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Federal budget part 2: small businesses question long-term impacts

Small business groups say they’re generally pleased with Tuesday’s federal budget, but questions still remain about its long-term impact.

 
While the budget was light of big promises it did include some measures that could help small firms save money. But Lionel Miskin would have preferred more details.

“It’s hard to imagine how a lot of it can be effectively implemented,” says Miskin, a vice president of the Toronto Association of Business Improvement Areas, which represents the city’s 77 BIAs.

So what’s in the budget for small businesses? Less frequent payments to Revenue Canada, as part of a continuing attempt to reduce red tape around taxes is perhaps the most broad-reaching.

“That’s helpful,” says Miskin, who chairs TABIA’s tax committee, “because filling out those forms is time consuming.”

Miskin says he’s also pleased to see plans for jobs and skills training programs, but once again, he’s taking a wait-and-see attitude. “The devil is in the details,” he notes.

Creating jobs and matching unemployed workers to open positions are major themes of the budget, including a plan to implement the Canada Job Grant program.

The Conservatives had been counting on provincial governments putting in a third of the cost when it first introduced the plan in last year’s budget. That didn’t happen, so the government will now go it alone, with the program set to take effect on April 1.

That means businesses will soon be able to access federal funding of up to $10,000 per employee for job-related training programs — at colleges, at the worksite or elsewhere — if the employer puts up one-third of the cost.

That grant will also include special programs for small business, and the budget holds out “the potential to count wages as part of the employer contribution.”

That’s good news, says Miskin because it will allow small businesses to improve the skills of their workers without extra costs.

The budget includes proposed interest-free loans of up to $4,000 for apprentices in the skilled trades. A further $15 million is earmarked to support internships at small- and medium-sized businesses.

Miskin says he thinks this program “could be very helpful to our members.” But other small business organizations aren’t so sure.

Dan Kelly, president of the Canadian Federation of Independent Business, says that while he’s pleased with the workplace training proposals, he has mixed feelings about internships.

“A lot of these programs are very expensive (for businesses) to apply for,” he says, putting them out of reach for some smaller firms.

Overall, the CFIB gave the budget a “bronze medal,” meaning there’s much to like, with a few key measures — like tax cuts for small businesses — missing.

Kelly praised a plan to reduce the cost of processing credit and debit card transactions, which according to Miskin could save Toronto’s small merchants a lot of money. Miskin says processing fees for some cards can cost businesses four per cent of a sale.

In keeping with the Conservative’s goal to spur entrepreneurship, the budget includes funds for starting new businesses, with $40 million set aside for startup accelerators and incubators, places like the MaRS Discovery District, that provide mentoring to new businesses.

But these programs aren’t for everyone, says Teri Kirk, CEO The Funding Portal, a Toronto-based company that helps other businesses find government and private sector funding. Kirk says the programs focus on “innovation-based” companies that could receive venture capital, as opposed to traditional brick and mortar or service companies.

One small measure that could end up impacting manufacturers is a move to examine the tax rules that apply to depreciating assets.

Currently, physical assets — such as buildings, machinery or signage — of more than $500 can be deducted from taxes based on their depreciating value.

The same is true for intangible assets, such as customer lists or franchise fees, but the rules are more complicated.

The government is expected to propose a plan that would simplify the process without changing the amount of the deduction.

But small business owners might be less pleased about the government’s promise to take aim at companies that charge more for the same good in Canada than they do in U.S., part of a Conservative push to champion consumer issues.

While the budget promises legislation “to address price discrimination that is not justified by higher operating costs in Canada,” it doesn’t get into specifics.

Even though the plan appears unlikely to affect small businesses directly, Miskin says he’s worried it could have a unintentional negative on small retailers.

“If it is successfully implemented, and a lot of people will be astounded if it does,” says Miskin, small businesses who don’t have the purchasing power or the margins of their large competitors might find themselves unable to match the lower prices.

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