Budget and Corporate Tax Cuts BDO Dunwoody/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication May 2, 2005

Transcription

1 Budget and Corporate Tax Cuts BDO Dunwoody/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication May 2, 2005 COMPAS Inc. Public Opinion and Customer Research April 29, 2005

2 1.0. Introduction This week s web-survey of Canadian CEO s and business leaders is the first study to gauge reaction by the business community to Martin s recent budget deal with the NDP. Respondents strongly disagree with the removal of tax cuts from the budget and are concerned that their elimination will hurt Canada s economy. Business leaders also disagree with most of the spending initiatives announced in the Liberal-NDP deal, which include new spending for the environment, pension protection fund, affordable housing and foreign aid. While Canada s business leaders have tended to be somewhat more conservative than the general population 1, the recent changes to the budget appear to have hurt Martin s popularity among this important voting constituency in three respects: Profound concern for the effects of the tax cut removal on business 71% of business leaders say removing the corporate tax cuts hurts Canada s economy; Martin is losing his image as a Bay Street politician 75% say Prime Minister Martin was never a Bay Street politician with heart (40%) or became less so than he had been as Finance Minister (35%) while only 16% say that he still represents Bay Street today; and There is some indication that the removal of tax cuts may cost votes for Martin among business leaders 34% of respondents say they would vote for Martin if an election were held today as compared with 43% who say they would have voted for Martin before the tax cuts were removed (N.B. margin of error on this study is 8.0%). These are the key findings from this week s online panel of Canadian CEO s and business leaders for publication in the Financial Post under the sponsorship of BDO Dunwoody and the Canadian Chamber of Commerce. 1 See COMPAS weekly business leader study from June 2004: Business panel favoured Conservative majority Government as best for economy and favours Harper s debate performance 2:1 over Martin s. 2

3 2.0. Canada s Business Leader s Disagree with Budget Changes from Liberal-NDP Deal Respondents were asked to rate the extent to which they agreed with the changes made to the Liberal budget to secure NDP support in the House on matters of confidence. As shown in table 1, 76% of respondent disagree with the decision to remove corporate tax cuts from the budget with more than half assigning the strongest disagreement score of 1. As many as 71% of Canadian business leaders say the elimination of corporate tax cuts hurts Canada s economy, as shown in table 2. Half (51%) say the decision will also hurt Martin s chances of re-election. As one CEO explained, The budget essentially did little for developing a strong business environment for investment and jobs. The elimination of the tax cut, which was the only thing there for economic development, means the government is frittering away our economic future for its own survival. The NDP has confirmed my worst fears in terms of not understanding the realities of the global economy. They have just sacrificed jobs of Canadians for political short term gain - if it is that. Several CEO s were troubled by what appeared to them as budget decisions intended to serve narrow or short-term political interests as opposed to the interests of the country and the economy. In their own words: The Liberal party's flip flop for politically expedient motives is abhorrent and makes us a laughing stock in the world s financial community. The cynicism of the Liberals in changing the budget to try and hang on to power is amazing. The old adage remains true: "Absolute Power corrupts absolutely!" We generally think of this in small dictatorships; it is too bad it had to happen in Canada. The recent actions from Prime Minister Martin simply reflect the Liberal mantra "Do anything possible to stay in power". Paul Martin is desperate to hang on to power at any cost. This was a deal with the devil and once again proves the PM has no scruples and that Jack Layton is no better; because he is willing to plop up a corrupt regime. 3

4 Martin's is a government on the run that will do anything to stay in power. Table 1: (Q5) As you may know, Prime Minister Martin announced this week changes to the Liberal budget in order to secure NDP support in the House. Using a 7 point scale where 7 means strongly agree and 1, the opposite, to what extent do you agree with each of the changes MEAN DNK Removing corporate tax cuts $500-million to increase Canadian foreign aid $100-million to set up a pension protection fund $1.6-billion for affordable housing $900-million for the environment $1.5-billion in Provincial transfer payments to reduce University and College tuition fees and help train unemployed workers

5 (Q6) Using a 7 point scale where 7 means strongly agree and 1, the opposite, to what extent do you agree with each of the following statements about Martin s decision to eliminate corporate tax cuts from the budget Eliminating the tax cuts hurts Canada s economy Eliminating the tax cuts hurts Martin s chances of re-election The original tax cuts were too small to have made a difference Eliminating the tax cuts will help postpone an election that the country does not need Eliminating the tax cuts makes sense because the money is better used for social programs MEAN DNK Martin Losing Bay Street Appeal As shown in table 3, few business leaders consider Martin to the Bay Street politician with a heart he was once considered. Only 16% of respondents say this description still holds true today while 35% say it might have been true of Martin while he was Finance Minister but less so today. Meanwhile, 40% say this was never an accurate description of Martin because he was never consistent in his commitment to fostering a strong business climate. 5

6 One respondent who favours Martin as a Bay Street Ambassador is optimistic that the tax cuts are not altogether lost: The cuts that Martin gave up yesterday can be put back into the next budget, provided the Liberals win the next election. Among those who say Martin is a shadow of his former self, one President says: Paul Martin performed well when faced with the single objective of eliminating the deficit. He appears out of his depth trying to govern the country, probably because the Liberals have never had a policy to implement. Those who say Martin was never truly pro-business offered comments in the following vein: Martin was a lousy Finance Minister, with little or no concern for small or medium businesses. Table 3: (Q7) Martin has been characterized as being a politician from Bay Street with a heart. Would you say this description % Was never an accurate description of Martin because he was never consistent in his commitment to fostering a 40 strong business climate Is somewhat true today, although less so than when 35 Martin was Finance Minister Is still true today 16 Don t know/refused Martin Appears to Be Losing Ground Among Business Leaders In response to a clean question, prior to any reference to the removal of corporate tax cuts form the budget, the Liberals are in second place with 34% support among respondents in this business panel, as shown in table 4. When respondents are asked how they would have voted prior to the removal of corporate tax cuts from the budget, the Liberals earn 43% support. Keeping in mind the margin of error for this business 6

7 panel (8%), there does appear to be some loss for Martin among CEO s and business leaders as a result of the Liberal-NDP budget deal. Table 4: (Q1) If a federal election were held today, would you vote for [RANDOMIZE] 2 % The Conservative party led by Stephen Harper 62 The Liberal Party led by Paul Martin 34 The NDP led by Jack Layton 3 The Bloc Quebecois led by Gilles Duceppe 0 [UNPROMPTED] Other 1 [UNPROMPTED] DNK/Undecided/Refused/ Would not vote (excluded from calculation) 4 Table 5: (Q3) Prior to the news that Martin has removed corporate tax cuts from the budget, how would you have voted if an election had been held, would you have voted for [ROTATE] 3 % The Conservative party led by Stephen Harper 54 The Liberal Party led by Paul Martin 43 The NDP led by Jack Layton 2 The Bloc Quebecois led by Gilles Duceppe 0 [UNPROMPTED] Other 0 [UNPROMPTED] DNK/Undecided/Refused/ Would not vote (excluded from calculation) 3 2 Combines initial response plus leaning among respondents who initially offer that they don t know how they would vote. 3 Combines initial response plus leaning among respondents who initially offer that they don t know how they would vote. 7

8 Respondents express frustration over a perceived lack of business support in the budget as well as with frustration over the continued spending sandals, namely Adscam. For some respondents, voting Conservative is voting against continued financial irresponsibility more than it is voting for Harper. The following are comments form respondents in their own words: I just do not believe Martin did not know what was going on in the sponsorship scandal. I would vote for Harper simply because he is the least of the evils. I do not think any of them are qualified to run the country. An election is required, not only because of the Gomery commission, but there is much other misspending of funds by the government. While aid needs to be increased, it needs to be properly managed and directed by Canadians to those most in need. For example, there are millions who are starving, for which CIDA is doing nothing but giving to World Food who are unable to cope. The sponsorship scandal shows that the majority and long lasting government increases the potential of corruption. This scandal should cost the Liberal party for sure. On the other hand, the existing oppositions also do not look too promising for the country. Unless Canadian parties and oppositions particularly start to see the real issue rather than power struggle, there will be no hope of getting out from this mess. We need someone with a strong commitment for accountability for the public s money and strong laws to deter those who mismanage the funds or use the funds for their own purposes. The public is sick and tired of the back door deals that cost us billions, with no return to either the people or economy. Steven Harper has not demonstrated any vision of what he stands for except crass opportunism. His disgusting performance in the last election when he accused his Liberal adversary of supporting child pornography also demonstrates he has absolutely no class. The NDP is...well the NDP. The Bloc is also opportunistic, and it seems that the majority of Quebecers have decided they are fed up with the Liberals. Federal politicians are a sorry sight, and I suspect a lot of 8

9 Canadians, and I am one of them, will say: None of the above when the time comes to cast our vote. God saves Canada from its politicians. We need honest people in the government who truly care about Canada s future. If the citizens of the country wanted the NDP's budget, they would have voted for the NDP. They did not, so I am disgusted that the Prime Minister would make a deal just to save his political hide. Aside from the expense, what is the big problem with having another election now? It is our duty to elect responsible members to Parliament and the Liberals have lost any authority to govern. In the interim, the Liberals are unlikely to accomplish much given their status. Awaiting the final Gomery report is a red herring. Anyone who has followed the hearing and is even half literate could write the report now. We already know what Gomery is likely to say (misuse of funds, lack of checks and balances, corruption, need to recover ill gotten monies, need to prevent future abuses etc.) I am astounded that the Liberals and Paul Martin have ANY support with the electorate. Has the AdScam, HRDC and Gun Control boondoggles made us so cynical that we now view them as 'business as usual'? Canadian voters tolerance for such irresponsible waste of tax dollars makes us look like unschooled buffoons, who can be suckered at will by slick Liberal politicians. I truly believe there should have been an election called. The country has not gained anything by joining forces with the NDP. It does insure the Liberals that they have a longer opportunity to rape the country. Get the rascals out and send the NDP with them At the moment, our government is without leadership. If we do not vote Liberal, are the options any better? It could very well be time to go to another party. What should happen is that Martin should step down and a new leader for the Liberal party should be elected with a mandate to start once and for all: an accountability of how tax dollars are spent. For myself, Martin has lost my support. As financial minister he knew about the scandal and if he did not, he should 9

10 have. Now, to rub shoulders with the NDP is just another step of desperation. Our government is beyond being funny anymore it needs serious repairs. Paul Martin cannot be trusted. He will use the NDP support if given a chance until it is in his best interest to have an election. We will not see the Gomery report before the election because he will say around September, if not defeated before that, that parliament is not working and he must go to the polls. The only way that will not happen is if he continues to fall in the polls. He must go now before he bankrupts the country trying to save the Liberal party. The country needs someone with values and integrity. The biggest knock I have on Martin is that he should have resigned from Chretien's cabinet. He was there when all of the crap was going on and to claim otherwise is an abdication of responsibility, and a pure sign of gutlessness. Before the tax cut reversal, I was closer to voting Liberal than I have ever been. I am truly disgusted by the Gomery revelations, but I really do not know what Stephen Harper stands for and whether he has any vision for the country. It seems to me that his inability to attract the enthusiasm of voters relates directly to: (1) His Bay Street image. Does this man ever wear anything but blue suits? (2) We know he dislikes the Liberals and their policies, but just what does he stand for, other than tax cuts? He needs to tell the electorate why they should vote Conservative, not just that they should reject the Liberals Methodology The National Post/COMPAS web-survey of CEOs and leaders of small, medium, and large corporations and among executives of the local and national Chambers of Commerce was conducted April 27-29, Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. 10

11 Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of 149 are deemed accurate to within approximately 8.0 percentage points 19 times out of 20. The principal and co-investigator on this study are Conrad Winn, Ph.D and Tamara Gottlieb. 11