A Canadian flag flying outside Parliament Hill is backlit by the setting sun Oct. 22, 2014. The provinces have been grumbling for years about Canada’s “fiscal imbalance.” While Ottawa’s budget could well finish the current fiscal year (ending March 31, 2015) with a small surplus, the 10 provinces expect to be, collectively, about $15-billion in the red.Fred Lum/The Globe and Mail
The Harper government has long courted the small business sector, but this year's pre-election budget stands out as one of the nine-year-old government's "strongest and most decidedly pro-small business budgets" said Dan Kelly, CEO of the Canadian Federation of Independent Business, which gave the budget an "A". By Mr. Kelly's measure, the government "either delivered or moved on six out of the seven" top asks put forward by his lobby group, including a gradual reduction of the small business tax rate to 9 per cent by 2019 from 11 per cent. Opposition leader Thomas Mulcair has also voiced support for a small-business tax cut, while experts including the University of Calgary's Jack Mintz have criticized the tax cut, saying it would primarily benefit the wealthy. Other budget measures geared toward small businesses include:
-doubling to $1-million the amount small businesses can borrow through the Canada Small Business Financing Program to buy property, equipment or leasehold improvements, while limiting eligibility to firms with $10-million in annual revenues, up from $5-million;
-charging the Business Development Bank of Canada to "increasingly make available quasi-equity solutions" totalling between $2-million and $10-million to help fast-growing companies make acquisitions;
-encouraging Canadian banks to increase lending to small and medium enterprises by spurring Export Development Canada to increase loan guarantees for lenders on associated credit facilities to 100 per cent from 95 per cent, and by increasing the approval rate of requests for accounts receivable insurance for the foreign customers of small and medium enterprises.
-increasing lifetime capital gains exemptions for farm or fishing properties to $1-million from $813,600;
-Reducing the requirement for small, new employers to remit Canada Pension Plan contributions and Employment Insurance premiums withheld from employee pay to once every quarter from monthly. That will eliminate the need for 80,000 employers to make 640,000 payments per year, the government said.
-Committing Canada Revenue Agency to honour all written advice and guidelines shared on its website - even if it's wrong. In the past, Mr. Kelly said the CRA hasn't always honored all written advice, snarling some businesses that made tax filings based on what was posted by the tax agency.
-Lowering Employment Insurance rates via a small business job credit, and taking several measures to reduce red tape.
Measures announced in the budget will see the government steadily increase spending geared to small business and entrepreneurship to $1.2-billion in 2019-20 from $80-million in the recently completed 2015 fiscal year. "The bottom line is they're trying to win friends and influence people in an important constituency," said CIBC chief economist Avery Shenfeld.
Sean Silcoff