Over Half of SMEs Still Making Less Than Normal Revenues
With Parliament back in session, two-thirds (66%) of small businesses want the federal government to focus on reducing the overall tax burden, according to a new survey by the Canadian Federation of Independent Business (CFIB). Other key priorities small businesses want to see them address include labour shortages (56%), supply chain disruptions (53%) and red tape (53%).
“With all the current challenges small businesses are facing, namely wage pressures, government taxes and rising input costs, it’s not surprising the majority of small firms want the government to help them alleviate their financial burden,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “We encourage Members of Parliament to focus on policies that help small businesses deal with their rising costs and heavy debt loads so they can have more leeway to invest into their future.”
If the government were to reduce the overall burden of taxes and fees, nearly 60% of business owners said they would use the savings to increase employee compensation, such as wages and benefits. More than half of business owners (57%) said they would pay down their business debt, 43% would hire new employees, and more than a quarter (28%) said they would invest in employee training.
Small firms would also reinvest savings in their businesses: nearly a quarter (21%) said they would invest in automation, while 36% would expand their business (increasing production, adding stores or products).
The latest data on CFIB’s Small Business Recovery Dashboard shows that 58% of small businesses are still making less than their normal revenues, 64% are carrying pandemic debt, and 78% are still under pandemic-related stress.
To help small businesses and ease their financial burden, CFIB is recommending that government:
- Lower the federal small business tax rate from 9% to 8%, at least for the next two years, to help businesses recover
- Freeze planned tax hikes, including the upcoming 2023 increase in CPP, EI, carbon and liquor taxation
- Increase the forgivable portion of the CEBA loan to at least 50% and extend the repayment deadline to December 2024
- Increase the small business deduction to $600,000 (currently $500,000) and index it to inflation after that
- Promote a policy of “mutual recognition” to improve internal trade
- Immediately implement the promised reduction in credit card fees for small merchants
“It’s disappointing to see the situation for many small businesses hasn’t improved over the summer. The next few months will be crucial for our economy. Governments must do more to ensure that small businesses can weather the inflationary storm we are experiencing and help the most affected businesses recover from the pandemic,” added Pohlmann.