Tax fairness or tax increase?
I am going to begin this week by crediting a few backbench members of the Liberal caucus in Ottawa. A few of these MP's have been quietly voicing displeasure with the Liberals attempts to frame a proposed tax increase on small business owners and other professionals such as doctors, as being all about “tax fairness” when in reality it is simply a tax increase. These Liberal MP's have no doubt received the same types of emails that I have been getting from accountants, who consistently provide data that the Prime Ministers claims on taxes paid by small business owners and others are patently false.
So what is really going on here?
Earlier this week, the Department of Finance revealed that the actual deficit from the 2016-2017 fiscal periods was just under $18 billion. The good news for the Liberal Government is the forecasted deficit was $23 billion. The bad news for the Prime Minister is that he promised a deficit of $10 Billion and has still has not announced when or how we will return to a balanced budget.
Fair to say, it will not be in the year 2019 as was also promised by the Liberals.
Looking closer at the deficit of roughly $18 billion, two items stand out.
$3.7 billion in budgeted spending did not yet make it out of Ottawa. There are many reasons for this and it is not uncommon for any Federal Government to see delays in spending commitments.
The other interesting aspect of this budget deficit was that the forecasted income tax revenues actually dropped by just over $1 billion. As you may recall, the Prime Minister increased income tax rates on those who earn in excess of $200,000 and they now pay a personal income tax rate of 33%. As a result of this tax increase the Liberals had predicted income tax revenue would increase by close to $3 billion.
So, the Liberals need to increase revenue to pay for their increased spending, and seeing as it has not been realized by income tax increases, the intent now is to go after those who are personally incorporated.
The challenge is, the truly wealthy, those who can take stock options at a 50% reduced tax rate, are not being targeted at all by these Liberal proposed tax fairness changes. Instead, small business owners, the majority of which are not among the 1% of Canada’s most wealthy, are being targeted along with some upper middle income professionals such as Doctors.
Farmers, Fisherman and other unique groups also are being targeted and impacted by these Liberal tax proposals.
The Liberals continue to insist the tax fairness changes will not hurt small business owners and other professional groups in the usual “Ottawa knows best” tone.
Here is the problem.
Ottawa bureaucrats, majority of whom have never owned or run a business, when attempting to tell small business owners how an Ottawa imposed tax increase will impact them, tend to offend.
I know this because I hear from many of these offended entrepreneurs, every single day.
Worse is the Liberals have yet to explain how Ottawa bureaucrats will make arbitrary decisions on how family members of a small business may or may not be able to be paid.
Does a stay at home parent raising children and doing the books of a small business qualify to be paid?
We don’t know.
How many more Ottawa bureaucrats will need to be hired to administer these complex changes and at what cost?
Again, the Liberals will not say.
Ultimately this issue is not about tax fairness, it is all about a tax increase and I congratulate those Liberal MP's who are admitting as much.
What is your opinion – Do you view these tax changes as tax fairness or a tax increase?
I can be reached at Dan.Albas@parl.gc.ca or call 1-800-665-8711.
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.
Central Okanagan – Similkameen – Nicola