Businesses may soon actively lower revenues to meet Ottawa’s subsidy threshold: advocate

The CEO of the Canadian Federation of Independent Business (CFIB) says the threshold to receive the government’s new wage and rent subsidies is too high and could force some businesses to consider decreasing their revenues to meet the eligibility criteria.

Dan Kelly said he’s lobbying politicians, currently studying the Liberal’s new pandemic aid bill at the finance committee, to lower the bar to access the benefits and make support commensurate to revenue loss.

“The floor is now so high, that if you are just below that, you would easily do that math and say ‘wait a minute, I’m hustling to try to make every possible sale, I’m trying to hire as many people as I can, but I’m 35 per cent down and I get zero. If I don’t hustle so much, and my restaurant has a 40 per cent loss, I’ll get 40 per cent of my rent and 40 per cent of my wages covered by the government,’” Kelly told CTVNews.ca on Tuesday.

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“This may be what [businesses] have to turn to.”

On Nov. 24, the government unveiled Bill C-2, which prolongs some and rejigs various other COVID-19 benefits. As part of that rejig was a change to the wage and rent subsidies, which have both gone through several makeovers throughout the course of the pandemic.

The Tourism and Hospitality Program provides a subsidy rate of up to 75 per cent to businesses that have seen an average monthly revenue reduction of at least 40 per cent over the first 13 qualifying periods of the wage subsidy program and a current-month revenue loss of at least 40 per cent.

Businesses that aren’t eligible for the Tourism and Hospitality Program can apply to the Hardest-Hit Business Recovery program if they can show an average monthly revenue reduction of at least 50 per cent and a current-month revenue loss of the same amount.

Previously, both subsidies were reflective of a sliding scale model, whereby the benefit was based on the percentage of revenue loss, including small losses.

“Up until the end of October, there was no minimum, so if you had even a five per cent revenue loss, you could get a two per cent subsidy…it was minor but it was commensurate to your losses,” he said.

Deputy Prime Minister and Finance Minister Chrystia Freeland says the proposed legislation is supposed to be “targeted” and aimed at weaning recipients off support.

“I see this legislation as very much the last step in our COVID-19 support programs. It is what I really hope and truly believe is the final pivot,” she said on Nov. 24.

Kelly said he understands the motive behind the new benefits but it doesn’t change the fact that businesses are still struggling.

“Our data at CFIB shows that only 36 per cent of small business across Canada are at regular levels of sales. Almost two-thirds are below water,” he said.

The organization is proposing lowering the revenue drop benchmark to 10 per cent.

“I understand if they don’t want to go down to zero, but if they lower the bar so that all businesses would be able to qualify if they had a 10 per cent loss in revenue or more….that we believe is the better outcome,” he said.