‘Tax reforms’ top concerns when Morneau meets business leaders in Aurora

Canada’s finance minister says the government wants to make home-buying more affordable to millennials

YorkRegion.com
Jan 24, 2019
Dina Al-Shibeeb

Federal Finance Minister Bill Morneau admitted on Jan. 22 that the country’s tax system is “complicated” when he met with businesses leaders in Aurora where the issue of tax reform topped their concerns.

Calls for tax reform are not new.

In early 2018, corporate Canada urged Ottawa to drops its plans for further changes to small-business taxes and instead reduce Canadian taxes following U.S. President Donald Trump cutting his country’s taxes.

Some of the business leaders at the Royal Venetian Mansion at Aurora told Morneau that Canada doesn’t have a global edge when it comes to competitiveness and that’s mainly due to its tax system, especially after the U.S. tax reforms erase Canada's corporate tax advantage.

“I think that the United States continues to have significant competitive advantage over Canada, and this is largely based on their current economics of incentives for certain businesses,” Perry Rizzo, president and CEO of the Aurora-based Axiom Group inc., told York Region Media.

“(American) tax reform is far more flexible to allow for companies to invest in a more dynamic way in their economy,” Rizzo added.
Rizzo told Morneau that businesses which are risk-taking and high-income earners in Canada are faced with a “punitive” culture that taxes them as opposed to the United States where entrepreneurship is encouraged.

“It’s hard to be audited every year, to be honest,” Rizzo told Morneau adding that “it will be nice to have a more balanced approach” that allow high income earners such as lawyer, doctors or businesspeople to have “rewards for their activities.”

In response, Morneau said: “I agree that there are things in the United States that are best in the world, but there are parts of the country that haven’t done so well.”
The minister added: “There are real fractures that we need to make sure we don’t have in Canada.”

Robert M. Chaggares, from the Newmarket-based Chaggares & Bonhomme, asked Morneau about any potential tax reforms and ways to improve Canada’s competitiveness on the world stage.

The minister gave an example of how “small business tax rates in Australia are as twice as much as ours,” but he said, “I acknowledge what you are saying, our tax system is complicated.”

“We need to make sure there are rules so it's a fair play,” the minister added.

But the accountant clarified that it’s the “personal taxes” that’s problematic.

“It’s difficult to have doctor earning $300,000, paying 50 per cent versus the U.S. where it starts at $600,000. I think there needs to be a tax reform.”

The minister said “it’s a contentious part” of his job as the minister of finance. “We do have a little scar tissue in this job,” reiterating for the need to keep the system “fair” for all those of different income brackets.
“We will never get it perfect.”

Affordable housing

Meanwhile, Morneau said that the government also wants to make home-buying more affordable to millennials after he was asked if there is going to be any flexibility for first-time home buyers.

He expects housing to be one of the main campaign issues ahead of October’s federal election.

The minister re-iterated that it's important to stay fair and competitive and that’s by thinking “local.”

Asked how, he said: “It’s local when we think about the fact that people here in this area
have Canada child benefits; it's local when we think that businesses here in this area will have up to $7,500 more to invest in businesses this year because of reductions in small business tax rate.

“These are local issues and international issues, we are committed in trying to make ensure we have an economy that works for everyone.”