Tax change will hurt

The Globe and Mail (Prairie Edition) - - OPINION -

Re The Sky Is Fall­ing On Small Busi­nesses – Or Is It? (Re­port on Busi­ness, Aug. 9): The pri­vate-cor­po­ra­tion tax pro­pos­als by Fi­nance Min­is­ter Bill Morneau are clear that their ob­jec­tive is to have busi­ness own­ers and em­ploy­ees ul­ti­mately be taxed at the same level. As a pro­fes­sional ad­viser to small busi­nesses for more years than I care to think about, I dis­agree with the pro­pos­als as cur­rently drafted (other than as they might ap­ply to some MDs). They will be un­fair to own­ers, dis­cour­age en­trepreneur­ship and hurt the econ­omy.

Un­like em­ploy­ees, own­ers risk their own cap­i­tal. Most new small busi­nesses fail, many oth­ers make prof­its sig­nif­i­cantly lower than the salary and ben­e­fits of an av­er­age gov­ern­ment em­ployee. Un­like em­ploy­ees with pen­sion plans to which their em­ployer con­trib­utes, own­ers have to fully fund re­tire­ment from sav­ings.

The tax sys­tem has to be de­signed to pro­vide en­cour­age­ment to en­trepreneurs to at least par­tially off­set these negatives, as op­posed to sim­ply pro­vid­ing a per­fectly level play­ing field with an equiv­a­lent em­ployee.

I would ex­clude MDs from this anal­y­sis to the ex­tent they are pro­vid­ing ser­vices paid for by the gov­ern­ment. As such, they are es­sen­tially a spe­cial­ized type of pub­lic-sec­tor em­ployee, one who does not gen­er­ally in­cur the risks and disad­van­tages of busi­ness own­er­ship re­ferred to above. – Jan Hol­land, Mon­treal

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