'We're open to changes' Morneau says of Liberal tax proposal

Minister of Finance Bill Morneau speaks to media during a press conference in Vancouver on Sept. 5, 2017. (Ben Nelms / THE CANADIAN PRESS)

OTTAWA – After months of push back from the business community, the opposition, and even within his own caucus, Finance Minister Bill Morneau says he’s open to making changes to the Liberal tax proposal.

"We’ve said really from the beginning that this consultation process is about understanding the impacts on Canadians and for that reason we’re open to changes," said Morneau following a meeting with business owners in Alymer, Que. Wednesday.

"There will almost certainly be areas in which we hear things that lead us to conclude that we should be making changes," said Morneau. "That’s why we have a consultation."

The finance minister said that once the 75-day consultation period ends on Oct. 2, the government will take some time to process the feedback.

"Tax is complex and we want to get it right. What they should also expect though is that we will move forward to make sure that our system works," he said.

Morneau’s comments come after media reports that the government was prepping changes to make the proposal more popular.

A finance official speaking on background said that while there is no one policy being considered, the government is open to changes after the consultation period ends.

The government has drafted legislation to address the income sprinkling and capital gains changes, but it’s possible to see more latitude on passive investments, the source said.

As well, the official said that while a change to the small business tax rate is not actively being considered, it’s not out of the question.

During the 2015 election campaign the Liberals pledged to reduce the small business tax rate to nine per cent. Currently it is frozen at 10.5 per cent.

"We know that having a system that incents people to start business is important. We’re going to continue to think about ways that we can insure that businesses can be successful. So, of course we’re always going to be open-minded about how that can be achieved," Morneau said.

The Liberal government’s three-pronged plan 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 through dividends or by paying them salaries, and restricting the ability for private corporations to recover taxes through passive investments.

Asked about potential tweaks to the government’s proposed tax changes on his way in to the Liberal caucus meeting on Parliament Hill Wednesday, Morneau said "well first I have to listen to people."

Both Morneau and Prime Minister Justin Trudeau have indicated they are listening to concerns and say they will make sure there aren’t any unintended consequences of the changes.

Some Liberal MPs are banking on that.

Several backbenchers have come forward since the government rolled out its proposal in July, saying the government has framed the changes in a way that could characterize those who are currently taking advantage of the “unfair” yet legal loopholes as tax cheats, and are concerned about how the changes are going over in their ridings.

"I’m very optimistic that all the discussions are leading to a clearer understanding and I think the minister is doing a good job of really listening," said Liberal caucus chair Francis Scarpaleggia.

Reviews have been mixed among Canadian business owners since the plan was unveiled. Farmers and some doctors have come out against the changes, while other groups including nurses, support the Liberal proposal.

"It is a plan that encompasses many aspects. The prime minister did say that he will consider each aspect and the decision will be made once the consolations are made," said Liberal MP Nicola Di Iorio.

"We’re not in a class warfare, we are a government that is inclusive. When we campaigned we sought the vote of every Canadian and every Canadian deserves to be treated with dignity and respect by its government. When we chose our examples we should be particularly prudent in not targeting some individuals," said Di Iorio.

Yesterday, Edmonton Centre MP Randy Boissonnault posted an apology to constituents over the "tone and language" used by his government in the roll out of the tax proposal. On his MP website, Boissonnault said "it is simply not true that these proposals are locked in."

The changes have dominated the Conservative party’s line of attack in Question Period the first three days back to Parliament.

"In one ear and out the other," is the kind of listening Conservative deputy leader Lisa Raitt classified it as Wednesday during question period.

The NDP is calling on the Liberals to double their consultation period into December to give business owners more time to understand the potential impacts and submit their feedback.

The NDP also want to see the scope of the tax changes expanded to include large corporations, and loopholes for CEOs and international tax havens.

"These consultations are too short and too narrow to result in true tax fairness," said NDP finance critic Alexandre Boulerice in a statement. "Right now, the Liberals are letting the big fish off the hook," he said.

With files from CTV News’ Glen McGregor