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Controversial changes to small-business tax rules are about to become law, but a new petition shows they remain very unpopular with thousands of business owners.

Conservative MPs tabled a petition Monday with about 45,000 signatures that calls on Ottawa to “abandon” its package of small-business tax changes.

At a news conference, Conservative finance critic Pierre Poilievre recounted the history of the sweeping tax changes that Finance Minister Bill Morneau first proposed in the summer of 2017.

Mr. Poilievre noted the original proposals prompted “a massive, spontaneous backlash led by plumbers, pizza shop owners and farmers” that forced the government to respond.

“They decided to put some of those changes on ice and move forward with a significantly watered down version of the original proposals,” he said. “We are putting forward the voices of 45,000 small-business owners who say they are not putting their guard down.”

The last of the small-business changes were approved this month when the Senate passed the government’s budget bill, C-74.

The budget bill includes measures that will apply immediately and affect businesses with significant amounts of money in passive investments, such as real estate or shares in other companies, that are not related to their active business.

Under the new tax rules, companies with more than $50,000 in passive investment income – which is equivalent to a 5-per-cent return on $1-million – will start to lose access to the lower small-business tax rate on their active business income. If passive income reaches $150,000, that business would completely lose out on the small-business tax rate and would be subject to the rate paid by large companies.

The federal corporate tax rate is currently 15 per cent, while the small-business tax rate is 10 per cent. Ottawa has promised to lower the federal small-business tax rate to 9 per cent for 2019.

The government says the changes are designed to ensure small business corporations are not used by high-income Canadians simply as a a vehicle for paying less tax.

The Canadian Federation of Independent Business had urged MPs and senators to delay the new passive investment rules through amendments to the budget bill, but that didn’t happen.

The Senate approved the budget bill last week without any amendments or debate at the final third reading stage.

According to the CFIB, some small-business owners will now face tax increases in the tens of thousands of dollars this year.

The Parliamentary Budget Officer estimated in November, 2017, that the passive income changes as proposed then would raise up to $1-billion a year in new revenue during the first two years and $6-billion annually after 20 years. However, the final proposal in the budget bill included further changes and the PBO has not yet updated its revenue forecasts.

The PBO also said that the changes will only affect about 2.5 per cent of incorporated small businesses.

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