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

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

Mr. Speaker, I want to thank my colleague for his speech.

I want to make a couple of comments and then ask a direct question. I think the comments I am going to make are important because we have approximately 200 new members in this place; and it seems there has to be a bit of a primer given to these new members on what actually occurred in years past, since I heard a bit of revisionist history being bandied about here today.

I know the member opposite is new to this place. I also want to make a comment based upon an exchange between the hon. member for Scarborough—Agincourt and my colleague the member for Durham. That exchange was based upon what happened in the global recession back in 2008. There seemed to be some criticism from the member opposite that we were running deficits. I would point out to all new members in this place that, during the time we were engaged in the debate on whether or not our government at the time should be running deficits, both the Liberals' and the NDP's main complaint was that the deficits were not large enough.

For any member of the opposition NDP and any member of the new Liberal government to complain that our deficit was some of the cause of our financial difficulties today is absolutely ludicrous.

My question is this. Why is it that the Liberals always seem to be wanting higher deficits when the Conservatives are the ones trying to get back to balance?

[Stephen Fuhr, Liberal, Kelowna—Lake Country, BC]

Mr. Speaker, deficit spending can make sense in certain situations when we have economic problems. We have seen it done in the past. Sometimes it is successful and sometimes it is not.

I think the situation coming out of 2008 was a function of how we applied that stimulus and the policies that fell out of it. We did not diversify our economy and really pinned the tail on the donkey to the energy sector, leaving us open to a lack of diversification. Therefore, when the dollar is down and manufacturing has been ignored and oil is down, we suffer across the board, as opposed to those other things coming up when the other commodity comes down.

Deficit spending can be helpful in certain situations. We understand that. It is the plan that—

[The Assistant Deputy Speaker, Anthony Rota]

Order, please.

Resuming debate.

The hon. member for Calgary Nose Hill.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, there has been a lot of talk today in the House on this bill with regard to helping the middle class. I want to talk about the middle class and the overall economy in my riding, and specifically in Alberta.

It is grim right now. I want everyone in the House to understand what it is like in Alberta right now. One cannot walk down a street or go anywhere without talking to someone who has been directly impacted by what is a significant economic issue in this country. I want everyone in the House to realize what is going on right now. It is really serious.

I get so many calls in my office from people who just do not know what to do. These are not just oil sector workers. This is the service industry. This is everything.

Members have to realize that people's severance pay is running out in the next few months. This is a major issue. While we are here talking academically about the middle class and what is happening, this is where the rubber hits the road. I implore all members, when we are thinking about this type of economic policy, to understand what it means to someone who does not have a job and does not have any sort of prospect for a job.

I have heard in this place that what is happening in Alberta is simply explained away as low commodity prices or a lack of trust in this or a lack of trust in that. The bottom line is that Canada's energy sector, whether members subscribe to it in their political philosophy or not, provides jobs to hundreds of thousands of people in this country. My riding is in the heart of this.

There was an article in The Globe and Mail this week that specifically talked about how this downturn affects blue-collar and lower-income workers in Alberta more than anything. What blows my mind is that we are standing here talking about these policies that materially impact hundreds of thousands of people in this country, and we are not talking about exactly what it means. Opposition and government members are probably not going to agree on a lot of things, but I really hope that in their cabinet and caucus meetings, Liberals talk about the impact of what some of these things mean to people who are without jobs in Calgary.

The finance minister talked about raising taxes on stock options. There was a January 10 Globe and Mail article that stated:

Small oil and gas firms also say they want the government to reconsider its pledge to cap the amount that employees can claim through stock-option income deductions. They say the change, if implemented, will be another blow to an industry already downtrodden by depressed crude-oil and natural-gas prices.

My colleague from Kelowna—Lake Country said that people do not take advantage of the tax-free savings account. Sixty per cent of Canadians who maxed out their TFSAs in 2013 had less than $60,000 in income, and we are taking that increase away from them at a time when we should be promoting their investment in this.

During the campaign, Liberals said they wanted to increase CPP contributions. There are people who do not have jobs and do not have prospects for jobs or are small-business owners during a time when the economy is a significant issue, and the signal from the federal government is that it is going to increase premiums. What do members think happens? Fewer people get hired. That is more money off people's paycheques. The same thing goes for EI premiums.

I hear the rhetoric over and over again about income splitting and that it only affects the wealthy. I ask the Liberals what their definition is of wealthy. I ask them that. How do they define wealthy? I would ask them to look at their ridings and tell me that the people who benefit from income splitting are wealthy. I think they would have a hard time doing that.

The same thing goes for the UCCB. When the Liberals cancel what the Conservative government put in place, it will cost $1,920 per child under six and $720 for older ages.

Parents have been paying for students in certain situations. The textbook tax credit is a huge amount to someone who is depending on it, such as a low-income student, on an annual basis. The Liberals are signalling again that perhaps students should be thinking about the fact that their taxes are going to go up because they are going to school.

If this was a manufacturing plant in Ontario, there would be a national outcry about this. There would be all sorts of investment programs. There would be “rah, rah, let us help this sector”. However, this just goes without notice. In fact, there will be even more punitive things. The Liberals are talking about eliminating the mineral exploration tax credit, which would further depress the industry in Alberta.

The other thing that blows my mind is that at a time when we need to be telling workers in the energy sector that we want to promote growth in the sector, we are telling them that we are going to make the regulatory environment more uncertain. We will hear the rhetoric on the other side that there is a lack of trust. Well, the Liberals have never quantified that.

Our government put in place a responsible resource development package. It invested in things like the Pipeline Safety Act, which included another $1 billion to respond to incidents, and we enshrined the polluter pay principle. The main thing that bill did was add certainty to how long a process was going to take. It was not about getting to a yes; it was about getting to a yes or a no in a certain period of time, because that is actually a determinant in investment in the natural resource sector.

My background is in intellectual property management and research administration. To talk about economic diversification and dismiss the problems in Canada's energy sector as simply having to do with commodity prices, or to say that somehow the government can diversify the economy itself, is shortsighted. When we have a thriving industry, we use the receptor capacity created in that industry to see technologies adopted and tested, have venture capital pools created, and have intellectual capital stay in the country.

However, when we increase taxes on small businesses and raise taxes on stock options, the sorts of incentives that help people invest and innovate, it says to people, “Why would they bother investing here?”

It is a very shortsighted philosophy to think that increasing taxes over and over again and increasing the deficit of our country is going to miraculously result in an economic turnaround.

I want people at home, and anyone who is listening in Alberta today, to understand that if they hear the Liberals over and over again say that it is just low commodity prices or it is just this or it is just that, it shows a complete lack of understanding of how the sector works. Everyone in Alberta knows that we need to have regulatory certainty to move forward on major projects.

We also need to ensure that we retain skilled labour so that when the prices do rebound, all the skilled labour has not left. We have not heard once from the government how it is going to keep the remarkable talent we have built in Canada's energy infrastructure or how it is going help them through this. All we hear is that we are going to increase their taxes, because they are wealthy.

The thing that bothers me most about this is that there is a lack of a plan. We heard in the campaign that the Liberals were going to have a $10-billion deficit. There are different schools of thought as to whether that is a good or bad thing. However, what I think is very negative is the fact that the government does not even know what that end number is going to be. Will it be $50 billion, $100 billion? Who knows? We do not know what that is going to do for the Canadian economy.

Anyone in my riding listening to this and anyone across the country who has a concern about where Canada's economy is going should write to their Liberal MPs and ask them why they are raising their taxes.

I implore my colleagues opposite to really have a think about this. When they are in their caucus meetings, they should ask how these tax increases will affect their constituents. They should ask what that huge increase in the deficit means, not just for their constituents but for their children and their children's children. Hopefully we can see something good come out of this.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Speaker, I thank my colleague for his speech.

An unemployed Canadian is one unemployed Canadian too many. What the energy sector is going through today is the same situation we have experienced in the forestry in Quebec, the mining industry in New Brunswick, and indeed, the manufacturing sector in Ontario and Quebec during the past 10 years.

Any job that is lost is one job too many. The member opposite watched as oil prices went from $110 to $90 to $70 to $50 under the previous government, yet we did not hear the kind of speech she gave in the chamber today.

The member opposite was the minister of western economic diversification. What measures did she put in place in the last 10 years that would gird Alberta and our energy sector, which is living through a crisis, during the kind of situation they are going through now?

[The Assistant Deputy Speaker, Anthony Rota]

Before we go to the hon. member, I want to remind members in the House, and the member who is about to speak, that they should be speaking through the Chair and not to the other side.

The hon. member for Calgary Nose Hill.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, during my tenure as minister of state for western economic diversification, I completely remodelled the department in five key themed areas. They included skilled labour training and ensuring that there was a better pathway for the commercialization of the research and development that was happening in western Canada. That included a $100-million fund to see process developments and prototypes commercialized and put into markets. I worked with first nations communities to ensure that first nations and aboriginal communities in western Canada had equal access to the economic opportunities created in western Canada. I worked to ensure that trading investment opportunities with new markets were opened up to western Canadian trade groups and producers. I also worked with the western Canadian aerospace sector to ensure that small and medium-sized enterprises had access to our supply chain.

However, I also stood up for my constituents day in and day out and said that the argument around Canada's energy sector was not a good versus evil debate; it is a sector we should embrace throughout the country, because it creates jobs. We also saw the lowest federal tax burden in over 50 years, which increased investment.

I think that is a pretty good record and is one I am more than happy to stand on.

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

Mr. Speaker, I would like to thank the member for Calgary Nose Hill for her speech. She is obviously a passionate person standing up for her riding.

I would like to let all members of the House know that we all are feeling the pain Alberta is going through. On a personal note, I have a brother who resides in the city of Calgary. He lost his job. I am a resident of British Columbia, and many people who live in my riding depended on the oil boom of Alberta for long-term, prosperous work. We all feel the pain Alberta is going through. It affects not just locals in Alberta but many people from across the country who got jobs there.

My question for the member is whether, in this time of economic uncertainty and the hurt Alberta is going through, she thinks the government would have been better to introduce in its first bill some honest measures to help the people who are going through a tough time by reforming our Employment Insurance Act.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, I am happy to again speak to the comments on employment insurance as a whole. My concern is with the government signalling to employers, especially small businesses, that it is going to increase EI premiums at a time when, clearly, we need to be looking at ways to promote economic growth. That is going to have a huge impact not only on small business growth but specifically on employees. For someone who may have taken a pay cut or was laid off, this means additional money right off their paycheque. It is not something I support. I strongly feel that it is going to be detrimental to the economy and that the Liberals will have to answer for that if they should pass it.

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am pleased to speak today. I want to begin by acknowledging my hon. colleague across the way, who said:

“Does the government have a plan?” I can assure the House that the government has a plan. We first reduced taxes. I cannot believe that the hon. member would be against that. Nine million people will benefit. Although she is leaving the room, I am sure she will understand that.

[The Assistant Deputy Speaker, Anthony Rota]

Order, please.

I just want to remind all members that we do not refer to the presence of other members, whether they are leaving or whether they are here.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, I am sure my colleagues on the other side will appreciate that we have a plan. We started by reducing taxes in December. We are going to put the Canada child benefit program in place in the next budget, and we are going to make historical investments in our infrastructure. That is the plan we have.

I criss-crossed the country. I am sure hon. members know that. We went from Moncton to Yellowknife to listen to people. I can assure them that what Canadians expect from us is to invest in our economy.

This is a turbulent time for the global economy, a time when the Bank of Japan is resorting to negative interest rates, China is facing a slowdown, the collapse of commodity prices is more than just a blip, and mediocre growth is the new norm. That is how Christine Lagarde, the head of the International Monetary Fund, recently spoke about the mediocre growth around the world.

This is a time when Canada needs decisive measures and a firm hand. It requires leadership in order to make smart investments and tax measures to put our economy on track for growth. That is what Canadians expect from us.

Our government is ready to rise to the challenge. After 10 years of slow economic growth, our government was elected to bring in an ambitious economic program to boost our economy. We are taking meaningful action to manage our economy. We are building a more sound economic foundation by providing tax relief to middle-class Canadians and investing in key economic sectors.

That is what people were asking us to do when I was criss-crossing the country during our prebudget consultations. People want us to invest in innovation, productivity, and in our infrastructure. They want us to diversify our economy and promote our exports.

Our government understands that infrastructure can and will go a long way toward solving our problems in the short term and ensuring prosperity in the long term. We know that investing in public infrastructure is the smart thing to do.

In the fall, we finished a very long election campaign during which Canadians voted for real change in Ottawa. They voted for a clear promise to help the middle class and invest in our country to create economic growth and good jobs.

Canadians made their voices heard. They said that it was time to come up with a new plan and a new economic approach. It is time to invest in our communities and in the things that are part of people's everyday lives, such as public transit, roads, clean energy, housing, and child care.

We need to grow our economy's infrastructure to move forward and prosper. As many members know, infrastructure is much more than just structures. It is more than concrete, water pipes, roads, bridges, buses, and railroads. As my colleague, the member for Edmonton—Mill Woods—Beaumont, pointed out, infrastructure is really about people. It is about what enables Canadians to connect in their communities and to play an active role in society and the economy.

When we were doing our cross-country pre-budget consultations, people talked to us about infrastructure, but they also talked about digital infrastructure. They talked about Internet and cell phone connectivity. My colleagues across the way talk about Alberta, but I am from a region that has seen major job losses, like in Shawinigan. Today, people are asking us to make smart investments in infrastructure so that they can participate fully in the economy.

Everyone in the House of Commons is well aware of the significant economic benefits that come from investing in public infrastructure in both the short term and the long term. However, we are also well aware of the power that infrastructure has when it comes to building communities and creating places where we want to live, work, and prosper. During the election campaign, we presented an ambitious platform, and that is the platform that Canadians voted for.

We have committed to doubling federal investments in infrastructure over the next decade. We are betting on and investing in Canadians, and specifically the middle class, in order to stimulate and diversify Canada's economy.

We have committed to investing new funds in three sectors, and they are public transit, green infrastructure, and social infrastructure. We are all familiar with the economic challenges we are currently facing, but strategic investment in infrastructure can stimulate the economy and help build strong, sustainable, and inclusive communities.

That is why the government is committed to working closely with its local partners. We have confidence in their expertise when it comes to establishing priorities in their own communities.

In order to build the infrastructure that Canada needs most, co-operation will be crucial to our success. That is why we have taken the time to go out and meet with Canadians across the country. We went from coast to coast to coast. I even went to Yellowknife to hear the voice of every Canadian. We visited more than 20 towns and cities right across the country, precisely to make sure that the programs we are bringing in are good for Canadians.

In this spirit of collaboration, the Minister of Finance and I held the most comprehensive pre-budget consultations in recent history. More than 146,000 Canadians participated in this process, and this number will continue to increase as online consultations are ongoing.

On January 11, the minister and I went on a six-day tour in order to speak with as many Canadians as possible. We hosted 26 separate meetings and round tables with stakeholders and Canadians all across the country. In addition to these meetings, the minister spoke to capacity crowds at the Halifax Chamber of Commerce, the Montreal Council on Foreign Relations, and the Surrey Board of Trade, with a total attendance of over 1,500 people. Those Canadians who were not able to meet with the minister or myself in person can continue to share their ideas on the Department of Finance website. We have already received more than 3,000 submissions from Canadians. This evening I will be in the riding of Ottawa Centre to hold pre-budget consultations with my colleague, the Minister of Environment .

As part of our pre-budget consultations, we are talking to Canadians to get their input on how the government can best support the middle class, meet infrastructure needs and help grow the economy, protect the environment, and meet local needs, as well as ensure that the most vulnerable members of our society do not get left behind. It is an ambitious list, to say the least, but one that respects Canadian values of honesty, hard work, fiscal prudence, and generosity.

Canadians will be able to see their contributions when the 2016 budget is tabled. I want to assure Canadians that we are listening and we hope that this renewed interest by Canadians will make a better country for all of us, for our families and for our communities.

No one will be surprised to hear me say that the economy is going through a very difficult period. However, in the face of this real challenge, there is also real opportunity to put in place the conditions to create long-term growth. Canadians asked us to make smart choices, and that is exactly what we are going to do. This growth will create good jobs and help our middle class, the lifeblood of our economy, to prosper. We have a plan to grow the economy, and we have already begun to implement it by focusing on investments that promote economic growth while maintaining a commitment to manage the country's economy responsibly.

We will improve economic prospects for our middle class, which is the backbone of our economy.

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

Mr. Speaker, when my colleague was running for office, I am sure he knocked on many doors and talked at many community forums where he would have indicated some of his party's key platform commitments, one being that there might be a deficit, but it would not be any more than $10 billion, and that the Liberals would have the rich pay more and the middle class would benefit, but it would be revenue-neutral. We now know that the deficit will be higher than $10 billion and we know that this revenue-neutral tax actually will be $1.4 billion.

How will my colleague explain that to residents of his riding? The Liberals will create a structural deficit, so who will pay that debt in the future?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Speaker, Canadians understand that when interest rates are low, we invest in the economy to grow the economy. My answer for my constituents is simple. I told them what we would do with the economy, and that is exactly what we are doing. In December we started our plan by reducing taxes for the middle class. We will have the Canada child benefit program, which will be put in place in the next budget. It will lift hundreds of thousands of children out of poverty. It will help 9 out of 10 families, probably 9.9 in my riding. We will invest in a historical fashion in our infrastructure. That is what we said we would do, and that is what we are doing.

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

Mr. Speaker, before I start, I want to quickly wish my eldest daughter a happy 16th birthday today.

In the member's speech, I did not hear a lot about Bill C-2. He talked about consultation with Canadians and going around the country. We know that the bill benefits 40% of Canadians, those who earn over $45,000. Those who do not earn $45,000, which is 60% of Canadians, were they consulted about this tax? If they were, I have a hard time believing that they would support this tax break.

The government has talked about setting its priorities and pushing those forward in the first 100 days. When are 60% of the taxpayers going to become a priority of the government?