Ottawa, July 20, 2026 – The Canadian Federation of Independent Business (CFIB) is calling on Premiers to put small business tax relief and internal trade reform at the top of the agenda for this week’s Council of the Federation meeting in Prince Edward Island.
"Small businesses across Canada are under mounting pressure from every angle,” said Keyli Loeppky, Senior Director of Interprovincial Affairs at CFIB. “Global trade uncertainty, rising costs, weak consumer demand, and limited access to capital have all led to three consecutive quarters where small business exits have outpaced entries. We’re in an entrepreneurial drought, and Canada cannot afford to keep losing entrepreneurs or discouraging business growth. Governments that want a stronger, more resilient economy must put small business priorities at the centre of their agenda.”
CFIB is urging Premiers to focus on two immediate opportunities to support entrepreneurship and economic growth: help deliver federal small business tax relief and accelerate efforts to tear down internal trade barriers.
While many provinces have reduced their small business tax rates over the past year—bringing the national provincial average down to 1.6%—the federal government has not kept pace. The federal small business tax rate has remained frozen at 9% since 2019, and the Small Business Deduction threshold has been unchanged at $500,000 since 2009. If the threshold had been indexed to inflation, as federal personal income tax thresholds are, it would now exceed $700,000.
Reducing the federal small business tax rate and increasing the deduction threshold would provide much-needed relief. CFIB estimates that lowering the federal rate to 6% and increasing the deduction threshold to $700,000 would save small firms up to $33,000 annually.
At the same time, governments must move more quickly to eliminate internal trade barriers that limit opportunities for businesses to expand and compete across Canada. Despite growing political commitments, progress on implementation has been slow. According to CFIB data, 69% of small businesses reported no improvement in the ease of doing business across provincial borders over the last 12 months, while 16% said conditions have worsened.
“Premiers have made important commitments to improving internal trade, but small businesses need to see results now,” added Loeppky. “One of the clearest examples is direct-to-consumer alcohol shipping. Despite broad support and repeated commitments, most provinces have yet to follow through even though the deadline was set for May. They are now 50 days late. When governments fail to deliver on agreed-upon reforms, confidence erodes and businesses are left bearing the consequences.”
To foster a better environment for entrepreneurial growth, CFIB is calling on all Premiers to:
• Advocate to the federal government to reduce the small business tax rate from 9% to 6%, increase the deduction threshold from $500,000 to $700,000, and index it to inflation;
• Quickly implement unilateral recognition of regulatory requirements affecting the sale and use of goods, services, and labour across Canada;
• Immediately implement overdue agreements such as the direct-to-consumer shipment of alcohol and the Canadian Mutual Recognition on the Sale of Goods, if not already implemented; and
• Hold one another accountable to collectively set internal trade agreement timelines and publicly identify where progress stalls.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
public.affairs@cfib.ca
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
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