Thank you, Mr. Chair, and thank you to the committee members for the invitation to speak with you regarding the impact of changes made to the capital gains tax.
I would like to take a moment to introduce myself and provide you with some context as to who I am and why I'm speaking with you today.
I am first and foremost a small business owner. I am the founder and CEO of Grit Engineering, a small consulting engineering firm in Stratford, Ontario. I also sit on the board of directors of the Association of Consulting Engineering Companies of Ontario, where I am the chair of the small firm network. I am a member of the Association of Consulting Engineering Companies Canada, and I am president of our current local Home Builders Association - Perth Huron.
I am speaking to you today as the owner of a small business, one that will be affected by the changes that have been made to the capital gains tax this year.
For those of you who don't know, consulting engineering firms are responsible for designing and building much of our public and private infrastructure, ranging from residential and community projects to Canada's most significant transportation, environmental and natural resources infrastructure projects. We also provide a wide range of professional services that allow private sector clients to grow, innovate, and address economic, social and environmental challenges.
But small employee-owned businesses like mine don't just do large-scale infrastructure projects. We are the ones who support the community members by taking on the small-scale but critical jobs that build, for example, a wheelchair ramp or a secondary suite for families to live together. We are the ones who take on young employees and help them work their way up to becoming part owners in the firm. We are the ones who donate to local charities and contribute to your community sports teams.
With the changes to the capital gains tax, businesses like mine will face new challenges that will put pressure on us in an economy that already provides little incentive for people to own and operate small businesses.
Many business owners like me take substantial personal risk when starting and growing their firms, and I am concerned that these changes will have a significant impact on the future of small, locally owned businesses. It is already challenging to encourage our next generation to take on the ownership within our firms. The financial benefits of acquiring shares in ownership of a firm must outweigh the risks for the new generation of leaders in our industry. By making employee ownership less financially feasible, more and more small firms will be forced into mergers or acquisitions. In many cases, these are publicly traded and sometimes foreign-owned companies, resulting in further consolidation of our industry and a reduction in competition and in the number of small employee-owned firms. Some firms may even cease to exist upon the retirement of their owners.
We need to make employee ownership more attractive, not less attractive. There should be incentives for employees to take on ownership roles in Canadian businesses, not penalties, so that Canada can preserve a landscape of large and small firms to serve the diverse needs of our Canadian communities. We need to reward Canadians who are prepared to take personal financial risk to innovate and to grow our economy so that we ensure a vibrant marketplace that includes a robust number of small businesses.
I would like to recognize the creation of the employee ownership trust tax exemption and the Canadian entrepreneurs' incentive as things that will mitigate the challenges for some businesses in some cases. However, many businesses like mine will not be eligible for these incentives, due to our business structure and other factors.
In closing, I would like to urge the committee members to recommend that the capital gains tax legislation be withdrawn and that any of the capital gains tax changes introduced in the 2024 federal budget be postponed pending further consultation with small businesses to ensure any future changes will not negatively impact Canada's small businesses.
Thank you for giving me the opportunity to speak with you today. I look forward to answering any questions you may have.