Thank you, Mr. Chair, and good evening.
Hello again to the members of the committee.
As many of you heard last week, CFIB is a not-for-profit, non-partisan organization representing more than 109,000 small and medium-sized businesses across Canada that collectively employ more than 1.25 million Canadians and account for $75 billion, or nearly half of Canada's GDP. Our members represent all sectors of the economy and are found in every region of the country. Addressing issues of importance to them can have a widespread impact on job creation and the economy.
You should have a slide presentation in front of you that I would like to walk you through in the next few minutes.
CFIB's October business barometer on slide 2 shows that after a rough spring, small business optimism has trended into more positive territory so far this fall. The barometer showed a gain of a half point to 65% from September's reading, but it generally remains in line with the average value from the past four months.
Full-time hiring plans are basically unchanged this month and typical for this time of year. We take this as a sign that business owners remain cautious. Only 41% of owners report a generally good state of business.
The barometer has shown us that the economy is still a bit sluggish. To help us get through this sluggishness, we believe the government needs to address the issues of greatest concern to small business owners so that business owners can focus their attention on hiring staff, growing their business, thereby growing the economy. What are those concerns? As you see on slide 3, the top issue of concern to small businesses is the total tax burden, which includes taxes from all levels of government. Another high-priority issue is government debt and deficit. Small business owners understand the importance of paying down debt and we have seen this issue grow in importance as the deficit itself has grown over the last few years.
Employment insurance is a high-priority issue for over half our members, the reasons for which I will get to in the next few slides.
As the previous slide has demonstrated, one of the top issues of concern to small business owners is their total tax burden. There's only one taxpayer and they pay taxes to all levels of government. With so many taxes, it's important to understand which ones have the biggest impact on the growth of their business. As you can see on slide 4, payroll taxes have by far the greatest impact on growth. Why? It's because they are effectively a tax on jobs. They must be paid regardless of whether the business has posted any profit that month.
Since EI is a payroll tax that can have a big impact on hiring decisions, our members have told us repeatedly how much the EI hiring credit has helped them maintain their workforce, especially during uncertain economic times. As you see on slide 5, 64% of our members indicated that the EI hiring credit would help their business. The stability of the EI rate is just as important to our members, and 85% of our members indicated that a steady and predictable EI rate is critical for small business to help keep their businesses afloat during unstable economic times, and in turn help them grow their business as the economy improves.
Even a few years after the recession started in 2008, as you'll see in slide 6, over half our members were in support of the EI hiring credit. The EI hiring credit has given those small businesses that received it a break from payroll taxes, this particular tax being EI. The hiring credit also allows small business owners to keep their employees, increase wages, and hire when they might not otherwise have been able to.
On slide 7, our research from 2011 shows that the rapid rise in premiums prior to the EI rate freeze would have resulted in the fund coming into balance in 2017. We see from the government's recent economic update that the fund will be in surplus prior to this time. While the recent rate freeze announcement has provided some predictability to the rate-setting process, which our members welcomed, we do recommend that the seven-year rate-setting process begin as early as possible.
CFIB recommends a fixed-rate approach as it provides the most stability in premium rates, which is a very important factor for small firms in their business planning. To conclude, CFIB supports the EI hiring credit and its expansion. It has given small business some measure of security during uncertain economic times.
Second, rate stability is a critical component of a well-managed EI program. The current projections indicate that we are close to the break-even rate and that the EI account will be in surplus in 2016. We suggest the government reduce rates as soon as the EI account is in balance, and do not let surpluses accumulate.
Last, CFIB encourages the government to maintain a separate, independent EI account. Transparency and accountability to the taxpayer are key to creating business confidence in the EI system.
Thank you, Mr. Chair.