Former Industry minister and moderator John Manley puts on a red baseball cap as he jokes around before moderating a session at a conference in Ottawa, Wednesday October 12, 2016. A big Canadian player has quietly picked up his chips and is heading for the exit amid the tumult over the Trudeau government’s controversial tax proposals. A business owner has informed John Manley, the head of an organization representing Canada’s largest corporations, that he has moved billions of dollars outside the country since the Liberals formally proposed their tax changes in mid-July. THE CANADIAN PRESS/Adrian Wyld

Tax changes, anti-rich rhetoric have already inspired big fish to leave: Manley

OTTAWA — A big Canadian player has quietly picked up his chips and is heading for the exit amid the tumult over the Trudeau government’s controversial tax proposals.

A business owner has informed John Manley, the head of an organization representing Canada’s largest corporations, that he has moved billions of dollars outside the country since the Liberals formally proposed their tax changes in mid-July.

The government’s proposals to eliminate several tax incentives have awakened a broad array of vocal opponents — from the small business community, to farmers, to tax planners, to professionals like doctors and lawyers. Some backbench Liberal MPs have also publicly expressed their concerns.

In the background, the Liberals’ proposed tax reforms are also seen as a threat by a much-smaller, more-silent group of Canadians: wealthy leaders of big business.

Manley, a former Liberal finance minister in the Chretien government, said the elements of the government’s plan to tighten rules on passive investment portfolios and the transfer of family businesses have created worries for some members of his organization, the Business Council of Canada.

The financial concerns have been compounded by the government’s accompanying messages that Manley believes have “vilified” higher-income Canadians.

Many of his members, he added, have been taken aback by rhetoric that they see as pitting the middle class against the wealthy.

“I don’t get it at all — I thought that one of the successes of Prime Minister (Justin) Trudeau was that he was the unifier, he was bringing people together,” said Manley, who noted the broader economy would eventually feel the sting of losing too many big job creators.

“There’s lots of journeymen hockey players in the NHL, but you still want to have some (Connor) McDavids and (Wayne) Gretzkys and people that are stars.”

Manley pointed to one example where a successful business owner has decided to leave Canada with “billions of dollars.”

On the advice of tax professionals, he said the individual decided to move the money primarily because of the impacts the reforms could have on his family through changes related to estate planning. Keeping the business in the family would result in a big tax hit.

There’s a notion that other big players could soon head for the exits, Manley said.

“You won’t know about it because they’re not going to buy ads or report it — they’ll just go.”

Manley’s group is calling on the government to hold off on the proposed changes for now to allow for a broader review of the tax system that examines additional goals like making the entire structure less complex.

Failing that, he would like to see the feds fix any unintended consequences from the current plan on the table.

Finance Minister Bill Morneau first released the three-part tax reform plan in the middle of the summer.

He argues that the tax system unfairly encourages wealthy Canadians to incorporate, so they can get a better tax rate than middle-income earners. The government insists the changes would level the playing field, although many disagree.

The package includes restrictions on the ability of business owners to reduce their tax rate by sprinkling their income to family members in lower tax brackets, even if those family members do not contribute to the company.

Morneau also proposed limits on the use of private corporations to make passive investments that are unrelated to the company. Another change would limit business owners’ ability to convert regular income of a corporation into capital gains, which are typically taxed at a lower rate.

The government gave Canadians a 75-day consultation period, ending Oct. 2, to weigh in on the proposals. Morneau insists the government will listen to concerns before it tables legislation and that he expects some of the feedback will lead to changes.

If the government’s proposals are introduced as is, University of Calgary tax expert Jack Mintz says there are plenty of options to get around the changes — and he warns they wouldn’t be good for Canada.

The reforms are aimed at private Canadian corporations, so Mintz said owners could change their citizenship, or partner with a foreigner or a public corporation to avoid paying more. He said they could also strip some of their firm’s assets while leaving the company itself in Canada.

For example, countries like the United Kingdom offer attractive tax incentives for business people looking to move to its shores from abroad, Mintz said.

Since Morneau’s tax announcement, Mintz said he knows one big business owner who has taken action and another who is considering it.

In these scenarios, he said Canada could not only lose tax revenue but the business leaders themselves, who create jobs and play constructive roles in their communities.

“It’s a major blow to the country in a number of ways,” Mintz said.

The president of a national small- and medium-sized business federation, which has been one of the most outspoken critics of the tax proposals, said many of his members have been receiving calls from business development organizations in the United States to offer them incentives to move across the border.

“There’s all sorts of business immigration programs that are out there encouraging entrepreneurs to pick up and leave,” said Dan Kelly of the Canadian Federation of Independent Business.

“Canada has to watch out because business owners in lots of areas can be quite mobile.”

Just Posted

WATCH: Finishing touches being put on Servus Arena

The finishing touches are being put on Red Deer’s newest arena. The… Continue reading

Suspect in police chase in court

RCMP opened fire twice while trying to arrest suspects in vehicle chase in October

New temporary beds will immediately help Red Deer homeless

The 20 new temporary beds approved for Safe Harbour’s warming centre cannot… Continue reading

Red Deer RCMP are seeking man posing as a police officer

Suspect is large, in his 30s, with red hair and beard

Update: “Someone knows something” – police

Motorist dies near Ponoka after loose tire collides with vehicle near Ponoka

Red Deer police seize rifles and shotguns from storage locker

A man and a woman facing nearly 200 charges after 29 firearms seized last month

Notley criticizes MLA who fired staffer after sex harassment complaint

Notley says if Jason Nixon was her house leader he’d be out of a job immediately.

Red Deer needs to find a solution to syringe debris: city manager

City will consider the problem during the 2018 operating budget talks

WestJet Christmas video turns children’s wishes into reality

This year’s annual video took a new spin on the 12 days of Christmas

VIDEO: Replay Red Deer Dec. 10

Watch news highlights from Red Deer and Central Alberta

VIDEO: B.C. to end geographic area rent increases, close fixed-term lease loopholes

Both clauses allowed landlords to raise rents above the max annual allowable rent increase

UPDATE: Train hits hydro pole, causes outage near Deltaport

No injuries reported but traffic in and out of Deltaport is blocked

A Red Deer daycare coordinator wins provincial award of excellence

Nicole Morrell is a coordinator at Johnstone Daycare

Holiday shopping season picking up in Red Deer

With 18 shopping days left until Christmas, Red Deer businesses are cautiously… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month