Clueless Liberals botch tax reform
The throaty growl coming from entrepreneurs, doctors, lawyers and even farmers across the country in response to Finance Minister Bill Morneau’s proposed changes to small business corporation taxation presents the biggest challenge faced by the Liberal government.
It’s hard to argue with the fundamental rationale for the changes: that the owner of an incorporated small business shouldn’t pay less tax than the owner of an unincorporated small business on the same amount of earned income.
But what basically started as a totally defensible fairness initiative has escalated into a perceived attack on entrepreneurs who take the risks of starting businesses. They’re taking it very personally, pointing out that neither Prime Minister Justin Trudeau or his Finance minister has a clue what it takes to quit their job, assume debt including mortgaging their home or personal assets, and work seven days a week to nurture a startup.
And they also point out that, unlike the bureaucrats who designed the tax changes, they have no job security or fat pensions waiting for them.
It isn’t entirely surprising that the announced changes would engender strong responses. But the way the rollout was handled has ignited an intensely visceral maelstrom.
And Morneau’s vow to “go after professionals and wealthy people” ignited the fuse. This was followed by the prime minister’s insinuation that some small business owners were conniving cheaters, “they have private corporation mechanisms and good accountants that allow them to get away from that.”
The rollout of the policy changes was, in the words of the Liberal’s own Commons finance committee chair Wayne Easter, “just God-awful.”
And echoing the response from business owners, Easter added that the drafters of the changes “didn’t have clue about the amount of effort that goes into ... a small business.”
With this angry, dark tax cloud hanging over our “sunny ways” prime minister, where should his government go from here? The best answer comes from Easter: “It would have been better to launch a broader review of the tax system, with extensive debate of options for reform.”
And while the prime minister is at it, he should appoint Easter as his new Finance minister.