Justin Trudeau wants to raise taxes on small business savings to 73%. What does that mean for farmers, small business owners, and small business families across the country? In this episode, Conservative MP Pierre Pouvreau talks about the impact of Trudeau's proposed 73% tax on savings.
00:00:00.000You're listening to The Blueprint, Canada's Conservative Podcast.
00:00:08.960Well, they thought they were going to have an easy day over there today, but not so fast, Mr. Speaker.
00:00:16.600What is it going to take for the Prime Minister to have any respect for any laws in this country that may curb his out-of-control behaviour?
00:00:25.320And now, here's your host, Tony Kremend.
00:00:31.140My next guest is Pierre Polyev, who is, of course, our new Finance Shadow Minister.
00:00:38.500Congratulations again for that awesome responsibility as part of our team.
00:00:42.940Thank you very much, Tony. Good to be with you today.
00:00:45.080Now, let's get right to the meat and potatoes, because this is an issue that I'm sure none of us thought we'd have to be dealing with throughout the summer months, and it's going to cascade into the fall.
00:00:57.120But whenever you have a Liberal government, my observation after 40 years of volunteer and elected politics is, sooner or later, they start to tax people more.
00:01:06.100And despite all their rhetoric about how they are for the middle class and they want to give people breaks, we're now seeing the other face of liberal – Canadian liberalism, which is taxing people who are trying to make a living.
00:01:22.040So, Pierre, why don't you walk us through these tax proposals that the Liberals are shopping around, and, in fact, go to Justin Trudeau's reaction when there was a little bit of pressure on him, how he doubled down on some of these things.
00:01:38.360Thank you very much, Tony. Great to be with you today, and congratulations on your role in our Shadow Cabinet as well.
00:01:45.140Well, Justin Trudeau sent his finance minister out in the middle of the summer to announce a discussion paper along with drafted legislation that would raise taxes on small business savings to 73%.
00:02:01.340Now, I'll tell you, explain to you how they're proposing to do this.
00:02:06.600Small businesses typically save for the retirement of their owners within the company.
00:02:13.700RRSPs often don't work very well if you're a farmer or a small business person because you need to pull that money out.
00:02:20.840If you're a farmer and there's a drought or your barn burns down or you have a major mechanical problem or a family member dies and you lose – you're one of your most valuable workers, you might need to pull that money out very suddenly.
00:02:34.660And, of course, RRSPs bring big penalties when you do that.
00:02:37.940So they save for the retirement within the company, and then later on they draw that money out as needed.
00:02:44.000What Justin Trudeau is proposing to do is tax the income on those savings twice – once when the original income is earned and then once when it is withdrawn from the company and put in the hands of the small business owner.
00:03:01.680And that's how you get this 73% tax on small businesses who are trying to save for their future.
00:03:08.220This will be devastating for our farmers, for small business operators right across the country.
00:03:17.260And it will mean a much higher tax bill for them than anyone else pays.
00:03:23.300Now, they claim that it's about leveling the playing field.
00:03:26.920Well, this is the other thing, too, because when this was rolled out, Justin Trudeau and Bill Morneau, the finance minister, were saying, no, we're going after the 1%.
00:03:35.980But what you're saying is you're talking about small business owners.
00:03:41.280This is a much broader range of people in our society.
00:03:45.800It's the dairy farmer in Osgoode, Ontario, who tells me this is going to make it very difficult not only for him to save but for him to eventually pass on the farm to his children.
00:03:56.140It is the owner of a small chain of dry cleaners who has 50 employees, most of them young people and new Canadians, some of whom he says he might have to lay off if these tax increases take effect.
00:04:08.940It's the young man who left the country for 11 years to study for dentistry and then stopped me on roadside while I was out jogging for a charitable run to tell me he was just on the verge of opening a practice and hiring people,
00:04:22.380but probably won't be able to do it in Canada because of this new liberal tax increase.
00:04:27.520And what's so unfair about it is that this 73% tax on small business investment income is much higher than the tax on big business investment income.
00:04:43.020So if a publicly traded multinational Fortune 500 company puts aside cash in a passive investment account, they only pay a total of about 50% all the way down from the time that that money is earned on the investment to the time it's paid out to the shareholder.
00:05:04.860But the small business who's trying to eventually compete with the big multinational will pay a tax rate that is more than 20% higher.
00:05:13.620So this isn't about leveling the playing field.
00:05:15.600It's about going after the little guy.
00:05:17.620So let's talk about the impact of this.
00:05:19.640You alluded to this already in terms of investment decisions, growth decisions.
00:05:26.800What does this mean in terms of jobs and in terms of the economy?
00:05:29.840Well, obviously, small business are the backbone of the Canadian economy.
00:05:35.480They're 97% of private sector employment is done by small and medium-sized enterprises.
00:05:43.940So whenever you hammer them with a 73% tax on their savings, it's going to affect workers right down the line.
00:05:49.980It's going to, if you are a young person looking for your first job out of university, you're going to have fewer people hiring you.
00:05:55.460If you are a farmer and you want to pass your farm on to your kids or to another family member, it is going to be more difficult with higher taxes and more compliance costs.
00:06:06.600If you are that small business owner who has a dry cleaner or a small tourism operator and you're trying to put aside money for a rainy day or for your retirement, you will pay far more to the government.
00:06:20.340This tax increase is in excess of $3 billion is going to be devastating.
00:06:52.020We have to put massive, relentless pressure on liberal MPs to do the right thing and tell Minister Morneau they will not vote for this tax increase.
00:07:02.940I mean, Bill Morneau has indicated that he'll likely introduce what's called a ways and means motion in the fall or early winter.
00:07:10.900That ultimately has to pass for these, and the legislation actually has to pass for it to be crystallized in law.
00:07:20.100If enough liberal MPs get the message that they're going to lose their seat if they raise taxes on their small businesses, then we can stop this.
00:07:28.700So I'm telling all Canadians, get on the phone and tell the liberal MPs to say no to this 73% tax on our small businesses.
00:07:39.380And of course, you and I and other Conservative MPs will be voting no if this ever comes to a vote in Parliament.
00:07:45.220Absolutely, and we will be using every legislative tool at our disposal to stand in the way.
00:07:51.820We will, I've already demanded that Minister Morneau appear before the Finance Committee, explain himself,
00:07:58.220that we bring the dozens of groups representing entrepreneurs, farmers, tradespeople, plumbers, etc., to come and speak out before that committee.
00:08:08.480I hope that other parliamentary committees, like the Health Committee, will study how this will impact on the number of family doctors in small rural communities like the ones you represent.
00:08:19.900I think we need to have our Employment Committee, what's called the Huma Committee, to study how many jobs will be lost.
00:08:26.460We need a full court press using every creature, every living organism of the House of Commons to wage this effort against this tax.