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 Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.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

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, the member's last comments go to the heart of what I said a moment ago. The members from the Liberal Party opposite are having a great deal of difficulty taking ownership for those things that Canadians decided were wrong about their governance when they were in office.

We can quibble back and forth about a number here or a point of view there, but the end result was Canadians assessed the Liberals, the Liberal government in the past, found them wanting, felt they were dishonest and booted them out of office.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, thank you for the opportunity to add my comments on Bill C-28, the budget and economic statement implementation act, 2007.

It certainly was a statement worth discussing with our constituents. We had the opportunity to meet with them at home in our constituencies to get their views and opinions. We also had the opportunity to get the views of the city councillors and our provincial representatives. Today I would like to bring some of those comments to the attention of this House.

In the Liberals' last budget, moneys were allocated for the cities. The cities need funds to take care of sewers, to take care of roads--

[An hon. member]

That was a broken promise.

[John Cannis, Liberal, Scarborough Centre, ON]

--in the member's area of Peterborough and everywhere, not just the city of Toronto, Mr. Speaker, where I come from.

One of the highlights of the economic statement was a 1% reduction in the GST. This supposed tax reduction, according to all of the economists, boils down to is a savings of about $125 to $127 per person, approximately $10 a month. What does that reduction in the GST mean? It means the average consumer has to spend money in order to save money.

I was on my feet during the budget debates when the so-called new Conservative government said that it was reducing personal income tax. I held up a year-end statement of a Canadian, whose name I will not mention, who wanted to know why, under the Liberals, that person was paying at the low end, 15%, and that under the Conservatives that person was paying 15.5%. That is factual.

Now the Minister of Finance in this economic statement has had the audacity to stand and say that the Conservatives have given Canadians a tax reduction. I do not know where the Conservatives learned their math. Under the Liberals it was 15%. It was increased by the Conservatives to 15.5%. It has now been decreased to where the Liberals had it, at 15%. It is similar to a store that has a 15% sale, but the store jacks up the price by 15%, then reduces it by 15% and calls it a 15% discount. That was the tax reduction.

On the GST, the current Minister of Finance, in his own words, when he was the minister of finance for Ontario, said he agreed with the then minister of finance, the member for LaSalle—Émard, when he said it was relatively useless. He also said that he agreed with the federal minister of finance. He said, “We have talked about this. All you get is a short term hit, quite frankly. It has no long term positive gain for the economy”.

That was said by today's finance minister on November 5, 2005, when he was the finance minister for the province of Ontario.

The current Minister of Finance also said that measures are relatively useless because it only advances consumer spending. The finance minister said, “That would happen in any event”. He said that he was more interested in cutting personal income tax because it is a more “direct stimulus”. The current Minister of Finance said that when he was minister of finance for the province of Ontario.

All the economists, even the Conservatives' own right-wing leaning economists, have stated that it is the wrong thing to do.

But let me tell members what Canadians, at least from my neck of the woods in the greatest city, Toronto, are saying. They are saying that there is six point something billion dollars that is going to be spread around at $100 or $120 per person per year. Why could that money not be allocated to the needs of the city?

In essence, the Minister of Finance is reducing an individual's GST, that is, if the individual spends money, by $120, yet the cities, which are in dire straits and need money to take care of roads, sewers and infrastructure, are having to jack up property taxes. He is giving them a break, supposedly, on the GST but the cities are having to raise property taxes for the money they need to keep the cities going.

Why could we not, as Canadians are saying, take that money and allocate it to the needs of the cities? It would be a great idea as a suggestion to the finance minister.

I would like to talk about education because not too long ago we met with the post-secondary students associations and they were concerned. The last thing students need is to graduate with a debt burden on their shoulders. They complained. We invested wisely through the Canada millennium scholarship fund. They are complaining that they should be supported and things administered in the same way Liberals did it, not in the way it is about to be changed.

What is upsetting is that in the statement there was zero money for post-secondary education. Students are the future of Canada. If we are going to be competitive we must have a smart society. A smart society is obtained through education. I am sad to say there was zero for education.

I chaired the Standing Committee on Veterans Affairs and National Defence. Today's Minister of Veterans Affairs is on tape as saying at committee on the issue of agent orange that if the Conservatives were in government, they would take care of that right away.

It is fortunate that our country has been blessed. We made some tough decisions as the Liberal administration post-1993 and today we have moneys, thank God. Why not take care of the commitments that were made? If we do not do it now when the money is there, when are we going to do it? After all, with every day that goes by we lose one, two, three or however many veterans. This is the time for the Minister of Veterans Affairs to do what he committed in committee to do. The previous minister of national defence was at that committee as well. They said that they would do it immediately. It has been two years now. They have made movements toward it, but not in the way they promised.

The Conservatives ran on a fighting crime agenda in 2006. There has been almost zero money put into crime prevention programs. It is not about building jails as was outlined in the first Speech from the Throne when the Conservatives took office. The Conservatives said that they were going to build larger and bigger institutions. If the crime rate comes down, why do we need bigger jails? It does not make sense.

Today, two years later, we see record numbers. When I contested my riding in 2006, my opponent in the Conservative Party said, “We are going to wipe out crime. We are going to put them in jail”. Lo and behold two years later we have numbers that we have not seen in 10 years. Why are we not putting moneys into rehabilitation programs and addressing things at the early stages so we can prevent crime from happening?

Part of the problem is in our communities. The city of Toronto is looking at closing libraries and community centres. If we do not provide money for the cities, how can the cities keep the community centres, swimming pools, basketball courts, and volley ball courts open? Without the money, how can that library stay open? That is where young boys and girls spend time doing some reading, research, et cetera. If they do not have those facilities, they might be out on the street and God knows, they might get into mischief.

I am concerned that this economic statement has nothing for the wait times. That is an issue which really touches all of us from coast to coast to coast. Our health care system makes Canada stand out. According to all the professionals, wait times have gone up instead of down. The question is why? Supposedly, when the new government came in it was going to reduce and eliminate wait times. It has been two years. I have read the statistics and wait times have gone up.

I look forward to any questions.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, that was a low point in the afternoon, I would have to suggest. The member started by pointing out that the NDP is to blame for the Liberal Party not being in government anymore. I would give Canadians the credit for voting that party out of government because I think that is where it is deserved.

The member said more than that. He talked about caring about student debt. Since when did the Liberals care about student debt? Student debt went up exponentially when the Liberals were in government. They care about property tax increases. My property taxes went up exponentially when the Liberals were in government.

I really need the Liberal Party to take a brief look at the Constitution because it clearly sets out that the municipalities are the responsibility of the provinces. That is why we gave so much more money to the provinces in budget 2007. He may like to read it. It is a good document.

We transferred a lot of money to Queen's Park. The city of Toronto, which the member is very close to, should march to Queen's Park, which is very close to Toronto, and they should say that they need some help. Maybe they should ask for some tax room, ask for some more money, or ask Premier McGuinty to give them a hand. They should not be coming to Ottawa. And they should not be saying that Canadians should not be given a tax cut which they rightly deserve just because the cities think it should go to them. Cities are the responsibility of the provinces. That is the first point.

The second point is that when the municipalities came to us last year, they said that what they really needed was an extension of the gas tax fund to 2014. If the member would read budget 2007, he would see that we gave them exactly what they asked for and not a penny less.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, I am glad the member for Peterborough used the words, the “extension of the gas tax”, meaning that it was a Liberal program.

In terms of responsibilities, I do know that the cities are the children of the provinces, but Canadians are Canadians whether or not they are city dwellers. There is one taxpayer. We collect their money in the way that the province and city do. When one member in a family needs help, others in the family should extend that help.

I explained it to the member. Maybe he was not paying attention. The cities today in not having funds are having to raise property taxes.

The member is new and was not here, but I will inform him that when we took over from the then Conservative government, this country was unofficially bankrupt. It took us several years to balance the books, to eliminate the $42.3 billion deficit and to start paying down the debt. It was not until a couple of years later that we had money surpluses. What did we do? We had one-third tax reduction, one-third investment in the programs that Canadians wanted, such as the millennium scholarship fund, funds directed to students, and of course we lowered the debt as well.

The hon. member talked about coming to Ottawa. When he is next campaigning, I ask him to go to his constituents and tell them not to talk to him but to go to Ottawa, and I would bet he would not return.

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Speaker, our colleague from the Liberal Party of Canada has provided us with a golden opportunity to briefly recall the September byelection in Outremont. The member just whined that the Liberal Party of Canada was overthrown and that the NDP was to blame. This is very revealing. It tells us that the Liberals believe they have some divine right to rule. Well, I have news for them. The results in Outremont will be reflected in many other Liberal ridings across the country. The NDP won 49% of the vote and the Liberal Party of Canada, 27%. I had to mention that.

In fact, the Liberals are competing with the Conservatives to see who can cut corporate taxes the fastest. At the same time, they are rising and saying how terrible it is that nothing is being done for forestry companies and manufacturers. The famous tax cuts do nothing to help a company that did not turn a profit and therefore does not have to pay any tax.

That is the Liberals' attitude. They are always ready to say anything. They signed the Kyoto protocol when they had no plan. As a result, they increased greenhouse gas emissions instead of reducing them. That is the Liberal record.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, it is the NDP that will say anything and promise anything, as they promised Canadians but when the member talks about the outcome, I want to remind the member that although he was not a member then, he should know that two out of three Canadians did not vote for that party.

[The Acting Speaker, Conservative, Royal Galipeau]

Order, please. It is my duty pursuant to Standing Order 38 to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Don Valley East, Federal-Provincial Relations.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I rise to speak to Bill C-28, referred to as the budget bill, that is shocking in many respects in terms of its consequence.

We need to put this in the proper context and I will spend most of my time addressing the corporate tax cuts.

It is important to look back as recently as the budget of 2007 when the government came forward with a series of substantial corporate tax cuts over the next four years. In that period of time, the corporate tax rate would have dropped from 22%, which is where it was at the time, down to 18.5% by the 2011 budgetary period.

We then jump forward to the October-November period with the throne speech and to, what in the common parlance is being referred to as the mini-budget, the economic update statement.

What do we see? First we see in the throne speech that the Conservative government will reduce the corporate tax rate. However, when we jump forward to the mini-budget, all of a sudden that drop has become accentuated. It has become accentuated because in between the throne speech and the finance minister standing in the House, although I am not sure he actually stood in the House or did it some place else, he told the country that he would introduce even greater corporate tax cuts. Now we have the corporate tax rate by 2012 going to 15% as opposed to just six or eight months ago the proposal that by 2011 would have been fixed at 18%.

What happened in that couple of weeks, maybe a month, between the throne speech by the government and the mini-budget? We heard the opposition leader and a number of other members of the Liberal Party saying that we needed bigger corporate tax breaks. What we had was the government of the day and the official opposition taking the same position.

What I find it most shocking is when I look at where the bulk of those corporate tax breaks will go. They will go to sectors of the economy that, quite frankly, do not need them: the oil and gas sector and the banking sector. A full 50% of every one of those tax dollar breaks will go to those two sectors.

In the figures that came out showing the profit levels of those two corporate sectors, banks were the highest. They made over $19 billion in profit last year and they will break $20 billion at the rate they are going this year, perhaps up to $21 billion or $22 billion. They will be getting a huge tax break because of the size of their profits.

We see similar figures, because of the international demand for oil and gas and the export rates at which we are selling it, that the oil and gas sector will get huge corporate tax breaks from this change that was very rapid. It was in less than nine months.

I come from a region of the country that has as its primary economic base the auto sector. In that same period of time, we saw thousands and thousands of jobs disappear from that sector and a substantial number of closings. We saw it again in some of the news reports this weekend, going through regions in southern Ontario, seeing auto parts supplier companies shutting down in large numbers.

It is estimated that over the last two and a half years--and this took place not just during the 22 months of the Conservative regime but a good number of the months when the Liberals were still in power, 250,000 to 300,000 jobs have disappeared in that sector and it is not finished.

When we look at these corporate tax breaks, 50¢ on the dollar will go to the banks and the oil and gas sector. What is happening in the auto sector? Actually, nothing is happening because there is very little profit. Even for the large manufacturers, the full-blown, primary manufacturers, particularly in the auto parts sector, there is very low profit, if any at all, because so many of them are going bankrupt or at least going out of business before they go bankrupt.

Those corporate tax breaks will do nothing for the auto manufacturing sector, whether in the parts sector or in the primary manufacturers.

In roughly that same period of time, when we jumped from giving the substantial corporate tax breaks to, in the latter part of the year, even more substantial corporate tax breaks, we see in just six months a 7% drop in the auto parts sectors in terms of its productivity. Those are the exports going out of the country.

In the same period of time we wonder what the government has done. We constantly hear the Finance Minister say that he is giving a tax break. It has already been shown that those are useless. He says that he has accelerated the ability to take write-offs on machinery. If we are not making any money and have no profit to write these off against, those write-offs are useless also.

This is not anything new being heard by the government. Both the manufacturers and the auto parts sector have told it repeatedly what is happening.

What do we need? We need those corporate tax cuts reduced dramatically and that revenue, which would have come in, used to help the auto parts sector get through this. We are hearing that it needs $400 million immediately in the form of loans. It would be in that form, not a tax break because that would not do any good, and not with write-offs because that would not do any good. The sector needs loan guarantees and outright loans to allow the auto parts sector to purchase equipment that will allow it to be more productive, more competitive and be able to put people back to work.

Are we seeing that? Absolutely not. The Conservative government has refused to do anything in that regard. We have seen the province of Ontario step in and the province of Quebec step in with direct assistance because manufacturers are in a crisis. This is not something where we can talk long term policy. For example, if we do this, that will happen eventually. We are away beyond that. By the time that happens we may have lost the auto sector in this country.

I say that advisedly. I have lived in the community of Windsor all my life and, for the first time in the last two and a half to three years, I have become convinced that at the rate we are going with our trade policies and with the kind of economic policies we have seen, both from the Liberals when they were in power and now from the Conservatives, which have policies that are almost identical, we are at serious risk of completely losing, by eyesight 20:20, our entire auto sector.

That is a shock because the auto sector, and nobody can debate this, is the sector that drives the entire economy in this country. By and large, in comparison with any other sector, it is the major driver, and both those political parties are prepared to sacrifice that because of their belief in free trade agreements, which do not work in that sector, and by economic policies that have no benefit to the auto sector whatsoever.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, I listened carefully to what the member had to say. He comes from a city in a part of the country where the auto sector is very important.

I noted that he glossed over the fact that when we had a different government, the one he helped throw out of office, there was a contribution of some $500 million, which was welcomed by the auto sector and the auto worker unions because it was the first time in 20 years that there had been any investment in the auto sector by Canada.

That was followed up by the province contributing an additional $500 million. It was $1 billion, which I realize was not enough for the hon. member but it was a substantial amount of money, plus an additional $500 million in the aerospace industry.

I am wondering just what kind of numbers the hon. member thinks would be sufficient. This question is coming from someone who actually has done something about investment in the auto sector, rather than someone who has just critiqued it.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I will not downplay the significance of the role the Ontario government played in this but the role the federal government played under Liberal administrations and now under the Conservative administration has been to consistently undermine.

We can talk about these subsidies. We need them from time to time to carry ourselves over in order to be competitive with the other sectors, but as long as the present government is, as the previous Liberal government was, wedded to the auto trade arrangements and treaties that were signed, our auto sector will disappear.

For all those Liberals who continue to stand in the House and whine about losing the election because we cut the ground out from under them, I will repeat, I hope for the last time, that it was not the NDP that did that. It was the Canadian people who threw that government out.

[The Acting Speaker, Conservative, Royal Galipeau]

Resuming debate? Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Conservative, Royal Galipeau]

The question is on the motion. Is it the pleasure of the House to adopt the motion?