You’d be hard-pressed to find a CEO who wouldn’t champion tax relief, and among the $60 billion in cuts proposed by the federal government, Canadian business leaders found plenty to like. In a survey conducted in early November by Compas Inc., the 158 business leaders polled were pleased with Finance Minister Jim Flaherty’s economic statement delivered on Oct. 30 — or at least with parts of it.
The respondents gave the mini-budget an average score of 74%, and according to Compas, it is rare for any government initiative to score higher than 70%. The heads of primarily small and medium-sized businesses lauded the $10-billion reduction to the federal debt, as well as the increase to the basic personal exemption. Reducing the small-business tax rate and slashing the federal corporate tax from 22.1% to 15% by 2012 also won points with the respondents. “Canada needs to be able to compete globally, and this mini-budget will help,” wrote one.
While the sentiment from the CEOs was generally positive, there is room for improvement. The decision to reduce the GST by an additional percentage point was the least favourable measure, with one business leader calling it “poor policy.”
Some were miffed by the lack of initiatives targeting specific sectors of the economy, particularly manufacturing. “A high Canadian dollar will kill many more manufacturers,” wrote one respondent, adding that the sector should have been central in planning tax relief. Others were concerned the government isn’t spending enough in certain areas, particularly infrastructure. They were also worried the government still might not do enough to reduce the debt — even after spending more than $37 billion to pay it down since 2005.
Looking ahead, the ball is in the provinces’ court with respect to taxes. “The biggest problem would be the greedy provinces, which may increase their tax base as the feds reduce theirs,” wrote one CEO. “Not all provinces think clearly.”