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tax reform

Finance Minister Bill Morneau.The Canadian Press

Liberal MPs will hold a special caucus meeting next week to talk with Finance Minister Bill Morneau about his controversial tax plans amid slumping poll numbers, party officials said.

Party caucuses traditionally meet on Wednesdays when the House is sitting, but the Liberals have called a special meeting next Monday at 8 a.m. ahead of a four-week sitting in Ottawa.

What happens at caucus meetings is usually confidential, but Liberal officials confirmed that Mr. Morneau will be front-and-centre to talk about his controversial plans to change tax rules for small corporations. The officials were not authorized to speak on the record.

How the Liberals want to change the tax code – and why

Other economic issues will also be discussed, as Mr. Morneau will brief the caucus on a meeting he had with International Monetary Fund managing director Christine Lagarde while Prime Minister Justin Trudeau travelled to Washington and Mexico City this week.

A number of Liberal MPs have publicly expressed concerns over the proposed tax changes, while the opposition parties believe they have managed to undermine the government's public support with relentless attacks in recent weeks.

The latest numbers from a Nanos Research tracking poll indicate that the Liberal Party has lost five points over the past four weeks, down to 36.9 per cent support. The Conservative Party has gained two points, up to 32 per cent support. The NDP has remained relatively stable at 15.4 per cent.

The poll of 1,000 respondents was based on a four-week rolling average that ended on Oct. 6. It is considered accurate within 3.1 percentage points, 19 times out of 20.

After months of public consultations, Mr. Morneau has promised to come back quickly with revised plans for changing the tax rules that govern incorporated small businesses.

Unveiled in July, the three-point plan would restrict the use of "income sprinkling" to family members who do not work or invest in the business as a way of paying less tax. It would also restrict the conversion of dividend income into capital gains and limit the use of incorporated small businesses as a vehicle for making passive investments.

Mr. Morneau has said the passive investment changes would likely affect only a small percentage of the 1.8 million incorporated small businesses known as Canadian-controlled private corporations. Still, that proposal has attracted the fury of business owners across Canada.

Earlier this month, Mr. Morneau said his revised proposals would protect the interests of farmers, fishermen and female entrepreneurs.

"We want to make sure that small businesses can continue to invest in their business and their communities and that the measures actually encourage that," he said.

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