The federal government appeared to be waving a bit of a white flag on Monday by stating the the small business tax rate will be lowered from 10.5 per cent to nine per cent by Jan. 1, 2019.
Prime Minister Justin Trudeau made the announcement at restaurant in suburban Toronto.
“This tax cut will support Canada’s small businesses so that they can keep more of their hard-earned money. Money they can invest back into their businesses, their employees and their communities.”
The tax break appears to be in response to major backlash and outrage across the country over proposed tax changes announced in July.
“If you were going to give taxpayers this large of a tax break lead with that – say ‘hey we’re trying to stimulate growth to make it better for business – here’s some good things for you and at the same time we’re going to take some things away,'” Clint Gifford, a Saskatoon accountant with Virtus Group, said on Monday.
“Instead they’re like ‘hey we’re going to try to take this stuff away – oh you really didn’t like that, OK we’ll have to give you something to make you feel better again’ it seems almost like damage control.”
The feds have now entirely retracted changes to the lifetime capital gains exemption after they say they heard Canadians loud and clear.
“I want to tell you while our consultation process is over, we haven’t stopped listening,” Federal Finance Minister Bill Morneau said.
The Liberals, however, haven’t decided to ditch everything and plan to stick to their guns when it comes to other changes.
“By fixing flaws in the system we know that we can benefit all Canadians. Part of that means moving forward on a simplified proposal to end sprinkling of income to family members who do not work in the business,” Morneau said.
More news on the proposed tax reforms are expected throughout the week but Conservative Leader Andrew Scheer isn’t having any of it.
“The prime minister only made this announcement today because local business operators are speaking out in opposition of his tax grab and if we let our guard down he’ll raise the small business tax rate again.”