Federal Conservative leader Andrew Scheer makes a campaign stop in Thorold, Ont., on Tuesday, September 24, 2019. THE CANADIAN PRESS/Nathan Denette

Conservative Leader Andrew Scheer is vowing to roll back the Liberal government’s small business tax changes.

At a restaurant in Thorold, Ont., on Tuesday, Scheer pledged to repeal tax changes for small business investments brought forward by Finance Minister Bill Morneau in 2018.

It includes a pledge to restore access to the small business tax rate for businesses with a passive annual income of more than $50,000, as well as allow such firms access to refundable taxes for corporations on the distribution of eligible dividends.

As well, Scheer wants to exempt spouses or common law partners of small business owners from Liberal changes restricting the savings from income sprinkling, a strategy used by wealthy owners of private corporations to divert their income to family members with lower personal tax rates.

READ MORE: Scheer commits to reviving more Harper-era tax credits

Small business tax changes were first proposed by Morneau in the summer of 2017 and then tweaked in 2018 following a strong outcry from certain business owners, including family doctors operating their own practice.

“I believe governments should get out of the way and allow small businesses to do what they do best,” Scheer said.

The Tory leader is also pledging to reduce federal regulations by 25 per cent.

While Scheer did not offer specific examples as to what red tape can be cut, he committed to eliminate outdated regulations he described on Tuesday as “low-hanging fruit.”

The Montreal Economic Institute, a think tank promoting liberal economics, estimated last year that there were 136,121 federal regulations, meaning a Scheer government would have to cut more than 34,000 measures.

Scheer is also vowing to appointing a minister to lead red tape-cutting efforts, as well as removing two regulations for every one adopted — echoing a commitment in Ontario by Premier Doug Ford.

Kevin Milligan, an economist at the University of British Columbia, said rolling back the Liberal government’s changes would benefit some of Canada’s wealthiest. In a Twitter thread, he said the passive investment proposal would affect the top 2.9 per cent of private companies who would receive 88 per cent of such income.

“These proposals clearly benefit the highest earners who have private corporations,” Milligan said.

I've been a bit skeptical of claims that the @CPC_HQ policy package has been cutting taxes 'for the rich'. Boutique tax credits do skew up toward the high end of the middle class, but they are not really focused at the top 1%. But, today's @CPC_HQ announcement is very different. — Kevin Milligan (@kevinmilligan) September 24, 2019

Meanwhile, the Liberals framed the Conservative announcement as a “tax cut for the 1 per cent.”

“Our Liberal government cut taxes for Canadian small businesses — full stop … Andrew Scheer will cut taxes for the wealthy and cut services for everyone else,” said a statement attributed to Navdeep Bains, the federal innovation minister and Liberal candidate in Mississauga-Malton. Under the Trudeau government, the small business tax rate has declined from 11 to 9 per cent.

As well, the Tory leader vowed on Tuesday to appoint an expert panel to undertake a system-wide review of the federal tax system. Scheer also wants to make it easier for Canadian businesses to access the Canada Revenue Agency by creating “information packages” for small firms and entrepreneurs.

“I believe it’s time for a review of our income income tax system. It’s incredibly complex and puts a huge burden on individuals and small businesses to navigate through the complexity of the Income Tax Act,” he said.

READ MORE: Morneau says federal tax system overhaul or review not on his agenda

Canada’s independent budget officer estimated repealing Liberal measures on passive income would cost more than $500 million annually, totalling $5.4 billion between 2020-21 and 2028-29.

Exempting spouses from taxes on income sprinkling would cost $334 million, spread over nine years, starting in 2020. A commission tapped to review tax competitiveness would cost $20 million.

Such efforts would ultimately widen the hole in federal revenues, although Scheer said Tuesday a fully costed platform will be released soon that shows a path towards balanced budgets in five years.

The Tory leader has also promised a cut to the lowest federal income bracket rate, a move that would cost $5.2 billion annually between 2020-21 and 2028-29.

Editor’s note: The story has been revised to include comments from the Liberals and an economist.

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