Professionals deserve a tax break, too

Local dentists contribute as much to the community as local shops do

It’s fair to say my trip to New Brunswick last month didn’t get off to the best start. I bought a bottle of Coke Zero as I was boarding a flight to Fredericton on Sunday night. While taking a sip, I knocked my front tooth, breaking an old filling. With two and a half jam-packed days ahead, starting Monday with a 7:30 a.m. TV appearance, followed by five speeches and big meetings with New Brunswick’s finance minister and premier, looking like Jim Carrey in Dumb and Dumber with half a front tooth wasn’t the way I wanted to start my visit.

Thankfully, my colleague Mary Wilson pulled off a minor miracle while I was in the air and found a dentist who was kind enough to open his clinic late on a Sunday night to help me out. Not only did Dr. Lance Schaefer expertly fix my tooth without staff to help, but he even volunteered to pick me up at the airport.

It was a humbling display of Atlantic hospitality and an embodiment of the small business spirit in this country.

Lance, a nd business owners like him, provide stable, local jobs, as well as acting as a stabilizing presence through generations as they serve families and watch their clients and patients grow up, all while acting as a magnet to draw businesses to the area.

Yet it is exactly this kind of small business owner who may lose access to the small business tax rate as the federal government reviews the rules around who qualifies.

During the election campaign, Justin Trudeau told CBC’s Peter Mansbridge that “a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes.”

Those are worrisome words for me. If what Canada’s new prime minister is saying is that there are some people abusing the lower small business rate, or setting up fake companies to shift or park income, then he’ll have nothing but support from the Canadian Federation of Independent Business.

CFIB applauds the federal government for confirming its commitment to lowering the small business tax rate from 11 to nine per cent by 2019. However, we remain concerned Ottawa may look to reduce access to the small business corporate tax rate for some because the mandate letter for the new Minister of Small Business says it will ensure the lower rate doesn’t “reduce personal income tax obligations for high-income earners.”

It is particularly worrisome Ottawa may be drawing inspiration from Quebec’s plan, where the government decided that most businesses with three or fewer employees will no longer qualify for the small business rate, and will be forced to pay the higher general corporate tax rate.

Sadly, this move will mean higher taxes for 75,000 very small companies and the selfemployed in that province.

For some time now, the main target for a few academics, bureaucrats and politicians has been professionals such as doctors, dentists, chiropractors, accountants and l awyers. There have been at least three attempts to limit these professionals access to the lower provincial small business rates in various provinces in the past 10 years, with Quebec being the most recent.

It is worth noting that only five per cent of small businesses owners could reasonably considered to be in the high-income range — hardly a large percentage. Furthermore, only 17 per cent of incorporated business owners with employees made more than $ 100,000 in 2010, versus nine per cent of employees. The vast majority of small business owners easily fall into middle-class income brackets.

Fighting for small business tax rate fairness represents CFIB’s founding issue. In 1969, the government of the day published a federal White Paper on taxation, proposing a 50 per cent tax rate on Canadian small businesses, prompting John Bulloch the founder of CFIB, into action.

From 2003, CFIB’s member- driven efforts have led to a $200,000 increase in the threshold, which now sits at $ 500,000, and a decrease in the tax rate to its current 11 per cent, with written commitment from the new government to reduce it to nine per cent in the years ahead.

Small business owners are ordinary Canadians making extraordinary contributions. This is as true for your local dentist as it is for your local hardware store owner. They work hard to compete in a world of big business and deserve recognition for their unique role in the economy. They take huge risks, often borrowing against t heir home, to create jobs and contribute heavily to their local communities. As for professionals, many have told me they are $ 300,000 in debt before they serve their first patient or client.

In the coming year, I look forward to learning more of the federal government’s plans for small business tax — including for professionals. Here’s hoping it’s a big year for small business.

Dan Kelly is president of the Canadian Federation of Independent Business and lead spokesman and advocate for the views of CFIB’s 109,000 small and medium- sized member businesses across Canada. dan. kelly@ cfib. ca Twitter. com/ CFIB

A MAJORITY OF SMALL BUSINESS OWNERS FALL INTO MIDDLE CLASS TAX BRACKETS.