Are you ready for a discount tax?
(This column originally appeared on the Toronto Sun)
When will it ever be enough?
As Canadians were sitting down for their turkey dinners over the weekend, news broke that the CRA had issued new guidelines decreeing that employee discounts are now taxable.
Apparently, getting 20% off the pastel pantsuit you have to wear at work or saving a couple of bucks on your fast-food combo meal made you a juicy target in the eyes of the taxman.
Fortunately, the Liberal government appears to be backing away from the misguided plan. Revenue Minister Diane Lebouthillier issued a statement Tuesday that says the Canadian Revenue Agency (CRA) will be “clarifying” its wording on a directive to retailers.
“There have been no changes to the laws governing taxable benefits to retail employees. We are not targeting individuals working in retail.”
If the government chose to proceed, it would have required the single mother working retail for near minimum wage to report any small discount she received as taxable income. The 18-year old students flipping burgers to pay their way through college would have had to report every time they used the employee discount to get a quick, cheap meal while on a break.
It also created the prospect of more red tape for businesses as they would be forced to track employee purchases, figuring out the difference between the “fair market value” of the item and the discounted price employees pay.
This plan was never about a crackdown on greedy tax cheats hiding their wealth in secret accounts or shysters claiming bogus tax credits. This was an attack on low-wage retail and hospitality workers who are often barely making ends meet.
It was the umpteenth nail in the coffin on the government’s “fairness” narrative — a move designed to shake down businesses and everyday Canadians to pay for corporate welfare projects.
And it sounded a lot like the triumph of bureaucratic pettiness over common sense.
Perhaps we shouldn’t be surprised. Since coming into office two years ago, the Trudeau government’s record on taxes can be easily summed up by one word: higher.
There was the cancellation of the planned small business tax cut. A payroll tax for employers in the form of higher Canada Pension Plan premiums. Killing income splitting. A new 33% tax bracket for higher-income earners. A beer tax escalator. A national carbon tax. And who could forget the tax revolt they set off with their ill-advised proposals to close “loopholes” for small businesses?
(Yes, they did cut the middle income tax rate in their first budget – but as noted by the Fraser Institute, after factoring in all changes together, 80 per cent of middle-income families were left paying an average of $840 more in annual taxes.)
Is it any wonder so many Canadians are fed up with the government constantly coming back for more?
The proposed crackdown on employee discounts was yet another nickel-and-dime tax grab by a government that can’t control its spending.
Yet, the CRA wasn’t even expecting to raise a lot of money off the measure — although it would have taken an army of taxpayer-funded CRA bureaucrats to enforce such guidelines.
And it could’ve turned out to be pointless in the end, since many businesses could decide the hassle of jumping through the CRA’s hoops just wasn’t worth it, and get rid of employee discounts altogether.
Trying to hit up minimum wage workers for a few extra bucks wouldn’t make much of a dent in the federal deficit.
But it might prove hazardous to a government already viewed with suspicion by tax-exhausted Canadians.