What Tim Hudak, Kathleen Wynne or Andrea Horwath could mean for your small business
The provincial election campaign is almost halfway through, with jobs and the economy taking centre stage.
That has all three major parties making promises to help support Ontario businesses, and criticizing the potential impact of each other’s proposals.
Here’s where the parties stand on five major issues that will affect small businesses in Toronto.
Taxes and minimum wage
Both the NDP and the PCs say they’ll cut business taxes.
PC leader Tim Hudak has said he wants to cut the 11 per cent corporate tax rate by 30 per cent. But small businesses won’t see much of a change — they already receive a credit that brings their provincial tax rate down to 4.5 per cent and changing that isn’t on the agenda. That deduction is available on the first $500,000 of active business income for business that have under $15 million in taxable capital.
According to Jamie Ellerton, the PC candidate in Parkdale-High Park, his party’s “analysis concluded that lowering the overall business rate would have the most bang-for-the-buck.”
The NDP says they would cut the small business tax rate to three per cent over the next two years. But there’s a catch — the minimum wage would increase at the same time, reaching $12 an hour in June 2016.
“We tried to find a balance and show small business some support,” says Catherine Fife, the party’s economic development critic.
But one business group says that while the NDP plan will benefit some successful businesses, it will hurt the businesses that can least afford the wage increase.
“At least [NDP leader] Andrea Horwath has acknowledged that there will be an impact,” says Plamen Petkov, vice-president for the Ontario branch of the Canadian Federation of Independent Business. While profitable companies will get a tax break, he says businesses that aren’t profitable will not only have to pay higher wages, they’ll also have to pay higher payroll taxes.
Both the Liberals and the NDP say they would tie further minimum wage increases to the cost of living index.
This would give businesses “fair warning,” says Steven Del Duca, the Liberal candidate in Vaughan. With an indexed increase, he says, “predictability and reliability are built into the system.”
Petkov says the CFIB, which has 42,000 members in Ontario, would like to see tax breaks for low income-earners instead of increases to the minimum wage.
He says that increasing the amount of money someone can make before they have to pay provincial income tax, from just below $10,000 to $17,000, would put more money in the pockets of low-income Ontarians.
Don’t expect tax cuts form the Liberals though. The party is standing on its existing record.
“We’ve already taken a number of initiatives to support smaller private sector employers,” says Del Duca.
He says the party has kept small business taxes low for years. The most recent change to the small business rate was in 2010, when it dropped by one percentage point.
He also points to the increased employer health tax exemption, which he says “provided tax relief of around $1,000 to about 90 per cent” of small businesses in the province.
The Liberals would raise personal income taxes on people who make over $150,000 a year.
The PCs are also touting their plan to cut government regulation as a form of tax cut.
Ellerton says his party will “take a comprehensive look” at all the provincial regulations on business and reduce them by one-third within three years.
The provincial pension plan
Del Duca says the province “is facing a retirement security crisis,” and the federal Canada Pension Plan just isn’t enough.
His party wants to introduce a supplemental plan. As with the federal pension plan, employers and employees would split the cost equally, with each one paying in the equivalent of 1.9 per cent of an employee’s salary.
The PCs have denounced the plan, calling it another payroll tax, while the CFIB’s Petkov says it would cost employers thousands of dollars and have a “disastrous effect.”
Del Duca doesn’t see it that way. He describes the plan as an investment that will ensure fewer seniors are dependant on public services in the future and have disposable income to spend.
The NDP says something needs to be done to support seniors, but Fife says she’d like a plan that had an “opt-in quality.”
The high cost of hydro
All three parties say they want to do something to help get the high cost of hydro under control.
The PCs say they’d work to reduce costs by “stopping failed programs,” says Ellerton. The party has called for the cancellation of some so-called green energy programs that it says have boosted costs.
The PCs and the NDP also want to end the practice of selling hydro to neighbouring U.S. states at a loss. According to the NDP’s Fife, this amounts to a $1 billion subsidy for other economies.
Liberal Del Duca says his party took action in late April, when it introduced a plan that would lower the threshold for businesses to qualify for a program that offers lower rates if they move their power consumption to off-peak hours. That plan would also give small businesses incentives and financing to conduct renovations that reduce their power consumption.
The CFIB says the the Liberal plan doesn’t go far enough.
“We are very worried about hydro rates,” says Petkov. “It’s very difficult for small businesses to move to off-peak usage,” especially for retailers and restaurants, he says.
He says the CFIB would like to see the reduction or elimination of fees and charges that are added on top of usage charges.
Supporting new business and growth
When it comes to supporting business, all three parties have taken a distinctly different approach. The PCs say low taxes are the way to go, the Liberals are promising grants, while the NDP are calling for tax credits.
The NDP’s Fife, who is running for re-election in Kitchener-Waterloo, says the high-tech sector in her region can set a good example for the rest of province. She says local academic institutions have worked closely with business to commercialize research.
The NDP have promised a research and development tax credit would help that collaboration. The party is also proposing “a targeted tax credit for job creation,” she says.
According to Fife, the current practice of providing grants to specific companies lacks transparency and its unpredictable nature discourages investment.
“The government shouldn’t be in the business of picking winners and losers,” she says.
The PCs have a similar message. Ellerton says his party would end “corporate welfare” to create a more level playing field.
“We’ve seen how handouts for a select special few have failed,” he says.
But Del Duca says business grants are exactly what the province has to do if it’s going to stay competitive against U.S. jurisdictions that offer incentives of their own.
The Liberals are promising to spend $2.5 billion over 10 years on grants for businesses.
Del Duca says part of jobs fund will be targeted at small and medium sized-businesses but didn’t get into specifics.
But the CFIB says that’s not what it’s looking for.
“The vast majority of our members don’t want to receive grants or subsidies from the government,” says Petkov. “They want a low-tax, low regulation environment.”