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Whether you agree with the timing or not, Canada is heading for a federal election and small business owners will be looking at political manifestos with trepidation over the next few weeks. According to the CFIB, over 80% of Canadians agree that small business recovery should be top of agenda for every party leader but paradoxically over 70% of small business owners don’t think that their worries will be heard nor given the attention they deserve.
Understandably business owners are worried. Many will have scraped through COVID with a lot of financial assistance and perhaps the false promises of medical experts that a vaccinated population would help get the economy back on track. As it materializes, the first highly vaccinated countries to reach the coveted milestone of ‘herd immunity’ are now reporting a fourth wave of breakthrough infections; further lockdowns will do nothing to ease the uncertainty of doing business and the signals are that we’re already starting to see the knock-on effect of the surge in infections in other countries through falling retail sales, higher costs across the board and reduced profits.
Economic uncertainty is the order of the day and in normal times businesses may be more focused on other areas of fiscal responsibility, not least how the incoming government plans to reduce the record $1 trillion deficit. These are far from normal times however and survival being the primary concern for small businesses faced with further lockdowns – what leaders are proposing both in terms of a detailed business recovery plan and in a worst case scenario, what the sentiment is with regards to keeping small businesses open are paramount to any plans to limit government spending currently.
Inflation reached its highest level in a decade in July at 3.7% and the concern is that the continued financial support being poured into the economy to assist small business will push it ever higher. Most won’t dispute that Canada can’t afford not to support small businesses who underpin the economy with tax revenue and jobs, however, there is a complex balance to be reached if we’re to avoid measures to quell inflation. Interest rate hikes in another downturn would spell bad news for Canadian business and exporters so it’s in everyone’s interest to strike a balance between stimulus and alternative methods of support where possible.
While any reduction in the overall tax burden on small business would be welcomed, there’s little concrete action being put forward by the main parties to help, not in the long-term anyway. Most of the ideas being tabled focus on trying to claw back revenues from large corporations whose executives benefitted from big payouts last year or imposing higher taxes on foreign tech corporations who haven’t been contributing their fair share to Canada’s economic growth.
Measures such as a tax rebate for 2022-23 capital expenditure are arguably unrealistic for most small businesses given the level of debt that’s been accumulated over the course of the pandemic but in any case, tax relief policies should be expected to be more targeted than blanket if there are any at all.
This is a key concern particularly for manufacturing and engineering businesses who are struggling to attract and retain talent and small businesses will be looking to party leaders for policies to address growing labor and skills shortages; something that may be hampered with the extension of financial support to individuals and global restrictions on movement.
Some parties are proposing initiatives such as a 6-week program to subsidize new hires and encourage Canadians back out to work but anything targeting employers is fairly immaterial in the face of an uncertain fall and winter season. Governments will need to do more to incentivize workers into the private sector through the overhaul of a dated employment insurance (EI) system which needs to reward workers for updating their skills coupled with grants and funding programs to draw younger workers into the industries that need them the most.
Small businesses have been burdened with unprecedented levels of debt simply to survive and in many ways the approach of party leaders coming up to an election has to be unprecedented too. To gain the confidence of small business owners, prospective prime ministers will need to demonstrate a comprehensive set of policies covering multiple scenarios of targeted support and debt-relief depending on what happens in the economy. Overlaid with this should be vital industry-specific policies which promote resilience; resilience in Canada’s ability to overcome future crises with assistance for domestic manufacturing and production, providing high-speed internet access for all whilst enabling tech-sector growth and providing an environment where small businesses can continue to operate and grow despite the challenges of a virus that seemingly won’t ever go away.
This will be the quickest run-up to an election ever and one of the major emerging factors for political leaders in securing the votes of small business will be how they deal with business continuity in the event of further stay-at-home sanctions. Small businesses quite rightly feel that they bore the brunt of inequitable mandatory closures during the pandemic and are now looking for that to be put right and to avoid future closures at all costs. Vaccine mandates are the hot topic and as employment lawyers debate employee’s rights in this regard, Canada’s leaders need to step up and be decisive, providing direction for small businesses unsure of their obligations. Mandatory vaccines and or testing for federal employees may be a step in the right direction but to ensure swift economic recovery, businesses must feel confident implementing and enforcing their own policies.
Whatever happens in next month’s election, Sallyport are committed to supporting Canadian entrepreneurs and SMEs with the funding required to grow their businesses. We understand that taking on further debt in today’s climate may not be feasible and we work with our clients to tailor alternative financial solutions that they’re happy will help them succeed. Reach out today to find out how we’re helping many Canadian small businesses thrive in challenging and uncertain times.
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