Will Budget 2018 help win back the trust of small business?
As small business owners are necessarily optimistic by nature, I try to be the same in my work leading Canada’s largest small business advocacy group. And while relations between the nation’s entrepreneurs and the federal government have been strained, at best, over the past few years, no one would be happier than me to see the 2018 federal budget turn a new page.
After an unprecedented outcry from the business community, the government began to recognize the potential harm its proposed tax changes for private corporations would bring. In October, it dropped one of the scariest provisions related to capital gains and reinstated its promise to lower the small business corporate tax rate to nine per cent — a policy endorsed by all major political parties.
It also began to soften its proposal to tax passive investment income at punishing rates. Allowing small firms to keep the status quo on the first $50,000 in annual passive investment income will exempt many of the smallest businesses that use passive income to help grow their businesses or save for a leave or retirement.
But much more remains to be done for budget 2018 to restore the trust of the local dry cleaner, dog groomer or dentist.
The timing of this budget is critical for small business. The minimum wage has increased or will soon increase in many provinces, and Canada Pension Plan premiums are going to go up for five straight years starting in 2019. Taken together with uncertain international trade, new carbon taxes and a complete tax overhaul south of the border, there are serious threats to Canadian businesses’ ability to innovate, compete and hire.