Premier, business slam tax plan

Hey there, time traveller!
This article was published 22/09/2017 (2948 days ago), so information in it may no longer be current.

Manitoba Premier Brian Pallister joined forces with small business leaders and owners Friday to condemn Ottawa’s proposed tax reforms.

Speaking at a small manufacturing company in the Polo Park area of Winnipeg, Pallister said it’s clear the federal government doesn’t understand the effort and risks that go into establishing and maintaining small businesses.

The proposed changes will have a negative effect on thousands of businesses in Manitoba and the tens of thousands of people who work for them, Pallister said.

“Those proposals could only come from a government that does not understand the importance of small and medium-sized enterprise to the Canadian economy,” he said at a news conference at Western Marble & Tile Ltd. on Yukon Avenue.

“Eighty per cent of Manitoba’s and Canada’s net new jobs in the next decade are going to come from businesses like this.”

Federal Finance Minister Bill Morneau announced his tax-reform plan this summer. It includes restrictions on the ability of business owners to reduce their tax rate by spreading income to family members in lower tax brackets, even if those family members do not contribute to the company. He said the tax system unfairly encourages wealthy Canadians to incorporate so they can take advantage of a better tax rate than middle-income earners.

Morneau proposed limits on the use of private corporations to make passive investments that are unrelated to the company. Another change would limit business owners’ ability to convert regular income of a corporation into capital gains, which are typically taxed at a lower rate.

But the proposals — now at the draft legislation stage — are stirring up a rising tide of protest across the country.

Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business, representing 4,800 enterprises in Manitoba and 109,000 across the country, said while Ottawa claims its proposals are targeting the wealthy, they are really hitting those with modest incomes.

“These changes would mean that any business owner earning above $50,000 a year would be negatively affected,” he said, noting two-thirds of business owners in Canada earn less than $73,000 a year.

The planned changes would make it more difficult for businesses to save money in good times to ride out future downturns or to transfer ownership from the current generation to the next, Kelly said.

He said “there’s no question” some business owners may be taking advantage of the tax system, and pledged his organization’s support in addressing this, but the whole tax proposal needs to go back to the drawing board.

With Pallister at his side, Kelly was asked for his opinion on the Progressive Conservative government’s possible introduction of health premiums in Manitoba. Such a tax could have significant implications for employers, who might be pressured to cover the costs on behalf of their workers.

Kelly said no business likes a new tax, but noted Manitoba seems to be testing the waters about health premiums, while Ottawa appears committed to its proposed tax changes.

“One difference for us is that (the proposed Manitoba health) tax is targeted more broadly, not just at the individual business community, and my understanding is it’s a proposal. What’s different about what’s going on in Ottawa right now is we have a consultation with draft legislation and a prime minister who’s at the United Nations saying that this is going ahead and he’s not backing down.”

Jackie Wild, a board member with Manitoba Filipino Business Council Inc., said she and other business owners have made “major financial sacrifices” in exchange for the autonomy of running their own enterprises.

“We don’t have the luxury of company benefits, (employment) insurance, vacation time, sick days or pensions,” she said. “The prime minister wants to take away from the top and level the playing field, but he doesn’t realize that many business owners who would be affected by this change are from the middle class.”

The federal government launched a 75-day consultation period that began in mid-July and ends Oct. 2 to allow Canadians to weigh in on its proposals.

Curtis McRae, a partner in G&G Farms Ltd. near St. Andrews, said the fact consultations were being held during harvest, the busiest time of year for farmers, shows a lack of respect on the part of the federal government.

The proposed tax changes would greatly hinder the transfer of farms to the next generation, said McRae, a partner with his mother and brother in the 5,000-acre operation.

“It’s a deliberate attempt to steal from my children,” he said.

— with files from The Canadian Press

larry.kusch@freepress.mb.ca