Published On: Wednesday, 28 February 2018
Faint Praise from Business for 2018 Budget
CANADA - Faint praise from the Canadian Federation of Independent Business (CFIB) greeted the 2018 federal budget. The Federation described the budget as somewhat less harmful than originally expected, but not enough to improve the overall health or competitiveness of the nation’s entrepreneurs.
The Federation highlighted five specific budget measures: taxes on passive investments, impact on competitiveness, pending new costs and ongoing deficits, support for women entrepreneurs, and reduction of red tape.
“While we compliment the government for rethinking its plans for taxing passive investments, it remains to be seen how significant this improvement will be,” said CFIB President Dan Kelly.
“The new rules appear to be simpler and may improve things for some business owners from the earlier proposals, but others will lose the benefit of the lower small business rate due to past investments.”
The new plan ends the benefit of “grandfathering” past investments from the earlier proposal.
“The tax changes for small business remain a billion-dollar take-away from entrepreneurs at a time when entrepreneurs in the US are seeing their tax bills drop considerably,” Kelly added. “With uncertainty over NAFTA, Canada needs to focus on improving our tax competitiveness – instead we’re making it worse.”
“It is important to keep in mind that Canada’s Small and Medium Enterprises are facing massive new cost pressures in the coming years, including five years of CPP/QPP hikes, five years of carbon tax/pricing increases, and higher minimum wages in several provinces,” Kelly said.
“On top of that, entrepreneurs know that today’s deficits are tomorrow’s taxes. The lack of a plan to get Canada out of deficit spending is deeply troubling,” added Kelly.
“CFIB is pleased to see a focus on ways to support female entrepreneurs and we look forward to working with Small Business Minister Bardish Chagger on these initiatives going forward,” Kelly said.
“We welcome new measures to address the burden of red tape and regulation in Canada, particularly the focus on improving services at the Canada Revenue Agency,” said Kelly. “Fixes to the CRA call centre can’t come soon enough.”
In the weeks ahead, CFIB will lobby MPs and senators for further changes to small business tax rules, including deferring implementation of income splitting rules and a full exemption for spouses.