With the increased globalization of the economy, the term “competitiveness” has become ubiquitous. What does it actually mean? Mostly the term is synonymous with productivity and innovation. This is incorrect as they are three completely separate although interrelated forces that act on our economy.
To truly succeed in today's technology-driven global economy, Canada needs to develop and execute three distinct strategies: one for success in innovation, one for international competitiveness, and one for productivity. While we applaud the federal government's efforts around NAFTA, market access and free flow of products is a top priority. It is a moot point and one we cannot celebrate if our domestic economy erodes due to the policy decisions being put forward through the proposed tax on incorporated businesses across our country.
The tax changes the government has proposed are the most significant tax changes we have seen in 45 years. They have the potential to alter our current tax system in fundamental and negative ways.
I'm here representing over 1,400 businesses in Saskatoon. Over 90% of our members who were polled are against these proposed federal tax changes as they feel there will be significant and far-reaching negative impacts on themselves, their families, and their communities.
These impacts will not only expand across our country but across generations. We cannot be constantly changing the rules of the game, so government has one shot at this. You need to get this right by having a more comprehensive consultation that includes business. The short 75-day consultation period started in the middle of summer. The limited information and the controlled access to round tables are not enough.
These tax changes will affect all private business owners regardless of their level of income, size of business, or conformity with fiscal rules. Many, if not most, business owners will end up paying higher overall tax in the future if these proposals go ahead, sometimes even paying higher tax rates of taxation than other Canadians at the same income level. This has been confirmed by accounting professionals across Canada.
If the government is concerned with the growing number of Canadian-controlled private corporations and is trying to ensure delinquent business owners pay their fair share of taxes, they should be looking at targeted measures, not the broad sweeping changes they have proposed. Many small business owners have indicated that if these rules pass in their current form, they will shut down their businesses and turn to full-time employment, or they will move their businesses out of Canada. This could result in significant job losses in addition to leaving Canada lagging behind other countries in terms of small business ownership statistics.
It isn't fair to target small and medium-sized businesses, and it certainly isn't fair to put in place measures that could cost employees jobs. These changes will ultimately affect productivity, disposable income, and the investment around innovation across our country.
If our government is serious about productivity, innovation, and competitiveness, we urge you to rethink your proposed tax changes to ensure that we grow small businesses across Canada and continue to encourage entrepreneurship, to launch meaningful consultations with the business community to review tax policy without unfairly targeting independent businesses, and to consider, through a royal commission, a comprehensive review of the Canadian tax system with a view towards fairness and simplification for all taxpayers and increasing competitiveness for all businesses.
I want to close by reading one of the many submissions that we received from our members:
“I grew up in Saskatchewan in a working poor single-mother family. I never received a college diploma or university degree. I didn't even finish high school. I started working as soon as I could. I vowed I would never be in the same position I grew up in. I worked non-stop doing various jobs, sometimes in unsafe conditions.
“Sixteen years ago, at the age of 26, I established my first business and invested every cent that I had saved—and not partied away like the majority of my peers—into a franchise operation hoping to purchase myself a stable job. With hard work and dedication, I managed to turn the one business into three small businesses and also operate a company that purchased housing so that my employees could have a safe place to live at a reasonable cost.
“As the owner of these businesses which run 24 hours a day, 364 days a year, I have gone into work at two in the morning to assist with power outages. I have laid in the hospital bed hours after giving birth doing schedules. I have carried my two-day-old baby to work doing fundraising for charities or company supports. I was ineligible for EI and wanted to breastfeed.
“I pay taxes in my business, and I pay personal taxes when I take money from my business to pay for things for my family of four children and a fifth on the way.
“I currently travel to Ontario several times a year and purchase—stockpile—groceries and bottles of water for my ailing father, who has poor well water, has osteoarthritis, and can't carry water bottles or other heavy items.
“Business owners make sacrifices to achieve. I am a leader. I take care of my people. I don't take sick leave. I don't take parental leave. I do take pride. I am not cheating. I am trying to build an example for my family and for others in my community that have given up hope.
“Please consider that changing these tax rules will limit my ability to pass on my achievements to my children. It will limit my ability to spend on extra benefits for my team members. It will limit my ability to expand my business and employ more people. Can you imagine how different my life would have been if I didn't become an entrepreneur, or the lives of my children, or the lives of my team members that I consistently help, or the community organizations I host at no charge in my business?”
Thank you.