Mr. Speaker, it is a pleasure to rise in the House today to speak to this important bill and to welcome all members back to the House on the first day of the resumption of Parliament. I hope all of my colleagues had a good summer and are ready to get back to work on behalf of Canadians in all of our ridings.
Bill C-2 received first reading in the House on December 9, 2015, following the adoption of a ways and means motion. At that time the New Democratic Party voted in favour of Bill C-2 at second reading in order to be able to propose our amendments to make the bill progressive and actually conform to the rhetoric that accompanied it both during the election and in the House at that time.
Despite the support of various stakeholders, our amendments at committee were rejected. Therefore, we cannot support the bill at third reading as it currently stands and will be opposing the bill.
Bill C-2 amends certain provisions of the Income Tax Act, such as the tax credit for gifts, taxation on income splitting, the tax payable by a non-testamentary trust, the refundable tax on investment income, private corporations, the tax on assessable dividends, the limit on TFSAs or tax-free savings accounts, and most important, the tax rates Canadians pay on their income in this country.
The New Democrats stated our position on the two significant elements of Bill C-2: the amendment on the income tax rates and the amended TFSA limit. Our approach was careful and principled then, and it is careful and thoughtful now. Although we support the government's proposal to limit the TFSA contributions to $5,500, we cannot accept the amendments of the Liberal government to the tax rates, which will primarily benefit the wealthiest.
Let me put this in some context. After almost a decade of poor economic growth and misguided management by the previous Conservative government, working-class and middle-class Canadians and their families are working harder than ever, yet falling further behind. What Canada needs now is a government that will fight against this pattern and this direction, against growing inequalities. However, we find, when we analyze the provisions of the bill and the way the government is using tax rates, that the Liberals will do just the opposite.
The Liberals have continually said they have a plan to help Canadians, middle class and otherwise. They promised change: rapid, urgent, and positive change. However, since they came to power, the Liberals have largely ignored Canada's real middle class, and certainly, as I will show hon. members with numbers, they have absolutely ignored Canada's working class and low-income earners with the bill.
Bill C-2 should have been the Liberals' opportunity to move from rhetoric to action. Unfortunately, that is not what happened. The Liberals' tax plan gives nothing to 60% of Canadians. I listened carefully to my friend from Winnipeg on the other side, who invited us to take the bill to Canada's next election. When two-thirds of Canadians do not receive a red penny from these tax changes, and when they see that people earning more than $89,000 in this country receive the lion's share of these tax cuts while over 17 million Canadians do not receive a cent, I would be happy to take this into the election and debate my hon. friend on who the bill really benefits.
The government is proving every day to be one of celebrity, one of rhetoric, one of spin. Let us look at something surprising. Let us look at facts. Let us look at the numbers. The government is proposing to reduce the second personal income tax rate in this country from 22% to 20.5% and to increase the tax rate to those earning more than $200,000 from 29% to 33%.
This is how Canada's tax rates will look as a result of the bill. If people make $45,282 or less of taxable income, the current rate is 15% and the new rate would be 15%. They receive zero tax breaks from the bill. If people make between $45,282 and $90,563, the next bracket of taxable income, they get a tax cut of 1.5%. From $90,563 to $140,388, the tax rate is the same. From $140,388 to $200,000, the tax rate is the same. For more than $200,000, as I say, the tax rate would go from 29% to 33%.
An analysis of this Liberal tax plan reveals that it is in fact the wealthiest Canadians who will benefit the most from the tax reduction program. The Prime Minister's tax plan excludes Canadians who are not in the second income tax bracket, the large majority of Canadians who earn less than $45,000.
No one has to listen to me and we certainly should not listen to the spin doctors on the government side of the House, so let us see what the parliamentary budget officer says. The PBO's office said it is estimated that 17.9 million Canadians who will file income tax returns in 2016 fall within the first tax bracket. They have taxable income and will report taxable income of less than $45,282, and will, therefore, fall below the threshold set by the Liberals to benefit from any tax adjustment. Therefore, the Liberal tax proposal excludes the lowest 60% of wage earners, anybody making under $45,282.
According to the latest statistics available from Statistics Canada, the average Canadian income is $40,000, while the median income is $31,000. That means 50% of Canadians make $31,000 or less. Canadians in this country most in need, those whose incomes are equal to or less than the median or average incomes, will not benefit in any way from this Liberal plan. In fact, only people in the first, second, or third income deciles will see a drop in their taxes.
My hon. colleague on the other side of the House from Winnipeg North also mentioned that the best thing we can do for small businesses is to provide them with consumers. Every economist in the world will say that the people who spend the most of their disposable incomes are the working poor. They cannot afford to save. Every dollar given to a working poor Canadian is a dollar that will be circulated in the economy and spent at every business in our communities, yet the government has not given a penny to two-thirds of Canadians to spend in their communities or in small businesses. Why the government thinks that this proposal is going to stimulate small business, when two-thirds of Canadians will not have a penny in their pockets to spend in their communities or in small businesses, is beyond me.
Let us look at it the other way. Canadians whose income ranks in the highest 30% will be the main beneficiaries, while the wealthiest 10% of Canadians will pocket most of the money from these tax reductions. Even with the income tax increase for those earning more than $200,000, the Liberal plan still offers benefits that are three times higher for people earning $210,000 or more a year than for people earning $50,000.
An income tax reduction for the middle class should benefit a larger proportion of Canadians, in New Democrats' view. That is not the case with the bill. Full-time workers earning less than $23 an hour, which in my riding of Vancouver Kingsway is most people, will get no tax reduction, while those earning $100 an hour will get the maximum tax reduction. That is a funny middle-class tax plan from the Liberals.
Using numbers from the Government of Canada's job bank, let us turn again to another objective source that has illustrated who would benefit from these changes.
An office worker who has a median hourly rate of pay of $19 an hour would get zero from this tax plan. A hairdresser who has a median income of $13.25 an hour would get zero from this tax plan. A fish plant worker who averages $12.50 an hour in median income would get zero from this tax plan. A bank teller who averages $17.20 an hour in median income would get zero from this tax plan. A school bus driver who averages $20 an hour would get zero from the Liberals. A child care worker who makes $17.35 an hour in median income would get zero from the Liberals. The Prime Minister's nanny, who makes $18.20 an hour, would get zero from the Liberals. Even the Prime Minister's assistant chef, who makes $20 to $21.68 an hour, would get nothing from the Liberals.
Let us see who does get money from the Liberal tax plan. A lawyer who averages a median hourly income of $53.91 would get $679.22 courtesy of the Liberals.
A member of Parliament, who is hardly middle class when we make $170,000 a year base income, will receive $679.22. Let us stop and contrast that. A member of Parliament gets money back from the government, almost $700, and officer workers, child care workers, and school bus drivers get nothing.
That is the proposal from the Liberal government to make Canada's tax system fairer. I do not believe that any Canadian who hears those contrasts will agree that it makes our tax system any fairer.
Contrary to what the Liberals claimed during the election campaign, the revenues generated by the tax increase for the very wealthy will not be enough to finance their plan.
I notice that the Liberals consistently refuse to answer questions put by the Conservative opposition and the New Democrats to actually hold them accountable for the promise they made to Canadians during the election.
On this side of the House, at least, we believe that candidates ought to tell the truth to Canadians during elections. What the Liberals said to Canadians was that if they were elected, the tax cuts for the middle class would be revenue neutral and would be paid for by a tax increase for the wealthiest Canadians. They told Canadians that directly.
After the election, it turned out that the Liberals were out by billions of dollars. It has been estimated that some $7 billion of excess money will have to be borrowed to pay for the tax cut, because in fact, the Liberal math was wrong.
In terms of Vancouver Kingsway, I have done my homework. According to Statistics Canada figures from 2010, in my riding roughly 70% of individual income earners will see absolutely no benefit from this cut, because they do not report income over $45,282. In my riding, we have 25,635 people who reported income of over $45,000 and 58,480 who reported income of under $45,282. The median income in my riding of Vancouver Kingsway is $22,614, and the average income is $30,639.
I think my riding is typical of most members' ridings across this country. Let us forget the spin about the middle class and the spin by the Liberal government that everyone is going to do better. The numbers tell the truth, and that is that most Canadians will actually not see a dime from this tax proposal, but wealthy Canadians will.
I want to just turn to something that has not been mentioned, which is the gender impact. It is well known in this country that women, still in 2016, earn significantly less money than men do. It is well known in this country that women who work full time earn less than their male counterparts.
The numbers I found for Vancouver Kingsway bear that out. The median income for men in my riding is $25,532. It is $20,303 for women. It is a full $5,000 less. What that means is that this bill, which exacerbates the inequity between wealthy Canadians and poorer, working, and middle-class Canadians, is going to have a disproportionately bad impact on women.
I was at a conference a couple of days ago when the Prime Minister stood up and said, “Poverty is sexist.” That is true, but then his government, in this House, puts a bill in that will change the tax rates in this country that will disproportionately give advantages to men and disproportionately harm women because of the skewed nature of the tax changes.
I want to mention the changes to the TFSA contribution limit. On this, the NDP does agree with the government. The Conservatives wanted to raise the annual TFSA limit from $5,500 to $10,000. The Liberals, to their credit, campaigned against that during the election, and the New Democrats agreed with that. There are a number of reasons for that. The bottom line is basically that the TFSA, by increasing the amount of money individual Canadians can shelter from taxes, is a cost to the treasury. A cost to the treasury means that it takes revenue from the government needed to pay for much-needed programs that the New Democrats will fight for in this Parliament, like pharmacare, child care, and health care.
Moreover, it has been shown that because investors in our country can take already established investments and shift them to TFSAs, most people, by and large, putting money into TFSAs are not making new investments. They are simply shifting investments.
Finally, I do not know too many Canadians who have an extra $10,000 this year they can put into TFSAs.
I want to comment a bit about the New Democrats' plan and what we would do.
If we really want to make a difference in the country, we have to make an adjustment to the first tax rate. What the New Democrats proposed during the election, and what we suggest to this government, was that we would reduce the income tax rate for the first $45,282 of income from 15% to 14%. That way, 83% of taxpayers would see a change in the amount of tax payable. According to the parliamentary budget officer, nine million Canadians would benefit from this proposal who do not benefit from the proposal of the current government. This solution would not only benefit more taxpayers but the cost difference would be minimal. The difference, we would argue, could be easily recovered through a very slight half-percentage point increase in taxes for large corporations.
I would point out that the Liberals are indistinguishable from the Conservatives on this score. Canada already has an extremely low corporate tax rate of 15% for large, profitable corporations, and neither of those two parties proposes altering that at all. If we were to increase that by half a point, from 15% to 15.5%, for companies like the Royal Bank and Imperial Oil, large profitable companies that are making a lot of money in the country, we could actually put more money in the hands of working-class Canadians, who would then circulate that money in the economy and help stimulate small business, which, the New Democrats believe, deserve a corporate tax cut. That is not what the Liberals and Conservatives believe, though.
David Macdonald at the Canadian Centre for Policy Alternatives, Nicolas Zorn of l'Institut du Nouveau Monde, Stephen Gordon, an economics professor at Laval University, and Luc Godbout, professor and holder of the research chair on taxation and public finance at the University of Sherbrooke, are all absolutely ad idem on this issue. They have all crunched the numbers, and they all say the same thing: this amendment to Canada's tax laws would benefit the wealthy, would do nothing for the poorest Canadians, and is bad economic policy.
The New Democrats will stand in the House and continue to fight against this bad policy and fight for the millions of Canadians who deserve some tax relief and support from the government, as opposed to spin and rhetoric from a government that is more interested in celebrity and style than in actually helping the millions of Canadians from coast to coast to coast who are suffering in this economy.