Reduced corporate income tax bills don’t add up for one Barrie small business

Reduction "won’t make much difference" at Cakes By Design

Every little bit helps, or does it?

Ontario’s small businesses get a break on their corporate income tax bills as of Jan. 1, 2020, as the rate drops to 3.2% from 3.5%, a decrease of 8.7%.

The province says this will deliver as much as $1,500 in annual savings to more than 275,000 Ontario businesses – from family-owned shops to innovative start-ups.

But Jennifer Mayrl, owner of Cakes By Design, says the reduction won’t make much difference to her Barrie business.

“When the Ontario government says that we could save as much as $1,500, my guess is that it won’t even be that high,” she said. “My guess is that that very small savings is going to have to go towards (other increases).” Mayrl mentioned an approximate 20% increase in Cakes By Design wages during the last 18 months, the 25-30% increase in food costs directly related to the Toronto Street business, the 30% increase in property taxes she had less than two years ago, plus another 3% this year, and the 35-50% hike in hydro rates, depending upon time of use.

“With all these continued increases in expenses…the possible savings of $100-$125 per month is probably not going to be noticed,” she said.

Cakes By Design, which employs 4-6 people, was Georgian College Small Business of the Year at the 2019 Barrie Business Awards. It’s celebrating 16 years in business this month.

The province says supporting small businesses is part of the Ontario government’s plan to attract investment and enable entrepreneurs and risk-takers to grow their businesses and create high-paying, good quality jobs.

“We are working to create the conditions for job creators to grow and succeed,” said Finance Minister Rod Phillips. “An important part of our plan is to reduce the tax rate for small businesses, as they play a vital role in the economy.”

“The move will help make doing business in Ontario more affordable, providing extra money for job creators to use where it’s most needed,” said Julie Kwiecinski, director of provincial affairs for Ontario at the Canadian Federation of Independent Business.

What else could and should the province do to help small Ontario businesses?

“I feel that, as a small business, we go through a roller-coaster,” Mayrl said. “We just came out of the (Liberal premier Kathleen) Wynne government, but as much as they really seemed to want to help the employee, it put a big strain on small businesses like mine when they increase all kinds of wages, additional days off, increased holiday pay…all that stuff has like a trickle-down effect.”

Mayrl says she’s in the grocery stores every day, and the effects of higher wages are reflected in prices. “I’ve noticed recently in social media that people are really starting to complain about the cost of food,” she said. “What happened two years ago (minimum wage increasing from $11.60 an hour in 2017 to $14 in 2018) was part of that.

“So everyone from the grocery stores to the manufacturers all had to increase their cost of wages. That goes into our cost of food,” Mayrl said.

The province says there are more than 470,000 small businesses in Ontario, representing almost 98% of all businesses here. Small businesses provide about one-third of private-sector employment — just more than two million jobs — and play a large role in the economy by providing goods and services to larger companies, consumers and government.

Aside from savings from the corporate income tax reduction, the province says small businesses will also save money this year from reduced Workplace Safety and Insurance Board (WSIB) premiums, and from keeping the minimum wage at $14 on hour.

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banner image via by Bob Bruton; Jennifer Mayrl photo via Facebook