Last week I held roundtables on the Trudeau governments small business tax increases in Bowmanville and Port Perry. At both meetings we heard how the tax increases threatened the viability of the family farm and how they could result in small business owners paying rates of tax in excess of 70%. The most consistent sentiment at these meetings and in my discussions with people in Durham and across the country, however, has been the divisive approach taken by the Liberal government in bringing these changes forward. Farmers, small business owners, doctors and other health professionals feel like they are being singled out as tax cheats. Not only is this completely untrue and incredibly divisive, the anger these people feel is increased by the fact that the Prime Minister and Finance Minister making these claims inherited their large fortunes and will be unaffected by these tax increases.
The suggestion that all small business owners are all rich and not paying enough in taxes is not only false, it glosses over the fact that small businesses are actually the drivers of growth and employment in our communities. The Canadian Federation for Independent Business (the CFIB), the association representing small business owners, released statistics that show that two-thirds of small business owners earn less than $73,000 per year. While this is above the median income in Canada, it is also solidly in the range of the middle class especially here in the Greater Toronto Area. Small business owners and farmers are light years away from being the “wealthiest 1%” – the language regularly used by Trudeau when he talks about people needing to pay more. The Liberals also seem to forget that Statistics Canada confirms that small and medium sized businesses account for 71% of all jobs in the country. Most Canadians do not work for large domestic or multinational companies. Most Canadians – in urban Canada and rural Canada – work for the small or medium sized enterprises. At the Bowmanville roundtable, the entrepreneurs who run two medium-sized manufacturing companies both confirmed to me that these changes will mean they hire fewer people over time. That is the true risk that underlies these changes. Fewer jobs.
Read: We should be championing small business, not hiking their taxes
It is also important not to lose sight of the bigger picture. The Liberal government does not have a revenue problem. They have a spending problem. When compared to the years of the global recession that took place during the Harper government, the Trudeau government has $60 Billion more revenue. They do not need to raise taxes at all, they need to get their spending under control. Despite a strong economy, they continue to raise taxes to fuel their spending. From income tax increases and reductions in Tax Free Savings Accounts, to the elimination of income splitting for families, to the carbon tax and payroll tax increases to businesses, the Liberal government is awash in new tax revenue, yet are still running $20 Billion plus deficits. They need to get their financial house in order and not expect Canadians to pay for their extravagant ways.
This morning I am back in Ottawa and the Liberal caucus was holding their emergency meeting to discuss the tax changes and the outcry from across the country. Both the CFIB and the Canadian Chamber of Commerce have been public with their view that these changes will lead to economic disruption and fewer jobs. The medical associations have been warning that physicians might leave their communities, particularly those starting careers with hundreds of thousands of dollars of student debt. The unintended negative consequences of these tax increases are huge and could ripple into other parts of the economy and our lives. In response to this outcry, it appears that the government is not going to withdraw their tax changes. Instead they appear ready to reverse a previously broken promise from the 2016 budget, when the government cancelled the small business tax rate reduction to 9% and froze the rate at 10.5%. It appears that 19 months after breaking one promise to small business, they are reversing that decision to placate small business outraged by the latest attack by the Trudeau government. At this rate, should we expect Trudeau to reverse these latest tax changes sometime in February 2019? If they don’t 2019 will also present an opportunity for small businesses, farming families and healthcare professionals to really address the problem plaguing small business and our competitiveness when we replace the “real change” of Justin Trudeau with the solid reliability of a Conservative government.
Read: Liberals trimming small-business tax rate amid uproar over tax-reform proposals
