TORONTO, July 15, 2024 /CNW/ - The Canadian Federation of Independent Business (CFIB) issued an open letter to all provincial and territorial premiers ahead of the Council of the Federation (COF)'s meeting in Halifax this week, urging them to raise small business priorities in their discussions.
Given the high costs of insurance and wages, as well as shortages of skilled labour and working capital, it is crucial for governments to prioritize policies that support small businesses rather than impose additional cost burdens. Here are four key areas where Canadian premiers could collaborate to improve economic conditions for small business.
Capital gains
The federal government recently announced significant changes to capital gains taxation. While CFIB commends the increase in the Lifetime Capital Gains Exemption (LCGE) to $1.25 million and recognizes the potential of the new Canadian Entrepreneurs' Incentive (CEI), CFIB is deeply concerned about the increase of the overall inclusion rate from 50% to 66.7%.
If the federal government does not back track on increasing its inclusion rate, it will make small businesses more vulnerable during economic downturns. Since provinces and territories would gain revenue increases from small businesses due to the capital gains changes, CFIB recommends governments to use extra revenues to help small businesses, namely by decreasing the provincial small business tax rate and increasing the small business tax rate threshold.
Internal trade
Since the signing of the Canada Free Trade Agreement (CFTA), progress to remove remaining barriers has been disappointingly slow. When provinces insist on maintaining barriers, they insulate themselves from competition and new investment. CFIB urges all governments to prioritize eliminating internal trade barriers and improving labour mobility, specifically through mutual recognition agreements.
Federal carbon backstop
A strong majority (83%) of Canadian small businesses are opposed to the current federal carbon tax system. CFIB estimates that small firms bear 40% of the costs, yet they are only eligible for 5% (previously 9%) in rebates.
The current carbon tax framework needs re-evaluation. CFIB encourages all premiers to strongly advocate for the elimination of the federal carbon tax and work collaboratively with the federal government to explore alternative solutions that balance environmental sustainability with the viability of small businesses in Canada.
Construction mitigation
Major infrastructure projects are essential but can significantly disrupt small business operations. CFIB estimates that impacted small businesses lost 22% of revenues on average over the last five years and incurred over $54,000 per business in additional expenses due to public construction projects. CFIB strongly recommends direct compensation be a part of any construction mitigation plans. If this is not feasible, governments need to consider offering tax holidays for affected businesses.
As premiers convene in Halifax this week, CFIB asks them to use this meeting as an opportunity to discuss how to strengthen Canada's economy, with a particular focus on small and medium-sized business.
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada's largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners' chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
SOURCE Canadian Federation of Independent Business
For media enquiries or interviews, please contact: Dariya Baiguzhiyeva, CFIB, 647-464-2814, [email protected]
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