Recently, I wrote about how legislation being proposed by federal Finance Minister Bill Morneau under the auspices of tax fairness was destined to suck the life out of small businesses.
I wasn’t alone in my thinking. Across the country, small business owners and advocates — from doctors and lawyers, to retail owners and farmers, and even Premiers and Liberal backbenchers — spoke out and pushed back. Following the short 75-day consultation period, Morneau tweaked the proposed legislation around the three most troubling areas.
To me, this is a striking example of the power small business owners when they stand up against bad legislation.
It bears repeating; if small businesses in Canada were to close shop, our economy would collapse. Small businesses contribute nearly one-third of the country’s GDP.
Strength in numbers
When Canadian business leaders band together, as was done to battle the recently proposed tax changes, we effect great change. We’ve seen many other examples recently of the collective will of Canadian business leaders in areas such as sustainability, international trade and business practice.
For example, the Business Council of Canada and five groups – which have individually pushed for equal representation of women in business leadership – teamed up to form the Canadian Gender and Good Governance Alliance (CGGGA). Combined these groups will use their strength and experience to help promote more women taking positions on company boards.
During the consultation period around Morneau’s proposed tax changes The Coalition for Small Business Tax Fairness formed to make the voices of small businesses heard by the Liberal government.
On August 31, it boasted a membership of 35 organizations and alliances, of which two are Canadian Federation of Independent Business, and Canadian Chamber of Commerce. Less than three months later it has more than doubled in size to include 80 organizations plus countless small businesses and owners.
At town halls across the country, concerned small business leaders relentlessly made their voices heard. And they clearly were. But were we heard loud and clear enough?
More to be done
In October, the government announced it would scrap plans to limit the ability to convert corporation income into lower-taxed capital gains. It is now moving ahead with scaled-back or simplified version of other aspects of its tax plan: a threshold of $50,000 on passive income, which it says will raise taxes for only the wealthiest 3% of private corporations; and simplified rules around income sprinkling. It will also be removing aspects that would have eliminated access to lifetime capital gains exemption and hurt the ability to transfer family businesses.
The federal government also announced it would be fulfilling a previous promise to lower taxes on small businesses from 11% in 2015 to 9% by 2019. That’s also good news. All good starts.
Except the Canadian Federation of Independent Business has called the measures the “most significant tax changes in decades” and launched a campaign to oppose it. And, the Coalition for Small Business Tax Fairness rightly notes the lack of details on the tax changes remain a concern1.
Small businesses, doctors farmers, and retailers of all types are among the groups who have spoken out against the changes. They argue the changes will cost jobs.
I agree.
More must be done before the proposed changes come close to something that can be considered fair to small business owners. There are approximately 1.2 million businesses in Canada of which 98% are identified as small businesses. These are people just like you and me who have taken the initiative to start a business, invested their money and sweat equity, and who employ about 71% of Canada’s labour force. Now the government is suggesting that they are abusing the tax system. I don’t think small business owners like being branded as “tax cheats”.
It’s time we take a stand
Everyday I work with and admire the tenacity and resilience of small business owners. They take on the risks and battle hard for every dollar they earn. There are good years, and there lean ones, but the entrepreneurial spirit continues to battle on.
If Canada is to succeed, grow and compete globally we need a strong, healthy environment for entrepreneurs to thrive. These are the risk-takers that should be rewarded for their efforts. Incentify Canadians to be creative and compete with the best. Success is a great motivator!
We have long been a nation that underestimates our abilities. Perhaps it’s time that we stepped up and showed the world just how great Canadian entrepreneurs are. If the government of Canada wants to grow the economy it will be achieved through the success of small businesses.
What can you do?
If you believe that the government of Canada is handicapping small business of the opportunity to succeed contact your Member of Parliament and let them know how you feel about their proposed tax legislation. Take to social media, let the Prime Minister (@JustinTrudeau) and Finance Minister (@bill_morneau) know that you disagree with their economic policy towards small business. It’s small business that represents the middle class, not large multinational corporations.
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