Reducing the overall tax paid by small and medium businesses is top of their wish list
Canada’s small businesses want the Canadian government to reduce their overall tax burden so they can pay down debts.
The Canadian Federation of Independent Business (CFIB) polled its members and found that 66% put reducing tax at the top of their wish list, ahead of flexibility around repayment of COVID-19 loans (57%) and reducing red tape (47%).
With the forgivable portion of CEBA coming to an end early in 2024 – after an extension of just 18 days was granted by Ottawa – CFIB says that the cost of doing business is getting worse, especially with a hike in the Employment Insurance rate.
“The surprise hike, despite the promised rate freeze in the most recent federal budget, is another blow to small businesses and is coming at the worst time given all the ongoing cost pressures,” said Jasmin Guenette, VP of National Affairs at CFIB. “This increase in payroll taxes will have a tangible impact not only on employers, but their employees as well, many of whom will see their paycheques go down. We are calling on government to reject the proposed EI increase."
Recent figures from Statistics Canada revealed a third consecutive monthly rise in number of Canadians receiving regular Employment Insurance benefits. The total was up by 25,000 (+6.0%) to 438,000 in July and was the highest monthly rise since May 2021. It was concentrated among core-aged men aged 25 to 54 and women aged 55 and older.
Paying down debt
CFIB research shows that a reduced tax burden would see businesses using the savings to pay down their debt (63%), increase employee compensation such as wages and benefits (56%), or to expand their business by innovating and/or increasing production (46%).
The organization recommends several measures that Ottawa could take to help small businesses:
- Further extend the forgivable CEBA deadline for an additional year to December 2024
- Reject the proposed Employment Insurance (EI) premiums
- Freeze the carbon tax at its current level and find a simple way to return the carbon tax collected from small businesses back to them
- Lower the federal small business tax rate from 9% to 8%, at least for the next two years
- Increase the small business deduction threshold (e.g. to $700,000) and index it to inflation going forward
- Expedite the passing of Bill C-234 to exempt natural gas and propane used for on-farm activities from the carbon tax
- Strengthen competition rules to ensure a level playing field between Canadian small businesses and multinational giants
"Members of Parliament should focus on policies that will help small businesses deal with sky-high costs and give them more leeway to deal with financial pressure, like extending the CEBA forgivable deadline and freezing the carbon tax, the alcohol excise tax and payroll taxes," said Corinne Pohlmann, Executive Vice-President at CFIB. "Now is the time for the federal government to step up and do the right thing by taking some concrete action to help lower costs for small businesses still trying to recover from the impacts of COVID."
