Top News

FRANKLY SPEAKING: Caution: Rough stretch ahead


Federal Finance Minister Bill Morneau looks like he's trying to pave the roadway using a backhoe.

The minister is currently in the later days of a consultation process he says is aimed at creating a more level playing field for Canadian taxpayers.
But it appears he is heading towards creating more hurdles rather than leveling things out.
Highlighting the Minister's plan is to eliminate certain tax strategies including allowing an entrepreneur to divest income to other family members. Morneau says other taxpayers can't do this so it should go.
While he hasn't used this particular example, Morneau is really suggesting that a small business owner netting $75,000 per year should pay the same tax as a federal civil servant earning that same amount. Fair is fair.
But while the amounts earned are the same, they are certainly not equal. That civil servant has many job benefits such as health care, and a defined pension plan that the entrepreneur does not have, and in many cases is not permitted to have, under current tax laws. Most small business owners have to purchase their own health care benefits. That's money out of their income rather than in addition to it as is the case with the civil servants.
What would be fair is for these civil servants to pay for their own employment benefits out of their salaries, the same as the entrepreneurs do. Or, instead, have all those benefits be considered taxable benefits and taxed appropriately. Then you are considering apples to apples, as the saying goes.
But you can be absolutely sure that is never going to happen.
Mr. Morneau has faced a harsh backlash across the country for his plans, and rightly so. Hundreds of Canada's top entrepreneurs recently signed an open letter to Morneau published in Canada's national newspaper condemning the plan. As they point out, it will destroy the entrepreneurial spirit in this country,
The field may be leveled but it will be a barren one.

Frank Likely is a retired Anglican minister and past president of the Springhill and Area Chamber of Commerce.  

Latest News