As if Bill 148 from the Provincial government wasn’t enough for businesses across Ontario to absorb but here comes Finance Canada and a proposal to radically overhaul the Federal tax legislation. The proposals brought forward over the past weeks could have substantial impacts on businesses across this country.
The proposal can be lumped into two distinct issues. First off, they are proposing a new tax on investment income that is inside a corporation and secondly, tougher rules for compensation in family businesses. The Minister states in his consultation document that it is all about “fairness”. From the Chamber’s standpoint, it does not appear to be about fairness at all.
Investment income within an incorporated company, has already been taxed and are after tax investments in that owner’s own company. Many business owners which include farmers, restaurants, and retailers will be punished for saving and investing in their own businesses. Many of these are smaller businesses who do not have pension plans and rely on these investments in their own companies to sustain them, if and when, they are able to retire.
As a former commercial banker, strong balance sheets with owners after tax re-investments in their companies, were encouraged and resulted in better rates and leverage, when needed. Many of the businesses that may be taxed based on this type of legislation, need the flexibility during cyclical downturns and also to raise capital when investing in purchases of capital equipment or premises. This proposed legislation Federally, will not help.
Last week, we had an opportunity to speak with Anthony Rota, MP for Nipissiing Temiskaming on the Ministers consultation document. He is also of the opinion that this is not particularly good for the business sector considering that he is also an entrepeneur. He indicated that he would discuss the same with the Minister at an upcoming caucus retreat in the upcoming weeks. He has heard the same response from many businesses and will bring those concerns to the Minister’s attention. We would encourage all incorporated business owners to let the Government know that they are not in favour of the proposals.
Over the past number of years, businesses have seen increased regulations and new taxes in the form of carbon taxes, increased CPP and EI premiums, taxing work in progress and cancellation of reductions in small business tax rates. Businesses are not asking for a free ride or legislation that will allow loopholes to avoid taxes. They are wanting to invest and keep their companies strong thereby creating and sustaining employment for many individuals and families. Make your voice known and inform our MP that these proposals will hurt.
Peter Chirico is the President & CEO of the North Bay & District Chamber of Commerce