In today’s uncertain economic climate, small business owners in Canada are facing growing pressures that make tax relief less about expansion, and more about staying afloat. Economic and political uncertainty, trade instability, rising operational costs, and tax burdens are making it harder for businesses to plan, invest, or even maintain day-to-day operations. With little financial breathing room, many businesses are holding off on new investments while doing everything they can to manage costs and remain stable.
As the backbone of the national economy, their ability to survive and grow is critical to long-term prosperity. When designed effectively, tax relief can help stabilize businesses today while laying the groundwork for future investment. This blog draws data from CFIB’s latest Your Voice omnibus survey, conducted in July 2025, to explore how small businesses would use tax relief and what it reveals about their most urgent needs and priorities.
When asked how meaningful tax relief would impact their operations, business owners were presented with a tradeoff: would they use relief to stabilize their business, or to grow it? Over half (55%) chose stability—using savings to better manage rising costs or economic volatility (Figure 1). Meanwhile, just over a third (35%) said they would pursue expansion, such as investing in new capacity or entering new markets.
Figure 1: Most Likely Use of Tax Relief by Small Businesses
Source: CFIB, Your Voice Survey - July 2025, n=2,088.
Question: If your business were to receive meaningful relief from government taxes, how would it most likely affect your operations?
This trade-off highlights the tough decisions small businesses are making in a resource-constrained environment. For many small businesses growth is not an option until they’re on stable footing. That’s why the value of targeted tax relief lies not just in stimulating investment, but in helping businesses regain control over their financial footing. A responsible tax strategy should reflect this nuance—providing immediate cost reductions that support both short-term resilience and long-term competitiveness.
Across nearly every sector, the dominant priority for tax relief is stability (Figure 2). Industries like construction (61%), hospitality (61%), retail (60%), and social services (57%)—which often face tight margins, fixed costs, and staffing challenges—are especially likely to use relief to manage costs rather than expand. For these businesses, tax relief is more about staying viable in a high-cost environment and less about scaling up.
In contrast, only the finance (57%) and enterprise & administrative management (57%) sectors stand out as exceptions, where most businesses would use tax relief to invest, grow, or expand. These growth-oriented sectors reflect different operating realities including flexible business models, and low immediate cost pressure as a result of the uncertain economic climate, but they are the minority.
Figure 2: Intended Use of Tax Relief, by Sector
Source: CFIB, Your Voice Survey - July 2025, n=2,088.
Question: If your business were to receive meaningful relief from government taxes, how would it most likely affect your operations?
Note: *Small sample size (<40).
How Stability-and Growth-Oriented Firms Use Tax Relief
To better understand how tax relief might be used, responses were segmented based on whether businesses prioritized growth or stabilization. As shown in Figure 3, two distinct strategic mindsets emerge.
Firms prioritizing stability were most likely to allocate savings toward paying down debt (61%), increasing employee compensation (54%), maintaining or lowering prices (40%), or building emergency reserves (29%). Their approach is less about expansion and more about securing a financial safety net to weather uncertain times.
Meanwhile, growth-oriented businesses focused on their tax savings on expanding operations, whether by increasing capacity or launching new products (79%), followed by boosting employee compensation (60%), and hiring new staff (49%). They also showed strong interest in investing in automation, training, and digital tools, signaling a forward-looking approach aimed at boosting investments and productivity. With the right financial flexibility, these firms are well positioned to turn those investments into real gains.
Increasing employee compensation was a top priority for both groups, reflecting the continued pressure to attract and retain staff—even in very different business conditions. With the right financial flexibility, both sets of firms are better positioned to make the workforce investments that underpin long-term resilience and growth.
Figure 3: Where Businesses Would Allocate Tax Savings
Source: CFIB, Your Voice Survey – July 2025, n=2,032.
Question: If governments at any level were to reduce the overall burden of taxes and fees, where would you allocate your savings? (Select all that apply)
Small businesses are clear about where tax relief would have the greatest impact: they want support that lowers the direct costs of running a business, especially those tied to payroll, cash flow, and operational costs. Their top priority was the small business corporate income tax, selected by 68% of respondents, highlighting how strongly firms value relief tailored to their size and financial capacity (Figure 4). This was closely followed by personal income tax (55%), sales taxes (51%), business property taxes (50%), fuel taxes (49%), Employment Insurance premiums (47%), and capital gains taxes (43%).
These preferences reflect both cost pressures and the strategic realities facing different types of businesses. The fact that nearly every type of tax received substantial support points to a deeper issue: small firms are feeling the cumulative burden of the tax system, not just in one area, highlighting the need to reassess how it supports entrepreneurship.
For many, tax relief can immediately ease cost pressures and create room for stabilization or reinvestment. And while these cuts are often framed as tools for investment or growth, for small businesses their value lies just as much in improving liquidity and offsetting the hidden costs of tax compliance, financing challenges, and elevated input expenses. In this context, tax relief is not a windfall—it’s a buffer.
Figure 4: Top Tax Areas Small Businesses Want Cut
Source: CFIB, Your Voice Survey – July 2025, n=2,044.
Question: If governments (federal, provincial/territorial and municipal) were to reduce taxes, which areas should be prioritized for tax cuts? (Select all that apply)
Note: Employer Health/Education tax was only asked in provinces collecting it (NL, QC, ON, MB, BC).
If the goal is to build a stronger Canadian economy, empowering small businesses through tax relief is an essential first step. Small businesses that can stabilize are more likely to plan, hire new workers, and invest in technology and training. These are the building blocks of a more productive, innovative economy.
To unlock that potential, fiscal policy must reflect the real pressures businesses face on the ground: rising input costs, staffing challenges, and tight margins. That means delivering targeted tax relief that helps businesses to stabilize when needed and grow when ready. With the right tools in place, small businesses will be able to contribute meaningfully to a more dynamic, competitive economy.
Based on this research, CFIB recommends the following actions to provide meaningful and targeted tax relief for small businesses: