Hon. Alice Wong, P.C.

The Liberal government must stop sending mixed signals and inconsistent messages to Canada’s small business community. Alice Wong, Official Opposition Critic for Small Business, and Phil McColeman, Opposition Deputy Finance Critic, today called for clarity from the Finance Minister on his intentions to target professionals operating small businesses incorporated as Canadian Controlled Private Corporations (CCPCs).

“With experts projecting that the Liberals intend to borrow close to $150 billion – putting Canada on track for at least ten years of deficit spending – Canada’s small business community remains on edge about whether they will be targeted by the Finance Minister to pay for his big government spending plans,” said McColeman. “Every time the Prime Minister and the Finance Minister recklessly muse about targeting different sectors of our economy to fund their borrowing, it sends shockwaves of uncertainty through the economy and causes business to hold back on investing and hiring.”

“Canadian small businesses play a crucial role in the economy. They deserve to have clarity from this current government, and their ideas and recommendations need to be listened to,” said MP Wong. “Businesses thrive when they know what the rules are, and the Liberal government’s inability to clarify what the rules are going to be for small business owners is stalling further investment and jobs in our economy.”

In his appearance before the Standing Committee on Finance during the Committee’s 2016 Pre-Budget Consultations, Dan Kelly, President of the Canadian Federation of Independent Businesses, echoed major concerns from the small business community about the government’s plans:

“We are a little bit freaked out with the prospect for some clawing back of access to the small business corporate tax rate. There have been some messages from the new government that it may limit some of the businesses who currently do take advantage of the lower small business corporate tax rate. Some talk about perhaps professionals being disallowed from accessing that rate … we’re hoping to get some messages of reassurance on that front in our meetings in the months ahead.” – Standing Committee on Finance, Tuesday, February 9, 2016

Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth Management, recently stated that concerns about Liberal plans to target small business are “the No. 1 issue that comes up when we deal with small business owners,” suggesting that advisors are recommending that professionals hold off on making business decisions until the Federal Government provides clarity on its intentions.

“Now is not the time for political games that create uncertainty and damage the Canadian economy. Small businesses know that someone will have to pay for the federal government’s massive borrowing plans, and the Liberal government’s irresponsible approach of publicly considering short-sighted tax grabs, without providing any certainty, must end,” said MP McColeman.

“The Conservative Opposition is calling on the Finance Minister to immediately clarify exactly what taxation changes he intends to introduce for Canada’s small businesses in the 2016 federal budget,” said MP Wong.

BACKGROUNDER

• During the 2015 election, Prime Minister Trudeau stated his view that “a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes”.

• The Liberal Platform signalled a belief that Small Businesses could be targeted to reap hundreds of millions of dollars in additional federal revenues, by changing the rules around professional and family businesses with Canadian Controlled Private Corporation (CCPC) status.

• The Prime Minister’s Mandate Letter to the Minister of Small Businesses and Tourism instructed her to work with the Minister of Finance to ensure that the small business tax rate is not used “to reduce personal income tax obligations for high-income earners”.

• During the Finance Committee’s 2016 Pre-Budget Consultations, Liberal MP Robert Falcon-Oullette stated: “I’ve never seen a homeless practising doctor.”

• During the Finance Committee’s 2016 Pre-Budget Consultations, Liberal MP Raj Grewal indicated that taxation for professional small businesses should remain status quo, while other small businesses should receive a reduction in the small business tax rate: “The economic rationale for me is that small businesses outside the professions deserve the reduction, and the professions remain as status quo”. When reached for an interview to provide clarity, Grewal fuelled further uncertainty, stating that “The government hasn’t made a final decision on that. It may or may not be included in the budget.”

• During the Finance Committee’s 2016 Pre-Budget Consultations, in response to a question from MP McColeman about whether he intended to eliminate the current taxation status held by professional CCPC’s, the Minister of Finance indicated that a decision has in fact already been made, stating: “I can confirm, no.”

• A February 29, 2016 Globe and Mail article indicated that the Finance Minister’s office, when asked to provide clarity on the Minister’s statement, declined to make any further comment.

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