Scheer calls tax proposal ‘crippling’

Restrictions will be fair, Trudeau insists

With duelling Liberal and Conservative caucus retreats underway this week, the government’s proposed tax changes are quickly taking centre stage as each party tries to frame the debate.

The Conservatives are describing it as a debilitating punishment on smallbusiness owners and everyone else who get tax advantages by owning a private corporation. The Liberals, meanwhile, argue it will affect only the wealthy who are using the corporations to avoid paying their fair share of income tax.

“If they knew, if they understood, if they cared, the Liberals would not be punishing local businesses and their employees with crippling new taxes,” Conservative Leader Andrew Scheer told his caucus in Winnipeg, arguing the tax changes could lead to layoffs.

“We’re talking about the mom-and-pop businesses that sustain our communities — the cashier working at the hardware store down the street, or the college kid who just got his first job with the local landscaper.”

But speaking to a radio station in Kelowna, B.C., where the Liberal retreat is taking place, Prime Minister Justin Trudeau said the proposed changes affect only those with incomes high enough to exhaust the other options for tax-assisted savings.

“If you’re making $150,000 a year or less, you can max out your RRSPs, you can use the tax-free savings account,” Trudeau told radio station AM1150. “The private corporation route only really benefits people making more than hundreds (of) thousands of dollars.”

Later in the day, pressed on that claim by reporters, Trudeau stood by it.

“As soon as you start talking about the small percentage of people who have or who can max out both their RRSPs and their tax-free savings account, you’re talking about the wealthiest Canadians,” he said.

Both Trudeau and Finance Minister Bill Morneau have said this week that the government intends to go forward with the proposed changes, unveiled on July 18 for a 75-day consultation period.

Trudeau was twice asked if he might extend the consultation period, but he would say only that the government will consider making some tweaks in response to the feedback.

“Obviously the concerns we’ve heard from Canadians, what we’ve heard from caucus members, is an imperative to ensure that we are not affecting middle-class families and middle-class small businesses, and that’s exactly what we will stay focused on,” he said.

The government’s plan would bring in new restrictions on splitting income among family members through a corporation, keeping investment income inside a corporation to take advantage of lower tax rates, and converting dividend income into capital gains.

It’s sparked a furious backlash from small-business organizations and such professionals as doctors, who have long used corporations for tax-planning strategies. Small-business groups argue these tax advantages exist to offset the risks that entrepreneurs take and the lack of benefits they receive compared to salaried workers.

Scheer told his MPs Thursday that the party will fight hard to convince Canadians the proposal will be harmful to everyone, not just the wealthy.

“You tell me what’s fair about a landscaper who can’t hire more workers when these tax changes come into effect because his tax burden’s too heavy,” he said.

“There’s nothing fair about it and there’s nothing compassionate about it and Conservatives will fight this every step of the way.”

AN IMPERATIVE TO ENSURE WE ARE NOT AFFECTING MIDDLE-CLASS FAMILIES.