OTTAWA - John Chretien's final budget includes good news for small businesses. While these measures look favourable for Canadian entrepreneurs, critics question the spending.

The Canadian Chamber of Commerce offered a mixed review. They applauded the pro-business measures that include commitments to phase out the capital tax, increase RSP levels, include the resource sector in corporate tax reductions, reform the EI program and cut the Air Security Tax. However, they expressed disappointed that the government has not done enough to reallocate funds from programs that have already served their purpose to new spending priorities.

"Canadians are left with year-over- year spending increases that are greater than the rate of growth in the economy and could jeopardize our economic prosperity in the long-term, " said Nancy Hughes Anthony, President and CEO of the Canadian Chamber of Commerce.

Among the provisions is a $70 million commitment to the National Research Council (NRC). The spending means that the Industrial Research Assistance Program (IRAP) will continue. Prior to the budget IRAP, one of the few grants programs aimed at entrepreneurs, it was rumoured that the program was being considered for elimination.

"The surprise of the budget was the emphasis on the whole budget on how to promote entrepreneurship and innovation in Canada," says Andre Piche, Director of National Affairs with the Canadian Federation of Independent Business. "Many of the measures that were included in the budget reflect that."

Among the measures that Piche is talking about were:

• The deduction limit will rise from $200,000 to $300,000 over a four-year period. Piche estimates that by the time this initiative is complete it will save small businesses $9,000 a year.
• Elimination of the federal capital tax over five years.
• Reducing the corporate tax rate to 21 per cent over the next five years.
• Reductions in Employment Insurance to $1.98 per $100 in earnings for employees, with a promise to review the program for new rate setting.

Additional spending that is expected to help small business includes:

• The Business Development Bank of Canada will receive $190 million in equity to offer more venture capital funding to businesses.
• Aboriginal Business Canada will get at $20 million boost to increase entrepreneurship and business development in the sector.
• The $41 million being spend on attracting and hiring skilled immigrants could help to alleviate the labour shortage.

A complete version of Budget 2003 is available at the Department of Finance website: http://www.fin.gc.ca/budtoce/2003/budliste.htm.

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