Recently, there have been several stories about the challenges that small business owners face in Canada.  One of these is the rising cost of operating a small or medium sized enterprise.  Last week, the Trudeau government introduced its Budget, and it contained some disappointments and raised some serious concerns about the management of our country.   In disbelief of broken promises and the increased financial burden created by Trudeau, the Honourable Tobias C. Enverga Jr., Ontario Senator, asked the Government Representative in the Senate the question below.

Small Business Tax Regime

Hon. Tobias C. Enverga, Jr.: My question is for the Leader of the Government in the Senate. In a September 2015 interview with the CBC during the last federal election campaign, Liberal leader Justin Trudeau stated:

We have to know that a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes. . . .

This dismissive attitude towards small business in our country was found in the 2017 budget as the Liberal government announced the elimination of billed-basis accounting for income tax purposes. This method of accounting is used by accountants, chiropractors, dentists and veterinarians, and it allows them to exclude the value of work-in-progress when calculating their income.

Does the Liberal government have any concern that this decision will lead to businesses moving to a lower tax environment, such as President Trump has promised to create in the United States?

Hon. Peter Harder (Government Representative in the Senate): I thank the honourable senator for his question. I think that he would agree that fairness in the tax structure is important for all Canadians, including those who are a small business, self- employed.

With respect to the latter part of the question and the suggestion that small business people will move outside of Canada to a lower tax regime, I think that’s rushing the conclusion quickly. That is not to say that governments, not only in Canada but elsewhere, do not have to look at competitive tax rates, and this government is vigilant to do just that.

Senator Enverga: Small business owners are also taking a hit in the federal budget through increased payroll taxes, as Employment Insurance premiums will rise next year. This is in addition to increased CPP premium hikes, which will come into effect beginning in 2019, and the Prime Minister’s carbon tax, which will lead to higher energy costs for all Canadians, including small businesses. Small business owners also remember last year’s budget when the Liberals broke their election promise to lower their tax rate and to create a youth hiring credit.

Why is this Liberal government intent on taxing small enterprises out of business?

Senator Harder: That is not the intent of the government, nor is it at all evident in any of the actions of the government, quite the opposite. Small- and medium-sized businesses are the life bone of the Canadian economy. All senators would acknowledge that. The objective of the Government of Canada is to ensure that businesses are better equipped to have a more skilled workforce that are better equipped to compete in the global economy and have the support mechanisms in place to do just that.