Liberals’ tax plan is well-intended, poorly executed

Armchair Mayor
By Mel Rothenburger
September 7, 2017 - 5:14am
Image Credit: Facebook

KAMLOOPS — For a man who is so media savvy, Justin Trudeau’s ham-handed handling of tax reforms is surprising.

He faces a major popularity crisis with his plan to restrict so-called “tax sprinkling” — in which business owners can lower their tax rate by “hiring” family members, whether or not they do any actual work. Stricter age requirements would be put in place.

There are other measures included in the plan, but the media focus has been on the perception that mom and pop businesses will face tough times under the new tax regime.

The usual negative nabobs of media negativism are painting a picture of destruction of the bulwark of the Canadian economy, as if the little guys of business will be broken. But is that reality?

As Trudeau pointed out Wednesday at a party caucus retreat in Kelowna, it’s actually aimed at high-income earners, the ones who get breaks those little guys don’t.

“People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year,” he said.

And Finance Minister Bill Morneau said the changes will only affect those who earn $150,000 or more and who still have money to shelter from taxation after maxing out RRSPs and TFSAs.

The Liberals say allowing professionals to incorporate their businesses under current tax rules gives them an unfair advantage. They characterize their plan as closing tax loopholes.

The intent, then, is not to do injustice to the average small-business owner, but to bring high-income earners into line with what everybody else is paying.

What’s left, however, is whether the result matches the intent.

Doctors, lawyers and accountants hate the plan. On the other hand, the Canadian Nurses Association supports it, saying it aims to treat “all sources of income similarly and equitably, based on the principles of social justice.”

But the cat is out of the bag, the horse is out of the barn, the ship has sailed. Opponents of the plan have gotten the upper hand. It has become a no-win proposition for the government. But what do Trudeau and Morneau do? They double down, insisting they’re going ahead with the plan, on their own schedule.

What they could do is back off, saying they understand concerns, listen to the Canadian Chamber of Commerce’s idea to extend the consultation period past the Oct. 2 deadline. Sometimes, words are everything. Now is a time to reassure the public that the government is willing to listen, meanwhile helping people to better understand the objective and the details.

Instead, Trudeau and Morneau only offer to do some “tweaking.” Where are the crisis managers, media consultants and political strategists when you need them?