There has been a vociferous chorus of opposition to the tax changes, coming mainly from doctors and business groups.
Let’s be clear, the changes purposed are to the federal tax act, not the provincial one, so one might rationally question why a provincial politician is inserting herself into a federal matter.
There could be a number of reasons.
It could be, as Mrs. Compton suggests, the changes may be a dis-incentive for people operating small businesses or they may affect the Island’s ability to attract doctors. Or it could be, like her federal counterparts, Mrs. Compton thinks this is an issue that has resonance with the public. Or, might it be that Mrs. Compton’s interest in this federal issue is an indication of her interest in being the next MP for Cardigan.
Whatever her interests, Mrs. Compton should take a hard look at what the federal government is trying to accomplish with the proposed tax changes.
As Andrew Coyne, a columnist with the National Post points out, the main change is not aimed at the small business owners or doctors per se, the main change is to prevent them from incorporating themselves in order to benefit from the lower tax rate that small private corporations enjoy.
Doctors and small businessmen who aren’t incorporated, have the same tax rate as everyone else. The federal Liberals want to put an end to individuals incorporating just to get a lower tax rate.
The doctors and small business owners have been fairly successful in voicing their opposition to the proposed tax changes, and on Wednesday at a public meeting in Kelowna, B.C., Trudeau-The-Younger got a taste of that opposition when two doctors verbally attacked him.
Dr. Monica Penner told the Prime Minister his tax plan would be detrimental to “thousands of really hard-working, honest, tax-paying Canadians . . .” And she questioned why anyone would bother going into debt to get a university education when these tax changes will “make sure everybody is the same in the end.”
Taken at their face value Dr. Penner’s comments leave the impression that the only honest, hard-working, tax-paying Canadians in the country are the doctors and small business owners who want to incorporate. They also indicate that she doesn’t understand that the Prime Minister wants her to have the same tax rate as everyone else, not to have the same taxable income. Why should Dr. Penner have a lower tax rate than the nurses and other employees at the hospital where she works?
Another argument small business owners, doctors and other professionals like to make in favour of their need to incorporate is that the lower tax rate is in exchange for the fact they don’t have pensions and other benefits.
It should be understood that there are many professionals and small business owners who don’t incorporate because their incomes are such it doesn’t give them any advantage. It’s the high-income earners who incorporate and they have plenty of opportunities to salt away money for their retirement, holidays and other perks.
And they also have sufficient income to take full advantage of such government programs as RRSPs and Tax Free Savings Accounts. For most wage earners, paying the mortgage, the kids’ education, the general costs of a modern existence doesn’t leave much to put aside for savings, or anything else.
Removing a few tax loopholes for the well heeled won’t be driving them into bankruptcy. Mrs. Compton, or anyone else, shouldn't be worrying about them . . . unless, you might soon be looking for a campaign contribution.
- Alan Holman is a freelance journalist living in Charlottetown. He can be reached at: email@example.com