Small business tax rate cut to 3.5 percent will only partially mitigate impact of minimum wage increases, both set for January 1 in Ontario

Premier Wynne of Ontario was clear that the new small business tax rate of 3.5%, set to come on January 1, 2018, was not meant to offset the impact of a higher minimum wage totally:

“There was never a commitment to offset the increases in minimum wage. I was very clear that that was not something that we were going to be able to do, but we want our small businesses to be strong. We want them to be able to thrive. So that’s why we’ve put a number of supports in place.”

 

 

 

The cut to 3.5 percent is a drop of 1 percent, effective the same month the minimum wage rises to $14.00 — up from $11.60. As of January 1, 2019, the minimum wage further increases to $15 an hour.

Manufacturers, in particular, were apparently disappointed by the apparent lack of help. Jocelyn Bamford, of the Coalition of Concerned Manufacturers, said she thought the tax break was of little help to business who have to adjust to the new minimum wage suddenly:

“We wonder if the government is in denial of the damage they will cause the economy or if they just don’t care about jobs in the province.”

Premier Kathleen Wynn.

There are other programs designed for small-to-mid-sized companies, besides the tax cut, including a plan to pay incentives of $1,000 for each worker hired and another $1,000 for each worker still employed after six months — for small business only. The spend will be $124 million and will focus on companies with fewer than 100 employees.

Premier Wynn explained her rationale: “When I talk to those business owners they talk to me about job retention, they talk to me about loyalty and quality of work and all of those things that are really important to a business. So I think they would say that there’s a net benefit to paying their employees well.”

Assuming people aren’t laid off — some retailers have indicated this is possible — the extra income is expected to partially pay back into the economy in the form of new buying. Jeff Leal, Ontario’s Minister for Small Business, explained: “We do know that people who make minimum wage take those dollars and re-invest them instantaneously back into the economy. Many of the businesses they spend that money at are small businesses in the province of Ontario.”

Did you miss this?

Other Popular Stories

  • Calgary group offers $50 million for clean energy projects
  • Global car sales up, luxury auto market surging in Canada: Scotiabank
  • New York's ban on fracking gives hope to other opponents
  • Canada's GDP strength was east, west and north, not central
  • Manufacturing continues to grow but exports decline, increasing Canada's trade deficit in February
  • 3D printed hempcrete could revolutionize construction industry
  • Ontario engineers facing crisis of under-employment
  • A supersonic jet with no front window? NASA's X-59 uses a 4K monitor instead.
  • REE and American Axle & Manufacturing to co-develop new electric propulsion system for e-Mobility
  • Porter Airlines seeks to extend island airport runway for jets
  • Manufacturing sector saw slight improvement in August: RBC
  • Williams Advance Engineering Develops Ground-Breaking Aerofoil
  • The three different types of Artificial Intelligence – ANI, AGI and ASI
  • Forestry industry pledges 13 per cent CO2 reduction to fight climate change
  • Major job losses predicted on oil spending slump
  • CFB Goose Bay awards $100 million service contract to Serco
  • Scientists claim 30 per cent improvement in solar cell efficiency
  • Toronto researchers reveal spray-on photovoltaics
  • Bombardier flies new CSeries jet for first time
  • Israeli aluminum-air electric car battery to be tested in Montreal
Scroll to Top