Many have concerns about tax changes, Miller says
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