Ottawa's budget was a missed opportunity: Kelly

Key Concepts

• 2025 Budget: The Canadian federal budget for the fiscal year 2025.
• Cost Relief: Measures aimed at reducing expenses for businesses.
• Tax Competitiveness: The attractiveness of a country's tax system for businesses compared to other nations.
• Economic Stimulus: Policies designed to boost economic activity.
• Reannouncements: Previously announced measures presented again in a new budget.
• Transformational Measures: Significant policy changes intended to fundamentally alter or improve the economy.
• Corporate Income Tax Cut: A reduction in the tax rate levied on corporate profits.
• Payroll Tax Relief: Reductions in taxes paid by employers on employee wages.
• Accelerated Depreciation/Immediate Expensing: Tax provisions allowing businesses to deduct the cost of capital assets more quickly.
• Super Deduction: A specific term used for accelerated depreciation measures.
• Union-Only Preference: Policies that favor or exclusively allow unionized labor in government projects.
• Building Communities Fund: A $51 billion fund for local infrastructure projects.
• Tariff Relief Programs: Initiatives to reduce or eliminate tariffs on imported goods.
• Programmatic Solutions: Government programs designed to address specific issues.
• Small Business Optimism: The level of confidence and positive outlook among small business owners.
• Lobbying: The act of influencing government policy.
• Opposition Parties: Political parties not in power.
• Deficits: When government spending exceeds revenue.
• Economic Development Spending: Government expenditure aimed at fostering economic growth.
• Civil Service: Government employees.

Summary

Disappointment with the 2025 Budget for Small Businesses

Dan Kelly, President and CEO of the Canadian Federation of Independent Business (CFIB), expressed significant disappointment with the 2025 federal budget, stating that most economic measures were merely reannouncements from 2024 and failed to provide the critical cost relief and tax competitiveness needed to stimulate the Canadian economy. While acknowledging some positive measures, Kelly argued that the budget lacked the "transformational" impact that small businesses were hoping for, especially given the current high levels of economic uncertainty.

Missed Opportunities for Small Business Growth

The CFIB had advocated for more substantial incentives for business growth, such as a corporate income tax cut or payroll tax relief. Instead, the budget primarily focused on measures like accelerated depreciation for capital expenses, which, while supported by the CFIB, were largely seen as reannouncements. Kelly emphasized that small businesses are crucial for job creation, noting that if every small business created one job, it would result in a million new jobs, a more impactful outcome than large, targeted investments in specific industries. The core need, according to Kelly, is tax and regulatory relief to empower entrepreneurs.

Exclusion of Small Businesses from Major Projects

A significant point of contention is the perceived exclusion of small businesses from major government initiatives. Kelly highlighted the new $51 billion Building Communities Fund for local infrastructure, noting that its "union only or union preference" clause effectively bars over 90% of small firms, which are typically non-unionized, from participating. This, he argued, is counterproductive, leading to higher costs for taxpayers, less infrastructure for the same spending, and a failure to disperse economic benefits to the thousands of small and medium-sized companies across Canada.

Inaccessible Tariff Relief Programs

Another example of programs failing to reach their intended beneficiaries is the tariff relief program for small businesses. This billion-dollar loan program, developed by regional economic development agencies, has fine print that bars many small businesses from participation due to their size. Specific examples cited include a Quebec program limited to manufacturers with over $2 million in sales and a BC program requiring at least 10 employees. Kelly described this as a "patchwork quilt and a giant mess," where programmatic solutions fail because they are not accessible to the very businesses they aim to help. The rationale behind these restrictions is believed to be administrative ease for the bureaucracy, prioritizing track record and size thresholds.

Acknowledged Positives and Continued Lobbying Efforts

The CFIB did credit the government for announcing measures like the "super deduction," which allows for accelerated depreciation or immediate expensing of certain capital expenses. These measures are seen as beneficial for driving innovation and productivity. However, the overall sentiment remains that the budget did not live up to its promised transformational impact.

The CFIB is actively lobbying the government, including Minister Champagne and the Department of Finance, as well as parliamentarians from all parties, to revisit the budget and implement policies that will truly stimulate entrepreneurship. Kelly expressed concern over the current low level of small business optimism, stating that many businesses are vulnerable and immediate help is lacking.

The Role of Political Dynamics and Alternative Solutions

Kelly believes the federal government, operating in a minority position, must listen to voices like the CFIB. He advocates for a bipartisan approach to address these issues, emphasizing that solutions do not necessarily require increased deficits. As an alternative, Kelly suggested reallocating half of the billions spent annually on economic development towards tax reductions and trimming the size and scope of the civil service. The CFIB hopes for a more receptive audience in Ottawa to these proposals.

Conclusion

The 2025 federal budget, according to the CFIB, represents a missed opportunity for small businesses in Canada. While some positive measures were introduced, the lack of significant cost relief, tax competitiveness, and accessible programs for small and medium-sized enterprises has led to widespread disappointment. The CFIB is committed to continued lobbying efforts to advocate for policies that will foster entrepreneurship and improve the economic outlook for Canadian small businesses.