Small businesses in British Columbia are lagging while other provinces are moving to cut taxes, according to the Canadian Federation of Independent Business (CFIB).

Several other provinces have recently reduced their small business tax rates or expanded their deduction thresholds, the CFIB says.

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For example, Manitoba’s small business tax rate is zero, it says, while B.C.’s rate hasn’t changed in nearly a decade.

This is leaving B.C. businesses at an increasing competitive disadvantage not just to those in the rest of Canada but to U.S. counterparts as well, the organization says.

The CFIB is calling on the B.C. government to cut the small business tax rate to zero by 2030. As well, it is asking the small business deduction be raised to $700,000.

Currently, B.C.’s deduction threshold is $500,000. Only three other provinces have higher deduction thresholds than B.C.’s: Saskatchewan and PEI at $600,000, and Nova Scotia at $700,000.

“The cost of doing business in B.C. is already high, and it keeps going up,” said Ryan Mitton, the CFIB’s director of legislative affairs for B.C.

“Slowly reducing the small business tax rate to zero by 2030 and raising the small business deduction threshold would ease that pressure. By helping SMEs grow and thrive, we can build a stable revenue base for the province and help get the budget back on track.”

The organization says conditions for small businesses in B.C. are weak, with a newly expanded PST on professional services. High labour costs and an unpredictable trade climate are also contributing to the struggle, it says.

The province is facing an entrepreneurial drought, the federation says, which is hurting employment levels.

“As large multinational corporations get fast-tracked for government benefits, small businesses are being left to fend for themselves,” said the CFIB’s senior policy analyst for B.C., Kalith Nanayakkara.

“If we want to see more investment and hiring, we need to make it easier for the 98 per cent of businesses in B.C. that are small businesses.”

Federally, the small business tax rate has remained at nine per cent since 2019.

“Since the last federal small business rate reduction, five provinces have made progress in reducing their corporate tax rates on small businesses,” said Dan Kelly, CFIB president.

The federal government is sending the wrong message to entrepreneurs, Kelly says.

“It is no small wonder that 55 per cent of business owners would not recommend starting a business today.”