Good morning, Mr. Chairperson, and members of the committee.
My name is John Hopkins and I'm the chief executive officer of the Regina and District Chamber of Commerce.
I want to begin my comments by expressing our shock and dismay about the manner in which the largest tax changes in 45 years were communicated. Tax cheats, not paying their fair share, tax evaders, and the list goes on: these accusations are being levelled at people who used to be the most respected professionals and business people in the land, farmers, doctors, dentists, lawyers, accountants, and business owners on every single main street.
What is most appalling is that these accusations did not come from a fringe group but, rather, from the Government of Canada, a government that is supposed to represent all Canadians, including business people, most of whom are in the highly exalted middle class. These changes were released in the dead of summer with only 75 days to disseminate. However, these are not simple changes. They are complex and far reaching.
Our view, which incidentally is the view of virtually every chamber of commerce, board of trade, and every other major business association in the land, is that there needs to be meaningful, open, transparent consultations where everyone can be heard. During the 1960s, the Carter royal commission took four years to propose changes, but for these changes it's 75 days. Why the rush?
Recently we had the opportunity to meet with numerous chamber executives from all over our country and, without question, by far the most egregious challenges facing members of chambers of commerce and boards of trade are the corporate tax changes. Our approach to dealing with the discussion paper was to encourage our members to get professional tax advice. In addition, we asked members to let their voice be heard through an online forum. To date, we have had over 1,320 individuals fill out the form, which calls upon the government of Canada to take the current proposals off the table and to launch meaningful consultations.
Business owners are risk takers and in many cases put it all on the line, and during start-up there's typically limited or no profit with the potential for downturns at any moment. At the same time, business owners have no safety net. There is no social program if the business doesn't make a profit. They simply don't get paid. There is no earned vacation pay, no medical leave, no maternity leave, no overtime pay, no employer contribution to a pension plan, and no severance or health benefits that many middle-class employees receive, which in many cases are mandated and in some cases paid for by businesses but are mandated by law. Yet the discussion paper goes to great lengths to say that both are on the same level playing field.
The proposed income-sprinkling changes will have dramatic impacts on some business owners and their families, while the government continues to say this will only impact the highest income earners. We're less than convinced. In addition, the government's reasonableness tests are not clearly defined, particularly given the reality that in many cases a family business person may be in charge of multiple duties that may not have a market comparison.
The goal of most businesses is to increase the value of the business as an asset, which has proven to be exceedingly valuable to all Canadians in terms of job creation, capital investments, and tax revenues for all governments. One can and should question what impact these changes will have on the national economy. Passive income is the most disconcerting tax change. While we do not know exactly how this will be implemented, our discussions with numerous tax professionals have led us to believe that these changes could be very material and have far-reaching impacts.
Most prudent businesses will have or will be seeking to have an adequate level of reserves through economic slowdowns, capital purchase, expansion, new acquisition, and the list goes on. Will these reserves, which are typically invested in various financial instruments, now be deemed as passive income? What about those who are saving to expand or buy out competitors, or those who have reserves to ensure that they don't lay people off? If these changes go through and these types of dollars are now deemed passive income, what happens to the pool of capital across the nation?
On intergenerational transfers, we were absolutely flabbergasted that this common practice was not caught until late in the consultation period. The unintended consequences of that measure alone sent shockwaves through families and businesses. Are there others? Business owners, business groups, individuals, and even some of the government's own MPs are calling for the Government of Canada to hold meaningful consultations.
As a country we cannot and should not be throwing out the baby with the bathwater. Please heed the call of Canadians and hold meaningful consultations.
Thank you.