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

[John Brassard, Conservative, Barrie—Innisfil, ON]

Madam Speaker, part of the frustrating part of this, as a middle-class Canadian myself, is to hear the arguments of the Minister of Finance and to hear the arguments of the hon. member, as though somehow they are giving a gift to the middle class.

David Macdonald, who is a senior economist with the Canadian Centre for Policy and Alternatives, broke it down. The reality is that for those Canadians making $48,000 to $52,0000 a year, the average saving will be about $51 a year, or as my hon. colleague for Brantford—Brant said, about $6 a week, roughly, or less than that, in fact. From $62,000 to $78,000, it will be $117 a year. He classifies what comes as the next level as the upper middle class. Those making $124,000 to $166,000 will gain $521 a year, and then from $166,000 to $211,000, it will be $813.

In the meantime, Canadians earning over $211,000, granted, will see a tax increase of $2,912, but in fact, it is a shell game. It is a shell game the Liberals are putting over on Canadians, because the Parliamentary Budget Officer himself said that there would be an $8.9 billion revenue deficit within six years.

We are providing tax breaks to Canadians now. Will the member tell us how Canadians will pay for this going forward, with the debt and deficits that will be created as a result?

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, I am assuming that my hon. colleague is new to the House. I have yet to hear a Conservative talk about the drawbacks of a particular tax break. That is a new one to me. Nevertheless, I will address the issue at hand.

During the campaign, we talked about how the tax savings measures we are talking about are a benefit, as most economists would say, to the middle class. I would like to remind him that the Canada child benefit is going to provide a great benefit to all Canadians with young families, as we talked about earlier.

The Conservatives continue to brag about the 2% off the GST. I was wondering if perhaps my hon. colleague would like to stand now and talk about the benefit that provided.

We are talking about thousands of people being lifted out of poverty, despite the numbers he puts out there.

In this particular situation, this is a great way for us to begin to invest in the middle class by providing the tax relief contained in Bill C-2 and by providing the benefits we will announce in the budget. I guess the overall answer for that is to stay tuned.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Madam Speaker, this will interest my hon. colleague, who I have known for many years. He is a very likable fellow and a decent guy. I feel bad for him that he is having to do this job, which is the Liberal attempt to treat Canadians like they are rubes at a country fair.

When the Prime Minister talks about the middle class, who is he talking about? He is not talking about the 18 million people who pay taxes.

My hon. colleague says the Liberals are worried about people who are facing tougher times, and I am looking at who will benefit from this and who will not. If people are in the top 30%, they will make out like bandits. If people are in the top 10%, they are going to love these guys.

However, if people are getting by as office workers, there will be zero dollars for them. A hairstylist earning $27,000 a year will get nothing. A social worker earning $43,000 a year will get nothing. A fish plant worker in Newfoundland will get zero dollars. A cashier will get zero dollars. Are these people not working hard?

However, if someone is a parliamentary secretary, thumbs up. If someone is a member of Parliament, thumbs up. If someone is a bank manager, thumbs up.

The question for the Liberals is to be honest. When they are using this shield of the middle class, they should at least have the decency to say that it is for the people who are doing quite well, thanks very much, and the rest of the hard-working Canadians who pay their taxes and do their jobs are the ones being left behind by the government.

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, I find it hard to believe. I have known the member for quite some time. I do not recall him actually being so down on all of the incentives that were brought in before.

In this particular situation, what he is talking about is a situation we have discussed before. He has supported many of the measures in the past. My understanding is that he is now supporting this particular measure going to second reading. If the rubes are making out in the market, I am not quite sure why New Democrats would want to support these particular rubes going forward. Nevertheless, they are.

He talked about the middle class in the election. I heard him do it during the campaign. I cannot imagine the reason his protestations are so loud about this particular bill that he has now decided to support at second reading. I would suggest that the hon. member come forward on this more constructively. I have always known him to be a constructive person.

Nevertheless, I would point to the facts about how many people will benefit.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Madam Speaker, the members opposite are geographically well positioned, because prior to the last election, all of them together seemed to prefer a program that sent cheques to millionaires through their universal benefits and a program that, surveys showed, three out of 10 Canadian families did not need.

What we have here is an example of the difference between equality, which is a good value, and equity, which means that one focuses one's resources on the people who actually need it.

I am wondering if my hon. colleague can enhance this notion of equity.

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, it is a valid point by my hon. colleague from British Columbia.

We talked earlier, throughout the campaign and until now, about how the investment in benefits and tax incentives are targeted toward those who will benefit the most. That is why, when we discussed the TFSA issue and reducing the limit from $10,000 to $5,500, the whole point was that more people would maximize it. We can use those savings to give benefits to others who will also leverage that. That is the whole point of what we have been doing.

We talked about the child care benefit. The Canada child benefit contains two things targeted towards those who need it most. Second, it is tax-free. That is what we talked about during the campaign.

We received the mandate to put that forward for those very reasons. People said to us, yes, we believe it is the right investment to make and not in cases where we would be providing a benefit for those who need it the least.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, it is interesting listening to the member opposite talk about their strategic approach. I think I stand for all of the opposition parties when we ask the government to show Canadians what its plan is. We have yet to see it. We have yet to hear any actual questions answered.

Earlier this morning, the Minister of Finance stood and said that indeed, the Conservative government left this country in a state of flux.

The document I am looking at right now, the “Fiscal Monitor”, which is a publication of the Department of Finance, states that as of November 2015, there was a budgetary surplus of $1 billion.

My question for the member opposite is this: Did the Minister of Finance just misread his cue cards?

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Madam Speaker, I first came here in 2004. In 2006, when the Conservatives took over, we handed them a multi-billion dollar surplus, which just ran through the cracks and madly off in all directions over the following six years. Trust me, I was here during the deficit years.

I would like to remind the member that whatever he talks about now is some fictional type of surplus. Trust me, it was fiddled away in the last 10 years of their existence.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, today I will be sharing my time with the hon. member for Dauphin—Swan River—Neepawa.

I am honoured to rise today to speak on Bill C-2. This is my maiden speech, and I wish to start by thanking the people of Elgin—Middlesex—London for giving me the opportunity to represent them in the House of Commons for the next four years.

I would not be here if not for the amazing volunteers and friends, but most of all my incredible family. To start, I know that as I speak today my mom and dad are watching these proceedings. I would like to thank my parents, Patricia and Harold Martyn, for all of the opportunities and support they have always given me. As the daughter of people who farm turkeys and pigs, I understand hard work and commitment, and I thank them for instilling these values in me. Whoever thought the girl from Sparta would be sitting in the House of Commons.

To my siblings who have always held me accountable, and doing so with love, a huge thanks for believing in me: Linda, Ann, Paul, and my in-laws, Greg, Scott, Trish, Lisa, Pete, and David. I thank them all. To Sandra and Bill, a.k.a. Nana and Pops, who have always been there for me, I love them both.

Making this decision to get into federal politics was not an easy decision, but I truly had a head start. My mentor and former boss, Joe Preston sat across this aisle from 2004 to 2015. “Trust me” was a common phrase used daily in our discussions. Today I would like to thank Joe for encouraging me. Without his support, this would not have been possible.

Now for the hard part, naming the people I miss every day as I serve this amazing country: Dakota, Garrett, Marissa, Hannah, and Christian. I hope from this new chapter of my life they will realize that anything is possible, will believe in themselves, and surround themselves with good people. I cannot wait to see what the future holds for them.

Finally, to Michael, my better half, the guy from band camp whom I married, I miss our evening walks, but I am definitely thankful for Facetime, or this journey would never have been possible. Although we are 640 kilometres apart, he is always with me. I believe in him, just as much as he believes in me, and I look forward to kicking off our bucket list in the next 20 years.

Elgin—Middlesex—London is an incredible riding. It is filled with beautiful lake harbours, rich agricultural land, small and large vibrant businesses, but most of all, great people. The volunteers not only on my campaign but throughout this riding helped mould me and educate me.

I would like to personally thank all the people who got me here, including Brian, Fran, Francine, Marci, Whitney, Jeff, Jen, Betty, Ena, Blake, Bob, Mae, Terry, Reinhardt, Dan, Shirley, Dean, Bridget, Melissa, and all the residents on Crescent Ave. I thought if I went fast, no one would know if I missed them. I send a special thanks to Ninja Turtle Noah, Maddie, Lauren, and Sarah.

To the ladies in the office, Cathy, Kaylie, Jena, and Kim, knowing that they are a part of the team makes me confident that Elgin—Middlesex—London is in good hands.

It is with all of these wonderful Canadians in mind that I stand in the House to oppose the proposed alterations to the Income Tax Act. Canadians have utilized the tax-free savings account since its introduction in 2009. This program has provided Canadians with incentives to develop attitudes of economic responsibility.

TFSAs are helpful tools for Canadians who are seeking to save or are preparing for unforeseen economic vulnerability, a tool used by many of my constituents in Elgin—Middlesex—London, both young and old.

The current Liberal government has proposed a reduction in the maximum amount of funds that Canadians can invest in these accounts per year. Unfortunately, the government does this on the false pretence that doubling of the TFSAs only benefits the highest earning Canadians rather than just the middle class.

On the contrary, statistics demonstrate that this investment tool is utilized by many middle-class Canadians. Half of those holding TFSAs earn less than $42,000 a year. In fact, 60% of Canadians who take advantage of the TFSA's limit earn $60,000 or less a year. What is more, in 2015, 600,000 Canadian seniors invested in TFSAs, maximizing their yearly deposits while earning less than $60,000 a year.

CARP, Canada's association for the fifty-plus, was in favour of increasing the limit the TFSAs to help seniors form fiscally responsible plans for the future. When the Conservatives raised the limit on TFSAs, the majority of Canadians supported that decision. Lowering the limit on TFSAs will do absolutely nothing for the low-income families, including financially burdened Canadians, to which the government must remain accountable.

The proposed changes in Bill C-2 will negatively affect Canadians by noticeably reducing their incentive to save for the future, creating a heavier reliance on government support during financial crises. Further, it will limit the choice of Canadians.

Why put up roadblocks for people who want to engage in responsible saving practices? Why remove the sensible avenue for saving, which costs the government very little?

Bill C-2 would do more than limit the choices available to the middle class. It would also reduce the amount of attention given to the vulnerable people in Canadian society. Instead of worrying about nitpicking a program that already works for Canadians, the Liberal government should be seeking out programs and initiatives that would actually aid in giving a hand up to this country's most vulnerable people.

The current government needs to continue to support programs such as the housing first initiative, which was undertaken by the previous Conservative government. This initiative was directly aimed at ending homelessness by identifying those most desperate in Canadian society and ensuring they were given a real opportunity for self-advancement. By seeking out these programs, the current government would have the ability to ensure that its efforts to end social issues do not go a mile wide and an inch deep. Spending well, rather than just spending, is the key to improving social issues today. Unfortunately, spending responsibly does not seem to be the current government's strongest attribute.

These tax cuts are aimed at making the public feel better about Canada's current position during this time of economic uncertainty. However, these cuts are not enough to provide true relief for Canadians being affected by the dipping dollar. It will take much more than just tax cuts to regrow the Canadian economy. This remedy is a mere surface solution to a much more serious problem.

Even more indicative of the Liberals' spending habits are the alterations to revenue that Bill C-2 would cause. Originally, the Liberals claimed that their new tax programs, including the lowering of the ceiling of the TFSA, would be revenue neutral. However, the tax bracket changes contained in this bill would actually cost the government $8.9 billion in the next six years. Since the government failed to accurately project and report these financial results, why should we trust the Liberals' promises that they will aid Canadians in the long run?

My constituents in Elgin—Middlesex—London have addressed this issue to me personally and are concerned about these changes. All age groups from all tax brackets have been using this method of saving their money for the future. Young adults have been putting their money away through TFSAs to invest in new homes, families have been using it to invest in their children's education, and many have been using it as a retirement tool.

As the official critic for families, children, and social development, I can assure members that I have spoken to many constituents and Canadians who want to see the ceiling of the TFSA contributions remain at $10,000 per year.

I look forward to continuing to hear from my constituents in the great riding of Elgin—Middlesex—London and to working with all Canadians in my new role. I would like to thank this House and my hon. colleagues for indulging me and for the opportunity to speak to this very important piece of legislation that would affect all Canadians.

[Adam Vaughan, Liberal, Parliamentary Secretary to the Prime Minister (Intergovernmental Affairs)]

Madam Speaker, I welcome my colleague across the floor to the House of Commons and note that, unlike me, she was not present in the last session of Parliament. She talked about false projections. I am just going to read back, from the 2015 budget, the projections that the other side of the House made as they relate to the economic circumstances in which we now find ourselves.

The Conservatives projected a 3.1% growth in GDP. That was the foundation of their budget. They projected growth this year of 2.2%, and from that they said they would therefore have a surplus. We now know that growth is at 1.2%. That is the misguided financial capacity of the previous government, with which we are now dealing.

However, the other reference that was made here, beyond the false projections of the previous government and the false projections of a surplus, is this. Your government has been withdrawing the funding agreements for social housing in this country over the last three years consistently, and in doing so, as you reduced it from $2.1 billion to $1.9 billion to $1.7 billion, you have been directly putting people in subsidized housing out on the street. How can you stand here and say that your government had a humanitarian approach—

[The Assistant Deputy Speaker, Carol Hughes]

Order, please. I would like to remind the member that he is to address his questions to the Chair and not to individual members.

The hon. member for Elgin—Middlesex—London.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, although I did not sit in the House of Commons, I am a Canadian who watched what happened in the House of Commons, and as well, I worked for a previous MP for 11 years. I have worked with constituents and I have worked with Canadians.

As the critic for families, children, and social development, I have taken it upon myself to do pre-budget consultations. Through them, I have had the opportunity to speak to many people regarding homelessness as well as affordable housing. One thing that I continue to hear back in meetings and briefings and through the ESDC is that housing first, the initiative we put forward for homelessness, works. That is why today I continue to ask the Liberal government to ensure that our vulnerable people be cared for with programs like this, which our Conservative government introduced and which had excellent benefits.

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

Madam Speaker, some members today have already done a good job of elucidating how odd it is to have a so-called strategy for the middle class that especially targets and benefits people making well into six figures. It is a strange definition of the middle class. There have been some allusions by members opposite, as well, as to how it is meant to help.

One of the big struggles for the middle class right now is job loss. We have seen that across the country from coast to coast to coast. Would the member agree that it would have been a better prioritization and better for the economy to put the same priority, which the Liberals have put on these tax cuts to help Canadians who overwhelmingly earn six figures already, on amending and fixing what is broken with EI? That would ensure that workers who are getting laid off right now across the country could access EI when they need it. Also would it have been a better prioritization and better for the economy to help people living on CPP, who are not getting enough money, and put money into their hands right now—the ones who really need it and would spend it—instead of people making over $100,000 a year? I would like to hear her thoughts on that.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, I truly respect where the member is coming from. I myself have worked for 11 years for a member of Parliament and have worked for all Canadians. I believe that job creation is the number one thing that we need to continue to focus on, to help our country. Yes, we must help our seniors. We must help those who are the most vulnerable. Job creation is one of the biggest things and should be our priority in doing so.

When it comes to CPP, that is a very important program. I will continue to support the Canada pension plan, allowing people to put it into their investments. However, I also think that investments made into the tax-free savings account are an excellent way for seniors to save as well. It does not just need to be the government that assists them with saving; it allows all Canadians to have accountability and choices as to how they wish to save their money.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, I have already committed the cardinal error of public speaking, which is following a terrific speech. I want to thank my colleague for her wonderful maiden speech. She is a welcome addition to the Conservative family in the House. I think we will all have to run like crazy to keep up with her, and that is a good thing.

Before I talk about the subject at hand, I would like to refer to something that came up in question period, which quite vexed me.

The member for Prince Albert talked about Ukraine and said that the government was crying crocodile tears for Ukraine. I remember in November 2014, I had the honour of accompanying the then prime minister to the G20 meeting in Brisbane, Australia. At that particular meeting, the prime minister had to shake hands with Vladimir Putin. He said to Mr. Putin, “I'll shake your hand”, and then he looked him right in the eye and said, “You need to get out of Ukraine”.

Imagine those on the other side, with the leader they have, ever doing such a thing, standing up for Canada, standing up for principle. He would probably want to take a selfie.

As well, the other side downplays the human tragedy that is occurring because of the economic downturn. Often anecdotes and personal experiences are as important or more important than numbers and statistics.

There is a gas station just outside of Winnipeg that I stop at when I drive back and forth between Winnipeg and my constituency. I chat with the proprietor. We have become friends. We were talking about the low price of gas and he was quite worried about it. I asked him why. He said that every day there would be a person or a family stop at the gas station. These people were heading back home to the Maritimes. With the Alberta economy collapsing, they have lost just about everything and their only alternative is to return to the Maritimes. The Maritimes are a wonderful part of the world to be sure, but they are economically stressed. However, these people have to pack up everything, leave secure, well-paying jobs, and go back home to live with mom and dad, trying to rebuild their lives.

The Liberal and NDP war on the resource industries is a war on rural communities as well. These have real and dire human consequences that we lose sight of at our peril.

On the topic at hand, I would like to point out that the Conservative approach is very much one of encouraging personal growth and development through our taxation and financial policy systems. Our goal is to ensure that people are as independent as they possibly can be, that they have fulfilled their ambitions, and that they are allowed to chart their lives in a way they choose. Government policies can encourage that kind of independence or can discourage it.

As Conservatives, we firmly believe that government's role is to enable self-sufficiency and reduce the reliance on government so people can chart their own course, and TFSAs are exactly in that mould.

I hate to say it, but I think it is true, and the record bears it out, that both the Liberals and the NDP on the other hand want more people dependent on government, and I am not sure why. The policies and programs that Liberal and NDP governments have put in place at both the provincial and federal levels across the country result in more and more people becoming dependent upon government. The creation of that kind of dependence, in my view, creates grave problems for society.

Canadians have a lot of pride, and charting one's own path in life enhances that pride. Government has a role to provide mostly a hand up as opposed to only a hand out.

Again, I would like to bring in the personal here. When we brought in our last budget with income splitting, the universal child care benefit, and all those great benefits for families, I received an email from a single mother from the town of Swan River in my constituency, from Ms. Mackenzie Danard, and she gave me permission to use her name.

She wrote to us to thank us for our tax policies. Keep in mind, this is a single mother on a very low income. She wrote, “This helps a lot for single parents”. She also added, “Thank you for helping us raise our children”. So much for the idea that Conservative budgets are for the rich. As I said in my speech yesterday, Conservative members of Parliament are the party for the working people of the country. No one should ever forget that.

TFSAs, tax-free savings accounts, are exactly in line with our philosophy of promoting independence. Again, I am not one who thinks government does not have a role in society. It certainly does. I have never been shy to encourage the spending of government resources on projects and programs that help people. We certainly need tax resources to ensure the health of our society, but they should be kept at a minimum.

The tax-free savings account is kind of a companion to the RRSP. It helps people to become independent. TFSAs are open to all citizens over 18. Let us contrast this with the Canada pension plan. Many members opposite want to see the Canada pension plan contributions increase.

The Canada pension plan, in and of itself, is a pretty good program. However, it is a matter of degree. TFSAs are complementary to the Canada pension plan. Unlike the Canada pension plan, tax-free savings accounts introduce choice in how one invests their money. They also accumulate in one's own personal account. If people contribute to CPP, even an added CPP, and they unfortunately happen to pass on before the eligibility date, there is nothing left for the family. At least with a TFSA a legacy is left that can be passed on to the next generation.

The attacks on the tax-free saving plan are completely unwarranted. My colleague who spoke before me listed chapter and verse the number of groups across the country, including seniors groups. I am in the over 60 club, if the truth be known . My generation is strongly supportive of the approach our government put in place.

I would like to go to the personal about TFSAs. On May 13, 2015, in Hansard, I quoted a constituent of mine who sent me an email. She gave me permission to use her name. Ms. Wendy McDonald is a hard-working wife from Newdale, Manitoba. Her husband farms, and they have children. They were visiting in Ottawa. They said:

The reason we were able to afford our trip to Ottawa was due to our income tax refund, which was larger than expected due to income splitting law...our family chooses to put the child care benefit money we receive directly into RESP for our 2 children, and I will be one of the Canadians that will benefit from the increased allowance on TFSA accounts because saving is important to me and allows me to be fiscally responsible in my own household

This is a family, the McDonalds from Newdale, that is charting its own course in life. These people are independent, saving money for their kids and for their retirement, using the tools our government put in place. These are tools the new government is trying to take away.

My last point is in regard to the so-called tax hike on the wealthy. A typical Liberal, NDP trait is to always penalize success, always envious of people who do well, always thinking that people who succeed in life are just lucky. Most people succeed in life because of hard work and governments should have policies in place that support and reward hard work.

I have The Fiscal Monitor from the Department of Finance. It is very clear. For the April to November 2015 period of the 2015-16 fiscal year, the government posted a budgetary surplus of $1 billion. What could be clearer than that? Our government left a financial legacy of which I am very proud. It is a government that I was certainly proud to be a part of, and in four short years we will be back.