Taxes, incentives, supports all top of mind in a new KPMG in Canada survey of medium-sized companies
TORONTO, March 3, 2022 /CNW/ – As we enter the third year of the COVID-19 pandemic, Canadian business leaders want measures in the next federal budget that will support innovation and growth amid the latest risks to a global economy already struggling with rising inflation and supply chain issues, finds new KPMG in Canada survey of 508 medium-sized companies. Yet despite everything, they remain optimistic about the future, with most expressing confidence in the growth prospects of their business.
Almost nine out of 10 (88 percent) of medium-sized businesses surveyed have used government support programs to help them during the pandemic and nearly four in five (78 percent) feel they still need relief programs to survive. In light of the challenges businesses have faced over the past two years, an overwhelming majority (89 percent) say they need to invest quickly in digital operations and 82 percent believe that their industry is on the verge of “going through a major shake-up” and that they will need government support to invest in emerging and clean technologies.
“The vast majority of business leaders told us they were looking for support to help them invest in digital innovations that open up new business opportunities and revenue streams and build their resilience to better weather economic storms” , declares Marie Jo FedyNational Leader, Enterprise, KPMG in Canada. “They also believe that targeted government assistance programs that help the hardest hit businesses and individuals should be maintained in the short term. Our survey results also indicated that skill shortages continue to grow. pose a risk to the recovery.”
Main results of the survey:
- 91 percent of mid-sized Canadian business leaders believe businesses need more incentives/tax credits to spend on investments in innovation, digital transformation, and research and development (e.g. software, automation, patents), almost half (45%) strongly agreeing
- 88 percent of mid-sized businesses say they have used government support programs for help during the pandemic, with 53% strongly agreeing
- 78 percent say their business “always needs government relief programs or we won’t make it,” with 36% strongly agreeing
- 86 percent strongly or somewhat agree that “targeted government relief programs that help the hardest hit businesses and people should not be cut just yet”, with 45% strongly agreeing deal
- 89 percent say they need to be quicker to redirect investment to digital operations and divest businesses facing digital obsolescence, with 40% strongly agreeing
- 82 percent think their industry is about to “be disrupted and will need government support to invest in emerging/disruptive technologies, with 37% strongly agreeing
- 74 percent say they have difficulty hiring workers with the skills needed to grow their business (32% strongly agree)
- 77 percent have difficulty hiring workers with the skills needed to maintain current levels of exploitation (30% strongly agree)
- 95 percent say, “despite everything, I feel optimistic about the future”, with nearly half strongly agreeing
- 95 percent say they are “very confident in the growth prospects” of their business, with 45% strongly agreeing
A trying dilemma
While business leaders appreciate targeted government aid programs, they worry about how governments will fund them and the potential tax implications of extra spending, adds Dino Infantinational corporate tax leader for KPMG in Canada.
“Our poll results show that a majority of business leaders are concerned that higher taxes will stifle economic growth, investment and consumer demand,” Infanti said. “They want a fiscally sound approach to this budget that includes highly targeted relief programs, prudent stimulus spending and modern fiscal policy that will stimulate from Canada growth potential. Finding the right balance in these three areas will go a long way to improving business confidence and accelerating the transition to a greener digital economy.”
Other survey results:
- 91 percent are concerned that the government will impose higher taxes on businesses to reduce the deficit and the national debt, with 60% strongly agreeing
- 92 percent are concerned that governments will increase taxes on individuals and businesses, which will negatively impact consumer demand, wealth creation and economic growth, with 46% strongly agreeing
- 96 percent say government spending needs to be prudent, targeted and focused on initiatives that will grow our economy, with 50% strongly agreeing
- 93 percent believe that imposing special taxes on profitable industrial sectors is punitive and will slow growth and discourage foreign investment, with 45% strongly agreeing
- 90 percentt believe further tax relief is needed to encourage businesses to reinvest in their operations and hire more workers, with 45% strongly agreeing
- 93 percent say personal taxes should not increase due to the need for strong consumer demand for the overall economic recovery, with 43% strongly agreeing
- 92 percent believe governments need to provide more financial support/subsidies to businesses, with sector plans, to help address from Canada net zero emissions/climate commitments (41% strongly agree)
- 93 percent claim that companies need more tax incentives/investment tax credits for clean energy sources and technologies (e.g. carbon capture, renewables, hydrogen, etc.) .), with 45% totally agreeing
The right balance needed for infrastructure investment
Well over nine out of 10 (95 percent) business leaders want governments to invest in major infrastructure projects to position society/economy for future growth, with 46% strongly agreeing.
“Our research shows that business leaders are primarily looking for projects that build industrial capacity, such as mass transit, rail, ports – and of course alleviate supply chain issues,” says Gary Webster, National Leader of KPMG’s Infrastructure Team and Chief Capital Projects Officer. “With inflation driving up the cost of everything, taxpayers’ money will need to be spent strategically to have the greatest impact.”
The survey also revealed that:
- 90 percent are concerned about the impact that the military conflict in Ukraine will have on the economy, their industry and their business, such as rising oil and gas prices, rising commodity prices and reduced supplies, more bottlenecks in the supply chain ( 44% totally agree)
- 97 percent strongly or somewhat agree that it is essential to remain vigilant for the variants of COVID-19 and to follow health and safety measures or risk having their employees and customers at home because they are sick (49% strongly agree)
“Mid-sized business leaders are ready to do their part to foster and support Canadian ingenuity and achieve strong economic growth post-COVID,” said Ms. Fedy. “But they also rely on policies that will improve long-term productivity and lay the foundation to support their future competitiveness and agility.”
About KPMG’s Midsize Business Federal Budget Survey
KPMG surveyed 508 mid-sized Canadian business owners and decision makers between February 9 to 22, 2022 using Schlesinger Group’s Methodify online research platform. All of the respondents are business owners or decision makers at the executive level. A medium-sized business is defined as having an annual gross revenue greater than $50 million and less than $1 billion. Thirty-eight percent of respondents reported an annual gross income of more than $500 million; 25 percent are between $300 million for $499 million; 18%, between $200 million and $299 million; 16%, between $100 million and $199 million; and the remaining 4% have between $50 million and $99.9 million.
About KPMG Canada
KPMG LLP, a limited liability partnership, is a Canadian-owned and operated full-service audit, tax and advisory firm. For more than 150 years, our professionals have provided consulting, accounting, auditing and tax services to Canadians, inspiring trust, fostering change and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For the Better, KPMG employs more than 10,000 people in more than 40 locations across Canada, serving private and public clients. KPMG is consistently ranked among the from Canada best employers and one of the best places to work in the country.
The Firm is incorporated under the laws of Ontario and is a member of KPMG’s global organization of independent firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see home.kpmg/ca.
SOURCE KPMG srl
For further information: For media inquiries: Nancy J. White, National Communications and Media Relations, KPMG in Canada, (416) 777-3306, [email protected]; Caroline Van Hasselt, National Communications and Media Relations, KPMG in Canada, (416) 777-3328,[email protected]