April 29, 2011 by Terri Goveia
Both small business owners and brokers will have taxes–ranging from payroll, small business and transfer taxes–on their minds as they head to the polls May 2. Those issues will shape hiring practices, business benefits and even family-owned business transfers, say representatives from the Canadian Federation of Independent Business (CFIB) and the Insurance Brokers Association of Nova Scotia (IBANS).
The federation has made payroll taxes its top priority in the lead-up to the May 2 federal election. “The political parties are talking about extension of CPP benefits, but have been silent on the impact it will have on taxes,” says Dan Kelly, senior vice president of legislative affairs at the CFIB. “The main thing that small businesses want is the assurance that taxes won’t go through the roof, particularly payroll taxes.”
He points out that current CPP premiums represent a 10% payroll tax on an employee’s salary. Throughout the campaign, all parties have hinted at increases: the NDP has said it will double CPP benefits, and the Liberals have suggested slight increases. “Even the Conservatives are considering a modest increase.”
Those promises come at “what’s still a difficult [economic] point for many employers,” Kelly told Canadian Insurance Top Broker.
“The payroll tax is a tax on jobs–it makes it hard for entrepreneurs to take on staff when their tax bill goes up,” he says.
A 2010 CFIB study found that doubling CPP benefits would cost approximately 235,000 jobs within six years.
New government, different benefits?
Entrepreneurs are also eyeing tax breaks. With moves to lower small business taxes, raise the small business tax exemption to $500,000 and raise the capital gains exemption to $1,000,000 on hold, “the concern [is] if there is a change in government will there be an erosion to the benefits currently in place?” says Karen Slaunwhite, executive director of the Insurance Brokers Association of Nova Scotia (IBANS).
Transfer taxes are another concern for brokers, as they seek to hand down their businesses to the next generation, she says.
“Insurance brokerages have a history of being family owned and operated businesses–many [have] 3rd and 4th generations employing people and servicing their customers locally,” Slaunwhite points out. “Brokers would like to see the business transfer within a family to be unburdened by the disincentive and unfairness of this tax to be treated in a similar manner as government treats fisherman and farmers.”
Focus on taxes, red tape
The CFIB has put 11 key issues on its election wish list–all involving taxes or bureaucracy. At least one issue–job creation–has gained traction, with hiring tax credits on the table for most parties. “We take it as good news,” says Kelly.
As election day looms, pundits aren’t betting on a majority government. What would entrepreneurs say to a coalition?
“I’m sure every business owner has a point of view,” Kelly says, noting that the federation isn’t taking a position on any party or particular outcome. “I don’t think anyone’s excited about having an election after an election after an election.”
This story was originally published by Canadian Insurance Top Broker.