Bill C-13 (Historical)

Budget Implementation Act, 2006

An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

Part 1 amends the Excise Tax Act to implement, effective July 1, 2006, the reduction in the Goods and Services Tax (GST) and the federal component of the Harmonized Sales Tax (HST) from 7 to 6 per cent. It also amends the Act to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the July 1, 2006, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after July 1, 2006, pursuant to a written agreement entered into on or before May 2, 2006. The Excise Act, 2001 and the Excise Act are amended to increase the excise duties on tobacco and alcohol products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of July 1, 2006.
Part 2 implements income tax measures proposed or referenced in Budget 2006 to
(a) reduce personal income taxes;
(b) increase the child disability benefit;
(c) increase the refundable medical expense tax credit;
(d) eliminate capital gains tax on charitable donations of publicly-listed securities and ecologically-sensitive land;
(e) reintroduce the mineral exploration tax credit for new flow-through share agreements entered into before April 2007;
(f) expand the eligibility criteria for the disability tax credit;
(g) expand the list of expenses eligible for the disability supports deduction;
(h) expand the list of expenses eligible for the medical expenses tax credit;
(i) clarify the eligibility of home renovation and construction expenses for the medical expenses tax credit;
(j) double the amount of disability-related and medical expenses that can be claimed by a caregiver;
(k) introduce a tax credit in respect of adoption expenses;
(l) introduce a tax deferral for shareholders of agricultural co-ops;
(m) reduce corporate income taxes;
(n) eliminate the federal capital tax; and
(o) extend the carry-over period for non-capital losses and investment tax credits.
Part 3 amends Schedule I to the Excise Tax Act to repeal the excise tax on clocks, items made from semi-precious stones and items commonly known as jewellery, effective May 2, 2006.
Part 4 amends the First Nations Goods and Services Tax Act to facilitate the establishment of taxation arrangements between the government of specified provinces and interested Indian Bands situated in those specified provinces. It also amends the Yukon First Nations Self-Government Act to provide transitional income tax measures consistent with negotiated agreements.
Part 5 amends the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and the Income Tax Act to harmonize various accounting, interest, penalty and related administrative and enforcement provisions. These amendments will apply based on an implementation date that is the later of April 1, 2007, and Royal Assent. It also amends the Excise Tax Act to confirm that debt collection services that are generally provided by collection agents to financial institutions are not financial services for GST/HST purposes and are therefore taxable for GST/HST purposes.
Part 6 enacts the Universal Child Care Benefit Act to assist families by supporting their child care choices through direct financial support to a maximum of $1,200 per year in respect of each of their children who has not attained the age of six years. It also makes consequential and related amendments to the Income Tax Act, the Employment Insurance Act, the Children’s Special Allowances Act and the Old Age Security Act.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to determine the amount of the fiscal equalization payments to the provinces and the territorial formula financing payments to each of the territories for the fiscal years beginning after March 31, 2006 and to authorize the Minister of Finance to make an additional fiscal equalization payment to British Columbia and Newfoundland and Labrador, and to make an additional territorial formula financing payment to Yukon and Nunavut, for the fiscal year beginning on April 1, 2006.
Part 8 provides for a total payment of $650,000,000 to the provinces and territories for the fiscal year 2006-2007 in respect of early learning and child care. It provides for payments to the territories for the fiscal year 2006-2007.
Part 9 authorizes the Minister of Finance to enter into an agreement to provide protection to mortgagees in respect of mortgage insurance policies that are provided by a mortgage insurer that is approved by the Superintendent of Financial Institutions to sell mortgage insurance in Canada. It also fixes the maximum amount of such protection and determines how that amount can be changed.
Part 10 extends the sunset provisions of financial institutions statutes by six months from October 24, 2006 to April 24, 2007.
Part 11 amends the Canadian Forces Superannuation Act, Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act to change the existing formula by which adjustments are made to a contributor’s annuity.
Part 12 enacts the Mackenzie Gas Project Impacts Act, the purpose of which is to create the Corporation for the Mitigation of Mackenzie Gas Project Impacts. The corporation will provide contributions to regional organizations that will fund projects that mitigate the existing or anticipated socio-economic impacts on communities in the Northwest Territories arising from the Mackenzie gas project. The Part also provides that a payment of $500,000,000 may be made to the corporation and adds the name of the corporation to the schedule of certain federal Acts.
Part 13 amends the European Bank for Reconstruction and Development Agreement Act to permit the European Bank for Reconstruction and Development to carry out its purpose in Mongolia and to allow the Governor in Council to amend, by order, the schedule to that Act. It amends the Freshwater Fish Marketing Act to increase the Freshwater Fish Marketing Corporation’s legislative borrowing limit from thirty million dollars to fifty million dollars. It also amends the Public Sector Pension Investment Board Act to create share capital for the Public Sector Pension Investment Board

Budget Implementation Act, 2006

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, the $150 million which is this year's tax credit for the cost of public transit is something for which the Federation of Canadian Municipalities and all municipalities have been asking. That is not a bad step. However, what the TTC and other public transit systems across Canada are also saying is that people can be encouraged to take transit but what if there is no money to buy buses, or to repair or build subway systems and new lines and pay for fuel?

Gas prices have gone up. Transit authorities, whether they are in Moose Jaw, Toronto, Vancouver or Halifax are saying that because of the rising fuel costs they need operating dollars. They are struggling. Aside from raising fares they cannot find enough money to pay for the transit service that the riders desperately need. They agree the credit will generate more riders, but they also need the funding that is missing. They need the 5¢ gas tax credit right now in order to pay for transit improvements so that more people will leave their cars at home and ride public transit. That is the piece that is missing in order to complement the tax credit. Getting more people to take public transit will not work if there are not enough buses. It is really costly. They will have to increase fares.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Mr. Speaker, I thank the hon. member for an interesting speech that was full of very strong words about the budget, things like gimmicky, superficial and bush league. While I have no objection to using strong words to criticize a budget that I agree is sorely misguided, I must admit that the hon. member's comments leave me a bit perplexed.

She spoke at great length about the importance of child care to her and her party, yet I could not help but think that it was the member's party that helped bring down the previous government, a government that had committed to an investment in child care. If it is a priority, the question becomes, would the NDP not want the government to proceed as quickly as possible with a national child care program? Why did the NDP want to destroy the chance of seeing that child care system come to light? The only possible explanation would be naïveté. Perhaps the member's party believed that a new government, and the only real alternative we all know was the Conservative Party, would go ahead and create a progressive, well thought out national child care program.

Why did the hon. member's party pull the plug on the previous government? Was it because child care was really not a priority, or was it because of naïveté?

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I have been called all sorts of things but naive may not be one of them.

Anyone who knows the history of my political life knows that all through the 1990s I pushed desperately for a national child care program. A whole generation of children have now grown up without child care. It is heartbreaking to see because many parents were promised it, whether it was in 1987 with the Brian Mulroney child care act, or the 1993 red book, or the 1997 red book, or the 2000 red book.

In 2004, whether we call it an early childhood development initiative or a multilateral framework agreement, we could call it all sorts of things but there was no child care program delivered. In fact in Toronto there were fewer child care spaces two years ago then in 1992 because of the various budget cuts by the federal government and of course by the provincial government also.

The child care program that we have been pushing for, which the last Liberal government finally began to put in place in its minority government, unfortunately was not enshrined in legislation. That allowed the new government to come in and cancel the agreements. Imagine if there were a national child care act that enshrined child care into legislation, today we would be in the House debating a child care act, not these bilateral agreements that can be cancelled with the stroke of a pen.

I put the fault of not having a national child care program with the way the former Liberal government created it.

[John Baird, Conservative, President of the Treasury Board]

Mr. Speaker, I can certainly confirm to the House that the hon. member has been fighting for many of the things she has talked about. I have some of the scars to prove it from over the years.

She did talk about seniors. Seniors are very important to me in my riding of Ottawa West--Nepean. She said that this budget contains nothing for seniors, but does she know about the important tax cut for seniors in doubling from $1,000 to $2,000 the basic tax credit on their pensionable earnings? Is she aware of that and would she not want to promote that to the good constituents of Trinity--Spadina? That of course would be in addition to the GST tax cut.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, the first deduction was introduced in 1975. Most seniors do not pay tax because they do not have enough money. They are not over the $25,000 to $30,000 bracket.

Seniors are in most desperate need of an increase in the guaranteed income supplement. For 12 years there have not been any additional increases. Last year the former Liberal government put in less than $1 a day for the GIS. What we need here is an increase specific to seniors on the guaranteed income supplement so that they will not live in poverty.

A lot of seniors are living in isolation because they cannot even afford that extra dollar to buy a subway token or pay the bus fare to visit their friends. They do not even have enough money to have a telephone. They do not have enough money for television sets. That is how desperately poor they are.

It is not the tax relief that is in this budget that is needed. It is extra dollars in the guaranteed income supplement that is most wanted and needed.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I will be splitting my time with the member for Mississauga South.

I do not know if anyone read the Globe and Mail this morning but there is an article by Norman Spector, a man who is hardly a great friend of the Liberal Party of Canada, having been Brian Mulroney's chief of staff and a former ambassador to Israel. Regardless of whether we agree or disagree with him, he is a noted commentator on the political scene in Canada.

He starts his column with a trenchant observation that no one should be surprised when the public interest gives way to what interests the public. He goes on in his article to point out that there are quite a number of areas in which public policy gets lost in favour of what is political expediency.

Jeff Simpson makes a similar observation when he says, “What's going on here is part of a pattern set early by the Harper government -- the making of political commitments in defiance of”--

[The Deputy Speaker, Bill Blaikie]

I would ask the hon. member not to try and do indirectly through quotes what he is not supposed to be doing directly.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I consider myself well and truly chastized, Mr. Speaker. I will try not to repeat the name.

The quote continues, “--expert advice, including from within government departments. There seems to be a rift between ministers and their own departments. The rift is probably widest in the Department of Finance and probably exists in others, such as the Department of Justice. There is almost a chasm in terms of what the minister wants done and what the people who have spent their entire careers studying these issues think should be done. There is a consensus among experts with respect to those issues.

Spector goes on to raise one of the most difficult and problematic issues facing this government, or any government, and that is the Conservatives' approach to the so-called fiscal imbalance. His argument is that this approach is quite worrisome, that the government could be putting Canada's future at risk for no other reason than electoral politics. The problem here is the raising of enormous expectations which makes the solution to this vexing problem quite difficult to achieve.

I suggest that we will look in vain through the documents submitted with the budget to find a solution to the so-called problem of fiscal imbalance. The only phrasing in the entire document is the issue of fiscal balance. As Simpson said, the pattern set by the government of ignoring the advice of experts in order to achieve its political expediencies is quite difficult. Not a soul in the Department of Finance believes that the fiscal imbalance exists, and they are right.

Provinces have access to all of the same taxing authorities as does the federal government. They have access to personal income taxes, corporate income taxes and consumption taxes. In fact, the provinces have access to some sources of revenue, such as gambling revenue and resource royalties, which the federal government does not have.

In addition, the federal debt as a percentage of GDP is higher on average than the provinces. Some provinces have no debt whatsoever, such as the province of Alberta. If we really want to talk about fiscal imbalance, we should look horizontally at Alberta which is in a league by itself in terms of its ability to raise revenue. Some provinces, quite candidly, have difficulty raising revenue because they simply do not have the wealth base on which to raise it. That is a horizontal fiscal imbalance and that is a legitimate concern because the inequities of revenue among those provinces leads to other difficulties that are politically quite problematic.

Let me give the House an example of a perverse consequence of poorly thought out public policy. The illustration is in the GST. I appreciate that the GST reduction from 7% to 6% and ultimately to 5% is politically popular. I concede that point.

However, the chief beneficiary of this reduction will be the wealthiest province, Alberta, because it has no provincial consumption taxes. The province of Ontario has a total of 15% in terms of consumption taxes, both retail, federal and provincial. Alberta, on the other hand, only has the GST and therefore a one point reduction effectively means about a 14% reduction in consumption taxes. However, in the province of Ontario and similarly in other provinces it is only about a 7% reduction in consumption taxes.

There is a perverse consequence of reducing a tax which appears to be politically popular but in fact allocates a tax relief measure to a province that needs it the least, which creates its own level of difficulties.

It is not only the Department of Finance. It is also the Department of Justice. No one in the Department of Justice thinks minimum mandatories are the appropriate way to go. The argument is quite clear that minimum mandatories just simply do not work.

I sat on the justice committee occasionally with you, Mr. Speaker, and there was not an expert who came before the panel of parliamentarians who thought that minimum mandatories work but, nevertheless, the government seems bound and determined to plough ahead with those kinds of issues. These are people who have spent their entire careers thinking about and listening to the evidence and yet the government seems bound and determined to ignore what people who think about these issues have said.

Every serious study of Canada's economic future believes that focusing on education, research, innovation and productivity is the only way forward and yet nary a word in this budget about those kinds of issues.

In fact, we shove in the window things like the GST reduction and these fairy tales about 16 is actually lower than 15. We shove in the window that these are actually tax reductions when in fact they are tax increases. We create tax credits where, again, people who think about these things know that giving a sports tax credit will just lead to other people requesting other credits for other activities. The government is creating an administrative nightmare. That has been the position of the Department of Finance for years.

Similarly with transit passes, it gives credit to people already using the system. It will not increase the use of the system except marginally. However I understand how, for political purposes, these so-called ideas are attractive to people.

The budget has a huge gap between what the people, who have thought about the issues, actually think is the proper way to go and this panoply and basket of issues which have political popularity but are poor public policy.

[The Deputy Speaker, Bill Blaikie]

Questions and comments? I want to say the hon. member for Elk Island but I know that is wrong. The member for Edmonton--Sherwood Park.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I am very proud to have been the member for Elk Island for almost all of its existence.

I want to challenge some of the things the member said. I would like to challenge a whole bunch of things but I will go to just one. He said that mandatory minimum sentences do not work but there is a lot of evidence that shows they do.

I will give a quick example. On Saturday, while I was driving down the road in my riding, there was a construction zone. In the past people would always pass other drivers in the construction zones. Some would go the reduced speed limit and others would just go zipping by. As a result of a number of highway workers being killed because of these people, the provincial government took the initiative to put up signs at these construction places stating, “Speeding Fines Doubled”. On Saturday, when I drove through that zone, not one person passed me while I was going the reduced speed limit through the construction zone.

Deterrents do work. I think it is rather specious of the member to just make a point blank statement that it does not make any difference and, therefore, why should we bother. It does in fact.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, with greatest respect to the hon. member opposite, I spent six years on the justice committee. We spent a great deal of time talking about whether minimum mandatories would work. With greatest respect again to the hon. member, he should read the material. He should read the studies.

It does not work. It does not reduce crime. It has no impact on the incidence of crime. It is not as if somebody thinks that if he uses a gun, he will get a minimum mandatory of four years, which is the current law. It is not as if he thinks whether he should use a gun or some other weapon. The truth of the matter is, criminals just do not think that way. Therefore, the issue of minimum mandatories, which is essentially taking away the discretion of judges, is an appearance of a solution and it panders to a certain segment of our population, but it has no consequence on the impact of crime.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, my colleague was able to weigh in with some comments on deterrence. I would like him to share with the House a few comments on incentives. The government has put in the window something that is fairly attractive, a $500 deduction for young people for the registry of sport. When Canadians do their income tax next spring, they will realize this equates to about an $80 benefit.

Where we have our greatest impact on young people, where we have our greatest impact on young athletes is when our premier athletes excel. We see the stars who are created over the Olympics and how that motives and inspires the next generation.

If the Conservatives had come through with their campaign promise of 1% of the health budget for sport and fitness, it may have made some kind of difference. Instead they offered this paltry exemption of $80, as my colleague indicated a bus pass. What impacts will be elicited from these types of tax exemptions?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I know my hon. friend has followed this issue assiduously over the past number of years. When I was the parliamentary secretary to the finance minister, he and I had regular conversations about it. In particular, he must be terribly disappointed by the appearance of a response to the issues that he pursued when he was a member of the government and the results of it.

A lousy $80 will not make a hill of beans worth of difference to most people who are putting their kids in hockey. That is just reality. These days that hardly covers one skate and that skate has to be used. It will have virtually no impact.

Simultaneously, it will be an administrative nightmare. We will have a whole bunch of athletic clubs, whether big club or small and they will all have to issue tax receipts. When they get around to trying to issue tax receipts in February, do we think the treasurer of the local soccer club will be really happy trying to remember to what tax credit so and so is entitled?

This is a classic example of poor public policy, released to great fanfare, giving Canadians an illusion that they are actually getting something. When they sit down next February, it will be a big disappointment.

The House resumed consideration of the motion that Bill C-13, An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee, and of the motion that this question be now put.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate today on the budget implementation act.

How often have we heard the phrase “The devil is in the details”? This budget is probably a very good example of where details can affect the interpretation or the appreciation of what has been represented.

One of the first points raised in the budget speech was that the income tax rate on the first tax bracket would be reduced from 16% to 15.5%.