The most radical Federal tax changes in 50 years will jeopardize small businesses, push prices up and negatively impact a majority of Canadians.
That was the message delivered by two - dozen small business owners at a Chamber of Commerce press conference last month.
Federal Finance Minister Bill Morneau is portraying this as a tax on the one per cent of Canadians who are the “ultra” rich and therefore will not impact the majority says Chamber president Shirley de Silva “but nothing could be further from the truth”.
She told those in attendance restrictions on income splitting, a 73 per cent tax on investment income and tougher rules for converting income to capital gains is potentially “devastating” to small businesses.
“Owning a business does not guarantee wealth,” says de Silva noting a majority of small business owners make less than $73,000 and half of those earn less than $33,000.00. She also pointed out they take substantial financial risks, lack pension plans, unemployment insurance and many of the benefits cherished by average Canadians.
Chartered Accountant Debra Taylor suggests the Finance Minister’s purpose is misguided. Morneau claims the aim is to stop high – income Canadians from taking “unfair” advantage of the tax system all in the name of “fairness” to the middle class. “To me the government is trying to ensure there is support from the voting middle class taxpayers by creating a perception of unfair advantages without telling the entire story”.
And part of that story says Taylor is that a majority of small businesses and small business owners aren’t wealthy. In fact, she suggests, “Few small or medium sized enterprises have much left over after paying wages, expenses and taxes”.
Manley’s Basics dealer principal Carolyn Luciani told those in attendance she and her sister Lisa Hewton who co – own the business aren’t rich and work long hours. All of our assets are on the line and “we have 20 employees who depend on us”.
Luciani noted that if she was a government employee she’d make $90,000.00 annually, after 23 years would have six to eight weeks holiday, sick days, personal days, maternity leave and a pension.
“How does taxing us at 73 per cent help offset my stress, help us prepare for retirement and make up for everything we go through on a daily basis?”
Taylor suggests the proposed tax changes will generate a meager $250 million for the Federal government to which Luciani noted “at the end of the day the government will have to tax more than a billion dollars in salaries, audit and litigate hundreds of thousands of businesses to realize $250 million”.
Linda Sparks of All Seasons Trophies suggests Morneau’s tax changes will cripple small business in Canada noting, “Running a trophy shop in Sarnia is a greater risk than being a doctor”.
Which led to Dr. Sean Peterson, family doctor who practices emergency medicine and runs a medical research company in Sarnia. He is also a partner in an office building and is attempting to attract new doctors to the City.
Peterson is a director of the Ontario Medical Association and suggests Federal tax changes will make it difficult to attract doctors who view the United States as a better place to practice.
Peterson also takes umbrage with Prime Minister Justin Trudeau’s suggestion that doctors pay less tax than a nurse in the same room.
“The only time that would happen is if the doctor is on maternity leave and isn’t receiving insurance payments”.
Karen Sanders who operates Wild Hog Farms in Watford along with her husband Steve says the Federal moves will decimate the family farm noting her children would have to pay triple the tax than if it the farm was sold to an outsider.
Lambton Federation of Agriculture president Al Langford, a cash crop farmer says his farm has been in the family for 107 years and “we are struggling”.
“We are on the edge now,” says Langford. “We can’t allow this to happen. We have to stand up to it. Our whole lives are in this”.
Chamber president de Silva told First Monday it is all about “fairness” but there are good reasons why owners are taxed differently than employees. “Owners don’t have pensions, health benefits or vacation pay and the government knows it”.
Asked about the chances, of reversing the tax changes de Silva says the backlash has started.
Several in the audience noted both the Finance Minister and Prime Minister are wealthy people with their wealth in trust accounts that won’t be impacted by the new proposed tax changes.