Tax changes under fire
Opposition party members host town hall to discuss what they believe will hurt small business and family farms
Concerns about the ramifications of a proposed federal tax change affecting business owners and farmers in particular attracted a large crowd at a meeting on Friday.
Farmers used to be able to transfer their land to succeeding generations and keep the farm in the family. The farmer under the proposed tax system change will no longer qualify for the lifetime capital gain exemption because all sales of assets from one family member to another will be classified as a dividend, and therefore will be taxed at the higher rate of roughly 45 per cent, said Pierre Poilievre, MP and the official opposition’s finance critic, who was the speaker at the event hosted by Glen Motz, MP for Medicine Hat-Cardston-Warner.
“If they sell to a stranger they will be able to use the exemption and pay lower tax than if they sell to their own family,” said Poilievre. “It will give a huge advantage to these huge corporate titans who want to buy up our farmland and turn our farmers into tenants.”
There will be greater scrutiny by Canada Revenue Agency of “income sprinkling,” questioning the legitimacy of sharing income with family members, said Poilievre.
There are also implications for small companies that incorporate. Physicians and dentists, for example, who are generally self-employed typically put profits in a corporation to cover things such as their own maternity leave, sick leave, vacation and pension.
The company’s profits are taxed already and then will be taxed a second time in the hands of the owner, said Poilievre.
“That double taxation will lead to rates as high as 73 per cent,” Poilievre claims.
A local investment banker believes it will impact young women planning within the corporation for maternity leave.
“This is a horrible mistreatment that really does single out incorporated female business operators/professionals. For someone who thinks of himself as a progressive, this is horrifically retrogressive,” Dan Hein says of Prime Minister Justin Trudeau.
Of the 30 questions posed to government in the House of Commons on Wednesday, 27 related to the proposed tax changes, said Poilievre.
Our ability to compete on the world market with these changes was raised as an issue by Drew Barnes, MLA for Cypress-Medicine Hat.
“Justin Trudeau is building a wall that will limit investment and lead to the very real possibility of those impacted choosing to leave Canada for the U.S.,” said Poilievre in response.
Normally there is a window of opportunity to prepare before a proposed change takes effect. In this case it will be retroactive to July 17, which happens to be the day before it was first talked about.
“It seems like a dastardly move to make it effectively retroactive to 24 hours before anybody opened their mouth about it. So that is a very, very troubling approach,” said Hein.
Poilievre made no apologies for not having an alternative plan to raise the same revenue that this plan will do. He said the government does not need more money.