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ECONOMY: Business groups give federal budget overall positive review
        (AlbertaIndex, February 29, Friday) --- Business groups have given an overall positive response to the federal budget even though they did not get much of what they wanted from Finance Minister Jim Flaherty this week.

        The Calgary Chamber of Commerce called it a “prudent and sensible plan that positions Canada to adjust to the risk of a slowing global economy.”

Praising the budget’s “prudent approach”, and the promise to repay debt of $10.2 billion in 2007–08, the Conference Board said the federal government is on track to achieve its debt-to-GDP target of 25 per cent by fiscal year 2012–13.

Brian Hahn, chair of the Calgary Chamber of Commerce Board, said: “The Calgary business community welcomes the federal government’s commitment to spending restraint and debt repayment. In these uncertain times, spending responsibly is a solid fiscal strategy.”

He said the chamber is pleased that many of its pre-budget recommendations are contained in the budget.

To enhance Canada’s attraction as a key destination for investment and skilled workers, the chamber has been advocating fiscal responsibility, government support for carbon storage and technology, debt repayment, improvements to corporate and personal tax competitiveness, investments in public transit, making the gas tax fund permanent and changes to the federal retirement programs.

Praising the government’s support for carbon capture and storage technology, Hahn said: “The funding announced is an important indication of federal and provincial alignment to reduce greenhouse gases.”

He was very pleased with the budget’s surprise announcement of the Tax-Free Savings Account that will encourage greater savings and investment. The new and flexible account will come into effect next year to encourage savings by Canadians. It will allow investors aged 18 and older to contribute up to an annual maximum of $5,000 (indexed to inflation), with an option to carry forward unused capacity to future years. Although contributions will not be deductible for income tax purposes, the TFSA will serve as a tax shelter on investment income.

While pleased with Ottawa’s support for public transit, the chamber wants more to be done.

He said: “Transportation infrastructure is a top priority of chamber membership. Infrastructure underpins economic growth. In Alberta, a one per cent increase in the stock of municipal infrastructure leads to a 2.4 per cent increase in provincial GDP.”

The chamber is also seeking changes to federal retirement programs to encourage older workers to remain in the labour force. It has long advocated expanding the age range at which people can access their CPP benefits to age 75, eliminating the Old Age Security clawback, and increasing the deadline that RRSPs are converted to RRIFs from 72 to 75.

These federal retirement program amendments could increase the national labour supply by 767,000 or nearly four per cent, and generate over $24 billion in government tax revenues and pension savings, said the chamber.

For Alberta, these changes have the potential to encourage 80,000 additional older Albertans to remain in the labour force right now.

Finally, as present economic uncertainty fades, the chamber wants the government to be bolder with personal income tax cuts by bringing personal tax revenues, as a percentage of GDP, below the OECD average by 2012.

Important steps in this direction include reductions in each of the three highest tax brackets (22, 26, and 29 per cent) and an increase in the basic personal exemption.



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