Question Period – September 19th

Today, I asked questions to Senator Peter Harder, Government Representative in the Senate, during Senate Question Period to continue the fight to save local businesses from unfair tax hikes.

Read the full text from Question Period here.

Small Business Tax

Hon. Larry W. Smith (Leader of the Opposition): My question today is for the Government Representative in the Senate and it concerns the proposed tax changes for small business announced by the Minister of Finance on July 18.

Running a small business is hard work, more often than not requiring long hours, significant financial risk and personal sacrifice. Plumbers, electricians, mechanics, florists, restaurant owners, convenience store operators and more, these are small businesses which create much-needed jobs in communities across our country and make a substantial contribution to Canada’s economic growth.

Through last year’s debate on Bill C-2, we learned that the government could not provide a definition of what exactly constitutes the middle class in Canada.

Senator Harder, you may remember that I questioned you on this matter almost a year ago. I wish to point out that the profile of small businesses across our country conducted by the Canadian Federation of Independent Business shows that two thirds of small business owners are earning less than $73,000 annually.

Senator Harder, would your government not agree that these hard-working small business owners are in fact the middle class? How can your government therefore provide assurances that middle class Canadians would not be hurt by the proposed tax changes if your government does not even know what constitutes “middle class”?

Hon. Peter Harder (Government Representative in the Senate): Again I thank the honourable senator for his question and welcome him back to this forum and also to this period of questions and responses from the government.

With respect to the consultation that is under way, the government, as is well known by all senators, is consulting Canadians on the actions to address tax planning that enables some owners of private corporations to gain unfair tax advantages. The government welcomes the comments it has received and is continuing to receive from business owners and Canadians.

For businesses large and small, Canada already has one of the most competitive corporate tax systems, and the government will ensure that the tax treatment of private corporations continues to be aimed towards growth and job creation.

The changes, I should add, will only occur on a go-forward basis, and neither existing savings nor investment income from those savings will be touched. But the government is committed to fixing the inherent unfairness in our tax system, and that is the purpose of the consultations under way. The government’s proposals are not targeted at any one group or professions. They’re intended to provide tax fairness for the middle class, while addressing tax planning strategies that allow some individuals to use private corporations to pay less tax than other Canadians. That is the purpose of the consultation. That is what is under way.

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Senator Smith: As a point in fact, when we talk about the $73,000 earned by small business people in terms of income, there is an astonishing number that somewhere around 90 per cent of small business owners are in that category; other reports say that two thirds are. That is between two thirds and 90 per cent. A lot of people in small businesses are not earning the type of money that I think your government is trying to chase in terms of individuals.

I think it’s fair to say that many small business owners will be impacted by these tax changes. They don’t feel their concerns are being heard by government — our government; their government. Senators have a responsibility to listen to Canadians and understand how they view these tax changes and how their businesses will be affected.

I have a simple question, sir. Would you support the study of these tax proposals at several standing Senate committees — we talked about that today — particularly National Finance? Would you support these studies so that we can get more in-depth information to truly understand the implications on Canadian taxpayers?

Senator Harder: I thank the honourable senator for his question. Not only am I disposed to having the Senate examine the proposals that are being consulted on but also I would like to indicate to all honourable senators that the Minister of Finance has responded to a letter from Senator Black, copied to Senator Tkachuk as Chair of the Banking Committee, and has indicated his support for the Senate to initiate what the Senate feels it wishes to do with regard to consulting Canadians on this set of proposals. The minister has assured the senators — and I pass on that assurance — that he is prepared to participate in those hearings and urges us, as the Senate, to do so as quickly as possible.

Yes, senator, the government would encourage the Senate to exercise its sober reflection on the consultations and to provide its input in a timely fashion. I do think it’s not up to me — or during Question Period — to determine which committee it should be. That is probably a conversation best left to the usual channels. However, I think it’s important for us, on this first day back, to signal that the Senate of Canada is open to conducting its sober reflection on this important issue of tax fairness.