'It's a joke': Small business owners blast Ontario tax cut announcement
Some small business owners are calling Ontario's plan to lower corporate taxes an empty gesture that will do little to offset the ballooning cost of doing business in the province.
In Ontario's fall economic statement, released Tuesday, Finance Minister Charles Sousa announced that the corporate tax rate for businesses with 100 and fewer employees will drop from 4.5 per cent to 3.5 per cent on the first $500,000 of profits beginning Jan. 1, 2018.
The changes will begin the same day the minimum wage will jump from $11.40 to $14 an hour, before reaching $15 an hour in 2019.
Business owners skeptical
"I think it shows a total lack of understanding and ignorance about small business," said Fred Luk, owner of the downtown restaurants Fred's Not Here and Red Tomato.
Luk says the impending minimum-wage increase coupled with high taxes on alcohol and hydro bills are threatening his restaurants in a way he's not seen in 29 years of business.
"For them to offer one per cent to small businesses and restaurants, basically it's a joke because many of us will not survive," he said.
During a quiet late morning at his midtown Toronto hair salon, David Scott said he laughed when he heard reports about the tax cut.
"Realistically, it doesn't do anything. It doesn't help small businesses," said Scott, who employs five people at his salon.
While he later admitted the tax cut "may do a little bit" to help his books, he said red tape added by the province to training programs, hydro rates and weak provincial rental protection has made for an arduous first 18 months in business.
"So when I hear people like [Kathleen] Wynne saying that, 'We're going to do this, this and this,' I just laugh," said Scott. "I just get so frustrated."
A call for help
The business owners called on the province to improve incentives and support rather than lower taxes.
"I would like to see more incentives, more helping small businesses make money," Scott said.
In his statement, Sousa announced a new program that will give small businesses $1,000 for hiring a young person aged 15 to 29 and another $1,000 if they keep the employee for six months.
Coupled with the tax cuts, the changes will cost the province $500 million over the next three years.
If Ontario intends to please frustrated business owners, it may be wise to create further incentive programs, rather than slash taxes, at least according to the owners.
"Don't reduce my corporate taxes," said Luk, who said he'd welcome a two or three per cent tax hike if the business environment improves.
"Reduce our cost of doing business, I would rather pay corporate taxes," he said.