Business groups, entrepreneurs mobilize to block tax changes

Rage is turning into action for a firestorm of opposition to proposed federal taxation changes gains force among entrepreneurs and business organizations.

In July, federal Finance Minister Bill Morneau announced several proposed tax changes. Small-business owners throughout the country have denounced them saying they will have a devastating effect on their enterprises. The proposals attempt to remove or restrict tax-saving steps like sharing income with family members, conserving passive investment income in a company and converting a company’s income into capital gains.

Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business (CFIB), said his organization is working around the clock to mobilize local business owners to pressure their local MPs.

“This will be won or lost by the level of warmth that Members of Parliament, especially Liberal Members of Parliament, feel in their ridings. That’s really where we are focusing our attention and time.”

Mr. Kelly stated the problem comes at a time when altering policies from different levels of government are increasing the cost of doing business through steps like minimum-wage hikes and carbon taxation.

“The amount of anger to their authorities is near an all-time large,” he said.

The Department of Finance is accepting feedback on the proposals until Oct. 2. At his July 18 news conference announcing that the tax proposals, Mr. Morneau said the government wants to prevent business owners from using tax plans that are not available to other Canadians.

“This is not about a company not paying its share. It is about people having a corporate structure to protect their income and to obtain a tax benefit,” he said. “we would like to hear from Canadians about how these policies will affect them, where we’ve got it right and where we could improve. … These are big changes. We know it’ll be an adjustment for many Canadians.”

Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, said the consultation period has to be extended so individuals can be better informed about the proposed changes and make themselves heard.

He said the team is working with a coalition of companies and groups throughout the country to mobilize and plan its own resistance. He says he can not remember a time when so many people were so irate over a particular government policy. “It’s genuinely a popular revolt which you are seeing in communities throughout the nation,” said Mr. Beatty, adding that the Chamber of Commerce will use its network of 450 local chambers to reach out to MPs.

Additionally, there are 1.3 million companies in Canada ranging from farms to restaurants to carpenters to retailers.

Mr. Kelly stated petition-style campaigns, advisories to CFIB members to contact their MPs straight and video content are being used in an effort to persuade the government to change its mind.

“We tried not to respond too heavily too fast because we needed to be certain we knew what the consequences were to our members. That has taken some time,” he said.

Several weeks ago, STEP Canada, an association of estate and trust professionals, held an all-day meeting in Toronto to create the framework for many admissions to the Department of Finance. One of the 70 attendees were representatives from Advocis, the Canadian Bar Association, Canadian Federation of Agriculture, Canadian Life and Health Insurance Association, Canadian Real Estate Association and the Chartered Professional Accountants of Canada.

Fiona Cook, executive director of the Grain Growers of Canada, said that the organization is quite concerned about the problem and will take a while to do an economic impact analysis.

“We’re going to push the authorities to back from this for now and work with us on exactly what the issues are,” she said. “Obviously, we are very concerned. This really strikes the family farm and succession planning, which is a huge deal for farming in Canada. How can you pass on to another generation?”

The organization is currently putting together an internal working group to make an official reply to the tax proposals and it’s reaching out to other company stakeholders. Ms. Cook is hoping the government will pause with the procedure, giving farmers who are active doing their summer harvests — a opportunity to respond. “This is most likely among the most complicated changes in the tax we have seen in quite a long time.”

David Taras, professor of communication studies and the Ralph Klein seat in media studies at Mount Royal University, said the Liberals are paying a steep political price on this problem and handing Conservatives a stage on a silver platter. Really, Conservative deputy leader Lisa Raitt has been meeting with small-business owners and says she intends to increase awareness about the situation.

“Whenever a politician raises taxes, particularly one of a group of wealthier, more better-educated, more cautious voters — people that will likely vote and likely to engage and likely to give money — there is usually a penalty to pay for this,” Mr. Taras said.

“I think there is a general understanding that these Canadian taxation have hit Scandinavian-type levels and essentially handed to the Tories a perfect issue ‘ I will lower taxes.’ Whenever you hand that issue to your opponent that they become the people who believe in lower taxes, boy, that is an unbelievable weapon in the ballot box{}”

Courtesy: The Globe And Mail

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