BC survey of business confidence fell in March
Confidence among B.C.’s small business owners is falling, with the province now eighth in Canada on the measure.A survey released Wednesday by the Canadian Federation of Independent Business concluded that optimism for the province’s small and medium-sized business owners fell a second month in a row to 63.8 on the index scale of 100 in March, from 64.9 in February.Index levels between 65 and 75 are indicative of a growing economy, the CFIB said.
The survey concluded that business confidence levels are below the national average of 67.7, with B.C. ranking eighth among the provinces. In January, B.C. was fourth.The survey noted that 49 per cent of businesses said the state of their businesses is satisfactory, 31 per cent said it’s good, and 19 per cent said it’s bad.Alberta led with a rating of 74.6, followed by Saskatchewan and Manitoba. As well, the survey found, 72 per cent of B.C. employers do not plan to increase full-time employment levels, while just 14 per cent plan to add jobs; and 14 per cent plan cuts.
Fuel and energy costs were cited as the biggest concern, with 64 per cent saying these costs cause difficulties – up from 51 per cent in February – while insufficient domestic demand was cited by 59 per cent.Operating challenges included insufficient domestic demand, a shortage of skilled labour, limited space, and management skills.It’s a basket of issues, said Shachi Kurl, the CFIB’s director of provincial affairs, B.C. and Yukon, who noted the monthly index is a snapshot in time. “Obviously costs are rising [and] the cost of business is going up.”
Kurl said hydro rates are on the rise, as are prices at the gas pump.
She also cited ongoing cost pressures including minimum wage increases, carbon tax increases, MSP premium increases, ferry fares, and looming costs associated with the implementation of Family Day and the transition back to PST.All of these costs would at the very least pose a challenge to small business owners – at worst they are a major stressor.Meanwhile, Sage, which provides business management software and services to over 6 million small and medium-sized businesses worldwide, released a survey this week that said Canadian businesses have increased confidence about their prospects for the next six months.
The survey, which did not have a provincial breakdown, concluded that Canadian businesses were more confident than their counterparts in the U.S., U.K., and the rest of Europe, but that Canadian businesses are more pessimistic about the global economy. “A majority of Canadian businesses surveyed (70 per cent) reported revenue either staying the same or increasing over the past six months,” the survey concluded. Only 19 per cent of respondents reported revenue decreasing over that same period.
Business Thinking Scotland and Northern Ireland Vets winner Now
Vets Now has been chosen as a regional winner for Scotland and Northern Ireland in the HSBC Business Thinking initiative. Following its nomination as a Scotland and Northern Ireland regional finalist and Thought Exchange visit to Paris Vets Now has been declared a regional winner in the HSBC Business Thinking initiative.
In just 10 years, Vets Now has built the largest national UK network of out-of-hours veterinary petcare providers.Now the company’s founder Richard Dixon wants to develop the business further, expanding its network of ?ve specialist referral centres and venturing abroad for the ?rst time.
Mr Dixon says the Scotland and Northern Ireland Business Thinking award of lending of up to £6m and a ?nancial reward of up to £120,000 will help fund this growth.We’re all absolutely thrilled,” he said. We knew the competition was intense and the more we learnt about the competitors, the more we realised how fabulous some of these businesses are. We feel very fortunate to have come out on top.
Financial experts say speculators are behind high oil prices and gasoline
Financial speculators are gambling on oil the same way they gambled on the housing market a few years ago — a frightening prospect for the fragile economy, a Democratic congressional committee was told Wednesday.It is similar to the gambling Wall Street did on whether or not people would pay their subprime (below-market rate) mortgages in the mortgage meltdown,” said Michael Greenberger, a law professor at the University of Maryland and a former federal regulator of financial markets. “Now they are betting on the upward direction of the price of oil.”
The housing industry collapse helped trigger the deep recession that began in late 2007 and whose effects are still felt today.The economy is slowly recovering, Greenberger said, but it could come to a halt unless oil prices come down. Gene Guilford, president of the Independent Connecticut Petroleum Association, told lawmakers that the recent oil price run-up has cost consumers an additional $10 billion a month since mid-December.
The House of Representatives’ Democratic Steering and Policy Committee, which consists of party leaders, called the hearing to spotlight Democratic efforts to promote lower oil and gasoline prices. No Republicans were present.Today’s routine $4-and-higher prices for a gallon of gasoline have nothing to do with conventional supply-and-demand forces, Greenberger said. He formerly directed regulation of market trading in futures contracts and derivatives for the Commodities Futures Trading Commission.It is excessive speculation, which is a fancy word for saying that gamblers wearing Wall Street suits have taken these markets over,” he said.
Financial speculators such as investment banks and hedge funds account for at least 65 percent of purchases of contracts for future oil deliveries, more than twice their traditional share, while buyers who intend to actually take delivery of the oil and use it, such as airlines, make up only about one-third of demand. The speculators bid up contract prices, sending oil and gasoline prices higher and reaping them huge profits. The bidding is stoked by fear of possible violence in oil-producing countries, notably Iran.
Congress has tried to pressure the Commodity Futures Trading Commission to put limits on how many contracts anyone can buy, but financial interests have stymied CFTC efforts in federal court.Greenberger suggested several remedies, including a strong Justice Department probe. He said the threat of a serious investigation can be enough to intimidate speculators.If there is a real investigation, just the appearance of it will cause these cockroaches to scatter,” he said, “because the light will be turned on.
The Energy Information Administration said Wednesday that U.S. crude oil inventories “are above the upper limit of the average range for this time of year.” Total motor gasoline inventories also remain in the upper limit of the average range. Both were as of March 30. That means supplies are plentiful; there’s no shortage pressure driving prices up.The EIA, the statistical arm of the Energy Department, also said that total products supplied over the last four-week period have averaged about 18.2 million barrels per day, down by 4.7 percent compared with the similar period last year. Similarly, over the last four weeks, motor gasoline product supplied has averaged nearly 8.6 million barrels per day, down by 3.8 percent from the same period last year.
That inventories are up and products supplied are down suggests that producers are stockpiling supplies on concern that prices could go even higher, when they could earn a premium, even as demand for oil and its derivative products such as gasoline is actually down. Inventories are often built up ahead of the summer driving season.The benchmark U.S. oil price fell Wednesday to $101.47 in New York, its lowest level since mid-February, but still well above where analysts believe it should be with supplies up and demand down.
Flirting with Islamic finance Sharia law bans both interest and speculative trading
With Egyptian newspaper headlines signalling Islamists’ increasing hold on politics, the economy pages are regularly filled with information on all kinds of investment products that adhere to Islamic principles. Sharia law bans both interest and speculative trading.The Egyptian media echoes the social transformation that is currently underway. Ikram El-Sayed, a 62-year-old housewife, said she is transferring all her savings to Islamic banks, after spending the past 15 years unwillingly investing her money in interest-bearing investment certificates. She feels good making this change, and blames recent life failures on having made investments she considered religiously prohibited. “The certificates’ yield that I get every six months is never blessed, as most of it was spent over the years on my late husband’s treatment for cancer, as well as on a failed private business for my only son.
El-Sayed said she hates usury. But as her relatives had told her that even Islamic banks in Egypt did not apply Sharia law completely, she and her husband had decided to invest the savings they had made from working in the Gulf in conventional banks. But now, “with Islamists rising to power, banks will strictly abide by Sharia, and I will be sure that my money is 100 per cent halal,” or Sharia-compliant.Banks and other financial institutions have already started to feel the new market beat. Egypt currently has two fully-fledged Islamic banks — namely Faisal Islamic Bank and El-Baraka Bank. Another handful of banks are applying for licences to open branches for Islamic transactions. They include Ahli United Bank, Audi Bank and the Bank of Alexandria. Moreover, the Central Bank of Egypt (CBE) is planning on setting up a new unit specialised in monitoring Islamic banks.
Participants in a recent conference on Islamic finance in Egypt expected the market share of Islamic banks to increase from the current four to 20 per cent of overall banking.And in February, the Egyptian Financial Supervisory Authority (EFSA) amended the capital market law to accommodate the issuance of Islamic bonds, or sukuk. Islamic investment funds have achieved the highest yield since the beginning of the year, exceeding 30 per cent in some cases. Starting mid-2011, Egypt added three new Islamic funds to raise the overall number to 11 out of the 60 currently working in Egypt. There is also a keen interest in Egypt for Islamic insurance, or takaful, which currently makes up five per cent of Egypt’s $1.45 billion insurance market. This area is expected to grow dramatically, according to a March report by Islamic consultancy BMB Islamic.
Further, Islamic finance has been gaining much popularity worldwide since the 2008 financial crisis exploded on the back of virtual transactions. Such transactions were based on derivatives and securitisation, both of which are banned by Islamic law and cost the world billions of dollars. Experts believe that one key factor in the expansion of Islamic finance is the fact that it can attract savings by Egyptians working in Islamic Gulf countries, as well as millions of Muslims worldwide.In a post-Mubarak era, the urgency of rebuilding and changing things will clash with the absence of resources and lack of money,” Ibrahim Warde, adjunct professor at the Fletcher School of Diplomacy at Tufts University recently told Reuters news agency. “Egypt is going to look towards the Gulf for money, and it’s going to have to offer Islamic options to maximise investments,” he added.
The National Bank for Development, which is currently transferring all its activities to become Sharia-compliant, is owned by the Abu Dhabi Islamic Bank. And the fully Sharia-compliant bank Al-Baraka Misr is entirely owned by the Bahraini Baraka Bank. According to data from Thomson Reuters, Egypt could see Islamic finance assets grow to $10 billion in 2013, from $6 billion in 2007.Still, the road ahead is full of challenges. Investment expert Hani Tawfiq said the new trend shows that the market is flirting with the Islamists who are now in power, by trying to offer products that might appease them. However, this interest will soon fade when profit and loss calculations prove that the market still lacks much- needed infrastructure.
Even if there is a demand on anything dubbed Islamic in a religiously sensitive society like Egypt, the market still lacks products that can accommodate the demand,” said Tawfiq.Sukuk is a good example of this. Tawfiq explained that it is a growing industry worldwide, but that it depends on sharing profit and loss. And as most Egyptian individual investors have small savings and are looking for a regular income, investing in sukuk could be risky unless they are used to finance projects with definitive revenues. Such projects might include drilling and oil exploration operations of oil wells with large proven reserves. Such projects are few in the Egyptian market,” he said.
Seeking halal investments in the stock market through Islamic funds, for example, is extremely difficult, according to Tawfiq. This is because investors have to exclude companies working in industries that are not permitted in Islam, such as tobacco, alcohol and gambling. Moreover, some Islamic funds only invest in companies with a maximum of 30 per cent of their assets financed by interest-bearing debt. “You can hardly find good companies to invest in after all those filters,” the expert said.For many years, Egyptians have had reservations against Islamic finance, after firms like Al-Rayan and Al-Saad stripped thousands of Egyptians of millions of pounds in Ponzi schemes in the mid-1980s.
That is one reason why Islamic finance witnessed very slow growth in Egypt, despite the fact that this was among the first countries that embraced Islamic finance. Islamic banking has yet to become a real success here. No new licences are being given out to set up new banks, while there are no incentives whatsoever to encourage banks to open branches for Islamic transactions. They even used to operate under the same regulations that traditional banks are governed with, according to May El-Haggar, deputy head of research and banking analyst at Al-Naeem Brokerage. She also pointed out that demand on Islamic banking products is so far limited. “On the corporate level, what really matters is getting the best terms for credit finance, be it Sharia-compliant or not.”
This leaves us with individual bank customers, whose main aim would be to get interest-free loans to buy a car or a house, or obtain a halal credit card. They are likely to be disappointed by the limited available options on these retail services. In fact, retail services in Egyptian banks, Islamic or not, are still very underdeveloped.El-Haggar added that she talked to senior officials in several top banks, who said they are not considering applying for a licence to offer Sharia-compliant products. Their economic feasibility in Egypt today, they say, is not particularly high.
Business tax breaks underneath state’s microscope
in his ongoing explore for new tax revenue to assist shut huge projected budget gaps, has caught up changes within the Illinois tax code that might eliminate pricey giveaways.In his budget speech last month, Quinn identified one specific tax break that permits oil and gas firms to shelter income earned in Illinois from offshore production. however he created it clear that he desires to spot others that are outdated or not effective in making jobs or economic growth.If history is any guide, identical breaks budget consultants have targeted for years are probably to resurface.
One concession for retailers prices Illinois $109 million within the 2010 fiscal year. to hide their administrative prices, retailers keep one.75 p.c of the sales tax revenue they collect from customers on behalf of the state.The Chicago-based Center for Tax and Budget Accountability caught up its reduction in 2007 as a result of the cluster said it’s outlived its purpose. A bill introduced in 2009 to eliminate the reimbursement died in committee. Ralph Martire, govt director of the budget watchdog, said lawmakers ought to once more take into account reducing the retailer discount.We rarely review tax expenditures and that is poor public policy, Martire said. “There ought to be a method in place where the state features a smart handle whether or not or not of these tax expenditures are in truth legitimately serving the general public purpose they’re speculated to be funding.”
Quinn declined to talk concerning the rebate given to retailers or different potential tax reforms as a result of budget discussions have simply begun with legislative leaders. in an exceedingly statement Friday, Brooke Anderson, a spokeswoman for Quinn, said: we have a tendency to believe that closing loopholes, particularly in these troublesome economic times, ought to be a priority and it’s our intention to travel once these inefficient loopholes and use the ensuing revenue to pay down the backlog of bills, offer targeted tax cuts for families and businesses, and facilitate our faculties.But there doesn’t seem to be abundant political can to require away special concessions for business, particularly in an election year, once the final Assembly voted last year to extend company and individual income taxes. Lawmakers are sensitive to the state’s business climate once firms threatened to go away Illinois owing to the tax increase.
Loopholes may be a pretty generic term, that may embody plenty of various things, said Rep. John Bradley, D-Marion, chairman of the House Revenue Committee. “Depending on the person, they see a particular tax credit or tax deduction as a loophole and others do not. there’s simply plenty of labor that has to be done on the difficulty.Legislative leaders held public hearings last year to contemplate changing the manner the state collects income taxes from businesses.In 1998, then-Gov. Jim Edgar and legislative leaders agreed to a restructuring of the company income tax that restricted the tax to profit stemming from in-state sales and eliminated property worth and payroll size from the formula.
State revenue officers estimated at the time that the new formula would quantity to a company tax break of concerning $60 million a year. the majority of the savings would visit Illinois’ largest firms, like Caterpillar Inc. and Motorola Inc. Tribune Co., that owns the Chicago Tribune, stood to avoid wasting concerning $1 million a year. Tribune Co. additionally edges from a sales tax exemption for materials utilized in news production.
The Illinois makers Association and different proponents sold the reduced tax liability as an economic development incentive that might produce as several as 285,000 jobs. Instead, the world shrank to fewer than 600,000 jobs, down from over 800,000 when the legislation took result.It’s a giveaway that hasn’t paid off,said Michael Mazerov, an professional in state taxation.Mark Denzler, vice chairman of the makers association, said producing losses don’t seem to be distinctive to Illinois and would are worse while not the tax amendment. “This has been a positive for the state of Illinois and job creators here,” he said.
But the sales-based formula raised taxes for a few out-of-state firms, said Mazerov, a senior fellow at the middle on Budget and Policy Priorities, a Washington analysis organization that focuses on how tax policies have an effect on the poor. He instructed that Illinois ought to come back to the pre-1998 formula, that took under consideration property and payroll, as a result of it additional accurately represents a corporation’s activities within the state than sales alone. concerning 1/2 forty five states that collect company income tax use a formula based mostly on sales alone.Former Gov. Rod Blagojevich in 2007 raised the thought of returning to the previous formula, however his set up met resistance from powerful Illinois business interests.
The corporate income tax raised $1.65 billion in fiscal 2010, or 6.7 p.c of the state’s total receipts. the rise within the company income tax rate from four.8 p.c to seven p.c is predicted to boost an extra $917 million in fiscal 2012, in step with state estimates.Because of the state’s monetary crisis, Quinn and legislators said that they had no selection however to boost taxes on residents and business. however Martire and others say it is time to overhaul the state’s tax system, together with company tax liability, before most of the tax increase expires once 2014.
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