Budget Implementation Act, 2006, No. 2

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

This bill was last introduced in the 39th Parliament, 1st Session, which ended in October 2007.

Sponsor

Jim Flaherty  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

Part 1 implements the following income tax measures proposed or referenced in Budget 2006:

–       the new Canada Employment Credit;

–       the new Textbook Tax Credit;

–       the new tax credit for public transit passes;

–       the new deduction for tradespeople’s tool expenses;

–       a complete exemption for scholarship income received in connection with enrolment at an institution which qualifies the student for the education tax credit;

–       the new Children’s Fitness Tax Credit;

–       a doubling, to $2,000 from $1,000, of the amount on which the pension income credit is calculated;

–       an extension of the $500,000 lifetime capital gains exemption, and various intergenerational rollovers, to fishers;

–       the new Apprenticeship Job Creation Tax Credit;

–       a reduction of the current 12 per cent small business tax rate to 11.5 per cent for 2008 and to 11 per cent thereafter;

–       an increase, to $400,000 from $300,000, of the amount that a small business can earn at the small business tax rate, effective January 1, 2007; and

–       a reduction of the minimum tax on financial institutions.

Part 2 implements the proposal in Budget 2006 to lower the income tax rate on large corporation dividends received by Canadians.

Part 3 implements the proposal in Budget 2006 to reduce excise duties for Canadian vintners and brewers.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

November 15th, 2007 / 4 p.m.
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NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

First of all, to be clear, the reason I'm not in favour of that is I think it leads to the very thing you're afraid of, which is the repetition of conversations. In order to have the vote, then we'll have the discussion, and if we've already had the discussion in subcommittee....

The ideal was how the thing worked before, which was the casting out of a calendar, looking at the issues that had come to us all as MPs and deciding which ones were to be proposed forward. Remember that we went through that on the Bill C-30 committee and on Bill C-28. Whenever we're looking at something specific.... We'll do the same for Bill C-377, which is in front of committee, I imagine.

To then put it into the prescription that we have to then take everything back to a vote.... Is it voting on each of the witnesses? Is it voting on the order? I think the best way to do this, as people have described tangentially, is to avoid the issue of voting. As the government has admitted, if the opposition chooses to just use that in concert, then the voting system doesn't work for their favour.

The reason I had originally posed my motion was to allow a government member on the table. The reason I had prescribed not a parliamentary secretary was to avoid what we'd seen last time, which was not the only factor but I believe was a contributing factor to the partisanship.

I think we should just vote on this motion as is. I appreciate you trying to achieve some consensus, but I think we have what we have and we need to try this and look at the Bali conference and the Bill C-377 legislation, which will likely be the first two areas of concentration. Try this at least until Christmas.

Income Tax Amendments Act, 2006Government Orders

May 14th, 2007 / 3:55 p.m.
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Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, to begin with, I would like to congratulate my colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup. His presentation was extremely clear. I will probably have the opportunity, in my own presentation, to substantiate even more what he just said. As he pointed out, the Bloc Québécois is in favour of Bill C-33, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act. It corrects a number of things.

Again, this is somewhat like when I spoke to the changes to the excise tax. Sometimes, we debate in the House of rather casual subjects. This is far from Tintin in the Congo or Tintin in Tibet and even farther from The Crab with the Golden Claws or, for example, The Castafiore Emerald . This is not very sexy for a debate, but it is a necessary debate, just as the one on the excise tax. Bill C-33 corrects various provisions of the Income Tax Act which made it easy to circumvent tax rules and allowed tax evasion.

The bill responds to the shortcomings identified by the Auditor General in her November 2005 report. This bill will require disclosure of additional information about non-resident trusts, which will allow a more rigorous analysis of the figures submitted to the Canada Revenue Agency, in accordance with the recommendations of the Auditor General.

As my colleague has mentioned, tax evasion goes against the basic principles of horizontal and vertical fairness in the way we treat individuals. We must never forget that fairness is of paramount importance if we want people to have any trust in the tax system. This means fairness not only between individuals, but also between the different categories of individuals.

When the tax system is viewed as being unfair, there is also, unfortunately, a certain nonchalance in the public opinion about everything that relates to tax evasion. Working for pay under the table is a case in point. We absolutely need a tax system that not only is extremely fair, but that also has the appearance of being fair. Every time we can close a loophole and prevent people from believing that there is a double standard that benefits those who can afford those mechanisms, we have to do so. We were talking earlier about tax havens and about specialists and experts who can teach people how to avoid their collective responsibility.

It seems to me that we have to try and close those loopholes, and that is what this bill is doing. As I mentioned before, the Bloc Québécois will support Bill C-33.

Both the absence of fairness and the perceived absence thereof create a sense of laxity within the affected society. They also cause taxpayers to feel that they are being treated unfairly. As I said, practices that do not quite comply with the legislation are becoming more and more accepted and commonplace. Moreover, the government is losing revenue that, as my colleague said, must be made up for by higher taxes elsewhere, especially for the middle class, or by cuts to necessary public services.

As I said, we will support this bill even though it lacks that something special. It is definitely relevant, and as such, I think it deserves our attention even though it is not exactly a fun read.

I will provide a little background. In Canada, taxable revenue on trusts is calculated for individuals, not families. Here, income can be split among family members, resulting in major tax advantages. In fact, this is a common financial planning tactic among higher-income taxpayers.

They use family trusts to split income among as many family members as possible to take advantage of those family members' tax brackets. Obviously, when the income is split among many, some members of the family may have lower tax rates than if just one or two family members declare the income.

Canada's income tax system is based on a progressive tax rate structure. As such, individuals who have low or medium income pay less tax than high-income earners. As I just said, splitting income is one way to save taxes within a family or household.

To take advantage of this method, one must have a family trust. In addition to allowing income splitting, the trust can protect assets against the beneficiaries' creditors or ensure the use of an asset by a spouse until death before transferring the property rights to the children. The trust can also ensure that children have sufficient capital to cover the cost of tuition or living expenses while studying.

Even though trusts may seem to be an attractive way of avoiding tax, annual management fees can run to several thousand dollars. Once again, often it is the wealthy who are able to invest and who have enough money so that the advantages and disadvantages balance out and these trusts become attractive investment vehicles. Therefore, trusts are clearly investment vehicles that are available primarily to wealthy taxpayers.

In my opinion, on the whole, taxpayers do not appreciate income splitting, because it goes against one of the main principles of taxation policy: fairness. I mentioned this earlier. To comply with the principle of tax fairness, government gradually regulated the use of trusts and tried in various ways to reduce the benefits of income splitting.

The use of offshore trusts as investment vehicles has many advantages in terms of tax avoidance. Offshore trusts enable Canadian taxpayers to shelter assets from the tax system. Since Canadian tax authorities can have a very hard time obtaining information on investments in such vehicles, this opens the door to tax avoidance.

I remember that in a report—I think it was on the show Enjeux—journalists went to Barbados to locate companies such as the ones owned by the sons of the former Prime Minister, the member for LaSalle—Émard. The journalists were astonished to find that the headquarters of CSL International was not only a law office with four employees, but also the headquarters of about 100 other companies. Unfortunately, this information was not known previously, because it is not always easy to travel to conduct the necessary investigations. That is why it is important to have an easier way to obtain the necessary information.

In January 2000, the federal finance department introduced legislation to prohibit splitting with minors. People may not use children under 18 years of age, who are usually not yet working and therefore have no income of their own.

Under the attribution rules, capital gains on shares in the trust can be split, enabling the trustees to save on tax. Contrary to the attribution rules, this provision taxes the recipient of the split income at the top marginal rate, instead of reattributing the income to the transferor or lender.

However, the lack of clear legislation pertaining to foreign trusts created loopholes allowing the use of trusts established in foreign countries in order to continue to profit from the various advantages of income splitting. Moreover, the problems with information gathering—and I gave an example of that earlier—to establish the market value of assets of offshore trusts has facilitated tax evasion. In my opinion, it is important to remember that.

We also need to remember what the market value of assets is, that is, the highest price that would be agreed upon in a completely open and unrestricted market between fully-informed, knowledgeable and willing parties dealing at arm's length without constraint. This is the definition of fair market value. As I said earlier, it is a provision that was put in in that regard.

It was hard to establish the fair market value of offshore trusts. This value could be underestimated or the owners could find ways to ensure that the people at the Canada Revenue Agency had the impression that the value was lower.

Consequently, in a section of her 2005 report the Auditor General looked at the various loopholes found in the application of the Income Tax Act. She made a number of recommendations to close these loopholes with respect to the treatment of foreign investment trusts.

Of course, a ways and means motion was introduced on November 9, 2006. The Minister of Finance included this motion in Bill C-37 and its purpose is indeed to amend various rules concerning income tax. This ways and means motion had three main components.

First, the bill amends the Income Tax Act in order to clarify and specify the tax rules for non-resident trusts and foreign investment entities. Those provisions will allow the government to better regulate the use of those offshore investment vehicles by clearly establishing the foreign investment entities that may be exempt from taxation, the rules for ensuring that the foreign trust will be deemed to be resident in Canada and the investment vehicles to be taxed. The provisions will also specify how the attribution rules will apply when a foreign trust is deemed to be resident.

On that subject, I would remind the House that California, for instance, amended its legislation two or three years ago to ensure that, in the case of a company established in California and whose head office is in California, but that does business all over the world, revenue generated by that company must be included in the revenue of the head office. People saw this as strong action against tax avoidance and against tax havens. In fact, this has existed in Canada for a number of years. As a rule, a company whose head office is in Canada must pay taxes on all its revenue, regardless of whether it is generated in Canada or abroad, as long as there is no tax treaty, of course. If a tax treaty exists—we have such treaties with several countries—it is a matter of not taxing the same entity twice for the same revenue. This is completely understandable.

The problem I want to underline, and maybe I will be able to come back to it, is that when we have a tax convention like the one we have with Barbados, where the tax rate varies between 2.5% and 1%, this is a regressive tax instead of a progressive tax. The tax rate goes down as revenues go up. Of course these are only symbolic tax rates. Canada considers that revenues have been taxed a first time in Barbados and does not tax them a second time in Canada. When the tax rate of the foreign country is reasonable and comparable to the rates we have in Canada, tax conventions are totally acceptable. Unfortunately, when we deal with a country that does not have a real and transparent tax system but a system that is used only to allow taxpayers to avoid paying income tax in Canada, we do have a serious problem.

The second aspect relates to a number of general provisions in the Income Tax Act. I am still referring to the ways and means motion of November 9, 2006. First, it changes some general provisions of the act to ensure an efficient enforcement of the measures contained in the first part. The bill proposes a few changes to the Income Tax Act to include different measures in Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. That is to say that the bill is modifying a previous bill that had already been introduced in this House. Some of the changes were suggested by the Canada Revenue Agency to clarify or facilitate the enforcement of measures included in the Income Tax Act.

The third and final component deals with the bijural aspect of the proposed amendments.

In other words, this last part adds or modifies expressions in the English and French versions in order to respect the semantics of civil law and common law. As we know, both apply in Quebec. This is inherent to the unique nature of the Quebec nation.

Let us now examine the individual parts of the bill resulting from the means and ways motion. The first part refers to changes to the rules that apply to non-resident trusts and foreign investment entities. A certain number of amendments and clarifications to section 94 establish the rules for taxation of non-resident trusts.

This part of the bill establishes and clarifies the rules regarding taxation of non-resident trusts. These clarifications and changes are made by amending article 94 of the Income Tax Act, as I already mentioned, which sets the tax rates for non-resident trusts.

As a general rule, a trust is subject to the Income Tax Act if it has received the transfer or loan of assets from an association, a joint venture, a trust, a fund, an organization, a natural person, a partnership or a financial syndicate resident in Canada. The non-resident trust must pay tax on income to the Government of Canada. If it does not, the beneficiaries are held responsible and must pay the amounts due. However, beneficiaries only pay their share of the tax on the trust. Additional relief is provided for beneficiaries who make a minimal contribution compared to other contributions to the trust.

The various changes proposed in this section of the bill amend the rules that apply to repatriation of moneys to Canada. More specifically, these rules define additional criteria for calculating the fair market value of assets. I have already mentioned the definition of fair market value for assets held by a non-resident trust.

Second, again in part 1, there are definitions of foreign trusts exempt from the Income Tax Act. This part of the bill specifies which type of trusts are eligible for tax exemption under the Income Tax Act. These measures will ensure that only trusts truly eligible for tax extensions could use this tax benefit. This will result in fairer tax treatment for everyone. Without going into too much detail, the following list indicates which trusts can be exempt and which trusts must pay tax.

Among the trusts eligible for exemption under the Income Tax Act, the exempt non-resident trusts, are trusts for beneficiaries with a mental infirmity who are not residents of Canada, and whose contributions to the trust are made to provide for the beneficiary's needs. This goes without saying.

Also exempt are trusts established after the breakdown of a marriage to provide for the children from the marriage who are under 21 years of age or under 31 years of age if they are enrolled full time at an educational institute, as well as charitable trusts, of course.

As far as the first exemption is concerned, I believe it is entirely consistent with what the Minister of Finance announced in his budget in February on the possibility of parents amassing, through a specific plan, money to provide for the needs of their severely handicapped children.

Resident trusts eligible for tax exemption are trusts for administering or providing pension benefits to employees, as well as charitable trusts.

Finally, the changes made to the Income Tax Act essentially mean that we have to ensure, quite simply, that the legislation as a whole is consistent.

In closing, Bill C-33 will ensure better application of the Income Tax Act.

The Bloc supports this bill to restrict the use of non-resident trusts as tax loopholes. This will allow us to maintain tax fairness—or improve it since it is not fair enough yet—and also show taxpayers in general that parliamentarians are interested in this and are concerned about their perception of fairness in the system. This will bring in a little more money for the good government.

February 21st, 2007 / 3 p.m.
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Liberal

The Speaker Liberal Peter Milliken

I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

February 21, 2007

Mr. Speaker:

I have the honour to inform you that the Right Honourable Michaëlle Jean, Governor General of Canada, signified royal assent by written declaration to the bills listed in the Schedule to this letter on the 21st day of February, 2007, at 11:05 a.m.

Yours sincerely,

Sheila-Marie Cook

Secretary to the Governor General

The schedule indicates the bills assented to were Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, and Bill S-1001, An Act respecting Scouts Canada.

February 5th, 2007 / 5:35 p.m.
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Conservative

The Chair Conservative Laurie Hawn

Great, that was easy.

We also have some CDs available, as we had discussed, with all the testimony from Bill C-288, the environment committee and so on. That will be handed out for your reading pleasure.

The clerk will explain how it's formatted, for those of us who are Luddites.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 1:45 p.m.
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Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I am pleased to speak to Bill C-28, which is the second bill to implement certain budget provisions.

What concerns me is the government is not speaking to its own bill. A budget is important to Canadians and there are many important provisions in the legislation. A lot of work has gone into it. It is as if there is no need for the government to explain to Canadians what happened as it went through committee, when various witnesses were heard. Surely, some witnesses must have had some input into the various provisions.

Let me remind hon. members about some of the proposals in this second bill to implement certain provisions of the budget.

One of the proposals is the new Canada employment credit. I wonder if there was any questions about whether anybody would slip through the cracks. All of a sudden we have an income tax system which has some principle and some balance to it. It is a progressive tax system where the ability to pay is taken into account. We understand that some Canadians do not even make enough money to pay any income tax.

Another proposal in the legislation is the textbook tax credit. I do not know whether there will be any input with respect to this.

With regard to the transit pass tax credit, I have to wonder if there was any input on this. This credit is linked to the whole issue of our environmental policy with respect to greenhouse gases, smog emissions and the like and to get people to be more cognizant of their options to make a contribution. Individuals have a contribution to make. The Conservatives have not risen to reinforce why they think this proposal is one of the best ways to go and what it adds in terms of the whole scheme of our environmental policy.

What about the new deduction of tool expenses for tradespeople? Who is left out with respect to this deduction? I know some people have been left out because they do not qualify under the definitions. Did they go before committee?

How can we make an informed decision and vote on a bill if members do not defend it and show how the budget and the budget bill address the needs of the most number of Canadians possible?

There is also the exemption for scholarship income received in connection with enrolment in an institution, which qualifies a student for the education tax credit. How many people qualify for that exemption? What else has been done to ensure that those who cannot afford to go to university get to go? I understand it is important to promote excellence, but have we also balanced the need to promote access and affordability?

Another proposal in the legislation is the children's fitness tax credit. I do not know very much about it. It is a modest amount. I am not sure whether there were some concerns about it.

With respect to the pension income credit, the government has subsequently come up with a scheme of pension splitting. This will help certain Canadians. Canadians with a pension income in excess of about $35,600 will be able to split with a partner or a spouse who has less income. However, it does nothing for people with a pension income of less than $35,600. This does nothing for people who do not have a partner.

We are shifting the burden of taxation here and I am not sure of the objective of the government. I have not heard from any Conservatives. They have not spoken to the bill. They have not explained why these things are happening. They have not told Canadians their vision. How do the Conservatives see this unfolding? I cannot explain it.

Another proposal in the bill is the extension of the $500,000 lifetime capital gains exemption and various intergenerational rollovers to fishers. I certainly understand this proposal with respect to the fishery because it is a very important area. I would have hoped somebody from the Conservatives would have spoken about why this was necessary, why the extension of the exemption, and how it translated into meeting the objectives of the Government of Canada on behalf of Canadians, particularly in this sector.

We also have the apprenticeship job creation tax credit. Apprenticeship training has been a priority of every government since I have been here. It is extremely important, but I do not know whether we have done enough on the apprenticeship side. I would have hoped somebody from the Conservative government would have made the case on behalf of those who were seeking to build on their skills so they could be contributing members to society. We did not hear any of that, and I am not sure why.

We have the reduction in the current 12% small business tax rate from 11.5% for 2008 to 11% thereafter. I am not sure whether Canadians understand what a small business is compared to another type of business. However, we do know one thing. Historically, small businesses have contributed to employment growth at a much greater rate than non-small businesses. How will this translate? Are there benchmarks and targets and what does it do for small business either in reinvestment or in further expansion and job creation? Those are important issues to Canadians. Not one Conservative stood and talked about why this was important, how it translated in terms of the vision for Canadians for economic growth, sustainable development and other issues. No interest whatsoever was expressed by Conservative members, and I do not understand it.

We also have the increase to $400,000 from $300,000 of the amount that a small business can earn at a small business tax rate effective January 1, 2007. As a chartered accountant, I know the $300,000 was there a long time ago. We have the magnitude of dollars, the expansion of businesses and start-up costs for businesses. The ability to get a sustainable business going is important.

I am concerned about what is not in this budget bill nor the first one, and that is new dollars for the health care wait times guarantee. It was one of the five promises in the throne speech of the government. In today's media Canadians will be able to read how the minister said that we were operating in a vacuum, that they had no idea how it worked and how to get there, but they would study it and maybe figure it out. How can they make a promise during the election campaign to do something about which they have no idea?That is totally irresponsible.

It is about time some Conservative members stood in this place, spoke about the budget and stood the test of scrutiny of questioning by hon. members of other parties to ensure they know what they are talking about. There is no evidence of that right now.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 1:40 p.m.
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NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Mr. Speaker, I really appreciate the question because when it comes to Bill C-28 and the federal Conservative budget of May 2006, this budget misses the mark totally when it comes to addressing the needs of children and youth.

In fact, under this budget that we are now wrapping up here today, child care wait lists will go up and more parents who are trying to juggle work and family responsibilities will be left with a very untenable situation by putting their children into unregulated child care environments. Nothing the Conservatives have done will address this very serious issue and we are only creating huge problems down the road by neglecting this urgent situation right now.

It is important to note that many in the House really do believe that we have to invest in child care spaces in a program that ensures quality of care for our children, our most precious resource. It is not good enough to simply say we are giving a little bit of money to parents with children under the age of six because that money does not buy the spaces that they need and want. It does not ensure that they will be able to put their kids in a safe protected environment with good quality care.

Most people in this country want to do their best, want to make a contribution. We have talented people willing to work to grow our economy, but they really need to know that our government cares as much about children as it does about paying off the fiscal debt or giving tax cuts to corporations. The government really needs to get a signal that children are the most valuable part of our whole society.

First of all, we would continue to work with the child care community to get an appropriate number of spaces every year. Second, the government should stop the cutbacks that just happened in terms of the youth career placement program. It is through that avenue that we are able to help students and young people get the experience and exposure they need to go on to pursue education and jobs that benefit all of us in the long run.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 1:35 p.m.
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NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Mr. Speaker, the bill is replete with numerous tax credits all of which probably offer a little benefit to some people and certainly they are not to be dismissed as insignificant. However, the member makes a good point in terms of whether or not the appropriate work was done to ensure the proper formulation of this program.

I want to remind the member though that all us in the House on numerous occasions have debated, discussed and approved the idea of a credit for using public transportation. We certainly support the idea.

We have real concerns with a government that focuses only on these kinds of tax credits and does not really look at the bigger picture. My colleague who just spoke before me was quite right when he asked how anybody could think that this measure was going solve the problems of Kyoto or climate change. We need a much broader approach and that is something that the Conservatives are unwilling to do.

Let me say one more thing on this issue. There is always a need to ensure that whatever tax breaks are given a solid analysis is done and the decisions are made on a cost benefit basis. We have found on numerous occasions that it never seems to apply when we are talking about wealthy Canadians or large corporations.

During the process at finance committee around Bill C-28 and before that around the prebudget consultations, we tried very hard to get a cost benefit analysis done of all tax breaks to gas companies and oil companies who are involved in the non-renewable area. We could not get the government to agree to that. Nor could we get the Liberals to support that initiative.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 1:15 p.m.
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NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

My colleague the member for Burlington said that is correct.

It is more important than ever for us to tell Canadians what the Conservatives want us to pass today. They want Bill C-28 to get through the House, into the Senate, and then to receive royal assent so all is finished and done.

Today we are deciding on whether or not the Conservative budget should be given any kind of support and treated with any sense of credibility and integrity.

I remind members and all Canadians who are watching that we are dealing with a budget that was an absolute missed opportunity for the vast majority of Canadians who are struggling to make a living. Canadians want to provide for themselves and their families. They want to contribute to this great country. They have much to offer by way of talent, energy and expertise but are being denied from doing so because of the regressive and repressive policies of the current government, and the governments before it, that keep working families down, that do not lift them up and encourage them to contribute.

This holiday season it is more apparent than ever what kind of a Canada the Conservatives and the Liberals together are creating. It is important for us to remind Canadians that there is an alternative, that there is hope, that there are other ways to approach the way budgets are done and the way this country is ruled and regulated.

The New Democratic Party has always said when it comes to budgets that they are a road map. They are an indication of where a government wants the country to go. We look at this budget in terms of how it would build a better future for everyone in our society.

We have always said it must be a balanced approach. We are not here to suggest all extra revenues should go into spending programs. We are not here to suggest there should never ever be a tax cut to anyone in our society. Nor are we here to suggest that no money should go against the debt. We are here to say that a good budget, one which we were hoping the Conservatives would have brought in, would actually balance those competing demands and would ensure that all areas were recognized and treated responsibly. That means addressing the shortfall in those programs that actually help people make a difference. It means redressing the 13 years of the tightfisted, budget cutting, meanspirited ways of the Liberals.

A good budget would ensure that a portion of any surplus, not all of it, not the whole kit and caboodle, but a portion of it went against the debt.

A good budget would look at the income distribution in this country, at which groups are trying to make ends meet, and ensure that where possible some tax relief went in the direction of people who need it the most.

What did we get with Bill C-28? A budget that basically ignored all of the needs of Canadians in terms of health care, child care, housing and the environment. It gave more tax breaks to the wealthy and big corporations, and in the aftermath of the budget the government put every penny that was left in terms of surplus against the debt.

Canadians did not get the balance they were looking for. They did not get the good government they thought they were getting when the Conservatives were lucky enough to form the government of this country. Much as Canadians are very skeptical about Conservatives, after 13 years of Liberal rule, they were certainly looking forward to some sort of change and had some optimism about the future, but they were sorely disappointed. We have to continue to find ways to address those concerns.

Let me also say that since this budget, as I mentioned at the outset, a lot of water has flowed under the bridge, lots and lots of water. Included in the list of things that have flowed under the bridge is $1 billion worth of cutbacks that have hurt Canadians in very many ways. It is something that has to be addressed in this context because we are talking about a budget and we are talking about the future.

When the Conservatives had a chance to redress some of the wrongs of the Liberals, to right things and to bring balance, they chose to follow the Liberal path of letting the surplus build up, not announcing it and dealing with it before the final days of the end of the fiscal year. Consequently they put $13 billion against the debt and at the same time cut $1 billion out of programs and important areas for Canadians. I want to reference a couple of them, because we need to go back and persuade the Conservatives to right a few wrongs.

The first has to do with literacy. As I have said over and over again, how could a government, if it is concerned about giving people the tools they need to contribute to this economy, cut the very ground out from under those people? How could it destroy the very things Canadians need in order to gain the skills to participate fully in this world?

Time and time again, the Conservatives have suggested that the cutbacks to literacy were all administrative.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 1:10 p.m.
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Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, I will reiterate what I said earlier. We supported the budget because of the promise to correct the fiscal imbalance. Through that correction, we will be able to support not only education and health care, but also Quebec's child care network. I would remind the House that it is not a public child care network. It consists of social economy enterprises often created by parents, and jointly managed by both the workers, primarily female workers, and parents. Out of the $3.9 billion—the amount needed to correct the fiscal imbalance, according to the Bloc Québécois—$270 million would serve as compensation for the Conservative government's unilateral decision to end the national child care program. We are also working on this.

As for loans and grants, and transfer payments for post-secondary education and social programs, I would remind the hon. member that we have a loans and grants system in Quebec. This means that our student debt problem is not as serious as it is in the rest of Canada. In that regard, what is important to us is that the fiscal imbalance be corrected in the next budget, which is why the Bloc Québécois supported the budget as a whole.

Now, a number of measures within Bill C-28 are a step in the right direction, but, unfortunately, as I said, this bill does not go far enough. For example, we called for all books to be exempt from the GST, as is the case in Quebec. There is no sales tax on books, because we want to promote Quebec culture and facilitate access to the documentation needed to really develop a knowledge based economy. We are therefore being entirely consistent. I am anxious to see if the NDP will display the same consistency over the coming months.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 12:45 p.m.
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Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, I am very pleased to speak to Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. As we all know, the Bloc Québécois supported that budget.

I am especially pleased to speak to Bill C-28 here today because several measures in this bill are quite similar to measures that the Bloc Québécois has been proposing for many years. Consider, for example, the tax credit for public transit passes. I seem to recall that one of our colleagues already proposed in this House a private member's bill that was very similar. Another example is the textbook tax credit. For some time, the Bloc Québécois has been calling for the elimination of taxes on all products and services related to books. This has been done in Quebec. This encourages access, not just to textbooks, but to all literature, regardless of target audience, since we must start somewhere.

Finally, the tax break for microbreweries—in fact, the government has extended it to all breweries—is completely in line with what the Bloc Québécois has been proposing. The Standing Committee on Finance also looked at this issue several times. Bill C-28 finally contains this provision, which we have wanted for quite a while now.

There are also provisions to help the next generation. This has been a major concern of the Bloc for quite some time. We even organized a symposium together with the Union des producteurs agricoles on the next generation of farmers. It is important, therefore, to have provisions in the act that facilitate the intergenerational transfer of businesses, although I will have a chance later, of course, to say that much more could have been done in this regard and in other regards as well.

In addition, there are provisions to help apprentices and tradespeople acquire the tools they need. Other provisions help out family fishing firms. Finally, a whole series of tax measures help to strengthen small business, which is the real economic backbone of Quebec. The Bloc Québécois will obviously, therefore, support these measures.

In general, much still needs to be done, but we have a few steps here in the right direction and the Bloc Québécois will vote in favour of Bill C-28.

I would like, first, to describe the bill because it contains a host of provisions. It is important for the people listening to us to understand the full scope of what is in this bill. Basically, there are five main groups of provisions.

The first is a whole series of tax provisions for individuals. Here we find the tax credit for apprentices and tradespeople, an increase in the non-refundable credit for people receiving a pension, the establishment of a public transit tax credit, and an increase in the refundable credit for medical expenses. This first group is aimed, therefore, at individuals.

The second group extends benefits already given to farms to fishing firms as well. The fishing sector is in serious difficulty at the present time. These benefits are therefore very important to us, especially in regions such as the Gaspé, the Lower St. Lawrence and the North Shore. So as I was saying, the second group extends certain provisions previously available to farms to fishing firms as well.

There are various measures dealing with capital gains, the transfer of a business to other members of the family and agribusiness tax benefits.

A third main group of provisions in Bill C-28 has to do with various tax measures for businesses including, among others, the abolition of the surtax on the revenue of Canadian corporations and an increase in the amount a small or medium-sized business can earn if it wants to benefit from a tax credit.

A fourth series of legislative changes pertains to lowering the tax rate on capital gains of Canadian banks.

The last series of measures aims to lower the excise tax on the first 75,000 hectolitres of beer brewed in Canada in order to stimulate the growth of this sector and microbreweries in particular. This is an emerging sector that has had significant growth in recent years.

This sector has been growing in the regions also. For example, in the Joliette region, the Alchimiste microbrewery was experiencing difficulties because taxation by some of our European and American trading partners benefited their microbreweries. In the Canadian tax system, no distinction is made between a major brewery—such as Molson or Labatt—and microbreweries.

We will see that the minister has somewhat changed his tune from his initial announcement. It is interesting to note. We will all have the opportunity to comment on the reasons that led the minister to apply this measure not just to microbreweries but to breweries in general, as requested by the Standing Committee on Finance. The lower excise tax will also apply to major breweries as well.

I would now like to come back to the first series of measures: tax measures for individuals. The first measure for individuals introduced in this notice of ways and means and in Bill C-28 implements a mechanism allowing apprentices and tradespeople to deduct expenses for certain tools. Deductible expenses may not exceed $1,000 or 5% of the apprentice's annual income, whichever is greater. It also allows tradespeople to deduct up to $500 of the cost of certain tools.

Next, the bill implements indexation of the tax credit for apprentices and tradespeople. The maximum non-refundable credit for some people receiving pension income will double from $1,000 to $2,000. It also creates a $1,000 non-refundable tax credit for employment income starting at $250 for 2006 and increasing to $1,000 in 2007.

It creates a non-refundable tax credit for public transit. To be eligible for the credit, taxpayers must supply a receipt or proof of purchase of a long-term public transit pass. Obviously, this does not apply to daily or weekly passes because we want to promote the use of public transit and relieve congestion on our roads. We could also have talked about meeting the Kyoto protocol targets or helping meet them, but because that word has become taboo for this government, we thought it best not to mention it.

This bill also creates a tax credit for textbooks of $65 per month of full-time study and $20 per month of part-time study. The refundable medical expense supplement will be increased from $767 to $1,000 and continue to be indexed to the cost of living. In addition, the bill will reduce the threshold for deducting medical expenses to the 2005 level. It will then continue to be indexed.

This first series of measures for individuals, some of which are better than others, aligns with what the Bloc Québécois has been proposing over the past few years.

The second group of provisions extends the same tax benefits currently enjoyed by fishing businesses to agricultural businesses as well. Thus, tax measures such as forward averaging when transferring a family business that includes agricultural capital property will also apply to fishing businesses.

The third group of provisions has to do with corporate taxation. The business limit under which Canadian and Quebec small and medium-sized businesses can seek a reduced income tax rate is being increased from $300,000 to $400,000. This will reduce the tax rate for small and medium-sized business from 12% in 2007 to 11.5% in 2008 and 11% in 2009. This measure will allow small and medium sized businesses to generate the liquidity they need for future investments.

This bill will eliminate the 1.2% surtax targeted for Canadian controlled private corporations in 2008, with a subsequent reduction of 0.5% planned for corporate income tax in 2009 and 1% in 2010. As a result, this will translate into a corporate income tax reduction from 22.2% in 2006 to 19% in 2010. These measures should encourage investments, although a generalized tax reduction such as this does not automatically lead to increased investment, as we have learned in recent years.

The corporate tax rate was some 28% in the early 1990s, but has fallen to 22.2%. Despite that, the rate of investment last year was not as high as expected, and Canada has moved down in the ranks in terms of productivity. We are currently ranked 15th or 16th, although we ranked much higher just a few years ago.

These measures are necessary, but are not enough to ensure that the Canadian and Quebec economies regain their former productivity. This is important, as we all know, especially considering our aging population and the knowledge-based economy.

The fourth group of provisions amends the tax rate for banking institutions. A single tax rate will now be applied on the taxable capital surplus of financial institutions, and the threshold at which financial institutions start paying tax is being increased. Previously, banks were taxed according to a sliding scale. For example, corporations did not have to pay tax on surplus capital of $0 to $2 million. Between $2 million and $300 million, the tax rate was 1% and for higher amounts it was 1.25%.

The new legislation amends the tax scale whereby a 1.25% rate will apply when taxable capital exceeds $1 billion. In future, we will have a uniform tax rate at a tax level that is quite interesting, especially for small and medium-sized banks, as I was saying.

The last group of provisions has to do with reducing excise duties on beer brewed in volumes up to 75,000 hectolitres. This new measure amends the Excise Tax Act and the Excise Act, 2001, by implementing a sliding scale based on the number of hectolitres brewed.

As I mentioned earlier, prior to this amendment all breweries, no matter the amount brewed, paid a fixed duty according to the volume of beer brewed. This new measure is favourable to microbreweries. In addition, and this is rather surprising, major breweries will also benefit from the reduction in excise tax payable on the first 75,000 hectolitres produced. I am almost certain that some of these major breweries exerted pressure on the government to have this measure apply across the board. Nevertheless, what is important to us it that it will benefit microbreweries and allow them to compete with American and European microbreweries in particular.

I would now like to comment on our position on these provisions. With regard to the first group, concerning taxation of individuals, as I mentioned, we have been calling for a tax credit for tradespeople's tools for some time. These workers often have to pay for their tools out of their own pockets even if employed by a garage or shop. It is quite a significant expense for them. In our opinion, this tax credit will be a tremendous help, particularly for apprentices who not only have to upgrade their tools but also purchase a basic set of tools.

The second measure pertains to public transit. I mentioned that a non-refundable tax credit is being proposed by the government. I have two comments in this regard. We would have preferred a refundable credit because quite often, people who use the bus, subway or public transit are not well off, do not pay income tax and thus cannot benefit from this measure. Consequently, we feel they could have gone one step further by providing a refundable tax credit.

Naturally, we do not believe that the overall number of users of public transit in Canada and Quebec will increase solely because of this measure. We need much more, particularly in light of the fiscal imbalance, to ensure that municipalities and transit commissions to have the necessary means to provide good service at affordable prices. Once again we support this measure in view of attaining the Kyoto targets.

What about the elderly and other segments of the population such as individuals receiving disability pensions, for whom these benefits represent their main source of income?

We in the Bloc Québécois have always maintained that older people should receive special treatment. Obviously, we would like to go much farther than that. Specifically, we are calling on the government, as we have done for a number of years, to ensure that all older people who qualify for the guaranteed income supplement receive it. A few years ago, we noticed that tens of thousands of people who were entitled to the supplement were not claiming it, because they did not know the program existed. Unfortunately, this is still true. At the time, Marcel Gagnon, the member for Champlain, travelled across Quebec. We were able to locate many people who did not think they qualified for this program. Unfortunately, many people still are unaware that they qualify.

As for the tax credit for textbooks, I repeat that we are not opposed to this measure, but we would have thought a refundable tax credit would be preferable, because students, especially full-time students, usually work only during the summer and therefore do not pay income tax, because they do not have sufficient income. They will therefore not benefit from this measure. I know that students can carry this credit forward, but they are purchasing books now. It therefore would have been preferable to have it now.

I know that the Minister of Finance was interested in the suggestion my colleague from Jeanne-Le Ber made at a meeting of the Standing Committee on Finance to look into this. In my view, it should go further.

As well, we are calling for the abolition of the GST on books. Once again, this is vital for us, especially when we are talking about a knowledge-based economy.

Now, if we look into the second main group of provisions—new measures for fishing businesses—as I have mentioned, we are in favour of the new measure aimed at introducing the same types of forward tax averaging in the fishing industry as for farm businesses. However, we think that this benefit could have been more widely accessible. The measure proposed by the government applies to transfers between people in the same family. We think that the government could have gone further and extended the measure to intergenerational transfers outside the family.

As to the third series of provisions, corporate taxation, as I was saying, we fully support increasing the amount of revenue that would allow small and medium-sized businesses to have access to a lower tax rate. In fact, that was part of our 2000 election platform. The Bloc Québécois will stand up for measures that strengthen our SMEs, especially in Quebec, where the economy is made up of small and medium enterprises.

We are aware that competition exists among different countries and jurisdictions with respect to taxation. We must therefore also reduce the corporate surtax.

However, in the case of oil, there is no danger of relocation because companies cannot transfer the oil supply to China or Mexico. Therefore, we think it makes sense to maintain a surtax for oil companies and to abolish rapid amortization in the oil sands, where all investments can be written off in one year, instead of 25% per year, as is the case for conventional oil and gas. We think that is abusive.

I mentioned the fourth group of provisions, which has to do with taxation of banks. Obviously, the proposed measure benefits all banks, but it could also have an impact on the smaller banking institutions. I would like to remind the House that, as we have said in relation to Bill C-37, we have been trying for many years to increase competition in the banking sector, which is extremely concentrated. Five big banks control nearly all of the activity and do not really offer consumers any choice. The proposed measure will most likely have a positive impact in this respect. Let us hope it does.

I would like to conclude by saying that we are very pleased with the measure to reduce the excise tax for microbreweries. I am certain that the entire microbrewery sector, particularly in Quebec, will benefit from this new measure. Might I remind the House that we have been asking—

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / 12:15 p.m.
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Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, it is a pleasure to speak on Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

When looking at a budget, the challenge of any government is to balance a budget that is going to ensure economic productivity and competitiveness and ensure people have money in their pockets. It should try to find a balance, that yin and yang between being able to have a productive dynamic economy and having the resources to provide the social programs we enjoy. As well, ensuring that individual Canadians have the maximum amount of money in their pockets and that governments do not waste money is the challenge of any budget.

The fundamental question of this budget is whether it meets that test. Does it enable our country to have a productive, dynamic economy and also provide the resources to allow us invest in the infrastructure we require in order to have a productive economy? Does it enable us to have the resources to provide for the social programs that all Canadians enjoy? I would argue that this budget fails on all of those counts. I will go through the reasons.

If we look at the global context, we can see in the future a greater amount of competitiveness in the world from giants such as India and China. They are on an economic juggernaut that will increase as time passes. It is up to us to change, modify, improvise and become more dynamic in order to stay ahead of those countries. If we fail to do so, we will suffer.

Right now Canada stands at eighth or ninth in the world in terms of economic productivity. That is okay, but we can do better. I am going to outline ways in which this budget fails as well as solutions for how our country can improve its productivity, for the reasons I mentioned.

This bill deals with a number of income tax measures. I am going to go through them in a second. I also want to say that the fundamental aspects of a balanced budget that will be useful are that the budget is indeed balanced, that there is responsible spending, there is debt reduction and there are tax reductions so that we will have a competitive international tax rate. I have mentioned the reasons why we ought to do that.

I also want to mention one of the profoundly disappointing aspects of this budget. Canadians would be very interested and very disappointed, I think, to know that this budget by the present government actually increases the taxes on the most vulnerable in society, the poor and the lower middle class.

How does it do that? The government increased the lowest tax rate that exists in our country. It also reduced the basic personal exemption. The government argues that the balance to that is the dropping of the GST, a consumption tax, but does a consumption tax really benefit the middle class and the poor? Dropping a consumption tax like the GST benefits primarily the rich, because in order to benefit from that, one has to spend. The more one spends, the more one benefits.

The people who are struggling to survive do not spend that much; ergo, they do not benefit as much. When government takes money out of the pockets of Canadians, it hurts Canadians selectively. Therefore, the wisest thing the government could have done in terms of productivity and of fairness, I would argue, would have been to drop the lowest income tax rates and increase the basic personal exemption. That puts real money in the hands of Canadians.

There is a reason why this budget is so peculiar and particular in certain areas, why it cherry picks certain benefits and does not deal with global tax reductions for individuals, particularly the poor and middle class. The reason is that this is a cynical budget. It is a budget that is designed to curry favour with the electorate. Naturally all political parties want to do that, but to do that by cynically parking one's brains at the door and not implementing solutions based on fact, reason and science is irresponsible.

Instead, the government and this budget are engaging in irresponsible behaviour because the solutions are based on cynically trying to curry favour with the public and putting forth woolly-headed solutions that sound good on the one hand but are not very effective. I gave the example of the GST cut. On the surface it sounds very exciting and good, but unless one spends a whole lot of money, which means one is rich, it is not really going to benefit the rest of Canadians. The fact is that Canadians with low or modest incomes are struggling hard these days. The increased tax burden on them is irresponsible.

One of the tax benefits the government has introduced in this bill is something called the Canadian employment tax credit. On the surface, that sounds wonderful. It is $1,000, but in reality, if we read carefully, we see that it is a tax credit for those who are working. Those who are unemployed and those who are really struggling, the most vulnerable, cannot access this. In fact, those who are working and making minimum wage or close to it do not pay very much in the way of taxes, so this kind of tax credit is not of as much benefit to the most vulnerable in our society at all. It does not help them at all.

What would be smarter? Earlier this year, I introduced something called the Canadian low income supplement, for which I have a private member's bill that will be introduced in the House in the next little while, a bill saying that a person who makes $20,000 or less will receive a cheque for $2,000, tax free. That number will decline to zero in a linear fashion, down to $40,000.

Why? Because this is real money in the hands of those who need it the most. A tax credit for those who do not make much money is utterly immaterial, because either they do not pay tax or the tax is so small that it does not really amount to much. When we so-called help those who are of modest means, we give them $50 a year.

Also, my bill does not apply only to people who work. It applies to people who do not work and who are on fixed incomes. For example, all of us here know seniors in our ridings who are living on fixed incomes. They have given their lives to our country and are living on a very tiny amount of money. The amount of money in my bill, the $2,000, is real money, tax free, in their hands. It will enable them to live and put food on the table. If people are younger, this will enable their children to have various benefits. If people are older and retired, it will enable them to pay for medications that are not covered, as well as a host of other challenges our seniors face day in and day out.

The Canadian low income tax supplement that I introduced earlier this year is something that the government ought to adopt. I hope Canadians who are listening will put pressure on the government, because this would mean real money in the hands of the most vulnerable in our society. It is fair, equitable and humane. It will help those in our society who are most impoverished.

Let us look at another couple of tax measures that are in this bill. One is the Canadian textbook credit of $500 annually, a credit for textbooks for students. On the surface it sounds good, but how does it actually materialize and get into the hands of a student? The tax credit is multiplied by the lowest income tax bracket. Therefore, this tax benefit is actually worth only $77.50. That is right. This $500 tax credit is worth only $77.50 in the hands of students. That, as we know, will not pay for even one single textbook for most courses in post-secondary education.

The next issue is the transit tax to reduce greenhouse gas emissions. We know that the government's so-called clean air act has been an absolute bust full of hot air. What would be a series of solutions that would actually reduce greenhouse gas emissions? I will give members a few.

If we take a look at greenhouse gas emission reduction, we will see that it is tied to our burning of fossil fuels, so the question is, how do we reduce fossil fuel consumption? I have a few suggestions.

Perhaps the simplest way of doing that is tied to how we build our homes. We lose an incredible amount of energy in our homes. We know that the technology exists today to build our homes more efficiently and substantially reduce our consumption of fossil fuels. China is making buildings that produce 70% less greenhouse gas emissions than buildings of a similar size in North America.

What the government can do is go back to adopting the EnerGuide program that it so callously cut because it was so-called Liberal. It may be something that we introduced, but the reality is that the EnerGuide is a good program. It enables people to have the tools, resources and know-how to provide and implement those changes in their homes that will reduce the consumption of fossil fuels and, therefore, the production of greenhouse gas emissions.

I have another couple of suggestions. As we know, cars made before 1986 produce 37 times the number of greenhouse gas emissions produced by a car made after 1996. That is absolutely staggering. By removing from the road one car built prior to 1986, we are actually reducing by the equivalent of removing 37 cars made after 1996.

The government should provide a tax break or eliminate the GST for anybody who takes a 1986 car off the road and buys a car made after 1996. It would be simple and easy to do. In effect, this is an example of tax shifting. The Minister of Finance should take a look at it. Frankly, it ought to be in this bill. It would enable us to shift the tax and encourage people to adopt actions that are more energy sensitive and environmentally sensitive.

Another issue is the Canadian children's fitness tax credit. This is a $500 tax credit for a parent, but again, it is only worth $77.50 because it is multiplied by the lowest tax rate. A parent would actually receive $77.50, not $500. The purpose behind this tax credit was noble: helping parents get their kids to become more active. We know that childhood obesity is at epidemic proportions in our country. How do we deal with this issue?

It would be smart to do two things. First, as I have argued repeatedly in the House, and in fact we passed it in this House in 1998, would be a headstart program for children. It could be adopted in the following way. The Minister of Health should call together all the ministers of health and the ministers of education from across Canada and tell them they should be providing this program for all children up to and including grade 3. Parents would be allowed to go into the class once every two weeks for two hours, if they wanted to, and they would deal with issues such as physical education, literacy and nutrition. Parents would be working with their kids on these three important things.

Literacy and physical education would be used, along with proper discipline, proper care and nutrition. This would have a profound impact on the lives of these children. The pillars and benchmarks would be laid for a solid individual in the future. Prior to the age of 8, neurons in a child's brain are actually quite malleable. They change. What a child experiences at that time could have a positive or negative impact on their future. It would be a smart move if the Minister of Health worked with his counterparts across the country to implement a headstart program.

The other thing that could be done is the implementation of a mandatory physical education program in schools, up to and including grade 11. Mandatory physical education would be very helpful in getting kids physically active during the course of the day.

As I said, it is very important that a budget such as this deal with productivity. I am going to outline a few solutions we could implement that would dramatically improve our productivity and enable us to be really competitive with those giants at our heels right now, particularly India and China.

First, we could reduce the basic personal exemption. Second, we could reduce the lowest tax rate. Third, we have to make sure that we reduce the tax rates on businesses so they are competitive across our country. Ensuring that we have a competitive business tax regime is extremely important.

With respect to surpluses, we should implement the one-third, one-third, one-third rule. One-third would be debt reduction; one-third would be spending on critical areas, which I will mention in a second; and one-third would be tax reductions for businesses and individuals.

With respect to investment, it is very disappointing that the government did not continue the research and development investments that my party made over the last five years. Rx and D is an absolutely integral part of our ability to be competitive. Therefore, I have no idea why the Conservative government chose to dramatically decrease research and development investment. This is one of the pillars of a vibrant and productive economy. Some of that money ought to be going to universities and colleges. Some of it should be used to encourage the private sector to reinvest profits into businesses.

The government should work with the provinces to harmonize the PST and GST to ensure that provincial sales taxes are not applied to business inputs but into their businesses.

The PST in some provinces is exempt from business inputs and in others it is not. The federal government could work with the provinces to ensure there is no PST or GST on business inputs, which would enable companies to make the investments they require.

On education, let us enable our students to get the higher education they require. With costs escalating, I find it reprehensible that individuals in our society are barred from accessing higher education because of the amount of money in their pockets. A fundamental tenet of our country is that everyone has the equal opportunity for success, not equal outcomes but an equal opportunity to be the best that they can become.

The fact that tuition fees have escalated so high and, quite frankly, have become a barrier for some people to access the education they require, is something the government should put its full effort into with its provincial counterparts.

In infrastructure, the government should be adopting the cities agenda that we started. The cities agenda is extremely valuable in ensuring that investments and monies that we have at the federal level will be driven at the municipal level for the needs of local communities. We did that. The agreements were hammered out with the provinces and municipalities and the Federation of Canadian Municipalities was very happy with that. I implore the government to continue with the program.

As the House knows, there are greater barriers to trade east-west than there are north-south. My province of British Columbia has signed a landmark deal with the province of Alberta to dramatically reduce and almost remove the barriers to trade between British Columbia and Alberta. There is no reason that the federal government cannot take a leadership role with the provinces to do this.

How would it work? The Minister of Finance, the Minister of National Revenue and the Minister of Industry should work with their provincial counterparts to call a trade council together where we put forward the trade barriers, eliminate those that are unnecessary and useless and we move on. It is a major restriction.

I will give one example, which is labour. The fact that somebody who is trained in Ontario cannot work in British Columbia or that somebody trained in B.C. cannot work in Newfoundland is ridiculous. The fact that we are all trained in the same country and yet our skills are provincial specific is an absurd situation. It is a major restriction to labour mobility and a major drain on the ability of our country to be economically competitive. I encourage the government to work with its provincial counterparts to do that.

When we were in government we started the smart regulation initiative, which took a ruthless look at the regulations. We started hacking away at and removing all those regulations that were unnecessary. The groundwork is there. The minister should take a look at this, continue with the smart regulation initiative and reduce those barriers to trade.

My last point is on the issue of immigration. With our changing demographics we know that the ratio between the retired population to worker population is increasing. We can do two things. First, retire the mandatory age of retirement. If the 65 of today is the new 50, why on earth do we not allow people who are 65 and above to work? It is absurd given the demographic changes that we require. These are smart, productive, willing people who want to work. They would be a boon to our economy.

Second, with respect to immigrants, many of the immigrants in our country are working on the margins because they may be here illegally. However, to ensure we honour the law but also enable these people to become integrated into our society and not live at the margins, we should give these people an opportunity to come in from the cold, apply for a worker's permits, give them a two year permit and renew it a couple of times. If they are law-abiding, pay their taxes and are employed, we then give them the chance to become Canadian citizens.

I have provided the government with a series of solutions and opportunities that it can take which would enable our country to be more productive. I am sure the government will find widespread support from across Parliament to give effective solutions to the benefit of our great people.

Budget Implementation Act, 2006, No. 2Government Orders

December 11th, 2006 / noon
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Conservative

The Acting Speaker Conservative Royal Galipeau

When we last considered Bill C-28, the hon. member for Western Arctic had seven and a half minutes left for his comments. He has the floor.

The House resumed from December 8 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the third time and passed.

Budget Implementation Act, 2006, No. 2Government Orders

December 8th, 2006 / 1:25 p.m.
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Conservative

The Acting Speaker Conservative Royal Galipeau

It is with regret that I interrupt the hon. member. When we return to the study of Bill C-28, there will be seven and a half minutes left to the hon. member for Western Arctic.

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

Budget Implementation Act, 2006, No. 2Government Orders

December 8th, 2006 / 12:45 p.m.
See context

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

Mr. Speaker, I am pleased to speak today about this notice of ways and means on the budget. Although the Bloc Québécois has always had serious reservations about this budget, we have decided to support it, as we believe it contains a number of gains that the Bloc Québécois has long been calling for. Moreover, today, during question period, I was glad to hear the Minister of Transport, Infrastructure and Communities remind this House that he needed the support of the Bloc Québécois. I think that clearly shows how useful and relevant the Bloc Québécois is.

Here are some of the gains and long-standing requests that we have successfully obtained from the government. The first is tax exemption on bursaries. We believe that if one level of government gives money to students for their studies, no part of that money should be taken away from them in the form of taxes. We also obtained tax improvements for micro-breweries. This is of particular concern to me, because the McAuslan brewery is in my riding. If time allows, I may discuss this further a little later. In any case, we had been calling for this for quite some time. A tax credit for public transit users, something that the Bloc Québécois requested on several occasions, was part of our platform. We are pleased to have obtained this. We had also long been asking for removal of the excise tax on jewellery, a tax credit for tools—the government even extended this to apprentices—and a 50% reduction in the right of landing fee.

As the Minister of Transport, Infrastructure and Communities stated this morning, the government needs the support of the Bloc Québécois in order to advance its issues. We are also working on another large file. We are hoping, as the parliamentary secretary said this morning, to be very pleasantly surprised and see the government finally fulfill its promise to correct the fiscal imbalance in the next budget.

However, I must confess that we are skeptical about this, to say the least, because, since tabling the last budget, all signs from the government seem to minimize the seriousness of the problem. We were even seriously told in this House and in committee that the GST reduction was helping to resolve the problem. This illustrates the government's failure to understand the problem of the fiscal imbalance. We are told that the problem is being resolved, although meanwhile, Ottawa cancelled a child care agreement with the Quebec government, thus adding to the fiscal imbalance.

Some say that the Bloc Québécois' requests are far-fetched, although the minister, Mr. Séguin, made the same requests in the National Assembly on behalf of Quebeckers. The number is the same. No matter how you try to calculate it, the answer is always $3.9 billion.

So, for us this is essential and it will be critical in the next budget. If the Minister of Transport, Infrastructure and Communities was serious this morning when he said that he needs the support of the Bloc Québécois, he will take note that this is our main demand. This is why Quebeckers put their trust in the Bloc Québécois. They know that we always follow up on our commitments, including resolving the fiscal imbalance issue. Quebec must receive $3.9 billion annually, through transfers or through the equalization program. In the short or the middle term, the government will also have to consider a true tax room transfer. Indeed, the middle or long term solution that is needed to solve the fiscal imbalance issue can only be achieved through a tax transfer.

No one in Quebec wants to be subjected to the risks that result from having various governments in Ottawa, various parties that change the programs, that abolish them, or that suddenly reduce federal transfers, like the Liberals did in 1995. We want to be able to manage our own financial resources, since it is our taxes that we are sending to Ottawa. This is a top priority for the Bloc Québécois.

In his economic statement, the Minister of Finance also talked about the government's intention to limit the federal government's spending power.

We are not opposed to that. On the contrary, this is interesting but, once again, we are very skeptical.

I asked the minister, when he appeared before the committee, to elaborate a little more on this, but he said very little. Now that this House has recognized that Quebeckers form a nation, it would be nice to include, in the next budget, real and concrete measures to limit the federal government's spending power.

What does this mean? When we talk about restricting the federal government's spending power, it is clear, at least in Quebec, that we are talking about the right to opt out with full financial compensation from any program put in place by the federal government in a Quebec or provincial jurisdiction. This measure will also have to be retroactive, so that the governments of Quebec and the provinces can say, “There is currently a program in my jurisdiction. We are asking for the right to opt out with full compensation, to be able to set up our own programs”.

This could be the case, for example, with the child care program. The approach used by the government in this area is totally different from the one selected by Quebec, which is to establish a public child care program shared by all.

If the government is really serious about limiting the use of its spending power, it has to expect that the Government of Quebec might say, for instance, “We are withdrawing from this program, taking the money currently provided by the federal government for child care and investing it in our own program”.

In its next budget, the government will have to correct errors and problems with taxation which penalize Quebeckers. I touched on that earlier this morning. The biggest problem was the impact of the child care program and cuts to Quebec in terms of the tax credit for child care, among other things.

In the rest of Canada, parents claiming tax credits for child care may claim $25, $30 or $40 a day, while in Quebec, parents who have access to public day care can claim only $7 a day. They still have to pay the difference through their taxes in Quebec, but they cannot claim more than $7 a day on their federal income tax. This makes for substantial savings for the federal treasury, while Quebeckers lose control over that money.

I questioned the parliamentary secretary this morning. As part of the Conservative government's alleged commitment to flexible federalism, will her government announce that it will respect the choice made by Quebeckers? Will it give back to the Quebec government the money saved each year on tax credits unclaimed by Quebec parents, so that this money can be invested in Quebec's own child care services? The parliamentary secretary would not commit to do so. It is very sad to see that this commitment to flexible federalism has remained little more than lip service. Flexible federalism really has to be taken to mean, “We are prepared to make an effort whenever it is no trouble and it serves us. Otherwise, it's your problem. We will not go out of our way for you”.

Quebeckers have to come to the realization that the only real choice left is to become our own country, to be able to make our own decisions and our own choices without having to ask permission of other levels of government. In the meantime, the Bloc Québécois will be here to try to limit the damage.

Moreover, there is absolutely nothing about Kyoto in this budget, which is very sad. Not only is there nothing on Kyoto, but the Minister of the Environment told us earlier this year that she would not give the $320 million that Quebec needs to implement its Kyoto plan.

In this regard, there is a similarity between the Conservatives and the Liberals. Neither of these parties acted on the Kyoto protocol. Yes, the Liberals ratified the protocol. The leader of the official opposition held a nice conference in Montreal and said a lot of nice things, but that does not change the fact that, under the previous government, Canada's record with regard to greenhouse gas emissions was nothing less than catastrophic.

For years the Liberals told us that it was important to meet our targets, but they did nothing. As for the Conservatives, they told us that it was impossible to meet our targets, so they did nothing. The Conservatives know they are incompetent and unable to deal with this problem, whereas the Liberals pretended they did not know. I think it is the only difference between those two parties. We hope that the next budget will include funds for the environment and for the Kyoto protocol and that the Government of Quebec will at least receive the money it has requested to fund its plan.

There is something else missing in this budget. It is a shame because what is missing would not cost much. I am talking about funding to set up an appeal tribunal for refugees, in accordance with the legislation. The regulatory and legislative framework already exists. The government just needs to fund this tribunal so that refugee status claimants can fully affirm their rights. They are currently dealing with commissioners who are often appointed for partisan purposes.

We recently saw in the media that the Conservatives are blocking some appointments for partisan reasons. By having an appeal division with truly independent judges, a refugee claimant who is the victim of a commissioner's error could appeal the decision and truly obtain justice. In my riding, there is a very real, very concrete example in the case of Abdelkader Belaouni, who is a refugee in sanctuary in a church basement in Pointe-Saint-Charles. This person was clearly wronged by a commissioner. This example is clear and striking because Laurier Thibault, the commissioner who denied Mr. Belaouni's claim, has not approved a single claim in the past two years. This is a commissioner who denies almost 100% of all claims. That cannot be right.

If a true appeal tribunal were set up, we would notice this situation even more. Maybe that is what the government is afraid of. Impartial judges might not have a 100% rejection rate and would see that many claims are justified and legitimate. Furthermore, Abdelkader Belaouni is quite involved in Pointe-Saint-Charles and has the community's support. This man wants to contribute to society and he wants to work. He has been here for 10 years. It is truly sad to see that such situations exist in Canada because the Minister of Finance did not include in his budget a few million dollars to set up this appeal tribunal.

In the meantime, the Minister of Citizenship and Immigration should personally intervene, as far as the law allows him, in order to compensate Abdelkader Belaouni and regularize his situation. Since there was no appeal tribunal in place to prevent this situation, the minister must act to repair the damage done, at least. This would be a good way to make amends.

The ways and means motion before us would implement part of the budget, Bill C-28. As I have said, the Bloc Québécois asked for a number of measures, including a tax credit for public transit, a tax credit for textbooks and tax deductions for microbreweries. We support these measures, as well as measures to assist and reduce the burden on small and medium businesses in Quebec.

It is therefore not surprising that we will support Bill C-28 even though we have serious concerns about this budget overall.

There is one particularly interesting measure that I mentioned before: a different excise tax for micro-breweries. Since the budget was tabled, the measure has been modified somewhat to cover nearly all Canadian breweries. Even so, it will help a lot and we are pleased to have made progress in this area. As I said, I think that this will help local economies like those in my riding where the McAuslan microbrewery is located. It produces a good product, does excellent work, employs people and helps our communities survive. This is an excellent example of how the Bloc Québécois can contribute by encouraging the government to make good decisions for people.

With respect to individual taxation, the tax credit for toolkits purchased by tradespeople is also something we have been asking for for a long time. In many cases, people whose jobs require tools end up spending a lot of money every year. This is how they make their living, so they do not have a choice. They must buy these tools. Therefore, we are very pleased with this measure, which we have been asking for for so long.

As for the transit tax credit, that was in our 2004 election platform and we are pleased to see that the government finally listened to reason and included this measure in its budget. Obviously, this will not solve the problem with greenhouse gas emissions or the problem with public transit in general. The issue of underfunding must be addressed through the elimination of the fiscal imbalance. If the government is really serious about wanting to deal with transit issues, it will have to deal with the fiscal imbalance.

There are also a few measures for the most disadvantaged, including increasing to $1000 the amount deductible from the taxable income for pensioners. This is a good measure. However, it would be hard not to say that this does not even compensate for the billions of dollars still owed to seniors who were cheated out of the guaranteed income supplement. This program was too difficult to understand and too difficult to use for many of them. There are people who, for years, would have been entitled to apply for the GIS but never did. When they became aware of it, it was too late. The government agreed to pay the money back only for the last 11 months. That was under the Liberals. We would have thought that the Conservatives would act differently, but no, they are still refusing to give full retroactivity to those seniors who were cheated out of the guaranteed income supplement.

Yet, I challenge anyone not to pay taxes for four or five years and then tell the government, when it asks for its money, that it will only get the last 11 months worth of taxes, and that it is too bad if it did not notice anything sooner. Of course, that would not work. The person would have to pay the taxes owed for the whole period of time. The Bloc Québécois thinks that the government should refund seniors for the whole period during which they did not get the support that they needed.

Finally, as regards corporate taxation, we are also in favour of increasing the sales figure that allows small and medium size businesses to benefit from a reduced tax rate. We think this is a measure that will help develop the Quebec economy. In fact, we talked about this in our 2000 election platform, when the Bloc proposed a reform of corporate taxation to give more leeway to small and medium size businesses by reducing their tax burden, because this would allow them to better compete on international markets. So, we like this measure.

In conclusion, the next budget will have to include a true support program for older workers, as pledged by the government in its throne speech. That has not been done, but it will have to be done in the next budget.