Small Business Growth and Tax Policy in Canada—A Theoretical Model

Khaled Soufani
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Khaled Soufani: Department of Finance, John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd. West, Montreal, Quebec, Canada H3G 1M8

Environment and Planning C, 2003, vol. 21, issue 4, 567-578

Abstract: The author develops a theoretical model for considering the impact and the compliance costs of taxation on the liquidity and the financial situation of small firms in Canada. The model addresses the tax burden that faces small firms at their different stages of growth and development, but the emphasis is on the start-up phase where small firms need more cash or liquidity relative to businesses at more developed stages of the business life cycle. It is recognized that one of the ways of bolstering the availability of cash and short-term liquidity for small firms is to offer them tax incentives and to design a system that reduces their compliance costs. The author looks at the importance of the small business sector and the stages of development and growth of firms; presenting the small business tax policy, and then providing some policy and managerial recommendations. The author's intention is not to measure direct tax and compliance costs, but simply to reflect on some key policy parameters.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:21:y:2003:i:4:p:567-578

DOI: 10.1068/c0322

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