by Morinville Online Staff
The latest Canadian Federation of Independent Business (CFIB) Business Barometer shows the 12-month index gained 0.5 points, reaching 51.4 index points in January of 2023, indicating that while small business confidence over the long term remained stable, it was low.
“Small business confidence seems to be better, but there’s still a lot of uncertainty in the economy. For this time of year, the levels are still quite low,” said CFIB Director of Economics Andreea Bourgeois. “Many businesses will continue to struggle under pandemic debt and rising prices unless the government takes action.”
CFIB reports that while skilled labour shortages are cooling off, they continue to be the top limitation for nearly half (46%) of small businesses. Sixty per cent of Canadian firms find wage costs above the historical average, causing cost constraints. Borrowing costs are causing difficulties for 37% of businesses.
The retail sector indicates the lowest optimism level over the long term (41.2). CFIB says this is the seventh month retail posted an index below 50.
CFIB is calling on the government to take action on rising prices, overall tax burden, and ensuring labour policies are reasonable for employers.
“We’re hearing from members who are concerned about their future and where the economy is headed as they continue to deal with pandemic debt, increasing taxes, inflation and labour shortage,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “These challenges are having a crippling effect on their revenues, ability to grow and mental wellbeing. Small businesses need some reprieve.”
CFIB sent a letter to Members of Parliament ahead of their return to Parliament on Jan. 30, calling on the government to implement various fiscal relief measures to support small businesses, including introducing a targeted Employment Insurance (EI) premium credit for 2023. The credit would reduce premiums for eligible employers to the same amount their employees pay.
To help small businesses alleviate some of their financial pressure, CFIB recommends the federal government:
- Introduce a targeted Employment Insurance (EI) premium credit for 2023
- Increase the maximum threshold for the small business tax rate (e.g., to $600,000), and index it to inflation going forward
- Decrease the small business tax rate from 9% to 8%, at least for the next two years
- Work with the provinces to offset the costs of the 2023 increases in Canada Pension Plan premiums through a targeted credit for small businesses
“Given all the challenges small businesses are facing, CFIB is calling on the government to help mitigate the impact of economic pressures on small firms,” Pohlmann concluded. “Give them some time and room to breathe and get back on their feet.”