Small business owners hope federal budget brings tax cuts, tariff relief

OTTAWA · Small business owners across Canada are hoping Thursday's federal budget includes tax cuts and more relief from punishing U.S. tariffs as they struggle with rising costs. Karla Briones, who owns two Global Pet Foods franchises in the Ottawa area, says commercial rent, employment and inventory costs are all climbing, squeezing her margins. "There are rising costs in absolutely everything. Commercial rent, employment, our inventory, everything is rising, but we're trying to stay competitive," Briones said. The Canadian Federation of Independent Business says more small businesses are closing than opening in the country, a situation it calls an "entrepreneurial drought."

Finance Minister François-Philippe Champagne hinted earlier this week that small businesses would "see themselves" reflected in the government's financial plan. The CFIB's top wish list items are a reduction of the federal small business tax rate from around nine per cent to six per cent, and raising the income threshold for that lower rate from $500,000 to $700,000. Vice-president of federal affairs Jasmin Guénette said such a tax change would have the broadest impact on owners across all sectors, who would reinvest savings into their operations. Briones says any move to simplify taxes would free up her time to focus on other areas of her business. She said an even bigger immediate help would be a cut to employment insurance premiums for small businesses, allowing employers to pay the same rates as employees, as the CFIB has also called for. "That would be incredibly useful for us on a payroll-by-payroll basis, as opposed to waiting until … we file our taxes to get credits or to get other types of support," Briones said.

Eric Saumure, an Ottawa-based small business finance expert and accountant with Zenbooks, is skeptical more major business measures are coming. In a pre-budget blog post, he wrote that the recently announced productivity mega-deduction and existing tariff relief measures will likely leave little room for more spending. "Put those together and my read is that Ottawa has already made its big business tax move for the year," Saumure said. The productivity mega-deduction allows businesses to immediately expense the full value of many investments, but Briones says she still needs upfront cash to pay for items like a new freezer before getting money back.

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Many businesses are also hoping for further trade war relief. The CFIB says 46 per cent of small exporters are directly impacted by the latest round of 50 per cent U.S. tariffs, while 49 per cent of small importers are impacted by Canada's counter-tariffs. Amit Thakkar, president of Brampton, Ont.-based fabric and apparel companies House of Blanks and Roopa Knitting Mills, says his businesses have taken a hit from U.S. tariffs on clothing. He applauded existing relief programs but says they are limited in the costs they cover and require businesses to apply and prove eligibility.

Saumure says that application process is an obstacle, and Zenbooks suggested in a pre-budget submission that the government give automatic tariff relief payments to impacted businesses. Thakkar would like to see revenue from Canada's counter-tariffs given directly back to the small businesses impacted by them, a measure the CFIB has also called for. "We've got to make sure there's a customer at the end of the tunnel," Thakkar said. "It's all in vain if there's no sales to attribute to it." He says subsidies to help Canadian companies ship products overseas could help business owners like himself pivot to new markets. Business leaders have been calling for tax reforms and less red tape ahead of Thursday's budget. Yadude Books reported in November that business groups urged tax cuts and faster approvals. The budget will be unveiled amid economic uncertainty and an ongoing trade war with the United States.

With files from CBC News