Thank you very much. It's a pleasure to be here. You've been keeping us very busy at the Canadian Federation of Independent Business over the last few months. I also want to say a special thanks to your committee chair, who has recently become a bit of a folk hero on the part of members of CFIB for recent comments he's made in the media.
I was hoping to bring to you a whole series of recommendations for the 2018 budget, but right now we're playing a bit of defence at CFIB and we hope to talk to you a little more about some of the changes that are currently under discussion.
As is noted in my slide deck, the number one issue that small businesses in Canada feel sensitive about is the existing tax burden which they as entrepreneurs have. I've not talked to an entrepreneur who doesn't say that the total amount of taxes they pay is unfairly too high. Yet, it seems as though we're headed down a course where that may become an even higher burden for many of those firms.
We're bringing to you some brand new data, data we just collected at CFIB from our membership, as to the potential effect of the proposed changes, as we know, Chair. We released this just today. Eighty-eight per cent of small businesses in Canada don't believe that the government itself fully understands the potential impact of these changes. Ninety-two per cent of small firms feel as though these changes will bring a great deal of uncertainty to their business lives. Eighty-eight per cent said it will make it more difficult for them to grow. Ninety-five per cent of them say that this will affect middle-class business owners. I have to say that was backed up by a special survey we did of tax professionals. Again, 95% of tax professionals, accountants, and tax lawyers in the country whom we surveyed said that these changes will affect middle-income-earning small business owners. Ninety-four per cent of small business owners oppose the change. I should note that 3% of small businesses in Canada were sympathetic and saw the need for some change. How significant are the proposed changes? Eighty-seven per cent said that they would be significant to their firm, and only 9% said that the changes that are under consideration would not be significant to them.
When we look at some of the specific changes that are under consideration, two-thirds of small firms, members of CFIB, said that they have some form of passive savings in their business. The number one category in that section was property or land that they as a business owned. After that it was shares, often shares in another private business that they may own through their corporation. When we asked business owners about income sharing, or income sprinkling as it is referred to in the discussion document, again, two-thirds of business owners, CFIB members, said that they did some form of sharing of business income with family members in the business. For 57% it was with their spouse. Nineteen per cent said that they shared income with kids—their children who were 25 years or older—and another 15% shared with their children who were between the ages of 18 and 24.
We asked about the consultation process, and 94% of business owners said that they would like to have a full, proper consultation process, as your government is doing with so many other areas of public policy. I do want to remind the committee why we have a lower rate of taxation on small business in the first place. First, it helps account for the overall higher burden of taxation that small firms feel and the higher cost of complying with taxation that small firms feel compared to their larger counterparts. Also, it addresses their more limited access to financing, allowing them to plow those retained earnings back into the business to help it grow for the future.
When looking at tax fairness, many entrepreneurs have reminded us that there are many areas in which they feel the burden is unfairly targeted at them. For example, entrepreneurs pay twice the rate of Canada pension plan premiums as do other Canadians. They pay 1.4 times the rate of employment insurance premiums compared to employees. They pay double to five times more in property taxes, 100% of workers' compensation or WSIB premiums, and 100% of payroll taxes like the employer health tax.
CFIB is part of a 65-member coalition. Sixty-five business associations have come together to call on the government to do a couple of things. Most importantly, we are asking government to take these proposals off the table and to replace them with a bottom-up consultation of business owners and their associations on any gaps in current tax policy.
I want to urge committee members to make sure that you pay close attention to the information that the accounting community is coming forward with. It is absolutely true that at least two of the three changes under consideration would affect business owners with income levels as low as $50,000. It is absolutely untrue that these changes would only affect business owners who have $150,000 or more in income.
Also, these changes would result in higher levels of taxation on entrepreneurs than on other Canadians. This isn't about making business owners even to that of the taxes of other Canadians, but would raise tax in important areas to rates higher than other Canadians pay. The small business corporate tax rate was the number one thing that small business owners said would help them strengthen their business performance. They endorsed the recommendations. All four political parties in the last election campaigned to reduce the small business corporate tax rate to 9%. This is an important measure, and we urge you to get back to that in the 2018 budget.
On some of our other recommendations, we urge you to put in place a strong plan to get the country out of deficit financing. We ask you in a series of recommendations in our package related to the red tape burden focused on small and medium-size firms. Addressing skills and labour shortages is a critical area, and I endorse the comments that were shared from the agricultural community on that front. We've made many recommendations along those lines.
As I wrap up, another idea we want to put in for your consideration is lowering the rate of employment insurance premiums on small firms. We have lobbied for years to make that an equal split between employers and employees. You may be able to do that by lowering the rate on the first $500,000 in payroll, as an example.
In conclusion, we urge you not to proceed with these changes. We in the business community, CFIB specifically, are 100% committed to working with government to shore up any areas in income tax legislation that may need to be shored up. We get that there are businesses that are stretching the definition and we are prepared to help the government in those efforts, but these changes are not the way. We urge you to set them aside and replace this with a proper consultation process including the business community and provincial governments.
Thank you so much.