Canada’s business community is urging Bill Morneau – who continues as Finance Minister following Wednesday’s reveal of the new federal cabinet – to resist demands for new spending in the minority Parliament.
Dennis Darby, president and chief executive of the Canadian Manufacturers and Exporters, said the business community will appreciate the “stability” that comes with Mr. Morneau remaining at Finance.
“Bill Morneau is the right choice,” he said in an interview.
The Liberal government’s ability to survive confidence votes on budget issues will depend on Mr. Morneau’s ability to work with other parties in the minority Parliament. NDP Leader Jagmeet Singh said this week that the Liberals should adopt NDP proposals for tax increases, such as a wealth tax or higher corporate tax rates, to pay for social spending in areas such as national pharmacare.
Mr. Darby said he hopes Mr. Morneau will push back on calls for higher business taxes and focus instead of raising revenue through stronger economic growth.
“There will be a lot of pressure on him in a minority Parliament, especially one that’s got a lot of support from the left side of the political spectrum, to spend more. Hopefully he won’t,” he said.
Mr. Morneau faced controversy during the Liberal government’s first term over plans to overhaul tax rules for incorporated small businesses. Mr. Morneau’s initial plans, unveiled in the summer of 2017, prompted months of outrage from small business owners, leading the government to eventually back down on several of the changes.
Dan Kelly, the president of the Canadian Federation of Independent Business, the main organization representing small business owners, said he did not have any direct meetings with Mr. Morneau over his four years as Finance Minister.
Mr. Kelly said small business owners remain upset with the changes, as well as the perception at the time that Mr. Morneau painted small business owners as tax cheats.
“It’s still a bit of an open wound,” said Mr. Kelly, before adding that his group is ready to turn the page.
“We’re going to try to start fresh with the government," he said. "I’m really hoping – looking forward, in fact – to kind of normalizing relations between Canada’s small business community and the federal government.”
Mr. Kelly said he would like to see Mr. Morneau take on a clearer role as the voice of business at the cabinet table and to demonstrate a commitment to fiscal discipline in the face of calls for more spending.
The small business tax changes flowed from language in the 2015 Liberal platform about reviewing existing programs. The 2019 Liberal platform also contains wording that could signal future clashes with the business community. The Liberal platform pledges to raise money through a comprehensive review of federal spending and tax policies “to ensure that wealthy Canadians do not benefit from unfair tax breaks.” It also promised to “crack down on corporate tax loopholes" and to make sure that multinational tech giants pay corporate tax on the revenue they generate in Canada.
Wednesday’s cabinet announcement saw Navdeep Bains remain as Innovation Minister, with a slightly revised title of Minister of Innovation, Science and Industry. Marc Garneau also remains as Transport Minister and Marie-Claude Bibeau continues at Agriculture.
Other economic portfolios now have new ministers in charge. Jean-Yves Duclos, a former economics professor, moves from Social Development to Treasury Board. Mary Ng continues as Small Business Minister, while adding Export Promotion and International Trade.
Ottawa-Vanier MP Mona Fortier joins cabinet as associate minister of finance, responsible for Middle-Class Prosperity.
Newfoundland and Labrador MP Seamus O’Regan moves from Indigenous Services to Natural Resources, where he will be responsible for easing tensions between Ottawa and the energy sector over recent federal bills that impose new rules for approving large projects such as pipelines. Filomena Tassi moves from Seniors to Labour.
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