Bill C-2 (Historical)

An Act to amend the Income Tax Act

This enactment amends the Income Tax Act to reduce the second personal income tax rate from 22% to 20.‍5% and to introduce a new personal marginal tax rate of 33% for taxable income in excess of $200,000. It also amends other provisions of that Act to reflect the new 33% rate. In addition, it amends that Act to reduce the annual contribution limit for tax-free savings accounts from $10,000 to its previous level with indexation ($5,500 for 2016) starting January 1, 2016.

Income Tax Act

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, it is not very often that we agree with the NDP, but my colleague has some excellent questions. We talked earlier about the math problem the Liberals had with the execution of their middle-class tax cut being $8.9 billion, over a billion dollars a year of math problems. They also have a definition problem. They have never been able to clearly articulate what the middle class is and why they are defining and giving the biggest benefit to those making between $100,000 and $200,000 a year. I am sure most Canadians if asked if that were the middle class would clearly say this is not what they expected in tax cuts and in revenue neutral.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, my colleague clearly articulated how the Liberals are back to using gun registry math, where we had a $2 million gun registry balloon to $1 billion. That is a debate for another day seeing as how they are bringing that one back.

I would like my colleague to tell us how the reduction of the TFSA maximum amount from $10,000 per year to $5,500 a year is working against the middle class.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, the Department of Finance has an excellent report on the uptake of Canadians and how the TFSA has been a very important vehicle for them. Again, whether it is for young people perhaps who want to save for their first home, whether it is people in the middle class who are looking to save toward retirement, the argument that because they cannot put $10,000 a year in is not a good argument. There are some years where people can put in $10,000. To have that limit has been a very important vehicle for all.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, as the member of Parliament for Renfrew—Nipissing—Pembroke, I thank the electors of my constituency for this opportunity to represent their interests in the affairs of this nation.

Today we will talk about paying for bad spending, like this legislation, Bill C-2. It is one of the reasons Canada has gone from having a budgetary surplus to having a huge requirement to raise taxes.

The legislation we have before us today is the result of election campaign promises. These measures could easily have been incorporated into the federal budget, but for whatever reason of political expediency that motivates the government, we are dealing with budget measures, but not from the March budget.

Some election promises are made to be broken. Unfortunately for Canadians, the election promises that were broken were the wrong ones, starting with a decision to triple the deficit from $10 billion to $30 billion in each of the government's first three years, with no plan to get Canada out of deficit. Deficits are nothing more than deferred taxes.

The Prime Minister went across the country during the campaign saying, we'll take the money from rich and we'll give it to the middle class for income tax cuts, and don't worry, it will not come out of the Treasury. It will be a revenue-neutral bill. The Prime Minister repeatedly and directly stated that he would introduce a $3 billion tax cut for the middle class, paid for by a $3 billion increase on high-income earners. The fact of the matter is that, as usual, the Liberals got their numbers completely wrong. There is no such thing as a revenue-neutral Liberal tax cut.

Now Canadians understand why the measures in the legislation before us today were sliced out of where they should have been, in the March 22 federal budget. That is because someone's tax cut on the one hand must be paid by someone else on the other hand, Canadians now realize that the title of the budget document was misnamed. It should really have read, “Paying for Bad Spending”.

By the Minister of Finance's own admission, when he is not in denial of the fact that our Conservative government left the nation's finances in a budgetary surplus, there will be a revenue shortfall of almost $2 billion from the measures contained in this legislation. Where will that money come from to pay for this campaign promise? It has to come from existing revenues, or the government will create an even larger tax increase requirement.

Starting April 1, the federal government is spending $444.4 million to hire a new army of tax collectors to go after average Canadians, with a five-year quota of $2.6 billion. For anyone who cannot afford to hire an expensive accountant or lawyer to defend themselves, or who has so much money that they can afford to use overseas tax shelters, the Liberal government will spend $351.6 million with a five-year collection quota of $7.4 billion to collect so-called tax debt. In round numbers, it will be spending almost $800 million in total to squeeze $10 billion more out of the pockets of Canadians.

The CBC tells us that Montreal-based clothing maker Gildan earned $396 million in profit last year, but paid just over $6 million in taxes, a rate of about 2%. Drug maker Valeant, based in nearby Laval, Quebec, booked $1.1 billion in profit in 2014 but paid only $110 million in tax.

If the plan was to go after companies that use overseas tax shelters to avoid paying their fair share of tax, Canadians would support that. However, rather than paying for the tax changes in Bill C-2 by going after the large corporations that make extensive use of lawyers, accountants, and tax shelters, the Liberal government has targeted campgrounds—not any campgrounds, just the small mom and pop campgrounds that are typically family owned and operated.

The Liberal government even mentioned a number, five employees, on page 220 of the budget, implying that a campground with fewer than five full-time employees is a tax planning scheme. This is the arbitrary Liberal threshold to be considered a small business. Forget that many of these small campgrounds consist of a husband and wife doing all the work, or that the short camping season in Canada is only a season. Someone has to pay for the Liberal campaign promises.

This is what the executive director of a camping organization in Ontario had to say:

Campgrounds are active, labour-intensive recreational businesses that provide an affordable vacationing option for Canadian families and international visitors.

These recent Canada Revenue assessments not only put these small, mostly family-owned businesses at risk, but also sends a terrible signal to the entire industry just days before the 2016 camping season is about to begin....

The Canadian Federation of Independent Business has stated that “Requiring five staff to qualify for the small business tax rate is deeply insulting to the entrepreneurs who are often a part of the daily operations of their businesses. It's called the small business tax rate. Being too small should not be a reason to exclude anyone.” It is called paying for bad spending.

The Minister of Finance in his opening remarks regarding Bill C-2 stated the government consulted widely before introducing the measures in his legislation. He claimed to have asked Canadians directly how the government could support them and grow the economy. The Minister of Finance even claimed to have met people from all walks of life, including small business owners. He obviously skipped meeting with any small business entrepreneurs who operate family campgrounds.

As much as I know that the government likes to say it consults Canadians, here are a few comments from average Canadians on how they feel about the federal government going after small family-owned campgrounds to pay for its wild spending.

If a company with fewer than five employees is not a small company, then what is, besides campgrounds that are still reeling from having to charge property tax on seasonal trailers? Surely the CRA must have bigger fish to fry.

There is this comment: “I am not running a passive small business. I am running a business. One that I work seven days a week. My campground is host to campers from Germany, Holland, France, Switzerland and darn near every state and province in North America. Passive I am not. I am however the owner of a small business and I resent that you suggest otherwise in order to rob me or any campground of more tax dollars. I do not believe that small family-run businesses should pay more tax than billion-dollar corporate businesses. I, along with my family, have camped most of my life and I'd like to continue doing so.”

As tax collection targets of the Liberal government, imagine the shock of family campground owners when they receive collection letters telling them they no longer are considered small businesses and owe tens of thousands of dollars in reassessed taxes. A campground owner in southwestern Ontario recently received a collection letter stating that he owed $250,000 in reassessed taxes. Another campground owner received a notice of assessment for 2013-14 showing that $36,000 more in taxes was due, plus $250 per month in interest charges alone. Campgrounds will be closing. This move to go after small businesses like family campgrounds is not unexpected.

The second campaign promise to be broken by the Liberal government after breaking the first by blowing the deficit sky-high was to renege on its promise to lower the small business tax rate. The Prime Minister demonstrated his contempt for small business by claiming that small businesses were nothing more than tax scams. He believes they are set up as a way to avoid paying taxes. That comment is an insult to the husband and wife team who work 60- to 70-hour weeks to manage a family campground during the short summer camping season. Camping is family time, getting kids off video games and out into nature and the great outdoors. The last affordable family vacation will now be taken away from Canadians.

Since I brought this change in taxation policy to the attention of the people who would be the most adversely affected by it, I am pleased to recognize the many individual campground owners, as well as the many municipalities, who have expressed their support for any action taken to rescind this unfair taxation.

We are supposed to be more active. What better way to be healthy than spending the day outdoors? Campgrounds are an escape for people who live in urban areas. Not everyone can afford a cottage. These businesses need to be recognized for what they are: small family run businesses. Small business is the backbone of our nation. Canada was built on appreciation for the great outdoors. The government should stop over-taxing and allow our kids to enjoy themselves in nature.

It is truly unfortunate that the first budget of the new regime should be so wrong for Canada. I urge the Liberal Party to really think about the harm it is doing to Canada with its policy of high deficits and raising taxes.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, my question continues from my previous one, which the member responded to by talking about deficits. The member seems to be convinced that the Liberal government intends to have nothing but deficits when in fact the reality is that when the Conservatives took office, they inherited a healthy multi-billion surplus, and then ran deficits in every year since 2009. Until today the Harper government had a deficit, so it deferred.

Why does the member now believe that a deficit is bad when the Harper government itself created a $160 billion plus deficit? It does not make sense.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, again, the Liberals are in denial. Our government left this country with a surplus at election time.

Because the Liberals like to consult so much, on climate change for example, and load up the meetings with their Liberal riding association members, is that another way to funnel money now? It used to be foundations during the Chrétien and Martin years, but now it is these organizations run by their electoral district associations. However, because they like to consult, I am going to provide more consultation from our campground owners.

One them says, “I have grown up with my parents running a family campground, run by my parents alone, with the occasional help of my sister and I. There is no 'one size fits all' but in our area, campgrounds are not investment opportunities, but instead a way for many families to make a living by offering those outside of the area a small piece of heaven.”

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, earlier today we heard from the member for Winnipeg North. He accused the Conservatives of being completely out of touch with the middle class. The member expressed the opinion that the Conservatives did not do enough to tackle inequality during their term in government.

When we look at the tax break that is being proposed, we know that those who earn $45,000 or less will get nothing, and those who earn between $100,000 and $200,000 will get the most. We know that even those who are earning between $100,000 and $200,000 need a break. Housing prices are going through the roof. However, Canadians are fair, and I do not think we will find a Canadian who earns between $100,000 and $200,000 who thinks it is fair that they will get a tax break and someone who earns less than $45,000 will get nothing.

Does the member think that the middle-class tax break being proposed by the Liberals is fair? Would she support the New Democrats' call to include the bottom tax bracket in the Liberal middle-class tax break, or scrap it altogether and do something more productive like create a national child care plan?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, clearly the Conservative Party represents the taxpayers. We have to fight for tax cuts and against tax increases. One of those increases is the small business tax credit. The Liberals, instead of lowering the amount that we had in mind and pledged to do during the election, did not. That really amounts to a tax increase.

I want to share another comment from another campground:

...I support small family run campgrounds. Regardless of how many people they employ, the surrounding municipalities benefit greatly from all the campers they draw in from other areas to contribute to our local businesses and attractions. Many of the people hired to work at the campgrounds are returning college and university students who rely on these summer jobs to pay for their education.

They, as my colleague said, are in the lower-income bracket and need the work.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, I will be splitting my time with the member for Saskatoon—Grasswood. I rise in the House today to speak to Bill C-2, an act to amend the Income Tax Act.

This legislation slashes the contribution limit for the tax-free savings account from $10,000 to $5,500. The rationale behind this cut, as we have heard many times from the Prime Minister, the Minister of Finance, and other ministers is that the tax-free savings account is only for wealthy Canadians, and no one has an extra $10,000 just lying around.

This rationale could not be further from the truth. Seniors are saving for their retirements, students are saving to pay for their educations, new parents are saving for their children, and young entrepreneurs are saving to start a business.

In my riding of South Surrey—White Rock, it is the seniors who will be hit the hardest by the legislation. Constituents in my riding overwhelmingly do not support this change. A report from the parliamentary budget officer back in 2015 stated that middle-income earners and Canadian seniors were benefiting the most from the tax-free savings account. This report also stated that raising the limit to $10,000 would benefit middle-income earners and seniors even more in the long term. This is exactly what the Conservative government did. We raised the limit to $10,000 to benefit seniors and the middle class.

However, I hear from the Liberal government that the tax-free savings account, again, only benefits the rich and therefore needs to be cut in half. It is the same thing with small business. We heard from the Liberal government that small business is only a tax haven for the rich. I cannot help but wonder where and how it is getting its information, because it is contrary to the parliamentary budget officer, contrary to experts in the banking industry, and frankly contrary to plain old common sense.

Let us talk about the so-called tax cut for the middle class. Again, we heard over and over again that the tax cut, which is also included in this bill, would be revenue neutral and would not cost Canadians anything. This statement is simply not true. The finance minister has since amended his comments and stated that his plan is not revenue neutral, and in fact it will cost Canadian taxpayers at least $1 billion. However, in a report from the parliamentary budget officer, it is stated that the figure is $1.7 billion.

Now we have gone from revenue neutral to costing the taxpayers $1.7 billion. However, it gets even better for taxpayers and those who are losing their jobs. The Liberal government told taxpayers that for a tiny deficit of $10 billion, infrastructure projects would be built and the economy would flourish. Again, that is not true.

From a balanced budget with a $1-billion surplus, the condition that we left our finances in, as stated numerous times by the parliamentary budget officer, the Liberal government burned through the $1 billion, racked up a $30-billion deficit, and we are still waiting for the infrastructure projects.

The Liberals have decreased the ability for seniors, middle-class families, and students to save, and increased the debt burden on every Canadian through reckless spending, as well as removing the tax credits for post-secondary tuition, school textbooks, and for sports and arts programs for children. They also increased the contributions to the CPP, and $6.7 billion has been spent or committed overseas. Just today, the Prime Minister announced over $450 million to the UN. That raises the total to over $7.1 billion.

Further to that, recently announced by the Prime Minister, an eight-month-old Asian infrastructure investment bank initiated by the Chinese government will see approximately 2.9 billion of Canadian taxpayer dollars for infrastructure built in Asia. It is important to note that all of these figures are only what is publicly being pledged. As we know, not all government spending is announced publicly.

There is only one question to ask: what tax increases will the Liberal government implement in order to pay off the debt? It will have to be paid off. I remind the government that there is only one taxpayer and it is not their money.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, we talk about being out of touch with real Canadians and we see that demonstrated by yet another Conservative speaker.

On the one hand, the member is saying that seniors are going to be most negatively affected by this government, when in fact the most vulnerable of seniors, the ones receiving the guaranteed income supplement, are seeing a larger increase than the Harper government ever gave to seniors. If she was in touch with the seniors in her community and if Conservatives listened to what their communities were saying, they would hear that the Government of Canada is in fact addressing many of the needs of our seniors.

The member made reference again to the deficit. Does she not realize that the Conservative Harper government had over $160 billion, more than the Chrétien and Martin governments. Only the Chrétien and Martin governments had balanced budgets.

Is she listening to her constituents?

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, as my colleague well knows, there was a global recession and Canada fared extremely well as it went through that.

Also, the GIS absolutely helps seniors, but why give with one hand and take away with the other hand?

When we look at how financially prudent the Conservative government was and how our banking system was set up, Canada fared better and were at the top of most countries around the world. I think there needs to be more acknowledgement of the actual facts.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Mr. Speaker, I want to bring it back to the fact that the NDP and the Conservatives seem to be agreeing on at least one thing in this debate, and that is the concern around the fact that this tax break we are hearing of is not revenue neutral and will create an $8.9-billion deficit that will have to be paid back by all Canadians. The tax break we are hearing about is going to benefit wealthier Canadians.

The member's colleague who spoke previously mentioned the fact that there are many large profitable Canadian corporations that are getting off very lightly in terms of taxes. Canada has some of the smallest corporate income taxes in the world. I wonder if the member would comment on the NDP proposal to raise those corporate income taxes by 0.5%, which would help cover this shortfall and help real middle-class Canadians in their tax savings.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, I think they need to go back to the drawing board. The Liberals have taken away tax credits for kids and added additional CPP contributions. They are all over the map on a number of things. There has to be a broad plan outlining exactly what it looks like, how much is being spent, how much is being borrowed, what the income is, and a plan to pay it back. It needs to be looked at broadly by people who actually know what they are doing.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, my colleague just reminded me about first responders and how important it is that we recognize that when we talk about the middle class we are talking about factory shop workers, police, health care workers, and many different professions both in the private and public sectors. They all would benefit. Actually, they have benefited because this bill took effect in January of this year so they are all getting more money in their pockets.

Why would she oppose putting more money in the pockets of the types of individuals I just listed?

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Mr. Speaker, I guess the point is this. All of us support our first responders and all of us want to ensure they are well supported and well paid in the jobs they do. However, the Liberals' so-called tax cut would benefit everybody over $100,000. Again, they have to look at it with some critical thinking and through a lens that makes sense, and certainly this does not make sense.