PM willing to improve small biz tax plan but won’t abandon in face of backlash

KELOWNA, B.C. — Justin Trudeau insisted Wednesday that his government won’t back down on a controversial plan to end tax provisions that it says give some wealthy small business owners an unfair advantage.

The prime minister delivered that message as he kicked off a Liberal caucus retreat, pre-empting backbenchers who’d come poised to press for changes to the tax plan after being inundated with complaints over the summer.

“I want to be clear,” Trudeau told the assembled MPs.

“People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year.”

While he signalled a willingness to adjust the proposed tax changes, Trudeau was adamant that they won’t simply be abandoned in the face of a mounting backlash from doctors, lawyers, tax professionals, shopkeepers and others who’ve incorporated their small businesses in order to reduce their income tax bill.

“We are always open to better ways to fix that problem but we are going to fix that problem,” he said.

The backlash has been growing since mid-July, when Finance Minister Bill Morneau released a controversial, three-pronged plan to end tax provisions used by a growing number of small businesses, creating what he called an “unfair playing field.”

One change would restrict the ability of incorporated business owners to lower their tax rate by sprinkling income to family members in lower tax brackets, even if those family members do no work for the business. Another would limit the use of private corporations to make passive investments in things like stocks or real estate.

The third change would limit the ability to convert a corporation’s regular income into capital gains that are typically taxed at a lower rate.

Morneau insists the plan will affect only those who earn $150,000 or more and who still have money to shelter from tax after maxing out their RRSPs and tax-free savings accounts.

Morneau stressed Wednesday that the government is still consulting on the proposals and is prepared to make some adjustments to avoid any unintended consequences.

“We know that we need to get more information before we can actually come to conclusions,” he said.

However, he ruled out extending the Oct. 2 consultation deadline, as urged by Canadian Chamber of Commerce president Perrin Beatty.

Morneau did try to reassure the Canadian Medical Association, which has warned that the proposed changes would disproportionately impact young female doctors who rely on the tax measures to be able to afford to take maternity leave.

“We have a commitment to making sure that the work we do for Canada includes a focus on how we can have a really great performance for women in the economy, that we deal with issues around differences in pay, that we deal with differences in terms of how women can be successful,” Morneau said.

“So nothing we will do will in any way jeopardize that. We’ll look at all these measures to make sure they’re not in any way causing (a) challenge for women.”

Ginette Petitpas Taylor, the new health minister, said she intends to meet soon with CMA president Gigi Osler to discuss her concerns.

“No decisions have been made at this time,” she said. “We’re really open to listening.”

Behind the closed doors of the caucus retreat, MPs aired the concerns they’ve heard from their constituents about the reforms. Insiders said views were mixed, with some backbenchers wanting to ditch outright one or more of the proposed changes and others seeking only a few tweaks.

Stephen Fuhr, whose riding encompasses Kelowna, said he’s satisfied that the government is listening to its backbenchers.

“They’re absolutely open to hearing from all of us,” he said. “That’s our job to deliver the message and it’s their job to compile the data to come up with the best policy to serve all Canadians and I’m convinced that they’re doing that.”

Despite the firestorm around the proposed tax changes, the Liberal government is riding high in the polls and the economy is rebounding. Backbenchers report their constituents are relatively satisfied with the government’s performance as it approaches the mid-point of its four-year mandate.

But Trudeau urged Liberal MPs not to spend time patting themselves on the back over the government’s accomplishments so far, warning that there’s plenty of heavy lifting ahead.

“As we come up on the halfway mark of our mandate, I think it’s fair to take a moment to look back and consider all that we’ve been able to achieve so far,” he told the caucus.

After a brief pause, he added: “So, there, that was your moment … What we need to do now and every day is focus on the hard work that lies ahead.”

Just Posted

Alberta’s status of women minister joins Twitter debate over women’s marches

EDMONTON — A minister in Alberta’s NDP government has chastised a tweet… Continue reading

Canada faces angry Americans in pivotal sixth round of NAFTA talks

Canada will be hosting an annoyed and angry United States as the… Continue reading

Arts and Craft (Beer) evening set for Feb. 3

Raising money for Red Deer Arts Council

‘Hobbit’ director Peter Jackson making WWI documentary

LONDON — “The Lord of the Rings” director Peter Jackson is transforming… Continue reading

Hot summer ticket: $130K could get you on a dive to the Titanic off Newfoundland

ST. JOHN’S, N.L. — Are you a risk-taking adventurer with $130,000 to… Continue reading

WATCH news on the go: Replay Red Deer Jan. 21

Watch news highlights from Red Deer and Central Alberta

Two Canadians, two Americans abducted in Nigeria are freed

Kidnapping for ransom is common in Nigeria, especially on the Kaduna to Abuja highway

WATCH news on the go: Replay Red Deer Jan. 21

Watch news highlights from Red Deer and Central Alberta

Liberals quietly tap experts to write new paternity leave rules

Ideas include creating an entirely new leave benefit similar to one that exists in Quebec

Insurers say Canadian weather getting hotter, wetter and weirder

Average number of days with heavy rain or snow across Canada has been outside norm since spring 2013

Are you ready for some wrestling? WWE’s ‘Raw’ marks 25 years

WWE flagship show is set to mark its 25th anniversary on Monday

VIDEO: Thousands join women’s march events across B.C.

Today marks one year since the first Women’s March on Washington

In photos: Get ready for Western Canadian Championships

Haywood NorAm Western Canadian Championships and Peavey Mart Alberta Cup 5/6 start… Continue reading

WATCH: Red Deer city council debates cost-savings versus quality of life

Majority of councillors decide certain services are worth preserving

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