House of Commons Hansard #163 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

11:05 a.m.

Liberal

The Speaker Peter Milliken

It being 11:02 a.m. the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House proceeded to the consideration of Bill C-279, An Act to amend the DNA Identification Act (establishment of indexes), as reported (with amendments) from the committee.

DNA Identification Act
Private Members' Business

11:05 a.m.

Liberal

The Speaker Peter Milliken

The hon. member for Burlington is not present to move the order as announced in today's notice paper. Accordingly, the motion will be dropped to the bottom of the order of precedence on the order paper.

Suspension of sitting
DNA Identification Act
Private Members' Business

11:05 a.m.

Liberal

The Speaker Peter Milliken

The sitting is therefore suspended until noon.

(The sitting of the House was suspended at 11:03 a.m.)

(The House resumed at 12 p.m.)

The House proceeded to the consideration of Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, as reported (with amendment) from the committee.

Speaker's Ruling
Budget Implementation Act, 2007
Government Orders

June 4th, 2007 / noon

Conservative

The Acting Speaker Royal Galipeau

I have a ruling by the Speaker concerning Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007. There are nine motions in amendment standing on the order paper for the report stage of Bill C-52.

Motion No. 2 will not be selected by the Chair, because it requires a royal recommendation.

Motions Nos. 1, 3 and 4 will not be selected by the Chair, because they were defeated in committee.

All remaining motions have been examined by the Chair and the Chair is satisfied that they meet the guidelines expressed in the note to Standing Order 76.1(5) regarding the selection of motions in amendment at the report stage.

Motions Nos. 5 to 9 will be grouped for debate and voted upon according to the voting pattern available at the table.

I will now put Motions Nos. 5 to 9 to the House.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:05 p.m.

Conservative

Monte Solberg Medicine Hat, AB

moved:

Motion No. 5

That Bill C-52 be amended by deleting Clause 45.

Motion No. 6

That Bill C-52, in Clause 46, be amended by replacing lines 1 and 2 on page 51 with the following:

“46. (1) Section 234 of the Excise Tax Act is amended by adding the following after subsection (2):”

Motion No. 7

That Bill C-52, in Clause 48, be amended:

(a) by replacing lines 1 to 4 on page 53 with the following:

“the Minister shall, subject to subsection (8) and section 252.2, pay a rebate to the person equal to the tax paid by the person in respect of the accommodation.”

(b) by replacing lines 30 to 34 on page 53 with the following:

“the Minister shall, subject to subsection (8) and section 252.2, pay a rebate to the particular person equal to the tax paid by the particular person in respect of the accommodation.”

(c) by deleting lines 37 to 46 on page 53 and lines 1 to 3 on page 54.

(d) by deleting lines 25 to 30 on page 54.

Recommendation

(Pursuant to Standing Order 76.1(3))

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the following amendment to Bill C-52, “An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007”. That Bill C-52, in Clause 48, be amended:

(a) by replacing lines 1 to 4 on page 53 with the following:

“the Minister shall, subject to subsection (8) and section 252.2, pay a rebate to the person equal to the tax paid by the person in respect of the accommodation.”

(b) by replacing lines 30 to 34 on page 53 with the following:

“the Minister shall, subject to subsection (8) and section 252.2, pay a rebate to the particular person equal to the tax paid by the particular person in respect of the accommodation.”

(c) by deleting lines 37 to 46 on page 53 and lines 1 to 3 on page 54.

(d) by deleting lines 25 to 30 on page 54.

Motion No. 8

That Bill C-52 be amended by deleting Clause 50.

Motion No. 9

That Bill C-52, in Clause 51, be amended:

(a) by replacing lines 20 to 32 on page 57 with the following:

“51. (1) Paragraph 252.4(1)(a) of the French version of the Act is replaced by the following:

a) la fourniture de biens ou de services relatifs au congrès, effectué par un inscrit qui est l’organisateur du congrès;”

(b) by deleting lines 33 to 42 on page 57 and lines 1 to 28 on page 58.

(c) by replacing lines 29 to 42 on page 58 and lines 1 to 13 on page 59 with the following:

“(5) Paragraphs 252.4(3)(a) and (b) of the Act are replaced by the following:

(a) the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to the convention facility or related convention supplies other than property or services that are food or beverages or are supplied under a contract for catering, and

(b) 50% of the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to related convention supplies that are food or beverages or are supplied under a contract for catering.”

Recommendation

(Pursuant to Standing Order 76.1(3))

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the following amendment to Bill C-52, “An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007”. That Bill C-52, in Clause 51, be amended:

(a) by replacing lines 20 to 32 on page 57 with the following:

“51. (1) Paragraph 252.4(1)(a) of the French version of the Act is replaced by the following:

a) la fourniture de biens ou de services relatifs au congrès, effectué par un inscrit qui est l’organisateur du congrès;”

(b) by deleting lines 33 to 42 on page 57 and lines 1 to 28 on page 58.

(c) by replacing lines 29 to 42 on page 58 and lines 1 to 13 on page 59 with the following:

“(5) Paragraphs 252.4(3)(a) and (b) of the Act are replaced by the following:

(a) the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to the convention facility or related convention supplies other than property or services that are food or beverages or are supplied under a contract for catering, and

(b) 50% of the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to related convention supplies that are food or beverages or are supplied under a contract for catering.”

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:05 p.m.

Conservative

The Acting Speaker Royal Galipeau

The hon. member for Markham--Unionville is rising on a point of order.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:05 p.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I rise to contest a ruling by the chair of the finance committee during clause by clause consideration last week. During that consideration, the chair of the committee ruled that an amendment referenced at the committee under the number 2972723 was out of order and could not be moved.

The amendment in question sought to provide a tax reduction to a group of taxpayers who would have otherwise paid 31.5% tax on proceeds from income trusts. Under my amendment, they would pay only 10%. The amendment also provides for a tax refund or credit of this tax for certain taxpayers. Both of these measures are clearly tax reductions.

With respect to the general tax reduction from 31.5% to 10% contained in the amendment, it was in no way questioned by the chair at the meeting. The chair presumably knew that such a tax reduction was in order. However, in committee, the chair ruled out of order another part of the same amendment that I proposed to clause 21 of the bill to reduce the tax on Canadian residents even further by way of a tax refund or credit, in subclause 2.1. Here I will quote the chair of the committee, who said that this “would require government spending”.

He then concluded, again erroneously, that this latter tax reduction required a royal recommendation, which if this was the case obviously could not be moved in committee. Therefore, the chairman mistakenly ruled the amendment out of order and the committee did not consider the amendment that I was proposing.

In addition, a number of amendments standing under my name at the committee simply could not proceed because the central amendment, which I have just described, could not be moved. The chair's ruling thus had an adverse effect not only on the amendment itself but on a number of other amendments as well.

I now want to touch briefly on the procedural arguments as to why I think the committee chair's ruling was erroneous. While I accept that increasing a tax or levy as well as increasing a benefit or grant are prerogatives of the Crown, my amendment did no such thing. It dealt with refunding a tax to a group that would otherwise have paid it.

On Monday, October 9, 1957, Speaker Lamoureux ruled in this place that reducing a tax by way of an amendment and without a royal recommendation was in order. This decision can be found in the Journals of the House of that day at page 254.

Speaker Lamoureux, in his decision, was basing himself on Erskine May's treatise on parliamentary procedure and form, the 15th edition, which says at page 704 that provisions for the alleviation of taxes are not subject to the rules of financial procedure. At page 572, May also states that a bill diminishing or repealing a tax or other public burden, unless the imposition of a new tax is proposed by way of substitution, needs no royal recommendation.

In our own House in the last Parliament, a number of private members' bills were passed, without royal recommendation, to provide tax alleviation. Two such examples were the bills to provide for a tax deduction for tools for automobile mechanics and a bill to provide similar relief for workers who purchase transit passes.

Only a few weeks ago, we passed private member's Bill C-294 to reduce income taxes for the benefit of lodging and other such allowances to young athletes, mainly hockey players. This bill was sponsored by the Conservative member of Parliament for Prince Albert.

Surely if it is in order to offer an exoneration of taxes for hockey players, which it certainly was and which I supported, it is equally in order to offer an amendment to reduce taxes to Canadian senior citizens who are now the innocent victims of the Prime Minister's broken promise on income trusts.

Finally, I wish to draw to the attention of the House a booklet published by the Procedural Services of the House of Commons under the authority of the Speaker and entitled “Amending Bills at Committee and Report Stages in the House of Commons”. At page 5 of this document, under the rubric “Financial Initiative of the Crown”, it is stated, “Any amendment to reduce public spending or to reduce a tax is admissible”.

Clearly the chair of the Standing Committee on Finance erred when he refused to allow me to move my amendment at committee. Equally clearly, the effect of not being able to move this important amendment was such that other amendments which I was offering either could not be moved because they were subordinate in nature or, in the case where they could be moved, did not carry much support simply because the main subject could not even be debated.

For greater clarity, I note that the Chair of the committee was in error when he suggested that subclause 2.1 was new tax expenditure. It is not. The subclause itself makes this point when it states, “Every individual who is resident in Canada and liable to pay tax under Part 1 may claim a refund or credit against tax otherwise payable”.

This subclause involves no new net tax expenditure by the Crown. It simply allows an individual taxpayer who is a Canadian resident to recover tax already paid on his or her behalf to the Crown.

A taxpayer who is a Canadian resident can recover not one penny more than that which was remitted on his or her behalf already to the Crown. Therefore, there is no new tax expenditure whatsoever.

In short, the withholding in question is then reimbursable to a specific category of investors, namely, Canadian residents, who would get their money back. For example, foreign investors would not qualify because they do not pay sufficient or any Canadian taxes. Pension funds would not qualify either because of their tax exempt status.

Therefore, there is a clear case of tax alleviation as identified by Erskine May, as I mentioned earlier.

That is why I am seeking this remedy in asking the Speaker that my amendment be allowed to be debated and voted on at report stage. The Chair of the committee provided an erroneous ruling which prevented me from doing my work of representing my constituents and Canadians generally at the committee.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:10 p.m.

Calgary—Nose Hill
Alberta

Conservative

Diane Ablonczy Parliamentary Secretary to the Minister of Finance

Mr. Speaker, I have a few comments on my friend's point of order that may prove helpful to the Chair.

First of all, we note that the four motions he brings forward today are, as he mentioned, similar to motions that were already proposed and defeated at committee stage. Further, they are flawed on so many levels that it is difficult to know where to begin, but I will touch on just a few of the many problems with these proposed amendments. Fortunately for all concerned, I believe they are entirely out of order and that the Speaker will find them so, but I do want to add the concerns that the House should be aware of.

It is well recognized that rules of parliamentary procedure preclude the introduction of a motion to amend a bill if the motion exceeds the scope of the notice of ways and means motion on which the bill is based, without the introduction of a new notice of ways and means motion on which the House has concurred. Further, the introduction of a motion is precluded if it increases the amount of an appropriation without having first obtained a royal recommendation.

Contrary to what my friend just said, these motions fail on both of those counts. The hon. member for Markham—Unionvale did not obtain the concurrence of this House on these motions before they were moved, nor was a royal recommendation obtained. Thus, these motions should be ruled out of order on this basis alone.

Furthermore, an amendment that would make a clause unintelligible is also out of order. For reasons which I will explain, the proposed amendments are simply incomprehensible. Accordingly, these motions should be ruled out of order. Should they proceed, they should be defeated on the basis of their confusion and questionable policy. I would like to explain briefly.

Motion No. 1 proposed by the hon. member for Markham-Unionvale is a prime example of an amendment that renders a clause unintelligible. In particular, the draft purports to apply a 10% tax on certain distributions made by trusts described in subsection 197(1). The difficulty here is that there are no trusts described in subsection 197(1), either as proposed in the bill or as amended by any other motions put forward by the hon. member. Accordingly, the motion is totally ineffectual and should on that basis alone be ruled out of order.

However, if one were to give the hon. member the benefit of the doubt and accept that the amendment proposed is actually meant to reference a trust described elsewhere, then there is another problem. I suspect the hon. member thinks he is reducing the trust distribution tax proposed by this bill to 10%. However, the text of the motion actually adds the proposed 10% tax to the existing 29% tax applicable to trusts.

Hence, the motion would, if one could make sense of it, expose trusts to a 39% tax on distributions of non-portfolio earnings. This compares with the 31.5% tax proposed in the bill for 2011 and therefore clearly represents a tax increase. This tax increase is not within the scope of the notice of ways and means motion on which the bill is based and the motion should therefore be ruled out of order.

Motion No. 2 appears to be another attempt to impose a 10% tax on SIFT trusts, curiously in a part of the act that is under the title “Tax on SIFT Partnerships”. Further, this 10% tax purports to apply to all distributions by SIFT trusts and not just distributions on non-portfolio earnings. The text of the motion also again adds the proposed 10% tax to the existing 29% tax applicable to trusts.

Hence, if we ignore Motion No. 1, Motion No. 2 would expose trusts to a 39% tax on distributions by SIFT trusts.

On the other hand, the hon. member who tabled these motions has given no indication that the motions are to be alternatives. Accordingly, Motions No. 1 and 2, read together, would increase the tax on distributions by trusts of non-portfolio earnings to 49%.

Both of these scenarios would clearly be a tax increase, which exceeds the scope of the notice of ways and means motion on which the bill is based, and should, therefore, again, be ruled out of order. Indeed, by proposing such tax increases, one has to wonder what the hon. member has against income trusts.

Motion No. 2 also expresses a very strange policy. It subjects existing income trusts to the new Liberal tax but does not apply this tax to new trusts created after October 2006. Motion No. 2 goes on to allow individual Canadian residents to claim a refund of an amount designated by an issuer of the security in prescribed form. The member talked about that.

Further, the motion goes on to allow a beneficiary of an RRSP to claim a refundable tax credit equal to the amount of the tax paid by a SIFT trust or partnership. This would create a right for any beneficiary of an RRSP, whether or not liable to pay tax, to receive an amount to be taken out of the consolidated revenue fund.

Given that this motion would require that money be taken out of the consolidation revenue fund, it should be ruled out of order on the basis that it was not accompanied by a royal recommendation.

Again, the motion shows the difficulty that the hon. member's party has with developing tax policy.

The bill before us today already allows for a dividend tax credit claimable by Canadian resident individuals and respective trust distributions that are subject to the SIFT tax.

The dividend tax credit is intended to provide an offset against tax payable by an individual up to the amount of tax payable on the distribution of the trust. This distribution is deemed to be a dividend eligible for a dividend tax credit.

This motion would allow an individual to claim a refund for the trust tax paid but would also allow a dividend tax credit to be claimed on the same income. Perhaps the double credit for the individual investors has some connection with the Liberal proposal to tax trusts at 39% or 49%, but I suspect it is just another example of the flaws in the thinking behind these motions.

As well, the refund for individuals is in an amount designated by the trust in prescribed form, but no guidance is provided for the calculation of the amount that can actually be refunded. Could it actually exceed the tax paid by the trust on the distribution?

Just briefly again, let me say a few things about Motion No. 3. Motion No. 3 adds yet another 10% tax to trusts that fail to comply with the provisions of the part of the bill that apply to SIFT partnerships. Now we have an amendment in the partnership provisions that purports to add yet another 10% tax not only on SIFT partnerships but also on SIFT trusts. This time bringing the tax up to what, 59%?

There is precious little in the partnership provisions that a trust could be non-compliant with. Or, it is just an attempt to confuse. Again, this motion clearly purports to effect an increase in a tax that would exceed the scope of the notice of ways and means motion on which the bill is based and should therefore again be ruled out of order.

Finally, Motion No. 4 is consequential to the other motions. Since those earlier motions should be ruled out of order so, too, should Motion No. 4.

I trust you will find that of assistance, Mr. Speaker.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:20 p.m.

Conservative

The Acting Speaker Royal Galipeau

Are there any other points of order? The hon. member for Markham—Unionville on the same point of order.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:20 p.m.

Liberal

John McCallum Markham—Unionville, ON

Yes, Mr. Speaker. I thank my hon. member for her help. However, her error is not limited to referring to my riding as Markham--Unionvale rather than Markham--Unionville.

I am afraid she is complicating the matters in an effort to sow confusion because my point is a very simple one. I believe that her allegations about us raising the taxes are due to the fact she forgot that we proposed to delete certain provisions which are part of the government's plan. However, that has nothing to do with my appeal to the Speaker.

My appeal to the Speaker is on one particular amendment which we presented to the committee regarding the refundable payments to residents. That was the only thing ruled out of order. Our arguments, as I have just presented, and she did not counter them at all, are for the various reasons I have described.

The amendment that we proposed and that was ruled out of order by the chair should indeed be in order. That is my sole request to the Speaker, apart from the fact that once the Speaker admits that amendment has been in order, then the associated amendments, which we presented before committee, should also be voted upon as a group.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:20 p.m.

Conservative

The Acting Speaker Royal Galipeau

Is the hon. member for Mississauga South also rising on the same point of order?

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:20 p.m.

Liberal

Paul Szabo Mississauga South, ON

Yes, Mr. Speaker. That indeed was the gist of my comments, that the matter raised by the hon. member has to do with the decision of the chair, which based on the evidence that was presented in the presentation of the point of order by the hon. member would tend to bring into question whether or not the chair had erred in its ruling and therefore there were consequential amendments.

With regard to the report stage motions that were proposed, Motions Nos 1 to 4, Motion No. 2 was with regard to a royal recommendation requirement. The other three were, according to the Speaker's ruling, on questions that were already defeated at committee. As a consequence, it is very clear that the items in question are not the ones in fact on the report stage listing in the order paper today but rather with regard to another matter on which the chair ruled and which has consequential amendments.

Accordingly, I believe it would be appropriate, Mr. Speaker, to review the basis for the decision by the chair. Should there be a clarification or correction of that decision, it then would appear that there may be other consequential amendments that would be necessary to make to the bill at committee stage which would also obviously impact possibly further report stage motions.

Motions in Amendment
Budget Implementation Act, 2007
Government Orders

12:25 p.m.

Conservative

Diane Ablonczy Calgary—Nose Hill, AB

Mr. Speaker, first of all, let me sincerely apologize to my friend, the hon. member for Markham—Unionville for misspeaking the name of his excellent riding.

I would just point out that the information I provided to the Chair I think should assure all members of the House that the chair of the finance committee in fact made a correct ruling and that the ruling should not be tampered with by the House because that was an entirely defensible and proper ruling.

I hope, Mr. Speaker, that this matter will be put to rest and we can get on with debating the bill.