The federal government’s proposed Small Business Tax overhaul has generated a heated discussion, with almost unequivocal opposition. This is not surprising considering the ‘convenient’ timing of the government’s initial announcement in the middle of summer. Experts refer to these proposed changes as “the most radical tax overhaul in 50 years,” yet only 75 days was given by Finance Minister Morneau for feedback and discussion. This period of time is dramatically less than previous consultation periods for proposed legislation. Is it coincidence this time period began in the middle of summer, when many business owners enjoy time away? Is it a coincidence that one of the biggest industries in Canada, farming, has owners who are in the middle of their busiest time of year? Many grain farmers I have spoken to are focused on harvesting their fields and have not been able to engage with these changes, even though they will be among the most affected types of small business. Coincidence or a planned effort in the hopes these drastic changes will fly under the radar? Even if this was not the intent, someone in the Liberal office should have realized how it would look and changed the timeline. As a result of this mistake, the discussion has become intense and heated, much more so than if the government would have allowed more time for feedback.
This issue affects the majority of the country. Over 70 percent of Canadians are employed by small and medium sized businesses, with an even higher percentage in the Southeast Manitoba region. The federal government makes it seem like the average Canadian will not be affected by these tax changes. But when over 70 percent of average Canadians are employed by small and medium sized business, how can this be true? If a business suffers, the employees suffer, and so does the community. These changes will affect nearly all small business owners, even those who have an income less than $150,000; even those who are not the ‘cheats’ the Liberals claim to be have said targeting by the proposed changes.
The facts are clear. Over 50% percent of small businesses fail within five years of being formed. Starting and running a business is hard. It involves risk, commitment, and enough challenges already to make it a daunting choice. These proposed tax changes will make it even harder for entrepreneurs to be willing to take those risks. Even if they are able to beat the odds and stay open beyond the five year mark, the ‘reward’ is a tax system that works against them. And what about passing the business along to your children? These changes seem to say that should cost a business owner more than selling it to strangers.
Mr. Morneau and Mr. Trudeau need to pull back these proposed changes. If there are ‘cheats’ who are abusing the current tax structure, there must be better ways to catch them than making drastic changes which will negatively affect over 70 percent of the Canadian population.