Quebec shared concerns with feds over tax proposals, right from the start
Carlos Leitao says he hopes Ottawa will adjust its tax plan, which is still in the consultation stage.
Andy Blatchford, The Canadian Press
Published Tuesday, September 26, 2017 3:54PM EDT
Last Updated Tuesday, September 26, 2017 4:58PM EDT
NEW YORK -- Quebec immediately brought some concerns to the federal government after Ottawa released a package of proposed tax reforms, the province's finance minister said Tuesday.
Carlos Leitao told The Canadian Press that he agrees with the overall goals of the tax proposals, which Ottawa argues are designed to inject more fairness in the system for the so-called middle class.
But Leitao is worried about the impact the changes could have on the agricultural sector, particularly when it comes to how the reform might complicate the transfer of farms within families.
"I think that merits some significant changes," he said of proposed elements that could make it easier for farmers to sell their businesses to outsiders rather than passing them along to close relatives, like a son or daughter.
"That transfer is not being made to avoid taxes, that transfer is being made so that the business can stay in family hands."
Quebec shared its concerns about the proposals with Ottawa "right from the start" after federal Finance Minister Bill Morneau released the plan in mid-July, Leitao said.
Now, Quebec hopes the Trudeau government will adjust this part of its plan, which will be under consultation until next week.
"As it stands now, the federal proposal probably causes some confusion in (the agricultural) sector and, regarding small businesses, I think there's also a bit of confusion," Leitao said in New York after he appeared at an investors' conference hosted by Bloomberg.
"Those things, I think, should be adjusted. And I think the federal government is open to coming with some amendments."
Morneau has said he's listening to feedback and that the Trudeau government has indeed signalled it is open to making changes, if necessary.
On Monday, Prime Minister Justin Trudeau maintained he had no intention of stifling growth for small businesses and start-ups with the tax proposals. Trudeau added that it's important to encourage entrepreneurs and risk takers.
Selling the plan hasn't been easy for Ottawa.
The Liberal government has been engaged in a communications war over the reforms, which it has insisted would end tax advantages unfairly exploited by some wealthy business owners.
The proposals have been met by vocal opposition from numerous areas, including many small business owners, tech-sector players, tax planners and doctors.
An organized movement has argued the tax incentives targeted by the Liberals are critical for Canada's economically crucial small-business sector.
It insists the current tax structure is necessary for entrepreneurs, including those in the so-called middle class, who take personal financial risks when they decide to open a company.
The federal government has also felt growing pressure over the proposals from some of the provinces, including British Columbia, Manitoba, Nova Scotia and Newfoundland and Labrador.
The Liberal 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 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.