Mr. Speaker, I appreciate this opportunity today to highlight some of the key initiatives in economic action plan 2013 act no. 2.
I would like to begin by saying that our government is very proud of the steps we are taking to support the economy through today's legislation. As always, we want an open, public, and timely debate on these measures; we also look forward to a detailed committee study in the House and in the Senate.
In keeping with previous budget legislation under our government, in addition to having the bill studied by the finance committee, we will recommend even further study to the provisions in today's legislation. It is for that reason that we will be asking the following committees to look at certain portions of the bill: citizenship and immigration; human resources, skills and social development and the status of persons with disabilities; and justice and human rights. Indeed, I will move a motion at the finance committee to this effect once second reading is completed by the House.
I hope opposition members will give their support at second reading as an indication that they genuinely want these committees to study the legislation instead of just playing political games.
On that note, let me outline why the opposition should support this legislation.
Economic action plan 2013 builds on the strong foundation that was laid last year. In addition to the portfolio of initiatives we have introduced since 2006 with affordable measures to create jobs, promote growth, and generate long-term prosperity, it will help to further unleash potential for Canadian businesses and entrepreneurs to innovate and thrive in the modern economy.
Let us revisit the facts.
Today Canada has the strongest job growth among G7 countries since the recession. Our unemployment rate is at its lowest level in four years. It is significantly lower than that of the U.S., which is a phenomenon that has not been seen in nearly three decades. Meanwhile, we have created over one million net new jobs, nearly 80% of which are in the private sector, and our government continues to make new opportunities for Canadians to find employment. Today's legislation does little to detract from this goal.
Both the independent International Monetary Fund, IMF, and the Organisation for Economic Co-operation and Development, OECD, are projecting that Canada's growth will be among the strongest performances in the G7 in the years ahead. Real GDP is significantly above pre-recession levels and is the best performance in the G7.
While other countries continue to struggle with debt that is spiralling out of control, Canada is in the best fiscal position in the G7. Canada still remains on track to return to balanced budgets n 2015.
However, our government has been very clear that we will not raise taxes on Canadians to balance the budget. Unlike the NDP, which continues to push high-tax schemes, our government believes that keeping taxes low means more money in the pockets of hard-working Canadians, and that in turn helps keep our economy strong.
A recent study by KPMG concluded that Canada's total business tax cost, which includes corporate income tax, capital taxes, sales taxes, property taxes, and wage-based taxes is more than 40% lower than it is in the United States. In short, our government has created an environment that encourages new investment, growth, and job creation, and one that ensures Canada has the strongest fiscal position and the lowest business tax costs in the G7.
Having the lowest overall tax rate on new business investment in the G7 translates into Canada having a competitive business tax system, one that plays a key role in supporting businesses in all sectors of the Canadian economy to invest, grow, and thrive.
Let me share some highlights of our tax relief initiatives.
Our government has implemented broad-based tax reductions that support investment and growth and is delivering more than $60 billion of tax relief to job-creating businesses over 2008-09 and the following five fiscal years.
For example, in order to boost investments and productivity, we reduced the federal corporate income tax to 15% from its 2007 rate of 21%.
In addition, the federal capital tax was eliminated in 2006, and the only corporate tax was eliminated for all businesses in 2008.
Furthermore, we reduced the small business tax rate to 11% in 2008 from 12% in 2007, and subsequently the amount of income eligible for this lower rate was increased to $500,000 in 2009.
Canada's system of international taxation was strengthened in order to better support cross-border trade and investment and to improve fairness.
These measures are part of a policy framework designed to increase our economy's production capacity and improve Canadians' quality of life.
Cutting federal corporate income tax and making other tax adjustments boost the assumed rate of return on investment and reduce capital costs. These measures encourage businesses to invest in Canada and hire Canadians.
That approach increases Canada's production capacity and improves Canadians' quality of life.
Economic action plan 2013 focused on positive initiatives to support job creation and economic growth while returning to balanced budgets, ensuring Canada's economic advantage remains strong today and into the future.
However, the job does not end there. Bill C-4 would implement key measures from economic action plan 2013 as well as certain previously announced tax measures to help create jobs, stimulate economic growth, and secure Canada's long-term prosperity.
Our government's low-tax plan is helping to guide the Canadian economy along the path of sustainable economic growth. Bill C-4 builds on our successes and maintains our government's focus on the economy.
I would like to discuss three key aspects of the bill today: a continued focus on job creation and support for job creators, a firm response to tax loopholes and tax evasion, and an overall respect for taxpayers' dollars.
While we believe in the benefits of lower taxes, our government fully understands that sustaining an effective tax system also rests on the foundation of tax fairness. That is why economic action plan 2013 is committed to closing tax loopholes that allow a select few businesses and individuals to avoid paying their fair share. Broadening and protecting the tax base supports our government's effort to return to balanced budgets, responds to provincial governments' concerns about protecting provincial revenues on our shared tax bases, and helps give Canadians confidence that the tax system is indeed fair.
The efforts made to ensure that everyone pays their fair share also help keep taxes low for Canadian families and businesses. In so doing, there is more motivation to work, save and invest in Canada.
Since 2006, and including measures proposed in economic action plan 2013, the government has introduced over 75 measures to improve the integrity of the tax system. Today's legislation takes additional steps in support of this objective.
Two examples include further extending the application of Canada's thin capitalization rules—which limit the amount of Canadian profits that can be distributed to certain non-resident shareholders as deductible interest payments—to Canadian resident trusts and non-resident entities, and introducing stiff administrative monetary penalties and criminal offences to deter the use, possession, sale, and development of electronic suppression-of-sales software designed to falsify records for the purpose of tax evasion.
We are also providing the Canada Revenue Agency, the CRA, with new tools to enforce the tax rules to combat international tax evasion and aggressive tax avoidance, all while we are taking immediate action to improve the integrity and neutrality of the tax system. Specifically, economic action plan 2013 does this by streamlining the process for the CRA to obtain information concerning unnamed persons from third parties, such as banks; requiring certain financial intermediaries, including banks, to report to the CRA clients' international electronic fund transfers of $10,000 or more; and introducing a new program to stop international tax evasion that would pay rewards to individuals who report major international tax non-compliance.
As the opposition can see, tax fairness is a basic principle that our government is committed to upholding. We make no apologies for doing so. In fact, we are proud of our record and we are building on it.
A level playing field is what Canadian businesses deserve and require, and we are delivering. For example, the Income Tax Act contains a number of provisions intended to constrain the trading of corporate tax attributes among arm's-length persons. Unfortunately, despite the various provisions intended to curtail the inappropriate trading of loss pools, transactions to circumvent these provisions continue to be undertaken.
Our government understands the need to introduce practical legislative measures to ensure that there are appropriate tax implications attached to these transactions. This bill does just that. It introduces an anti-avoidance rule to support the existing loss restriction rules that apply on the acquisition of control of a corporation.
As everyone can see clearly, our government is committed to putting in place the right framework to ensure tax compliance. The Canadian Institute of Chartered Accountants had this to say about economic action plan 2013:
The budget looks to close tax loopholes, address aggressive tax planning, clarify tax rules, reduce international tax avoidance and tax evasion and improve tax fairness. It also provides the Canada Revenue Agency with new tools to enforce the tax rules.
The statement continued with a strong backing of our initiatives and stated:
We support efforts to maintain the integrity of the tax base....
The bottom line is this: our government is committed to fighting tax evasion and giving Canadians a tax system they can have confidence in. There are those who would rather take advantage of the system to skip their fair contribution; Bill C-4 introduces strong new measures to combat this and would ensure that any previously mentioned measures from economic action plan 2013 come to fruition.
Lowering taxes is not the only way our government is furthering taxpayers' dollars. Canadians deserve streamlined services and efficient programs.
Today's legislation contains several measures fully in line with our government's respect for taxpayers' dollars. A few examples include modernizing the Canada student loans program by moving to electronic service delivery, improving the efficiency of the temporary foreign worker program by expanding electronic service delivery, phasing out the labour-sponsored venture capital corporations tax credit, and modernizing service delivery for Canadians by accelerating the move from paper-based to automated passport application e-services.
These are all changes that I am extremely proud to speak to. It is measures like these that demonstrate our government's commitment to making it easier for Canadians to access services that are cost-effective and efficient. While many of the changes in Bill C-4 are technical in nature, many provide clear benefits for Canadians.
I know that my constituents back home expect a fiscally responsible government. Let us take the modernization of the Canada student loans program as an example. Students in my riding of North Vancouver rely on this important program to help achieve their goals and make their educational aspirations a reality. This change in Bill C-4 would not only eliminate a cumbersome and often long process of paper agreements and identification but would also provide the government with approximately $10 million in cost savings per year. It is just common sense to provide a better service to Canadians and while saving taxpayers' dollars at the same time. It is initiatives like this that make bills like today's all the more important to pass.
I have talked about how we are working hard to make our tax system fair and how we are doing everything possible to maximize taxpayer money, but I have not forgotten about an area that Canadians have on their minds: jobs.
Quite simply, our government values job creators and we have been working hard with them in recent years to ensure that they are in the best position possible to provide jobs for Canadians.
The legislation I have the privilege of speaking about today introduces some new ways our government can support job creation in this country. Examples include extending and expanding the hiring credit for small business, which would benefit an estimated 560,000 employers; increasing and indexing the lifetime capital gains exemption to make investing in small business more rewarding; expanding the accelerated capital cost allowance to further encourage investments in clean energy generation; freezing employment insurance premium rates for three years, leaving $660 million in the pockets of job creators and workers in 2014 alone.
Let me elaborate on one of these measures that I think will have a big impact for small businesses.
Among the many ways that Canada's income tax system supports small business owners, farmers and fishermen is the lifetime capital gains tax exemption, the LCGE. In order to increase the potential rewards of investing in small business, farming and fishing, economic action plan 2013 proposes to increase the LCGE from $750,000 to $800,000 in 2014. The exemption helps these entrepreneurs better ensure their financial security for retirement and facilitates the intergenerational transfer of their businesses. In 2007 our government increased the LCGE to $750,000 from $500,000, the first increase in the exemption since 1988.
In addition, to ensure the real value of the LCGE is not eroded over time, economic action plan 2013 proposes to index the $800,000 LCGE limit to inflation for the first time ever. The first indexation adjustment will occur for the 2015 taxation year. This is added security for the small business owner and provides financial freedom to create new jobs.
The initiatives set out in economic action plan 2013 are based on domestic government measures to improve the overall strength of Canada's tax system and to once again demonstrate our government's commitment to using taxpayers' money responsibly.
With a comprehensive and forward-looking agenda, these initiatives will deliver high quality jobs, economic growth and sound public finances.
Economic action plan 2013 would allow Canada to meet these challenges and emerge from them stronger than ever today and in the future.
While the opposition continues to focus on issues that do not matter to Canadians, our government remains focused on the task at hand. Economic growth did not stop at the last budget or the last budget implementation act for that matter. We continue to look for ways to maximize taxpayer dollars, increase the efficiency of the inner workings of government and make certain that job creation and economic prosperity are at the forefront of any new legislation. In this respect, the bill would make significant improvements that would benefit Canadians. I urge members of the House to pass it.