Entrepreneurs welcome progress, but warn uneven policies still threaten fairness and growth nationwide
Canada’s small business sector is seeing a wave of policy movement across provinces, with tax cuts and trade reforms drawing praise from the Canadian Federation of Independent Business (CFIB)—but also raising fresh concerns about uneven implementation.
In Ontario, the CFIB welcomed a newly announced reduction in the small business tax rate, calling it a long-awaited response to mounting pressure on entrepreneurs. The rate is set to drop permanently from 3.2% to 2.2%, a move expected to benefit hundreds of thousands of firms across the province.
The federation said the change reflects sustained advocacy efforts, noting that thousands of business owners had pushed for relief amid rising costs and external pressures such as tariffs and energy prices. Many owners indicated they would reinvest savings into hiring, wages, and expansion, reinforcing the broader economic impact of the measure.
At the same time, CFIB data shows nearly three-quarters (72%) of Ontario small businesses are feeling the effects of US tariffs, either directly or indirectly, highlighting the urgency behind tax relief efforts.
However, while Ontario is lowering the small business corporate income tax rate, higher personal tax rates could make it more costly for owners, according to CPA Canada. Starting next year, personal tax rates on non-eligible dividends will rise as the dividend tax credit is reduced, potentially offsetting some of the benefits of the corporate tax cut.
“This makes it more expensive for business owners to access retained earnings, which could reduce the net benefit of the corporate tax cut,” says Ryan Minor, director of tax at CPA Canada. “Business owners will need to weigh the advantages of lower corporate taxes against higher personal taxes when planning dividend withdrawals and long-term growth strategies.”
While Ontario’s move addresses cost pressures, other provinces are focusing on internal trade, an area where progress is accelerating but remains incomplete.
In Alberta, the tabling of the Interprovincial Trade Mutual Recognition Act has been met with approval from small business advocates. The legislation aims to align provincial standards with those of other jurisdictions, making it easier to sell goods and services across borders.
The CFIB said the bill reflects growing momentum toward reducing interprovincial barriers, with nearly 7 in 10 Alberta small businesses previously indicating governments need to move faster on this front.
However, the organization stressed that coordination between provinces will be critical, particularly in expanding agreements to cover key sectors such as food and alcohol.
Nationally, CFIB continues to push governments to maintain progress on internal trade reform, warning that longstanding barriers—from inconsistent regulations to duplicative testing—still limit growth opportunities.
“Canada has seen more movement on internal trade over the past year than we have in nearly a decade,” said Keyli Loeppky, CFIB’s director of interprovincial affairs. “The signing of the Canadian Mutual Recognition Agreement (CMRA) on the Sale of Goods and the introduction of mutual recognition legislation show governments are serious about tackling barriers. But momentum alone isn’t enough — businesses need clear rules, consistent implementation, and fewer exceptions.”
She added that businesses remain wary of reforms that could unintentionally recreate complexity. “Small businesses are encouraged by recent announcements, but they’re also worried governments could replace old barriers with new, more complicated ones,” Loeppky said.
Those concerns are echoed in Manitoba, where a recent provincial sales tax (PST) change on groceries has drawn criticism for excluding smaller retailers and restaurants.
Under the current structure, independent grocers and food-service operators must still apply PST to certain items, while similar goods sold at large grocery chains are exempt. The CFIB argues this discrepancy risks distorting consumer behaviour and shifting sales away from smaller businesses already grappling with tight margins.
The federation says such policy gaps highlight a broader issue: while governments are taking steps to support small firms, inconsistent approaches can create unintended competitive disadvantages.
Overall, recent developments suggest governments are increasingly responsive to small business concerns, whether through tax reductions or efforts to streamline interprovincial trade.
But for CFIB, the next phase will be just as important as the initial announcements. Ensuring fairness across sectors and regions while avoiding new layers of complexity will determine whether these measures deliver meaningful, lasting benefits for Canada’s small business community.
