It was a war of words when the federal Liberals and Conservatives dropped their gloves Monday, facing off in person for the first time since the finance minister announced the government’s contentious proposed tax changes.
The sides battled with messaging – the Conservatives alleging Prime Minister Justin Trudeau is attacking job creators and treating entrepreneurs like “tax cheats,” while the Liberals countered with an assertion the previous Conservative government was happy to help “the wealthiest Canadians” decrease their tax burden.
“There is no suggestion any Canadians aren’t following the rules,” Trudeau said in question period Monday.
“The problem is the rules we have currently favour the wealthy over the middle class.”
The proposed tax reforms may affect a minority of Canadian taxpayers, but the reaction has been fierce.
Proponents of the plan to close three federal tax loopholes, including many Liberals and some prominent economists, paint the move as one that will make taxes fairer by preventing high-earners from using sophisticated accounting techniques to dramatically slash their tax bills.
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On the other hand, opponents of the proposed changes, including the Canadian Medical Association and the Canadian Federation of Independent Business have said the changes will “destabilize” health care delivery and discourage people from starting businesses.
For weeks, the Conservatives have been throwing punches at the Liberals, echoing the doctors and independent business group.
“The prime minister’s arrogance is astounding,” Conservative Leader Andrew Scheer said Monday.
“I can tell the prime minister one very simple thing,” he said of the “hard-working Canadians, job creators and entrepreneurs” he met throughout his summer travels across the country.
“They are not tax cheats.”
The proposed changes have sparked a revolt by doctors, lawyers, farmers, financial planners, home builders, shop owners and other incorporated small business owners – as well as Liberal backbenchers, who have been getting an earful from constituents throughout the summer.
Trudeau has said the changes are aimed at those making over $150,000.
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Several economists Global News has spoken with have backed this up, noting that two of the loopholes, income sprinkling and passive income, yield the greatest benefits for high earners.
The capital gains tax trick is so sophisticated that only well-heeled taxpayers tend to use it. (For a clear explanation of the three loopholes the Liberals are targeting, click here.)
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Finance Minister Bill Morneau released the controversial, three-pronged plan in mid-July, which includes restricting the ability of business owners to lower their tax rate by sprinkling income to family members in lower tax brackets, even if those family members don’t actually provide work for the business.
He also proposed limiting tech use of private corporations to make passive investments in things like stocks or real estate and limiting the ability to convert the regular income of a corporation into capital gains, which are typically taxed at a lower rate.
Conservative finance critic Pierre Poilievre has said he’s looking to have the House of Commons finance committee put aside all other business in order to focus all efforts on the proposed changes before the public consultation period ends Oct. 2.
– With files from The Canadian Press