Hon. Alice Wong, P.C.

September 28, 2017

The Honourable Bill Morneau, PC, MP
Room 435-S, Centre Block
House of Commons
Ottawa, ON

Re: Tax Planning Using Private Corporations Consultation

Dear Minister Morneau,

I write to you today to express my concerns regarding the recent proposed changes to our tax system. As a former small business owner, I know firsthand the hard work, personal and financial risk, and the passion that is required to operate a small business.

As you know, our small businesses are the job creators in this country. They contribute to our communities, provide work for new graduates, and foster the entrepreneurial spirit Canadians value. Small business owners seek to provide stability for their employees, paying Employment Insurance and CPP premiums – neither of which they receive themselves. These entrepreneurs create new ways to be more efficient, environmentally smart, and community minded. They and their families invest a considerable amount of risk to pursue a passion they have always dreamed of.

The proposed changes you and your government have proposed will have negative impacts on these very entrepreneurs. Whether intentionally or unintentionally, the individuals you claim to be targeting in these changes are not those who are actually on the line. I strongly encourage you to re-examine your proposals, and to ensure that these small, community serving companies are not caught up in a poorly planned pursuit to raise revenues.

Many of my constituents have shared with me their frustration with the proposed changes. Below, are several examples from individuals in my riding who have reached out to me to share their personal stories through emails and letters. I have also included a petition addressed to your office signed by more than 100 constituents on the issue.

“As you continue to propose changes to make it even harder for small businesses to save for equipment upgrades, balance their business so that banks will lend us money when we are forced to relocate due to double digit increases to our base rent, and yet try earnestly to provide a fair and reasonable wage to our employees living in an urban center – why do you allow people who are really not paying anything let alone their “fair share” to thrive? Surely you could focus your governments efforts on identifying businesses that are licensed to operate and yet don’t show up in your own system.” – Richmond Resident September 25, 2017

“I have operated my small business and provided jobs (6 employees) since 1976. My business has a larger and continuously increasing tax burden than my employees, including 40 percent for in Employment Insurance and double the CPP premiums. At 70 years old, I continue to work 7 days a week, I can’t afford to be ‘sitting in a gated community”. I personally take all the financial risks because banks want my personal guarantees for any business loans and mortgages. I have very little in RRSPs and no TFSA. All my tax planning has been based under the current tax regime, saving in the business, and relying on drawing down dividends for my retirement years. “ – Small Business Owner, September 8, 2017

“The three tax measures proposed by the government will greatly interfere with my businesses’ ability to run operations, achieve my goals and provide the societal contributions that benefit my staff that live right here in Richmond,” – Entrepreneur, September 25, 2017

Please consider these concerns as you consider tax reform. There are many ways we can improve our tax system, but targeting our job creators is not one of them.

Thank you for your consideration, and I hope we can work together to find a more fair and agreeable solution.

Sincerely,

The Honourable Alice Wong, PC, MP
Member of Parliament for Richmond Centre

On March 20, 2017, Alice Wong asked a question during Question Period. The topic was on Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, the Prime Minister has said that small businesses are just there to help rich people avoid taxes. Clearly, he has never met the hard-working entrepreneurs who actually own small businesses across our nation. It seems he will continue the attack on these middle-class families in the upcoming budget.

When will the Prime Minister end his attack on small businesses?

Hon. Bardish Chagger (Leader of the Government in the House of Commons and Minister of Small Business and Tourism, Lib.):
Mr. Speaker, this government recognizes the important work that small business owners do and the contributions they make to our economy. Our endeavour will always be to help them be more productive, more innovative, and export oriented.

This government will continue to take a whole-of-government approach to ensure that we open up markets for 99% of businesses, which are small businesses. We will continue to work very hard for them.

On March 8, 2017, Alice Wong asked a question during Question Period. The topic was on taxation.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, 2016 was a difficult year for our small business owners. Their hiring credit was axed, their payroll taxes were increased, and they did not get the tax cut the Liberals promised. Small businesses are being targeted by the Liberals for being too small and the Prime Minister accused small businesses of existing solely to avoid tax.

Will the Prime Minister finally listen to our entrepreneurs and cut their taxes in the upcoming budget?

Hon. Bardish Chagger (Leader of the Government in the House of Commons and Minister of Small Business and Tourism, Lib.):
Mr. Speaker, I appreciate the opportunity to rise in this House, especially on International Women’s Day. I wish everyone the best on this day, especially our women entrepreneurs.

This government has committed to making more opportunities for under-represented groups. We are working better with entrepreneurs, we are listening and engaging with small business owners, we are speaking to their customers so that we can create the opportunities they need. The solutions that our small businesses owners have are not only good for Canada, but they are amazing for export markets. We will continue to open up those markets so that we can encourage our small business owners to export, as well.

On March 8, 2017, Alice Wong made a statement in the House of Commons on the topic of Women in Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, it is my pleasure to rise on this day, International Women’s Day, to highlight women in small businesses. In Canada, 47% of small and medium-sized enterprises are wholly or partly owned by women. As a former small business owner myself, I understand that running a business requires dedication, hard work, and finding the right balance between business and family.

We must continue to encourage and empower women of all ages to accomplish their goals. We also need to ensure that the right tools, mentorship, and opportunities are provided to guarantee the success of our small businesses.

I hope this day reminds us that every day women in Canada and around the world greatly impact our economies and communities for the better. We must ensure that all women have a chance to pursue their dreams.

On October 31, 2016, Alice Wong asked a question in the House of Commons on the topic of Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, our small businesses are hurting. CFIB’s October report shows that 61% of small businesses state that higher taxes and regulations are the most significant barriers to allowing innovation and growth in their businesses. Yet, the Liberals continue to raise taxes through both the CPP and their new carbon tax.

When will the Liberals stop punishing small businesses with high taxes and more regulation?

Hon. Navdeep Bains (Minister of Innovation, Science and Economic Development, Lib.):
Mr. Speaker, I would like to thank the member opposite for raising innovation, because that is a key component of our government’s economic agenda.

Innovation is so critical for small business, which is why we are focusing on small businesses to make sure we invest in people and give them the skills and training they need to compete in a digital world. We are also focusing on emerging technologies and platforms that will allow them to be part of global supply chains. We are focusing on the small businesses to grow, to be more export oriented.

This is our economic plan on how we grow the economy and create jobs.

On October 19, 2016, Alice Wong made a Members’ Statement in the House of Commons. The topic was on Small Business Week.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, this week is Small Business Week. As a former small business owner, and the critic for small business, it is my pleasure to mark this important week celebrating our innovators and job creators from across the country.

In the city of Richmond, small business and tourism is a critical part of our community. The 27-year-old entrepreneur, Amira Ladha, is an example of what it means to be an entrepreneur in Richmond.

Last year, Amira opened Sugar ‘n Ice, a bakery store in our harbourfront area. She brought her passion for baking to our city, and has seen her business grow.

Whether it is hosting cake workshops, birthday parties, or other events, Amira proudly serves her community, and Canada should be proud.

I highly recommend to any of my colleagues to stop by Sugar ‘n Ice in Richmond for one of Amira’s delicious cakes, and commend her for representing the true spirit of Canadian small business.

On June 9, 2016, Alice Wong asked one question in the House of Commons on the topic of Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, in the last election, the Liberals promised to continue the small business tax cuts brought in by Conservatives. Instead, once in power, they broke their promise and raised its taxes.

Also, just last night, the Liberals actually voted against a motion that would allow them to follow through on their promise.

Why did the Liberals break their promise and turn their backs on our job creators?

Hon. Bardish Chagger (Minister of Small Business and Tourism, Lib.):
Mr. Speaker, budget 2016 focuses on growing our economy for all Canadians. We know that a healthy economy improves business conditions for small and medium-sized enterprises and Canadian businesses. We know that helping Canadian consumers and families will help businesses, as they are their customers and we can better sell their goods and services.

A better economy for all Canadians and more revenue for business helps everyone. This will make a stronger economy for all Canadians. That is the good work we are doing.

On June 6, 2016, Alice Wong spoke in the House of Commons on Bill C-15, the Budget Implementation Act, specifically on the amendment to strike clause 34 (the removal of the small business tax rate reduction).

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Madam Speaker, today I rise to speak to the amendment put forward to strike clause 34 from Bill C-15, the budget implementation act.

Clause 34, as it stands, will amend the Income Tax Act in a manner that would increase the small business income tax rate to 10.5% instead of continuing its scheduled decrease to 9%. Right this minute, the Income Tax Act, as currently written, will continue to lower the small business tax rate down to 9%. The removal of clause 34 from Bill C-15 will be an important gesture to demonstrate the commitment that the government made to small businesses during election time. During the 2015 campaign, all parties promised to reduce the small business tax rate and continue the outlined reductions put forward by our previous Conservative government.

We understand that small businesses are the backbone of our communities and are essential for job creation and a robust economy. As a result, the government should be encouraging small business owners and ensure that they have access to low tax rates. However, the Liberals seem to think differently. This is exactly why clause 34 is so concerning. This clause seeks to break one of the key promises previously made by the current Liberal government. I strongly believe that this reduction is crucial to motivating small businesses to grow and prosper.

As the former coordinator of the small business programs at both the Vancouver Community College and Kwantlen Polytechnic University, I have trained many business owners in leadership and business development. There are many challenges that small business owners face, whether it is working long hours, sacrificing time spent with family and loved ones, or the personal expense. However, when it is time to mature as a business, and at the point of decision to expand or not, the ability to reinvest is key and perhaps the greatest challenge. The question is to expand or not to expand.

This is exactly true for female entrepreneurs. I have had the opportunity to witness the growth and prevalence of female-run businesses, through the British Columbia Women’s Enterprise Centre. Tax burdens, whether personal or business, have always been a great challenge to creating access to the money they require in their own pockets to reinvest. Additionally, my involvement as one of the founders of the Ethno Business Council in B.C. and my personal business experiences both demonstrate that tax burdens weigh particularly heavily on immigrant entrepreneurs.

While I was completing my doctoral dissertation at the University of British Columbia, I focused my research on studying the business cycle of immigrant entrepreneurs. What I found then, and what I continue to witness, is that immigrant business owners require as much encouragement and assistance as possible, not as a handout, but real encouragement in low-tax policies and business development opportunities.

Over the past several months, I have continued to meet with business leaders in my own riding and from across the country. One concern continues to ring out most clear. Lower tax rates, whether federal, provincial, or municipal, are crucial to small business development. It is not for the government to choose winners and losers. However, that is exactly what we have seen. The current Liberal government has chosen small businesses as the losers.

On several occasions, the Minister of Small Business and Tourism has stood in this House and promised to reduce the tax rate for small businesses. She promised that she was working with the Minister of Finance and other colleagues to ensure that the voice of small business owners were heard. Unfortunately, that was all for nothing.

Instead, the Liberals have deliberately and blatantly left small business out of the budget and show no indication of following through on their promise. Small businesses across the country feel slighted and have witnessed first-hand the broken promises of the Liberal government. However, by accepting this motion, the Liberal government would be able to demonstrate to small businesses that it recognizes their worth and seeks to support and encourage growth for lower tax rates.

As research and data emerge regarding the government’s decision to eliminate the tax rate reductions, we are gaining a clear picture of just how much this will cost our small business owners. According to the Canadian Federation of Independent Business, the CFIB, this decision will cost small and medium-sized firms over $900 million, compared to the government letting the scheduled small business tax reductions stand. That is a cost of nearly $1 billion that the Liberal government is placing on our hard-working middle class. Instead of alleviating the burden on our middle class, the Liberals are actually adding to their burden.

There is no doubt that small businesses stimulate our economy and encourage growth. The president of CFIB, Dan Kelly, stated that “The simple truth is Canada’s small business owners are overwhelmingly middle class. They are your mechanic, accountant, hair dresser, and landscaper, just trying to earn a living doing something they love.”

The Liberals are looking for a way to pay their debt by placing it on the backs of our small businesses. Our middle class is not responsible for the Liberals’ reckless spending. This I have mentioned before. When small businesses are paying more in taxes, it means they have less money in their pocket to reinvest in their businesses. Whether these investments materialize as hiring new employees, seeking out new business opportunities, or expanding their market, each is important, and this budget will inhibit any type of growth.

I am proud to support this motion to amend Bill C-15, and I strongly encourage all members of the House to do the same. We need to invest in our small and medium businesses and provide them with tools and funding to help them succeed, not just in the start-up phase, but throughout their entire business cycle. Small business owners are counting on us. We need to demonstrate that we value their hard work.

Mr. Adam Vaughan (Spadina—Fort York, Lib.):
Madam Speaker, I have been listening to the hon. member opposite talk about the need for tax cuts. Putting aside the fact that taxes did not go up for small businesses, future reductions have been deferred, and taxes did go down this year.

I have been reading through all of the private members’ bills that the Conservative Party has introduced in the House this term. It is quite fascinating to note that we do not find tax cuts amongst them. We found things like an act to amend the Criminal Code. We found an act to establish a national appreciation day, a much higher priority than tax cuts in terms of the private members across the way. We found an act to amend the firearms legislation and an act to amend corrections and conditional release. We did not find tax cuts as being a popular component of their private members’ bills.

I am curious as to why the member herself has not brought forth a private member’s bill, if the issue is that important to her.

Hon. Alice Wong:
Madam Speaker, our Conservative government lowered personal taxes 120 times. We do not need a measure in the bill just to reinstate our commitment to cutting small business taxes. It was in our campaign promises, as it was part of every party’s commitment.

Once in power, why did the Liberal government forget about its commitments and not fulfill its promise to lower small business taxes? The Liberal government should be facing that challenge. The Liberal government should be helping our small business owners.

Mr. John Brassard (Barrie—Innisfil, CPC):
Madam Speaker, it is incredulous to me, to anyone who sits in the House on this side, that the hon. member would actually bring that up when he knows full well that it was the Liberal Party that promised to bring the small business tax rate down, and yet it is not included in the budget. However, I digress. I am not actually here to speak to that, but it is worth noting.

I would like to ask my hon. colleague about small business. In the committee of the whole last week, the Minister of Finance was asked a very pointed question as to whether in fact he had consulted with Dan Kelly of the CFIB during budget deliberations. Like an artist in Cirque du Soleil, he contorted his body in every angle without answering the question. Therefore, I would like to ask my hon. colleague a question. How important would it have been for a finance minister to meet with the president of the CFIB during budget deliberations?

Hon. Alice Wong:
Madam Speaker, during many of my visits and discussions with the president of the CFIB, the first concern he raised was they were not even able to secure a meeting with the finance minister. How can the government really set up a policy when the most important economic element in our whole community in Canada that creates over 95% of jobs is not even heard?

In my experience, in meeting many of the business owners, and as a former business owner myself, this is exactly who we should be listening to, small business owners and small business organizations that represent them. I mentioned the B.C. Women’s Enterprise Centre, the Ethno Business Council of B.C., and all those business associations I have been consulting. We should be listening to them. This is their major concern.

Mr. Jamie Schmale (Haliburton—Kawartha Lakes—Brock, CPC):
Madam Speaker, first, I would like to mention that small businesses in my area are concerned. They are trying to invest, to hire, and to develop.

I would like to ask about the overall government plan on spending. If spending for the sake of spending were true, Ontario would be the economic engine of Canada. Of course that is not true. Perhaps she could speak to that.

Hon. Alice Wong:
Madam Speaker, the government has said it is going to spend on infrastructure and innovation. What they are spending on is the program, and the program administration. There is no actual job creation. There is no direct benefit to any of our businesses, especially now that it is actually increasing taxes to our small businesses.

Again, to grow or not to grow, to expand or not expand, that is the question. I do not think the Liberals have a good answer to it.

On May 10, 2016, Alice Wong asked two questions in the House of Commons on the topic of Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, the decision of the Liberals to increase the small business tax rate is proving worse and worse. Last week, I asked why the Liberals broke their promise to our small businesses. This broken promise will cost the industry $2.2billion.

Why do the Liberals continue to abandon our hard-working small business owners?

Hon. Bardish Chagger (Minister of Small Business and Tourism, Lib.):
Mr. Speaker, on January 1, the tax rate for small businesses was reduced. Today the parliamentary budget officer confirmed that the decision to maintain the reduced business tax rate was the right one.

The report confirmed that the previous government’s approach would have created just over 1,000 jobs at a cost of almost $2.1 billion to the economy with no growth to the economy.

It is important that we support our small and medium-sized businesses. I am here to ensure they are productive, more innovative and export oriented. We will continue to do the work we are doing.

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, I wish Liberals understood small businesses, but the facts just do not support that.

A report from the parliamentary budget officer today indicated that in addition to the $2.2 billion cost to the industry, the changes to the small business tax rate would actually cost jobs. When will the Liberals stop punishing small businesses?

Hon. Bardish Chagger (Minister of Small Business and Tourism, Lib.):
Mr. Speaker, I would like to thank the budget officer for offering his projections to Canadians and parliamentarians.

In a previous report, the budget officer’s verdict was that our budget as a whole would have significant positive impact on the Canadian economy and create tens of thousands of jobs.

As a whole, budget 2016 proposes targeted investments, totalling $50.2 billion. Small business is implicit throughout the entire budget. Small businesses are the backbone of the economy. They are our job creators, and we support small business.

On May 5, 2016, Alice Wong asked a question in the House of Commons on the topic of Small Business.

The following is a transcript:

Hon. Alice Wong (Richmond Centre, CPC):
Mr. Speaker, for two days, the parliamentary secretary has accused small business owners of being tax cheats.

She is not alone. The Prime Minister has said small businesses are just a way to avoid taxes. Just today, a Liberal member said in the House that the small business tax rate does not matter.

When will the Liberals reverse their broken promise and bring the tax rate to 9%?

Ms. Gudie Hutchings (Parliamentary Secretary for Small Business and Tourism, Lib.):
Mr. Speaker, I would like to thank my hon. colleague for the question because we know that there is a loophole that allows some to use the tax rate to get out of paying the personal income taxes the rest of us pay all year. But we do understand small business and I understand small business and we know they need a robust economy and they need strong consumers.

With our middle-class income tax cuts, the child benefits, the investments in infrastructure, in broadband, in incubators and accelerators, in tourism marketing, the list goes on, absolutely all of it helps small and medium-sized businesses.