House Call with Carol Hughes

Extending consultation process is the best answer for tax fairness

OTTAWA—There is a heated battle over tax fairness stemming from the government’s plan to cut down on what they see as improper use of incorporation to the advantage of some highly paid individuals. While reigning in the use of this tax strategy might not be the best place to start a tax-fairness campaign, with larger sums and more egregious violations associated with offenders such as offshore tax cheats, the timing of the announcement and short consultation process have to be questioned too.

When the Finance Minister explains the proposed changes to incorporation he uses the example of professionals who use loopholes to sprinkle money throughout their household to avoid paying higher rates of tax. Opponents point to farms and small family businesses that could become collateral damage if these changes come into force. The only way to investigate these claims is through wide-spread consultations, but when they were announced in the dead of summer many of those who may be affected were caught off guard. By making the consultation timeline short, it almost ensured the backlash we are seeing.

That’s why the NDP is asking the government to double the timeline for consultations on tax fairness and to expand the scope to include large corporations, loopholes for CEOs, and international tax havens. With all the rush associated with the current process, it is increasingly difficult to look past the rhetoric being blown around Ottawa so Canadians can fully understand who will be affected, and how.

Right now there are a lot of differing opinions about the changes to incorporation being proposed. The government is claiming they are only trying to institute tax fairness, and business groups are saying this move will be a job killer. The truth may lie somewhere in between, but that truth will be harder for most Canadians to see if consultations turn out to be an incomplete rush job. By sticking to a compressed timeline, the government might do more damage than good. If the only reason is to make sure the government is maximizing what is owed, again, there are bigger fish to fry.

Consider how the government has backed away from a major campaign promise to close the CEO stock option loophole which costs Canadians $750 million a year. On top of that, they have given out sweetheart deals rather than crack down on the wealthiest Canadians who’ve been caught using illegal international tax havens.

By now it is clear that for most people, and especially those who may be affected, the consultation period is too short and too  narrow to result in true tax fairness. It is vitally important to make sure that proposed changes target wealthy tax avoiders and big corporations who are not paying their fair share. New Democrats suggest that right now, the government is letting the big fish off the hook.