After October 2nd, owning a small business or farm in Canada could become a whole lot more expensive.
On July 18th the Trudeau Liberals announced proposed changes to Canada’s tax system that target small business owners – farmers, restaurant owners, retail and convenience store owners, as well as important service providers such as accountants and doctors.
The Liberals are once again ramming legislation through (announcing these sweeping changes mid-summer and only providing for limited consultations and debate) and hope to have everything passed as early as October. In short they hope that Canadians aren’t paying attention as they once again pick their pockets.
While the Liberals claim that these proposed changes are meant to affect the wealthy, make no mistake, it is small businesses, farmers and their employees who will suffer as a result.
With greater tax burdens facing these business owners, it could be more difficult for Canadians to find a family doctor, increase the costs of local produce at the grocery store, discourage young Canadians from starting their own businesses, and make Canadian businesses uncompetitive. It’s also likely that this will force some small businesses to make difficult decisions resulting in layoffs, fewer working hours, and reduced health insurance and other employee benefits. Furthermore these tax rates will make it even more expensive, if not impossible, for parents to pass on family businesses or farms to their children.
Many experts agree that, at a time when small businesses are already facing challenges such as rising minimum wages and increases in EI and CPP premiums, such a tax increase would result in many Canadian businesses having to close their doors.
Canada already has one of the highest effective tax rates on business investment in the G7. Business owners already pay tax twice: first when their business earns money from sales and then again when they withdraw money from the company for their personal use.
Two years ago, when the Liberals took office they increased the tax rate on investment income by over 17%. Now some experts believe that the combination of these new proposed Liberal tax hikes and changes to the tax system could see small business taxes could almost double.
Why make these changes? According to Justin Trudeau a “significant portion” of small businesses serve as a screen for wealthy Canadians who want to avoid paying taxes and that is “unfair.” That is an unbelievable statement and one that further underlines Justin’s naiveté and ignorance of business and the economy.
Small business owners do not have job security, employment benefits, employer sponsored pension plans, employment insurance, sick days or vacation days. As a result entrepreneurs rely on their ability to save from their earnings to retire. These the proposed changes will also be retroactive without the ability for tax payers to plan ahead. Justin Trudeau, on the other hand–with the exception of working at a children’s camp in his youth and a brief foray into acting–has never held a job where he wasn’t receiving a Government paycheck with guaranteed benefits. No wonder he’s so out of touch with the plight of farmers, professionals, small business owners and their employees—a demographic that makes up nearly 97% of Canadian businesses and approximately 70% of Canada’s workforce.
Starting a small business is a huge risk, but when small businesses are successful they benefit the broader community by growing the economy and creating jobs. Increasing the tax burden on these job-creators will decrease the incentives for individuals to take these important risks and rob people of their livelihood.
Conservatives are working hard to ensure that the voices of hardworking small business owners, professionals and farmers are heard. Conservatives believe taxes should be lower for all Canadians: for businesses, families, and individuals. This is a core part of our Conservative vision of prosperity and opportunity for all Canadians.