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Budget 2019: Little relief from rising small business taxes

Friday, 22 March 2019 11:05.AM
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- Canada Training Benefit requires stronger link to employer needs.

The Canadian Federation of Independent Business (CFIB) is disappointed that the 2019 federal budget provides little relief for small businesses facing a barrage of new and higher taxes. Small firms are facing seven years of CPP premium hikes, higher taxes for many family businesses and those with passive investments and the new and rising federal carbon backstop about to hit firms in four provinces.

Canada Training Benefit

While supportive of action to address the growing skills and labour shortage, CFIB has reservations about the new Canada Training Benefit. This new and expensive program will increase the cost of the Employment Insurance (EI) system by over $300 million per year with no guarantee of any link to the needs of employers. "Will small businesses be required to hold open a position if an employee has always wanted to take a paid leave from work in order to study Latin or interpretive dance?" asked CFIB president Dan Kelly.

"CFIB is pleased government is planning an EI Small Business Premium Rebate to help cover some of the increased costs to fund the new program, but calls on the federal and provincial governments for significant consultation to ensure the needs of employers are considered before launching any EI benefits or job protection requirements," Kelly added.

Positive Measures for Small Business

In addition to the budget's recognition of small business with an EI Small Business Premium Rebate to help offset some of the costs of the Canada Training Benefit, there were other positive measures that respond to CFIB's pre-budget recommendations. These include:

- Important measures on regulatory modernization, including the creation of an External Advisory Committee on Regulatory Competitiveness;
- Relief for farmers and fishers from "arm's length" rules that limited access to the small business deduction;
- Further consultation to facilitate intergenerational transfers of businesses that are currently affected by higher tax rates than when sold to strangers; and,
- Changes to the Social Security Tribunal to resolve EI and CPP appeals more quickly and efficiently.

Deficits

"It is deeply troubling that the 2019 budget provides no plan to get the budget back into balance. Not only are today's deficits tomorrow's taxes, they sap Canada's ability to respond to future economic challenges or recessions," Kelly said.

"The tax picture for small businesses in 2019 and beyond remains decidedly negative. The hundreds of millions in new EI costs as a result of the Canada Training Benefit could have provided important relief for small firms facing higher CPP costs and new carbon taxes," Kelly concluded.

CFIB calls on government to ensure the EI Small Business Premium Rebate is significant and permanent, in addition to reversing course on the small business tax changes and the federal carbon backstop.


SOURCE: Canadian Federation of Independent Business

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