A new Canadian Federation of Independent Business study shows seven in 10 small businesses feel the Bank of Canada latest rate increase — the fifth this year — will hurt their bottom line.
The study also says 81% of small businesses believe the feds do not understand the pressures of costs that they face.
“This should sound the alarm for governments to take swift action and provide more cost relief,” said CFIB president Dan Kelly in a statement.
“Putting upcoming tax hikes on hold and fast-tracking promised reductions in credit card processing fees would be two early ways the federal government can help.”
The CFIB’s August Business Barometer data also shows almost one-third of businesses (32%) plan to raise their prices by 6% or more in the next year although it was as high as 39% back in June.
The study also shows 79% of small businesses raised their prices more than usual in the past year to compensate for rising costs.
The CFIB wants the government to freeze planned federal tax hikes, including the 2022 increase in CPP, EI, carbon and liquor taxation, and reduce the provincial payroll tax burden.
The group also wants Ottawa to increase the forgivable portion of the Canada Emergency Business Account (CEBA) loan to at least 50% and extend the repayment deadline for CEBA loans to qualify for partial loan forgiveness to December 2024.
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They also want the small business deduction increased to $600,000 from its current $500,000 and Ottawa to immediately green light the promised reduction in credit card fees for small merchants
“As small firms are struggling to keep up with staggering increases on almost every line of their budget, governments must avoid imposing additional costs that would put the livelihood of small businesses at risk,” said Kelly in a statement.
The bank raised its benchmark interest rate by 75 basis points on Wednesday bringing the policy rate to 3.25%.
“While keeping inflation at reasonable levels is definitely an important policy goal, the rate increase comes at a time when 62% of small businesses are still saddled with pandemic debt, for an average of $158,000,” said Simon Gaudreault, the CFIB’s Chief Economist and Vice-President of Research, in a statement.
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