Deputy Conservative leader visits Moncton, challenges 'atrocious' proposed federal tax changes

Small business leaders in Moncton met withthe deputy leader of Canada's official oppositionbehind closed doors on Tuesday, to discuss their concerns about the federal government's proposed tax changes.

In July, the Liberalgovernment announced a75-day consultation periodon itsproposals to crack down on tax loopholes used by private corporations. The measures wereproposed in the2017 budget.

But Conservative Party Deputy Leader Lisa Reitt said these changes are "atrocious and an insult" to small business owners across the country.

If you're trying to kill a fly,you don't use a sledge hammer. And that's exactly what's happening in the case and it's very concerning.- Lisa Raitt, deputy leader of the official opposition

"The reality is, this isn't a loophole closing exercise, this is fundamentally changing tax law. That has never been done since 1972 and it's doing it in 75 days," said Raitt.

"If you're trying to kill a fly,you don't use a sledge hammer. And that's exactly what's happening in thiscase and it's very concerning."

3 contentious changes

The government said the proposed changes willensure fairness among the middle classand close practices thatenable "some owners of private corporations to gain unfair tax advantages."

The 75-day consultation period focuses on three contentious proposed changes in the federal budget:

• The curtailment of "income sprinkling," a method by which business owners shift a portion of income to family members, either through salary or dividends
• The curbing of "passive investment income," which the government describes as the investment of money left in a corporation, for purposes other than to invest directly in growth
• The conversion of a corporation's regular income into capital gains, which typically attract a lower tax rate

Federal Finance Minister, BillMorneau said the government wants a tax system that is fair for Canadians.

• Finance Minister BillMorneauproposes tax changes to close loopholes for wealthy

"This is about people using a corporate structure to shield their income and gain a tax advantage," Morneausaid at a press conference in July.

Why Moncton?

Raitt said she came to Moncton because she's been "hearing a lot of rumbling around Atlantic Canada" regarding the proposed tax changes, specifically in New Brunswick.

"If you look at social media, a lot of it is coming from New Brunswick," she said.

Chris Constantine, who represents the New Brunswick Real Estate Association and the GreaterMonctonReal Estate Board, said he worries the changes will have a negative impact on his industry and others in the province.

"We feel like there hasn't been proper vetting or proper preparation for the purpose changes," he said.

"We don't feel like that proper consideration has been given to the impact across the economy. When folks embark on owning their own business, part of the idea behind that is to have a legacy and a succession plan for our families."

• 'Taxing the rich' gets biggest reaction in real-time survey of 2017 budget speech
• Small business owners say they are unfairly targeted by proposed tax changes

Constantine said some business owners won't survive the changes, and the impact of these changes, which he said have not been considered,will affect people across the country.

"Were being told this affects the top one per cent of people," he said.

'It'soffensive to us when they talk about loopholes when in reality we are following our tax rules properly, business owners are operating properly,- Source

"It's offensive to us when they talk about loopholes, when in reality we are following our tax rules properly. Business owners are operating properly."

"For there to be mass changes in short order without proper consideration, the impact on that really doesn't appear to be considered and it's going to affect everybody in Canada."

Ripple effect on hiring

Raitt said taxing smaller businesses will also negatively affecthiring practices.

"If they are going to have more taxesthey are going to making decisions about whether or not they are going to be hiring an employee or even keeping an employee and we have to be worried about that," she said.

Raitt saidmore people are self incorporating or establishing small businesses that help plan their financial future.

Theywill now have to "make significant changes," she said.

She said70 per cent of employment in Canada is with small business.

"How is this not going to affect Canadians across the country?" she said.

"This legislation takes that all away and now they are left to try and figure out how they are going to have a financial plan that they probably set up for the next 30 years,

"The rug has been pulled out from underneath them."