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Federal tax reform could hurt small businesses

Three changes proposed
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Dairy cows feed at Parksville’s Morningstar Farm. Farms are among the small businesses in the area that could be impacted by proposed changes to federal tax rules, says Courtenay-Alberni MP Gord Johns. — NEWS file photo

Courtenay-Alberni MP Gord Johns said he and the federal NDP are hoping to extend the consultation period for proposed federal tax changes, which he said could potentially affect small businesses.

The 75-day consultation period ends Oct. 2, but Johns said the NDP are hoping to extend it by another 60 days.

The three proposed changes for tax reform include: reducing income sprinkling, where business owners shift a portion of their income to a family member either through a salary or dividend; curbing passive investment income, which is described as investing money left in a corporation for purposes other than to invest directly in growth; and the conversion of a corporation’s regular income into capital gains, which typically attract a lower tax rate.

Johns said that while the NDP does support tax fairness, the 75-day consultation, which was launched in the middle of summer, shows how the federal government is out of touch with small businesses.

“In the summer, many of them (the small business owners) are farmers. They’re out in the fields working or they’re in tourism and they’re catering to the visiting public from across Canada and around the world,” Johns said.

Johns and the NDP are demanding the Liberal government double the alloted time for consultations on tax fairness and expand the scope beyond small businesses to include large corporations, loopholes for CEOs and international tax havens.

“This affects a lot of different sectors, so by doubling the allotted time it actually will include all of those people in those sectors that, certainly in Courtenay-Alberni, are thriving and a big part of the small business sector,” said Johns.

He said he has received more than 100 responses from local chambers of commerce and businesses, and they were all very clear that extending the process would benefit everybody.

The Parksville and Qualicum Beach chambers of commerce both put information in their newsletters for small business owners to contact their local MP about the proposed tax reforms.

Kim Burden, Parksville and District Chamber of Commerce executive director, said he’s received lots of feedback from professionals, such as lawyers and doctors.

“Like the change in minimum wage, like the change in ther regulations that comes forward, we have a tendency to roll with the punches,” Burden said. “But it’s certainly going to have an impact on those individuals that are running those businesses. It’s going to decrease their spending power, it’s going to decrease the reinvestment in their business because they’re having to put money out into a spot where they’re not necessarily getting a return.”

Evelyn Clark, Qualicum Beach Chamber of Commerce CEO, said while she hasn’t received much feedback from small business owners, the chamber is meant to be an advocate for small businesses.

“The chamber supports small business in our area, and advocates for making sure that we keep taxes low in order to have our businesses thrive,” Clark said.

Johns said by extending the consultation period, the NDP is hoping to make sure the government understands how these potential changes could impact businesses and how they’re designed and set up to protect the business owners from difficult challenges.

“A lot of business people haven’t got pensions, they aren’t eligible for EI or maternity benefits. So it’s important they have tools at their disposal that they can protect themselves in difficult times and in retirement,” Johns said.

One of those people the tax reform could affect is Bowser resident Meghan Towers.

Towers is a full-time doctor at Nanaimo Regional General Hospital and she is currently on maternity leave. She said the government doesn’t provide support for maternity leave.

“This is something I’ve had to save up for myself, so I used my corporation to do that because there are a certain number of expenses that you pay out personally. And then, at the end of the year, you look at what the corporation owes you,” Towers said. “I’ve just managed to save enough money that way so that I knew I could be off for a certain amount of time and be able to take care of myself that way.”

Towers said the Doctors of B.C. provide $1,000 per week for 17 weeks for maternity leave.

“For most doctors, that would be something that they would use to pay the locum that they might have who’s taking care of their practice while they’re away on their maternity leave, or they have to pay their rent still, or they have to pay their office assistant,” said Towers, adding it might allow the doctor to break even, but sometimes it’s not even enough for overhead costs.

Towers said for physicians there is a lot of talk about work-life balance, with long days and hours which the doctors don’t always get paid for.

“At some point, something’s going to have to give, and so if these changes go through, I know myself, I’ll be sitting down with my accountant to say, ‘OK, what is the sweet spot?’” Towers said in terms of working hours, adding that she might be pulling back to part-time hours.

She said she’s heard from a lot of doctors who are thinking along those lines.

“We’re not going to have enough doctors in an already sort of doctor-short environment. And with specialists who are used to working 80-100 hours a week, if they start to pull back, what kind of effect is that going to have for our patients who already have fairly long wait times?” Towers said.

Johns said it’s important for small businesses to have these tools through taxes at their disposal.

“In our riding in particular, small businesses are the people that are sitting in our local government, they’re volunteering on our boards, they’re out there coaching our kids in sports, they’re donating to local charities and causes. They’re the economic drivers of our economy in Courtenay-Alberni.”



Lauren Collins

About the Author: Lauren Collins

I'm a provincial reporter for Black Press Media's national team, after my journalism career took me across B.C. since I was 19 years old.
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