29th September 2017
After Canadian Finance Minister Bill Morneau proposed a plan for tax reforms, he received critical responses from many sectors, including those from members of the Canadian Chamber of Commerce who said he owes them an apology. The tax reform proposal, according to Morneau, is believed to close loopholes which enable wealthy business owners to avoid paying higher tax rates by incorporating themselves.
The reform’s changes
The plan included more controls on business owners’ activities, including doctors and lawyers, who avoid their high tax rate by participating in “income sprinkling” to family members in lower tax brackets.
It also aimed to put restrictions on the use of private corporations to passively invest in unrelated companies, as it may allow a person to have tax deferral advantages. Another change would limit Canadian business owners from claiming regular income of a corporation as capital gains, which are generally taxed at a much lower rate.
Voices from Chamber of Commerce members
Upon learning the news, many of the business owners say the proposed reforms, and the Liberal government in Ottawa itself, are casting a negative light on them and the minister owes them an apology.
"Whenever a process from government starts to position business people and the business community in such a negative light, it is an absolute disaster from a communications perspective and I think an apology from our federal minister to the Canadian business community would be appropriate," said Steve McLellan, CEO of the Saskatchewan Chamber of Commerce.
In addition, the concerns were expressed that the reforms could be unfair for family farmers and small business workers.
"We may very well find that it discourages entrepreneurship and investment in Canada and has damaging impacts on the Canadian economy," said Perrin Beatty, CEO of the Canadian Chamber of Commerce.
The meeting also discussed the proposal as it would impact how doctors pay their taxes and could shake up the Canadian healthcare system. As of now, medical associations on many provinces have conducted surveys on doctors’ opinions towards the change. The results are shocking.
In New Brunswick, 65% of more than 500 doctors said they would consider reducing working hours, 46% would move their practice outside of the province, and 25% would consider retiring from the profession, if the measures are implemented.
In Nova Scotia, more than half of 864 doctors would consider leaving the province if the proposal passes.
There are growing concerns that Morneau’s tax reform will largely affect the patients as the loss of only a portion of doctors in a province like Nova Scotia could impact the needs for essential healthcare services. Given that it already faces a hard time caring for the aging and sick population, the passing of this proposal could have serious repercussions.
However, Mr Morneau said he is open to all opinions including those from doctors and willing to take them into consideration.
"We're out listening to people and haven't concluded on the fiscal measures," he said.