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

[Peter Kent, Conservative, Thornhill, ON]

Mr. Speaker, it is a pleasure to rise in the final hours of debate on Bill C-2.

We all recognize that this piece of legislation, rushed into the House in December, a forerunner of the budget scheduled for March 22, was intended to fulfill a number of misguided campaign promises in time for a new taxation year. I must say that over the hours of debate since the speech by the Minister of Finance, his answers in debate and in question period, his pronouncements in various fora across Canada, Canadians are getting a very clear and concerning picture of where the government intends to go in terms of taxation, the collection of Canadians' hard-earned tax dollars, and of spending, namely, that it intends to go on a mega disbursement spree of those same hard-earned tax dollars.

The economic situation in Canada today, which a number of speakers have remarked upon, is truly a crisis in parts of the country walloped by the crash of resource prices, but it is not at all like the 2008-09 global recession. The fact is that Canada is not in recession today. Focused stimulation, tax cuts, incentives, and decisive and courageous support of projects such as pipelines and power projects are, indeed, appropriate for provinces hit hard by the resource downturn. However, massive, expansionary government spending, growth of the debt, increased debt servicing, and the mortgaging of our children's futures is simply not justified.

The minister's much touted middle-class tax cut will, he proclaimed, put more money into the pockets of Canadians who need it. The tax cut does, modestly, do that, but the finance minister himself estimates that it will amount to barely $10 a week for the middle class and then, as our NDP colleagues have pointed out, only a portion of the middle class. At the same time, the Liberals promised that the total cost of the tax cuts would be offset by a new tax on Canada's most affluent taxpayers. Again, a reality check from Finance Canada reveals that, in fact, there will be at least a billion dollar shortfall in the Liberals' estimate, or, more appropriately, guesstimate, which is hardly reassuring as we anticipate the coming budget.

I will move on to the minister's ill-advised trimming of the tax-free savings accounts. The TFSA, as we know, was created by our previous Conservative government, along with more than 180 tax cuts made between 2006 and 2015. These tax cuts combined to give Canadians across all income groups significantly greater take-home income and reduced the federal tax burden to the lowest level in half a century. About half of adult Canadians today have tax-free savings accounts, which is a very high level of participation, indeed, for a program that only began in 2009.

These numbers have been cited before, but I am proud to remind the government again that of those TFSA investors who took advantage of last year's $10,000 limit, fully 60% earned $60,000 or less, which refutes the Prime Minister and the finance minister's characterization of the TFSA as a tool for the rich only. The tax-free savings account is also a particularly important retirement savings tool for seniors who can no longer take advantage of RRSPs, registered retirement savings plans.

A majority of Canadians supported and still support the $10,000 limit. Public opinion polls reflected this and still reflect this. That support is consistent across all age groups, income levels, and regions of our country. That support was reflected in one of the first e-petitions to the government, an e-petition that I was proud to sponsor. Folks at home can find and consider that petition at petitions.parl.gc.ca, listed under e-3, with the key words “taxation”, and “tax-free savings account”. This petition has accumulated almost 5,000 signatures, even though the government plowed ahead in reducing this year's TFSA contribution level by half. The petition is still open for another month, and frustrated Canadians can still register their unhappiness with the government's decision until April.

The government tried to justify the gutting of the annual savings limits with the excuse that the TFSA cost the government too much. The federal government spends much more every year to support the very generous indexed pensions of government employees. Those public service pensions are paid for with the hard-earned tax dollars of the 80% of Canadians who do not work for the government, who have much less generous employer pension plans, or who must provide entirely for their own retirement.

In my constituency, the wonderfully diverse middle-class community of Thornhill, TFSAs have become an important part of taxpayers' retirement savings portfolios, an important part, again, of our senior citizens' retirement savings portfolios. That is evident across all income levels, as national polls show.

Making the retirement savings process even more challenging and burdensome, the new federal government has agreed to collect for the spendthrift Government of Ontario the job-killing payroll taxes from employees and employers for the so-called Ontario retirement pension plan. The ORPP is sold as a top-up to the Canada pension plan, but it will take fully 40 years to reach its modest annual payback level. Why now? What is the rush?

Well, Premier Wynne's government, in an amazing blaze of unintended transparency, in its 2014 budget, revealed that the ORPP is not really designed for retirees. The budget document revealed that ORPP is really a tax grab. It will help bail out the debt and deficit created by the provincial Liberal government's misspending. The 2014 budget said precisely that by “encouraging more Ontarians to save through a proposed new Ontario Retirement Pension Plan, new pools of capital would be available for Ontario-based projects such as building roads, bridges and new transit.”

The federal government is now complicit by recently agreeing to collect for Ontario the job-killing employment taxes, not for the workers of today who will see little, if any, eventual benefit, but effectively to create a new slush fund for its provincial Liberal cousins who have created the largest sub-national debt in the world.

A variation of an old joke, not that far from reality is, ask an Ontario Liberal how to create a small business and they will say, take a medium-sized business and tax it down to size.

I see my remaining time is short, so I will briefly return to the Minister of Finance's remarks, when he introduced Bill C-2, in which he talked about growth and investment in the budget that will be tabled on March 22.

We on this side of the House are very concerned about the dark reality for Canadian taxpayers and the Canadian economy that will, we believe, define those words. The growth that the minister and Prime Minister are trying, unwisely, to create will be in annual deficits: $30 billion, $40 billion, or more, in expansionary spending that simply cannot be justified. The investment will be the billions of dollars of deeper debt that our children and grandchildren will eventually have to confront.

If the Liberals are really serious about growing the economy, the minister must come forward with a jobs plan that will actually help get Canadians back to work. He should abandon the rush to recklessly push Canadians' billions of hard-earned tax dollars into spontaneously confected, inadequately planned infrastructure projects or to impose new regulations and taxes based on half-baked theories.

[Tom Lukiwski, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Mr. Speaker, it is a pleasure for me to speak today on what I think should be more appropriately titled the Liberal government's legislation on misplaced priorities, because that is exactly what Bill C-2 is.

The government of the day claims that this is a tax cut for middle-class Canadians and will help stimulate the economy. In fact, all it is is a bit of a shell game.

Liberals are attempting on the one hand to suggest to Canadians that this is a good thing, that it is reducing taxes, which is certainly something that our government believes in, since when we were in government for nine years, we reduced taxes over 140 times. The reason it is a shell game is that while there may be some modest gains in tax relief for some Canadians, on the other hand the Liberals have started to reduce the amount of contributions allowed in TFSAs.

The tax-free savings account was an initiative that our government brought in several years ago, the most important savings vehicle that Canadians have seen since the advent of the RRSP. It has been incredibly popular, and it was well received by Canadians from all income brackets.

My colleagues previously have talked about the fact that 60% of Canadians who maxed out their TFSAs have modest incomes. I always say that any time we give Canadians an opportunity to save money in a tax-free vehicle, that has to be a good thing, so when did it become wrong for Canadians to have the ability to save more of their hard-earned money tax-free? When did it become wrong to do that? However, that is exactly what the government apparently is saying, because it is planning to reduce the TFSA contribution limit from $10,500 to $5,500. Liberals are denying Canadians the opportunity to put $5,000 more per year into a tax-free savings account.

I recognize that perhaps not all Canadians would be able to contribute the full amount each and every year, but the TFSAs have been structured so that there is a carry-over element. If people cannot max out their contributions in one year, they do not lose it the next year. No, that unused amount can be carried over, and carried over almost into perpetuity, so that several years down the road if a retired couple wants to sell their house in which they have built up a great deal of equity to travel in their golden years, they could take the money from the sale of their house and put it into a TFSA to the maximum amount.

However, the Liberals feel that this is not the right route to take. Rather than allowing Canadians more opportunities to save more money, they want to reduce that amount. Their argument is that only the wealthy can afford to contribute $10,500 a year, but that is not what they really are saying. They may say that publicly, but what they mean and what they intend is that if a majority of Canadians maxed out their contributions at $10,500, it would cost the government money in lost tax revenue. That is really the crux behind this move, because the government is in trouble.

Although the Liberals promised what they considered to be modest $10-billion-a-year deficits in the first three years of their term, now are going to be incurring at least $30-billion deficits for the first several years of their mandate. They said they would be able to balance the books by 2019, by the time of the next election. It is now admitted by the government's own officials that doing so will be an impossible task.

The government needs more revenue. Allowing Canadians to save more in a tax-free environment would deny the government the much-needed revenue it so desires. What do the Liberals do? Their approach is to spend more money. They say that spending more money will ultimately create a healthier and larger economy. This Keynesian approach has never worked in the past and it will not work this time, but that is the approach that the government has.

I suspect that some of that comes from a long history of Liberal mismanagement in the economy. If one only takes a look at the current Prime Minister's father and his regime, when former Prime Minister Pierre Elliott Trudeau left office, his Liberal government was spending $1.03 for every $1 that it took in in revenue.

No wonder we have such a huge debt in this country, a debt that we are still trying to pay off, thanks to a previous Liberal government. Apparently the apple did not fall far from the tree, because the current Prime Minister seems to be taking the same approach as his father, an approach that has left this country in massive debt.

This is unacceptable, but obviously there are options. Any government has choices. How can it increase its revenue? How can it take in the amount of money it needs to produce programs and balance the budget, as it apparently desires to do?

The obvious choice is to raise taxes, but that is never a popular choice for any government. The other option is to find projects that might increase employment and consequently increase tax revenue, both personal and corporate. The government would argue that this is exactly what it is doing with its stimulus spending: by putting money into the economy, it would create those jobs, create those projects, and in return receive additional revenue.

Unfortunately, most economists worth their salt would tell us that stimulus really only works if a government or a country is in a recession, which Canada is not. Our economy is growing. Perhaps it is growing more slowly than we would like, but we are most certainly not in a recession, so there is no need for stimulus spending. What is needed is for the private sector to initiate projects that would bring in that much-needed tax revenue, projects that would create employment.

What have we got out there? Is there anything on the horizon that we could point to that might actually fit the bill? There is something, and it is called the energy east pipeline. Here is a project that is shovel ready, would not cost the Liberal government or taxpayers a dime, and would create literally thousands of jobs and billions of dollars in tax revenue between personal and corporate income tax, yet the government sees fit to put so many impositions and prohibitions on the start of this project that the chances of energy east ever seeing the light of day are slim. Hopefully, chances are not zero, but that is what is probably going to happen.

This is why I say that this piece of legislation is misguided in its priorities. There are alternatives. There are options the government could employ to increase its revenue base without costing the Canadian taxpayer a dime, but the Liberal government does not want to do that. Instead, it is going to punish and penalize average hard-working Canadians by reducing the amount of money that those same Canadians can contribute to their tax-free savings accounts.

The Liberal government is making the wrong choices. It has misguided priorities. At the end of the day, we will find that Bill C-2, the first piece of legislation the government has introduced, will end up costing Canadians far more than they will save.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, it is a pleasure to speak to Bill C-2. I want to focus my discussion today on the tax-free savings account.

I find some of the comments from the other side of the floor about the tax-free savings account, which we initiated, very interesting. We are very proud of this initiative and I think many Canadians appreciate it.

From going around my riding of Foothills in southern Alberta during the campaign and during other times during the year, I know Canadians, especially those in my riding, appreciated the increase in the tax-free savings account. Canadians use this to save for their children's education, or to buy their first home, or maybe to have a comfortable retirement. However, the fact is that the tax-free savings account allows Canadians to save.

Some members opposite claimed that this was just a way for us to pander to our base. If the middle-class Canadians who supported TFSA is our base, I would be more than happy to take them.

Members say that these dollars do no go to the Treasury and that they could be better spent. That is an arrogant statement, especially coming from a government that horribly has gotten the math wrong on its middle-class tax cut, which will now go into $30-billion annual deficits despite having pledged $10-billion deficits. Its financial plan is a mess and yet it is telling Canadians that it does not want them to have the benefits of the tax-free savings account because it feels it could spend those dollars better than them. It is extremely disingenuous to tell Canadians that a government can spend their dollars better than they can.

I want to talk a bit about what the tax-free savings account really means to Canadians.

We heard members opposite say that this was something very few Canadians could use, that it was a tax haven for the wealthy.

It should be noted that 11 million Canadians have tax-free savings accounts. That is certainly more than just wealthy Canadians. Eighty per cent of those are making $80,000 or less. Of those who maxed out their TFSA, 60% are making $60,000 or less annually. These are not wealthy Canadians. These are hard-working Canadians who are making difficult choices for their families, difficult choices that they feel will benefit them in the future, whether that is saving for their first house, or their children's education or for retirement. These are hard-working Canadians making the financial choices that they feel are best for them.

Since when does the government step in and say that it knows better than them when it comes to savings? These Canadians are simply trying to have a sound financial plan. We should be encouraging these things, not eliminating them. The key is that Canadians should have the opportunity to make decisions that are best for them. They are making choices that suit their priorities. Certainly some may have an RRSP, but the TFSA has much more flexibility than an RRSP. What is wrong with giving Canadians another option, another opportunity to save for their futures?

Canadians want to have those choices so they can put money away when times are good. Certainly for Albertans, many of them may be tapping into their tax-free savings account when times are difficult. This is a great chance for them to put funds away when times are good to help them through when times are difficult. When times are tough and they do not have that savings, they will rely on government social programs, whether it is EI or other programs. Any time they can be self-sufficient and rely on their own savings is a benefit for the government.

The new Liberal government's approach to this is misguided. It wants to take away something that has been extremely popular. As I said, 11 million Canadians have a TFSA. The Liberals want to take away something that allows Canadians to make their own choices in whatever their unique savings goals might be. Not only do they want to take away the TFSA, but they will be implementing a mandatory CPP increase. This will not only hurt Canadian taxpayers—an additional $1,000 a year—but it will also impact Canadian business owners because they will have to also match those fees.

Why would the government put in a mandatory savings when it has this great opportunity of which many Canadians can take advantage? They can put as much or as little into it, whatever they feel best benefits them and their families.

What kind of message is this sending to Canadians when the Liberal government is saying that it wants to take away some of their options for savings, but at the same time it will use those dollars to try to mitigate this massive deficit it will pass on to the taxpayers. The government will be taking with one hand and taking with the other. That could be extremely frustrating for Canadians who are trying to save for their future.

The Parliamentary Budget Officer released a report earlier this year that stated household indebtedness and financial vulnerability in Canada were increasing. It showed household debt servicing capacities were continuing to trend upward, while continuing capacity to meet those debt obligations was diminishing. It shows that we should be giving Canadians every opportunity to save when times are good, so when times are tough, like they are right now in Alberta, Atlantic Canada and Saskatchewan, they have an opportunity to have savings they can tap into when they need it.

Reducing the TFSA contribution limits will simply reduce the ability of Canadians to save for retirement and to protect themselves during those economic downturns. TFSAs remove barriers for all Canadians to maximize their financial position. It really is a shame the Liberal government wants to decrease the ability of Canadians to use this tool to save for their future.

The other issue at hand with Bill C-2 is the middle-class tax cut. I am sure this vision was burned into the minds of Canadians during the election campaign. The Prime Minister went from coast to coast to coast and said, “A billion dollar tax cut for the middle class, paid for by a $3 billion increase on high income earners”.

However, the Liberals got their numbers completely wrong. This middle-class tax cut is anything but revenue-neutral. In fact, the Parliamentary Budget Officer has said that this tax reform, and I will not call it a tax cut, will cost Canadians $8.9 billion over the next six years. That is anything but revenue-neutral and it shows that the Liberal government will be taking away with one hand and taking away with the other. They say that this is a middle-class tax cut, but average Canadians who qualify for this will only get $6 a week. I do not think that will have a profound impact on stimulating our economy or making a big impact for middle-class Canadians. In fact, middle-class Canadians will not benefit from this at all. The group that makes closer to $200,000 will benefit the most.

We will be penalizing those hard-working Canadians, usually those who have started businesses, created jobs, grown our economy and who worked extremely hard to be in that higher tax bracket. We will be taking $3 billion away from them, and it will not be making that big of an impact.

We should be taking a hard look at who actually will be benefiting from this middle tax cut. It is not a tax cut. It will be an $8.9-billion debt for which each and every Canadian taxpayers will have to pay.

We should not be impacting or discouraging Canadians from saving. We should not be discouraging those hard-working Canadians who are job creators, who have started businesses, who have helped grow our economy. What I see in Bill C-2 are miscalculations impacting our business owners and our entrepreneurs. Also it will not have the financial impact the Liberals have said it will have.

I encourage all members of the House to vote against Bill C-2. This will have not have the financial impact the Liberals have said it will, other than increasing our massive and growing debt. It comes down to this. Should Canadians be taking financial advice from a Liberal government that could not get the math right on its middle-class tax cut, is arguing with its own financial staff on the amount of the Conservative surplus, and will now have a $30 billion annual debt that it will put on Canadians? I do not think we should be taking financial advice from that party or that government.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, I would like to thank my colleague from Bécancour—Nicolet—Saurel for his speech. Bill C-2 will reduce the second personal income tax rate on income exceeding $45,000. My question for my colleague is as follows: would it be better to reduce the first tax bracket, which applies to everyone?

[Ted Falk, Conservative, Provencher, MB]

Mr. Speaker, I want to thank the member for Mount Royal for his excellent speech and defence of Bill C-2; however, I would like to focus on the tax-free savings accounts, TFSAs.

In my riding and right across Canada, the most prolific users of tax-free savings accounts were our seniors. It was an avenue for seniors to take their nest egg, their retirement savings accumulated over a lifetime of working, and put it into a vehicle that did not attract any tax. The government is focused on giving the guaranteed income supplement a boost, but would this not have also been a good measure for our seniors?

[Anthony Housefather, Liberal, Mount Royal, QC]

Mr. Speaker, let me draw a picture. A single mother is earning $80,000 and has two kids; one of the kids is in day care, and one of the kids is starting grade 2. She has to afford her mortgage, her grocery bill, her day care bill, and all of these different things in her daily life. This is exactly the type of measure that is designed to help her and nine million other Canadians. This is why I am so proud to rise today to support Bill C-2 in its second reading.

On January 1 of this year, nine million Canadians received a tax break. Our government was elected on a plan to grow the economy, and these changes are an important first step in that plan.

This week, our government reiterated its conviction that when you have an economy that works for the middle class, you have a country that works for everyone. Our government is charting a new course. At the heart of this approach is a commitment to strengthen the middle class and create conditions for economic growth that benefit all Canadians.

The new government will take action to ensure that economic growth is shared equally with the middle class and those working so hard to join it. In challenging economic times, the government has an important role to play. Now, more than ever, is the time to make investments to build a stronger middle class and foster sustainable, clean growth.

The legislative measures set out in Bill C-2 are the first step in the government's plan to create the long-term conditions necessary for economic growth. This will certainly not be the last step since we have a very ambitious agenda that we will fulfill one step at a time, one bill at a time, and one debate at a time.

I want to focus on the bill we are debating today, Bill C-2. This bill makes a meaningful change for the middle class by putting more money in the pockets of Canadian workers. In 2016, this bill will lower the personal tax rate for taxable income by 7% for people earning between $45,282 and $90,563.

On January 1, 2016, the government also reduced the annual contribution limit for the tax-free savings account, or TFSA, from $10,000 to $5,500. I assure the House that this change is not retroactive. The 2015 contribution limit will remain $10,000. We know that just 6.7% of Canadians who are eligible to contribute to a TFSA contributed the maximum amount in 2013. Doubling the contribution limit did nothing for the 93.3% of Canadians who did not contribute the existing maximum. Indexation of the annual contribution limit will be reinstated so that the annual limit maintains its real value over time.

Let me just say that I very strongly support the TFSA. I think it is a very important investment vehicle.

However, given the fact that so few Canadians used the maximum amount—only 6.7% in 2013—the amount of money we are losing in treasury for doubling the amount of TFSA can well be used on better things, such as for example, the Canadian child tax benefit that we intend to introduce.

With this tax cut for the middle class and the associated changes, we are delivering a fairer tax system. It is expected that about nine million Canadians will benefit from this measure in 2016, and this measure represents a real change for many Canadian workers. Not only is this measure fair, but it is also the smart thing to do for our economy. Furthermore, the tax changes proposed in Bill C-2 took effect on January 1, 2016. This means that the Canadians affected by these tax changes are already seeing the impact on their paycheques.

This is a turbulent time for the global economy, a time when the Bank of Japan has adopted a negative interest rate policy, China is facing a slowdown, the collapse of commodity prices is more than just a blip, and mediocre growth is the new norm.

This is a time when Canada needs decisive measures and a firm hand. It requires bold leadership in order to make smart investments and adopt tax measures to put our economy on track for growth.

Our government is ready to rise to the challenge. Our government was elected to implement an ambitious economic agenda that will kick-start our economy. We are taking concrete action to manage the Canadian economy. We are building a more sound economic foundation by providing tax relief to middle-class Canadians and investing in key sectors.

Thanks to our plan to strengthen the middle class and grow the economy, people who work hard can expect a good standard of living, a secure retirement, and better opportunities for their children.

During the election campaign, many of us had the chance to travel around our own ridings; and my riding of Mount Royal is no different from many other ridings. All of us know many people who would benefit from the middle-class tax cut.

It is true that not every Canadian would benefit. Some Canadians who earn more than $200,000 would be taxed a little more. Some Canadians who earn less than $45,000 would not benefit from the middle-class tax cut itself. However, they would benefit from all of the corollary efforts the government would make: to add to the guaranteed income supplement for single seniors, the Canada child tax benefit that would allow those who earn less to have much more to take their children out of poverty, and all of the corollary plans of our agenda, which was the plan Canadians chose in this election. They are ones that we believe are well worthwhile to put through.

I fully understand that some members opposite may disagree. We are all free, in a democracy, to disagree. However, I do think nobody can doubt that this was a proposal we made in the election campaign—a proposal we were elected on—and as such, it is a proposal the government needs to adopt in this Parliament.

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

Mr. Speaker, what the member does not realize, or he did not state, is that there are millions of Canadians who will benefit. I also did not hear him make reference to the tens of thousands of manufacturing jobs, and those workers who would benefit by the bill. This is why the NDP have chosen to support the bill.

The member did not talk about the tens of thousands of teachers from coast to coast to coast who would benefit in tax relief from the bill before us. There are nine million Canadians who would benefit from the bill.

The NDP asks about those on very low income. Never before have we seen such a progressive national child care program, which we are going to be hearing a lot more about in a week or so, that would lift hundreds of thousands of children out of poverty.

These are the types of progressive initiatives that the Liberal Party talked about prior to the last federal election. What we are seeing today, through Bill C-2, is a piece of legislation that would help to implement the Liberal platform. It would lift children out of poverty and support Canada's middle class.

I appreciate that the NDP will be supporting the bill, but will the member not at the very least acknowledge the benefits that tens of thousands, if not millions, of Canadians, would receive by seeing this legislation pass?

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak on Bill C-2 today. It is an initiative that New Democrats support going to committee. The reason we are doing so is because there are so many issues related to the incomes of Canadians.

The debate itself is healthy, because we have seen in society, during the years that I have been here, a movement away from the middle class, in two directions. One direction has been that some have become more affluent and are able to take advantage of certain government changes in laws, like the tax-free savings account and other types of measures put in place over the last decade. In the opposite direction, there are people with challenging circumstances, such as their wages being frozen, having their working hours reduced, a reduction in benefits taking place as collective agreements have been stretched to the limit, or benefits staying the same and cutting the workforce. That has very much been a priority of unions across this country, because they want to keep the same benefits and wages. However, there has been a stagnation with that.

We have also witnessed, on the other end against personal income taxes, massive corporate tax reductions that were supported by the Liberals originally, and then later by the Conservatives. That has left our economy without a lot of the tools that we normally would have had. There are a number of different industries, like the banks and so forth, that have benefited from a lot of tax reductions. Their response to those tax reductions has been historic layoffs and closures of facilities that actually cost Canadians more. There has also been a reward for them related to the products and services that they provide to customers on the other end. Therefore, there are those who are less affluent and cannot take advantage of their different circumstances.

Before I get into the connection to Bill C-2, I will take, for example, my bank, which I will not mention the name of; I also deal with a credit union. My bank allows its customers free banking services if they maintain a minimum of $1,000 in their accounts. It continues for the duration of a month. If customers go below that amount, then they pay a series of charges. In the riding I represent, Windsor West, there are a lot of people who do not have $1,000 in their accounts, especially if they are students or working-class families. They pay those additional fees, whereas people with the money do not have to. We have lost the income stream from the government's tax reductions and a whole bunch of dead money in our economy, and then, on top of that, service charges continue to grow.

The tax-free savings account, in Bill C-2, is something that New Democrats are happy to see the eventual reduction of. The parliamentary budget officer and others have raised the caution flag with regard to the way that this expanded. I know from representing my area and travelling to other parts of Canada over the years, whether it be for my seniors charter of rights bill or other initiatives on auto fairness, that there are a series of things I have run into. The common thing is that a lot of people do not even have enough money to save for their current school year, let alone the next one.

There is a fine college, St. Clair College, in my riding, as well as the University of Windsor, that have done their part in expanding services and competitiveness, and attracting international students and other Canadians to go there. In many respects, it revitalized some of our innovation. However, the reality is that most people who go to school there are just getting by or taking out loans to get by, let alone putting money in a tax-free savings account. Perhaps some of their family members are doing so with their help, but the ordinary Canadians I represent do not have that luxury.

The squeeze is on the middle class and those who are unemployed. As I mentioned, in the job service sector many people are moving to part-time or precarious work and basically just getting by. Unfortunately with this bill, we know from third-party experts and economists that 60% of this plan for a reduction in taxes for Canadians will not be enjoyed by the middle class or people with less earnings. Therefore, there is a series of Canadians who will be left out. Because of the way this scheme works, the wealthiest will have the benefit. That is a real problem that New Democrats want to address at committee. It is an issue that we have raised before.

There will be a vote later tonight on employment insurance, where there are many people paying into a system that does not provide them with any benefit whatsoever. In the example that I used in speaking about this issue earlier in the House, there are persons with disabilities. They only have a certain number of hours to do their jobs because of health restrictions. They pay into the system, and to my knowledge would never benefit from it because they would not qualify at the end of the day.

We have to be careful. People are still getting their heads around it. To this day, I run into people who say they do not want to go on employment insurance because they do not want to feel they are taking taxpayers' money. They like to get by on their own. However, what people forget is that employment insurance is their money that comes off their paycheques, and the companies' money. That has nothing to do with the government, aside from the government deciding how that is disbursed, how it is actually given back to workers.

We set rules that disadvantage those who are in more precarious and part-time positions, and that includes women. We have a systemic issue within our culture and our society, even on the government programming side. We make lots of noise about being equality driven, but we still have rules in place that do not allow that to happen.

Who would not benefit from this bill? It is important for Canadians to realize some of the comparisons and who would not benefit whatsoever from this plan in terms of tax reductions. They are office workers who make an annual salary of less than $40,000 per year; they would receive nothing under this scheme. They are hairstylists, who in Canada basically earn around $28,000 annually. They will get zero. They are social workers, which I used to be in my previous working life. I worked for two organizations, on behalf of persons with disabilities and on behalf of youth at risk. Their annual salary today is around $44,000. They would get nothing. Some people in the process of trying to buy a home, who are trying to raise families and trying to get forward, would not be able to benefit from this plan.

We have cashiers. When we go to stores and see the people working there, they work hard doing what they need to do. In our economy in some places, we have had challenges with the retail sector and so forth. They earn $21,424 on average. Cashiers would get nothing back. That is a classic example. All of the people working in department stores, in retail shops, in drive-throughs, in fast-food chains, and all of these different businesses, would receive zero from the plan. To me, they are the people we should be rewarding with a tax reduction. These are the people who do not have the equity to easily afford some of the tax deductions that wealthier Canadians get. They do not earn income at the level to take advantage of some of the policies that have been put in place over the last couple of decades.

Waiters and waitresses earn less than $22,000 as an average wage. They would get zero. That is another group of individuals I would argue would not benefit from this tax reduction. They would get nothing at all. Nannies are another good example, and chefs and assistant chefs as well. They would not get anything.

Who would get income from this legislation? Our bank managers, who earn around $82,000 a year, would receive $555 in their tax season from this. They would receive that and also be eligible for the tax-free savings account. They would be in an income stream where they might be able to take advantage of it. It would be beneficial for them and their families. A lawyer, earning around $108,000 a year on average in Canada, would get $679. Members of Parliament in that same wage amount would get the cap, at around $680, as well.

I know my time is running out, but I want to hopefully create an opportunity at committee so we can work on some of the measures to ensure that all Canadians are included in this proposed tax reduction. We know it is going to come from the cost of borrowing, as the Liberals do not have the money coming in that they thought they had for this bill. Interest and payments on that money in the future are paid for by all Canadians, so all Canadians should be part of a tax reduction.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Mr. Speaker, I am pleased to stand today to speak on behalf of my constituents and Canadians across the country who have great reservations about Bill C-2 and the ballooning deficit agenda of the Liberal government.

My riding of Yorkton—Melville is strongly representative of the highly educated and talented workforces the Minister of Finance confirms exist in Canada, from young successful entrepreneurs and professionals to small- and medium-sized businesses in the real estate, retail, agriculture, manufacturing, and mining sectors, just to name a few.

We are a hard-working bunch who are committed to sustainable growth and prosperity. We value caring for each other and those less fortunate. We value investing in our communities, our hospitals, care homes, and our youth at risk programs. Quite frankly, the people of Yorkton—Melville are second to none when it comes to hard work, compassion, and common sense.

Election promises were made. However, promises made, promises kept, has yet to apply to the government. Instead of helping the middle class, the Liberals' tax cut is most beneficial to the high end of the second highest tax bracket, those who make close to $200,000 a year. In fact, the parliamentary budget officer says that the reduction of the second tax bracket will benefit the top 30% of income earners in the country.

Based on the Finance Department's own estimates, the new Liberal tax plan amounts to an average $6.34 a week for those who qualify. These facts reveal that this tax cut does not in any way uphold the Liberals' campaign promise. They promised that the tax cuts would be part of a plan holding the deficit to $10 billion.

The Prime Minister promised a $3 billion tax cut for the middle class, paid for by a $3 billion tax increase on high-income earners. The middle-class tax cut would be revenue-neutral. By the Minister of Finance's own admission, there will be a revenue shortfall of over $1 billion on this issue.

The Institute of Research on Public Policy has said that the shortfall will be even greater, creating a revenue debt up to $1.5 billion. The C.D. Howe Institute, which the Minister of Finance once chaired, said the Liberal plan will fall short by nearly $2 billion, that will not be revenue-neutral, but a tax cut that will cost the treasury a minimum of $1 billion.

I have to say that ordinary folks in my riding are shaking their heads, wondering how election promises were made, either with poor research and poor advice, or with no clarity other than that hope that “This could work. It sounds good. Let's go for it.”

Another related promise has been made that in the upcoming budget a new Canada child benefit will be introduced, plainly to target those who need it most by replacing the universal child care benefit, which was not tied to income.

The UCCB was given to every family, true, regardless of income. In addition, the Canada child tax benefit was also available for parents who needed and were eligible for more support. Here, I totally agree with the member opposite that my own family, when they were in challenging circumstances, were very thankful for that support that lower income folks need, and especially since, in many cases, the amount of tax they pay is minimal to begin with.

While I was door knocking during the election campaign, one gentleman complained to me that his daughter and son-in-law would have to give it all back when submitting their taxes and that it would not be of any benefit to them. As we talked, he did share that they were both good income earners who had qualified for their mortgage, and whose children were well cared for and that they had a little bit of savings. Since they knew they were likely to have to return the money, I suggested that perhaps they could put it in their tax-free savings account and at least make a little tax-free interest in the meantime.

As well, I suggested that it was probably good to know it was there in case the unexpected happened, an illness or who knows what, such as a downturn in the economy that could mean a temporary or permanent loss of employment, in which case an unexpected change in their family income could suddenly mean that the UCCB would be there for them because it is readily available and not tied to income.

This new Liberal child benefit tied to income would not be adjustable until after one's income tax has been filed and a difficult year is in the past, like the year that many of our oilfield workers in Saskatchewan and Alberta and those from the east coast are experiencing right now.

Then there is the decision of the government to eliminate the increase in the tax-free savings account to $10,000, declaring that this action is consistent with their objective of creating a tax system that is fair and helps those most in need.

As a result of the TFSA being designed to be cumulative, it encourages young Canadians to invest what they can, knowing that it is a savings account to be used for the future when they are economically able to put more away in the knowledge that they had that choice. These accounts were an enormous step forward for the middle class to support a wide range of their financial goals, including saving for school, their children's futures, a home, or a comfortable retirement.

When the money is withdrawn it carries no tax penalties. Unlike the RRSP, money in a TFSA can be used as collateral, while at the same time investments are not counted as income to qualify for government benefits or pension supplements that carry a means test. They are not to penalize the most vulnerable people in society but to add to the free choice of how Canadians can save.

The argument that keeping the limit at $10,000 would have helped Canada's wealthiest save more while costing the federal treasury hundreds of millions of dollars over the next five years is truly telling. It says that the government cannot afford people putting away for their own futures, saving for their own retirements, so they can continue into their golden years self-sufficient and continue to contribute to the economy. It says that when the government goes into deficit to the tune of at least $50 billion in the next four years, it will need to claw back the hundreds of millions of dollars Canadians would be saving for themselves and their families' futures over the next five years.

The new government's approach to retirement savings is counter-intuitive. On the one hand, it supports the Government of Ontario's ideology to force all workers into new government-sponsored pension schemes that would cut take-home pay and force employers to cut jobs and/or have less to invest in the very businesses that are the backbone of our economy. On the other hand, the Liberals want to deter Canadians from using a revolutionary savings tool designed to support Canadians in whatever their own unique goals might be.

Eleven million Canadians opened tax-free savings accounts. People earning less than $80,000 a year accounted for 80% of those holding those accounts, and 60% of the individuals contributing the maximum amount had incomes of less than $60,000.

I personally encourage all young Canadians to open tax-free savings accounts now, in the midst of the challenges of getting their post-secondary education, raising their young families, facing increased unemployment and rising housing costs, including higher down payment expectations from the government that will hurt their ability to get into the housing market. I urge them to do it now so that the accrued potential for their future savings gives them hope and the incentive to plan and take hold of their future, and certainly not depend on a government that says on the one hand that it wants to invest in the middle class while on the other hand stifling their saving options and growing a national debt that will ultimately fall on their shoulders to repay.

This legislation does not recognize the fact that the tax break for the middle class is not revenue-neutral and would not make a significant difference in the ability of the middle class to grow or stimulate the economy in a significant way. This legislation would place a higher priority on federal revenues to offset the government's intentions to go significantly further into deficit than on empowering Canadians. When the Minister of Finance introduced the bill he said that “the government's job is to help Canadians succeed”. Sadly, the bill does not meet that objective.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, I want to follow up on the question my colleague asked regarding the consultation.

When I went around my riding and most of Alberta, the feedback I received from Albertans was that the increase in the tax-free savings account was extremely welcome to Albertans. Talking to my colleagues, I heard that it was extremely positive across Canada.

The member talked about consultations with Canadians. Have the Liberals ignored the feedback from Canadians who appreciate the increase in the tax-free savings account? Bill C-2 would eliminate that increase. I would be interested to hear why the Liberals would eliminate something that Canadians really want.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, our government was proud to run on an ambitious economic agenda, an agenda that highlighted the importance of investment, investing in our economy and infrastructure. However, we did not pledge only to invest in the economy; we pledged to invest in the resourceful and talented people of our great country.

Specifically, our campaign was predicated on the belief that investing in the middle class and those working hard to join it was of utmost importance. As all members of the House can agree, when the middle class succeeds, we all succeed.

We are committed to a strong and growing middle class. The middle class is the true driver of economic growth and job creation in our country, and it needs our help.

Having run on, and been elected on, this plan, I am proud to support this legislation, which delivers on our promise to cut taxes for the middle class that has gone far too long without a raise. This is the fair thing to do; this is the right thing to do.

In the economic update of a few days ago, the Minister of Finance made clear that we were facing difficult economic times. We know that times of economic difficulty exacerbate inequality.

Bill C-2 would cut the tax rate on income earned between $45,282 and $90,563 in 2016 to 20.5% from 22%, and it would introduce a new tax rate of 33% on income in excess of $200,000.

As of January 1, the government is putting $3.4 billion in the pockets of about nine million Canadians each year.

Single individuals who benefit would see an average tax reduction of $330 every year, and couples who benefit would see an average tax reduction of $540 every year.

To help pay for this middle-class tax cut, the government is asking the wealthiest Canadians to contribute a little more. We are therefore creating a new top personal income tax rate of 33% for individual taxable incomes in excess of $200,000.

Earlier, I mentioned the importance of helping the middle class, and those working hard to join it. It is critical that as a government we remember those most vulnerable in our society. In budget 2016, we will see a major step forward in helping our most vulnerable, through the introduction of the Canada child benefit.

I would like to discuss what this measure will mean for Canadian families.

This new tax-free income-tested benefit will lift hundreds of thousands of children out of poverty. Nine out of ten Canadian families will be better off.

The proposed Canada child benefit will simplify and consolidate existing child benefits. It will replace the universal child care benefit, which is not income tested. As we have committed, the new Canada child benefit will be better targeted to those who need it most.

We aim to have payments under the CCB begin this summer. It will give a new generation of Canadians just a bit more space to be children and to grow into a Canada that has prepared itself for them through long-term investments. That includes things like skills and labour strategies to unlock the potential of greater productivity, without making people work longer and harder for less.

Our most vulnerable will also benefit from our historical commitments to infrastructure. They will benefit from our commitment to social infrastructure in things like affordable housing, but also targeted investments in public infrastructure that will grow the economy and get Canadians moving, and green infrastructure that will open up new sectors while addressing climate change.

Canadians elected us to do these things, and they are supportive on the work we are doing.

Recently the Minister of Finance and the parliamentary secretary fanned out across the country, asking Canadians directly what our government could do to better support the middle class. They met with indigenous leaders, business leaders, cultural leaders, all with the intent of listening to Canadians and engaging in discussions to find practical solutions to the difficulties they were facing.

These pre-budget consultations continued online until very recently. The response rate and comments received were tremendous. With over 200,000 interactions with Canadians and more than 500,000 online submissions, this has been the largest pre-budget consultation on record.

Throughout the course of these consultations, Canadians confirmed that they wanted a government that delivered on strengthening the middle class and helping those working hard to join it, and we will deliver.

Our plan to grow the economy is now more important than ever. As the minister reiterated at the finance committee and in the House, the other parties' balanced budget proposals would have led to massive cuts at a time when the economy needed more investment. Cuts at this time would have led to more layoffs and less flexibility.

After 10 years of weak growth, we have a plan to grow the economy. As Bill C-2 clearly demonstrates, we have already started. It is a plan that we are proud to put forward and proud to be implementing. I know some in the House disagree, and members on our side will be happy to hear their perspective and happy to debate them. However, ultimately, we will not be deterred from implementing a plan that will help Canada by investing in it and in its talented, resourceful, and well-educated people.

The tax relief proposed in the legislation will help millions of Canadians. It will give middle-class Canadians more money in their pockets to spend, invest, and grow the economy. I encourage all members of the House to vote for this important legislation.

The House resumed from February 1 consideration of the motion that Bill C-2, an act to amend the Income Tax Act, be read the second time and referred to a committee, and of the amendment.

Business of the House

[Dominic LeBlanc, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue with debate on the opposition motion that we began this morning.

Tomorrow, we will have the final day of debate at second reading on Bill C-4, concerning unions. I would like to note that the votes relating to this bill will be deferred to the end of the day on Monday, March 7, pursuant to an order adopted earlier today.

I want to sincerely thank my colleagues in the House for their co-operation in finding an agreement on this matter, and also on the ISIL motion, which was debated earlier this week.

Next week, as my colleague indicated, members will be working in their ridings.

On Monday, March 7, we will resume debate, at second reading stage, of Bill C-2 concerning a tax cut for the middle class. I would like to inform the House that Tuesday, March 8, will be an allotted day. On Wednesday, we will begin debate at second reading stage of Bill C-6 on citizenship, which was introduced this morning by my colleague, the Minister of Immigration, Refugees and Citizenship. On Thursday, we will begin consideration of Bill C-5 concerning public servants' sick leave.

Finally, Mr. Speaker, I know that you have been looking forward to this. Pursuant to Standing Order 83 (2), I would ask that an order of the day be designated for the Minister of Finance to present the budget at 4 p.m., on Tuesday, March 22, 2016.

Employment Insurance

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I appreciate the question from my colleague across the way. I believe I did make reference to that aspect of the program in my speech, when I said we supported a proposal that would allow workers to choose which system benefited them individually.

What we have before us today is a motion. The real meat of the issue has to come in the form of legislative change. I would have preferred to have seen that legislative change come in Bill C-2, but unfortunately, the member's party had other methods that it wanted to pursue. Many of the changes we are proposing can be brought forward in a government bill. We do not need to wait for the budget. If we are serious about immediate action for those who are suffering, the government should bring us a bill, show us something we can work with, and we will look at some amendments if necessary.

Business of the House

[Dominic LeBlanc, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I know colleagues look forward to this every week. I will be brief.

This afternoon, we will continue with the debate on the Conservative opposition motion.

Tomorrow, we will resume debate on government Motion No. 2, which was moved by the Prime Minister yesterday, concerning Canada's fight against ISIL.

I am currently negotiating with the House leaders of the other parties to come to an agreement on the length of the debate. We will continue debating that motion next Monday and Tuesday. If we manage to conclude the debate on Tuesday evening, on Wednesday we will proceed with second reading of Bill C-2, an act to amend the Income Tax Act.

Finally, Thursday of next week will be an allotted day.