GUEST COLUMN: Small businesses still need to keep guard against Trudeau tax hikes
By Pierre Poilievre and Michelle Rempel
“What a relief,” sighed many small business owners after Prime Minister Justin Trudeau and Finance Minister Bill Morneau finally began backtracking from their massive new tax increases last fall. The original Liberal proposals, rolled out in the middle of last summer, would have put a 73% tax on the savings income of small businesses, penalized family businesses for sharing earnings and work with family members, and doubled the tax on the sale of a farm from parents to children, forcing them to instead sell the farm to multinational corporations.
Farmers, plumbers and pizza-shop owners launched a massive uprising. For months, Trudeau and Morneau continued to steamroll ahead. They claimed business owners were just rich tax cheats and “wealthy doctors” to quote Trudeau. Our prime minister ironically said that the tax hikes would not effect his “family fortune” — even though he had inherited a multimillion-dollar trust fund.
Meanwhile, the finance minister’s billion-dollar family business Morneau Shepell — in which he still indirectly held shares — was exempt from the tax increases.
Eventually, backbench Liberal MPs started to realize the tax hikes would cost them their seats in an election only two years away. That fear forced Morneau and Trudeau to put some of the most damaging tax increases on hold. With an election on the horizon, the government could not afford a tax revolt.
The government was forced to back off the worst parts of its proposal. The Liberals decided to go ahead with tax increases and complicated compliance rules that will hurt many small businesses. For example, any small business owner with more than $50,000 in investment income — from rental properties, stocks or bonds — will lose access to the small business tax deduction.
That means much higher tax rates on earnings. The Liberals also added a cobweb of rules for family businesses who share income with family members. These rules are so vague and complicated that a former chief justice of the Tax Courts said they will lead to “battle” in court between taxpayers and the Canada Revenue Agency.
Make no mistake. The original tax changes that the government has put on ice will be back in their most destructive form, if Trudeau is re-elected. How do we know that? Because neither he nor his finance minister have ever acknowledged the proposals were a problem. They merely claimed they were backing down for political reasons. After all, the election is only a couple of years away. When that election is behind them, they don’t need to worry about voter backlash.
That means Justin Trudeau can return to his original objective — to feed his spending. The government is running out of other people’s money. Its spending has grown three times as fast as the combined rate of inflation and population growth. The deficit this year is three times what the Liberal platform had promised in the last election. Finance Canada now says that, at the current rate, the budget cannot be balanced for another 25 years. Trudeau promised a balanced budget by 2019.
These bills will soon come due. Taxpayers will shoulder them. Small businesses will be first on Trudeau’s hit list. That is why small businesses cannot and will not let their guards down.
This week, Conservative MP Michelle Rempel tabled a petition with the signatures of 45,000 small business owners warning the government not to reintroduce these tax increases.
The only way to avoid another Liberal tax hike is to change governments. Conservative Leader Andrew Scheer will rein in out-of-control spending, balance the budget and lower taxes for workers and the entrepreneurs who employ them.
Until 2019, all taxpayers need to keep their guards up.
Pierre Poilievre and Michelle Rempel are Conservative MPs.