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

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Mr. Speaker, I will be splitting my time with my colleague, the member for Carleton, so I ask that members stick around, because I am going to give a speech, but he is going to give an excellent speech.

Thank you, Mr. Speaker, for the opportunity to speak to Bill C-2, to talk about the government's financial record and the challenges I see presented with its financial vision.

I come from Alberta. I am a proud Albertan, and I am proud to defend the people I represent. I am also proud of the people who have built our local economies within the communities I represent. They are the bedrock of the communities across the province of Alberta, across western Canada, and contribute so much to the economy of our nation from coast to coast.

One of the things I have noticed with the Liberal economic plan is that there seems to be no long-term perspective as to how it is going to create jobs and drive the economy. The Liberals talk a lot about things like creating jobs and providing opportunity for people to move from lower income to middle income. Of course, they do use the terms of class, which as my colleague from Calgary referenced, is probably offensive to a lot of people who are workers in our country. The concern I have is the Liberals keep talking a good game, but they have not demonstrated a plan that is coherent in any way. As a matter of fact, the bill we are debating today probably establishes for all of us that that is the case.

They talk about it being a tax cut for people who need it most. Of course, what we do note is that those who need it in our country most are actually not able to benefit from the provisions in the bill. Lower-income Canadians are not included. As a matter of fact, there is nothing in the bill that provides any assistance to lower-income Canadians.

There is also a major hit against senior citizens. Just this last week, we heard it said that the Liberals are looking at a plan to increase CPP contributions. As my colleague just referenced, this in fact would be a payroll tax. Not only does it establish a problem for those income earners who would have an additional amount of money taken off their paycheque, it would also mean that small business owners would have to pay additional taxes to help support a CPP increase.

Let us just think about this a little. A CPP increase today would not benefit seniors today. It would not benefit those people who are in their later years and who most desperately need support today. The hope is that if money is put aside today, seniors in decades to come would benefit from those increased contributions. That is a debate to be had, but let us be clear, this would benefit no senior who is a senior today. It also would not help those people who will become seniors and start drawing pensions in the next number of years. We are talking about a Liberal plan to start taxing small businesses, workers, and families today in the hopes that some day there may be a benefit to people down the road. It is not about seniors who are struggling today.

One provision that we as a government instituted was the tax-free savings account. Having looked at the evidence, what we note is the people who were most likely to use the full allocation of the tax-free savings accounts were low-income senior citizens, those people who were having to withdraw money from RIFs or different types of savings plans. The tax-free savings account was a vehicle that created all kinds of opportunities for senior citizens to manage their retirement money. It allowed senior citizens to put money in and withdraw money without any tax implications. They could manage it, and withdraw money as they needed, to address their needs. They could withdraw it if they had a medical emergency and all of a sudden needed to pull out some money for travel, or if they wanted to go on a vacation they were able to withdraw that money without having to take any kind of a penalty.

The Liberals have gone after senior citizens by cutting down the tax-free savings account at the same time that they are telling Canadians they are concerned about seniors, but they have no plan that would benefit seniors today or people who will become seniors in the next number of years.

I am also concerned about the Liberals' plan for families. I did reference the fact that I come from Alberta and I represent people who are in the resource sector, those who work hard every day, play by the rules, pay their taxes, and contribute to our communities. They have had some of the worst years of their lives over the last couple of years.

Obviously, all governments and all parties recognize that we in Parliament do not control the price of energy in the world. Regardless who is in power, there are going to be some troubles with regard to small and larger businesses and to those who are employed in the resource sector.

We know that the Liberal government can make it better or worse for those people who work in the energy sector. Let us be honest, Liberals have made it significantly worse, creating uncertainty in the marketplace, such that companies refuse to invest in Canada because they are uncertain about things like carbon taxes. They are uncertain whether they are going to be able to get products to market.

When the Liberals continue to place hurdles in the way of the development of the energy east pipeline and the TransCanada pipeline, when they continue to play politics with some of the most important nation building infrastructure, which will cost the taxpayer zero dollars as this is private sector investment, when the Liberals continue to create hurdles to see that infrastructure built, my constituents are hurt.

The reason they are hurt is because many of them are employed in the energy sector or have businesses that are secondary industries within the resource sector, that are looking toward the future. The companies are saying they are not going to invest in a place where there is so much uncertainty. The Liberals' announcements that they are going to create difficulty for pipelines to be built and their commitment to continue a job-killing carbon tax hurt.

There is a document that came out this morning from the Alberta government that is an assessment simply on the provincial portion of the carbon tax, not of the federal government's carbon tax that it promised, which will be in addition to any provincial carbon tax. The government's analysis itself says that it will cause 15,000 job losses, it will take $4 billion out of the household income of Albertans, so not only is the government taxing them more, it is also going to reduce their income. If there is going to be $4 billion taken out of the household income of Albertans with a provincial carbon tax, one can only imagine how much additional money will come out of household incomes of Albertans when the Liberals get their hands on a cash grab from the province of Alberta as well.

The Liberals' plan has been completely incoherent. We have established that. They have said they are going to support seniors, yet they are taking vehicles away for seniors to actually save. They have said they are going to help people move from lower income to higher income, yet they are taxing those families at every turn, creating disincentive for investment in provinces like Alberta and other provinces that depend on the energy sector. They are continuing to increase payroll taxes on those same small business owners, creating disincentive to create more jobs. The incoherence of the Liberal economic plan is not only challenging, it is actually creating such difficulty for people who live in communities like mine.

There is an urgency for the Liberals to change course. We would ask the Liberals to look at the facts and the evidence and start to respond to the needs of Albertans and all Canadians to ensure that we can build an economy that will prosper for generations to come.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I think my colleague from Calgary Signal Hill had a premonition and knew that I was going to rise and ask him a question. This actually gives me a chance to respond to a point the member for Gatineau just made.

It is not that we support additional tax cuts, but we are in favour of a real tax cut for the middle class, which is not what Bill C-2 proposes. We proposed a tax cut that would apply to annual income beginning at $11,000, rather than $45,000. That would cover 80% of Canadians, rather than just 9 million out of the 25 million or 28 million taxpayers in Canada right now. I just wanted to correct my colleague's comment.

However, I also have a question for my colleague from Calgary Signal Hill, since we disagree on some of the points in the bill. We agree with the Liberals that the TFSA limit should be lowered. We know that the Conservatives want a higher limit, set at $10,000.

Then again, one thing my colleague and I do agree on is the definition of “middle class”, which, seems to us, is not the same as the Liberals' definition. If we look at the tax cut that is set out in this bill, anyone who earns less than $23 an hour will not benefit at all.

I would like my colleague to say a few words about what constitutes the definition of middle class and why the Liberals are trying to make political hay out of an issue that, according to their own interpretation, does not correspond whatsoever to reality?

The House resumed consideration of the motion that Bill C-2, An Act to amend the Income Tax Act, be read the third time and passed.

[Erin Weir, NDP, Regina—Lewvan, SK]

They are free to applaud that, Madam Speaker.

Of, course, the flip side of that is that we do not have enough resources to fund important public services and necessary infrastructure. That is one of the main reasons we have a big federal deficit. It is important that if we want to live in a civilized society, we need to have ways of raising the revenue to pay for those services and those infrastructures that we depend on.

What has the government done in terms of generating that needed revenue?

Bill C-2 proposes an additional four percentage points of personal income tax on incomes over $200,000 per year. That is definitely a positive initiative, but it is also a fairly minor initiative. It does not actually raise very much revenue. In fact, it does not even raise enough revenue to pay for the so-called middle-class tax cut that actually goes to what we might call the upper middle class. The maximum benefit is only to people earning more than $90,000 a year. We have this kind of redistribution from the rich to the nearly rich, which is costing the treasury even more money.

We, in the NDP, have suggested that the government might look to the corporate sector as a source of additional revenues to pay for public services.

It is interesting. This morning, the Toronto Star and CBC have come out with a joint investigation that looks into the loss of revenue to offshore tax havens. It notes that all of these tax information exchange agreements that the former Conservative government was very keen to sign have actually made the problem worse.

The goal of these agreements was obviously to achieve greater transparency, to get more information about what was going on in tax havens. However, what the Conservatives did while they were in power was to put in place a policy whereby once a country had signed one of these tax information exchange agreements, there was no more enforcement. Canadian companies could just repatriate profits tax free from those jurisdictions. Far from curtailing offshore tax avoidance, this plethora of tax information exchange agreements has actually made the problem worse. I think that is a problem that we need to be addressing in this House.

I would also like to talk a bit about a specific case of offshore tax avoidance that I think really illustrates the problem.

Cameco is a company that mines uranium in Saskatchewan. In 1999, it signed a deal with its own subsidiary in Zug, Switzerland to sell that uranium to Switzerland at a fixed price of $10 per pound. Switzerland was not the ultimate destination or user of that uranium. The subsidiary in Zug was just reselling it to other jurisdictions around the world at market prices. Of course, the market price of uranium is variable, but it has consistently been quite a bit more than $10 a pound. It is currently around $30 a pound. It was up to as high as $140 a pound in 2007.

The only real effect of this arrangement was to transfer billions of dollars of profits from Canada to this Swiss tax haven. The Canada Revenue Agency has calculated that from 2003 through 2015, that cost the governments of Canada and Saskatchewan more than $2 billion in lost tax revenue.

This is a huge scandal. It first came out in 2013. At that time, I was struck by the fact that Saskatchewan's Conservative MPs and one Liberal MP were totally silent on the matter. Fortunately, we now have some New Democratic MPs from the province who are going to speak up for tax fairness and raise issues like this.

It is very concerning that we have this company that is making huge profits off of Canadian resources and then transferring those profits out of the country, in a very brazen way, in order to avoid paying tax on it.

The good news is that the Canada Revenue Agency has started to pursue this matter. That is the way in which it came out publicly in 2013. However, the news that is a little more concerning is that there has been a real tradition of both Conservative and Liberal governments not actually following through on these cases, and instead signing these deals that let the tax cheats off the hook.

Part of the reason that I want to bring the Cameco case forward in this House is to put it on record, to make sure that the Government of Canada is actually going to follow up on this and not let the company get away with this scam.

I am not alone in this. Earlier this week, an organization called Canadians for Tax Fairness presented a petition signed by more than 36,000 people, calling on Cameco to make these tax payments. There are a lot of people who are concerned about this, and finally they have some Saskatchewan voices in Parliament speaking up for them.

I would also like to touch on the provincial side of this whole question. The tax base to which provincial taxes apply is actually defined by the Government of Canada. When you have a company like Cameco shifting taxable profits out of the country, it is not just the federal government that loses out; it is also the Government of Saskatchewan that is no longer able to collect the appropriate taxes on that money.

This is a pressing concern, because the Government of Saskatchewan is running a huge deficit right now. The Government of Saskatchewan really needs that money to maintain important public programs in our province. This is a critical issue. It has just come to light recently that the small “c” conservative government in Saskatchewan refused to present a budget prior to the recent provincial election because they wanted to conceal the fact that they were running this big deficit.

Now we know there is a huge deficit there, and we know how important it would be for the Province of Saskatchewan to be able to collect fair corporate taxes from the profits generated from our province's resources. It is not just about Cameco. This point is applicable to the whole question of offshore tax avoidance.

If the federal government were to do a better job of preventing this tax avoidance and tax evasion, and actually make sure that the correct amount of profit was subject to federal corporate income tax, that would also mean those profits could be subject to provincial corporate income tax.

I think almost all provincial governments are in deficit right now, and one of the best things this Parliament could do to help our provincial governments generate the revenues they need for health care, education, and social services would be to get our tax system in order. It wants to make sure that appropriate reporting is being done, so that not only do we have adequate revenues for the federal government, but so that our provincial counterparts can fund their operations in an appropriate way as well.

We are facing a huge revenue problem in this country. We have tax rates at historic lows, which are not sufficient to fund the important services and necessary infrastructure on which Canadians rely. Why is this happening? Obviously, one of the problems is that the general corporate tax rate has been cut. As my colleague pointed out, that has led to a huge loss of revenue and has not produced investment in our economy.

The other issue is that whatever the tax rate, it is not actually being applied because of these offshore tax schemes, which were aggravated by the recent Conservative government, of which Cameco in Saskatchewan is a particularly egregious example. We need to focus on this problem and come up with concrete solutions to collect appropriate revenues.

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

Madam Speaker, before I begin, I will be splitting my time with the hon. member for Regina—Lewvan.

It is good to be returning to the discussion on Bill C-2. As we all know in the House, this is a bill that received its first reading all the way back on December 9, 2015. We have had quite a session since then, and it is good to be returning to some old familiar ground.

Bill C-2 covers a few different areas. It is a bill that would amend a few different areas of the Income Tax Act. However, I am going to be limiting my comments to two areas in particular. The reason for that is they are the areas that are most relevant to the constituents in Cowichan—Malahat—Langford, and I suspect to constituents of most members of Parliament in the House as well. One area is the changes the bill would make to our tax code, notably to the area that the Liberals define as the middle class; and the second area is the reduction of the TFSA contributions from what the previous Conservative government used to have at $10,000 per year, down to a more reasonable level of $5,500 per year.

As part of my introductory remarks, I also want to speak a bit about my history as a former constituency assistant. I had the honour of working seven years as a constituency assistant. In that time, Canada Revenue Agency casework was one of the top three cases that came across my desk. It was some of the top casework that I got to see. I had a very privileged position, because over seven years I had very privileged access to many members of my constituency and their tax returns. I got to see the full range of their incomes, the very intricate details of their tax returns, and their relationship with the CRA because they essentially signed a contract with our office to give me unimpeded access to their tax returns and their tax history so that I could make some inquiries with the CRA on their behalf and try to solve the problems that they brought to the office.

One of the notable things that I saw during those seven years was the range of incomes. The range of incomes in Cowichan—Malahat—Langford would not be touched by the Liberals' tax measures. Incomes generally fell in a range of about $25,000 per year and maybe up to a high end of $50,000 to $60,000, so that the people at the high end would get some benefit but not much.

The key point I am trying to make here is that most constituents in my riding and I suspect most people across Canada would not receive any benefit from this tax cut, yet the Liberals keep on selling to the Canadian public that this would be a middle-class tax break. That is absolutely false.

I spoke to the bill at second reading back in February, when I was still getting used to making speeches in this hon. House. One of the things that I really loved to bring up during that speech, and I brought it up again during our discussions on Bill C-15, was the fact that the median income in Canada according to Statistics Canada is $31,000 a year. If we take the definition of median, which basically is the number separating the higher half of a data sample from the lower half, we could take $31,000 a year as a reasonable definition of where the middle class is. However, the Liberals' so-called middle-class tax break would not even start to begin giving benefits until people reach an income of $45,000 a year. They would max out when they get above $90,000 and into $100,000 a year.

To make it perfectly clear to everyone watching this debate, every member of Parliament in this chamber who earns $170,000 a year, which is on the public record, would get the maximum tax break of $670 per year, everyone. That is what the Liberals would do. They would give people in very high incomes a tax break, which frankly speaking we do not need. I do not know about everyone else in this chamber, but I was not elected to come to the House to give myself a tax break while the hard-working men and women of my riding get nothing. That was not what I was sent here to do. That is not the middle class that I came here to fight for.

The Liberals will say that it is okay because they are introducing the child benefit. It is a great concept, the child benefit. I will never, as a father of young children and knowing many constituents who have young children, argue against giving more money to the hard-working men and women of our country to help them raise their children.

However, I need to point out some evidence for everyone who is watching this debate. The Liberals' plan for the Canada child benefit will provide a maximum annual benefit of up to $6,400 per child under the age of six. Compare that with the average cost of child care in B.C., which is $14,000 per year. It is a drop in the bucket.

When I talk to families about the difficulties of child care, they say that more money would help but that what is really bugging them is the lack of affordable spaces and the lack of spaces overall. Furthermore, a lot of parents come up to me and say that their spouse works and they are a stay-at-home parent, and what would really get their family ahead is if they could actually hold two jobs. They cannot do that because the costs of child care are too high. They literally cannot afford to go and get a job.

That is what I hear. That is what I heard during the election. That is what I heard during seven years of working with constituents, right where the rubber meets the road, right at the constituency office.

I do not want any member of Parliament to tell me I do not know what I am speaking about, because I come here with evidence. I come here with testimony. I come here with seven years of experience of working with families. It is a shame that this Parliament is not doing anything to expand child care spaces in this country.

Furthermore, if we really wanted to give lower-income Canadians a leg up, we would pay attention to the wages they are receiving, and we would take this opportunity to show some leadership and institute a federally regulated minimum wage of $15 an hour.

A lot of people will say that is only going to affect a small number of jobs. That does not matter. It is about showing federal leadership. It is about having the House of Commons lead the way so that we put ourselves in the morally correct position of saying that we did it first and we expect the provinces to follow. I do not know how families make it on $11-an-hour wages. I simply do not. It is a miracle that they get by in the first place on those low wages.

I have spent a lot of time in my speech speaking about that particular tax change. It is a very passionate subject for me, as members can see. I do want to devote a little time on the TFSA, because that is one change in Bill C-2 that I agree with.

The Conservative government's plans in the previous Parliament to raise the limit to $10,000 a year would have been a huge cost to our treasury in later years. Furthermore, I do not know many families who could max out at $5,500 per year, let alone $10,000. When a family is earning a median income of $31,000 a year, how on Earth are they able to save $10,000 per year extra, to sock away? It is simply not possible.

That is a policy that benefits the top income earners in this country. Leaving the limit at $5,500 is perfectly reasonable, and it is something I can certainly support.

The costs with the TFSA increase to $10,000 a year would have risen to $132 billion by the year 2080. Conservatives like to portray themselves as the party of low taxes, and they like to really use the phrase “tax and spend”. The point I am trying to make is that if we are taking that much money out of federal revenue by those later years, that in itself is a tax on the programs that we use to support this society, to help low-income people get through.

If we are taking that kind of revenue out of the federal revenue stream, we are going to have to make cuts to federal programs. As much as we do not like to pay taxes, they are a part of living in our society and they are a part of building our infrastructure and building our supporting programs.

I will conclude by saying that we have been proposing some truly progressive things that could have made a real difference to low-income earners. I am sad to see that Bill C-2 did not live up to those standards and for that reason I will be voting against the bill at third reading.

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

Madam Speaker, it is an honour to rise in this chamber on behalf of the constituents of Central Okanagan—Similkameen—Nicola.

I appreciate that we are at the eve of our rise, although it is neither your job, Madam Speaker, nor mine to say when that is. However, I want to thank every member I have had the opportunity to work with in this chamber during this opening round before we rise for the summer and thank the pages and the table staff for their commitment to this country.

I am here to speak to Bill C-2. It is an important bill, because it lays out the philosophy of the current government. The Liberals believe that raising taxes on the highest bracket will benefit this country. It is perfectly all right for them to contend that. They won the election. However, it is also perfectly all right for us, as members of Her Majesty's opposition, and all opposition parties, and even their backbench, to question the government.

Oftentimes in our system, members of Parliament are more relegated to being an approval body in this chamber and are not necessarily directing policy. However, I think one of the strengths of our system is when governments of any stripe take the policies of their predecessors, evaluate them, and continue them, if they are good for Canada.

In the same spirit, I would also suggest that we must remember that a broken clock can be right twice a day, but once in Quebec, I believe, because they go by international time. However, even in opposition, we may strike on an idea whose time may have come. I would hope that the government and members of the governing party will listen and take that forward. This country is great because of continued work toward policies that support all Canadians.

With that in mind, I will raise a few points about what I think could be improved and what the government, or ministers themselves as they work with their deputies, maybe not through this legislation but through their deliberations on future legislation, might take into account.

I have had the great opportunity to work with some members of the finance committee by subbing in from time to time. It is a very good group. The members seem to have a good understanding of the bills before them, and they seem to get along quite well.

One of the interesting concepts we heard about in committee was from Dr. Jack Mintz. Dr. Mintz raised a concern that taxing at the highest bracket would put pressure on some people of higher means, who may say that they are going to move to a different province or offshore to another country. When we lose those entrepreneurs, because 60% of small business owners are in that bracket, we lose collectively. We lose their innovation, and sometimes their capital, because they may begin investing in other countries.

The current government has said that it will use evidenced-based decision-making. Evidence means that there is theoretical evidence provided through academia, governmental reports, or think-tank studies or through actually collecting the data and creating an inventory, so to speak, on whether a policy is in the long-term interest of this great country.

In regard to Bill C-2, Dr. Mintz made the suggestion that the Canada Revenue Agency has the ability to track whether someone in this higher income bracket, who the Liberals will be taxing at a higher rate, moves or migrates to other lower-cost jurisdictions to operate, such as my province of British Columbia.

I am sure that Premier Christy Clark would love me to take a moment to sell all the high points of locating to British Columbia to entrepreneurs, but I will not do that. I am not going to speak to the parochial interests of my home province. I refuse to. However, what I will say is that there could be interprovincial or offshore migration.

If CRA was to collect the information, we might be able to get a tale of the tape.

I realize that people move for all sorts of reasons, but economists will tell us that incentives matter and people do make decisions, particularly in the higher income brackets, to find places where they can maximize their capital and where they feel welcome.

As a starting point, this is something the government can do on behalf of all Canadians to ensure that its policies are to the benefit of the long-term interests of this great country. I hope the government will give that full consideration.

I will also step back and tell the House about a personal experience. I love this chamber. I love this country. However, one of the things about our politics that we could change would be to stop judging an idea because of the messenger. If a former minister of the previous government gets up and makes a suggestion based on his or her experience, or someone from some think tank who people believe has some sort of ideological background says that this is a good policy for Canada, we should listen and evaluate it. We should not simply dismiss it because we disagree with some sort of vaguely placed ideological position. Let us start judging policies by their merits, not by the people who espouse them.

There are many things this government is going to be looking at. Trade, for example, is going to be an extremely difficult file for the Liberals, because Canadians have different views. Ultimately, the government is going to have to look at the evidence, look at how our economy has grown over the past 30 years by becoming a free trading nation, and then evaluate how that helps all of us.

We all have a different reaction when we suffer a loss, whether it be an electoral loss or a personal loss. We face denial, then anger, sadness, and acceptance. I am getting close to the acceptance stage on many of the government's policies, but members on the other side continue to get up and criticize the opposition for having a different view. We need to embrace the views, respect the views, and not cut each other down.

That being said, I will go to the subject of tax-free savings accounts. My riding is made up of an older demographic. Broc Braconnier is a veteran and one of the volunteers on a volunteer tax group. This is a group of individuals that helps seniors, usually low-income seniors at risk, file their tax returns so they can get the benefits they so desperately need. He mentioned to me that the tax-free savings account offered seniors two important steps. First, if they sold a home and downsized, a lot of the money from the sale of that home could go into a tax-free savings account if it had not been used before. They could also draw income from that account at an accelerated rate, which could make them feel that they had the nest egg they worked for. The same applies to the RRIFs.

I would just say to members on the other side that it is perfectly legitimate for us to raise concerns about certain policies. I do not mind being criticized, but let us talk about the ideas, and let us make sure that we are not skating around the area we like or the area we dislike. Policies are not so simple that they can be dismissed in one statement in this place.

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

Madam Speaker, I am honoured to stand to speak to Bill C-2 once again, and about some of the implications it will have when the bill moves forward.

It is great that we are in the House today debating the bill, because there are many things Canadians need to know about it, and that we as the official opposition have to bring to the attention of the government.

Today I want to start with the tax-free savings account. The current Liberal government has proposed a reduction in the maximum annual amounts Canadians can invest in these accounts. We know this is a tool that has been working for Canadians. Unfortunately, the government does not, on the false pretence that doubling the tax-free savings account only benefits the highest-earning Canadians, rather than just the middle class.

As we talk about this today, we are looking at all of these proposed middle-class tax hikes that we will be seeing for the middle class and for all Canadians.

Madam Speaker, I will be splitting my time with the member for Central Okanagan—Similkameen—Nicola. We probably know him as the member of Parliament for the “free the beer” campaign, another great campaign we have done.

I am here to talk about the tax-free savings account and the proposal of the Minister of Finance to move forward with the CPP contributions that the government will be inflicting on all Canadians, especially future generations.

The Liberals proposed middle-class tax cuts, reducing it to 20.5%. It really does sound good when they say they are cutting taxes for the middle class. However, they are forgetting to tell Canadians about all the other things they are going to do. We heard the Minister of Environment in the House this week talking about the carbon tax. We have to recognize that they are going to say they will be reducing taxes for the middle class in order to create more opportunities, provide better savings, and more opportunities for families, but they are not talking about all of these other things they are also proposing.

I am a resident of Ontario. We are already going to see gas prices go up 4¢ a litre, because it was proposed by the Ontario Liberal government. Now we see our federal Liberal government also proposing a carbon tax, a CPP tax, and all these other things. Therefore, although they talk about a middle-class tax bracket at 20.5%, they are not letting all Canadians know that they are actually taxing us in other forms. It really is very unfortunate that they are saying one thing but doing another.

We are not decreasing the taxes when we have backdoor amendments changing the current tax system. For those people living in Ontario, where we see horrible job creation and much unemployment, much like Alberta with the non-support in our energy sector, not only are Canadians not going to have jobs, but they will be paying more, even at the gas pumps. They are going to be paying more in the grocery stores, because we see governments taxing Canadians, whether they are in Ontario, or anywhere in Canada. I have huge concerns about this.

We talked about the tax-fee savings account, which is a vehicle for Canadians to save money. Our Conservative government increased it because we had Canadians saying this was a great vehicle for saving money. By introducing a new threshold for what they could save it gave them the opportunity. Many times, we will hear the government say people are not maximizing it. Now, what it is proposing is “nannyfying” what we are doing in Canada by introducing Canada pension plan increases.

We have a vehicle that currently works, the tax-free savings account, which allows Canadians to save responsibly, and many Canadians are doing so. However, now the Minister of Finance will be touring later on this month, trying to get all of the provinces on board to increase our CPP contributions. We have to recognize that that is not only a vehicle for savings. At the same time, it is a huge burden on small businesses. Those small businesses were looking forward to a decrease in their small business tax. However, the government will not be fulfilling that promise either.

Therefore, what the government will be doing is taking the tax-free savings accounts, which allow Canadians to make the choice on how they want to save their money, and instead introducing a new tax on Canadians and employers through the Canada pension plan, as a nanny state tax.

What is this going to do? We know that when students come out of university, they have high debts. It is something that we should be aware of as Canadians. We are asking our students to go out there and get the proper education they need so that they can make sure they have a brilliant future. They come out of those schools with debt and when they get their first job, not only are they going to have to contribute to the CPP but they will have to double those contributions. We are looking at an additional $3,000 out of their pockets to be put into the CPP.

As a parent, I have no problem because I believe that it is very important for people to save for their future. However, at the same time, what we are doing is having them save for retirement when they can take that money and put it into their student debt, put it into a tax-free savings account, or into the first-time homebuyers plan under the RRSPs and put that money toward their first home. What we have now done is taken away all of those opportunities for Canadians and, as a government, we are saying, “You must put it into the Canada pension plan.”

Although I think saving for retirement is very important, we have to recognize that this is the Canada pension plan. It does not help our current seniors, those seniors who we say are the most vulnerable. It will just be an additional tax. For those students who have come out of Carleton University with these enormous debts, we will see another tax on them. The opportunity for them to save their own money for what they choose is being removed by the current government. These are things that I am extremely concerned with.

The government has talked many times about deficit spending in its campaign promises. I want to talk about the middle class. The middle class we are talking about today will be that group of people, these young families who are currently the middle class, who will wind up with a huge debt. Whether it is the debt from the deficit or from the new CPP contributions or the debt they will have because we will be taking this carbon tax money, will we be using it properly? Those are some huge concerns I have.

I am very much an environmentally friendly person. However, I believe in the stewardship of our land. I think we need to ensure that we recognize that if we are taxing people, this money will actually reduce costs or, as the Liberals are saying, the man-made climate change, or will we just be taking that money and putting it into general revenues and pet projects. Unfortunately, I see the latter, the pet projects, truly being the focus of this climate change plan.

We have this new carbon tax that has now been introduced in the province of Ontario. We will see one at the federal level as well. Average Canadians, the people who will have to pay for this huge deficit in 2016, this line of credit or the 2016 budget, will just see huge debts that they will have to pay. That is a very large concern for me. As I said, I am parent and I have three children currently in post-secondary education. I recognize the costs of education. I am very fortunate to be able to assist with some of those expenses. Not all families can do that. What we have done is once again crippled the middle class by introducing so many different factors in this.

Going back to the tax-free savings account, this is a vehicle, as we have said, and as the government has said many times, to maximize contributions. This party on this side, the official opposition, sese this is an excellent vehicle for people to save money. It gives them the opportunity to put in maximum contributions. Instead, we are rolling that back. We have different institutions and different organizations throughout Canada saying, “We appreciate that increase and we think that's what needs to be done.” Instead, we see a government that is planning on taxing Canadians—tax, tax, tax, and spend, spend, spend. As we go through this, the bottom line is that we are trying to tax ourselves to prosperity. That is not what we should do. We are taking all of this money from hard-working Canadians and we will be taxing them more and more.

Unfortunately, now that the Liberal government has come into office after it had its great campaign, all it is doing is crippling our middle class and our seniors, and it has only short-term plans. I hope that when the Liberals look at this they will recognize that we need to do better, and we can do better. I hope that they look at and review all of the documents that they have put forward.

The House resumed from May 19, consideration of the motion that Bill C-2, An Act to amend the Income Tax Act, be read the third time and passed.

Business of the House

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

Mr. Speaker, I want to thank my colleague from Regina—Qu'Appelle.

This afternoon, we are continuing third reading consideration of Bill C-6 on citizenship. Tomorrow, we are going to debate Bill C-2, which would amend the Income Tax Act.

If colleagues would not mind, I would prefer to dispense with the statement for next week's business if that is okay. What I will do is join my colleague from Regina—Qu'Appelle and associate myself with the very positive and appropriate comments he made.

Mr. Speaker, for you and me and many of our colleagues, the past few months have certainly been a learning experience. This is the first time in your long parliamentary career that you have served in this role that is so essential to democracy. On behalf of my Liberal colleagues, I want to say that we think you have done an excellent job, and we thank you for your service and for taking on the role of Speaker.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Just out of curiosity, we had asked you to do a study on the fiscal impact, in order to find out who would benefit from lowering the second tax bracket in Bill C-2.

You have also done studies, including for the Senate, to determine the impact of the new Canada child benefit, and the results have been interesting.

The government tends to combine everything together. It says that everyone will benefit from it, meaning that 90% of people will benefit from tax measures and that nine million Canadians will benefit from tax cuts.

According to the scenarios explored by the Senate, those measures are appealing because they will benefit families with children, but there is no study on the impact of the Canada child benefit on families without children. Has there been a request for such a study? In your view, would it be useful to study the overall impact of the tax measures, the combined tax cuts, the Canada child benefit and the tax cut for SMEs? You have also studied the elimination of that tax cut.

The government said that, since it granted a tax cut to the middle class, SMEs don't need an additional tax cut. Have you studied the impact of those three measures combined and would it be useful to do so?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

We are opposed to the idea of income splitting. I am not referring to seniors, of course, but to what the Conservatives passed. We simply wanted to publicly express our disappointment with the fact that the government is replacing this measure by another tax-reduction measure, a pseudo-reduction for the middle class whose only effect will be to move money towards the 30% with the highest income and to ignore 70% of Canadians.

We are going to vote in favour of this clause because it does away with income splitting, not for seniors, but for the rest of the population, for couples with children. However, we would have preferred the government to listen more to what we were telling it about reducing taxes for the middle class in Bill C-2.

Criminal Code

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

Mr. Speaker, back in 2015, when this came out, a panel was set up by the former justice minister. However, I look at the work we have done today, and we can talk about these timelines. Let us be honest, this week we did Bill C-2, Bill C-6, Bill C-10, and Bill C-11. We had all of these things shifted off of the Order Paper.

What has happened here is this. Although it is a very important bill, unfortunately, when it came to the agenda of what we were supposed to be discussing and what we were discussing, a lot of political games were being played at that time. This took away the rights of the opposition members to debate this. We can talk about that. However, let us be honest about what happened this week. We lost hours of crucial debate because of the actions of the government.

Income Tax Act

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

Mr. Speaker, I can assure the member that I was not laughing at him. However, it is with pride that I stand today to comment on Bill C-2, in a special shirt with a unique-looking tie in celebration of Ukraine heritage.

The fact is that this is an implementation bill that ultimately will see thousands, in fact, millions of Canadians get a tax cut. I say it in that fashion, because the Conservatives who I have known over the years, generally speaking, vote in favour of tax cuts.

The types of tax cuts we are giving are going to Canada's middle class, such as teachers, firefighters, factory workers, and health care providers. They are part of Canada's hard-working middle class, and they would be getting a substantial tax cut, hundreds of millions of dollars in tax cuts.

Could the member explain to all those middle-class workers why the Conservative Party is voting against giving them a tax break? The member should recognize that the Conservatives are also voting against giving a special tax increase to those who make in excess of $200,000. This bill would ensure more income equality. Why would he vote against it?

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I appreciate the opportunity to speak to this important bill. I will say at the outset that it is good to be back talking about the business of the nation again. As much as the conversation that happened this morning needed to happen, it is very good to be back to the things that Canadians are most concerned about, which is the economy, jobs, their well-being and that of society as a whole.

There are some significant concerns about the bill that we need to draw particular attention to. We in the opposition have been doing that over the course of this debate, and we will continue to do that. We will continue to do our job, which is to highlight problems with government legislation, suggest improvements, and to do so in a fair-minded and constructive way.

Just by way of some review, the legislation that is before us would make two different changes to our tax system.

The first change is that it would make a modest reduction to some middle-income earners' taxes while introducing a tax increase for those at the high end. However, this change would not be revenue neutral. Rather, it would significantly add to the deficit, and over a number of years, significantly add to the debt. That is one of the changes.

The second change that the legislation would make is that it would do away with the higher cap on tax-free savings accounts that was implemented by our previous government and did exist. There was a limited opportunity for Canadians to save at that higher level. However, it would now cut back on the amount that Canadians can save tax free.

I want to start my remarks here by talking about one specific aspect of this issue, and that is the issue of equality. Members on all sides of the House are concerned with equality. They want to ensure that everybody has a shot. They want to ensure that everybody in Canada has a similar shot at doing well. That is really a principle that we all come at perhaps from slightly different perspectives and slightly different emphases.

On its face, it seems that the bill was advanced with an eye to equality. However, if we dig into the details, I think there are some serious problems from an equality perspective in terms of the actual impact that the bill would have. I would describe it as maybe a first-year undergraduate version of equality. It may be well-intentioned but it would not actually have the desired impact.

Let me start by saying that for me the most important measure of equality is something called “intergenerational earnings elasticity”. This is a measure of the likelihood that a person will perform at the same economic level as their parents relative to the rest of society; in other words, it measures movement between different income quintiles. Therefore, if I come from a high-income family and was almost certainly going to have a high-income family myself, that would be bad from an equality perspective using this metric of intergenerational earnings elasticity. This does not mean that we want people who are well off now to do worse. Rather, it means that, relative to each other, we want to have a society where people who had lower incomes can move ahead of others, and vice versa, a society where opportunity is more fluid and not fundamentally shaped by who our parents are or where they came from.

This information is tracked, and there was a report that came out in 2012 that looked at intergenerational earnings elasticity. What was interesting to me, and made me very proud as a Canadian, was that we performed particularly well. As I recall, we were fourth place in the world overall. It is interesting that we actually performed better than stereotypically more left-wing countries, and we performed better than stereotypically more right-wing countries. Where we were at, and likely where we have been over the course of our history, was in a relative sweet spot by providing not only necessary social programs but also allowing a healthy level of free enterprise that allows for economic growth and allows people to pursue economic opportunities that perhaps their parents did not have. That is one measure, intergenerational earnings elasticity. It is a measure on which we have historically done very well.

The other question might be the performance of the middle class. I have quoted this before. This is a quote from the former secretary of state, now presidential candidate, Hillary Clinton, when talking about the Canadian middle class. She said:

Canadian middle class incomes are now higher than in the United States. They are working fewer hours for more pay, enjoying a stronger safety net, living longer on average, and facing less income inequality.

There are two ways of measuring the performance of the middle class. Well, there are more than two, but these are two significant ones: looking at median income and median net worth. Between 1999 and 2012, the median net worth of Canadian families rose by 78%. That translated to more than a 50% growth in net worth for every income quintile, except the lowest, which still grew but did not grow as much. Therefore, when it comes to median net worth, we are doing very well.

Median, by the way, is typically used as a measure of the middle class performance. It is better than an average measure, because an average metric can be skewed upward by groups who are doing particularly well, but median gets us closer to looking at those actually in the middle and how they are doing.

There was a study that came out in The New York Times in 2014 that showed real inflation-adjusted median income—I am talking about median income now—went up by more than 20% since the beginning of the last decade. By the way, at the same time, median income was roughly stagnant in the United States.

When it comes to intergenerational earnings elasticity and the performance of the middle class, Canada historically has done and is doing very well. That is important by way of context, because it seems that some members in the House have this revolutionary spirit when it comes to our economy—that we need to upend the way our economy functions now as it just is not working—but if we look at any credible measure of equality or middle-class performance, Canada is in a strong position. That does not mean we cannot do better, but we should recognize where we are and recognize the risks of dramatic or revolutionary changes in our fiscal policy.

I want to say, on the equality front, that at the same time as being very much concerned about equality, I and most of us on this side of the House would strongly reject the politics of envy. We would reject the idea that we should in some way regret the success of those who are doing well. The focus of public policy should be on helping the poor and the middle class. We do not need to focus on improving the lot of those who are well off, but we should not regret the fact that there are some people doing well.

Those people are important members of our community as well, and very often those who are well off are contributing to the community in ways that they are able to do, in particular, because of their wealth or position. That is an important point about equality. It is not about trying to level down those at the top. Rather, it is trying to build up those who are in the middle and those who are particularly struggling. Those are some underlying equality principles, at least as I understand them.

Let us, then, talk about specific measures in Bill C-2 and how they would impact equality. First, we know that this bill would provide a tax cut that would not impact those who are worse off. The tax cut specifically targets those who are making between $45,282 and $90,563. It would not have any impact on those who are making less than $45,000 a year, and that could, by the way, be families with a family income of $70,000 or $80,000 a year, if the earnings are shared by a couple. There would be absolutely no impact of this tax reduction.

Canadians should know that and reflect on the fact that this has a somewhat strange view of middle class. To get the benefit of the middle-class tax cut, one has to already be doing reasonably well. This certainly does not do much for those who, in the Prime Minister's oft-repeated phrase, are seeking to join the middle class.

However, more than that, this bill would lower the limit for putting money into tax-free saving accounts. The data suggests that many people who have low and middle incomes make very good use of tax-free saving accounts.

More than half of those who max out tax-free savings accounts are making less than $60,000 a year, so reducing the power of this vehicle is the only thing in the bill that impacts those who are making less than $45,000 a year, who arguably need the help the most.

This is a rather strange concept of equality, and although taxpayers get a benefit when they start to make $45,000 year, we know the way the tax system works here that they benefit from this change to a greater extent the more of that income tax bracket they cover. Therefore, people who are making just over $90,000 like this policy the most. They are going to benefit the most. A family making $180,000 is really in that sweet spot for earning the tax cut. Again, there are newer, higher taxes when they hit $200,000. However, a family income approaching $400,000 could actually be significantly to the positive because of these tax changes. Therefore, that is a bit of a strange approach if the objective is equality.

The impact on people making less than $45,000 a year with this tax change would be they would be losing the opportunity to invest in a tax-free savings account. They would be losing the opportunity to save in the same way, to the same degree, for their future.

One other point I want to make about tax-free savings accounts is that there are specific things within them that are pro-equality. The impact of TFSAs is greater for those who are lower income. This is because of the relative value of an investment in a tax-free savings account versus an investment in an RRSP. These are different savings vehicles. Canadians who are doing financial planning will potentially choose between putting money in a tax-free savings account or in an RRSP. The difference is that if they put their money in an RRSP they get a tax deduction at the beginning, but then they pay tax on it when it is converted to a RRIF and withdrawn from the RRIF in the future. On a tax-free savings account they have to pay tax on that money up front, but then they can accumulate interest tax free.

They are different kinds of vehicles, and I would obviously encourage Canadians to save their money in one or both of these vehicles. However, the greatest value of an RRSP is for those who can achieve a significant tax differential between the taxes they would have paid on that money. They are not paying tax on it during their working years, but then they do pay tax in the future. Therefore, if they are paying income tax at a very high rate and they can reduce that amount during their working life, but then during their retired years they can draw on that and pay a much lower rate of tax, that is really where the greatest value is in an RRSP.

On the other hand, Canadians who are making more modest incomes, who are not in the higher tax brackets, are more likely to opt for the use of the tax-free savings accounts because they do not get the same benefit from that differential. This explains why Canadians of modest and lower incomes clearly use tax-free savings accounts at very significant levels.

The argument has been used on the other side that it is only well-off people who have $10,000 they can save. I am not convinced that is true. There are many modest- and low-income Canadians who make significant sacrifices, not necessarily because they have to this year, but because they believe it is important for them to put money aside for a rainy day or for opportunities for themselves and their children in the future. There are many Canadians who do that, and that is often a very good choice to make.

With regard to the specific point about the difference between the tax treatment of TFSAs and RRSPs, if very wealthy Canadians have $10,000 sitting around, they are probably more likely to put it into an RRSP than in a TFSA. The point is that, as much as well-off people have more money to save, TFSAs are a specific vehicle that is specifically providing a greater relative advantage to those who are of modest and lower income. Therefore, it is important to understand that TFSAs are in many ways inherently more of an equal or pro-equality type of saving vehicle.

As we talk about equality, I think it is important to say, as well, that inherently debt is regressive; that is, accumulating deficits and debt is inherently a measure that is not conducive to income equality because it assigns costs to future generations, to children, people who do not have economic means, at least not right now. It says to the next generation, “Here is more money that you have to spend, in addition to dealing with your needs, because we expect you to be working hard to take care of our needs”. It assigns the cost of present needs to future generations. That, obviously, is not conducive to equality.

Telling my three-year-old daughter, Gianna, that she has to pay for social programs that I want to use today is not something that those who are genuinely seeking equality should be doing. We should be paying for present needs with present dollars.

It is worth underlining, in terms of the measures of Bill C-2, that because the tax changes do not balance out, this is going to cost a significant amount of money over the next few years. We are going to be spending billions of dollars simply because of the poorly thought-out hole in the government's budget. It is telling that the Liberals said, during the election campaign, that it would be revenue neutral. They told Canadians that their tax changes would be revenue neutral and, in fact, they were not.

Maybe this is because they were not being truthful; but maybe it is that they just did not know, because they got the numbers wrong. I think either of those is pretty concerning. This is a problem. I think it is a problem that the government should have remedied, and could still remedy.

I think it is very clear, looking at the bill, that there are significant equality problems with it.

Measures that would have been more pro-equality would have been to look for ways to lower taxes for those who are at the bottom.

I have to say that this is exactly what the previous Conservative government did. We lowered the GST from 7% to 6% to 5%. That is the tax that everybody pays. That is the tax that all Canadians pay. We also lowered the lowest marginal tax rate. That was one of the important tax changes we made. We made necessary EI reforms, which would have allowed reductions to EI premiums over the long term. It is no coincidence that all of these taxes that we sought to impact were taxes that had the biggest impact on lower-income Canadians. Cutting the GST, cutting the lowest marginal tax rate, and undertaking those necessary steps that opened the door for lower EI premiums were necessary measures to help those, in particular, who needed the help the most.

If we then compare that with what the government would do in Bill C-2, there is a clear difference. When I sometimes hear members opposite, even the Prime Minister, say that the previous government was helping those who are better off, it is always telling that they never mention a specific tax measure. I have never heard the Prime Minister cite specific tax measures or tax changes we made, in the context of that claim. That is because all of the tax changes we made were really with an eye to those on the low- and middle-income end of things.

Of course, we did cut business taxes, as well. Those are the kinds of measures that help job creation. They help low-income Canadians. They help unemployed Canadians get jobs.

I think it is important, when we think about social equality, to dig deeper into it than just the slogan. It is important to look at how we are performing as a country, first, to look at measures like the performance of our middle class, to look at things like intergenerational earnings elasticity, and then say, “This is where we are now. Now, how do we improve our performance?”

Bill C-2 would not improve our performance. By getting rid of TFSAs and by denying any benefit of these tax changes for those who are less well off, the bill is not pro-equality. We could do better. There are better measures that we could be proposing, and I would hope to see the government be willing to make some of those changes.

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

Mr. Speaker, it is nice to be debating Bill C-2 after what has gone on this week. I do not think debate on Bill C-2 is going to make the highlight reel on CPAC; let us not kid ourselves.

I appreciate the comments the member made and I understand the position he is coming from. For us in the NDP, we have had a problem with what the Liberal definition of “middle class” is. When we look at the median income in Canada being $31,000 a year and median is very much defined as the middle point in a set of numbers, so it is about halfway. A tax cut in that range is not giving people any kind of relief. The member mentioned that we have many people in Canada who are suffering and I think he would agree with me that the gap in incomes is widening. People on the higher end of the spectrum are getting more and people on the lower end are getting less.

Economists are pointing out that couples with a combined income of $250,000 a year would gain $1,100 in tax cuts, while a couple with a combined income of $75,000 a year, which is pretty average, would gain zero to $4. I would like the member's comments on the fairness of that.