Olds and District Chamber of Commerce president Ben Stone said he is pleased the federal Liberal government is pledging to cut the small business tax, but he's wary about why it's being done and concerned it's a way to deflect anger over other tax changes announced this summer.
The Liberals announced Monday they plan to cut the small business tax rate from 10.5 per cent to nine per cent by 2019, a pledge they first made during the 2015 election campaign but didn't implement until now.
The rate would be cut to 10 per cent on Jan. 1, 2018, and then down to nine per cent on Jan. 1, 2019.
"My initial impressions are it looks pretty good. Nice to see that they're at least listening to Canadians and the feedback that's coming not only from the chambers, but from the various other organizations," Stone said Monday.
Critics suspect the change was made to deflect criticism from controversial tax changes announced this summer, which were panned by doctors, lawyers, accountants and small business people in Olds and across the country.
In general, according to critics and accountants, the federal government wants to eliminate or drastically change the following:
Income sprinkling, whereby a business owner pays family members a salary or dividend in order to cut the business's total tax burden.
Passive investment retention, under which a business owner invests income for reasons other than immediate reinvestment into the business. According to those attending an earlier meeting on the changes, that can include taking income from the business as a source of retirement income.
Income conversion to capital gains, which, according to critics, is essentially declaring income in a way that creates a lower tax burden.
During a Liberal caucus meeting in Ottawa Monday, it was announced that some changes will be made to at least some of these matters. However, critics fear the changes will be only cosmetic; that basically they won't be altered much.
That's Stone's fear too.
"I think, judging by the initial announcement it will be better. Now, we'll have to wait and see what kind of stipulations are attached to this so-called decrease,'" he said.
"I think that's important to see ñ what exactly they mean ñ whether it's just a straight cut or if there are certain qualifying criteria that need to be met.
"Unfortunately, I think they're doing this just to receive votes, not because it actually makes sense, but because they want to be re-elected and they're appealing to a large proportion of voting Canadians."
Reports say the Liberals will roll out the changes in the coming days.
"Unfortunately, I think they're doing this just to receive votes, not because it actually makes sense, but because they want to be re-elected and they're appealing to a large proportion of voting Canadians." BEN STONE PRESIDENT OLDS AND DISTRICT CHAMBER OF COMMERCE
