Conservative MP Pierre Poilievre.Chris Wattie / Reuters/Reuters
The Conservatives and NDP are planning to force the Liberals to vote against their own election promise to small business owners.
Conservative MP Pierre Poilievre is putting forward an amendment to the government's budget bill, C-15, that would force a House of Commons vote on the specific issue of what should happen with the small-business tax rate.
The NDP proposed a similar amendment when the bill was before the House of Commons finance committee, but it was defeated by the Liberal majority. The NDP has proposed a similar amendment to the Conservatives for a vote in the House. It is not yet clear how the Speaker will manage the proposed amendments.
Both the NDP and the Conservatives were in favour of reducing the small-business tax rate to 9 per cent last year when the Liberals decided to adopt the same position in the party's 2015 election platform.
The previous Conservative government's 2015 budget set in place a gradual reduction of the rate from 11 per cent to 9 per cent by 2019. The first cut – to 10.5 per cent – took place on Jan. 1 under the Liberals.
However a single line in Finance Minister Bill Morneau's March 22 budget said any further reductions were "deferred."
The budget provided no explanation for this change. Mr. Morneau has faced repeated questions to explain this language in recent weeks and has declined to provide a rationale for the decision nor has he said whether any further reduction may still take place.
The Parliamentary Budget Officer estimates that each quarter point reduction in the small-business tax rate would reduce federal revenues by $148-million. That means a further reduction to 9 per cent would reduce federal revenues by about $890-million annually.
The Liberal platform had also promised that annual deficits would not exceed $10-billion. However the budget said that because of slower-than-expected economic growth, annual deficits are projected to be about three times larger than that promised cap.
"They need the money. I think it's that simple," said Mr. Poilievre in offering his theory for the Liberal change. "They made a lot of promises during the election [and] they're vastly over budget."
The vote will likely be considered a matter of confidence by the government and is unlikely to succeed, but Mr. Poilievre said there will be symbolic value in having Mr. Morneau and Prime Minister Justin Trudeau stand and vote against their own campaign promise.
"I think it will be very stark for them to have to vote directly against their platform commitment," he said. "It's one thing for them to oppose Conservative policy – which one would expect – but it's quite another for them to vote against their own policy."
Voting on amendments to the budget bill is likely to take place Tuesday.
The small-business tax rate of 10.5 per cent applies to the first $500,000 per year of qualifying business income for a Canadian-controlled private corporation. Larger businesses are subject to the general corporate income-tax rate of 15 per cent.
When asked, Mr. Morneau repeatedly states the focus of the budget is on growing the economy, which will benefit small business owners.
"That is the sort of change that will allow those families to be excellent customers for small businesses, buying products and services, and raising the revenues of those businesses, which is, after all, first and foremost what businesses want. They want improved situations and an improved economy, so they can make their business better in the long run," he said on Monday when pressed by the Conservatives to explain his position on the small-business tax rate.