Survey Says: Tax Policy a Factor in Where 88% of Businesses Locate, Invest
For better or worse, Connecticut’s tax policy is a significant factor in businesses’ decisions to invest and locate here. That’s according to fourth-quarter results of CBIA’s Economic & Credit Availability Survey, conducted in collaboration with Farmington Bank and DataCore Partners LLC.
The question of the quarter asked, “How important is the state’s tax policy, both business and individual, in your company’s investment and location decisions?”
Sixty-one percent of respondents said it was very important, and another 27% characterized it as somewhat important.
Most businesses surveyed (57%) made capital investments in the fourth quarter of 2014, 34% used financing to meet their credit needs, and 15% said credit availability was a problem.
Other key findings:
- 39% of businesses surveyed expect their company performance to improve, up four percentage points over the previous quarter (35%).
- Fewer businesses in the fourth quarter expected their performance to erode (12%) compared to the previous quarter (18%).
- Similarly, expectations for growing their workforce were more optimistic in the fourth quarter (28% of companies anticipating some improvement, versus 25% in the third quarter). Whereas 16% had negative expectations for the size of their workforce in the previous quarter, this quarter it was 11%.
- Nearly half of the companies surveyed (48%) expect conditions for their firm to remain stable, and 62% expect their workforce to remain stable.
- Credit conditions showed slight improvement over the previous quarter: 30% of businesses characterize the lending climate as good or excellent, 50% call it average, 16% consider it fair, and 5% say it’s poor. (In the previous quarter, 13% of respondents said credit conditions were poor.)
- Expectations for the next three months remain unchanged: 29% believe Connecticut’s lending climate will improve, 21% anticipate a decline, and half expect things to stay the same.
- Bank loans and lines of credit are by far the most common type of financing used by businesses surveyed (81%), with vendor credit and credit cards a distant second and third (22% and 20% of businesses, respectively).
- Working capital for day-to-day operations is the greatest need (identified by 35% of respondents), followed by capital for machinery and equipment purchases (19%).
The majority of respondents (75%) were small companies employing fewer than 50 people. Half were either manufacturers or business/professional service providers.
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