CANNINGS: Liberal income tax fairness is not so fair
Richard Cannings, MP South Okanagan-West Kootenay
Image Credit: Contributed
September 16, 2017 - 12:00 PM
There has been a great deal of talk in the news and on the street about the Liberal government’s proposed changes to federal tax laws that would make it more difficult for small businesses to make passive investments in their companies and share profits with members of their families. The Liberals claim that many small business owners are using these methods to avoid paying their fair share of taxes.
Business owners, farmers, lawyers and doctors across the country have risen up in anger over the proposals. And the Liberals are digging in, saying that, while this is a consultation period, they will not back down on the concept.
Why the controversy? Well, the small business owners rightly point out that their financial situations are very different from salaried employees—they don’t have pensions, sick leave, parental leave and other benefits and are often taking big risks for little profit for long periods of time while growing their companies. I was self-employed for 20 years, so I know about those uncertainties and lean times.
I’ve talked to doctors who have to save up for a year before they can afford to take maternity leave, business owners who have to put aside money so that they can survive through years when profits are minimal or non-existent. I’ve heard from entrepreneurs who are working very long hours to build their companies and use passive investments as a way to get through difficult times.
The government estimates that these tax changes will add $250 million to annual government revenues. However, the Liberals have backed down on an election promise to close a much bigger loophole—the huge tax cuts wealthy CEOs receive when they are paid in stock options instead of salary. Closing that loophole would only impact the top one percent of income earners and would net the government an estimated $800 million per year in new taxes. That would be tax fairness. The Liberal government should also tackle the huge issue of big corporations moving their profits to offshore tax havens, cheating Canadians of billions in tax dollars.
The NDP knows that small businesses are the real job creators in Canada, and when we return to Ottawa next week our caucus we will continue to press the government to make sure that they will not bring in measures that will unfairly hit most small business owners—two-thirds of whom make less than $70,000 per year. We will also press the Liberals to live up to their election promise to cut the small business tax rate from 11 to 9 percent.
We all want the tax system to be fair. But it’s clear that these proposed changes need more than a bit of summertime consultation. The government needs to truly listen to the business owners so that any new system can stymie true tax cheats without putting legitimate businesses at risk. And above all, the Liberals need to tackle the big loopholes that create true unfairness in the tax system—the CEO stock options and offshore tax havens that benefit only the wealthiest of Canadians.
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