2019 will ring in new tax burdens for small-business owners and their employees, the federation warns
With owners and employees of small businesses facing a deepening affordability crisis, the Canadian Federation of Independent Businesses (CFIB) has urged Canada’s finance ministers to delay and reject a host of new tax measures scheduled to take effect next year.
In a statement addressed to the ministers, the CFIB noted that CPP premiums are scheduled to rise for five years starting on January 1 for all Canadians (seven years for those earning over $56,000), which will reduce the take-home pay and of employees and the payroll budgets of business owners.
Saskatchewan, Manitoba, Ontario, and New Brunswick will also be hit with federal carbon taxes this spring, with yearly increases scheduled planned from 2020 until 2022. And starting in 2019, many family businesses must consider the significantly higher corporate taxes to be imposed on passive investment income above $50,000 per year.
“We're on the precipice of an affordability crisis for small businesses," said CFIB president Dan Kelly. “In fact, 84 per cent of small businesses in the four affected provinces say they can't afford the federal carbon tax announced last month on top of the CPP increases starting on January 1, 2019. “
Kelly also noted the difficulties small-business owners will face in saving for retirement, economic uncertainty, and equipment upgrades because of the incoming passive-investment rules.
In surveying business owners from Ontario, Saskatchewan, Manitoba, and New Brunswick, CFIB also found that 87% of respondents were against the federal carbon tax plan, including many who otherwise agree with the principle of carbon taxation in general.
Furthermore, four out of five of the business owners surveyed said the current plan to allocate 90% of carbon tax rebates to consumers is unfair, and 88% wanted their respective provincial governments to either pull support for the CPP expansion (47%) or reconsider the timing and size of the increase (41%).
“While CFIB supports the federal government's decisions to introduce accelerated depreciation, drop the small business tax rate to nine per cent and reduce EI premiums, the tax increases will eclipse any savings for most firms," Kelly said.
On Sunday, the Ontario and Saskatchewan governments released a letter calling on the federal government to rethink its initiatives and consider their impact on small and independent businesses. Ontario and New Brunswick have also rejected the new passive investment rules that were announced at the federal level.
“CFIB is calling on other provinces to join Ontario and Saskatchewan in calling on the federal government to reconsider the increase in CPP premiums set to begin in a few weeks,” Kelly said. The CFIB also encouraged all provinces to follow Ontario and New Brunswick in their rejection of Ottawa’s rules on passive investment.
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