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 Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.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

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I have a technical question but related to the budget. It is about search and rescue airplanes.

I know the member was not here at the time, but it is more of a philosophical question. Around 2002 and 2003 the government committed and set aside money for 15 new search and rescue planes. Our fleet is well over 30 years old, some over 40 years, and this is to protect Canadians at home.

All of a sudden the money seems to have vanished in these statements. There is no movement on this. We should be replacing the fleet. There are going to be accidents and Canadians are not protected.

Does the member think that military and defence investments should be a priority in order to first, protect Canadians at home, as opposed to buying things under the other numerous contracts they have let?

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Speaker, my hon. colleague from Yukon must face up to a small problem of logic. He rises in this House to ask the NDP if we think that Bill C-28, which has to do with budgetary issues, is flawed. I have good news for him. The NDP does in fact believe that Bill C-28 is full of flaws.

I have only a brief question for the member in return. Why does he not vote against this bill? Why does he want to keep the Conservatives in power? If he believes at all in what he is telling us, why can he not find an ounce of courage to represent the people who elected him, instead of sitting on his hands like the rest of his colleagues every time one of these important questions is raised here in the House?

[The Acting Speaker, Royal Galipeau]

Order. 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 Pickering—Scarborough East, Justice.

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

Mr. Speaker, when members rise and speak to this bill, the immediate thing that has to come to mind is the missed opportunity, the missed opportunity for us as a country to invest in our country, to make our economy stronger, and to create greater benefits for all citizens of our country. This mini-budget fails on all counts. It lacks vision; it lacks a plan.

It is like listening to the Conservatives over and over again say their mantra that tax breaks are going to solve all the problems of the world. We know that just does not work. We look in particular at what happened with the corporate tax breaks and the vast majority of the dollars which will go to the large corporations.

Let us do a quick history. In February-March of this year the government brought forth the budget. In that budget there were substantial tax cuts for the corporate sector. That would have had the effect over the period of 2007 through to 2011 of reducing the effective corporate tax rate in this country, which is at this point actually lower than the corporate tax rate United States, which is a point the Conservatives constantly forget, but the Conservatives were going to reduce it from 22% down to 18.5% by 2011.

That budget passed with the assistance of the Bloc Québécois at that time. We then come forward through the summer and the Liberal Party is collapsing around itself and its new leader. We see the government, because it really did not have a plan, finally decide to prorogue Parliament and come back with a new throne speech.

In the new throne speech there are a number of provisions of an economic nature, but there is no particular mention of any further substantial reductions in the corporate tax rate.

As we just heard from my colleague from Outremont, lo and behold, shortly after the throne speech, the leader of the official opposition is up proclaiming that not only do the Liberals support the corporate tax breaks that have already been granted but that if they were in power they would give even greater tax breaks.

Within a day, if not the same day, the Minister of Finance is publicly proclaiming that in fact we are going to get greater corporate tax breaks. Within a month an economic statement came down which is encompassed to some significant degree in Bill C-28 in this mini-budget, and now what have the Conservatives done?

They are going to take that 22%, which is dropping already because of the earlier budget of 2007 and they are going to further reduce it. Now by 2012, the corporate tax rate in this country is going to fall to 15%; 22% this year. In five years or less it is going to be 15%, a full third of the corporate tax is no longer going to be required.

Inevitably, what do Canadians say about this? We have two political parties which have no substantial difference in how they deal with the revenue coming into the coffers of the government. We have to say, let us take a look at where these corporate tax breaks are going to go. We have done the analysis and this has not been contested by the government.

A full one-third of those two corporate tax breaks is going to go to the big banks in this country, the same big banks that in 2006 made $19 billion in pre-tax profit and are on line so far in 2007 to at least make that and probably break over the $20 billion mark. These are companies that we can see are poverty stricken, that are in absolute need of assistance from a government that feels compelled out of a sense of deep compassion to give them a tax break.

Where else is the money going? The next big chunk goes to the oil and gas industry. Natural resources is a bit broader, but primarily to the oil and gas industry. It pays because of its huge pre-tax profits due to all the oil and gas Canada is exporting to the world and contributes quite dramatically to environmental consequences in the form of global warming and climate change.

Those companies are making huge amounts of profit. One-sixth, in fact, of all the pre-tax corporate profits will be in the oil and gas sector, as it was in 2006. Chances are that those profits will be somewhat higher in 2007. Those companies will be picking up a huge chunk. In total, between those two sectors of the economy, they will be getting almost half of all these tax breaks, billions and billions of dollars.

If the government had not given this tax break, where could average, hard-working Canadians and their families have benefited? We have heard over and over again about the ongoing problems with waiting lists in our hospitals and in our medical system. More money could have been put there to deal directly with those waiting lists so that people do not have to wait six months, a year or 18 months just to be diagnosed and then many more months, if not years, beyond that to have surgery.

It could have built a national housing program. We heard from our colleague in question period today of some of the deaths that have occurred across the country as a result of homelessness.

We could have begun to create some child care spaces, one of the promises in the last election that the government likes to conveniently forget about. We are still waiting for the 125,000 or 150,000 new spaces. The government has abandoned that completely. Rather than use some of this revenue to assist in creating child care spaces for young families that need that assistance, what do we see? We see corporate tax breaks, revenue not coming in because the big banks and oil and gas companies need assistance.

Given the problems we are confronted with on the environment, we could have dramatically expanded the funds in many retrofit programs, both in the private sector and the government sector. However, we did not do any of that. We have the mantra that corporate tax breaks and tax breaks generally will solve all the problems. It is obvious, because of the problems we are faced with, whether it is waiting lists, lack of a housing program, homelessness or problems with the environment, that tax breaks are not the be all and the end all.

I want to step back, and this is really hard, and pretend for a minute that I am a Conservative. This is probably more creative than I usually am able to be, but let me pretend to do that for a minute and say that I do not really care about housing, the environment, unemployment and health services. All I really care about is helping big corporations, and that is where my--

[Pat Martin, NDP, Winnipeg Centre, MB]

That's why you were put there.

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

Yes, exactly, that is why I am here and why I was elected. They are my buds. I would say to the Conservatives, even playing that Conservative role for a minute, that I have an alternative for them.

We have a crisis in the manufacturing sector and it has taken the government, which has been the government for almost 20 months, a little better than 18 months to finally come to that realization, and maybe even a little longer. For the first time this past week and on the weekend, we heard from both the Prime Minister and the finance minister that they would finally do something.

However, they have said before that they knew there was a problem with the manufacturing sector but they said that their tax breaks would take care of it. Again, playing Conservative, I am saying that it is not working but that I still need to help my buddies in the big corporations so what am I going to do? At this point they do not know what they are going to do.

I am going to play Conservative again and play their role and I am going to tell them what they can do. However, before I do that, I want to emphasize that the policies they have put in place up to this point have not worked. They have really had two that were supposed to help the manufacturing sector. What will come as no surprise is that one of them was giving corporate tax breaks.

I will stand back now and not be a Conservative anymore. I will be critical of the Conservatives. So much of what they do is so simplistic that I will keep it simple for them because maybe they will then understand it.

The way the corporate world works is a company produces a product or service, it pays all its bills and whatever is left over is profit. The government comes in at that point and tells the company that if it made a certain amount of profit, then it must pay this percentage of it in tax. I think that is pretty simple and even the Conservatives could understand it.

What they do not seem to understand, so I will share this with them, is that the crisis in the manufacturing sector is so bad now that there are no profits. If companies do not make profits, the government does not come in and tell them that they must pay a certain share of it because there is nothing there. That is the situation we are in. Corporate tax breaks are of no use in those circumstances.

What is the second point that the Conservatives always make when we say that they are not doing anything? They say that they have sped up the write-offs for any investments the company makes in its company to produce a product. If a company invests in its corporation and in new equipment, the government will let the company write that expense off more rapidly against the company's income and revenue.

Again I will make this simple. If there is no net revenue coming in, no profit coming in, a company cannot write it off. More important, this is true right across the manufacturing sector which has been going down and has been in crisis for a long time now. This goes back, of course, to when the Liberals were in power, so I am not pointing my finger only at the Conservatives. I am pointing my finger at both of them because they both missed the boat on this one. The manufacturing sector has been going down for so long that any reserves it had have dwindled to the point where it cannot afford to invest in corporate equipment.

In addition to that, in spite of all that money the banks are making, they are not that interested in lending the money. Again, they are not profit-making corporations in a large number of cases. They are not good credit risks as far as the banks are concerned and they turn them down.

Therefore, regarding their two plans, corporate tax breaks do not work because there is no profit to tax, and more rapid write-offs on equipment cannot be used because there is no money to invest in the corporate field. We need another solution.

I will go back to playing Conservative. I am saying, okay, I have all this money coming in from the banks, the financial institutions and from the oil and gas, maybe what I should do is try to help out another one of my buddies in the corporate sector, in the auto manufacturing sector, textiles or any number of industries within the manufacturing sector that need help. That is what I am proposing they do.

That is not a radical thought. It is a very conservative approach, and I mean that in the pure sense of the word conservative. A fiscally conservative approach is that governments involve themselves in the marketplace when they are needed to be involved in the marketplace. Therefore, they are safe in their ideology.

In addition, there is no politically dramatic shift here because both the Governments of Ontario and Quebec have already done this. They have moved directly in and have told the manufacturing sector that they have made pools of funds available for companies to invest in what they need to make themselves more competitive, to expand their industry or to be able to export more. Those are all the good things that the Conservatives love to talk about.

I will go back to being an NDP member now and say that what I am most interested in is that if we do that we create jobs and put people back to work.

Let us talk about the employment situation in the manufacturing sector.

We had a very detailed debate about a year ago in this House on the textile industry and what was going on there. Between two to three years ago, Canada had roughly 100,000 people employed in the textile industry. When we were having that debate about a year ago, those numbers had dwindled to 50,000. What came out in the course of that debate was that by the end of another two to two and a half years, we would be down to 10,000 people in the textile industry. What has happened, both with the Liberal government and the Conservative government, is they have just stood back and let it happen.

What I am worried about is that the same thing will happen to the auto industry. I come from Windsor and Windsor-Essex county has the largest auto sector. In that two and a half year time period, we have lost 17,000 jobs in Windsor-Essex county and that is in a population of less than 400,000. All those jobs, without exception, were well-paying jobs, jobs that people could raise their families on, pay their mortgages and maybe even have a holiday. Across the country in the manufacturing sector, at least 250,000 jobs, if not closer to 300,000 jobs, were lost in the last two and a half to three years.

Much of what happened in the textile industry is happening elsewhere in the manufacturing sector. I see it primarily in the auto sector but it is happening in other areas.

The Province of Ontario and the Province of Quebec have said that it is time for the government to help. They have also told the federal government that it must do its share. The government loves to talk about partnerships and about working cooperatively. It is now time to pony up. It is time for the government to come forward and participate in saving the manufacturing sector in Canada.

I have said this repeatedly and I will now repeat it in this speech. I have done some research and I have not been able to identify, across the whole of the globe, and I have gone back over the last roughly 100 to 150 years, one national economy that functioned in a vibrant way without having a key manufacturing sector as a significant component of that economy. However, the present government and the previous Liberal government have repeatedly taken a hands off and will not help. They told the manufacturing section that it was on its own at the same time as they brought in trade policies and implemented those trade policies that allowed other governments, other economies to sack our manufacturing sector. Because they protected their manufacturing sector, we allowed them to come in, penetrate ours, purloin the best parts of it and we just stood back and let them do that while we were shut out from their economy.

Canada has repeated that over and over again. We saw it with the free trade agreement back in 1988-89. We saw it with the North American Free Trade Agreement. We saw it with policies and in a number of different trading arrangements. We are seeing it right now. The current minister, who is negotiating with South Korea, is willing to give away the fort once again, particularly in the auto sector.

There is a simple solution on an interim basis. We see that from the province of Quebec and the province of Ontario. The government should be joining with them, as a national government, and assisting the manufacturing sector.

The auto parts manufacturers have said that it needs, $400 million in a fund that they can borrow against. Overall within the manufacturing sector, the estimate is that we need a fund at the federal level of $1.5 billion. It is here in the corporate tax breaks. All the government has to do is forget the corporate tax breaks to the banks and the oil and gas companies and put it into this fund.

[Gary Goodyear, Conservative, Cambridge, ON]

Mr. Speaker, I would like to table a report today to Your Honour to consider Bill C-18, the verification—

[The Deputy Speaker, Bill Blaikie]

Order, please. I recognized the hon. member in the context of questions and comments. If the member was rising on a point of order, perhaps he should make that clear.

The hon. member for Cambridge on a point of order.

[Gary Goodyear, Conservative, Cambridge, ON]

Mr. Speaker, I would like to present the seventh report of the Standing Committee on Procedure and House Affairs concerning verification of residence.

I think if you seek it, you would find unanimous consent to revert to reports from committees for the purpose of tabling the seventh report of the Standing Committee on Procedure and House Affairs.

[The Deputy Speaker, Bill Blaikie]

The House has heard the request of the hon. member for Cambridge. Is there unanimous consent?

[Some hon. members]

Agreed.

No.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, I spoke on this topic the other day and I said some similar things. Unfortunately, I ran out of time and did not get to say everything.

My hon. colleague mentioned how we were accelerating development in some parts of our economy, but not in others. I am speaking of the oil sands development in Alberta and what is happening there.

We are in talks about climate change and we are trying to accomplish something. The government says that it is getting things done for the environment. However, I have to wonder what it is doing except creating more carbon emissions. What we will see in the very near future is the acceleration of development in the oil sands with pipelines to the U.S.

Why would the government favour a large corporation that makes billions of dollars in profits at the expense of people who have to live on the streets, or people without child care, or people in the auto sector? There are so many other things where we could have had a better balance in our budget, but we are not seeing that?

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

Mr. Speaker, it is not cynical, it is only practical politics that we expect the Conservative government to be favourably disposed, in the extreme, to the oil and gas sector. Because so many of their members come from the province of Alberta, the government is beholding in many respects to the oil and gas industry. We understand that from a purely perhaps cynical political standpoint.

On the other hand, we also understand that the government has come late to the global warming and climate change realities confronting us. The Prime Minister is constantly quoted about saying that the Kyoto agreement was a socialistic money grab and words such as that.

It was not until the Conservatives came to power and the reality of what the world was facing and what we as a country were contributing to what was happening in the world around climate change did the government admit that. However, the Conservatives have not moved beyond that. They clearly feel no compulsion whatsoever to clean up the environment. They still feel very much favourably disposed to the oil and gas industry and quite willing, as we see in these large corporate tax breaks, to give huge amounts of tax breaks to an industry that has absolutely no need for them. In fact, by giving these tax breaks, it encourages the companies to follow practices that are very negative to the environment.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I would like to thank the member for Windsor—Tecumseh for his fine presentation. He has brought to the attention of the House the truth about tax reductions for big business and this budget, which does nothing for ordinary people. My colleague certainly made his point well.

I would like to hear his opinion on an issue that I believe he touched on. Where was the Liberal government when the companies were grappling with the softwood lumber dispute? Rather than giving tax breaks to big business, we could have dealt with the problem when it arose and helped the companies as well as the workers. Where was the Liberal government? The problem continued after the Conservatives came to power and let the United States take $1 billion from the softwood lumber file.

Instead we should give money to other companies, rather than the profitable ones such as oil companies. I am not jealous of the way the oil companies that are making money. However, we are giving them more money while we allow ordinary people and the poor to suffer, and while we let welfare recipients live on $500 per month. We will be helping only Toronto's Bay Street and the big corporations. That is where the money will go. Does my colleague, the member for Windsor—Tecumseh, not think that this is truly immoral and unacceptable?

That is what the Conservatives are doing. They are catering to big corporations that make millions and millions of dollars at the expense of ordinary people, workers and people in need, whom they are ignoring in turn.

The UPM Miramichi plant has closed. So have the AbitibiBowater plant in Dalhousie, New Brunswick, and the Smurfit-Stone plant. Textile companies in Pokemouche, Atholville and New Richmond have also closed. Companies are closing their doors and good jobs are being lost. The Conservatives are turning a blind eye to this problem and giving money to the big Alberta oil companies. If the workers in the rest of Canada do not like it, that is too bad; let them move to Alberta. That is the real Conservative message.

There is a lack of respect for the Atlantic region and rural regions throughout Canada. People want to stay in their regions, they want to work and have a good, sound economy. That is where the Conservative Party failed in its mini-budget.

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

Mr. Speaker, I thank my colleague from Acadie—Bathurst.

I will deal with this in reverse of the member's questions.

When he talks with great passion, as he always does, over concerns for working families, it makes me think of what has happened to my community, and a good deal of what I know he has gone through in his community, in terms of high unemployment rates. I want to make two points about that.

A study came out last week about the impact of long term and in most cases indefinite layoffs on individual worker's health. It was done in the United States. It was a wide-ranging one, a longitudinal one, which I think went on for 20 years. What it showed consistently throughout that period was when a corporation shut down a plant completely, as they followed those individual workers over the balance of their lives, on average they lost a year and a half of their life expectancy.

The only thing that differentiated them from the rest of the population, and it showed this earlier demise, was the unemployment factor when they were working. It particularly hit men and women who were in their middle forties because it was so difficult for them to find employment. They were in a situation of still supporting families. It was a very stressful incident for them and it ended up costing them a year to a year and a half in what would have been their normal lifespan.

I also thought of the two suicides I had in my community in the springtime. They were two relatively young men, both in their late thirties. They left spouses and young children. Both had lost all hope as a result of indefinite layoffs. I also think of the constant parade of individuals who come into my constituency office and who I see when I am out and about in the riding. They are suffering and are having to deal with that kind of stress.

We have solutions. We could be saving the manufacturing sector, yet we see these kinds of policies that do absolutely nothing for it.