Small Business Reaction to 2012 Ontario Budget

TORONTO, March 27, 2012 /CNW/ - After years of consistent lobbying, the Canadian Federation of Independent Business (CFIB) is pleased that the government has acknowledged the main challenge facing Ontario's budget is salaries, pensions and the size of the broader public service.

"The government should be credited with presenting a tough plan to cap program spending increases at one per cent and limit the spiraling costs of public sector pensions," said Plamen Petkov, CFIB's Ontario director.  "However, much of this plan depends on public sector unions putting water in their wine and accepting restraint in wages, positions and pensions,"  Petkov noted.  "We've seen no evidence that unions will agree to any change regardless of how dire the state of Ontario's finances."

Public Sector Pensions: The budget notes that pension costs will nearly double by 2017 unless action is taken.  "CFIB is pleased government has committed to limit taxpayers' exposure to massive unfunded pension liabilities, but believes the steps they outline will not produce the needed savings.  The size and scope of unfunded pension liabilities are so significant, we cannot wait for reviews or dispute resolution processes to produce results," said Dan Kelly, CFIB's senior vice-president of legislative affairs.

Pooled Pensions/Payroll Taxes: Small firms will be let down about government plans to tie implementation of pooled registered pension plans (PRPPs) to a mandatory increase in Canada Pension Plan (CPP) premiums.  "We are disappointed that government will not allow Ontario small businesses and employees to benefit from lower-cost pooled pensions unless a national agreement is reached to increase CPP.  In addition, the budget takes no action to address the ongoing threat of rising Workplace Safety and Insurance Board (WSIB) premiums and liabilities," Kelly noted.

Business Taxes: While the freeze on corporate income tax reductions was widely rumoured prior to the budget, the freeze on Business Education Tax reductions will be an unwelcome surprise to many small firms expecting a cut to this profit-insensitive form of capital tax. "With government counting on business for growth and job creation, delaying these tax measures is poorly timed," Petkov added.

"Overall, small business will be pleased the 2012 Ontario budget appropriately puts a major focus on implementing many of the Drummond Commission recommendations. CFIB will support any efforts on the part of the government and opposition parties to live up to this tough mandate, but worries that delivering on the plan depends deeply on public sector unions suddenly waking up and listening to the call for restraint," concluded Petkov.

To arrange an interview, please call Gisele Lumsden or Meghan Carrington at 416-222-8022 or by email at [email protected]