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5 Minutes for Business: Business Costs and Canadian Competitiveness—We’re Not Crying Wolf

 

Every so often, one of our government contacts will ask a question that goes like this, “Why is the Canadian Chamber complaining about (pick one): the new carbon tax/the CPP premium increase/the deferral of small business tax reductions/the proposal to tax passive income/this new regulation/that increase in fees? It’s not a huge cost to business. Why are you making a big deal?”

 

We politely explain that all of these tax increases come out of the same pocket. If you take one of these tax hikes individually, it may be small, but when you add them all up, we’re accumulating a rather large pile of straws on the camel’s back. And that’s the problem. Canada is an expensive place to do business.

 

Last week, the President and CEO of the Canadian Chamber of Commerce and his provincial and territorial colleagues wrote to the Prime Minister to point this out. The letter was also sent to all of the provincial premiers because, right across the country, we are worried that “the cost of doing business in Canada is rising. This concern is not limited to the costs generated by the fight against climate change, but reflects the serious cumulative impact of the growing burden posed by fees, taxes and regulations the private sector is being asked to bear. Our members are deeply worried about their ability to both grow their businesses within Canada or compete for investment and customers from abroad. This concern becomes even more substantial when we see the determination of the U.S. administration to dramatically cut both regulation and business taxes in that country.”

 

As luck would have it, our letter was published on the same day that Petronas cancelled a $36-billion LNG investment in British Columbia. It’s impossible to pin the blame for the decision on any one factor (Petronas vaguely cited “market conditions”), but the uncertainty around project approval, along with regulatory, tax and cost burdens all contributed. The effect is a loss of jobs for Canadian families, truly a missed opportunity for Canada.

 

It’s not just Petronas, Canada has seen a mass exodus of investment, a staggering $60 billion has left over the past two years (in 2017, Shell divested $7.5B, Marathon sold $2.5B and ConocoPhillips $17.7B. Most has gone to other jurisdictions). And we’ve seen some of the players shedding Canadian energy assets while investing more in the U.S. It’s true that U.S. shale enjoys a modest cost advantage over oilsands production, but we worry that Canada’s high costs and dithering over pipelines is having a big impact. As the Globe and Mail pointed out last week, “It’s beginning to feel it is becoming impossible for any new interprovincial pipelines to ever get built […] because of obstructionist games played by premiers and mayors. […] Environmental benefit: Nil. Economic cost: High.”

 

 And it’s not just oil and gas. Last week, we sat down with a major multinational agri-food producer who told us that, for his company, regulations are a bigger cost than taxes. The company was struggling with Canada’s new food labelling rules and asked if the current government is “sensitive” to the cost burden of regulation. I said the word “sensitive” is too strong. “Blissfully unaware” might be a better descriptor. The government wants to attract more foreign investment, but in a tough globalized environment. What really attracts investors is the rate of return. That’s why costs, rules and regulations are so important.

 

And they have real world impacts on Canadian families and their prosperity. Last week, we wrote to the Prime Minister, “As we increase business costs to address climate change, we urgently need to find ways to lower costs elsewhere. […] to strengthen Canada’s economic competitiveness.” Global capital can go anywhere. The wolf is at the door.

 

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

 613.238.4000 (284) | hbrakel@chamber.ca

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Canucks in the Volunteer State

Guest Column by Perrin Beatty, President & CEO, The Canadian Chamber of Commerce

 

Want to understand the reality of trade in North America? Start at the FedEx Super Hub in Memphis, Tennessee at 1:00 a.m., watching the incredible flood of 3.3 million packages daily, ripping with machine-like efficiency over 300,000 conveyor belts spread out over 862 acres.

 

Our delegation’s four days in Tennessee were designed to provide an opportunity to make the case for Canada. The southern reputation for hospitality is well-deserved in Tennessee. And it seemed like everyone has a connection to Canada. I discovered that the Mayor of Nashville, Megan Barry, once worked for Nortel, that FedEx’s 4,000 pilots train on Canadianmade flight simulators and that Memphis residents can enjoy poutine and Canadian beer at the area’s two Kooky Canuck restaurants.

 

And who says Americans don’t know much about Canada? I met dozens of people who appreciate the importance of Canadian businesses, often because of large Canadian investments. We visited CN’s massive intermodal hub, located slightly outside of Memphis. This hub is CN’s gateway to the south, where it can switch containers from one mode of transportation to the other easily. These connections helped us spread the word about the benefits of doing business with Canada.

 

Most folks weren’t aware that Canada was their biggest trade partner, but they were happy to hear it. Currently, there is nearly $14 billion of trade between Tennessee and Canada (that’s more than our trade with France and Italy combined), and over 170,000 jobs in Tennessee depend on trade with Canada. The numbers are astonishing, and when I met Matt Wiltshire, Director of Nashville’s Economic and Community Development Office, he enthusiastically offered to help spread the word.

 

We had very positive discussions about NAFTA. When we met the Memphis Chamber, the participants rallied around the idea of “do no harm.” We agreed that although NAFTA can and should be modernized, the current structure should be the starting point, without having to reinvent the agreement. Overall, the Americans we met believed the NAFTA renegotiation will go well. That’s why this work is so important.

 

Last week the U.S. Trade Representative released its objectives for renegotiating NAFTA. There are areas of concern for us, but it emphasizes building upon the current NAFTA relationship. However, we worry the scope of the negotiations is extraordinarily ambitious—everything from dispute resolution to rules of origin, services, intellectual property. A major rethink could take years.

 

In Washington, politicians will be under pressure to talk tough and tweet crazy things. The negotiators will set “red lines,” deadlines and “deal breakers.” Things can get hot. I remember the Cabinet meeting when Brian Mulroney ordered our negotiators to walk away from the Canada-U.S. talks. But behind the rhetoric and theatre, Tennesseans reassured us that real business people are still sensible, cooperative and ambitious.

 

Whether it’s a fight over NAFTA or any other friction between our countries, it is so important that we have business allies who will stand with us to say that Canada is a friend, an ally and a partner.

 

Our next stop is Texas and then on to Georgia. If you’d like to participate in any of our delegations, please email us. If you’re looking for more info, click here.

 

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

 613.238.4000 (284) | hbrakel@chamber.ca

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5 Minutes for Business: The Explosive Debate around Minimum Wage

Big increases to minimum wage are becoming fashionable in Canada: first Alberta (from $12.20 currently to $15 in October 2018), then B.C. (from $10.35 to $11.35 in September 2017) and now Ontario (from $11.40 to $15.00 in January 2019, a 30% hike in 18 months). Are workers better off or does it mean fewer jobs?


The debate has been ferocious because economists don’t agree, but let’s look at the fundamentals. The government accepts that carbon taxes are effective at reducing emissions because if you make something more expensive, people will use less of it. We agree, but the same logic must apply to wages. And, actually, a business owner faced with the rising cost of an input (labour) has three options:

  • Absorb the added cost out of her profit margin
  • Raise prices
  • Reduce use of labour by substituting in morecapital or simply making do with less work

Let’s take these in order. Some businesses are so spectacularly profitable that owners can just absorb rising labour costs. But Apple and Microsoft don’t use minimum wage labour. If we look at profit margin by industry, the biggest users of minimum wage labour are in retail and food service, with razor thin (below 3%) margins. There is very little room to absorb these costs, and if a business is not profitable, there is not much point in keeping it going.


What about raising prices? The critical ingredient in business success is getting the right price point for your market. One restauranteur told us that the lunch menu in her neighborhood has to be $5-$8, any higher means flirting with disaster. In retail, the competition is with online giants, like Amazon. Often, there is no room to raise prices without driving away customers.


The third option to cope with rising wages is making do with less staff. This is controversial because many studies show that minimum wage can be increased without a corresponding rise in unemployment.

 

That’s why the recent Seattle study produced such a bombshell. Washington state collects detailed data on hours worked and it showed how part time workers with irregular schedules are cut back. Seattle’s minimum wage hike reduced the total hours worked by the low-wage workforce by about 9% while raising their wages by only about 3%. The net loss to workers was an average of $125 a month. This is a big, immediate hit to the most vulnerable workers.


In the long-term, minimum wage hikes can also drive labour-saving capital investment. The former CEO of McDonald’s told Forbes, “demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives.” At the time, labour groups accused business owners of crying wolf. McDonald’s is now rolling out touchscreen selfservice kiosks across Canada and the U.S.

 

There is some evidence that modest increases in minimum wage can be done without disrupting labour markets, but governments have to be cautious about hurting competiveness. Previously, I had said there are three options to deal with rising costs, but there is actually a fourth and a fifth option: shut down or move to a different jurisdiction. Let’s provide input to the Government of Ontario to prevent this from happening. The Ontario Chamber of Commerce has
done some great work on this issue and has a report that can be viewed here.

 

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284) | hbrakel@chamber.ca

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5 Minutes for Business: Modernizing NAFTA – Come Join Our Campaign!

We remain optimistic that NAFTA 2.0 could be a huge boost to the economies of North America because there is so much to be gained. But we’re also starting to worry: anti-trade rhetoric and posturing could veer the talks towards trouble. There are a lot of contentious issues to resolve in an unreasonably short deadline. Trade, in general, and NAFTA, in particular, are massively unpopular with Trump supporters.

 

And the decision-making in Washington D.C. around trade issues has become increasingly chaotic, with U.S. business groups pushing back aggressively against nationalists in the administration. We’ve already seen an executive order to withdraw from NAFTA, where President Trump told the Washington Post, “I looked forward to terminating. I was going to do it.” It was the uproar from U.S. business that forced the Trump Administration to reverse its position.

 

And again this week, the U.S. government appeared poised to make a dangerous decision on steel tariffs. The Commerce department was supposed to brief Congress on the tariffs last Friday, but the meeting was cancelled. Officials are now scrambling to alter the decision after ferocious blowback from U.S. business.

 

The lesson is clear: the most important group advocating trade is not politicians or (god help us) economists. It’s the business community because businesses understand the real world consequences, the jobs that depend on trade. These folks have a very powerful message that resonates with the general public as well as local members of Congress and Senators. And they are the most credible on the benefits of trade.

 

It’s exciting to see business at the forefront of this campaign, and we need your help. The Canadian Chamber is organizing visits to key U.S. states, including Tennessee, Texas and Georgia. (We’ve already been to Virginia and South Carolina.) We’ll be meeting local businesses and U.S. political leaders to raise awareness of the benefits of the Canada-U.S. relationship and to point out the risks of damaging it.

 

Our CEO, Perrin Beatty, recently pointed out, “When you go to Washington and meet politicians on Capitol Hill, you’re just another foreign lobbyist. But when you go out to their congressional district in Memphis, with Canadian business leaders who are investing in the local economy, importing their goods and hiring their workers, then you are priority number one.”

 

Participants are needed to make this strategy effective. Businesses, large and small, in all sectors are invited. We would also appreciate if you could provide us with information about your relationships in those states— the key suppliers, major investments, etc. Canadian firms with local offices in these states can help by alerting the local branches of our visits and asking them to participate in events or perhaps host site tours, etc. If you’d like to participate or join any of our delegations, please email us.

 

We’re also playing a direct role in Canada’s NAFTA negotiations. Our CEO met last week with the Cabinet Committee and our Vice President is on the Chief Negotiator’s consultative committee. Our framework NAFTA brief has been submitted to the Global Affairs department. We’ll be providing additional information to our trade negotiators in the coming weeks and months. If you have trade issues that you want us to bring to Canada’s NAFTA negotiators, please email us.

 

Let’s put the power of the network behind NAFTA. Our economies and our jobs depend on it.

 

For more information, please contact :

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284) | hbrakel@chamber.ca

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5 Minutes for Business: How Europe Got Her Groove Back

Poor Europe! She suffered years of economic stagnation and austerity. Costly government bailouts and a drawn-out banking crisis sapped her confidence. Terrorism and an unprecedented surge of migrants poisoned political debate and encouraged extremists. The final insult came when the British voted to leave her.

 

By the end of 2016, popular wisdom was that Europe’s politics were so shattered and her people so fed up, that upcoming elections would see right-wing extremists swept to power from France to the Netherlands, Austria and Italy. Even the gentle Scandinavians were eager to elect loons!

 

Except that didn’t happen. The elections came and went. The Austrians and the Dutch elected moderates by healthy margins. The Trudeau-like French centrist Mr. Macron won the French presidency by a staggering 30%, in a victory so crushing that his opponent Mme. Le Pen announced her intention to change the name of her political party. Far from a wave of Trumps, Europe is governed by sensible moderates (with the exception of Orban in Hungary).

 

And recently Europe’s economy has gone from strength to strength. All 28 members of the EU saw growth last year, and this will continue through 2017 and 2018.

 

In the first quarter of 2017, the European Union’s economy grew at a healthy 1.9%, more than double the U.S. quarterly growth of 0.7%. European business confidence is near an all-time high for manufacturers and services. More importantly, business is spending – European investment will grow by 3% this year and 3.5% next year. And best of all: European consumers are a happy bunch with low debt levels and money to burn. Last week, consumer confidence hit the highest level since June 2007. Happy days are here again!

 

Canadian businesses see the opportunities. Hudson’s Bay will invest $570 million in Europe this year and are targeting sales growth of 20%. The CEO Jerry Storch says profits will grow even faster than sales.

 

So far in 2017, some of Canada’s fastest growing export markets can be found in Europe. Exports to Germany are up 9%, sales to France are up 14% and the Netherlands are up 10%. And Canada’s investments in Europe are even larger. The total sales by Canadianowned companies operating in Europe exceeds $100 billion. That’s more than triple the value of Canada’s direct exports to the region.

 

Investors have noticed that Europe has her confidence back, and she’s even got a bit of swagger. When Mr. Trump promoted Brexit to other EU countries, the President of the European Commission Jean-Claude Juncker said “I’m going to promote the independence of Ohio and Texas.” Europe has also started flexing her muscles and is about to embark on a new defence spending spree.

 

And thanks to far-sighted trade ministers, Ed Fast and Chrystia Freeland, the Comprehensive Economic and Trade Agreement (CETA) will come into force soon. We’ve all been so focused on the NAFTA renegotiation and those fabulous 3 a.m. tweets. Let’s not lose sight of a spectacular opportunity for Canadian business. With 500 million people and GDP of $18.5 trillion, the EU is the world’s largest economy, so a return to stability and growth will have a stimulating effect on the whole global economy. Welcome back Europe!

 

For more information, please contact :

 

Hendrik Brakel Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284) | hbrakel@chamber.ca

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5 Minutes for Business: Fast and Furious—Negotiating NAFTA

Tick-tock! The U.S. Trade Representative just sent the official notification to Congress that NAFTA negotiations will begin in 90 days. The Canadian government must now negotiate and resolve all the hot button issues with our American and Mexican friends—in the midst of a highly charged political environment. How will it play out?

 

For the next 90 days, every special interest and aggrieved Wisconsin dairy producer will have a chance to provide input during the consultation period under Trade Promotion Authority. Then, whatever new agreement is negotiated must pass the House and the Senate. All three governments want NAFTA 2.0 wrapped up ASAP. Canada wants to end the uncertainty that is hurting investment, and for our partners, it is even more urgent.

 

Mexico’s presidential election is set for July 2018 and will be in full election season by the early spring. Polls show the current leader is Andres Manuel Lopez Obrador, a fiery left-wing nationalist who filed a human rights complaint against Mr. Trump and his plans for the border wall. He calls it embarrassing to see the current Mexican government prostrate before Trump. Mexico’s government would dearly love to conclude the NAFTA well before the election.

 

Similarly, U.S. mid-term elections will be held on November 6, 2018, and Republicans need to show progress on trade. The likelihood of NAFTA passing Congress drops off significantly after the mid-terms.

 

Gallup points out that when the U.S. President has an approval rating below 50%, his party loses an average of 36 seats during mid-term elections. President Trump’s approval rating is well south of 50%, in the high-30s. If the administration remains mired in scandals, special counsels and the Russian Connection, the Republican house is likely to lose its 31-seat majority. Would a newly-elected Democratic house be eager to pass Mr. Trump’s NAFTA?

 

No way. Is it even possible to renegotiate NAFTA before the deadlines? The original Canada-U.S. FTA took 18 months (May 1986 to Oct 4 1987), and our governments at the time were the closest of friends.

 

So it’s possible but very unlikely because of the politics. We often hear from Americans that Canada is not the main target of U.S. trade ire. Canada just needs to give the Trump administration a PR win, which it defines as a big give on supply management and softwood lumber, then it can have whatever it wants— regulatory cooperation, movement of people, maybe even an exemption from Buy American.

 

But the politics are awful because Mr. Trump’s bullying, blustering threats have made it impossible for Mr. Trudeau or Mr. Pena Nieto to agree to concessions without appearing weak. Their supporters despise Mr. Trump and would be furious. And even if it wasn’t politically poisonous, why should we make concessions for another country’s domestic politics?

 

There may be another way. The USTR referred to NAFTA modernization as opposed to renegotiation. In the past, NAFTA has been amended extensively without going back to Congress. We could add a chapter on ecommerce, fix the rules of origin and sign a bunch of side letters that could give the Americans the win they need. Let’s hope they take what they can get. Otherwise, NAFTA 2.0 is doomed.

 

Hendrik Brakel

The Canadian Chamber of Commerce

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284)

hbrakel@chamber.ca

 

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Exiting Europe and Terminating NAFTA – Have our Trading Partners Lost it??

From Europe to the U.S.A., our largest trading partners are burning up with anti-trade fever. Is it a short-term flu of harmless populism or the most destructive strains of anti-globalization since the 1930’s?

 

Last week the Trump Administration leaked a draft executive order to withdraw the U.S. from NAFTA. “I was all set to terminate,” Trump told the Washington Post “I looked forward to terminating. I was going to do it.” What changed his mind?

 

He backed down after an uproar from U.S. business groups, ferocious blowback from Congress (Senator John McCain said it would be a “disaster”), and calls from the leaders of Canada and Mexico. Apparently the decisive factor was a map of the United States showing the areas that would be hardest hit from cancelling NAFTA and highlighting that many of those counties, particularly in agriculture and manufacturing had voted Trump last November. The blustery threat and same-day retraction inflamed public opinion in Canada and Mexico, so that it will be even harder for those governments to make concessions to the U.S. What could be nuttier?

 

Frexit. If France elects a President dedicated to exiting the European Union and abandoning the Euro, it would be much worse than Brexit, perhaps leading to a break-up of the EU. Should we be worried?

 

We will find out on May 7th when the people of France vote in the second round of the Presidential election. The parallels with the U.S. are striking – Marine Le Pen presents herself as a champion of the oppressed working class, les oubliés (“the forgotten”) and she promises to stop immigration, withdraw from the EU, and impose tariffs to protect French business. Her opponent, Mr. Macron is in the centrist Hillary position with somewhat vague promises that are proEU and include investments in training, along with more flexibility and lower taxes for French business. Mr. Macron has a massive lead in the polls, but analysts point to severe trauma in the French political system. From the Euro crisis and bank bailouts, to an influx of migrants, economic stagnation, and terrorist attacks, the French have never been more disenchanted with their elites. In fact, both of the major parties (the equivalents of the Liberals and Conservatives) were eliminated in the first round.

 

There’s been much talk about a world-wide trend of government elites losing to anti-trade populists, but don’t count on a big win for Madame Trump. Extremist candidates were defeated in the Netherlands and Austria, because of concern about the economic consequences and also because messages of openness do resonate. Polls show that significant numbers of Trump voters and Brexiteers are experiencing regret.

 

Personally, I think Ms. Le Pen has pushed her luck too far with a promise to exit the Euro. This means that all financial assets, debts and pensions would have to be converted from Euros to some new currency to be introduced by Ms. Le Pen. Hear that, French seniors? Your life savings could be devalued and switched into new Francs from the Front National. Good luck.

 

That’s the point of Brexit, Frexit, threats to withdraw from the EU/NAFTA and trade wars generally. It’s lots of fun to bluster and bash trade, but there are real consequences and real job losses. Sometimes we only see the benefits of free trade when someone threatens to take it away. So let’s hope the French come to the same conclusion as so many Dutch, Austrians, remorseful Brits and American businesses to embrace openness. Because despite all the uncertainty, faster growth in global trade is just around the corner.

 

For more information, please contact:

Hendrik Brakel,

Senior Director, Economic, Financial & Tax Policy

613.238.4000 (284)

hbrakel@chamber.ca

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Canadian Businesses Lose Billions of Dollars to Cyber Crime Each Year

 

The increasing frequency of cyber attacks is costing Canada billions of dollars a year and hindering our ability to compete in the global economy, says a new report from the Canadian Chamber of Commerce. Cyber Security in Canada: Practical Solutions to a Growing Problem finds that cybercrime is an increasing concern for businesses and proposes cooperation between government and the business community to improve security.

 

“A study from the Center for Strategic and International Studies found that Canadian businesses are losing over $3 billion a year to cybercrime,” said the Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. “It’s not technology-savvy security experts committing these attacks. Anyone with a computer and an internet connection can now disrupt services or hold data for ransom. What costs a criminal $100 may end up costing a business millions in lost money, time and reputation.”

 

Small businesses are particularly susceptible to cyber attacks because they often lack the financial resources and technical expertise needed to protect themselves. “SMEs comprise 98% of the Canadian economy. Nearly half have been the victim of a cyber attack,” said Mr. Beatty. “Their focus is on recovery instead of prevention. Unfortunately, recovery is often not possible. The average cost of a data breach in Canada is $6 million. Most small businesses would not be able to survive losing a tiny percentage of that figure.”

 

The report’s release comes after the federal government’s 2017 budget included $1.37 million for the fiscal year to continue programs already in place for risk assessment of critical infrastructure but made no direct mention of cyber security. “Government can’t do everything but they need to play a leadership role in securing Canada’s digital landscape for everyone,” said Mr. Beatty. “We need a public-private approach to address this urgent challenge.”

 

The report, released at the Lockheed Martin Canada IMPACT Centre in Ottawa, lays out a path for closer collaboration between government and business on cyber security, including providing incentives for security innovations and developing programs to increase workforce digital literacy. “By creating a stronger, more resilient cyber security framework we can better protect both our businesses and our citizens,” concluded Mr. Beatty.

 

The Canadian Chamber of Commerce is the vital connection between business and the federal government. It helps shape public policy and decision-making to the benefit of businesses, communities and families across Canada with a network of over 450 chambers of commerce and boards of trade, representing 200,000 businesses of all sizes in all sectors of the economy and in all regions. Follow us on Twitter @CdnChamberofCom.

 

Guillaum W. Dubreuil
Director, Public Affairs and Media Relations
The Canadian Chamber of Commerce

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5 Minutes for Business: Are We Ready for the Next Generation of Small Business Owners?

Canadian business is about to go through an era of unprecedented upheaval. Is it an economic crisis? A climate calamity? A Trump presidency? It’s much worse: a mass-retirement of business owners!

 

A staggering 75% of small business owners will retire over the next decade, and $1 trillion in business assets will change hands. Are we ready?

 

The answer is a resounding no. Less than half of small business owners have succession plans and only 9% have a formal written plan. We often hear that owners don’t like talking about retirement. They’ve been leading their business for decades and it’s part of their identity. Many just assume that they will be able to sell the business or pass it along to kids when the time comes. And because it’s years away, the awkward discussion can always be put off to another day.

 

There are huge implications. For starters, inadequate planning will lead to a big tax hit. Many family businesses have concerns that they are treated unfairly. If an individual sells a business to an unrelated person, it’s considered a capital gain and subject to a significant exemption. However, when an individual sells a business to a family member, the disposal is taxed as a dividend at the top marginal rate. That’s because the Crown sees the cash remaining within the family unit and wants to avoid creating a costly loophole. It’s a tough issue—there is an issue of discrimination against family business. In fact, NDP Deputy Finance Critic Guy Caron has prepared the private member’s bill C-274 to address the “unfair treatment” of family transfers.

 

But financial planners tell us that Canada’s tax code is actually quite generous. If you set up a family trust, an estate freeze or other tax strategies, it’s possible to minimize your tax bill substantially. The problem is that this must be done years in advance.

 

The second big challenge is financing the succession. It can take years to find the right buyer with deep pockets to buy-out the retiring owner. Again, a lack of planning can force owners into a fire sale situation, and potential buyers need time to raise funds.

 

The Canadian Chamber recently passed a resolution asking that government small business financing programs be expanded so that potential buyers can access the funds to buy-out a retiring owner. It’s a great idea.

 

We sometimes focus exclusively on supporting startups, but it’s just as important to ensure the continued success of existing businesses. Consider the perspective of an entrepreneur: you could create a new idea from scratch, seek out customers who have never heard of you and hope against the odds to turn a profit. Or, you could take over a company that has been in business for decades, with a loyal customer base and a track record of profitability.

 

The point is that it takes years to plan, finance and implement a successful exit strategy—on top of the training and mentoring to prepare the business itself for transition.

 

That is why chambers and business associations must do more to encourage members to start early and create robust succession plans. Financial institutions and government agencies also must help fund the next generation of managers and owners. But it’s a big challenge for business and for the Canadian Chamber. If you have views on succession planning and/or on bill C-274, please email or give me a call.

 

Hendrik Brakel Senior Director,

Economic, Financial & Tax Policy

Canadian Chamber of Commerce

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