Liberal Tax Hike on Local Businesses May Cost Twice What Minister Morneau Claimed

March 08, 2018

The Parliamentary Budget Officer’s latest report revealed that small businesses will end up paying at least half a billion more under new rules

OTTAWA, ONConservative Shadow Minister for Finance, the Honourable Pierre Poilievre, today responded to a new report from the Parliamentary Budget Officer (PBO) which found that the Liberal government’s latest tax changes will cost local businesses at least twice ($589 million) as much as the Minister of Finance originally claimed, and could potentially end up costing more than $1 billion depending on how the Canada Revenue Agency (CRA) enforces them.

“Today’s report clearly shows that the Liberals’ tax changes are really just a complex tax grab,” said Mr. Poilievre.  “While Andrew Scheer’s Conservatives are focused on bringing forward solutions that put hardworking people before government, Prime Minister Justin Trudeau is focused on raising taxes to pay for his out-of-control spending.”

Today’s PBO report follows unprecedented criticism of the Liberals’ “income sprinkling” rules from past and current Chief Justices of the Tax Court. “‘I think it’s going to substantially increase the number of cases that go to the court, because it’s going to be a battle between the CRA and the taxpayers as to what ‘reasonable’ means in various situations,’ former chief justice Gerald Rip said in an interview,” according to the Financial Post. 

Mr. Poilievre agreed, “These complex rules will cost more to administer, enforce and litigate than they will raise in revenue. Meanwhile, local businesses will be forced to spend more on accountants, lawyers and taxes—instead on hiring workers and serving customers.” 

Amazingly, the PBO had to do three separate scenarios of how the CRA may enforce these changes, because its analysts were “unable to clearly identify the individuals who will be subject to the [tax on split income] TOSI rules.” 

“If Justin Trudeau wanted to raise taxes on local businesses and wrap them in red tape at the same time, he has found the perfect policy to do it,” said Mr. Poilievre.  “If masters- and PhD-level economists at the PBO cannot figure out who will pay what, how will a small family-run burger joint or laundromat do so?”