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Trudeau defiant on small business tax changes

Coalition argues targeted incentives recognize the greater risks faced by small business owners.


OTTAWA — Justin Trudeau says he’s paying attention to the growing dissent over his government’s controversial plan to eliminate tax incentives that he insists only benefit wealthy small business owners.

But the prime minister said he “will make no apologies” for the Liberal government’s commitment to helping the so-called middle class, even at the expense of the wealthiest Canadians.

Speaking to reporters in Saskatoon, Trudeau acknowledged the backlash over what the government calls proposals to inject more fairness in the tax system by closing loopholes used by a growing number of small businesses.

“We’re doing more for the people who need it and doing less for the people who don’t,” Trudeau said.

“I’m hearing feedback from Canadians that want to make sure that this does help the middle class…. I’m happy to have discussions and feedback from interested Canadians who want to make our tax code fairer and we’re going to take all of those reflections into account.”

Entrepreneurs, major industry associations, tax experts and political rivals have warned the three-part plan would hurt the economy and small businesses, including many whose owners would be considered middle class.

The potential changes under scrutiny include ending a practice that allows business owners to lower their tax rate by sprinkling income to family members in lower brackets, even if those relatives are not active in the business.

Another proposal calls for limits on the use of private corporations as a way to gain tax advantages when making passive investments in things like stocks or real estate.

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

The government has launched a consultation on the proposed reforms that ends Oct. 2.

Trudeau characterized the changes as being in step with his oft-repeated promise to help the middle class, even if it requires Canada’s wealthiest to “pay a little more.”

“We’re doing more for the people who need it, and less for the people who don’t. That’s the commitment we made to Canadians and will continue to make to Canadians,” he said. “I will make no apologies for this approach.”

Opponents of the plans include a newly formed coalition of more than 40 industry associations.

The group argues that the incentives targeted by the Liberals are designed to recognize the greater risks faced by small business owners. Those include the use of their family homes as collateral against business loans and having no access to unemployment insurance.

The Conservatives have also demanded that the government allow more time for Canadians and experts to study the proposals.

The growing anger over the proposed changes has also created concerns in the Liberal caucus.
Finance Minister Bill Morneau held a conference call this week to ease the fears of Liberal backbenchers spooked after complaints over the proposals poured into their riding offices.

Morneau listened to the concerns of his colleagues and provided strategies to help them counter what he considers rampant misinformation about his plan. He also reassured them the government is open to tweaking the proposals to avoid any unintended consequences.

Many Liberals also expect the tax proposals to be a major theme at next week’s caucus retreat in Kelowna, BC.

News from © Canadian Press Enterprises Inc. 2016
4 Comments » for Trudeau defiant on small business tax changes
  1. Tim Galbreath says:

    To all those who elected these idiots you have got what you voted for. You couldn’t realize it until you feel the pain. Now you get what you deserve. Good luck.

  2. Allen says:

    When you have a non-business friendly Finance Minister like Morneau, being supported by an inexperienced, Hollywood styled PM like Trudeau, to which neither one can define MIDDLE-Class Canadians let alone make progressive tax decisions. These new tax rules are a recipe for disaster.
    I hope Canadians will stop them before we lose many of our quality health care professionals and small business owners. Without small, professional businesses, Canada risks becoming a banana republic. We already have difficulty exporting our lumber and agricultural products. The US has acquired most of our innovative businesses, technologies, and manufacturers, thus leaving a grim outlook for the future.

  3. Steve says:

    How exactly does collecting more taxes from people who work hard running small businesses help the less well off become part of the middle class? Is it through more government handouts?
    The Liberals have created a welfare state where people demand and expect government handouts, and those willing to work want government jobs. Sounds a lot like what doomed communism!
    The middle class are historically the hardest working people in the country. The real problem nowadays is that too many Canadians are not capable of hard work because they have been conditioned to be weak and liberal minded! How do Liberal leaders combat such a problem, by bringing in more desperately like minded people to be a further strain on what’s left of the middle class of course, after all misery loves company!
    Big business has played their own part in helping to eliminate the middle class. They have duped liberal governments worldwide into believing that they will create countless jobs if given huge tax breaks, but have only eliminated their small business competition while creating countless part-time jobs.
    Take Apple for example; they move to Ireland in order to pay little to no taxes, and then while they were at it proceeded to circumvent regional European tax laws to further screw all EU countries! All this while marketing to, and profiting from the young and vulnerable with their 24/7 information overload lifestyle mantra which inflicts even more damage on society.
    We need leaders with some balls to make tough decisions and who will take big business to task, not wimpy, weak minded frat boys and their like.
    The liberals are desperate and their stupidity is on display for everyone to see the world over.
    Canada has contracted a debilitating disease and the prognosis is fatal!

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