Crushing taxes holding back Canadian small business, CFIB warns
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OTTAWA — Seven per cent.
That’s how many Canadian small businesses plan to grow or diversify over the next year, thanks to crushing taxes and affordability issues, according to a recent study released by the Canadian Federation of Independent Business (CFIB).
“Every dollar Ottawa takes in small business taxes is a dollar that doesn’t go toward an employee raise, a new hire, or new equipment,” said federation national affairs vice-president Jasmin Guénette.
“Entrepreneurs know where the money will do the most good, and time and time again they tell us it goes straight back into their people and their businesses. The upcoming budget is an opportunity for the government to be bold and send a clear message to Main Street that Canada is the best place to start, run and grow a business. That starts with fixing our tax system so that it works for small businesses.”
Make tax cuts a priority, CFIB demands
According to the study, one-third, or 31%, of small businesses blame costs and economic pressures for their lack of growth, while over half (59%) of those blame Canada’s untenable tax burden as the biggest barrier preventing expansion.
“When small business owners are telling you they’re stuck in neutral and it’s taxes that are the number one thing standing between them and growth, it’s time to listen,” said Corinne Pohlmann, the federation’s executive vice-president of advocacy.
“Small firms have been crystal clear that they would rather see government reduce taxes than announce programs and grants that only target a small pool of applicants. The best way to invest in Canada’s small businesses is for government to get out of the way.”
Cutting tax rates for small businesses, she said, needs to be the government’s top priority in the upcoming fall budget.
Ball’s in Finance Minister’s court
Indeed — with budget time fast approaching, the House Finance Committee tabled its pre-budget report in the House of Commons late last month.
That report, compiled from 1,351 policy briefs and the testimony of 90 witnesses, will be used by the Finance Minister as an advisory brief on various spending and policy priorities.
Among those recommendations include calls to reduce Canada’s small business tax rate, which currently sits at 9%, as well as increasing small business deductions from $500,000 to at least $700,000 indexed against inflation, and launching a comprehensive review of corporate tax frameworks to simplify compliance, streamline tax rules and ensure small business competitiveness.
But whether those measures end up in this fall’s budget book is up to the Finance Minister — and the CFIB is calling on the government to make sure small business owners get a break.
Demands being made by the federation include reducing small business tax rates from 9% to 6%, increasing the GST/HST threshold from $30,000 to an inflation-indexed $60,000 and tax-exempting capital gains obtained through the sale of a business.
The CFIB’s study concludes that if the recommended measures were enacted, 58% of small businesses would increase employee wages, while 48% said they’d pay down debt, and 47% would expand their businesses.