Federal Finance Minister Bill Morneau, centre, is flanked by his provincial and territorial counterparts as he speaks during a news conference after reaching a deal to expand the Canada Pension Plan, in Vancouver, B.C., on Monday June 20, 2016.DARRYL DYCK/The Canadian Press
The federal-provincial deal to raise Canada Pension Plan contributions is breathing new life into lobby campaigns that are pressing the Liberals to come through on a promise to lower the tax rate for small business.
The Canadian Chamber of Commerce, local chambers of commerce, the Small Business Matters Coalition and the Canadian Federation of Independent Business have been lobbying on the issue since the spring federal budget, when the Trudeau government broke a campaign promise to lower the small business tax rate to 9 per cent.
Now, the CPP expansion from 25 per cent of earnings to 33 per cent will cost businesses more in contributions and is feeding lobbying and grassroots campaigns calling on the Liberals to live up to the tax commitment. Lobbyists say there is a body of opinion within the Liberal caucus that supports the tax reduction or other measures to help small business.
"We're facing a slower economy and increased costs, so we have to make sure our interests are heard," said Alex Scholten, head of the Canadian Convenience Stores Association, which is part of the Small Business Matters lobbying coalition of 98,000 small retailers, including convenience stores, gas stations, independent supermarkets and bike shops.
"From our perspective, we just want to make sure that the small business retail voice is heard and that if they're implementing these kinds of things [like CPP], that they're doing it when we're better able to absorb the increases," Mr. Scholten said. "We continually meet with MPs both in Ottawa and in their local ridings to talk about that, and to have our members talk to their local MPs."
The 2016 Liberal budget said further reductions in the small business tax rate, from its current rate of 10.5 per cent, would be "deferred," while the Liberal platform said the party would gradually reduce the tax rate to 9 per cent.
The fear among the small-business lobby is that the tax reduction may not happen as the Liberal government tries to gradually bring its $30-billion deficit back to balance. The Trudeau government has also expressed concerns that wealthy individuals could use corporation status to benefit from the lower small-business rate.
The CFIB, which has reported more than 50 lobbying communications with parliamentarians and government officials since the start of March, says the CPP increases will bolster its case for a lower tax rate.
"We've been fighting pretty hard. We've obviously been using this [the tax rate] as a centrepiece in our lobbying meetings," said Dan Kelly, head of the group.
He said many Liberal MPs were surprised by the government's decision in the budget. "There are many who believe that this is simply a deferral and that the goal of achieving the 9-per-cent rate by 2019 will still be met," he said. "We've been engaging our members to contact their members of Parliament to sign petitions."
The CFIB says small businesses will face additional costs through the end of the former Harper government's Small Business Job Credit, which reduces employment insurance premiums for businesses but is set to expire in 2017.
The group did not receive a meeting with Finance Minister Bill Morneau before the introduction of the budget, but Mr. Kelly said he is hoping for a meeting this summer.
The Convenience Stores Association has also been lobbying for lower limits on fees charged for credit-card transactions, which it says cost its 26,000 convenience-store members more than $800-million in 2014. Consumers are increasingly using credit cards for purchases because of points programs and the ease of the cards' tap-and-pay technology, which increases the costs faced by small businesses, the group argues.
Liberal MP Linda LaPointe has introduced a private member's bill, C-236, that would follow Australia and the EU's lead by capping credit-card transaction fees.
NDP legislator Gord Johns, the party critic for small business, has been working with the lobby groups, and has been leading a campaign stunt in which small businesses can send the government mock invoices for the tax savings they would have received had the Liberals come through on the commitment.
"These are issues that are very sensitive to Liberals," Mr. Johns said, adding that the tax reduction would help "lighten the load" amid a coming increase in CPP contributions. "We know that cutting taxes for small business leaves more money in local communities."
Mr Johns said he expects the issue to be discussed in a new all-party entrepreneur caucus, co-chaired by himself, Liberal MP Ruby Sahota and Conservative MP Dean Allison.
At a finance committee appearance last month, Mr. Morneau wouldn't say when the tax reduction might happen. The Finance Minister said in the House that the government's tax measures for the middle class are helpful to small business owners because they "allow those families to be excellent customers for small businesses, buying products and services, and raising the revenues of those businesses."
Annie Donolo, a spokeswoman for Mr. Morneau, pointed out the government is phasing in the CPP changes from 2019 to 2025 to make sure the contributions are affordable and that "the impact is small and gradual."