The Newfoundland and Labrador business community gave a passing grade — and words of caution — to the federal government’s proposed budget Tuesday night.
Richard Alexander, the executive director of the NL Employers’ Council, and Bradley George, director of provincial affairs for the Canadian Federation of Independent Business, gave the budget letter grades of B and B-plus respectively.
Alexander said the continued corporate tax cuts were a plus in the budget.
“That’s going to create jobs in this country. It’s going to create jobs in this province. It’s going to be something that helps this province move forward from the recession,” he said, adding that while the government’s plan to eliminate the deficit by 2016 isn’t aggressive enough, it’s still good that the government plans to move back to balanced budgets.
“You don’t want to get into a situation where we continue with large deficits year after year after year, and five years down the road we’ll end up with a situation where the government has to increase taxes of make massive spending cuts.”
Alexander was also relieved there wasn’t a doubling of Canada Pension Plan benefits, as had been requested by the NDP. “We had some big concerns about that. … A very radical increase in premiums that go right against people’s salaries would have cost jobs, would have impacted the salaries that employers are able to pay.”
George noted the government’s inclusion of an EI hiring tax credit, which will exempt some small employers from having to pay premiums on an increase in their payroll in 2011 over 2010 levels. George said the credit was the federation’s top priority for the budget.
“The federal government declared this year the year of the entrepreneur, and obviously the budget recognized job creation as a priority,” he said.
Jo Mark Zurel, president of the St. John’s Board of Trade, however, said the budget doesn’t do enough to reduce spending.
“The government’s still off-track with their fiscal controls. Spending is still growing, even though the stimulus spending was supposed to be ending,” he said. “We had hoped and expected to see program costs coming down, but in fact they’ve continued to rise. When we look at the forecast they’ve provided, they’re relying on economic growth to generate revenues to bring deficits down over the next several years, and they’re still not projecting a surplus until 2016. Our position is that this is irresponsible, that we’re spending way more than we can afford, and that ultimately the debt that’s building up will have to be paid off by somebody, and it’s just irresponsible to leave that to the next generation.”
Zurel was pleased to see a planned program review as well as some small targets for cost-cutting, but called them insignificant compared to recent spending increases.
Brian Brophy, a tax specialist at Deloitte in St. John’s, said the federal budget won’t have much effect on the tax burden for average Canadians.
“It’s what I call a nibbling-at-the-edges budget, sort of a sprinkling of a lot of money around,” he said. “One of the things we had been looking for but didn’t see was a further reduction in personal tax rates and or an increase in the brackets of when higher tax rates apply. Canada continues to fall behind in terms of personal tax rates, comparatively to its competitors in the G7 and the greater G20 countries.”