The Budget and the Economy NDP Caucus, February 2009 Canadian Federation of Independent Business

The current situation: What CFIB is saying Canada needs political stability, volatility only serves to deepen economic uncertainty Canada needs economic stability Avoid deficits Prudent, strategic spending Avoid bailout packages Develop a long-term personal income tax plan Focus economic policy on SMEs

The current situation: What CFIB is doing Continues to meet with MPs, MLAs in all parties Appealed for political and economic stability in a letter to federal and provincial leaders Surveyed our members on spending, tax and ‘stimulus’ principles

Economic stimulus: What it means to SMEs Balanced budget No large-scale bailouts unless: In the form of repayable loans Temporary only Linked with criteria and specific, long-term outcomes Short and long-term ‘stimulus’ Focus on initiatives aimed at supporting all families and businesses: tax relief Longer-term ‘stimulus’ infrastructure investment

Current economic environment: National business expectations Confidence reaches lowest levels since 1990

Nova Scotia Business Expectations: SME Overview Significant decline in confidence began in 4th Quarter, 2007 Until that time, optimism in Nova Scotia led Atlantic region; top third in country Beginning 2008, optimism in Nova Scotia lowest in Atlantic region; bottom third in Canada

Nova Scotia Business Expectations: SME Overview

Government and Economy: What’s working Better Regulation Initiative* Small Business Advocate for energy rate hearings Buy local marketing efforts Broadband initiative Office of Employer Advisor – WCB Exceptions: Tobacco regulations, Home heating rebate

NDP and Economy Appreciate support for balanced budget Caucus support for SME sector Focus on working families, like small business families

CFIB’s Focus TAXATION

Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=305.

Tax is top issue Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=314.

SME Priorities: Nova Scotia Source: CFIB, OMO Survey No.62, N=869 Tax is top issue

Why tax is a top priority Nova Scotia has: 3 rd lowest level of basic personal exemption in Canada 3 rd lowest level of basic spousal exemption in Canada One of only 3 provinces that do not index personal income tax brackets; but other 2 (PEI and MB) increase the exemption intermittently; not NS One of only 3 provinces with an income surtax 3 rd highest provincial fuel tax rate in Canada 3 rd highest small business tax rate in Canada Highest corporate tax rate in Canada 2 nd highest WCB premiums in Canada Second highest debt per capita in Canada

Why tax is a top priority Single earner of $40,000 pays $3,258 in provincial income tax  3 rd highest in Canada One-earner with $40,000 income with two children pays $2,681 in provincial income tax Highest in Canada Source: New Brunswick Department of Finance 2008

Spending: Cross-country comparison Province Increase in Total Expenditures* ( ) Alberta145% Newfoundland & Labrador103% Nova Scotia97% Manitoba85% British Columbia84% Saskatchewan80% Prince Edward Island79% Ontario77% Quebec59% New Brunswick56%

SME tax priorities

The way forward: Upcoming budget Fiscal measures must encourage – not discourage – entrepreneurship Plan must be outlined to reduce overall tax burden on Nova Scotia’s working families Implement practical, ongoing increases in the basic personal exemption Increase basic spousal exemption up to basic personal exemption End bracket creep immediately Reduce small business tax rate (i.e. 0.5% every year for next four years) Offset the impact of minimum wage increase by reducing small business tax rate or extending the minimum wage schedule

Hold spending to inflation + population growth (overall expenditures cannot continue to increase by 8 to 9 per cent ) Balance budget Continued debt repayment, earmark savings in interest payments to tax relief Continuation of Better Regulation; outline for plan past 2010 The way forward: Upcoming budget

ProvinceWhat’s WorkingWhat Needs Work NB Commitment to reduce the total tax burden on businesses and families. No commitment to measure, report and reduce the red tape burden. NL Significant tax reduction past two budgets Large spending increases NS On-going commitment to measure, report and reduce red tape. Minimal tax relief for businesses and families. PE Commitment to reduce small business tax rate to 1% by Deficit budgets Atlantic Comparison

Other Issues Pre-budget consultation process Budget date (fixed budget date) NS Tax Review CFIB’s top three for 2009: Personal income tax Regulatory reform Shortage of qualified labour