Mr. Speaker, it is a pleasure to rise to speak to the Liberal motion because it gives me an opportunity to talk about the proposed Liberal motion but, also, to talk about the introduction of the small business tax credit and the fact that I believe so many small businesses are welcoming this and looking forward to it.
I find the Liberal motion, frankly, as another speaker said earlier today, quite cynical. We also heard the member for Skeena—Bulkley Valley say earlier in this debate that math is difficult. I believe that is what he said. Also, I am finding a lot of fearmongering and misinformation about this issue.
I think it is fairly simple in that I believe small businesses want lower EI premiums because high premiums are essentially a payroll tax. We have been hearing from these small businesses that reductions are what they are looking for and it will make it easier for them to do business.
My first job was working for my father, who owned a small business for 40 years. At varying times, he had anywhere from about 8 employees to a high of 40 employees over this 40-year period. I happened to be speaking to him about this initiative when it was first announced by the Minister of Finance a couple of weeks ago and I asked him, as a former small business owner and operator, what he would have done with such a tax cut. His answer was, to paraphrase, that it would not change his entire business model in any way but that, as a small businessman, any kind of reduction in tax or red tape makes it that much easier to do his job.
I find the misinformation and fearmongering on the other side of this House is a real stretch, with regard to potentially firing employees because somehow this tax break would lead employers to think it is a way they could reduce the number of employees.
A representative of the Canadian Federation of Independent Business wrote about that, in particular. He said or he wrote, I am not quite sure, but he dismissed this as kind of a ridiculous claim, saying, “Some suggested companies will lay off staff or hold off hiring just to stay under the threshold to receive the credit”. “I've got news for them:”, he writes, “small business owners don't have time to research the eligibility requirements, then carefully manage their payroll to receive a few hundred dollars over two years.”
That is essentially what my father said when he answered my question about his thoughts on the Conservatives' small business job credit.
Let me also mention that Angella MacEwen, senior economist with the Canadian Labour Congress, who is probably not our biggest fan most of the time, points out that money in the pockets of businesses is generally a good thing.
She also said:
These businesses will put the money to good use; find other ways that are better to use it like upgrade equipment or put a sign up...or buy a laptop maybe.
That was my initial thought when I heard of this. When we are stimulating business by reducing taxes, it is the same theory as reducing taxes for families and for individuals. It frees up that much income so that small business owners, the entrepreneurs, can then buy another piece of equipment, modernize their business and their operations a little bit. That is what this would do.
In fact, a couple of weeks ago, on the same weekend, I was able to cut the ribbon on two separate brand new businesses in my riding. One, called Yoga Seven located in Port Credit, opened and held its grand opening. It made me realize that the entrepreneurial spirit is alive and well, not only in Mississauga South but across Canada, and that our government has a responsibility to encourage that entrepreneurial spirit. With initiatives like this, that is exactly what we are doing. The other business was the Express Yourself music academy.
When I attended these two grand openings, I mentioned that our government is friendly to small businesses. It is not just the small business job credit, which is lowering payroll taxes, but there have been a number of other initiatives as well, including freezing EI premiums in general and cutting red tape. In fact, even CRA is getting in on this reduction of red tape and helping businesses in that way.
Overall, we have reduced the tax rate on small businesses from 12% to 11% and the average business has seen a savings of about $28,000 since this Conservative government came to office in 2006. That is a reduction of 34%.
I want to give an example and talk a bit more about red tape. In terms of an example, I want to mention that it is not just small businesses of two and three employees. We are talking, for example, of a business that employs 14 employees. If each earns $40,000, the business would pay just under $15,000 in EI premiums. Being under the threshold of $15,000, the business would be eligible for the small business job credit and a refund of $2,200, which is the difference between employer premiums paid at the legislated rate versus the premiums that would be calculated under the new reduced small business rate.
About that point in particular, I want to mention another chief economist, at the Royal Bank. The reason I am mentioning the names of a few economists, such as with the Canadian Labour Congress, the Canadian Federation of Independent Business, as well as now the Royal Bank, is that we heard earlier from a Liberal member of the House that economists have said this is not going to stimulate business, this is not a good idea, and the Liberal idea is a better one. However, I want to point out that the majority of economists that I have been reading about with regard to this new job credit are saying that this is, far and away, a very positive initiative on the part of this government.
Craig Wright, chief economist at the Royal Bank, said that this may even be enough to push some employers to consider hiring, because it lowers the cost of employment, so it is helping out at the margins. I will say that he did qualify it in that way.
While the impact might be modest, the modest changes would add up. When we look at the overall numbers, which the Minister of Finance talked about, we are talking about savings of $660 million to small businesses in Canada, and that is in one year alone. Therefore, there is no doubt in my mind that this is a good idea.
I am going to wrap up by mentioning red tape one more time. I want to make the point that businesses need not apply. This is not extra paperwork. It will be calculated automatically by Canada Revenue Agency.
For all of these reasons, small business owners in Canada will be very happy to see this job credit, and I am very proud that this government is introducing it.