Office of the Prime Minister
80 Wellington St
Ottawa, ON
K1A 0A2

Dear Prime Minister Justin Trudeau,

I have never taken the step of directly communicating with Members of Parliament until now. I do not write this letter to slight any political party but rather to speak out against what I and many others believe is simply poor policy in the form of the proposed tax changes that will have severe and long last social and economic impact to Canada.

I feel the “tone” of these new tax proposals labels all independent business owners (including farmers, retailers, manufacturers, real estate investors and developers, financial advisors, doctors, lawyers and accountants, etc.), who are the “engine of employment” in Canada (approximately 90%) according to articles I have read, as “tax cheats” horribly unfair. Small business owners contribute significantly to Canada and are doing their best to efficiently manage risk, cashflows, and returns on capital invested. I know Mr. Morneau “qualified” his statements, but politicians know better than most, that messaging boils down to sound bites and “we are targeting small business owners who are tax cheats” is the message that came across loud and clear. Further, the government has always had the ability to enforce existing tax legislation. If there are actual “tax cheats” out there, why not strictly enforce existing legislation rather than propose new changes that will have unintended ripple effects across the greater economy? This is a government failing to recognize the ineffectiveness of its own enforcement and trying to fix one problem (supposed tax cheats) by creating two more. If taxpayers are following the rules, they are not “tax cheats”.

The government has an extensive tax regime in place which is so complex no ordinary taxpayer has any possibility of understanding all components. These rules have been developed over decades and have been amended, changed and modified, as nauseum by the cumulative governments of the day. Taxpayers have relied on at least the underlying principles to remain consistent to make long-term decisions for their retirement, business continuity and estate planning. The proposed changes represent momentous change in these principles, not seen since the tax reforms of 1972 and does not give individuals an opportunity to adjust to impacts on tax planning and retirement savings that may have been in place or built over decades.

Employees and small business owners are different in many ways. They are distinct groups with unique needs, attributes and contributions; hence, they should not be treated or taxed in the same way to remain truly “fair”. For example:

– Employees do not take the same risks or incur the same costs. Small business owners require significant capital to get started which is exposed to uninsured risk, self-employed individuals have difficulties securing mortgages and working capital loans, many put everything they own on the line to succeed.
– Compensation is not the same nor are small business owners and employees supported by government or tax advantaged programs in the same way (i.e. EI, pensions, vacations, sick days, benefits, etc.)

I believe that small business represents the essence of what Canada is all about.  The relentless drive to innovate and lead change.  To dream and risk one’s own security to better not only one’s self but their family, community and country.  Business owners work hard and have made the hard choice to forego the security of a normal job to forge ahead independently.  I personally would not have it any other way.  It is important to understand what independent businesses owners bring to the table – a willingness to take risk, a drive for innovation, jobs, investment, growth, progress, a desire to give back to their communities, charitable donations and the core services necessary to build our nation.  Independent businesses and their owners already pay some of the highest taxes in the world.  I think that this proposed tax change will be devastating and wide spread in its harm with the following impacts:

– Jobs will be lost, either because they move to more tax advantageous jurisdictions or to simply cut staff to save money
– Charitable donations will be significantly reduced
– Investment in Canada will significantly decrease
– The benefit of the USA “Trump” brain drain will not flow to Canada
– Our efforts to maintain future technology and other startups in Canada will be negatively affected
– Our healthcare professionals will have but another reason to move abroad
– More barriers for innovators and risk takers to consider which may lead to them not moving forward
– Less incentive to invest, start an enterprise or support existing startups – necessary “free” capital will be reduced
– Real estate values will be negatively impacted as will the wealth creation and capital it makes available

I have read numerous, well researched articles from various knowledgeable, professional authorities, who continue to outline the negative impact these changes will have on small businesses and employment in our country. I trust you are reading these articles as well and ensuring you are responding in a manner that puts your country’s interests at the forefront rather than any potential short-term political agenda. As you are no doubt aware, various affected groups are starting to become aware of the impact these changes will have on their business and are mobilizing to respond. You have provided a limited the timeframe of 75 days to do this – not nearly enough time for the massive changes proposed.

In my opinion, these proposals represent poor policy which will have irreversible, long-term, damaging impacts and I expect there will also be a multitude of unintended consequences – none of them positive. For the reasons outlined above, I encourage you to stop and not implement these changes contemplated on July 18th, 2017.

Respectfully,

Gregory Zehr
CEO & CO-FOUNDER
T 519 342 1000 X 222
C 519 465 7000
gzehr@marshallzehr.com

cc:
Andew Scheer, Leader of the Conservative Party of Canada
Bardish Chagger, Member of Parliament for Waterloo
Bill Morneau, Member of Parliament for Toronto Centre & Canada’s Minister of Finance
Kyle Peterson, Member of Parliament for Newmarket-Aurora