As part of their first budget, the Liberal government is reducing the small business tax rate to 10.5%. This is contrary to the Liberal Party’s campaign promise to continue the previous governments plan for small business taxes. The schedule was set to reduce the small business tax rate to 9% this year.
The government did not directly answer the question as to why they abandoned this promise.
The government has stated that their budget is beneficial to small business. They argue they are helping the middle class, and indirectly helping small business by putting more money in their pockets to spend, and providing small businesses more customers.
During the election, Liberal leader Justin Trudeau created a controversy when he suggested small businesses set up as private corporations were a way for people to avoid paying taxes.