Bill C-52 (Historical)

Budget Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007

Part 1 implements income tax measures proposed or referenced in Budget 2007 to
(a) introduce a tax on distributions from certain publicly traded income trusts and limited partnerships, effective beginning with the 2007 taxation year;
(b) reduce the general corporate income tax rate by one half of a percentage point, effective January 1, 2011;
(c) increase the age credit amount by $1,000 from $4,066 to $5,066, effective January 1, 2006;
(d) permit income splitting for pensioners, effective beginning in 2007;
(e) introduce a new child tax credit of $2,000 multiplied by the appropriate percentage for a taxation year, effective beginning in 2007;
(f) increase the spousal and other amounts to equal the basic personal amount, effective beginning in 2007;
(g) increase the age limit for maturing registered retirement savings plans, registered pension plans and deferred profit sharing plans to 71 years of age, effective beginning in 2007;
(h) expand the types of investments eligible for registered retirement savings plans and other deferred income plans, effective March 19, 2007; and
(i) increase the contribution limits for registered education savings plans and expand eligible payments for part-time studies, effective beginning in 2007.
Part 1 also amends the Canada Education Savings Act to increase the maximum annual grant payable on contributions made to a registered education savings plan after 2006.
Part 2 amends the Excise Tax Act to clarify the legislative authority that allows the Canada Revenue Agency to pay refunds of excise tax directly to end-users, where fuel subject to excise has been used in tax-exempt circumstances. It also amends that Act to repeal the excise tax on heavy vehicles and to implement the Green Levy on vehicles with fuel consumption of 13 litres or more per 100 kilometres. It also provides an authority for the Canada Revenue Agency to pay a refund of the Green Levy for vans equipped for wheelchair access.
Part 3 implements goods and services tax/harmonized sales tax (GST/HST) measures proposed or referenced in Budget 2007. It amends the Excise Tax Act to exempt midwifery services from the GST/HST and to zero-rate certain supplies of intangible personal property made to non-GST/HST registered non-residents. It also amends that Act to repeal the GST/HST Visitor Rebate Program and to implement a new Foreign Convention and Tour Incentive Program, which provides rebates of tax in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents, and establishes new information requirements in the case where rebates are credited by the vendor.
Part 4 implements other measures relating to taxation. It amends the Customs Tariff to increase the duty-free exemption for returning Canadian residents, from $200 to $400, for absences from Canada of not less than 48 hours. It amends the Federal-Provincial Fiscal Arrangements Act to clarify that when a federal corporation listed in Schedule I to that Act pays provincial taxes or fees, wholly-owned subsidiaries of that corporation also pay provincial taxes or fees. It also authorizes the Minister of Finance to make payments totaling $400 million out of the Consolidated Revenue Fund to the Province of Ontario to assist the province in the transition to a single corporate tax administration. This last measure is consequential to the October 6, 2006 Canada-Ontario Memorandum of Agreement Concerning a Single Administration of Ontario Corporate Tax.
Part 5 enacts the Tax-back Guarantee Act, which legislates the Government’s commitment to dedicate all effective interest savings from federal debt reduction each year to ongoing personal income tax reductions. That Part also commits the Minister of Finance to report publicly at least once a year on personal income tax relief provided under the Guarantee to Canadians.
Part 6 amends the Federal-Provincial Fiscal Arrangements Act to set out the amounts of the fiscal equalization payments to the provinces and the territorial formula financing payments to the territories for the fiscal year beginning on April 1, 2007 and to provide for the method by which those amounts will be calculated for subsequent fiscal years. It also authorizes certain deductions from those amounts that would otherwise be payable under that Act. In addition, it makes consequential amendments to other Acts.
Part 6 also amends that Act to provide increased funding for the Canada Social Transfer beginning on April 1, 2007, and to provide for the method by which the Canada Social Transfer and the Canada Health Transfer amounts will be calculated for subsequent fiscal years, including per capita cash allocations. It also provides for transition protection.
Part 7 amends the Financial Administration Act to modernize Crown borrowing authorities.
Part 8 amends the Canada Mortgage and Housing Corporation Act to permit the Minister of Finance to lend money to the Canada Mortgage and Housing Corporation.
Part 9 amends the Bankruptcy and Insolvency Act, the Canada Deposit Insurance Corporation Act, the Companies’ Creditors Arrangement Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act to allow the Governor in Council to prescribe the meaning of “eligible financial contract”. Those Acts are also amended to provide that, after an insolvency event occurs, a party to an eligible financial contract can deal with supporting collateral in accordance with the terms of the contract despite any stay of proceedings or court order to the contrary. This Part also includes amendments to the Bankruptcy and Insolvency Act and the Winding-up and Restructuring Act to provide that collateral transactions executed in accordance with the terms of an eligible financial contract are not void only because they occurred in the prescribed pre-insolvency or winding-up period.
Part 10 authorizes payments to provinces and territories.
Part 11 authorizes payments to certain entities.
Part 12 extends the sunset provisions of financial institutions statutes by six months from April 24, 2007 to October 24, 2007.
Part 13 amends the Department of Public Works and Government Services Act to provide the Minister of Public Works and Government Services with the power to authorize another minister, to whom he or she has delegated powers under that Act, to subdelegate those powers to the chief executive of the relevant department. That Act is also amended with respect to the application of section 9 to certain departments.
Part 14 amends the Financial Consumer Agency of Canada Act to allow the Minister of Finance to provide funding to the Agency for activities related to financial education.

[Jim Flaherty, Conservative, Minister of Finance]

Thank you, Mr. Chair. I am pleased to appear before the members of the committee today to discuss Bill C-52, which implements certain provisions of the 2007 budget, and other fiscal measures announced before the budget was presented.

I would note, as usual, that the remaining budget 2007 measures will be included in a second budget bill, which we will introduce in the fall session.

Since March 19 I've had the opportunity to travel across Canada to discuss the budget with Canadians from all walks of life. I've also had the opportunity to travel to New York and Tokyo and London to promote Canada and all that we have to offer.

People are aware of the fact that we're making our strong Canadian economy even stronger. They recognize that we are creating an environment that encourages investment, rewards hard work, and further opens the door for our investors and entrepreneurs and risk-takers.

Canadians have a right to be proud. Our country is a leader in the global economy. We have the most solid financial foundation of all the countries of the G-7. We are the only member country that continues to record budgetary surpluses and whose debt burden is being reduced.

Although we have only been the government for 15 months, we've moved the yardsticks considerably on a number of fronts, first with budget 2006, then our tax fairness plan, and then with budget 2007. Budget 2007 is an historic document that begins delivering on our long-term economic plan for Canada, called Advantage Canada.

Advantage Canada is a plan that seeks to mobilize the most compelling research, innovation, investment, and competitive forces in our society. It is a plan that sets out a bold and exciting course for a strong and united Canada, a Canada with purpose and passion that believes in itself and is a shining example to the world of what a great nation can be. It is a plan that will lead to a more rewarding future for Canadians and their families.

Advantage Canada focuses on creating five key advantages, which are reflected in this bill and reflected in budget 2007: first of all, a tax advantage, reducing taxes of all kinds and establishing the lowest tax rate on new business investment in the G-7; secondly, a fiscal advantage, eliminating Canada's total government net debt in less than a generation; third, an entrepreneurial advantage, reducing unnecessary regulation and red tape and increasing competition in the Canadian marketplace; fourth, a knowledge advantage, creating the best educated, most skilled, most flexible workforce in the world; and finally, an infrastructure advantage, building the modern bridges, roads, gateways we need to link our nation and make our workers and businesses more efficient.

Now, if we're to achieve these goals and maintain an upward trajectory, we need to adopt the measures contained in Bill C-52. As part of our plan to create a fiscal advantage for Canada, Bill C-52 proposes to enact our tax-back guarantee, which will provide taxpayers with a direct benefit from debt reduction. Lower debt will mean fewer interest payments, which will mean lower taxes every year.

The interest savings related to our national mortgage will be passed on to Canadians in the form of personal income tax relief. That relief will be permanent and ongoing.

Mr. Chair, I say and I repeat, Canadians are paying too much tax. This is why the government is also moving to create a Canadian tax advantage.

In fact, measures introduced by Canada's new government will reduce taxes for individuals by nearly $38 billion over three fiscal years. Bill C-52 proposes to implement several important tax relief measures, including the tax fairness plan I announced last October. Our plan increases the age credit amount by $1,000 to $5,066 as of January 2007. This will benefit low- and middle-income seniors by ensuring that less of their income will be subject to tax.

The plan also makes one of the most significant changes to the federal tax system to have been made in a long time. This is the decision to allow Canadian seniors, starting this year, to share up to half of their pension income with their common-law spouse.

Taken together, these measures will put some $1 billion a year more into the pockets of Canadian seniors.

Budget 2007 also proposes significant tax relief for Canadian families, a working families tax plan, and that relief is also set out in Bill C-52. The first part of the four-part plan helps Canadian families with children. The plan includes a new $2,000-per-child tax credit for children under the age of 18. It will provide more than 90% of tax-paying families with the maximum benefit of $310 per child.

The second part of the plan will increase the spousal and other amounts to the same level as the basic personal amount. Single-earner families will receive the same tax relief as that already provided through the basic personal amount to two-earner families; that is, the elimination of what has often been called the marriage penalty in Canada.

Third, the working families tax plan strengthens the registered education savings plan, RESP, to help parents save for their children's education. The $4,000 annual limit on RESP contributions will be eliminated and the lifetime limit will increase from $42,000 to $50,000. We will also improve access to RESP funds for part-time post-secondary students. Moreover, the maximum annual amount of the Canada education savings grant that can be paid in any year will be increased to $1,000 from $800, if there is unused grant room from previous years.

The fourth component of the working families tax plan builds on the tax fairness plan. It will raise the age limit for maturing RPPs and RRSPs to age 71 from age 69. This change recognizes that many older Canadians want to continue working and saving. It is important that we help them pursue these goals.

We are also committed to providing an economic environment in which Canadian businesses can thrive. In budget 2006 we reduced the corporate tax rate to 19% from 21%. Under the tax fairness plan, Bill C-52 proposes to reduce that rate by a further 0.5%, effective January 1, 2011, to 18.5%. Additional corporate tax measures in budget 2007 will be introduced in the second budget implementation bill, to which I referred earlier.

Of course, Mr. Chairman, there's much more to budget 2007 and to this bill than tax relief.

For example, in Bill C-52, Canada's New Government is proposing significant measures that will help to clean our environment and improve our health care system.

It is only through a healthier environment that Canadians can create the quality of life and standard of living to which we all aspire. With that goal in mind, budget 2007 invests $4.5 billion to clean our air and water, reduce greenhouse gases, combat climate change, and preserve our national treasures, which are also natural treasures, like the Great Bear rain forest on the central coast of British Columbia. Bill C-52 takes the first step by proposing to support major clean air and climate change projects through a new $1.5 billion Canada ecoTrust. This is an innovative way to engage the provinces and the territories and improve our environment for the benefit of future generations.

On health care, as we all know, Mr. Chairman, our health care system is an important part of what defines us as Canadians. That is why Canada's new government is committed to implementing the 10-year plan to strengthen health care. This will provide $41.3 billion in new federal funding over 10 years to the provinces and territories. In support of that commitment, Bill C-52 proposes to provide up to $612 million to help eligible provinces and territories move forward with patient wait time guarantees in key areas such as cancer treatment, heart procedures, diagnostic imaging, joint replacement, and sight restoration.

Mr. Chair, in order for Canada to be even better tomorrow, the national fiscal balance must be re-established, starting today. To do this, we must provide the provinces and territories with the funds they need.

The needs include such matters as an unprecedented and long-term investment in public infrastructure; better health care; better-equipped universities; cleaner oceans, rivers, lakes, and air; training to help Canadians get the skills they need.

Mr. Chairman, restoring fiscal balance is very much about building a stronger, safer, and better country.

I would also like to mention that the harmonized sales tax provinces—Nova Scotia, New Brunswick, and Newfoundland and Labrador—have each announced their intention to participate in the foreign convention and tour incentive program proposed in Budget 2007. Accordingly, I am pleased to announce that the Government of Canada plans to propose motions to amend Bill C-52 to extend the application of the new program to the 8% provincial component of HST, effective April 1, 2007.

Given that such amendments have the effect of increasing the amount of the rebates to be paid under Bill C-52 it is the government's intent to seek a royal recommendation and to propose the motions at report stage.

In Bill C-52, Canada's new government is taking action by proposing a new formula that improves and enriches equalization, and a territorial formula of financing. It also puts major transfers, such as the Canada social transfer and Canada health transfer, on a more solid footing and makes treatment of provinces fairer for those transfers.

In fact, under Bill C-52 we are proposing to deliver more than $39 billion in additional funding to the provinces and territories. This is funding that will restore fiscal balance in Canada.

Mr. Chairman, that is what Bill C-52 is all about. I look forward to answering questions from the committee.

I should mention that officials from the Department of Finance are here with me to provide any further clarification the honourable members may wish to have on any of the measures in the bill.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

I'd like to get started right away, because we only have about an hour with the minister.

We are here, pursuant to the order of reference of Tuesday, May 15, 2007, to examine Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007.

Mr. Flaherty, do you have an opening statement for us? Yes, okay. So if you can keep it to a brief intervention, then members will have questions for you.

I appreciate your coming before us, taking time out of your day. The floor is yours. Thank you.

Budget Implementation Act, 2007

[The Speaker, Liberal, Peter Milliken]

The House will now proceed to the taking of the deferred recorded division on the previous question at the second reading stage of Bill C-52.

The hon. chief government whip is rising on a point of order.

The House resumed from May 14 consideration of the motion that Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, be read the second time and referred to a committee, and of the motion that this question be now put.

Equalization

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, tonight the House will vote on Bill C-52, the budget bill that breaks the promise to Nova Scotia and Newfoundland and Labrador on the Atlantic accords.

Will the Conservative MPs from those two provinces do the right thing, do what they were sent to Ottawa to do, and support their constituents by voting against this broken promise?

Will the Chief Government Whip permit Atlantic Conservative members to vote in support of their constituents and against this flip-flopping funding fiasco?

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Purdy and Mr. Ernewein. It's nice to see you. We appreciate your testimony today. I think we're all cognizant of the slowness with which change occurs on issues like this that are extremely complex, and we appreciate your participation in the discussion.

Committee members, in reference to Bill C-52, should we receive an order of reference on Bill C-52 at some point in the near future, notice will be sent to your offices in the morning for a meeting to take place tomorrow afternoon from 3:30 until 5:30. So I give you possible notice of such a meeting occurring.

Thank you, committee members, for your rapt attention and focused discussion on this issue.

The meeting is adjourned.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

It all comes down to the ability for members to be able to speak and express opinions, whether that be their personal opinions or whether it be opinions based on collective wisdom of the constituents. It certainly speaks to the fact that this ability would be compromised and in fact completely curtailed, because combined opposition members then would absolutely have the ability and the right to be able to control everything from procedures and practices to Standing Orders to long-standing conventions to, in fact, legislation. I don't believe by anyone's definition, regardless of political stripe, that would be an acceptable practice.

I believe Canadians understand the fact that when they express their voting intention on polling day, they expect that the party who receives the most votes by individual members will form a government of sorts. Sometimes it will be a minority; sometimes it will be a majority. It appears the recent practice has been to elect minority governments, and there's nothing wrong with that. If a minority government can function and function well, and in the spirit of compromise perhaps and in the spirit of cooperation it still is able to function by bringing forward legislation that is debated and discussed and then ultimately passed into law, I think most Canadians would say, well, you know, the system works. But I do not believe members of the Canadian public or voters, the ordinary Canadians who cast ballots on any polling day, would agree to the fact that, regardless of who is elected as the government of day, they should not have the ability to advance their own agenda, that in a minority government the opposition in fact is governing this country.

That's why we have votes of non-confidence, and that's why we have elections. I would suggest to the members of the opposition that if they want to govern, well, just bring us down. You have the combined votes. We have a confidence bill, quite frankly, coming up. We have a vote tonight on Bill C-52, and if there's a desire by this combined opposition that they want to see an election right now, well, clearly that's a confidence vote and they have the ability to do so, as they do from time to time over the course of any Parliament.

That's the way the system works. There are checks and balances involved in any Parliament. There are checks and balances that have been put into place in the procedures and practices that we follow, and it's for that very reason that Parliament functions.

So to me, listening to the motion that was brought forward, that was voted in favour of by opposition members here, I think that to stop debate flies in the face of the very thing that I'm talking about. It speaks to the fact that members of the opposition want to ignore convention, long-standing practices, and start working on their own agenda and start working on a different set of practices without even consulting members of Parliament. I just don't think that's right, and I think that most Canadians would, without question, agree with my position on that.

That's why I say that I have—

Income Tax Amendments Act, 2006

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for his question. Indeed, Bill C-33 contains interesting aspects regarding the reduction of tax evasion. However, it is still just a band-aid on a cancer. We think there are other priorities. I spoke about the tax treaty with Barbados. If the Minister of Finance and the Conservative government really want to reduce tax evasion, they will have to amend that treaty and the law in order to turn off the tap. Until now, we have not seen the minister show any such commitment.

There has been a lot of talk about interest deductibility for Canadian companies investing abroad. The minister backed off and said that he was doing this to prevent tax evasion in tax havens. This is also a measure which could be interesting in some regards, but it is throwing the baby out with the bath water. So, it is good to see the minister backing off from his initial plan, but even if he maintains the non-deductibility of interest charges for Canadian companies investing abroad, this is still a small measure in the big picture. It is somewhat the same for income trusts.

During the proceedings of the Standing Committee on Finance, I was very surprised to see that the Minister of Finance was not able to demonstrate to us that existing income trusts were generating a tax loss that is extremely harmful to the Government of Canada's financial position.

Minister Audet told me that, in the case of Quebec, these trusts were responsible for a shortfall of about $40 million. That is significant, particularly since the Prime Minister made a promise regarding this issue during the election campaign. It seems to me that the government could have found a solution that is more respectful of the two and a half million Canadians who contributed to income trusts and who, among other things, probably believed the Prime Minister during the election campaign, when he promised that he would not touch these trusts.

That said, my greatest concern with income trusts was their effect, in the longer term, on Canada's economic development. For example, BCE, a corporation, was to become an income trust, because of the pressure exerted by one competitor, TELUS, and not because of its own corporate interests. In my opinion, this was more important than the issue of revenue losses for the federal or the Quebec government.

The hon. member is right when he says that this is creating a perverse effect, particularly regarding the value of the Canadian dollar. Many of these businesses represent a minor investment for foreigners, particularly Americans. So, we found out that there was a very real risk.

I have learned one lesson from all this. As with interest deductibility, as with income trusts, and as with many other issues, the Minister of Finance has good intentions, but he takes measures that seem improvised and whose consequences have not, in my opinion, been properly examined.

In conclusion, this will not prevent the Bloc Québécois from supporting Bill C-52. However, it could mean that, in the coming years, all parliamentarians, and the members of the Standing Committee on Finance, may have to look at this issue again, in order to suggest to the government, regardless of which party may be in office at that time, ways that are more effective on an economic, fiscal and financial level.

Budget Implementation Act, 2007

[The Acting Speaker, Conservative, Royal Galipeau]

Pursuant to the request by the chief opposition whip, the vote on Bill C-52 will be held at the expiry of the time provided for government orders tomorrow.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, it is unfortunate that I only have 10 minutes to address Bill C-52 because I could take far longer to talk about what has been omitted and the poor budgetary policy contained within this budget.

However, after a year of the government, it is quite obvious that it has taken all its lessons from the former Liberal government. We have seen in the past year the softwood sellout, which was started by the Liberals and continued by the Conservative government. I will come back to that in a moment. We have seen the continued push on SPP, deep integration, started by the Liberals and continued by the Conservatives.

What we see in the budget is the continued push for corporate tax cuts rather than actually dealing with real issues that Canadians from coast to coast to coast are experiencing. There are $9 billion in corporate tax cuts that are being continued. The Conservatives are continuing the Liberal practice of shoveling corporate tax cuts off the back of a truck. What we see here is just a continuation of the failed Liberal policies we saw over 13 years, by the Conservatives.

What is the context of this budget? What should have been addressed? As Statistics Canada told us just this week, and after study after study has proven, is that we are experiencing in Canada a clear and growing prosperity gap. In fact, “gap” is perhaps too innocent a term. It is indeed a prosperity gulf.

As Statistics Canada reported as recently as last week. but as its studies over the past decade have shown, since 1989 the real income for most Canadian families has actually gone down. It is a reality that the Conservatives have not grasped and the Liberals did not grasp before that.

If we look at the figures since 1989, since the signing of the Canada-U.S. Free Trade Agreement, the poorest 20% of Canadians have seen their incomes collapse. They have lost a month of income in real terms. It is no wonder we are seeing burgeoning numbers of homeless Canadians across the country when the poorest Canadians are actually living on a month's less income than they were in 1989.

It continues with the lower middle class. They have lost two weeks of salary in real terms. Even the upper middle class has seen stagnation. They have not gained a dime more since 1989. They are living on the same income they were living on in 1989.

Who has profited by the failed Liberal economic policies continued by the Conservatives? We all know that it is the wealthiest of Canadians. The wealthiest 5% of Canadians have seen their incomes skyrocket. Corporate CEOs and corporate lawyers in the boardrooms of Canada are doing better than ever before. In fact, coming from Vancouver on the red-eye last night, I read another article about CEOs giving themselves multi-million dollar pension incomes. While the corporate sector has been pushing to cut back on services that working Canadian families need desperately, they are giving themselves unprecedented awards, even for mediocrity.

That is the context of this budget. Eighty per cent of Canadian families are earning less now than they were in 1989. It is a prosperity gap. It is an income crisis that must be addressed.

What do we see in the budget? In the midst of that income crisis; in the midst of a homelessness crisis that we have not seen since the 1930s where 300,000 Canadians will be sleeping out in the parks and on the sidewalks of our nation tonight; in the midst of a fall in real income for 80% of families; a gutting of our manufacturing sector; and the giveaway of our resources, raw logs from British Columbia and oil and gas resources from Alberta, at fire sale prices, which only profits corporate CEOs and corporate lawyers, we have a budget that addresses more corporate tax cuts and continues subsidies paid by Canadian taxpayers to the profitable oil and gas sector.

I come from British Columbia and when I left on the red-eye yesterday to get back to Ottawa, gas prices were at $1.30 a litre. A study that came out last week clearly showed that there was no justification for gas prices being more than 97¢ or 98¢ a litre right now given the current international price for a barrel of crude oil. We have this gouging by the big oil and gas companies, a favourite of the Conservative government, but in addition to that, as these companies reap record profits, the Conservatives shovel more money at them, taxpayer money.

The Conservatives do not deal with homelessness or with the crisis in the health care sector. They shovel hundreds of millions of hard-earned Canadian taxpayer dollars at the oil and gas sector. It is absolutely appalling.

What is in the budget? There is no national housing strategy and no national transit strategy. There is nothing on employment insurance. It contains nothing on establishing a $10 minimum wage, which is something the NDP has been calling for now for some time. Obviously, if we were to take a look at the poorest of Canadians, we would see that 20% of Canadians have lost a month's salary over the past 18 years. That needed to be addressed by the government but, since it only listens to the boardrooms of the nation, it did nothing to deal with this crisis of income and nothing to establish a $10 minimum wage.

The budget has no poverty reduction strategy and no plan to end student debt that is now at record levels. The budget has no cancellation of the corporate tax cuts started by the Liberals. In fact, the Conservatives just continue to shovel that money at the corporate CEOs and corporate lawyers.

The budget has nothing for pharmacare, home care, long term care in the health care sector; nothing for improved access to health care for aboriginal peoples; nothing about coordinated training of medical professionals; and nothing about catastrophic drugs. The budget has no significant new money for aboriginal Canadians who, along with Canadians with disabilities, are the poorest of the poor of Canadians.

The budget says nothing about autism. There is no ban on bulk water exports, which is an issue that was started by the Liberals and being continued by the Conservatives. We see nothing for seniors and no increase in the old age supplement as my colleague, the member for Sackville—Eastern Shore, just mentioned. We see nothing about providing the kinds of benefits that veterans and their widows and spouses deserve. We see no action following the NDPs' promotion of the veterans first motion that was adopted by this Parliament. The government talks the talk but it does not walk the walk and, therefore, nothing for veterans.

What we see across the country is absolutely no effort by the government to change track after 13 years of Liberal obsession with corporate tax cuts at the expense of everything else. We see nothing to deal with that income crisis.

I will now talk about British Columbia because that is the most egregious part of this budget. The Minister of Finance rose in the House and said in his budget speech:

From the majestic peaks of the Rocky Mountains [in Alberta] to the rugged shores of Newfoundland and Labrador, many of the most beautiful places on earth are in Canada.

This budget completely neglected British Columbia. We see that on the equalization formula that was adopted. We see absolutely no action at all in any of the key areas that British Columbians have been crying out for and pushing the Conservative government to take action on.

What have we seen from the government on the pine beetle which has devastated the interior of British Columbia? The government actually withdrew the funding last year that had been allocated to the pine beetle, even though it was far below what was needed. This year it has allocated pennies on the dollar. We have seen a lot of photo ops and press conferences but very little action has been taken.

The Conservatives promised to take action on leaky condos but no action has been taken.

It is no surprise to me that the poll which came out this weekend shows the Conservatives third in British Columbia now. The NDP are at 30% , the Liberals at 29% and the Conservatives at 23%. Quite frankly, they do not deserve British Columbians' support because this budget does not include British Columbia.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, I greatly appreciate the opportunity to speak to Bill C-52, the budget implementation act.

As I stand here today to represent the concerns of my constituents of Mississauga—Brampton South with respect to the 2007 federal budget, my comments and remarks will focus on three areas: economic competitiveness; social issues and the lack of social investment; and how the budget has damaged our reputation abroad.

I am glad to hear today that the Minister of Finance has withdrawn a major part of a controversial budget measure. I believe it is widely accepted that this has been the worst policy to come out of Ottawa in over 35 years. He understands now that he should allow interest deductibility to ensure Canadian companies can be more competitive abroad. The Minister of Finance also mentioned in his remarks this morning that he would put forth a panel of experts to review Canada's international tax system. More work needs to be done in this area and he has a great deal of explaining to do.

As I indicated, my remarks on the budget will focus on the economic aspect of the budget. It is so important at the federal level that the government show leadership with respect to how to improve competitiveness in our country.

One area, as I have indicated, is the reversal of the Finance Minister on interest deductibility. I will outline the concerns we had raised in the past and why this decision was made by the Minister of Finance. It was through the hard work of our finance critic and our leader of the official opposition that really put forth a clear cut message to the Canadian public of how poorly thought out and poorly conceived this measure was.

The proposal in the 2007 budget eliminated deductibility of interest accrued to finance foreign assets. The Conservatives are forcing Canadian companies to compete with one hand tied behind their backs. Competing businesses in the U.S., Japan and Europe all have this tool at their disposal. The Conservative government at least was planning to take this away.

Companies in the U.S. Japan and Europe are all able to write off interest on loans taken out to finance foreign assets. Canadian firms have also been able to that for more than 30 years. This is a very important tool to promote competitiveness.

At a time when the entire world is headed forward, the Conservative government is making it increasingly difficult for Canadian companies to compete globally.

I raise this question in the House because I do not understand why the Finance Minister has difficulty with foreign companies acquiring Canadian companies, but he does seem to have a fundamental problem with the ability of Canadian companies to compete abroad. Removal of the interest deductibility would compromise the competitiveness. Again, I am thrilled the minister has made this reversal. There are probably many measures that I will discuss, which I hope he gets to re-evaluate and reconsider and maybe change the direction of the budget.

Not only is it something about which the Liberals and many Canadians have expressed concerns, but also in the business community as well. The president of the Canadian Chamber of Commerce said this with respect to the budget:

We don't see any broad-based tax relief either for taxpayers or businesses.

The government promised in November that they were going to make Canada more competitive and control spending and I think they broke that promise today.

I will also highlight a theme of broken promises in the budget as well. One area where I believe the Conservative government really misled Canadians was with respect to tax fairness, as it stated. The Conservatives cut the GST, but they increased personal income taxes.

We all know that to improve productivity, it is absolutely vital we have more disposable income for our Canadian public. To improve disposable incomes and to help build greater productivity, the first target for a tax reduction should always be income taxes, not consumption taxes.

In the previous government we lowered the tax rates for low and middle income Canadians in order for them to make greater investment in the economy and save more money. The Liberal government brought forth a comprehensive package to eliminate billions of dollars in taxes for low and middle income Canadians. When the government cut the GST rather than implement our personal income tax, the Finance Minister really constrained his government's fiscal capacity.

A study released on March 29, 2006, by the independent non-partisan research institution, the Canadian Centre for Policy Alternatives, found that the 5% of families earning over $150,000 a year would receive nearly 30% of the benefits of the Conservatives tax cuts, an average of $2,000 roughly savings in each year. Therefore, 5% would receive 30% of the benefit of the tax cut. However, almost over half of Canadians families earning less than $40,000 would only receive 20% of the benefits of the Conservative tax cuts, an average of $163. Their tax fairness policy is about broken promises and appeasing the more affluent in society.

Another issue that again highlights the government's inability to improve productivity and competitiveness and focuses on its trend of broken promises is income trusts. The income trusts reversal hurt Canadian investors, particularly seniors. The decision to cut income trusts wiped out more than $25 billion in savings overnight and reversed a key Conservative campaign promise, a promise on which many people relied. They took their hard-earned savings and invested it in income trusts. Seniors whom I have met at the town hall meetings I have had over the past month have clearly shown their frustration with the government. They are completely appalled with the government for breaking such an important promise and they do not understand the rationale behind it. The government swiped billions of dollars from seniors through income trusts savings as well.

We have already seen not only in income trusts a broken promise, but now we are beginning to see a trend in foreign acquisitions. We have already seen great Canadian companies such as Inco, Molson's, Defasco and Hudson's Bay Company taken over by foreign entities, and Alcoa may be next.

The Conservatives took this initiative with the income trusts by crippling it and using the non-refundable 31.5% instead of the Liberal plan. We put a plan forth of a 10% tax rate which would be refundable to all Canadians, creating an opportunity for Canadians who have invested in income trusts.

Tom d'Aquino, president of the Canadian Council of Chief Executives, has said that the decision with respect to income trusts:

—may seriously undermine the competitiveness of Canada's homegrown champions—the companies that are most active and most successful in building global businesses from head offices in Canadian communities.

It is clear, if we look at the government's agenda when it comes to economic policy, it has crippled our ability to remain productive and has hurt our competitiveness. It has shown the government has continuously broken promises that it made to the Canadian public.

However, it does not end there. Another area in which my constituents have expressed a great deal of concern is with respect to social justice issues and social policy. There was absolutely no mention in the budget of homelessness or affordable housing, an issue that resonates in my constituency, across Ontario and across the country as well.

Constituents of Mississauga—Brampton South understand how important this is. The government has cut money from Status of Women, youth programs and the list goes on and on, and again, no investment in these initiatives.

My last is with respect to international trade. This is an area where I believe the government truly had an opportunity to put Canada on the map. It had an opportunity to showcase Canada to the world.

When we were in power, as the Liberal government, we put forth the Can-trade $485 million initiative, which invested in branding Canada. The Conservatives completely wiped that out to replace it with a measly $60 million over two years. It has closed consulate offices and cut funding. The Auditor General's report clearly demonstrates a lack of strategic planning, low morale and the department as well. Therefore, the government has a lot of explaining to do when it comes to the budget.

I am very fortunate that I represent a constituency which is very diverse and has a population of about 130,000 people. It is a hub of economic activity. I have an airport there, looking to the government to show leadership in reducing airport rents. I have major highways and we are looking for funding for infrastructure. Many head offices are looking to expand their businesses abroad and build strong Canadian brands outside of Canada. My residents want to enjoy a high quality of life, but they are very disappointed with the government's poor economic policies, a lack of compassion in investment in the most vulnerable in our society. The government is hurting our reputation abroad.

We are taking steps backwards and we need to provide good public policy, not bad public policy. I think the Canadian public is very impressed that through its hard work and sound management we are in a strong position to create a better and prosperous future for our children. Canadians looked forward to the government to continue to reverse some of its policies. In the meantime, I and the Liberal Party will not support the budget.

The House resumed from April 23 consideration of the motion that Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, be read the second time and referred to a committee, and of the motion that this question be now put.

Opposition Motion—Finance

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, first I would like to congratulate my colleague, the member for Jeanne-Le Ber, for his speech. Like him, I rise today to speak to the motion tabled by the Liberal Party with regard to income trusts.

As pointed out by my Bloc Québécois colleagues, we supported both the ways and means motion and the 2007-08 federal budget. The latter changes the taxation of existing income trusts, which will receive the same tax treatment as corporations at the end of a four-year transition period. Furthermore, it will no longer be possible to establish new income trusts.

There are reasons for our support. First, we must realize why corporations register as income trusts. In the March 2007-08 federal budget, the Minister of Finance indicated that, year in and year out, the different levels of government lost $400 million in revenue because of income trusts. And this was before companies such as Bell and Telus announced that they would convert to income trusts which, in and of itself, would have inflated tax losses to about $1 billion annually. This measure, which has allowed corporations to avoid paying significant amounts of tax, had to be eliminated.

Furthermore, the income trust structure practically forces a company to pay 100% of its profits to its shareholders at the end of the year. Although the shareholders are the main beneficiaries of this measure, it has a negative impact on the economy. If the company retains part of the profits for an investment project, for instance, it must pay the maximum amount of taxes on that non-distributed revenue. This is why, in addition to the tax losses associated with the conversion of a growing number of income trusts for reasons that are strictly tax motivated, we must also look at the potential loss of productivity in our businesses, in the context of a serious productivity crisis in the manufacturing sector of Quebec and Canada. Between 2005 and 2006, Canada dropped from seventh place to tenth place in the world, according to the World Competitiveness Yearbook 2007.

Over the past few months, thousands of investors have been pressuring members of Parliament to reverse this decision. I am sure we have all met citizens who have come to us to tell their stories. In my riding, some of my constituents told me that the drop in the stock market cost them thousands of dollars. During the last election campaign, the Conservative Party promised not to touch income trusts. Investors trusted that party, trusted the government, and either kept such investments or acquired more, which meant that those investments became even more attractive and we saw an artificial inflation of the price. The Conservative government is therefore partially responsible, because it deceived thousands of investors during the last election campaign.

The Bloc Québécois supports this decision, but deplores the Conservatives' lack of honesty during the last election.

It goes without saying that steps had to be taken to eliminate the corporate practice of converting to income trusts in order to avoid paying taxes. Until now, only shareholders were taxed on dividends, not the trust itself.

I also want to mention the importance of keeping campaign promises to voters. A promise made to the people is sacred and must be respected. During the election campaign, the Conservatives had two options. They could easily have said that they would make changes once in power, or they could have avoided creating false hope by saying nothing about it. In other words, they should have stuck to what was in place and made a decision at the right time.

In 2006, companies that decided to convert to income trusts accounted for $70 billion worth of market capitalization, and that is not including telecommunications giants BCE and Telus, which also planned to convert.

Canada has about 250 income trusts worth about $200 billion in sectors ranging from real estate, oil and gas and telecommunications to food processing and manufacturing. The income trust craze was getting so big that it was endangering the national economy.

Again yesterday, the Bloc Québécois issued a news release demanding the elimination of tax havens. My colleague talked briefly about tax havens earlier. It would have been nice to see some steps taken against these tax havens, which are causing Canada to lose billions of dollars.

Given that some companies are taking advantage of interest deductibility to deduct interest charges in a number of jurisdictions, which is a form of tax evasion, and given that the Bloc Québécois is strongly opposed to tax evasion and the use of tax havens, we cannot support this motion. We will vote against the Liberal Party's motion.

Let us not forget that the bill concerning interest deductibility will be studied in committee, and that the Standing Committee on Finance will have an opportunity to submit its recommendations. Everyone will have the opportunity to suggest solutions to this problem during committee meetings.

The Bloc Québécois is very concerned about the increase in tax evasion in Canada. Canadian investments in tax havens between 1990 and 2003 soared, reached unprecedented levels, increased considerably. Canadian corporations invested large and growing amounts in countries recognized as offshore financial centres, particularly in the Caribbean. Assets held by the financial sector have practically increased tenfold, rising from $8 billion in 1990 to $72 billion in 2003. Barbados, where Canadian corporations operate 1,700 subsidiaries, is ranked the third most popular destination for Canadian capital abroad, after the United States and Great Britain.

Bill C-52 which is presently being studied by the House, amends the tax treatment of income trusts in order to eliminate the advantage of this entity over a corporation.

The Bloc Québécois has been giving thought to the issue of income trusts for a few years. We do not want income trusts to be abolished. One solution might be to introduce a minimum tax on income trust profits rather than preventing corporations from establishing themselves as income trusts.

With this bill, the government will impose a 21% tax for 2007 and will add 13% in subsequent years.

In closing, we will vote against the Liberal Party motion.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, as you are aware, this week is strengthening accountability through democratic reform week. It has been a busy week for the democratic reform family of bills.

We sent out invitations for the first birthday of Bill S-4, the Senate tenure bill, which Liberal senators have been delaying for almost a year now.

While we are disappointed with the behaviour of Bill S-4's caregivers, we did have some good news this week with the successful delivery of two new members of the family: Bill C-54, a bill to bring accountability with respect to loans; and Bill C-55, a bill to expand voting opportunities.

There is more good news. We are expecting.

Tomorrow, I will be introducing an act to amend the Constitution Act, 1867, on democratic representation, which is on today's notice paper.

Bill C-16, fixed dates for elections, was finally allowed by the clingy Liberal-dominated Senate to leave the nest when it was given royal assent last week.

With respect to the schedule of debate, we will continue today with the opposition motion.

Friday, we conclude strengthening accountability through democratic reform week with debate on the loans bill, possibly the Senate consultation bill and, hopefully, Bill C-52, the budget implementation bill.

Next week will be strengthening the economy week, when we will focus on helping individuals, families and businesses get ahead.

Beginning Monday, and continuing through the week, the House will consider: Bill C-52, the budget implementation bill; Bill C-33 to improve our income tax system; Bill C-40, to improve the sales tax system; Bill C-53, relating to investment disputes; and Bill C-47, the Olympics bill, which help us have a successful Olympics. Hopefully, we can get to Bill C-41, the Competition Act.

If time permits, we will also call for third and final reading Bill C-10, the minimum mandatory sentencing bill.

Thursday, May 17 shall be an allotted day.

Wednesday, May 16, shall be the day appointed, pursuant to Standing Order 81(4)(a), for the purpose of consideration in committee of the whole of all votes under Canadian Heritage of the main estimates for the fiscal year ending March 31, 2008.

Thursday, May 17, shall be the day appointed for the purpose of consideration in committee of the whole of all votes under National Defence of the main estimates for the fiscal year ending March 31, 2008.

Finally, there is an agreement with respect to the debate tomorrow on the 13th report of the Standing Committee on Public Accounts. I believe you would find unanimous consent for the following motion.

I move:

That, notwithstanding any Standing Order or usual practice of the House, the debate pursuant to Standing Order 66 scheduled for tomorrow be deemed to have taken place and all questions necessary to dispose of the motion to concur in the 13th Report of the Standing Committee on Public Accounts be deemed put and a recorded division be deemed requested and deferred to Wednesday, May 16, 2007, at the expiry of the time provided for Government Orders.

Business of Supply

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, the Liberal party has chosen to introduce an opposition motion today that raises a good number of points for which we are far from having ideal solutions. Having said that, this motion demonstrates how the approach of the Conservatives lacks attention to detail. They have not really found a way to solve the problems. However, the motion offers solutions that I find inadequate. Therefore, the Bloc Québécois will vote against this motion, as it is presented.

The government has not properly dealt with some problems. For example, GST rebates for tourists comes to mind.

An announcement was made but it was recognized, after the fact, that there were problems in terms of organized tours, as well as outfitters and duty-free shops. They have corrected part of that, but not everything has been settled. Since there was some improvisation, the result was that major changes had to be made later.

It is the same for income trusts, except that it is even more serious.

During the election campaign, the government said that it did not want to change the rules of the game.

Some of my fellow Quebecers, who are not necessarily supporters of the Bloc Québécois, have told me that they put their savings into these entities. They thought that the rules of the game were clear, but they were changed without notice. They want to know whether a solution can be found to this problem.

We have listened to them. We have to abide by the principle that companies and trusts pay their share of income tax. On the other hand, is there no solution that would counteract the negative effects this is having, particularly for individual investors? We have to put a little more thought into finding a solution. This is another example of the government’s ad hocery.

On the question of deductibility, that remains to be seen, because the bill that will allow this part of the budget to be implemented has to be tabled first. Everyone has to know the rules of the game.

Next Monday, it seems, the Minister of Finance will make a speech to clarify the situation. However, it is obvious that the government has been very inept, and has more or less thrown the baby out with the bathwater. It sent a very ambiguous message: that the interest will no longer be deductible when investments are made for the good of our economy, even though a number of countries in the world apply that rule. On the other hand, not enough attention was drawn to the fact that this was going to eliminate tax avoidance. More work will be needed on that subject.

The Liberals have introduced a very partisan motion. When considering economic issues like these, it is a little dangerous to try to go too fast. Strangely, they seem to be reacting that way because the Conservatives went too fast themselves.

On the question of interest non-deductibility, in order to do the job, the measure must obviously target only the abuse, very precisely. We must ensure that we achieve that result. It will not be easy, because these are very complex questions. It would be wise to think about it very carefully.

The Liberal critic is talking about a working group to discuss it, and the Minister talked about the need to fine-tune things. Maybe they could get together.

It is important that a clear and moderate message be sent to the economic community and the public as a whole. I think we could agree on that.

The government says that it wants to tackle tax havens. In fact, the Standing Committee on Finance is meeting to consider the questions raised in a motion by the Bloc Québécois. The ultimate tax haven, the one the government should be taking on, is Barbados. Canadian companies that invest money there, knowing that the interest rate there is very low, can bring those profits back here without being taxed. That is not the general rule in tax treaties. Ordinarily, they provide that when money is invested in another country, it is taxed when it returns to Canada, if the two tax systems are not equivalent. But under the Liberal government, a little paragraph was added—in section 5907—exempting that money from taxation, with the result, according to the Auditor General’s 1990 estimates and the extrapolation by Statistics Canada, that this income amounts to $4 billion annually. It comes in from Barbados and it is not taxed.

I believe, at a rough estimate, that we end up losing some $800 million in income tax revenues. Obviously this money that businesses do not pay—because they take advantage of this tax haven—is money that others pay, middle class people and all taxpayers who do their part. This also means less money that could be allocated in part to social programs. On one hand there are companies that can bring home profits without being taxed, and on the other there are people who are paying too much in taxes because of this.

That is a considerable amount of money. There is a way of settling this problem, namely by quite simply getting rid of section 5907. This very concrete and practical measure could be implemented. It would immediately have a very significant effect and it would send the following message to all taxpayers: we are trying to make the situation a bit fairer; we do not tolerate this sort of situation. This is a tax loophole with the ability to disappear clearly and neatly, if the practical solution is applied. However, as far as interest deductibility is concerned, it is not easy to know what the solution is.

So there is a problem. The Liberals are dealing with it in one way in the motion, but in our opinion a lot of things are getting all mixed up at once. This issue is being associated with the fact that there are a lot of foreign takeovers of companies. This may be one element, a variable that is taken into account, but it is also the result of several years of operation in Canada, during which people were told that this is a free market and we would see, in the end, whether we were winners.

A detailed analysis of this question is needed. It is true that many Canadian companies are buying foreign companies. The net result, though, even if there are more that buy foreign companies, as far as the size of investments goes, we are clearly in the red. This matter must be examined. The solutions, however, are systemic, and a much broader policy will be needed than the one found in the motion we are discussing today.

The first aspect in the motion is the issue of non-deductibility. The second aspect is the issue of trusts.

There is a big problem with income trusts because people have to pay their taxes. It became clear that the mechanism that was created for a certain kind of capital was being used by companies in sectors that clearly did not need it. A trend was developing, especially in telecommunications. It became a way to get a tax break without producing wealth.

I think that the underlying principle was unacceptable. That being said, the way they did it was also unacceptable because they pulled the rug out from under investors without warning after having told them that the rules of the game would not change. People who had saved up $50,000 or $100,000 or $200,000—their life savings or at least a substantial portion thereof—were deprived of income that, in many cases, they had worked for their whole lives. I can well understand why people who have been affected by this issue are angry.

So how should we react to the Liberals' motion? Apparently, according to the Liberals' proposal for income trusts, people should be taxed according to the alternative solution the Liberals proposed, which was summarized in the 14th report of the Standing Committee on Finance.

Let us not forget that this report was the product of a consensus indicating that solutions had to be examined. The Bloc Québécois proposed a simple solution: extending the moratorium, the transfer period, from four to 10 years. The Liberals suggested another proposal that we consider unacceptable. As such, that part of the Liberals' motion is totally unacceptable to the Bloc Québécois because they are trying, in a roundabout way, to make it all non-taxable. I think that that aspect of the motion has no future.

The bottom line is that there is now a perception among electors and the general population that some people are more equal than others when it comes to taxation. Because of the complexity of the systems, because of what has been developed over the years, because of the expertise that some companies may have access to, there are some people who maximize their tax benefits, to the limit and to the extreme. Hence the reaction of wanting to do away with the tax advantage.

We must take the time to think and look at how these things are determined to ensure that at the end of the day, the reaction is sensible and rational. Sometimes, the possibility of tax savings should be available, because it has positive impacts on the economy. But we must find ways to stop abuse from happening.

The Liberal motion also refers to the fact that the government's two measures are the cause of foreign takeovers. I do not think that a direct causal link can be made in this way, but the fact remains that we must address the phenomenon of foreign takeovers of Canadian and Quebec companies.

In Quebec, we are obviously now carefully assessing what the impact of Alcoa's takeover of Alcan would be. All the consequences of such a takeover must be reviewed, because based on the information I have seen, this transaction would mean that 37% of all of this new giant's aluminum production would come from Quebec.

Are there not in fact benefits to be gained from this kind of transaction? We must have a closer look at this and ensure that the existing legal mechanisms concerning foreign investment review are fully utilized. In that respect, we must ensure that our legislation is consistent with the new, current economic reality of globalization. Ultimately, when a transaction is being assessed for its relevance to the Canadian economy, important social factors must also be considered, such as the impact on employment in certain regions, for instance, and the repercussions of such a transaction on older workers. Not only will this serve to correct some purely economic aspects, but it will also take into account other types of impact we can expect to see.

This motion is a bit of a hodgepodge of a number of conditions. In my opinion, its current wording is a little outdated, considering our current reality. On one hand, with respect to interest deductibility, the minister announced that he will make a statement next Monday that will make his position clear. On the other hand, yesterday, the day before the debate on this motion, the Liberal finance critic himself suggested that an expert panel should examine this issue.

Perhaps we need to head more in this direction, in order to ensure that the Standing Committee on Finance, which is currently working on these issues, can complete its work, reach some conclusions and make some recommendations, especially since we can sense the government's desire to achieve some real results and outcomes. I thank the government for its support of the Bloc Québécois motion to study the issue of tax havens. This proves that they want to have a closer look at these issues. However, we must be prepared to study all situations. Certain aspects have to do with interest deductibility. There is also the matter of the treaty with Barbados, which, in my view, is a key factor.

I hope that the Standing Committee on Finance can produce a report on which there is as much agreement as possible, with recommendations that will have an impact as soon as possible. Maybe we can set as our deadline the fall economic statement or, at the latest, next year's budget. Clearly, if the work of the Standing Committee on Finance should result in a recommendation to abolish section 5907, which enables companies to bring $4 billion in profits from Barbados back to Canada without paying taxes, that would send a message to Canadians that their elected representatives have identified a fundamental inequity that must be corrected. I think that would be a key recommendation.

In my opinion, the committee should take a thorough look at interest deductibility. This week, we met with experts from the Canada Revenue Agency, who are very cautious about these and other issues.

It is not easy to get figures. The government needs to be more transparent.

The message that should be sent to people at the finance department or the revenue agency or to other government experts is that we need information in order to make the right recommendations.

We need to stop playing hide and seek with money, or else we will encourage the current perception that there can be inequity in the tax system, but it cannot be addressed because it is protected by people behind the scenes.

We have a wonderful opportunity to move forward and correct this situation in the Standing Committee on Finance. Personally, I hope that this will be the best way of ensuring that, at the end of the day, we can make recommendations to address these issues.

Regarding income trusts, Bill C-52 is already before us. The budget has been adopted and now must be implemented. What we must do is keep listening.

We have to listen to people who have suffered serious losses, those in a position to provide arguments on this issue. Maybe we should hold a debate in the fall, and, in a future budget, determine what is feasible. Nonetheless, we must always respect the principle of tax fairness and strive to make changes that will improve the situation, allow more fairness in taxation and take into account any potential impact on the economy.

We can learn from this motion and keep the following in mind. When the government makes announcements on economic investments—primarily in the budget and on other occasions—it should make sure that it has considered every possibility and not present half-baked initiatives. Otherwise, we are sending economic stakeholders a mixed message. That is what the government has to be aware of now in the matter of deductibility of interest expenses. There needs to be a clearer message.

Consider the example I gave on the GST rebate for tourists. Again, there is still some work to complete. Often it is not just a matter of small details, but things that have a major economic impact. These days, we must always consider the big picture in the context of globalization.

Like everyone else, the representatives of the multinationals in Canada—whose head office may be in the United States or elsewhere—are well aware of the conditions on investments. We should not have to kneel down to these companies. We should make sure the representatives from Quebec or Canada within these multinationals have what they need to get authority from their head offices in order to capitalize on factors that would attract the companies and create the right conditions to move forward.

We thought the Conservative government would have been particularly sensitive about the importance of these issues, but we are seeing the opposite and it is quite surprising. The government, which says it defends business interests, has introduced a number of initiatives that lack polish, that need fine tuning, especially on aspects that could have been planned or have already been studied. These initiatives could have been introduced and implemented in a very clear manner.

I am not saying that decisions can always be made that work for everyone. Sometimes we must make decisions even if some people will be penalized. However, in the end, the criteria to be considered are transparency and respect for what has been proposed. If ever there is a need to reverse a decision or way of doing things because a party, having come into power, realizes that it was mistaken, then a way must be found to penalize the fewest possible people.

Promises made during an election campaign—such as the one pertaining to income trusts—are in some ways moral commitments, contracts entered into with the voter. In this case, the Conservatives have broken this moral contract. Therefore, we are right to bring forward our proposals. However, the way in which the Liberal Party is proposing to move forward in this motion, today, is unacceptable. With regard to the proposed solutions, the motion does not reflect comments made about interest deductibility. With regard to income trusts, it is even worse, because the proposal does not resolve the basic issue of the need for tax equity.