Canadian Entrepreneurs Might Call 2017 The Year of Uncertainty

It’s typical this time of year to start reflecting on the year that was. Throughout 2017, it seemed around every corner there was another government policy creating more uncertainty for Canadian small business owners

a Canadian Meat Business exclusive By Marilyn Braun-Pollon

At the provincial level we witnessed many examples of governments introducing roadblocks with more onerous labour and employment standards laws – many coming hand in hand with sharp increases to the minimum wage. Just like the flu, bad policy spreads, and what started in Alberta and Ontario not only infected each other, but has the potential to spread to neighbouring provinces, as BC and Quebec undergo minimum wage and labour reviews respectively. Many of these policies are starting to have an impact – some, like in Ontario, before they are even officially in place, with no telling what the full brunt of them may bring in 2018.

“The not so good news: While the pause on capital gains changes can be regarded as a step forward, there is still a lot of work and a tough road ahead for Canada’s small business owners on federal taxes”

 

We also know many provinces are moving forward on carbon policies before the federal government announces their own costly carbon tax plan. While some, like Saskatchewan, are aggressively resisting the call, others, like Ontario, Alberta and Quebec, are moving forward with policies that will have major negative impacts on small business owners and disproportionately impact the agriculture sector.

On the Ag policy front, in July the Federal, Provincial and Territorial (FPT) agriculture ministers announced they had reached an agreement on the next Agricultural Policy Framework, the Canadian Agricultural Partnership. The five-year $3 billion investment into the next suite of agriculture programs, will take effect April 2018. The Ministers also committed to undertaking a one-year review of BRM programming. While reducing red tape – the number-one-ask from CFIB members in a new agreement – was not explicitly part of the agreement, the ministers did recognize the important role that having a strong and effective regulatory approach plays. CFIB will be watching the roll out of this plan closely to ensure there isn’t additional red tape at the farm gate.

And then there were the proposed federal tax changes – introduced in mid-July.

Right from the start, CFIB said the federal government’s tax proposals, while intended to target the wealthy, will hurt middle-class business owners from every sector of the economy. The tax changes created unprecedented uncertainty for shop owners, farmers, doctors, financial planners, homebuilders and trades in all sectors.

As a result, 78 organizations from across the country came together to form the Coalition for Small Business Tax Fairness — a unified voice to aggressively oppose the federal government’s tax proposals.

Let’s start with the good news. After an intense fight over federal tax proposals, the government has started listening to small business owners. They recently announced that they will reinstate their promise to lower the small business tax rate from 10.5% to 9% by 2019, and plan to drop provisions related to capital gains and income stripping. We know the proposed rules would have made it more costly for small business owners – including farmers and fishers – to sell or transfer their business to their children.

In the past, CFIB has supported two private members’ bills, from NDP MP Guy Caron and Liberal MP Emmanuel Dubourg – which proposed amendments to a nuance in the Income Tax Act which currently makes it easier to sell a family business to a third party than a family member. We stand ready to work with the government on finding solutions to ensure that intergenerational transfers of small businesses are easier and less costly, while, at the same time, maintaining the integrity of the tax system.

The not so good news: While the pause on capital gains changes can be regarded as a step forward, there is still a lot of work and a tough road ahead for Canada’s small business owners on federal taxes. The adjustments made to passive income rules were progress from the original proposal; however, the $50,000 annual threshold may be inadequate for many businesses – particularly for those businesses saving for large investments, innovations or retirement. Similarly, we remain concerned that changes to income sprinkling rules will keep the benefits of business ownership out of the hands of the countless spouses who participate in more informal ways in the business.

With all of the proposals, the devil remains in the details and details are something we remain short on. Still, we look forward to working with government to find solutions that don’t negatively affect the small business community’s ability to grow and prosper.
And let’s not forget about NAFTA. We were pleased to see that all sides recognized the importance of small business’s role, with a dedicated chapter containing specific measures to help small- and medium-sized businesses trade across borders. However, there continues to be a large amount of uncertainty on issues still being debated by negotiators. Some of the more dire reports say that the negotiations may be souring and it has become difficult to say if a deal will get done.

2017 raised many questions for Canada’s job creators, and there are still two more months to go.

Unfortunately it looks like 2018 is shaping up to be more of the same with more uncertainty on the horizon: five years of escalating carbon taxes or pricing strategies (for many provinces), an Employment Insurance tax hike for all Canadians and their employers, followed by five years of Canada Pension Plan premium increases. Not to mention the minimum wage hikes scheduled in many provinces.

Marilyn Braun-Pollon is Vice-President, Prairie & Agri-business for the Canadian Federation of Independent Business. She can be reached at mssask@cfib.ca Follow Marilyn on Twitter @cfibsk and learn more about CFIB at www.cfib.ca.