Ernst & Young LLP

Ernst & Young LLP

March 27, 2013 09:30 ET

43% of Canadian Business Community Rate Federal Budget a "B" or Higher: Ernst & Young Survey

Respondents split on effectiveness of measures introduced

TORONTO, ONTARIO--(Marketwire - March 27, 2013) - While 43% of Canadian business people surveyed rated last week's Federal budget a "B" or higher overall, respondents were generally split down the middle on the specific measures it entailed, Ernst & Young finds. That said, 57% ranked this year's budget a "C" or worse.

"Not unlike the Canadian political scene itself, the response to the budget was somewhat polarized," says Gary Zed, Tax Markets Leader, Ernst & Young. "The business community seems particularly divided on whether this budget will stimulate jobs and growth or the economy overall - which we know was a major focus for the government this time around."

For example, 44% said they believe the budget would stimulate jobs and growth moderately, with a further 1% saying they believed it would provide a strong stimulus. That's in contrast to the 46% who did not think the measures introduced would drive results in these still-struggling areas.

Respondents were similarly split on whether the budget struck the right balance between stimulating the economy and reducing government expenditures. While 36% agreed that it did (and a further 6% strongly agreed), 38% disagreed (and 13% strongly disagreed).

"That divergence in opinion was clear on the business investment front, too," added Fred O'Riordan, National Tax Advisor who also heads up Ernst & Young's economic analysis and analytical services practice. "Forty-five percent of respondents said the budget would stimulate business investment from their company's perspective, while an almost equal 46% said it would not."

In contrast, respondents were much more aligned in their views on whether the federal budget deficit will be eliminated by 2015, as projected in this budget. While 32% thought it likely or highly likely, a whopping 67% thought it unlikely, or highly unlikely. They were similarly vocal in their agreement that the recent federal budget trend toward lower corporate tax rates to provide an internationally competitive tax environment was good economic policy (75% agreed or strongly agreed; only 23% disagreed or strongly disagreed).

The Ernst & Young National Survey polled individuals, primarily from the business community, between March 21 and March 25. Additional survey highlights include:

  • Fifty-four percent agreed targeted tax relief and economic incentives to support specific industries were good economic policy (40% disagreed)
  • Public debt management emerged as the most pressing policy priority not adequately addressed by this budget (25%, followed by productivity/innovation and tax reform, 16% each respectively)

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