Did you know that today, most private sector employees in Ontario work for a small business? This trend is likely to accelerate. Small businesses accounted for 87.7 per cent of Canadian private sector employment growth in the past decade.
You don’t need an economics degree to realize that helping small businesses and entrepreneurs start up and grow will lead to more jobs. Yet politicians aren’t taking action to support small business.
Instead, the provincial Liberals focus on handing out billions to big corporations like it’s Halloween candy and cutting taxes for Bay Street corporations.
Status quo politicians love the photo op that comes from “saving” thousands of jobs. So they focus on big corporations and mostly ignore the real job creators — small businesses whose small individual job numbers add up to millions of good jobs.
Many of the small business owners I know are working hard to create jobs and are already doing their best to pay a living wage — businesses like Pia’s in Orangeville, Grey Rock in Guelph and Kudrinko’s grocery in Westport. These businesses provide good local jobs that contribute directly to their local economy.
But the combination of proposed federal tax changes and a rapid rise in the minimum wage have small business reeling.
This is why I’m pushing the Ontario government to help small business create jobs by lowering their taxes.
It will help them — along with non-profits and charities — absorb the rapid increase in the minimum wage.
We can make it easier for small business to create jobs by lowering the payroll taxes they pay — regardless of whether they make a profit or not.
The Ontario government should increase the exemption level for the Employer Health Tax (EHT). This will make it less expensive to create new jobs, and provide the opportunity to increase the pay for existing jobs, before being taxed on those jobs.
It’s a win for workers who deserve a living wage and small business owners who want to create more well-paying jobs.
Currently the EHT exemption is $450,000 for companies with payrolls under $5 million. This means that a company does not pay the EHT on their first $450,000 in payroll.
I am calling on the Ontario Liberals to more than double the exemption to $1 million in payroll. This means that small businesses can create jobs and increase their payroll by $550,000 without being taxed. This could save qualifying businesses $20,000 in pre tax savings.
As a former small business owner, I know this will make a difference for both mom-and-pop shops, as well as for start ups looking to grow their business. This change will help small businesses grow. It will help them — along with non-profits and charities — absorb the rapid increase in the minimum wage.
This strategy is a win for workers who deserve a living wage and business owners struggling to manage a rapid increase in labour costs.
This balanced approach will also boost local economies. By necessity, lower wage workers spend most of their income on paying for the basics — rent, food, hydro. Earning more gives these workers more disposable income and puts more money back into the local economy.
Supporting small locally owned businesses create more diversified, resilient and prosperous communities.
There’s an added community benefit as well. Studies have shown that locally owned, independent businesses spend three times more money to support the local economy than comparable large corporate businesses.
This creates a multiplier effect where money circulates within a local economy instead of being sucked out of a community.
Just think of local small business owners in your neighbourhood. These folks are more likely to hire local accountants and lawyers, contract with local advertising and marketing firms, and donate to local charities and community events.
Supporting small locally owned businesses create more diversified, resilient and prosperous communities. The Ontario Liberals need to act now to support small business by lowering the taxes they pay to create jobs.
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