By Dave Flaherty/The Oshawa Express
The federal government has backed down on several aspects of its controversial business tax reforms, but Oshawa MP Colin Carrie says it’s far from enough.
The tax reforms in question were introduced in July and have faced heavy criticism from small business owners and some economic analysts.
Carrie recently hosted a town hall meeting, attended by local business owners and other concerned citizens, to discuss the matter. At that meeting, guest speaker Pierre Poilievre, MP for Carleton and Shadow Minister of Finance said the Liberal tax reforms
will be “extremely destructive” to the country’s economy and could handcuff business owners in bureaucratic red tape.
However, Poilievre told those in attendance he is confident that public discontent, and even backlash from some members of the Liberal Party, would force the government to back down, at the very least, on a few of the measures announced in July.
These words became reality as Federal Minister of Finance Bill Morneau announced several modifications to his proposed tax reforms.
The Liberals will still move forward with higher tax rates on passive investment income, but now only on funds above of $50,000, however, this did little to curb Carrie’s criticism.
“We would prefer they didn’t increase taxes on hard-working Canadians,” he said, adding the Liberals “can’t be trusted” and are always “finding new ways for Canadians to pay for out of control spending and crazy deficits.”
Passive investment is a strategy where a business sets aside money for the future in hopes of maximizing returns over an extended period of time and can be used for a number of reasons, like a capital investment, covering uninsured damages, or dealing with the consequences of an economic downturn.
Under the proposed tax reforms, Poilievre said these investments would now be subject to “double taxation.”
“Take a dollar, tax it half up front, you’d be left with 50 cents, and then tax that remaining 50 cents again at almost a rate of 50 per cent. So you’d take another quarter off and be left with about 26 or 27 cents on each dollar of passive income.”
Morneau also announced he would not move forward with plans that would have deemed the sale of a family business to a relative as a dividend instead of a capital gain, resulting in higher tax rates on the sale.
In comments made prior to Morneau’s announcements, Poilievre said this would have created an unfair situation.
“Take Farmer Joe, if he is selling to his son, he will pay $400,000 in taxes, if he sells to [a larger worldwide company] he pays no tax, so now Joe Jr. is at a $400,000 disadvantage in bidding for his father’s farmland. The reality of that is it is a disincentive.”
Again Carrie stood undeterred in his dissatisfaction with the actions of the government.
“I am not happy until I see the details,” he said, stating the Liberals had tried to “slide these tax reforms through” and he wouldn’t be surprised if they bring them back to table later on down the road.
“I won’t be happy until we see no new taxes,” he added.
Poilievre said Prime Minister Justin Trudeau claims Canada’s wealthiest residents are not paying enough taxes, however, he argued the situation isn’t that simple.
“How do you measure someone’s wealth? I know someone who makes $220,000 a year, but her net worth is lower than most teenagers. She has a lot of student debt, which will take years to pay off. She’s going to be hit hard,” he said. “What’s happened with this approach the government has taken to break down people into different classes and target them through rhetoric and policies is you end up missing the target.”
If the federal government wants “to go after tax cheats”, he claims they should be targeting “the big fish.”
“They are not targeting offshore accounts, the Ma and Pa grocery store will pay 70 per cent while the individuals who set up shop in Barbados will pay 2.5 per cent to a foreign government.”
Speaking with The Oshawa Express after the meeting, Carrie said regardless of Liberals backing away from certain measures, the government crafted its original proposed tax reforms without input with business owners.
“This [Liberal] government ran on consultation, and you know the story about our Canadian Border Services Agency office being closed with no consultation, we weren’t told about it,” Carrie said. “It’s the same thing with these tax proposals, they were released at the beginning of the summer, when people were on vacation, when farmers were at their busiest, and when, for many small businesses, it’s their busiest time of year.”