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Fri, Jul 19, 2024
Sean Hu presents to a Parliamentary Caucus

Mr. Sean Hu, CBCC Executive Director, presented to the All-Party Entrepreneurial Caucus of the House of Commons on behalf of the Coalition for Small Business Tax Fairness in Ottawa on November 2, 2017.

Over 70 business and professional associations formed the Coalition for Small Business Tax Fairness, following the federal government¡¯s announcement on the proposed changes to the taxation of private corporations in July 2017. The CBCC is one of the members of the Coalition.

The Coalition sent three tax professionals (including CBCC¡¯s Executive Director Mr. Sean Hu) to meet with the All Party Entrepreneurial Caucus of the House of Commons to express concerns over the proposed tax changes.

Mr. Hu¡¯s presentation focused on: 1) The reasonableness test is unnecessary. 2) Crack down on passive income would hurt growth and the middle class. 3) The negative impacts on the Chinese community would be disproportionate.

The CBCC takes the position that the negative impacts would be disproportionate on the Chinese community mainly for two reasons: 1) our community is relying more on self-employment and small business; 2) it would suffer more from the weakening of Canada¡¯s international competitiveness as a result of the tax changes.

Members of the Chinese immigrant community are most likely to start and run a small business or find employment with small businesses after immigrating to Canada, as the chances for us to land a job with the government or a big business are relatively low due to the fact that our proficiency in any of the official languages is generally lower than the rest of the population. So the Chinese community would be hit harder by the changes to the taxation of small business corporations.

The Chinese community also has an international dimension; it relies heavily on Canada¡¯s international competitiveness. The proposed tax changes have come at a time when other countries and jurisdictions, such as the United States, Hong Kong, Australia, New Zealand, Singapore, Japan, Britain, Germany, and so on, are taking steps to improve their competitiveness for international investments and entrepreneurs. For example, our neighbour the US has refused to join the CRS and has just announced significant tax-cuts; that will help the US and hurt Canada in attracting international investments.

Canada¡¯s current tax regime is working well in attracting Chinese investments and immigrants but would lose its attractiveness in a significant way if the proposed tax change would go ahead. Without sufficient incentives for entrepreneurship, hardworking, innovation, it would be very difficult for Canada to attract any new investments and entrepreneurs from China and other parts of the world. Furthermore, many of those that are already in Canada would leave for other countries like the United States, Hong Kong, and China.

The Chinese business community in Canada relies heavily on the businesses that are directly and indirectly related with China. Popular such businesses include trading with China, immigration consulting, international education, travel, tourism, investment consulting, real estate agent services, insurance agent services, legal and accounting services, financial planning and so on. These businesses would be the first to suffer from the diminishing of Canada¡¯s competitiveness; and then the pain would spread to more traditional Chinese businesses such as local restaurants, variety stores, supermarkets and so on.

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