The Deputy Leader of the federal Conservative Party calls the proposed tax changes atrocious and insulting.
Lisa Raitt says small businesses are the backbone of the economy, and many owners have used personal incorporation to plan their financial future.
“This legislation takes that all away, and now they’re left trying to figure out how they’re going to have a financial plan that they probably set up for the next 30 years that’s suddenly just gone like that, the rug has been pulled out from underneath them,” says Raitt. “They’re going to have to make significant changes.”
Raitt says the timing and length of the public consultation period of 75 days is no coincidence, adding it is a strategic decision to limit the amount of input from small business owners.
She was in Moncton Tuesday to listen to small business owners, and representatives of organizations like the Canadian Federation for Independent Business at a roundtable hosted by the Greater Moncton Chamber of Commerce.
Back in July, Federal Finance Minister Bill Morneau announced public consultations on proposed changes to the tax system.
He says this is about individuals not paying their fair share of taxes.
There are three loopholes currently in use.
“The first is income sprinkling which is when a business owner spreads, often by paying dividends from private corporations his or her income around to family members that are in a lower tax bracket,” says Morneau.
The second loophole is using a private corporation as a tax advantaged personal savings account.
“Right now, income that isn’t actively being invested back into the company can be left to accumulate while taking advantage of the lower corporate income tax rate,” says Morneau.
He adds the third loophole involves “converting a private corporation’s regular income into capital gains, which can provide an unfair opportunity to reduce income taxes.”
Morneau says this is basic fairness to prevent the wealthy from buying tax avoidance schemes.
More to come…
