Tax changes may hinder job growth: Chamber

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This article was published 18/04/2024 (678 days ago), so information in it may no longer be current.

The Brandon Chamber of Commerce said the federal government’s proposed tax changes may limit opportunities for business development locally and nationwide.

Presenting the budget on Tuesday, Finance Minister Chrystia Freeland announced a tax adjustment on capital gains, representing the profits individuals accrue from asset sales such as stocks and second properties.

The budget also includes provisions to refund fuel charge proceeds from 2019-20 through 2023-24 to an estimated 600,000 businesses with 499 or fewer employees via a new refundable tax credit.

Chamber president Lois Ruston said the tax increase may limit employment growth.

“Changes to the capital gains system may, unfortunately, limit opportunities for business development and employment growth locally and across the country,” Ruston told the Sun in an email on Wednesday. “When the potential success of a business is throttled, the investment climate can become threatened, and entrepreneurship stifled.”

While Ruston could not provide specific details on how Brandon’s business may be impacted in the near term, she said changes like this make it difficult for companies to thrive and grow.

She explained that an essential aspect of future economic growth lies in creating a business environment capable of adapting to change, adding alterations to the capital gains tax system could potentially hinder businesses from growing and seizing opportunities, both locally and beyond.

Ruston said the chamber approved of the proposed return of fuel charge proceeds to small- and medium-sized enterprises (SMEs) through a new refundable tax credit.

“We are pleased to see this commitment in the budget,” she said. “We hope that SMEs in Brandon and our region receive returns promptly. Depending on their sector, these businesses have seen significant increases related to fuel consumption in recent years. It will hopefully provide some relief as they struggle to do business under many layers of taxes and regulations.”

Canadian Federation of Independent Business spokesperson Brianna Solberg said the capital gain changes could lead to net loss.

“The capital gains inclusion rate increase to 66.7 per cent will create many net losers, including owners of medium-sized businesses,” she told the Sun. “Owners of professional corporations (such as doctors), financial, insurance, food and accommodation, and personal care services firms will be excluded from accessing the new Canadian Entrepreneurs’ Incentive and will be hit with more taxes on capital gains for sales of small business shares above $2.25 million.”

Looking ahead, Solberg expressed concern that these adjustments to capital gains could potentially discourage Canadians from entering business ventures or striving to expand small businesses into medium-sized enterprises.

“CFIB will be pushing back against any increase in the capital gains inclusion rate for all business owners,” she said. “It seems bizarre that government would single out some sectors of Canada’s SME community for higher taxes, including many of those hardest hit by pandemic restrictions like restaurants and arts and recreation firms.”

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