Clouds on horizon as we turn focus to 2017

But businesses will see some bright spots, too

As I looked at the stockpile of exciting new Lego sets and Nerf guns waiting under the Christmas tree, my mind instinctively drifted toward what must be done in this new year (aside from toy assembly), and what we can expect going forward.

The past year was a tough one for many small businesses. The cancellation of promised reductions in the small business corporate tax rate, the surprise agreement to increase the Canada Pension Plan over a seven-year period starting in 2019, and five years of carbon prices kicking in next year, all have many small firms wondering where they will find the money to keep going, let alone to expand, in 2017.

From the outset, it’s shaping up to be another tough year. The Canadian Federation of Independent Business’s Business Barometer, which measures small business optimism, has been flatlining for months. Most important, for the first time in many years, there are now more small firms reporting that they will reduce full-time employment than increase it. This is very troubling and needs to be taken seriously by public policy measures.

So what else can we expect? While my crystal ball is no better than anyone else’s, here are some of the things I’ll be keeping an eye on as we head into 2017. Trudeau’s early offer to renegotiate the agreement could prove a solid strategy, as president-elect Trump may look for a symbolic win in public that doesn’t disrupt NAFTA’s critical elements. And while the future of the Trans-Pacific Partnership looks bleak, there is a play for Canada to press on independently with the other countries involved, to create what in the end would be preferential access to three major trading blocs (Europe, the U.S. and Asia).

This is one of the sectors showing some positive signs. Recent rave reviews in important travel publications, Canada’s 150th anniversary and the low Canadian dollar will all help lure more visitors to our country in the coming year. While I was in Calgary over Christmas, I saw the airport packed with U.S. skiers heading to Banff. I expect to see much more of this.

The government’s early changes to the Temporary Foreign Worker program are very positive and have reduced the recent hysteria over this issue. The elimination of the four-in-four-out rule will end the practice of sending home workers who have, after four years here, had their credentials recognized and begun to establish roots in the community. The government appears to be listening to the needs of small business owners on this issue and seems open to CFIB’s recommendation for a pathway to permanent residency for TFWs, regardless of their skill levels. fallout. If experience in other jurisdictions is any guide, expect more Alberta employers to downsize, replace staff with technology or simply give up. Also, expect calls from unions for the other provinces to follow Alberta’s ill-considered lead.

Some members of a federal government task force appointed to look at tax expenditures are questioning whether small firms should have a lower tax rate than large firms. Even last year’s changes to the small business rate as it applies to partnerships has created concern over unintended consequences and overreach. I for one am very worried that Ottawa will implement Quebec’s rollback of the smallbusiness tax rate for firms with fewer than four employees. Sadly, in 2017, the dépanneur in Trois Rivières with two staff will now be considered a big business from a tax perspective. This would be a Code Red issue for CFIB and small business owners if applied federally.

While some provinces appear to be clawing their way out of deficit, the federal government is sinking deeper in. New generous civil service contracts that do not scale back such benefits as excessive sick-leave entitlements are proof that infrastructure spending is but a small part of our ballooning deficits. Entrepreneurs have learned the hard way that today’s deficits are tomorrow’s taxes, so their big question is when will higher general rates of taxation result.

All eyes will be on the spring budget to see if this happens in 2017.

So, there’s lots to watch for in the coming year. After 45 years, CFIB begins another year of serving the small business community. We’ll continue to applaud good policies and developments and sharply criticize the bad. Along the way, I’ll work on this pile of new toys needing assembly.