OTTAWA -- The federal government’s proposed changes to close what it calls “unfair” tax loopholes could end up costing them politically, the Canadian Federation of Independent Businesses warns.
Speaking to CTV Power Play’s Don Martin on Tuesday, CFIB president Dan Kelly said if the Liberal government follows through on changing the way small business owners are taxed, it’ll result in “massive uncertainty” for years, stunting business growth.
“We just delivered 15,000 signed petitions this morning from CFIB members to MPs across the country,” said Kelly. “I think a lot of those people were or are Liberal supporters, and they run the risk of losing some of the people that are in their corner right now. That’s something that I think any political party needs to take seriously.”
Finance Minister Bill Morneau said Tuesday he’s not surprised by the level of pushback he’s getting over proposed tax changes.
“We always expected that there would be specific issues that we might not have fully considered,” said Morneau, during a roundtable with small business owners in Vancouver.
The current system gives high-income earners the advantage of paying the lower corporate tax rate instead of personal income taxes.
The proposed measures will tackle income sprinkling, where a business owner splits his or her income among family members by paying them salaries; and methods of converting income into dividends and capital gains.
Morneau said if things carry on as the rules permit now, it could create two classes of Canadians.
“We don’t want to have a system that creates increasing wedges between people in different situations,” he said.
While the government has not reviewed all the feedback it has received, Morneau did signal the government is open to changes that would avoid any “unintended consequences” of the changes.
Small Business and Tourism Minister Bardish Chagger is also planning to head out across the country to meet with the small business community about the changes.
Frustration has been mounting among small business owners since the federal government unveiled its plans in Ottawa in July. The federal government is now in a 75-day consultation window and will be soliciting feedback from people on its proposal until October 2.
On Wednesday, the Liberal caucus begins its retreat in Kelowna, B.C., where it’s expected the proposed small business tax changes will dominate the agenda, as MPs have reported hearing lots of blowback from small business owners like doctors and farmers in their ridings.
The Conservatives have been vocal about their opposition to what they see as a tax increase for small business owners. Conservative finance critic Pierre Poilievre has written to the House Finance Committee Chair Liberal MP Wayne Easter asking that the committee reconvene early to hear from Canadians who have concerns with the proposed changes.
“At present, there are no meetings scheduled to even discuss this particular tax increase. The committee will only return to resume its work a few weeks before the consultation cut-off, making it impossible to even produce a report by the deadline,” said Poilievre in the letter to Easter.
“Neglecting to hear from representatives of millions of affected taxpayers would be an abdication of the committee’s responsibility,” he said.
