Provinces challenge Ottawa over tax-reform proposals
OTTAWA — Provincial pressure is intensifying against the Trudeau government’s controversial tax-reform proposals, which have angered business owners, doctors and farmers across Canada.
On Friday, provincial leaders representing different political stripes — Liberals, New Democrats and Conservatives — spoke out about tax reforms recommended by Ottawa’s Liberal government.
Manitoba Premier Brian Pallister, flanked by business owners and a farmer, held an afternoon event in Winnipeg where he aired his frustration over the federal tax proposals.
On the East Coast, Nova Scotia Premier Stephen McNeil expressed concern that the changes could hurt his province’s physician recruitment efforts and hamper the ability of small businesses to create financial cushions as protection during downturns. McNeil was scheduled to meet federal Finance Minister Bill Morneau later in the day to directly convey this message.
Out west, British Columbia Finance Minister Carole James said she didn’t think Ottawa had consulted enough on an issue that has spread fears of the “unintended consequences” on small business owners.
The comments by the provincial leaders added to waves of complaints that have come from a range of sectors — as well as backbench Liberal MPs. Newfoundland and Labrador Premier Dwight Ball has also said he thinks the tax changes would hurt his province.
Morneau and Prime Minister Justin Trudeau have argued that the tax system unfairly encourages wealthy Canadians to incorporate, so they can get a better tax rate than middle-income earners.
In Halifax, McNeil urged Ottawa not to overlook the importance of these incentives for some smallbusiness owners and doctors who lack retirement plans.
In Vancouver, James told business leaders after a speech that she believes in closing what Ottawa has described as “tax loopholes.”
“But I also believe that there wasn’t good consultation done,” she said of the federal strategy.
“I have heard from many people, including many small-business owners, that this doesn’t close loopholes. In fact, it causes unintended consequences for many small-business owners.”
Friday, before his meeting with McNeil, Morneau said there was “some pretty obvious misinformation” circulating about the impacts of the proposals.
He added that, for example, only business owners who have annual incomes of at least $150,000 can really benefit from the passive income incentive.
The government launched a 75-day public consultation period in July, which ends Oct. 2. Morneau has said he’s listening to feedback about the proposals and that he’s open to making changes, if necessary.
Manitoba Finance Minister Cameron Friesen wrote Morneau to demand that he hold off on the tax reforms until after the provincial finance ministers meet him in December.