‘Tomorrow's federal spring economic statement is an opportunity for the federal government to address Canada's entrepreneurial drought and restore small business confidence’
The Canadian Federation of Independent Business (CFIB) is urging governments to adopt a three‑part plan to reverse what it calls Canada’s “entrepreneurial drought,” starting with major changes to how small firms are taxed and financed.
In its new report, Canada's Entrepreneurial Drought, Part 2: Fixing Canada's Shrinking Business Landscape, CFIB calls on Ottawa to cut the federal small business corporate tax rate (SBCTR) from 9% to 6%. It also wants provinces to permanently reduce their SBCTRs to 0% by 2030, arguing this would help smaller firms reinvest in staff, operations and productivity.
The federation is further urging federal and provincial governments to raise SBCTR thresholds to at least $700,000 and index them to inflation, so firms are not pushed into higher tax brackets simply due to rising prices. CFIB also wants financing to be more accessible and affordable, and government programmes and procurement processes to be genuinely open to small firms, saying this would stabilise employers and support jobs.
“Tomorrow's federal spring economic statement is an opportunity for the federal government to address Canada's entrepreneurial drought and restore small business confidence,” said Michelle Auger, CFIB director of trade and marketplace competitiveness. “Governments have spent years prioritizing big business needs, while small firms have been largely ignored. Canada cannot afford to keep losing more businesses than it gains, it's time for all governments to put small businesses first and reverse the entrepreneurial drought.”
This comes as more Canadian businesses are closing than opening, with exits outpacing entries for six consecutive quarters – a reversal that threatens job creation, wage growth and career mobility across Canada, one group has warned, according to CFIB.
Cutting red tape and easing internal trade
CFIB’s second priority is to reduce regulatory and internal trade barriers that it says are weighing most heavily on small and mid‑sized enterprises. The organisation is calling on governments to measure and publicly report the overall regulatory burden so progress on cutting red tape can be tracked over time.
It is also advocating a “two‑for‑one” rule that would require the elimination of two existing regulations for every new one introduced. CFIB argues this would gradually shrink the regulatory load and force policymakers to consider cumulative impacts on business before adding new rules.
On internal trade, the federation wants mutual recognition expanded beyond its current scope to include sectors such as food and alcohol. It says the Canadian Mutual Recognition Agreement and related provincial legislation should be applied consistently and transparently, with minimal carve‑outs, to reduce duplication and conflicting rules across provinces.
CFIB maintains that a simpler, more coherent regulatory and trade framework would free time and resources for small firms to focus on operations, productivity and workforce management rather than administrative tasks. It argues that this, in turn, would help keep more businesses viable and able to sustain employment.
Even bigger businesses - such as the 7-eleven, Starbucks, and the Hudson’s Bay Company - have announced closures in Canada.
Labour market fixes and succession support
The third strand of CFIB’s plan targets labour market pressures and business succession, which it warns are feeding Canada’s shrinking business base. It is calling for training incentives and stronger partnerships between employers and educational institutions to improve workforce quality and better align skills development with business needs.
CFIB also wants governments to “keep, protect and defend the Temporary Foreign Worker Program” and consult the business community before making changes, saying the programme remains critical in sectors facing persistent labour shortages.
To prevent viable firms from closing when owners retire or exit, the federation is urging greater awareness, particularly among young entrepreneurs, of the opportunities and advantages of purchasing an existing business. It is also calling for small corporations to be allowed to defer tax on capital gains from transferring a business to the owner’s children, to make intergenerational succession more financially feasible.
CFIB’s proposals come against the backdrop of what it described in an earlier report as a sustained decline in net business creation, with exits outpacing new entries since early 2024 and closure rates reaching 5.6 per cent in the second quarter of 2025.
“The entrepreneurial drought won't fix itself. Canada needs to give businesses clear reasons to start, stay and invest, yet current government policies are failing to inspire confidence among entrepreneurs,” said Brianna Solberg, CFIB director for the Prairies and the North. “If governments are serious about Canada's economic strength, competitiveness, and productivity growth, they need to start reflecting this in their policies.”
