Small businesses often have difficulty raising capital and the federal government needs to do more to help their cause, according to Investment Industry Association of Canada (IIAC) president and CEO Ian Russell.
Russell said direct incentives to help small companies raise capital are "urgently" needed.
"For nearly three years, share prices for small public companies in Canada have tumbled to near lows, market liquidity has dried up and the volume and value of small business financings, both for secondary offerings and IPOs, have collapsed," he said.
"The dearth of financing activity is evident right across the small business marketplace as the lack of public market access for capital has made angel networks and venture capital funds reluctant to fund early stage and emerging businesses."
Russell is calling on the federal government to create tax incentives that would help small businesses. Specifically, he feels the government should create:
- a preferred capital gains tax rate related to shares of small businesses in the areas of treasury offerings and secondary market transactions; and
- a tax-free capital gains rollover provision for those purchasing shares in small companies.
"The freezing of capital access for small business comes at a critical time for our country," Russell said.
"A strengthening economic recovery has not materialized, largely because of weak commodities markets, and the consensus outlook for economic growth is in the paltry 2.5% range."
The IIAC also said it is going to continue pushing for a single regulator that will help streamline regulation.
