A new survey of thousands of small-business owners shows strong opposition to the federal government's proposed tax rules.
The Canadian Federation of Independent Business survey found its grassroots members back the lobby group's condemnation of the government's plans, with 86 per cent of business owners saying they do not support the changes.
CFIB president Dan Kelly said the survey results directly contradict the government's claims that the changes will only affect business owners with very high incomes.
"The government is suggesting that people are exaggerating this," he said. "If anyone is misinformed, it's the federal government as to the breadth of the changes that they're proposing, how many it is going to affect and how this is absolutely not targeted at wealthy business owners but is focused on business owners of all income levels."
The CFIB is part of a coalition of business groups opposing the package of proposed changes to small-business tax rules. The issue dominated the political agenda this week as MPs returned to Parliament Hill after the summer recess.
But while the survey suggests business owners are clearly opposed to the tax changes, there are other indications that the situation is mixed.
An open letter from doctors and medical students who support the changes had about 280 signatures on Sunday but more than 400 by Wednesday. Yet in Thunder Bay, 16 emergency-ward doctors penned their own letter this week, warning they would either resign, retire or leave the country if the federal government goes ahead with the plan.
Another survey, released on Wednesday by the independent Angus Reid Institute, found a more nuanced reaction from small-business owners, concluding that most of the business community is neither blindly supportive of the plan nor outraged.
The government is proposing to limit the ability of a small-business owner to "sprinkle" income to family members who do not work directly for the business. The changes would also restrict the use of an incorporated small business as a vehicle for making passive investments unrelated to the business.
The Angus Reid online survey of 1,988 Canadians included a sample of 852 small-business owners. A survey of 852 people would carry a margin of error of plus or minus 3.4 percentage points, 19 times out of 20. The survey found that almost two-thirds of small-business owners – 63 per cent – say the proposed changes to income sprinkling will have "no impact" on them, while 24 per cent anticipate a negative impact.
The CFIB, which has 109,000 members, received 8,553 responses from business owners and 410 responses from tax practitioners to its online survey. It was conducted Sept. 6-14.
In its survey, only 32 per cent of business owners said they do not pay family members compensation from their businesses. And 31 per cent of respondents said they do not hold passive investments in their business. For those who do hold such investments, property and land was the most common type, followed by business shares and stocks.
The responses from tax practitioners revealed even stronger concern, with 84 per cent saying the changes would be "very significant" for their clients. The CFIB said the government should take special note of that finding.
Liberal MPs met behind closed doors on Wednesday for their weekly caucus meeting. Afterward, some expressed uneasiness with the way their government has promoted the changes.
"It pitted large portions [of the population] against each other," said Manitoba MP Doug Eyolfson, a former emergency-room doctor. "There were some errors."
Liberal caucus chair Francis Scarpaleggia said the issue is so complex that he's had meetings in which constituents brought along their accountants.
"It's normal that constituents have concerns about what it means for them, but I think as time goes on and it becomes better understood, I think there will be more confidence in this proposal because, as I say, it's very complicated," he said.
On Wednesday, the NDP said it is broadly supportive of efforts to ensure the tax system is fair, but the party called for an extension of the Oct. 2 consultation deadline and recommended that other issues such as executive compensation and offshore tax evasion be part of any changes to tax rules.