New KPMG Canada poll reveals concerns on taxes, incentives, and support for medium-sized enterprises
Even as the COVID-19 pandemic enters its third year, Canadian business leaders are hopeful about the future, with the majority expressing optimism about their company's growth prospects.
Still, according to a new KPMG in Canada survey of 508 medium-sized businesses, Canadian business leaders want measures in the upcoming federal budget that will support innovation and growth amid the latest risks to a global economy already struggling with rising inflation and supply chain issues.
Nearly nine out of ten (88%) of medium-sized businesses studied used government assistance programs during the epidemic, and nearly four out of five (78%) believe they currently need assistance to survive.
Given the challenges businesses have faced in the last two years, the majority (89%) believe they must invest quickly in digital operations, while 82% believe their industry faces a "major shakeup" that will necessitate government support to invest in emerging and clean technologies.
Mary Jo Fedy, National Leader for Enterprise at KPMG in Canada, said, "The vast majority of business leaders told us that they're looking for support to help them invest in digital innovations that open up new business opportunities and revenue streams and build their resiliency to better weather economic storms. They also believe that targeted government relief programs that help the hardest hit businesses and individuals should be maintained in the near-term. Our poll findings also indicated that skilled labour shortages continue to represent a risk to recovery."
The survey also found that nearly half (45%) of the 91% Canadian medium-sized business leaders strongly agree that more tax incentives/credits are needed to expense investments in innovation, digital transformation, and research & development (e.g. software, automation, patents).
78% of respondents believe, with 36% strongly agreeing, that they still need government aid programs to ensure their business’ survival.
With 45% agreeing strongly, 86% strongly or somewhat agree that "targeted government relief programs that support the hardest-hit businesses and people shouldn't be wound down just yet."
With 37% strongly agreeing, 82% say their industry is headed for a major shakeup and will require government backing to invest in emerging / disruptive technology.
However, according to Dino Infanti, National Leader of Enterprise Tax for KPMG in Canada, while business leaders applaud targeted government assistance programs, they are concerned about how governments will fund them and the potential tax consequences of increased spending.
"Our poll findings show that a majority of business leaders are concerned that higher taxes will
stifle economic growth, investment, and consumer demand," Infanti added, "They want a fiscally-sound approach from this budget that features highly targeted relief programs, prudent stimulus spending, and modern tax policy that will boost Canada's growth potential. Striking the right balance in these three areas will go a long way toward improving business confidence and accelerating the transition to a greener, digital economy."
The survey found that 91% are concerned that the government would raise taxes on businesses to reduce the deficit and national debt, with 60% strongly agreeing.
92% of respondents, with 41% agreeing strongly, say that governments should provide additional financial support/subsidies to businesses, with sector-specific plans, to assist Canada fulfill its net-zero emissions/climate targets.
According to 90% of respondents, with 45% strongly agreeing, more tax relief is needed to encourage firms to reinvest in their operations and recruit more workers.
"Medium-sized business leaders are ready to do their part to foster and support Canadian ingenuity and achieve strong, post-COVID economic growth," Fedy said, "But they are also counting on policies that will enhance long-term productivity and lay the foundations to support their future competitiveness and agility."
