October 16, 2017
OTTAWA – Morneau’s tax tweaks and small business rate cut announced
The Finance Minister announced that there will be tweaks this week to the closure of unfair private corporations tax loopholes. At the same time, a rate cut for small businesses has been announced.
The lower small business tax rate, already the lowest in the G7 was costing taxpayers $3.6 Billion. The new rate cut is estimated to cost $1.6 Billion. This is less than the estimated revenues from closing the loopholes, leaving us further behind.
“The large gap between the business tax rates and those for individuals is already the main driver of the tax avoidance the government is trying to address,” says Dennis Howlett, Executive Director of Canadians for Tax Fairness. “There is little evidence that lower business tax rates are linked to job creation at all.”
Canadians for Tax Fairness, and other groups in the Canadian Coalition for Tax Fairness, have been pushing the government to persevere with tax reforms to close the private corporation tax loopholes and other unfair loopholes, despite backlash from the opposition and vocal business lobby. Although some of the tweaks seem reasonable, the changes need to proceed without further undermining tax fairness.
“Less than half of the private corporations under $500,000 have any employees at all,” adds Howlett. “If this rate cut proceeds, it needs to be targeted to the small businesses that are actually creating jobs (3+ employees) like it was in Quebec, not providing boutique tax savings for the privileged.”
Canadians for Tax Fairness is a national organization that advocates for a modern, effective and fair tax system.
For more information: Dennis Howlett Canadians for Tax Fairness 613-863-3670
Read more about this issue on the Tax Fairness website.