On November 15th, 2017, Ontario Finance Minister Charles Sousa announced a Fall Economic Update. This blog post with content support from the Ontario Chamber of Commerce highlights announcements relevant to businesses.

The fall statement forecasts real GDP growth of 2.8 percent in 2017, up from 2.3 percent in the 2017 Budget. Ontario’s net debt-to-GDP peaked  in 2014–15 at 39.3 percent, however, it is projected to be 37.3 percent in 2017–18, lower than the 37.5 percent forecast in the 2017 Budget.  

The government also made announcements related to Strengthening Ontario’s Small Businesses, Encouraging Youth Employment and Modernizing Apprenticeships for Small Businesses.

Strengthening Ontario’s Small Businesses

The Province is announcing more than $500 million in new initiatives, over three years, for small business. Most notably the province is proposing a 1 percent cut in the small business Corporate Income Tax (CIT) rate from 4.5 percent to 3.5 percent for businesses under $500,000 in annual revenue. The Fall Economic Statement also includes enhanced financial support for small and medium‐sized fruit and vegetable farming businesses and investments to enhance the vibrancy of communities and main streets.

OCC Response: As part of the OCC’s Bill 148 advocacy work, the OCC has consistently urged the government to provide a comprehensive package of offsets, which includes a reduction in the small business tax rate. These measures will help to provide small businesses compensation for their limited access to capital financing, and the pressures placed on their revenue streams from Bill 148’s increased labour costs.

Additional Response: The Tax Cut was announced to address business concerns about revenue losses due to the aggressive measures and implementation timelines within Bill 148. However, with a maximum $5000 boost in revenue, the cut will barely cover the ~$6400 per employee cost increase for employers in certain sectors with workers on minimum wage.

Encouraging Youth Employment

Ontario will provide $124 million over three years in supports for youth ages 15 to 29 years, working with Employment Service and Youth Job Connection to support employer hiring and retention beginning January 1, 2018. Through Ontario’s Employment Service program, a small employer with fewer than 100 employees would receive a $1,000 incentive for hiring a young worker and a $1,000 for retaining that worker for six months. Additionally, if workers are hired through Youth Job Connection, a separate program that recruits youth facing employment barriers, employers would receive retention payments of $1,000 after three months, with a further $1,000 payable after six months for each worker.

OCC Response: In partnership with Canadian Centre for Economic Analysis (CANCEA) the OCC conducted an independent economic analysis modelling the impacts of Bill 148. Evidence suggests that a 10% increase in the Ontario minimum wage could decrease youth employment by 2% to 6 % over time. Considering this challenge, funding for small business to link youth with the labour market is a step in the right direction.

Additional Response: While businesses will welcome additional financial resources, we’ve also heard negative feedback about the red tape and compliance costs necessary to apply for and maintain wage subsidy programs in a reasonable timeframe, especially for small businesses. We encourage the government to conduct further analysis on the diversity of firms availing themselves of these incentives.

Modernizing Apprenticeships for Small Businesses

The Province is proposing adding five service‐sector trades to the eligibility list for the new Graduated Apprenticeship Grant for Employers: Hairstylist, Cook, Horticultural Technician, Baker/Patissier, and Appliance Service Technician. Additionally, the government is proposing supporting multiple employers to pool together and form consortia to hire, register and train their apprentices for skilled trades. An apprenticeship training tax credit will be turned into a grant, giving employers $2,500 upon an apprentice’s completion of both level one and level two, $3,500 for completion of levels three and four, and $4,700 when the apprentice gets certification.

OCC Response: In their report Talent-in-Transition, the OCC recommended that the government collaborate with business and education stakeholders to increase employers’ awareness of the consortium model. By allowing for multiple employers to join and form hiring consortium, apprentices will see an enhanced system flexibility while improving support for the development of a workforce that is responsive to Ontario’s local labour market needs.

Investing in Main Streets to Create Opportunities for Small Businesses

The Province is moving forward with an additional investment of $40 million for an enhancement fund. This will help strengthen communities’ promotional, planning and implementation activities, as well as providing direct business support for capital improvements, enhanced digital capabilities and improvements to energy efficiencies.

---

Next steps: In the leadup to Budget 2018, the OCC Network will continue their engagement with the Government on other initiatives necessary to help businesses mitigate the short-term cost of the transition to Bill 148 and other regulatory burdens. We’ve discussed solutions related to the time of use rates for electricity costs, reductions in Employer Health Tax and reduction in red tape for accessing government programs.

---

For more information please contact: Huzaifa Saeed | Policy & Research Analyst | Hamilton Chamber of Commerce | t: 905-522-1151 ext: 230 | e: h.saeed@hamiltonchamber.ca

• Share on Facebook
• Share on Twitter
• Share on LinkedIn