Chamber says Liberals’ numbers justifying tax changes don’t add up
Chamber insists government’s tax proposals targeting rich will hurt owners of small businesses
There’s no formula in which a $50,000 income earner pays more tax than a company with an income of $250,000, according to the Kelowna Chamber of Commerce.
The chamber has had accountants from BDO and Crowe Mackay do, and redo, the math because Justin Trudeau’s Liberals have proposed tax changes so average $50,000 wage earners don’t pay more than businesses pulling in $250,000.
“There’s no scenario in which someone making $50,000 a year pays more taxes than a business with an income of $250,000,” said chamber president Tom Dyas, who also heads up TD Benefits.
“The federal government lets on average Canadians are paying more and that’s just not the case. By targeting the top five per cent of business earners, the government will also be hammering the middle class, which are the smallbusiness owners.”
To illustrate its point, the chamber gives the example of a typical $50,000-a-year wage earner paying 20 per cent, or $10,000, to taxes.
A sole business owner with an annual company income of $250,000 will not only pay $10,000 tax on the $50,000 income they pay themselves, but also an additional $26,000 corporate tax.
The chamber also did the math for four other scenarios with business dividends handled different ways.
In each instance, the business ended up paying more taxes.
“The Kelowna Chamber of Commerce is all for tax fairness,” said Dyas, “but we want it after proper consultation and with everyone knowing what the numbers are.”
The federal government in July proposed tax changes that would change income-splitting for smallbusiness owners, restrict access to the lifetime capital gains exemption, upset the tax treatment of passive income investment earned in a private corporation and limit strategies to convert income into capital gains.
Ottawa then launched a 75-day consultation process with a deadline of Oct. 2 to introduce new tax legislation.
The chamber, and a coalition of the 42 biggest business and industry associations in the country, wants more consultation and the Oct. 2 deadline scrapped in favour of a date in the new year.
“Trudeau’s intention was to tax the wealthiest of Canadians more,” said Kelowna chamber business development manager Caroline Miller.
“Unwittingly, with these proposed tax changes, he’s lumped in business owners who are only taking $50,000 to $77,000 annual income out of their businesses in with the top five per cent or top one per cent wealthiest.”
Dyas already lobbied Trudeau not to rush the tax changes when they ran into each other during a reception while the prime minister was in town last week for Liberal caucus meetings.
The local chamber, along with the B.C. and Canadian chambers, is making sure all members and the public are aware of what the tax changes really mean to smallbusiness owners and the middle class.
The chambers are urging anyone who wants more consultation time or modifications to the proposed changes to contact his or her MP.