Trudeau gets earful over tax reform at B.C. townhall

Residents upset with proposed changes to the tax code lectured Trudeau at a public meeting in Kelowna Wednesday

Prime Minister Justin Trudeau speaks during a news conference in Peterborough, Ont. Friday January 13, 2017. THE CANADIAN PRESS/Adrian Wyld

Prime Minister Justin Trudeau speaks during a news conference in Peterborough, Ont. Friday January 13, 2017. THE CANADIAN PRESS/Adrian Wyld

KELOWNA, B.C. – Justin Trudeau got a small taste of the kind of grief his backbenchers have been getting over the government’s plan to end what it calls unfair tax advantages for wealthy small business owners.

During a townhall meeting Wednesday night, the prime minister was lectured by two female doctors about the negative impact they contended the proposals will have on hard-working middle class Canadians.

Monica Penner told Trudeau that the tax plan will catch “thousands of really hard-working, honest, tax-paying Canadians” who have always believed that “hard work is the road to success.”

She questioned how he can explain to students why they should bother going into debt to get a university education when he’s proposing tax reforms that would “make sure everybody is the same in the end.”

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

Trudeau told Penner that the proposals are intended to eliminate tax provisions that “disproportionately advantage the wealthiest Canadians.”

“Let me be absolutely clear. There is nothing in these proposals that is targeting small, middle-class businesses,” he said.

“There are a number of people who are wealthy individuals who use private corporations as a way of opting out of big portions of the income tax system.

“So you get someone who’s making $50,000 a year who’s actually paying more taxes than someone who’s making $300,000 a year because they have private corporation mechanisms and good accountants that allow them to get away from that.”

But Trudeau’s defence of the proposals did not forestall further complaints.

Anita Sanan, who said she went to school for 14 years and incurred a six-figure debt load to become a doctor, accused the government of creating “two classes of Canadians,” pitting employees against small business owners.

She argued that preferential tax treatment for professionals and small businesses that incorporate is meant to compensate for the fact that they don’t have access to pensions, vacation pay, Employment Insurance, sick leave, maternity leave and other benefits enjoyed by employees.

“Now, you’ve moved the goal posts in the middle of the game and expect me somehow to be able to plan for my retirement, plan for maternity leave, which I will not be able to afford at this time and am having to choose between having a family and being able to actually practice as a physician here in Kelowna.”

MORE: Tax code changes will prevent ‘two classes of Canadians,’ says Morneau

Trudeau said he’s “fairly certain” that “every single province in this country” has maternity leave for doctors. Sanan told him that’s incorrect while another audience member accused him of lying.

In fact, according to the B.C. Medical Association, Sanan would be eligible for up to 17 weeks of parental leave benefits.

Trudeau said the current tax system has already created two classes of Canadians, where those who can afford to “create private corporations as a way of helping with their tax planning already have access to things that employees and others do not.”

“That’s not entirely fair,” he said.

He was careful to emphasize that there’s nothing illegal about taking advantage of those tax measures.

“There is no suggestion that you haven’t been following the rules. There is a suggestion that perhaps the rules which benefit the wealthy deserve a little tweaking and that’s exactly what we’re doing.”

Trudeau also emphasized that the government is consulting on the proposed changes precisely so that it can hear people’s concerns and ensure that there are no unintended consequences.

Trudeau’s encounter with the doctors came after Liberal backbenchers, who’ve been inundated with complaints, aired their concerns about the proposed tax changes during a closed door caucus retreat earlier Wednesday.

Under the three-pronged plan, the government is proposing to restrict the ability of incorporated business owners to lower their tax rate by sprinkling income to family members in lower tax brackets, even if those family members do no work for the business.

MORE: Inside Ottawa’s crackdown on small business tax loopholes

It’s also proposing to limit the use of private corporations to make passive investments in things like stocks or real estate and to limit the ability to convert a corporation’s regular income into capital gains that are typically taxed at a lower rate.

Notwithstanding the doctors’ interventions, Trudeau received a largely warm reception at the townhall, attended by almost 2,500 people jammed into the gymnasium at UBC Okanagan’s campus.

He even won cheers for his explanation of why he reneged on his promise to reform Canada’s electoral system.

Trudeau said he would have preferred a ranked ballot system but the other parties held out for a referendum on some form of proportional representation – a system he said he couldn’t support because it could empower anti-immigration parties or other small fringe groups.

Whatever the shortcomings of the current first-past-the-post system, Trudeau said it forces a small number of political parties to represent a wide diversity of views rather than encouraging the proliferation of many small parties representing narrow views.

As a result, he said: “We do not have an anti-immigrant party in Canada … There’s no official party voice in the House of Commons that speaks up and thinks that racism is a way to get votes.”


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Trudeau gets earful over tax reform at B.C. townhall

  1. Two white male sons of privilege, Trudeau and Morneau, trying to tell hard-working entrepreneurs and small business owners that they are tax cheats.

    That’s what you get with a trust fund prime minister and a government filled with the so-called best and brightest of the Laurentien establishment elites.

    • Is that your best, Trust fund prime minister, how about the doctors and the accountants, and the business people who were trust fund babies, hoard their money when they start to make to much, or better still, poke it away in some foreign bank, making high interest, and making these offshore tax heavens richer. ‘Charity begins in the Home’, and thats where this tax haven money should go.

    • No one is saying that these people that use and abuse present loop holes in Canadian taxation system are tax cheats.
      To me, making $70 K a year working for a company I should not pay the same or more in income taxes then “hard-working entrepreneurs” making $200 K working for themselves!!
      If I understand it correctly, this kind of inequality in present Taxation System this Government is trying to address and looks like some people do not like it.

      • Your right. You should pay less than you are now. Not a single person in this country needs to pay more tomthe government. We all need to pay less.

    • Trudeau said “There is no suggestion that you haven’t been following the rules.” He’s not accusing anyone in particular of being a “tax cheat”.

  2. I hope Andrew Sheer is watching these town hall meetings Trudeau is doing, because he(Sheer) is going to have to walk into the very same type of lions den Trudeau is walking into today, so before Sheer and any other conservative, including the NDP, decided to deride Trudeau, for all of his shortcomings and anything else, need to get a taste of real politics and face the voters like Trudeau, or is Sheer and the new NDP leader to be, going to be another ‘Pussy’, like Harper was, and just go on answering 5 questions. This is all blowing smoke because the cons and dippers can’t talk about the economy, and i wonder why. this is just petty stuff for the cons to raise money on, using the wedge again.

    • Oh yes Mr. Sheer, if your going to have any town halls in the future, i doubt you will, but please don’t stage them like your last predecessor, Steve Harper and Jason Kenny, inventors of ‘Fake News’ in this country, something to be proud of for sure..

    • My my — look who has there girdle in a knot. May I suggest you stay on topic.

      Well we learned something from the townhall. JT does not know the difference between paternal and maternal benefits.

      • Actually it speaks to the character of each leader, Trudeau has Balls, and Sheer is a Pussy. Trudeau Takes an earful, while Sheer takes a powder, Sheer even hired Lisa Rait as deputy leader in order to stay away from answering questions in the MSM, that’s another reason why Sheer is a Pussy..And the cons are starting to whine to much, they whine about helping rich people shelter taxes..

        • Trudeau is the most narcissistic, arrogant leader in the world. His old man was a socialist who almost ruined Canada with his wild ass spending spree but at least the old man had an IQ north of 100.

          • Mulroney stole the rugs out of 24 Sussex drive when he left, and Harper emptied the cupboards bare in order to claim he had no deficit in the 2015, and if i can recall, between the both of them (Harper ran the treasury like a ponzi scheme). They(cons) blew over a half a trillion dollars in the 2 tenures of conservative government, and they continue to blame the grits, that’s why the cons, and stupid people like you are always whinning to much..

        • And there you have it. CB degraded to name calling.
          Really the only thing more stupid then your comments is your idiotic handle.

          • Right on Chip. It should be Carpet Bummer.

          • I don’t allow petulance to get in the way of my comment, tirade, rant, or complaint, you name it. Would you prefer i use ‘Rebel News’?

  3. Once again, no sympathy from me for people who are able to make use of tax benefits that are not available to regular taxpayers.
    – Can I ‘sprinkle’ income to my partner and kids? No.
    – Can I convert regular income to capital gains? No.
    – Can I defer tax on income other than using a RRSP? No.

    And Anita Sanan has it totally wrong – these changes don’t create “two classes of Canadians”, we now have that – these changes create one class.

    So, rather than whinge about losing tax benefits that shouldn’t have existed in the first, how about putting forth some constructive ideas for mitigating their loss that don’t benefit just doctors, lawyers, etc – e.g. promote increasing RRSP contribution limits, point out the unfairness and negative outcomes of having marginal income tax rates north of 50% (aided by Trudeau’s 4 point tax increase on “the rich”), etc.

    These folks are fighting the wrong battle, so as I said above – no sympathy from me.

    • Doctors are a of a different class in society. Nothing wrong with that. So are althletes. So are CEO’s. If on make hundreds of thousands of dollars a yea.. or millions.. they are of a different class than this who make 40k a year. Why does that offend you? And your logic that operating a business should be the exact same as your 9-5 is ridiculous.

      People need to be treated fairly, not equally. And btw, we all need to pay less taxes to government. All of us need to pay less.

      • [stuff about class]
        Let’s be slightly more precise then, replace ‘different class’ with ‘different class of taxpayer’. Yes, the progressive nature of the income tax system can be interpreted as meaning different classes of taxpayers, but that’s kind of incidental to this, no?

        “And your logic that operating a business should be the exact same as your 9-5 is ridiculous.”

        Where did I say that? Clearly running a business is different from a working in a salaried position.

        Having said that, there is zero logic in saying that an incorporated individual should be able to avail themselves of *personal* (not corporate, personal) tax breaks that an unincorporated individual can’t. Personal income is personal income, and should be treated the same by the tax system regardless of the state of incorporation of the individual.

        “People need to be treated fairly, not equally.”

        The word ‘fair’ is often bandied about by folks who want someone else to pay more so that they can pay less – e.g. “the rich should pay more as they don’t pay their fair share”. Fairness is a subjective notion at best, and highly so when it comes to taxes. So, along with 99% of economists, I do prefer ‘equal’, as in personal income being treated equally w.r.t. taxation.

        I’ll ask:
        – Why should an incorporated individual be able to ‘sprinkle’ income to their partner and kids, whereas the unincorporated individual can’t?
        – Why should an incorporated individual be able to convert regular income to capital gains, whereas the unincorporated individual can’t?
        – Why should an incorporated individual be able to defer tax on income outside of a RRSP, whereas the unincorporated individual can’t?

        Incorporation should be a mechanism for benefiting one’s business, it should not be a means to avoiding personal taxation.

        • Jim we had income splitting but Trudeau’s government took it away. I do believe everyone was entitled to it as well. We also had increased contributions for TFSA, but yet again JT reduced the amount and would bet he would like to get rid of the whole program.

  4. I had a neighbour down the street who ran his own business which employed a couple of dozen people. He engaged in this ‘Income sprinkling” that would be done away with. He paid his wife $100k a year to mind the house and kids basically. I for one do not think this is fair, and I don’t know why anyone else would think it fair either. there are salaried professionals who are working many hours a week for the sake of their careers and to get ahead who either have an (unpaid) spouse at home or pay for childcare/housekeepers out of their earnings with preferential tax benefits.

    If a household with two professional incomes (one of which is a doctor) can’t plan financially for a child, then I would suggest they need to learn how to save, not special taxation rates.

  5. The top 1% of income earners in Canada pay 10% of all income taxes collected. The top 10% pay 54% of all income taxes collected. And Trudeau keeps yapping about the “rich” not paying their fair share. He has a much different definition of “fair” than I’m familiar with!!

    • Where is your tax information coming from? Are all those income earners individuals? Or as is the case with so many ‘top earners’ “corporations”.

      Most medical practitioners set themselves up as ‘medical corporations’ for business purposes and pay themselves and others from their corporate account – reducing corporate income by ‘expenses’. They can also set up and endow their own Trust Funds to provide non-taxable gifts to themselves and the family. It’s a benefit other income-earning Canadians – some of whom are also paid from the public purse – can’t get.

  6. The issue of parental leave needs to be clarified. For example, in BC doctors contribute to their own parental leave through Doctors of BC which will provide up to a maximum of $1000 per week. This is NOT provided by the government. Office overhead is often $10,000-$12,000 per month, meaning a doctor taking parental/maternity leave could still be paying $6000 per month, or $36,000 for 6 month leave. I fail to see how this is “fair”, and am also shocked that the PM and Finance Minister have no idea about this before suggesting such sweeping tax changes.

    I’m also quite concerned what effect this will have on students entering medicine. The cost to become a surgeon is around $250,000, depending on where one trains. It’s quite possible that these tax changes will result medicine becoming only something that children of wealthy parents can pursue. How can we expect new doctors to graduate in their mid 30s with $250,000 to $300,000 debt and realistically pay this off while hoping to start a family, and/or buy a house, start an office, save for retirement and cover any medical expenses? Why would anyone choose this unless they had wealthy parents to foot the Med school bills? This will likely hit rural areas hard.

    The word “fair” should be removed from this discussion. It is used to villianize doctors to gain public support. The existing tax structure for corporations provides balance for the time, expense, risk, and lack of benefits faced by physicians and small business. Is it equal to taxes paid by employees? No. Are benefits, pension, parental leave, etc., equal between doctors and other employees? No. Are costs and risk the same? No. Equality and fairness are not the same thing.

    Full disclosure, I am a physician but would not consider myself wealthy. I have a 6 digit negative net worth (thanks student debt), zero saved for retirement, and live in a house that is less than the average house price in BC. Let’s avoid the use of “fair” and “wealthy” when discussing these tax changes and who they will impact. These are simply incorrect and insulting descriptors used by the Liberals (and notably our very wealthy PM and Finance minister) who are trying to capitalize on doctors as a soft target. I think any Liberals with pensions or benefits should give these up voluntarily if they want things to be “fair”. I think the PM should go after getting a cut of all the nice little stock options Finance Minister Morneau and his Bay Street buddies get if the Liberals want to go after the “wealthy”. But they won’t. This isn’t about fairness or helping the middle class. While I quietly voted Liberal last election and in years past, I can promise that I will enthusiastically engage in voting against them in two years and the foreseeable future.

    • A good, informed opinion. Thank you.

    • Student debt is an investment in ones future. If you hadn’t had one you might have celebrated with your first house or a really snazzy car. You did manage to buy as car too, right?

      I remember bringing $2.50 a week to the doctor’s office and giving it to his wife, a nurse, who was the only employee, for a couple of moths for a home visit and a shot of penicillin. Thank goodness changes in tax law and society have made the medical side of life easier and more affordable for everybody, even doctors.

    • I’m not claiming this is untrue, but how is the cost of becoming a surgeon $250,000? Medical school tuition is usually at most just shy of $20,000 a year for 4 years, and you have to buy books and a ton of supplies, but that’s also the same for all specialties.
      – Are you including the opportunity cost of not having a paying job while in medical school for 4 years? Because that is also reasonable, but should not be discussed without also discussing the large jump in salary that surgeons (and all doctors) make when moving from residency/fellowship to a staff position – – Are you including the costs of undergraduate education? Because that is certainly part of it but not a cost exclusive to surgeons (or even doctors).

  7. Apparently she claimed she went to school for 14 years – that was either a personal choice not forced on her, or she is fudging the numbers. I’m a family medicine resident, so this isn’t a grouchy “anti-doctor” rant, I just prefer when people in medicine don’t exaggerate the sacrifices they’ve made.

    University is generally 4 years, and medical school is 4 years, is she counting residency as school? Because in residency you get paid. In BC right now you get $50,000 as a first year resident and salary increases up to $76,000 as a 6th year resident. Or maybe she also did a PhD, which no one would force her to do unless she’s working in a highly specialized field, which is cool and very commendable, but also a personal choice.

    Medical school is expensive, and some people feel that part of the justification for high salaries in our field is to offset that, but healthcare policy is highly complex, and we need to use the real numbers in our discussions. Vague values like “six-figure debtload” aren’t helpful, was her debt $105,000 or $500,000?

    14 years in school is a drastic misrepresentation of the majority of medical careers….and if that includes residency, it’s not even true.

    • I am very sceptical of some of the claims made by those two doctors. I suspect that the tory party had more in crafting their outburst than they will admit. Typical of politics in Canada there seems to be no middle road only extremes and exaggerations.

    • Really?
      Seriously where are you doing your training that you don’t know this?
      4 years undergraduate degree
      4 years medical school
      General surgery is a 5 or 6 year program depending on where you train
      Most specialists do fellowships which are typically 1-2 years.

  8. This issue is far from over. There are things to be said for both sides of the issues. The small businesses have had a tax advantage for many years and many have abused this advantage. Not all but many. To point at doctors and professionals as the prime example is wrong. But this is all the tories want us to see. There are many more small business owners that take us to the cleaners. They spread money among relatives, hide income and then complain if the minimum wage moves up a dime. I feel for doctors and I hope that the government looks at the idea on plan does not fit all. I believe a compromise will be reached and at least the government is listening somewhat. Under Harper, he would have issued an edict through his PMO and then wasted millions of tax dollars on propaganda ads touting how wonderful he was.