MOOSOMIN — The Canadian Federation of Independent Business (CFIB) has written a letter to Saskatchewan’s Minister of Finance, requesting the province to extend freezing the small business tax rate at zero per cent to give more businesses a chance to recover from the pandemic.
In 2020, the Government of Saskatchewan reduced the small business tax rate from two per cent to zero per cent with plans to increase it to one per cent on July 1, 2022, and back to two per cent on July 1, 2023.
However, last summer the province announced they would temporarily extend the zero per cent income tax rate until June 30, 2023, and the restoration of the rate to one per cent would be delayed to July 1, 2023, and on July 1, 2024, the rate will return to two per cent.
The reduction of the tax rate has helped a great number of small business owners, said Brianna Solberg, Director of Provincial Legislative Affairs at CFIB.
“Ultimately, it’s been extremely appreciated by small business owners,” said Solberg.
“It seems like a small percentage for what we’re talking about here, but the difference between 2 per cent and zero per cent, or 1 per cent and zero per cent, is if you’re paying that on let’s say $500,000 in earnings, that’s $5,000 to $10,000.
“Ultimately when everything is tight, budgets are tight, small businesses are seeing almost every line item in their budget go up right now, so any amount of savings is going to go a long way for them.”
Solberg said keeping the provincial tax rate at zero per cent for another year will save many small business owners from shutting down.
“It would essentially come as cost savings to help them pay down their debt, to help them hire and hopefully attract and retain employees in a tight labour market,” said Solberg.
“Any savings at this point while business owners are just trying to recover goes a long way because they’re also not back to making their normal revenues.
“That’s another long-lasting impact because of the pandemic. Our survey is telling us that only half of small business owners are back to making their normal pre-pandemic revenues. It’s been slow to recover and customers have been slow to return to shopping, especially retail.
“Hospitality is struggling still and they’re spending less on average because everyone’s budgets are tight, everyone is dealing with the impacts of inflation and so, any cost savings is becoming increasingly urgent.”
One of the many challenges owners of small businesses are facing is heavy debt, said Solberg.
“Heavy debt loads are something that we hear about all of the time. Right now we’re seeing skyrocketing inflation, increased input costs such as fuel, food, rent, and utilities,” she said.
“Interest rates are on the rise, the challenges are endless, not to mention labour shortages and supply chain challenges as well.
“Small business owners are just looking to catch a break, especially with such a huge budget surplus, a billion dollars projected for this year, we would’ve hoped—and expected to see—some sort of relief for small business owners.”
Solberg was asked why she thinks small businesses have not returned to making “their normal pre-pandemic revenues.”
“I think the number one reason would be that everyone is going through the same struggles with inflation,” she said.
“I think everyone’s budgets are tight, especially retail now who might have competition with the online space, that was sort of exacerbated by the pandemic where everyone moved online and now their competition is no longer just the stores next to them, it’s every store that has an online offering. That’s made things challenging as well.”
CFIB asks federal government for extension on CEBA loan
On June 7, CFIB sent a letter to the federal government stating that over 8,000 Saskatchewan small businesses—19 per cent of small businesses in the province— would be at risk of closure if they have to repay their Canada Emergency Business Account (CEBA) loan by December of this year.
“This is something CFIB has been campaigning on,” Solberg said.
“As of right now, there’s over 8,000 Saskatchewan small businesses that could be at risk of closing their doors unless we see changes to the repayment deadline.
“CFIB is warning the government that small businesses need more time to pay this back, and they’re also worried that if the deadline isn’t extended they’ll lose that forgivable portion.
“They’ll get to keep 33 per cent right now of their loan, that’s forgivable, but if they don’t pay their loan back on time then they don’t get to keep that.
“I know right now, as it stands, there’s only 12 per cent of our (CFIB) members who took CEBA loans that have been able to repay it yet. It’s definitely creating a stretch, that’s for sure.”
As part of the federal agreement for repaying the loan on or before Dec. 31, 2023, CEBA borrowers would receive a percentage of their loan forgiveness of up to 33 per cent (up to $20,000).
“We have a federal lobbying team and this is a petition we’ve had going for a few months now and been actively calling on the government to extend the deadline for an additional year and to increase the forgivable portion to 50 per cent,” said Solberg.
“The number (on average $3,000) on how much the government has estimated that two-year freeze the zero per cent rate has saved small business owners, has been significant, so if they did it again it would be appreciated.”
