The topic of this news column is a concern that was raised by constituents at every one of my eight recent Satellite Constituency Office meetings. Liberal Finance Minister Bill Morneau has announced his plan to raise taxes on self-employed Canadians, including small business owners, farm operations, doctors’, dentists, and virtually all professionals who are not paid wages as an employee. Estimates are that this will raise about a quarter of a billion dollars in tax revenue every year for the Liberals to spend.
The Liberals say that these entrepreneurs are not paying their “fair share” of taxes. Prime Minister Trudeau complained about successful entrepreneurs and called their businesses “tax shelters” on the election campaign trail. Minister Morneau talks about farms that are “incorporated” and medical practitioners “sprinkling” profits to “family members,” including their spouse.
In free-market economies, entrepreneurs are taxed differently than employees. They try to establish businesses based on their skill or talent to meet market demands for their products or services. In turn, they hire employees and help build local, provincial, and national economic growth.
These small- and medium-sized businesses hire workers and expand their operations when there is demand for their products and services – not when it’s “fair.” They take the risks and try to achieve a profit margin – and maintain profits. The lower tax rate helps enable them to expand their business, hire staff, help finance benefits and pensions. They do not receive the health benefits and pension plans that their employees receive. Their profits either go toward growing their business or paying for their own health services and pensions. Many family-run businesses struggle to maintain profits and have very little left over to invest in pensions.
How can we grow a strong economy if skilled and talented Canadians would rather simply ‘get a job’ and be paid wages with benefits and a pension plan, rather than risk their own and their family’s livelihood by establishing a small business? Even today in our area of Alberta during tough economic times, we see, for example, farmers and members of their family taking on side-jobs that pay by the hour with benefits. They do this to keep the ‘incorporated’ farm with a thin profit margin afloat and pay for day to day living expenses or get extra revenues to pay for a family member fallen ill. Too often, we see aging self-employed folks take on jobs that are ‘off the farm’ to try and quickly create a pension because the farm has not been profitable enough over the time-span of their careers.
It is not “fair” for the Liberals to describe this arrangement as a “tax loophole.” The Finance Minister’s plan amounts to changing the rules in the middle of the game. The “tax and spend” (and “go deeply into debt”) Trudeau government is cash-strapped with interest payments mounting on the billions of dollars they have borrowed in a very short time frame. They are now going after the small firms in Canada that employ 80 per cent or more of Canada’s workforce to raise revenues, trying to make it sound as if they are being “fair.”