The Liberal government claims to be dedicated to improving the quality of life for all Canadians — but their latest proposal to reform tax laws are unlikely to do so.
Prime Minister Justin Trudeau has been touting his new tax reform plans as of late. He was recently in British Columbia, attempting to curry favour amongst his constituents and discussing how proposed changes to the small business tax regime will benefit all citizens. He wants to change the law to curtail what he calls "income sprinkling" and "passive investment," and in doing so end the minor tax advantages that are currently provided to small business owners.
Trudeau says that he wants to level the playing field so that someone making $250,000 a year will not be taxed at a lower rate than someone earning $50,000. He has promised to "fix that problem."
While it sounds like a cutesy sound bite, the reality of these proposed changes will create far more problems than they will solve.
If his tax reform laws are to move forward, many will suffer. First and foremost — young female professionals.
Female physicians have been particularly vocal in opposing the proposed changes. The Canadian Medical Association has explained how female physicians will be disproportionately affected. It says that, if these laws are implemented, female doctors will be forced to choose between pursuing their careers and having a family.
They are likely to negatively affect small business owners and entrepreneurs of all shapes and sizes.
This is because they, like many other young professionals, do not have access to adequate maternity leave programs. For this reason, most female physicians rely on income sprinkling in order to help support themselves, their spouses and their young families while continuing to work and maintain their practice. Without income sprinkling, female doctors will be faced with a difficult, unfair decision.
However, the problem isn't exclusive to female doctors.
It is likely to affect anyone — particularly women — who intends to rely on income sprinkling in order to support themselves and their young family without access to paid parental leave, no matter what their discipline.
Gender issues — as important as they are — aside, though, these changes will affect more than just women. They are likely to negatively affect small business owners and entrepreneurs of all shapes and sizes.
The Liberal government's plan fails to recognize the risk that such people assume in launching their businesses and obtaining an extensive post-secondary education. This doesn't come easy. Without income security, many who choose these routes rely on the minor advantages afforded to them by our current tax system in order to stay afloat.
Moreover, it fails to take into account that the self-employed — by and large — do not have access to the same pension programs, medical and/or dental coverage that their more traditionally employed counterparts enjoy. Similarly, they do not get sick days or paid vacation time. These are benefits received by workers that must be factored into their take-home pay.
Without similar benefits, small business owners, professional and entrepreneurs have to pay out-of-pocket for essential services while simultaneously attempting to save enough money for retirement. They also have to pay for the day-to-day cost of running their businesses, including operation costs, advertising, overhead and supplies.
Our prime minister appears to be more out of touch than ever with the middle-class he promises to protect.
Trudeau's changes will make this much more difficult. They will also discourage young people from assuming such risks and from growing our economy by doing so. This cannot be in the best interests of our citizens or of our country.
With the introduction of these proposals, our prime minister appears to be more out of touch than ever with the middle-class he promises to protect. He has been accused of stoking class warfare. He's also been accused of hurting the middle class and of attempting to implement dangerous, short-sighted legislation that will harm women and small business owners.
While this may not be his intent, it seems that the legislation — if passed as is — will certainly have this effect.
But there is still hope that he will come to his senses.
Finance Minister Bill Morneau has said that the consultation process is still well underway and that the proposed changes are not yet "set in stone."
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