09/06/2017 15:45 EDT | Updated 09/07/2017 07:54 EDT

NDP Leadership Hopefuls Weigh In On Controversial Liberal Tax Proposals

Trudeau's Liberals appear committed to the proposals.

The Canadian Press
NDP leadership candidates Niki Ashton, left, Guy Caron, second left, and Charlie Angus, via video conference, take part in a Facebook Live town hall hosted by the Canadian Nurses Association in Ottawa on, Sep. 6, 2017.

A federal NDP leadership hopeful says Liberal proposals to reform small business taxes are akin to "trying to kill a fly with a hammer," while most of his rivals suggest they back the ideas on principle.

At a town hall event hosted by the Canadian Nurses Association Wednesday, the leadership race's four candidates were asked about proposed changes that have outraged advocacy groups such as the Canadian Federation of Independent Business and Canadian Medical Association, as well as privately incorporated farmers and other professionals.

Finance Minister Bill Morneau appears committed to scrapping three loopholes often enjoyed by small business owners who incorporate their companies in order to pay lower taxes: so-called "income sprinkling" to family members, the conversion of private income into capital gains, and the use of passive investment portfolios.

'Catching the good with the bad'

Quebec MP Guy Caron focused on the "income splitting element" of the proposed reforms.

"I do believe that we need to address the issue of aggressive tax avoidance. That's being done in that matter," he said. "But it's not in all cases."

Caron said many doctors incorporate because they act like small businesses, which includes being responsible for paying staff and office expenditures.

But "in some of the cases, they enjoy those benefits without really being a small business," he said.

"The way that the federal government addresses it right now, I do believe, is trying to kill a fly with a hammer in the sense that we are going to be... reaching many sectors of society and catching the good with the bad. And that's not the approach that we should be looking at."

Caron says he wants a more fundamental rethink of the tax system that will truly close loopholes. Caron has already unveiled a number of policies that he thinks will help crack down on tax evasion.

Watch the full Facebook video of the event below. The discussion of Liberal tax proposals begins at around the 1:16:00 mark:

Ontario MP Charlie Angus, participating via video conference, said ordinary Canadians are already paying their fair share of taxes and not getting any breaks.

"And yet we see these corporate structures being set up to create family corporations to not have to pay their fair share. It's not right," Angus said. "And so there is certainly a lot of whining right now in the media from certain interest groups who say it's not fair to them. Well, hey, everybody else is paying their fair share."

Angus also threw a shot at Morneau, saying it is ridiculous the finance minister is "suddenly Mr. Class Warrior" when he has kept in place the "$800-million corporate stock option loopholes" that permit deductions, mostly from wealthy CEOs, to be taxed at half the rate. Angus also accused the government of failing to crack down on overseas tax havens.

There is certainly a lot of whining right now in the media from certain interest groups who say it's not fair to them. Well, hey, everybody else is paying their fair share.Charlie Angus

Ontario MPP Jagmeet Singh, who also appeared on live video, said he agreed that everyone in the country, particularly Canada's wealthiest people and corporations, should pay what is fair in order to fight against inequality and protect social programs.

He also expressed concerns about small businesses being used as "shelters" for the rich.

"We need to ensure that we create an economy that develops small businesses but ensures that everyone pays their fair share," Singh said. "And particularly we need to ensure that there is no loophole for high-income earners to not pay their fair share."

Manitoba MP Niki Ashton touted what she called her own bold platform on tax reform, rooted in "making the rich and powerful corporations" pay more. Ashton pledged to hike income taxes on the wealthiest five per cent and return the corporate tax rate to pre-Stephen Harper era levels.

"While we welcome the federal government's current interest in tax reform, we certainly believe that we need to go much further in ensuring that Canada even harks back to a more fair time when it comes to taxation for all," she said.

Though Conservatives are hammering the potential measures as a Liberal tax grab, Morneau told reporters this week that they are needed to avoid "two classes of Canadians" from emerging, with "inappropriate" benefits for the privileged few.

Speaking in Vancouver Tuesday, Morneau said there has been a 300 per cent increase in the incorporation of professionals over the last 15 years. Small business owners in Canada already pay the lowest income tax of all G7 countries, he said.

The finance minister was also unmoved by arguments that, in contrast to salaried workers, small business owners take on risks that ought to make them entitled to the perks. The CMA has also noted that most incorporated doctors do not get the same benefits and pension plans as salaried workers.

The Canadian Nurses Association, however, has come out in favour of Morneau's proposals.

In a statement released Tuesday, CNA president Barb Shellian — who moderated the NDP leadership event — commended Morneau's "aim to achieve federal tax policy that treats all sources of income similarly and equitably, based on principles of social justice."

With previous files from Althia Raj and The Canadian Press