Conservatives ready for tax reform fight
As protests grow from business groups over the government’s proposed tax crackdown on private corporations, the Conservatives are getting ready to launch their own campaign against it.
Lisa Raitt, the Conservative Party’s deputy leader under Andrew Scheer, says she’s been deep in discussions with doctors and small business owners over the government’s tax plan, and is lining up roundtables across the country to help air concerns around it.
“They dropped the policy paper in mid-July, and only now does it seem to be percolating through,” she said.
Raitt is organizing an event in Moncton, N.B., next week, has another set up in her home riding of Milton, Ont., and plans to put together more meetings in the Prairie Provinces and elsewhere.
“We’re getting a lot of folks who want to come in, some want to understand the changes, some want to help explain the changes from the accounting side,” she said. “We’re going to record all this and pass it on ... I’m going to ramp this up. This is a terrible decision made by the Liberals.”
Finance Minister Bill Morneau released a package of proposed reforms on July 18, and although the Liberals had long hinted they were planning changes, the scope of the reforms took observers by surprise. Morneau presented data showing a recent steep increase in the number of registered private corporations, and said wealthy Canadians are using them to avoid paying higher rates of personal income tax.
The proposals are complicated, but in essence they tighten restrictions on three ways people can use private corporations to reduce their taxes: splitting income among family members, keeping investment income inside a corporation to take advantage of lower tax rates, and converting dividend income into capital gains.
But a wide range of professionals — doctors, farmers, plumbers, landscapers, convenience store owners, dentists, veterinarians, and many more — are set to take a big tax hit if the proposals go through, and industry groups have been organizing to fight back.
The proposals are open for a 75-day consultation period, but critics say the consultation is too short for such a complex and farreaching package of reforms. Perrin Beatty, CEO of the Canadian Chamber of Commerce, tweeted on Tuesday that he had just been on a call with 107 business chambers across the country who said they need more time to study “the most radical tax changes in 50 (years).”
Meanwhile, the Canadian Medical Association is having its annual meeting in Quebec City, and its executives have made frequent media appearances blasting the proposal, claiming it punishes doctors. Rates of incorporation vary, but between 60 and 70 per cent of doctors in most provinces are incorporated for tax reasons.
The Conservative plan to start hitting the Liberals politically over the reforms is a preview of what’s to come in the fall sitting of Parliament, as the tax changes will be one of the more controversial items on the government’s agenda.
Asked if the Conservatives had concerns about corporations being used for tax shelters, Raitt said the party is still building its policy platform under Scheer’s leadership. But she noted their past approach has been to open up income-splitting for more people, rather than restrict its use through corporations. (Prime Minister Justin Trudeau used his first budget to cancel the recent Conservative policy of allowing income-splitting for parents.)
Raitt said, for now, her main focus is on raising awareness around the Liberal proposal, given it came out at a time when people are not necessarily paying attention to what’s happening in Ottawa.
“I think it’s duplicitous that they’re doing in the summertime instead of letting Canadians know about it at the time when MPs are in their offices, not on vacation, and able to help them,” she said. “But we still have September, and I’ll be there to lead the charge.”