Our small and medium-sized businesses and entrepreneurs are struggling: urgent reforms are needed

Quebec City, October 22, 2024 – A delegation from the Federation of Quebec Chambers of Commerce (FCCQ), comprising some 20 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 provide a real boost to Quebec SMEs and entrepreneurs, who continue to suffer from the unfavorable economic climate. 

This initiative is strongly supported by the Quebec Innovation Accelerators Movement (MAIN), as today’s startups will be tomorrow’s small and medium-sized enterprises, and it is important to have an environment that fosters the growth of these innovative startups.

The FCCQ and MAIN point out that small and medium-sized businesses employ more than 3 million Quebecers, generate over $10 billion in tax revenue annually, and are the lifeblood of our village centers, our regions, and our “Québec Inc.”.

“Entrepreneurship isn’t doing very well in Quebec. The rate of new business creation is lower than in Canada, the business insolvency rate is on the rise, 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, calling on the government to do more to support our small and medium-sized businesses and our startups is not a whim; it should be a national priority. For several years now, Quebec businesses have felt as though they are operating on the margins of government priorities, and we believe this inaction must change. Instead, our public policies should support sufficient rates of business creation, startup survival, and entrepreneurial succession to ensure that our economic fabric does not irreversibly wither away in the years to come, ” says Louis-Félix Binette, Executive Director of MAIN.

Access to Public Procurement

Another major issue identified by the FCCQ is the ability of our small and medium-sized enterprises to secure public contracts. Specifications are too often modeled after the solutions proposed by large companies, leaving little room for innovation. 

We need government action to address certain challenges related to access to financing, as well as to help these startups secure their first public contracts, which will then enable them to win additional sales both locally and internationally. 

“Currently, bid 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 process so that they are not at a disadvantage. The government can, through regulations, ensure that public contracts for infrastructure projects are primarily awarded based on criteria such as quality, sustainability, innovation, and environmental performance—in addition to price,” 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 stringent for our small and medium-sized enterprises (SMEs). Due in large part to their convoluted eligibility criteria, fewer than 5% of these businesses are able to take advantage of the tax credits available to them.

“Quebec SMEs face a heavier tax burden than their competitors, particularly when it comes to payroll taxes—even on their first $500,000 in revenue. The decision to follow the federal government’s lead by raising the capital gains inclusion rate is, moreover, highly 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 a transfer or sale in the coming years.

“In light of these findings, our expectations are clear. The government must abandon the increase in the capital gains inclusion rate—which has sparked widespread 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

The FCCQ and its delegation believe that the first step should be to address the administrative and regulatory burden, which hampers the productivity of our small and medium-sized enterprises (SMEs) and amounts to a form of indirect taxation. Bill 25 on the protection of personal information places a disproportionate strain on the limited resources of our SMEs. 

“The government must understand that it is more necessary than ever to better support small and medium-sized enterprises (SMEs) through its policies, to help businesses weather the storm first and then contribute to Quebec’s economic goals. Among the measures that would help businesses is dedicated assistance for SMEs to cover the significant investments required to comply with Bill 25. Furthermore, the goal of introducing bills each year aimed at reducing regulatory and administrative burdens must be significantly scaled up, and should help ensure consistency in government action across the various ministries and public agencies,” said Manon Champagne, president and co-founder of Aplus Transition.

Members of the delegation attending the Quebec National Assembly today:

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

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

Mylène Duguay, President and CEO, Cabana Séguin

Luc Pariseau, Attorney and Partner, Lavery Avocats

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 Québec

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 Valley-Rouville Chamber of Commerce and Industry, and President, Alliance of Chambers of Commerce of Montérégie

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 Federation of Quebec Chambers of Commerce (FCCQ)

Through its extensive network of nearly 120 chambers of commerce and more than 1,000 corporate members, the Federation of Quebec Chambers of Commerce (FCCQ) represents more than 45,000 businesses operating across all sectors of the economy and throughout Quebec. As Quebec’s largest network of businesspeople and companies, the FCCQ serves as both a federation of chambers of commerce and a provincial chamber of commerce. Its members—whether chambers or companies—all share the same goal: to foster an innovative and competitive business environment.

About the Quebec Innovation Accelerators Movement (MAIN)

The Quebec Innovation Accelerators Movement (MAIN) is driven by the belief that organizations supporting startups can amplify their impact by working together. Its goal is for every startup, no matter where it is located in Quebec, to have access as quickly as possible to the best available resources to support its development and growth. Its mission is to support, develop, and implement projects capable of energizing this ecosystem and enhancing the value and impact of the services offered to Quebec startups. For more information, visit https://mainqc.com

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