Federal Conservative leader Andrew Scheer is sounding the alarm on a proposed change to small business tax in Canada. It comes as Scheer visited Edmonton on part of his cross-country tour talking to Canadians.
“We’re hearing more and more from people who are checking in with their accountant,” Scheer said. “They were going to invest and expand, maybe open another branch, create jobs for people in the community, and that’s all being threatened.”
“A lot of entrepreneurs are really feeling the pinch with that,” he told Global News. “(There are) a lot of signs that that’s going to kill jobs and opportunities for people looking for work.”
The government is in the middle of a 75-day public consultation period to allow stakeholders to examine and weigh in on the new small business tax proposals announced in early July. Scheer calls the consultations abbreviated based on the large impact it’s going to have on small businesses and farms.
Watch below: Conservative leader Andrew Scheer says proposed federal tax changes will hurt small businesses. At an Edmonton event on Monday, Scheer said the Liberals will stall Alberta’s economic recovery. Tom Vernon reports.
“I think you’re going to see a lot of people on the final days of the consultation really rush to get the message out that this isn’t about tax fairness,” Scheer said. ” This is about punishing people who create prosperity, who create the jobs for people to enter the workforce.”
Finance Minister Bill Morneau unveiled a series of measures in early July that he says will close loopholes in the federal tax system that disproportionately benefit wealthy Canadians.
“We know that businesses, including small businesses, help grow the Canadian economy,” Morneau said in a statement to Global News.”Some tax advantages are in place to help these businesses reinvest and grow, find new customers, buy new equipment and hire more people.”
“We want to make sure those rules are used to do just that, and not to give unfair tax advantages to certain – often high-income – individuals,” he added.
The government said the changes are meant to improve the fairness of Canada’s tax system by closing tax loopholes and amending existing rules to ensure that the richest Canadians pay their fair share of taxes and that people in similar circumstances pay similar amounts of tax.
The “fancy accounting schemes,” as Morneau dubbed them, include things like business owners “sprinkling” their total income among family members who sit in lower income tax brackets but don’t actually do work for the company. That can dramatically reduce the overall amount of personal income tax paid.
Ottawa believes about 50,000 families across the country are employing this particular strategy, to the tune of $250 million in lost tax revenue per year.
The new rules also look into “passive investment income,” which the government said is when individuals keep money inside the corporation, not to invest it, but to take advantage of lower corporate income tax rates.
The third major change is around capital gains. Similarly to passive investment income, a private corporation can reduce income taxes by taking advantage of the lower tax rates on capital gains.
Legislation making the changes, and applying them retroactively to today’s date, will be coming “in an expeditious fashion” once the consultations are finished, Morneau promised.
-With files from Monique Scotti