What to Do About the Federal Surplus: CIBC/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication June 3, 2002

Transcription

1 What to Do About the Federal Surplus: CIBC/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication June 3, 2002 COMPAS Inc. Public Opinion and Customer Research

2 Introduction Business leaders as a whole want the surplus allocated in roughly equal proportion among debt repayment, tax cuts, military-security, and health. Despite this shared, overall view, a passionate minority nonetheless opposes allocating any of the surplus to military-security or tax cuts. Expressed another way, debt paydown and increased health spending elicit a moderate level of consensual enthusiasm. By contrast, military-security spending and tax cuts provoke a division between a staunch majority favouring more military-security spending and increased tax cuts on the one hand and a staunch minority opposing both, on the other. To the extent that business people do not share a common outlook on how the surplus should be allocated, this poses a governance problem for the federal cabinet. With respect to tax cuts, it appears as if there may be a growing appetite for acrossthe-board personal cuts at the expense of other kinds of tax reductions. However, it is possible that the appetite for personal cuts is seasonal, affected by the fact that the survey is conducted during the time of year devoted to submission of personal tax returns. These are the key findings from the current web-survey of CEOs and other business leaders conducted by COMPAS on behalf of the National Post under sponsorship of the Canadian Chamber of Commerce and CIBC. Spending the Surplus Targeting the Surplus Money Debt Repayment, Tax Cuts, Military-Security, and Health Business leaders were asked once again how the sizeable federal surplus ought to be allocated. Repayment of the national debt, cuts in taxes as a whole, military and domestic security in combination, and health transfers to the provinces receive almost equal attention though debt repayment is at the top, as shown in table 1. Business opinion is relatively stable with the possible exception of a slight, apparent increase in the desire for debt pay-down compared to last November. One respondent captured the group s concern about debt in the following words: The more we pay down the national debt, which in turn decrease our interest payments, the more money we have for essential social programs. The debt is a tight noose around our necks. 1

3 Table 1: Approximately what percentage of any NEW money, if any, should go to each of the following [ROTATE] Nov 12, 2001 June 3, 2002 Paying down the national debt Health transfer payments to the provinces Cutting personal income taxes Military preparedness Home security including border and immigration controls and domestic preparedness against potential terror Cutting corporate taxes 8 10 Innovation policy one billion dollars on high speed 7 NA Internet access in small town/rural Canada and supplementary monies for university technology research COMPOSITE CALCULATION: Total tax cuts i.e cutting corporate taxes + cutting personal income taxes COMPOSITE CALCULATION: Total physical security i.e. military preparedness + home security Note: Respondents were not prompted with the innovation policy response category in the June 3, 2002 survey. Minority Resistance to Tax Cuts and Military-Security COMPAS reported, above, the average sense about whether the surplus should be directed, but average opinions can obscure passionate minority opinion. To capture such minority opinion, we also asked, as we have done before, where the surplus should NOT be directed. In the previous wave of web-interviewing, the idea of substantial spending on innovation policy, including a commitment to the rural Internet, elicited immense opposition. In this wave, innovation policy was no longer an option within the question. In its absence, spending on military-security and tax cuts rose to the fore 32% opposing an allocation of the surplus to military-security preparedness and 23% to tax cuts. To the extent that business leaders are divided between a majority staunchly favouring tax cuts and more military-security spending and a minority staunchly opposing both, the federal government is confronted with a serious and possibly unattainable challenge of pleasing the business community. 2

4 Table 2: As you know, the federal government may have a surplus of several billion dollars. Where should the federal government definitely NOT devote any new money (choose one answer) [ROTATE] Nov 12, 2001 June 3, 2002 Military preparedness 8 18 Home security including border and immigration 3 14 controls and domestic preparedness against potential terror Cutting corporate taxes Health transfer payments to the provinces 7 9 Cutting personal income taxes 7 9 Paying down the national debt 10 5 Innovation policy one billion dollars on high speed 47 NA** Internet access in small town/rural Canada and supplementary monies for university technology research UNPROMPTED: Advertising/public relations for NA 5 Liberal government/patronage UNPROMPTED: New programs/new social programs NA 4 UNPROMPTED: Government grants/sponsorship NA 4 programs/business incentives UNPROMPTED: Arts and culture/cultural industries NA 3 UNPROMPTED: HRDC NA 2 UNPROMPTED: Aboriginal affairs NA 2 UNPROMPTED: Foreign aid NA 1 UNPROMPTED: None NA 2 Other NA* 2 DNK/Refused NA 7 COMPOSITE CALCULATION: Total tax cuts i.e cutting corporate taxes + cutting personal income taxes COMPOSITE CALCULATION: Total physical security i.e. military preparedness + home security * Note: Respondents were not given the option to volunteer replies other than the prompted categories in the November 12, 2001 survey. Respondents were allowed to volunteer an other response in the June 3, 2002 survey. ** Note: Respondents were not prompted with the innovation policy response category in the June 3, 2002 survey. 3

5 In addition to these major categories where surplus monies should not be directed, respondents volunteer a wide variety of their own spontaneous thoughts, for example, that new discretionary money should not be directed toward new government programs (4%), aboriginal affairs (2%), HRDC (2%), and foreign aid (1%). In the present climate of mediated suspicion of self-dealing by federal cabinet ministers, a minority of respondents volunteered that the federal government should not devote surplus money in ways intended primarily for the promotion of the Liberal party (5%). Individual respondents specifically mentioned: Grants to advertising agencies to promote the Liberal Party No more promotional boondoggles! Advertising/public relations Giving themselves a raise Advertising contracts and sponsorship programs. What Kinds of Tax Cuts Personal Across-the-Board Cuts Above All To the extent that tax cuts take up a part of the surplus, respondents were asked to make allocations among various types of cuts. As shown in table 3, across-the-board personal tax cuts elicit the most support (38% compared to second-ranking GST (28%). Furthermore, support for across-the-board tax cuts may be on the rise 38% today compared to 30% in December, Table 3: If you had to choose, which of the following type of tax cuts would be best for the economy? [ROTATE] Dec 10, 2001 June 3, 2002 Corporate tax cuts for all types of companies Corporate tax cuts for large companies 1 2 Corporate tax cuts for small companies 9 3 Personal income tax cuts across the board Personal income tax cuts for individuals earning less 7 6 than $ 40,000 p.a. Personal income tax cuts for families earning less than 11 7 $60,000 p.a. GST and sales tax cuts DNK/Refused 2 1 4

6 Respondents volunteered the following comments: Decreasing GST and sales taxes, even slightly, gives a strong signal and increases disposable income (marginally). What the taxpayer is annoyed about is the waste and lack of ethics the government is displaying. Sales taxes are a regressive tax. An individual or corporation can only purchase so many material items. The best possible and equitable solution, giving the government control of where the excess monies are allocated, would be to reduce the GST. We can be proud of our Canadian heritage by spreading the wealth this way. The highest tax rates are too high and unfair. 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 May 27-29, Because medium and small companies are more numerous in the economy and hence among Chamber membership, actual respondents are drawn more from these strata than from the stratum of the largest companies. 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 n=184 are deemed accurate to within approximately 7 percentage points 19 times out of 20. The principal and co-investigators on this study are Conrad Winn Ph.D. and Robert Laufer. 5