Small biz owners once bitten, twice shy

Finance minister Bill Morneau has a strange way of going about damage control. “Trust me, you’ll be fine!” is the message he’s selling small business owners who have mobilized against the Liberals’ proposed changes to the tax rules.

The government is attacking the legal ways mom and pop businesses, family doctors and other professionals use to lower tax rates — income splitting with family members, sheltering investment income within corporations and claiming regular business income as capital gains, which carry lower tax rates.

Understandably, small businesses across the country are incensed. The Liberals are using loaded language like “loopholes” to suggest small business people are tax cheats.

Meanwhile, Statistics Can reports, small businesses account for almost 90 per cent of new job creation in this country, and employ about 70 per cent of private sector employees.

Hiking their taxes may have broad economic repercussions.

Morneau appeared on the CTV Sunday morning program Question Period and brushed aside concerns, stating that folks making less than $73,000 a year won’t be impacted at all by the changes.

He’s also stressed that only business owners making more than $150,000 or who have money left in their accounts after maxing out their RRSPs and TFSAs will feel the effects of his “tax fairness” plan.

None of this is as assuring as Morneau seems to think it is. Small business owners in this country should be forgiven if they’re skeptical. They’re likely feeling once bitten, twice shy.

After all, the Liberals campaigned on dropping the small business tax rate down to nine per cent. Yet in the 2016 budget, they broke that promise, keeping it at 10.5 per cent for the foreseeable future.

All they’ve got is Morneau’s word that these tax changes won’t affect lower earning small businesses, yet the Liberals have proven their word — at least on financial matters — isn’t worth much these days.

Canadians believe individuals and corporations should pay their fair share. That is not in dispute. But that doesn’t mean they want more wealth distribution.

We should be celebrating people’s success, not punishing them. Is there some sort of moral imperative to target people making more than $150,000?

Right now, very little of this makes sense to Canadian business owners. Morneau and Trudeau need to do a whole lot more to explain these changes.