For business owners such as Karla Briones, managing a small enterprise has become increasingly challenging.
Briones has operated two Global Pet Foods franchises in the Ottawa region for over ten years, but she indicates that expenses are soaring, which is squeezing her profit margins and complicating competition with budget-friendly online stores.
Additionally, her suppliers have transferred some costs related to tariffs, compelling her to increase prices in her stores.
“Costs are escalating in every aspect. Rent for commercial spaces, staffing, our inventory — all of it is on the rise, yet we are striving to remain competitive,” Briones stated.
Briones is not alone in her difficulties. Numerous small and medium-sized businesses across Canada, which together employ over 60 percent of the private-sector workforce, are grappling with issues stemming from tariffs and a decline in consumer spending, according to Jasmin Guénette, vice-president of federal affairs at the Canadian Federation of Independent Business (CFIB).
“Canada is experiencing a shortage of entrepreneurial activity, which means that currently, more small businesses are shutting down than launching in this nation.”
As the federal budget approaches on Thursday, Finance Minister François-Philippe Champagne hinted to an audience at the Canadian Club in Toronto on Monday that small businesses would find their interests reflected in the government’s financial strategy.
This announcement would be well received by numerous business proprietors and their representative organizations, who are optimistic that the 2026 budget may feature enhanced tax initiatives and programs to assist them in coping with burdensome tariffs.
As Canada’s counter-tariffs on U.S. products come into effect, some small-business owners say that while they understand the urge to fight, they’ll take a major blow from these levies. For The National, CBC’s Nick Purdon hears from business owners trying to survive more tariffs, which one advocate calls ‘economic chemotherapy.’
Less taxes for small businesses top of CFIB’s list
At the top of the CFIB’s wishlist for the budget are tax reforms aimed at reducing the cost of operating a business.
Currently, the federal tax rate for small enterprises is approximately nine percent, which the advocacy group wishes to see lowered to six percent.
They also propose increasing the small business income threshold — the amount that enables businesses to benefit from the lower tax rate on a portion of their earnings before facing a higher 15 percent rate — from $500,000 to $700,000.
Guénette asserts that this change would significantly benefit small and medium-sized business owners across all sectors, many of whom indicated to the CFIB that they would reinvest tax savings back into their businesses.
Karla Briones rearranges cans of pet food on a shelf at one of the Global Pet Food franchises she owns in the Ottawa area. Briones is hopeful the budget will help business owners like her following comments earlier this week by Canada’s finance minister. (Marc Robichaud/CBC)
Possible reinvestments could encompass initiatives such as enhanced training programs and increased employee compensation, along with acquiring new equipment and machinery, she notes.
On Monday, the finance minister hinted at potential changes aimed at making tax processes simpler.
Briones mentioned that such adjustments would allow her more time to concentrate on other aspects of her business, while the CFIB’s proposals would provide a much-needed financial boost.
However, she added that a reduction in employment insurance premiums for small enterprises, aligning the rates for employers with those for employees (a request the CFIB is also advocating for), would be particularly beneficial, as it would provide immediate financial relief.
“That would be incredibly helpful for us on a payroll-by-payroll basis, rather than having to wait until… we file our taxes to receive credits or other forms of assistance,” Briones explained.
The cash flow issue has been one of the primary challenges for Briones, and a significant reason why she hasn’t yet opted to utilize the government’s productivity mega-deduction, a program introduced in September that allows businesses to deduct the total value of various investments, including equipment costs.
Prime Minister Mark Carney announced a massive tax break to attract investors to Canada. It includes the productivity mega-deduction which lets companies immediately write off the entire cost of new investments.
While these investments can be expensed right away, Briones points out that she still requires upfront capital to purchase a new freezer or point-of-sale system before she can reclaim the funds, which can be challenging. She expresses a desire for an interest-free lending program to assist businesses in making such investments.
However, Eric Saumure, a finance expert and accountant based in Ottawa with Zenbooks, expresses skepticism. In a pre-budget blog entry, he mentioned that the mega-deduction and previously announced tariff relief initiatives will likely constrain the budget’s capacity for additional business spending.
“Combining those factors, my interpretation is that Ottawa has already made its significant business tax move for the year.”
More tariff relief, help accessing new markets
With the latest implementation of 50 percent U.S. tariffs particularly affecting small and medium-sized enterprises, many are eager for the budget to provide further relief related to the trade conflict.
The CFIB has indicated that approximately 46 percent of small exporters are directly affected by U.S. tariffs, while 49 percent of small importers are suffering due to Canada’s counter-tariffs.
Amit Thakkar, president of fabric and apparel companies House of Blanks and Roopa Knitting Mills in Brampton, Ontario, reports that both businesses have suffered due to the 50 percent U.S. tariffs on clothing.
He praised existing tariff relief options like the regional tariff response initiative, which provides qualifying businesses impacted by the tariffs with up to $3 million overall. However, Thakkar points out that some of these programs have limitations on the expenses they cover.
Additionally, they necessitate businesses to apply for assistance and demonstrate their eligibility, which Saumure notes can be a barrier. In a pre-budget suggestion, Zenbooks recommended that the government implement automatic tariff relief payments for affected businesses to alleviate this challenge.
Amit Thakkar is the president of Roopa Knitting Mills and House of Blanks, which make apparel and fabric in Brampton, Ont. Some clothing items were hit with 50 per cent tariffs by the U.S., and Thakkar says he’d like to see more relief measures in this Thursday’s budget. (Spencer Gallichan-Lowe/CBC)
In the upcoming budget, Thakkar hopes to see revenue generated from counter-tariffs returned directly to the small businesses affected, mirroring another initiative the CFIB has urged the government to adopt.
Nonetheless, he emphasizes that companies still need a customer base after receiving aid.
“We need to ensure that there is a customer at the end of the tunnel,” he stated. “It will all be in vain if there are no sales to attribute to it.”
He believes that increased assistance in accessing new markets would be beneficial in the budget. The significant barrier to shipping to Europe, for instance, is the high expense, so he suggests that subsidies to assist Canadian businesses with exporting their products internationally could help entrepreneurs like him tap into new markets.