Premier tells feds he is hearing worries over planned tax changes
ST. JOHN’S, N.L. — Newfoundland and Labrador Premier Dwight Ball is worried there’ll be “unintended consequences” from the federal government’s plan to end what it calls an unfair tax advantage for some wealthy small business owners. And he says he’s not alone. “I’ve heard this from all provinces, I’ve heard it from small businesses, I’ve heard it from physicians throughout Newfoundland and Labrador,” Ball said Tuesday.
His comments came as the federal cabinet met in St. John’s to prepare for the resumption of Parliament next week.
Critics say drawing higher taxes from doctors could raise medical fees or make it tougher to attract them to rural areas.
“I want to make sure that we have enough physicians, enough health-care providers,” Ball said. “We need to have those professionals available to us to deliver health-care services. We also need vibrant small businesses, companies that are strong to actually create employment throughout Newfoundland and Labrador.”
The province has among the highest jobless rates in Canada.
The premier said he met one entrepreneur who mistakenly thinks her tax rate would jump 73 per cent under the changes put forward by Finance Minister Bill Morneau.
Morneau said he’s heard a lot of complaints about the tax plans and is battling misinformation and fear over who will be targeted. He said he will speak personally to the woman who spoke to the premier.
Amid the objections from different groups, Morneau said he’s also found support. For example, he said, the Canadian Labour Congress agrees the tax system “has to work for everyone.”
Consultations have been going on across the country for almost two months and are to continue until Oct. 2.
“Our sense is people are starting to understand our objectives,” Morneau said.
He said he is willing to tweak the planned reforms based on what comes out of the consultations.
“As we hear those things, we’ll consider how we can best implement what we think are the best measures.”
The three-pronged plan has sparked a backlash from doctors, lawyers, tax professionals, shopkeepers and others who’ve incorporated their small businesses in order to reduce their income tax bill.
One proposed change would restrict the ability of incorporated business owners to lower their tax rate by sprinkling income to family members in lower tax brackets, even if those family members do no work for the business. Another would limit the use of private corporations to make passive investments in things like stocks or real estate.
The third change would limit the ability to convert a corporation’s regular income into capital gains that are typically taxed at a lower rate.
Newfoundland and Labrador Premier Dwight Ball talks with reporters as the Liberal cabinet meets in St. John’s, N.L. on Tuesday.