'This isn't about small business' Morneau says of tax changes
Published Sunday, September 10, 2017 11:38AM EDT
OTTAWA -- Finance Minister Bill Morneau says two-thirds of Canada’s small business owners, including farmers and physicians need not worry about the proposed federal changes to the tax system because they won’t be impacted “at all” by what the Liberals have put on the table.
"We have no intention of trying to make it more difficult for the family farm," said Morneau in an interview with Evan Solomon, host of CTV’s Question Period.
The Liberal government’s proposal to close what it calls “unfair” tax loopholes has been met with fervent opposition from small business owners since the its three-pronged plan was unveiled in Ottawa in July.
The government’s proposal includes limiting a corporation’s ability to convert income into capital gains and dividends, halting business owners from lowering their tax rate by sprinkling money to family members regardless of their involvement in the business through dividends or by paying them salaries, and restricting the ability for private corporations to recover taxes through passive investments.
Morneau said that while the government will look at the potential unintended consequences being raised, two-thirds of small business owners in Canada that earn $73,000 per year or less won’t be impacted “at all” by the tax changes.
"We don’t want in any way to jeopardize the healthy family farm," Morneau said in the interview, adding that farmers will still be able to have family members working for them, and will have the ability to pass down their farms to future generations.
"Those are things that are embedded in our tax code now. They’ll still be able to have their family members working in their farm," said Morneau. "They’ll still have a million-dollar capital lifetime gains exemption. They will still be in a position that is advantageous for the farm."
Farmers have raised concerns that the changes would have financial impacts on their businesses, including putting incorporated family farms at a disadvantage to factory farms.
Many have taken to social media, posting photos and videos of themselves working long hours inside combines and tractors, refuting the idea that their businesses are tax shelters.
At the Liberals' Kelowna, B.C. caucus retreat, Morneau and Prime Minister Justin Trudeau made numerous attempts both to the media and to their own concerned caucus members to diffuse anxiety that the proposals will impact small business owners.
The government says the most impact will be felt by those business owners who are making $150,000 a year or more, or those who have money to tuck away after contributing the annual maximum to RRSPs and TFSAs.
"This isn’t about small business, just to state clearly. We want small business to continue to invest in our economy. We want to continue with a very advantageous position for small business," Morneau said, noting that there’s been a threefold increase in the use of businesses incorporating in order to lower their tax bill and it’s this “broader professional class” that these changes are aimed at.
The tax proposal has been a rallying point for the official opposition, with Conservative leader Andrew Scheer and his party vowing to go hard at the government for it once the House of Commons resumes sitting Sept. 18.
The federal government is now in a 75-day consultation window and will be soliciting feedback from people on its proposal until Oct. 2.
Morneau was non-committal on extending the consultation period, despite the concern being raised.
"This is absolutely what we think needs to happen to make sure that our tax system is working for the long term," he said.