Business group wants provinces’ help fighting feds’ tax plan
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Hey there, time traveller!
This article was published 22/09/2017 (1786 days ago), so information in it may no longer be current.
It feels just like yesterday that I moved away from Winnipeg. After stops in Calgary and Ottawa, my friends and colleagues in Toronto will report that I am still a proud Manitoban and my 15-plus years living in other cities haven’t changed that.
So imagine my surprise when I read a national news story, quoting a Winnipeg member of Parliament, suggesting wealthy small-business owners were just sitting back in their gated communities, suggesting their employees eat cake. I had to do a Facebook check-in with my pals from the University of Manitoba about all these new gated communities I had never heard of.
Incidentally, I still am still searching for the suburb filled with rich small-business owners. As the head of the Canadian Federation of Independent Business, I’d like to find it — we could likely make a few new membership sales.
The MP in question was offering his support of proposed changes to the way small businesses in Canada are taxed. While I believe the changes have serious negative consequences for Canada, I certainly respect any politician who works to ensure our tax system is fair for everybody.
But somehow, this issue has stopped being about tax fairness and has morphed into a full-out attempt to pit one group of Canadians against another. If you listen to some politicians, you might think business owners are a bunch of noisy rich people searching for loopholes in the tax system to avoid paying their fair share.
I get that there are many Canadians — even some in Manitoba — who feel that anyone who owns their own business is automatically a member of Canada’s one per cent.
Gosh, if it were only that easy.
Sure, there are some wealthy independent businesspeople driving their fancy cars to their Lake of the Woods cottages. But what the public doesn’t see is the incredible sacrifices that are made to make that happen — the second mortgage on the family home, or the months where the payroll was put on the personal credit card.
For every success story (which we should really be celebrating anyway), there are 10 other business owners who live just up the street, driving their kids in the same kind of car to the same public school as their employees. And there are also a few other business owners who have risked and lost it all.
So I’m back in Manitoba today, meeting with the provincial government and asking for its help in defending small businesses against these federal changes. Provincial governments have been leaders in reducing small-business corporate taxes. In fact, over the past few decades, both Tory and NDP governments in Manitoba have steadily reduced the small-business corporate tax rate to zero per cent today.
Of course, the corporate tax rate is just one of dozens of forms of taxation that small businesses pay. And some taxes, such as Workers Compensation Board premiums and payroll taxes, are 100 per cent paid by business owners.
But under the guise of fairness, the federal government has proposed major changes to the way small businesses share income with family members, save through their businesses and address capital gains during business succession. These changes would directly or indirectly affect provinces too, particularly as the Canada Revenue Agency collects provincial corporate income taxes on behalf of eight out of 10 provinces, including Manitoba.
In a recent CFIB survey, nearly 90 per cent of small business owners report these changes will be significant to their firms. And virtually every tax professional in the country has confirmed that the changes would not be confined to high-income professionals, but will affect middle-class business owners, raising some tax levels on entrepreneurs to rates higher than for other taxpayers.
The federal government is rushing through the most significant changes to the small business tax system in more than 40 years. A 75-day consultation process, launched in the dead of summer, is entirely insufficient to address the many challenges the proposed new rules would bring. Rather than working with businesses and provinces on any shortcomings of existing tax rules, the feds seem to be doubling down and raising the rhetoric in order to flex their middle-class muscles.
But cracks are beginning to show. More Liberal MPs are speaking out in opposition to the changes, including some who have apologized for their own government’s tone toward entrepreneurs. And provinces are beginning to share their concern over the potential impact on job creators or on rural communities working hard to attract and retain health-care professionals.
I’m hoping the public sees through this tax-fairness campaign soon. We’ve worked too hard to build a culture where entrepreneurship is celebrated and rewarded to move back to one where business owners are viewed as just a bunch of wealthy folks looking to save on their taxes.
Dan Kelly is president of the Canadian Federation of Independent Business.