Canada is facing a severe entrepreneurial drought as business closures outpace new formations across multiple core sectors, according to testimony delivered by the Canadian Federation of Independent Business (CFIB) to the House Standing Committee on Finance in June 2026. Jasmin Guénette, CFIB’s vice-president of national affairs, told lawmakers that 55 percent of current small-business owners would not recommend starting a company in the current economic environment.
Consecutive Quarters of Net Business Losses
Data presented during the parliamentary study of Bill C-30, the Spring Economic Update Implementation Act, reveals a prolonged contraction in business creation. According to CFIB testimony before the House Finance Committee, wholesale trade has recorded 12 consecutive quarters of net business losses, where closures outpaced openings. The agriculture sector has experienced 11 straight quarters of negative growth, while retail has marked eight consecutive quarters of contraction.
Guénette told the committee that the federal spring economic update tabled on April 28, 2026, failed to address structural cost pressures and declining optimism among small and medium-sized enterprises (SMEs). He noted that government priorities heavily favored major projects of national interest and international trade expansion while leaving domestic Main Street businesses to absorb high operating expenses and complex regulations.
Proposed Tax Adjustments and Threshold Reforms
When pressed by members of Parliament for immediate interventions, the CFIB outlined two specific policy adjustments for Bill C-30. The organization recommends reducing the federal small-business tax rate from 9 percent to 6 percent. Additionally, the group is pushing to raise the small-business deduction threshold from $500,000 to $700,000.
The $500,000 ceiling has remained unchanged since 2009. According to CFIB’s submission to the House Finance Committee, indexing that threshold to inflation would place it above the $700,000 mark today. The proposed increase would only restore the real economic value the limit held more than 15 years ago.
Response to Employee Ownership Trusts
The spring update included a permanent capital-gains exemption for business sales transferred to an employee ownership trust. Guénette described this measure as positive during his committee appearance, characterizing it as a useful addition to succession planning options for retiring owners, though insufficient on its own to resolve broader economic headwinds.
Beyond tax rates and deduction limits, CFIB members continue to voice concerns regarding regulatory complexity and the absence of a concrete federal timeline for returning to an overall balanced budget. As parliamentary reviews of Bill C-30 continue, business advocacy groups maintain that targeted fiscal relief is necessary to reverse the ongoing decline in domestic enterprise formation.
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