There is growing angst among small-business owners across the country as they feel the combined blows of rising costs and a government tax squeeze.
Andrew Violi, president and co-owner of Mellow Walk, a Toronto-based manufacturer of safety footwear, said many entrepreneurs are upset with what his business partner calls the war on small business being waged across Canada these days.
“It feels that way for a lot of business people … All of these costs, whether it"s hydro, minimum wage, limiting our ability to set up corporations, impact on our profitability and therefore impact on our viability as businesses,” Mr. Violi said.
Small-business groups across the country are warning that recent government decisions, and the rising cost of doing business, will have a cumulative negative impact – resulting in potential closings and job losses. The recent federal government announcement of proposed tax changes have rallied the troops to action and opposition.
“A lot of small businesses operate at pretty tight margins to begin with. I don"t think the government, provincially or federally, fully realizes the precariousness of a lot of small businesses in this country,” Mr. Violi said. “It"s important to note that small businesses generate a huge amount of economic activity and they also employ a large number of Canadians.”
Steven Mastoras, managing director of Whistler"s Grille & The McNeil Room in Toronto, said small-business owners across the country are clearly feeling the cumulative impact of decision-making from all three levels of government and they are struggling.
“We are feeling the brunt. It is impacting business owners" ability to stay competitive, to stay open for their customers. It"s impacting decisions on youth employment efforts. It"s impacting decisions on people"s overall payrolls,” Mr. Mastoras said.
An analysis by Michael Goldberg, Mac Killoran and Jay Goodis on the Minden Gross LLP website says the new tax policies introduced by the federal government on July 18 “appear likely to materially harm the Canadian economy” by exposing Canadian small-business owners to high tax rates.
Those measures will also combine with other factors, including rising labour costs, forcing some business closures and job losses.
The layered impact of a number of government decisions from all levels is one of the core concerns the Calgary Chamber of Commerce consistently hears from small businesses. The Chamber says that while some of the increased taxes, fees and other operating costs viewed only individually may be debated, taken as a whole they are really putting a lot of undue strain on businesses at a critical time.
It recently completed a project analyzing the cumulative impact of many of these costs on Calgary business as they fight for customers during a time that most costs are going up.
“We absolutely see it. We see it at all levels of government. It"s not a partisan thing. It"s a government thing,” said Zoe Addington, director of policy and government relations with the Calgary Chamber of Commerce.
Amber Ruddy, Alberta director for the Canadian Federation of Independent Business, said the business environment is already tough enough as a result of natural pressures of finding customers but it has become worse because of government policies.
“It just seems that many policy makers don"t have the true understanding of what it"s like to run a small business. Small businesses are very disappointed with the federal government"s tax reforms,” Ms. Ruddy said, adding that entrepreneurs are also upset that the federal government has not acted on an election pledge to reduce small-business tax rates.
Trevor Tombe, associate professor of economics at the University of Calgary, said he doesn"t want to sound too cynical but there have always been concerns raised by small-business owners.
Citing Statistics Canada data, Mr. Tombe said the total number of new businesses in the fourth quarter of 2016 was about 140,000 in Canada while the number of businesses that closed down was 126,000.
“There"s a huge flow in and out all the time even if we go back to a strong period of economic growth in early 2014 there was over 120,000 business exits per quarter,” Mr. Tombe said.