A voice at the table

Adrian Wyld/Canadian Press

Minister Morneau,

Our family lives, farms and does business in south-central Manitoba. Like many who live in rural Canada, we strongly believe in supporting local businesses and professionals in our communities. Why? Not only because they are our neighbours, but because they support us.

They provide jobs for those who need off-farm income, for students and many others in our small towns. The service they give often goes above and beyond, because they know us so well. Local businesses and professionals support sports teams, school music programs, local fund-raising projects and refugee families; provide scholarships and bursaries to graduates; donate to community and hospital foundations and numerous charities. When a fellow citizen is in need they step up to the plate to help in whatever way they can. As with farmers, giving back is not done because it is expected but because it fills needs, builds a stronger community and many will say, “Because it is the right thing to do.”

Will your government step in to fill the void when their contributions are no longer possible because of your proposed 73% crippling tax rate, and an inability, or desire, to take on the risk of owning a business?  Your government committed to providing new opportunities for small business to grow. Please explain how that will be accomplished with your “Tax Planning Using Private Corporations”?

In Canada, 85% of businesses are small to mid-size, and of those, 55% are incorporated. Many do so for the same reasons as our family farm – succession planning, building a retirement, paying down debt and saving to grow our business. We are not using loopholes. We are following the existing set tax structure and rules. In order to survive, and have lending institutions provide us with financing, we must make a profit, which in turn fuels the local economy. We cannot succeed on a perpetual and ever-growing deficit.

Operating a business, making that decision to be your own boss and employ others, requires significant financial investment, time commitment, grit and determination. Like farmers, self-employed entrepreneurs have no employee benefits (employment insurance, retirement plans, sick or vacation pay, vacation pay, maternity/paternity leave etc). Their businesses too, are often passed on from generation to generation. Others may mentor employees, who are interested in taking over the reins, to ensure that business stays in the community.

But if your proposal goes through, why would anyone want to take the risk? It would be simpler and more advantageous to be a wage-earning employee. But who will provide employment? How does this new tax structure encourage the next generation of innovators and entrepreneurs to stay in Canada? And who will be left to support our communities?

Minister Morneau, with your proposed tax changes, I am not only concerned for the viability and future for our family farm, but also for that of the business owners and professionals in my community. We are not the wealthy 1%. We are the hard-working, dedicated, middle-class — the very ones your government claims to be ‘protecting’. But double taxation, changes to capital gains, income splitting, passive income and estate taxes (up to 90%) will dramatically increase our overall tax burden. We are not against taxation, but believe it should be reasonable and the tax dollars you collect from us spent responsibly.

The changes you are proposing are the most sweeping to business taxes in 50 years, yet you are only allowing a brief 75 day consultation period, which ends October 2nd.

Chambers of commerce and agriculture organizations, along with a host of individuals across the country are requesting an extension. Why not let them have a voice at the table? Clarify what the changes entail. If we are misinformed, and our certified profession accountants and their firms are misinterpreting the intent of your reform, why not extend the deadline? Let’s have a broader, thoughtful discussion with everyone concerned. Closely examine at the short and long-term implications for individuals, families, businesses, professionals, their communities and our country.

 

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We need to talk…

Minister MacAulay,

Thank you for taking time to sit down for an interview with Kelvin Heppner from Real Agriculture to address concerns regarding your government’s proposed tax changes — many say the most sweeping to business taxes in 50 years.

To be honest, your replies left me perplexed. Since farm organizations, farmers and accounting firms became aware of Finance Minister Morneau’s “Tax Planning Using Private Corporations” proposal, they’ve been raising concerns.

And as our industry was not consulted prior to the announcement, which coincidentally was during our busiest season, we’re asking for an extension on the incredibly short July 18th – October 2nd consultation period. Farmers have made time during harvest to reach out to you, Minister Morneau, Prime Minister Trudeau and other Members of Parliament with letters, phone calls, petitions and on social media. Yet when asked if you would speak up on our behalf, you state, “The fact is there’s really nothing to speak up against yet.” Have not heard our collective voices?

As farmers we take a significant risk every spring when we put a crop in the ground. We rely on Mother Nature to cooperate and hope for a decent harvest to recoup our investment in the fall. And then, we hope commodity prices reach the point to give us a decent return. We cannot demand an increase in the markets when our expenses go up, or our crops fail. Along with the financial risk, we have no employee benefits — vacation pay, pension plans, maternity/paternity leave etc. So how can you fairly compare our income to a wage-earning employee?

There is a major discrepancy between what you and the Finance Minister are saying and what accounting firms (BDOMNP) and certified professional accounts are telling us regarding the dramatic, negative impact on our businesses. Your reply, “What is the discrepancy, I’d have to ask,” , and “I would have to know what changes.”

The discrepancies include capital gains, income splitting, reasonableness tests, passive income (i.e. saving to upgrade/repair/expand to avoid deficit spending & keep debt load manageable), estate taxes and overall tax burden.

In regards to intergenerational transfers you state, “I’m not sure what the accountants are referring to,” and question “In what way?” (will it be more expensive.)

Many farms have, or are in the process of, incorporating in order simplify succession planning, make it financially viable for parents to retire while allowing their children to carry on the farm operation.  Only 16% of young people are coming back to the family farm and now it will cost up to three times more to pass it onto them than to sell to an outside entity. How can that be? And how will we maintain family farms that so many Canadians value and trust?

I look at our farm, and those around us — we are not the wealthy 1%. We are middle class — the very ones your government claims to be ‘protecting’. Come visit our homes, tour our farms, sit at our kitchen tables and see for yourself our perceived ‘tax shelters’.

You admit, “Perhaps there are problems. If there are, be sure we know. That’s why we have a discussion paper, to make sure we address the issues as well as we possibly can.” Yet, if the draft legislation is enacted, some measures are to be retroactively effective July 18, 2017.

Well Minister MacAulay, we are trying our best to convey our concerns — as are farm organizations, chambers of commerce and so many others. So please, speak up on our behalf. Extend the 75-day consultation period. Give all those impacted a chance to voice their concerns. Fully examine the effects these changes will have on agriculture, small businesses and our communities.

We work hard and take enormous risk in farming. That should not be punished and undermined by unfair taxation. If it is truly the wealthy you are after, revamp taxes accordingly.


To contact Agriculture Minister Lawrence MacAulay:

E-mail: lawrence.macaulay@parl.gc.ca

Twitter: @L_MacAulay

Phone:  613-995-9325   Fax: 613-995-2754  (Ottawa,ON)
Phone:  902-838-4139   Fax: 902-838-3790  (Montague, PEI)