Canadian businesses have broken a not-so-great record: the highest total of unpaid sales tax in a single year.
Driving the news: Canadian businesses are on the hook for $19.4 billion in outstanding sales taxes from last year, according to the CRA. That’s up $3.2 billion from the prior year and double the amount seen in the years before the pandemic.
- High levels of debt from COVID, including unpaid government loans, growing supply costs, and less foot traffic, have all hit businesses' bottom lines.
- Small and medium-sized businesses are feeling these problems the most, with ~64% of them citing cash flow problems, according to an Equifax survey.
Why it matters: The rise in unpaid taxes has coincided with business insolvencies hitting levels Canada hasn’t seen since the Great Recession. The economy needs healthy businesses to drive competition and innovation, employ people, and pay taxes.
Zoom out: The challenges confronting small businesses right now could be deterring some Canadians from starting their own. Despite record population growth, Canada currently has 100,000 fewer entrepreneurs than it did 20 years ago.—LA