Bill Morneau shows a flash of temper in the small-business tax battle

The finance minister isn’t easy to rile, but this protracted policy fight is now testing his patience


 
Finance Minister Bill Morneau makes an announcement on housing in Toronto Monday, October 3, 2016. The federal government has announced measures intended to stabilize the real estate sector amid concerns that pockets of risk have emerged in some housing markets, particularly those in Toronto and Vancouver. (Nathan Denette/CP)

(Nathan Denette/CP)

Finance Minister Bill Morneau is usually so unflappable, his voice so unmodulated, his black brogues so unscuffed, that it almost came as a relief to hear him sounding more than just exasperated, maybe even a little hot under his well-ironed collar, answering reporters’ questions after an appearance today before the House finance committee.

Inside the committee room, Morneau had been subjected to yet another round of rankling questions about his small-business tax proposals from Pierre Poilievre, the Conservative finance critic whose rare knack for getting under the skin of his political adversaries reminds me of the way Claude Lemieux used to drive his NHL opponents to rash retaliations.

Morneau kept his cool as usual inside the committee room. By the time he faced a scrum of reporters outside, though, he’d had enough and let himself get a little worked up. He accused a small minority of well-to-do small business owners and their advisors of stoking needless anxiety among farmers and entrepreneurs of modest means, who won’t be affected, he vowed, by his tax reforms that target the wealthier few.

READ: How Bill Morneau found himself at war with small business

“What’s clear to me,” Morneau charged, “is that people who don’t like what we’re doing are trying to make sure that other people don’t understand what it is that we’re doing.”

Pressed about farmers who worry his proposal to change treatment of capital gains will make it harder for them to pass on farms to their children, he pledged that won’t happen. But he went further, angrily suggesting that they are being cynically misled to the point of making bad tax-planning moves before his reforms are even firmed up.

“In the specific case of farmers,” he said, “we believe that there is misinformation, and there are people out there trying to encourage people to take decisions at the wrong time. We’re listening. We’re going to get this right. Their family will still be able to be in the farm. They will still be able to transfer the farm to the next generation.”

And he accused his political opponents of fostering and exploiting groundless fears. “The members of the opposition who are giving misinformation about what these proposals might or might not do are not doing Canadians a service,” Morneau fumed. “What they are doing is scaremongering.”

He said all this in the wide, sunlit hallway of a recently renovated historic building just off Parliament Hill. Waiting patiently and within easy earshot for his turn in front of the cameras was Poilievre. At one point, when Morneau, clearly growing frustrated, chided a reporter for not letting him finish an answer, Poilievre uttered a soft but audible, “Oh, minister.”

READ: The problem with Trudeau’s high road

When the critic stepped to the spot where the minister had just been letting off steam, his interpretation of what he had just heard was interesting. “He understands,” Poilievre said of Morneau, “that farmers and local businesses are furious that he and his government have attacked them with this draconian high-tax plan, and he’s feeling that backlash, his MPs are speaking out against him. He’s getting frustrated and defensive, and he’s even snarling at journalists.”

Any concern is appreciated, but I’ve known journalists to be snarled at worse without suffering lasting damage to their self-esteem. Poilievre’s more important point was that he suspects Morneau is preparing to “backpedal.” That’s one way to see it. From the outset, Morneau has stressed that he means to adjust his proposals in response to criticisms raised in the consultation process he launched back in July.

That sort of adjustment is clearly in the works. For instance, there’s the rather technical—but still key—matter of entrepreneurs pleading for a way to save that lets them defer tax, but also offers more flexibility than the RRSPs that are typically at the core of the savings strategies of Canadians who don’t own businesses. “That’s something we’ve heard from small businesses and something that we are listening to closely,” Morneau said today.

And there you have a snippet of the measured and moderate voice that Canadians are growing accustomed to hearing from Morneau, and maybe tuning out. He might find, if this policy battle keeps heating up in the coming weeks, that the less familiar voice he gave reporters a taste of today might come in handy, too.


 

Bill Morneau shows a flash of temper in the small-business tax battle

  1. I can count the politicians I trust on the thumbs of my hands.
    Bill Monroe is one of them.
    Michael Chong is the other.

    • If you trust Bill Morneau you need to do some more reading. He was listed in the Panama Papers, as he has an off shore bank account. He is a tax cheat. Not sure why you would trust a blatant hypocrite.

      Scheer 2019.

      • Apparently, there are legitimate reasons to have offshore accounts. So, to be guilty of tax evasion, he would have to have been not declaring income that the account generated; which we don’t know.

        Having said that, not only has the CRA been woefully useless on going after tax evaders with offshore accounts, but it also seems to only give them a slap on the wrist when it finds them. So, I have next to zero confidence in it doing anything useful with the info from the Panama papers.

        • Likewise, there are legitimate reasons for a small business to retain earnings, rather than pay everything out.

          What legitimate reason is there for Google/Alphabet and most megatech companies to deduct the free meals and perks for their employees, and a farmer’s spouse cannot cook a meal for the harvest work crew.

          • Jim R- Funny you should mention how toothless the CRA is when going after big-time tax cheats. Look at the revelations from the Charbonneau hearings, where millions of dollars in bribes were paid out to government employees, yet we haven’t heard word one about the CRA going after a penny of that money. Yet, CRA spent about 30% more than they managed to collect doing a massive audit sweep up in NE BC just a few years ago.
            It’s probably worth noting that the waitresses and small contractors that had to undergo what turned out to be a wasteful bunch of audits are not very familiar with car bombs and the vagaries of disposing of dead bodies, unlike the people whose nefarious conduct came to light via Charbonneau.
            Those mobsters, and the people connected to them got a free pass from CRA for a reason, and it had everything to do with the potential to inadvertently receive an offer that couldn’t be refused. I’m not thinking some waitress from Prince George is going to put a dead fish in an auditors mail box over the penalty for under-reporting her tips.

    • Bill Morneau? You mean the person who directly profits from this tax change via his Bay st business? You trust these folks? Sad.

  2. Morneau is so wrong. I wouldn’t accuse him of mendacity, so the only available explanation is that he doesn’t understand the implications of what he’s put on the table.

    I can tell you, as an accountant with 30 years’ experience, that this legislation will affect virtually every small business owner, from doctors to farmers to convenience store owners. It is incredibly poorly drafted; “vague” is too nice a term.

    • It is amazing, isn’t it. It is like he has no clue how small businesses and farms operate at all.

  3. Morneau is very vulnerable on this, and both the Conservatives and the media are letting him off too easy. Despite never having lived in Alberta, he has parked millions of dollars in Alberta, where it’s conveniently out of the reach of Ontario provincial taxation. he also apparently has little grasp of how a lot of farms and small businesses are “sold” to the next generation.
    I routinely sell equipment to people who have retired from their business or farm. Instead of selling it, they simply take a monthly paycheque as an employee of the corporation, with the final disposition of shares coming at time of death. The new tax rules will limit the feasibility of that, forcing thousands of farmers and small business owners to adopt different and less fruitful succession plans.

  4. The big smell here is “the elephant in the room “. If Morneau can ram these changes through, then his family’s company has the potential to make millions of dollars. Call it a new type of RRSP if you like, but it’s just another “legal” tax shelter.
    And Morneau-Shepell is the biggest name, in that market.

    • A good rule of thumb to follow: Never trust a politician whose surname ends with the letters EAU.

  5. If this poor excuse of a finance minister would like an honest discussion of what he is about let him come up with some detailed wording how his intent will appear in print.

  6. We should be asking for full tax disclosure from our Prime Minister and the Finance Minister; and that should apply no matter the party or person in power.

  7. Why are the representivesof the hourly wage earners not being heard? Most people pay taxes through wage deductions and one simple tax form per year. The media have not given the hourly wage earners any coverage. They seem to be in the back pocket of associations and lobbyists hired by doctors and chambers of commerce. These PR companies supply the panelists for all the talk show panels. Coincidence? Hourly wage earners are paying an unfair share of the total tax burden.

    • Sorry JW, but you’re dead wrong. The top 10% of income earners pay 54% of ALL the taxes paid in this country. The top 15% pay 75% of all taxes. That’s income and property taxes. The tax changes sought by the Trust Fund Twins will erode hourly employment and employment opportunities in this country. Hourly employees of- especially- small businesses should be standing with their employers on this, as it will negatively affect lots of people who earn modest wages.