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

[Karina Gould, Liberal, Parliamentary Secretary to the Minister of International Development]

Madam Speaker, I will be sharing my time today with my colleague, the member for Honoré-Mercier.

Madam Speaker, I am honoured to be able to take this opportunity to speak about the government's middle-class tax cut, a tax cut that would provide needed tax relief to nine million Canadians.

First, I would like to elaborate on our government's ambitious economic agenda that sets Canada on the path of economic growth.

No one will be surprised to hear me say that the Canadian economy is going through a difficult period, some regions more than others. While there are encouraging signs with our biggest trading partner, the United States, which is facing an upswing in its economy in 2016, there remain concerns that slower growth in certain emerging markets such as China has the potential to stifle prosperity. Also, the Bank of Canada revised downward its economic forecast twice over the last 12 months and undertook two rounds of interest rate easing.

Nevertheless, in the face of this real challenge, there is a real opportunity to put in place the conditions to create long-term growth, growth that will create good jobs and help our middle class prosper, the lifeblood of our economy. Indeed, the good news is that we were elected on a plan to grow the economy, and we have already started.

In December, we introduced the middle-class tax cut. This amendment to the Income Tax Act is what we are to discuss in the House today.

After 10 years of weak growth, our government is redoubling its efforts to ensure that Canada is poised and prepared to compete and succeed in these challenging economic times. However, it is clear that we cannot go at it alone. It means that we need collaboration.

A key component of our plan is to work closely with provincial and municipal governments to deliver results for Canadians. From infrastructure projects to responsible environmental stewardship, we are providing needed leadership. Our government will work in a renewed spirit of collaboration with our provincial and municipal partners. That work has already begun, with the first ministers' meeting held by our Prime Minister shortly after our government was sworn in, as well as by the finance ministers' meeting just before the Christmas holidays.

Our priority is to implement our agenda while pursuing a responsible fiscal plan suited to the challenging economic times. Indeed, we fully intend that our plan for economic growth will benefit all Canadians through targeted investments.

Let me reassure members that our government is not daunted by the challenges before us. We are cognizant of our fiscal realities and we know that our plan is more important than ever. 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. Some of these areas include making targeted investments in public infrastructure that will grow the economy, get Canadians moving, and open up more cost-efficient trade options for our exporters, with the focus on public transit, green infrastructure, and social infrastructure.

Working together with all of the provinces and territories for a cleaner environment and to fight climate change, Canada has a plan to invest additional funds each year in clean 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 the natural resources sector.

As our Prime Minister has emphasized, a strong economy and healthy environment go hand in hand. We are committed to leaving our children and grandchildren with a more sustainable and prosperous country.

The government's plan will be realistic, sustainable, prudent, and transparent. The plan will also include further details on measures that are intended to steer Canada toward a more prosperous, inclusive, and sustainable economic future.

Before turning to the contents of Bill C-2, I would like to mention that the government's plan includes proposals to create a new Canada child benefit. 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. The new Canada child benefit would be better targeted to those who need it most.

Our government will also be working collaboratively to implement the Canada child benefit, which will lift hundreds of thousands of Canadian children out of poverty and place them on a surer footing for a brighter future.

We are committed to a strong and growing middle class. We want to ensure that all Canadians have a fair and real chance to succeed. The legislation before the House today takes an important first step in this direction. Bill C-2 would cut the tax rate on income earned between $45,000 and $90,000 in 2016 to 20.5% from 22% and introduce a new tax rate of 33% on income in excess of 200,000. As of January 1, the government is putting more money in the pockets of about nine million Canadians each year through our middle-class tax cut. This is the smart and fair thing to do.

Recently, the Minister of Finance and the parliamentary secretary travelled across the country asking Canadians directly what our government can do to better support the middle class. They met with indigenous leaders, business leaders, cultural leaders, with the intent of putting Canadians' views front and centre and engaging in discussions to find practical solutions to the challenges and opportunities they are facing. These pre-budget consultations continue online. The response rate and comments received have been 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 delivers on strengthening the middle class and helping those working hard to join it. The measures in this bill would help strengthen the middle class. That 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, but, more importantly, by engaging with Canadians we have been able to consider new perspectives and refine our plans to be included in the future federal budget.

The government's approach to consultations recognizes that collaboration is essential to delivering real change. The government has committed to and already demonstrated its willingness to listen, engage, and collaborate with members from all parties to identify ways to find solutions and avoid escalating conflicts unnecessarily. Given what we have already heard from Canadians and many members of other parties, I look forward to discussing and debating how best to serve Canadians.

The tax relief proposal in this legislation would help millions of Canadians. It would give middle-class Canadians more money in their pockets to spend, invest, and grow the economy. I encourage all members of the House to vote for this important legislation.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, today I will be sharing my time with the hon. member for Dauphin—Swan River—Neepawa.

I am honoured to rise today to speak on Bill C-2. This is my maiden speech, and I wish to start by thanking the people of Elgin—Middlesex—London for giving me the opportunity to represent them in the House of Commons for the next four years.

I would not be here if not for the amazing volunteers and friends, but most of all my incredible family. To start, I know that as I speak today my mom and dad are watching these proceedings. I would like to thank my parents, Patricia and Harold Martyn, for all of the opportunities and support they have always given me. As the daughter of people who farm turkeys and pigs, I understand hard work and commitment, and I thank them for instilling these values in me. Whoever thought the girl from Sparta would be sitting in the House of Commons.

To my siblings who have always held me accountable, and doing so with love, a huge thanks for believing in me: Linda, Ann, Paul, and my in-laws, Greg, Scott, Trish, Lisa, Pete, and David. I thank them all. To Sandra and Bill, a.k.a. Nana and Pops, who have always been there for me, I love them both.

Making this decision to get into federal politics was not an easy decision, but I truly had a head start. My mentor and former boss, Joe Preston sat across this aisle from 2004 to 2015. “Trust me” was a common phrase used daily in our discussions. Today I would like to thank Joe for encouraging me. Without his support, this would not have been possible.

Now for the hard part, naming the people I miss every day as I serve this amazing country: Dakota, Garrett, Marissa, Hannah, and Christian. I hope from this new chapter of my life they will realize that anything is possible, will believe in themselves, and surround themselves with good people. I cannot wait to see what the future holds for them.

Finally, to Michael, my better half, the guy from band camp whom I married, I miss our evening walks, but I am definitely thankful for Facetime, or this journey would never have been possible. Although we are 640 kilometres apart, he is always with me. I believe in him, just as much as he believes in me, and I look forward to kicking off our bucket list in the next 20 years.

Elgin—Middlesex—London is an incredible riding. It is filled with beautiful lake harbours, rich agricultural land, small and large vibrant businesses, but most of all, great people. The volunteers not only on my campaign but throughout this riding helped mold me and educate me.

I would like to personally thank all the people who got me here, including Brian, Fran, Francine, Marci, Whitney, Jeff, Jen, Betty, Ena, Blake, Bob, Mae, Terry, Reinhardt, Dan, Shirley, Dean, Bridget, Melissa, and all the residents on Crescent Ave. I thought if I went fast, no one would know if I missed them. I send a special thanks to Ninja Turtle Noah, Maddie, Lauren, and Sarah.

To the ladies in the office, Cathy, Kaylie, Jena, and Kim, knowing that they are a part of the team makes me confident that Elgin—Middlesex—London is in good hands.

It is with all of these wonderful Canadians in mind that I stand in the House to oppose the proposed alterations to the Income Tax Act. Canadians have utilized the tax-free savings account since its introduction in 2009. This program has provided Canadians with incentives to develop attitudes of economic responsibility.

TFSAs are helpful tools for Canadians who are seeking to save or are preparing for unforeseen economic vulnerability, a tool used by many of my constituents in Elgin—Middlesex—London, both young and old.

The current Liberal government has proposed a reduction in the maximum amount of funds that Canadians can invest in these accounts per year. Unfortunately, the government does this on the false pretence that doubling of the TFSAs only benefits the highest earning Canadians rather than just the middle class.

On the contrary, statistics demonstrate that this investment tool is utilized by many middle-class Canadians. Half of those holding TFSAs earn less than $42,000 a year. In fact, 60% of Canadians who take advantage of the TFSA's limit earn $60,000 or less a year. What is more, in 2015, 600,000 Canadian seniors invested in TFSAs, maximizing their yearly deposits while earning less than $60,000 a year.

CARP, Canada's association for the fifty-plus, was in favour of increasing the limit the TFSAs to help seniors form fiscally responsible plans for the future. When the Conservatives raised the limit on TFSAs, the majority of Canadians supported that decision. Lowering the limit on TFSAs will do absolutely nothing for the low-income families, including financially burdened Canadians, to which the government must remain accountable.

The proposed changes in Bill C-2 will negatively affect Canadians by noticeably reducing their incentive to save for the future, creating a heavier reliance on government support during financial crises. Further, it will limit the choice of Canadians.

Why put up roadblocks for people who want to engage in responsible saving practices? Why remove the sensible avenue for saving, which costs the government very little?

Bill C-2 would do more than limit the choices available to the middle class. It would also reduce the amount of attention given to the vulnerable people in Canadian society. Instead of worrying about nitpicking a program that already works for Canadians, the Liberal government should be seeking out programs and initiatives that would actually aid in giving a hand up to this country's most vulnerable people.

The current government needs to continue to support programs such as the housing first initiative, which was undertaken by the previous Conservative government. This initiative was directly aimed at ending homelessness by identifying those most desperate in Canadian society and ensuring they were given a real opportunity for self-advancement. By seeking out these programs, the current government would have the ability to ensure that its efforts to end social issues do not go a mile wide and an inch deep. Spending well, rather than just spending, is the key to improving social issues today. Unfortunately, spending responsibly does not seem to be the current government's strongest attribute.

These tax cuts are aimed at making the public feel better about Canada's current position during this time of economic uncertainty. However, these cuts are not enough to provide true relief for Canadians being affected by the dipping dollar. It will take much more than just tax cuts to regrow the Canadian economy. This remedy is a mere surface solution to a much more serious problem.

Even more indicative of the Liberals' spending habits are the alterations to revenue that Bill C-2 would cause. Originally, the Liberals claimed that their new tax programs, including the lowering of the ceiling of the TFSA, would be revenue neutral. However, the tax bracket changes contained in this bill would actually cost the government $8.9 billion in the next six years. Since the government failed to accurately project and report these financial results, why should we trust the Liberals' promises that they will aid Canadians in the long run?

My constituents in Elgin—Middlesex—London have addressed this issue to me personally and are concerned about these changes. All age groups from all tax brackets have been using this method of saving their money for the future. Young adults have been putting their money away through TFSAs to invest in new homes, families have been using it to invest in their children's education, and many have been using it as retirement tool.

As the official critic for families, children, and social development, I can assure members that I have spoken to many constituents and Canadians who want to see the ceiling of the TFSA contributions remain at $10,000 per year.

I look forward to continuing to hear from my constituents in the great riding of Elgin—Middlesex—London and to working with all Canadians in my new role. I would like to thank this House and my hon. colleagues for indulging me and for the opportunity to speak to this very important piece of legislation that would affect all Canadians.

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, I am assuming that my hon. colleague is new to the House. I have yet to hear a Conservative talk about the drawbacks of a particular tax break. That is a new one to me. Nevertheless, I will address the issue at hand.

During the campaign, we talked about how the tax savings measures we are talking about are a benefit, as most economists would say, to the middle class. I would like to remind him that the Canada child benefit is going to provide a great benefit to all Canadians with young families, as we talked about earlier.

The Conservatives continue to brag about the 2% off the GST. I was wondering if perhaps my hon. colleague would like to stand now and talk about the benefit that provided.

We are talking about thousands of people being lifted out of poverty, despite the numbers he puts out there.

In this particular situation, this is a great way for us to begin to invest in the middle class by providing the tax relief contained in Bill C-2 and by providing the benefits we will announce in the budget. I guess the overall answer for that is to stay tuned.

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, I did not have a chance the last time I spoke in the House to thank the constituents of Coast of Bays—Central—Notre Dame for putting me back in office. I would like to do that now. The vast majority of them have been doing so for five elections now. I keep testing the limit every time I run out there. Nevertheless, I want to thank them for their generosity and for giving me the opportunity of a lifetime to represent them in the House of Commons in the nation's capital. Indeed, it is the opportunity of a lifetime for all of us to sit in the House of Commons.

I am honoured also to talk about a bill this morning that we talked about much during our campaign. We talked about it as a way of helping the middle class of this country grow Canada's economic engine. We faced challenges as we started the campaign, and the challenges continue to this point. Right now, we have challenges in certain aspects and geographic areas of this country that are certainly unprecedented. I talk of the price of oil and natural gas. I also talk about the fact that many of the provinces also find themselves in a precarious situation given the fact that a lot of their revenues are based on royalties and taxes they collect from this particular sector. We also have a low dollar, something that for many people may produce some opportunities but in other cases could provide many challenges. It too is at an unprecedented level of less than 70¢ to the American dollar now.

I want to talk today about Bill C-2 and some of the measures we hope to bring forward that would provide some tax relief to Canada's middle class. As I said before, the middle class is the economic engine of this country. When I say the middle class is the economic engine of this country, I am talking about the individual talents of those individuals and their ability to provide a living for their families.

For example, in my area of Newfoundland and Labrador the greatest exports right now in dollar value alone would be seafood exports. We also have mining and forestry and many other sectors with great exports. To be honest, one of the greatest and most exciting exports that we have right now in central Newfoundland, the area that I predominantly represent, is the people and their talents.

We do have skilled people in the oil and gas sector but we also have many skilled people in other sectors such as mining. They have a skill and a trade that they export around the world. Each and every week I travel from my home riding to Ottawa or to other parts of the country, I run into people that I have grown up with or I talk to people that I have met in my tenure as a member of Parliament. These people talk to me about the areas where they have been or where they are going, such as Russia, the North Sea, northern Africa, or Alberta, Saskatchewan, and British Columbia right here in Canada. In the field of hydroelectricity, they have travelled to Quebec and Manitoba. It is phenomenal how they do this. They travel vast distances. They go away for weeks at a time then return home and bring that wealth home with them. This a precarious position for them right now given the situation in the oil and gas sector. Some people would say that the reason they have created that value is the oil and gas itself, but I would disagree. What created that value for them was their own talent and ability to adjust to the world markets. On the one hand, I am worried about the price of oil and gas in this country and around the world, but on the other hand I am not worried because of the versatility these individuals have shown over the past while. The majority of them are certainly in that middle-class income bracket.

I am pleased to participate in this important discussion on the government's middle-class tax cut. My objective today is twofold. First, I want to provide the House with a quick assessment of our economic and fiscal situation and, second, I want to tell members why the middle-class tax cut would help grow our economy.

As we embark on an agenda of economic growth and long-term prosperity, there is no doubt that we are facing considerable headwinds as I discussed earlier. Globally we continue to experience what International Monetary Fund Managing Director Christine Lagarde famously called “the new mediocre”. In its latest economic outlook in January, the IMF expects global growth to pick up modestly to 3.4% in 2016 and 3.6% in 2017. This is down point two percentage points for both 2016 and 2017, compared to its October 2015 world economic outlook.

Though the recent performance of the U.S. economy is encouraging, the European and Chinese economies are cause for concern. We have seen this happen in Europe now for the past seven years and most recently with the Chinese economy. Although China's GDP is very large and is still growing, it is not growing as much as it did in the past four to five years. Many if not all of of us here have experienced the benefit of global trade and have had conversations with people in business in our ridings who deal with many Chinese companies. Members, of course, know of what I speak.

As I mentioned earlier, global crude oil prices remain at less than half of what they were in mid-2014 due to persistent global oversupply and softening demand. What is happening beyond our borders has real and tangible consequences for us all.

In Canada, our economic performance in the first half of 2015 was poor, mainly due to the collapse of oil prices in 2014. Consider this. Last April, just to put some numbers on this, the government projected an oil price of $71 a barrel by the end of this year. As I speak, oil is now trading at about $30 a barrel, less than half the projected price. As I mentioned earlier, coming from Newfoundland and Labrador, I know how we are hit directly and indirectly by the resulting large hole in our provincial budget. We are directly hit, of course, because our offshore exploration has diminished and it is our offshore supply that directly benefits us in the way of royalties and taxation for our province, and indirectly through the employment that it creates, including for individuals who travel around the world in this particular sector.

We know that growth will be lower than was expected in the last budget projections. This has important implications for our currency and our fiscal situation. The good news is that real GDP growth resumed in the third quarter of 2015. The IMF, it its latest economic outlook released January 19, expects growth in Canada to pick up over the next two years in relation to 2015. We also maintain an enviable position of having a low debt-to-GDP ratio, abundant natural resources, and one of the most educated, intelligent workforces in the world.

Our policies will strike a balance between fiscal responsibility and controlled investments that promote economic growth. One of the most important components of this is restoring middle-class economic progress, which is, as we all know, the backbone of our economy and has been since our inception for close to 150 years now.

This is why one of the government's first orders of business back in December when we arrived was to table a notice of a ways and means motion to cut taxes for the middle class. This was the right thing to do for our economy. The proposed middle-class tax cut and accompanying proposals will help make the tax system fair so that all Canadians have the opportunity to succeed and prosper.

Specifically, Bill C-2 proposes, first, to reduce the second personal income tax rate to 20.5% from 22%; second, to introduce a 33% personal income tax rate on individual taxable income in excess of $200,000; and third, to return the tax-free savings account annual contribution limit to $5,500 from $10,000 and reinstate indexation of the TFSA annual contribution limit.

I will expand on the three points.

The first one is the reduction of the the middle-income tax bracket, which is taking effect January 1. It is expected that about nine million Canadians will benefit from this measure in 2016. Single individuals will see an average tax reduction of $330 per year, and couples will see an average tax reduction of $540 per year.

Second, the government is introducing a new personal income tax rate of 33% that will apply to individual taxable income in excess of $200,000 per year. This means that only Canada's top income earners are expected to pay more tax as a result of the government's proposed changes to personal income tax rates. As with other bracket thresholds, the $200,000 threshold will be indexed to inflation.

Third, the government is returning the tax-free savings account annual contribution limit to $5,500 from $10,000, effective January 1, 2016.

These are some of the issues that we discussed during the campaign, including my colleague for Cape Breton—Canso. He was just here and talked incessantly about how wonderful his riding is and how hard it is for him to get around his large riding. He likes to talk about all these new policies we are bringing in to help the middle class in that beautiful area known as Cape Breton.

I can reassure members that the change to the TFSA is not retroactive. The TFSA annual contribution limit for 2015 will remain at $10,000. However, returning the TFSA annual contribution limit to $5,500 is consistent with the government's objective of making the tax system fairer and helping those who need it the most. When combined with other registered savings plans, which we are all familiar with, the $5,500 TFSA annual contribution limit will permit most individuals to meet their ongoing savings needs in a tax efficient manner.

Indexation of the TFSA annual contribution limit will be reinstated so that the annual limit maintains its real value over time. This is referring to the consumer price index and how we will tie the limits to the increase in inflation.

Finally, before I conclude, I would like to highlight some of the other measures that are included in today's legislation, Bill C-2.

The bill proposes to change the current flat top rate of taxation rules applicable to trusts to a new rate of 33%, which is in line with the 33% tax rate as we proposed. The bill proposes to set the tax on split income to the new rate of 33%. It would amend the charitable donation tax credit to allow higher income donors to claim a 33% tax credit on the portion of donations made from income that is subject to the new 33% marginal tax rate. Finally, it would increase the special refundable tax and the related refund rate imposed on investment income of private corporations to reflect the proposed new 33% personal income tax rate.

Also, the government will introduce proposals in the upcoming budget to create a new Canada child benefit, which will take all of the benefits and put them into one tax-free Canada child benefit. This is something that has been talked about in my riding for quite some time. The biggest complaints were about benefits from government that suffered from tax clawbacks, which affected all benefits no matter what they were. We have now put forward this Canada child benefit that puts the tax aside for the sake of and benefit of our families. I look forward to the budget in the spring to talk about this.

Of course, nowadays there is an added pressure regarding things such as child care and child spending. Therefore, this is one of the proposals I look forward to in the upcoming budget that we talked about in the campaign, which Canadians overwhelmingly accepted as a way of financially helping themselves during their child-rearing years.

All these initiatives demonstrate that our sights are clearly set on the future. This legislation will help strengthen the middle class by putting more money in the pockets of Canadians to save, invest, and grow the economy. More broadly, it will help grow our economy in the context of a difficult global economic climate so that all Canadians benefit.

I heard some of the debate earlier, and I appreciate some of the concerns the opposition put forward. Of course, we have taken a strategic approach to provide a benefit to middle-class Canadians, especially those facing tough times.

To address these tough times in the future, I look forward to the budget, as I mentioned earlier, with things such as the Canada child benefit, which I think will enhance a way of life for those bringing up children now. For those who are suddenly unemployed, the situation is very difficult. As we deal with the situation in the next few months and certainly within the next few years, my colleagues, no matter what party they belong to, would certainly agree with me that we have challenging times ahead.

Again, for those provinces dependent on revenues from the oil and gas sector, and I speak of Alberta, Saskatchewan, and my own province of Newfoundland and Labrador, there are difficulties ahead, certainly when it comes to social programs. There will certainly be added pressure, but we believe that measures taken, such as those contained in BillC-2 and in the upcoming budget, will help to alleviate some of those concerns.

For the budget coming up, consultations are going ahead. I would advise all members to conduct consultations in their ridings, as I will. It is a perfect opportunity to get back to our ridings as members of Parliament. I am travelling to 15 communities in an area the size of Germany. I wish all members the best, because I know that travel can be very taxing on our families, but it is certainly worth it.

In my situation, I know what I will hear. I will hear a lot about the resource sector. I am going to hear a lot about the challenges that lie ahead but also about things like skilled trades and infrastructure spending to help spark the economy and to help communities deal with transit and their future investments.

I will leave it at that for now. I look forward to the questions and comments from my hon. colleagues.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I am very pleased to rise in the House as the NDP's finance critic to debate Bill C-2, which was introduced in December and which is now being debated in the House.

I had the opportunity to ask the Minister of Finance a question earlier today after his opening remarks. Unfortunately, I did not get an adequate answer. I did not get an answer to the fundamental question raised by this bill: how does the Liberal Party define the middle class?

This is a fundamental question, because since the election, the Liberal Party, which now forms the government, has boasted about making tax cuts for that much talked-about middle class. However, as the Parliamentary Budget Officer's report very clearly and succinctly states, the middle class will get nothing from the tax cuts the Liberal government is promising.

With Bill C-2, there is the good and there is the bad. I will start with the bad, and then talk about the good.

Any definition of the middle class must be based on a common definition. One way to define it would be to use the median income, which is $31,000 a year per person in Canada. That means that half of Canadians earn less than $31,000 a year and the other half earns more than $31,000 a year.

Will someone earning the median income benefit from this tax cut? No. In fact, those earning $45,000 or less a year will not benefit at all from the tax cut promised by the Liberals. Even those earning between $45,000 and $90,000 a year will only receive part of what was promised. The devil is in the details. In reality, someone earing $50,000 will probably only receive twenty or thirty dollars.

Taxpayers earning more than $90,000 a year will benefit the most from this tax cut. Even someone who earns $200,000 a year will receive the maximum from this tax cut. An individual would have to earn $210,000 a year before receiving less, due to the new tax bracket, but they would still still receive a large part of this reduction.

If we take this definition of the middle class, whose members earn around $31,000 a year, and exclude all those whose income is among the top 20% and those whose income is among the bottom 20%, then we have a middle class that makes up 60% of the population. The range of income of that middle class would be between $20,000 and $60,000 a year. A very small portion of those people would benefit only slightly from the tax cut.

If we take the median income, people will receive nothing. If we take the income that everyone associates with the middle class, in other words, $45,000, people will receive nothing. Those who will receive the biggest slice of the tax-cut pie are the top 20% income earners. That is not the middle class.

When the ways and means motion was tabled, we made a counter-proposal because if we really want change, and considering that on October 19, Canadians voted for a tax cut for the middle class, then this tax cut has to be given to the middle class.

That is why we proposed a change to the Liberal proposal. Instead of targeting the second tax bracket, as the Liberal government wants to do, we should change the first tax bracket so that a larger portion of the population can benefit from such a tax cut. Our proposal seeks to reduce the first tax bracket from 15% to 14% to ensure that all taxpayers, those who pay income tax, can benefit from this change.

Our proposal seeks to give people earning the median income a tax cut as high as $250 annually, as those people are currently receiving nothing.

Someone who earns $200,000 per year and who will get a tax cut worth about $600 would be forced to pay a portion because of the higher tax rate and the new bracket that we would leave in place.

It is clear that the Liberals' proposal is merely a smokescreen. In his response to my question about the Liberal Party's definition of the middle class, the minister did not answer the question. He simply said that this is just the first step and that the next step is the child benefit. We have not seen that yet. Maybe it will actually be a good thing for families with children, or maybe not—we will see. However, that does not answer my question.

This measure will not really help the middle class at all. A child benefit might help families with children, but it will not do a thing for single people, couples without children or seniors. Any of those people who earn less than $45,000, and especially if they earn less than $90,000, will not benefit at all from the Liberal promises for the middle class, even if their income is lower.

It is important to look at everything the Liberals are proposing. We believe that our proposal would help the middle class much more effectively than the Liberal measure, which, as I said, will benefit only the top 20% of income earners and do very little for everyone else.

I began by talking about the bad, and there is a lot of it, but now I would like to talk about the good, and one key measure that we support in this budget. I am talking about dropping the contribution limit for tax-free savings accounts, or TFSAs, from $10,000 to $5,500. We regard TFSAs as a useful tool for saving, and they should be used for that purpose. However, what the previous Conservative government proposed, raising the contribution limit to $10,000, is very harmful to Canada's public finances and does very little to help taxpayers and investors who want to use that tool.

This is because anyone can open a TFSA, and among those who can afford to do so, only 7% are contributing the maximum at this time. This measure is extremely costly. The numbers speak for themselves. In 2020, if the limit stays at $10,000—and it could even be indexed later on—it is estimated that it will cost the Canadian treasury $2.3 billion, all for a single investment tool that benefits only a small minority of Canadians. In 2030, 10 years later, the lost revenue or tax expenditures are estimated to be $9 billion. In fact, the parliamentary budget officer, whose job it is to study the impact this would have on the Canadian treasury, went as far as to say that in the medium term—I am talking about 2040-50, since the horizon might well extend that far ahead—tax expenditures, which is income lost by the Canadian government, will account for nearly 0.7% of GDP.

I would like to point out that this House is not budging and that previous governments did not budge on the issue of international aid and reaching the target, which was set at 0.7% of GDP under the agreements. The previous government considered it to be too costly to move forward on that. We were never even close to the 0.7% target. According to the parliamentary budget officer, with the TFSA alone we would reach 0.7% of GDP in foregone revenues, those revenues that would no longer be paid to the Canadian government, by 2040-2050. The TFSA is a savings vehicle that we fully support. However, if we were to head in the direction that the Conservative government proposed, it is a measure that could be extremely debilitating for Canada's fiscal capacity and its ability to provide the quality programs and services that Canadians expect.

As I was saying, the TFSA is a beneficial savings vehicle. The $5,500 contribution limit, indexed to inflation in $500 increments when this amount is reached, is quite adequate. Only 7% of Canadians currently contribute the maximum. If we look at just individuals who have already opened a TFSA, only 17% of them contribute the maximum. Increasing the contribution limit will only help the 17% who already contribute the maximum. Thus, this is a very expensive measure that very few people take advantage of.

If I am dwelling on the tax-free savings account, it is probably because outside of the tax cut in Bill C-2, it is the key issue in terms of finances. The TFSA is a useful tool for promoting savings and a tax shelter appreciated by those who use it properly. However, it could also become a means of tax avoidance, and that is what we must prevent.

I say that, because when we are talking about $10,000, which will one day be indexed, a lot of Canadians see the tax-free savings account as an account where they put after-tax money, which will yield non-taxable interest. They can then withdraw that money as they see fit, which is not a bad thing. However, what these people often do not know is that you can put many things other than cash in these accounts. You can put in stocks or financial instruments, and anyone who can afford it can put up to $10,000 in stocks, for example, into a tax-free savings account and enjoy capital gains that will not be taxed within that account.

Right now, 50% of capital gains are taxed, at a rate of about 40%. The TFSA can be an attractive vehicle for those who want to avoid paying tax on capital gains and are able to contribute up to the limit of $10,000, in which case they do not really need to save.

In that sense, the TFSA can be useful for Canadians, and that is why we support it. However, we want to prevent these accounts from becoming a way for people to avoid paying taxes, and that is why we oppose increasing the contribution limit to $10,000. We think that the $5,500 limit is a perfectly adequate way of helping Canadians who want to ensure their future financial security.

Let us remember that there are also other savings vehicles, such as RRSPs. These private savings are one of the main ways to ensure one's financial security. Others include company pensions, the Canada pension plan, the Quebec pension plan, and old age security, which can be supplemented with the guaranteed income supplement.

If we tally the good and bad points that I talked about earlier, it is clear that the Liberals' decision to reduce taxes for the richest 20% and increase them for the richest 1% is not an appropriate measure if the government really wants to help the middle class.

Eventually, under an NDP government, there will be a way to review this decision and really help the middle class. We are extending an olive branch to the government here, because the other thing that could be done is to make the necessary changes in committee so that we can come back to the House and adopt a measure that will really help the middle class.

We are therefore going to resubmit this proposal in committee for review. It is largely based on the excellent work done by the parliamentary budget officer.

Lowering the TFSA limit is extremely important from a tax perspective in order to ensure that the Canadian government can offer these services, function properly, and ultimately, or so we hope, make significant reinvestments in areas where the Conservatives cut funding to the bone or even deeper.

That is why we will support the bill at second reading. We hope the government and its members will be willing to listen in our committee meetings. This would eventually open the door to amending the provision to lower taxes for the richest 20% of Canadians and instead helping 80% of Canadians, many of whom are getting nothing right now. Of course we will support the second measure, which is to lower the contribution limit for TFSAs.

This is the first bill introduced in this new Parliament. I truly hope the government will take a new approach. I think all parliamentarians have already noticed a change in tone and dynamics, which is very much appreciated. However, after four years of hearing meaningless slogans and catchphrases to try to justify things that are simply not supported by the facts, we might still be in for another four long years.

This morning, when the Minister of Finance introduced Bill C-2 and delivered his speech justifying the tax cut, I was hoping he would at least understand or acknowledge the auditing work done by the parliamentary budget officer, but that was not the case.

I wish he would accept a fact that has been proven over and over. The middle class will not benefit from these measures; only the richest 20% will. The facts prove it. The parliamentary budget officer proved it, and we ourselves proved it before the report was released. He wants to stay the course and perpetuate the myth that the middle class will benefit. This is a snow job.

A lot of Canadians are going to be surprised and disappointed when they fill out their income tax returns. They thought they voted for a party, the Liberal Party of Canada, that would give them a tax cut, but they are going to find out that they are not eligible. A good 80% of people will find out that this does not apply to them. I predict some nasty hangovers for them.

I sincerely hope that the government will pay more attention to the opposition parties, especially when we are trying to help by suggesting improvements that should help the government achieve its goals. I would like it to say so publicly.

The most disappointing thing about the Minister of Finance's speech is the fact that he is trying to deal with the problem by sending up yet another smokescreen. We have not yet seen the Canada child tax benefit, which is really just going to be a remix of existing programs. That is still nothing but a promise.

The fact is that only couples with children and single-parent families will benefit from this money. Those people will be happy to get some extra money. Couples without children, singles without children, and seniors, even the poorest of them, even those who earn, say, $45,000, $30,000, $20,000, or $10,000, will get nothing. They will not get a tax cut, nor will they benefit from the Liberals' upcoming measure.

I would like the Liberal government to be consistent, to respect the Canadian public, and to tell the truth about the real impact of the measures it is introducing. This was the government's first opportunity to do so. I think it has missed its opportunity, but it will have another chance in committee. I hope that the government will be listening. If the government continues in this direction, I think that the next four years will be very long and full of hype, catch phrases, and empty rhetoric, but very thin in terms of measures that will truly help Canadians, especially middle-class Canadians and those with such low incomes that they struggle to make ends meet.

I look forward to questions from my colleagues in the House, but I want to reiterate that we will support the bill at second reading, because it maintains the TFSA contribution limit at $5,500, which has considerable tax implications, and we will try to make changes to the bill in committee.

The House resumed 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.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Mr. Speaker, it is a pleasure to rise in the House today. Having listened to the finance minister's comments, I will set aside my initial speech to respond to a couple of those comments.

The minister commented on how the middle-class tax cut would be revolutionary for Canadians. Finance Canada estimates this to be $6.34 a week in tax relief to middle-class Canadians. That is less than $1 a day. In the minds of the finance minister and the Liberals, $6.34 a week is revolutionary.

Today I will divide my speech into separate parts. In the first part I will talk about tax-free savings accounts. In the second part I will talk about the housing market in Canada relative to what tax-free savings accounts provide for individuals. The third part will deal with the middle-class tax cut. However. I could not resist the opportunity to put it in actual numbers that everyday Canadians could understand because the finance minister relied so heavily on it in his speech. Again , it would be $6.34 a week, less than $1 a day. I will then go on to talk a bit about how this would affect Canada under the current economic situation, gathering momentum toward what I will call the fiscal mess and who will pay for it.

I will wrap up my remarks with a general comment about understanding what the Liberal tax plan is really all about.

Throughout my speech today, I hope to cut through the rhetoric that we hear coming time and time again from the new government and talk in terms of real life through the eyes of hard-working Canadians, people like my constituents, who come from largely working-class families. My community of Brantford was born out of industry, hard work, and immigrants, who have worked two or three jobs to raise their families. It is not the most affluent community in the country, but it is the most resilient and one of the most hard-working. I like to describe its makeup as one of the most opportunistic and humble communities in the country.

Not all members in the House were around when the late Jim Flaherty first unveiled the tax-free saving account, but I remember it quite vividly as a historic occasion. I will take this opportunity to remind the House just how popular and widely celebrated this savings vehicle was and is today.

Experts from across the board were unanimous. Tax-free savings accounts represented the most revolutionary savings vehicle since the registered retirement savings plans of over 50 years ago. These accounts were an enormous step forward for the middle class to support a wide array of their financial goals, including but not limited to saving for school, their children's futures, a home, or a comfortable retirement.

The strength of tax-free savings accounts is that when the money is withdrawn, it carries no tax penalties. It is basically tax-free just as the name of it suggests. Another major strength is that tax-free savings accounts offer enormous flexibility, which was lacking in RRSPs. According to experts, tax-free savings accounts can fill any number of short-term and long-term savings goals. Unlike the RRSP, money in a TFSA can be used as collateral, while at the same time, investments in TFSAs are not counted as income to qualify for government benefits or pension supplements that carry a means test. Again, they are not to penalize the most vulnerable people in our society but to add to the free choice of how Canadians can save.

Experts in retirement planning are unanimous that the tax-free savings accounts are a valuable tool to reach personal retirement goals. Our government's efforts to continue growing this revolutionary savings tool represented a major step forward for middle-class Canadians, in particular, Canadians saving for their retirement.

The new government's approach to retirement savings is completely off base. On one hand, it supports the wrong-headed approach of the Government of Ontario to force all workers into a new government-sponsored pension scheme that will cut take-home pay and foist upon and force employers to cut jobs or go out of business in some cases. On the other hand, the Liberals would cut a widely-acclaimed revolutionary savings tool designed to support Canadians in whatever their own unique savings goals might be.

Tax-free savings accounts have been so popular in our country since the beginning, that over 11 million Canadians have opened accounts. However, the Liberals have have said that only the rich can afford to put more into tax-free savings plans, and this, again, is absolutely false. It is an argument that is ignorant to the real cost of saving for a home or retirement, and it is an argument that is not supported by the facts.

I will allude to the speech from the Minister of Finance. I appreciate him coming into the House and explaining the platitudes of all of this, and repeating the rhetoric of the election campaign, but let us hit the facts. The facts are, as I have mentioned, that 11 million Canadians opened tax-free savings accounts. In 2013, people earning less than $80,000 a year accounted for 80% of TFSA holders, and 60% of the individuals contributing the maximum amount to their TFSAs had incomes of less than $60,000. Those are the facts. I did not hear this from the Minister of Finance.

Our motivation in doubling tax-free savings accounts was to build on the momentum of this incredible savings tool for middle-class Canadians in order to give them greater incentive to save and provide retirees with a higher rate of tax-free income. However, this is where we get into the argument of whether the government should be involved in making those decisions, or should individuals. We believe individuals should make those decisions, not the government.

Our motivation in doubling tax-free savings accounts was to build on this momentum. The Liberals' motivation in cutting tax-free savings accounts appears to be nothing more than looking for ways to fund a Liberal spending spree.

I will give credit to the Minister of Finance this morning. He did mention in his speech the fact that had the new limits for tax-free savings accounts been honoured as positive changes, the government revenues would have gone down, a concern by the Liberal government that this takes revenue away from the federal government, instead of thinking about middle-class working Canadians on the ground trying to save for their future and their children's future.

Cutting back tax-free savings accounts may support the Liberals in their plans for massive spending and big-government programs, but it certainly does not support the millions of middle-class Canadians who are working hard to save for their future.

I would like to move to what I believe to be at the heart of what middle-class Canadians desire. I am very familiar with this because I spent my life in this industry, building houses for individuals. This is in regard to the mortgage changes that the Minister of Finance brought out very suddenly and unannounced, without consultation. We have a clear example of how the Liberals are repairing their fiscal plans really on the back of a napkin, without thinking about the long-term financial consequences for Canadian families.

Last month, out of nowhere, the Minister of Finance announced new mandatory minimum down payments on home purchases. We know that buying a home is the most important financial decision most Canadians will ever make and that achieving home ownership is a bedrock issue when we are talking about supporting the middle class. Therefore, one might expect that the finance minister would actually consult with those who know the housing market best before making a massive change, doubling the minimum down payment on some homes.

For example, the Canadian Real Estate Association is Canada's top source of accurate, up-to-date information on statistics on the Canadian real estate market. I know it would have been delighted to have offered its input to the minister on the minister's mortgage changes and would have been eager to work with the new government on issues like housing affordability. Yet it was not consulted.

The Canadian Home Builders' Association employs 800,000 people in the country. It builds approximately 200,000 new homes every year for Canadians. It has such a huge multiplier of economic benefit and spinoff to it, 10 times whatever the value of spending is on housing. It was not consulted.

The minister said that he made these changes to cool the Vancouver and Toronto housing markets. If he had taken the time to consult, he would have realized there were actually eight major Canadian housing markets where the average home price was already more than $500,000.

The Liberals say they support the middle class. However, with a stroke of a pen, the finance minister has made it harder for young people and families to achieve home ownership in places like the Fraser Valley, Victoria, Milton, Mississauga, Markham, Calgary, and Fort McMurray. He has cut many families out of the housing market altogether. He is telling millions of young families that they will now have to save at least $10,000 to achieve home ownership. At the same time, he is cutting the tax-free savings account in half to $5,500.

We have a government on one hand telling us that average Canadians cannot afford to put away $10,000. On the other hand, it is telling us that Canadians have to save $10,000 to buy their new homes. This is just one example of why cutting the tax-free savings account, a revolutionary savings tool, will hurt middle-class Canadians.

There was much in the finance minister's speech about the middle-class tax cut, so let me address that as the third section of my speech today.

Another core part of Bill C-2 is the government's changes to Canada's middle and upper-class tax brackets. What was supposed to be a simple change to the tax code has created a long-term financial mess for Canada. It is worth noting that the tax changes before us would not have anywhere near the impact the Liberals have promised.

The Liberal tax cut most benefits those in the high end of the second highest tax bracket. Those who make close to $200,00 would benefit the most. In fact, the PBO says that the reduction in the second tax bracket will benefit the top 30% of income earners in the country. Those are facts from the Parliamentary Budget Officer. They are not my comments, not my party's comments, not the opposition's comments, but the government's objective overseer of all things economic. For the average Canadian family, this means very little. Based on the finance department's own estimates, and I mentioned this before, the new Liberal tax plan amounts to, on average, $6.34 a week for those who qualify.

Even more troubling is how these tax changes add to a growing trend of this new Liberal government that it cannot get a handle on its baseline numbers.

We had this yesterday in the House of Commons during question period. Actually, it began on Tuesday in the House of Commons during question period, when the Parliamentary Secretary to the Minister of Finance stood up in this House and wilfully misled the House in making a statement that the previous Conservative government left this country in a deficit position. In fact, the finance department and the PBO have put online for all Canadians to see the actual facts and the numbers, where we left the government with a surplus of $600 million. All Canadians can go online to see that if they choose.

Again, those are not the opposition's numbers. Those are the baseline numbers on which the government came to power and had to deal with on day one, a $600 million surplus, not a deficit.

The tax changes we have before us today are not what the Liberals campaigned on. They promised that the tax cuts would be part of a plan that holds the deficit to $10 billion, a promise that they have already thrown out the window, and they campaigned on a commitment. This is the one that is so vivid in many Canadians' minds, the commitment that the tax cuts would be revenue neutral.

The new Prime Minister went across the country and said, “We'll take the money from the rich and we'll give it to the middle class for the income tax cuts, and do not worry, it will not come out of the Treasury. It will be a revenue-neutral deal.” The Prime Minister repeatedly and directly stated that he would introduce, and I quote, a $3-billion tax cut for the middle class paid for by a $3-billion increase on high-income earners. However, the Liberals got their numbers completely wrong, and this tax cut will not be revenue-neutral, not even close.

By the Minister of Finance's own admission, there will be a revenue shortfall of over $1 billion. This is money that will be taken from the Treasury, another $1 billion, plus. In fact, some of the objective observers and economists have looked at it, and I will give the House these numbers. The Institute for Research on Public Policy says the shortfall will be even greater, creating a revenue gap of closer to $1.5 billion, and the C.D. Howe Institute, which the Minister of Finance once chaired, said the Liberal plan will fall short by nearly $2 billion.

Where is that money coming from? It is coming from existing revenues, that puts us into a further deficit, so it already looks as though we are projecting a larger deficit.

I will wrap up by saying that Canadians are concerned and worried about how quickly the Liberals have managed to put the country into a financial hole. Their bad math and the faulty projections behind the measures in Bill C-2 help illustrate why.

Finally, I would like to move an amendment. I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following: “this House. declines to give second reading to Bill C-2, An Act to amend the Income Tax Act, since the principle of the Bill: (a) fails to address the fact, as stated by the Office of the Parliamentary Budget Officer, that the proposals contained therein will not be revenue-neutral, as promised by the government; (b) will drastically impede the ability of Canadians to save, by reducing contribution limits for Tax-Free Savings Accounts; (c) will plunge the country further into deficit than what was originally accounted for; (d) will not sufficiently stimulate the economy; (e) lacks concrete, targeted plans to stimulate economic innovation; and (f) will have a negative impact on Canadians across the socioeconomic spectrum.”

[Bill Morneau, Liberal, Minister of Finance]

moved that Bill C-2, an act to amend the Income Tax Act, be read the second time and referred to a committee.

Mr. Speaker and hon. members of this esteemed House, I appreciate the opportunity to discuss the merits of the middle-class tax cut the government introduced in December and that this bill, Bill C-2, would enact.

On January 1 of this year, nine million Canadians received a tax break. Our government was elected on a plan to grow the economy, and these changes are an important first step in that plan.

Our government believes that a strong economy starts with a strong middle class. Canada's middle class has gone too long without a raise, and in challenging economic times, we have taken action to help them.

The global economic downturn has presented some new realities for the Canadian economy. This means that our plan to grow the economy is now more important than ever.

As we pursue this plan, we will continue to keep Canada's debt-to-GDP ratio on a downward track. We will be prudent in our expenditures and will return to a balanced budget by the end of our mandate.

The government's job is to help Canadians succeed. We are lucky to have one of the most highly educated and talented workforces in the world. In order to harness the power of our people to build a stronger and more prosperous country, we need to improve direct support to the middle class and those working hard to join it. The legislation before the House today does just that.

This bill would cut the tax rate on income earned between $45,282 and $90,563 in 2016 by 7% and would introduce a new tax rate of 33% on income earned above $200,000.

The middle-class tax cut and accompanying changes will make the tax system fairer. Specifically, the bill proposes to reduce the second personal income tax rate to 20.5% from 22%, introduce a 33% personal income tax rate on individual taxable income in excess of $200,000, return the tax-free savings account annual contribution to $5,500 from $10,000, and reinstate indexation of the tax-free savings account annual contribution limit.

Let me elaborate on the three points. First, the personal income tax rate changes took effect on January 1 of this year. As I mentioned at the outset of this speech, it is expected that about nine million Canadians will benefit from this measure this year.

Second, in conjunction with this tax cut, the government is introducing a new personal income tax rate of 33% that will apply to individual taxable income in excess of $200,000. We are asking the wealthiest 1% of Canadians to pay a little more to help the middle class and those working hard to join it. This means that only Canada's top income earners are expected to pay more tax as a result of the government's proposed changes to personal income tax rates. As with other bracket thresholds, the $200,000 threshold would be indexed to inflation.

Third, the government is returning the tax-free savings account, TFSA, annual contribution limit to $5,500 from $10,000, effective January 1, 2016. Let me reassure all members of the House that this change is not retroactive. The TFSA annual contribution limit for 2015 will remain at $10,000. I should also note that the limit is cumulative and builds over time.

Eliminating the previous government's increase to the TFSA contribution limit is consistent with our objective of creating a tax system that is fair and that helps those who need it most. Keeping the limit at $10,000 would have helped Canada's wealthiest save more while costing the federal treasury hundreds of millions of dollars over the next five years.

We know that only 6.7% of eligible Canadians contributed the maximum in 2013. Doubling it did nothing for the 93.3% of Canadians who could not max out their contributions with the existing limit. Indexation of the TFSA annual contribution limit will be reinstated so that the annual limit maintains its real value over time.

While these three elements are what I expect will be discussed during the parliamentary debate, I would like to highlight some of the other measures that are included in today's legislation.

Today's bill proposes to change the current flat top-rate taxation rules applicable to trusts to use the new rate of 33%.

The bill sets the tax on split income to the new rate of 33%.

The bill amends the charitable donation tax credit to allow higher income donors to claim a 33% tax credit on the portion of donations made from income that is subject to the new 33% marginal tax rate.

The bill increases the special refundable tax and the related refund rate imposed on investment income of private corporations to reflect the proposed new 33% personal income tax rate.

The measures included in this legislation are a priority for this government. However, there are many unique issues that confront Canadians today. That is why reaching out and listening to Canadians is so important. We have a plan to grow the economy, and we need the input of Canadians to learn how to best implement our plan in their cities and communities.

Over the past few weeks, my parliamentary secretary and I have heard from Canadians about what we can do to help the middle class right across the country.

We asked Canadians directly how the government can support them and grow the economy. We met with people from all walks of life: business leaders, farmers, small-business owners, members of our indigenous communities, and community leaders. I also engaged with students by holding a Google hangout and two Facebook live events that attracted a total audience of more than 80,000 Canadians. I am encouraged that young Canadians have found new reasons to become engaged with their government. Our goal is to listen and engage with Canadians on the issues that are important to them, and it has, to date, been a very successful endeavour.

As part of these consultations, I was pleased to have spoken to the member for Milton and the member for Rimouski-Neigette—Témiscouata—Les Basques, my colleagues across the aisle, and I assure the House that their input will be thoughtfully considered.

Although we are both back in Ottawa now, these consultations continue online. Since the opening of the online consultations, we have already reached over 150,000 Canadians and have received over 3,000 submissions, in fact 3,400 submissions as of today, from Canadian individuals and groups, more than twice the submissions, almost three times the submissions, in fact, received last year under the previous government.

It was especially important for me to hear from Canadians about the effect the economic situation is having on them. The stories I have heard have reaffirmed for me the importance of our plan to grow the economy in the short, medium, and long term.

Collaboration is a critical element of our plan to deliver real change in a way that takes into account the priorities and opinions of Canadians. As we implement our plan, we will continue to be open and transparent every step of the way.

This legislation is an important first step to help strengthen the middle class. It puts more money in the pockets of Canadians to save, to invest, and to grow the economy, but it is just a first step. In budget 2016, the government will introduce a new Canada child benefit that will lift hundreds of thousands of Canadian children out of poverty and will help nine in 10 Canadian families with children to be better off. It will replace the universal child care benefit, which is not tied to income, and it will simplify and consolidate existing child benefits while ensuring that help is targeted at those who need it most.

Taken together, the measures we intend to introduce will help grow our economy to the benefit of all Canadians. The government will invest in our economy, in our communities, and in Canadians themselves. We will make transformative investments in infrastructure that will increase the productive capacity of our economy while improving the day-to-day lives of Canadians.

After 10 years of weak growth, we have an ambitious economic agenda to grow the economy and the mandate to implement it. It started in December with this middle-class tax cut and will continue with the introduction of the Canada child benefit and our historic investments in infrastructure over the next decade.

I encourage all members to support this legislation and to help us deliver on our plan to support the middle class and those working hard to join it.

Business of the House

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

Mr. Speaker, in spite of his best efforts, we just had a good example of embellishment right there. Why do I not focus on the very erudite question that comes on Thursdays that I know members look forward to all week.

This afternoon we will resume debate on the Conservative Party's opposition motion.

Tomorrow, the House will debate Bill C-2, which amends the Income Tax Act, at second reading, and we will continue that important debate on Monday.

Tuesday, February 2, will be another opposition day.

On Wednesday, we will debate Bill C-4, which repeals the Conservatives' unfair union bills. As colleagues know, this important legislation was introduced this morning.

Lastly, Thursday, February 4, will be another opposition day.

Opposition Motion—Energy East Pipeline Project

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Mr. Speaker, I thank the hon. member and congratulate him on his election as well.

As I mentioned in my speech, our Prime Minister made a promise in our election platform that this is the party and this is the government that is going to help the middle class. Every policy that is coming in is helping it. Bringing in Bill C-2, as I said earlier, reducing income tax from 22.5% to 20.5%, would help middle-class families. Bringing in a Canada child benefit would help the families who need the most. These are the types of policies we need, and these are the types of policies our government is going to deliver in the coming months and years.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Mr. Speaker, first, I congratulate the nominees who sit in this chair, and I am sure the constituents of Nipissing—Timiskaming are very proud of the hard and diligent work you do, not only for your constituents but for Canadians.

I am proud to stand today to speak about our government's economic agenda.

This is a difficult period for the Canadian economy. China has slowed down dramatically, and commodity prices have dropped globally. The Bank of Canada has adjusted its economic forecast and has cut interest rates twice over the last 12 months. Now, more than ever, is the time for our government to look toward long-term growth, growth that will provide good jobs for Canada's middle class, the lifeblood of our economy. This is why we introduced Bill C-2, which provides a middle-class tax cut to support Canadian families.

My constituents of Surrey—Newton are happy to finally have a government that believes that they too deserve tax relief. The Liberal middle-class tax cut will lift $3 billion in tax burden from the backs of middle-class income earners.

Bill C-2 will reduce the middle-income tax rate from 22% to 20.5%. It will also reduce the contribution limit on tax free savings accounts from $10,000 to $5,500. This will benefit about nine million Canadians, which accomplishes two important objectives. First, it will restore fairness to the tax system by treating middle-income earners on par with the highest earning bracket and corporate Canada, which received the majority of tax relief from the previous government.

Just as important, this is a middle-class tax cut that is designed to stimulate the economy. The Bank of Montreal's chief economist, Doug Porter, has stated that this tax cut will encourage an increase in consumer spending and might compel middle-class earners to work more, because they will be able to keep more of their paycheques in their pockets.

History has shown that a middle-class tax cut has one of the highest returns on investment for a government, because it spurs growth by encouraging spending in the local economy. This is why, in Surrey—Newton and across Canada, small businesses are also supportive of this measure. It means that they will see a direct positive impact.

However, this is not the only way this government is putting money back into the pockets of families. The new Canada child benefit creates a simpler, more generous, and tax-free infusion for families with children.

Investment does not stop there. We will also invest in cities, the economic engines that are critical to the success of our national economy. In Surrey Newton, we see the strain that is caused by rapid growth. The city of Surrey continues to welcome over 1,000 new residents per month, and we need to continue to improve our municipal services to accommodate this growth.

This Liberal government has committed to investing $125 billion over the next 10 years to upgrade public infrastructure and public transit. The newly proposed LRT line in Surrey is absolutely essential for strong public transit long into the future. Within the next 30 years, Surrey will emerge as the largest city in British Columbia, and easily accessible public transit is critical to that evolution.

Our government understands that investing in Canada's economy must be balanced, but it also means that we will never give up on working to get our natural resources to international markets. Our Prime Minister and this government will never forget that 1.8 million jobs are directly and indirectly attached to natural resources across Canada.

This government looks far into the future of Canada's economy and plans for long-term sustainability and growth. This will be accomplished in a number of specific ways: by ensuring that environmental sustainability is at the heart of Canada's resource sector, which will make Canadian resources globally attractive; by working with the provinces and territories to ensure that under-represented groups are represented in a new skills and labour strategy; by supporting growing firms in attracting talent and investment while still incorporating innovation in their operations; and by enhancing the Canada pension plan co-operatively with our provincial and territorial partners to ensure that all Canadians have access to a secure retirement. I cannot emphasize how important this kind of approach is to the future success of all Canadians.

In Surrey, we had the pleasure of being one of the six cities to host the hon. Minister of Finance during the pre-budget consultation tour. The minister was able to hear a wide range of perspectives from one of the most dynamic communities in Canada, and one of the key messages was this: Canada can no longer place all of its eggs in one basket. We must look for balance. We must invest in the middle class, in cities, and in different industries, and we must take the long view for our future generations.

These are the same messages we are hearing from Canadians from coast to coast to coast. We have reached nearly 150,000 Canadians in these pre-budget consultations, through technology and through in-person meetings. This is the largest participation in pre-budget consultations in Canadian history. We are proud of this inclusive approach, which will come to define everything our government does over the next four years. This is a government for all provinces, all territories, all cities, all financial profiles, all races, and all backgrounds. We are committed to listening to each and every perspective and opinion. This is why our mandate to grow the economy sustainably, responsibly, fairly, and with a long-term vision was supported in Surrey—Newton and across Canada. We will continue to show respect for every single Canadian voice as we work towards presenting our budget in the coming months.

I am proud to say that balance is back in Ottawa.

Ways and Means

[Bill Morneau, Liberal, Minister of Finance]

moved that Bill C-2, An Act to amend the Income Tax Act, be read the first time and printed.

(Motion deemed adopted, bill read the first time and printed.)