Tech sector, investors lead last-minute assault on Liberals’ tax changes

With its public outreach winding down, the Trudeau government received fresh warnings Monday from major industry associations about the negative fallout from its controversial tax-reform proposals.

The latest criticisms of the government’s plan to change tax rules for private corporations arrived as its 75-day consultation period on the proposals approached its deadline late Monday.

One message came from a group representing some of the country’s fastest growing technology companies and industry investors. They argued the proposals would restrict the ability of tech entrepreneurs to access capital that’s vital to growing their companies and creating jobs.

“It is vital that before any decisions on this file are made, the federal government meets with Canadian innovators to discuss solutions that do not hurt Canada’s job and prosperity creators in the tech sector,” said the letter, signed by CEOs representing entrepreneurs, venture capitalists and angel investors.

“This is a race to the bottom, and runs contrary to the government’s innovation and skills plan.”

The association said the changes, if implemented, would create uncertainty for corporate tax planning, intensify a brain drain of tech talent away from Canada and negatively affect the government’s highly publicized investments to help high-potential firms scale up.

Canadian Manufacturers & Exporters, which represents more than 10,000 companies, also laid out its concerns in a letter sent Monday to Finance Minister Bill Morneau that called the changes “significant but flawed piecemeal amendments.”

In the message, president Dennis Darby said the reforms would “strike well beyond their intended target” and could lead to “significant negative unintended consequences” for small manufacturers.

The changes, Darby added, would reduce the incentive and economic return from entrepreneurship, risk-taking, business investment and job creation.

He also said the proposals would increase business costs, further complicate an already complex tax system and create new areas of unfairness.

Morneau has pitched the changes as a necessary levelling of the playing field for all Canadians, particularly those in the so-called middle class, because they would end tax advantages unfairly exploited by some wealthy business owners.

The plan, however, has led to considerable outrage, pushing the Trudeau government into a difficult communications war. Vocal and often organized opponents have argued the changes would hurt Canadians at different income levels and from many different sectors.

“We are listening — we’ve heard things that we know are going to be important in our implementation,” Morneau said Monday during question period as he once again faced waves of questions about the proposals from opposition MPs.

“As we move forward, we’re going to get this right.”