House of Commons Hansard #151 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was companies.

Topics

Agriculture and Agri-Food
Committees of the House
Routine Proceedings

12:20 p.m.

Some hon. members

Agreed.

Agriculture and Agri-Food
Committees of the House
Routine Proceedings

12:20 p.m.

Conservative

The Acting Speaker Andrew Scheer

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Agriculture and Agri-Food
Committees of the House
Routine Proceedings

12:20 p.m.

Some hon. members

Agreed.

Agriculture and Agri-Food
Committees of the House
Routine Proceedings

12:20 p.m.

Conservative

The Acting Speaker Andrew Scheer

(Motion agreed to)

Opposition Motion--Finance
Business of Supply
Government Orders

May 10th, 2007 / 12:20 p.m.

Liberal

Scott Brison Kings—Hants, NS

Mr. Speaker, the NDP member likes to present this as some sort of battle between Main Street and Bay Street when in fact all Canadians, regardless of where they live, benefit from head office jobs here in Canada. Why does she believe it is a good thing for Canadian companies to pay tax when companies in the U.S., Japan and Europe do not pay tax?

Why does she believe that it is in our long term economic interests, and I am talking about all Canadians regardless of where they live, to lose head office jobs in Canada? How can she justify her position on this issue, which is one that would essentially destroy Canadian competitiveness in jobs, and at the same time demand that governments take action to stop international takeovers of Canadian corporate assets?

I questioned her economic capacity earlier because of the fact that she represents an economic position on one hand where she is saying that we must stop foreign takeovers of Canadian corporate assets when in fact she supports a policy by the government to encourage foreign takeovers of Canadian corporate assets to destroy Canadian jobs and to hurt people on Bay Street and Main Street.

Why is she supporting Wall Street in her assertion that we should actually help the big takeover artists on Wall Street take over Canadian companies? Why is she supporting--

Opposition Motion--Finance
Business of Supply
Government Orders

12:25 p.m.

Conservative

The Acting Speaker Andrew Scheer

The hon. member for Winnipeg North.

Opposition Motion--Finance
Business of Supply
Government Orders

12:25 p.m.

NDP

Judy Wasylycia-Leis Winnipeg North, MB

Mr. Speaker, whenever anyone disagrees with a Liberal, that Liberal needs to put down the other person by suggesting that the person knows nothing about the economy. That has certainly been the strategy of the member for Kings—Hants who probably should be a little more guarded in his comments given his e-mail of November 22, 2005 dealing with the income trust file.

I would suggest that the member and his party consider the error of their ways on these two files, income trusts and interest deductibility. They should consider the following question. Why would Canada give up tax revenue to create economic activity and tax revenue in other countries? It would be to increase the profitability of Canadian banks that already are rolling in profits to the tune of $19 billion.

If the member is so concerned about the questions pertaining to other countries' taxation policies, he should be standing in the House today and making the recommendation that we start taxing corporations on a worldwide basis, something that he fails to consider. He never considered it when he was in the Conservative government and has never considered on the Liberal benches.

Opposition Motion--Finance
Business of Supply
Government Orders

12:25 p.m.

An hon. member

He's consistent.

Opposition Motion--Finance
Business of Supply
Government Orders

12:25 p.m.

NDP

Judy Wasylycia-Leis Winnipeg North, MB

He is consistent, as my colleague points out. However, I think it is high time that we recognize the exact purpose of these measures and the motives behind the Liberals' motion.

Opposition Motion--Finance
Business of Supply
Government Orders

12:25 p.m.

Liberal

Yasmin Ratansi Don Valley East, ON

Mr. Speaker, I will be splitting my time with the member for Kings—Hants.

I rise in the House today to speak to the Liberal motion, which reads:

That...the government's mistaken policies with respect to interest non-deductibility and income trusts are making it increasingly difficult for Canadian businesses to succeed internationally, while making Canadian businesses increasingly vulnerable to foreign takeovers, thus putting Canadian jobs, head offices and investment at risk....

Budget 2007, the second Conservative budget, contains what the former chairman of the Canadian Tax Foundation, Allan Lanthier, called “the single most misguided policy to come out of Ottawa in 35 years”.

I am not referring to the disaster caused by the Conservatives in the income trusts sector last October. I will return to that issue later. Rather, I refer to the tax measure tucked away on page 242 of budget 2007 regarding interest deductibility and foreign affiliates. It would easily throw a major hurdle in front of Canadian firms who want to make foreign acquisitions by removing the interest deductibility from money borrowed to carry out those transactions.

As I was listening to the member for Winnipeg North, I was flabbergasted by her lack of knowledge to the fact that it is the small and medium size enterprises that create jobs, that are in an expansion mode and in a growth mode. Those are the businesses that create jobs. Why would she be against those corporations trying to expand? Where would her constituents find jobs? Who creates those jobs?

While the Conservatives may fancy themselves as a party of free enterprise, the fact is that the Minister of Finance has no credibility. I would refer to the article by their biggest supporter, Diane Francis, talking about the total incompetence on the cabinet benches of the Conservative government.

As we move forward and we look at who the real job creators are, the engine of competitiveness, we destroy them by removing that interest deductibility. The Canadian Council of Chief Executives, Tom d'Aquino, has said that the decision to remove this deductibility may seriously undermine the competitiveness of Canada's homegrown champions, the companies that are most active and most successful in building global businesses from head offices in Canada.

I would hardly call that faint praise for a budget that is ironically entitled “Aspire”. What does it aspire? Does it aspire to remove the economic security of Canada? Does it aspire to destroy Canadian companies? That is what interest deductibility does.

We live in a global competitive world. We need to be smart and let our companies, the small and medium size enterprises, which are in expansion mode, expand.

I am afraid that what the Minister of Finance calls a tax loophole is actually a competitive edge for Canadian firms to compete globally on an even playing field with firms enjoying similar tax measures in the United States, Japan and Europe. It is beyond me why the minister is so determined to hobble the Canadian economy.

According to tax specialist, Neal Armstrong:

it is typical for a Canadian parent company to arrange most of its borrowing in Canada, then use the funds to invest in foreign acquisitions.

However, the Conservatives want to take this tool away from business. It makes no sense whatsoever.

As Mr. Armstrong points out, the result is that Canadian banks will lose income from those loans and in turn the government will lose the tax benefit from that income.

Mr. Armstrong goes on to say:

And that doesn't do us any good, because the bank in the foreign country isn't paying any [Canadian] tax.

What should businesses in Canada expect from the proposal of the Minister of Finance?

Tax specialist, Karen Atkinson, predicts that many companies will have to “jump through hoops” to create financing structures, calling the finance minister's proposal a “make-work project for lawyers and accountants”. Is that what we want to do? We must remove red tape in order to make our companies competitive. We do not need to hobble these companies.

Len Farber, a former senior official at the Department of Finance, is equally baffled by the proposal. According to Mr. Farber, what the minister calls double dipping is what gives Canadian corporations the competitive edge internationally. He suggests that the minister could have the measure apply to only foreign multinationals operating in Canada but exclude Canadian companies. That is why the Liberal motion today calls on the Minister of Finance to rethink his strategy and enter into meaningful consultation.

At this stage, I would like to congratulate my hon. colleague, the member for Markham—Unionville, who has done a splendid job in bringing this issue to the attention of all Canadians. The hon. member is a well-recognized economist and former minister who eloquently points out that:

[It] is not that we should oppose foreign ownership, but that we should oppose tax measures that tilt the playing field in favour of foreign companies and at the cost of homegrown Canadian companies.

This is not the first major misstep by the Minister of Finance. I am still receiving desperate letters and phone calls from constituents in Don Valley East who took the Conservatives at their word when they made an election promise to not tax income trusts.

Thousands of investors, many of them seniors, lost the bulk of their retirement savings because of this finance minister, when he broke his promise in October last year. What are my constituents going to aspire to when half of their savings have been wiped out by the Conservatives' incompetence?

Sadly, it is a fact that many of the Prime Minister's cabinet just do not have any experience in the business world. The result is simply bad policy and bad business environment.

Instead of tapping into this country's entrepreneurship, the Conservatives are hobbling Canadian businesses. Instead of being proud Canadians, being economically independent and competing in the global market, we are hobbling our Canadian companies, our pride, our enterprise, and our ability to create and maintain jobs.

Instead, we are now becoming economically dependent on other countries and foreign takeovers. In the past few weeks we have seen foreign takeovers by China, the United States and India. Where are the high-paying jobs going? They will go south, or anywhere, except stay in Canada.

The policy of non-deductibility is not a very intelligent policy and I would like to urge the government to rethink it.

Opposition Motion--Finance
Business of Supply
Government Orders

12:35 p.m.

Conservative

Chris Warkentin Peace River, AB

Mr. Speaker, I would like to ask the member across the way if she agrees with the Ontario finance minister. I know that there has been some discussion about income trusts for some time. Obviously the finance minister made an effort to ensure tax fairness.

I will just read what Greg Sorbara, who is currently the Liberal Ontario finance minister, said in a letter he wrote to the committee:

“I'd like the committee to know in principle that the Government of Ontario supports the federal government's efforts to ensure fairer taxation through changes to the tax treatment of income trusts. We believe that these changes will protect the federal and provincial revenues from significant tax leakage. Ontario supports federal transition rules as they appear to be flexible enough to allow trusts to proceed with reasonable growth while ensuring that there is no unfair advantage over the transition period. It's an example of sometimes, when you're in government, you just have to do what you think is right”.

I wonder if the member across would agree with her provincial Liberal counterpart or if in fact she would disagree?

Opposition Motion--Finance
Business of Supply
Government Orders

12:35 p.m.

Liberal

Yasmin Ratansi Don Valley East, ON

Mr. Speaker, it just amazes me how very uninformed the Conservatives seem to be on economic matters.

When they make a promise to constituents, to Canadians, that they will not tax income trusts, and then they break that promise, there is no trust left of the Conservatives by Canadians. Seniors have lost money. It is seniors we are talking about. Where is the social justice? That is incompetence to the hilt.

Then we go and hobble our very own homegrown Canadian businesses that create jobs by not allowing interest deductibility. What are we trying to do?

I have been to the Fraser Institute and seen that they would like to have private enterprise and private everything. Where are we going to go as Canadians if we do not have economic security or economic independence?

I would like to say to the member opposite that the National Post, which is a friend of the Conservatives, talks about the flip-flop of the Minister of Finance, who is really not very competent. An article by Diane Francis, who is a real good friend of the Conservatives, talks about how the whole cabinet lacks economic astuteness. Cabinet ministers do not know globalization. They do not understand it. They are hobbling along because they do not know economics.

Opposition Motion--Finance
Business of Supply
Government Orders

12:35 p.m.

Liberal

John Cannis Scarborough Centre, ON

Mr. Speaker, during the election the Conservatives made a promise that they would not touch income trusts, as it was initially being proposed before the election. Now the Conservatives are trying to spin this promise that they went back on that they do not want to hurt the seniors and their incomes, but they want to address the corporation side of things.

I have a lot of seniors in my riding and in the emails and communiqués that I have received, it has impacted their way of life for the future. We have to keep in mind that these seniors today are not income generators and cannot work a couple of hours of overtime to offset it. They depend on a certain income to at least maintain the lifestyle that they dreamed of and now it is being taken away. Could the member please elaborate on the seniors aspect? The Conservatives are trying to misrepresent it again.

Opposition Motion--Finance
Business of Supply
Government Orders

12:35 p.m.

Liberal

Yasmin Ratansi Don Valley East, ON

Mr. Speaker, I have a lot of seniors in my riding who have written to me and who have stated that they trusted the Conservative government when it made a promise that it would never tax income trusts.

They invested their money in income trusts, and suddenly, lo and behold, on October 31, we got this 31% tax and seniors lost their savings. The market took a dip. We have lost $35 billion in total. How are the seniors ever going to recover it?

I would like to bring something to the attention of the House. The NDP has always claimed to be the party of social justice, but it has worked against seniors, against Kelowna, against Kyoto, and against everything, and it has lost--

Opposition Motion--Finance
Business of Supply
Government Orders

12:40 p.m.

Conservative

The Acting Speaker Andrew Scheer

Resuming debate, the hon. member for Kings--Hants.