Conservatives pledge review of tax system to ease headaches for small businesses

Conservative Leader Andrew Scheer is pledging to repeal changes to the tax system that led to a near war between small business and the Liberal government two years ago.

Scheer said today that, if elected, he would reverse the decision by the Liberals that increased the tax rate on small business investments and made it harder for companies to pay dividends to family members.

"A new Conservative government will continue to celebrate small businesses as drivers of prosperity, and not view them merely as sources of revenue," he said.

In 2017, the Liberals changed the tax system for businesses to close what they called an unfair loophole. It allowed small businesses to keep income from sources not related to their work inside their corporations — where it was taxed at a lower rate than it would have been had they counted it toward their personal bottom line.

The government had argued that allowing that system meant people were incorporating solely for a tax benefit — but a massive outcry ensued among those who felt the Liberals were branding self-employed Canadians as tax cheats.

The government subsequently was forced to change its proposed new rules, opting to allow businesses to keep a maximum of $50,000 in passive income before the new taxes kicked in.

Scheer said today he would just reverse that policy, and another change the Liberals made around paying dividends to family members.

Scheer said he'd slash 25 per cent of all federal regulations over four years to ease the burden on the country's businesses.

That would mean culling more than 34,000 regulations from the 136,121 currently on Ottawa's books.

To accomplish such a major rewrite of the federal regulatory regime, Scheer said he'd appoint a cabinet minister solely responsible for cutting red tape.

The minister would also initiate a two-for-one rule on regulations across government departments — for every new regulation enacted, two others would have to be scrapped.

When asked what regulations would get the axe, Scheer said the government would start with "low-hanging fruit."

He pointed to the hassle a young Ottawa girl had to go through to open a lemonade stand on National Capital Commission-owned property. She had to satisfy 15 regulations before she could sell her product on a hot summer day.

There are also outdated regulations about the size of fruit and vegetable containers and more than 11 different standards for first aid kits across the country, Scheer added.

"We want to bring in experts in these areas — they can help make sure that we're keeping regulations that provide a benefit to Canadians, whether it's health, environmental safety, but eliminating the ones that are purely useless," he said.

Scheer is campaigning today in southwestern Ontario, making his tax announcement in St. Catharines before moving on to Waterloo and London, Ont.