Bill C-28 (Historical)

Budget Implementation Act, 2006, No. 2

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

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.

Budget Implementation Act, 2006, No. 2

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I want to raise what we are actually debating here today. We are debating the budget implementation act. I want to actually explicitly state what we are doing in this bill and why the member is opposing this bill.

For workers, we are creating a new Canada employment credit for every worker across this country and a new deduction for tool expenses for tradespeople, which is very needed certainly in western Canada.

For students, we are creating a new textbook tax credit and a complete exemption for scholarship income. The member talked about students. This is what we are doing for students.

For public transit users, we are creating a new tax credit for public transit passes.

For seniors, for the first time, we are doubling to $2,000 from $1,000 the amount on which the pension income credit is calculated.

For small businesses, something the NDP should be in favour of, we are reducing the current 12% small business tax to 11.5%, and then to 11%, and we are also increasing to $400,000 from $300,000 the exemption for small businesses.

This is for workers, students, seniors and small businesses. This is what is actually in the budget implementation act. This is what is in the budget. This is what is in the bill. This is why the NDP should stand and support this piece of legislation.

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

Mr. Speaker, I have Bill C-28 here. As I look through it over and over again, I really do not see how this bill actually deals with, for example, lowering tuition for students.

It does not increase pensions, whether it is the CPP, the GIS or the OAS for seniors.

I also do not see any real investment in public transit. We know that there is serious gridlock in a lot of cities. It has slowed down a lot of the small businesses. Their employees take a long time to go to work. They get stuck in traffic jams. People are crying out for investment in public transit so that we will be able to have better productivity and people will not be wasting their time sitting in traffic jams.

Those are the kinds of things that small businesses, seniors, students and a lot of working families are asking for.

Working families are saying that giving them a tax credit or a small deduction does not help, because, as we know, it takes a lot more than $100 a month to get affordable child care. There is not a chance that they even can get enough money for babysitting by April 2007. Also, this money for the so-called universal child care allowance is taxed back. When I tell working families that they had better put aside some money because the money they are receiving every month will be taxed by April, they say, “Oh, my goodness”.

This budget has nothing for working families that they can count on, especially as it relates to children.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I have to say that the hypocrisy that I have listened to is unbelievable. I know it very well and I know the member very well. I know what work she did on the issue of getting child care spaces when we were both councillors in the city of Toronto. The fact is, though, that the member's party brought down and defeated the best social policy we were going to have when it came to child care spaces and early earning for our children. That party brought down the post-secondary investment and all of the increases in the GIS that we were putting forward.

We were delivering all of those things. All of them were issues that I know my colleague cares very much about. The fact is that it was her party which brought down the government so that we are not able to deliver on those policies. How can the member stand there and still promote these policies? I question how the member can talk about those policies and how much she cares when those things were all being delivered by the previous Liberal government. It was her party that brought the government down.

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

Mr. Speaker, I do not know what part of corruption that member of Parliament does not understand, and also the fundamental concept of democracy. I do not know whether that member of Parliament understands what democracy means. It was Canadians who voted the last Liberal government out of office. It was Canadians who voted. It was Canadians who were upset with the corruption, with the money that just disappeared into some Liberal coffers, the Liberal Party's coffers. That is why the Liberal Party has been thrown out.

Having said that, I will say that we have to come together rather than blaming each other and looking at the past. Why can we not say that? In order for us to move forward, why can we not join together and look at investing in children and making sure that a decent Canadian early learning and child care act is passed?

I want to remind folks that in 2003 there was a red book promise. There was a 2004 promise. I believe there was also a promise in 2000. There were so many promises on early childhood education that we cannot keep track of them.

Fundamentally it was Canadians who voted the last government out of office, not the New Democratic Party of Canada.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I would like to split my time with my colleague from Edmonton Centre.

I am very pleased to have this opportunity to rise and speak on behalf of Bill C-28, the budget implementation act, which, as the title indicates, is designed to implement certain measures outlined in our budget 2006.

On January 23, Canadians voted for change: a change in government, a change in fiscal accountability, and a change in fiscal management. These are changes to the benefit of all Canadians.

With that change came the direct support for our new government's five priorities. These priorities were outlined in the Speech from the Throne as well as in budget 2006, delivered by the finance minister on May 2.

On June 22, Bill C-13, the first budget implementation act, was given royal assent and many of our fiscal promises were fulfilled. These measures included reducing the GST from 7% to 6% and introducing a $1,200 per year universal child care benefit for parents of children under the age of six.

We introduced other tax cuts as well, tax cuts that Canadians have not seen before. Our first budget cut taxes by an incredible $20 billion over two years. Yes, $20 billion over two years. Our budget offered more in tax cuts than the four previous Liberal budgets combined.

Canadians are very happy with our budget, and I am happy to say that not one of the opposition parties opposed our budget when it came to a final vote, not one. They grumbled at first, but then they studied our budget and saw the great benefit of our government's budget to Canadians. In the end, they did not oppose it, so our budget has the support of Canadians and of the opposition.

I am pleased to be here today supporting the second budget implementation act, Bill C-28. We want to keep rolling out the tax cuts for Canadians and, in doing so, show Canadians that when we make a promise, we keep it.

The action taken with Bill C-28 will cut taxes for pensioners, families, students, users of public transit, and each and every worker in Canada. These measures will make a real difference to Canadians by focusing on their priorities, priorities like lowering taxes for working families, assisting small and medium sized businesses achieve real growth, and helping tradespeople, students, families and seniors.

In short, Bill C-28 delivers on our budget and delivers real tax relief for Canadians. This government recognizes that Canadians pay too much tax. As a colleague of mine previously reported, according to the Fraser Institute, while the average family's income has gone up 1,100% since 1961, its taxes have shot up a whopping 1,600%, outstripping the growth in income.

As I mentioned, this is a new government with a new respect for our fellow Canadians. We need only look at the measures in Bill C-28 to see exactly how we are putting more money back into the pockets of hard-working taxpayers.

Working Canadians are the foundation of Canada's economic growth. However, choosing to work also means additional costs, costs for everything from uniforms and safety gear to computers and various supplies. For some, particularly low income Canadians, these additional costs can impose a barrier to joining the workforce. For others, work related employment expenses are another factor that limits the rewards of their hard work.

In recognition of this, budget 2006 introduced the Canada employment credit, a new employment expense tax credit for employees' work expenses. A credit on employment income of up to $500 will be provided effective July 1, 2006. The amount of employment income eligible for credit will rise to $1,000 effective January 1, 2007.

Budget 2006 also recognizes that creating an environment for more and better jobs and for strong economic growth depends on having a competitive tax system. The engines of our economy, our wealth creators, are businesses, both small and large, and they should not have to face the heavy burden of overtaxation. The businesses that feel this burden most are small and medium sized businesses. They create jobs and are the backbone of our country's economy.

In my riding of Glengarry—Prescott—Russell, small and medium sized businesses are essential. They are the economic backbone of my riding: farms, farm equipment retailers, manufacturing, industry, pharmacies, grocers, et cetera. Without their success, ridings like mine would struggle. Many of us are employed by them. Small to medium sized business is responsible for the majority of all new jobs created in Canada. Whether we live in an urban riding or a rural riding, all of us turn to small businesses for services, and our future economic growth will depend a great deal on their success.

An important way that Canada's federal income tax system supports the growth of small businesses is through a lower tax rate on the first $300,000 of qualifying income earned by a Canadian-controlled corporation. This helps these small businesses retain more of their earnings for reinvestment and expansion, thereby helping to create jobs and promote economic growth in Canada.

With the passing of Bill C-28, and effective January 1, 2007, the threshold for small businesses will be increased from $300,000 to $400,000. In concert, the 12% rate for eligible small business income will be reduced to 11.5% in 2008 and then down to 11% in 2009. It is estimated that these changes will reduce government taxation on these businesses by $10 million in 2006-07 and $80 million in 2007-08.

There is more.

Hon. members from all ridings know that Canada is facing a serious shortage of tradespeople: carpenters, plumbers, electricians, cooks and others. Our government is taking action to encourage apprenticeships and to support apprentices in their training.

Specifically, we will help companies hire apprentices with a new apprenticeship job creation tax of up to $2,000 per apprentice. We will create a new apprenticeship incentive grant of $1,000 per year for the first two years of a red seal apprenticeship program and other programs.

Through these actions, our Conservative government will be investing more than $500 million over the next two years, which will help approximately 100,000 apprentices.

We will also help apprentices and tradespeople with the heavy burden of buying the tools they need to do their jobs. Our government will invest $155 million over the next two years for a cost of tools deduction, which will help approximately 700,000 tradespeople in Canada.

In regard to our seniors, members will no doubt agree that some seniors struggle to live on a small fixed income. As I travel throughout my riding, I often hear seniors ask, “Why does the government not do something to help seniors, those of us on a fixed income?” I am always pleased to state that this is exactly what we are doing. We are providing real tax relief to seniors.

The most important measure involves a doubling to $2,000 from $1,000 of the amount on which the pension income credit is calculated. A deduction for the first $1,000 was introduced in 1975, but since its introduction the amount has remained unchanged. That is unbelievable.

It took our new Conservative government to do something for our seniors to rectify this problem. We recognize and understand the difficulty faced by seniors on fixed pension incomes. To provide greater tax assistance to those who have saved for their retirement, budget 2006 increased to $2,000 the maximum amount of eligible pension income that can be claimed under the pension income credit, effective for 2006 and subsequent taxation years.

The measure will benefit nearly 2.7 million taxpayers receiving eligible pension income, providing up to $155 per pensioner, but not only that, it will remove approximately 85,000 pensioners from the tax rolls. This is real action to the benefit of our seniors.

In regard to Canadian families, they are the very foundation of our society and they play a vital role in the development of our communities. This is why it is important that we reduce their tax burden as much as possible.

One of the ways we are doing this is with the children's fitness tax credit. The health and fitness of our children is very important. As the government, we want to promote physical fitness among children and we want to do it by supporting families directly.

We take families seriously and we take physical fitness seriously. Budget 2006 provides a children's fitness tax credit effective January 1, 2007. The credit will be provided on up to $500 of eligible fees for programs of physical activity for each child under the age of 16.

I am the father of five children. They are involved in fitness activities such as soccer, basketball and highland and Celtic dance. I am pleased to state that finally we have a government that listens to families, that works together with families and that helps families with their real expenses. This is a great tax credit for families. It encourages and supports physical fitness and it is my sincere hope that the opposition parties will support it.

Lastly, I would like to highlight what we are doing for students. We believe that our post-secondary students need to be supported in their hard work in pursuit of academic excellence. Currently, the first $3,000 in scholarship, fellowship and bursary income received by a post-secondary student is not taxed, but any amounts above $3,000 are taxed. Students do not need this. They do not need to be paying tax on scholarships, fellowships and bursaries. They need to use that money toward their education.

I am very pleased to highlight that our new government understands the financial challenges that post-secondary students face and that we are on their side. We want them to succeed in their studies by alleviating financial pressures, which is why Bill C-28 proposes a complete exemption for scholarship income received by students.

Budget 2006--

[The Deputy Speaker, Bill Blaikie]

Order, please. When the Speaker is standing the members are sitting.

The member's time has expired. I tried to give him a signal but he never looked at the chair and I cannot give people signals if they never look at the chair.

Questions and comments, the hon. member for Yukon.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I want to set the record straight on one item before I ask my question.

The member suggested that all opposition parties were in support of the budget. I want to make it categorically clear, on behalf of all Liberals, that this opposition party totally opposes the budget. We have always opposed it and we will continue to oppose it.

There was a technical slip-up in Parliament and one vote slipped through. If the government wants to make a big issue out of the fact that it only received support due to a technical mistake, then that is a pretty weak case to make. Maybe it was the same type of mistake that people made in electing the Conservatives once they see the budgets and the recent budget cuts.

The member talked about the importance of seniors and the fact that they had not suggested an increase in the pension deduction since 1975, which is true, and it is too bad that they did not do that, but for those seniors who do not get the pension deduction, why did the government harm seniors by increasing their income taxes from 12% to 12.5%?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, in answer to the first comment the hon. member made, the records show that there was no opposition regarding our budget. I thank the hon. member for his party's support regarding it. This government pays attention--

[An hon. member]

It is history.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Exactly so. It is history. It is on the record. I thank the member again for his support.

As I mentioned, many of our seniors are on pension incomes. Our pension income action will actually benefit 2.7 million pensioners and it will remove 850,000 people from the tax rolls. It is a very strong measure in favour of our seniors.

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

Mr. Speaker, many seniors do not file income tax returns and many of them, through no fault of their own, do not receive the guaranteed income supplement even though they are entitled to it.

Would it not be a much better use of taxpayer money to help the poorest of our seniors by adding more funding to the guaranteed income supplement? Seniors would then have real money in their hands.

The member said that if seniors have filed their income tax returns then they should automatically receive the guaranteed income supplement. However, if seniors do not apply for it or if they do not know how to apply for it, they do not receive it. Even if they receive it, they end up getting a small amount of money.

Would increasing the guaranteed income supplement not be a better way to spend the budget surplus? This would give our seniors some income security and real money in their pocket. It would also help to have a national pharmacare program so seniors would not have to pay so much to buy the drugs they need.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, there are many different ways to assist seniors and we have taken a very dramatic step in assisting our seniors by doubling the amount of pension income that is non-taxable, that is doubling it from $1,000 to $2,000. We have also taken other measures, for example, lowering the GST, so when they spend money they are actually saving on the GST.

We are helping seniors on other matters. such as health care. One of our priorities is ensuring that health care is more readily accessible to our seniors.

I would like to talk about the surplus. We put $13.2 billion down on the debt, thereby saving Canadians interest charges of $650 million per year. The $650 million per year will be reinvested for the benefit of Canadians. We have other strategies that we will be presenting in the future to further assist our seniors.

I would like to underline that Bill C-28 takes direct action to benefit seniors, especially those on fixed pension incomes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, it is a great pleasure to speak to Bill C-28. This budget is full of good news for the people of Canada and the people of Edmonton Centre. I intend to highlight the benefits that it will have in my community.

I am very proud to represent the constituency of Edmonton Centre. This is a time of great economic growth in the province of Alberta, but that growth also comes with great challenges that must be met if we are to enjoy the benefits of growth. The vibrant and diverse people of Edmonton are up to this challenge, and I am pleased to see in this budget that the government is giving them the tools that they need for this task.

First, I would like to talk a little about the constituency of Edmonton Centre. The riding includes the downtown core as well as some of the oldest residential neighbourhoods in the city. It includes part of the scenic river valley, one of the oldest municipal golf courses in Canada, and the oldest municipal airport in Canada, Blatchford Field.

A tour of the riding will show us the Alberta legislative buildings, as well as the Royal Alberta Museum, the Art Gallery of Alberta, the Citadel Theatre, the Francis Winspear Centre for Music and the historic Hotel Macdonald. There are corporate headquarters, along with a thriving small business community and the World Trade Edmonton Centre.

We have two of the busiest hospitals in the city, as well as two of the largest post-secondary institutions in the province. There are new condo developments in historic old houses. There are many shops devoted to antiques, as well as many private galleries showing off the best that western Canadian artists and artisans have to offer.

Edmonton's menu of fine restaurants rivals any city in Canada. There are industrial areas and beautiful parkland. The area is as rich and diverse as Canada itself. There are many seniors' residences alongside condos where young families are moving to bring up the next generation.

There has always been a large immigrant community in Edmonton Centre. Where once Ukrainians came to build better lives for themselves and their children, we see the same thing happening with new Canadians from China, Vietnam, Somalia, Sudan and many other places around the world.

I would like to touch upon the importance of students and the measures that the government has taken for their benefit. At schools, like Grant MacEwan Community College, I am extremely pleased to note that post-secondary students will now have their entire scholarship, fellowship and bursary incomes exempt from income tax. For many of these students, that money represents their entire income and this will free them from having to juggle a part time job while studying for exams. More than 100,000 students will be affected by this measure.

Another institution that is important to Edmonton is the Northern Alberta Institute of Technology. This school is the largest supplier of skilled trades and apprentices in the province and supplies fully 17% of apprentices for the entire country.

Several measures in the budget will apply specifically to students at NAIT. I have been to many forums at NAIT and I have been fortunate to be part of a major funding announcement for new programs and services. I have talked to the students at these events and have listened to their concerns. People accept that tuition fees are part of getting a good quality education, but one of the single biggest costs associated with getting an education and which affects the students' standard of living is the cost of textbooks. It is for that reason that budget 2006 has instituted a new textbook tax credit. This will help students where they need it most, and this credit applies to both full time as well as part time students.

Apprentices are critical to the future of the Alberta economy and, in fact, Canada's economy. There is a surge in demand now and this government is moving to ensure that that demand is sustainable. That is why we have introduced the $2,000 job creation tax credit. Eligible employers will now receive a tax credit equal to 10% of the wages paid to qualifying apprentices in the first two years of their contracts, to a maximum of $2,000 per apprentice per year. This helps maintain a supply of apprentices by ensuring that people look at this training as a stable opportunity for future jobs. It will also encourage employers to grow their businesses with a steady supply of skilled labour.

Once the students leave NAIT, they will also receive a benefit from this budget in the form of a $500 deduction for tradespeople's tool expenses, as has already been mentioned. This measure recognizes the cost of tools beyond the $1,000 that is covered by the new Canada employment credit and provides yet another helping hand exactly when and where it is needed.

Successful students are vital to our future and are represented in the budget by several measures, but I also want to highlight another segment of our population that needs a helping hand.

Our senior citizens have lived and worked through some of the darkest times as well as the brightest. They have raised families. They have fought Canada's wars in the cause of freedom. They have started and run businesses and they have paid a lot of taxes. For too many of them, however, life is a struggle, being caught between the rock and a hard place of a fixed income and a rising cost of living.

It is for this reason that the initiative to raise the maximum amount of pension income, which can be claimed as pension income credit, is so important. Since its inception 30 years ago, the credit has been $1,000. Recently we measurably increased it to $2,000, affecting 2.7 million taxpayers and taking 85,000 taxpayers off of the tax rolls altogether. Those people have worked so hard so we can enjoy our prosperity. It is critical to know that 85,000 pensioners will no longer face the burden of income tax due to this budget, and I am extremely pleased to be able to say that.

Another new credit in the budget will help seniors, but it will also help students and all of us. I am referring to the $500 public transit pass credit. One does not have to spend a lot of time in Edmonton Centre to see how important the public transit system is to that community. Whether it is students making their way to college or school, seniors shopping for groceries or businessmen heading for downtown, the Edmonton transit system covers all parts of the constituency and is relied on by a very large number of people.

This new credit will increase ridership and, thus, also increase the frequency of services. It will also reduce the amount of air pollution that is caused by the large number of cars on the road. This is a tangible measure to conserve our environment and protect the health of Canadians and its value will be felt by those who need it most.

The budget has measures to help out the thriving small business sector in Edmonton. Small and medium enterprises are the real engine of our economy and they need a clean and sustainable supply of fuel on which to run. That fuel is capital and our new government wants to keep their tanks full.

Specifically, the government is reducing the current tax rate of 12% on qualifying small business income to 11.5% in 2008 and to 11% in 2009. In addition, we are increasing the amount of income a small business can earn before it has to pay federal tax from $300,000 to $400,000 as of January 1, 2007.

I take great pride in going back to the riding to tell business owners that we are listening to them, that we understand their concerns and that we are taking steps to help them solve their business problems and develop even more jobs and prosperity. Some of these small businesses are companies that provide tax advice to people who are fighting the high cost of living and the high cost of taxes at the same time. They are the ones who have known for a long time that there is an inherent advantage to being a small business owner when the tax man comes knocking.

There are many more deductions that people can claim and a variety of options for lowering the overall tax burden. Those who receive regular employment income rather than owning a small business have always suffered in comparison, but budget 2006 recognizes that unfairness and treats the problem properly with the Canada employment credit. The new credit covers things like personal computers, stationery, uniforms, clothing and a long list of items that people sometimes are required to purchase for their work. If they were small business owners, this would all be deductible as the cost of doing business.

Now the people who earn employment income will be recognized as well. Every Canadian who receives employment income will get up to $500 for the 2006 calendar year and $1,000 for 2007. This benefit will be felt by all working Canadians, especially the low income earners who face barriers in the form of work related expenses.

This budget makes a difference. It is targeted and focused on helping those who need help while providing much needed tax relief for all Canadians.

The seniors and students in my riding will see a significant difference in their cost of living when these tax measures take effect. Working Canadians will take home more of their money at the end of the day. Small businesses will be able to grow without extra penalties and be able to increase employment. In short, this budget is good news for Canada, good news for the province of Alberta and good news for the riding of Edmonton Centre.

I am privileged and proud to be part of the government that has delivered this budget to the people of Canada and I encourage all opposition parties to help us in making the bill become law as soon as possible.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, maybe my colleague from the Tories can help me to understand part of the thought process that went into the making of the budget. A lot of us were shocked at the $1 billion worth of cutbacks that were announced recently. Yet when the Conservative Party introduced the budget, there was no mention of the lost revenue associated with offshore tax havens.

How can the Conservatives justify the cutting, hacking and slashing of $1 billion out of relatively small increments from many important little programs and turn a blind eye or have wilful blindness to the fact that tax fugitives are denying the federal government up to $7 billion per year of lost tax revenue in offshore tax havens, such as Barbados?

I know the previous government tore up 11 tax treaties for different countries in which people could hide their money. They call it tax motivated expatriation. We call it sleazy, tax cheating loopholes. It left only one, the very tax haven where the former prime minister has his dummy companies and enjoys this tax haven status.

Why would the Conservative Party not close the door on this outrageous and egregious violation of principles and ethics called offshore tax havens?

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, part of my response is we inherited a 13 year old elephant. It cannot be eaten in one sitting.

Perhaps the member for LaSalle—Émard's company still derives benefit from work that perhaps has been left undone. I cannot say what will come in the future and all the measure the government will take. I do know there will be a succession of Conservative governments over the next many years. Those governments will continue to address issues as they come up. The government will continue to address the needs of Canadians.

With respect to the billion dollars in savings that was recently announced, a lot of that money, as I am sure this member surely knows, was money that was never committed to anything in the first place. It was money that was idly sitting by and doing nothing. That money has been redirected to programs that will help all Canadians, average Canadians, everyday Canadians.

The $650 million that the government will save next year and every year after in paying down the national debt will also go to helping Canadians. This is what the Conservative government is all about and it will be all about this for many years to come.