Morneau to testify at committee about Liberals' controversial tax proposals

Finance Minister Bill Morneau rises during question period in the House of Commons on Parliament Hill in Ottawa on Tuesday, Sept.26, 2017. (THE CANADIAN PRESS/Adrian Wyld)

OTTAWA -- Finance Minister Bill Morneau tried to reassure farmers Thursday that the federal government's controversial tax proposals won't impair their ability to bequeath the family farm to the next generation.

Morneau said Thursday that "technical fixes" for the proposals may be on the way when it comes to the issue of keeping the family farm in the family.

The minister was among more than a dozen witnesses testifying before a parliamentary committee that's examining proposed tax changes for private corporations -- measures that have subjected the Trudeau government to an onslaught of public and political outrage.

Opponents of the reforms insist the changes would hurt Canadians at different income levels and from many different sectors, including doctors, farmers and small business owners.

Farmers have raised particular concerns about elements of the proposed changes that could add new costs to inter-generational transfers of their family operations.

"Our goal is not, and will not be, to change the ability to move a family business, a family farm, a fishing business from one generation to the next," Morneau said after his appearance.

"There may be technical fixes to make sure that we get that right."

Morneau also warned that critics are spreading misinformation about the proposed tax changes, particularly when it comes to how they might affect farmers.

The Liberal government has been engaged in a communications war over its plan, which it insists would end tax advantages unfairly exploited by some wealthy business owners.

Inside the committee room Thursday, Morneau faced sharp criticism from political opponents over his three-part plan to change the tax system.

One rival noted after the hearing that Morneau appears to bending to pressure amid a backlash from angry business owners, several provincial leaders and even public concerns voiced by backbench Liberal MPs.

"The result is, I think that he's looking for an off-ramp for some of these proposals," Conservative MP Pierre Poilievre said after the meeting.

"He does look like a minister who's on the run."

On the farmer-succession issue, New Democrat MP Alexandre Boulerice said: "I hope he will do the right thing because there's a lot of fear right now."

Morneau argues the proposals are designed to create a fairer tax system, especially for those in the so-called middle class, but he says he's open to adjusting it after a consultation period ends next week.

Critics of the plan say it would hurt entrepreneurs who take personal financial risks when they decide to open a business and hire staff.

The federal tax-reform package includes restrictions on the ability of business owners to reduce their tax rate by sprinkling their income to family members in lower tax brackets, even if those family members do not contribute to the company.

Morneau has also 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.