The dirt on the tax proposals
First of all, know that I am a proud Canadian farmer and want to stay that way. The debate over the finance minister’s proposed tax reforms is so much bigger than a Liberal/ Conservative issue. This is more of a right/wrong issue.
The last time a tax reform of this magnitude was implemented it was the early seventies. It took about six years of consultation and about two years of legislative debate to become law. The government is attempting to ram this tax-reform package through with a 72- day consultation period, which happens to fall during farmers’ harvest season. This cannot be seen as a coincidence.
The federal government continues to move forward rapidly with its tax- reform initiative. As each day passes it is becoming increasingly clear that its communication strategy leaves a lot to be desired. All of Canadian agriculture is united in expressing serious concerns in opposition to the initiative in its present form and is working through a coalition of over 60 organizations across the country.
Finance Minister Bill Morneau and Agriculture Minister Lawrence MacAulay are now starting to make statements attempting to assure us that the tax exemption on intergenerational transfers and the lifetime capital- gains exemption, which are of significant interest to farm owners in particular, will be maintained. While this is good news, it highlights the failure of the communication initiative.
There was nothing in the original tax-reform proposal documents indicating that the capital gains exemption would be protected for farmers. The Department of Finance has wasted the time, energy and resources of financial experts, accountants, certified financial planners and others by not stating what the intended tax-reform proposal actually looked like.
A good c o mmunication plan would have consulted financial experts on the impacts the tax reform would have on various stakeholders and the overall effect on the economy. This would have led to the financial experts and the Department of Finance having congruent interpretations of the tax reforms. Instead there is a huge disconnect between what the Department of Finance is spinning and how financial experts interpret the tax- reform policy.
There are a number of si gnificant “unintended consequences” as a result of this lack of meaningful consultation. These raise a lot of questions and are major concerns for succession planning and passive income within farms and small businesses. This raises the question of why these have not been addressed in the proposal already. How does one know that these aren’t actually objectives rather than unintended consequences? What kind of government plants the seeds of a class war in our great nation?
Canadians’ voices are getting louder and louder as they register their concerns any way they can in hope that the government will listen and actually engage meaningful consultation. In my opinion, the whole package should be thrown out and started over with proper meaningful consultation.
An even better option would be to leave the tax system the way it is now, drop this whole tax-reform initiative, and just spend less. A low corporate tax is one of the few things that helps us compete internationally.
In Western Canada, we typically export 90 per cent of what we produce and are farther from tidewater than other major exporters. It is not fair to compare tax legislation of small business with that of individual people. That’s like compari ng f oods l i ke meat and bread: Individually, meat and bread are quite different, but when they’re put together, they can actually make something better and more useful.
I have always believed t hat government should work for the people, not the reverse. It appears that the path we must utilize to maintain our ability to have our voice heard is to lobby federal Liberal MPs any and every way we can.
HOW DO WE KNOW THAT THESE AREN’T ACTUALLY OBJECTIVES RATHER THAN ‘UNINTENDED CONSEQUENCES’?