Small business tax hike, CEBA repayment hitting Sask. in new year

Kayle Neis/Regina Leader-Post. Canadian Taxpayers Federation prairie director Gage Haubrich stands for a portrait at the CTF offices in downtown Regina on Thursday, June 15, 2023 in Regina.

CEBA loan repayment is due on Jan. 18 while the tax hike is expected on Canada Day 2024.

Angela Amato, Regina Leader-Post

The Canadian Taxpayers Federation (CTF) and the Canadian Federation of Independent Businesses (CFIB) is sounding the alarm on COVID-19 loan repayments and a small business tax hike hitting Saskatchewan in the new year.

“Saskatchewan businesses need tax relief, not tax hikes,” said CTF prairie director Gage Haubrich. “Saskatchewan is going in the wrong direction by raising this tax. It needs to stop the hike and cut the tax for good.”

The Government of Saskatchewan lowered the small business tax rate from two to zero per cent in 2020, but it was raised to one per cent in 2023 and will double in July 2024.

“This tax hike is coming because the government has decided it wants to punish job creators for hiring and working with Saskatchewanians in 2020,” Haubrich said. “We’re not exactly out of the weeds yet and the economy still hasn’t recovered.”

According to a statement from CTF that was released on Tuesday, the average small business saved about $6,100 during the three years that the tax rate was at zero per cent.

“Other provinces are cutting taxes while the Saskatchewan government is raising them on job creators,” said Haubrich. “This tax hike will hurt businesses, and it won’t even make a dent in the provincial government’s current fiscal problems.”

On Canada Day this year, over 31,000 small businesses in Saskatchewan saw their taxes go up. In Manitoba, the small business tax rate has remained at zero per cent to help the local economy stay afloat.

To add insult to injury, the Canada Emergency Business Account (CEBA) loans will be due come Jan. 18, despite calls by the CFIB for Ottawa to extend the deadline again to 2024. The federal government had drawn out the time limit for repayment from December 2022 to December 2023 and again to Jan. 18, 2024 after considering that businesses are typically busy around the holiday season.

The January due date will allow for businesses to take advantage of partial loan forgiveness. If the deadline is missed, some business could owe up to $20,000 plus interest.

The CEBA program offered interest-free loans of up to $60,000 to small businesses and not-for-profits across the country.

In June, CFIB reported that nearly 900,000 small businesses across the country utilized the CEBA loan program, which resulted in about $49.2 billion given out to support businesses during the COVID-19 pandemic. Seventy-eight per cent of businesses have yet to make payments and about 40 per cent are at risk of missing the repayment deadline. CFIB says that this puts a quarter of a million businesses at risk of closure in 2024.

Brianna Solberg, a policy analyst with CFIB, says that one of their main asks to Ottawa has been to get that deadline extended so that small businesses in the prairies can stay afloat, but that the feds are hesitant to grant it because they’ve already stretched it out.

“They thought maybe that economic circumstances would have levelled out by now, when they certainly have not,” said Solberg on Tuesday. “It’s almost harder to be in business right now with all the inflation and added debt that business owners have had to take on and interest rates are skyrocketing.”