Finance Minister ​Bill Morneau convinced tax reforms needed

​Bill Morneau didn't look like a man fleeing pitchforks and torches as he sauntered into a Saturday morning briefing for reporters over the weekend.

'We need to make long-term changes and make sure the incentives are right for business'

Federal Finance Minister Bill Morneau speaks to reporters in Fredericton. (CBC)

Bill Morneau didn't look like a man fleeing pitchforks and torches as he sauntered into a Saturday morning briefing for reporters over the weekend.

The federal finance minister was relaxed, even jovial, in tie and shirtsleeves. He greeted three reporters gathered in a boardroom with a firm, dry handshake and a broad smile. No hint of anxiety over his imminent journey later that morning into the lion's den of the Canadian Chamber of Commerce annual meeting, many of whose delegates would like to see his head on a spike, metaphorically speaking.

"My message is that we are in a good place. The economy is doing well we are in the best place in a decade."

Morneau's opening line radiates optimism, though a subsequent reference to declining jobless rates seems slightly tone-deaf in New Brunswick.

Morneau is a man who appears absolutely convinced he is doing the right thing by proposing changes to fundamentally re-tune tax breaks through incorporation that currently save small businesses hundreds of millions of dollars a year. Morneau believes those tax breaks are now more about shielding income from the taxman than building stronger small businesses.

"Tax changes are important. We need to make long-term changes and make sure the incentives are right for business."

Argues for change

Is he put off by the loud objections of business groups opposed to those changes?  

"It's unfolding in a way that's louder than I would have hoped," he says, smiling at his own understatement.

Morneau argues the changes will not affect the vast majority of farmers as some have claimed. Nor will they prevent small businesses from using income sprinkling, distributing revenues in paycheques to family members, where those family members are actually working for the business.

"We have looked at the number of families sprinkling income. About 50,000 tax filers out of 25 million tax filers. That's about one out of 500. Many of them are doing it legitimately."

Those that are using the technique legitimately and have earnings below $150,000 a year needn't fear the tax changes says Morneau, they won't be affected.

That reassurance isn't carrying much weight with business people alarmed by the changes. They've been vocal, especially doctors who have latched on to the benefits of incorporation to protect revenues from taxation.

Listening and considering

Morneau professes to be listening to and considering all objections. 

"We have to be out there listening to people, how these measures will impact people."

That listening period ends on Oct. 2.

Has he heard anything so far that would alter his plan?

"It's premature to say, 'I heard this so we're going to change that.' 

"We've spent a long time looking at the tax system. This has been a process of pretty intense study."

So, no appears to be the answer.

As for the federal Conservatives who are rallying growing opposition to the tax reforms, the finance minister is sanguine.

"If the Tories want to defend the interests of people who are incorporating to get a better tax rate that's their decision."

"What we think is most important is that we have a tax system that provides a firm foundation for all Canadian taxpayers."

And with that, Morneau is on his feet for a quick round of handshakes before setting off to face the next round of skeptics.

About the Author

Harry Forestell

Host CBC News New Brunswick at 6

Harry Forestell is the host of CBC News New Brunswick at 6. He worked in London as journalist from 1995 to 2000 and from 2005 to 2008 as CBC's European correspondent for Newsworld.