Bill C-15 (Historical)

Budget Implementation Act, 2016, No. 1.

An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures

Part 1 implements certain income tax measures proposed in the March 22, 2016 budget by
(a) eliminating the education tax credit;
(b) eliminating the textbook tax credit;
(c) exempting from taxable income amounts received as rate assistance under the Ontario Electricity Support Program;
(d) maintaining the small business tax rate at 10.‍5% for the 2016 and subsequent taxation years and making consequential adjustments to the dividend gross-up factor and dividend tax credit;
(e) increasing the maximum deduction available under the northern residents deduction;
(f) eliminating the children’s arts tax credit;
(g) eliminating the family tax cut credit;
(h) replacing the Canada child tax benefit and universal child care benefit with the new Canada child benefit;
(i) eliminating the child fitness tax credit;
(j) introducing the school supplies tax credit;
(k) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(l) restoring the labour-sponsored venture capital corporations tax credit for purchases of shares of provincially registered labour-sponsored venture capital corporations for the 2016 and subsequent taxation years; and
(m) introducing changes consequential to the introduction of the new 33% individual tax rate.
Part 1 implements other income tax measures confirmed in the March 22, 2016 budget by
(a) amending the anti-avoidance rules in the Income Tax Act that prevent the conversion of capital gains into tax-deductible intercorporate dividends;
(b) qualifying certain costs associated with undertaking environmental studies and community consultations as Canadian exploration expenses;
(c) ensuring that profits from the insurance of Canadian risks remain taxable in Canada;
(d) ensuring that the dividend rental arrangement rules under the Income Tax Act apply where there is a synthetic equity arrangement;
(e) providing specific tax rules in respect of the commercialization of the Canadian Wheat Board, including a tax deferral for eligible farmers;
(f) permitting registered charities and registered Canadian amateur athletic associations to hold limited partnership interests;
(g) providing an exemption to the withholding tax requirements for payments by qualifying non-resident employers to qualifying non-resident employees;
(h) limiting the circumstances in which the repeated failure to report income penalty will apply;
(i) permitting the sharing of taxpayer information within the Canada Revenue Agency to facilitate the collection of certain non-tax debts; and
(j) permitting the sharing of taxpayer information with the Office of the Chief Actuary.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures proposed in the March 22, 2016 budget by
(a) adding insulin pens, insulin pen needles and intermittent urinary catheters to the list of GST/HST zero-rated medical and assistive devices;
(b) clarifying that GST/HST generally applies to supplies of purely cosmetic procedures provided by all suppliers, including registered charities;
(c) relieving tax to ensure that when a charity makes a taxable supply of property or services in exchange for a donation and an income tax receipt may be issued for a portion of the donation, only the value of the property or services supplied is subject to GST/HST;
(d) ensuring that interest earned in respect of certain deposits is not included in determining whether a person is considered to be a financial institution for GST/HST purposes; and
(e) clarifying the treatment of imported reinsurance services under the GST/HST imported supply rules for financial institutions.
Part 2 also implements other GST/HST measures confirmed in the March 22, 2016 budget by
(a) adding feminine hygiene products to the list of GST/HST zero-rated products; and
(b) permitting the sharing of taxpayer information in respect of non-tax debts within the Canada Revenue Agency under certain federal and provincial government programs and in respect of certain programs where information sharing is currently permitted under the Income Tax Act.
Part 3 implements certain excise measures proposed in the March 22, 2016 budget by
(a) ensuring that excise tax relief for diesel fuel used as heating oil or to generate electricity is targeted to specific instances; and
(b) enhancing certain security and collection provisions in the Excise Act, 2001.
Part 3 also implements other excise measures confirmed in the March 22, 2016 budget by permitting the sharing of taxpayer information in respect of non-tax debts within the Canada Revenue Agency under certain federal and provincial government programs and in respect of certain programs where information sharing is currently permitted under the Income Tax Act.
Division 1 of Part 4 repeals the Federal Balanced Budget Act.
Division 2 of Part 4 amends the Canadian Forces Members and Veterans Re-establishment and Compensation Act to, among other things,
(a) replace “permanent impairment allowance” with “career impact allowance”;
(b) replace “totally and permanently incapacitated” with “diminished earning capacity”;
(c) increase the percentage in the formula used to calculate the earnings loss benefit;
(d) specify when a disability award becomes payable and clarify the formula used to calculate the amount of a disability award;
(e) increase the amounts of a disability award; and
(f) increase the amount of a death benefit.
In addition, it contains transitional provisions that provide, among other things, that the Minister of Veterans Affairs must pay, to a person who received a disability award or a death benefit under that Act before April 1, 2017, an amount that represents the increase in the amount of the disability award or the death benefit, as the case may be. It also makes consequential amendments to the Children of Deceased Veterans Education Assistance Act, the Pension Act and the Income Tax Act.
Division 3 of Part 4 amends the sunset provisions of certain Acts governing federal financial institutions to extend by two years, namely, from March 29, 2017 to March 29, 2019, the period during which those institutions may carry on business.
Division 4 of Part 4 amends the Bank Act to facilitate the continuance of local cooperative credit societies as federal credit unions by granting the Minister of Finance the authority to provide transitional procedural exemptions, as well as a loan guarantee.
Division 5 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things, broaden the Corporation’s powers to temporarily control or own a domestic systemically important bank and to convert certain shares and liabilities of such a bank into common shares.
It also amends the Bank Act to allow the designation of domestic systemically important banks by the Superintendent of Financial Institutions and to require such banks to maintain a minimum capacity to absorb losses.
Lastly, it makes consequential amendments to the Financial Administration Act, the Winding-up and Restructuring Act and the Payment Clearing and Settlement Act.
Division 6 of Part 4 amends the Office of the Superintendent of Financial Institutions Act to change the membership of the committee established under that Act so that the Chairperson of the Canada Deposit Insurance Corporation is replaced by that Corporation’s Chief Executive Officer. It also amends several Acts to replace references to that Chairperson with references to that Chief Executive Officer.
Division 7 of Part 4 amends the Federal-Provincial Fiscal Arrangements Act to authorize an additional payment to be made to a territory, in order to take into account the amount of the territorial formula financing payment that would have been paid to that territory for the fiscal year beginning on April 1, 2016, if that amount had been determined using the recalculated amount determined to be the gross expenditure base for that fiscal year.
Division 8 of Part 4 amends the Financial Administration Act to restrict the circumstances in which the Governor in Council may authorize the borrowing of money without legislative approval.
Division 9 of Part 4 amends the Old Age Security Act to increase the single rate of the guaranteed income supplement for the lowest-income pensioners by up to $947 annually and to repeal section 2.‍2 of that Act, which increases the age of eligibility to receive a benefit.
Division 10 of Part 4 amends the Special Import Measures Act to provide that a finding by the President of the Canada Border Services Agency of an insignificant margin of dumping or an insignificant amount of subsidy in respect of goods imported into Canada will no longer result in the termination of a trade remedy investigation prior to the President’s preliminary determination. It also provides that expiry reviews may be initiated from a date that is closer to the expiry date of an anti-dumping or countervailing measure and makes amendments related to that new time period.
Division 11 of Part 4 amends the Pension Benefits Standards Act, 1985 to combine the authorities for bilateral agreements and multilateral agreements into one authority for federal-provincial agreements, and to clarify that federal-provincial agreements may permit the application of provincial legislation with respect to a pension plan.
Division 12 of Part 4 amends the Employment Insurance Act to, among other things,
(a) increase, until July 8, 2017, the maximum number of weeks for which benefits may be paid to certain claimants in certain regions;
(b) eliminate the category of claimants who are new entrants and re-entrants; and
(c) reduce to one week the length of the waiting period during which claimants are not entitled to benefits.
Division 13 of Part 4 amends the Canada Marine Act to allow the Minister of Canadian Heritage to make payments to Canada Place Corporation for certain celebrations.
Division 14 of Part 4 amends the Jobs, Growth and Long-term Prosperity Act to authorize the Minister of Infrastructure, Communities and Intergovernmental Affairs to acquire the shares of PPP Canada Inc. on behalf of Her Majesty in right of Canada. It also sets out that the appropriate Minister, as defined in the Financial Administration Act, holds those shares and authorizes that appropriate Minister to conduct, with the Governor in Council’s approval, certain transactions relating to PPP Canada Inc. Finally, it authorizes PPP Canada Inc. and its wholly-owned subsidiaries to sell, with the Governor in Council’s approval, their assets in certain circumstances.
Division 15 of Part 4 amends the Canada Foundation for Sustainable Development Technology Act to modify the process that leads to the Governor in Council’s appointment of persons to the board of directors of the Canada Foundation for Sustainable Development Technology by eliminating the role of the Minister of Natural Resources and the Minister of the Environment as well as the consultative role of the Minister of Industry from that process. It also amends the Budget Implementation Act, 2007 to provide that a sum may be paid out of the Consolidated Revenue Fund to the Foundation on the requisition of the Minister of Industry and to clarify the maximum amount of that sum.

Budget Implementation Act, 2016, No. 1

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, the first program the member mentioned was welfare. Welfare is there, like a lot of government programs are, for those who have found themselves in tough circumstances in life. I fully support that.

Employment insurance is there for people who lose their jobs. It is not there for somebody to use as part of a plan. I fully support that.

As my hon. colleague will know, the previous Liberal government took I believe it was $52 million or $54 million out of the EI fund, which it had no right to do, and it put it in the general coffers.

Those programs are in place and I fully support them.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, today I rise in the House to speak to Bill C-15, the implementation bill for the budget the Minister of Finance tabled on March 22.

I will be very clear from the outset that I am very worried. This government does not know what it is talking about and does not know what it is doing. It spends without thinking, it throws money around the country from coast to coast, it has no structure, and no guidelines. I must say that it is a bad manager.

Let us go back to October 19. Let us look at the many promises that were made and broken by our friends across the way who are now in government. First, they said that they would balance the budget at the end of their term in four years, which they criticized us for doing. I will talk about that broken promise later.

Their second broken promise was having a modest $10 billion deficit. They told us that they now project an astronomical deficit of $30 billion for the first year. They promised to lower business taxes from 11% to 9%. They did not do that. Again, they did not keep their promise. They asked Canadian voters to trust them to put postal workers back on their routes. Again, that is not true.

With regard to refugees, the Liberals created an emergency. The election took a turn and, unfortunately, the party that was in the lead got bumped to third place. The Liberals took the lead by promising to bring 25,000 refugees to Canada before December 31, 2015. Once again, they did not keep their promise.

They said that the middle-class tax cut would be revenue-neutral. They probably do not know how to count. It is going to cost a minimum of $1.2 billion. They also said that they were going to paint the Quebec Bridge and that they were going to solve that problem in my region. They have two weeks left to do so, or 23 days to be exact, but I can already tell the House that they will not keep that promise either.

They said that they were going to do politics differently. It is funny but there have never been as many gag orders as there have been under this government. They are not capable of governing responsibly. Canadian families must not follow their example. I am a father and, if I managed my family's budget the way that the government is managing our economy, we would go bankrupt. Managers, parents, and adults need to do things carefully.

Yes, every so often, circumstances arise in which we need to borrow money to improve our country, but we need to do so in a careful and controlled manner. Every Canadian family knows that, sooner or later, they will have to pay back what they borrowed. The day of reckoning will come. It is the law. It is a fact of life. When we borrow money, we have to pay it back. Money does not grow on trees. We have to fulfill our obligations.

What the government announced in the most recent budget is a structural deficit created by the Liberals. We need a drastic remedy. With a little luck, in four years, Canadians will be able to elect a Conservative government. Our children and grandchildren are the ones who will pay the price.

There are members here who have children at home. If they do not set any limits, if they do not get organized, and if they always say yes, their family unit will crumble and they will go bankrupt. If you give a child a credit card with no limit, you will be in a mess in no time. That is what the Liberal Party is doing to our beautiful country.

This government must govern. It must make hard decisions, decisions that are not very popular, but that are nevertheless extremely important and responsible. For example, its decision to reduce the pension age to 65 years was easy and popular, but was it responsible? That is the question. I can only answer that it was not.

It is simple, really. Fewer people are contributing, and costs are higher. More people are taking money out of the fund, and fewer people are putting money in. Nobody needs to take a university course to understand that.

Are the Liberals aware that life expectancy is going up? People are in better health and have a wealth of experience. Why take them out of circulation?

Even an expert with a high-profile financial firm, when he was in private practice, commended the Conservative government for having the courage to make what was a difficult but necessary and responsible decision. What is that so-called expert doing now? He is the Government of Canada's Minister of Finance. Things are not going well. How are we supposed to trust this minister when he does an about-face now that he is responsible for the budget?

Imagine if I said that I was going to give back my universal child care benefits because my income is above average and, on becoming prime minister, I hired two nannies and kept my benefits. What is going on?

They cannot even admit to some of the facts that have been confirmed repeatedly by the parliamentary budget officer. We, the Conservatives, left a budget surplus, and that was after going through one of the biggest global financial crises. Our former leader, who was not a drama teacher, but rather an economist, successfully led Canada out of that situation and made it an economic leader and the first G7 country to get out of the red. As Canadians, we can be proud of that.

The Prime Minister said he was going to govern differently. He is not governing. He is surfing the waves and taking selfies. Rather, it is most likely his inner circle who are taking selfies. Instead of making decision, he is using words like “we are going to consult”, “we are going to analyze”, and “we are going to re-examine departmental reports”. Those are the kinds of things we hear all the time in question period. The Liberals do not even trust Canadian federal public servants. For instance, at Canada Economic Development, a survey was done to determine what to do with the subsidy programs and what sector to support. Let us be serious.

Where is the amazing plan they had announced during the election campaign?

I visited companies that told me they were discouraged by the red tape. On the tax side, business owners must have access to measures that will let them keep these companies in Canada and sell them to family members without losing their shirts. The current federal tax system makes this difficult. Why not look to Quebec for inspiration? It will help companies remain in Canada and let owners, such as a mother or father, to transfer their business to their family. Why not? Why do we not put in place measures to help make this happen? It is not complicated.

Let us move on to another matter and talk about Bombardier. The Liberals have not yet said whether they will support the company or how they would do it. They said that they would provide that information 10 days before the budget, and then in the budget. It is now June 7 and Bombardier's management does not even know what to expect.

It would have been easy and very simple to extend the runway at Billy Bishop airport. That is not complicated. It does not cost anything. However, the Liberals never choose the solutions that do not cost anything.

There is nothing in the budget for our regions. We have to invigorate our regions. The only measure is providing broadband Internet. Our regions deserve more than that. They have tremendous potential that must be developed with our local partners.

I will move on quickly and get to my conclusion. Do members know that the worst debt-to-GDP ratio in Canada's history, 72%, was recorded in 1996 when the Liberals were in power? Do members know that the best debt-to-GDP ratio was recorded in 2009, when the Conservative government and economist Stephen Harper were in power? How can we trust a drama teacher and his troupe? The current government has no vision. It consults, considers, looks at, studies, examines, observes, thinks about taking into consideration—

[The Assistant Deputy Speaker, Carol Hughes]

I remind the member that he cannot refer to a member of the House by their first or last name. I must also inform him that his time is up.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, the only thing that is rich about the Conservatives' legacy is their own description of it.

Many of their statements are not exactly up to date. The Conservatives did not manage to balance the budget one single time in the 20th century. The last time they managed to balance it was in the 19th century.

They claim to be good economic managers, but with their magic economist, the former prime minister, I have a hard time believing that claim.

Can the member talk about the Conservatives' real history with balanced budgets?

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Madam Speaker, I thank my colleague for his pertinent question. This gives me the opportunity to tell the House that the Liberals, once again, are not able to acknowledge the truth.

We balanced the budget in 2014-15 and we left the house in order financially. I do not know what planet the Liberals are living on, but their claims are not true.

I should therefore ask you, Madam Speaker, what is the procedure for requesting that a member retract an erroneous statement?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I thank my colleague for his speech.

I would like to come back to an issue that he raised but did not elaborate on it as much as I would have liked. I mean old age security. He said it was irresponsible on the part of the government to bring the age of eligibility back down to 65, but he failed to cite any studies showing that the program was not viable if the eligibility age remained at 65.

Earlier I tried to get an answer from one of his colleagues, who referred me to a blog post to try to justify the fact that his government raised the eligibility age from 65 to 67. Maybe I will have better luck with this member.

Can he refer me to any studies proving that the program is unsustainable if the eligibility age is set at 65? I would like him to cite at least one study, rather than a blog post.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Madam Speaker, I thank my esteemed colleague for the question.

On the official opposition side, our objective is to create wealth. We need to get the economy moving. We need to invest in the regions. We need to put Canadians to work, so that they have money in their pockets. If the funds are available, we are willing to use them to improve our social programs. However, we believe that you need to have the money in order to make investments.

The same thing is true for families. If no money is coming in, no one can invest; no one can spoil themselves, and no one can go on vacation, for example.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Madam Speaker, I want to thank my colleague who serves on the public accounts committee with me for his hard work there and the great speech he gave today.

There have been a number of questions referencing 2008. The member before him spoke about the Hon. Jim Flaherty and how, in the first two years our government was in power, we paid down $38 billion with surpluses. We balanced the budget, we had a surplus, and we paid down over $38 billion in national debt.

In 2008, the largest recession since the Great Depression hit, yes, we did go into deficit spending with infrastructure funding and investing in things that would help create jobs. Canada was the last to enter the recession and the first to come out of it. This showed that it was good fiscal management.

We had balanced budget legislation, which said that if we were not in recession, if the economy was growing, we would have balanced budgets. The current government has thrown that out and has gone from $10 billion to $20 billion to $30 billion in projected deficits—

[The Assistant Deputy Speaker, Carol Hughes]

I want to give the member a chance to respond.

The hon. member for Portneuf—Jacques-Cartier.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Madam Speaker, indeed, we worked hard for the nine years that we were in power. What worries me, unfortunately for Canadians, is that the Liberals will destroy Canada in the next four years.

In Canada right now, the Liberals want to let young people use marijuana, let vulnerable people commit suicide, and send Canada into bankruptcy.

[The Assistant Deputy Speaker, Carol Hughes]

Order, please. I can see that people feel quite passionate about this debate. It is a shame we do not have more time, but other members want to ask questions and participate in the debate.

The House resumed consideration of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, as reported (with amendment) from the committee, and of the motions in Group No. 1.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, there are so many reasons why this legislation is bad for Canadians that I hardly know where to begin. The excessive spending the Liberal budget sets out is not targeted and will end up hurting businesses, families and hard-working Canadians in the form of future tax increases.

The budget is about spending. It will stifle economic growth. The Liberals hope that by throwing out buzzwords like “infrastructure” and “innovation”, Canadians will not notice their true intentions.

When the Liberals took office, taxes were at their lowest point in 50 years, transfer payments had reached an all-time high, our economy was leading the G-7 in job creation and growth since the recession, and the budget was balanced. The Liberal budget is a plan for reckless spending that offers higher taxes, billions in new debt, and no real plan for jobs. It is a fundamental Conservative principle that Canadians should be able to keep their hard-earned money in their pockets.

Before the people of Edmonton Manning gave me their trust as their member of Parliament, I was a small business owner. I have owned and operated a number of businesses since coming to Canada in 1990. I know first-hand the importance of balancing the books. I understand the importance of meeting payroll and how much having a good, steady job meant to my employees. I worked hard to build my business, because I knew that in Canada success comes with hard work.

My experience is the same as that of thousands of Canadian businessmen. We work hard and have the satisfaction of creating something. We are not rich, but we earn a living, and through our businesses, we help others earn a living also. That may be why I was so disappointed to hear, during the last election campaign, that the Liberal leader thought small businesses were just a tax haven for the rich. I am not rich, but I have worked hard for what I have. I did not grow up with a trust fund.

Roughly two-thirds of small and medium-sized business owners fall directly into the middle class. Employers are about four times more likely to earn less than $40,000 than more than $250,000.

We know that small business creates jobs, According to Innovation, Science and Economic Development Canada, small businesses account for more than 98% of all firms in Canada and play a large role in net job creation. Small businesses created 77.7% of all private jobs from 2002 to 2012, a little more 100,000 jobs each year on average.

Given those statistics, it would seem only logical that governments would encourage small business owners to grow their business, that government would create a climate in which entrepreneurs would want to invest in expanding their companies, creating more jobs in the process. There is no logic in this bill.

We know the Liberals will have to raise taxes to pay for their out of control spending. It is unfortunate that 700,000 middle-class small business owners who employ 95% of working Canadians are the Minister of Finance's first target.

The Liberals ended the hiring credit for small businesses. The Liberals cancelled their planned youth employment hiring credit. The Liberals have broken their clear promise to small businesses to proceed with a small business tax rate reduction.

Our previous Conservative government encouraged job-creating small business by cutting the rate to 10.5% for 2016, with a planned further reduction to 9% to encourage growth and jobs. In 2015 the Liberal Party told Canadians that, if elected, they would also implement these planned cuts.

Apparently a year ago, they recognized the importance of small business. That does not seem to be the case anymore.

The Minister of Finance has said that the planned cuts would be deferred. He has not given a concrete date for implementation. Perhaps we can expect him to live up to his election promise when we see a herd of unicorns on the front lawn of Parliament Hill. What we do know is that the finance department has estimated that this broken promise would cost the small-business sector $2.2 billion over four years. By increasing taxes on job-creating small businesses, the Liberals are discouraging success and entrepreneurship for the whole country. They are hurting the middle class.

Another one of the provisions of this bill that I find profoundly disturbing is the repeal of the Federal Balanced Budget Act. This is a subject I would hope would be of concern to all Canadians. Let me quote from the preamble of that act:

...a sound fiscal position is crucial to economic growth and job creation over the longer term;

...attaining and maintaining a sound fiscal position requires that the Government of Canada achieve annual balanced budgets and reduce debt, other than when a recession or extraordinary situation occurs;

...maintaining balanced budgets and reducing debt helps to keep taxes low, instill confidence in consumers and investors, strengthen Canada’s ability to respond to longer-term economic and fiscal challenges and preserve the sustainability of public services;

...reducing the debt burden will help to ensure fairness for future generations by avoiding future tax increases or reductions in public services;...

The Federal Balanced Budget Act requires the Minister of Finance to be accountable to this House. If he wanted to run a deficit, he would need to appear before the appropriate committee, make a case for the deficit, and present a plan for a return to balanced budgets. I can understand why this is a concern for the current government. After six months in office, the Liberals have discovered that despite their leader's assurance, budgets do not balance themselves.

[The Assistant Deputy Speaker, Carol Hughes]

Is the House ready for the question?

[Some hon. members]

Agreed.