Many have con­cerns about tax changes, Miller says

The Sun Times (Owen Sound) - - FRONT PAGE - ROB GOWAN Larry Miller

Bruce-Grey-Owen Sound MP Larry Miller is con­cerned about how pro­posed tax changes by the fed­eral gov­ern­ment will im­pact small busi­nesses, par­tic­u­larly farm­ers, in his rid­ing.

“It is go­ing to hit peo­ple no mat­ter how big the cen­tre is, but I do think there is def­i­nitely a larger fac­tor in small com­mu­ni­ties,” Miller said Thurs­day. “It is not very many com­mu­ni­ties that are ac­tu­ally grow­ing.”

Miller said his of­fice has been in­un­dated with calls and e-mails from peo­ple since the pro­posed changes were in­tro­duced in July.

“This is both­er­ing a lot of peo­ple, there is no doubt about that,” Miller said.

To­day at the Best West­ern Inn on the Bay, Miller is hold­ing a round­table dis­cus­sion on the pro­posed tax changes. It will run from 11:30 a.m. to 1:30 p.m. and is to in­clude in­di­vid­u­als, busi­ness own­ers, physi­cians, farm­ers and oth­ers who have raised con­cerns.

“Maybe peo­ple have sug­ges­tions for tweak­ing our tax laws that won’t dam­age busi­ness or our econ­omy,” said Miller. “The way it is pro­posed, it def­i­nitely will.”

The gov­ern­ment’s pro­pos­als, re­leased in July, tar­get three tax­plan­ning meth­ods that make use of pri­vate cor­po­ra­tions to save on in­come taxes: sprin­kling in­come among fam­ily mem­bers named as share­hold­ers, grow­ing an in­vest­ment port­fo­lio in­side a cor­po­ra­tion as “pas­sive in­come,” and con­vert­ing in­come into cap­i­tal gains.

Farm­ers have been among the most vo­cal groups op­posed to the changes. Fam­ily farms in­cor­po­rate to pay 15 per cent small busi­ness tax (plus taxes on div­i­dends to share­hold­ers, who are nor­mally fam­ily mem­bers work­ing on the farm) rather than up to 50 per cent at the high­est mar­ginal per­sonal in­come tax rate.

But the changes would put in­cor­po­rated fam­ily farms at a dis­ad­van­tage to large cor­po­rate land ag­gre­ga­tors, which can di­vide the farm in­come by the num­ber of adults work­ing there, farm­ers say.

Farm­ers are con­cerned the Lib­er­als tax plan will af­fect their abil­ity to pass their farms on to their chil­dren in three dif­fer­ent ways: by chang­ing how cap­i­tal gains for fam­ily mem­bers are taxed, how div­i­dends paid to fam­ily mem­bers on the farm are taxed and how pas­sive in­come is taxed.

“Some of the tax rules al­low for the trans­fer with­out get­ting hit with as much tax,” Miller said. “With these changes it is re­ally go­ing to hurt that.”

The av­er­age age of a farmer in Canada was 55 last year ac­cord­ing to Sta­tis­tics Canada, and Miller said mak­ing it harder for suc­ces­sion plan­ning is not the an­swer.

“Some­body has to feed us and if you don’t al­low it so ba­si­cally fam­i­lies can farm, then you are go­ing to have more cor­po­rate farm­ing,” Miller said. “Not that that is a to­tal bad thing, but I think most peo­ple would pre­fer that (fam­ily farm) av­enue if at all pos­si­ble.”

The gov­ern­ment has said the changes are not in­tended to make small farms un­com­pet­i­tive against large farms, while the gov­ern­ment would also main­tain a life­time cap­i­tal gains ex­emp­tion of $1 mil­lion for farm­ers to al­low for “the in­ter­gen­er­a­tional trans­fer of farms.”

Miller said small busi­nesses are also con­cerned about the changes.

“A lot of peo­ple get ed­u­cated and move away, but if mom and dad can ar­range it so they can pur­chase that fam­ily busi­ness, then of course that is good to keep our young peo­ple around, etcetera,” said Miller. “There is al­ways a lot of peo­ple com­plain­ing there are no jobs for our young peo­ple.”

A pub­lic con­sul­ta­tion pe­riod runs un­til Oct. 2 and Fi­nance Min­is­ter Bill Morneau has said the gov­ern­ment will con­sider tweaks to the leg­is­la­tion to pre­vent “ad­min­is­tra­tive prob­lems” or other un­in­tended im­pacts.

Miller said any in­put he re­ceives will be passed on to the fed­eral gov­ern­ment.

Miller has said every MP he has talked to has heard con­cerns about the changes, in­clud­ing some who are mem­bers of the Lib­eral gov­ern­ment.

Lib­eral fi­nance com­mit­tee chair Wayne Easter has called the com­mu­ni­ca­tion strat­egy around the re­forms “god-aw­ful.”

“Any MP who came from a busi­ness side, whether it be small-busi­ness or agri­cul­ture like Wayne Easter or my­self, we see that this is a wrong move,” Miller said. With files from Post­media Net­work

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