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 Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.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

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, I am curious about how the Liberals keep changing their position on the GST over time. Now they are talking about what a great tax it was. In 1993 they promised to get rid of it. One of their leadership candidates, who is now their critic for foreign affairs, said things like this: that he would just as soon that the Liberals “got rid of the GST”. He said, “I have not given up on” the Liberals keeping their promise and “getting rid of the GST”.

Does the member support what Mr. Rae has to say about getting rid of the GST? I realize that one month the Liberals support it and the next month they do not, but what is their position today?

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Speaker, if the member had checked the record, he would know that we talked about harmonizing the GST with provincial sales taxes. By the way, the government just tried to do that recently with the province of Ontario, but because of bad faith, unfortunately, it did not go ahead.

We talked about harmonizing the tax, not eliminating the tax. As for what would happen with harmonization, if the member were to read the record very carefully, he would know that this was and continues to be the position of the Liberal Party, and that when it comes to dealing with tax cuts, again, income tax cuts are the way to go. That party talks about wanting to reduce taxes, but the best way to go is obviously to reduce income tax and put more money in people's pockets.

Again, on the GST, $5 billion to $6 billion a year in the national treasury does not have that effect. The Conservatives should know that. They should see what other countries have done and which way they have gone. Clearly, it has not been by way of the elimination of a consumption tax.

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

Mr. Speaker, I am not noted in this place for giving a lot of credit to Liberals, but in this case I am very impressed with the member's speech. He talked about the fact that there is a need for a manufacturing strategy. As for the way he spoke on investment, I found that very interesting too.

I have a question for the member. For reinvestment and for the income tax cuts he is talking about, we have an opportunity today with the motion to amend to get rid of clause 181, which will end these corporate tax giveaways. Will the Liberal Party be supporting that amendment today?

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Speaker, I thank the hon. member for his comments. The simple answer is no. The answer is no because, again, we believe in the kinds of corporate taxes that create jobs. I know the member is very concerned about jobs in his community and in fact across the country. We on this side of the House think it is very important that these companies reinvest. In dealing with taxes, there has to be an overall tax management approach. We cannot just simply deal with one aspect, in this case the one in clause 181.

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I know that our colleague is a former president of the Federation of Canadian Municipalities. Certainly, Canadian cities have been crying out for the government to take serious action and deal with the infrastructure needs of our communities and cities, yet the government has failed.

Could my hon. colleague comment on some of the concerns he has heard from his colleagues and from municipalities?

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Speaker, with an infrastructure deficit of $123 billion, the member is absolutely correct. When the Conservatives were in office from 1984 to 1993, they had the opportunity to take the FCM program on infrastructure at that time and adopt it. They did not, so they have no credibility on infrastructure.

There is no question about it. We are seeing bridges collapse. We are seeing road problems. What the FCM has announced is just to deal with existing infrastructure issues. It does not even look at the future.

I think it is an important issue. This is why we are the party that understands urban Canada in particular and of course rural Canada because of our caucus members. We certainly want to work on this with people across the aisle, but they have to get it. They do not get it on this issue.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, it is my pleasure to stand today to speak to the amendment that my party has proposed on the economic update statement delivered by the government. Of course, our amendment speaks directly to one aspect of the bill, not all aspects. It speaks to the aspect of the bill that we find most troubling.

We are only being consistent. We were only being consistent in 2005. At that time, we saved the Liberal government from imminent defeat by forcing it to retract a corporate tax cut it was proposing. We had the money reinvested in many programs, some of which are programs that the Conservative Party has taken much credit for over the last while in regard to the few things it has thrown out to people in Canada in terms of housing and post-secondary education.

Our position is very consistent. It has carried forward over the years. It has carried through different governments. Why is it like that? One reason, quite clearly, is that it is different from that of the other two parties that sit here.

The other two parties that sit here represent corporate interests. In their desire to represent those corporate interests, they have been bidding down the tax system in this country over many years. They have been bidding it down in order to hold the respect and the support of the corporate system in their efforts to get re-elected and hold on to power in this country.

Recently, the leader of the Liberal Party said the Liberals would be moving to the left with a platform that would include measures to aid students in paying for post-secondary tuition, to combat poverty and to support seniors. In order to do that, we need revenue. As a person who came up through the municipal side, and having been a mayor for many years, I know that collecting revenue is the only way that we can institute programs to provide services to people.

The cuts proposed by the Conservatives in their last budget and in this budget update are massive. They stand next to the ones that we just heard about from my Liberal colleague from Richmond Hill, who spoke of the $100 billion that the Liberals gave up to tax cuts in the early part of this decade.

These tax cuts are in the order of $190 billion over the next five years. Of that $190 billion, where is it coming from? Our numbers show that with full implementation of the corporate tax cuts proposed by the government, by 2012 this figure would amount to $12 billion a year. Let us compare it to the GST cuts. The GST cuts now cost about $5 billion a year per percentage reduction, so we are going to see a $10 billion reduction through the GST cuts. On personal tax cuts, the estimate is that they will amount to only $8.4 billion over a six year period, so they are really not the issue that is of key importance here in terms of raising revenue for the government to deliver the services that Canadians require.

Therefore, when we stand up and say we do not support corporate tax cuts, we do that for a very good reason. Let us look at the profit in the Canadian corporate system, where one-half of the corporate pre-tax profits come from the financial sector and the booming oil, gas and mining sector. Half of the money that we are giving up here comes from two sectors in our economy that are not likely to leave. They are not likely to relocate to some other jurisdiction. They are essentially part of the Canadian economy. The rest of the corporate interests right across this country, from small businesses to large, make up the other percentage.

What we in the NDP say when it comes to providing incentives in the economy is that we need to send those incentives in the directions that are required. We do not need blanket corporate tax cuts that do nothing to answer the questions that our colleague from the Bloc raised earlier about the forest industry and the manufacturing sector. Corporate tax cuts do not do it. We are saying no to these cuts and we are hoping that others in the House will see the logic of that and join us in this effort.

Over the last six months, I took the time to look at the mining industry in the Northwest Territories because I felt it was very important to understand its impact. I also did it because the federal government has the final say on all mineral development in the north and makes the decisions about royalties and the direction of investments that may occur as a result of that.

Right now the diamond industry does not need tax cuts. It needs directed investment in infrastructure that can deliver more profit and royalties and can make a better deal for Canadians out of the resource being extracted in that region. Tax cuts will not accomplish that. Tax cuts will not build electrical transmission lines to the Slave Geological Province so we can reduce the costs of the fossil fuels burned to provide energy for the mines. Tax cuts will not build the highways required to get supplies to those areas. None of those will be accomplished through tax cuts. Those things will be accomplished through government investment in infrastructure that is required to produce more profit for government through increased royalties and taxation.

There is a role in this country for directed investment and I see it quite clearly in my area. When we looked at the opportunity for profits and to expand the diamond mining industry, we saw that there was a role for the federal government in establishing a national diamond strategy. The diamond industry needs a national diamond strategy. Diamond mines are being opened in Ontario and Nunavut. Opportunities also exist in Saskatchewan and Manitoba.

Mining diamonds represents about 10% to 15% of the value of this resource. The way things are going in Canada, we are letting the rest of the value in this very large sector escape the country. This is because the Liberals have a laissez-faire or marketplace attitude toward investment and the Conservatives have the same ideology going on. They are not allowing us as a country to maximize the return from our resources and allowing us to say that we have an interest in making that happen.

Corporate tax cuts will not do that for us. That is not directed investment. That is not what we need right now. Let us get serious. Let us forget the ideology that drives those two larger parties, which may not be so large after the next election, to continue the way they are going.

[David Anderson, Conservative, Parliamentary Secretary to the Minister of Natural Resources and for the Canadian Wheat Board]

Mr. Speaker, I would like to respond to a couple of things that the member said. He talked about ideologically driven parties. I think there is none more so than the NDP and particularly its unbalanced fiscal policies.

We have seen what happens when the NDP comes to power. We have seen what happened in Ontario. We have a former NDP premier who virtually destroyed his province and then wanted to be the federal leader of the Liberal Party. We had an example in British Columbia where the NDP came to power and left that province struggling for years.

There is no better example than my home province of Saskatchewan. The question is often asked as to whether the NDP's fiscal policies have permanently damaged the province's ability to be what it should be.

Those of us in the federal Conservative Party take a much different approach and a much more positive approach than our NDP friends in the House here.

I believe the member was mentioning some of the tax cuts. I want to talk about some of the legislation that we have brought in and get his response.

We are all familiar with the income tax cuts that we brought in and the fact that those cuts will make a difference for every taxpaying Canadian. Everyone knows that we kept our promise on the GST by reducing it by 2%. We have reduced corporate taxes, which the NDP opposed. We have brought in the child tax benefit to benefit children across this country. We brought in a tax credit for working folks, which gives them an opportunity to benefit from the changes we have made. We have brought in capital gains exemptions. We have brought in an accelerated depreciation, which benefits our manufacturing sector.

Rather than the very narrow and limited financial ideology that the NDP has, we have one that actually reaches out to all Canadians. It reaches across the board and gives everyone a break from the overtaxation that was previously in place because of the Liberal government.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, there was not much of a question there but there was a lot of historical inaccuracies.

We have to look at what happened when the New Democratic Party took over in Saskatchewan from the most corrupt government that Saskatchewan ever had, a Conservative government that ran it into the ground, that is its record.

We can go back in history to look at the kinds of things that have gone on in government. However, what we are saying here is that the government will be taking $12 billion out of the system by 2012. That needs better emphasis. The government is taking that money, throwing it in the air and allowing it to fall anywhere.

We need to have directed incentives in this economy to help the industries that need help and to move the country forward with infrastructure that can build industry and support industry, rather than this laissez-faire market approach that has driven this country for 20 years. It has driven our energy industry to the point where by 2020 we will be importing natural gas to heat our homes. What kind of a strategy was that? What kind of effort was that? I think the shame of that should stand in front of this Parliament.

[The Acting Speaker, Royal Galipeau]

The hon. member for Thunder Bay—Rainy River should know that in one minute I will cut him off.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, some of us can say in one minute what many other members may take fifteen minutes to say.

A few minutes ago in question period I asked the government a question about what plans it had to address the issues in the beleaguered forest industry. Much to the chagrin of the House, the question was not answered. The hon. member read from perhaps some campaign literature or something extolling the virtues of all the good things that are happening, and, in spite of the fact that I was very specific about the mill closures in northwestern Ontario and throughout Canada, my question was not answered.

The government clearly does not have a plan for forestry. If we are going to get anywhere, the government must understand that when 1,100 families are without work this Christmas that is just this month's bad news.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, once again, I really cannot respond to questions unless I understand the direction that is being taken.

I appreciate the member's concern about the forest industry. I think we need a massive strategy in the forest industry to drive new investment.

Last night I met with the manager of Tembec. We had a very good conversation about how we could actually work within the industry.

The House resumed from December 7 consideration of Bill C-28, 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, as reported (without amendment) from the committee, and of Motion No. 1.

Budget Economic Statement Implementation Act, 2007

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Speaker, in talking to the budget implementation bill, I will focus my remarks particularly on the aspects of the forest industry and what may be done and what should be done to the bill to improve it so it can address this.

I will take us back to November 2005, when a $1.5 billion forest industry competitive plan was announced by the minister of industry at that time. That plan included funding support for what we would call transformative technologies, incentives for bioenergy expansion, assistance to respond to innovative opportunities, support for market expansion and a national forest community adjustment fund.

As I continue on through my speech, let us understand that the forest industry in Canada, the capacity for us to sell to the rest of the world, remains as vibrant as it ever was. We know our fibre is the best in the world. The product we have to sell and the pent-up demand that continues is something that should afford us tremendous opportunities. Let us keep this market expansion in mind as we discuss all other aspects that affect the industry and its dramatic downturn that we face right now.

These supports were developed in collaboration with forest industry leaders, union, labour and management, suppliers, to help slow the loss of jobs in forest companies across the country. Therefore, there had been a great deal of concentration and input. Indeed, the hon. member for Kenora, who established a forestry caucus, and caucuses are voluntary organizations, took great pains to ensure that representation from coast to coast to coast, covering most provinces and territories, was involved in the drafting of this and the pushing of it, not only through the Liberal caucus but through the cabinet itself.

We know what happened in January 2006. After that, the Prime Minister decided to cancel this plan, in the 2006 budget. From that date to the present, we have yet to see any tangible assistance to replace the supports that were put in place in November 2005, over two years ago.

As news happens daily in the forest industry, very rarely does it offer much good news. On November 16, 800 more jobs were lost in northwestern Ontario. On November 20, the announcement of a permanent closure of AbitibiBowater Fort William mill meant the loss of another 300 people, this time, with a full closure.

When we talk about a budget being designed to help the country give a leg up to industries that at various times could use the help, it is very clear the budget does nothing to help the forest sector through its own period of restructure.

Let us be certain we understand that. We know there will be some casualties. Anything else is a dramatic lack of awareness of what is happening in the industry. However, my contention is that thousands of jobs would have been saved by continuing to keep the forest competitiveness plan in operation.

The lack of response or the inaction by the government has not been due to a lack of effort by, again, labour or industry. Almost a year ago, on January 22, the CEP Union asked the Prime Minister to call a national summit on the future of the forest industry and to do that as soon as possible. It has repeatedly expressed its concern over the past 11 months.

In April of this year the opposition leader pledged, in response directly to the CEP, to hold that national summit on the future of the forest industry upon taking office as prime minister.

Just a few days ago, on November 30, the Communications, Energy and Paperworkers Union again announced that it would do its best to organize a national summit on its own, since the government would not do it.

On December 5, the Forest Products Association of Canada called for Parliament to study the forestry challenges and develop a market based action plan that would set the groundwork for a vibrant forest industry.

Before I became the critic for FedNor, I was the associate critic for Natural Resources. The departmental briefing made it very clear that the demand for Canadian forest products, whether it be wood, pulp or paper, compared to the rest of the world meant that with some adjustments we could provide market share and grow our market share in many of those components. Whether it is higher end, higher quality product, we know we can find our niches.

After all is said and done, Canadian fibre is the best fibre in the world. The way we process it in terms of our environmental standards, the way we harvest it, meeting exceptional environmental safeguards, the way we produce it, by cleaning the plant operations, means that on all those fronts the industry has shown a dramatic interest from the time I was a young boy, when I saw mercury pollution and smokestacks emitting all kinds of pollutants into the air. The Canadian forest industry can stand head and shoulders in the world with the effort it has made in terms of capitalizing.

Just recently in Thunder Bay, Bowater, before it became AbitibiBowater, put $180 million of environmental improvements into its operation. In these days, in a very competitive environment, it is something that should be applauded and recognized.

In the budget of last February was a capital cost allowance. As I read the budget, this is the only assistance that has been offered. While the measure is a small step forward, it is far less than what is needed. The best way to describe it is this way. A company has to have money and it has to make money in order to invest in new equipment, which is logical. It also needs to show a profit to benefit from the measure. Therefore, on two counts, while laudable as a concept, the reality of what the industry faces right now makes it very difficult for a company to take advantage of this. Indeed, to take advantage of something, it is a two year window. I am offering right now my advice that it be improved.

In question period last week I asked the government what it was doing to help. It said that it was getting it done. However, for the workers, the families and suppliers, there has been marginal assistance. I insist once more, let the budget include measures to help the forest industry, the workers, the communities and, directly, the suppliers. It is not just northwestern Ontario, it is the entire province of Ontario and, indeed, the whole country.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I congratulate the member for his excellent speech. I must also say that he has been a very passionate leader of the rural caucus and he fights for the rural people of Ontario and Canada.

It is in that light that I would like to ask the member a question related to the budget. Does he fully support reinstating the exhibition transportation service?

I have had numerous calls from desperate people who have heard that this program is going to be cancelled on March 31, 2008. This is a special fleet of vehicles used by the Canadian government to transport Canadian heritage exhibits across the country.

This program has been in place since 1972 in the Department of Canadian Heritage. If the program is cancelled it will dramatically reduce access by Canadians to their heritage and the works of Canadian artists. It will have a serious effect on non-profit museums and galleries in rural Canada which exhibit the work of Canadian artists.

Museums and galleries across Canada have used this program for years to transport important travelling exhibitions. The program brings high calibre art to remote communities generating a sense of national cohesion. I know Yukon is expecting an exhibit about Inuit and Sami art. This is a very important program. I hope the member will support keeping this program alive.