'A system that works for all Canadians': Finance Minister Bill Morneau defends tax plan

The government defends proposed changes to the way incorporated businesses are taxed, saying it's based on fairness. Critics say the plan is creating a class warfare.
Finance Minister Bill Morneau tells The Current that the proposed tax plan is 'the right thing to do to make our system work.' (Adrian Wyld/Canadian Press)

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In July, Finance Minister Bill Morneau announced his government plans to close so-called "tax loopholes."

The proposed changes come as part of the Liberals' election promise to make taxes fairer — and prevent wealthy individuals who set up private corporations from paying a lower rate.

But opposition has been mounting from all sorts of Canadians — from doctors and lawyers, to farmers and shop owners. 

RelatedHow proposed changes to Canada's tax system could hit small business

Critics say the tax plan hurts the very middle class the government claims to want to help  — creating a class warfare.

"We respond to those critics by saying that we're out to achieve a system that works for all Canadians," Finance Minister Bill Morneau tells The Current's Anna Maria Tremonti.

He points to the growth of Canada's economy, going up over the last decade with a "huge amount of job growth."

"It's not good enough if all Canadians don't get access to that. So if we're creating advantages only for a few, it actually isn't going to help the overall economy because it's not going to engage everybody in the success story."

Prime Minister Justin Trudeau defends his government's proposed tax changes for incorporated small businesses, saying the reforms are about "levelling the playing field" between the middle class and wealthy Canadians. 4:06

After hearing from Morneau speaking to Tremonti on The Current, Conservative Party deputy leader Lisa Raitt says the tax plan sounds like a solution to fix the Liberal's spending problem. 

"This to me is a case where they've spent the money and now they have to figure out how to get that from the Canadian public and this is the tax measures that they're putting in ... going after small business," she explains.

RelatedLiberal plan to close tax loopholes has raised questions: Here's a look at 3 of them

"I'm not in favour of increasing taxes just to make up for the deficits that the Liberals are running up," Raitt says.

But she suggests taking money out of the Treasury could be a manageable solution.

As for the people who believe they have escaped taxes associated with dividends or stock options with this plan, Raitt warns think again.
The Conservative Party of Canada's Lisa Raitt says the Liberals have a spending problem and increasing taxes is just a way to make up for the deficits the government is responsible for. (Nathan Denette/Canadian Press)

"I wouldn't relax if I were you because it sounds like they're coming back. They haven't backed away from it, they've just put it on hold for a moment," she explains.

"So it's just more ways for the Liberals to continue to tax with massive, massive effects both on small business, professionals, farmers — it's very distressing."

In principle, NDP finance critic Alexandre Boulerice says any measure making Canada's tax system fairer and more equitable is welcome.

"But what is quite interesting right now is that the Liberals are targeting small businesses and professionals, and they are doing nothing with the one per cent — the super rich," Boulerice tells Tremonti.

He says that Morneau not backing down or pushing forward on the stock option loophole, "proved that we are not targeting the friends of Bay Street and the big CEOs of this country."

Listen to the full segment near the top of this web post.

This segment was produced by The Current's Kristin Nelson and Willow Smith.