Growing support for the federal government’s plan to close tax loopholes shows Canadians are tired of seeing anti-tax rhetoric dominate political discourse, says the head of a coalition advocating tax reform.
Dennis Howlett of the Canadian Coalition for Tax Fairness said the public has grown weary of constant anti-tax messaging from business and conservatives and wants government to be able to provide decent services.
“The tax issue was dominated by the right wing for many years” Howlett said. “Even the NDP was afraid to stand up to them.”
It’s time to change the framing, he said. This week the coalition issued a statement supporting the proposed changes signed by labour, advocacy and student groups representing more than four million Canadians.
Tax changes have “disproportionately” benefited the wealthy, Howlett said, while services have been cut.
Now that the government is trying to restore balance, those affected are fighting the changes and misrepresenting the reality of the tax breaks, he said.
The reforms would close loopholes that let high-income individuals form personal corporations to reduce their taxes. The government proposes to end “income sprinkling,” which allows people to split income with family members who don’t work in the business. It also plans to end the practice of using personal corporations to shelter investments not related to business activities.
The current tax benefits are so attractive that the number of registered personal corporations increased by 50 per cent between 2001 and 2014.
The Canadian Federation of Independent Business and the Canadian Taxpayers Federation have come out hard against the changes which they feel will hurt the economy.
Organizations representing physicians and lawyers have been ferociously opposed to the proposed changes.
Doctors say they need the tax breaks to pay for things like parental leave and retirement. They warn the change will “destabilize” the health system.
Some have even threatened that doctors will leave Canada for other countries if the tax changes go ahead.
Conservative Leader Andrew Scheer has been making similar complaints and in question period he and his MPs refer to the changes as a “tax hike.”
Even three Ontario New Democrat MPs, Tracey Ramsey, Cheryl Hardcastle and Brian Masse, wrote Finance Minister Bill Morneau opposing the changes.
And opponents launched their own air force Monday as a Canadian Taxpayers Federation-funded plane circled Parliament Hill towing a banner opposing the changes.
Howlett argued that groups opposed to the changes aren’t being honest. The wealthy will have to pay more, not the middle class, he said.
“They’re getting people up in arms who really aren’t going to be affected,” Howlett said. “You have to be making $150,000 or more to make [using the loopholes] worthwhile.”
The government made the situation worse by doing a poor job rolling the proposals out and not making it clear those using the current loopholes are acting in a perfectly legal manner, he added.
Howlett’s consortium was put together in about a week and he said more organizations are expressing interest every day in fighting the anti-tax narrative.
The movement in support of a fairer tax system has gained steam in recent years as people see the inequality in the tax system, he said.
“More money in the hands of middle/lower-income people is actually going to boost consumer demand and do more to support business than tax cuts,” he said, adding infrastructure spending is also good for the economy.
“We’re not attacking business, but we think there are smarter ways to support business and support our economy.”
His group isn’t the only one to offer support for the changes.
On Monday a group of physicians from across Canada released a letter in support of the tax reforms. By Tuesday morning, 370 doctors had signed.
“While we have had some concerns with the government’s approach and language used in the roll out, we do fundamentally support an equitable taxation system as a pillar for a just and healthy society,” reads the letter.
It said even with the costs of operating their practices doctors are still in the top one to five per cent of income earners in Canada.
Dr. Vanessa Brcic, a British Columbia doctor and one of the physicians behind the letter, said the fight against the changes has ignored what taxes do.
“There’s been a lot of implicit mistrust that this money won’t be spent well and it’s better spent by the small business owners who are taking advantage of these tax benefits,” Brcic said. “The reality is this is how we fund the health-care system and important public and social services.”
One of the doctors’ main arguments has been that they need the money saved through the tax breaks because they’re not eligible for paid maternity leave. But Brcic said many medical associations in Canada offer a parental leave program for members.
Brcic said some of the doctors’ complaints, such as the need to pay off student loans, are legitimate concerns, but should be addressed directly instead of through tax loopholes.
Some doctors have inappropriately tried to silence those who support the tax changes, she said.
“There’s a very unprofessional and even bullying type response to people expressing disagreement with the majority voice,” Brcic said. “So we really had to create a respectful platform, do it in the public eye.”
Brcic said she hasn’t experienced any negative response since the letter was released, but has received support from doctors who are nervous about signing it.
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