By Trevor Parry, M.A., LL.B,LL.M (Tax), TEP
Special to the Financial Independence Hub
I am always concerned when a Federal government starts thinking of the Province of Quebec as a policy innovator. Certainly the left exalts their cheap daycare, made possible by an utterly punishing tax burden on business and individuals. Well, it should be no great surprise that the Boy King and his fellow trust fund alumnus, LSE grad Bill Morneau have started to embrace “revenue measures” quite popular in La Belle Province.
Taxing private medical and benefit plans
The latest trial balloon is to make private medical and benefit plans a taxable benefit. This would mean that most Canadians who have dental and pharmaceutical coverage provided as part of their employer compensation would start seeing these benefits taxed as income.
Of course, the middle class: that amorphous group that the kumbaya chorus known as the federal Liberal Party claims to represent would feel the pinch most acutely. If your group plan costs $6,000 per year you can now look forward to having the Little Prince confiscate just over $2,000 from you. If you are unfortunately part of the class enemy known as the 1% then count on $3,000 or more being forked over. One can assume that the bedrock of the Liberal Party, that is the civil service, would somehow be spared from this tax measure.
The rationale for this policy innovation is of course the grand and lofty goal of egalitarianism. The homeless and downtrodden don’t have these plans so once again we must measure all policy according to the lowest common denominator. The fact that these individuals, if they care to check into the medical system are completely covered is irrelevant in the Fabian Socialist society (a.k.a LPC).
Unfortunately too many Canadians, fed a steady diet of Liberal sycophancy from the Canadian media believe that Justin and the Liberals are champions of the little guy. There has been no bolt of lightning that jars into accepting the reality that the LPC is the part of oligopolies, banks, insurance companies, Bombardier and the law and accounting firms that service them. It is also lost upon them that the general health of the population should be given at least equal weight as mandated equality of results.
Small business deductions may be restricted
What other measures can we expect to see floated in the lead-up to the next confiscatory federal Budget? Perhaps a restriction on claiming the Small Business Deduction can be expected. In Quebec the deduction is dependent on employing three or more fulltime workers. The definition of “full time” could be construed in a most punitive fashion to further constrict tax planning and flexibility. For the Trudeau Liberals, advised as they are by that coven of entrepreneurialism the Wynne government , small business concerns have no place in the formulation of policy.
It won’t be just doctors who decide to shut down practices, businesses of all measures faced with this Orwellian level of mission creep will simply decide that there are greener pastures elsewhere, notably south of the border. I wonder if it is lost on Messrs. Trudeau and Morneau that the corporate tax reform that the incoming Trump administration is likely to enact will create an American version of the Small Business Deduction. President Trump however is unlikely to mandate employment levels, believing instead that the American spirit when unfettered by regulation has routinely produced abundantly.
For the immediate period we can look forward to more “trial balloons” being floated in expectation of a draconian federal budget that will seek push the tax burden to new heights. Given the complete reckless abandon that the government has approached fiscal matters with we should not be surprised.
Targeting the 1%, fettering the middle class
It will be convenient to publically target the 1% but in actuality to fetter the middle class. Economic advancement comes from deploying capital strategically and for the middle class amassing capital of any sort is a product of savings. With the very real expectation of increasing interest costs which will weigh as a millstone around the neck of our mortgaged population together with stratospheric taxes being levied by Liberal governments, both federal and provincial, the only result will be economic exasperation.
When Canadians are given a chance to rectify fiscal incompetence at the next election hopefully even the “snowflake” millennials will join with others and recall that other great message from Quebec, Je me souviens.
Trevor Parry is the President of the TRP Strategy Group, specializing in owner manager tax and compensation planning, executive compensation, philanthropic strategies, enhanced retirement planning and professional corporation planning. Trevor was formerly the National Sales Director of GBL, a boutique actuarial consulting firm. In addition to his practice he speaks and writes extensively on financial strategy, planning and tax issues.