RE-EVALUATE TAX CHANGES

The public outcry is immense. The Liberals clearly thought they had a victory on their hands when they announced they were altering the rules around small business taxes. In the past couple of weeks, it’s proven to be anything but.

Prime Minister Justin Trudeau has spent years going on about “fairness.” He won a majority in the election largely by promising to look after the “middle class.”

We’ve put those phrases in quotes because it’s clear that the PM has a very different definition of those words than many Canadians.

At first, it appeared that Trudeau was planning to govern in a way that did deliver fairness for middle-class Canadians. One of his first moves after becoming PM was to lower one of the middle tax rates. Then his government revised the child benefits families receive to give more back monthly to Canadians.

Yet along the way they got confused and their latest attempt at fairness has turned into an all-out assault on many middle-class Canadians for the apparent sin of running their own businesses.

Back in July, finance minister Bill Morneau launched a 75-day consultation to deal with proposed changes to business taxes that have caught many Canadians off guard.

The Liberals plan to end ‘income sprinkling,’ in which an owner pays a salary to a family member. We’ve got no problem with tax audits rooting out abuse of this practice. But so far the Liberals have horribly failed to explain why the process is inherently wrong.

They also want to end what they’re calling “passive investment income” — which would be investing money that sits around in a corporate account. The Liberals want that money out of the accounts and being spent on growing the company.

For starters, how in the world is this the government’s business? But, more importantly, many small businesses keep money in their accounts as a contingency fund. Small business owners don’t have defined benefit pensions or maternity leave top-ups.

As Sun columnist and Liberal strategist

Jim Warren has advised, the Liberals need to extend the consultation period.

It’s sad that a government projecting deficits far into the foreseeable future is now shaking down many hardworking middle-class Canadians.

These tax changes need a serious rethink.

This editorial originally appeared in the Toronto Sun.