In today’s highly competitive global economy, countries fight tooth and nail for corporate investments, promising everything from tax breaks to subsidies.
Why? Because these investments bring jobs, and jobs have become one of the world’s most precious commodities.
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Canada’s unemployment rate rose to 5.5 per cent in July, according to Statistics Canada — the highest it’s been since February 2022. That’s more than one million people looking for work.
When I was CEO of Magna, whenever we opened factories in small towns across Southern Ontario, it usually meant hundreds of new jobs and a big boost to the local economy.
But most jobs in Canada don’t come from big corporations — they come from small businesses.
According to statistics published by the Government of Canada, 98 per cent of companies that employed people were small businesses. As of 2021, 8.2 million people in Canada staffed small businesses, which is about two-thirds of the total private labour force.
So the question is: if small businesses are so vital to job creation and employment in Canada, why don’t we focus more on this critical sector of our economy?
You’d think politicians would be tripping all over themselves to remove obstacles for small businesses to let them grow and hire more people. But the reality is that big business tends to be the squeaky wheel that gets the grease, and big business has far more clout and influence in the corridors of governmental power. Small businesses are the backbone of our economy, but they’re treated more like an appendage.
Recognizing that Canada’s small businesses play a crucial role in creating jobs and generating wealth, what steps can we take to get the sector firing on all cylinders?
First, we need to unclasp the regulatory shackles holding them back. Let our tech startups, mom-and-pop businesses, home-based enterprises and new entrepreneurial ventures operate freely, unhindered by the hundreds of needless regulations that currently impede nearly every move they make. In other words, we need to stop strangling them with red tape. Lastly, we should exempt the corporate income tax from any small business with 300 or fewer employees.
Doing so will help in two ways. First, eliminating corporate income tax will enable the company to stockpile profits that can be fed back into the company to fuel future growth, expand into new markets or sink into new product development — a vital factor in the success of any tech or manufacturing startup.
Second, ditching the corporate income tax will do away with the effort required for tax compliance and tax filing, which eats up time and human resources that could be productively employed elsewhere.
The one condition attached to eliminating corporate income tax should be a requirement for any small business owner to reinvest resulting profits into the business, allowing it to grow and hire more people. If these resulting profits are paid to the owner through a salary, that salary should be heavily taxed.
The more small businesses across Canada that get up and running, the more that will grow into medium and large-sized corporations in the years ahead.
What’s more, many of these new companies will be started by young Canadians and immigrants, who often struggle nowadays to find good paying jobs in many sectors of our economy. Young Canadians and new Canadians represent the future of our country. Creating the conditions needed to start successful new businesses is the best thing we can do for them — and for Canada.
But for all this to happen, we need small businesses to join together and push for an economic charter of rights and responsibilities to remove the corporate income tax from small business, cut red tape, slash government overhead, share profits with employees of large corporations, pay down the national debt and simplify the tax system. Such a charter would create the conditions for businesses to flourish.
If small businesses are so critical to Canada’s economic fabric and the creation of jobs, then it’s high time we treated them like the economic engine they are.