Trudeau to listen to those opposed to closing tax loopholes before delivering legislation

Prime Minister Justin Trudeau says that he will not back down from his mission to make the tax system fairer for the middle class, but he is willing to listen to the concerns of small business owners worried about the impact of closing tax loopholes.

Prime Minister says he makes 'no apologies' for plans to change tax system

Prime Minster Justin Trudeau speaks after meeting with students at the Gordon Oakes Red Bear Student Centre on the University of Saskatchewan campus in Saskatoon on Friday. Trudeau said while he is committed to creating a fair tax system, he is willing to listen to critics of his move to close tax loopholes. (Liam Richards/Canadian Press)

Prime Minister Justin Trudeau says that he will not back down from his mission to make the tax system fairer for the middle class, but he is willing to listen to the concerns of small-business owners worried about the impact of closing tax loopholes.

Speaking in Saskatoon after meeting with students, Trudeau defended his government's decision to close tax loopholes as part of his government's plan to ensure the wealthy do not get tax breaks while the middle class suffers.

"We are doing more for the people who need it, less for the people who don't," Trudeau said, citing his government's middle class tax cut and introduction of the Canada child benefit as examples.

"I will make no apologies for this approach. It's what Canadians expect of us when we say we are going to grow the middle class and those working hard to join it," he said.

"At the same time we are in a consultation period. We are hearing feedback from Canadians that want to make sure that this does help the middle class and that is what we are very much focused on."

Last month, Morneau launched a 75-day consultation period for three proposed changes:

  • The curtailment of "income sprinkling," a method by which business owners shift a portion of income to family members, either through salary or dividends.
  • The curbing of "passive investment income," which the government describes as the investment of money left in a corporation, for purposes other than to invest directly in growth.
  • The conversion of a corporation's regular income into capital gains, which typically attract a lower tax rate.

Liberal backbenchers have been getting an earful this summer from small business owners outraged by the proposals.

They are preparing to unleash those concerns on Finance Minister Bill Morneau during the government's summer caucus retreat next week in Kelowna, B.C.

"From what I'm hearing right now, the highest priority thing is to engage in a meaningful discussion of the proposed tax changes to Canadian-controlled, private corporations," said Stephen Fuhr, who represents the riding that encompasses Kelowna.

"There are a whole host of people — i.e., the ones that are on the receiving end of the tax proposals — that are not happy.... My job is to deliver their input or that message to my colleagues."   

With files from Kate MacNamara and The Canadian Press