CFIB cites pressure 'from every angle,' including global trade uncertainty, rising costs, weak consumer demand, and limited access to capital
With more businesses closing than opening, the Canadian Federation of Independent Business (CFIB) is calling on Premiers to champion small business tax relief and internal trade reform at this week's Council of the Federation meeting in Prince Edward Island.
This comes as small business finances are directly limiting hiring, wage growth, and job creation across local labour markets.
Small businesses are facing pressure "from every angle," including global trade uncertainty, rising costs, weak consumer demand, and limited access to capital, according to Keyli Loeppky, CFIB's Senior Director of Interprovincial Affairs.
"We're in an entrepreneurial drought, and Canada cannot afford to keep losing entrepreneurs or discouraging business growth," Loeppky said, adding that small business exits have outpaced entries for three consecutive quarters.
Loeppky said governments seeking a stronger, more resilient economy "must put small business priorities at the centre of their agenda."
Canadian small businesses are bracing for a sharp pullback in private investment even as the broader economy rebounds, which signals slower hiring and delayed workplace technology upgrades in the coming quarters, according to a previous report.
Tax rate frozen since 2019
CFIB noted that while provinces have lowered small business tax rates over the past year, bringing the national provincial average to 1.6%, the federal small business tax rate has remained at 9% since 2019.
The Small Business Deduction threshold has stayed at $500,000 since 2009, according to CFIB, which said the figure would exceed $700,000 today had it been indexed to inflation like federal personal income tax brackets.
CFIB is asking Premiers to press Ottawa to cut the federal rate to 6% and raise the deduction threshold to $700,000, changes CFIB estimates would save small firms up to $33,000 annually.
Internal trade barriers persist
CFIB is also urging faster action on internal trade barriers, saying implementation has lagged despite growing political commitments among provinces.
Citing its own data, CFIB said 69% of small businesses reported no improvement in the ease of doing business across provincial borders over the past 12 months, while 16% said conditions worsened.
Direct-to-consumer alcohol shipping was cited as an example of delayed follow-through. "Despite broad support and repeated commitments, most provinces have yet to follow through even though the deadline was set for May," Loeppky said. "They are now 50 days late."
Premiers' action items
Loeppky said unresolved commitments carry consequences: "When governments fail to deliver on agreed-upon reforms, confidence erodes and businesses are left bearing the consequences."
CFIB is calling on Premiers to:
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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;
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Quickly implement unilateral recognition of regulatory requirements affecting the sale and use of goods, services, and labour across Canada;
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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
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Hold one another accountable to collectively set internal trade agreement timelines and publicly identify where progress stalls.
Two-thirds of small businesses (64%) say Ottawa should take the time needed to secure favourable terms in a renegotiated Canada-United States-Mexico Agreement (CUSMA), even if it means a longer wait, according to a previous report.
The United States refused on July 1 to renew the CUSMA for another 16 years, extending a period of trade uncertainty that the Bank of Canada has already linked to five straight quarters of declining business investment.
In the second quarter of 2025, the national business exit rate reached 5.6% of active firms, while the entry rate fell to 4.8% in the fourth quarter – some of the highest closure and weakest start‑up levels outside the pandemic, according to a previous report.
