Canadians need to be aware of proposed tax changes

There are more tax proposals currently being reviewed. These are penal to small businesses and to professionals and professional corporations. Regardless of your political stripes at some point we have to cry wolf. Recently taxation to small business owners was increased through higher dividend taxation and class changes in write downs. The guise behind this was more equalization to business owners who apparently aren’t paying their fair share of taxes according to Morneau and Trudeau.

There was no accounting to business paid HST, employer health tax, fees and licensing in each business and costs for meeting government compliance and regulation which is invasive and not effective. At a time when our economy needs to evolve for Canada to survive we need small business and entrepreneurship more than ever. With proposed increased labour costs and our high tax base we simply can’t compete globally for large manufacturing jobs anymore and that won’t change in the foreseeable future. We need innovation and technology jobs which in general terms come from small business and start ups. These people employ a growing majority of workers in the country yet we continue as a nation to bail out large manufacturers with bad business practices (See auto/airline industries) and penalize small business.

Ultimately small businesses in this country get little help, they sink or swim on their own. We have a regulatory system that favours the large companies and banks in the finance and insurance industries. Other professionals like doctors and dentists are looking at reduced tax breaks if the legislation goes through. Doctors were essentially given these as part of the tax system to counter decreased or capped fees. Professionals will begin to leave the country again and particularly new ones without family ties. We will educate them, then we’ll lose them.

Small business had some income tax splitting opportunities and other ways to keep their taxes minimal as they grow to maybe being one day public corporations. Interesting that Mr. Morneau whose company is now public wants to remove some of the very things he benefitted from. What he also hasn’t mentioned is that one of the few bastions of tax sheltering he’s not touching is IPP’s, a complex structured program that is effective for very high income earners. Of course he also doesn’t mention that this is an area of specialty for his own firm. These require an actuary to assemble and monitor and are very profitable for the provider, why not be required to show your revenues on that similar to fees for advisors now being disclosed? Some would call that a conflict of interest in many parts of the world.

We continue to subsidize organizations like OPG that are poorly run and pay for commercials telling us what a great job they’ve done of mismanaging a provincial asset and that our bills have been reduced because they’ve deferred debt. Government today also considers a balanced budget when in and out are equal essentially but they don’t count the interest payments on the massive debts they’ve built and are growing.

Instead of penalizing and discouraging the one area of your economy that functions on its own for its own survival why not encourage it. If your tax base is falling stop bailing out mismanaged companies and mismanaging tax payer monies already coming in. This seems easy enough. To keep it even simpler, even if you have a social conscience which most Canadians do, doesn’t it follow you need to have a successful economy and business base to pay for your programs. This isn’t just a government problem. Too many Canadians are far to placid about thinking through political decisions or standing up and demanding things being mismanaged get corrected. It’s up to all of us to tell Mr. Morneau enough is enough. This isn’t just a federal or provincial issue, all Canadians have to start getting involved. Let your MP and MPP know how you feel and pass it on….

Comments are closed here.