Canadian business groups expressed their support for Tuesday’s federal budget, but remained concerned with the large deficits proposed.

The Canadian Federation of Independent Business (CFIB) says it believes that the budget will provide a certain stimulus to the economy.

“The number one priority for small business in this budget was to see signs of stability that would build confidence,” says CFIB president Catherine Swift. “There are measures that will benefit Canada’s small business owners but we remain very concerned with giant deficits.”

CFIB was pleased to see the government acknowledge its sector by raising the small business corporate income tax threshold to $500,000 from $400,000. In addition, Swift applauds the targeted reductions in personal income tax, as that has been CFIB’s members’ top tax cut priority. The fact that these reductions are permanent is also very positive. Another top priority of CFIB members was to stabilize Employment Insurance (EI) rates. Freezing EI rates through 2010 was therefore positively received by CFIB. It was also encouraging that EI benefit increases are to be temporary. Capital cost allowance (CCA) measures on technology assets and extension of CCAs for manufacturers is also good news for many businesses.

“The high levels of spending in this budget are worrisome for taxpayers and small business owners,” says Swift, “as it may be the beginning of a trend which could be repeated at other levels of government, reversing in two years what it took a decade to achieve.”

Although CFIB welcomes the introduction of some scrutiny on credit card companies, more needs to be done to promote transparency for both consumers and small business owners.

The Canadian Chamber of Commerce says it welcomes Ottawa’s plan to respond to the global recession.

“Since the meltdown in global financial markets last fall, we have called for a comprehensive strategy to limit the impact of the recession on Canada and to speed recovery. While there are elements that we would have designed differently, the government has consulted extensively and has answered our request to show how it thinks we can get our economy moving again. In the interests of all Canadians, the plan should be given a chance to work,” says Chamber president and CEO Perrin Beatty.

However, the Chamber says that the government’s projections for recovery are more optimistic than most private sector economic forecasts, and it will closely monitor progress to ensure that deficit financing does not become permanent.

“While the next several months will be rough for both families and businesses, and we will watch carefully to ensure that Ottawa does not return to long-term structural deficits, the fact that we now have a clear strategy should help to restore consumer and investor confidence over the medium term. We believe it is an important step forward,” says Beatty.

IE