Premiers want federal tax proposals on agenda at first ministers' meeting

When Prime Minister Justin Trudeau sits down with the premiers next week, it's likely he will get more grief on his government's proposed small business tax changes. And the Prime Minister's Office said Thursday that Finance Minister Bill Morneau will be on hand to answer premiers' questions.

Some provinces have publicly expressed concerns recently with corporate tax changes

Prime Minister Justin Trudeau is likely to hear more about his controversial tax reform proposals when he meets with the premiers next week in Ottawa. (Sean Kilpatrick/Canadian Press)

When Prime Minister Justin Trudeau sits down with the premiers next week, it's likely he will get more grief on a topic he's heard a lot about lately — his government's proposed changes to the small business tax regime.

Premiers have publicly expressed concerns with those changes recently, including leaders from Nova Scotia, Newfoundland and Labrador and British Columbia.

The Prime Minister's Office said Thursday there will be a discussion around tax reform, and federal finance minister Bill Morneau will be part of it. He will also be available to meet with premiers individually to answer any of their concerns, a PMO spokesperson said.

The agenda still isn't finalized, but an afternoon session on job creation and economic growth will include talk about the Liberals' proposed changes to how private corporations are taxed.

Those changes have faced criticism from a number of quarters, from the Conservative opposition and business owners to Liberal backbenchers.

Morneau draws criticism from business, concerns from N.S. premier

Nova Scotia premier Stephen McNeil told reporters in Halifax Wednesday that one of the real-world issues around not allowing private corporations to retain passive investments is how such a move would affect doctors who use that tax vehicle to save for retirement. 

Concern for small business

"At the same time, we believe when it comes to investments being left in corporations, it's imperative in our province that we allow that, so small businesses across this province continue to have their own capital inside of the corporation so they can reinvest," he added.

Newfoundland and Labrador Premier Dwight Ball said the federal government needs to do a better job of explaining the proposed tax changes. (Andrew Vaughan/Canadian Press)

N.L. Premier Dwight Ball told reporters during a federal cabinet retreat in St. John's recently that the federal government needs to do a better job explaining the consequences of its tax proposals.

Some Liberal MPs have also publicly expressed a concern over the changes which would:

  • Restrict the ability of business owners to reduce their tax rate by sprinkling their income to family members.
  • Put limits on the use of private corporations to make passive investments that are unrelated to the company.
  • Limit business owners' ability to convert regular income of a corporation into capital gains, which are typically taxed at a lower rate.

The opposition Conservatives have raised the issue in question period every day since Parliament returned last week.

NAFTA continues to loom

CBC News has obtained a copy of the first ministers' meeting agenda, which will be held in Ottawa next Tuesday.

The afternoon is devoted to an economic update, as well as a debrief on Canada-U.S. relations which likely includes talk of ongoing NAFTA negotiations. Foreign Affairs Minister Chrystia Freeland and Canada's Ambassador to the U.S., David McNaughton, will lead those talks.

McNeil has a few items he would like to hear more about, as the third round of talks comes to a close.

"The whole issue of point of origin is an important piece for our province in terms of exports. Looking at the dispute mechanism is an important piece. We need to make sure that's there," McNeil told CBC News.

There is also a lunchtime presentation on economic growth and job creation from Bank of Canada Governor Stephen Poloz and Chief Statistician Anil Arora.

Nova Scotia Premier Stephen McNeil has raised concerns about how the tax changes will affect physicians saving for retirement. (Jason Franson/Canadian Press)

​The morning will be devoted to Indigenous issues, with a roundtable on "inclusion of Indigenous Peoples in an economic growth agenda."

Leaders from the Assembly of First Nations, the Inuit Tapiriit Kanatami, and the Métis National Council have all been invited to that part of the meeting.

These are the same three Indigenous groups that refused to attend the annual summer meeting of the premiers, because they were not invited to be part of all of the discussions.

Next week, the Indigenous leaders will meet first with Prime Minister Justin Trudeau for 45 minutes, then with all of the premiers for another hour and a half.

But the leaders are not part of the luncheon presentation, nor the afternoon update on Canada-U.S. relations.


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