Did you know small businesses in Ontario could save up to $6,000 a year if the provincial tax rate was lowered from 3.2% to 2%? That’s a big deal, especially when every dollar counts.
We spoke with Angela Drennan, CFIB’s Vice-President of Legislative Affairs in Ontario, about how taxes are affecting small businesses and what’s being done to help.
Angela, how would lowering the tax rate help small businesses right now?
Lowering the provincial small business tax rate from 3.2% to 2% could put about $6,000 back into the pockets of a typical small business each year. But there’s more, if the income threshold for the lower rate was raised from $500,000 to $700,000, growing businesses could save up to $19,000 more every year. Adjusting that limit for inflation would also help make sure businesses don’t fall behind as their costs continue to rise.
Why is this change so important at this moment?
Small businesses in Ontario are facing a lot of challenges, such as rising costs, labour shortages, and the impacts of the Canada-US trade situation. Meanwhile, Ontario still has one of the highest small business tax rates in the country, and the threshold hasn’t been updated in over 15 years. Lowering the rate and increasing the limit would make a real difference. It would help businesses hire more staff, expand their operations, and keep prices more affordable for customers. Altogether, these changes could save a business up to $25,000 a year, while costing the government about 0.2% of its total budget. If the threshold had simply kept pace with inflation since 2007, it would already be around $700,000+ today.
"Small businesses are the foundation of our economy," Angela adds. "They need the right mechanisms to succeed, and that means meaningful tax relief to stay competitive and reinvest in their businesses.”
What is CFIB doing to help make this happen?
One of the primary ways government can help businesses combat the financial strain of inflation is to allow as much income as possible to remain in the business. This generates the financial flexibility and freedom small businesses need to plan ahead.
We’re advocating directly with the Ontario government to push for this change. The sooner the province acts, the sooner small businesses can get the relief they need. Right now, 84% of small business owners in Ontario want to see the Small Business Tax Rate (SBTR) reduced. My team and I will work with Ontario’s Finance Minister and Associate Minister for Small Business and present them with the signatures from our petition, “Lower Ontario’s Small Business Tax Rate (SBTR) & Increase the Threshold Now.” There is power in numbers and with enough petitions we can strongly advocate for exactly what small businesses need: reduce the SBTR to 2% with a plan to eventually bring it down to 0% like Manitoba, raise the income threshold to at least $700,000, and ensure it’s indexed to inflation every year.
How can small business owners get involved?
It’s easy! You can sign our petition advocating lowering the small business tax rate and increasing the threshold in Ontario. The more signatures we receive, the better it is to go to the government with recommendations on behalf of entrepreneurs.
When you become a CFIB member, you unlock a wide range of discounts, benefits, and services designed to help your business thrive. You’ll also gain exclusive access to updates on ongoing initiatives we’re leading to support and grow our members’
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