Most Canadian business owners say conditions are too tough for start ups
If owners of small and medium sized businesses were asked about starting a new business in Canada today, most would say don’t.
That’s according to a new survey of SME owners by the Canadian Federation of Independent Business which discovered that less than one in five respondents would advise starting a business now.
Conditions for businesses have been challenging for several years and keeping up with the current cost of doing business in Canada is the main reason why most feel it’s the wrong time to be starting out (90% said so).
The economic situation (76%) and high tax burden (73%) were the second and third most cited reason for the downbeat view of business conditions.
"Small businesses are still facing hardships that are impacting their ability to operate and invest, which in turn impact Canada's economy and productivity. On top of that, there's been no update from Ottawa on carbon tax rebates and when small businesses can expect them," said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. "Parliament needs to consider the unique needs of small business if they want to improve the current economic climate."
Around half of poll participants say they are struggling with taxes and operational costs and are hoping that the new session of parliament may bring them some relief. Just a 1% decrease in the small business tax rate would keep $610 million in businesses’ pockets.
Most respondents want the federal government to tackle rising prices and the cost of doing business (77%) while 74% want to see a reduction in their overall tax burden with savings made being prioritized for employee compensation (56%), paying down business debt (56%), and business expansion (46%).
"Instead of giving away billions to large foreign multinationals, the government should lower taxes on small businesses, level the playing field and reduce red tape. The recommendations we propose would help hundreds of thousands of Canadian small- and medium-sized businesses face current challenges," said Christina Santini, CFIB's director of national affairs.
The CFIB is calling on Ottawa to:
- Lower Employment Insurance premiums for smaller employers and increase the Canada Pension Plan Basic Exemption Amount.
- Eliminate the carbon tax.
- Reconsider capital gains changes by scrapping or repealing the planned increase in the general inclusion rate to 66.7%.
- Increase the small business deduction threshold to $700,000 and the passive income amount to $60,000 and index those thresholds to inflation going forward.
- Lower the federal small business tax rate from 9% to 8%, at least for the next two years.
- Eliminate the automatic escalator on alcohol excise duty rates.
- Reduce red tape on small businesses.
