In todays economic climate, large enterprises are generating unprecedented profits while engaging in practices like shrinkflation where the size of products decreases but prices remain the same or even go up. This trend not only affects consumers but also puts small businesses at a disadvantage. Introducing higher taxes for large corporations can help level the playing field, provide essential support for small businesses, and address the broader impacts of shrinkflation.
Large enterprises like Walmart and other major retailers have reported substantial increases in their profits, even during economic downturns. These companies benefit from economies of scale, global supply chains, and significant market power, allowing them to dominate their respective industries. Meanwhile, smaller businesses often struggle to compete, especially as they face higher relative costs and limited market access. By creating more tax tiers and higher taxes on large corporations, we can ensure that they contribute a fair share to the economy and help support the smaller businesses that are essential to our communities.
Shrinkflation exacerbates the economic strain on consumers and small businesses alike. As big businesses reduce product sizes without lowering prices, consumers get less value for their money. This practice increases profit margins for large enterprises but leaves consumers paying more for less. Small businesses, which often cannot afford to engage in shrinkflation to the same extent, find it harder to compete on price, further squeezing their already tight margins.
Small businesses are the backbone of our economy, driving innovation, creating jobs, and supporting our communities. However, they often struggle with high taxes, which can stifle their growth. By adding more tax tiers specifically targeting large enterprises like Walmart, grocery stores and other major retailers, we can reduce the tax burden on small businesses, helping them thrive. A more graduated tax system will ensure that taxes are fairer and support small businesses while still funding public services.
Currently, Ontario’s corporate tax system has two main rates: a lower rate for small businesses on their first $500,000 of income and a higher rate for anything above that. While this helps to some extent, it does not consider the wide range of incomes that businesses have.
Adding more tax brackets does not have to reduce the total tax revenue. It can be set up so that overall taxes stay the same by adjusting rates and thresholds. Large enterprises, which can handle higher taxes more easily, would pay a bit more. This ensures that those who can afford to pay more do so, creating a fairer tax system.
Last year 2023, Walmart Canada reported strong financial results. The company experienced a 1.8% increase in net sales, amounting to $6 billion (Grocery Business Magazine). While the exact profit figures for Walmart Canada alone were not disclosed, Walmart Inc., the parent company, had a significant overall performance with global revenues rising by 4.9% to $172.1 billion (corporate Walmart).
So while large enterprises like Walmart generate billions in profit, they are only taxed at the same rate as small businesses that barely make over $500,000 annually. This disparity is not just unfair but also detrimental to the overall health of the economy. By introducing new tax tiers specifically targeting large enterprises we can help rectify this imbalance and help support small businesses more effectively.
The Disparity in Profits and Tax Burden
Despite these massive figures, Walmart’s effective tax rate remains comparable to that of small businesses with much smaller revenues. This situation creates a significant imbalance where small businesses, already struggling with limited resources and market competition, shoulder a disproportionate tax burden relative to their income.
Small businesses often operate on tight margins, reinvesting most of their profits back into their operations. Higher tax rates on these small businesses can stifle their ability to grow, innovate, and hire more employees. In contrast, large enterprises like Walmart have vast resources and diversified revenue streams, allowing them to absorb higher taxes without significant operational impacts.
The Need for New Tax Tiers
Creating additional tax tiers for large enterprises would ensure a more equitable distribution of the tax burden. Here is why this change is necessary:
- Fairness and Equity: Small businesses and large enterprises operate on entirely different scales. It is only fair that their tax contributions reflect this disparity. Higher tax tiers for corporations with millions and billions of substantial profits would ensure that these companies contribute a fairer share of public revenues.
- Support for Small Businesses: Lowering the tax burden on small businesses can provide them with the financial breathing room needed to expand, innovate, and create jobs. This can lead to a more vibrant and diverse economy, driven by the growth of small enterprises.
- Revenue Generation: Higher taxes on large enterprises can generate significant additional revenue for the government. This revenue can be used to fund public services, infrastructure projects, and support programs for small businesses, creating a positive feedback loop of economic growth and development.
- Mitigating Economic Disparities: Large enterprises often benefit from economies of scale, market dominance, and preferential treatment that small businesses do not enjoy. Higher taxes on these corporations can help mitigate some of these advantages, levelling the playing field for smaller competitors.
So here is an example of how additional tax tiers could work:
- Income up to $500,000
- Income from $500,001 to $2,000,000
- Income from $2,000,001 to $500,000,000
- Income from $500,000,001 to $1,000,000,000
- Income from $1,000,000,001 to$50,000,000,000
- Income from $50,000,000,001 to$100,000,000,000
- Income from $100,000,000,001 and above
as opposed to the current two tiers; a reduced rate for Canadian-controlled private corporations (CCPCs) on the first $500,000 of active business income and a higher general corporate rate for income above the $5000,000 threshold.
My new tier platform will allow for the lowering of tax rates for businesses making $2,000,000 a year and would make it easier for them to carry the same burden as the billion-dollar companies. This will lead to more investments in their business, more jobs, and a healthier economy. Supporting small businesses in this way helps keep our economy diverse and dynamic. By adding more tax tiers and small increases to the corporate tax system in Ontario. We can significantly help small businesses benefit and grow.
By implementing slightly higher tax tiers for large enterprises like Walmart, we can alleviate the tax burden on smaller enterprises. A more graduated tax system would support small businesses, encouraging their growth, creating jobs, and diversifying the economy. This approach is fair, and practical, and aligns with the economic needs of small businesses and the broader goals of sustainable economic development.
There is no reason why small “Mom and Pop” businesses should be taxed at the same rate as Walmart and other big chain stores. By adjusting the tax structure, we can ensure that small businesses are not unfairly burdened, allowing them to thrive and contribute to a more dynamic and resilient economy.