Bill C-28 (Historical)

Budget and Economic Statement Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007

Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to
(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;
(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.
Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.
Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it
(a) introduces a new Working Income Tax Benefit;
(b) eliminates income tax on elementary and secondary school scholarships;
(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;
(d) enhances the child fitness tax credit;
(e) expands the scope of the public transit tax credit;
(f) increases the lifetime capital gains exemption to $750,000;
(g) increases the deductible percentage of meal expenses for long-haul truck drivers;
(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;
(i) allows for phased-retirement options for pension plans;
(j) extends the mineral exploration tax credit;
(k) enhances tax benefits for donations of medicine to the developing world;
(l) streamlines the process for prescribed stock exchanges;
(m) introduces an investment tax credit for child care spaces;
(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;
(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);
(p) eases tax remittance and filing requirements for small business;
(q) introduces a mechanism to accommodate functional currency reporting;
(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and
(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.
Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.
Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.
Part 6 enacts the Bank for International Settlements (Immunity) Act.
Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.
Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.
Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.
Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.
Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.
Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.
Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it
(a) reduces the general corporate income tax rate;
(b) accelerates the tax reduction for small businesses;
(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and
(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.
Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of January 1, 2008.

Budget and Economic Statement Implementation Act, 2007

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Speaker, I listened with interest and I suppose I could comment on quite a few things, but I want to talk about the budget.

I am curious to know whether the member realizes that with an intake of approximately $210 billion by the government, after it makes its transfer payments to the provinces, we are then left with the responsibility of conducting what federal governments are supposed to do, to run our agriculture, transportation, defence and the mail, all of those things.

I wonder if the member realizes that from $70 billion, $33 billion is spent to service the debt. I am wondering if she does not think then that it would be good business practice, as in a household if one's debt service gets too high, that one reduces the debt so that future generations are not stuck with that horrendous situation. I would like the member to comment on that.

[The Acting Speaker, Royal Galipeau]

The hon. member has 40 seconds to respond.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I wish the member would apply his logic to a household because in fact that is the perfect example the government should follow.

If one has a mortgage and there are payments to make on a monthly basis, one pays what one can without sacrificing the well-being of one's children. One does not pay off the mortgage and have nothing left to pay for university education. One does not pay off the mortgage and have nothing left to pay for necessary medications because one would only be creating a much larger deficit down the road. That is all we are asking of the government, to balance--

[The Acting Speaker, Royal Galipeau]

Resuming debate, the hon. member for Cape Breton—Canso.

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

Mr. Speaker, I am very happy to join in the debate, although my pleasure is not in support the legislation. As a member of Parliament from Nova Scotia, I reflect the views of not only members of Parliament from Nova Scotia on this side of the House, and a couple on that side of the House, but all Nova Scotians when it comes to the budget implementation act and the impact it will have as we go forward with what we see as the shredding of the Atlantic accord. It is of great concern.

Over the last couple of weeks, much has been said about the briefings that were to take place between members of Parliament and the department on aspects of the accord and the budget implementation act. Much has been written about the fact that several meetings were scheduled but cancelled, and that is of concern. We can deal with a little inconvenience on the part of members of Parliament, both in this House and the other house. However, what we have trouble with and what we are most concerned about is the impact this has had on Nova Scotians, which is significant as we go forward.

When the accord was signed, Nova Scotians, for the first time in many years, had the opportunity to impact on their own fate. They would be the masters of their own domain, where they would be the prime benefactor of 100% of the revenues from their natural resources. This would be over and above equalization. With the changes to the most recent equalization programs, whatever those changes might be, we would benefit from that as well as 100% of the resources.

This is not different from Alberta. When Leduc was discovered and that industry was in its infancy, it was given the same opportunity. However, when the past government signed onto the accord, it was the understanding that the agreement would allow Nova Scotians and the province of Nova Scotia to become a have province and continue to contribute to the great federation. We have seen the government step back from that.

When we sat in on two briefings with the finance officials, we saw something that was relatively simple. The Atlantic accord was a two-page document. The government brought forward 28 pages of amendments, 28 pages of changes to the legislation. We talked about the projected numbers. We still do not have projections by the federal officials, but there are published figures from the province of Nova Scotia. When challenged on those figures, the officials did not deny those numbers, but they did not support them, and that is significant. Before we are asked to vote on it, we should know what the scenario will be and what we think will hold in future for the people of Nova Scotia. However, that was not available to us and the officials did not provide that information to us.

From the numbers that have been put forward by the province of Nova Scotia, what we see is fairly dramatic. If there is any benefit to the people of Nova Scotia, it will come in the year 2020. It will come very deep into this agreement. In fact, over the first four to five years, Nova Scotia will lose $306 million.

We certainly will not buy into any deal that is back end loaded like that. It is a huge departure from where we went with the deal when we were in government, under our former prime minister, the member for LaSalle—Émard. After the deal was signed, there was an upfront payment of $800 million advanced to the province of Nova Scotia in good faith of this agreement going forward. However, with this one, if there is benefit, it will be in the year 2020.

Mr. Speaker, I know you are independently wealthy and a man of above average means. If you were to lose $3,000 for the first four years and a guarantee that you might get $2,000 in the year 2020, if everything went well, I do not think even a man of your means would sign on for something like that. It is not right and it is a detriment to the people of Nova Scotia.

Every time we challenge the government or members on the government bench, they switch and change tact. It is not about the numbers and the benefit any more. They start to talk about the crown's share. This is the trade that takes place and these are the future considerations. I am a Maple Leafs fan. I know a lot of times future considerations do not pan out. Often they do not work out.

In this case the recommendations from the panel are not binding. They are only recommendations. The government can do what it wants with these recommendations. If there were something binding, we would have a little more comfort with that. These are only recommendations.

The premier said that the accord would be fixed by March. I do not even know if the recommendations will come forward by March. The whole aspect of the accord and the crown's share is of great concern to the people of Nova Scotia and Cape Breton—Canso.

The other aspect I want to speak to is the reference made in the throne speech about changes to the administration of EI, the governance of the Employment Insurance Act and where it might go. I know, through the course of the debate on the throne speech regarding EI, a great deal of concern was raised on where the government would go with employment insurance and how much faith Canadians had in the government providing much needed support for families least apt to adapt without EI benefits?

Changes were made in previous parliaments to better support workers in seasonal industries. I am not talking about seasonal workers; I am talking about the industries. These workers want to stay in those communities and support those industries. It is crucial that they have the labour skills to allow those industries to survive.

I have much trepidation when I look at the government's approach to this. There must be a strong statement in the legislation. Some great private members' legislation on EI has been put forward by a couple of the opposition parties. One bill in particular was put forward by the member for Sydney—Victoria. It deals with the extension of health benefits to those stricken by a severe disease such as cancer, stroke or heart attack, and it goes past the 15 week period. My position is we should be able to support those bills. It is good legislation.

I had hoped to see some reflection by the government and some acknowledgement of the good legislation in this legislation, but we do not see that. That is a huge disservice to the many Canadians who find themselves losing EI benefits during times of illness or extended absence from work.

The government had an opportunity to do this. The best way to describe the current legislation is an opportunity missed.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I listened intently to what the member had to say. Once again, I suggest he is another member who does not understand what is in budget 2007. He does not understand the very significant funding commitments that were made to the provinces.

The member was part of a government that created the fiscal imbalance between the federal government and the provinces. The previous government held on to too much money while the provinces struggled to pay for things like health care. That member's government created the health care problem and then tried to pretend to be the saviours of it. His government slashed $26 billion from health care.

I listened to what the member had to say. The Premier of Nova Scotia called on all members from Nova Scotia to support the bill brought forward by the government to clarify the Atlantic accord. I know the Leader of the Opposition was very clear. He does not believe in the Atlantic accord. Maybe he does now because it is good politics.

Our government has clarified it. We have gone all the way back to 1984 to ensure that it is straightened out for good. We have also come forward with a principled form of equalization that is fair to all provinces, including my home province of Ontario, which has long been discriminated against through the equalization system.

Why does the member believe we should have discriminatory equalization systems in our country?

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

Mr. Speaker, I am not aware that the premier has called on all members of the House to support the budget this time.

The opposition members and the member for Cumberland—Colchester—Musquodoboit Valley fought many weeks and months in the House against the past budget, which shredded the accord. I guess the way to be a leader is to find a whole bunch of people going in one direction then jump out in front of them. This is what the premier did at that time. However, we fought that battle against the government because of the way it destroyed the Atlantic accord and Nova Scotia's opportunity to be the main benefactor of its natural resources.

I do not think we need any lessons from the premier on how to vote on this legislation.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, my hon. colleague from Cape Breton—Canso talked about an opportunity lost.

We were at the meeting to discuss the Atlantic accord. The Conservatives admitted it was broken, that they had broken it, that they betrayed the people of Nova Scotia.

The member for Peterborough should be very careful if he is to hitch any wagon to Rodney MacDonald. In Nova Scotia we already are talking about him in the past tense.

There is a lovely lady in his riding named Joyce Carter. The other day the Minister of Veterans Affairs said that he had talked to Joyce Carter and that Joyce was quite happy with his work on VIP services. However, in today's Hill Times is a letter written by Joyce Carter. She slams the government for having billions in surplus, yet doing nothing to keep its promise to extend VIP services to widows and veterans immediately.

Because Joyce Carter is one of his great constituents, could the hon. member elaborate and enunciate a bit more as to why the government would deliberately the widow of a veteran?

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

Mr. Speaker, I appreciate the question from the member. I fully respect the work he has done on behalf of veterans, not just on the VIP program, but also on many other issues for veterans.

He mentioned Joyce Carter. Many people in the House have come to know Joyce over the last number of years. She is not only a great advocate for the people who are involved in the VIP program, she is a great Canadian, a super Canadian.

The current Prime Minister, when he was the leader of the official opposition, on two occasions made a promise to immediately fulfill those VIP obligations to all World War II and Korean veterans. It is a shame and a fraud that this promise has not been kept.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I rise to speak to Bill C-28. The bill lumps together all the different changes that were proposed this year for the tax system. It also includes a number of other rather interesting things which have come out of the budget that I hope to have a chance to expound on a little today.

We have a problem with the direction the government is taking in the budget. It is wrong headed. The Conservatives are moving the country in the wrong direction.

The country is experiencing a great outflow of resources and energy. This has led to a very significant surplus of government revenues. That is a wonderful situation to be in, but it happens to be the cusp of the situation. What is proposed at the cusp is to cut the legs out of the government and future governments that will have to deal with Canadians' issues as they go forward by cutting revenue. Cutting $190 billion over five years will likely to lead us into a deficit situation, either financially or in the kinds of services and support that we provide to Canadians with their own money.

Canadians were not crying out for tax cuts. They were not standing in the streets waving the flag demanding tax cuts. No. The move for tax cuts has been rather different. It has been directed by the government. It follows a trend that was set by our friends to the south with the Republican government that was elected in 2000. It is completely backward. The U.S. government is in a tremendous deficit. That deficit is extraordinary and is only getting worse. Are we seeing the same pattern today? My sense is that we are.

I want to speak to the corporate tax cuts. The logic used for the corporate tax cuts is that they will do wonderful things for the economy and for workers, that they will increase workers' wages and that they will make our economy work that much better.

The Canadian economy is not the same as every economy in the world. It is like some of them. It is like that in Russia and Qatar, countries that export resources. The value in our economy comes from minerals, oil and gas, diamonds, and so on. That is where the real wealth comes from in our economy and we are exporting it.

Companies that are taking advantage of our resources, and quite rightfully so, are in a position to make great profits right now. Those profits are escaping us as Canadians. Those are the opportunities that represent for our children and grandchildren the reinvestment of the resource revenue that we are expending right now. In doing that, we are robbing the piggy banks of our children. Government revenues from those areas in the Canadian economy are extremely important. We cannot sell ourselves out. We cannot sell our children out.

I am not against corporate tax cuts if they are incentives for regions that really require the effort. We met with members of the Canadian Hydrogen Association two weeks ago. They talked about their burgeoning industry with great opportunities for innovation and development and that they needed money. We asked them if they supported the corporate tax cuts that are taking the money out of the government coffers, which means it is not available to invest in and to grow the kinds of businesses that we need to make a good future for Canada. They were silent. They need to get out there and express that in the corporate world.

I come from the north where wealth is generated from resources. Wealth flows from that region every day, yet the people who live in that region, who work in the mines and on the pipelines and in every sense are part of the explosion of the Canadian economy, are not getting the tax break they got 20 years ago. It has been degraded since then with nothing added to it. The cost of living has gone up tremendously for us.

The deal that was struck 20 years ago by the previous Progressive Conservative government has evaporated due to inflation. The current government is not talking about putting it back into place for those people who are making this economy work. I do not think that is fair. There is talk about the capital gains exemption in this budget and how we need to make that fair by raising it 50% to bring it up from where it was 20 years ago, but when it comes to northerners and our tax breaks, the government is remarkably silent. It is a sad fact.

Something that I am finding difficult with Bill C-28 is that part 9 talks about amending the Canada Oil and Gas Operations Act. What are the reasons? They are very simple reasons. It is not working quite right. Should it be included in this bill? Should it be done in the way it is being done right now? No. These changes are part of the reregulation of the north. They are directed toward the north and they are going to impact on our development of pipelines in the north for Canadians.

In the budget plan, these amendments were to be made and a consultation process was to be done. To quote the budget plan:

The Government will develop, for consultation, legislative amendments to address the discrepancy in the regulatory powers of the Board under these two Acts.

That is a great idea. Let us have some consultation. Are we having consultation here? No, we are getting this rammed down our throats. While amendments may be beneficial, in the context of the complexity of those amendments, can we understand simply by accepting them in a two day debate in the House of Commons? No. The government was supposed to consult on them before presenting them to the House of Commons.

Not having consultations is an anti-democratic, hollow action from the so-called accountable Harper government that was going to listen to people. Well it is not listening to people. It is not--

[The Acting Speaker, Royal Galipeau]

The hon. member for Western Arctic is sufficiently experienced in this House to know that we do not refer to other members by their names, but by their titles and names of ridings.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I regret my actions.

In Canada, the National Energy Board just presented a report which said that with all the new sources of natural gas included in the equation, by 2020 we are going to be a net importer of natural gas. It does not refer to our export requirements under NAFTA. We will not be exporting gas by 2020. We will actually be without sufficient gas for our own needs, for heating our own homes. This is the situation with energy right now.

Yes, we need to discuss the Canada Oil and Gas Operations Act. Yes, we need to discuss how we can implement plans to ensure there is fair access to pipelines for all kinds of companies. However, we have a bigger job and if we do not take up that larger job today, the situation is only going to get worse.

When we talk about the Canada Oil and Gas Operations Act and the National Energy Board, we have to do a little more than simply slide them into a budget address and hope that everybody will ignore it and that we will continue to conduct business in this fashion, which has led us from 1985 where we had a 25 year surplus of natural gas to a situation in the future where we will not have enough for our own needs.

This is not acceptable. We need to move beyond this kind of action of trying to slide something into an act. It is not the way to conduct business in the House of Commons. It is not the proper way to do things for Canadians. It is not the way to understand how serious issues around the regulation of pipelines are going to affect aboriginal people who are landowners, who have land claims and who have constitutional authority in their lands.

It is not the way to deal with governments like the government of the Northwest Territories that is hoping for devolution, where it can actually have a say in how its systems are developed.

It is not good for small Canadian junior gas companies that are competing with one of the largest companies in the world. The only reason the largest company in the world is building a pipeline is to control the access and delivery of gas from its fields, giving it a competitive advantage over our Canadian companies.

These are all issues that need much more examination. They cannot just be thrown into a bill and slid under the table in haste to get this thing done in time for Christmas. What does Christmas hold for Canadians when we are selling them out on the very essentials to heat their homes at Christmas? It is really unfair to all of us.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I thank the member for Western Arctic for his intervention on this very important bill. The bill does a lot of things for a lot of Canadians, including lowering the GST, which would affect all consumers in this country no matter what their income level.

He said he was in favour of corporate tax cuts, which is something that I was shocked but happy to hear. Then he went on to say that he wanted them targeted and he gave an example. If he reads the bill, the corporate tax cuts being offered go to companies that need it today.

We hear from the New Democratic Party that the government is not standing up enough for manufacturing. At every meeting I have attended recently to talk about what we are doing in terms of manufacturing in Ontario, and we hear plenty from the automotive manufacturing organizations in this province, all were in favour of what we are doing on corporate tax cuts.

Did the member for Western Arctic mean that he supports this government doing things for the manufacturing sector through lowering corporate tax cuts? Is that what he means by the kind of targeting he would like to see? Is that not a target that we should be going after?

[Dennis Bevington, NDP, Western Arctic, NT]

Yes, Mr. Speaker, and with oil at $100 a barrel we do not need to target the oil and gas industry for tax cuts. That is not what is required here. That is not going to work. When we see the overall reduction in the corporate tax rate at 15% below that of the United States, we are talking about basically giving our resources away.

In the manufacturing industry, the profits are not large. This industry absolutely needs reinvestment opportunities. It needs to be given the opportunity to change what it is doing and in a fashion that will allow it to be more competitive and allow profits to rise. If we lower the tax rate on industries that are not making a profit, then we are not doing them a heck of a big service. What we want to do is change what these industries are doing so their profits will increase. Then they will not mind paying a reasonable tax to provide services to their country.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I have a short question for the member. Does he think women in the north are being treated well by the government? In particular, how did he feel when the announcement was made that there would be money for shelters on reserve when, as he knows, there are effectively no reserves in the north?

A few weeks ago, the member for Beaches—East York and I went to a press release announcement on northern homelessness. Eloquent women speakers were there from each of the three territories. Also, last weekend, a marvellous conference was held by aboriginal women in the Yukon and all sorts of recommendations were made.

Does my colleague agree with those recommendations? More important, does he feel that the government will follow up on those recommendations? Also, does he feel that aboriginal women and other northern women are treated well in the budget and the economic update?