Bill C-201 (Historical)

An Act to amend the Income Tax Act (travel and accommodation deduction for tradespersons)

This enactment allows tradespersons and indentured apprentices to deduct from their taxable income any travel and accommodation expenses that they have incurred in order to secure and maintain employment in a construction activity at a job site that is located at least 80 kilometres away from their ordinary place of residence.

Income Tax Act

[Chris Charlton, NDP, Hamilton Mountain, ON]

moved that Bill C-201, an act to amend the Income Tax Act (travel and accommodation deduction for tradespersons), be read the second time and referred to a committee.

Mr. Speaker, I cannot believe that the time has finally come to debate Bill C-201, an act to amend the Income Tax Act (travel and accommodation deduction for tradespersons). It is the very first bill I introduced in this chamber after being elected in January 2006 and it is a bill that is near and dear to my heart.

However, my wait is nothing compared with the wait experienced by the workers who are at the heart of my bill. The Canadian building and construction trades have been lobbying for this legislation for over 35 years. Their tenacity on this file is remarkable and ought to be indicative to the government that this issue matters deeply to the very people who have literally built our country.

In fact, I would be remiss if I did not publicly thank Bob Blakely, the chief operating officer of the Canadian Building Trades Unions, for his personal commitment to this bill and for never ceasing to fight for the best interests of his members. Bob knows only too well what a bumpy road it has been to get to this point today.

Both Liberal and Conservative governments have made promises to the building trades in the past about concrete action to come. However, those games of political footsie led exactly nowhere.

It is time for the games to stop and for all members in the House to stand up and be counted. Lip service is no longer good enough. I am delighted to give members the opportunity to clarify their positions in the coming vote on my bill.

I know, Mr. Speaker, that you follow American politics closely, so you will remember former Speaker Tip O'Neill coining the phrase “all politics is local”. It is the principle that a politician's success is directly tied to his or her ability to understand and influence the issues of constituents.

While that certainly encapsulates the genesis of bill that we are debating today, I introduced it because of the amazing education and awareness-raising efforts of the members of the Building and Construction Trades Council in my hometown of Hamilton.

In particular, I want to single out the leadership of business manager Joe Beattie, who invited me to meet with the building trades about this issue before I was even elected.

We can see that the Hamilton building trades are not just savvy lobbyists, they are also clairvoyant. They knew I would eventually get elected, even before I believed it myself.

The case that was put to me by Joe, along with the members of Carpenters Local 18, UA Local 67 and Sheetmetal Workers Local 537, made sense then, and it still makes sense now. It makes sense for workers, who would benefit from a reduction in their temporary relocation costs and a reduction in time spent unemployed. It makes sense for employers which will benefit from access to larger pools of qualified workers and reduced costs relating to participation in programs such as the temporary foreign workers program. It makes sense for the government, because it would benefit from increased long-term income tax revenues and reduced dependence on costly social programs.

However, let me not put the cart before the horse. Let us start at the beginning and look at the issue that my bill is seeking to address, the specific remedy that it offers and the opportunity that it represents for the government and all members of the House.

Right now, there are two major human resource challenges facing Canada's construction industry: regional labour shortages and barriers to labour mobility.

The 2011 edition of the Construction Sector Council's “Construction Looking Forward” report suggests that to replace retiring workers and maintain productivity, construction employers, collectively, must hire more than 320,000 new workers between now and 2019. While training programs and recruitment from non-traditional labour sources are part of the solution, they will not be enough to ameliorate the significant labour shortages that are projected for the decade ahead.

Compounding this problem is the unevenness of demand for construction workers. Some regions of the country, such as Newfoundland and Labrador, are expected to face significant worker shortages until next year. Others, such as Ontario, will offer fewer work opportunities in the short term, but many more between 2015 and 2019. A third group, including Quebec, Nova Scotia and Alberta, will offer consistently high numbers throughout the forecast period.

With the demand for labour thus high in some parts of the country and lower in others, it would be in everyone's best interest to facilitate the mobility of unemployed workers from one part of the country to job openings in another.

This would be an easy problem to solve if construction jobs were permanent, but they are not. Construction is a transitory business. When a hospital, a mall or, for that matter, a Pan Am stadium is built, the job is done. Work can last for days, weeks or months, but the bottom line is that it is not permanent and no worker can fairly be expected to move his or her family to a new city every time the workplace changes, and therein lies the rub.

Under current rules, construction workers often incur large personal expenses to accept jobs in other parts of the province or country because neither their travel nor accommodation expenses are tax deductible under the Income Tax Act. As a result, these costs create a huge disincentive for workers to accept work in those parts of the country that are experiencing skills shortages.

Figures compiled on behalf of the building and construction trades department of the AFL-CIO suggest that the average mobile worker spends approximately $3,500 of his or her own money to temporarily relocate. That is a significant barrier to the appeal of working mobile. Without wanting to be too cute, I ask my hon. colleagues to imagine what would happen in this place if we told members tomorrow that they could no longer get financial assistance for their secondary residence here in Ottawa while they are here on the job, or for their travel for that matter.

If that is not enough to spur us on to creating fairness for the building trades, let me just remind members that this House already acknowledged that transitory workers merit financial support, and budget 2008 provided a tax break to truck drivers to assist with mobility challenges in that industry. I am calling on us to do the right thing here today and create a labour mobility tax credit for the building and construction industry too. Specifically, my bill would allow tradespersons and indentured apprentices to deduct travel and accommodation expenses from their taxable income, so they can secure and maintain employment at a construction site that is more than 80 kilometres from their home. Adopting this bill would remove one of the largest stated barriers to labour mobility in our country and would pave the road for workers to move freely between regions of the country where their skills are in demand. For me, this is absolutely the right thing to do, and I do not believe that this issue has to be partisan. In fact, I know it is not.

Let me remind members than in April 2008, the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities supported my bill in intent if not by name. The two germane recommendations were numbers 1.6 and 1.7. Recommendation number 1.6 reads:

The Committee recommends that the federal government examine the moving expenses provision of the Income Tax Act with a view to extending this provision to individuals who must leave their principal residence to work on a temporary basis, provided their principal residence is retained.

Recommendation number 1.7 says:

The Committee recommends that the federal government provide funding to assist individuals who agree to relocate to enter employment in occupations experiencing skills shortages.

Both of those recommendations are spot-on.

Yes, these recommendations were adopted during a minority Parliament, so it may be assumed that the government members did not actually support them. However, let me provide further evidence to the contrary. Before the Standing Committee on Finance on November 19, 2012, the Conservative member for Fort McMurray—Athabasca responded to a presentation by a representative of the building trades by saying, “...I've been advocating since 2005 for a tax credit on travel and mobility”.

Just a month later, another report by the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities made this its 30th recommendation. It stated:

The Committee recommends that the Government of Canada study the anticipated cost of introducing new fiscal measures that would help people who find jobs far away from where they live, for example a tax credit for travel and lodging if a person must work more than 80 kilometres from his or her residence, and that it study the potential impact of such measures on labour mobility and labour shortages.

This time, the government had the majority of members on the committee, so that recommendation would not have passed without the support of the Conservatives.

I want to publicly thank the Conservatives who were members of the committee at that time. They are the members for Mississauga—Streetsville, Don Valley East, Okanagan—Shuswap, Brant and Calgary Northeast, and the member for Simcoe—Grey, who is now Canada's Minister of Labour. I know that the member for Mississauga—Streetsville, in particular, understands this issue and has been advocating for it inside his own caucus. Also, I hope the Minister of Labour is using her new clout to assist his efforts in every possible way. Since she has repeatedly mentioned her own family roots in Alberta's construction industry, I trust that she understands what is at stake here.

Certainly, all of the opposition members on the committee got it right away. I was but one member of that committee, and I was proud to note that my NDP colleagues at HUMA, the members for Hochelaga, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup and St. John's South—Mount Pearl, have always stood four-square behind the building trades in their communities and immediately expressed their support for my bill.

I am also cautiously optimistic that my Liberal colleague from Cape Breton—Canso will see fit to vote for it, although truthfully I am not sure which side he was on when the issue was being discussed when the Liberals were in government, during their 13 years in office. What I do know is that in opposition he has been nothing but supportive, and I want to thank him for that.

This issue does have broad-based support. What is stopping it from becoming law? At one point both the Minister of Finance and the former Minister of Labour were concerned about how much my proposed tax credit would cost. They were not entirely convinced by the admittedly rough initial calculations, which showed that it would be revenue neutral, since the cost of the tax credit would be more than offset by savings in employment insurance payments that would no longer have to be made as unemployed Canadians went to work in other parts of the country.

However, the building trades took the minister's concern seriously and had the projections related to my bill audited by Hendry Warren. The audited numbers were given to every member of this House during the last building trades lobby day, and I trust that everyone will have familiarized themselves with the costing of my proposal. However, let us take a quick look at the numbers again just to make absolutely certain that we are all on the same page.

Hendry Warren estimated that there are 1.6 million construction workers in Canada. An estimated 10% of them travel each year. At an average cost of $3,500 per worker per year, a 15% tax credit would cost the government $525 per mobile worker per year, for a total cost of $84 million.

Working with the same number of 160,000 travelling skilled trades workers whose average weekly employment insurance benefit would be $393 per week for an average period of unemployment of four weeks if they were not working means that the government would pay $251 million in EI benefits per year. That means that the tax credit proposal in my bill would actually save the government $167 million per year.

Let me repeat that, Mr. Speaker, because these numbers will be germane in your consideration of whether my bill will ultimately require a royal recommendation. Far from being an expenditure, my bill would actually save the government $167 million each and every year, and that is just premised on savings on EI.

As the audited statement makes clear, when savings from all social programs are taken into account along with increased long-term income tax revenues from employment, the labour mobility tax credit is more likely to yield a return on the government's investment of nearly five to one. We would think the Minister of Finance would be doing a happy dance at the prospect of such a windfall.

The bill really is a win, win, win. As I said at the outset, workers win because the travel and accommodation costs would no longer be a barrier to accepting decent jobs for decent wages in other regions of the country; employers win because they would have access to larger pools of qualified workers without needing to resort to the costly temporary foreign workers program; the government wins by having taken a concrete step toward addressing regional skilled labour shortages, all the while reducing dependence on costly social programs and actually boosting long-term income tax revenues. It does not get much better than that.

Let me conclude by bringing this discussion full circle. I want to end where I began.

Locally and nationally, the building and construction trades have lobbied for the bill for over 35 years. They represent an industry that is critical to our economy. In fact, construction is Canada's largest private sector industry. Its direct impact is immense. Construction accounts for 12% of Canada's GDP.

The industry has more than 260,000 businesses, employing more than a million Canadians. It is responsible for installing, repairing, and renovating more than $150 billion worth of infrastructure every single year. It is a threshold industry on which everything else is based.

In a very real sense, the building and construction trades have built our country. It is time for us to shore up their work. It is time for us to heed their call for action. It is time for us to provide them with a tax credit for travel and accommodation expenses when they accept work more than 80 kilometres away from their home. It is time to pass my bill.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, I come from a long line of carpenters. I was a carpenter myself. I built a house about three years ago, so I understand what travelling to work involves and the cost involved.

My first job out of high school was working at a gold mine in Manitoba. We incurred the cost ourselves because there was a good job waiting at the other end. The incentive was the good job we got at the other end.

I am not clear and I do not quite see the linkage to absolute employment with a tax credit. I do not think it would be that direct, and you are making the presumption that there would be an automatic increase in employment based on the tax credit. I would ask that you explain that.

[The Deputy Speaker, NDP, Joe Comartin]

I would remind all members to direct their questions through the Chair.

The hon. member for Hamilton Mountain.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I welcome the question. I take the member at his word that it is a sincere question and I believe it is.

When someone accepts a job in another part of the country and does that on a permanent basis, the Income Tax Act already provides assistance to those workers. The Income Tax Act, for example, allows workers to write off their moving expenses, but that is when they are moving for a job that will be permanent.

What happens in the building trades is that they may be asked to move from my hometown of Hamilton to Sudbury for a period of six months while the Sudbury hospital is being built. However, that is not a permanent job so the worker would have to move his or her entire family to Sudbury for six months. That makes no sense.

If there is a trades shortage in Sudbury, this would allow a worker to accept that job in Sudbury, get some additional help for accommodation and travel expenses to that job site, but would allow him to then come home and the next time perhaps accept a job in Sarnia, where perhaps a school is being built. That is what the bill is designed to do. If there are labour shortages in one part of the province or country and we have skilled workers who are unemployed in another region, the bill would facilitate those workers accepting jobs in other parts of the country.

The member said at the outset that he was formerly a member of the carpenters' union. The carpenters were a driving force behind my bill and I would encourage the member to talk to the leadership of his former union. I am sure they would be delighted to sit down with him at greater length than I can do here in the House, and explain the details. I know that he will come to understand the merits of the bill.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, Canada is a vast land and labour mobility is very important. Within provinces a redistribution of labour often occurs that goes beyond 80 kilometres. For example, in my province of Manitoba there might be something happening in Brandon or in northern Manitoba. Is the member aware of any provinces that provide the type of tax break she is suggesting in the bill?

Seeing the bill go to committee is positive, but it would be very helpful if the member could cite an example from some of the larger provinces where there is a need for labour mobility.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, as the member will know, the Income Tax Act with which my bill deals, is a federal piece of legislation. It applies equally to all provinces of the country, so this amendment would for the first time allow workers, no matter where they live in Canada, to make this deduction under the federal Income Tax Act.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Speaker, my riding is huge.

In concrete terms, if this bill were passed, how much money would someone receive if they accepted a six-month contract 150 km from home? How much money might he and his family save?

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, if someone in the member's riding were to accept a job 150 kilometres away from his or her home, they would be able to deduct the travel and accommodation costs. The costs for getting to the job site 150 kilometres away, as well as their accommodation for the six months while they are working away from their primary residence, would be deductible on their federal income tax in the next year that they file their income tax return.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency]

Mr. Speaker, it is a pleasure to rise in debate today on Bill C-201, which is sponsored by the member for Hamilton Mountain.

The bill proposes to allow tradespeople and apprentices to deduct from their taxable income travel and accommodation expenses that they incur in order to secure and maintain employment. These deductions would be subject to certain conditions.

I would like to focus on a few reasons why I oppose Bill C-201.

First of all, our government is quite focused on providing support for employees and tradespeople across the country. Second, the bill would be ineffective and inequitable. It would be ineffective because there is no evidence that the proposal would increase the likelihood that tradespeople will travel more for work, and inequitable in that some tradespeople would receive tax relief for work-related travel while other workers would not.

Third, especially during a time of fiscal responsibility, the bill would be very costly and that cost would be significant at this time in our economy. The bill looks nice and has a nice sound to it. It is kind of like a chocolate cake with a lot of icing on it. We look at the icing on the chocolate cake and say it looks tasty, but it really is not good for us. There is no way to square that piece of cake to be good for us.

I will start by highlighting our government's role in supporting employees and tradespeople. I would like to say that the hon. member for Hamilton Mountain did not support any of the legislation that we brought in to support employees and tradespeople. That needs to be noted during this debate. I mean, it is one thing to have a personal preference. It is one thing to have a party bias. I think we all have some party bias in this place. However, it is another thing to ignore good legislation simply because it is the government that brings it in.

Canada's strong economic performance during the global recession has been widely recognized around the world. Although it may not have gotten the same amount of press as other key initiatives, Canada's economic action plan provided key funding to several organizations to stimulate growth and jobs during the recent recession and helped tradespeople and other Canadians find jobs.

Our government knows that Canadian workers are among the best educated and the best trained in the world. However, Canada is facing a skilled labour shortage. In particular, persistent pockets of unfilled positions exist for some skilled tradespeople and professional occupations. The Canadian Chamber of Commerce, for example, has identified Canada's skills shortage as the number one issue facing its membership.

Our government takes this issue seriously. To help Canadians connect with available jobs, in economic action plan 2013 we set out a three-point plan to address these challenges. First, economic action plan 2013 introduced the new Canada job grant, which would provide $15,000 or more per person, including the maximum federal contribution of $5,000, to be matched by the provinces, territories and employers, to ensure Canadians are getting the skills employers are seeking.

Second, the plan would create opportunities for apprentices by working with provinces and territories to examine the use of practical tests as a method of assessment and to harmonize requirements, and by introducing measures that would support the use of apprentices through federal construction and maintenance contracts, investments in affordable housing and infrastructure projects that receive federal funding. Finally, it would provide support to groups that are under-represented in the job market, such as persons with disabilities, youth, aboriginal peoples and newcomers, to help them find good jobs.

These are great initiatives that are directly helping to fill the labour shortages and connect Canadians with jobs. These are all measures that the opposition has voted against. If the member's bill attempts to focus on apprentices and tradespeople, let me highlight some of the measures our government has already taken to support these individuals.

Since 2006, our government has invested nearly $2.7 billion per year to support skills and training programs. We have supported tradespeople with the tradesperson's tools deduction and extended the fees eligible for the tuition tax credit to include those examinations required to be certified as a tradesperson in Canada, thereby encouraging more tradespeople to become red seal tradesmen. With a red seal, they can work anywhere in the country.

Our government has legislated measures such as the apprenticeship job creation tax credit, the apprenticeship incentive grant, and the apprenticeship completion grant. Tax credits already exist for employers and tradespersons, such as the Canada employment credit, the moving expenses deduction, and the special or remote work sites tax exemptions.

That is not all. We understand that education has a big part in this equation as well. We will promote education in fields where there is high demand for employees, including science, technology, engineering, mathematics, and skilled trades. We will help improve educational and labour market outcomes for aboriginal peoples by investing to improve the on-reserve income assistance program and by providing funding for post-secondary scholarships and bursaries.

We will continue to work with the provinces and territories and stakeholders to improve the foreign credential recognition process, thereby enhancing the integration of internationally trained individuals in the job market.

Put simply, our government remains focused on what matters to Canadians—jobs and economic growth and ensuring that Canada's economic advantage today will translate into the long-term prosperity of tomorrow.

Let me now address some of the specific concerns we have with the bill before us.

First, we believe that providing an income tax deduction for job-related travel and accommodation expenses, as proposed under Bill C-201, would make it difficult to ensure that tax relief is not provided for personal expenses that reflect lifestyle decisions. Under the provisions of this bill, expenses incurred by eligible individuals who choose to live more than 80 kilometres from the workplace for personal reasons would quality for tax relief.

Second, the open-ended nature of the proposed deduction would make it vulnerable to unfair tax planning and abuse. For example, individuals could arrange their affairs to claim a recreational property, such as a cottage that is more than 80 kilometres from work, as their principal residence. They could then deduct the cost of maintaining their urban residence as an expense required to secure and maintain employment. That is a serious flaw with this piece of proposed legislation. This is not conductive to a fair tax system, especially as we have just been debating Bill C-4, which emphasizes our government's commitment to a fair tax system for all Canadians.

Third, the bill would raise equity concerns, as eligible tradespersons and indentured apprentices would be able to reduce their tax liability when they incurred eligible travel and accommodation expenses whereas other workers who had to incur similar work-related travel expenses, such as nurses, would not receive tax assistance. This would result in individuals with a similar capacity to pay taxes having markedly different tax liabilities, due solely to occupational differences.

Fourth, it is not clear that the bill would increase travel by tradespersons and indentured apprentices. In fact, for individuals who would have incurred eligible travel and accommodation expenses in any case, the deduction would represent a windfall gain.

Finally, and perhaps most importantly, the cost of the proposal would be significant. Preliminary estimates suggest that providing tax assistance to tradespersons and indentured apprentices for travel and accommodation expenses would cost approximately $60 million per year at maturity. At a time when our government is committed to returning to balanced budgets and eliminating the deficit, this bill, which already raises some concerns, would be extremely costly to the government.

In addition, Bill C-201 would create pressure to extend tax relief in respect of other expenses or other types of employees, at a higher fiscal cost.

Make no mistake. Our government believes in tax relief for all Canadians. Canadians know that when it comes to tax reductions, this government has a long-standing record of significant achievements. By keeping taxes low, our government is allowing Canadians to keep more of their hard-earned money.

In conclusion, this bill is poorly targeted, would subsidize personal choices, and would open the door to unfair tax planning. It would also entail a cost of approximately $60 million per year. It would create pressure to extend tax relief to other work-related expenses at a higher fiscal cost. In addition, our government already provides tax relief and program support for tradespersons and apprentices and tax relief for employees who must incur travel-related expenses in the course of their employment.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, maybe a good place to start is to draw a comparison on why it is important to recognize that there is value to the private member's bill that has been brought forward this afternoon and the fact that we should allow the bill to go to committee.

On the one hand, the government representative has just made it very clear that if we take a look at a cost analysis of the implementation of this bill, we are looking at somewhere in the neighbourhood of $60 million. On the other hand, the sponsor of the bill said that the Minister of Finance should, in essence, be rubbing his hands and saying what good fortune we have in this particular bill because the bill will generate a net benefit to the taxpayer in excess of, I believe, $80 million. I believe it was just over $100 million. I suspect, if the truth be known, that it would likely be somewhere in between.

I do not necessarily believe that is and should be the only argument to be made on whether the legislation should be passed. A number of other factors need to be taken into consideration, but what is clear is that there is, no doubt, a question regarding the impact of the legislation from a financial point of view for Canadians. What would it actually be?

We would be in a better position to get an answer to that question if we were able to take it to the committee stage. There we could bring forward individuals, whether they are research analysts or other professionals, possibly from the Department of Finance, to find out what the actual answer is.

All I know is that either the former speaker or the member who introduced the bill has to be wrong. We know that. There is close to a $200 million gap between the two of them. I do believe that there is some merit for us to acknowledge right up front that we really do not necessarily know the facts.

In that sense, I would suggest that we need to take an assessment of what the bill would be able to do—

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, I would like to answer—

[An hon. member]

There is no question.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I am not asking a question.

[Chris Charlton, NDP, Hamilton Mountain, ON]

We only have 10 minutes of questions. We are resuming debate.

[Some hon. members]

Oh, oh!