Quebec SMEs among the least optimistic in Canada
Only 47% of small and medium-sized enterprises (SMEs) in Quebec are optimistic about the future, reveals the latest report from the Canadian Federation of Independent Business (CFIB). This is a drop of 6.2 points from the February 2022 data. In comparison, 51.7% of Canadian SMEs say they are optimistic.
The two industries with the most fears about the future in Canada are wholesale trade, where 43.8% say they are optimistic, and the arts, entertainment and information industry, where 44% share a confidence in the future. On the other hand, the average of Canadian retail SMEs who say they are confident exceeds that of the national average. At 66.5%, the rate even exceeds the pre-pandemic rate of 61%.
According to the CFIB, “pandemic-related debt” and “inflation” would explain this drop. Difficult, however, to establish what makes Quebec SMEs on average less optimistic than the national average, but the CFIB suggests that it is possible that “the heavier tax environment in Quebec” has a role to play in the situation. For example, “Payroll taxes are 30% higher here than in Ontario. They are among the heaviest taxes for SMEs,” says the CFIB.
“We have a particularity in Quebec where service or construction companies with three employees or less pay the same tax rate as a multinational, recalls the Federation. This comes from a tax reform that was intended to ensure that SMEs hire more employees, but in a context of labor shortages, SMEs cannot find employees and have a greater burden than their biggest competitors.”
According to PMEMTL, inflation, the labor shortage, the rise in interest rates and the fact that an upcoming recession is highly likely are elements that particularly affect the optimism of SMEs here.< /p>
How is the optimism rate calculated?
To assess the optimism rate, the CFIB questions the SMEs that are members of its organization at the using a form that contains questions like “How do you see your business performing over the next 12 months?” or “Are unfilled orders above normal, normal, below normal?”.
While the questions are the same from province to province, the calculation is done differently. In a province like Ontario, where there are a greater number of SMEs, the average is based on the return of a single series of questionnaires. In contrast, in Prince Edward Island, the average is based on data collected over four months.
