Albas off the mark with some of his tax-plan criticisms

Editor: During the month of September, Conservative MP Dan Albas wrote a number of articles in The Daily Courier concerning the Liberal government’s tax reform proposals affecting small business corporations.

On two occasions he has stated the following: “In essence, the small business owner pays taxes twice. The first time is when the small business owner pays tax on any profit, assuming there is some. Small businesses pay lower taxes on business income than personal income taxes. However don’t overlook that all net income, once paid out in wages, is taxed again at the same personal income rates as all other Canadians.”

This is a very misleading statement and shows a lack of understanding by Albas. It is misleading because when he says the small business owner pays taxes twice, it gives the impression that the small business owner is double taxed. This is not the case. The owner is taxed on the wages, at personal tax rates, he decides to take out of the business and the corporation is taxed on the remaining net income at the small business rate of 15 per cent. It shows a lack of understanding because he says all net income once paid out in wages is taxed again at the same personal income rates as all other Canadians.

This really does not make sense as wages are deducted from income to arrive at net income. Net income is taxed at the small business rate of 15 per cent.

Albas also demonstrates that he has not done due diligence when he states that a small business owner has no Canada Pension Plan and no Employment Insurance. This is simply not true with respect to CPP.

When the small business corporation pays wages to the owner, it would have to deduct CPP and this would entitle the owner to Canada pension upon reaching retirement age. In regard to Employment Insurance, he is only partially correct. Small business owners may elect to pay EI contributions if they wish and such election would give them access to EI benefits in the event of interruption of their business.

It is understandable that an opposition MP would be critical of the current government, but he has a responsibility to ensure that his statements to the public are accurate and not misleading or he will lose his credibility.

Having said all this I believe small businesses are important to our economy and should receive some breaks from government.

Ken Cormack, Kelowna