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Bonnie Crombie, Leader of the Ontario Liberal Party, caused an outrage on Twitter, as she self-proclaimed that Ontario has the highest tax on small businesses, blaming Premier Doug Ford for not lowering the taxes. Crombie remarked that her party while coming into power would reduce the tax rate on the small businesses by 18 thousand dollars.
“Doug Ford, with his policies, has turned Ontario into the province with the highest small business tax in Canada and we know he is not able to deliver on tax cuts. Small Business Owners in Ontario can expect an8,000 cut every single year as the Liberals will reduce the small business tax rate to half.” — @BonnieCrombie
Thanks to Doug Ford, Ontario has the highest small business tax rate in Canada.
— Bonnie Crombie (@BonnieCrombie) December 20, 2024
Doug Ford just can’t get it done on tax cuts.
Ontario’s Liberals will cut the small business tax rate in half and save small businesses $18,000 each and every year.
Such a mesmerizing statement certainly went viral turning heads and fueling debates amongst small business owners, political commentators, and economic analysts alike. So it begs the question, is this promise to slash taxes truly genuine or is it merely a tactic embedded in a wider ploy– a cheaper option so to speak?
Small Business Tax Rates: Where Ontario Stands
In the current situation, Ontario is among the provinces that have set the small business tax rate at 3.2 which is relatively high for Canadian Standards. The Multi-faceted economy of Ontario is home to nearly 400,000 small businesses and for this specific demographic, this rate has a substantial impact on them. While some Canadian provinces such as Manitoba impose a fee as mediocre as 0.5% others still above Ontario’s rate, for instance, it has a 3% rate.
According to a CFIB report in 2023, small businesses are recorded to pay more than 5 billion dollars in provincial taxes. Such a reason alone is more than enough to start advocating for an improved lower rate for the small business owners even a percentage would come as a reliving feel at the start since they are constantly in the rat race with high operational costs.
Can This Tax Cut Actually Happen?
If implemented, Crombie’s pledge would help the small businesses by $18,000 every year which would help the owners that have to deal with exorbitant operating costs. If this measure is realized, that will also cut tax obligations by 18%, which can be used to reinvest back into the business, pay salaries, or hire more staff. But such a drastic tax cut will be possible?
First, let’s consider Ontario’s economic standing. At the moment, the province is over $400 billion in debt, while also making large annual interest payments on it. Larger scale tax cuts without participating and new strategies will throw the province’s budgeting system out of whack.
The Public’s Response
With what is present context, It is highly unlikely for any government to want to make such a deficit. While some small business owners are hopeful, others are wary of the implications of such a tax and Crombie’s tax cut.
An illustration of this question can be found in the concern that @K_Pena raised, which was mentioned earlier, questioning:
Doug Ford has already cut a lot business taxes and the like.. we actually have less revenue than before. What services/programs are you planning to defund or cut by providing these tax cuts? Transparency is what we need in the next government. Not another @fordnation
— K Pena (@dperador) December 20, 2024
This is a necessary concern and reinforces the response presented previously, which notes the issue of tax cuts in great depth but cannot go into sufficient depth in their concern without clarity of how such cuts are going to be compensated: how lower taxes can aid in bringing essential small business services to smaller businesses for the appeal:
On the other hand, this potential of this tax cut to influence provincial services was pointed out by @MarkJefovic:
Liberals think small business owners are tax cheats.
— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) December 20, 2024
This tweet highlights the mistrust among political parties that promise tax cuts to small business owners in the hopes of gaining electoral votes. Many small business owners believe that the political parties are only concerned about the electoral votes and not the future of the business.
Nonetheless, some users of Twitter are pleased to hear the promise of tax relief. Engaging in the debate, @WilliamCook had this to say:
Glad to see you embracing Tax Relief. Merry Christmas
— william cook (@cookstarfarms) December 20, 2024
This particular comment, reveals the hope that the tax burden will be reduced such that small business owners will have an urgent cash flow. Most business people will say that any tax cut will be a great way to alleviate their cash flow and pressures on the business.
The Real Impact of Tax Cuts: A Closer Look
In evaluating Crombie’s proposal on tax cuts, one may as well look into the experiences of other provinces where tax cuts have been implemented. For example, Manitoba has the lowest tax rate for small businesses at 0.5 % which is among the lowest in Canada. A CFIB report published in 2023 explains that those rates have attracted a great number of new small businesses originating in areas like IT, construction, and services.
Additionally, one economist points out that tax breaks have the potential to enhance the local economy. When businesses are taxed less, they can hire more people, buy new equipment, and grow their business. A survey conducted in 2022 by the Ontario Chamber of Commerce found that 61% of Ontario’s small businesses intended to invest in their operations if taxes were lessened.
On the other hand, some envisage disadvantages and are critical of tax cuts including the author of steamhead.com appointed by the government as a policy advisor. @Shernotcher emphasized the concrete implications of such policies:
This would impact some of my family members who would be able to self fund for their eventual retirement.
— sher (@shernotcher) December 20, 2024
Most particularly the need to pay for public safety, education, and economic management is overshadowed by the need to lower taxes.
A Tightrope Walk: Balancing Tax Cuts and Public Services
To begin with, it has to be made clear that Crombie’s promise regarding the reduction of tax rate for small scale businesses is completely impracticable and would never be accomplished by any government. At the provincial level though, there has to be a careful weighing of benchmarks.
Lowering parameters such as taxes may lead to an enhanced growth in terms of the business economy alongside an influx of job creation. However, if there are cuts in taxes yet the issue of gap of revenue isn’t addressed, then there will be likely measures of austerity which would influence social services, healthcare and education, these services are often used and are critical by a substantial amount of entrepreneurs.
It’s a lofty goal that Crombie lays before us, the realization of it, however, is hinging mostly on the political desire to implement the tough fiscal options and the forecast.
What’s Next for Ontario’s Small Businesses?
The argument regarding the tax reductions for small businesses in Ontario continues. With Crombie half-taxing and offering to save $18,000 in a year, small business owners in Ontario have shown some room for optimism. The catch though will be ensuring that such cutbacks will not undermine vital services or are feasible in the future.
Amidst the ongoing pressures of cost of operations, inflationary scenarios, and the dread of the economic collapse, the small business sector in Ontario is left wondering, do politicians have what it takes to follow through on their words without ripping out the fundamental pillars Ontarians depend on? For the time being, small business owners from across Ontario will have their eyes peeled to whether or not this promise transitions from being a campaign talking point to a reality.
Last Updated on by Saket Kumar
