The Whistler Chamber of Commerce is warning that proposed changes to Canada's corporate tax system will unfairly impact local small- and medium-sized businesses.
The aim of Ottawa's overhaul is to go after high-income Canadians who use private corporations to reduce their personal income tax burden by using one or more existing "tax loopholes:" passive investments; income "sprinkling" to family members in lower tax brackets; and converting business profits into capital gains.
One of the more controversial proposals would limit incorporated business owners' ability to hold their business income within the corporation, essentially protecting it from a higher personal tax rate, a common tactic companies use to save for large capital investments or endure through slow periods.
"Business owners have employees who depend on stability and if there are 'dead seasons,' as in Whistler Resort or myriad of other business challenges, owners may not earn a penny while keeping the business afloat," wrote Melissa Pace in a letter outlining the Chamber's concerns addressed to Sea to Sky MP Pamela Goldsmith-Jones.
While the Liberals have touted the changes by saying they would target the wealthy and level the playing field for low- and middle-class Canadians, the reality, according to Coast Mountain Photography co-owner Mike Mills, is that in a cyclical market like Whistler's, most business owners are decidedly middle-class themselves. (The overwhelming majority — 93 per cent — of the Chamber's members are either small or medium business owners with fewer than 50 employees.)
"If you're grossing a million dollars a year and have a whack of staff and paying what people need to pay here in Whistler, you're middle class as a business owner and these are the people being affected," said Mills, who also serves as chair of the Chamber's advocacy committee.
"There needs to be a realization that what (the government) is proposing for a $50-million business also applies to a half-a-million-dollar business."
Limiting income sprinkling would be another example of Ottawa's one-size-fits-all approach to Canada's diverse business landscape, Mills said.
"I think that most people that are doing income sprinkling are probably doing it on a very conservative basis. Again, if you've got a small business, there isn't that much income to sprinkle around," he said.
"I understand where (the government is) coming from, but I think they're catching all the fish with a net that's really just looking for a few cheats."
The general consensus among Chamber members, who were recently polled on the proposed changes, is that there needs to be more consultation.
"We understand (the government) wants to make changes to the tax policy, but the consultation feels a lot like they are just telling us what they're going to do," said Mills. "So let's open up the consultation period, lengthen it, and develop the ability for small and medium businesses to be sheltered from this."
The good news is that Ottawa appears to be open to softening its stance on one of the most significant corporate tax reform's in recent memory. In a Sept. 19 article, CBC reported that the Liberal government is preparing to offer a measure that would make the contentious changes more acceptable to the business community.
"We are not just going to take, take, take," a senior government official, speaking on background, told CBC News. "We're going to give something as well."
The official would not speculate as to what that concession might be, but it will likely be a part of the final proposals presented at the conclusion of the consultation period on Oct. 2.