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.

The House resumed from February 1 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.

Business of the House

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

Mr. Speaker, this afternoon we will continue with debate on the opposition motion that we began this morning.

Tomorrow, we will have the final day of debate at second reading on Bill C-4, concerning unions. I would like to note that the votes relating to this bill will be deferred to the end of the day on Monday, March 7, pursuant to an order adopted earlier today.

I want to sincerely thank my colleagues in the House for their co-operation in finding an agreement on this matter, and also on the ISIL motion, which was debated earlier this week.

Next week, as my colleague indicated, members will be working in their ridings.

On Monday, March 7, we will resume debate, at second reading stage, of Bill C-2 concerning a tax cut for the middle class. I would like to inform the House that Tuesday, March 8, will be an allotted day. On Wednesday, we will begin debate at second reading stage of Bill C-6 on citizenship, which was introduced this morning by my colleague, the Minister of Immigration, Refugees and Citizenship. On Thursday, we will begin consideration of Bill C-5 concerning public servants' sick leave.

Finally, Mr. Speaker, I know that you have been looking forward to this. Pursuant to Standing Order 83 (2), I would ask that an order of the day be designated for the Minister of Finance to present the budget at 4 p.m., on Tuesday, March 22, 2016.

Employment Insurance

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I appreciate the question from my colleague across the way. I believe I did make reference to that aspect of the program in my speech, when I said we supported a proposal that would allow workers to choose which system benefited them individually.

What we have before us today is a motion. The real meat of the issue has to come in the form of legislative change. I would have preferred to have seen that legislative change come in Bill C-2, but unfortunately, the member's party had other methods that it wanted to pursue. Many of the changes we are proposing can be brought forward in a government bill. We do not need to wait for the budget. If we are serious about immediate action for those who are suffering, the government should bring us a bill, show us something we can work with, and we will look at some amendments if necessary.

Business of the House

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

Mr. Speaker, I know colleagues look forward to this every week. I will be brief.

This afternoon, we will continue with the debate on the Conservative opposition motion.

Tomorrow, we will resume debate on government Motion No. 2, which was moved by the Prime Minister yesterday, concerning Canada's fight against ISIL.

I am currently negotiating with the House leaders of the other parties to come to an agreement on the length of the debate. We will continue debating that motion next Monday and Tuesday. If we manage to conclude the debate on Tuesday evening, on Wednesday we will proceed with second reading of Bill C-2, an act to amend the Income Tax Act.

Finally, Thursday of next week will be an allotted day.

Canada Labour Code

[Erin O'Toole, Conservative, Durham, ON]

Madam Speaker, the member always has very insightful questions in this House.

I cannot put myself in the shoes of the new government, and I certainly would not want to be in those shoes. However, if we look at the first 100 days—and there is a snazzy video out on the first 100 days—we can see the legislative agenda.

Bill C-1 is a formulaic administration-of-oaths bill; Bill C-2 was tax increases and the elimination of the TFSA; Bill C-3 was a massive injection of spending, in large part to cover a promise on the Syrian refugee resettlement; Bill C-4 is the unwinding of labour modernization from the previous Parliament, clearly a quid pro quo for support during the election; and Bill C-5 is undoing the sick day negotiation with the public service.

If we look at the legislative agenda of the new government in the first 100 days, it is tax, spend, and support the friends who got them into office. Contrast that with the previous government's first 100 days. There was the Federal Accountability Act, child care benefits for all families, and a GST reduction. It was about giving back to Canadians, not taking away.

Business of the House

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I will be sharing my time with my colleague from Mississauga—Lakeshore.

It is a privilege for me to be here to participate in this important debate on today's motion.

I would like to reassure my hon. colleague that we have complete confidence in the abilities of the dedicated officials at the Department of Finance, who are currently working on the 2016 budget.

I can say that our budget will flesh out our plan to grow the economy, a plan that has the support of the Canadians who gave us a majority mandate last fall.

First of all, the government believes that all Canadians should have real and equal opportunities to succeed. This will be achieved by strengthening and growing the middle class. That is what we said throughout our election campaign, and that is what we are offering Canadians.

It will come as no surprise when I say that Canada is going through tough economic times. Although the recent U.S. economic performance is encouraging, emerging economies, especially China, are cause for concern.

Many analysts were counting on emerging economies, such as Brazil, Russia, India, China, and South Africa, to help stimulate economic growth. We now know that this will unfortunately not be the case.

Canada's economic performance was weak in 2015, which can primarily be explained by last year's drop in the price of oil. Make no mistake about it, the Government of Canada will post a deficit for the 2015-16 fiscal year, and this deficit is the result of what the previous government did and did not do. That is a fact.

The previous Liberal government left a $13-billion surplus in 2006. The Conservative government wasted this surplus and racked up more than $150 billion in additional debt, all the while managing to achieve the worst growth record since the Great Depression. Those are facts.

Our colleagues have told us all kinds of tales this morning, but what I just said is the truth. All of that, with no plan to grow the middle class, no plan to invest, and no plan for growth. That is the Conservative government's disastrous record.

It is quite likely that the global economy will remain unfavourable in the future and that the price of commodities will remain low. There is no doubt that, as we begin to put our plan for economic growth and long-term prosperity into action, we are up against fierce headwinds.

However, in the face of this real challenge, there is also real opportunity to put in place the conditions to create long-term growth. This growth will create good jobs and help our middle class, the lifeblood of our economy, to prosper.

This is a good time to make targeted investments to support our country's economic growth. However, I want to be clear. We are going to focus on smart investments that promote economic growth while maintaining a commitment to fiscal responsibility.

We intend to focus on two particularly challenging issues. The first is restoring economic progress for the middle class, the backbone of our economy. We simply cannot claim that our country is prosperous if our middle class is having trouble making ends meet.

That is why the government followed through on its promise by making a tax cut for the middle class the first order of business on December 7, 2015. I am proud to say that, as of January 1, approximately nine million Canadians are receiving significant tax relief. This is a fair measure, and it is the smart thing to do for our economy.

In order to achieve this goal, we introduced Bill C-2, an act to amend the Income Tax Act.

This bill is merely the first step in our plan to grow the economy in the long term, create jobs, and help Canada's middle class prosper.

More specifically, Bill C-2 will cut the personal income tax rate, dropping it from 22% to 20.5%, and establish a 33% tax rate for individual taxable incomes above $200,000. We are asking the wealthiest Canadians to contribute a little more.

Lastly, we are lowering the annual contribution limit for tax-free savings accounts, TFSAs, from its current $10,000 back to its previous amount, which was $5,500, and we are also reinstating the indexation of that limit. Our middle-class tax cut and the accompanying changes will help make the tax system fairer. As I mentioned, this bill is just the beginning of our government's measures to grow the economy.

In the next budget, we will introduce the new Canada child tax benefit, another important measure that will provide increased support to the vast majority of Canadian families and help lift hundreds of thousands of children our of poverty. That is right, I said hundreds of thousands of children. Unlike the existing program, the Canada child tax benefit will be simpler, more generous and more targeted to those who need it most. Plus, it is tax free.

Together, these measures will help strengthen the middle class and help those who work hard to be a part of it. As a result of these measures, Canadians will have more money to save, invest, and help grow our economy. More generally, these measures will stimulate economic growth at a time when the global economy is cause for concern, to ensure that all Canadians will benefit.

The second challenge we are facing, and this may be the biggest one, has to do with creating the conditions for strong, long-term economic growth. Smart, targeted investments in infrastructure are essential to stimulating economic growth. Furthermore, now is the time to invest, while interest rates are at all-time lows.

Canadians made it clear that they want real change. They want their government to govern differently. They want to be able to trust their government and they want leadership that is focused on what is most important to them.

We are listening. Since early January, the Minister of Finance and I have been criss-crossing the country holding pre-budget consultations organized by the Department of Finance. We have gathered some very good ideas and excellent comments. Canadians have told us that they are concerned about the state of our infrastructure, including bridges, roads, public transit, sewers, and seniors' homes.

Canadian cities are growing rapidly, and all levels of government are facing the same challenge: making infrastructure investments that generate economic benefits for Canada and promote sustainable urban environments.

Over the next decade, we will invest $120 billion in public infrastructure. Our investments will focus on making life better for Canadians and developing more lucrative business opportunities for our exporters.

To ensure that we are making strategic investments, we will work with the provinces and territories to address their most urgent needs. That is what Canadians expect of us. They want us to work together to make progress and begin building a better Canada.

A number of initiatives are important to our government's growth strategy for Canada. First, environmental sustainability will be central to the development of our natural resources sector. Together with our North American partners, Canada can and should be one of the most efficient and responsible energy producers in the world.

We will also support growing businesses to help them attract the talent, capital, and innovation they need to capitalize on business opportunities in the global market.

We will work with the provinces to develop a skills and labour strategy that promotes greater participation of under-represented groups.

We will work with the provinces and territories to improve the Canada Pension Plan and help Canadians achieve their retirement income security goals.

These are important objectives that can have a significant impact on our long-term growth.

In closing, there is no quick and easy solution. We are lucky to live in such a diverse and prosperous country. However, the challenges we are facing today are real and to overcome them we must find common ground despite our different points of view. I can assure my colleagues that our government is prepared to meet these challenges.

Opposition Motion—Department of Finance

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, to begin, I would like to address today's motion and reassure the hon. member that we support the officials in the Department of Finance. They are consummate professionals who are working hard drafting our government's first budget. Like the members on this side of the House, they know that a snapshot in time is just that. It does not tell the whole story. It is like looking at one's bank account before paying the bills.

Let us make no mistake. The projections outlined in the economic and fiscal update show that there will be a deficit in budget year 2015-16 as a direct result of the previous government's failure to prepare for a downturn in global oil prices and volatility in the global market.

Happily, we have a plan. After 10 years of weak growth, this government has a plan to grow the economy and create jobs by focusing on the middle class, investing in infrastructure, and helping those who need it most.

As the Prime Minister recently said, we fully intend to take all means necessary to support an economic growth strategy that will benefit all Canadians.

Our government was elected on ambitious economic measures. We know that there has never been a better time to make targeted investments to support economic growth. If the members opposite are patient, we will certainly provide them with our vision for the future and the details of these targeted investments.

Let me describe our starting point. As we embark on an agenda of economic growth and long-term prosperity, there is no doubt that we are facing considerable headwinds. Globally, we continue to experience what the International Monetary Fund's managing director, Christine Lagarde, famously called the “new mediocre”. In its latest world economic outlook, in January, the IMF said that it expects global growth to pick up modestly to 3.4% in 2016 and 3.6% in 2017. This is down 0.2 percentage points for both 2016 and 2017 compared to the October 2015 world economic outlook.

Although the recent performance of the U.S. economy is encouraging, the emerging economies, especially China, are causes for concern. Global crude oil prices remain at levels less than a third of what they were mid-2014, reflecting a persistent global oversupply and softening demand. What is happening beyond our borders has real and tangible effects for all Canadians.

In Canada, our economic performance in the first half of 2015 was poor, mainly due to collapsing oil prices in 2014. It has become obvious that growth in Canada will be lower than was expected in the previous government's last budget projections, in April 2015. This, of course, has important implications for our current fiscal situation. Indeed, the Department of Finance's own numbers in the economic and fiscal update, tabled in this House, show this. I find it strange that the members opposite only seem to respect the numbers from department officials when they feel that they can score political points with them. I urge them all to review the economic and fiscal update, and in the spirit of respect for this country's public servants, admit that they are dead wrong in believing that we will not be in a deficit by the end of this fiscal year.

The previous Liberal government left behind a $13-billion surplus in 2006. The Conservative government squandered the surplus and accumulated an additional $150 billion in new debt while still managing to deliver the worst growth record since the Great Depression. The “Fiscal Monitor” referred to in the member's motion is a snapshot in time and does not tell the full story.

Tough economic times call for bold measures to support the middle class and those working hard to join it. We in the government are prepared to implement these measures.

We maintain an enviable position here in Canada, with a low debt-to-GDP ratio, abundant natural resources, and one of the most educated and talented workforces in the world. Keeping our debt-to-GDP ratio on a downward path throughout our mandate remains a central plank of our economic agenda, alongside balancing the budget by the end of our mandate. To achieve this, our policies will strike a balance between fiscal responsibility and our commitments to Canadians.

One of the most important pillars of our plan is strengthening our middle class, the backbone of our economy, whose members have gone too long without a raise. This is why one of the government's first orders of business was to table a notice of ways and means motion to cut taxes for the middle class. We would cut taxes for nine million Canadians by asking the wealthiest 1% of earners to kick in just a little more. This is the right thing to do and the smart thing to do for our economy.

The middle-class tax cut and the accompanying tax changes would help make taxes fairer so that all Canadians would have the opportunity to succeed and prosper. I am pleased to note that Bill C-2, the bill to implement these measures, is now being debated in Parliament. The middle-class tax cuts would mark an important first step in our plan for economic growth.

Going forward, the government will introduce proposals in the budget to create a new Canada child benefit. Changes under the new child benefit would begin in July 2016. In addition to replacing the universal childcare benefit, which is not tied to income, the proposed Canada child benefit would simplify and consolidate existing child benefits while ensuring that the help is targeted to those who need it most.

Taken together, these measures will help strengthen the middle class and those working hard to join it, putting more money in their pockets to save, invest, and grow the economy. More broadly, they will help grow our economy in the context of a difficult global economic climate so that all Canadians benefit.

The second challenge the government faces, and the most important one, is creating long-term conditions for strong and durable economic growth. The international community, as well as leaders right here at home, have more or less arrived at the same conclusion: targeted investments in infrastructure are key to driving economic growth. With interest rates at historic lows, now is the right time to invest. Canadian cities have been growing at a rapid rate, and all governments have a shared challenge in making investments in infrastructure that create economic advantages for Canada and more sustainable urban areas.

For the next decade, we will make investments in social infrastructure, like affordable and seniors' housing, in green infrastructure, like water-treatment systems, and in public transit. We have pledged to make historic investments in Canadian infrastructure, and we intend to follow through. These investments will aim to get Canadians moving and will open more cost-efficient trade options for our exporters. These are big, meaningful measures that can have an significant impact on our long-term growth.

Unlike the previous government, we do not intend to recklessly add to the national debt on the backs of our children and grandchildren by making reckless and politically motivated investments. Rather, we intend to make smart investments that will build an even more prosperous country for our children and grandchildren.

Given the government's clear objectives listed today, I would strongly encourage hon. members to support the government in our efforts to strengthen the middle class and grow the economy.

Income Tax Act

[Matt DeCourcey, Liberal, Fredericton, NB]

Mr. Speaker, it will come as no surprise when I say that Canada is going through tough economic times.

However, along with this real challenge, we also have a real opportunity for establishing the conditions needed for long-term growth, which in turn will create good jobs and contribute to the prosperity of the middle class, the lifeblood of our economy.

First, I would like to elaborate a moment on our government's ambitious economic agenda that sets Canada on the path for economic growth. Our government believes that all Canadians should have a real and fair chance to succeed. Central to that success is a strong and growing middle class, but in the face of this real challenge, there is a real opportunity to put in place the conditions to create long-term growth.

We were elected on a plan to grow the economy, and we have already started by introducing this tax cut in December. From infrastructure investment to responsible environmental stewardship, we are providing needed leadership. Our priority is to strike a balance between fiscal responsibility and delivering on our commitment to Canadians.

Indeed, we fully intend that our plan for economic growth will benefit all Canadians through targeted investments. Let me reassure the House that the government is not daunted by the challenges before us. We are cognizant of our fiscal reality.

Before turning to the content of Bill C-2, I would like to mention that the government's plan will include introducing proposals to create a new Canada child benefit. This new, tax-free, income-tested benefit would lift hundreds of thousands of children out of poverty. In fact, nine out of 10 Canadian families would be better off under this plan. We aim to have payments under the new Canada child benefit begin in July 2016.

The proposed Canada child benefit would simplify and consolidate existing child benefits. It would replace the universal child care benefit, which is not income tested. As we have committed, this new Canada child benefit would be better targeted to those who need it most.

We also recognize that public investment is needed to create and support economic growth as well as job creation and economic prosperity, which is why we will make significant new investments in public transit, green infrastructure, and social infrastructure. We will work together with both the private sector and our provincial and municipal counterparts to advance our shared priorities across a range of fronts.

Here are some of the areas. We will make targeted investments in public infrastructure that would grow the economy, get Canadians moving, and open up more cost-efficient trade options for our exporters with a focus on public transit, green infrastructure, and social infrastructure.

We will also work together with all of the provinces and territories for a cleaner environment and to fight climate change. Canada has a plan to invest historic amounts each year in green technology producers, so they can tackle Canada's most pressing environmental challenges and create more opportunities for Canadian workers. The government will also invest to support innovation and the use of clean technologies in forestry, fisheries, mining, energy, and the agricultural sector.

We will support our communities and our economy by making significant new investments in green infrastructure and clean technologies. Not only will these strategic investments help us tackle climate change, but they will create jobs. Canadian businesses now have an incredible opportunity to be a part of the solution and to help build a low-carbon economy. The government will prove to Canadians and to the world that a clean environment and a strong economy go hand in hand. In fact, we cannot have one without the other.

Protecting the environment and growing the economy are not incompatible goals, and in fact, our future success demands that we do both.

We are committed to a strong and growing middle class, and we want to ensure that all Canadians have a fair and real chance to succeed. This is why our government has enacted legislation to deliver a tax cut to the middle class. This is the fair thing to do and the smart thing to do for Canada's economy.

That is why Bill C-2 is so important for all Canadians.

I would now like to talk about the specific elements of Bill C-2. Our tax cut for the middle class and the accompanying proposals will make the tax system fairer by reducing the second personal income tax rate from 22% to 20.5%; introducing a personal tax rate of 33% on individual taxable income in excess of $200,000; decreasing the $10,000 maximum contribution to a tax-free savings account to its previous level of $5,500; and reinstating indexation of this ceiling.

Recently the Minister of Finance, his parliamentary secretary, and MPs across the country fanned out asking Canadians directly what our government could do to better support them. They met with indigenous leaders, business leaders, and cultural leaders, all with the intent of listening to Canadians and engaging in discussions to find practical solutions to the difficulties we know they are facing. These pre-budget consultations continue online. The response rate and comments received have been absolutely tremendous. With over 146,000 Canadians reached to date, this has been the largest pre-budget consultation on record.

Through these consultations, Canadians confirmed that they want a government that will deliver on strengthening the middle class and that will help those working hard to join it. This legislation would help do just that, and that is why it is a priority for the Government of Canada.

During the pre-budget consultations, it also became increasingly clear that Canada's economic outlook has changed since the election. This only reaffirmed the government's commitment to the path we were elected to follow. More importantly, by engaging with Canadians, we have been able to consider new perspectives and refine our plans that will be included in the federal budget.

The government's approach to consultation recognizes that collaboration is essential to delivering real change. The government has committed to, and has already demonstrated, its willingness to listen, engage, and collaborate with members from all parties to identify ways to find solutions and to avoid escalating conflicts unnecessarily.

Given that we have already heard from Canadians and many members of the other parties, I look forward to discussing and debating how best to serve Canadians.

There has never been a better time to make targeted investments to support our country's economic growth. We are confident in our plan to achieve that goal. That is the main reason why I am optimistic about our future prospects. I therefore encourage all members to support this bill.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Mr. Speaker, I would like to thank the hon. member for Milton for leading Canada's official opposition on this file as our finance critic.

I can say without hesitation that Bill C-2, as it stands now, would have a significant affect on the lives of Canadians. While the Liberal members opposite would argue that the bill would benefit Canadians by lessening taxes on the middle class and increasing taxes on wealthy Canadians, the bill would in fact hurt Canadians more than it would help.

Do not misunderstand me. As a Conservative, I am very much in support of keeping Canadians' hard-earned dollars in their pockets. Our Conservative government endeavoured to do just that. It let Canadians keep more of their hard-earned money. We have a proud legacy of tax fairness and cutting taxes. While in office, our Conservative government reduced taxes more than 140 times. We did so through targeted measures that were responsible and consistent.

However, there is a significant difference. Bill C-2 would end up costing $8.9 billion over the next six years. Do not just take my word for it. A Parliamentary Budget Officer's report, “The Fiscal and Distributional Impact of Changes to the Federal Personal Income Tax Regime”, says the exact same thing. The PBO made it clear that these changes would lower taxes for a significant number of Canadians and increase them for just 1.5% of the population, which would result in a cost of $8.9 billion to Canadians over six years.

The PBO estimates that the tax changes would cost $400 million this year and $1.7 billion in the subsequent years. Since the government inherited a $400 million surplus, it has squandered the surplus already. I hear jokes already, but it is in the PBO report. This happened in only four short months.

How can the government claim that it is a good idea to commit more money to programs and tax breaks when it is not fiscally responsible to do so? We all know that eventually the money does run out. There is only one taxpayer. I am interested to know what the Liberals have planned at that point. Would they increase taxes on Canadians, or would they cut service levels? Perhaps they would cut some programs altogether. Perhaps they could leave this mess for our next generation to deal with. However, the next time I speak with the students in my riding, whether they be from Lindsay, Kennington, Haliburton, or Millbrook, I guess I should warn them to start saving now since they will be paying not only their bills but ours as well.

Many of my colleagues have gone through the amendments in the bill thoroughly so I will not rehash all of them, except to say that an extra $6.34 a week for those individuals who qualify is not enough income to grow the economy, nor does throwing money at the middle class stimulate growth and innovation. I am suggesting that the government should be less worried about the income tax rate and focus more on creating jobs so more people would be paying in. These modifications to the income tax rate hardly qualify as significant tax relief for Canadians, and come with a much larger price tag. The Liberals promised that their tax plan would be revenue neutral, and clearly it is not. This is yet another example of broken Liberal promises.

A tax hike for the wealthy, they say. The new Liberal plan would raise taxes on higher income earners, those who traditionally create jobs and grow our overall economy. By increasing taxes on these job creators, we are discouraging success, while doing nothing for those making less than $45,000 a year. Many in my riding are in that category.

I will now touch on how the changes to the tax-free savings accounts, or TFSAs, come into play. Tax-free savings accounts allow Canadians to set money aside in eligible investments and watch them grow tax free. While meeting with my constituents, many of them spoke to me about the value of their tax-free savings account. Whether they used it for saving for a child's tuition fees, a home renovation, opening a small business, or saving for a family vacation, all of these constituents were able to use their tax-free savings account to save their money. Their savings, in turn, stimulate the economy, whether it is paying for the costs associated with university or college, paying a contractor for home renovations, or buying supplies to open up a business.

In my riding, the towns and communities are driven not only by agriculture but also by tourism. Whether it is places like Sir Sam's ski hill near Eagle Lake, Happy Days Houseboat Rentals in Bobcaygeon, or even Emily Provincial Park near Omemee, these and many other small businesses across my riding and across the country could benefit from an increase in tourism.

Giving Canadians a mechanism in which to save money can and will stimulate the economy. I would be remiss not to mention that this bill still leaves $5,500 in contribution room. However, why put such a low cap on a program that not only helps Canadians and their families, but also benefits the wider community?

The members opposite have argued that TFSAs only benefit the wealthy. However, we all know this is not true. The majority of tax-free savings accounts belong to low and middle-income earners. In fact, two-thirds of tax-free savings accounts are held by people with incomes less than $60,000. Why is the government trying to limit the choice of Canadians on how they choose to save their money?

Canadians are taking on a significant amount of debt lately. Instead of trying to help, the government is taking away one of those methods in which they can save. Bill C-2 would increase the national debt, penalize those who have worked hard and prospered, while also limiting the amount that Canadians can save, while doing nothing for those earning less than $45,000 a year.

The Liberal government inherited a $400 million surplus. We, as the official opposition, will continue to protect the hard-earned money of Canadians from the high-tax, high-spend agenda of the government. We all know we cannot spend our way to growth, and we cannot tax our way to prosperity.

I look forward to questions from my colleagues.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, it is my pleasure to rise today to speak in support of Bill C-2, An Act to amend the Income Tax Act. As stated on January 29 by my hon. colleague, the member for Toronto Centre, Bill C-2 would help strengthen and grow the middle class, as promised in the government's election platform. Bill C-2 would deliver on that promise.

All hon. members of the House have heard about widening income inequality. On January 1, 2016, Canada's highest-paid CEOs had already earned what most Canadians earn in an entire year. With this growing gap between extreme ends of the income scale, the people who are squeezed the most are the people in the middle-income group. They are the Canadians whose real take-home pay packages have been declining, and these are the Canadians who contribute to the economy and pay their taxes and spend money so the economy can keep growing. This is the group that we would like to address with our tax cuts.

My colleagues and I have been conducting town hall meetings for this pre-budget consultation. We have engaged thousands of people and continue to do so. Resoundingly, the people who have attended the town halls have been telling us that the tax cuts we are proposing are a good move. It is the first move toward prosperity for all. However, constituents also know that the rhetoric from the Conservatives is just that. It is filled with fallacy. So they want me to get some facts right.

The Conservatives had the worst job-creation record since 1946, the worst economic growth in G7, and the worst budget deficits, with some eight deficits in a row. According to Mr. Jim Stanford and Jordan Brennan, “it turns out that the economic record of the [previous Conservative] government is actually the worst of any government since World War II—and by a wide margin”.

The first order of business this government therefore undertook, as promised in our platform, was to cut taxes for a majority of Canadians. We promised to invest in infrastructure, in physical and social infrastructure as well as green technology. Throughout the debate today, the Conservatives have been talking about job losses and want the Liberal government to clear up the mess the previous Conservative government created over 10 years. We are not magicians; in 10 weeks we cannot do that. However, there is something that we can all do together. As a person who works in the financial field, I always advise my clients to diversify and not to put their eggs in one basket. This is common sense. Unfortunately, the previous Conservative government did not believe in wider diversification.

The resource industry is an important industry, but it also needs investment in research and development to help it diversify. If the previous government had diversified the energy sector, the creative people who are intelligent would have been able to move to different areas of work, like in the clean-technology environment, and we would have maintained our market share of the clean-energy sector, which was at 74%, but we have lost it.

Canadians are intelligent, smart, and resilient. Therefore, we would like to improve economic growth for everyone by working with everyone. I hope the hon. members opposite will support this because it is a move in the right direction. We said that we would cut taxes for 90% of the people, invest in infrastructure, create good jobs, and invest in children.

Bill C-2 helps these Canadians directly by lowering the income tax rate they pay. The passage of Bill C-2 would reduce the income tax rate from 22% to 20%, and this change alone would benefit approximately nine million Canadians whose taxable income is between $45,000 to $90,000. I personally know many people in my riding of Don Valley East who would benefit from this well-deserved tax cut.

In my riding, the majority of people do not earn more than $50,000. That is what we call the “middle income”. They need the help, and with our tax cuts plus the investment in the Canada child benefit, people will move out of poverty and into economic prosperity, which will help them pay taxes and help the economy grow.

Several international organizations, such as the World Bank, the IMF, and the OECD have concluded that growing income inequality is a hindrance to economic growth. In its report entitled “Alternative Federal Budget 2015”, the Canadian Centre for Policy Alternatives found that the top 1% income earners in Canada pay less in income tax than the poorest 10%. That is unfair, which is why we have created a new category for that 1% earning $200,000 and more.

Our government has taken the bold step of bringing about a progressive taxation system. I have been to many think tanks, and as a tax consultant myself, people have been telling me that the boutique tax cuts that the previous government made deprived the treasury and benefited only a handful of people, and that is totally unfair. It is why we see ourselves in the situation we are in. It is because the previous government lacked common sense or economic sense.

The other aspect of Bill C-2 that I would like to address is income splitting. There has been much misunderstanding on this, and I will set the record straight.

Bill C-2 does not apply to pension income splitting for our senior citizens. The repeal of income splitting will only apply to a small group of families. According to the commentary from the C.D. Howe Institute, only 15% of the population benefits from this, which is why the late Jim Flaherty, the minister of Finance for the Conservatives, did not believe in it.

Bill C-2 contains critical building blocks, which are necessary to restore fairness and progressiveness in our income tax system. It would provide our government with revenues that would otherwise have been hidden from taxes to invest in people and make the economy grow.

[Anthony Housefather, Liberal, Mount Royal, QC]

Mr. Speaker, I thank my colleague for his speech. I also thank him for saying that he supports Bill C-2.

I understand that his political party believes that Quebec should be an independent country. In his speech, he said that Quebec did not need the federal government and that his people were trapped in a federation. Twice, in two referendums, our people voted to remain in Canada.

After two referendums and a number of provincial and federal elections in which our people decided to stay in Canada, why does he still believe that the desire and will of the people of Quebec are not respected?

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I enjoyed listening to my hon. colleague, except for his political manifesto. It is time to set the record straight.

To say it in English, we need to set the record straight.

First of all, I applaud my hon. colleague's intervention, since he indicated that the Bloc Québécois plans to support Bill C-2. That is the right thing to do. This bill will help the middle class.

When I heard my colleague use a word like “insignificant” to describe a bill that will lower taxes for nine million Canadians, I found that insulting, especially in this House, to the middle-class people I represent from Saint-Maurice—Champlain, which has one of the lowest per capita disposable income averages in Quebec. When the government shows that it cares about the middle class by proposing a measure that will reduce taxes for nine million Canadians, that is not insignificant.

Furthermore, my hon. colleague must have noticed that the measure set out in Bill C-2, the middle-class tax cut, was merely the first step. The upcoming budget will include the Canada child benefit, which will benefit nine out of 10 families.

While the federal government is taking steps to help the middle class, what would my colleague propose to help the middle class?

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Speaker, I am pleased to participate in today's debate on Bill C-2, the government's tax bill. I would like to begin by saying that we will vote for this bill.

We will vote for this bill, but not because it is excellent; it is not. It is actually rather insignificant, but it is slightly less bad than the status quo that the Conservatives and the NDP were championing during the recent election campaign.

This bill gives effect to the ways and means notice that was hastily tabled before the holidays as a gift to taxpayers. It implements just one of the tax measures that the government promised, and not necessarily the best one.

Objectively, there is little or nothing to justify separating this tax measure from the other tax measures in the upcoming budget and rushing to introduce it before Christmas, nothing but partisan motives.

The government had to do something, anything, to convince people that it intended to keep its promises. It had to do something, because the Liberals have a long history of failing to make good on promises.

The previous Liberal government promised to abolish the GST. It did not. It promised to tear up NAFTA. It did not. It promised to be the government of honesty and transparency. It gave us the secret national unity fund, the sponsorship scandal, and Alfonso Gagliano as minister in charge of government operations. It promised to be the government of growth. It cut transfers to the provinces so drastically that it practically sent Quebec into bankruptcy.

The government had to do something, anything. That something is Bill C-2, which we are currently discussing.

Taxation should be looked at as a whole. It is only by looking at all the tax measures, tax credits, exemptions, benefits, in fact all tax measures, that we can measure a government's performance when it comes to wealth, the middle class, families, and those who are hurting, struggling to pay their bills and make ends meet.

Here we have a government proposing a measure in isolation that will affect a minority of people. This bill proposes to raise taxes on those who drive a Bentley in order to provide relief to those who drive a BMW.

Above $200,000 of taxable income, the marginal tax rate jumps to 33%. This increase will affect the richest 1.4% of taxpayers. No one can disagree with that. The wealthiest 1%, in particular the wealthiest 0.1%, continue to hold a growing share of our society's wealth. That is a problem. They are holding an increasingly larger slice of the pie, while the middle class and other classes continue to get poorer.

On the other hand, Bill C-2 would drop the tax rate for incomes between $45,000 and $90,000 from 22% to 20.5%. The government claims that this mini-reform will provide relief to the middle class, but the kicker is that this measure does not provide any relief to the middle class. According to figures from Revenu Québec, 74% of Quebec taxpayers earn less than $50,000. These people are the ones who really need a break, but Bill C-2 will not help them. The bill does nothing for most of the middle class, for most of the people who are represented here. Instead, this bill will help the majority of the people here in this chamber, who will be able to take full advantage. All of us here, in the House, will benefit from this bill.

According to Revenu Québec, only 5.2% of Quebec taxpayers earn more than $100,000. I find that this government has a rather strange view of the middle class.

Furthermore, the parliamentary budget officer believes that those subject to the tax increase will take steps to avoid it by changing how they report their income. In the end, the government will lose out. We know that without measures to combat tax havens, Bill C-2 will be ineffective for the most part.

As I mentioned, passing this bill will lead to a slight improvement over the status quo. However, it is not this bill, which is nothing more than a public relations exercise, that will determine whether this government really plans on helping the middle class and people of modest means. It will be the next budget.

The next budget will reveal whether the government really supports families by providing its new benefit, collecting enough taxes from those earning more than $100,000—such as MPs, especially by eliminating certain measures—helping seniors by increasing the guaranteed income supplement or by indexing pensions, and looking after the unemployed by making changes to the employment insurance fund and not plundering it, as has been done over the past 20 years.

There is another problem with taxation. I honestly do not think that the government is going to tackle this problem, and I do not believe that the other parties would tackle it if they were in power. I am referring to the fiscal imbalance. The federal government takes approximately 50% of tax revenue in Canada, but provides virtually no services. Consequently, it needs more money than necessary to assume its responsibilities. There are two consequences.

First, the federal government does not need to manage its money properly because it already has too much. Look at what happens when it starts to manage its services. It costs 150% more to handle an employment insurance claim in Ottawa than it does to deal with a claim for social assistance in Quebec. It costs 100% more to take care of a patient in a Veterans Affairs Canada hospital than it does in a hospital in Quebec. At that rate, we would go bankrupt if Ottawa was responsible for health.

Second, the provinces can barely keep their heads above water. While the federal government is spending $50 billion to build ships, and is also thinking about buying F-35s, Quebec universities are thinking of cancelling their subscriptions to scientific journals just to save a few pennies.

Nevertheless, I am convinced that if we were to ask the people of Quebec to choose between a good education and an F-35, the choice would be obvious. Unfortunately, they do not have that choice because the system for sharing tax revenue in Canada is broken and because the federal government has enough revenue to poorly manage its own jurisdictions and to stick its nose where it does not belong.

Since Canadians control the joint account, they claim the right to decide how Quebeckers will organize their own society even in areas where we are already supposed to be sovereign under the Constitution. That is a serious problem that is only going to get worse.

Since it is Quebec that will have to foot the bill for the aging population, our government, like all other provincial governments, is at risk of crumbling under the weight of the health care system, unless it brings in permanent austerity measures and shrinks the government.

The federal government will not be affected, and it will start raking in an obscene surplus. The parliamentary budget officer and the Council of the Federation have stated that, 20 years from now, Ottawa will have paid back its entire debt accumulated over 150 years, but the provinces will all be virtually bankrupt. It is clear that from a taxation perspective, Canada is not working at all. This is creating tension and pointless quarrels, and it is depriving my people of the freedom they need to grow and flourish.

There is obviously one government too many in this equation. We think the superfluous government is the federal government. We will have to tackle this problem one of these days, and the sooner, the better. We have put off the inevitable long enough. The Bloc Québécois will make sure it happens.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Speaker, I am thankful for this opportunity to speak on behalf of my constituents. Like I did last time when I spoke on energy east, I am going to use a Yiddish proverb: the heaviest burden is an empty pocket. Lowering the tax on the middle bracket and hiking taxes on savings would empty the pockets of my constituents.

With this bill, the government would also defer taxation to another generation, because, by its own admission, it will run big deficits well into the future. Why are we punishing savers? The tax cut has the biggest impact on the highest income earners. They get full advantage, whereas others would get pennies on the dollar. Most importantly, the government's economic plan seems to involve sacrificing energy and resource jobs to satisfy and mollify opponents of major energy infrastructure projects. A Canadian without a job pays no income tax, and that is the truth for many of my constituents right now who are out of work. They cannot contribute to the national coffers, but, more importantly, they cannot do anything for their families, their loved ones, to earn income to pay for their daily expenses.

Albertans understand the value of thrift and frugality. I do not see those values on that side of the House. I see an insatiable appetite for deficit spending and debt bingeing. The Bill C-2 tax plan further offends the principle of equal pay for equal work. Let me explain.

Let us take two of my constituents, both welders. Many of my constituents happen to work in the trades. One of them works a standard 40-hour week and opts to forgo overtime to stay home with his family and take up coaching on weekends. The other welder decides to work seven days a week, three weeks on, one week off, and spends 14 or 16 hours per day working. This welder gives up time with his family, his kids do not see him, and it strains his marriage. Why does he do it? He does it because he believes it is worth the sacrifice for the reward. That is not an exception in Alberta.

Many families over the past decade have struggled with this choice between a higher income and the quality of life that it brings and family time at home. There exists no practical scheme of averaging incomes that can do justice to the author or inventor, artist or actor, or tradesman, who either sacrifice a few years with their family or reap the rewards of their craft after decades of effort in a few short years. Their extra effort is taxed more in those years. The income after tax does not purchase as many goods and services for their effort.

The purchasing power of these two welders varies significantly and the effort that each expends for the work should be fairly addressed by our income tax system. The tax scheme proposed in Bill C-2 punishes them all. Why are we punishing professionals and tradesmen who work extra hours, sacrifice their weekends with their families, and contribute more to our common prosperity? How fair is this? Bill C-2 punishes success and hard work. It says no to extra effort and to greater endurance at work.

Like other members have said, we know from the parliamentary budget office that the tax plan partially set out in Bill C-2 is not revenue neutral. The budget office confirmed what Conservatives have always been saying, and have repeatedly said today, which is that this tax plan, if we can call it a tax plan, would create an $8.9 billion budget hole by fiscal year 2020-21. The deficit spending of today is simply the deferred taxation of tomorrow. It is a tax hike of tomorrow on our children's futures.

In January 2009, the Conservative government announced a $63-billion economic stimulus. The opposition then crowed that it was not enough. It took many years of stewarding the economy and careful spending reductions to wrestle that deficit to zero. In fact, the “Fiscal Monitor” published by the Department of Finance showed that the outgoing Conservatives left the Liberals a $400 million surplus. That was in November. They are welcome.

Members on the other side of the House accused us of running deficits for the stimulus that they were demanding in 2008-09, the stimulus they threatened to bring down the government over. They wanted more spending, a bigger deficit, and more debt. Now they are about to embark on a spending spree with the taxpayers' credit card, totalling $125 billion over 10 years. This excludes, of course, all the other ill-thought-out promises they made in their platforms. It also excludes any potential emergencies, new policy initiatives, or new operating costs associated with this new public infrastructure that will be built, and on and on.

I am concerned that the government plans to run massive, long-term structural deficits, which would increase the tax burden on future Canadians and leave Canada more vulnerable to economic headwinds or economic shocks. It seems the answer from the other side of the House is that the next generation can pay.

I truly believe the worst part of this bill is the slashing of the TFSA in half. We know that 75% of tax-free savings account holders earned less than $70,000 in 2013. Nearly 700,000 seniors have a tax-free savings account.

It was the number one issue brought up to me while I was enjoying the Calgary Stampede, serving my constituents in New Brison, Cranston, and Auburn Bay. The number one issue that they brought to my attention was how much they enjoyed using the TFSA to plan for their future.

Past Liberal members of this House in 2008-09 criticized the TFSA when we introduced it for the first time as only for the 1%, but Canadians have proved them wrong. They were wrong then and they are wrong now. In fact, 11 million Canadians took advantage of the TFSA and said that the Liberals were wrong.

It is not just for retirement. It is also an excellent saving tool in general, because when done right, it allows Canadians to save tax free. The TFSA can be used to save for a post-secondary education, for a new car, to start a small business, or even for a down payment for a home. Here I think we can extend the analogy a little bit to buying a house.

An individual's investment in it is like a TFSA. An individual can pay for their house out of after-tax income, but any gains on the sale of a principal residence are tax free. If the individual cannot afford a house as an investment vehicle, the TFSA serves that role admirably. It is that intermediary goal between owning a house and something else as a savings tool.

Some Canadians use the TFSA to save for emergencies, and we in Calgary have experience with that. A BMO survey in September 2015 found that 66% of respondents had less than $10,000 available in an emergency. It is not about maximizing the use of the tax-free savings account. I understand many Canadians cannot reach the maximum, but it is about choice. It is about freedom of choice. It is about flexibility. It is about humility from the government to admit it does not have all the answers, and Canadians know best how to save for themselves.

Canadians understand their own personal needs much better than we do in this House, and some Canadians have chosen RRSPs. On average, 30% set aside money in an RRSP every single year, but 11 million Canadians have chosen a TFSA as their retirement service of choice.

Like many parents, I spend a lot time tyring to teach my kids the fundamentals of the economy so that they will understand the importance of saving their money, their income.

I will spend decades rewarding good behaviour and reminding them why it matters. We spend a lifetime teaching this to our children, but the government sends the opposite message when it slashes the TFSA. We have spent years promoting financial literacy at the federal level, and we prize financial literacy in our students, yet when it comes to creating and preserving efficient savings vehicles that facilitate savings, we slash them in half.

I wholeheartedly reject the notion that the TFSA has a public cost associated with this, as a cost to the treasury. We are taxing the savings of Canadians. It is not a cost to government. It is an unfair tax on those Canadians who want to save. It is taxing thrift and frugality. It is taxing those who plan for themselves and make choices for their own future. By slashing the TFSA in half, the government is simply moving the cost to private households, and that is wrong.

In closing, I heard someone on this side of the House say that this bill was an election promise, so the government has to go ahead with this ill-advised plan. However, one aspect of leadership is the ability to adapt to changing conditions. Conditions have definitely changed, especially in my province, Alberta. Cutting TFSA contributions is not a show of leadership. Instead, it will hurt Canadians' ability to save. Under a previous Liberal government, led by this Prime Minister's father, Canada's net debt rose from $18 billion to $206 billion, from 24% to 43% of GDP.

I encourage all members to vote against this bill. Canadian families are not here to support the government's frivolous spending.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Speaker, the hon. member mentioned that many people in his riding do not have $10,000 a year to contribute to a TFSA, and I am sure he is right about that. He is right about that in part because so many people in his riding do not make the $45,000 a year that they would need in order to qualify for the Liberal tax cut in Bill C-2.

I am wondering if he could get up and explain to the House why it is that he will not support the NDP proposal to give tax breaks to people who make under $45,000 a year. Will he admit that he would be doing more for more people in his constituency if he supported our plan over what is presented in Bill C-2?