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Everyone wants lower taxes says Catherine Swift, president, CEO and chairwoman of the Canadian Federation of Independent Business (CFIB). The CFIB has been fighting for years, with some success, to get a lower corporate tax rate for small business. Swift suggests that one practical way to help small business survive would be for the federal and provincial governments give tax breaks to the smallest and newest businesses when they have the most difficulty. She says that if business was allowed to keep a little more of their money in their start-up years, it would increase their chances of success.

Garth Turner, a Member of Parliament for Halton, Ontario, says that government needs to develop more sensitivity when trying to pursue tax revenues that aren't there. For example, if the economy takes a tumble or your business drops 60 percent because the road in front of your restaurant is being dug up, government still has the same demands at all levels. "It's extremely frustrating for business," says Turner. "They (government) can put you under very quickly."

Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC), believes that we've done a very poor job in Canada in providing tax incentives for the middle-sized small business sector and the reason is how we define small business. He'd like to see that ceiling raised. "The Tax Act has set very stringent ceilings on the eligibility for tax incentives," says Russell. "Once you exceed the threshold in assets, you no longer qualify for the favourable small business rate (11 percent versus the larger corporate rate of 19 and1/2 percent). The problem is that they cut it off at too small a level. That's a major reason why we haven't been able to grow our small businesses into mid-sized successful companies. There's a need to level the playing field here."

Peter Brenders of BIOTECanada says government needs to eliminate outdated tax restrictions that were put in place 20 years ago, specifically involving the Scientific Research and Experimental Development credits, a program currently limited to Canadian controlled private companies. Two thirds of their companies don't qualify since a lot of these companies have gone public or have brought in foreign investors trying to raise money. Then they lose that refundable tax credit. Getting rid of these restrictions would increase Canada's competitiveness on the world stage.

Regulatory burden: Reduce, streamline and coordinate

Swift, Turner and Russell all believe that the regulatory burden on small business in Canada is too large.

"Man, we've got a lot of government — municipal, provincial and federal," says Swift, who criticizes all levels of government for overcomplicating the tax system and not coordinating services. "If they could lighten the load — not just on the tax side but on the whole red tape paperwork — that would be huge." She says that many small businesses don't take advantage of breaks in the tax system, like big business does, because they don't have a battery of lawyers and tax experts on staff. Simplifying the system would especially help many young firms. "That's an area for reform that's eminently do-able," says Swift.

She also suggests that government work together to avoid expensive duplication of services, such as the Department of Finance Canada and Statistics Canada, both federal agencies, collecting precisely the same data. She says there's no rationale for not streamlining what they do.

Turner says that the greatest obstacle and the greatest challenge for government at all levels are to coordinate their burden on small business. Right now, business has to file both federal and provincial corporate taxes. He says it is impossible for any business person in Canada to actually fill out their own corporate tax return, so therefore, even the smallest business must spend $3,500 (the average cost for an accountant for this service) to file their corporate taxes.

While many governments have talked about streamlining government demands on business, no one's done it yet, according to Turner. He says that one way to make sure the paper burden is reduced would be for business to report to only one government agency. He suggests that the existing Service Canada should be handling all those services, both federal and provincial.

Ian Russell says that the regulatory structure in Canada carries a heavy burden for their members who are intermediaries in the market. He advocates regulatory reform that would change the structure from 13 different regulators to a single regulator. "We have excessive rules so compliance costs are high," says Russell. "It would help to rely more on principles and less on prescriptive rules."

Peter Brenders says that biotechnology is probably one of the heaviest regulated industries in the country making it slow and difficult for a lot of their companies. There is too much paperwork involved in introducing new technologies to Canada compared with other countries in the world. Companies don't want to be dealing with 10 different provinces, the federal government and territories and all that. A lot of the companies that develop technologies in Canada are small companies without huge regulatory departments or a team of lawyers.

Encourage innovation and competition

Turner believes that government can use existing programs and channels to encourage innovation, without adding more layers of bureaucracy. For example, he'd like to enhance the scientific research credit by 25 percent for investments in high tech and green technology. He would also encourage lenders by giving them some kind of backing or guarantee program for loans involved in funding high technology.

Russell says that, given our resources and the rapidly growing world market, Canada can leverage into the global economy very effectively. That entails enabling companies to get more access to capital they need so that they can purchase plant and equipment technology to be competitive and take better advantage of the talented labour force in Canada.

Peter Brenders says "Canada needs to walk the talk" about encouraging innovation by doing what they say they want to do. Government needs to set regulatory policy that allows companies not only to research and develop new technologies here, but also introduce it to the country. "We have a lot of examples of companies that have developed new technologies through Canadian research and they've brought them to market, but now they're only selling in the U.S. or Europe. The problem is a regulatory environment that's difficult to access within Canada because of old regulations…written long before this new technology was ever envisioned. Biotechnology is a 21st century wave and our environment needs to adapt to this new innovation. "

Brenders believes Canadian business can be more competitive on a global scale if they have the operating environment that helps them. He says the three things a company needs to be competitive "out there" are:

1. Capital — to develop the technologies and bring them to market. Canada needs to allow more financial money to come here.

2. People — We need to make sure we can bring in the brightest minds and keep the most entrepreneurial leaders to build a strong environment.

3 The regulatory environment needs to encourage companies to develop and introduce new technologies with this country. We need to take down barriers that inhibit that. We need to change mental attitudes that new technology needs to be studied for 10 years. We need to introduce it today.

Provide greater access to capital

Turner would also like to see more capital available to companies. He suggests letting them write off more of their capital costs so they can keep more of their cash flow for expansion.

Russell says agrees that the key ingredient is the tax system. The best incentive for encouraging capital formation, in a way that you can get the cost of capital down for investors, is to reduce the capital gains tax. But the debate over the capital gains tax has become cluttered due to the complexity of reducing the capital gains tax. The most effective capital gains tax, says Russell, is a very simple mechanism.

Brenders says financing is number one for companies to take their research and development to market. They need an environment and incentives that are competitive. A lot of companies have opted to take their business elsewhere in the world for far more money and easier access. Canada's facing a lot of competition with that.

A prescription for reform

Garth Turner sums up with five things that government can do to improve the regulatory climate for small business (and big business too):

1. Get out of the way of business

2. Keep government spending within its means

3. Keep interest rates as low as possible

4. Keep corporate and personal taxes as low as possible

5. Streamline the regulatory burden

Brenders believes we need to work together to make Canada globally competitive as a country. "When we look around the world, we say, 'What's India doing? What's the U.S. doing?' We don't go around and ask, 'What's this province or state doing?' At the end of the day, it's one country, one point of access and that's what Canada needs to be," says Brenders. "We need to work together to make sure we are selling Canada in a global space and not just a mish mash of a whole bunch of regulatory regimes."

The experts:

Catherine Swift, president, CEO and chairwoman of the Canadian Federation of Independent Business (CFIB)

CIFB lobbies for small and medium sized independent businesses at the federal, provincial and local levels of government. The 35-year-old organization represents over 105,000 members across Canada, ranging from one-person home-based businesses to firms with several hundred employees. All are owner-operated and do not trade on the stock markets. The CFIB does not accept funding from governments, large corporations or other sources.

Garth Turner, Member of Parliament for Halton, Ontario

Turner was first elected to the House of Commons as a Conservative in 1988 and served until 1993. During that time, he was a member of the Treasury Board, served briefly as Minister of National Revenue and ran unsuccessfully for leader of the Conservative party.

Ian C.W. Russell, president and CEO of the Investment Industry Association of Canada (IIAC)

As head of the IIAC since their inauguration in 2006, Ian Russell develops and communicates investment industry positions on major current issues, including what he describes as the pressing need for regulatory reform. Russell acts an advocate for industry with various levels of government and market officials and is a frequent columnist for industry publications and a speaker at industry events.

Peter A. Brenders, president and CEO, BIOTECanada

BIOTECanada is the national industry-funded association representing 550 biotechnology companies in the health, agricultural and industrial sectors. Incorporated in 1987, it is dedicated to the sustainable commercial development of biotechnology in Canada and to providing solutions to the challenges their constituents face.

Before joining BIOTECanada as president & CEO in 2005, Peter Brenders worked in health affairs in senior management roles at Genzyme Canada and Schering-Plough Canada. He has also worked in the Ontario Ministry of Health and in the health consulting practice at KPMG, a professional firm that provides audit, tax and advisory services. While at Genzyme, he served as Chair of the BIOTECanada Health Policy Committee and sat as a member of the association's Government Relations Committee.

Brenders is currently a director of the DeGroote School of Business Alumni, McMaster University and a member of the Advisory Council for Algonquin College's biotechnology program. He is a former director of the Biotechnology Human Resources Council and has served as a member of the Privy Council Office's Reference Group on Regulating.