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

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

Mr. Speaker, I and the hon. member for Gatineau are on the finance committee, and we have had a good working relationship over the past six months. I quite often do not agree with the member, but he is open to listening.

Therefore, while he is listening, I did not campaign in the election in 2015 to give myself a tax cut, and that is what the government has done. It has given every member over there a tax cut.

I would have campaigned on the ability to give all Canadians fairness when it came to a tax system. My fellow colleague on the finance committee is probably going to ask me about those Canadians who earn under $45,000 a year, many of whom live in the member's riding I am sure. They get nothing from this budget.

[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?

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

Mr. Speaker, my colleague and I have had some good debates at the finance committee on these issues.

As I said earlier, I did not campaign on a tax cut for myself or those who are in our income category. The member raised a good question. At the finance committee, we tried to ask the Minister of Finance to please explain to us what “middle class” meant.

I am quite offended by the term “middle class”. When I hear a term like “middle class”, I think about the class structure of Britain of thousands of years ago. I like to refer to people in income groups. I do not think we have a middle class, a lower class or an upper class. We have an income class.

From day one, when the Prime Minister talked about the middle class, it offended me. I do not consider myself to be in a class system, and he has placed me there simply by the amount I earn.

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

Mr. Speaker, I was intrigued to hear the hon. member talk about what he would do if he were leading a campaign and the questions he would ask. There is a job opening there. Maybe he will get his chance.

The question on Kinder Morgan is a big one, especially in metro Vancouver. We recognize there is a huge divide between sentiments on the west coast and sentiments in Alberta.

How do we close the gap between clearly opposition on one side and the proponents on the other?

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

Mr. Speaker, I would like to get really worked up about this. We talk about being a country. The Prime Minister has said that as Canadians we help each other. Yet when we have projects of a national nature, we have people playing politics with it, whether it is our friends from the Bloc Québécois who keep raising issues in the House about energy, or the mayor of Vancouver who comes to Ottawa to campaign against Kinder Morgan.

There are things that need to be pointed out in the House, and they need to be put on the record. As energy minister in Alberta a few years ago, I had an opportunity to tour the Kinder Morgan facility at Burnaby. One of the things that was mentioned to me was that the current pipeline from Alberta to British Columbia, to Burnaby, provided all of the fuel for all the vehicles that operated in the Lower Mainland. It is okay to ship Alberta oil to Vancouver to refine, to service the Lower Mainland, but all of a sudden, for Vancouver's mayor, it is not good enough that we can ship additional oil to export.

Why is that fair? How Canadian is that? It is good enough for us, but it is not good enough to sell.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I have two comments to begin with. As far as social classes are concerned, I think that we should agree on the fact that a class structure still exists. The member can come to Montreal and see that between Westmount and Hochelaga there is a clear class difference.

My colleague said that governments do no create jobs, the private sector does. I know that this is part of the Conservative creed, but we need to recognize that this is a rather simplistic cliché. There would be no workers who can read and write without schools; there would be no healthy workforce without hospitals; there would be no skilled workforce without our colleges and universities. The public sector and the private sector must work together, hand in hand, to grow our economy. When the Conservatives were in power, they handed out billions of dollars in tax giveaways to Canadian corporations without creating a single job. They did nothing to help small and medium-sized businesses, which is what the NDP was calling for. Are they going to ask the Liberals to accept the NDP's idea of lowering taxes for small and medium-sized businesses from 11% to 9%?

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

Mr. Speaker, I am happy the member understands it was not just an NDP proposal to reduce the small business tax. We clearly campaigned on that and so did the Liberals. The Liberals broke their promise, so it is one thing we probably share with the NDP.

Let me make sure the member is clear. There were 1.3 million net new jobs created during the Conservative government's administration. When the member says that health care and education jobs are all public sector jobs, he is wrong. Thousands of people work in the private sector. I do not believe there is a doctor in Quebec who works for the public health care system. He or she is a private businessperson.

It is wrong for New Democrats to say that we would not have any teachers or health care officials if we allowed the private sector to create the jobs.

[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 someday 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.

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

Mr. Speaker, as per usual, the Conservative view of economic reality is something to behold.

The member opposite spoke about the tax-free savings account and how good it was for Canadians. There certainly were some benefits.

One question that I have been asking members opposite for weeks now and one to which I still have never received an answer is this: Why the doubling of the tax-free savings account when only 7% of Canadians maximized it? The former finance minister himself said it would cost billions of taxpayer dollars by doubling it. He also said that the former prime minister's grandchildren could worry about that debt in the future.

I would ask the member opposite, why the doubling of the tax-free savings account? Canadians knew that it was targeted to the Conservative base and it was not fair. Why the doubling when 7% of Canadians maximized it?

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

Mr. Speaker, the member makes the point that 7% of Canadians were maxing out the TFSAs. Many more were coming close to the max and many others were using it as a tool to put in different amounts. Let us be clear. He called it a Conservative base but we are talking about low-income senior citizens. I am hopeful that they are our base, but let us think about this. The same people who max it out one year, 7%, will be different from the 7% the next year, it may be 10%, which might be different than the next 10%. Within three years perhaps 30% of Canadians will have maxed out their tax-free savings accounts.

The point is that this tool should be available when Canadians need it. Many people who need it are in their later years and are trying to manage their retirement savings money. They want to be able to access that money. The flexibility that that tool provides for senior citizens is one that we need to continue allowing them to use.

I am concerned that the hon. member is not just offended by the doubling of the tax-free savings account but he is now offended by the tax-free savings account altogether, which makes me wonder if it is the Liberals' plan to eliminate the tax-free savings account altogether.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, I do not know what the member's riding is like, but in my riding seniors who do not earn a lot of money and are on a fixed income cannot invest $10,000 in a TFSA; they cannot even invest $5,500.

In order to save money, people need to have enough to survive on. Many seniors are having trouble surviving. I would be very surprised if the member saw that in his riding.

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

Mr. Speaker, I am not speaking about what my feelings are. Many people's intuition might be similar to that of the member, but the evidence demonstrates that 60% of the people who were maxing out the tax-free savings account earned less than $60,000 in that given year. I am not asking the hon. member just to believe me because I think that is the case, but the evidence demonstrates that, and it is not just my constituents but her constituents her as well. The evidence demonstrates that the vast majority of those who were maxing out the provisions were lower-income Canadians.

Many of our constituents have probably used the tax-free savings account as a mechanism to move money, as they are withdrawing money from RRIFs. They might use that as a vehicle so that they have flexibility in their retirement years as to how they hold that money, how they earn interest on that money, and how they use that money.

The hon. member should call the Library of Parliament and ask if it has statistics on her particular constituency. I think she will be surprised by what she finds out.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, our friends in the Liberal Party have been trumpeting the middle class in their rhetoric a lot lately. In fact, they included a fancy chart in their recent budget to talk about the incomes of middle-class people. In it they claim that for the last 40 years, the middle class has not had a real after-inflation raise.

I was surprised to hear that, because Conservatives had produced a lot of data to show that in the last decade alone, middle-class incomes had skyrocketed. How could both of these claims be true?

I looked at the underlying data that Finance Canada used to produce this chart in the Liberal budget. I found that when Liberals say that Canadians have had almost no middle-class income increase over the last four decades, they are telling the truth. When the Conservatives say that there has been a very large increase in middle-class incomes in the last 10 years, we are also telling the truth. How do we reconcile both of those things?

We can look at the chart. We can go back to 1976, the beginning point of this chart that the Liberals put in their recent budget. It demonstrates that, at that time, in inflation-adjusted dollars, Canadians were earning just over $46,000 on average, and then suddenly, over the following six years, incomes plummeted by 6% after inflation.

That drop was the biggest of the last half-century, and it was presided over by Pierre Elliott Trudeau, whose policies of high taxes, spiralling debt, and taxpayer give-aways to large corporations sent our economy reeling. It caused a massive national recession and enormous job loss, particularly in western Canada, but caused a job-loss contagion that spread right across the country and led us to the biggest pay cut for the middle class in a half-century. It then took 30 years for incomes to recover to the level they had been back in 1976. It just so happens that recovery occurred under the previous Conservative prime minister.

What happened in the last 10 years then?

According to data right out of page 11 of the Liberal budget, incomes for middle-class Canadians rose by a staggering 11% after inflation, from $44,700 to $49,602, which is a $5,000 after-inflation increase in median incomes. In fact, the pay increase that occurred under our most recent Conservative prime minister was larger than income growth under Prime Ministers Trudeau, Clark, Turner, Mulroney, Campbell, Chrétien, and Martin combined, again, according to data right out of the Liberal budget.

Let us break it down further. The government has said that it is a big champion of women in the workforce. In fact, the Prime Minister likes to brag that he is a “feminist”. I would like to look at the data that his budget presents about incomes for women.

Anybody who does look at that data, which again is found on page 11 of the recent Liberal budget, will find that women enjoyed a $5,234 pay increase after inflation during the most recent Conservative government. This is an increase of 14%. In other words, female incomes grew even faster than the average income during the last 10 years.

It is also worth noting that the annual rate of income increase for women during the most recent Conservative government was five times the rate it was during the first Trudeau government, and five times as fast as during the Chrétien and Martin governments.

In other words, women, middle-class women, had their biggest pay increase in a half-century under the most recent Conservative government, according to the Liberal budget.

Where do we go from here? Ironically, this budget, which contains this valuable information, seeks to repeat the exact same mistakes that caused Pierre Elliott Trudeau to tank the middle class four decades ago. It is unfortunate, but history does seem to repeat itself. This Prime Minister is enacting the same high-tax, big-debt, costly government strategy that his father did to destroy the middle class when he was in office not so long ago. We would think that the Liberals would learn. We would think that they would understand that trickle-down government harms the middle class even though it is particularly good for the wealthy and well connected.

We talk today about a budget that would make changes to the income tax system. Far from helping the middle class, if people earn $150,000 as Liberal MPs, they would save almost $700 in income tax as a result of changes in the bill before the House right now. If people earn $45,000 a year, they would get absolutely nothing. The question of social justice can always be answered with the following two-part question: From whom, to whom?

The costs of the bill would be borne by people who earn $45,000 a year and the maximum benefits would go to those earning $150,000 a year. That is not social justice. That is not a defence of the middle class. That is a wealth transfer from the working poor to the wealthy and the well connected.

So it is so often the case when government gets big and expensive. Those who can afford the lobbyists to pressure government and the accountants and lawyers to gain the rules of government always do so much better when there is more government. That is what we are seeing today, a government that is on the side of the very rich, that is increasing the cost and the burden on the shoulders of the working poor, and that is reversing the very impressive middle-class gains that our country enjoyed over the last decade.

Now we hear speculation that the current government may give one billion middle-class tax dollars to Bombardier, a company of billionaire owners and millionaire executives. This is a company, in fact, that just paid $8 million to one executive alone, while it was simultaneously asking middle-class taxpayers in Quebec and Canada to bail it out. This again would be a massive wealth transfer from the working poor and the middle class to the wealthy and well-connected, which is so common under left-of-centre governments like the current one. This is the insider economy or crony socialism at its very worst.

By contrast, our official opposition will continue to fight for working people who get up every day and put in a hard day's work in order to earn their incomes. We will continue to fight for those who want to save a bit more through their tax-free savings accounts, keep a bit more from their income tax bills, and hire a bit more through their small businesses. In so doing, we will champion the underdogs in Canada and fight for the people who are the backbone of this country.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Mr. Speaker, that was a very interesting speech. The hon. member spoke about social justice and wealth transfers. The people in the constituency I represent, Saint Boniface—Saint Vital, are very excited about the new Canada child benefit. It is more generous than the previous benefit. It is targeted to income; if people earn less money, they will get more money. Probably most important of all, it is tax free. The Canada child benefit will raise 300,000 children out of poverty. That is what I call a wealth transfer and a champion for social justice.

In addition to the Canada child benefit, we are launching Canada's largest ever infrastructure program, as part of the budget.

In addition, speaking of the middle class, and perhaps it was not this speaker but an earlier speaker who did not like to talk about class but income levels, Canadian citizens making between $40,000 and $90,000 will get a 7% tax cut. That is in the budget.

How can anybody be against a 7% tax cut for income earners between $40,000 and $90,000?

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, if only it were true. In reality, the member's numbers are inaccurate. If someone earns $44,000, they will get a zero per cent income tax cut from this budget. The very small tax relief that does exist really only peaks for people who earn over $100,000. Even for them, it works out to about $700 a year. A person needs to earn about as much as the hon. member does to enjoy that maximum tax relief under this budget. However, the working poor get exactly nothing, which is unfortunate because it reverses the trend of the previous government, according to the parliamentary budget officer, the independent and non-partisan parliamentary budget officer.

The previous government cut taxes by about $30 billion per year, and that tax relief was overwhelmingly in favour of lower- and modest-income earners. In fact, for many low-income and impoverished workers, the previous Conservative government cut their taxes by 100%; meaning that they do not pay anything at all. That helps them get over the welfare wall; that is to say, it ensures that work always pays more than welfare. We know that the best anti-poverty plan is a good job.

Now, we have a government that is going to impose new costs on the working poor, through a carbon tax that will make it more difficult to heat a home and drive to work, and through a payroll tax, which will mean that small businesses will have to lay off their most vulnerable workers. That is an attack on the poor, it is an attack on the working family, and we will, on this side of the House, fight it every day.