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

[Matt DeCourcey, Liberal, Fredericton, NB]

Mr. Speaker, the words just delivered by my friend on this side of the floor speak volumes. I will say that providing the space of $5,500 is adequate to ensure that average Canadians can save, while also ensuring that we provide support where it is needed most.

Many of the people graduating from university in the next number of years—again, from those fine institutions in my riding—will be looking to secure employment and pay down debt. That is what we need to focus on, while also helping vulnerable Canadians.

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.

[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.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Speaker, the member for Nepean mentioned that the pre-budget consultation his government did was one of the largest in history. Would the hon. member not agree that bigger is not always better?

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, bigger is always better when we engage Canadians. From coast to coast to coast, we listened to indigenous, community, and cultural leaders. We heard their issues and the problems they faced so we could propose good plans for implementation.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, six out of 10 Canadians will get nothing under the Liberal plan. Seniors who are waiting for an increased pension are being told to hang on. Families are still waiting to find out how much they will get under the Canada child benefit. However, my colleague talked about this child benefit using the conditional tense and said that it should begin this summer. We are asking questions, but we are not getting any answers.

My colleague talked about the most vulnerable members of our society. Why are Canadians who are living in poverty, the vulnerable people he is talking about, still not getting anything under this bill?

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, as I mentioned, we will include a Canada child care benefit that will help nine out of ten families that need this assistance most. We also said we would increase the old age pension plan to help seniors. We have other plans for seniors as well.

[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, we hosted a very good pre-budget consultation meeting in my riding of Nepean. It was a jam-packed room. We heard very clearly that Canadians were happy with the tax cuts we proposed for the middle class and were interested in our infrastructure plans that would allow the economy to continue to grow.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Mr. Speaker, I have one comment with respect to tax-free savings accounts. It was a very good program initially, but I think the facts show that a very small percentage of Canadians actually maxed out their tax-free savings accounts and a smaller percentage took advantage of doubling the tax-free savings account. This absolutely was done by the party opposite to pander to its base and allow those who could afford it to do so.

The Liberals came forward with a tax break for the middle class, to put more money back into the pockets of the middle class. What does my hon. colleague believe the benefit of putting more money back into the pockets of hard-working middle-class Canadians will mean to the economy?

[Chandra Arya, Liberal, Nepean, ON]

Mr. Speaker, in relation to the problems he has mentioned with the tax-free savings account, it is a harsh fact of life that many Canadians cannot even invest in RRSPs. I believe the amount not being invested is in the range of $700 billion. The tax-free savings account is above and beyond what people can invest in their RRSPs.

Taking about our proposed tax cuts, we know this is a time when Canadians need to spend. We need the economy to grow and that can come through both spending by individuals and investments in infrastructure.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Speaker, I am pleased to rise in debate on this bill today.

What has been most interesting about the debate on this bill to date has been the opportunity to drill down into an issue of contemporary Canadian political semantics. There was a time when we started to talk about the middle class that a lot of people felt this was sort of updating the language of standing up for working-class people and that when we talked about the middle class, we were talking about people who were going to work every day and working hard every day to bring home what they needed to be able to feed their family, pay for their home, and engage in some meaningful recreation after working hours as well.

That is where a lot of people felt the language of the campaign put forward by many parties, especially the governing party, was going when we were talking about the middle class. People felt the middle class meant people who were working hard every day to try to provide for their families.

We see an acknowledgement by the government sometimes that that is not quite what they mean by “middle class”. It has talked about the middle class and those working hard to join it. However, in fact, the way the government is defining the middle class through the tax cuts is to say, first of all, that they would only benefit people making over $45,000 a year, which already does not include 60% of Canadians going to work every day and trying to provide for their families.

Then the greatest benefit, of course, does not come at the bottom of that bracket, but at the top, so when we start talking about the people who are going to see the major benefit of this tax cut, it is plain to see that it is far more than 60% of Canadians who will not be seeing any real, substantial benefit from this tax break.

We have been talking about how we define the middle class. If we are trying to define in any sort of absolute way what that means vis-à-vis the majority of working Canadians, then I would say the government proposal really does fail to do anything for the middle class, understood as the large majority of Canadians who are going out and earning the median market wage for a lot of the work being done in Canada. The median salary of a Canadian worker is somewhere in the neighbourhood of $35,000 a year. That is not even close to qualifying for any benefit under the new Liberal tax plan.

We can define it aspirationally, as the Prime Minister sometimes does when he says it is the middle class and those working hard to join it. Maybe the implication is somehow that is more the focus or that we really need to capture all those people under the umbrella of “middle class”, even though they are living a life quite different life from those making $90,000, $100,000, $110,000, $120,000, who are the people in the middle of the bracket that the government has chosen to target.

If we are defining it aspirationally, then it is a mistake to say it is the class of people who need the most help. It is not. It is often implied by the government itself that the intention of the program is to provide help to those who need it the most, but if the middle class is going to be defined only aspirationally, then it would be a mistake to say that it is the class of people who need it most.

If it is defined absolutely, we are looking at the majority of working Canadians, and I would say that those are the people who do need help. If anyone needs extra help or extra resources in order to leverage more out of their work and create an acceptable living standard for their family, it is the people on the lower end of that scale, not the people on the higher end.

I find it a strange focus. I wish the government would be clear about the way in which it is going to go about defining the middle class and clarify whether it wants to speak directly to the majority of working Canadians or whether it is talking about some aspirational category. If that is the case, then the help is misplaced. We really want to be helping those who are trying to get into that category, and this tax package really has nothing to do with that.

I find that odd. We want to talk about how we provide real help to those who need it, those working families. If the Liberals are going to get away with defining “middle class” as being that upper end, a six-figure category, then we do need to rehabilitate the language related to “working class” in Canada, because the category of people we thought we were talking about when we were talking about the middle class clearly is not the category we are talking about if we listen to the government.

There is a whole group of people out there, 60% of the population, working for under $45,000. Those are the people on whom the efforts of government are best spent, both because there is a moral obligation to make sure that people who are putting in that work are getting a fair return for that work and are able to provide for their families and also because there is an economic argument.

It is the kind of economic argument that has been appropriated by the government in favour of those making around six figures. That argument really belongs with that 60% who are making $45,000 or less a year. The resources provided to them and the extra bit of spending money that could be provided to them, whether it is through tax relief or through a child care program that would do a better job, would relieve the actual dollars that are coming out of the pocket just the same as taxes are.

Child care is not optional for most working families in Canada, so the money that they spend on child care is no more an option than the money that is taken off their cheque every week for taxes. Providing relief on the cost of child care is meaningful and would put money back into the pockets of families. The benefit of this strategy is that it also means we could do a better job of making sure those services are available where they are needed.

We know that the market has not always been doing that in the most efficient way and that there is room for intervention there. There are many ways to put money back into the pockets of those families who need it the most—not the ones in which one or two earners are making $100,000 a year, but the ones who are making a median salary. We could do that with a child care program.

We could do it by providing relief on EI, because even families who might have benefited from these tax cuts because they were making $80,000 to $120,000 somewhere in the country in the trades are now unable to find work. Because of the change in commodity prices, their jobs no longer exist, and those families need relief right now.

It is why I was quite pleased with our opposition day motion to get the government to move as quickly on EI as it saw fit to move on this tax break, the main benefit of which is going to go to people already making six figures. It will not help the people who need it now. If the government asked what its priorities are and how it can move quickly to help those who need it most and how it is going to put money in the pockets of people who will spend it right away because they have to and need to, this would not fit the bill.

I am shocked that this is what we are debating and that it took an NDP opposition day motion to get urgent debate on EI reform in the House. We will be voting on that later today, and I would be pleased to see colleagues across the way stand in favour of that motion. It is much needed, and I would be remiss if I did not mention it, because the vote is today.

In the spirit of being constructive, we also put forward a different tax proposal. Investing in a national child care strategy is a better way to go and would accomplish a lot of what the Liberal government said it wants to accomplish through tax relief. We said, “Fine; the Liberals ran on a platform of tax cuts that are supposed to help the middle class, so let us play ball. Why do we not give a proposal that is in spirit the same thing, but would actually do a better job of realizing the objectives the Liberals set out in the campaign for tax relief?”

We proposed a reduction on the first bracket that would actually cover that 60% of Canadians earning below $45,000 a year. It is why we are looking to move the bill on to the committee stage to have it examined. I hope members opposite will see that as an opportunity to improve a plan that has misfired because it not helping those who need the help and is not helping those that the government in the election campaign implied it was going to be helping with tax relief.

We are looking to be constructive in the House. We think we have found a way to help the new government help itself. It is a busy time. There is a rush to get certain things through, and we hope that our reflections may assist the government in doing a better job of what it said it would do. We are voting in favour of the bill at second reading to get it to committee and have that full debate.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I will start with a comment about what we are discussing today and then go on to the less fortunate individuals in our society, as the member mentioned and pointed out so rightly.

I will start by saying that this measure would put money into the pockets of nine million Canadians. We cannot dispute the fact that would have the ability to spread throughout the economy and help it grow.

If we were to stop there, then I could possibly agree with the suggestion that this would not be enough. However, we are going further. This goes to the member's point in his eloquent speech and to the passion he showed with respect to the less fortunate in our communities. That is why the Liberal Party is planning to put forward the Canadian child tax benefit, which would put more money into the pockets of families who need it the most, rather than maintaining the universal child care benefit—which, by the way, the NDP supported during the election.

My question to the member opposite is this. When it comes to the particular program that we will be putting forward, a program that would put more money into the pockets of families who are struggling, will he go against what the NDP committed to during the election and support that plan? It would truly benefit those he has singled out who were not being taken care of, which is what we plan to do with the Canadian child tax benefit.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Speaker, it would be irresponsible to endorse a plan I have not seen. In the House we have been calling to see that plan. We keep being told that it is coming. However, until I see the details, I will not say one way or another whether it is something I would be willing to support.

I would urge the member or another member to stand up in the House today and give us the details of that plan so that we might better evaluate our support.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Speaker, I thank the member for his eloquent speech. I agree with him that this bill and this strategy that the Liberal government is putting forward to this place does not help the low-income Canadians who need it the most. I will certainly grant him that point. I wish the priorities of the Liberals were different on that front.

The NDP and the member have said they will be supporting this measure. To bring it to committee means that it will have a good examination, and the NDP may decide not to support it later. What I am concerned about is that this measure will cause a deficit of $1.2 billion or more, because it is not revenue-neutral as the Liberals originally proposed it would be.

Does the member not see, though, that if we continue to put forward things that would put us into a deficit position, many of the programs and supports that the member is calling for that would help low-income Canadians would inevitably be put under pressure, to the point where we may revisit the 1990s, when the Liberal government at the time cut transfers to the provinces, particularly around health care, in order to pay the bills?