Canadian Finance Minister Joe Oliver’s announcement Thursday (September 11) of a new Small Business Job Credit which the government says will save small businesses more than $550 million over the next two years, may also be a disincentive to becoming bigger, according to some economists reacting to the announcement.
The job credit will lower small businesses’ Employment Insurance (EI) premiums and according to the Minister “will lower taxes for business owners and make it easier for them to create jobs for Canadians.”
In a press release from the Finance Ministry, Dan Kelly, the President of the Canadian Federation of Independent Business is quoted as saying: “I couldn’t be more pleased to stand beside Finance Minister Oliver as he announces half a billion for small firms in payroll tax cuts—the most harmful form of taxation affecting job creation and employee wages.”
But a number of Canadian economists who discussed the impact of the announcement on Twitter on Thursday suggested a more critical view of the tax credit’s impact.
Angela McEwan an economist for the Canadian Labour Congress wrote:
Yup, @robgillezeau, lots of economists on twitter have noted that small business tax cuts serve to hamper their growth. #cdnecon
— Angella MacEwen (@AMacEwen) September 11, 2014
University of Laval economics professor Stephen Gordon wrote:
From a FinMin study http://t.co/Hn60OM1cJr , here’s how small biz *stay* small for tax reasons: pic.twitter.com/rurl4Non5Q
— Stephen Gordon (@stephenfgordon) September 11, 2014
More information:
Press release – Harper Government Introduces Small Business Job Credit – here
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