Thank you so much for the opportunity to be here. I apologize in advance to the committee, last weekend I had a bout of laryngitis—I'm sure many parliamentarians would be happy to hear as I was quieter than normal—so I'm about 50%. I'm happy to be doing this from home.
I wanted to share a few thoughts about the budget and the budget implementation bill. I thought I would start with a bit of an overview of where small businesses are at right now in Canada in their economic recovery, and then go to the specifics of this piece of legislation and perhaps make a couple of broader comments about the budget.
As you know, we have 97,000 small and medium-sized companies as members of the Canadian Federation of Independent Business. When I look at the state of affairs for small businesses, we are still deeply worried about what is happening with the situation facing SMEs across the country. If you can believe it, still, three years in, only half of small businesses in Canada are back to normal levels of sales, prepandemic levels of sales—only half.
On top of the fact that only half of them are back to regular sales, two-thirds of them are facing a mountain of pandemic-related debt. This isn't new debt they took on for a plant or equipment or expansion, this is debt they took on to keep their lights on over the course of the past three years. That legacy of debt is significant, an average of $105,000 per business. About $60,000 of that typically is in the form of a CEBA loan. A lot of businesses are very worried about how they're going to possibly repay the debt they've taken on.
Of course, there are a whole host of issues. Even those businesses that have sales back to normal or are doing better than normal, they are facing a litany of cost increases. Some of them are natural cost increases due to inflationary pressures from private sector suppliers. Sadly, many cost increases are as a result of government policy. This includes rising EI premiums at the beginning of this year, rising CPP premiums at the beginning of this year, minimum wage increases from provincial governments, and of course the most recent increase in the carbon tax and the smaller but still an increase in the excise tax on alcohol products.
That's the situation facing small and medium-sized firms at the moment.
On the actual bill itself, there are a few pieces that we quite like. The measure that we were very pleased about in this legislation is the doubling of the tradeperson's tool deduction from $500 to $1,000. That's really good news. That is super helpful to a whole bunch of tradespeople, an issue that CFIB put forward decades ago. It's really wise on the part of government to look at that threshold and raise it by $500, doubling it essentially to $1,000. That's something we're happy with.
Secondly, I'm also pleased to see there's going to be a single complaint-handling body for the banks. This has been a recommendation of CFIB for several years. There are lots of small business issues related to Canada's financial services sector. This is progress in that respect.
I mentioned a second ago the change on the excise tax, capping that at 2% rather than the full inflationary increase, which I think was going to be between 6% and 7%. This was a huge relief and we were pleased. We would have been further pleased had the budget capped it altogether. However, it is good news that the full hit did not happen to Canadian consumers and all the industries that are affected by that as well, both for producers and restauranteurs and bar owners, who would be forced to pass that on to their customers at a challenging time.
Those are a few of the measures in the specific legislation before you that we like. One that was a smaller one that does worry us is the exclusion from the definition of “financial services” of certain payment card clearing services, now exposing them to GST or HST. I reference this because in the budget there was a big win for small businesses on credit card processing fees. This was the central positive move in the budget for SMEs. We're hoping to learn some more details of what that's going to look like in the days ahead, but I can tell you that adding taxes to certain payment processing fees while you're trying to reduce payment processing fees is not really helping to the degree that it possibly could. We've had some estimates that it could cost as much as two basis points more by this policy change. We're still investigating that one. It's something that we wish to have a further study and a review of.
A couple of other smaller items include the requirement to make electronic remittances or payments to CRA and other departments for any amounts over $10,000. That is something we have heard from a few small businesses on. When I look at it, on employment insurance—