House of Commons Hansard #45 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Business of the House
Oral Question Period

December 14th, 2004 / 3 p.m.

Conservative

John Reynolds West Vancouver—Sunshine Coast, BC

Especially, Mr. Speaker, since we already made it Friday.

I would like to ask the government House leader if he could tell the House what we will do on January 31 when we come back here, so we can get primed. We know we will have a very busy vacation, and hopefully we will all get a bit of a rest.

We are anxious to come back. We would like to know what we will do for that first week.

Business of the House
Oral Question Period

3 p.m.

Hamilton East—Stoney Creek
Ontario

Liberal

Tony Valeri Leader of the Government in the House of Commons

Mr. Speaker, when the House returns, it will take up the business that normally would have been debated for most of the second half of this week, namely the annual prebudget debate itself. We will then turn to bills that have been reported from committee or introduced in the last few days.

Thursday, February 3 will be an allotted day.

I would also like to take this opportunity to congratulate the Speaker as the longest serving member for Kingston and the Islands since Confederation.

Business of the House
Oral Question Period

3 p.m.

Some hon. members

Hear, hear!

Business of the House
Oral Question Period

3 p.m.

Liberal

Tony Valeri Hamilton East—Stoney Creek, ON

I have one more thing. I would like to wish all parliamentarians and all Canadians from coast to coast to coast a very merry Christmas and a happy holiday.

Budget Implementation Act, 2004, No. 2
Government Orders

3:05 p.m.

Wascana
Saskatchewan

Liberal

Ralph Goodale Minister of Finance

moved that Bill C-33, a second act to implement certain provisions of the budget tabled in Parliament on March 23, 2004, be read the second time and referred to a committee.

Budget Implementation Act, 2004, No. 2
Government Orders

3:05 p.m.

Scarborough—Guildwood
Ontario

Liberal

John McKay Parliamentary Secretary to the Minister of Finance

Mr. Speaker, I appreciate the opportunity to speak on Bill C-33, the budget implementation act, 2004, for second reading today. The bill implements many of the income tax measures that were introduced in the 2004 budget. It also contains proposed legislation included in the budget related to the air travellers security charge and a sales tax agreement between the Government of Quebec and certain interested Indian bands.

I will touch on each of these issues in more detail, but first I would like to begin my remarks with a brief overview of the 2004 budget, which will provide the context for the measures in this bill.

Budget 2004 was introduced as a focused budget with two clear objectives. One was to provide responsible and prudent financial management and the other was to give tangible shape and focus to the vision, presented in last February's Speech from the Throne, of strengthening Canada's social foundations, building a 21st century economy and restoring Canada's place of pride and influence in the world.

This ambitious agenda includes: living within our means by balancing the books, controlling spending, continuing to reduce debt, and enhancing financial management and accountability; giving Canadians greater means to enhance their well-being by taking important new steps in key areas such as health care, learning and communities; and giving Canadians the opportunity to succeed, to enlarge their ambitions and pursue their dreams.

Prudent budget planning has been the cornerstone of Canada's economic track record in recent years. This approach has allowed the government in budget 2004 to take realistic but far-reaching action to build a new agenda for Canadian achievement.

It is, however, an agenda for a government that lives within its means, providing better value for the taxpayer's dollar while making investments needed to help Canadians enhance their well-being and the well-being of their families.

This brings us to the legislation that is before us today. Bill C-33 is comprised of three main parts: amendments to the Air Travellers Security Charge Act; amendments to the First Nations Goods and Services Tax Act; and amendments to the Income Tax Act and related acts. If I may, I would like to outline those measures, beginning with the air travellers security charge.

As hon. members will recall, in response to the events of September 11, 2001, the December 2001 budget allocated $7.7 billion through 2006-07 for a comprehensive plan to enhance personal and economic security for Canadians. This amount included $2.2 billion to make air travel more secure in accordance with rigorous new national standards, including the creation of a new federal air security authority, the Canadian Air Transport Security Authority.

At the time the air travellers security charge was announced, the government indicated that it would review the charge over time to ensure that revenue remains in line with planned expenditures for the enhanced air travel security system through 2006-07.

Following up on this commitment in budget 2003, the government reduced the charge on round trip domestic air travel to $14 from $24, a reduction of 40%.

Based upon updated revenue and expenditure projections, this budget proposes further reductions as follows: for air travel within Canada, the charge is reduced to $6 from $7 for one way travel, and to $12 from $14 for a round trip; for trans-border air travel, which essentially includes travel between Canada and the U.S., the reduction is to $10 from $12; and for other international travel, it is down to $20 from $24.

These reduced charges would apply to tickets purchased after April 1, 2004. The government will continue to review the charge over time to ensure that the revenue from the charge remains in line with the expenditures on the enhanced air travel security system.

The second part of the bill deals with first nations people. The government has expressed its willingness to put in effect taxation arrangements with interested Indian bands. To date the government has entered into taxation arrangements allowing nine first nations to levy a tax on on-reserve sales of fuel, tobacco products and alcoholic beverages. Canada and the eight self-governing Yukon first nations have entered into personal income tax collection and sharing agreements.

In 2003, the government introduced legislation to provide authority to interested first nations to levy on their lands a first nations goods and services tax that is fully harmonized with the federal goods and services tax. The government is also prepared to facilitate the establishment of taxation arrangements between provinces, territories and interested first nations.

In that regard, Bill C-33 proposes amendments to the first nations goods and services tax to facilitate the establishment of taxation arrangements between the Government of Quebec and interested first nations bands situated in Quebec.

The purpose of this initiative is to help those first nations achieve a greater degree of self-reliance and self-government. Hon. members may be assured that this government remains willing to work with interested first nations on putting these types of arrangements in place.

Part 3 of Bill C-33 introduces a number of income tax measures. Time does not permit me to describe all the measures contained in the bill. I would, however, like to outline some of the initiatives that are integral to the government's priority of ensuring that we have a fair and effective tax system.

For example, in Bill C-33 we introduce tax relief for Canadian Forces personnel and police deployed to international high risk operational missions. We improve tax fairness for persons with disabilities and those who care for them. We make the tax system fairer and improve the tax treatment of small businesses. We introduce a new regulatory regime for registered charities.

If I may, I would like to discuss the measures with respect to Canadian Forces personnel, which provide tax relief for Canadian Forces personnel and police deployed in international high risk operational missions.

Canada's military and police serving on international missions provide testimony to Canada's commitment to world peace and stability. They serve on important missions around the globe, working in partnership with the United Nations and our NATO allies. The budget provides special recognition of these brave Canadians.

Effective January 1, the employment income that these individuals earn while deployed on those missions will be exempt from income tax. This tax relief will apply on income up to the highest level of pay earned by a non-commissioned member of the Canadian Forces. It is important to note that this tax initiative includes the extension to additional missions announced on April 14, 2004.

The Government of Canada views greater inclusion of Canadians with disabilities as a national priority. Greater inclusion contributes not only to the well-being of persons with disabilities themselves, but also to the life and economy of the communities in which they learn, work and volunteer.

That is why budget 2004 includes measures to help persons with disabilities, building on past actions taken by the government. Specifically, this includes provisions to allow caregivers to claim more of the medical and disability related expenses they incur on behalf of dependent relatives and to allow a tax deduction for the costs of disability supports required for employment or education, such as talking textbooks or sign language interpreters.

The second measure acts on an early recommendation of the technical advisory committee on tax measures for persons with disabilities.

The government recognizes that entrepreneurs and small businesses are a key source of economic growth and job creation in Canada. The initiatives contained in the bill reflect the government's commitment to helping entrepreneurs and small businesses succeed through supportive tax, regulatory and contracting policies.

It is important to mention that the suggestions from entrepreneurs and small businesses have formed an important part of the budget consultation process over the years. Indeed, the government welcomes all suggestions that support the emergence and growth of small businesses in Canada.

I will briefly touch on two of the income tax related measures contained in the bill that affect small business.

First, the government recognizes that it can sometimes take many years before new businesses begin to earn profits. Small businesses have submitted representations that the existing seven year carry-forward period for business losses is not long enough, particularly for new businesses undertaking risky ventures.

In response to that concern and to provide additional support, particularly in the small business sector, this bill proposes to extend the non-capital loss carry-forward period of all taxpayers to 10 years.

Second, hon. members may be aware that a lower federal corporate tax income rate of 12% applies on qualifying small business income.

This bill proposes a measure to help small businesses retain more of their income for reinvestment and growth. Accordingly, the bill accelerates a previous initiative to increase the amount of eligible income for the 12% small business tax rate provided to small businesses.

This means that small businesses will have access to a $300,000 limit by 2005, two years sooner than previously announced.

Canadians depend on community based non-profit organizations that have activities as diverse as education, culture, the arts, the delivery of social services, faith, international aid, health, and the environment.

Although some of these charitable organizations rely on volunteers while others have paid employees, they are similar in that they work for the greater good of communities of all sizes in every region of the nation. In recognition of their contribution to the well-being of Canadians, budget 2004 contains a number of initiatives that benefit the voluntary sector of the social economy.

The 80,000 charities registered under the Income Tax Act form a significant part of Canada's voluntary sector. These charities deliver social services and financial support tailored to meet the diverse needs of individuals and communities. Canadians recognize the value of charitable giving and the important contribution that Canada's registered charities make toward improving quality of life.

Canadians must be able to donate to charities with full confidence that their moneys will be spent on charitable programs and services. Registered charities, for their part, need to know that the rules are clear and are administered fairly and transparently. They must also have the flexibility to effectively manage the gifts entrusted to them by Canadians.

Budget 2004 proposes significant changes to the tax rules for registered charities that will help advance these goals. Let me explain.

First, the budget responds to the 75 recommendations of the joint regulatory table, a key component of the voluntary sector initiative that was launched in 2000 by the government. These recommendations relate to the improvements to the rules governing charities under the Income Tax Act.

Budget 2004 responds to the large majority of these recommendations concerning registered charities by proposing: first, a new compliance regime; second, a more accessible appeals regime; and third, improved transparency and more accessible information.

The government will invest $12 million a year to implement these reforms.

This is not all that the 2004 budget measures contained in Bill C-33 offer to assist charitable organizations. The bill also takes important steps to improve the rules that determine the portion of charitable donations that registered charities must devote to delivering charitable programs and services, including proposals to support more effective gift management practices by charities. These proposals will help ensure that capital endowments can provide a stable and sustainable flow of funds for the delivery of charitable programs and services.

Finally, as I mentioned at the outset, budget 2004 was introduced as a focused budget plan with two clear objectives, one to provide responsible and prudent financial management and the other to give focus to the vision of strengthening Canada's social foundations and building a stronger economy.

The vicious cycle of chronic deficits has been shattered and Canadians now enjoy the benefits of a virtuous circle. This has led to increased confidence in the Canadian economy, lower interest rates and the robust growth of well-paid jobs.

As the Prime Minister said in the response to the October Speech from the Throne, “The virtuous cycle enables us to lower taxes in an equitable way and to invest in social programs. We will continue in this vein.”

The measures contained in this budget before us today speak to the Prime Minister's words. Therefore, I urge all hon. members to support Bill C-33.

Budget Implementation Act, 2004, No. 2
Government Orders

3:20 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, I thank the member for highlighting the elements of the implementation bill.

I am seeking some amplification on one item from the member. It has to do with the corporate tax points on the extension of the non-capital loss carry forwards from, I believe it was seven years to 10 years.

This matter had been discussed for a number of years, even back when I was on the finance committee in the early 1990s. It had to do with whether or not the public was to be on the hook for mismanagement of corporations any further than the seven years. It was a matter of how many years was reasonable to take into account. It could be economic downturn or extraordinary circumstances which businesses were not able to protect themselves against.

There is this question at some point in time that businesses may have made bad business decisions, may have experienced mismanagement, the cost of which effectively would be transferred more to the taxpayers than otherwise would because of the extension.

I wonder if the member could give us a little insight as to why there is the extension to 10 years.

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

Liberal

John McKay Scarborough—Guildwood, ON

Mr. Speaker, the hon. member raises a good question and one which deserves a full answer.

The answer is that a loss is a loss is a loss. Whether the loss occurred because of a downturn in the economic cycle, whether it became a loss because of poor planning, or whether it became a loss because of poor management, it is still a loss. I do not know that the Income Tax Act actually recognizes why people lost money, but they did in fact lose money.

The only extension is the additional three years and whether the losses that occurred in the previous seven years had to do with poor management, poor planning, or whatever, I think the same losses apply to the previous seven years as do now apply to the additional three years.

I hope that is a response to what was a thoughtful question. The member has literally served on the finance committee for years and years and has made a major contribution to the function of that committee.

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

Liberal

Don Boudria Glengarry—Prescott—Russell, ON

Mr. Speaker, I rise on a point of order. Earlier this morning the procedure and House affairs committee met and adopted a report and I would like to seek unanimous consent to present it.

I understand there has been discussions among all the parties in the House and agreement so that I could table the 20th report of the Standing Committee on Procedure and House Affairs.

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

The Speaker

Does the hon. member for Glengarry—Prescott—Russell have the unanimous consent of the House to revert to presentation of committee reports?

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

Some hon. members

Agreed.

Committees of the House
Routine Proceedings

3:25 p.m.

Liberal

Don Boudria Glengarry—Prescott—Russell, ON

Mr. Speaker, I have the honour to present, in both official languages, the 20th report of the Standing Committee on Procedure and House Affairs regarding changes to the Standing Orders.

The House resumed consideration of the motion that Bill C-33, A second Act to implement certain provisions of the budget tabled in Parliament on March 23, 2004, be read the second time and referred to a committee.

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

Conservative

Loyola Hearn St. John's South, NL

Mr. Speaker, I listened with interest to the hon. member's speech. One of the things which he brought out quite clearly was that mistakes of the past should not be visited upon the future, as we would say, and that we always try to improve our legislation to make sure that any wrongdoings in the past are corrected. I agree with the member on that.

In light of that, I will ask him, has he now changed his mind in relation to the fact that poor interpretations of regulations in the past have seen provinces, particularly resource rich provinces, being robbed of their resources? Should commitments to change be done as soon as possible to make sure that these benefits go to the people who are deserving in the first place?

Budget Implementation Act, 2004, No. 2
Government Orders

3:25 p.m.

Liberal

John McKay Scarborough—Guildwood, ON

Mr. Speaker, I did not realize that the hon. member was so interested in my speech. It is unique on his part.

He has asked something of a generic question which I am having trouble relating to my actual speech. Assuming that somewhere in it there is some relationship to the actual question asked, I would not claim perfection for the government. I am sure that my hon. colleague would similarly see that this is not a perfect government. However, my argument would be, and I doubt my hon. colleague would agree, that this is a good government. When we see errors, egregious mistakes, things that could be done better, we do respond in an expeditious fashion. I am sure my hon. colleague would agree with that.