As a number of small business owners are not yet certain on their market’s level of purchasing power for the upcoming year, some of them have just decided to delay their plans for the upcoming year.
One big thing that caused the decision of these small business owners was the heated arguments in Congress as to whether it would extend the payroll tax holiday that is supposed to end this year.
Last December 20, the House disapproved a Senate stop-gap bill requesting to extend a federal 2 percent payroll tax cut for two months and to continue long-term unemployment benefits. However, immediately after this, House Speaker John Boehner summoned a conference committee to further ponder the measure even though the Senate would be leaving for the holidays and the House of Democrats have not appointed any of the conference members yet.
If the House does not look for a compromise to compensate the lifted payroll tax cut, there would be a tax increase for 160 million workers this coming year. If this happens, economists predict that the country’s rate of consumer spending would slide down.
James Gillula, managing director of consulting services at IHS Global Insight, said that if the tax increase would be materialized, there would be an estimated decrease of 0.1 percent in the disposable income of the people, and this would further reduce the growth rate of the county’s consumer spending.
Since franchise businesses like fast food chains greatly depend on consumer spending, the International Franchise Association (IFA) has expressed its sentiment to extend the payroll tax cut. Last December 20, IFA warned the Senate and the Congress that the making of 168,000 new jobs for the franchise business in 2012, will not be longer feasible if the payroll tax cut would not be extended.
Aziz Hashim, owner some Popeye’s and Domino’s franchises across the country, shared that his business may slow down next year as a result of high prices of merchandise, higher minimum wages in selected states and less consumer spending.
Tom Kemper, president of Dolphin Blue, an office supply company based in Dallas, is disappointed with the Congress for turning an environmental issue into an economic one. Kemper was pertaining to the review of the Keystone XL oil pipeline, which was rolled with the payroll tax cut extension.
To give lawmakers time to draft new proposals to solve the problem, the Senate planned to extend the holiday tax cut for two months. However, a number of business owners said that two-month extension period is not enough for them to plan their business’ operations for the coming year.
For instance, Gary Desilets, president of Deckscapes of Virginia in Manassas, asked the authority on how he could plan his business with such a short-term economic policy.