Bank of Canada rate hike will hurt small businesses: study

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A new study by the Canadian Federation of Independent Business shows seven in 10 small businesses believe the Bank of Canada’s latest rate hike – the fifth this year – will hurt their bottom line.

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The study also indicates that 81% of small businesses believe the federal government does not understand the cost pressures they face.

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“This should be a wake-up call for governments to act quickly and provide further cost relief,” CFIB President Dan Kelly said in a statement.

“Suspending upcoming tax hikes and accelerating promised reductions in credit card processing fees would be two of the first ways the federal government can help.”

Data from CFIB’s August Business Barometer also shows that almost a third of businesses (32%) plan to raise prices by 6% or more over the next year, although they have risen to 39%. in June.

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The study also shows that 79% of small businesses have raised prices more than usual over the past year to offset rising costs.

CFIB wants the government to freeze planned federal tax increases, including the 2022 increase in CPP, EI, carbon and alcohol taxes, and reduce the provincial payroll tax burden.

The group also wants Ottawa to increase the repayable portion of the Canada Emergency Business Account (CEBA) loan to at least 50% and extend the CEBA loan repayment deadline to qualify for a partial loan forgiveness until in December 2024.

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They also want the small business deduction to be increased from $500,000 to $600,000 and an immediate green light from Ottawa for the promised reduction in credit card fees for small merchants.

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“As small businesses struggle to keep up with sky-high increases on almost every line of their budget, governments must avoid imposing additional costs that would endanger small business livelihoods,” Kelly said in a statement.

The bank on Wednesday raised its benchmark interest rate by 75 basis points, bringing the key rate to 3.25%.

“While keeping inflation at reasonable levels is certainly an important policy objective, the rate hike comes at a time when 62% of small businesses are still struggling with pandemic debt, averaging 158,000 $,” said Simon Gaudreault, CFIB Chief Economist and Vice-President, Research, in a statement.

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