Mortgage Broker

8 | fall 2017 cmba-achc.ca CMB MAGAZINE Adrian Wyld/Canadian Press editorialsummary The government's hypocritical new tax plan hits brokers, borrowers, investors and small business hard BY sAmAnthA gAle, CmBA exeCutive direCtor Mortgage industry weathers Liberal attack TWo YeARS INTo THe Liberal government mandate, it has waged a massive two-pronged assault on the mortgage industry and its client base. One blow was struck in the ramping up of mortgage qualification stress tests, which will now apply to non-insured bank mortgages, and are estimated to reduce a home purchaser's buying power by as much as 21 per cent. e second and more far-reaching assault is on small business, through tax changes which initially promised to crush the life out of corporations earning passive income. e small business corporations targeted by the Liberals include just about all persons who participate in the mortgage transaction process, including the many mortgage brokerages across Canada, mortgage investors who place passive income into mortgage investment corporations, and mortgage borrowers consisting of the self employed and individuals operating under a professional corporation. ere is a deep irony at work here over the issue of overspending and the dire need to curtail it. e Liberals are motivated to implement heavy-duty stress tests to ensure that mortgage borrowers can withstand anticipated future interest rate hikes. Of course, no one wants homeowners to be foreclosed upon or even struggle to make their monthly mortgage payments, despite the likelihood that the new stress test will push a good many borrowers into the alternative lending market. However, when it comes to spending, the Liberals do not operate as good role models for the Canadian public. What is good for the goose is clearly not good for the gander. In their October 2017 economic statement, the Liberals promised to press ahead with $14.9 billion in new spending initiatives over and above that contained in the March budget. But apart from how the Liberals are spending tax dollars on infrastructure and other government programs, the irony is much more profound if we look at how the Liberals treat themselves. Take, for example, Trudeau's trip to a private island in the Bahamas as a guest of the Aga Khan, which so far has cost taxpayers a whopping $215,398 – a number which is 70 per cent higher than the initial cost, reported to have been $127,187. We also know that the Aga Khan island is owned by a mysterious web of secret companies in a jurisdiction known for being an offshore tax haven. We will see what comes from an ethics investigation into Trudeau's trip. In response to the tax change proposals, the public launched a massive protest. CMBA, for instance, partnered with 76 other professional and business organizations, representing hundreds of thousands of small business operators across Canada, to lobby for common sense to prevail. A significant turning point in the campaign was when the Liberals promised to start taxing employee discounts – a move which brought about swi rebuke from the public, and crystallized the image of the Prime Minister and Finance Minister as elitists, taxing hardworking Canadians and small business; meanwhile, they personally take advantage of tax loopholes and schemes designed for the rich, a class to which both clearly belong. e good news is that the Liberals have succumbed to the pressure and finance Minister Bill Morneau is grilled by the media on tax reform.

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