www.cfib.ca a back to basics budget 2013/14 bc pre-budget recommendations to the select standing...
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www.cfib.ca
A Back to Basics Budget
2013/14 BC Pre-Budget Recommendations to the Select Standing Committee on Finance and Government Services
Shachi Kurl - Director, BC & Yukon
October 2, 2012
www.cfib.ca
Who is CFIB?
10,000 independent business members in BC
109,000 members Canada-wide
Non-partisan, not-for profit, political advocacy
organization
Represent all sectors, all regions
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Facts about Small Business in BC
More than 80% have fewer than five employees
Small businesses represent one-third of BC’s GDP
Small businesses employ 56% of BC’s private sector workforce
Small business owners protect jobs, even during a recession: In 2008, small business reduced employment levels by only 0.5% By contrast big business reduced employment levels by 8.8%
96% of small businesses give to charitable or community causes.
Source: BC Statistics 2011 BC Small Business Profile and CFIB Research Reports
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State of the Economy
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Small Business September Economic Indicators
30
40
50
60
70
80
90
Jul 2008 Jan 2009 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012
Business Barometer Index (0-100)
Canada
British Columbia
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Small Business September Economic Indicators
5443
1937
823
1929
4159
Fuel, energyWages
BorrowingBanking
Foreign currenciesProduct inputs
Capital equipment, technologyOccupancy
InsuranceTaxes, regulations
Main cost pressures (% response)*
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Small Business Economic Uncertainty
Source: CFIB, BC Pre-Budget Survey, September 2012
Somewhat optimistic
49%Somewhat pessimistic
37%
Very pessimistic
9%
Very optimistic
4% Don’t know 1%
How do you feel about the future of BC’s economy?
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Small Business BC Budget Priorities
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Keep BC’s Budget Balanced
Source: CFIB, BC Pre-Budget Survey, September 2012
Very important
60%
Somewhat important
33%
Not important
5%
Don’t know 1%
How important is it to you that the provincial government balances its budget every year?
53%
30%
10%
7%
What measure should the BC government take to make up the shortfall?
Hold the line on public sector wage increases
Make changes to government programs to reduce spending
Other
Increase revenue through other measures
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Deal with BC’s Debt
Source: CFIB, BC Pre-Budget Survey, September 2012
Yes 81%
No 11%
Don’t Know
8%
Should the BC government legislatea debt reduction plan?
1%
35%
58%
70%
73%
77%
0% 20% 40% 60% 80% 100%
No concerns
Reduce incentive to make long-term investments in my business
Harm investment reputation of the province
Transfer of debt to next generation
Limits government ability to invest in infrastructure and programs
Future tax liability on my business
The BC government estimates that its debt will reach $56.7 billion by March 31, 2013. What concerns do you have about
current provincial government debt levels?
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Keep BC Taxes Competitive
Source: CFIB Tax Competitiveness Survey, July 2012
3%
6%
7%
13%
25%
26%
28%
41%
41%
54%
0% 10% 20% 30% 40% 50% 60%
Not interested in growing my business
No constraints
Lack of information about new markets
Other
Management skills, constraints on my time
Access to capital
Competition
Trouble finding qualified labour
Government regulation
Overall tax burden
What are the main constraints that keep you from growing your business?
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Simplify Taxation
Source: CFIB Tax Competitiveness Survey, July 2012 – 613 responses
4%
20%
22%
24%
29%
33%
44%
51%
57%
0% 20% 40% 60%
Increase BC’s Scientific Research & Experimental Development Credits
Increase funding for hiring/ training new employees
Reduce the Property Transfer Tax
Align the provincial school tax rate for business properties with the rate for residential properties
Reduce personal income taxes
Freeze/ lower BC’s Carbon Tax Rates
Reduce the Small Business Corporate Tax Rate
Cap the gap between what residents and businesses pay in property taxes
Simplify the PST system
Which specific initiatives would most improve BC’s tax competitiveness?
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Simplify PST
Source: CFIB Tax Competitiveness Survey, July 201
“If we sell a pencil to both an architect and an artist that have an SST exemption number. We charge the architect the tax but not the artist, because the tax is based on how a product is used. I can give over 50 examples where we need to know how our customers will use the product. That is, will it become part of the finished product, or be exempt from one of the hundreds of explanatory tax release notices.”- CFIB Small business owner
Negative impact 66%
Positive impact 15%
Don’t know 10%
No impact
8%
What type of impact will the return to the Provincial Sales Tax have on your business?
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Keep Promise to Lower the Small Business Corporate Tax Rate to Zero
Small Business Corporate Tax Paid Table
“Any business making up to $500,000 per year will not pay any tax in the Province of British Columbia as of April 1, 2012.” – Letter from Hon. Colin Hansen, Minister of Finance, November 2009
Quoted in ‘The Globe and Mail’ on Feb 25, 2012, B.C. Finance Minister Kevin Falcon said he won’t rule out a later elimination of the small-business corporate tax “if it is the smart thing to do”.
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Release Results of BC’s Carbon Tax Review
Source: CFIB, BC Mandate Survey, September 2011
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Small Businesses Need Employees
Source: CFIB, Labour Shortages and Immigration Survey, September 2012
No, I am a one-person business,
4%
No, I wasn’t looking to hire,
15%
No, I had no difficulty filling
the available positions, 23%Yes, it was
somewhat difficult, 37%
Yes, it was very difficult, 21%
During the past three years, have you had difficulty hiring new employees?
In a slower economy 58% of our members still reported difficulties finding employees.
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Small Businesses Need the Right Employees
Source: CFIB, Labour Shortages and Immigration Survey, September 2012
47%
25%
16%
7%5%
What type of worker does your business have the most difficulty hiring?
Skilled and technical occupations that usually require college education or apprenticeship training
Elemental and labourer - occupations where on-thejob training is usually provided
Intermediate and clerical - occupation that usually require secondary school and/ or occupationalspecific training
Professional occupations that require university education
Managerial occupations
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As the economy recovers, BC SMEs will struggle to find and train qualified labour
Create a one-time “training bonus” paid by government to employee (payable at end of training)
Employer would certify completion for employee who has mastered three to five basic/intermediate skills after six months
The BC Training Bonus: A made in BC solution to small business’ labour shortage challenges
How Can Government Help
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Tax cuts good for business and employees
Source: CFIB Tax Competitiveness Survey, July 2012
2%
13%
19%
23%
27%
30%
45%
50%
50%
52%
53%
0% 20% 40% 60%
Other (Please specify)
Invest in research & development
Increase charitable donations
Convert tax saving into profits
Increase employee training
Lower or maintain prices
Expand operations
Increase employee wages
Hire additional employees
Invest in new equipment
Pay down debt
If the provincial government reduced taxes on businesses, how would you use the savings?
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Recommendations
1. Balance budget as promised
2. Introduce a debt reduction plan
3. Simplify PST upon its return in 2013
4. Reduce Small Business Corporate Tax Rate as promised.
5. Address small business challenges over looming labour shortages
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Thank you for this opportunity.
Questions?
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