The parliamentary secretary to Finance Minister Bill Morneau says he can’t say if, or when, the Liberals will move to close a controversial tax loophole primarily used by CEOs in Canada to reduce their tax bill.
As the Liberal government continues to struggle against widespread criticism of proposed changes to the tax system that could affect incorporated business owners, Joel Lightbound remained non-committal about the so-called ‘stock option loophole.’
“We’re looking at all sorts of options,” Lightbound said of the government’s review of the tax system.
Asked by The West Block‘s Vassy Kapelos to clarify when the Liberals might close the stock option loophole, Lightbound replied, “that I can’t tell you right now.”
The NDP, in particular, have long advocated that the rules involving stock options be changed. At the moment, they allow company employees to pay taxes on only 50 per cent of their earnings from stock options as part of compensation packages.
Typically, it’s senior executives who benefit from this arrangement, which is perfectly legal.
The federal finance department has, in recent years, estimated that the stock-option deduction is depriving federal coffers of around $750 million per year.
Lightbound said the government remains focused on tax evasion and tax fairness and has invested $1 billion in recent federal budgets to ensure Canadians are paying their fair share.
“We remain steadfast in our objectives,” he said.
The changes that are being proposed right now by Morneau were subject to a 75-day consultation period that ended last week.
They include cracking down on income sprinkling among family members who don’t actually contribute to a business and making changes to ensure that holding passive investment income inside a corporation doesn’t offer advantages that wouldn’t be available to somebody saving outside a corporation.
WATCH: Unpacking the Politics of the government’s proposed tax changes
“We’ve gone through consultations, we’ve listened to Canadians coast to coast,” Lightbound said of the proposals. “And we want to make sure we get things right, that we get these changes right. That there are no unintended consequences.”
The finance minister has said that he is open to tweaking his proposals in the wake of sustained blowback from doctors, farmers and small business owners.
“There will be changes, and there will be changes reflecting what we’ve heard from Canadians,” Lightbound confirmed.
“I think it’s important to set the record straight. We have no intention of impacting middle-class business owners, small business owners.”
— Watch the full interview with Parliamentary Secretary Joel Lightbound above.