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Now​ ​that​ ​the​ ​federal​ ​government’s​ ​whirlwind​ ​tax​ ​planning​ ​changes​ ​consultation​ ​period​ ​has​ ​passed,​ ​let us​ ​catch​ ​our​ ​breath​ ​and​ ​take​ ​stock​ ​of​ ​what​ ​the​ ​heck​ ​just​ ​happened.

When​ ​Finance​ ​Minister​ ​Morneau​ ​dropped​ ​the​ ​department’s​ ​consultation​ ​document​ ​in​ ​the​ ​middle​ ​of​ ​the summer​ ​-​ ​widely​ ​understood​ ​to​ ​be​ ​an​ ​ineffectual​ ​time​ ​to​ ​consult​ ​(or​ ​less​ ​generously,​ ​the​ ​perfect​ ​time​ ​for a​ ​less​ ​than​ ​genuine​ ​consultation)​ ​-​ ​while​ ​only​ ​providing​ ​a​ ​scant​ ​75​ ​days,​ ​it​ ​was​ ​immediately​ ​clear​ ​to those​ ​of​ ​us​ ​with​ ​experience​ ​with​ ​government​ ​consultations,​ ​that​ ​the​ ​minister​ ​was​ ​hoping​ ​to​ ​check​ ​off the​ ​‘Consulted​ ​with​ ​Business’​ ​box​ ​without​ ​much​ ​debate​ ​or​ ​give​ ​the​ ​private​ ​sector​ ​enough​ ​time​ ​to​ ​fully contemplate​ ​the​ ​effects​ ​of​ ​the​ ​proposals.​ ​Unfortunately​ ​for​ ​the​ ​minister,​ ​the​ ​business​ ​community​ ​was unwilling​ ​to​ ​comply​ ​with​ ​the​ ​desire​ ​for​ ​minimal​ ​debate.

We’ve​ ​been​ ​hearing​ ​from​ ​our​ ​members​ ​on​ ​a​ ​daily​ ​basis​ ​on​ ​this​ ​issue.​ ​​ ​The​ ​response​ ​is​ ​unlike​ ​anything we’ve​ ​seen​ ​at​ ​our​ ​chamber​ ​in​ ​recent​ ​memory.​ ​What’s​ ​being​ ​proposed​ ​by​ ​Minister​ ​Morneau​ ​is​ ​going​ ​to affect​ ​business​ ​of​ ​all​ ​shapes​ ​and​ ​sizes,​ ​in​ ​all​ ​industries​ ​and​ ​they​ ​are​ ​afraid​ ​for​ ​the​ ​future​ ​of​ ​their businesses​ ​and​ ​their​ ​livelihoods.​ ​In​ ​short,​ ​our​ ​members​ ​tell​ ​us​ ​that​ ​these​ ​proposed​ ​changes​ ​are​ ​the greatest​ ​challenge​ ​they’ve​ ​faced​ ​regarding​ ​the​ ​viability​ ​of​ ​their​ ​businesses​ ​throughout​ ​their​ ​careers​ ​-​ ​for decades​ ​in​ ​some​ ​cases.

When​ ​businesses​ ​lose,​ ​so​ ​does​ ​the​ ​middle​ ​class.​ ​Business​ ​owners​ ​that​ ​are​ ​affected​ ​by​ ​these​ ​changes​ ​will, quite​ ​logically,​ ​take​ ​steps​ ​to​ ​protect​ ​the​ ​continuation​ ​of​ ​their​ ​business,​ ​their​ ​livelihood,​ ​their​ ​families, their​ ​retirement,​ ​their​ ​rainy​ ​day​ ​fund.​ ​This​ ​may​ ​mean​ ​fewer​ ​jobs,​ ​fewer​ ​hours​ ​for​ ​employees,​ ​less disposable​ ​income​ ​for​ ​charities​ ​and​ ​community​ ​organizations​ ​-​ ​putting​ ​further​ ​pressure​ ​on​ ​the​ ​country’s social​ ​safety​ ​nets.​ ​Small​ ​business​ ​owners​ ​are​ ​the​ ​engines​ ​of​ ​our​ ​communities​ ​-​ ​these​ ​proposed​ ​changes will​ ​hurt​ ​their​ ​ability​ ​to​ ​contribute​ ​and​ ​disincentivize​ ​the​ ​next​ ​generation​ ​of​ ​entrepreneurs​ ​-​ ​not​ ​a​ ​“fair” outcome​ ​for​ ​anyone.

Business​ ​people​ ​have​ ​also​ ​been​ ​quite​ ​willing​ ​let​ ​the​ ​government​ ​know​ ​about​ ​their​ ​concerns,​ ​writing letters,​ ​posting​ ​on​ ​social​ ​media,​ ​​ ​and​ ​making​ ​phone​ ​calls​ ​by​ ​the​ ​thousands.

By​ ​the​ ​time​ ​that​ ​Bill​ ​Morneau​ ​arrived​ ​in​ ​Fredericton​ ​on​ ​September​ ​23rd​ ​for​ ​the​ ​Canadian​ ​Chamber​ ​of Commerce’s​ ​annual​ ​meeting​ ​(joined​ ​by​ ​MPs​ ​Matt​ ​DeCourcey,​ ​Karen​ ​Ludwig,​ ​TJ​ ​Harvey​ ​and​ ​Alaina Lockhart​ ​for​ ​his​ ​subsequent​ ​news​ ​conference),​ ​the​ ​business​ ​community’s​ ​message​ ​had​ ​clearly​ ​been received​ ​by​ ​the​ ​government,​ ​despite​ ​their​ ​unending​ ​loyalty​ ​to​ ​their​ ​talking​ ​points.

This​ ​unwillingness​ ​of​ ​Minister​ ​Morneau​ ​to​ ​have​ ​an​ ​actual​ ​conversation​ ​about​ ​the​ ​proposals​ ​-​ ​despite​ ​the perfect​ ​opportunity​ ​with​ ​President​ ​and​ ​CEO​ ​Perrin​ ​Beatty​ ​of​ ​the​ ​national​ ​chamber​ ​-​ ​instead​ ​relying​ ​on​ ​a handful​ ​of​ ​pre-programmed​ ​responses​ ​for​ ​every​ ​situation,​ ​has​ ​damaged​ ​his​ ​credibility​ ​with​ ​the​ ​small business​ ​community,​ ​likely​ ​beyond​ ​repair.​ ​So​ ​when​ ​the​ ​federal​ ​government​ ​started​ ​to​ ​markedly​ ​shift their​ ​tone​ ​days​ ​later​ ​(from​ ​“we’re​ ​not​ ​backing​ ​down”​ ​to​ ​“obviously​ ​there’ll​ ​be​ ​changes”),​ ​there​ ​was​ ​no reason​ ​for​ ​the​ ​business​ ​community​ ​to​ ​trust​ ​the​ ​minister’s​ ​sudden​ ​change.

Minister​ ​Morneau​ ​recently​ ​articulated​ ​five​ ​principles​ ​that​ ​have​ ​been​ ​identified​ ​to​ ​move​ ​forward​ ​with some​ ​changes:​ ​support​ ​small​ ​businesses;​ ​keep​ ​small​ ​business​ ​taxes​ ​low​ ​while​ ​supporting​ ​owners​ ​who invest​ ​and​ ​create​ ​jobs;​ ​avoid​ ​creating​ ​unnecessary​ ​red​ ​tape​ ​for​ ​small​ ​businesses;​ ​recognize​ ​the importance​ ​of​ ​family​ ​farms,​ ​and​ ​ensure​ ​tax​ ​changes​ ​do​ ​not​ ​affect​ ​the​ ​transfer​ ​of​ ​family​ ​businesses​ ​to the​ ​next​ ​generation;​ ​and​ ​ensure​ ​any​ ​changes​ ​to​ ​the​ ​tax​ ​system​ ​promote​ ​gender​ ​equity.​ ​While​ ​we certainly​ ​have​ ​no​ ​argument​ ​with​ ​these,​ ​it​ ​is​ ​a​ ​great​ ​concern​ ​to​ ​the​ ​business​ ​community​ ​that​ ​these​ ​most basic​ ​of​ ​economic​ ​principles​ ​were​ ​not​ ​top-of-mind​ ​for​ ​the​ ​government​ ​from​ ​the​ ​very​ ​beginning.​ ​One​ ​of the​ ​most​ ​common​ ​comments​ ​I​ ​am​ ​hearing​ ​in​ ​the​ ​post-consultation​ ​period​ ​is​ ​“what​ ​were​ ​they​ ​thinking”? Given​ ​that​ ​the​ ​minister​ ​is​ ​only​ ​now​ ​turning​ ​his​ ​mind​ ​to​ ​these​ ​principles,​ ​I’m​ ​not​ ​so​ ​sure.

 

We​ ​encourage​ ​the​ ​federal​ ​government​ ​to​ ​go​ ​back​ ​to​ ​the​ ​drawing​ ​board.​ ​The​ ​business​ ​community​ ​has been​ ​calling​ ​for​ ​a​ ​comprehensive​ ​tax​ ​review​ ​for​ ​many​ ​years.​ ​Tax​ ​policy​ ​in​ ​Canada​ ​is​ ​too​ ​complicated​ ​and compliance​ ​is​ ​too​ ​costly​ ​-​ ​these​ ​proposals​ ​will​ ​make​ ​it​ ​far​ ​worse​ ​in​ ​both​ ​regards.​ ​This​ ​should​ ​not​ ​be surprising,​ ​cherry-picking​ ​tax​ ​policy​ ​for​ ​political​ ​reasons​ ​has​ ​no​ ​other​ ​possible​ ​outcome​ ​than​ ​making​ ​a bad​ ​situation​ ​worse.​ ​October​ ​2nd​ ​was​ ​an​ ​arbitrary​ ​date​ ​picked​ ​by​ ​the​ ​federal​ ​government​ ​to​ ​attempt​ ​to shut​ ​down​ ​consultations​ ​-​ ​it​ ​is​ ​now​ ​more​ ​important​ ​than​ ​ever​ ​that​ ​business​ ​owners​ ​continue​ ​to​ ​let​ ​the government​ ​know​ ​how​ ​concerned​ ​they​ ​are​ ​for​ ​their​ ​businesses,​ ​their​ ​employees​ ​and​ ​communities.

 

Krista Ross is CEO of the Fredericton Chamber of Commerce. With more than 950 members, the Fredericton Chamber of Commerce is one of Atlantic Canada’s largest chambers of commerce. A dynamic business organization, the Fredericton Chamber of Commerce is actively engaged in policy development that affects the competitiveness of our members and of the Canadian business environment. It’s vision is "Community Prosperity Through Business".