House of Commons Hansard #27 of the 39th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Oral Questions
Points of Order
Oral Questions

3:05 p.m.

NDP

Paul Dewar Ottawa Centre, ON

Mr. Speaker, during question period, the leader of the New Democratic Party posed a question to the government. In the response, the Secretary of State (Foreign Affairs and International Trade) said that the Prime Minister was meeting with the president of Russia. I think she will find, once she has clarified with the Prime Minister, that in fact the Prime Minister was meeting with Prime Minister Zubkov of Russia.

I wanted to clarify for the record and for the House that this was indeed the case.

Oral Questions
Points of Order
Oral Questions

3:05 p.m.

Liberal

The Speaker Peter Milliken

I can tell the hon. member's clarification is much appreciated.

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3:05 p.m.

Liberal

The Speaker Peter Milliken

Before oral question period, the hon. member for Argenteuil—Papineau—Mirabel had the floor to respond to questions and comments after his speech. He has five minutes remaining.

The hon. member for Jeanne-Le Ber.

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3:05 p.m.

Bloc

Thierry St-Cyr Jeanne-Le Ber, QC

Mr. Speaker, I have a question. For a long time now, the Bloc Québécois has been recommending that tax credits for research and development be refundable, especially during the current crisis in the manufacturing sector. The government claims that this represents an extremely significant tax expenditure. What the government is not saying is that unused tax credits will represent a tax expenditure one day or another. When the business in question makes a profit, it will then use these credits.

The purpose of the Bloc Québécois proposal is to allow this tax credit to be advanced and applied now, without necessarily creating a new gift for businesses, as is the case in the tax reductions for the oil companies. The last budget granted a general tax reduction.

Can my hon. colleague explain how this refundable tax credit we are proposing, instead of a general tax reduction, would be more beneficial to the industries that really need it?

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3:10 p.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I want to thank my colleague from Jeanne-Le Ber, who does such a fine job on the Standing Committee on Finance. He is quite right. The Bloc’s suggestion of a refundable tax credit is easy to understand. The tax credits proposed by the government will not do anything for the forestry and manufacturing businesses that are not profitable in these difficult times. On the other hand, a refundable tax credit would produce some income for them. If the government issues them a cheque in the amount of their tax credit for the current year, they can use it to modernize, even though they do not have any income or profits.

Once again we are faced with this Conservative trait of not understanding the real needs. It is hard, especially when the Conservative members from Quebec are incapable of rising in the House to defend the interests of their constituents and the working people who have lost their jobs or are on the verge of losing them. The crisis in the forestry and manufacturing sectors means that companies are being merged and taken over. Sawmills and other forestry operations are being shut down in our villages. We are very much aware of this.

My colleague’s proposal of a refundable tax credit rather a tax credit for future use when companies have returned to profitability would be much more effective. It would be of direct assistance to companies and would help them modernize, create added-value products and expand, rather than remaining mired in losses and penury.

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3:10 p.m.

NDP

Brian Masse Windsor West, ON

Mr. Speaker, I will follow up with a question on manufacturing. When the Minister of Finance answered a question in the House, he talked about the capital cost reduction allowance. The government has only moved on two years of the recommendation of the industry committee, of which I was a part. This is a very grievous situation. It should have been five years. Many companies have already made decisions about their original capital purchasing. They will benefit from that, which is fine.

We wanted to get the third, fourth and fifth year investments. After that, there was to be a review for a potential extension of five years. This would send a strong message. An important distinction is the equipment would get on the plant floors in the manufacturing sector of Ontario and Quebec and the rest of the country because of the capital stay, as opposed to a general corporate tax cut where that money could move offshore, as it has been doing historically.

What does my colleague think of the fact that the minister has completely disregarded this aspect, which hurts the investment strategies that need to be made today to protect jobs?

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3:10 p.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, the Bloc Québécois agrees with the NDP's position on this and defended it in committee. Capital cost allowance is still an expense. It is all very well to make it possible to amortize a purchase more quickly, but once again, only for companies that are profitable because the item is still an expense. When companies are losing money, even if they can write things off more quickly, the losses are already there and losses cannot be amortized. The losses mount even higher and nothing comes in.

That is the part the NDP forgets. It is like the Conservatives and Liberals and always thinks of profitable companies. Some of them need it too, of course, because they are on the verge of no longer being profitable. But in manufacturing and especially forestry now, we have companies that are already losing money. This requires prompt assistance programs and fresh money to invest in the company. Once again, if a company is not making any money, its problems cannot be solved by increasing its expenses.

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3:15 p.m.

Liberal

Shawn Murphy Charlottetown, PE

Mr. Speaker, I am pleased to rise today to say a few words on Bill C-28, an act respecting the March budget and the October economic update. I want to say a few things about the general direction of both these documents, or I should say, the lack of direction and the lack of vision.

We have heard a lot of talk in the House over the last number of weeks and from any group that comes to Ottawa, and any questions that are put to the Minister of Finance. Basically it is talk about tax cuts and some numbers. I want to point out to the House and to all Canadians, that I do not represent numbers. I represent people, real people who have real jobs and real families, and those people do not like what is coming out of the government.

There were certain tax cuts in the last economic statement. They should be part of what I would classify as a productivity agenda but we do not hear anything about that. The right tax cuts are very much a vital part of this productivity agenda, as is skills training, as is funding for post-secondary education, as are initiatives that reduce any constraints on the mobility of capital, labour or goods, as are innovation, science and technology. The tax cuts can be put into four classifications.

We had the corporate tax cuts, and in my opinion these were good tax cuts. The minister is to be congratulated. These tax cuts will be beneficial to Canadian companies and will help the productivity of this nation.

On the individual tax cuts there was an increase in the basic personal exemption. In my opinion, that was a good move. The $10,000 which was announced originally by the Liberal government was decreased and now it is gradually going back up. It is a step in the right direction. This move certainly benefits lower income families as opposed to higher income families.

The individual tax rate cut from 15.5% to 15% was basically a removal of a tax increase which occurred one year ago when the tax rate was increased from 15% to 15.5%. Now it is being decreased from 15.5% to 15%, so really, it is an insignificant event.

Most of the money in the tax cuts came from cuts to the GST. I believe that every living, breathing economist in Canada would suggest that this is absolutely the wrong direction. It does absolutely nothing for productivity. It is inflationary. It is certainly geared toward the higher income Canadian. Again, it is something I do not think should have happened at all and I believe history will bear me out.

People expect more from a federal government. The situation in Canada is the agenda of the government of the day is to allow each of the 13 provincial or territorial jurisdictions to erect a firewall or a moat around their particular jurisdiction and have their programs and policies geared to the particular ideology of the government of the day. As such, the federal government has no role, other than in aboriginal affairs, fisheries and immigration. It has no role in the lives of Canadians. That is not my vision of Canada at all. That is not the vision of the people that I represent.

Over the last three or four weeks, we MPs have met a lot of people visiting Ottawa. A lot of sectors have come to Ottawa to meet with us, to talk to us and to plead with us for more assistance.

The manufacturing sector has been to Ottawa. We have lost 90,000 jobs in the manufacturing sector this year alone as a result of the Canadian dollar and the movement of jobs to other jurisdictions. The answer we get from the Minister of Finance is that we have tax cuts.

Well tax cuts just do not cut it for those 90,000 people who have lost their jobs, or for those who think they may lose their jobs, or a mayor or city councillor who represents a city or town that has lost a lot of jobs in the manufacturing sector.

Last week many representatives from the Federation of Canadian Municipalities were here. This is a very important component of Canadian society, especially the large capital regions. They actually drive the economy. They are looking for assistance in immigrant settlement, in skills training, in research, in post-secondary education, in early childhood development. Most important though, they are looking for assistance in infrastructure. We have heard their pleas. There is a $123 billion infrastructure deficit.

I am pleased to be part of a previous government that did respond. It was not a total response to the plight of cities and municipalities, but it was a very good response with the gas tax rebate, the GST rebate, the municipal and rural infrastructure program and the strategic infrastructure program. These were starting to make a big difference.

There is a new package coming out. I call it re-gifting. The government has taken the bundle and put it in a much smaller box and put a big bow on it. Instead of being over three years it is over seven years, and it is approximately 50% of the previous programs.

No one should think that the mayors and city councillors are being fooled as a result of this announcement. These people have to go back to their constituents and they have to get re-elected. They know exactly what is going on.

These people were in Ottawa last week and they met with the Minister of Finance. They were told three things. The first thing they were told was that the government is not in the pothole business. The second thing they were told is that they should stop their whining. The third thing they were told is that they should go home. They are going home, but I do not think they are going to be quiet.

Over the last three weeks we have met with two separate pan-Canadian organizations representing students at our post-secondary institutions. They pleaded with politicians to do something about their plight. A country is only as strong as its educational system. We know the debt crisis that some of these students are facing. They did meet with the politicians and they did meet with the government, but they went home empty-handed. They were told about these tax cuts.

The week before last, several of the agricultural sectors were in Ottawa. Not in all, but in certain sectors, farmers across Canada are having a very difficult time, especially the beef and pork producers. In fact, in my career here, I have never seen the pork industry in worse shape. It is facing a perfect storm. There is the high Canadian dollar, feed costs are going through the roof, and other import costs are increasing dramatically. Also, the price of their final product is at an all time low. The primary producers are shutting down in record numbers.

I want to quote one of the leading producers from my province, Mr. Eddie Dykerman, a Prince Edward Island farmer from the Canadian Federation of Agriculture:

At a time when the federal government is basically embarrassed by its surplus...it's a big disappointment that something couldn't be done for agriculture when people are actually walking off their farms and losing their houses and their way of living and everything else...

A lot of farmers who are closing their farms, especially in the pork sector, have been third, fourth and fifth generation farmers. They are very efficient farmers but they are caught in this perfect storm, and again, we have a government that is doing absolutely nothing.

I recall three or four years ago, when the Conservatives were in opposition they were talking about agriculture. Now that they are in government, we are seeing absolutely nothing. I, like most Canadians, especially the Canadians in these sectors, am extremely disappointed.

The list goes on and on. What did the aboriginal people see in Bill C-28? What did they see in the previous budget? Did the people who are concerned about climate change and about the environment see anything in either of these two documents? Students and poor people saw nothing. The list goes on and on.

That is the direction in which we are heading. The Prime Minister announced that he intends to introduce legislation in the House putting constraints on the federal government's spending power. This power was used by successive governments of various political stripes to develop, to maintain and to enhance social programs, such as medicare, employment insurance, the Canada pension plan, the child tax credit, the old age pension, the old age security, et cetera. Those programs responded to the needs, the hopes and the dreams of Canadians from coast to coast to coast.

However, we have a government now that is prepared to put a moat or a wall around each jurisdiction and that is prepared to introduce legislation in the House that would restrict the power of any future government to develop any programs like medicare, like the Canada pension plan and like old age security. Let me say right here and now that is not my vision of a strong federal government.

In Canada, we need a federal government that speaks for every Canadian, regardless of where they live or in which sector they are involved, but as a pan-Canadian vision. I do not see that in the policies, the programs and the initiatives that are coming forward in either Bill C-28 or in any other legislation that has been introduced in the House.

I will get questions at the end of my speech and I hope I do because it will give me an opportunity to expand on some of the points I raised.

In the House, the Prime Minister issues talking points and the Conservatives will be talking about 13 years. I will address that right here and now.

I was a member of Parliament on that side of the House for the last five years of that government and that government has a tremendous record. When it came to power, the annual deficit was $43 billion.

We had a Conservative government in power for nine years. Interest rates were at 12% and unemployment was at 11%. The debt to GDP ratio was at 73%. The world monetary bank had an active file monitoring this country. We were basically under active engagement with that world organization. We were down to days before this country would have been broke. I say that the country would have been broke, not the prime minister, Mr. Brian Mulroney. He was not going broke, according to the media reports and what I am hearing in the House right now. It was the country. We need to make that distinction before we go any further. It was not Brian Mulroney.

We did respond to the needs of Canadians. We developed a lot of assistance for the cities, the towns and the communities. We had the gas tax agreement, the municipal rural infrastructure program, the strategic program and other programs that assisted the cities, because there was in Canada a real imbalance developing between the cities, that level of government, and the other levels of government.

There were dramatic increases in the amount of research moneys going to not only post-secondary institutions but other foundations. We developed a program of early childhood development. We substantially increased maternity benefits for families. We developed the child tax benefit, which, in my opinion, was probably one of the greatest social programs ever developed in this country. We also increased the guaranteed income supplement.

I could go on and on. However, I do want to clarify that the Liberal government did have problems at first. When we were left with a $43 billion deficit from the Mulroney years, we had to make tough decisions. Yes, we made tough decisions but we did respond to the needs of Canadians. That will answer any questions that members on the opposite side have.

We also introduced $100 billion in tax cuts that again responded to the productivity agenda of this country.

I am disappointed in the direction the government is taking.

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3:30 p.m.

Conservative

Mike Lake Edmonton—Mill Woods—Beaumont, AB

Mr. Speaker, while listening to my hon. colleague, it was interesting to hear him refer to some of the challenges faced by cities. I would point out that our government has provided record amounts of infrastructure funding for provinces and cities. I would also point out that we have provided record increases in federal funding for post-secondary education, an issue that he raised. It is an interesting contrast, particularly to the Liberals, who, as he mentioned, cut $25 billion in transfer payments to the provinces.

However, the Liberals did have priorities. They did find millions of dollars to run Liberal campaigns during that same time. It was good to know that they at least had some priorities back then. Right now they apparently have a little difficulty with priorities and decisions, as evidenced by their lack of ability to make decisions on which way to vote, for example, on important issues facing the country right now.

I have a couple of questions. First, now that the hon. member has had time to think about how to vote on this fall economic update, will he vote yes or no?

Second, his leader and several other key Liberal members have mused openly about raising the GST from 5% to 7%. I would be curious to hear, again, in a yes or no answer, with no dancing around, what he is feeling on this. Is he in favour of raising the GST from 5% to 7%?

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3:30 p.m.

Liberal

Shawn Murphy Charlottetown, PE

He could have just asked me over here, Mr. Speaker. He did not need to get up on his feet.

I have a couple of points on that. On the infrastructure, I want to point out that the package announced by the Conservative government is a re-gifting. It has taken all the Liberal programs and put them in a package that adds a bit of money. The original programs were over three years but it has extended it over seven years. It is re-gifting but it is re-gifting in a much smaller box with a bigger bow.

Some people in this chamber might be fooled but I would suggest that they go back to their ridings this weekend and talk to their mayors and city council and I assure everyone that they are not fooled. They have to stand for re-election so they know exactly what they are being presented with. They know that there is a $123 billion infrastructure deficit in this country and that the government is not responding to it.

I would repeat the comment the Minister of Finance made to municipal leaders. He said, “we're not in the pothole business”, stop “whining” and go home.

On the issue of voting, we will decide when and at what time the Canadian people want an election. We are certainly talking to Canadians and we will let the hon. member know in the fullness of time.

As to the point on the GST, there is absolutely no indication from my party that we would be raising the GST.

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3:35 p.m.

NDP

Bill Siksay Burnaby—Douglas, BC

Mr. Speaker, I am a little surprised that the member is disappointed in these financial statements. His lack of a vote would have led me to believe that he was not so disappointed with where the government was going on this measure.

I also find it a little strange that he is disappointed in the corporate tax cuts that the Conservatives proposed since his own leader proposed exactly the same tax cuts. In fact, a lot of people think that the challenge from the Leader of the Opposition led the government to the lengths that it went in the budget, to go even lower in terms of the corporate rate, and that he in fact gave them permission to do so.

I am really concerned about the gutting of the fiscal capacity of the government by these massive corporate giveaways to big oil, to the big banks and to the wealthy in Canada. It is undermining our ability to address program needs, like the ones he talked about, like students, the need for post-secondary education, the infrastructure needs that are very serious all across the country and like the agriculture programs that he seemed so concerned about.

I am also concerned about the financial planning that the government is doing that eliminates the surplus from any reasonable consideration of the needs of Canadian society. It is always a big surprise and it is always automatically turned right over to the debt. We agree, money should go to pay down the debt, but not all of the surplus should go to that and it should be involved in the financial planning process in this place and in government. It seems that the Conservatives have adopted the same policy with regard to that as the Liberals did.

Why would the member be so disappointed in the economic statements when they follow the exact same planning path that the Liberals adopted? Why would he not adopt his party's own policies?

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3:35 p.m.

Liberal

Shawn Murphy Charlottetown, PE

Mr. Speaker, I may not have made myself absolutely clear but on the corporate tax cuts I am not disappointed. In fact, I congratulate the government. I think the cuts are very much a part of the productivity agenda and I think they are good. I said that in my opening remarks and I thought I had been clear.

These corporate tax cuts are not a major part of the overall tax cut package. The most significant part is the cut in the GST. As I explained in my remarks, that cut is inflationary, it is the wrong way to go and it is much more beneficial to higher income Canadians versus lower income Canadians.

Under the capacity of the federal government, I agree with what the member said. People from across Canada are looking to the federal government to respond to some of their concerns in the sectors, whether it is the manufacturing, agriculture or farming sectors or students. Certain sectors in Canada right now are suffering and it is incumbent upon the federal government to at least talk with them and, if there is a legitimate case, to respond to their concerns.

On that very point, this is something that will be debated in the House, but the announcement by the Prime Minister that he intends to introduce legislation to constrain federal spending powers, which governs successive political stripes used to develop medicare and the Canada pension plan, that will be gone if the legislation passes, and that would be very regrettable.

As people watch this, I have one comment. What would Sir John A. Macdonald, Lester Pearson or Tommy Douglas think if we were to do that?

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3:35 p.m.

Conservative

Leon Benoit Vegreville—Wainwright, AB

Mr. Speaker, I have always had a great deal of respect for the hon. member. His comments are interesting but he did provide a lot of revisionist history today that simply is not accurate.

For example, he talked about our $160 billion in tax reductions and criticized it in so many different ways. He talked about the $100 billion that his government, he claimed, put in place, but he forgot to talk about the fact that it increased taxes in other areas and the net tax reduction was very minimal indeed.

However, I want to ask the member for his comments on the hog and beef sectors of agriculture being hard hit by so many things going wrong at once. Our government fully recognizes that. With most of the members of the Conservative Party being from rural areas, of course we understand that fully. Our agriculture minister and our party are doing everything we can to deal with what is an extremely difficult issue and not one that can be effectively dealt with, quite frankly, to be completely honest about it. The high dollar simply makes it far more difficult for hog and beef producers to compete. The dollar increasing so rapidly is the biggest part of the problem, that along with increased import costs.

I acknowledge that the member is absolutely right on that issue but not when he says that our government is not doing anything about it because we are doing more than any government in the past has.

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3:40 p.m.

Liberal

Shawn Murphy Charlottetown, PE

Mr. Speaker, I disagree with the member across that it cannot be dealt with. I am not going to suggest for a minute that I am blaming the government for the rise in the Canadian dollar. We all know that is basically outside the control of one government. However, there are programs that should be looked at for the hog industry. It is a perfect storm; I have never seen it worse.

I have seen sectors go through very difficult times, but this is probably the worst I have ever seen. These people are walking away from their farms. They are losing their farms. Time is very much of the essence and I plead with the government to provide assistance to this sector immediately.