POLITICS

Trudeau Signals He'll Push Ahead With Controversial Small Business Tax Changes

Some Liberal MPs are concerned.

09/06/2017 15:57 EDT | Updated 09/07/2017 10:25 EDT
Darryl Dyck/CP
Prime Minister Justin Trudeau addresses a Liberal caucus retreat in Kelowna, B.C., on Sept. 6, 2017.

KELOWNA, B.C. — Prime Minister Justin Trudeau pledged Wednesday to listen to Canadians — even those who didn't vote for him — but he gave little indication he will abandon plans to hike taxes on people with private corporations.

Trudeau made the comments as he kicked off the Liberals' summer caucus meetings in Kelowna where Grit MPs planned to raise their opposition to the changes.

Members of Parliament have heard an earful from concerned constituents and small business lobby groups over the summer.

'We are going to fix that problem'


In his speech, Trudeau trumpeted his government's record: the Canadian Child Benefit, infrastructure spending and cutting taxes on the the middle-income bracket.

"And speaking of tax changes, I want to be clear," Trudeau told the room. "People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year.

"We are always open to better ways to fix that problem, but we are going to fix that problem," he added.

The Liberals argue that the tax changes affecting income sprinkling, capital gains and passive investments won't be as drastic as lobby groups are suggesting.

The Canadian Medical Association, for example, argues that the proposals will unfairly target women who use their investments in their private corporations to help fund their maternity leave and hurt all doctors who use the measure to save for major investments. Some doctors have suggested that they'll be more likely to head south of the border if they are subjected to a huge tax hike.

Earlier this week, Finance Minister Bill Morneau said the government has noticed a huge uptick in the number of people incorporating themselves — 300 per cent over the past 15 years.

"There's some elements in our tax code that provide advantages for people to do that," he said. "We're concerned that if we don't move forward with some changes that create a level playing field, that we could find ourselves down the road with two classes of Canadians: a class of Canadians that are able to incorporate and find themselves in a lower tax situation and a second class that aren't able to incorporate and end up paying a higher rate of tax."

While he understands that many small business owners use their investments to save for retirement or help expand their businesses — which in turn creates jobs — Morneau said he just wants "to make sure that there's no situation where they have a much, much better retirement income as a result of an approach to tax planning not available to other Canadians."

Trudeau referred Wednesday to the Liberals' 2015 election platform — which promised to ensure Canadian controlled private corporations were not being used to reduce personal income tax obligations for high-income earners rather than supporting small businesses. He said the plan had been crafted after listening to Canadians.

Liberal MPs publicly voice opposition


He encouraged MPs to do the same.

"Every one of those conversations with Canadians is important — because it's true that it is for them that you are working. It is towards them that you have taken an engagement to serve," he told his MPs.

Many Liberal MPs have publicly voiced their opposition to the government's plan — they told reporters they would use the caucus to share their constituents' concerns.

Manitoba MP Doug Eyolfson, a former emergency room doctor, said the government needs to communicate its message better and address any "misinformation."

[My constituents] are concerned that small business owners are being unfairly targeted.Liberal MP Doug Eyolfson

"[My constituents] are concerned that small business owners are being unfairly targeted," he told reporters before the meeting. "If there is anything that is unfairly targeting anybody, we want to address that."

Eyolfson stopped short, however, of suggesting that any disappointed Liberals would vote against the government on a financial matter — a sign of no confidence — if Trudeau pushed ahead with the current suggestions.

"I don't know the answer to that," he told HuffPost Canada. Neither was he sure that he would make that move. "I honestly don't know."

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