By Canadian Press

Conservatives pledge review of tax system to ease headaches for small businesses

Sep 26, 2019 | 8:36 AM

ST. CATHARINES, Ont. — Conservative Leader Andrew Scheer is pledging to undo changes to the tax system that led to a near war between small business and the Liberal government two years ago.

“No government program can replace the power of the entrepreneurial spirit,” Scheer said Tuesday morning in Thorold, Ont., near Niagara Falls.

Scheer said, if elected, the Conservatives would reverse the decision by the Liberals that increased the tax rate on small-business investments and made it harder for companies to pay dividends to family members.

“A new Conservative government will continue to celebrate small businesses as drivers of prosperity, and not view them merely as sources of revenue,” he said.

In 2017, the Liberals changed the tax rules for businesses to close what they called an unfair loophole. It allowed the owners of incorporated small businesses to keep revenue from sources not related to their work inside their corporations, where it was taxed at a lower rate than if they had counted it as income they’d made as individuals. The government had argued that some people, such as doctors with solo practices, were forming tiny corporations just for a tax benefit.

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A massive outcry ensued among those who felt the Liberals were branding self-employed Canadians as tax cheats.

The government changed the proposed new rules, and decided to allow businesses to keep a maximum of $50,000 in “passive income” before the new taxes kicked in.

Scheer said Tuesday he’ll reverse that, along with another change the Liberals made that limited the dividends such corporations can pay to family members.

He’d also appoint an expert panel to review the entire tax system and modernize it, find a way to help businesses better navigate the tax system and reduce regulations by 25 per cent over four years. Scheer could not detail which regulations might be removed but said he’d assign a minister specifically to eliminate rules.

“We have a good idea of where there is some low-hanging fruit with the outdated ones,” he said.

Scheer has campaigned on making the tax system simpler while promising targeted tax credits for things like transit passes and children’s art and learning programs.

Conservative credits are “simple in nature,” Scheer said, and he believes they won’t further complicate what he called an incredibly complex income-tax system that burdens individuals and small businesses.

Scheer used Tuesday to campaign in southwestern Ontario, in ridings that have been held by Liberal rookies.

He spent his morning in Niagara Centre, where the Liberals beat a New Democrat in 2015. He later went to Cambridge, which was a Tory stronghold until it flipped in the last election, and Kitchener South-Hespeler, a new riding that also went red four years ago.

Scheer was scheduled to go to a cafe at the University of Waterloo Cambridge School of Architecture but changed his plans at the last minute to stop by a local hot-dog business instead, where he spent a few minutes speaking with staff and the local candidate.

Photos and video on social media showed about 50 protesters awaiting at the university, holding signs calling for action on climate change. Conservative staff said construction and a shortage of time were the reasons they relocated to the restaurant, where there were also about 20 demonstrators.

Elsewhere in Cambridge, Scheer received friendly greetings on the street and during a tour of a company that makes baseball bats. He pushed his central message that the election is a question about who people should trust to help them get ahead.

Lenny Schuller, a local business owner, asked for a handshake.

“I told him he has my vote,” Schuller said.

More than 100 people filled a restaurant and bar in London in the evening where Scheer rallied supporters and pushed them to vote for their local candidates, many of whom were in attendance. He received booming applause when he told the crowd he’s met people during the campaign who apologized for voting Liberal in 2015.

One man yelled briefly asking Scheer to explain how he would pay for his promises and the leader responded he would get all the answers as the campaign continues. A demonstrator outside the venue briefly called to the leader about climate issues as he was leaving.

Inside, Dave Jenkins sought out the leader and presented him with a gold pin in the shape of a ribbon. Jenkins said it was for childhood cancer month in honour of his teenage daughter, Maggie, who had died after a brief battle with cancer. He gives them out to politicians when he can, Jenkins said, but it would be very important to see Scheer wear the tribute to his daughter.

“It would mean everything to me,” Jenkins said.

This report from The Canadian Press was first published Sept. 24, 2019

Kelly Geraldine Malone, The Canadian Press