Liberal majority a mixed bag for small business

What does this month’s election result mean for small business? Like with most new governments, it’s a mixed bag.

Laura JonesExecutive Vice President of the Canadian Federation of Independent Business

 

What does this month’s election result mean for small business? Like with most new governments, it’s a mixed bag — there is the good, the bad, and the worrying.

Let’s start with the good. Prime Minister-to-be Justin Trudeau has committed to reduce the small business tax rate from its current 11 per cent to nine per cent by 2019. This is unequivocal good news for business owners who consistently cite tax loads as among their biggest challenges. A reduction in taxes will allow for additional investment in new equipment and employee training.

More good news on the tax side comes in the form of a commitment to reduce Employment Insurance contributions in 2017 from an expected $1.88 for employees and $2.63 for employers to an estimated $1.65 and $2.31.

With respect to labour shortages, there are several commitments that small business owners will like, including providing an EI premium holiday for hiring youth — a nice incentive to hire young people and invest in their training. Specifically, the new government has committed to waiving EI contributions for 12 months for any employer who hires someone between the ages of 18 and 24 for a full-time position in 2016, 2017 or 2018. The Chretien Liberals had a similar program in the 1990s that was very popular with small business at the time as it helped offset some of the training costs for new hires.

The idea of developing more pathways toward citizenship for the Temporary Foreign Workers who want to make Canada their home will, if done well, provide some relief to businesses who are finding it extremely challenging to find employees.

The least popular idea for small business relates to increasing mandatory Canada Pension Plan taxes. The Liberals have publicly committed “to gradually phase in an expansion of the core CPP.” The small business objection, shared by the general public in at least one poll, is that a mandatory CPP increase is not the best way to help Canadians save for retirement. In fact, to pay the additional mandatory taxes, many say they will have to reduce contributions to voluntary plans like RRSPs or other forms of retirement savings such as paying down a mortgage. A CPP hike could mean hundreds or thousands of extra dollars in taxes paid each year for each employee and employer. But the federal government needs two-thirds of the provinces representing two-thirds of the population to proceed with its CPP changes. Small business owners will strongly encourage B.C. Finance Minister de Jong to continue saying no to this idea.

The intention to run deficits is in the “worrying” category. Small businesses tend to be pretty pragmatic about the need for deficits on occasion, but are also very mindful of the reality that, as Saskatchewan Premier Brad Wall once quipped, “Deficits are like potato chips: It’s hard to eat just one.” Infrastructure spending is another potential worrying area. There is no question that there are many worthy infrastructure projects, but if the federal government insists on matching dollars from other levels of government (a strong possibility), spending could balloon fast.

Before the election, many were predicting a minority government of some description. Personally, I put a majority government in the “good” category. Minority governments tend to behave in constant electioneering mode, with far more attention to what makes good politics rather than what makes good policy. Majorities, in contrast, have clear lines of accountability. Whatever decisions are made going forward — good, bad, or worrying — the electorate knows exactly who to hold accountable four years from now.

 

Just Posted

Greyhound cleared to end routes in northern B.C., Vancouver Island

Company says nine routes have dropped 30% in ridership in last five years

BC BUDGET: New spaces a step to universal child care

Fees reduced for licensed daycare operators

BC BUDGET: NDP cracks down on speculators, hidden ownership

Foreign buyers’ tax extended to Fraser Valley, Okanagan, Vancouver Island

BC BUDGET: Payroll tax replaces medical premiums

Health spending to increase $1.5 billion for drugs, primary care teams

B.C. freestyle skier wins gold

Cassie Sharpe of Comox shines in the halfpipe

VIDEO: Top 10 B.C. budget highlights

The NDP is focusing on childcare, affordable housing and speeding up the elimination of MSP premiums

Northern B.C. short 121 registered nurses: report

Auditor General says officials need to improve internal management, track effect of new policies

Fraser Valley Ringette team goes for B.C. Games gold

Fraser Valley Zone 3 ringette team has completed their final preparations for 2018 BC Winter Games

WATCH: Vancouver Island family builds eight-foot igloo in their yard

Sunday snowfall on the mid-Island leads to all-day family activity

Three new judges appointed to B.C. Supreme Court

Two spots filled in Vancouver, one in New Westminster

BCHL Today: Merritt’s Buckley nets scholarship and Vees slam Salmon Arm

BCHL Today is a (near) daily look at what’s going on around the league and the junior A world.

Trial date delayed in case of slain Victoria sisters

Andrew Berry’s next court appearance will be in three weeks to set a date for trial to begin

B.C. MP invites convicted terrorist to Trudeau reception in India

Jaspal Atwal was convicted of trying to assassinate an Indian cabinet minister

OLYMPIC ROUNDUP: Women’s ice hockey team loses first Olympic game in 20 years

Team Canada added two silvers and a bronze to their total

Most Read