Premier tells feds he is hear­ing wor­ries over planned tax changes

The Observer (Sarnia) - - NATIONAL NEWS - SUE BAI­LEY

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 health­care 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.

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