Our SMEs and entrepreneurs are suffocating: urgent reforms are needed.

Quebec City, October 22, 2024 – A delegation from the Quebec Federation of Chambers of Commerce (FCCQ), composed of some twenty entrepreneurs, chambers of commerce, and organizations that support them on a daily basis, is visiting the Quebec National Assembly today to urge the Quebec government to quickly introduce measures that will give a real boost to Quebec SMEs and entrepreneurs, who continue to suffer from the unfavorable economic climate. 

This approach is strongly supported by the Mouvement des accélérateurs d’innovation du Québec (MAIN), as today's start-ups will be tomorrow's SMEs, and it is important to have an environment that encourages the emergence of these innovative start-ups.

The FCCQ and MAIN point out that SMEs employ more than 3 million Quebecers, generate over $10 billion in tax revenue annually, and breathe life into our village centers, our regions, and our Québec Inc.

"Entrepreneurship is not doing very well in Quebec. The rate of business creation is lower than in Canada, the rate of business insolvency is growing, and our villages are slowly losing their local businesses. The government must do everything in its power to reverse these trends, and quickly," says Philippe Noël, Vice President of Public and Economic Affairs at the FCCQ. 

"In this context, asking the government to pay more attention to our SMEs and startups startups is not a whim; it should be a national priority. For several years now, our Quebec businesses have felt that they are operating on the margins of government priorities, and we believe that this inaction must change. Our public policies should instead support business creation rates, start-up survival rates, and entrepreneurial succession rates that are sufficient to prevent our economic fabric from irreversibly eroding in the years to come, " says Louis-Félix Binette, Executive Director of MAIN.

Access to public procurement

The ability of our SMEs to access public contracts is another major problem identified by the FCCQ. Specifications are too often based on solutions proposed by large companies, leaving little room for innovation. 

We need government action to resolve certain challenges in accessing financing, but also to enable these start-ups to secure their first public contracts, which will then enable them to win other sales locally and internationally. 

"Currently, tender specifications are ill-suited to the reality and expertise of our SMEs, which makes public procurement unattractive to our businesses. The government must take decisive action to encourage our SMEs to participate in Quebec's public procurement market so that they are not at a disadvantage. The government can, through regulation, ensure that public contracts are awarded primarily on the basis of criteria such as quality, sustainability, innovation, and environmental performance, in addition to price, for infrastructure projects," said Sandra Rossignol, President and CEO of the Saguenay-Le Fjord Chamber of Commerce and Industry.

Taxation

The corporate tax system is complex and tax compliance requirements are high for our SMEs. Due in particular to their convoluted eligibility criteria, less than 5% of SMEs benefit from the tax credits available to them.

"Quebec SMEs have a higher tax burden than their competitors, particularly in terms of payroll taxes and taxes on their first $500,000 in revenue. The decision to follow the federal government's lead by raising the capital gains inclusion rate is also very ill-advised," says Éric Dufour, Vice President and Partner at Raymond Chabot Grant Thornton.

The FCCQ points out that a significant and growing number of businesses, many of which are family-owned, will need to prepare for their transfer or sale in the coming years.

"Given these findings, our expectations are clear. The government must abandon the increase in the capital gains inclusion rate, which has caused considerable discontent among entrepreneurs, reduce the general corporate tax rate from 11.5% to 10%, and make simplifying the corporate tax system a priority in its ongoing review of tax expenditures," concluded Éric Dufour.

Administrative and regulatory burden

For the FCCQ and its delegation, the first step should be to tackle the administrative and regulatory burden, which weighs heavily on the productivity of our SMEs and represents a form of indirect taxation. Bill 25 on personal information protection places an excessive strain on the limited resources of our SMEs. 

"The government must understand that it is more necessary than ever to better support SMEs in its government actions to help businesses weather the storm first, and then contribute to Quebec's economic targets. Among the measures that would help businesses is dedicated assistance for SMEs that can be applied to the considerable investments required to comply with Bill 25. Next, the ambition to introduce bills on regulatory and administrative relief each year must be significantly enhanced, and should ensure consistency in government action between different ministries and public agencies," said Manon Champagne, president and co-founder of Aplus Transition.

Members of the delegation present at the Quebec National Assembly today:

Philippe Noël, Vice President, Public and Economic Affairs, FCCQ 

Éric Dufour, Vice President and Partner, Raymond Chabot Grant Thornton, and Chair of the FCCQ Entrepreneurship Committee

Mylène Duguay, President and CEO, Cabana Séguin

Luc Pariseau, Lawyer and Partner, Lavery Lawyers

Marcel Curodeau, President, Médial Conseils SST

Paul Le Brun, President, Brault & Bouthillier

Manon Champagne, President and Co-founder, Aplus Transition

Guillaume Lajoie, Public Affairs Manager, MAIN Quebec

Lanie Dufour, Public Affairs Advisor, Catapulte Communication

Sandra Rossignol, President and CEO, Saguenay-Le Fjord Chamber of Commerce and Industry

Alexandra Houle, Executive Director, Drummond Chamber of Commerce and Industry

Julie La Rochelle, President and CEO, Richelieu-Rouville Valley Chamber of Commerce and Industry, and President, Montérégie Chamber Alliance

Marie-Josée Morency, President and CEO, Greater Lévis Chamber of Commerce and Industry

Pierre Berthiaume, President and CEO, Les Moulins Chamber of Commerce and Industry

Marie-Christine Lavoie, Executive Director, Nouvelle Beauce Chamber of Commerce and Industry

Jade Bessette Poitras, Executive Director, Greater Joliette Chamber of Commerce

About the Quebec Federation of Chambers of Commerce (FCCQ)

With its vast network of nearly 120 chambers of commerce and more than 1,000 corporate members, the Fédération des chambres de commerce du Québec (FCCQ) represents more than 45,000 businesses operating in all sectors of the economy and throughout Quebec. As Quebec's largest network of business people and companies, the FCCQ is both a federation of chambers of commerce and a provincial chamber of commerce. Its members, whether chambers or companies, all pursue the same goal: to promote an innovative and competitive business environment.

About the Quebec Innovation Accelerator Movement (MAIN)

The Mouvement des accélérateurs d’innovation du Québec (MAIN) is driven by the conviction that organizations supporting startups can amplify their impact by working together. Its ambition is for every startup, wherever it is located in Quebec, to have the fastest possible access to the best resources available to support its development and growth. Its mission is to support, develop, and implement projects that can energize this ecosystem and increase the value and impact of the services offered to Quebec startups. For more information, visit https://mainqc.com

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