With the projected federal deficit to hit $78 billion in 2025/2026 and no clear plan to return to a balanced budget, small businesses are calling on Ottawa to get its fiscal house in order in the upcoming spring economic update. Entrepreneurs should not foot the bill for today’s out-of-control federal spending, warns the Canadian Federation of Independent Business (CFIB) in its new report.
The federal government has posted deficits in 12 of the last 13 budgets, and debt has doubled from $602.4 billion in 2012/2013 to $1,266.5 billion in the 2024/2025 fiscal year – the equivalent of $30,407 per Canadian, said Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region.
Jasmin Guénette
“Government is treating public funds like a limitless resource it can tap into without any consequences,” said Jasmin Guénette, CFIB vice-president of national affairs. “Small business owners are tired of watching federal spending spiral out of control while being told to brace for impact and absorb costs at every turn. It’s unsustainable.”
The debt has grown so large that all the money to be collected from the goods and services tax (GST) across Canada doesn’t even cover the $53.4 billion in annual interest payments on the country’s national debt. Federal debt interest is almost equivalent to the total combined provincial budgets of Manitoba, Saskatchewan, and Newfoundland and Labrador in 2025/2026, explained the CFIB.
Looking ahead, Canada’s debt charges are projected to rise to $76.1 billion in 2029/2030 due to higher borrowing requirements and interest rates. That sum could eliminate the GST, energy taxes, customs duties, and other excise taxes based on the last fiscal year, while still leaving a $4 billion surplus, it said.
“Our economy is weighed down by a massive debt and ongoing deficits,” added Guénette. “The government needs to get its spending under control and fix the business environment. We have already reached a point where we have more businesses closing than starting up. Which means, Canada is facing an entrepreneurial drought, and politicians must pay close attention. We need policies that will reverse that trend.”
The CFIB said most (92%) small business owners are against the idea of raising revenues through higher taxes and fees as they’re already crushed by high tax and regulatory costs.
CFIB is urging the federal government to:
• Implement a clear path to balancing the overall budget with specific indicators to measure progress.
• Commit to a fiscal anchor that will actually reduce the deficit and debt, not just stabilize its growth relative to GDP.
• Implement legislated spending limits for the government outside of a global crisis.
• Undertake meaningful actions to reduce the size and cost of the federal public service.
• Avoid introducing new or expanding social programs (e.g., dental care, pharmacare etc.).
• Sell government assets (e.g. Crown corporations, land, buildings) where it makes sense.
Juliette Nicolaÿ
“The federal debt is massive, and not a single province is heading in the right direction, with record-breaking deficits and debts projected in their budgets. We should all be alarmed,” said Juliette Nicolaÿ, CFIB’s bilingual policy analyst and author of the report. “The only way out of this enormous debt is by restoring fiscal responsibility and setting a path back to balanced budgets.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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