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

[Robert Gordon Kitchen, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, we have heard a lot about taxes today, with the cutting of the sports deduction, as well as the Canada pension plan prices going up. You mentioned charts being available.

I wonder if you might be able to comment as to how that is going to affect jobs and the economy?

[The Assistant Deputy Speaker, Anthony Rota]

I just want to remind the hon. member that I will not be commenting on it. I am sure he meant the hon. member for Carleton.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Speaker, the member is quite right. The Liberals got rid of the children's fitness tax credit, they have cut back the tax-free savings accounts, and they are planning, now, to raise payroll taxes on small businesses and working people who earn less than $50,000 a year. I think this will have a detrimental impact on low-income people trying to make a break and get ahead.

The tax-free savings account, by the way, has been mischaracterized by members of the Liberal Party and the NDP, who say that it is only for the rich. Again, Statistics Canada has demonstrated that 60% of those who maxed out their tax-free savings accounts earned less than $60,000 a year. They are seniors who, typically, have sold their homes to downsize and want to reinvest the proceeds, or who have inherited money from a deceased spouse. They want to put that money where the government cannot get it, and who can blame them? That is the Canadian thing to do.

The tax-free savings account at $10,000 allowed them to do that. The government has raised taxes on those people. We will, hopefully, try to convince it to change its mind on that.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, it is a pleasure to rise today to speak on Bill C-2, an act to amend the Income Tax Act.

We have talked a lot today already about some of the changes that are going to be coming forward with this. However, I would like to tell a personal story about why I feel that this is important to speak about today.

I remember vividly, in 2006, my wife and I were in a small southern Alberta town. I would say that we were a low to middle-income family. We had three children: one in hockey, one in volleyball, and one in dance. I remember when the children's fitness tax credit was first introduced by the Conservative government, and what a godsend that was to me and my family to be able to cover a substantial part of the costs for my children's activities.

Then, last year, when we put forward a plan to double the children's fitness tax credit from $500 to $1,000, I went to as many doors as possible in my riding to talk about this program with my constituents. It was incredible how many families, especially young parents, spoke to us about how important this program was to ensure they were able to keep their children healthy, active, and enjoying some of the activities.

There is a reason that programs such as KidSport, the United Way, and Boys and Girls Clubs are so popular. It is a reality that lower-income families have a difficult time being able to afford the costs of some programs.

The children's fitness tax credit was a program that impacted just about every single Canadian family with children. It was extremely disappointing to see that the Liberal government has eliminated that program. I have had profound feedback from residents in my Foothills riding who are extremely upset with that change.

We will hear from the members opposite that the reason they got rid of programs, like the children's fitness tax credit and the post-secondary school book tax credit, was that they were going to be more generous on the side of other programs and the middle-class tax cut. It was going to be revolutionary for Canadian families. This was going to be something that was a life-altering change for Canadian families.

However, let us put it in perspective. According to Finance Canada, the average impact to Canadian families with the middle-class tax cut is $6.34 a week. That is less than $1 a day. That is what the impact on the average Canadian family is going to be. The government is eliminating the children's fitness tax credit, the universal child care benefit, and those types of programs. I find it interesting that the Liberals find $1 a day to be revolutionary. I am pretty positive that I can say for my family that $1 a day is anything but revolutionary.

We were kind of joking a little in question period, but I found it interesting that the Minister of International Development was laughing at the fact that we were asking about $17 for a glass a juice. We, on this side of the House, are here to protect the Canadian taxpayer. Every single dollar has an impact on their lives, their jobs, and their families. Paying $17 for a glass of juice, or $5,000 on tips and gratuities for two days, is certainly worth asking about. For Liberals to say that $6.34 a week, less than $1 day, is somehow revolutionary and is going to lift up 9 million families out of poverty, or 9,000 children out of poverty, or whatever the number, is pretty coy.

The money will either have to be drawn from or reduced from the public services and the tax base. I would say that the spending plans of the Liberal government are risky at best. We have seen no concrete proof that these tax cuts, which the Liberals initially said during the election were going to be revenue neutral, are that in fact.

The tax breaks they introduced were going to be revenue neutral and revolutionary, but in fact are going to cost Canadians more than $8 billion over the next six years. It is not really a tax cut at all, because they are going into very severe deficits to do these things. The amount of $9 billion dollars over the next six years is not a tax cut in my estimation.

Again, as part of that election platform, the deficit was going to be around a $10 billion mark. Now we are beyond that, three times beyond that. The four-year plan that the Liberals tabled as part of the budget in 2016 has absolutely no plan to get out of that massive deficit spin. It is a downward spiral. It is a massive deficit with absolutely no plan to get us out of it.

To have $30 billion deficits year after year, and then laugh about overspending on trips to Washington, shows the arrogance of the Liberal government.

[Peter Van Loan, Conservative, York—Simcoe, ON]

New York.

[John Barlow, Conservative, Foothills, AB]

New York, Mr. Speaker, I am sorry. Thanks for that correction.

The Liberal government has said that it wants to cut the tax-free savings account, so again we are going to be talking today about the impact and what it truly means for Canadians. The tax-free savings account, I know from speaking to residents in Foothills in southern Alberta, was something many of them embraced. They felt that it was an outstanding opportunity for them to save. In fact, 11 million Canadians accessed the tax-free savings account.

Instead, the Liberal government has taken away another voluntary option for Canadians to save for whatever they feel is most important to them. It could be a house, children's education, or, yes, retirement. Instead, after reducing the tax-free savings account limit from $10,000 down to its original $5,500, the government would like to replace that with a mandatory CPP tax, which would be a tax of more than $4,000 for the average Canadian worker, as well as an additional tax on small business owners. When Liberals say Canadians will have these benefits, if they do not have jobs, they will not pay any taxes. They will be more of a burden on the social system.

Liberals also want a job-killing carbon tax. We have talked about that several times this week. In Alberta, in the month of May alone, another 24,000 jobs were lost. There are 24,000 more Albertans out of work. The unemployment rate in Alberta is now 7.9%, the highest it has been since the national energy program was brought forward by the Liberals in the 1980s, with no relief in sight.

In question period today, I talked about Ritchie Bros., one of the largest auction operations in Alberta, last month having what was supposed to be a two-day auction sale. It ended up being five days, and it sold more than $240 million in industrial commercial equipment that went south to the United States. With the equipment that goes south to the United States, so do the jobs that go with that equipment, or they disappeared in Canada entirely.

Over the past year, half a billion dollars in oil sands equipment has been sold, and the vast majority of it has gone south of the border. On top of that, $50 billion in investment has left Alberta. That shows the impact that Albertans are feeling right now. We expect the unemployment rate to exceed 8% over the next year. I do not think this is the time to be joking about that $1-a-day middle-class tax cut, which actually only benefits those making over $100,000, many who have now lost their jobs entirely, or to be joking about introducing a carbon tax, which would increase the cost of literally everything that an average Canadian is trying to pay.

The government wants to bring in a mandatory CPP tax, while taking away an option that Canadians have to make the choices that they feel are best for them, which is the tax-free savings account. I appreciate that it is still going to exist, but it is not going to have the limit that Conservatives had offered before.

Let us put that in perspective. Over the last six months, the Liberal government has talked about a middle-class tax cut, which is not really a tax cut at all because it is not revenue neutral. It is going to cost close to $9 billion over the next six years. It wants to establish a mandatory CPP tax, which will impact Canadians and small business owners, our job creators, and now it is talking about a carbon tax. That is really a tax on top of a tax, because 80% of Canadian jurisdictions already have a carbon tax at the provincial level. Therefore, why would we add yet another tax on Canadians?

Putting it into perspective, over the Conservatives' 10 years in government, we reduced taxes more than 150 times. Canadians had the lowest tax burden they have had in 50 years. The average Canadian family was saving more than $7,000 a year on their taxes. Those tax advantages will be gone almost entirely with a CPP tax, which would cost more than $4,000 for the average Canadian.

I am sure we will hear the argument today from my colleagues on the other side that the tax-free savings account was simply just a tax haven for the wealthy. We also heard from my esteemed colleague from Carleton that is simply not the case.

People earning $80,000 a year or less accounted for 80% of those who had a tax-free savings account, and of 60% of the individuals who contributed the maximum of $5,500, the vast majority of them had annual earnings of less than $60,000.

As a Canadian, I do not feel that $60,000 a year is wealthy or anything close to wealth. That is just the average hard-working Canadian who is making certainly difficult decisions for whatever they feel is best for them and their families, whether it is a down payment on a house, saving for their children's education, or saving for their retirement.

I believe that reducing the tax-free savings account is a step backwards. I do not think it is something that will benefit Canadians. This was a savings mechanism that was extremely flexible and allowed Canadians to make the choices they felt were best for them and their families.

I want to jump ahead a bit and talk again about what our Prime Minister said during the election. During the election, he said repeatedly that the $3 billion tax cut for middle-class earners was for a $3 billion increase on high-income earners. We said before that this simply is not the case. This will actually cost Canadians close to $9 billion a year. That just shows that in six months, there has been broken promise after broken promise by the Liberal government . The Liberals are simply trying to regress some of the tax advantages and things we were able to change.

In conclusion, I would encourage all members of the House to vote against Bill C-2, because it reverses some of the great tax advantages that we were able to offer Canadians over the last few years, including the lowest tax burden on Canadians in 50 years.

[The Assistant Deputy Speaker, Anthony Rota]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's Order Paper.

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

Mr. Speaker, I will be sharing my time with my colleague from Labrador, which means I only will have 10 minutes to speak to a very important legislation.

This is where the previous Conservative government really lost touch. The Conservatives were out of touch with Canadians and real people, and that it ultimately led to the current Prime Minister. Even before he became the leader of the Liberal Party, he talked about the importance of Canada's middle class. The Prime Minister has been consistent throughout not only his leadership, but even prior to it in saying how important Canada's middle class is to our economy and to Canada's future prosperity. The Conservative government never really understood that. One only needs to look across the way to see how those members have voted on this legislation. I would challenge them to revisit the way they voted on the passage of Bill C-2 at second reading, and listen to what Canadians are telling them. If they are really in touch with Canadians, they will appreciate what Bill C-2 is all about. Not only that, it goes even beyond Bill C-2. It is about Canada's middle class and those who want to become a part of it.

I have been a parliamentarian at the provincial or federal levels now for 25-plus years. Never before have I seen a government so determined to have an impact on Canada's middle class. That is why it is with great enthusiasm that I highly recommend to all members, no matter what their political affiliation, to get behind Bill C-2 and vote in favour of it. If they understand how the economy works, I believe they will recognize how important it is that the middle class be supported. Let me give an example. If a middle class is given a tax break or is enriched, we will have a healthier economy. How does that work? If there is more money in the pockets of average Canadians, that means they have more disposable income to invest in our economy.

There is an immense amount of literature and there are many arguments put forward to tell us that if the middle class has confidence in the economy and they have money in their pockets, they will spend that money. By spending that money, we then enrich and afford small businesses and so many others the opportunity to do that much better.

I find it interesting. Whether from the Conservatives or the New Democrats, and at times we get confused messages coming from those two parties, there seems to be a consistent message in their fight to resist Bill C-2, which I do not quite understand. One of the things they ask us is why the government does not support small businesses. This bill would do more to support Canada's small businesses than anything the previous Harper government did in its ten years. It would put that money back into the pockets of people. By doing that, people would be spend. We can ask small business owners, as I have done, as have many of my colleagues who have canvassed their constituents over the summer in a very real and tangible way. They will tell us that the best thing we can give a small business is not necessarily a tax break, but a consumer. Small business owners want people going into their stores, buying their products and consuming them.

Bill C-2 is all about that. It would give a significant amount of money to Canada's middle class. Ultimately it is not just talk; it was the first piece of legislation that the Prime Minister introduced to the House of Commons, and it was implemented on January 1. Not only did we want to give the middle class that tax break, we also wanted it to take effect as soon as possible. We saw that in the implementation of the government's policy. It was a substantial election platform promise made to Canadians. The Prime Minister and this government are materializing on that promise. We should recognize this valuable legislation. It reflects what Canadians want and is something on which the government is delivering.

Other criticisms on Bill C-2 have nothing to do with the bill. The New Democrats ask about those who make less than the threshold to get the tax break. It is important to recognize that over nine million Canadians will benefit by this tax break. The NDP refuses to acknowledge that this is step one of a number of steps. All my NDP friends need to look at is the Canada child benefit. Some of Canada's poorest families are getting significant increases in child support. We would have to look a long way back before we would see a government taking such a strong social commitment to lifting children out of poverty. Hundreds of thousands of children are being lifted out of poverty because of the Canada child tax benefit. That tax-free money is already being sent to families across this nation.

That is just one aspect to help those with low incomes who want to become part of Canada's middle class. What about the other most vulnerable, our seniors? Some of the most vulnerable seniors are easily identified through the guaranteed income supplement. We saw a significant increase in the last budget for seniors. I believe some of them will receive an additional $900 per year. If people are in a poverty situation and receive the GIS, that $900 is the equivalent of thousands of dollars to individuals making $100,000 per year. It is a significant increase for those vulnerable seniors. Through Bill C-2, they see a government that truly cares and is prepared to invest in Canada's middle class, but we have not forgotten about our most vulnerable such as children and seniors, in particular those who are on the guaranteed income supplement.

We have seen a redistribution of wealth that we have not seen in many decades. The bill is in part made possible because of a new tax for those Canadians making more than $200,000 taxable income per year. There is that expectation from this government. It is making our system that much fairer.

When we look at Bill C-2, I would like to think the commitment to that tax break is being fulfilled here.

I started off by saying that the Conservatives have lost touch. They can demonstrate that they are listening to Canadians by voting in favour of Bill C-2.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I clearly recall that when the Liberals were campaigning approximately a year ago they talked about the middle-class tax cut, but they never did define “middle class”. I know that the member opposite is in the tax bracket that would benefit most from this tax break, and I do not think that many Canadians would look at members of Parliament and say they are part of the middle class.

Therefore, I would ask the member this. Could he define “middle class”, and would he suggest that the members of this House are the ones who should be benefiting the most from this initiative, which is what the Liberals have done?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, if that is how the Conservative members want to justify voting against the legislation, they can do that. However, I would suggest that it is ill-advised.

The real benefactors of this tax break are teachers, firefighters, professionals, and factory workers. These individuals are part of Canada's middle class. They work very hard to build our society. That is the group that is receiving the greatest total benefit. If members want to nitpick, I am happy to do an overall assessment of who is benefiting, which is Canada's middle class and those who want to be able to participate in it.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, we know that two-thirds of Canadians, 17.9 million Canadians, will not benefit from this Liberal tax break. In fact, those who work full time and earn $45,000 a year, which is $23 an hour or less, will get nothing.

The Liberals talk about lifting people who are not in the middle class and helping them join the middle class, but they have forgotten them with this tax break. They tell them that they will help and grow the middle class. The people who will benefit the most in this tax bill earn between $100,000 and $200,000 a year, or between $50 and $100 an hour. Even they do not think it is fair that those who earn $23 an hour or less get nothing.

I would like the member to tell us what the Liberal middle class is, because in Canada the median middle class is $31,000 a year. I know in his riding it is $24,000 a year. In my riding, it is $26,000 a year. The member likes to scold the Conservatives for being out of touch with Canadians and the middle class. Therefore, I would like to hear from the member, what is the Liberal middle class?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, if the member would read the legislation, he would get a very good sense of what the middle class is.

If the member wants to take the issue to the next election, whether in 2019 or whenever it might be, I would invite him to do that. I would like the members who vote against this bill to tell those individuals I pointed out, the teachers, the firefighters, the health care workers, the many different professionals, the factory workers, and hard-working middle-class members, that they voted against this bill because they wanted their own narrow perspective which does not encompass what the government is providing.

When the member makes reference to those who make less than $45,000, imagine those individuals making under $45,000 who have children, and the benefits they are getting under the new Canada child benefit program. The NDP conveniently forget that.

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

Mr. Speaker, I want to thank my friend for outlining our government's priorities on how this bill will help the middle class.

During the summer, I met a lot of people in the constituency who received the Canada child benefit, tax free, for the first time. The difference it is making on individual lives is phenomenal.

I wonder if our member could outline the issues with respect to the TFSA. In many ways, the TFSA was short-sighted in terms of increasing the amount of tax-free growth within the TFSA. It will debilitate our future generations from getting the benefit of tax revenue. Therefore, could our member advise as to the changes, and how those will benefit the economy right away and ensure we have a long and steady stream of tax revenue so that future generations are not debilitated?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, when we looked at how we could deliver the most effective tax change that would assist Canada's middle class, it was determined that Bill C-2 would be the easiest and most effective way of putting money back into the pockets of Canada's middle class.

If we contrast that to the tax incentive that the Conservatives were talking about in terms of increasing it, there are two distinct approaches. I would argue that our approach is far more direct and that millions of Canadians will benefit by it, which is far greater than what was proposed by the previous government.

[Yvonne Jones, Liberal, Parliamentary Secretary to the Minister of Indigenous and Northern Affairs]

Mr. Speaker, it is a pleasure for me to speak to Bill C-2. I thank my colleague from Winnipeg North for sharing his time with me today.

Bill C-2 would amend the Income Tax Act. It falls in line with what the Liberal Party said during the election campaign and what the Prime Minister said in subsequent days. Bill C-2 would reduce the personal income tax of many Canadians and allow them to have more money in their pockets. It also introduces new marginal tax increases to people at higher taxable income levels. Why anyone in the House of Commons would not want to support that is beyond me. Bill C-2 would allow more money to be held by families who need it, families in the middle-class tax bracket.

Bill C-2 is a good piece of legislation. It is good because it will help many middle-class families, and many income earners who fall into this bracket, to move forward and do things in their lives that they have not been able to because they were in higher tax brackets, losing more of their money and not being able to catch up.

With Bill C-2, our government is allowing middle-class families and income earners to catch up. We are giving them the break they deserve, and this is what Canadians want. It was a large part of the platform of the Liberal Party of Canada in the election. Canadians had an opportunity to have their voices heard at the ballot box, and they chose to have reforms made to the income tax legislation that would allow the middle class in this country to move forward. That is exactly what we are doing.

We are making changes around direct income tax adjustments and allowing more income tax earners to be in a lesser tax bracket. Higher income earners will pay a little more, which we asked them to do in a friendly way and they agreed. We also introduced the child tax benefit in July of this year. This Liberal government initiative allows more families to gain more money in child care benefits that are tax free. They no longer have to incorporate these benefits as part of their income, which was required by the former government and gave them less money in their pocket.

Our government is making that child care benefit tax free. We are bringing more balance to the child care benefit to ensure that families who need that benefit to care for their children will actually get the benefit. This means that people in the higher income bracket will be eliminated from the child care benefit. They can take comfort in knowing that those with lower incomes who need the money to support their children in their initiatives, schooling, careers, and in their lives, will have a little extra money to do that. This is about bringing more fairness and balance to Canadians right across the country.

The other thing we have done to complement the changes we are proposing in the Income Tax Act, besides the child care benefit, is the increase in the guaranteed income supplement for single seniors. This was a huge issue in the election campaign from aging individuals in our country who felt they needed an increase in their supplement to allow them to support themselves, especially widows and widowers. We introduced that benefit, which is going to help them substantially.

We also made improvements to the employment insurance program. We expanded it to include regions that were the hardest hit in the country at the time, including Newfoundland and Labrador, the province in which I live, and also Alberta. These two provinces have been going through huge transitions.

In addition to the income tax breaks, the child care benefits, and the increase in the guaranteed income supplement, we provided a reprieve for workers who have found themselves unemployed. We were able to make changes to the employment insurance program to help them in a difficult time.

However, we also need to look at how we are investing in capital infrastructure, which complements the strategy of where the government is going in lifting up people in our country and ensuring there is a greater balance.

When we look around the country today, we see in the first year of our mandate that we have already been investing money in transit, transportation, housing, and infrastructure, which the country has needed for a very long time. This is not just an investment for today but ensuring economic prosperity for the regions in which we are investing this money. That in itself is creating new opportunity and new jobs for people in many regions of the country, and they are seeing the benefits very quickly. They are seeing it in their homes, their pockets, and in their communities. I think that is very important.

The changes we are making to the income tax legislation, as I said, will ensure that those people who were at a personal income tax rate of over $45,000 a year will drop from 22% taxation to 20.5%. We will also introduce a new personal marginal tax rate of 33%, which will be for those with taxable income in excess of $200,000 a year.

The opposition members are critical because they know that what we are doing is right. It is the right direction to take. They also know that what we are doing is benefiting families. They had the opportunity to do this but chose not to. They chose to distribute the investments of the country in a different way. They provided more income relief for wealthy income earners than they did for low and middle-class income earners. We have chosen a different route. Our route is creating a better balance for Canadians right across the country.

I represent a riding that falls in the middle income level. I define that middle income level as people who make $40,000 to $45,000 a year to $100,000 a year. They are the people who work in our factories, mines, hydro power projects, schools, hospitals, firefighting and policing services. These are the middle-class earners of Canada.

We are saying to them that we recognize that over the last 10 years they have been falling behind and that we are now going to allow them an opportunity to start catching up, be a stronger part of the middle class, and ensure that their families have that opportunity. We are doing it through our income tax reductions, child care benefit, guaranteed income supplement to seniors, and our investment infrastructure programs, which are helping communities, businesses, and Canadians right across the country.

I would suggest that there is no member of Parliament that has any reason or rationale not to support the changes we are proposing to allow middle-class families to have more money in their pockets.