I am a physician, practicing community-based palliative care in Ottawa. I am not incorporated, but I stand firmly in support of my colleagues who are advocating against the proposed changes envisioned by Minister Morneau and Prime Minister Trudeau. The unfairness of these changes, which will penalize my colleagues and others who made use of a completely legal vehicle to finance things such as capital expenses, maternity leave, and retirement planning, is clear. The fact is that the use of Private Corporations was not a “grey-area” and was actually encouraged by governments. It is clear that Mr. Morneau and his Finance Department staff felt they were targeting a group of people who, regardless of their actual financial health, could be portrayed as “one percenters.” They are now finding out that the bullseye at which they were aiming has expanded in size to include just about anyone who owns their own business in Canada.
But let’s take it a step further. Given the reach of private enterprise in Canada, we all, all citizens, are going to be paying for this tax. I only hope that businesses would have the courage to be transparent about it. When you receive a bill at the local family-run restaurant, I would like that bill to read:
- Food/drink: $40.00
- MTS*: $ 4.00
- Subtotal: $44.00
- HST: $5.72
- Total: $49.72
*MTS: Morneau-Trudeau Surcharge
Because that cost will be there. When that entrepreneur looks at his or her finances, and realizes that their savings is no longer going to be sufficient for them to sell or hand to business off to family when they planned, that they may never achieve the financial independence that years of crushing hard work and risk should reward them with, something has to give. Small business owners, who early on in their careers are the last to collect earnings, having gone through the growing pains and sleepless nights wondering if they will be successful, have earned the right to an appropriate income. Given the choice between delaying retirement for five years and raising prices, they will do the latter. Given the choice between standing pat or expanding their business, with its attendant risks and costs, they will do the latter, and raise prices to fund this expansion.
My pets’ veterinarian has been in the process of building a new clinic to replace the old outdated building he has been in for many years. As expected, prices have gone up. He is still a bargain, in my books, and I understand that my pets will benefit if they need more than routine care. This is not a tax, this is money going to support a business I need and that I value. But the next hike in rates may be solely due to the fact that our veterinarian can’t afford to keep all his employees while saving for other future improvements to the clinic. That he can’t afford to keep all his equipment maintained while saving responsibly for his retirement. So in order to maintain service, he will have to institute a surcharge, thanks to Mr. Morneau and Mr. Trudeau.
What will the Morneau-Trudeau Surcharge amount to? Hard to say. But it will be real. And it won’t provide any direct benefit to those who are going to be asked to pay it – consumers, you and me. It will reduce our federal deficit somewhat, but not as much as Mr. Morneau’s staff hopes. Because some businesses will not raise prices. They might be already in a fight for their lives against big box stores, big box restaurants, multinational professional services companies, massive public corporations. They might have customers who simply cannot afford to pay more, businesses who operate in low socioeconomic regions or who have existing contracts to honour. They might be unable to charge more because they are constrained to one or few payors, such as doctors.
The fact is that these businesses, the ones who cannot pass on the cost of the Morneau-Trudeau Surcharge to their customers/clients/patients may simply do what Mr. Morneau and Mr. Trudeau hope – that they “pay a little more.” But many more will decide to “cut a little more” instead. So a bit longer wait for your food because there are less wait staff. A bit less stock on the shelves at the corner store. A bit more likely to reach voicemail than a person when you call your doctor’s office, and a bit longer to get a call back. Some people will lose their jobs or have hours cut back, causing a drop in income tax revenue. Businesses may simply close, reducing tax revenue at all levels of government. These are real consequences and real people being affected. And none of them, not the employees of the businesses, not the owners, not the clients/customers/patients, none of them are “one-percenters.”
So don’t let Mr. Morneau and Mr. Trudeau fool you into thinking this is about the “rich paying a little more.” This is a shell game. This is your money. You paid tax on it when you earned it, you will pay “a little more” when you spend it. You even get to pay HST on the whole amount, including the Morneau-Trudeau Surcharge. Wealthy, middle class, blue collar, working poor, or unemployed, we will all pay.