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

[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.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, the plan for those with over $200,000 in income was supposed to be to raise votes not to raise revenue. Does the hon. member agree with that?

[Erin Weir, NDP, Regina—Lewvan, SK]

Madam Speaker, as I said in my speech, I do believe that this modest tax increase for the very wealthiest Canadians is a good and desirable policy. It will raise some needed revenue, so I certainly think it makes sense.

Where I would agree with the member for Edmonton Manning is that it will not actually raise very much revenue. In fact, it will raise significantly less money than the Liberal government is going to give away through this so-called middle-class tax cut that does not actually go to the middle class.

Therefore, if we are serious about raising revenue, we need to look at the corporate side of the ledger and start reversing corporate tax cuts, as well as closing loopholes and dealing with these offshore tax havens.

[Kennedy Stewart, NDP, Burnaby South, BC]

Madam Speaker, I would like to thank my colleague for an excellent speech and, of course, his deep knowledge in this area of tax and revenue.

I wonder if the member could expand on his comments concerning the so-called middle-class tax cut. I wonder if he could expand on why the title does not actually match the measures that are being put forward by the government.

[Erin Weir, NDP, Regina—Lewvan, SK]

Madam Speaker, on the Liberal side of the House, I think there might have been some confusion between a middle-class tax cut and the middle tax bracket.

What the government has done is to cut the middle bracket, which actually only applies to incomes in excess of $45,000, and it goes all the way up to incomes of $90,000. Therefore, to receive the maximum benefit from this supposed middle-class tax cut, one would need to be earning an income of more than $90,000 a year, which I believe most Canadians would consider to be certainly the upper middle class. This is the reason I do not think that the title “middle-class tax cut” is very accurate.

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

Madam Speaker, I totally disagree with the member. This middle-class tax cut is going to provide tax relief to over nine million Canadians, hundreds of millions of dollars. We are talking about farmers, teachers, and all sorts of professions.

Why does the member and the NDP choose to disagree in allowing for Canada's middle class, those teachers, manufacturing workers, that hard-working middle class, to have a tax break?

[The Assistant Deputy Speaker, Carol Hughes]

A very brief answer from the member for Regina—Lewvan. However, the member will still have about a minute and a half the next time he speaks on this.

[Erin Weir, NDP, Regina—Lewvan, SK]

Madam Speaker, if nine million Canadians are getting some benefit from the tax change, that means that 20-odd million Canadians are getting no benefit at all. Of course, many of those nine million Canadians are not receiving much benefit.

I look forward to debating this matter again after question period.

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.

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

Mr. Speaker, I believe that there were one and a half minutes left in questions and comments.

[The Assistant Deputy Speaker, Anthony Rota]

I have just been informed that technically, yes, that is correct. Normally it is at the discretion of the Speaker, but since it was brought up, we do not want to rob anyone of the opportunity to ask or answer a question.

In a minute and 30 seconds, if the hon. member for Sherwood Park—Fort Saskatchewan wants to ask a very brief question, I am sure he will get a very brief answer from the member for Regina—Lewvan.

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

Mr. Speaker, I always so enjoy asking questions of my friend from Regina—Lewvan.

We heard his perspective on economic policy, but I would encourage him to look not just at economic theory but at economic history. He is from Saskatchewan, and I am from Alberta. I think both of us suffer from provincial government envy, to some extent. For decades, under NDP governments in Saskatchewan that pursued policies that he advocates of bigger government and bigger spending, capital, and more importantly, people left Saskatchewan for Alberta, but now, under the Wall government, the exodus of young people from Saskatchewan has stopped.

Does the member not have to agree that the policies of free enterprise that are now being pursued in Saskatchewan are better and have led to more young people staying in Saskatchewan and being able to get employment there?

[Erin Weir, NDP, Regina—Lewvan, SK]

No, Mr. Speaker, I do not have to agree. In fact, I would note that there are many other differences between the two provinces.

For example, the Canadian oil industry really started out in Saskatchewan. It was the discovery of the huge reserve of oil at Leduc in 1947 that caused that industry to shift to Alberta. That was not about government policy; that was about geology.

Also, we see now that with the downturn in commodity prices, both Alberta and Saskatchewan have been hit with layoffs and cuts in investment, and the right-wing policies at the provincial level in Saskatchewan certainly have not saved our province.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Speaker, it is my pleasure to speak to this particular bill one more time as this session of Parliament winds down.

Certainly we have had extensive debate on this particular bill. We have had committee of the whole, and we even had a session the other night with one of our colleagues presenting what I thought was one of the better speeches of this particular session, on If I Had a Million Dollars.

I will be a long way from being as entertaining as my colleague from Red Deer—Lacombe, but it is probably helpful to put on the record a number of things this budget would do, and more importantly, what this budget would not do.

First, we have to go back to the election of October 2015. Leading up to that election, our current Prime Minister, who was the Liberal leader at that time, was promising Canadians that we were going to go into debt just a bit, by about $10 billion, to pay for infrastructure, which Canada needs. If this budget had in any way reflected that we were going to go into deficit to spend on infrastructure significantly, I believe that there would have been wider acceptance of this budget. However, to date, what we have seen in infrastructure spending is only about $1 million on the office of the Minister of Infrastructure and Communities.

If what we are going to do with this budget is continue to spend money, and when we create jobs they will be public-sector jobs, that is hardly going to be a budget that will encourage growth in our economy.

As a member of Parliament from a province that has seen incredible growth, growth that is significantly reduced today, I can say that it is not government that makes things happen, and it is not government that creates jobs. It is the private sector. It is unfortunate that in this budget, the current government has taken it upon itself to feel as though it can take Canadians into debt for the next four years, at least, to the tune of about $150 billion, to try to create jobs.

Clearly, it would be my view, and I believe that of most of my colleagues in my caucus, that if we were to work this hard creating a tax structure that created jobs, rather than the government trying to create those jobs, we would be far better off at the end of the four-year mandate. However, it is the current government that will have to answer for that at the end of four years.

Quite honestly, while I do not support this budget in any manner, I believe that it is this kind of budgeting that will ensure that after the next election, we will be rid of the current government and we will have a Conservative government back that will allow the private sector to create jobs.

I want to take a few minutes to look at what this budget would and would not do. As I said, it is a budget that we were promised was going to rebuild Canada. As I say, besides the office of the Minister of Infrastructure and Communities, we have not seen an awful lot of rebuilding in Canada yet.

Again, we have some promises out there. We have heard a lot of good talk. However, there are a lot of needs. When it comes to infrastructure and infrastructure spending, one of the things I am disappointed in is that the current government seems to be again shifting away from the P3 model. In fact, it is probably not using it at all. It is having public servants in Ottawa and elsewhere across the country deciding how best to spend these infrastructure dollars.

Let us be very clear that while this particular budget would take Canadians $30 billion into deficit in this year alone, only $10 billion would be spent on infrastructure over the next two years.

This budget has significantly increased public spending on programs. We have seen it in a number of areas. I am not even going to start to list them, because there are so many. It will create jobs, more public sector jobs, more people who will be working for government. That is not going to create economic growth.

I also want to talk a little about the so-called tax cut the Liberals have in this particular budget. We have heard the parliamentary secretary stand in his place in this Parliament on at least three or four dozen occasions to talk about this middle-income tax cut that is so significant to Canadians. This is how significant it is. It is $1 a day for working Canadians.

I guess the member for Winnipeg North and the parliamentary secretary, because they fall into that middle-income category, feel as though the members of this Parliament should have a tax cut while low-income earners should not get anything, and high-income earners should pay that $1 a day so that the member for Winnipeg North and the parliamentary secretary can have their coffee paid for every morning by the taxpayers of this country.

That tax cut was supposed to be revenue neutral. It took about 24 hours to change that. When the government finally introduced that objective in a motion in this House in December, we found out that the middle-income tax cut that was going to give Canadians $1 a day was going to cost all Canadian taxpayers $1 billion a year. That is hardly revenue neutral.

If we are going to start having tax cuts, they have to be meaningful tax cuts. This so-called middle-income tax cut is hardly meaningful.

At the same time, the government also took away from middle-income Canadians the ability to save in a significantly enhanced tax-free savings account. This is typical of the Liberals' policies: take on one hand, give back with the other, and then turn around and take what they gave back. The net difference is that taxpayers have less in their pockets than they would have had under a Conservative government.

I want to talk a little about retirement and about future plans the government has. Tax-free savings accounts are a way Canadians can save for retirement. What we have now is a Liberal government that has taken away that ability to save via tax-free savings accounts. We also have a Liberal government that is going to be meeting with the provinces on Monday. Let me make this very clear. It is meeting with a whole bunch of Liberal and socialist finance ministers.

We have a finance minister in Alberta who, frankly, is taking our province into much higher debt than the Liberals. It is hard to imagine that there could actually be a government that would go deeper into debt than the Liberals, but come to Alberta, and we will show people one.

Here we have the Minister of Finance meeting with his provincial counterparts on Monday to take more money out of the pockets of taxpayers and more money from small business taxpayers by way of increasing our Canada pension plan contributions.

I happen to sit on the finance committee. I see that my colleague from Gatineau is here today, and he also sits on the finance committee. He has heard the same evidence we have had presented at the finance committee that the number of low-income seniors is down to single digit percentage points.

The government is saying that we need to take more taxes from Canadians, and let us be clear: increased Canada pension plan contributions are a tax on small business and on working Canadians. This Minister of Finance is going to go to Vancouver on Monday and negotiate a deal with his provincial counterparts, almost all of whom are Liberals and socialists, to take more money away from taxpayers and small businesses to solve a problem that, frankly, does not exist.

If the Liberal government had kept the tax policies that were in place under the previous government, if it had left the TFSA alone, that would have allowed Canadians to save money on their own and not have a bigger bureaucracy take money allegedly to have more benefits for Canadians down the road.

In addition, we had an absolutely unthought-out position. Like so many promises that were made by the Liberals during the campaign, we had a Liberal leader running around the country, making a promise at every stop. There was one particular visit where he was not quite sure what to promise, so he said that the Liberals would drop the eligible age for benefits from 67 to 65. I do not think they really thought they would form government, but when they did, they had to try to keep all those promises. This was one promise they should have broken.

Of the litany of promises the government broke, it should have added that to the list of promises broken. There is no way we should be lowering the age from 67 to 65, some 10 years into the future, because that will cost Canadian taxpayers an extra $11 billion a year. Let us just put that into perspective. That is 30% of the equivalent deficit that the government is putting us into right now. There is a campaign promise that should have been broken.

I would like to spend a few more minutes talking about some of the things the government could do, which could be important for my province of Alberta, for the neighbouring provinces of Saskatchewan and British Columbia, and clearly for Newfoundland and Labrador. I would also venture to say that it is important for other Atlantic provinces. I know we have at least a couple of members in the House today from Atlantic Canada. I hope they will take up the challenge of putting pressure on the government to speed up the process and at least give an indication that it will take seriously the hearings that started yesterday on the energy east pipeline. We know that in 2019, if the government decides not to approve that energy east pipeline, members like the member for Saint John will not be sitting in the House because they will be thrown out of office.

Liberals members from British Columbia are also going to have a very difficult time because the Kinder Morgan pipeline to the west coast is absolutely essential for our country.

If the government listens to that socialist mayor of Vancouver and does not listen to Liberal members from British Columbia, who should be advocating on behalf of the Kinder Morgan pipeline, a whole bunch more of them will not be back here in 2019.

I believe the government will make some bad decisions over the next couple of years. It has exhibited that in the first six months of being in office. If it continues to make those bad decision, I will look forward to 2019 when the government can be a Conservative government again, allowing the private sector to create jobs, not driving us into deficit, and not taking money out of the pockets of taxpayers and small businesses.

Let us also put on record that the government broke a promise to small business in Canada. It promised, like all parties in this Parliament did, to reduce the small business tax. It broke that promise. The finance minister came before the finance committee and clearly stated that this promise would not even be considered in the government's mandate.

I could go on for quite some time, but I will allow my friend, the member for Gatineau to ask me a question.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Speaker, I thank my hon. colleague for his speech. As he mentioned, we are both members of the Standing Committee on Finance, and I appreciate his pragmatism and his experience as a parliamentarian both here and in Alberta.

I found his speech very intriguing. I always find it intriguing when a Conservative opposes a bill, our first bill, that cuts middle-class taxes. All of the Conservatives here seem to feel the same way. He gave all kinds of reasons for his stance, but it is always surprising to hear Conservatives speak out against tax cuts and New Democrats in favour of tax cuts. This is all very surprising.

What the member does not yet seem to understand, even though we were very clear about this during the election campaign, is that our decisions would be guided by what is good for the middle class. Whether the issue is retirement, parents, or people who work hard every day, like my constituents and, I would imagine, his constituents, we will make decisions that strengthen Canada's middle class.

I know my hon. colleague to be fair, equitable, and pragmatic. Will he therefore acknowledge that our decisions, our first bill, will benefit the middle class in Canada, in his riding, in my riding, everywhere?