The Investment Industry Association of Canada is urging the Trudeau government cut back on spending, as the feds push ahead with helping small businesses gain better access to capital.

In a letter, the IIAC’s Ian Russell says the federal government should spur business investment through targeted incentives and exploring infrastructure financing through public-private partnerships.

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“Efforts should be made to rein in spending and improve efficiencies in government activities to reduce and eliminate deficits, and [to] regain the fiscal flexibility to tackle concerns crucial to Canada’s long-term competitiveness, such as lowering marginal personal income tax rates,” the letter says.

The IIAC, which submitted its federal budget recommendations earlier this month, has also been calling for changes to the RRSP regime. Russell notes: “Group RRSPs should be given the same tax treatment as defined benefit pension plans, namely relieving employers’ and employees’ contributions to Group RRSPs from payroll taxes to encourage small business to offer these pension plans to their employees and to boost savings for individuals using these plans.”

The parliamentary finance committee has been receiving position papers from stakeholders and lobby groups in advance of the 2017 budget. The 2016 budget introduced new infrastructure spending and tax measures intended to spur growth, financed with a $29.4 billion deficit this year.

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Russell says the government should “return to budget balance at the earliest opportunity.” He also calls for incentives for small businesses with 100 employees or less because these businesses account for “the lion’s share” of jobs.

The IIAC says the federal government’s Venture Capital Action Plan and its new Labour Sponsored Venture Capital Corporation tax credit will incrementally stimulate the flow of equity capital to small businesses, as would the BoC’s proposal for an equivalent to the U.K. Business Growth Fund–through which banks would offer equity and debt financing to small businesses.

But overall, equity capital flows to small business would be relatively small through these programs, the IIAC says. It has called on the federal government for “targeted incentives to assist small and mid-sized businesses attract equity capital to finance start-ups and expansion.”

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