The Canadian Federation of Independent Business (CFIB) believes that federal budget announced yesterday will provide a certain stimulus to the economy but remains very concerned with the large deficits, and questions whether this level of spending is really necessary in the current economic context.

“The number one priority for small business in this budget was to see signs of stability that would build confidence,” said CFIB president Catherine Swift. “There are measures that will benefit Canada’s small business owners but we remain very concerned with giant deficits.”

CFIB was pleased to see the government acknowledge its sector by raising the small business corporate income tax threshold to $500,000 from $400,000. In addition, Swift applauded the targeted reductions in personal income tax, as that has been CFIB’s members’ top tax cut priority. The fact that these reductions are permanent is also very positive. Another top priority of CFIB members was to stabilize Employment Insurance (EI) rates. Freezing EI rates through 2010 was therefore positively received by CFIB. It was also encouraging that EI benefit increases are to be temporary. Capital cost allowance (CCA) measures on technology assets and extension of CCAs for manufacturers is also good news for many businesses.

“The high levels of spending in this budget are worrisome for taxpayers and small business owners,” said Swift, “as it may be the beginning of a trend which could be repeated at other levels of government, reversing in two years what it took a decade to achieve.”

As well, CFIB is concerned that many of the so-called temporary spending measures, such as enhancing EI benefits, will be difficult to reverse and could lead to structural deficits in the future. Although CFIB welcomes the introduction of some scrutiny on credit card companies, more needs to be done to promote transparency for both consumers and small business owners. Questions also remain on whether measures in the budget aimed at alleviating the current credit crunch will be effective. In the area of training, small business would have appreciated a refundable tax credit on workplace training instead of directing additional monies to existing programs which have questionable effectiveness.

Given small businesses’ role as a stabilizing force in Canada’s economy, CFIB is calling on all political parties to provide messages of political and fiscal stability to Canada’s entrepreneurs.