Be­ing self-em­ployed has many chal­lenges

Penticton Herald - - OPINION - RICHARD CANNINGS

There has been a great deal of talk in the news and on the street about the Lib­eral gov­ern­ment’s pro­posed changes to fed­eral tax laws that would make it more dif­fi­cult for small busi­nesses to make pas­sive in­vest­ments in their com­pa­nies and share prof­its with mem­bers of their fam­i­lies.

The Lib­er­als claim that many small busi­ness own­ers are us­ing th­ese meth­ods to avoid pay­ing their fair share of taxes.

Busi­ness own­ers, farm­ers, lawyers and doc­tors across the coun­try have risen up in anger over the pro­pos­als. And the Lib­er­als are dig­ging in, say­ing that, while this is a con­sul­ta­tion pe­riod, they will not back down on the con­cept.

Why the con­tro­versy? Well, the small busi­ness own­ers rightly point out that their fi­nan­cial sit­u­a­tions are very dif­fer­ent from salaried em­ploy­ees — they don’t have pen­sions, sick leave, parental leave and other ben­e­fits and are of­ten tak­ing big risks for lit­tle profit for long pe­ri­ods of time while grow­ing their com­pa­nies. I was self-em­ployed for 20 years, so I know about those un­cer­tain­ties and lean times.

I’ve talked to doc­tors who have to save up for a year be­fore they can af­ford to take ma­ter­nity leave, busi­ness own­ers who have to put aside money so that they can sur­vive through years when prof­its are min­i­mal or non-ex­is­tent.

I’ve heard from en­trepreneurs who are work­ing very long hours to build their com­pa­nies and use pas­sive in­vest­ments as a way to get through dif­fi­cult times.

The gov­ern­ment es­ti­mates that th­ese tax changes will add $250 mil­lion to an­nual gov­ern­ment rev­enues. How­ever, the Lib­er­als have backed down on an elec­tion prom­ise to close a much big­ger loop­hole — the huge tax cuts wealthy CEOs re­ceive when they are paid in stock op­tions in­stead of salary.

Clos­ing that loop­hole would only im­pact the top one per­cent of in­come earners and would net the gov­ern­ment an es­ti­mated $800 mil­lion per year in new taxes. That would be tax fair­ness. The Lib­eral gov­ern­ment should also tackle the huge is­sue of big cor­po­ra­tions mov­ing their prof­its to off­shore tax havens, cheat­ing Cana­di­ans of bil­lions in tax dol­lars.

The NDP knows that small busi­nesses are the real job cre­ators in Canada, and when we re­turn to Ot­tawa next week our cau­cus we will con­tinue to press the gov­ern­ment to make sure that they will not bring in mea­sures that will un­fairly hit most small busi­ness own­ers — twothirds of whom make less than $70,000 per year. We will also press the Lib­er­als to live up to their elec­tion prom­ise to cut the small busi­ness tax rate from 11 to 9 per cent.

We all want the tax sys­tem to be fair. But it’s clear that th­ese pro­posed changes need more than a bit of sum­mer­time con­sul­ta­tion.

The gov­ern­ment needs to truly lis­ten to the busi­ness own­ers so that any new sys­tem can stymie true tax cheats with­out putting le­git­i­mate busi­nesses at risk. And above all, the Lib­er­als need to tackle the big loop­holes that cre­ate true un­fair­ness in the tax sys­tem—the CEO stock op­tions and off­shore tax havens that ben­e­fit only the wealth­i­est of Cana­di­ans.

Richard Cannings is MP for South Okana­gan-West Koote­nay and mem­ber of the NDP cau­cus.

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