Small-busi­ness own­ers ‘feel­ing the brunt’ of pol­icy changes

The Globe and Mail (Prairie Edition) - - REPORT ON BUSINESS - MARIO TONEGUZZI

Ad­vo­cacy groups say ris­ing costs will re­sult in clos­ings and job losses

Thereis grow­ing angst among small-busi­ness own­ers across the coun­try as they feel the com­bined blows of ris­ing costs and a gov­ern­ment tax squeeze.

An­drew Vi­oli, pres­i­dent and coowner of Mel­low Walk, a Toronto-based manufacturer of safety footwear, said many en­trepreneurs are up­set with what his busi­ness part­ner calls the war on small busi­ness be­ing waged across Canada these days.

“It feels that way for a lot of busi­ness peo­ple … All of these costs, whether it’s hy­dro, min­i­mum wage, lim­it­ing our abil­ity to set up cor­po­ra­tions, im­pact on our prof­itabil­ity and there­fore im­pact on our vi­a­bil­ity as busi­nesses,” Mr. Vi­oli said.

Small-busi­ness groups across the coun­try are warn­ing that re­cent gov­ern­ment de­ci­sions, and the ris­ing cost of do­ing busi­ness, will have a cu­mu­la­tive neg­a­tive im­pact – re­sult­ing in po­ten­tial clos­ings and job losses. The re­cent fed­eral gov­ern­ment an­nounce­ment of pro­posed tax changes have ral­lied the troops to ac­tion and op­po­si­tion.

“A lot of small busi­nesses oper- ate at pretty tight mar­gins to be­gin with. I don’t think the gov­ern­ment, provin­cially or fed­er­ally, fully re­al­izes the pre­car­i­ous­ness of a lot of small busi­nesses in this coun­try,” Mr. Vi­oli said. “It’s im­por­tant to note that small busi­nesses gen­er­ate a huge amount of eco­nomic ac­tiv­ity and they also em­ploy a large num­ber of Cana­di­ans.”

Steven Mas­toras, manag­ing di­rec­tor of Whistler’s Grille & The McNeil Room in Toronto, said small-busi­ness own­ers across the coun­try are clearly feel­ing the cu­mu­la­tive im­pact of de­ci­sion­mak­ing from all three lev­els of gov­ern­ment and they are strug­gling.

“We are feel­ing the brunt. It is im­pact­ing busi­ness own­ers’ abil­ity to stay com­pet­i­tive, to stay open for their cus­tomers. It’s im­pact­ing de­ci­sions on youth em­ploy­ment ef­forts. It’s im­pact­ing de­ci­sions on peo­ple’s over­all pay­rolls,” Mr. Mas­toras said.

An anal­y­sis by Michael Gold­berg, Mac Kil­lo­ran and Jay Goodis on the Min­den Gross LLP web­site says the new tax poli­cies in­tro­duced by the fed­eral gov­ern­ment on July 18 “ap­pear likely to ma­te­ri­ally harm the Cana­dian econ- omy” by ex­pos­ing Cana­dian small-busi­ness own­ers to high tax rates.

Those mea­sures will also com­bine with other fac­tors, in­clud­ing ris­ing labour costs, forc­ing some busi­ness clo­sures and job losses.

The lay­ered im­pact of a num­ber of gov­ern­ment de­ci­sions from all lev­els is one of the core con­cerns the Cal­gary Cham­ber of Com­merce con­sis­tently hears from small busi­nesses.

The Cham­ber says that while some of the in­creased taxes, fees and other oper­at­ing costs viewed only in­di­vid­u­ally may be de­bated, taken as a whole they are re­ally putting a lot of un­due strain on busi­nesses at a crit­i­cal time.

It re­cently com­pleted a pro­ject an­a­lyz­ing the cu­mu­la­tive im­pact of many of these costs on Cal­gary busi­ness as they fight for cus­tomers dur­ing a time that most costs are going up.

“We ab­so­lutely see it. We see it at all lev­els of gov­ern­ment. It’s not a par­ti­san thing. It’s a gov­ern­ment thing,” said Zoe Ad­ding­ton, di­rec­tor of pol­icy and gov­ern­ment re­la­tions with the Cal­gary Cham­ber of Com­merce.

» Amber Ruddy, Al­berta di­rec­tor for the Cana­dian Fed­er­a­tion of In­de­pen­dent Busi­ness, said the busi­ness en­vi­ron­ment is al­ready tough enough as a re­sult of nat­u­ral pres­sures of find­ing cus­tomers but it has be­come worse be­cause of gov­ern­ment poli­cies – ones that are ac­cel­er­at­ing in re­cent years. And busi­nesses are sim­ply fed up.

“It just seems that many pol­icy makers don’t have the true un­der­stand­ing of what it’s like to run a small busi­ness. Small busi­nesses are very dis­ap­pointed with the fed­eral gov­ern­ment’s tax re­forms. Small-busi­ness own­ers are mid­dle-class Cana­di­ans and if you want to en­sure that they have a solid foun­da­tion for suc­cess you have to have the right rules in place,” Ms. Ruddy said, adding that en­trepreneurs are also up­set that the fed­eral gov­ern­ment has not acted on an elec­tion pledge to re­duce small-busi­ness tax rates.

“Be­ing a busi­ness owner is a risky en­deav­our and we should be re­ward­ing en­trepreneurs that go out there on a limb and make their ideas and ser­vices into a re­al­ity that peo­ple are will­ing to pur­chase but in­stead they’re be­ing hit over the head with a long list of things – min­i­mum wages, car­bon taxes, fed­eral tax changes – all at once and it seems like it’s never been harder to be a busi­ness owner.”

Trevor Tombe, as­so­ciate pro­fes­sor of eco­nom­ics at the Uni­ver­sity of Cal­gary, said he doesn’t want to sound too cyn­i­cal but there have al­ways been con­cerns raised by small-busi­ness own­ers.

“It is a very dif­fi­cult en­vi­ron­ment al­ways. In boom times, the com­pe­ti­tion is fierce. In re­ces­sions, the de­mand is low. There’s al­ways chal­lenges fac­ing busi­nesses. Small busi­nesses fail at a pretty im­pres­sive rate. Some spec­tac­u­larly so. Like restau­rants, be­ing a prime ex­am­ple there.”

Cit­ing Statis­tics Canada data, Mr. Tombe said the to­tal num­ber of new busi­nesses in the fourth quar­ter of 2016 was about 140,000 in Canada while the num­ber of busi­nesses that closed down was 126,000.

“There’s a huge flow in and out all the time even if we go back to a strong pe­riod of eco­nomic growth in early 2014 there was over 120,000 busi­ness ex­its per quar­ter,” Mr. Tombe said.


An­drew Vi­oli, right, pres­i­dent of safety-footwear manufacturer Mel­low Walk, says provin­cial and fed­eral gov­ern­ments don’t un­der­stand the pre­car­i­ous po­si­tion many small busi­nesses find them­selves in.


Mel­low Walk pres­i­dent An­drew Vi­oli speaks with sewing su­per­vi­sor Teresa Tor­res at the firm’s Toronto fac­tory. Mr. Vi­oli says many en­trepreneurs are up­set with what his part­ner calls the war on small busi­nesses.

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