SAINT JOHN – On Tuesday morning, Saint John-Rothesay MP Wayne Long attended a breakfast panel discussion on the federal government’s proposed changes to the way incorporated businesses are taxed.
It was hosted by The Saint John Region Chamber of Commerce and attended by nearly 200 people, most of them very angry small-business owners.
After the panel participants had spoken, the floor was opened to questions and comments. Many business owners stood up, turned toward where Long sat near the back of the room and urged him to oppose the planned changes. One man was literally spitting mad, another on the verge of tears as she spoke. They all had the room with them, receiving supportive ovations after they spoke.
It wasn’t a pleasant experience for Long, who had once been a small business owner himself and was now expected to tow the party line on what has become a deeply unpopular tax plan in the business community.
Later the same day, Long he attended a similar function at the Union Club in uptown Saint John.
“[It] certainly wasn’t an easy day starting with The Chamber of Commerce breakfast, where there was upwards of 200 people, and [then later] at the Union Club there was probably another 200 people there – all against, all very, very upset at the way we were proceeding with this,” Long told reporters Wednesday.
“I was a small business owner, I grew up here, I started my business here. A lot of these small business owners are my personal friends. They’re people I have a lot of respect for.”
Later on that night, Long posted the following message on Facebook:
“I’ve lived the hopes and dreams of having a business,” he wrote. “Small business is the backbone of our economy. I believe in my heart that these proposed changes will discourage entrepreneurship and hurt the very people we want to help. I cannot support these proposals without amendments.”
As tough as that day was for him, Long says those group events weren’t the only encounters that finally made him decide to take a stance.
In the last couples days, Long also had private meetings that influenced his decision to break from the party position. He met with a small business owner who said he’s not going to expand his business because of the changes, and he spoke with someone else who has decided he’ll have to lay off some of his staff.
“I believe what we’re doing is, we’re sending a shot across the bow of small business,” said Long. “We’re causing a lot of concern. Certainly, there’s a lot of unknowns. Anytime as a small business person, and again I’ve lived this, if you have an unknown, and you’re not quite sure what the future holds you’re going to pull back.
And when I [see] businesses in this riding that aren’t going to expand, that aren’t going to buy that piece of equipment, that gives me great, great cause for concern. That was a breaking point for me.”
In his conversation with reporters Wednesday, Long said many times that he understands the plight of the small business person because he once was one himself. He used to work for an international salmon company called Stolt Sea Farm, he said, and then he left to start a salmon sales and marketing company called Scotia View Seafood.
“I had a $15,000 line of credit. I had four weeks vacation pay, and that’s how I started my company,” he said. “We had a lot of success, but there was also a lot of risk. I can remember sleepless nights. I can remember wondering if enough cheques were going to come in to pay staff, to pay my suppliers.
I have firsthand experience in the trials and tribulations of growing a business. And I just fundamentally believe in my heart and my stomach that these changes are a dampening of that entrepreneurial spirit.”
He doesn’t take issue with all of the proposed changes, though, saying it is reasonable to ask business owners to demonstrate how their family members take an active role in operations if they engage in “income sprinkling.”
“I believe there is an opportunity for our government to move forward on that,” he said. “I believe a ‘reasonableness test’ is fair, and a lot of people I talk to concur with me. I think there probably are abuses on the income sprinkling side. I’ve said from day one I believe that there is an opportunity to look at what is fair and what is not.”
He feels most strongly about the proposal to tax at a higher rate “passive investments,” or money held in reserve for retirement savings, to make new investments, or make up for shortfalls in lean times. If business owners invest the money in RRSPs, as government supporters of the plan suggest, Long said they have no flexibility to use the money for things that help sustain and grow the company.
“A small business owner that doesn’t have stat holidays, that doesn’t have vacations days, if they get sick they’re in trouble, deserves to have that money in their deferred account,” he said. “They can grow it, invest it, use it for expansion, use it for collateral, and that just creates the proper conditions for small business growth.”
Long said he informed the Finance Department before he went public with his opposition, but he didn’t reach out to Prime Minister Justin Trudeau or Finance Minister Bill Morneau personally.
I’m doing what I think is best for my constituents,” he said. “It’s up to every MP to decide what’s best for the constituents in their riding.”
Speaking to reporters in St. John’s Wednesday, Trudeau said he was fine with Liberal caucus members who voice dissent on this issue. “I encourage a broad range of voices speaking up within the Liberal party,” he said.
Long may be happy the prime minister is prepared to hear him out, but what he most wants are changes to tax proposals he believes could hurt the economy that’s on an upswing after reporting a 4.5 percent growth rate in the second quarter.
“We have an economy that’s growing right now,” he said. “We’ve had the highest growth I believe, in the last 10-12 years. I believe a lot of our policies are working. Our infrastructure spending, our commitment to get communities moving is working. But again small business is the backbone of our country, small businesses employ people, small businesses take risks, small businesses are the ones that grow, develop, expand.”