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Trudeau says wealthiest Canadians using small business tax rate to avoid taxes

Liberal leader Justin Trudeau addresses a rally in Edmonton on Wednesday, Sept, 9, 2015.


Liberal Leader Justin Trudeau is coming under fire from the group representing small businesses in the country for saying the wealthiest Canadians were using small business tax rates to reduce their own tax bills.

Trudeau, however, isn't backing down from the comments that have angered and perplexed many small business owners who, just this week were told the Liberals backed a plan to reduce their tax rate — an issue that could sway how they vote in this election.

"As the largest small business group in Canada, we see no evidence that the small business rate is being used by so-called wealthier Canadians to save on their taxes," said Dan Kelly, president of the Canadian Federation of Independent Business.

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The federal parties have courted the small business vote, promising to reduce their tax rate to nine per cent from 11 per cent. Small business groups have long advocated for the move after watching the federal Conservatives cut corporate tax rates over the past 10 years.

Trudeau said his party would follow through on that promise if elected Oct. 19, but confused business owners with comments in an interview with the CBC, which aired Tuesday night, that seemed to suggest many were using the reduced tax rate to avoid paying their fair share of taxes.

Trudeau seemingly doubled-down on the comments when pressed about them in Edmonton on Wednesday, saying that several studies have shown that more than half of small business owners are "high net worth individuals who avoid paying as high taxes as they otherwise would."

In that group are doctors and lawyers, groups that may find themselves squeezed by the policy Trudeau loosely outlined this week.

"We want to focus on helping small business owners who are working hard, who are creating jobs for members of their community and serving their community," Trudeau said. "We are committed to evidence-based policies and I will make no apologies for that."

Kelly said his organization's data suggest four-fifths of Canadian incorporated employers earn less than $100,000 per year, and almost half earn less than $50,000.

"When you include the self-employed, incomes are even more modest. Most teachers make more," he said.

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The comments drew the ire of Trudeau's political opponents as Conservative Leader Stephen Harper chided Trudeau for believing that a large percentage of small businesses were "tax scams," while the NDP called on Trudeau to apologize for his comments, arguing he was smearing small business owners as being tax cheats.

The issue is likely to continue to dog Trudeau on Thursday as he campaigns in Vancouver, but Trudeau didn't seem concerned that his political foes would use his comments to chip away at his rising poll numbers.

"One of the things I have been consistent in throughout my tenure as leader is an approach that actually doesn't worry too much about how my opponents might choose to attack me on a given statement," Trudeau said.

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