Bill C-2 (Historical)

An Act to amend the Income Tax Act

This enactment amends the Income Tax Act to reduce the second personal income tax rate from 22% to 20.‍5% and to introduce a new personal marginal tax rate of 33% for taxable income in excess of $200,000. It also amends other provisions of that Act to reflect the new 33% rate. In addition, it amends that Act to reduce the annual contribution limit for tax-free savings accounts from $10,000 to its previous level with indexation ($5,500 for 2016) starting January 1, 2016.

Income Tax Act

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, what I like best about Bill C-2 is the tax hike for the richest 1%. In my opinion, the income gap is too wide and that is the most glaring problem in our current capitalist society, together with the extreme pressure that our economic system is placing on the environment.

Over the past 30 or 40 years, income inequality has grown steadily and has now reached unacceptable levels. Paying a CEO ten times what his employees are paid can be justified. However, when the CEO is paid 200, 300, or even 400 times as much, that is a sign that there is something seriously wrong with our society, and that the state has failed to do one of its main jobs, namely to ensure an acceptable redistribution of wealth.

The government is sending a strong message with Bill C-2 and it is headed in the right direction. It has been a long time since Ottawa increased taxes for the rich. Lowering the TFSA limit is a measure in the same vein and I will applaud if it actually shows up in the budget.

On the other hand, my enthusiasm for the tax cut for the so-called middle class is somewhat lukewarm. In my opinion, it misses the mark. This tax cut will benefit the wealthiest one-third of taxpayers. People who earn an average or median income will not benefit at all. The government is saying that anyone who earns $45,000 or more will benefit. However, if gross income is used in the calculation, people actually have to earn $51,000 to save money on their taxes. The reason for this is that other tax deductions reduce the gross income to a net income of $45,000, which is taxable. As a result, a worker who earns $51,000 a year will not save any money on taxes under Bill C-2.

By way of example, I would like to inform the parliamentary secretary that 80% of the people in his region of Mauricie report an income of less than $50,000. Only 4% of the people in his region, including himself, will see their taxes reduced by the maximum amount. People who earn $52,000 will not even save $20 with this measure. It is far from a solution. Those who earn $100,000 a year will save $680, and those who earn a gross income of $240,000 will not have to pay a penny more in taxes.

In short, the tax transfer in Bill C-2 will help the rich save money on their taxes by making the richest 1% pay more. In other words, the Bentley owners will have to pay to help BMW owners. Bill C-2 will not help Focus, Civic, or Corolla owners and will do even less for Accent owners, even though they are the ones who need help the most.

Nevertheless, this bill sends a strong message to the richest 1%. This is a step in the right direction. The proposed change is obviously symbolic and is not enough to correct the inequalities that exist. We need to go further.

The government should also target the problem of tax avoidance and tax havens as a priority. While the middle class and the poor are struggling and coping with austerity policies, receiving fewer services, and paying more for existing services, white collar criminals are ducking their social obligations. What good is it to increase their taxes by 1% if they are diverting their income? The KPMG scandal is the most recent example of this. The issue of tax havens is the elephant in the room. Canada's has one of the worst records among OECD countries. It is time for that to change.

This government can take action right now to deal with Barbados because we moved a motion to deal with this very issue. Barbados is Canada's tax haven. That is where Canadian banks and financial institutions, as well as wealthy Canadians, send their money. We can tackle Barbados as a tax haven right now. We do not need agreement from other countries to take action. I hope this will be done. It is a matter of fairness and justice.

The government of the Quebec nation is currently looking at the issue of tax havens. It will quickly see that it has little latitude on this matter and that it is largely dependent on the decisions that are made and voted on here in Parliament.

Since Quebec is not a country, it is subject to the tax treaties and laws negotiated, voted on, and ratified by Ottawa.

Quebec suffers when this government gives amnesty to white collar criminals. Quebec suffers yet again when Ottawa allows banks to move money to their branches in Barbados.

This lax attitude causes serious shortfalls for Canada and also for Quebec. When white collar criminals shirk their responsibilities, the rest of the public loses services, pays more in taxes and fees, and sees its debt balloon. This must change. We must do much more than what is in Bill C-2.

[Cheryl Hardcastle, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I explained that in my speech. I expressed a bit of frustration with the shortcomings of this legislation.

What we are seeing with Bill C-2 is a token response to the Liberal platform and to what Canadians saw. There was something in that platform that resonated with Canadians. That is why they were elected, the Liberals claim, so they should do something with it. It is a token response. As a matter of fact, it is insulting to people living in that median income range, because $600 can go a long way toward nutrition and bills.

Not providing that well-being for all Canadians puts a burden on all of us as a country. One would think the Liberals would want to maximize this tool. That is why it is a bit frustrating.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, I definitely agree that Bill C-2 would do nothing for seniors on a fixed income and those with lower wages who are counting on maybe CPP, OAS, and GIS to get through.

Does the member think a $600-a-year middle-class income tax break would really make a big difference to those making up to $200,000 a year?

[Cheryl Hardcastle, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, it is a pleasure to speak to Bill C-2 today. I will begin by saying that, while the NDP members have issues with some elements of the bill, we are pleased to acknowledge that there are parts of the bill that we believe would be beneficial to Canadians. We have decided to support the bill going forward to committee, where some of these can be more meaningfully considered. There are some clarifications and some rationalizations that I am going to take advantage of during my time here today.

Let us talk about some of the more positive aspects of Bill C-2

Bill C-2 would include tangible measures to collect a fair tax from the rich. Specifically, it would increase, by 4%, the top income tax rate on incomes over $200,000.

As the hon. member for Regina—Lewvan pointed out when the bill was first debated, this increase is entirely consistent with what the NDP has achieved at the provincial level.

In Nova Scotia, the NDP government increased, by 4%, the top rate on incomes over $150,000.

In a minority legislature in Ontario, the NDP amended a budget to add two points of income tax on incomes over $500,000.

The NDP government in Alberta has, quite correctly, gone from a flat tax to a progressive income tax system.

As part of our election platform in Saskatchewan, the NDP is proposing an additional percentage point of tax on incomes over $175,000.

The other positive aspect of this legislation is to restore the TFSA contribution limit to $5,500 per year. I think it is important to note that the previous Conservative government's proposal to increase that limit to $10,000 would only affect people who have extra money left over after 18% of their income has been contributed to RRSPs and after the $5,500 that can still be contributed to the TFSAs.

In 2013, fewer than 7% of eligible Canadians made the maximum TFSA contribution. It stands to reason that probably only up to 7% of Canadians would stand to gain anything from a higher limit on TFSA contributions. Therefore, restoring that limit to $5,500 is clearly a progressive move.

Let us face it. Given the unemployment rate, the skyrocketing cost of food and rent or housing, and the rising precariat, there are far too many people who will not see benefit from the bill. Consider a family of four living off minimum wage with a total monthly income, including benefits and credits, of $2,882. By the way, I get this information from the local Windsor anti-poverty organization, Pathway to Potential. Of this fixed monthly income, 62% goes to rent and food, leaving only $1,082.70 for remaining expenses, such as utilities, phone, transportation, medical costs, and dental costs. People face precarious situations when their rent exceeds 30% of their monthly income. When income is low and rent is high, there is not enough money left for food. This helps explain why so many are forced to use food banks. In 2015, 80,865 individuals were served by Windsor and Essex County food banks, and 41,942 of this number were children.

I think it is safe to say that, when we have a situation this urgent, this dire, we should be drafting legislation to help these people. Yet, these are precisely the ones who are left out of the bill. When families must choose between paying rent and feeding their children, they are not going to have a spare $10,000 to hide away in a tax-free savings account.

Let us consider students. In the Windsor area, we have St. Clair College and the University of Windsor. The reality is that most people who go to school are just getting by or taking out loans to get by, let alone putting money in a tax-free savings account. Perhaps some of them are doing so with the help of family members, but the ordinary Canadians I represent do not have that luxury.

As I alluded to earlier, in the service sector, many people are moving to part-time or precarious work and basically just getting by.

Unfortunately, with this bill, we know from third-party experts and economists that 60% of this plan for a reduction in taxes for Canadians would not be enjoyed by the middle class or those with low incomes. Therefore, it is a sizeable section of Canadians who would be left out. Because of the way the scheme works, the wealthiest would benefit the most. That is a real problem, which New Democrats want to address at committee. It is an issue we have raised before.

Who would benefit from this bill? It would not be the office workers who are making an annual salary of less than $40,000 a year, or the hair stylists who basically earn around $28,000 annually in Canada. They would get zero. It is the same with social workers who make an annual salary totalling around $44,000, and with our friends in the retail sector who earn $21,424 on average.

Cashiers would get nothing back. That is a classic example. All of the people working in department stores, retail shops, drive-throughs, fast-food chains, and all of these types of businesses would receive zero from the plan. They are the people we should be rewarding with a tax reduction. These are the people who do not have the equity to easily afford some of the tax deductions that wealthier Canadians get. They do not earn income at the level to take advantage of some of the policies that have been put in place in the past couple of decades.

Waiters and waitresses earn less than $22,000 on average. They would get zero. That is another group of individuals who, I would argue, would not benefit from this reduction. They would get nothing at all. Nannies are another example. Chefs and assistant chefs would get nothing.

Who would get a benefit from this legislation? Bank managers who earn around $82,000 a year would receive $555 in their tax season from this. They would also be in an income stream where they might be able to take advantage of tax-free savings account. It would be beneficial for them and their family. Lawyers earning around $108,000 a year on average in Canada would get $679. Members of Parliament with the same wage amount would get the cap of around $680 as well.

It gets worse. Bill C-2 also includes a so-called middle-class tax cut that would not actually help the middle class. I think the Liberals might be a bit confused between cutting the middle-class tax bracket and changing taxes in such a way as to help people with middle incomes. What the bill proposes is a tax cut that applies to incomes above $45,000 a year, which is more than the median Canadian income. To receive the maximum benefit, someone would need to have an income of more than $90,000 per year. To put that into perspective, someone working as a nanny for the Prime Minister would receive nothing from the middle-class tax cut. However, the Prime Minister himself, and indeed all members in this House, would get the maximum benefit of about $700. However, we do not need the money.

What are the alternatives? We in the NDP have proposed to reduce the first tax bracket, which applies to everyone. We also propose a boost to the working income tax benefit, which is better targeted to lower incomes. It would be extremely easy to design and implement a middle-class tax cut that would actually go to the middle class. However, in all of the discussion we have heard with respect to this bill, I have not heard a coherent explanation from the Liberals as to why they are pushing ahead with a tax cut that would only go to incomes above $45,000, rather than enacting a tax cut that would include all taxpayers.

Moreover, it has been revealed that the bill would not pay for itself. It would cost more than $1 billion a year in lost federal revenue. In effect, what the government is proposing is to borrow money to fund a tax break for people who do not really need it.

In conclusion, there are a enough positive elements in Bill C-2 that the NDP is prepared to support it on second reading. However, there is a huge amount of room for improvement in targeting the so-called middle-class tax cut to those who really need it, and in collecting the revenue that would ultimately be needed if the government is ever going to balance the budget—

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Mr. Speaker, I am rising for two reasons. The first is personal, and the second is to talk about Bill C-2

I would like to inform the House that this morning, my wife and I became new grandparents. Our first grandchild was born, and we are so proud. My daughter, Chantal, and her husband, Mathieu Hayley, are the proud parents of a beautiful little girl named Maëlle.

Mr. Speaker, I am extremely proud and happy to rise on Bill C-2, the law that talks about benefits for the middle class. That is what was so important about our election campaign. This was a promise that we made throughout our campaign platform, and this will make good on it.

I was very happy to hear our Prime Minister indicate that this would be the first priority of our government in this 42nd Parliament. This was a platform promise that we felt was essential because over the last 10 years the middle class has been struggling. That has been extremely difficult for many people across Canada, in many communities.

This idea is not something that came from within. This is something we heard throughout the campaign, because we were listening to and consulting with Canadians during door-to-door visits. We heard clearly that the middle class were in need of some type of tax relief for them, as they were struggling. Many people were telling me that they were working extremely hard and yet did not seem to be getting ahead because the cost of living was rising, because of the challenges of paying for personal family needs, for day care, etc. After 10 years of what I would call a low-growth economy, Canadians were looking for real change.

Our Minister of Finance has been hard at work as well, consulting with Canadians for the upcoming budget. He has consulted from coast to coast to coast. He was in Nova Scotia and had great attendance by youth at the university, and as well at the chamber of commerce. This allowed many Canadians to be engaged in this process of sharing some innovative and creative ideas. This is another sign of what I call a government that is open, transparent, and accessible. Our minister displayed that throughout that process, and I am very pleased with that.

The reality is that people have to pay the mortgage, as well as for groceries and other essentials, like child care and so on. It is very difficult for the middle class. This formula is not good for the economy, that is for sure. The bill we are debating today will allow us to shift the tax burden, so that those who have a little more will get a little less and those who have a little less will get a little more.

In my riding, over 30% of the citizens will gain from this tax reduction. Over nine million Canadians will also be taking advantage of this tax reduction. This means that a family of four will have about $540 more in their pockets for spending on things that are essential for the family.

It is also important to note that this is only part of the plan. Our plan is much more horizontal, if you will; in other words, many other initiatives that were set out in our platform will be rolled out over the next four years. What we want is to support the middle class. Our government will also be investing in infrastructure and transportation, which is absolutely crucial to stimulating the economy.

In my riding, which is Sackville—Preston—Chezzetcook, public transit and transportation are extremely important. One has to understand that there are both urban and rural parts of my riding, and I am working closely with my colleague from Dartmouth—Cole Harbour on the construction of the long-awaited Sackville-Burnside expressway. It is essential and must move forward as soon as possible.

In addition, our government is committed to creating a Canada child benefit. This will help families with day care, a fairer system, one that would see Canadians who have a little more get a little less, and those who have less getting more. That is a fairer system. There are nine out of ten Canadians who would benefit from this. Over 315,000 children will be pulled out of poverty. That is the type of plan that will be effective for Canadians. That means about $2,500 more per year for families, tax free. Add that to the $540, and it is over $3,000 per year per family. That is a very important aspect of taxes for Canadians. There will be more money in their pockets.

Our government has focused on fairness. We want to support the middle class by ensuring they have money in their pockets and that they are able to prosper.

I would like to make one final point regarding Bill C-2. We made some changes to tax-free savings accounts. The Conservatives had increased the contribution limit to $10,000. We dropped it back down to $5,500, given that 93% of Canadians were not taking advantage of the increase, because they could not afford to. The only people who will not benefit from this measure are the wealthy, not the middle class. In fact, the $10,000 limit was giving more money to those who already had the most, and the Canadian government was having to pay millions of dollars more over five years, and billions more in the long term. This will mean less spending, but it will go to those who need it most.

For the last 10 years, like I said, the middle class has been ignored. This government is putting the middle class at the forefront. This government will ensure that our policies reflect what is important for middle-class Canadians.

The House resumed from March 8 consideration of the motion that Bill C-2, an act to amend the Income Tax Act, be read the second time and referred to a committee.

Business of the House

[Dominic LeBlanc, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, perhaps there might be consent for me to table this very incisive statement that members are about to hear.

Today, we will continue our second reading debate of Bill C-6 on citizenship. Tomorrow, we will continue to discuss Bill C-2 on the middle-class tax cut. There have been discussions among several members, and I believe we will be able to conclude second reading debate tomorrow. Next week, as my colleague mentioned, we will be working very hard in our constituencies.

Monday, March 21 will be the final opposition day in this supply cycle.

On Tuesday, we will take up debate again on Bill C-6, until 4 p.m. I know that members on all sides are looking forward with great enthusiasm to the Minister of Finance presenting his budget at that time.

On Wednesday and Thursday of the week we are back, the House will have the two first days of the budget debate.

Finally, on a serious note, there have been discussions among the parties, and I believe if you seek it you will find unanimous consent for the following motion. I move:

That, notwithstanding any standing order or usual practice of the House, one minister of the Crown be permitted to make a statement pursuant to Standing Order 31 on Friday, March 11, 2016.

The House resumed from March 7 consideration of the motion that Bill C-2, An Act to amend the Income Tax Act, be read the second time and referred to a committee, and of the amendment.

Income Tax Act

[Dave MacKenzie, Conservative, Oxford, ON]

Mr. Speaker, this is an interesting time, when we talk about Bill C-2. I come from a very strong rural riding, but it is also a riding that is one of the few in Canada that has two auto plants not related to each other. Therefore, I have a broad cross-section of Canadians. When people ask what is middle income, nobody seems to know, but one consensus is that it is always somebody who makes $10,000 more than I do. The difficulty, when we start to talk about what we are doing for middle-income people, is that there is no real definition of it.

We talk about what the Conservative Party did, and I think you, Mr. Speaker, might have been here when we reduced the HST from 7% to 6% to 5%. I think members would agree that everybody benefited from that.

This change being brought forward was be revenue neutral. Revenue neutral would mean that they would take from Peter and give to Paul, but it would not cost Mary anything in the middle. As it turns out, the Liberals abandoned the promise and according to the PBO, Bill C-2's changes would cost Canadians $8.9 billion over the next six years.

I think members recognize that when governments accumulate debt, and when we are in a position that we are in now when the economy is not that bad—it is fragile but it is still growing—it does not mean we will pay it. It is not like a mortgage when we buy a house and intend to pay it off in a certain length of time. Government debt always ends up being paid by the next generation or generations. When I look at it, I recognize that we are putting this debt not only on my grandchildren but on their heirs. The debts that we build up in our time here are very important.

By taking the debt and doing what they would do for a small benefit to some people, and it would be so small that they would not be able to retain it, the Liberals have not shown us what the real advantage would be to the economy, other than we know we would add $8.9 billion to debt. This does not make sense.

Those good people in Oxford who are the farm people, the people who work in the auto assembly plants, the firemen, the policemen and the teachers, are they the middle-class people? I do not know, but they are concerned that these debts will be added on to their children and grandchildren. We need some transparency that goes along with this.

When we said that we would reduce the HST from 7% to 6% to 5%, everybody knew what that meant. It meant that everybody was going to save on their tax dollars. We recognized that tax dollars were not for the government; they were for the people. It is not for the government to decide that the tax money should be taken from pockets of people' and to spend it willy-nilly. It is to do things for the government.

Unfortunately, in this case, we are past that point. We are looking at adding billions of dollars, and I am not sure whether anybody has calculated exactly what that will be. Some economists have said it will be $150 billion over the Liberals' term in office. That is a lot of money.

We just went through the worst downturn in the Canadian economy since the Great Depression, and we know that cost money. The deficit went up and the debt went up. However, we handed over a surplus. We should be looking at starting to pay it down, as we did in our first three years in government. Canadians are starting to see the sunny ways turn into dark cloudy days, and we are handing that big debt to our children to pay.

The tax-free savings account is one area that has been focused on a great deal. I know, when I talk to people in my riding about the tax-free savings account, they see no benefit in reducing the contribution limit. We have not heard why it is so important to reduce the contribution limit, other than if the Conservatives did it, it must be bad so we will go back to where it was. I hear from young people who say that they want to save that money to buy a house. There is a difference between RRSPs and tax-free savings accounts. When people want to buy a home out of an RRSP, it just means they have another debt. They can take their money out, but it has to be paid back or they have to pay the tax on it.

These young people, who are smart enough, and there are many of them, recognize that they can put the money into a tax-free savings account. It will not grow by leaps and bounds, but it will grow. They can take the money out to purchase a home. They do not have to put the money back in, but they do have an opportunity to put that same amount back into the tax-free savings account. It is a totally different scenario, so many are looking at that.

Many middle-aged people are looking at the TFSA as an opportunity to build for their retirement. They are not anxious to take part in the new scheme in Ontario, for instance. The Ontario government wants to have its own pension plan, something like the CPP, but we do not know exactly what it is. These middle-aged people are not interested in that. They want to save for themselves, to put that money away for when they retire.

To think that it would make sense to cut back the TFSA is illogical. It does not cost anything. The government's losses in revenues from that would be minimal. It is just a slap in the face of those people who felt the need to put the money away.

As we know, the vast majority of people who put their money in a tax-free savings account would perhaps be deemed to be in the lower half of the income brackets. They are not high-income people. This is a penalty on people who can least afford it, people who would like to save for their future, who do not want to be part of a nanny state. They want their own money they have saved for their retirement. In many cases, it also includes young people who want to save for their education or to go back to school. They may want to buy a house or a car. They may want to start a business.

Therefore, when we look at it, we wonder why the government would want to cut this back. What is the harm in leaving it where it is? It is a big harm to the people who wish to save, but no harm to the coffers of the federal government.

To turn around and have the tax break we are talking about today, which we know will be minimal—I heard a number today of $1 a day—what is the benefit in that? One cannot even buy a coffee with that, although there is one chain that is giving away free coffee now, but it is rather difficult to see how that $1 or $2 a day would make a great deal of difference to the average Canadian. It is different from when the HST was reduced. We knew what it would do for the auto industry, the recreational industry, and the equipment industry, all of those.

We have not heard what this is going to do. No one can say “We'll see an increase in productivity”, or “We'll see an increase in opportunities for manufacturers.” It just is not there.

However, what we do know from the PBO, and I am sure everyone on that side agrees with the PBO now, is that it will cost $8.9 billion over the next six years. That is just a number that gets added to the growing deficit that we hear about.

We heard during the election campaign that we would have a $10 billion deficit. That $10 billion deficit was one of the 300 promises made. Now that $10 billion deficit seems to have grown to $30 billion. When we put $30 billion here and there, I know it is just a number and that budgets will balance themselves eventually, but somehow they get balanced by our young people, our families, our grandchildren. It is just not fair that we push this on to them. We have been doing it for far too long as a nation and a province.

I am from the province of Ontario, so when we put our debt here, along with the Province of Ontario's debt, we can just imagine the kind of money that our young people will have fished out of their pockets to pay for what we have not paid for. It just does not make sense in the big picture of society.

I am really puzzled as to why we would want to support taking away just one little thing, the tax-free savings account. It just does not make any sense.

I can see, Mr. Speaker, that you are getting anxious to stand up, so I do not want to take away your time when you stand up and tell us we are finished.

I know that on this side, we do not understand why the government would deny people the opportunity to save their own money. That is really what it is: they are saving their own money.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I rise in the House today to discuss Bill C-2, an act to amend the Income Tax or, as I like to call it, the Liberals' tax cut in name only.

There are many things to be said about this bill. For starters, the tax cut, while sounding good in a press release, is nothing more than a PR ploy. I want to first note the fact that this tax break is another in a string of broken promises by the Liberals. I recall the warm summer months, and I do recall the warmth fondly being here, and the beginning of a long and growing election. One of the promises made by the government was that the new tax plan, a plan that would cut taxes for the middle class, would be made revenue neutral through a tax hike on the wealthy. The wealthy were defined as those who make $200,000 or more. However, surprise, the tax plan is not revenue neutral, and in fact will cost Canadian taxpayers well over $1 billion per year, year after year.

The finance minister himself conceded that the plan will leave a staggering $1-billion annual hole behind, and this is from the head of the government's finance department. Further, a report from the parliamentary budget officer estimates the cost to be close to $1.7 billion per year, adding almost $9 billion in debt over the next six years. This broken promise proves that the government's plan was grossly miscalculated. It is clear that for the Liberals, numbers are a challenging thing to deal with.

This tax plan would completely eliminate the $1 billion surplus that the previous Conservative government left behind, as confirmed by the “Fiscal Monitor” in Finance Canada. I would normally favour tax cuts, but what Canadians are getting is a future tax hike. It is a tax cut being paid for by deficit spending. By borrowing more money to pay for this tax cut, the government is slightly reducing what individual taxpayers are paying now, in exchange for a future hike in taxes. This hike in taxes will surpass the small decrease they are receiving now. It is akin to taking out a bank loan and thinking that the money is an increase in income. It is not. Interest payments on the money borrowed to finance a $9-billion deficit over the next six years will add millions upon millions of extra dollars to what the government owes, which in turn means more money that the taxpayer will be forced to pay.

This tax cut simply does not make sense. Why pay a little less now for a larger tax hike later? In the world of the Liberals, we do so because it makes the government look good. It makes it look like it is saving Canadians money, when in reality it is sticking it to future taxpayers. This so-called middle-class tax cut amounts to savings of mere pennies a day at the lower end of the income scale, rising up to a whole $3 a day of savings at the top end.

What would it offer those making below $45,000 a year? It will offer nothing. There are 17-million Canadian taxpayers who make less than $45,000 a year and will receive absolutely nothing from this tax cut. Sixty-six per cent of all Canadian tax filers will get nothing from this tax cut. There are 338 members of Parliament in the House who will benefit from this tax cut, but not those below $45,000 a year. It is not often that I agree with my NDP colleagues, but, like them, I question how the Liberal government could overlook 66% of Canadians who make less than $45,000 a year and will receive nothing but higher debt from this tax cut. This is not a middle-class tax cut paid for by the 1%. It is simply cynical Liberal rhetoric used solely for election purposes.

It is not just the fact that this tax cut is nothing but a phony one; it includes much more than that. This bill would effectively slash the savings vehicle that gives those with low to medium-income levels a chance to get ahead. The bill would slash the tax-free savings account from $10,000 to $5,500. We Conservatives understand the importance of saving and investing. Frankly, our tax system is often a disincentive to the lower middle-class income earners when it comes to saving. The tax code would treat interest and income from savings as yet another lucrative pool of money that the government could get its hands on.

The TFSA limit at $5,500 a year and then at $10,000 a year was fair. It allowed for both lower and middle-class income earners to save without worrying that the gains made from interest or rising stock values would be washed away by taxes. Doubling the TFSA was a chance for those at the bottom of the economic rungs to climb up. However, never let a good program that benefits Canadians get in the way of the Liberals' chance to play politics for their own gain.

Let me quote from the Liberal website, which is still up, about TFSA. It states that TFSAs are “tax breaks for the wealthy — like the doubling of the TFSA limit, which does nothing for the middle class.” Yet, 73% of those who maxed out their TFSAs in 2013-14 were making less than $80,000 per year. Sixty per cent of those who maxed out their TFSAs made less than $60,000 per year.

What about those horrid one-percenters who the Liberals claim were the biggest benefactors of the TFSAs? Just 5% who maxed out their TFSAs were from this despicable 1%.

The government is trying to change the ability of Canadians to save for their future. Through Bill C-2, Liberals are now saying that those in the middle class should in fact pay more taxes on the money that they save. Rather than giving low- and middle-class income earners the freedom to save up to $10,000 a year, Liberals are saying that $5,500 is a proper amount. If one is able to save more, then clearly one is rich enough to pay more taxes, yet 60% of Canadians who maxed out their TFSAs make less than $60,000 a year. Still they are told it is a tax break for the wealthy, so they are not allowed to save more, tax free.

This has affected many Canadians who have come to rely on these savings accounts in planning for their future: students saving for higher education; families saving to start a family or for a down payment on a house; entrepreneurs saving for a business; parents saving for their children; and, more importantly, seniors saving to stretch their savings into retirement. These changes will make life less affordable for these Canadians who are trying to save for their vulnerable years. This will be the Liberal legacy: taking away opportunity for wealth generation for Canadians.

The bill embodies the Liberal ideology of higher taxes, higher debt, and higher deficits. It highlights the financial illiteracy of the current government. To Liberals, debt and deficit are great things. Taxing people more is a great thing. This is in stark contrast to what our previous Conservative government did.

Under our leadership, Canada was prosperous, with the wealthiest middle class in the world. Canada was an island of stability in a turbulent world. We had a proud legacy of tax fairness and cutting taxes. When in office, our Conservative government reduced taxes more than 140 times, bringing the federal tax burden to the lowest level it has been in 50 years. To put it in perspective, the Maple Leafs were still winning Stanley Cups the last time the tax burden was this low. We did this through measures that were targeted and responsible. We did it while ensuring that when taxes were cut, they were cut for good. It is not like what the current Liberal government is doing, which is cutting today with more to pay in the future.

All in all, the bill is simply irresponsible. It would put an even bigger hole in our budget, pile on more debt for future generations, and cost Canadians more in the long run. It would also take away the economic freedom of Canadians to be able to save and invest in their already taxed hard-earned money, tax free.

It is for these reasons I will not be voting in favour of the bill.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, a few phrases come to my mind, and one of them is “You have to be kidding.”

It was just a couple of weeks ago that I was at a local restaurant, and someone said to me that the new Prime Minister, in his first 100 days, has accomplished more toward making our society a better place to live than the previous prime minister did in his entire 10 years. I do not know where the member gets off with the comments that he is making.

Let me ask the member a question. We talked about an election platform. He seemed to be focused on that. Let us take a look at what Bill C-2 does. It fulfills a major party platform. It will in fact give money to Canada's middle class. This bill is a promise kept. That is something that was promised in the platform. It said that we were going to give an increase to Canada's wealthiest, that 1%. Again, it is a promise that is being kept.

Let us not give up hope. There is more coming on March 22. It is going to give that much more in terms of Canada's middle class and those aspiring to be a part of the middle class, through the Canada child benefit program. We have seen the greatest redistribution of income inequality in trying to address that issue in the last 120-plus days.

Let us be a little more patient. There is a lot more to come. Would the member not recognize, at the very least, that the government has done more for the Canadian middle class than the previous government did in the previous 10 years?

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I want to begin my remarks today with a point of refutation, because in listening to the debate we have heard some discussion around inequality in Canada, with the member for Saanich—Gulf Islands using the phrase a “crisis in Canada with inequality”. We need to review the record with respect to inequality. Frankly, this bill is going in the wrong direction.

However, over the last 10 years as a government we had a really positive record addressing inequality, as the numbers clearly show. As I have mentioned before, at the beginning of our mandate we lowered the GST, which is the tax that all Canadians pay. We also cut the lowest marginal tax rate. This is a very different approach from that of the current government.

In my view, the best way to measure inequality is through something called “intergenerational earnings elasticity”, which is the ability of people to move between different income brackets across generations. In other words, what are someone's chances of being a wealthier person even if he or she had relatively lower income parents and vice versa?

I will refer members to a paper written by Miles Corak from the University of Ottawa. If we look at the data on intergenerational earnings elasticity, the numbers are clear that Canada is near the top when it comes to equality. In terms of intergenerational earnings elasticity, Canada gets a score of 0.19, where low is good. We are fourth in the world. We are far ahead of the United Kingdom, France, Italy, and countries with a very different social system. We are also ahead of the United States. Therefore, we have a combination of factors in Canada that is good for equality. I would argue that it is a combination of certain necessary social programs in areas like education and health care but also of economic opportunity, and what we have had historically over the last 10 years with limited but effective regulation of business and low business taxes. This environment has been good for equality. It is one thing for members to throw out phrases like “crisis in Canada with inequality”, but if we look at the data specifically I would argue that with respect to intergenerational earnings elasticity, we see that Canada is in a very good spot right now.

Nonetheless, I would argue, and here I agree with our colleagues in the NDP, that this bill does not move in the right direction with respect to inequality because it cuts taxes in certain categories but not in others. Many low- and moderate-income Canadians would not benefit at all.

I am concerned about this bill because we might call this a Liberal promise-wrecking ball. It is a bill that breaks through what were clear election commitments by the Liberal Party. The Liberal Party committed in two key categories when it comes to fiscal measures. It promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that all tax changes were revenue-neutral. It also promised to cut taxes for, in their words, the “middle class, or [those] hoping to join it”, and to pay for those tax cuts with tax increases on higher-income earning Canadians. We see very clearly that this bill makes utter nonsense of these two commitments.

In terms of the Liberals' commitment to run only three modest deficits of $10 billion, balance the budget after that, and ensure all tax changes are revenue neutral, we know that the deficits have ballooned significantly since the election, and that even before new spending is promised, we will be running an $18.4 billion deficit in fiscal year 2016-17 and a $15.5 billion deficit in 2017-18. That is again before new spending.

The Minister of Finance had this to say about that:

A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government might see that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago.

I will say it is a rather strange definition of “ambitious” to leave the cupboard bare for the next generation. Let us define our ambition by how much we leave for the next generation, not how little we leave for it.

The Prime Minister has said that Canada has room to run these massive new deficits because of our relatively low debt-to-GDP ratio at the federal level. It is true that our government left Canada with a low debt-to-GDP ratio. In fact, we left a reduced debt-to-GDP ratio compared to when we first took office. However, the combined federal, provincial, and municipal debt-to-GDP ratio is alarmingly high. It is over 90%. It is in the same ballpark as the debt-to-GDP ratio of the U.S. and the U.K., if we combine federal, provincial, and municipal debt.

We actually do not have room at all to run these massive new reckless deficits. Of course, this large debt-to-GDP ratio is led by the very large deficit and debt here in the province of Ontario. The policies of the Kathleen Wynne government, which I think unfortunately the current government wishes to emulate, have made Ontario the most indebted sub-sovereign borrower on earth. We cannot go in that direction at the federal level as well. We are already significantly weighed down by that combination of federal, provincial, and municipal debt.

Bill C-2 makes tax changes that will have a significant cost to our treasury. By ignoring the value of tax-free savings accounts, they will also have a significant cost to our economy. This bill would cut tax-free savings accounts and lower some taxes while raising others, but it is not revenue neutral. According to the parliamentary budget officer, it would cost the treasury $1.7 billion per year. It is clear that the current government is not sticking to its $10 billion per year deficit commitment. The Liberals have no serious plan to balance the budget in year four. Their tax changes would not be revenue neutral, and estimates are that they will increase instead of lowering the debt-to-GDP ratio. Over the next four years, it is projected that the Liberals will increase the debt more than we did in 10 years. They will increase the debt-to-GDP ratio. They will do it, not because of a financial crisis, but because they have no regard for the importance of planning for the next generation. They are spending today with no regard for the future at all, and, again, certainly making nonsense of their initial budget commitment.

The Liberals said as well that they would cut taxes for the middle class and those hoping to join it. The details do not measure up to that commitment at all. Their proposal is a modest tax reduction for those making between $45,000 a year and $90,000 a year. Individuals making less than $45,000 will get nothing. Families with a combined income approaching $90,000 a year will perhaps get nothing. Whether those people consider themselves middle class or those hoping to join it, they in fact would lose because of the proposed changes. Even individuals at the low end of that tax bracket may be worse off because of the other changes that the current government would bring in with respect to tax-free savings accounts.

Those who will benefit most, as has been pointed out, would be those making over $90,000 per year, perhaps families with a combined income approaching $200,000 a year. That is the reality of these changes. As a member of Parliament, I know I make a good salary, and my wife, as a part-time physician, does as well. With two incomes, each individually less than $200,000 a year, we are in the group that would benefit the most from these proposed changes. However, the fact is that members of Parliament and senators do not need tax cuts. Canadians do—hard-working, middle-class Canadians—and those who are hoping to join it. The rhetoric does not match the reality in this bill, at all. Instead, what the Liberals will do by reducing tax-free savings account limits is to hurt those Canadians who need the help the most.

Here are the real numbers on tax-free savings accounts. Over 65% of tax-free savings account holders make less than $60,000 a year. Almost half of TFSA holders make less than $40,000 a year. Over half of those who currently max out their TFSAs make less than $60,000 per year. The Liberals somehow behave as if those making over $90,000 a year count as middle class for the purposes of their rate cut, but those making less than $60,000 a year for the purposes of tax-free savings accounts count as wealthy. This is a clear paradox in their plan. Why would they cut benefits for those who make less than $60,000, while increasing benefits for those who make more than $90,000 a year?

Again, this bill will drive a stake through the Liberals' election commitments. They promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that tax changes are revenue neutral. That was and is nonsense. They promised to cut taxes for, in their words, the middle class and those hoping to join it, and to pay for those tax cuts with tax increases on higher-income Canadian. Again, if we look at the numbers, clearly this is total nonsense.

Those of us who are on the Conservative side of the House, and even our colleagues in the NDP, have convictions. We stick to them and we try to advance them. However, it is clear that the current Liberal government already has no regard for its platform. The Liberals have broken more promises in a mere four months than we did in 10 years. Shame on them for that.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

Mr. Speaker, I would like to thank my seatmate for his elucidation on sunny ways.

The comment I want to make to him, notwithstanding the ridiculous question posed by the member from the Liberal Party, is this. Anyone who is a financial advisor or understands financial investment and personal income security would understand that anyone earning less than $40,000 a year currently has no or little-realized benefit from putting their money into an RRSP. That money is better put into a tax-free savings account until the income earner is in an income bracket where it makes more sense for them to put their money into an RRSP.

If we do the math and apply it, if an individual Canadian earning less than $40,000 a year who can save or put, say, $5,000, $6,000, or $7,000 a year into an RRSP were instead to put it into a TFSA—whose extra capacity they will lose under Bill C-2—they would be able to further advance their own income security and income for retirement. By maximizing their contributions to the tax-free savings account early in their careers and then when they become seniors and need to take money out of their RRSPs or their locked-in retirement accounts at the other end, they are taking advantage of the most important financial vehicle that has ever been brought in by a government. The fact that this has been undermined and political games have been played with it is astounding.

Could my colleague talk to the importance of Canadians who can look after themselves and are able to do so with vehicles like a tax-free savings account?

[John Brassard, Conservative, Barrie—Innisfil, ON]

Mr. Speaker, it is a great pleasure to rise in the House today to speak to Bill C-2.

I realize that we are near the end of the debate and the vote is coming tonight. Oftentimes when we prepare for these types of things, a lot of what we want to say has already been said. We have heard some good arguments from both sides of the House, but I happen to think that the arguments from this side have been more persuasive.

I have tried to break this issue down to its simplest form, and its simplest form is this. If I were standing in a Tim Hortons in Stroud or Alcona or if I were at Big Bay Point or in Huronia, in Barrie, how would I explain Bill C-2 to the residents of my riding? I would simply start by saying that it is a shell game. I have often used the term “liberalnomics”. If one were to define “liberalnomics”, it would be accurately reflected as a fiscal policy of saying that things will add up when they do not; a fiscal policy that equates to playing pin the tail on the donkey in the dark, where a government keeps missing its targets; and a fiscal policy in which, if government members made decisions using their own money, they certainly would not make the same types of decisions they are making, including those that appear in Bill C-2.

Who is going to pay for this? That is the question we need to ask. The Liberals said they were going to give middle class Canadians a tax break by making taxes fairer. They said they would cut the middle-class tax bracket to 20.5%, and they certainly have done that. However, they also said that this plan would be revenue neutral. All of the speeches that have been presented by members on our side, even information that has been presented to us by the parliamentary budget officer, have indicated that a $1.7 billion deficit will be created by this plan this year and effectively an $8.9 billion deficit over six years. This plan would benefit the top 30% of wage earners. How would I explain this to the people of my riding if I were standing in Tim Hortons?

This may not be a great example for this side to use, but it is an example nonetheless and it comes from Mr. David Macdonald, who is senior economist with the Canadian Centre for Policy Alternatives. In an article in Maclean's magazine Mr. Macdonald, through a study, said that 1.6 million families making $48,000 to $62,000 a year would see roughly $51 a year in tax savings; and for those families making $62,000 to $78,000 a year, they would be making $117 in tax savings. I would define those figures as the middle class, and Mr. Macdonald did as well.

Then Mr. Macdonald moved into an interesting category that he defined as the upper middle class, and I think most of us would agree with his definition. Those Canadians who make $124,000 to $166,000 a year would see a benefit of this middle-class tax decrease of about $521 a year, while those making $166,000 to $211,000 would see a tax saving of $813 a year.

How would I explain that to my residents if I were standing in Tim Hortons? I would simply say to them that this middle-class tax decrease would benefit every single member of the House of Commons more than it would affect those who need it the most.

We have heard the finance minister stand up many times in the House during question period and say that nine million Canadians are going to benefit from this. If the parliamentary budget officer's estimates are correct—and there is no reason to think that anyone in the House would discount them—that means for those nine million Canadians, the amount of deficit that they would have to pay is equal to about $164 each. If I were to explain to my residents in Barrie—Innisfil, with an average median household income of $69,000 in Barrie and $66,000 in Innisfil, that the maximum amount they would get as a result of this middle-class decrease would be $51 but the expectation would be that they would have to pay $164 for the amount of this deficit, not one of them would think this is a good deal.

Yet the Canadian government is running around, because of this election promise, saying that nine million Canadians will actually benefit from it, when in fact, every member of the House knows that it is Canadians who pay the price.

Based on Finance Canada's estimates, the new Liberal tax plan amounts to an average of an extra $6.34 a week for those who qualify, merely a head of cauliflower with the way the prices are today.

The other thing Bill C-2 talks about is the reduction of the TFSA from its current amount down to $5,500. In fact, 11 million Canadians took advantage of the TFSA. My wife and I, who I would classify as middle-class Canadians, and my kids who are in university have used TFSAs as a savings and investment vehicle. It is a tool that lessens the dependence on government. It gives people options. To reduce it just does not make sense because it puts Canadians in control of their future if they choose to do so.

Recently, my financial planner talked about TFSAs and he was quite concerned about the fact that we would see a reduction in them. He told me the story of a 22-year-old student who had invested the maximum amount in a TFSA, which was now worth $220,000. That individual will be able to take that out tax-free and use it for whatever purpose he or she chooses to use it for. The purpose of the TFSA was all about that.

About a century ago, American author and journalist H.L. Mencken wrote that complex problems had simple, easy to understand wrong answers. He may as well have been referring to the idea that budgets balanced themselves or that the Government of Canada could foster economic growth by simply injecting mountains of taxpayer money into the economy.

Government stimulus spending and workers alike can succeed. However, bad public policy, one based on pin the tail on the donkey approach, Liberalnomics, sees companies rushing for the border and everyone else heading straight to the unemployment line. That is exactly the road that the people in my home province have found themselves travelling on over the past 13 years and Canadians are sadly following the same disastrous route under the current government.

Tax breaks that do not help those who need it the most and they create deficits that are not needed. That is Liberalnomics. That is how I would explain to the residents of my riding why I am not supporting Bill C-2. It does not help those who need it the most. It gives members of Parliament a bigger tax decrease than most Canadians, and I will not support it.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, it is an honour to rise today in the House to discuss Bill C-2.

I want to start by clearly stating my premise up front and then speak to it throughout the 10 minutes I have. My premise is that fairness for the middle class and societal inequality cannot stand together. We cannot as a society, and nor can the government, decide that the middle class is the be all and end all of tax policy. I will say this bill misses the mark on delivering for the middle class.

We cannot say that fairness for the middle class is the be all and end all for society, because as long as inequality and poverty persist, every part of society is disadvantaged. Every part of society is disadvantaged by the continuation of poverty.

In the last half hour, I heard a Conservative member say that the people who need the tax breaks the most, the people who need the help the most, are the middle class. No, the people who need the help the most are the homeless. The people who need the help the most are the unemployed. The people who need the help the most are the poor.

In terms of inequality, where does Canadian society stand today? By any measure, we are a fairer and more equitable society than the United States. However, in a very real way, we are not as fair or as equitable as we used to be.

During the election campaign, I was digging all the time for stats and arguments for the few leaders' debates in which I was included. While doing research, I was staggered to come across this stunning statistic: the 86 wealthiest families in Canada have more combined wealth than the 11.4 million Canadians in the bottom of income brackets. Eighty-six individual Canadian families have more wealth than 11.4 million Canadians at the bottom.

Is this a problem? I submit it is a serious problem, and it is a problem that Bill C-2 will not address. I do not imagine that anyone thought Bill C-2 would address it. I will say, in fairness to the new government, that I hope that more is planned if it is serious about addressing income inequality.

Let us just look at this on a higher plane of analysis, namely, in regard to the mania for neo-liberalism, for the policies of Milton Friedman and for the Thatcher-Reagan era, in which no politician would say anything other than that we needed smaller government, that we needed tax cuts, that we needed deregulation, that we needed trade liberalism, as though that mantra would deliver great blessings to society overall.

One of the economists who I think has skewered this most effectively with detailed empirical research, and who does not brook a different opinion because he comes fully loaded with the facts, is Nobel prize winning economist and current professor at Columbia University in New York, Joseph Stiglitz. Stiglitz amassed all the information any Parliament would need to decide that inequality is unacceptable for a society that wants to succeed at anything.

Joseph Stiglitz's book, The Price of Inequality, is one that I hope every member of Parliament will read. Stiglitz concludes that:

Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset—its people—is not being fully used.

There are a lot of things one can say about the era of Thatcher-Reagan, neo-liberalism, and the kinds of trickle-down policies that were supposed to deliver benefits for all, but Joseph Stiglitz has pronounced, and I think it is time that we all learned how to say it, that the neo-liberal experiment with tax cuts to deliver wealth has been tried and is a monumental failure. Growth is stagnant. The economy is suffering, not just in Canada but everywhere. In Canada, particularly more than some of our OECD colleagues, we have had stagnant growth for a while now. We are not seeing investment, and I want to touch on what our corporate sector has been doing or not doing.

Trickle-down economics is a joke. The great Canadian economist, the late John Kenneth Galbraith, used to explain trickle-down economics like this. If one feeds a horse enough oats, the sparrows will eventually find a meal in the manure. That is trickle-down economics. In the alternative, as Gus Speth, who used to be head of the United Nations Development Programme, once said, when talking about trade liberalization, a rising tide lifts all boats; we can now fairly say that a rising tide will lift all yachts, not all boats.

We have a real challenge in our society and, boy, do we have a really good opportunity right now. I would urge the new government to actually embrace the idea of tackling inequality in our society. We have seen a foundational shift in our tax system in the last 10 years.

Let me provide this statistic. I am indebted to a great Canadian economist, who I wish had not just moved to Australia, Jim Stanford, for having identified this. Over the 10 years of the previous government, the federal revenues as a share of GDP fell from 16% in 2006 to 14.3% last year. That may be celebrated by some, but tax cuts overall end up with shrinking revenue to do the things that society needs, like make sure the health care system works, deliver child care for all, make sure people are not living in poverty and cannot get adequate housing, because again, I repeat, the empirical evidence is clear that it disadvantages all of society, not just the poor.

If we are going to see a rise in revenue, that means politicians are going to have to get used to saying some words that have been drilled out of our lexicon since the Thatcher-Reagan era began, and that is to ask where we are going to find the taxes to increase government revenue. It is clear that this tax cut modestly, moderately readjusts a tax bracket for our highest income earners. The top 20% basically see $3 billion removed from the very highest taxpayers, so that the next highest taxpayers get a slight benefit. It is not bad in itself, but it is not, on its own, tax relief for the middle class, nor does it strike any significant blow against income inequality. It is a small step, but tepid, and it fails to address the needs of the middle class, nor does it address the needs of the poor, nor does it really deal with the complicated tax code we have.

I would like to propose to the Minister of Finance that we need root and branch tax reform. We need to step back from all the fashionable pandering to individual sectors of a voting electorate, the boutique tax cuts of the previous 10 years. We need to review all of the complications that work against a tax code, that frankly, the fiscal conservatives say they want, and that people in Canadians for Tax Fairness argue we absolutely need. We need to simplify our tax code by taking out the special rewards: for people who happen to have kids who are already in hockey and can get a prize for that, for people who are already taking the bus and can get a prize for that. That is not good tax policy.

We also need to look for where we should be increasing taxes. I would suggest we need to look no further than what happened to the tax code for the corporate tax rate in the previous 10 years. It used to be 28% in the year 2000. By 2006, when the previous administration took over, it had dropped from 28% to 20%. It now stands at 15%. People might be interested to know that, in comparison, the U.S. corporate income tax rate stands at 35%. Other than Ireland, which is at 12%, Canada has the lowest tax rate in the industrialized world, and certainly right now we stand with the lowest tax rate in the G7.

I draw members' attention to the fact that Canada's corporate tax cut has resulted in about $700 billion to date being considered as dead money, as the former governor of the Bank of Canada described it—$700 billion sloshing around as available cash and not being reinvested in our economy where we need it. We may need to look at other tax measures. Down the road, we may need to look at the GST. The Green Party is not advocating raising that tax. We are talking about increasing the corporate tax rate. I believe it should be set where it was in 2008. We really need to look at a guaranteed livable income, because the bottom line is that Canada's society is middle class. All of Canada's society will not experience well-being and prosperity as long as poverty persists.