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Island business groups applaud drop in federal taxes

Business leaders on P.E.I. say they're pleased with Monday's announcement from Ottawa of an impending drop in the small business tax rate from the current 10.5 per cent down to nine per cent.

However, they're still waiting to hear what other tweaks Ottawa has planned for its controversial suite of small business tax changes.

The Trudeau government rolled out its proposal over the summer, pledging to close tax loopholes available to corporations in order to make the tax system more fair.

"While we're waiting for the Liberals to take a position on the proposed changes that were in play, that's not what we heard today," said Rory Francis, president of the Charlottetown and Area Chamber of Commerce.

"We did hear a change of tone in a positive direction."

'Cancelled the cancellation'

The Liberals promised to drop the small business tax rate to nine per cent during the 2015 election campaign, but froze the tax rate in their first budget.

In that respect, Francis said Monday the government "cancelled the cancellation" of the promised tax drop that still hadn't materialized.

He said taxing businesses at a lower rate will help them reinvest and to grow.

Meanwhile, another group on Monday said government showed it's been listening to business owners and interest groups who've been outspoken in their opposition to the changes.

"The fact that they are taking some of the steps that we're seeing today and hopefully some more as we progress through the week does mean that our voices were heard," said Erin McGrath-Gaudet, P.E.I. director with the Canadian Federation of Independent Business.

Government caved, council says

But the head of the Council of Canadians said his group is disappointed with Monday's announcement, saying it shows government "caving in to public pressure" rather than move ahead with tax reform.

Leo Broderick said Canada requires significant changes to its tax system. However, with Monday's announcement he said "this does not look good for the future of tax reform in the country. If they can't move ahead with modest reforms … it doesn't appear that we're going to get a fair tax system in the country."

Broderick said reducing taxes to small businesses will either shift that tax burden to other taxpayers, or take dollars away from public programs and infrastructure.

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