TORONTO, Oct. 14, 2025 /CNW/ - As next month's federal budget approaches, Canadian business leaders want broader supports, wider access to capital and structural fixes to the tax system to sustain their businesses ahead of Canada's economic renewal, finds a KPMG in Canada survey.
KPMG's annual federal budget survey of 501 Canadian business leaders reveals that more than nine in 10 want the government to provide more broad-based and sectoral supports, including expanded financing and loan options for any company or sector impacted by tariffs. While the severity and impact of U.S. tariffs varies, most Canadian businesses say they are being affected, whether due to rising costs, lost revenue, reduced competitiveness, paused investment or the removal of the $800 duty-free exemption on shipments to the U.S. Specifically, 84 per cent of respondents that trade directly with the U.S. say their business costs have risen. Overall, 96 per cent believe the greatest risk to Canada's economic future is dependence on the U.S., and recognize the need to diversify trade with reliable, strategic partners.
"As U.S. tariffs cast a shadow over the Canadian economy, the vast majority of business leaders are supportive of the government's plans to confront Canada's economic challenges and make capital investments that accrue long-term benefits," says Lucy Iacovelli, KPMG's Canadian Managing Partner, Tax and Legal. "More urgently, however, many companies are looking for a bridge to help them sustain and transition their businesses beyond the U.S. market, so they can participate in "Build Canada" opportunities and compete on the global stage. Our survey pointed to the need for the Canadian government to invest in improving the business environment by delivering on wider access to low-cost financing and capital, tax relief that attracts investment, less red tape, and greater incentives to innovate."
"While the focus of the upcoming federal budget is to make a generational investment in building the economy, the government also needs to make expenditures that provide immediate relief and sustain capital for businesses and sectors that are struggling right now," adds Ms. Iacovelli.
A federal budget business wish list
As businesses wrestle with uncertainty, most respondents believe it is critical for the government to lessen the obstacles they face to be part of Canada's 'nation-building' strategy. The need for increased transitional support is even more urgent given uncertainty surrounding the renewal of the Canada-United States-Mexico Agreement in 2026.
Key survey findings:
- 80 per cent agree that their business is struggling due to U.S. tariffs that have made them less competitive (e.g. higher import and production costs, lower revenues)
- 92 per cent want the government to deliver on improving access to markets within Canada (e.g. streamline provincial regulations, improve labour mobility, reduce transportation costs, etc.)
- 90 per cent want incentives and support to help Canadian businesses adapt, retool and develop new products and services for overseas markets
- 97 per cent believe the government needs to reorient and expand programs to help businesses access non-U.S. markets and reliable trading partners.
- 91 per cent say the government needs to expand financing and loan options to improve business liquidity for any sector impacted by tariffs (e.g., Business Development Bank of Canada, government-financed funds, etc.)
N i ne in 10 agree that Canada needs both a new national industrial strategy to compete in global markets, as well as a bold innovation strategy that fosters advanced technology investments and capitalizes on AI and Canadian ideas. A roadmap to deliver on a large number of trade-enabling infrastructure projects also ranks high on the list of national priorities, with 96 per cent supporting infrastructure and policies that enable Canada's energy sector to access global markets.
Tax reform as a lever to unlock growth
In addition to raising revenue, Canada's tax system needs to be leveraged as a strategic tool to meet the bridging needs of businesses and improve the future state of the economy. Business leaders are united on the need for tax relief and reform to achieve these objectives.
More than nine in 10 want the federal government to collaborate with provincial governments to cut the overall Canadian corporate tax rate (by 2-4 per cent) to attract more investment and entrepreneurial activity and restore a competitive advantage over the U.S. Nine in 10 also want the government to commit to a timeline for tax reform that will reduce corporate taxes and boost competitiveness.
"Clearly, the government faces some hard fiscal choices in the upcoming budget, since spending seems certain to materially exceed revenues, and additional borrowing increases already-high debt-servicing costs," says Brian Ernewein, Senior Advisor, National Tax, KPMG in Canada. "If the size of government is not going to shrink, then its revenues need to increase. However, it is difficult to see where there is room to increase personal or corporate income taxes. In fact, current top personal tax rates are likely impeding productivity and growth, and a lower combined federal-provincial corporate tax rate is required to restore Canada's competitive rate advantage."
"These realities point to the need for the government to reconsider the level of various consumption taxes," adds Mr. Ernewein. "All taxes – including consumption taxes – impose a cost on the economy. However, consumption taxes impose less damage than personal or corporate income tax, and represent a stable source of government revenue."
Other findings:
- 90 per cent say Canada must improve the effectiveness of R&D tax incentives, including a patent box regime, to increase patenting and commercialization of Canadian inventions
- 90 per cent agree that Canada should institute immediate expensing for businesses to recover certain costs (i.e., an incentive to claim expenses on property in the year purchased).
- 92 per cent want the government to increase its own austerity efforts and plans to reduce government waste.
About the KPMG 2025 Federal Budget Survey
KPMG Canada surveyed 501 Canadian companies between Sept. 11 to Oct. 2, 2025, to gauge the views and priorities of business leaders ahead of the November 4th federal budget. All respondents are business owners or executive-level decision makers and are from all industry sectors. Thirty-five per cent lead companies with $500 million to $1 billion in annual gross revenue; 31 per cent, over $1 billion; 20 per cent, between $300 million to $499 million; 9 per cent, between $100 million and $299 million; and the remaining 5 per cent, between $10 million to $99 million. Fifty-seven per cent of the companies are privately held, 30 per cent are owned by private equity, 11 per cent are publicly traded, and 2 per cent are foreign-owned subsidiaries. The survey used Sago's Methodify online research platform.
About KPMG in Canada
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.
The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca.
To arrange for a media interview, please contact:
Nancy White
Corporate Affairs & Media Relations
KPMG in Canada
(416) 777-3306
SOURCE KPMG LLP
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