Nine in 10 Business and Financial Pros Oppose Morneau’s Tax ProposalsPosted: September 01, 2017 By : Tamar Satov
Posted in: Strategic Thinking, Federal Government, Financial Advisor, taxation, knowledge bureau, Evelyn Jacks, income tax, tax evasion, Small Business, Canadian economy, financial education, tax preparer, tax reform, proprietorship, financial planner, wealth manager, proposed tax changes, tax regulation, tax regime, Canadian small business, private business, business owners, tax in Canada, standards of living
Accountants, bookkeepers, financial advisors and business leaders are joining the chorus of dissent against Ottawa’s proposed tax changes affecting private corporations, warning of dire consequences to the Canadian economy if implemented, a Knowledge Bureau survey finds.
Nine in 10 (90.1 per cent) of respondents said they do not agree with new proposals to tax passive investment income inside a small business corporation at top personal rates, according to the online poll conducted by Knowledge Bureau, Canada’s premiere national institute for excellence in financial education.
Of the more than 360 poll participants — just 36, or 9.9 per cent — said they agree with the new proposals.
Respondents fear the new tax regime would force many small businesses — which they refer to as the “backbone” and “central employer” of the Canadian economy — to close because they couldn’t remain profitable.
“This will have a detrimental effect on the small business owner where many of them are already struggling,” says Doug Northrup in an online comment to the poll. “It could mean the end of some businesses.”
“Small business needs more breaks, not fewer,” commenter Sandra Gibbs says. “This is what keeps the Canadian economy alive, vibrant, and equitable.”
Lise Lacroix agrees many small corporations will be forced to close, or will instead find unlawful ways to stay afloat. “It will encourage tax evasion … as there are no benefits to operate a business,” she says. “It is forgotten that an owner of business does not work only 40 hours a week, but much more. Where is the incentive?”
This notion of business owners’ personal sacrifice — both in terms of long work hours, and investing their own funds, thus taking on substantial risk — was a common thread in the poll’s comments.
“[Consider] the risks, the limited rewards prior to success and the need, more often than not, to finance expansion or even cash-flow from the proceeds of the passive investments that were placed there by the business owner(s),” says Alan Caplan.
“We take the risk as small business owners,” agrees Craig McConnell. “The benefits are few and far between. These new measures would be terrible.”
Some respondents took issue with the assertion that the changes would be more “fair” — a term used so frequently in the proposed policy paper that at least one pundit has deemed it his “least favourite four-letter word.”
“There are many Canadians that have built their retirement around their CCPC. It would be terribly unfair to make changes now that would permanently lower their standard of living,” one commenter notes.
“Double taxation is never fair,” says Charlene Cranley. “[This] is a biased and unfair tax aimed at those who have put in tireless hours, much of their own money, put their nose to the grindstone and worked hard. Assets are these people’s retirement. My whole family has worked hard to overcome the adversities we have dealt with by even owning a business. I am not proud to be Canadian.”
Another business owner pointedly states the problem with changing the rules in the middle of the game.
“Try to succeed at business and try to create a little benefit for our hard work and effort to save, diversify and invest. Then the government changes the rules,” she says. “If I could redo the past 20 years, I’d seek a federal government nine-to-fiver and reap the benefits of a pension and health care coverage.”
The results of the Knowledge Bureau poll echo the views of 35 business organizations across the country, who came together last week to form the Coalition for Small Business Tax Fairness — a unified voice to oppose the federal government’s tax proposals.
The 35 business groups — on behalf of the hundreds of thousands of members they represent — have presented a letter to Finance Minister Bill Morneau, asking the government to take these proposals off the table and instead meet with the business community to address any shortcomings in tax policy affecting private corporations.
The Coalition for Small Business Tax Fairness is encouraging those concerned about these changes to contact their member of parliament and use the hashtag #unfairtaxchanges on social media. The government is also accepting submissions on these proposals until October 2, 2017, via email at firstname.lastname@example.org.
Knowledge Bureau’s September Poll question is: Does the government do enough (e.g., Lifelong Learning Plan, Registered Education Savings Plan) to support post-secondary education in Canada?
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