Justin Trudeau’s Liberals introduced a range of tax increases on employee discounts to pay for their free-spending ways. After a public outcry, the Liberals forceful announced they would no longer be taxing employee discounts. The increases were presented by means of an amendment to Canada Revenue Agency’s tax folio. The updated folio now reads:
“when an employee receives a discount on merchandise because of their employment, the value of the discount is generally included in the employee’s income”
The changes to the folio remain petty and small-minded. They also show a lack of political awareness of who the audience for tax increases are in Canada. The speed at which the Liberals changed their minds shows how closely the opponents to these changes represent their base. The proposed changes to the small business tax regime in Canada are accepted by lower-income Canadians, and silver spoon socialists, who believe in the misguided fallacy of the making the rich pay ever more being a positive thing for our economy.
The Liberals were originally misguided in their response to the outrage caused by the change in the CRA wording. National Revenue Minister Dianne Lebouthillier said in an email statement:
“We are not targeting individuals working in retail.”
The Liberals finally got it. It is not just retail workers who would have been impacted by these proposals. There are workers in a number of other sectors who are now free of these proposed rules. Workers in the bar and restaurant industry would have been impacted because they would have had to report the cost of meals provided as part of their employment.
The kid cutting grass at your local golf course as a summer job would theoretically be expected to claim the cost of a free round of golf as part of their income. An employee at a car wash would have to pay for washing his own vehicle at his owner’s facility during slow times.
The changes to the tax regime will impact businesses on a few fronts. The changes would have imposes “additional administrative burden” on business despite Lebhouthillier’s expressed desire to not do that. How much effort would have been involved for businesses to go through the process of proving the exact cost of a good or service they provide to employees on a discounted basis? How much effort would have been required to record all discounts given to employees on the chance the CRA requests those records?
There was a real possibility for a huge unintended consequence to the most vulnerable members of Canada’s workforce as a result of the terrible CRA guidance. Some employers would have stopped offering employee discounts. When faced with the time and effort to keep up with government reporting requirements it might have been easier to end the practice of giving discounts altogether.
The abandoned changes to the tax regime are another example of fiscal incompetence in the Trudeau cabinet. Finance Minister Bill Morneau should have foreseen the problem these tax increases would have caused with the Canadian public. Increasing taxes on the working poor were bound to cause a public relations nightmare. If Morneau were willing to meet with constituents in his riding he may have heard criticism of these changes earlier in the process.
Morneau’s disdain for retail politics is a contributing factor to this failed tax grab on the backs of the working poor. The writing is on the wall despite Lebhouthillier’s feeble attempts at diversion. Bill Morneau is not suited to be Minister of Finance and should resign immediately.