The taxation and regulatory policies surrounding small companies need to change, according to the 127 Canadian business leaders surveyed by COMPAS Inc.
The web poll was conducted in response to a recent report from the C.D. Howe Institute that advocated lightening the taxation and regulatory load on small businesses. The CEOs were overwhelmingly in favour of the think tank’s assertion that such policies should be framed to make it easier for small businesses to grow.
“Government by its very nature attempts to solve all problems with regulation and complexity. In today’s regulatory climate, it certainly is difficult for small companies to survive,” wrote one respondent.
An overwhelming majority of panelists agreed the laws surrounding capital gains rollovers should be simplified to allow for easier reinvestment in small businesses. Employment laws and other regulatory obligations should also change to ease the burden. “Small businesses get hammered by large pieces of employment regulation, [such as] maternity leave and sick leave,” wrote another respondent. “Small businesses are not the banks.”
The suggestion that the federal government should adopt a flat corporate tax rate for all businesses also gained support from the panelists, though some were opposed. “Large corporations can afford staff to address the ever changing rules and regulations,” wrote one CEO. “Small businesses do not have these resources, and staying up-to-date means taking valuable time away from running and building their businesses.”
The respondents were divided on the issue of whether the federal small business deduction, which lowers taxes on the first $400,000 of revenue, encourages companies to “bonus out” income instead of reinvesting it. More than 40 CEOs agreed with the statement, while 36 felt it was untrue. “The amount of the small business income ceiling has not impeded our growth,” according to one respondent. “The issue is more one of the tax rate on capital gains versus the tax rate on personal income.”
Taken as a whole, the CEOs’ comments unsurprisingly showed a cynicism and disdain toward taxes and government. “When will governments realize that without business, big or small, they will not get money to operate?” asked one. “Governments do not create wealth. They use it up.”