On September 7th, 2017, Ignite Fredericton submitted a letter to MP Matt DeCourcey in response to the proposed tax changes. The letter is as follows:
Re: Proposed Private Corporation Tax Planning Changes
On behalf of Ignite Fredericton, I am writing to express our concern with respect to the tax policy proposals per the “Tax Planning Using Private Corporations” document released by the federal Department of Finance on 18 July 2017. Representing our clients, the businesses of the Greater Fredericton Region, we are adding our voice to the collective Canadian business community who have soundly rejected the implementation of such measures.
The Honourable Bill Morneau, Minister of Finance has proposed the most radical change to business tax policy in decades under the claim that the government’s objective is ‘to reduce abuse of the system’. Primary practices discussed are:
- Income sprinkling,
- Passive investment portfolios, and
- Capital income
There are already many articles, blogs, letters, and websites articulating what the specific implications the proposed policies will have on business. We would like to address the overarching negative effect on entrepreneurship and the economy.
First, in aberration from other processes (Innovation Agenda, etc) the national consultation process put forth by the Department of Finance has only a 75-day period for feedback. Viewed in its best light, the Government has vastly underestimated the time required for proper consultation on proposals that have the potential to impact the vast majority of Canadian employers and employees alike. Viewed skeptically, a poorly publicized process launched in the dead of summer with such a short timeframe leaves observers speculating the Government has already determined the policy outcome and has no intention of engaging in substantive dialogue.
Second, the proposed policies are diametrically opposed to the Government’s stated objectives of encouraging innovation and entrepreneurship. The punitive measures amount to a tax on entrepreneurship, and dis-incentivizes risk takers that move our economy forward. Furthermore, these taxes ensure the very constituency this government has courted- the Canadian middle class- will inevitably be hurt most. Plans for new hires, pay raises and investments in employee benefits will be delayed to fill the balance sheet gap of profit-making enterprises.
Third, under scrutiny for the proposed policies the Minister of Finance and Prime Minister have used such misleading and targeted political rhetoric it borderlines on class warfare. Let me be clear: these measures do not address ‘loopholes’, they radically change existing tax policy in Canada. These measures are not designed to ask some to ‘pay a little more’, they will eliminate the means of attaining a financially secure retirement and safeguard against unemployment for thousands of Canadian business owners. These measures do not simply apply to the ‘wealthiest Canadians’, they will hit small business owners hardest. Those that represent 97% of total employers in Canada and account for 70% of Canadian jobs.
We are not alone in our opposition to the proposed policies. The national business community has been united in opposition. Locally, we have heard outrage and pessimistic expectations for employment growth from small business owners across the Fredericton constituency. These individuals are the backbone of our economy. They should be supported and championed, not punished by excess tax burdens and vilified by their elected leaders.
Mr. DeCourcey, we urge you to condemn this initiative in its entirety, and to use your position to ask Minister Morneau to reconsider. The middle class and business community of Fredericton will thank you if you do.