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Did Trudeau misspeak?

The proposed tax changes being contemplated by the Trudeau Liberal government remain the single largest concern that I hear about on a daily basis. 

Although I have heard some support for these potential tax increases, the overwhelming response has been  strongly opposed. I have also heard some specific concerns from a number of local accountants.
 
When the prime minister was in Kelowna last week, he stated that “people who make $50,000 should not pay more taxes than people who make $250,000."

I believe most would agree with that statement.

Unfortunately, as many accountants have taken the time to share with me, this statement is not even remotely true or even close to being accurate.

In reality, a small business owner, doctor or other person would indeed be paying tens of thousands more than one who earns $50,000 per year.
 
This is one of the reasons why there is such outrage from many small business owners who feel that the prime minister either does not understand the impacts of our existing tax laws or is intentionally misstating them in an effort to draw public support for the proposed tax increases.

I will grant the prime minister the benefit of the doubt and assume he misspoke as can inadvertently occur with any elected official.

For the record, I will continue to oppose these tax changes in Ottawa and encourage the Liberal government to be more transparent with their talking points.
 
For an update on another matter I have raised in a previous reports.

Some of you may recall I have mentioned that the federal agency responsible for regulating banks and other financial institutions has issued new enforcement regulations, a blanket prohibition on the use of terms such as bank, banker, and banking by basically any entity other than the big banks.

Credit unions, which have traditionally been allowed to use these common words, would no longer be allowed to do so.

This would not only create consumer confusion, it would also impose more costs and regulatory compliance burdens on credit unions that in turn would be passed onto credit union members.
 
Suffice to say these proposed restrictions also generated overwhelming public opposition throughout our region as well as many other regions across Canada. As a result the Financial Regulator has temporarily suspended this enforcement action while it begins a series of consultations.

I believe this should be taken a step further.

I am working on a bill that would amend the Bank Act to make it clear that credit unions can continue to use bank, banker, and banking without fear of The Office of the Superintendent of Financial Institutions (OSFI) coming after them.

I had hoped the Liberal government would introduce similar legislation but in the absence of any my only recourse would be this private member's bill.
 
My question this week:

  • Would you support a private member's bill to amend the Bank Act and allow credit unions the continued use of words such as bank, banker, and banking?

I can be reached at [email protected] or call toll free 1-800-665-8711.



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Dear prime minister

Mr. Prime Minister,

I would like welcome you and the Liberal caucus to Kelowna.

I trust your caucus retreat will be constructive and I hope you have some time to visit some of our nearby amenities and attractions. 

I also hope you will have the opportunity to meet with local small business owners and I will explain why.
 
During my time as a member of Parliament, I have not encountered any single issue that has more angered small business owners than the current tax proposals you are contemplating.

I believe it is important you understand why this anger exists.
 
You might recall during the last election, your Liberal platform promised to, and I quote directly; “reduce the small business tax rate to nine per cent from 11 per cent."

Flash forward to today and not only have you reneged on this promise, but many small business owners feel that you have labelled them as tax cheats.

Your Liberal government is implying that the amount of tax they pay is unfair and paying more tax to Ottawa will create fairness for those who are not self-employed.

Many small business owners find this offensive from a government who promised something very different during election time. 
 
Throughout this discussion, I have repeatedly heard your finance minister talk about “misinformation” as if to imply that somehow small business owners do not understand what paying more in taxes really means.

This also offends many small business owners.

On the topic of misinformation, it is also very important to explain that when a small business owner pays themselves a wage, they do so at the exact same income tax rates that any other Canadian citizen does.
 
That is an important distinction.

In essence, the small business owner pays taxes twice.

The first time is when the small business owner pays tax on any profit, assuming there is some. All small businesses pay lower taxes on business income than personal income taxes.

However, don't overlook that all net income, once paid out in wages, is taxed again at the same personal income rates as all other Canadians.
 
It is also important to keep in mind that a small business owner has no:

  • Employment Insurance
  • Canada Pension Plan
  • taxpayer financed public sector pension or related benefits
  • maternity leave benefits
  • formal vacation pay system.


All of these expenses must be covered by the small business profits, again assuming there are some.

I mention all of these things to hopefully better illustrate why so many small business owners are taking such strong opposition to your proposed changes.
 
As I believe it is important to propose and not just oppose, I would like to offer a few observations.

Canadians understand we must live within our means.

Likewise, Canadians also understand your Liberal government is running significantly larger deficits than promised and currently has no plan to return to the promised 2019 date for balanced budgets.

Canadians further understand either spending has to be reduced or taxes increased to pay for all of your spending.
 
Your Liberal government has clearly decided increasing taxes is the solution. Rather than demonize small business owners under the guise of tax fairness, why not at least admit that your Liberal proposal is a tax increase? Recognize that small business owners are being asked to pay for this heavy burden.

Mr. Prime Minister, you often talk of recognition and respect and in my view, it is time for you to show some for Canada’s small business owners.

Here's my question for Canadians: 

  • What are your thoughts on raising small business taxes?

I can be reached at [email protected] or by calling 1-800-665-8711.



Was shuffle good idea?

This week, the prime minister shuffled his cabinet.

Although media often portray cabinet shuffles as a type of crisis-level event, there are many reasons why a shuffle occurs and, in this case, I believe the Liberals are refocusing in several key areas.

Most important is the decision to divide the current ministry of Indigenous and Northern Affairs into two new and separate departments.
 
One of the new departments will be Crown-Indigenous Relations and Northern Affairs, headed up by Minister Carolyn Bennett and the other will be the Department of Indigenous Services with former Health Minister Jane Philpott in charge.
 
What will these two new departments do?

In essence, one will focus entirely on the relationship between government and Aboriginal leadership, while the other will focus on delivery of services to First Nations communities.
 
The Liberal government said the former ministry had become too large, delivered far too many services with an equally large mandate to be truly effective. The Liberals believe that having two ministries with different mandates will be a more effective solution.
 
My thoughts?

I believe few would suggest that the status quo was not in need of improvement. However, there are also concerns with this particular decision.
 
One aspect of governance that I have come across that applies at all levels, is that joint accountability can often lead to no accountability.

In this case, there will be a strong requirement for these two ministries to work together while avoiding overlaps and missing gaps, all at the same time.
 
Another concern is creating another department with yet another minister adds even more bureaucracy to a system that is already considered by many to be administratively overburdened.  

The time line for First Nation communities needing decisions or approvals from Ottawa on important projects, delays and hurdles can be significant. Adding another department and minister to the fold is unlikely to help the process. 

What would have been an alternative?
 
This Liberal government has had one minister for the ministry of Indigenous and Northern Affairs. Perhaps a shuffle with a new and different minister may have been a prudent course of action before engaging in the costly split and creation of an entirely new department.
 
As an example of this, it is not a secret that the former Conservative government had some struggles with the department of Veterans Affairs.

Fortunately, a shuffle and the introduction of a new face with extensive experience, Minister Erin O’Toole, made a significant positive change of direction in getting the department back on track.

Ironically, Prime Minister Trudeau also just shuffled a new minister of Veteran Affairs into this portfolio for similar reasons as Seamus O’Regan takes over from Kent Hehr.
 
Ultimately, how a minister runs a department from my experience can make a significant difference.

My question this week:  

  • Do you support the splitting of the department of Indigenous and Northern Affairs into two different ministries or should there have first been a change in minister?

I can be reached at [email protected] or call toll free 1-800-665-8711.



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Is tax fairness fair?

It is difficult to turn on the news these days without hearing yet another media story about the United States administration.

Even the most trivial of presidential social media stories have become almost daily features during prime time news coverage of many Canadian news agencies. I mention this because all too often, important Canadian events are being overlooked or ignored at the expense of U.S. political coverage.
 
Why is this a concern?

In Ottawa, at the moment, the Trudeau Liberal government is pursuing a new direction they refer to as “tax fairness” for Canadians. The Liberals enjoy using buzzwords like tax fairness.

This phrase is cover for the fact that they are really proposing to seriously increase the amount of tax certain groups of society will send to Ottawa. This is the Liberal plan to deal with their problem of massively increased deficit spending.
 
Why should you care?

One of the groups that will be most seriously adversely impacted by these proposed tax changes is Canadian doctors.

First, let me pass on some background information. 
 
Doctors often operate like a small business. They pay rent, hire and pay staff, obtain insurance, cover monthly utility expenses, purchase medical equipment and supplies along with paying a host of other expenses.

As a result of operating much like a small business, doctors often incorporate as there are tax advantages to incorporation.
 
What are some of those tax advantages?

For starters, business income is taxed at a lower rate than personal income. However, it should be pointed out that when doctors pay themselves a wage out of the net corporate after tax income, they are taxed again on that income at the same personal income tax rates as any other Canadian.

Incorporation also provides other advantages in that family members can also be employed, not unlike any other small business.

This can help increase overall household income at a lower potential personal income tax rate. On the surface, this is why the Liberal government asks if it's fair to allow professionals such as doctors to benefit from these taxation benefits.  
 
However, there is another side to this discussion that is overlooked.

Doctors are not eligible for many of the same benefits as many working Canadians. There is no lucrative public sector pension plan for doctors even though they work entirely within the public sector in most cases.

Likewise employment insurance, maternity benefits, disability coverage and more, is not provided to doctors. Coverage for these critically needed benefits must be provided and paid for by the doctors themselves. 

In many cases, this is why doctors will leave residual funds within the corporate framework. This allows them to access some of these benefits, maternity leave being but one example.

Keep in mind when doctors are away for any reason, they suffer a loss of income or have to cover the costs of replacement coverage, all while monthly operating expenses remain in place.
 
If these “tax fairness” changes are pushed through by the Trudeau Liberal government, they will seriously impact doctors along with many other professionals all across Canada.

While the potential outcome of these impacts is unknown given the already short supply of family doctors, it is highly unlikely these tax changes will help with much needed recruitment and retention.  
 
My question this week:

  • Do you support the status quo of the current taxation policy with professionals such as doctors or do you believe a tax increase would create more "tax fairness"?


I can be reached at [email protected] or call 1-800-665-8711 toll free.



More Dan in Ottawa articles

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About the Author

Dan Albas is the Member of Parliament for the riding of Central Okanagan Similkameen Nicola which include the communities of Kelowna (specific boundaries), West Kelowna, Peachland, Summerland, Keremeos, Princeton and Merritt.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best. For his work on child safety and awareness, Dan was the recipient Penticton’s ‘2005 Young Entrepreneur of the Year’ award. Dan served as campaign chair for the United Way of the South Okanagan-Similkameen in 2006-7 and 2010-11, both times surpassing their fundraising goals.

On June 28 of 2012 Dan became one of the first MP’s in recent history to have a Private Members Bill (Bill 311) C-311 become law with the unanimous all party support of both the House of Commons and the Canadian Senate.  Bill C-311 “An Act to amend the importation of intoxicating liquors Act” amended a prohibition era law to prevented the free trade of wine over provincial borders.

Dan’s parliamentary record includes being recognized by the Ottawa Citizen in 2015 as one of only five Members of Parliament in Canada with a 100% voting attendance record.  Locally in British Columbia,  MP Dan Albas has been consistently one of the lowest spending Members of Parliament on office and administration related costs despite operating two offices to better serve local constituents.

 MP Dan Albas is consistently recognized as one of Canada’s top ten most active Members of Parliament on Twitter (@danalbas) and also continues to write a weekly column published in many local newspapers and on this website.

In October of 2015 MP Dan Albas was re-elected to Parliament representing the new riding of Central Okanagan Similkameen Nicola.  Dan is currently the Deputy Finance Critic, serving with Finance Critic, MP Gerard Deltell and sits on the Standing Committee on Finance.

Dan is honoured to serve the residents of Central Okanagan-Similkameen-Nicola as their Member of Parliament.

MP Dan Albas welcomes your input, so please contact him by e-mail, phone or mail.

He can be reached at:

Central Okanagan-Similkameen-Nicola's MP office
2562-B Main Street
West Kelowna, B.C. V4T 2N5
Email: [email protected]
Phone toll free: 1.800.665.8711
Fax: 250.707.2153



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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