Adam Prudhomme
Beaver Staff
Federal finance minister Bill Morneau was in Erinsville Thursday morning to announce an amendment to proposed tax reform the Liberals say would help keep Canada’s family farms in the family.
Speaking at Maclaughlin Farm on County Rd. 41, Morneau was joined by agriculture minister Lawrence MacAulay, Hastings-Lennox and Addington MP Mike Bossio, Kingston and the Islands MP Mark Gerretsen and Northumberland-Peterborough South MP Kim Rudd.
The Maclaughlin family provided them a quick tour of their dairy operation.
John Maclaughlin is in the process of transferring control of the farm to his son Angus, which makes them a perfect example of the demographic the Liberals say their amendments are intended to help.
“We’re putting forward simplified proposal that makes it clear there will be no impact on family members that are actually working on the family farm or working in businesses,” said Morneau.
The changes would also allow farmers and business owners the flexibility to save money inside their corporation.
“We said that they could save in future about $1 million inside their corporation to manage risk, save for a rainy day or sick leave or parental leave,” said Morneau.
“With these measures we know that for 97 per cent of small business owners, for farmers and fishers in the country, there won’t be any change,” said Morneau. “But for the three per cent of private corporations who hold the lion’s share of an estimated $200 to $300 billion in passive investments inside their corporations, there are going to be some change to make sure the system is fair.”
Morneau says the amendments came following feedback from taxpayers.
“We heard from business owners including many farmers and fishers that the draft legislation on converting income to capital gains was too broad and that it could create some problems for intergenerational transfers for businesses and farms,” said Morneau.
“We heard some concerns that it might be more difficult for farmers to pass their farm to the next generation. What we’re announcing this morning is we’re going to take a step back and reconsider that part of our tax reform proposal. We’re going to work with farmers like John to protect family businesses, including farms and fisheries in particular, and their ability to hand that farm down to the next generation.”
The announcement came on the heels of other tax reform amendments made earlier in the week.
“Earlier this week the prime minister and I announced that we’re going to move forward on reducing the small business tax rate to nine per cent, as we promised in the last election,” said Morneau. “We’re going to make sure that happens by Jan. 1, 2019. There was a second part to that promise. It said as we lowered the small business tax rate, we wanted to make sure that it actually went to small businesses and helped to make those businesses and helped to make those businesses grow and not to reduce personal income tax for high income earners.”
Bossio says the announcement was an “exciting” one given the rural nature of the Hastings-Lennox and Addington riding.
“My raison d’être is how do we build sustainable rural communities and this is part of it,” Bossio said of the proposals. “This is a big part of it. Small businesses and farms are the backbone of rural sustainability. When these proposals came out myself and other rural members approached the (finance) minister and said ‘I’m willing to work with you, we need to stop the uber wealthy, the super wealthy, from realizing tax advantages that others don’t have to ensure that we have fairness within our system. But at the same time, we don’t want to have an impact on the ability of intergenerational transfer of small businesses and family farms. That is the way that a lot of our youth come back to our community, by inheriting the farm of the small business.”
Bossio says they heard plenty of feedback on the original draft of the reform.
“The intent of this is not to impact the intergenerational transfer of our businesses,” said Bossio. “This is what’s unfortunate. As a party who ran in the last election, we said we were going to consult constituents; we weren’t just going to jam things through in a draconian way. We were going to put forward proposals and we were going to consult widely. We have done this non-stop. The difficulty is most Canadians aren’t used to it. They see the proposal and they think ‘Oh my God, it’s legislation. This is going to pass.’ They panic. And of course unfortunately others out there take advantage of that — the politics of fear, and they get people whipped up in a very stressful situation, necessarily.”
At the close of the press conference Morneau also addressed an issue that came up in Wednesday’s question period, in which critics grilled the prime minister as to why Morneau didn’t put tens of millions of dollars worth of shares of his company, Morneau Shepell, into a blind trust when he joined the cabinet. According to critics, not doing so is a conflict of interest.
“There’s been a distraction this week,” said Morneau. “What I can tell you is that when I came into office I made sure that I disclosed all my assets to the ethics commissioner. I got some advice from her to make sure I didn’t have any conflicts of interest and I followed that advice very carefully because I want to make sure I can do the work I’m doing.”
He added he planned to speak more on the matter later in the day and week.