Bill C-208 (Historical)

An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation)

This enactment amends the Income Tax Act in order to provide that, in the case of qualified small business corporation shares and shares of the capital stock of a family farm or fishing corporation, siblings are deemed not to be dealing at arm’s length and to be related, and that, under certain conditions, the transfer of those shares by a taxpayer to the taxpayer’s child or grandchild who is 18 years of age or older is to be excluded from the anti-avoidance rule of section 84.‍1.

[Lindsay Gwyer, Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance]

Thank you, Mr. Chair.

I'm Lindsay Gwyer, director general, legislation, at the Department of Finance. I'm here to talk about part 1. A number of my colleagues are also here to answer questions on part 1.

Part 1 contains the income tax measures in the bill. There are about 20 measures, so I won't be able to describe them all, but I'll just do a very high-level summary of several of the key ones.

First, there are a number of integrity measures in part 1. The first two relate to recommendations from the OECD's base erosion and profit shifting project. The first would limit the deductibility of net interest and financing expenses by certain corporations and trusts to a fixed ratio, which in most cases would be equal to 30% of tax EBITDA. The second OECD-related measure would implement rules to deal with hybrid mismatch arrangements, which are cross-border tax avoidance structures that exploit differences in income tax laws between two countries.

The bill contains other integrity measures, including an anti-avoidance rule to prevent private corporations from avoiding the refundable tax on passive income, as well as new rules to facilitate true intergenerational transfers, stemming from Bill C-208. Bill C-59 also includes a change to deny the deduction for dividends received by Canadian financial institutions on certain shares held as mark-to-market property, as well as changes to strengthen the general anti-avoidance rules. In addition, the bill will introduce a 2% tax on the net value of equity redemptions by certain Canadian corporations, trusts and partnerships whose equity is listed on a designated stock exchange.

The bill also includes a number of incentives and changes to tax credits. First there are two new refundable investment tax credits. The first would be available to taxable Canadian corporations on investments in eligible equipment used in carbon capture, utilization and storage projects. The second is another refundable credit available to taxable Canadian corporations and real estate investment trusts for investments in certain clean technology.

Other incentives and credits in part 1 of the bill include changes to the flow-through share rules to allow expenditures incurred in the exploration and development of all forms of lithium to qualify for the critical mineral exploration tax credit, changes to extend the phase-out by three years and to expand eligible activities for the reduced tax rates for zero-emission technology manufacturers, and changes to facilitate the creation of employee ownership trusts. Part 1 would also double the rural supplement for the Canada carbon rebate tax credit.

Those are the major measures in part 1. There are also a number of other more technical measures.

My colleagues and I would be happy to provide more detail on those or any of the measures I mentioned.

Greenhouse Gas Pollution Pricing Act

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Mr. Speaker, before I begin, I would like to wish my amazing wife, Cailey, and our beautiful daughter, Maeve, a happy Valentine's Day. I love them both, and I cannot wait to see them and celebrate.

I am going to speak from the heart a little on this one, it being Valentine's Day. It is something that is extremely close to my heart. I have been involved in the efforts to eliminate the carbon tax on natural gas and propane for grain drying for many years, going back to Bill C-206 in the previous Parliament. I worked for the Grain Growers of Canada prior to this.

This is a good piece of legislation. It should not be political. This is about fixing a policy that does not make sense and that simply punishes our farmers. Grain growers, when they have a wet year, have no choice but to store their grain at the appropriate moisture level. They do this by drying it, and the only sources to do that are propane and natural gas. In just the same way, our livestock producers are forced to use those fuels to heat and cool their livestock operations for the welfare of the animals.

This is a common-sense carve-out that would leave money in the pockets of farmers to reinvest in their own operations, to reinvest in their own communities and to lower the prices of food for Canadians. It amounts to $1 billion; it was the intention of the bill to allow our farmers to maintain that in their pockets. The amended version of this bill removes about $900 million of that, because the Senate gutted it.

Let us just go back through how we got to where we are. This was supported by parties across this chamber, and even some Liberal MPs. It was supported by the Conservatives, the NDP, the Bloc Québécois and even the Green Party members, recognizing the importance of this legislation to Canadian producers and to Canadian consumers. The members acknowledged that this carve-out made sense.

Things got political, though. When it got to the Senate, of all places, that so-called chamber of sober second thought had a whole bunch of political manipulation involved with it that caused absolute mayhem. The fact is that we are in no man's land here, with debate potentially never ending, thanks to the Liberal government and its intrusion into that so-called independent Senate.

The reality is that, after we got through the House, the bill went to the Senate. The senators tried to amend it at the senate committee with the exact same amendments that were tried in this chamber, but the Liberals could not find a dancing partner. All the other parties realized that this is good policy; only the Liberals stood in the way of it.

However, in their back pocket, the Liberals had the so-called independent Liberal, not by name, senators that they could manipulate. In fact, the environment minister even admitted that he called six of them. At our environment committee, I asked for the names of the six senators. He promised to get back to me, and after 49 days, he came back with three names. I guess he forgot, and guessed up, how many senators he tried to corner into moving and passing amendments at the committee stage and at the broader Senate chamber to try to gut this bill.

The Prime Minister's Office and the radical environment minister did everything they and their government could to force the Senate to gut this bill. The environment minister just loves the carbon tax and put his entire credibility and career on the line, saying that he would resign if there was an additional carve-out for farmers. That is how we have arrived at where we are today.

This, from the Liberals, should not be surprising. They are fully committed to a policy that is failing Canadians from coast to coast to coast. This carbon tax scam is raising the price of everything, making us all poorer, making us less competitive and driving down profits for our farmers.

It is not surprising, because this is the Liberal government that called all farmers and small business owners “tax cheats”. The same government voted against a common-sense piece of legislation, Bill C-208, that would have aided in the transfer of farms from one generation of a family to the next. It came up with a crazy idea to reduce the amount of fertilizer we use in this country by 30%, following Europe's lead. Europe is a continent that went from being a net exporter to a net importer of food; it is reliant on other nations for its energy, in this case, terrible aggressors, namely Russia.

We are going down an awful path as it relates to our food and fuel in this country, so it should come as no surprise that the government stands opposed to such common-sense legislation. Frankly, the Liberal record on agriculture and rural issues is horrendous. It is appalling. That is part of the reason I went from being an advocate, working on behalf of farmers as a representative of the industry, to wanting to put my name on a ballot and come here. I thought I could do more from the inside to stand up for our rural communities and farmers. That is what I am proudly doing today and will do every day for the rest of my time in this place.

The government seems to think it can rebrand the carbon tax or the rebate cheques to people and that they will somehow change their minds about this. People know better. They know that the carbon tax is failing them in every facet of their life and simultaneously not reducing emissions. We went from being ranked 58th to 62nd in the world because of our environmental outcomes. We have become worse under this government, yet it stands by its failed policies, which are making us all poor.

I would encourage the Liberal MPs who do not have the opportunity to represent farmers and probably deny them meetings when asked to come and explain their situation, to pick up the phone and call a farmer. I will provide a few phone numbers if they want. It will be the best five minutes of their life when they get the chance to ask them what they think about the carbon tax, or better yet, when they ask them why they are paying a carbon tax on drying their grain, why they are drying grain and why they need temperature-controlled barns. They should ask them what they think of the 5% GST they pay on the carbon tax specifically, the revenue-neutral carbon tax that has just collected an extra 5% for the government, which needs it here in Ottawa for its political pet projects more than Canadian farmers and Canadian consumers do, who are paying higher prices at the grocery store.

They would also be able to tell MPs stories about the innovations and strides that have been made by our producers across this country over the last number of decades. It is hard to recognize a farm from a few decades ago, from the improvements in seed and livestock genetics to the vast improvements in equipment and machinery, the tractors and combines, the data collection and the focus on increased yields while reducing emissions. In fact, we have doubled our production in this country since 1997, while our emissions have stayed the same.

That is what we should be looking at. The emissions intensity of our production in this country is something we should be proud of. We are better than other countries around the world at growing food. It is something we should be standing up for. We should be taking down barriers and roadblocks. We should be enabling trade. We should be enabling our producers to sell their products around the world at a profit to reinvest in their own operations and communities. Instead, we focus on anti-competitive measures that push businesses south of the border and make it harder for farmers to make a living in this country.

Our farmers, of all types, are the true conservationists. They are the ones on the ground. They are the ones focused on making sure that their land is better off when they leave it than how they found it, because it makes sense. It is common sense for them to make sure they can maximize production on their land. This land is passed down from generation to generation. They are proud of it, and they want to protect it.

At the end of the day, there is no good reason to support this gutted bill. The farmers know that. Every member in the House absolutely should know that. It should not be about politics. It should not be about the Liberals deciding that 3% of Canadians should get a break on the carbon tax on their home heating oil while our farmers have to pay more because of the Liberals' political hides being on the line.

This is good legislation, as drafted and unamended, to save farmers $1 billion. I urge my colleagues of all political stripes to listen to our farmers and the organizations that represent them, do the right thing, pass this bill without the Senate amendments and send it immediately back to the Senate, which should also do the right thing and pass this legislation as Parliament has asked it to.

Taxation

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Mr. Speaker, the next petition I have to present is from Canadians from across the country who are concerned about the tax regime that favours selling a small business or farm to a family member over a stranger. They are concerned that family ownership and long-term business stability is weakened by the current tax rules. The folks who have signed this petition note that small businesses are the backbone of our economy and communities.

The average age of the Canadian farmer in 2016 was 55 years old, and the Canadian Federation of Agriculture estimates that $500 billion in farm assets are set to change hands in the next 10 years. Therefore, the folks who have signed this petition call on the Government of Canada and the House of Commons to support and quickly pass Bill C-208, an act to amend the Income Tax Act, transfer of small business or family farm or fishing corporation, which would ensure that farms and businesses can be transferred to the next generation without having to worry about unfair tax treatment, and to ensure that family-owned small businesses and farms are encouraged, supported and that the red tape would be eliminated.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for your answer, Minister. For years, the EI fund had a surplus, which was shifted to the consolidated revenue fund. Now, however, workers and unemployed people are being penalized. We are anxiously awaiting EI reform, so we can have a system that is truly accessible.

Two years ago, Parliament passed Bill C‑208 in order to stop penalizing owners for passing on their business to a family member, especially a farm. However, people still can't take advantage of those measures, so we are still waiting. Tax experts and accountants in Quebec say they have yet to receive direction from the Canada Revenue Agency, which says that it is waiting for clarification from you. We hear from business owners, families and accountants about it all the time. Is there anything you'd like to say?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

My next question pertains to the former Bill C‑208, which dealt with the intergenerational transfer of small businesses. This bill came from the opposition. As we know, the purpose of the bill was to stop hurting family transfers by making it no less profitable for a business owner to sell to their children or family members than to a stranger.

The bill received royal assent, but the government then refused to implement it. Wayne Easter was chair of the Standing Committee on Finance at the time. The committee convened during the summer with the aim of reminding the government that it had to implement the bill. The government then said it would do so. However, many family farms and businesses in Quebec are still waiting to make these transfers because the Canada Revenue Agency has not yet directed accountants and lawyers on how to proceed. This has been going on for two years.

During last month's in‑camera meeting, we heard presentations on the budget's legislative proposals, which seemed to include a new law that would replace the old provisions and finally get the ball rolling. I couldn't believe my eyes, however, when I looked through the hundreds of pages in Bill C‑47 and saw that it was nowhere to be found.

Obviously, I'm not going to ask you any questions about the political choices at play here. I'll save those for the Minister of Finance when she decides to appear before the committee. That being said, are there any technical reasons that can explain why the implementation of former Bill C‑208 is not included in Bill C‑47? The bill received royal assent two years ago, the government has committed to implementing it, and we know from the budget documents that the bill is ready.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

Since Bill C‑208 was introduced, we have been getting calls every week from owners of farming businesses and family farms who are postponing transferring their businesses to their children so as not to be penalized from a tax perspective.

I now understand that the rules concerning these transfers do not appear in the current implementation bill, but that could be the case in the fall.

Thank you for your answer, even if it doesn't make me happy.

I am going to come back to a subject addressed earlier, the duplication of the GST credit adopted in Bill C‑46, also called the “grocery rebate”, which is better from a marketing perspective.

Assuming that Bill C‑47 is adopted by the end of the parliamentary session, how would Bill C‑46 speed up payment of this GST cheque?

[Lindsay Gwyer]

You're referring to the rules related to Bill C-208?

Those rules do not appear in Bill C‑47. In the budget, we published the preliminary legislative provisions that the public can consult. It will be up to the government to make a decision, but it is possible that those rules will be in the bill in the fall.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Madam Chair.

I would like to reiterate some of the things that have been said here in regard to that and maybe add some personal views to this.

For certain, we had witnesses come before this committee in regard to Bill S-245, an act to amend the Citizenship Act regarding the granting of citizenship to certain Canadians. That is the focus of the bill. It was the intent of Senator Yonah Martin, who brought it forward. It was made very clear at this committee that her intent was to have a specific, narrow focus for this particular bill, so that we can at least help someone. There have been years outstanding in this regard.

There are other areas, as my colleagues have just said, and there are other means of dealing with those. We dealt with that at the committee when Ms. Martin was here. I don't know why we're trying to extend it to do this now. I get the fact that we were extending it for 30 days. If the intent is not to bring in anything more than the wording changes that my colleague, the vice-chair and critic in this area, indicated, that's one thing. However, 30 days is a long time when you already have a bill that's very focused on what was requested to be done by the person who brought the bill forward.

I've been on this committee now since fall. I was on it five years ago when we went through a whole list of things. I didn't know my colleague was going to bring up the report today on the 300,000 workers needed in the agricultural industry as well. I come from the agricultural industry, Madam Chair. I can assure you that we dealt with this back in the days of TFWs and the shortage of labour in the agricultural industry then, trying to get people into activities here that could fulfill those spots. A lot of these people we're trying to help are already in Canada. We want to get them their citizenship as quickly as we can.

I would also agree that I'm not very enthralled with the idea of getting citizenship through the click of a button. I really believe that ceremonies mean something. They certainly do. At the citizenship ceremonies I've been at, the people there take them very seriously. They phone my office. We spend about half of our time dealing with citizenship issues in the Brandon area. We're very thankful to be one of the 15 places in Canada, with the Westman Immigrant Services in Brandon, that has been able to focus on the citizenship opportunities that are arising from the rural and northern initiative.

We want to make sure we keep this particular bill. There are lots of other ways of expanding it to those outside of this bill who are not included in it. This is very specific to a certain group of individuals. I think it's very important, even though we've extended it for 30 days, to certainly not use that amount of time to deal with it, when it can be done.... If it it is just wording and corrections to the bill, we can do it somewhat more accessibly. This bill is ready to go, as I say.

The idea of vandalizing the bill is not a threat. I mean, it's about precedent. It's not about whether we like the idea or not, as my colleague and critic from Calgary just indicated. It's about the precedent of what could happen to anybody's bill in the future.

I brought my own bill, Bill C-208, forward about two years ago, I guess. It was in regard to family farm transfers and family business transfers. We did get that consensus through Parliament, but there were talks about changes. The government decided to do that through regulatory mechanisms. We're still studying those because it was just brought in through the budget. We're very thankful that the bill has moved forward. It is active. People are able to use it across Canada.

With the type of bill that's before us, if we don't do this in the manner that has been put forward by the mover of Bill S-245—Senator Martin, herself—then it will likely end up doing what my colleague indicated, which is going back and forth with amendments and ping-ponging back and forth.

Everybody sitting here knows full well that the Senate agreed on this specific wording of this bill. It was the only way it passed the Senate to get here in the first place. I think we should honour the fact that all of the Senate indicated that's the way it should be. It's not just Ms. Martin, even though it's her bill. She was very diligent in making sure she got the consensus of the Senate to bring this bill forward in this manner.

I would say that it's not about the motivation to pass the bill or the motives in passing it. It's about the setting of this precedent for all future private members' bills in the House of Commons.

I think we know what she said and indicated in the bill itself.

There are a number of other issues in areas I pointed out—from the past experience I've had on this committee—that we could be dealing with. My colleagues mentioned some of them already. I've outlined a few more. We travelled extensively in Canada at that time, in order to look at the types of individuals who would be affected by some of the changes required from revamping the whole immigration act.

We're not suggesting we need to do that with this bill. In fact, we're emphatically saying we don't need to do that with this bill. This bill is very well written and focused on its requested outcomes. Therefore, Madam Chair, I'll be voting against the idea of the motion to put forward further amendments to this bill, which may allow for amendments that would be out of the scope of this bill.

Food Day in Canada Act

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, the Bloc Québécois is clearly in favour of establishing a food day. It was a pleasure to address this in committee, and it passed within minutes. It is not controversial.

The bill states that “Canada’s national sovereignty is dependent on the safety and security of our food supply”, that it “contributes to our nation’s social, environmental and economic well-being”, that it is important to support local farmers and that local foods need to be celebrated. All that is wonderful.

Unfortunately, I will be a bit of a killjoy this morning, because it is just lip service. Yes, we will vote in favour of the bill because it is important to establish this day. I think that we will be able to use it as a springboard for future initiatives; however, in reality, our agricultural industry is currently suffering. In response to the significant inflationary pressure, the Union des producteurs in Quebec and the Canadian Federation of Agriculture sent out messages and letters and expressly asked for meetings. Their requests were very, very reasonable and based on facts and data. They even made pre-budget requests, because they know how things work. They know when they need to do this.

There was very little in the budget; next to nothing, in fact. There was some clarification about Bill C-208 on farm succession after more than a year of waiting and more than a year of frozen transactions, especially in Quebec. That takes time. That was positive, but as for the rest, all we got were vague figures and the continuation of existing programs that barely work or are not working at all. I will provide some statistics. The people at UPA explained it for us.

The cost of inputs has risen by 43.3% overall, but in agriculture, it is up 69%. Inflation has risen by 55.4% on average, but in agriculture, it is up 64%. That refers to the cost of everything required to produce food. The increase in interest rates and the cost of debt servicing comes to 36.9% overall, but 58.5% in agriculture, because farms have a high debt load. As the previous speaker mentioned, gone are the days of pitchforks; Technologies have evolved and farmers now need tractors, which are expensive. We see farmers working in their fields and we think they are doing fine, but they still have not paid off their equipment. These producers are going into debt to feed us. I really want people to start understanding that, believing it and taking appropriate action.

The costs do not stop there. Transportation costs have risen by 33% in other sectors, but 49.9% in agriculture. Insurance costs have increased by 31.7% overall, but 49.6 % in agriculture. The list goes on. Things have reached a point where two out of 10 farm businesses are now in poor or very poor financial shape. We are talking about 20% of farms. Five out of 10 farm businesses expect their financial situation to deteriorate in the next twelve months. Three out of 10 businesses have a negative residual balance. Things are not going well. Four out of 10 farm businesses report that rising interest rates could prevent them from meeting their financial obligations. For some, this will mean shutting down. More than six out of 10 businesses plan to reduce or delay investments because they are straining just to keep up with their payments. In this kind of situation, investing is out of the question. The government wants these businesses to invest money and says it will help them, but they are tapped out. To grasp the reality of this situation, we have to see what is happening on the ground.

A total of 18% of businesses are considering asking their financial institution for a capital holiday. Do members understand what it means to request a capital holiday from a financial institution? It means that things are going so badly for the business that it will only pay the interest on its loans. What a great future for agricultural production. I think that, as a federal government, we have a role to play in that. I think that we could meet the needs and boost cash flow. What is more, 14% of farms plan to reduce the size of their business because they cannot deliver. Here is the most troubling statistic: 11% of farms plan to cease operations or close their doors. That is more than one in 10 farms.

We are mainly talking here about young farmers, the ones we talk about with a tear in our eye, while saying they are so great and wonderful. Perhaps it is time for us to show them how great and wonderful they really are by helping them. Farming is an ongoing, daily struggle, and we, as elected officials, need to have the utmost respect for these people who work seven days a week.

Given the current shortage of workers in almost every sector, let us survey agricultural businesses to find out who is interested in taking over the farm, in working seven days a week, 12 months a year. Let us find out who is interested in living in uncertainty with little support from governments and in being forced to compete with foreign products that do not meet the same standards.

I do not know how many times we have talked about reciprocity of standards. I want to give a shout-out to my colleague from Beauce, who is leading this fight with me at the Standing Committee on Agriculture and Agri-Food. He often raises this issue. Something needs to be done. We cannot ask our farmers to meet very strict standards yet also let in junk. When they talk about increasing the level of glyphosate in food—like they did last year—when none of our local farmers asked for it, they are sending a very clear message, namely that we will adapt to international standards. That way, people can bring in stock subject to more standards than our farmers' products. Can we be serious for 30 seconds, impose the same requirements and support our people?

Chicken farmers have created a DNA test. It has been around for years, it works and it is ready to go. Why is it not in place yet? The DNA test determines whether the poultry coming in is spent fowl or fresh chicken. There is cheating in international trade. Trade is wonderful; we all need to trade, but that has to be a rigorous process.

We must not forget the most important part. There have been plenty of positive speeches and gestures here in the House of Commons, including overwhelming support from 293 members who voted in favour of the bill to protect supply management in future trade agreements. That is significant. All political parties and the vast majority of MPs supported it. Only 23 people opposed it. However, now the bill is stuck in committee. There is an obvious intent to hijack the bill, and some members are filibustering. They keep talking to kill time. Everyone's time is being wasted.

I would also point out that this is coming from a political party that is always talking about government spending. They have good reason to talk about government spending, but it is important to stop and think for a second about what it costs to have a committee meeting where the same person talks for two hours, delaying a crucial bill that we passed in 2021 but had to start over again because an election was called. Although some progress has been made and we are at roughly the same stage, the bill is currently stuck.

I do not really want to hear anyone say that the bill is going to pass anyway. Are we serious about supporting our producers? Our producers are watching us and watching the public committee meetings. They are not happy. They want transparency and honesty when it comes to support, and they want concrete action. My colleagues know that it is important to be self-sufficient in terms of food security. I talk a lot about food resilience, food sovereignty. It really is important.

In closing, I would like to remind all my colleagues how much this reality hit home during the pandemic. This is a very serious issue. It is not just unpleasant for key sectors to be reliant on outside sources, it is actually very bad. I am talking about medical equipment, masks, ventilators. I am talking about food. That is basic. When we talk about key sectors, feeding the public is the foundation of everything. I am very pleased to support this bill. A food day will be wonderful. It needs to be used as a launch pad for what comes next. Let us do something meaningful and put our words into action.

Agriculture and Agri-Food

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, the next generation of farmers is under threat at a time when the price of land has spiked by 248% in 10 years. The House passed Bill C‑208 some time ago to make it easier to transfer a farm between members of the same family, but no one is benefiting from that because Ottawa keeps promising to amend the legislation without ever actually doing it.

If they sell their farm to their family, as permitted under law, farmers are afraid they will be hit with a tax bill if the federal government changes the rules mid-year.

Can the minister confirm that they will not be retroactively penalized?

Opposition Motion—Carbon Tax

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, that was a most interesting exchange. Maybe we can get into it later in questions.

Our Conservative Party motion we are debating today is an opportunity for all members of Parliament, even those in the Liberal backbenches, to stand up for their constituents. I know it would take courage, but I urge each and every one of them to do the right thing. If we can pass this motion, it would send a clear message and a strong signal to the Prime Minister that his government needs to get serious about the dramatic rise in the price of food. It would also send a signal to our entire agriculture and agri-food sector that the House of Commons will not sit idly by. We must do everything in our power to stop the Liberal government from making it more expensive for them to produce the food that Canadian consumers rely on.

There is a cost-of-living crisis for millions of Canadians. Our Conservative team gets up every single day in this House to fight for them, and sadly all we hear are empty Liberal talking points with no solutions. Just yesterday the Bank of Canada raised the interest rate another half a percentage point. First-time homebuyers are now paying $500 more a month in monthly payments for the same mortgage they had a year ago, and it now takes 67% of their income to service a traditional mortgage.

With these relentless rate hikes, more and more already struggling Canadians will have to choose between paying their mortgage and putting food on the table. Canadians are out of money, and the Liberal government is out of touch. We can just look at the number of credit card applications this year over last year. A report the other day had it at a 31% increase.

Like all MPs in the House, I am getting emails and calls from moms and dads who are struggling to pay their bills and put food on their tables. I am hearing from seniors who worked decades to save for their retirements, only to see inflation eradicate their income and their financial security. Every time families and seniors go to the grocery store, they get sticker shock. It is expected the average family will pay an additional $1,065 for groceries next year. It is no wonder that one in five Canadians is already skipping meals and a record one and a half million Canadians are visiting food banks every single month.

Our Conservative opposition day motion would not only help reduce the cost of food for families and seniors, it would pour water on the fire of government-induced inflation.

I farmed all my life. It is what I know best. I also represent countless farm families and hear from them every day. They find it reprehensible that the Liberal government is determined to make it more difficult for them to produce the food we eat. It is simply unconscionable that their own government is implementing policies that are making it more expensive for them to farm and stay competitive.

Farmers will never forgive the Liberals for calling them tax cheats, and they will never forget how the Prime Minister and the Minister of Agriculture voted against my private member's bill, Bill C-208, which my colleague referred to earlier, that made it easier to transfer their farm to the next generation. The one little correction is that it is working. It is out there today and farmers are taking advantage of it, but they are only 3% of the small businesses in Canada. There are 97% of the small businesses in Canada that are not farms, and they are also getting the opportunity to level the playing field, because nobody is getting an advantage here. It is just a levelling of the playing field under Bill C-208.

Returning to the farming industry, farmers are livid that the Liberals recently voted against the Conservative bill to completely exempt them from the carbon tax. We live in Canada, where it gets cold and wet. Farmers need to dry their grain and heat their livestock barns. Farmers are getting punished through no fault of their own.

As the recent “Canada's Food Price Report 2023” stated, a typical 5,000-acre farm, which has been alluded to today many times and of which there are many across the Prairies, will have to pay $150,000 in carbon taxes per year, once the Liberals triple their carbon tax.

When I was a farm leader, I recognized that there is 100 million acres of arable farmland on the Prairies. If that was an average rate, it would require that $3 billion be taken out of the farm pockets and added to the cost of food. I want to remind the Minister of Agriculture that every time the cost of growing food, processing food and transporting food goes up, we see those costs borne out in our grocery store receipts.

Our Conservative motion aims to resolve the long-standing issue of the Liberal carbon tax being one of the cost drivers that is making Canada less competitive and making food more expensive. On the first issue, farmers have seen their input costs soar, which includes energy and fertilizer. With the Liberal carbon tax being applied to many aspects of our agriculture and transportation sectors, it is making farmers less competitive on the world stage.

Lots of farmers in my region experienced a wet spring and had to rely on aerial application services. Those companies pay the Liberal carbon tax, which is passed down to the farmer.

Many farmers get custom haulers to take their grain, oil seeds and pulses to the elevator or their final destination. Those companies pay the Liberal carbon tax, and it is passed down to the farmer.

Most farmers use fertilizer to increase their yields. Those companies that produce and transport the fertilizer pay the Liberal carbon tax, which is passed on to the farmer.

I could go and on, but it is clear that the Liberal government does not know how farmers operate. Almost every product that a farmer needs to purchase to plant a crop, maintain a crop and then harvest a crop gets transported in from somewhere, and the Liberal carbon tax is applied to all of it.

The beef and pork producers in my riding also feel the brunt of the Liberal carbon tax. The trucking companies that haul the supplies they need to run their farms and ship their livestock pay the Liberal carbon tax, and it is passed on to the farmer.

If members are starting to see a trend, it is that a significant portion of our agriculture sector is paying the carbon tax.

As our leader said, our Conservative team wants to repatriate food production by standing with our farmers here at home. The Liberal government's high energy taxes and proposed fertilizer emissions cuts will only drive food production abroad to higher-polluting foreign jurisdictions, which would have them then burn fuel to send that food by ship, train and truck back to us. Our Conservative team wants to repeal these taxes and fertilizer mandates to get out of the way and get off the backs of our farmers.

It is no wonder the Parliamentary Budget Officer said that families are seeing a net loss thanks to the Liberal approach. Families and seniors are getting crushed, and it is time for action. They are tired of the Liberals gaslighting about how much better off they are under the carbon tax rebate scheme.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I have a few things to say about Bill C‑241.

The Bloc Québécois supports Bill C‑241, as we've said from the beginning. We think it's a good bill. However, some aspects of the bill gave rise to uncertainty.

I'd like to thank the Department of Finance for addressing those issues recently in a letter that it sent to the committee.

The Department of Finance provided a lot of information in response to the concerns that were raised regarding the definitions and interpretation the Canada Revenue Agency will apply in implementing the measures.

In the House, debate at second reading revolves around the principle underlying the bill. What I like about working in a committee is that members of every party can put forward amendments to make the legislation better.

As I recall, I had been pushing the government to do this. Since 2019, I've noticed that the government doesn't seem to think that an opposition member's bill can actually be passed and implemented. Just think of Bill C‑208 in the previous Parliament. The bill, which dealt with the transfer of family businesses, sought to ensure that families would no longer be penalized when a family business stayed in the family instead of being sold to a third party. The government didn't bring forward a bill to do that, saying that it was going to introduce legislation to regulate the whole thing. A year and a half later, still no bill.

Many things in the finance department's response could have been turned into amendments had the government wanted to set parameters and prevent potential abuse.

That didn't happen, and from what I understand, the departments and the Canada Revenue Agency have the latitude they need to interpret how terms will be defined and so forth. To me, that means it's acceptable.

Obviously, I want to underscore to the members of the committee that it is better to make amendments to clarify and strengthen bills.

Personally, I recognize that the department and the agency will bring forward regulations and the relevant definitions. I still support this important bill, and I again want to thank the Department of Finance for providing information that will no doubt provide clarity around the bill's implementation.

Thank you.

Food Day in Canada Act

[Caroline Desbiens, Bloc, Beauport—Côte-de-Beaupré—Île d’Orléans—Charlevoix, QC]

Madam Speaker, I am very pleased to rise to speak today, and I would like to say at the outset that the Bloc Québécois is in favour of this bill for several reasons. Obviously, designating the first Monday in August as food day in Canada is a good idea because, at that time, farmers will have just finished haying and the potato harvest is beginning. Thus, it is a very good time to have it. It is also an opportunity to address concerns that are often ignored, which is why such a day is so important.

As a society, we make the mistake of taking the agri-food and agricultural sectors in Quebec and Canada for granted. It would be a good idea to promote them more, to celebrate local food and local cuisine. The country is celebrated first and foremost around the table. It is the same all over the country, so this is a great opportunity to highlight that aspect of our happiness on this land.

Obviously, the pandemic has opened our eyes to serious problems with our food sovereignty, for example in our production chains. As a result, we have discovered that we are highly and seriously dependent on foreign countries for many aspects of our industries.

At the Bloc Québécois, obviously the agriculture and agri-food sector has always been a priority. In Quebec, we are constantly investing in food sovereignty, including by promoting our supply management system and ensuring it is protected. It is an indispensable tool for balancing our agri-food market and a system that is used as a model in several countries around the world. Canada may once again benefit from referring to Quebec on the matter. I do not mean that as a boast; well, maybe a little bit.

There are several ways to go about promoting food sovereignty in Quebec and Canada when it comes to agri-food. First, we need to secure our food chains by changing course with the temporary foreign workers program, for example. We need to make it easier for workers to access our lands. We could promote succession planning in agriculture, for example, by bringing into force Bill C‑208 on taxing the intergenerational transfer of businesses because it is much easier for a farmer to sell to a stranger than to hand over his business to his own son, which is not right. The son invests in his parents' farm his whole life, but they are unable to hand it over because the way the taxation is done does not favour that. We need to help producers and processors innovate and become resilient to climate change. We need to protect critical resources and agriculture and processing facilities from foreign investments, including under the Investment Canada Act. We need to promote human-scale farms by encouraging buying organic and buying local.

I would like to take this opportunity to salute my riding's diverse and exciting agri-food industry, which produces berries, potatoes, ice cider, wine, beer, mouth-watering cheeses and organic pork and poultry on farms all over Île d'Orléans and along the Côte‑de‑Beaupré. Throughout my riding, from Beauport to Baie‑Sainte‑Catherine, our producers' reputation is well established. I could talk about them all afternoon. It would make my colleagues hungry. It is suppertime, after all.

Now I want to talk about an equally important aspect of the agri-food landscape: seafood. Surprisingly, it is easier to buy Quebec's products in the United States or in Europe than in Quebec. Are my colleagues aware that people in Quebec and Canada consume just over 10% of the seafood our fishers harvest and that 90% of the seafood Quebeckers and Canadians consume comes from other countries?

That is appalling. As if that were not bad enough, the food safety and traceability standards that apply to fishers in Quebec and Canada, who export 90% of our resource to Europe and the United States, are significantly higher than those that apply to the imported products that make up 90% of the seafood we eat. We ship our high-quality products out, and then we eat lower-quality things from other countries. That is appalling; it makes my skin crawl.

Simply put, the quality of the food we eat in Canada is not as good as the food we export and that we supply to the international market. Quebeckers and Canadians deserve better.

Following a motion that I moved for that purpose, my fine colleagues on the Standing Committee on Fisheries and Oceans, whom I thank for their valuable contributions, and I began a study on labelling and traceability. Many observations were made, some of which were worrisome, others alarming, and still others encouraging. Many solutions, approaches and suggestions were also proposed. All of this resulted in the tabling in the House in June of a report entitled “Traceability and Labelling of Fish and Seafood Products”. The government must urgently implement the committee's 13 recommendations and take real action, not just say that it has taken note of these recommendations, but actually take action.

If we want to know what we are eating and where it came from, we need better labelling and better traceability, from farm to plate for agriculture and also from boat to plate for the fisheries.

Our local products deserve to be in the spotlight. If a chef describes a menu item as “St. Lawrence halibut stuffed with northern deepwater prawns from Matane, Quebec black garlic butter and medley of local Charlevoix vegetables”, people go crazy for it. If it is described as just “shrimp-stuffed halibut”, it is not as popular. That is why it is important to promote our local products and to make them available. I think that is crucial.

When people go to restaurants, they want to eat local, they want to taste locally caught fish. When we eat foods from Quebec and Canada, we appreciate our artisans' and our experts' skill. It sustains us to take pride in discovering the quality of the homegrown products available to us and the often distinctive and exemplary practices of our food producers. We know it will be fresh. We know it is from here. We know minimal food miles mean less pollution. We know our money stays here and helps our own fishers and farmers, who, in turn, spend that money here. Buying local is all about the circular economy, and it is good for everyone. It tastes good, and it is good for society, too.

I also want to talk about by-catch. I had a jarring experience that made no sense in terms food sovereignty, and I have yet to recover from it. Fishermen have permits to fish for shrimp, for example. If they catch some halibut, redfish or squid, they are forced to take the dead fish and throw it overboard, because their permit is for shrimp. It is terrible.

In the Gaspé, if someone wants to have some fresh, local fish, they are told it is impossible. The fish they are serving comes from Norway and the shrimp comes from China. I still cannot believe it. I want the House to be aware of this very important aspect. Perhaps permits could be expanded and made more flexible, so that fishermen with by-catch could redistribute it in the area.

The Standing Committee on Fisheries and Oceans has done a lot of studies. We are completing a study on the right whale and are starting to realize that the expertise and knowledge of our fishers are not always truly taken into consideration. They are not always closely listened to, and yet they have concrete solutions to better understand the right whale.

In closing, everyone has to eat, so we might as well do so responsibly, taking into account our environmental footprint and the social and economic impacts of our choices.

Let us be proud of our local products, our producers, farmers, fishers and food artisans. Let us promote their products, within a balance of supply and demand, before opening up to foreign markets, which are necessary, of course, although they must not control our own supply or affect our market prices, since that would have a serious impact on our food sovereignty.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I am pleased to rise to speak to this bill. I would like to announce at the outset that the Bloc Québécois agrees that the first Monday in August should be designated food day in Canada.

There are a lot of interesting things in the bill's preamble. I think they are worth mentioning. First, it says that sovereignty is dependent on the safety and security of our food supply. It is important to keep that in mind. If we cannot feed ourselves, we cannot defend ourselves and survive.

It also states that strengthening connections from farms to tables of Canadian cuisine contributes to our nation's social, environmental and economic well-being. The closer we can bring production to the consumer, the more we will reduce the environmental impact. This cannot be done for everything, and we are not talking about extreme measures here, but it must be done as much as possible.

The next point, support for local farmers, is music to my ears. We have to provide adequate support to the people who feed us. We cannot expect them to cope with the vagaries of annual production alone. Just a few minutes ago, I was talking to a farmer who explained to me that all the extra precipitation this spring had a devastating impact on the entire season; it was so long ago that people have forgotten. Farmers had to redo their drainage to prevent future flooding. There may be years when there is not enough water. That kind of instability and unpredictability are reason enough for us to take good care of our people.

The last part of the preamble states that the people of Canada will benefit from a food day in Canada to celebrate local food. That sounds great to me. As I said, we support the bill.

In any conversation about agriculture and agri-food, food sovereignty is bound to come up. We hear that expression a lot. It is a bit overworked and gives people the impression that we are trying to be entirely self-sufficient. That is not the idea. It might be better to talk about food resiliency than food sovereignty. The idea is to ensure that we can feed our population and that farming remains a viable occupation going forward. That involves a number of factors.

I will start with temporary foreign workers. Everyone knows that our agricultural production is now dependent on this essential and valuable workforce. It is also a great way to redistribute wealth around the world. When these workers return home, they take a good income with them and a different kind of wealth and drive. It is a win-win situation. For us, it means production can continue. Otherwise, the crops would remain in the field.

However, we have to smarten up. We have been saying for years that this is not working. Quebec has asked to have full management of this program to make it more efficient, so that only one level of government manages it. I think this is a good idea. I invite Parliament to consider this option very seriously. In the meantime, there are things that can be done, like improving processing times. Why does it take so long to renew a permit? When the same worker has been coming back for 12 years, why are all the security steps repeated? It is completely ridiculous and appallingly inefficient.

I am talking about agriculture because the debate is on a food day, but there is growing number of sectors that are using foreign workers, including the entire tourism sector. We need to facilitate these operations. We need to acknowledge the state of the employment market in Quebec and Canada, this shortage that is affecting us, and recognize that we need these people. Let us be effective. Let us welcome them. It is a win-win, as I was saying.

The second point I want to address is succession planning in agriculture. I look at the governing party across the way. The Speaker does not want me to address them directly, but I am looking at them and asking them when they will adjust Bill C‑208, which was democratically voted on in the last Parliament and crossed every stage, including the Senate.

Members know that the Senate is not my favourite institution, and the senators I know are also aware of that. However, it is part of the process. The bill was approved everywhere and it must be implemented. Officially, it has been, but the minister and the government have raised some uncertainty about the transfer of these family farms that is causing significant harm to our Quebec businesses.

I have said it many times here in the House: Financial advisors recommend that our farmers wait before transferring their family farm because they are concerned about the amendment that the Liberal government wants to make.

The new alliance is like a majority government. They can do anything. I am therefore asking them to shed some light on this so that we can see what is happening and where things are going. This bill was passed and no one should be preventing it from being implemented. Our next generation of farmers is important.

We spoke about our local production and feeding people. I would be remiss if I failed to mention supply management. Every time I rise, I have to mention it at least once, and I am going to talk about it again.

It is a great system that allows self-regulation within markets, and it costs nothing. These folks are not going to come up to us and ask for subsidies, because they are self-regulated and the system works perfectly. All the Canadian government has been doing for these people for the past ten years is hurting them by giving foreign countries access to these markets, which were working very well.

The principle behind supply management is about controlling the entry of goods. If the entry of goods is not controlled, it does not work. When nearly 20% of the market, for example in the dairy industry, comes from abroad, if our local producers reduce their production in a particular context, for example COVID-19, if foreign countries continue to bring in the 20%, then control no longer works. I will say it again today: We are dealing with a government that appears set on gradually eliminating this system because it does not have the courage to assume the political cost of making that decision.

We are hearing lofty words. The government says it will protect supply management, there is no problem and no more concessions will be made. If that is true, then the government can readily vote as it did the last time. I again congratulate the government and I invite it to start over. The last time, it voted in favour of our bill. If not for the unnecessary election in the midst of a pandemic, the law would probably be in effect already. Therefore, I am asking that we deal with this quickly, because it is an important sector.

The motion also mentions the environment. People increasingly want to eat healthy and organic products, but this does not exclude other products and other techniques. I believe that we must pay attention to our organic industry. Paying attention means continuing to identify foods that have been genetically modified, even with the new techniques.

As we know, there was a minor controversy recently. The Bloc Québécois does not oppose innovation, but is in favour of transparency. People must be able to choose what they eat and they need the relevant information when they eat something.

We are talking about local production, but of course we engage in international trade and will continue to do so. One thing we should do is implement reciprocal standards. Why do we allow products in if they do not meet the standards that apply to our own producers?

Something about that does not make sense. Why are we not making it possible for our consumers to know exactly what they are buying?

I challenge my colleagues to figure out where the chicken in the frozen chicken pot pie they buy at the grocery store tomorrow comes from. I challenge them to give it a try. It is not easy. Appropriate food origin labelling requires traceability. Some companies have come up with interesting innovations in that respect.

My colleague on the Standing Committee on Fisheries and Oceans is also working on this. These are great ideas.

I see that my time is up. I therefore invite all my colleagues to joyfully and happily pass this bill.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I am pleased to rise today to speak to Bill S‑227, an act to establish food day in Canada.

The purpose of this bill is to establish the Saturday before the first Monday in August across the country as food day in Canada.

I will say right away that the Bloc Québécois will be voting in favour of this bill as it addresses and highlights important issues in the lives of all Canadians and Quebeckers, issues that are ignored all too often.

The wealth of the Canadian and Quebec nations makes us take for granted the agricultural and agri-food sector. The Bloc Québécois has made the agriculture and agri-food sector a priority. We speak constantly of food sovereignty, in particular by promoting the supply management system, which is a good example.

Food sovereignty is a relatively new concept. It was first introduced by the movement known as La Via Campesina, which introduced the idea and presented it for the first time at the World Food Summit of the UN Food and Agriculture Organization in Rome in 1964. Since then, it has been championed by various movements, which have adapted it to reflect the concerns and values of their own organizations and the socio-economic situation in their country.

Over time, the Bloc has raised several issues to promote food sovereignty in Quebec and Canada. Specifically, we should be securing our food chains by giving a boost to the temporary foreign worker program; fostering the next generation of farmers by passing Bill C-208 on the taxation of the intergenerational transfer of businesses; promoting local agriculture and processing, particularly by increasing slaughtering capacity; helping farmers and processors innovate, especially when it comes to building resilience to climate change; protecting critical resources and agriculture and processing facilities from foreign investments, including under the Investment Canada Act; and promoting human-scale farms by encouraging buying organic and buying local.

The pandemic has opened our eyes to the cracks in our production chains and, especially, to our over-dependence on foreign imports for many aspects of these critical industries.

In November 2021, Quebec's agriculture minister, André Lamontagne, launched the $12 challenge, which encourages Quebec consumers to replace $12 worth of foreign products with local food during their weekly trip to the grocery store. If every Quebec household replaced $12 worth of foreign products with $12 worth of Quebec products each week, Quebec's bio-food industry could grow by $1 billion a year, and there would be an estimated $2.3 billion in annual economic benefits for the province. I encourage every Quebec family to take up the challenge.

We are spoiled. Our cuisine offers a wide variety of possibilities. It is regional and seasonal, with a touch of our multicultural history thrown in for good measure. There are blueberries from Lac-Saint-Jean, tourtière, maple syrup, shrimp from Matane, not to mention fruits and vegetables from Abitibi-Jamésie. Those are all good local products.

Buying local is everyone's business: retail stores, restaurants, caterers, canteens and food trucks, establishments that serve alcohol, food services for the health care system, schools, correctional services, municipal services, factories and businesses, day cares, hotels and other tourist sites.

It is also important to have purchasing policies that integrate the origin of products in their food supply selection criteria. Broccoli from abroad travels a long way between the field and our plate. Imagine the thousands of kilometres apples from South Africa or raspberries from Mexico have to travel before arriving in Quebec. What about all the pollution generated by the transportation of these foods, from their production to our plate?

According to a study published in 2021 in the scientific journal Nature, one-third of all greenhouse gases come from food production, especially food transportation.

Choosing to consume local products when they are available is an easy way to reduce one's ecological footprint. Buying local helps support the nation's economy and regional vitality. Everyone wins. This summer, I visited farmers' markets in Val-d'Or, Malartic and Senneterre, where people can buy foods produced close to home.

According to Statistics Canada, when the second COVID‑19 wave hit in the fall of 2020, approximately one in 10 Canadians aged 12 or older said their household had experienced food insecurity in the previous 12 months. That is unacceptable in a country like Canada.

Fortunately, Quebec is one of the provinces where the number of families experiencing food insecurity has dropped significantly. It seems likely that Quebec's progressive social safety net—its child care centres, parental leave, education system and so on—has something to do with that.

With respect to the regions, I want to talk about the riding of Abitibi—Baie-James—Nunavik—Eeyou, which I proudly represent, and, more specifically, Nunavik.

Despite several decades of government efforts, food insecurity remains a significant and complex problem in the north. This insecurity has to do with both the quantity and quality of food consumed and is caused by different factors such as the very high cost of living, the increasingly limited access to products from traditional subsistence activities such as fishing, hunting and gathering, a lack of knowledge of the harm and benefits of market foods, as well as the repercussions of climate change and environment pollution on the traditional food systems.

To deal with the major challenges of food insecurity in the villages in Nunavik, the development of a nordic agriculture is considered an innovative solution. Focusing also on the health and well-being of the Inuit communities, the installation of community greenhouses helps enhance the supply of local fresh produce and improves the quality of food in a sustainable way, while taking into consideration the cultural dimension of food insecurity.

The approach used in this interdisciplinary project allows a local and sustainable supply system to be built with the community and to include the contribution of a horticultural project for improving the quality of life and health of the people.

These community greenhouses also help to slightly lower the price of groceries, which cost far too much in Nunavik. For example, the people in Nunavik pay 48% more for their groceries than people in the southernmost regions of Quebec.

Some 84% of Inuit living in the Hudson Bay region of Nunavik are food insecure. Inuit people experience the highest prevalence of food insecurity of any indigenous people in Canada. It is vital to find effective ways to ensure their food security.

The bio-food industry is helping to shape Quebec's identity and contributes to its wealth. It helps feed Quebeckers with food of the highest quality. It enjoys a good reputation on international markets thanks to the uniqueness of its products. This sector is more than just an essential activity for Quebec's economic prosperity. It is intimately linked to how the land is occupied and how each region is developed.

Quebeckers are privileged to be able to count on a dynamic bio-food sector that responds to their expectations and does everything possible to meet their extremely diverse needs. This industry is well established within our territory and has a presence in markets beyond our borders. It also supplies fresh agricultural products and original, high-quality processed foods.

A food day, as proposed in Bill S-227, would showcase farmers, fishers, processors, distributors, retailers, restaurateurs and, ultimately, Quebeckers, who are growing more and more fond of Quebec products.

I know I said this before, but that is why the Bloc Québécois will vote in favour of this bill.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I echo Mr. Baker's words about our commitment to Ukrainians, and it's not about roots, but first about justice. I congratulate you on your commitment to that, Ms. Freeland. We want a just peace as soon as possible.

As my time is limited, I will ask you two questions in quick succession.

The first is about the Canada Community Revitalization Fund and the programs through which the federal government funds municipal infrastructure programs.

Given the shortage of labour and the number of companies that can carry out work under these programs, turnaround times can often be very long. In addition, municipalities may find it burdensome to enforce the deadline for completion of the work, which is usually March 31. The government shows little flexibility with respect to this date.

Can the government commit, in general, and in particular with respect to the Canada Community Revitalization Fund, to showing more flexibility in extending the date that municipalities must meet?

I'll ask my second question right away. It concerns a bill that was passed before the last election. It is Bill C‑208, on the transfer of family businesses. The bill was passed and came into force. Yet, in Quebec, tax specialists and accountants do not want to use these legislative provisions, because they are still waiting for guidance from the government or institutions on how to apply them properly.

Is the government committed to producing the guidelines or proposing a new bill that will spell out how it will be applied, as soon as your economic update, which is expected this fall?

[Mathieu Lavigne]

Indeed, it shouldn't be referred to anymore as Bill C‑208, since it's now an act.

In our opinion, it's a matter of fairness for business owners who want to transfer their business to family members. This is a very important issue because there are a lot of owners in Quebec who are nearing the end of their careers. There's a pool of young people, often within the same family, who are ready to take over. However, the current tax rules penalize people in this situation, both those transferring the business and those taking over.

It's essential to relax the tax rules immediately. We're pleased that the government at least mentioned it in its last budget, but we'd have liked for it to move much faster on this issue and make that relief a reality.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you very much, Mr. Chair.

Good afternoon, honourable members.

Good afternoon to those taking part in this meeting. Your comments are very interesting.

I'll begin with Mr. Lavigne from the Fédération des chambres de commerce du Québec.

Mr. Lavigne, I'd like to address several points with you. First, I want to point out that Bill C‑208 was passed and is ready to come into effect. It just hasn't yet.

In your opinion, what would be the benefits of the legislation coming into effect immediately?

[Mathieu Lavigne, Director, Public and Economic Affairs, Fédération des chambres de commerce du Québec]

Mr. Chair, members of the committee, good afternoon.

My name is Mathieu Lavigne, and I am the director of public and economic affairs with the Fédération des chambres de commerce du Québec, or FCCQ. I'm here today with my colleague, Ms. Audrey Langlois, adviser, workforce and economic affairs.

Thank you for the opportunity to appear today by video conference from Montreal.

The FCCQ, which some of you know well, is an organization that comprises 125 chambers of commerce and 1,200 member businesses, for a total of over 50,000 businesses. Our members operate in all sectors of the economy in every region of Quebec. As the largest network of business people and businesses in Quebec, the FCCQ is also a provincial chamber of commerce and defends the interests of its members with respect to public policy.

We thank you for inviting us to take part in this study on the labour shortage and the productivity of our small and medium-sized enterprises, or SMEs. It's a topic that is obviously at the heart of our work at the FCCQ.

I'll quickly share a few observations and, above all, some recommendations on the various elements included in the study, but rest assured that we can discuss other topics in response to your questions, if time permits.

First and foremost, I'll begin with the labour shortage. It's clearly the main concern in the economic sector in Quebec. For example, in March, there were 259,170 job vacancies in Quebec, double the number there were at the end of 2019, before the pandemic.

There are many causes for the shortage, hence the importance of deploying a wide range of measures. I'd like to draw your attention to some of those, beginning with attracting foreign skilled workers.

Our members are very concerned about the slow processing of applications of would‑be immigrants. While the processing time for a skilled worker is 32 months in Quebec, the wait time for a similar program in another province in Canada will soon be set at six months. Accelerating the processing of immigration applications and the issuing of work permits should be a top priority for the federal government. I want to take this opportunity to second what the rector of the Université du Québec en Abitibi-Témiscamingue said earlier. We're on the same page.

Obviously, immigration is not the only answer to the labour shortage. There's also a need to better train current and future workers on an ongoing basis, and encourage the unemployed to quickly return to work and experienced workers to remain on the labour market longer if they wish to do so.

That's why we are proposing that the federal government create a voluntary lifelong learning savings plan, based somewhat on the registered education savings plan model. We also suggest that the government undertake a real overall review of the employment insurance system to refocus it on its primary mission, temporary income support with support measures to promote a quick return to work. Finally, we recommend that the government increase the income threshold at which guaranteed income supplement benefits are reduced.

The regulatory and administrative tax burden is another major obstacle to growth for our SMEs. Here again, the federal government can and must act, beginning by bringing former Bill C‑208 into force quickly. The bill promotes the transfer of business ownership within a family. The current tax rules make things difficult for SME owners and hinder the transfer of family businesses to the next generation. The bill must come into effect.

Another source of obstacles for business owners is the duplication of reporting requirements under similar federal and Quebec laws. We've been asking the federal government for several years to undertake discussions with the Quebec government to come to an agreement regarding a single income tax return; we recommend the pragmatic and innovative approach of focusing the process solely on the interests of taxpayers.

We then suggest that the federal government learn from its Quebec counterparts, who have brought forward an omnibus bill on regulatory relief measures for the second year in a row. There's no doubt that, every year, some of the many federal laws and regulations could be eliminated, and others, streamlined, to make life easier for business owners.

In closing, I thank you for taking a serious look at the productivity and labour challenges that our SMEs face.

We would be glad to answer your questions.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Mr. van Raalte, last spring the committee conducted a study on competitiveness in Canada. In June 2021, parliamentarians took part in a historic vote on a bill that later received royal assent. By the end of June, it'll have been a year since this historic vote took place. By passing Bill C‑208, parliamentarians corrected a tax injustice long-tolerated within the federal government. The bill grants small businesses, particularly family farms and fishing corporations, the same tax rate on the sale of their business whether it is sold to a family member or to a third party.

However, on June 30 and July 19, 2021, the Minister of Finance issued a press release announcing her intention to delay the entry into force of these changes until January 1, 2022, due to concerns with the wording of the bill. It is now June and there has been no update. Ms. Freeland committed to providing further clarification, yet when we asked her about the matter at the Standing Committee on Finance, she was unable to provide an answer.

Can you tell us if you have any clarification on the implementation of this legislation? People are awaiting news. When will that happen?

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, Mr. Lobb, for the attention you have paid again to our farm community. I want to thank you for bringing this very important issue forward to our agriculture committee.

Last year, when I was on the finance committee, we passed Larry Maguire's Bill C-208, which allowed farmers to successfully transition their farms to their children with the same favourable tax treatment as selling it to a third party. A lot of these transitions to the next generation still mean that the second generation has to be highly leveraged.

I'm wondering if you considered the impact of highly leveraged young farmers when you presented your idea in this private member's bill.

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

Thank you, Mr. Chair.

I want to say that I know how difficult these conversations can sometimes be, and I do like the tenor, the tone, that we have all embraced as members of Parliament. We are all sent here to try to work together.

I will disagree with some of the things my honourable colleague MP Dzerowicz said earlier, but I'll save that for a moment other than to say that I appreciate that these meetings are not only important to our constituents, but they can be long because you can't put a price on democracy. There are rules that have been enshrined in this place to allow committees to function as independently as possible, as MP Chambers said earlier.

There are obviously other tools the government can use such as a House order. It, in fact, directed the study of Bill C-19 to this committee. Ultimately this committee was created to serve the House, but without having further instructions, we have a responsibility to set our own sail.

While the original programming motion that was put forward by MP Beech as the parliamentary secretary was received in good faith by MP Ste-Marie, who I admire very much for his passion for his constituents, for the questioning he's had and the lack of answers he's been able to receive when it comes to the luxury tax and the occasional intervention by my honourable colleague from the NDP, what has happened is that he put that forward, and now we've had a further subamendment to his amendment, which was to try to make sure that there was a proper process.

The government—let's be mindful, Mr. Chair—at the very beginning tried to apply its direction to what is supposed to be an independent committee. Right off the bat, I believe I made it known that it was an issue. I believe I made some arguments about how there were promises by this government to not have parliamentary secretaries on committee. They would occasionally sit down in the corner and listen in thoughtfully so that they could report back to their ministers the goings of this committee, which is a very august body, and I've always enjoyed being on it.

Again, this is a bill, 468 pages, I believe, because when I put it to the minister when she came in for the hour, I said 421. Again, Mr. Chair, you might be mindful that there are a number of pages we did not know about. The government didn't even give us the courtesy in their courtesy copies to say that there's more on the website, even just a note to go along with it, so there are missing pages, which I raised earlier.

As I open my comments today, I go back to the tone that Mr. Chambers presented earlier. In fact, he made a little bit of a joke saying someone had to listen to him, and when he said thank you for staying, they said, “No, I'm the next speaker.” That was very funny. It reminds me of a very similar joke I used to give when I first set out in politics. I said that my goal in any speech or presentation was three things: to be bold, to be brief and then to be gone. Actually, I think it wasn't to be bold. I think it was to be brilliant.

I'm going to let everyone now know that I used to joke that at least you'll get two out of three. I have become a little bit more of a realist, so I'm going to let everyone know not to expect any of the three today.

I'd like to start with why we should be concerned about the programming motion put forward by the parliamentary secretary, and I have already touched on it. Governments are tethered to this institution. They are not the ones who tell us as members of Parliament to have confidence. They're the ones who have to put forward bills that show confidence. In this case, we have a motion that is directly telling us how many presentations we can have. I guess it just gives us a time limit, and it also puts in when we should have clause-by-clause.

The very thoughtful motion by MP Ste-Marie does actually propose that we divide this up, because in those 460-odd pages there are many clauses that pertain to areas of expertise in other committees, and committees like international trade, industry and technology, the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, the Standing Committee on Citizenship and Immigration, and the Standing Committee on Justice and Human Rights—all very important bodies.

When we send something to them, the very premise should be that we are in good faith seeking their responses. Now if you harken back to our last meeting, Mr. Chair, I believe it was confirmed that clause-by-clause would be done only by this committee. Regardless of what those members on those other committees think, ultimately they will not be able to substantially do what we do, which is to put forward amendments and to debate them. I don't think that is fair.

I should also point out that there is going to be a bit of a challenge, because I don't think independent members are being taken into account under this particular motion by the parliamentary secretary, or even in his amendment. Don't worry, though. I'll save that for closer to the end.

What I think is important to note is that when you offer someone something in good faith, the idea is that it's a legitimate offer. Now for those committees to suddenly decide whether or not they can meet at the time that has been listed here by the parliamentary secretary...and let's note that it is today, Thursday, May 12. When this was first tabled, obviously it was earlier in the week. Already days have slipped by, and while I do understand that MP Baker and MP Dzerowicz had both raised the idea that politics is the art of compromise, compromise means thoughtful discussion and give and take. It does not necessarily mean overriding other members without having some sort of thoughtful process.

As you can see, Mr. Chair, that leaves the Conservatives with very few options other than to say that we do not believe that this particular motion or its amendment.... Actually, I should say that the amendment seems to improve upon it, but the subamendment by the parliamentary secretary is not being done in good faith. Why? Because time has already been whittled away.

We already had to say no to those witnesses who came here on Monday ready to present. I presented a motion to try to see if we could speed that up. The importance of having witnesses cannot be overstated. Why? It's because obviously this is a very large omnibus bill and I find it lamentable that the Minister of Finance, the deputy prime minister, spent only an hour with the committee. I would have preferred a second hour, because I would have asked several other questions that pertained directly to Bill C-19.

I don't see any provision here in the subamendment for having the minister come back. In fact MP Chambers had expressed his desire to have the Minister of Industry come and speak to the competition components, the Competition Act amendments. I do enjoy Minister Champagne. I think he's a very thoughtful individual. If it is the will of the committee to have him come in for an hour, I would certainly make the time in my schedule for that. I think this particular subamendment that Mr. Beech has put forward has neither the Minister of Industry nor the Minister of Finance.

What worries me as time cuts away at this is that ultimately we're going to have less and less time, because the Liberals have not tried to work co-operatively with all members. I think that's really at the heart of this. I don't blame the Bloc or the NDP for playing ball because maybe their preferences have been met.

Maybe they see a different reality from the one I do, but this particular subamendment of Mr. Beech does not necessarily meet those needs from our perspective. Again, while we know the saying that politics is all about compromise, it's usually referred to as the art of the possible.

Do you know what, Mr. Chair? What's possible isn't always probable.

What's probable is where you make.... You don't think you should speak to other members and try to get them on board. Instead, we have motions, amendments and subamendments that do not have the consent of each and every party or member. Obviously, there's a way to have a democratic debate about this and, eventually, a vote, but I am not going to be keen to give that until we have had a thorough venting of some of the issues with this particular motion.

Let me go into some of my concerns.

In the last Parliament—I'm going to give a personal example—I was on the environment and sustainable development committee. It's a very good committee. Much like in this body, I got a chance to work within a group where we may have had distinct views on policy. I felt that the people around the table were generally respectful and understood that we were all here to represent our constituents and to have an exchange of views. Where we might have disagreements, we would talk them out until either we found some consensus or compromise, or we put it to a democratic vote.

We went to a bill called C-12, and there's something very similar between Bill C-12, the net-zero bill presented by the minister of the environment—at that time, it was MP Wilkinson of North Vancouver, a fellow British Columbian.... Similarly, in that particular bill and study, the parliamentary secretary put forward a programming motion. Unfortunately, the member of Parliament for the NDP at the time decided that they would opt into that programming motion. Again, I don't want to prejudice or call into question anyone's character, including the previous member of Parliament or the current NDP representative at this table, who I'm sure is here in good faith.

What ended up happening was, in my mind, remarkable. We had witnesses come forward and we listened to the testimony. All parties, the Bloc, even the Green individual.... My colleague MP May from Saanich—Gulf Islands brought amendments, as did the Liberals, the New Democrats and the Conservatives. We brought forward a number of meaningful amendments that we felt would have improved the bill, even though we opposed the bill in the House due to some issues over the net-zero advisory committee. I will not get into that discussion of what happened in the House. I will say it was rather unfortunate how that shut down.

What ended up happening was that they jammed through such a tight process that we were literally hearing witnesses when the period for submitting amendments to the bill had already expired.

Think of this. You get a call from the Standing Committee on Environment and Sustainable Development. You have dedicated your professional career or your voluntary hours and expertise to writing up a brief. In fact, one witness told me that the moment he got the letter, he started furiously typing up his presentation, but by the time he got on the schedule, all of the suggestions that he had presented in his report and in his remarks were moot.

Why were they moot? It certainly wasn't because of bad faith by that individual, but because of the way the committee had jump-started the process and programmed in that there was only going to be a certain amount of time to get amendments in. That person was deeply disappointed, as were others.

The government probably never heard from those individuals in person, but I can say that MP May attested at committee that she heard the same thing. Why? Many groups want to be invited back and they want to keep the government, at least, in a somewhat neutral, positive state.

In that case, I have to say that the environment committee process—a committee ably chaired by one of your colleagues, MP Scarpaleggia—was so bad that we ended up jamming through witnesses after the period for amendments had already closed. People felt that process was not in good faith. I see many of the same hallmarks—many of the same markers—in this process, in fact, and I will say that I did speak up at the time. I did very much what I'm doing today. I said to other members, “If we adopt this process, we are jamming witnesses.” We are going to end up with a process that does not lead to a better outcome than Bill C-12 did.

Unfortunately, that's exactly what transpired. In fact, when we look at the amendments, it was such a bad process. Some amendments were supported by certain witnesses, but others, effectively.... The NDP joined up with the Liberal members and voted down pretty much every single amendment, except for a Bloc Québécois motion that established a five-year review. There are some real parallels that I'm starting to see between that process and now. Where did we end up? We ended up where committee members were at each other's throat. It wasn't very good. Witnesses felt bad and, at the end of the day, the government got what it wanted. I see many of the same things happening here.

I would say that it probably wasn't a lot of fun for Mr. Scarpaleggia, but let me tell you what was even worse. Your former colleague, Mr. Scott Simms, said publicly.... He was on Michael Geist's podcast, Law Bytes, where he talked about what was known as Bill C-10 and the shenanigans that ended up happening there.

Why? Well, there is a direct connection with what has happened here with MP Beech's subamendment. The process and timelines were so tight in the original programming motion that, at one point, during clause-by-clause, because of a programming motion, the committee members, in many cases, did not know what they were voting on. In order to meet the programming motion set out by the government, which happens to be the same government here, they ended up voting on amendments without even knowing what they were voting on. The chair would call out a number, and what's even worse, for the people.... There were stakeholders there, obviously, from industry and cultural groups—artists, etc.—who all had a real concern about this. These were people who study the Internet and freedom of expression—those kinds of legal constitutional concerns. All of them were horrified because they didn't even know what the members were voting on. They just heard numbers being shouted out, and that brought the whole committee process into disrepute.

What's even worse is that Conservatives had to appeal to the Speaker in the chamber regarding such a bad process. Do you know what ended up happening? The Speaker said that was not how Parliament was intended to work and ordered the committee to restart the process. The government did end up getting its way, but, for the people who were following along, the parliamentary committee process was in question.

I would say to all members here that the same issues the environment and sustainable development committee had, and the standing committee on heritage had with Bill C-10.... There are certainly parallels with what we have here today—a large omnibus bill, where the witness time is being dictated by the government.

Again, this particular bill is much larger than traditional ones, Mr. Chair.

On one of the things that MP Chambers pointed out—because there will be some arguments that say, if the Conservatives are so serious about not proceeding on this side, there are tax measures that can affect Canadians and that they will not be able to take advantage of—was that for the ways and means process, actually, the government can table ways and means motion tax measures and the CRA will treat those as having been passed, even if that is not the case. Many Canadians, as I was explaining to one of my constituents the other day on Bill C-8, would be quite surprised.

Now, obviously, during a minority, I would surely hope that they would be very careful around those measures. I know, for example, that Bill C-208 in the last Parliament, Larry Maguire's bill, was a change in law. That was actually passed by Parliament, and they still have not put out the regulations. Most people would say, wait a second, when Parliament passes an actual law that allows that if you're a farmer or you have a fish operation, you could transfer that intergenerationally to your family without having to pay extra costs associated with it.... If CRA and the Department of Finance can hold back on those provisions, how in heck...? Pardon the language. I'll repeat: How on earth, Mr. Chair, can it be that CRA can take a proposed law and start acting like it is a law?

Budget Implementation Act, 2022, No. 1

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, my colleague spoke a lot about investigations into money laundering and recovering money. We agree with all that.

However, there is something that really bothers me. How does my colleague explain the fact that his government is not doing anything at all about tax havens? They are perfectly legal and everyone is aware of them. It is estimated that the government is losing at least $7 billion a year to tax havens.

Also, is the member not the least bit embarrassed that his government is creating uncertainty about the coming into force of the farm succession act, on the pretext that our farmers are fraudsters rather than honest people who put food on our tables? I think that is completely shameful, and I encourage him to put pressure on the government from the inside to quickly dispel this uncertainty.

Economic and Fiscal Update Implementation Act, 2021

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I will begin by saying that I will be sharing my time with my colleague from Kingston and the Islands. This is a pleasant surprise for me. I am happy to share something with this colleague. Perhaps this is the beginning of something. We do not usually see eye to eye.

I am going to talk about Bill C-8. The main problem that we have with it is the underused housing tax, which is yet another jurisdictional encroachment.

Allow me to clarify that, fundamentally, everyone agrees on the basic principle that something needs to be done about the housing shortage and foreign speculation. On the substance, we are in perfect agreement. The problem is how to go about it.

The Standing Committee on Finance heard from constitutional expert Patrick Taillon, who explained that the tax was legal, but that the problem lies in using the tax as a way to regulate the sector. We agree, so we think this must be done in collaboration with the municipalities, and especially with the provinces and Quebec. We are seriously concerned about this, and it is going to be a big stumbling block for us when it comes time to vote.

As usual, as the party that believes in constructive, positive, sensible opposition, the Bloc Québécois suggested adding a clause requiring the agreement of the cities involved. Our suggestion was rejected, so we have no choice but to oppose the measure.

There are other things missing from Bill C‑8, such as measures to address the labour shortage. Everyone knows that I am a good sport in Parliament, because I am willing to acknowledge the positives. I will acknowledge that there are things in the budget that will help, particularly when it comes to immigration. However, this is an urgent matter, and I do not think that enough is being done to address it.

The number of calls we are getting about delays is absolutely staggering. Money has been announced, of course, along with a lot of good intentions, but something needs to be done quickly. Processing times are atrocious. The government is all smiles as it makes big announcements to the media, promising to do this or that, which sounds good, but, months later, nothing has changed.

Take, for instance, the increase in the cap on temporary foreign workers in the agri-food industry, which was announced in August but did not end up being implemented until late January. That is too long. The government needs to be more efficient.

We have other ideas for measures to address the labour shortage, such as tax credits for people aged 65 and over. I see that as a simple measure that everyone would support right away. I look forward to seeing that implemented, but it has not happened yet.

We can be creative. Why not bring in a tax credit that would apply once a certain threshold of hours is exceeded in a given week? Let us sit down and get to work, because our entrepreneurs need these workers.

There is also the whole issue of the supply chain. I am willing to believe that Bill C-8 was prepared some time ago, since it has been around for a while now. On this point, I agree with my Liberal friends. However, we can always improve things, especially in the next Parliament, in order to do something to help our farmers.

There has been a lot of talk about agriculture today, particularly about an additional credit for the carbon tax, but now we have other problems, such as the fact that fertilizer from Russia is now subject to a 35% tax. This will have repercussions on all of eastern Canada, which gets its fertilizer from Russia.

We had meetings with the parliamentary secretaries and ministers to explain the situation, and they told us that they would always be there, that they would monitor the situation and act accordingly.

We need to do something, because our constituents are sounding the alarm. We raised the issue in question period last week, because this is ultimately going to have an impact on the cost of groceries, and that affects everyone.

There is nothing about tax havens either; it boggles my mind. Every time that we talk about the budget or the money available to deliver services to the public, I am sorry, but I cannot not talk about tax havens. It is estimated that at least $7 billion is lost to tax havens every year. These amounts are rather fuzzy because nobody is sure of what is really going on.

At the same time, the government is dragging its feet on bills such as Bill C-208, which deals with the next generation of farmers. This is about agriculture. If we respect our farmers and want to provide for the next generation, we have to get rid of the vagueness surrounding this bill. I just quickly touched on this, but I hope that the government will hear my message.

I did not bring up compensation for people in supply managed industries either. Wherever it is paid out, we will be happy, but it has to be paid somewhere.

Let us talk about health transfers. How can we not talk about them? We are being praised for bringing in a dental plan. Again, the same principle applies as to the underused housing tax. We all agree on the substance, but there are areas of jurisdiction in this federation, and they are the responsibility of the provinces. Why not increase health transfers to the provinces and Quebec, which is something they have been calling for?

When we talk about health transfers, we are talking about increasing the federal portion to 35% of expenditures, or $28 billion per year, which represents $6 billion for Quebec alone. That needs to be ongoing funding, not just a sexy press announcement about a one-time shot of $2 billion to show just how generous the fine Canadian government is. That is smoke and mirrors. The pandemic was temporary, but the problems with the health care system have long been an issue and they are not going away.

Of course, then there are seniors. Those 65 and older suffered the most during the pandemic. The government still has its head stuck in the sand.

I see people are looking at me with interest. Earlier, when I was being asked questions, I was expecting to hear that they were there for seniors, that they increased old age security starting at age 75 and that they handed out $500. Those are all temporary measures. We want to see an increase to old age security starting at age 65 so that we do not have two classes of seniors. That is important.

There are other measures in Bill C‑8, including the underused housing tax. We have expressed our reservations about who would implement it and how it would work. Essentially, will a 1% tax actually be effective, considering countries like France have taxes as high as 12% or 13% the first year and 25% the second year? That may be more effective. Why not go a bit further? Again, it is all in the execution.

As far as help for businesses is concerned, we also agree. It is good that the deadline for repaying Canada emergency business account loans has been pushed back, but that is not enough. We have proposed other measures.

The Canadian Federation of Independent Business has also sounded the alarm, saying that its members are struggling. They have taken on heavy debt loads, and the concern is that many of these businesses will not weather the crisis.

For example, why are we not providing more support to brick-and-mortar businesses facing unfair competition from e‑commerce? That could be a solution. We could also decide to make a larger share of the loan non-refundable. Why not help businesses set up online purchasing and electronic marketing so they can compete?

There is also the issue of shipping costs. I do not understand why it only costs $2.50 for a Chinese company to send a package to Canada when it costs me $20 to send a package to Lac‑Saint‑Jean. Something is not right. Can we help businesses with shipping?

There is also the $2 per book to help bookstores.

These are all Bloc Québécois proposals. These are suggestions we have made, and we will be there to collaborate if the government wants to make improvements.

Some members have given speeches about agriculture and education and a tax credit for electronic devices. These are good measures, but they are too small. Let us get serious and provide appropriate support to our farmers and teachers.

Financial Statement of Minister of Finance

[Andréanne Larouche, Bloc, Shefford, QC]

Madam Speaker, today I want to talk about budget 2022. I would like to thank my colleague from Berthier—Maskinongé for sharing his time with me.

Budget 2022 is, ostensibly, “a plan to grow our economy and make life more affordable”. I doubt anyone will be surprised to hear me heave a sigh of exasperation. As I will show in my speech, there are still far too many who are not getting any help to make life more affordable.

Only one of our five unconditional demands was met: housing for indigenous communities. The government is planning to invest $4 billion over seven years starting in 2022-23 through Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada to accelerate work on housing.

I applaud this initiative because I know it is essential to put an end to violence against indigenous women and girls. I was just at a meeting of the Standing Committee on the Status of Women, where we discussed this issue. There is no way we will be able to extricate these women from the cycle of poverty without providing them with adequate, affordable housing.

That said, the government does not understand that Canadians gave it a minority mandate, that they did not want to give it a blank cheque, and that they did not want to let it scatter money willy-nilly and in areas of jurisdiction that are none of its business.

I am forced to see the glass as half empty today and criticize what is not in the budget. In particular, I want to talk about seniors, our health care system, and economic development in areas still affected by the pandemic and recovering from the crisis. As the critic for seniors, I will begin by highlighting the complete lack of help for seniors.

We had made help for seniors one of the five prerequisites for passing this budget. To add insult to injury, in addition to not announcing anything new, they included a chart to tell seniors that they do not need any additional help. The government should tell them that while looking them straight in the eye and trying to explain why they are still being discriminated against based on their age.

For the rest of this part, I will let our seniors speak. Here are the words of those I have met over the past few weeks who are not happy: “Why do the Liberals insist on dividing us?” “I may get sick before I'm 75”; “My car will soon give out on me and I won't be able to get around. How will I maintain my independence?”

Take Michel and his wife Josée, or even France, for example. These three retirees feel penalized by the lack of federal government assistance for people between the ages of 65 and 75. They tell us that they want to enjoy life, that they have needs and that they want to help restart local economies.

An organization in my riding, SOS Dépannage, told me that there has been a sharp rise in the number of seniors relying on food assistance. Do we really want to reduce seniors to standing in line for food hampers?

Contrary to what the NDP-Liberal alliance is saying, it is not dental insurance that seniors want to talk to me about. Besides, this dental plan comes without any transfers to Quebec and it would not cover seniors until 2023.

Seniors need more money in their pockets now. It is not to invest in tax havens; rather, it is simply to be able to age with dignity. It is nice to have great teeth, but that means nothing if you cannot afford groceries at the end of the month. It is not a year from now that seniors will be hungry. They are going hungry now.

As I said, poverty does not wait until people reach the age of 75. In fact, a petition is currently being circulated calling on the government to reverse its decision to increase the pension of those aged 75 and over, known as older seniors, by 10%. Instead, petitioners are asking for an increase of $110 per month in the old age security pension beginning at age 65.

People lined up at the Tim Hortons restaurant across from my office in Granby last week. People do not want this unfair two-tier senior system. I also had some nice conversations with seniors in Drummond. The meeting was organized by the Centre‑du‑Québec branch of the Association québécoise de défense des droits des personnes retraitées et préretraitées. That was also where I heard many of these first-hand accounts.

Many people feel passionate about signing this petition, which I am sponsoring and which was initiated by Samuel Lévesque. Petition e‑3820, which can be found on the House of Commons website, aims to support the the Bloc Québécois's demand for a permanent and lasting increase in old age security benefits for everyone 65 years of age and older.

The FADOQ also said that the government broke its own election promises. There is no additional credit for home support, no tax credit for experienced workers, nothing at all. There is no increase in the old age security pension for seniors 65 and older in the budget. In fact, there is nothing. The government instead proposes the creation of a panel tasked with studying the idea of an allocation for seniors wishing to grow old at home.

Once again, if the Liberals truly wanted to help seniors stay in their homes, they would have increased health transfers.

In the second part of my speech, I will talk about another major omission in this budget: health transfers. There is no increase in transfers to 35% of costs as requested by Quebec and the provinces. “Any conversation between the federal government and the provinces and territories will focus on delivering better health care outcomes for Canadians”. That does not mean anything. There is no commitment to the unanimous request of Quebec and the provinces to increase health transfers to 35%. This request also has the support of many seniors groups.

Quebec and the provinces do not need to be told what to do by know-it-all Ottawa. There is nothing on the increase to health transfers yet the government keeps repeating and boasting about the same points.

In the third part of my speech I want to talk to my colleagues about the recovery for some sectors that are still very much affected, because the government missed some perfect opportunities.

I know that my colleague from Berthier—Maskinongé cares a great deal about the agricultural sector, because this sector is also very important to Shefford's economy. There is not much in the budget for this sector, however.

When I travel around my beautiful riding of Shefford, people often bring up the agricultural sector. People wanted to see some innovative and bold measures. At the very least, the government should have considered improvements to existing programs like AgriStability and AgriInvest. My colleague has already spoken extensively about that.

The agricultural sector also wants something like the agri-green program, which would help producers and processors improve their operations and compensate them for good environmental practices. Aside from the second investment, the government is proposing other types of investments, but it is not going far enough. The Bloc Québécois is therefore disappointed with this announcement, on which it had pinned much hope. We will see what producers and processors have to say about it. For the time being, compensation is a long time coming. The government wrote that compensation for CUSMA will be included in the fall 2022 update. As my colleague from Berthier—Maskinongé stated, it seems that there are further delays for those hard hit by the repercussions of the last three trade agreements signed by Canada.

The situation is dragging on. I was told about this recently at the Agristars gala. The young people I met spoke to me about farm transfers and controversial Bill C-208, which would facilitate intergenerational transfers. The government is satisfied once again with conducting consultations and creating delays. It is a major step backwards for farm transfers, even though the bill was passed in the final days of the previous Parliament, after the Liberals dithered. Now, the government is delaying its coming into force. The Bloc Québécois co-sponsored Bill C-208. It is a an extremely important issue for farm succession.

[Richard Lehoux, Conservative, Beauce, QC]

Madam Speaker, I rise in the House today to discuss the first NDP-Liberal budget in Canada.

What a year it has been. As COVID‑19 continues to devastate the Canadian economy and our supply chains, many people in this country will struggle for many years to recover from the losses suffered over the past two tough years.

People are wondering what this budget does for Canadians. Well, it proposes higher interest rates, higher taxes, and more and more spending. At a time when Canadians could use a break, the bad news keeps piling up.

Liberal MPs will likely use the same talking points as usual when debating this subject, but they will probably not ask any questions about the following topics that I was very much hoping would be included in budget 2022.

First, I would like to discuss the rural-urban divide that seems to be growing in this country. My riding of Beauce is located in rural Quebec. It is a entrepreneurial and agricultural hub. Unfortunately, the latest budgets from the current government only make us feel further and further away from seeing any meaningful change in our region.

Why does the government continue to ignore rural Canada?

I was hoping to see some funding for public transit or additional funding for community infrastructure in this budget, but once again, we have been forgotten. Municipalities in my riding are trying to implement public transit, but they need financial support. This is something that needs to be addressed, but until the federal government is prepared to put money on the table this will remain a distant dream.

Cell connectivity in rural Canada is another issue that matters to rural Canadians and that was not mentioned once in the budget. How hard is it for the government to recognize that this is not only a matter of fairness but also of public safety?

Many municipalities in my riding do not have reliable cell coverage. This not only increases the probability of public safety disasters but also causes lost productivity for our businesses.

The government needs to sit down with the CRTC and the large telecom companies and find a way to finally provide affordable service to rural Canadians. There has to be a way to set a baseline for minimum coverage and a fair and equitable scale of payment for these services.

In my riding, cell phone bills are among the highest in the country even though we get some of the spottiest service. We must tackle this problem and improve high-speed Internet service at the same time, because they are both equally important in our regions.

Another issue I would like to tackle, which is probably the biggest problem in my riding, is the labour shortage. Beauce has one of the lowest unemployment rates in Canada and is constantly struggling to attract workers. In our case, the only option for many years has been to use the temporary foreign worker program. Unfortunately for us and for many other Canadian business owners, this system is broken. In recent months, the government has made some promises and some supposed changes to the program, but nothing has changed on the ground.

Let us be frank. Our country has a lot of red tape. There is paperwork upon paperwork to be done. Departments that should work together blame one another for the delays. They also blame the provinces.

The immigration department really needs to wake up. These files should be processed much more quickly. It is simple. Many businesses wait months and months to get workers. They spend thousands of dollars in government and administrative fees only to be told that the workers may never arrive or that their arrival will be considerably delayed because of problems that the government itself has created.

Many proposals with respect to agricultural and seasonal workers were brought forward at the Standing Committee on Agriculture and Agri-Food, of which I am a member, and elsewhere, but the situation has improved only slightly since we tabled our report.

We are also seeing numerous issues with non-agricultural workers, yet there does not seem to be any urgency on the part of this government to bring them in when they are needed.

I believe that one of the most effective ways to speed up this process would be to get rid of the labour market assessment for areas of the country where the unemployment rate is below 5%. As I have said many times, both here and in committee, this is a solution that would be fairly easy to implement. I will continue to hammer this point home until the government understands that this is a serious problem that needs to be addressed as quickly as possible.

A total of 60% of the businesses in my riding are looking for workers. At the same time, they are accelerating automation and robotics because they also need to stay competitive in the marketplace. The problem is that their margins are already very thin, and it is very difficult to invest in new technology right now.

I believe the government needs to implement better programs and incentives to help these companies modernize their production. However, until the government keeps its promises on high-speed Internet and steps up its fight to improve cell coverage, advancing robotics will remain difficult in rural ridings like mine.

The last thing I want to talk about is how this government has tragically failed our agriculture and agri-food sector. There is no money in the budget to improve and secure our country's food supply. I have always said that the agricultural sector is an economic driver just waiting to be optimized. Instead of helping Canadian farmers, the government continues to create programs that plunge them further into debt. Canadians are struggling to put food on the table, yet we are importing more and more of our food products.

The government also decided to impose a 35% tariff on fertilizer from Russia without a clear understanding of whether orders placed before the beginning of the conflict in Ukraine will be exempt from the tariff or not. Spring seeding is upon us, and farmers cannot bear the burden of these tariffs alone. Obviously consumers will have to pay the additional cost.

What is more, this government continues to refuse to bring into force Bill C‑208, which was passed in the previous Parliament. This bill provides for the fair transfer of a family farm or small business to a family member, rather than charging the seller unreasonable taxes that they would not have to pay if they sold the business to a third party.

This government will do everything it can to collect as much tax as possible, even at the expense of losing our family farms and SMEs, which are so important to the development of our regions. The creation of a round table for discussing this bill, which has already passed and received royal assent, will still not force the hand of these greedy Liberals.

How can a government unilaterally decide not to bring legislation into force, when the majority of parliamentarians voted in favour of it? That is not how democracy works.

In closing, this is another budget and another complete failure by this government.

I am here once again debating with my colleagues, but I cannot help but wonder when this Prime Minister will descend from his throne and finally listen to the opposition's proposals. I can only imagine that his MPs from rural ridings feel the same way.

We are all here to do a job, to represent our constituents. The government has to focus on the divide between rural and urban regions. The time where there were two classes of citizens is over.

We must unite and make Canada the economic superpower it should be. I will continue to provide a glimmer of hope for the Beauce community. I simply hope that this government will listen to me for once.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I enjoyed my colleague’s speech. He appears to be attuned to the issues of youth and the next generation of farmers. I will ask him about Bill C-208. I am assuming he is familiar with this bill, which was democratically passed in the last Parliament and should now be in effect.

The Liberal government, however, announced in its budget that it would review the nature of the bill, which would put a freeze on the transfer of family businesses. Financial advisors are telling our farmers to wait before transferring their businesses, since no one knows what the Liberal government is going to do.

That is not helping the next generation of farmers, and I would like to hear what my colleague has to say about it.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I thank my colleague for his intervention. I would like to know what he thinks of the agricultural component of this budget. In his speech, he stated that people need to know where they are going and they need a certain predictability. That is what the farming community needs, but unfortunately the government continues to disappoint with respect to the NAFTA compensation. The government keeps announcing that the compensation is coming within the year. People have been waiting a long time. This issue must be resolved.

This type of unwarranted insecurity is affecting the next generation of farmers. It was announced that Bill C-208 would be reviewed. This bill was democratically passed in the House. This creates insecurity in the sector and, as a result, tax experts are recommending—and this is important—that our farmers delay transfers, because they are concerned about what the Liberals will do. I would like to hear what my colleague has to say about that.

[Kim G. C. Moody]

In my notes, yes, just very quickly.

Amend the tax on split income regime; lots of people have appeared before you on that. On those rules, while there may be a compelling policy argument to have an anti-income splitting regime, this regime just needs a complete rethink.

Number five is to repeal the journalism tax incentives. Those are just very poor policy.

Number six, which MNP did comment on, is to release the amendments to Bill C-208. That's very important.

Lastly, abandon the so-called luxury tax on automobiles, airplanes and boats. In my notes what I said is if that's good policy—which it's not, it's good politics—if a luxury tax on planes, automobiles and boats is good policy, then why not a luxury tax on handbags, expensive cellphones, jewellery, furniture, appliances, homes, etc.

There's too much politics in the Income Tax Act already, and in the Excise Tax Act, we don't need more.

[Amanjit Lidder, Senior Vice President and Partner, Tax Services, MNP LLP]

Thank you, Mr. Chair and honourable members, for the invitation to share our thoughts with you today in advance of budget 2022.

As you said, my name is Am Lidder. I'm the senior vice president of tax at MNP, and I'm joined today by my colleague Kim Drever. As the largest professional services firm headquartered in Canada, we proudly serve over 280,000 clients, and we've worked side by side with Canadian businesses for over 60 years in 125 communities of all sizes across the country.

It's with the experience of our clients in mind that we provided the committee a copy of “Unleashing Canada's Potential”. In this document that was shared with you is a summary of policy considerations that we've developed by canvassing our national network of professionals.

Over the last two years, our partners have had hundreds of thousands of conversations with Canadians about their lives and businesses, and supported them as they navigated the impacts of the pandemic, as well as managed through wildfires, floods, labour challenges and supply chain disruptions. Whether it's a blueberry farm in the Fraser Valley, a flower shop in Brandon or a fabrication shop in Halifax, each of our clients has been impacted in some way.

Our submission provides several policy considerations along three key themes that we believe, when addressed, can bolster Canada's economic standing and ensure that we build a resilient and sustainable economy. These three themes are building Canadian confidence, fostering innovation and achieving Canadian excellence.

While there are many potential topics contained within those themes, our remarks today will focus on one specific challenge for Canadian farm, fishing and private businesses, which is making sure that family businesses stay family businesses.

Previously, a long-standing rule in the Income Tax Act treated intergenerational transfers of a business as a dividend, rather than a capital gain. Bill C-208 changed that rule to allow access to the lifetime capital gains exemption, and provided positive changes around the division of a family business among siblings. Although our time today focuses on the transition aspect of Bill C-208, we believe that the ability to divide a family business amongst siblings granted in the legislation is necessary and that it should be maintained.

Because of how our tax rules are currently structured, transitioning a farm, fishing or small business from a mother or father to their children or grandchildren has been punitive, compared to selling that same business to a third party. The introduction of Bill C-208 provided for the intergenerational transfer of certain family businesses to receive the same tax treatment as businesses sold to a third party. Bill C-208 represents a significant positive change to support family business succession in Canada.

Prior to this bill passing, when a business owner sold or transferred their shares of their business to either their adult child or grandchild, they were taxed at an average dividend rate of up to 46%. However, if that same business was instead sold to a non-family member, the seller would be taxed at the lower capital gains rate of up to 26% and they would be able to use their capital gains exemption to reduce their tax.

We believe families should not be disincentivized from selling their businesses within their family due to tax policy. Bill C-208 represents a good start to addressing the disadvantage families face.

On July 19, the Government of Canada suggested that amendments would be forthcoming in the fall of 2021. However, businesses have yet to see this draft legislation. In the press release, the Government of Canada laid out four potential hallmarks to define a bona fide succession, and we agree that the tax treatment outlined in Bill C-208 ought to be used in the process of a true business transition.

It's important to remember that no two family business transitions are the same, and overly prescriptive hallmarks have the potential to create different barriers that hinder the succession of family businesses. For example, in the sale of a business to a third party, the Government of Canada does not limit the involvement of the seller in the future activities of the business following the sale. However, the government has indicated that they would limit the level of ownership and involvement that a parent can maintain after the transfer. In our experience, it's common in the succession of many businesses for the seller to remain engaged for a transition period, though the length and nature of that transition period should be driven by what is best for the business and not mandated by tax law.

As the Government of Canada contemplates amendments, we would encourage intergenerational transfers to be broadened to include, for example, the sale of businesses between siblings. In addition, the capital gains treatment on the sale of shares should be maintained where the lifetime capital gains exemption is not available.

Also, Bill C-208 restricts the use of the capital gains exemption for capital-intensive businesses like farming or manufacturing. The taxable capital limit was introduced in 1989 and has not been adjusted nor kept pace with inflation.

We welcome any questions you might have related to what we have provided in our submission or presented today.

Thank you.

Economic and Fiscal Update Implementation Act, 2021

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, I want to ask my colleague from the Bloc a question with regard to small businesses. He and a member from the NDP, both of whom are in the House today, supported and helped me with Bill C-208 on qualifying small businesses and interfamily transfers last summer. I wonder if he could just remind my colleague from Winnipeg North that major accounting firms in Canada said that passing this bill did more for small businesses in Canada than probably any other finance decision for those qualifying small businesses in the last 25 years. I wonder if he could also remind my colleagues on the Liberal side of the House that it is this kind of support for small businesses that is really needed, as opposed to some of the things the Liberals have talked about. We know polices were needed to get things going. The problem with the government spending now is that only part of it can be traced to the need to keep small businesses and families going through the pandemic.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Mr. Speaker, before I begin today, I just want to take a moment to thank our former leader, the member for Durham. He worked hard for the Conservative caucus and for the country. He served in the military, and as an MP in cabinet and opposition leader. I thank him for his service and dedication to our party and country, and I thank Rebecca and his family for their sacrifices.

I am pleased to rise today to speak on Bill C-8.

Expectations were high after the unnecessary election that cost taxpayers over $600 million, which was called during a pandemic in an attempt by the Prime Minister and his government to further their own self-interests. However, the results were clear. Canadians, 67% to be exact, voted against giving the Liberals more power and overwhelmingly against the corruption scandals and overreach by the Liberals by a 2:1 margin.

What have we seen since the election? The Prime Minister took a vacation during the first National Day for Truth and Reconciliation. He delayed the return of Parliament by 60 days and he broke his promise to deliver action in the first 100 days. Instead of rebuilding the country at a time of crisis, the Prime Minister has repeatedly alienated western and rural Canadians. He has played the worst kind of divisive politics and attempted to label those who disagree with him as being hateful. No responsible person, let alone the leader of our country, should ever throw around words like “misogynist” or “racist” so casually and recklessly.

No one knows how easily the Liberals will sacrifice good, hard-working people than Albertans. Almost every year, the Liberals have squeezed more and more of Alberta's jobs out of the province. They then killed four pipelines with their no more pipelines act. They have ignored the cries of indigenous communities who rely on resource development agreements. They have created political problems with key trading partners that hurt farmers in the west and have sought to fight Alberta's provincial government at their return. The irony is that their drive is to make a green, clean energy grid, but the likelihood is of that is delayed, even by a decade or more, as many energy companies who invested heavily in renewable energy and new technologies left the country or simply pushed their investments to another location.

While providing some money in the economic and fiscal update for COVID testing, for business loans and school ventilation was good, the update was silent on the top demand from provinces for the last two years. They needed new funding for health care. The pandemic has strained health care workers, hospitals and the overall system to the point of near breaking, with thousands if not tens of thousands of delayed surgeries and procedures. There is no doubt that there will be many more preventative measures that have been missed and undetected illnesses that will demand emergency action instead of early intervention. All of that will drive up health care costs, with health care costs all but guaranteed to increase.

Provinces are on even more shaky financial ground. For example, Newfoundland has already had a bailout of sorts while other provinces could even be headed towards economic crisis after the debt piled on during the pandemic. With the excessive spending before and during the pandemic, the federal government is not well positioned to help. According to the Parliamentary Budget Officer, one-third, or about $177 billion, of pandemic spending was unrelated to the pandemic response plan, which is about six years of military spending, six years of health care in Alberta or more than double provincial and territorial transfers.

I come from a riding with a large rural economy where farmers have endured extreme hardships from a severe drought and the impacts of the pandemic. Our agricultural sector is critical to our trade, our international relations, our domestic economy and our rural economy for that matter.

Farmers and rural Canada were ignored in the throne speech, and we do not know why. For the last five years, they have paid enormous carbon tax bills, some in the tens of thousands of dollars. Their costs have been driven up, and the costs of food products in Canada are continuing to rise.

These costs hurt farmers who cannot compete with America or other countries in costs. The prices hurt Canadian food manufacturers who want to use Canadian farm products, but they also have to do with the high cost of buying from U.S. competitors. They hurt small business owners who face higher downstream costs, as well as continually higher costs from employment taxes, the GST, etc. Who do they pass those costs on to? It is to consumers: to families, with higher grocery bills.

The government made a promise to improve, and to help farmers and everyone who consumes Canadian farm products. Conservatives provided a clear policy option in Bill C-208 that would have eliminated carbon taxes for on-farm activities. That exemption would not have required new administration costs. It would not have increased costs for businesses to track and calculate those expenses.

The Minister of Finance, who is from downtown Toronto, had a better idea. Instead of a simple solution that was easy to understand, practical to implement and would cut costs, she would create a complex tax regulation that could change on a political whim. It would not reduce costs at all and would ultimately keep prices higher for consumers, while providing little to no relief for farmers.

According to the Parliamentary Budget Officer, instead of tens of thousands of dollars less in taxes, farmers will get a rebate of between $1.47 and $1.73 per $1,000 spent on eligible farm activities. The generosity of the government to the farming community is amazing. Who determined those eligible farming activities? It was the government. What is eligible? We do not know. It is entirely up to the minister and the government.

There are many serious issues facing Canada right now that need immediate action. We have a drug addiction crisis. We have a violent crime and criminal gang shooting crisis. Canada is increasingly alienated by our allies, while facing greater global pressures and hostility. Our military is lacking key trades, trained personnel and equipment, and plans to meet its increased mandate.

Inflation is quickly eating away at working-class and lower-income Canadians. Anger, resentment and division are increasing at an alarming rate across the country, spurred on by the indifference and rhetoric from even our Prime Minister. Small businesses are struggling to hang on, and are unable to find workers. Canadian shelves are emptier and have fewer options than ever before. Worker losses and capacities increase and decrease the supply of goods.

Private-sector investment has dropped massively since 2015 and has hit records lows, suggesting Canada could face significant competitive challenges in the years ahead. Our consumer energy prices are among the highest in developed countries, and our housing prices are some of the top in the world.

We need better from the government. We need the government to swallow its pride and stop slapping band-aid solutions onto its broken policies in an attempt to address the problem. Crime is up, and the witch hunt on law-abiding firearms owners, while ignoring gangs and gun smuggling, needs to end before we can actually address crime. Inflation is up, due in large part to unchecked, uncontrolled and wasteful spending by the Liberals. We need a plan to get back to balance and to manage spending properly.

If we fix the policies that created these issues, we can begin to solve the problem. However, without acknowledging their mistakes and their failures, the Liberals will never be able to govern Canada to better days. They will be forever stuck trying to distract Canadians with social media campaigns, hashtags and undelivered commitments.

Better is possible. The people of my riding, and all Canadians, deserve to be heard and respected by their government. They deserve a clear economic recovery plan for their communities and our country. They deserve a plan to manage inflation, reduce crime, reduce everyday costs and deal with our national security. Canadians should not have to wait the better part of a decade for that to happen.

Resumption of Debate on Address in Reply

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I thank my valued colleague from Brandon-Souris for his speech. I will once again have the privilege of changing the dynamic in the House so that we stop focusing on who did what and who did it better and start focusing on constructive feedback and the content.

I would like my colleague from Brandon—Souris to tell me about the minister's mandate letter. He is right in saying that the throne speech contains absolutely nothing for the farming community; we agree on that. That is why I went back to the document, which contained a little bit of content. The minister's mandate letter talks about facilitating the transfer of family farms. We managed to work together to pass a historic law during the previous Parliament. I thank my colleague again for promoting and introducing this bill.

I would like to know if he is concerned about that note in the mandate letter. When the Liberals want to try to make changes to the great work we have done, what aspect of the law does he think we need to keep an eye on?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, it is my privilege to stand in the House for the first time since the election to provide a speech. It has been since last fall, so I want to thank the citizens of Brandon—Souris for allowing me the privilege of representing them here in the House of Commons again.

I want to speak to the throne speech today. It seems like a lifetime ago when the throne speech was tabled, only last November, and it has only given me more time to reflect on how disappointing it was to hear the lack of vision from the government for farmers, our agri-food sector and rural Canada, just as my colleague for Medicine Hat—Cardston—Warner indicated. The throne speech is not just a symbolic document wrapped up in pomp and circumstance. It is the government's first opportunity in a new Parliament to lay out its blueprint for the coming years.

I can assure members that the ministers, the deputy ministers, the Privy Council Office and the entire public service take this document quite seriously. Moving forward, they will use the throne speech, coupled with ministerial mandate letters, to set cabinet priorities and determine which government bills will be tabled and then debated. As someone who represents a vast rural constituency, where countless jobs and families' livelihoods are directly tied to the agriculture sector, I must inform these people that they do not exist, according to the Liberal throne speech. They are the invisible Canadians, out there in rural Canada. As someone who farmed for decades, I never thought I would see the day that the Government of Canada would so nonchalantly forget an industry that is so integral to our country.

Who does the government think raises and grows the food we put on the tables? We are all aware that the issue of the day is who transports that food, as well.

Canada has the potential to become a food powerhouse on the world stage, yet there is not a mention of the agricultural industry's potential. With the global population growing and wealth growing, the need for trusted food sources will only get larger. To meet the targets laid out in the Barton Report, we need a vision and a plan to get there. In the coming months it will have been four years since that report, and we have yet to see an action plan to seize the tremendous potential of our agricultural sector. Some provinces have done a better job of that than the federal government has. It has a lot of people wondering, “Where is the beef?” How do they deliver? There are over two million Canadians whose jobs are connected to the agri-food sector. It is worth billions of dollars to our economy, and its potential for growth is as large as the prairie sky.

In Manitoba, we have thousands of farmers. We also have value-added processing for such things as vegetables, dairy, sunflowers, flax seed, canola, peas, potatoes, beef and pork. If we want to grow our agri-food sector, it starts at the farm. To support farm families, I took concrete action in the last Parliament by introducing my private member's bill, Bill C-208. Despite the Liberals' attempt to quash my bill, it is now the law of the land. Bill C-208 sends a message of hope to young farmers who want to carry on what their families started. No longer will parents be given a false choice between a larger retirement package after selling to a stranger or a massive tax bill after selling to a family member, their own child or grandchild.

I will remind my Liberal colleagues that their government is still sowing confusion, as it said it was going to amend Bill C-208 sometime in November, 2021. That date has come and gone, and we are now into a new tax year. That means the government will make retroactive tax changes back to November, 2021, but it will not tell us what it actually plans until some later date. That level of uncertainty is the last thing farm families and small businesses need right now in Canada.

I was looking for a clear commitment in the throne speech on what initiatives the Liberal government planned to introduce in this Parliament. I was looking for practical steps the government would take to grow our beef herd and to support our livestock producers, who are still struggling as the drought has depleted pastures and feed costs continue to rise. I wanted to see additional supports to assist farmers and producers impacted by the drought by expediting access to business risk management programs and making up any provincial funding shortfalls. I wanted to see a commitment to amend existing laws to allow livestock owners to use local abattoirs.

We need to make permanent the temporary measures that allowed provincial authorities to enable trade across the country, and to use their abattoirs for products that would move across provincial borders. These are common-sense policies the Liberals could have announced in the throne speech that could have been welcomed across the country.

It is also clear that we need to reform and improve business risk management programs, particularly AgriInvest and AgriRecovery, as my colleague just mentioned. The throne speech should have included a commitment to bring agricultural stakeholders together for a summit-like meeting with the Minister of Agriculture to develop a way forward on insurance programs such as AgriStability.

Instead of just fully exempting farmers from the carbon tax, the Liberals announced a complicated rebate system that has been widely panned as unfair. The Grain Growers of Canada reported that some farmers are only going to get back 20% to 30% of the taxes they paid. To fix this once and for all, the Liberals could have just exempted farmers from the carbon tax in its entirety. There would be no need for rebates, no need for paperwork and no need to create unnecessary red tape. Rising input costs, such as skyrocketing fuel and fertilizer prices, are already causing financial challenges. The one thing the government could do to help farmers overnight is just exempt them from that carbon tax.

The throne speech also did not contain any clarity about the government's plans to reduce fertilizer emissions by 30%. As many western farmers can attest, any time the Liberal government muses about making changes that will impact their operations or livelihoods, there is always a sense of apprehension. As a farmer, as a farm leader and then as an elected representative, I know the disconnect between those in Ottawa who think they know best and those who sow their fields.

It was not long ago that the Liberals called farmers tax cheats. Their 2017 proposed tax changes would have cost farm families thousands of dollars. Thanks to the farmers and entrepreneurs who loudly opposed those tax changes, and the fact that Bill Morneau is no longer the finance minister, those tax hikes are yesterday's news.

Whether the Liberals are attempting to eliminate the deferred grain tickets or doing everything in their power to delay the implementation of my private member's bill, there is enough evidence to suggest farmers' anxieties are well-founded. No details have been announced on the Liberals' plans to reduce fertilizer emissions, and this has caused all sorts of consternation within the farming community. Instead of working collaboratively with farmers, the Liberals have decided to stick out this arbitrary number with zero information on how they plan to implement it. This is not the right way to govern, nor does it inspire any confidence in the thousands of farm families across our country.

A report just released by Meyers Norris Penny outlined the potential impact of reducing fertilizer emissions by 30%, and the numbers are staggering. They have calculated that for corn, canola and spring wheat, there would be a total value of lost production of 10.4 billion bushels per year by 2030. As the report stated, this would have a dramatic impact on Canada's ability to fill domestic processing capacity. This would also reduce our ability to export, as well.

I would be remiss not to talk about the logistical challenges that farmers and agri-food processors have faced due to either the B.C. floods, the pandemic or the fact we need to vastly expand our infrastructure system. As the recent Auditor General's report stated, the Liberal government's investing in Canada plan was unable to provide meaningful public reporting on overall progress. If Canadian farmers and agri-food processors are going to continue to grow and export around the world, we need to make sure the roads, bridges, highways, railways and ports have the capacity for them to do so.

I raise these agricultural issues as I fear that farmers do not have a voice in the Liberal government. I worry their concerns fall on deaf ears. Unfortunately, the Liberal throne speech was silent on these matters and it lacked any bold vision for the sector. There is life in rural Canada. There is hope, and there is a strong future. I implore the Liberal government not to forget about farmers. Do not take them for granted. Let us work together and implement many of the ideas our Conservative team has been advocating for. Farmers are not asking for the moon. They just want to be treated fairly and want a government that is willing to listen.

Government Business No. 4—An Act to Provide Further Support in Response to COVID-19

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

Madam Speaker, I certainly appreciate the member's contributions to the debate today.

In June of last year, when it came to Bill C-208, a bill that would allow someone to sell their family farm or fishing enterprise to their children and be treated the same as if selling to someone at arm's length, the government and the minister said that the coming into force date was not specified in that piece of legislation and therefore they would reinterpret it as coming into force this year.

In this bill, at least Finance Canada seems to have learned its lesson, and there is no coming into force date for the amendments here. Would the member agree that it is important for the government, and in this case particularly Finance Canada, to honour the will of Parliament and if a piece of legislation has no coming into force date when the government amends a current act, that act be deemed, once it has gone through both Houses and received royal assent, the law of the land?

Does the member believe that Finance Canada and the government have learned their lesson, and are doing that in Bill C-2?

[Trevor McGowan]

Certainly, we've gone through the Quebec intergenerational business transfer rules. They provided a great source of inspiration for the work we're currently doing on them. Some of that is probably reflected in the bullets in the July 19 press release. It is certainly a made-in-Canada set of rules to deal with issues that are the same or similar to what we're talking about right now.

It's absolutely been an important source of inspiration. I mean, we've heard about technical questions relating to the Quebec rules and the impact of Bill C-208, but I'm not an expert on Quebec's provincial tax, so I can't really comment on that sort of thing.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair.

I must say that I'm very pleased to see Mr. Maguire here. He certainly deserves the credit for bringing forward Bill C-208. As other members have also said, though, Monsieur Emmanuel Dubourg from the Liberal caucus also brought forward something very similar, as have the Bloc and the NDP over the course of the last many years.

Mr. Maguire, you also mentioned that this issue has been discussed and debated for the last 20 years. For 10 of them, there was a Conservative majority, during which time the Conservative government of the day could have brought forward these measures.

I have a few questions for Mr. McGowan.

Since this morning, people have been bringing up Quebec and the integrity measures in place there. I was wondering whether you were inspired by anything in particular. Also, could any of Quebec's rules be implemented countrywide?

Talk about that, if you would, Mr. McGowan.

[The Chair, Liberal, Wayne Easter]

That's fine, Trevor. Thank you.

Mr. Maguire, you said that the government doesn't like Bill C-208. The minister made it clear that the Government of Canada is committed to facilitating genuine intergenerational share transfers, and it has raised some concerns with Bill C-208. Let's be absolutely clear on what's happening here.

We'll go now to Ms. Bendayan, and then Mr. Kelly will close it off.

[Larry Maguire, Conservative, Brandon—Souris, MB]

You know, I understand that the government doesn't like Bill C-208, but not a single amendment was put forward by the government through this whole process, and now we still don't have amendments. The government is talking about them here, but if there are amendments, why aren't we seeing them now, so that we can discuss them before a committee like today's?

Have you been asked to put forward amendments? You've had 20 years.

[Trevor McGowan]

As I've said before, both today and certainly at the Senate agriculture and forestry committee in an earlier appearance on Bill C-208, right now the tax administrators at the Canada Revenue Agency are tasked with applying the law as it stands and not anything else. The CRA, I'm sure I can say with the utmost confidence, will apply the law as it currently exists, as is their mandate. I would never want to suggest that anybody could do anything other than apply the law as it currently stands.

[Ed Fast, Conservative, Abbotsford, BC]

All right. This is my last question. The most recent press release is the July 19 one, in which the elected government did an about-face on Bill C-208. Certainly we see it as an about-face. It still suggests that some intergenerational small business transfers aren't genuine. In fact, you use the term “genuine” in that press release. I'm looking at it here.

It still suggests that small businesses are engaged in tax avoidance, in surplus stripping, in artificial tax planning and in not paying their fair share. Do you understand why many small businesses and the families who run them still feel that you and your finance department colleagues, and the government, and the Prime Minister still believe they're tax cheats? It's baked into your press release. Small businesses reading that would take from it that this government really doesn't trust small businesses and still believes they're tax cheats.

Do you understand why small businesses are concerned?

[Trevor McGowan]

In its July 19 news release, the government said it would be releasing conditions for defining what is a genuine transfer and would entitle a transfer or making use of the exception for the anti-avoidance rule in section 84.1. It said that it would allow the benefit or that it would provide conditions that would need to be met in order to be considered to be a genuine intergenerational transfer, which would apply no earlier than November 1, 2021. Right now, the law as enacted by Bill C-208 stands, and those conditions would not be implemented until after October at the earliest.

[Trevor McGowan]

Thank you. I think I understand the question now. I had been focusing on the date on which it received royal assent and amended the Income Tax Act.

In terms of the administration of the rules in Bill C-208 and whether or not the Canada Revenue Agency was ready to go on that on June 28, as it is the administrator of the Income Tax Act, I think that would be a question better put to the CRA. Certainly it monitors developments, but really it's the CRA that is tasked with the administration and enforcement of the provisions of the act.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you.

We are not gathered today because of a news release that came out yesterday. We are actually here because of a June 30, 2021 news release that said, and I quote, “Bill C‑208 makes amendments to the Income Tax Act but does not include an application date.” You found that shocking as well, Mr. Chair. According to that same news release, “The government proposes to introduce legislation to clarify that these amendments would apply at the beginning of the next taxation year, starting on January 1, 2022.” It is on account of that news release that the committee was recalled and we are here today.

Yesterday, the government realized that the committee was going to meet today and that, as a result, the government was probably going to look bad. It opted to put out another news release to retract what it said in the June 30 news release. Unfortunately, the government can't undo a news release. The one put out on June 30 still exists. You and I saw it, as did a whole lot of people in the small business sector and farming world. They were shocked and upset to learn that the government had no desire to implement a bill that had received royal assent and been passed by both Houses. Unfortunately, on June 30, the government apparently decided not to implement the bill because it had come from a Conservative member this time around. The government saw the bill as dangerous and wanted to avoid giving the opposition parties any credit. Too bad for the government that the bill was passed. That is a fact.

The good news is we found out yesterday that the changes in the bill did apply in law. Nevertheless, we need to know what happened on June 30 and why we are meeting today, in the middle of the summer, during the construction holidays, to discuss the government's decision to hurt family farms and small businesses.

My question is for Mr. McGowan, and it has been put to him a number of times.

Earlier, you said that the minister made her decision. Can you tell us the name of the minister who made the decision you were referring to?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you. I'm not sure that clarified it.

Mr. Chair, I'd like to ask if the people in the Department of Finance know whether the Justice officials were consulted on the illegality of delaying the implementation of Bill C-208. I'm talking about consultation, not advice, because we went through that this morning.

[Trevor McGowan]

The government has announced that it would not apply before November 1, 2021. As a general rule, income tax amendments often apply as of the date of their announcement.

For example, Bill C-30 received royal assent on the same day as Bill C-208. It was the first budget bill for 2021. That had a number of measures that had application dates based on March 18, 2019, the day of the 2019 federal budget related to, for example, the foreign affiliate dumping rules, some mutual fund trust measures using an allocation redeeming methodology, and individual pension plans. Several amendments had their application dates based upon—

[Trevor McGowan]

As we've discussed, these amendments to the Income Tax Act that were made by Bill C-208 are part of Canadian law and could only be changed through a subsequent bill tabled in Parliament that receives royal assent.

[Trevor McGowan]

Yes. That was the government's announcement, that whatever conditions would be introduced in a later bill, which again would have to go through Parliament, those restrictions or conditions would not apply before November 1. From now until October 31, at a minimum, the law as enacted by Bill C-208 would apply.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Mr. Chair.

Just for clarity, Mr. McGowan, I want to go back to a question that one of my Liberal colleagues asked you earlier in this area. You said that the current plan and the message to the small business owners is that Bill C-208 will be in effect, unaltered, until November 1. Can you confirm that any small business transfers to family members that take place between today, or even June 30, and November 1 will not be subject to retroactive application of any further amendments?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I want to start with a few comments.

In yesterday's news release, the government recognized that Bill C‑208 has been law since it received royal assent. As I said this morning, I have no doubt that yesterday's news release had to do with the fact that the committee was recalled for a special meeting today. Again, hats off to us.

My concerns stem from the questions I asked Mr. McGowan last time. In yesterday's news release, the government stated that Bill C‑208 had become law and that the law was the law, but the government also indicated that it would bring forward new legislation to amend the bill. Since the bill was studied for 527 days, I'm wondering why the government did not propose the amendments during the usual examination process. Five hundred and twenty-seven days is a long time.

What's more, as has been mentioned, this isn't the first time Parliament has considered a bill like this. A few years ago, Liberal member Emmanuel Dubourg proposed similar legislation, as did the NDP's Guy Caron, not to mention my fellow Bloc Québécois member Xavier Barsalou‑Duval. Mr. Maguire's version was the one that finally took and got passed by Parliament.

Although the bill received royal assent, the government did not recognize it as law, just as the government did not recognize the authority of the House of Commons. Threats were made, and the Standing Committee on Finance decided to hold an emergency meeting. That was when the government finally acknowledged the application date of the bill, while indicating that it would bring forward amendments. Why were those amendments not brought forward during the legislative process, which lasted 527 days?

I asked the witnesses who were called before the committee whether the government had instructed them to draft amendments. I recall quite clearly that Mr. McGowan, among others, told the committee members that it was rather complicated, that numerous loopholes existed and that they needed to be closed. I then asked whether the Department of Finance had prepared, at the government's behest, amendments that could have been brought forward, voted on and adopted during that 527‑day period.

Now, Mr. McGowan, Mr. Jovanovic and Ms. Aitken are saying that it is a matter of cabinet confidence and that they can't answer the question. My guess is that, if the amendments aren't ready yet, they will be soon, since the government announced that a bill containing the amendments was on the way.

The government could be accused of being asleep at the wheel, because it dragged its feet and did not do what it should have—instruct the department to draft the amendments and bring them forward. On the committee and in the House, we were all able to work together harmoniously. I have no doubt that, had we studied the amendments, the level of co‑operation would have been high and the process would have been fruitful, but that was not the case. That makes me wonder what happened. Here's my theory.

I think that, back in the spring, the government was considering calling an election, not caring too much about Bill C‑208—figuring it would die on the Order Paper. An election was coming, anyhow. When the third wave of the pandemic hit, the Liberals realized that they couldn't do as they had planned; they would lose face if they called an election in the spring. Subsequently, the bill received royal assent, which was seen as collateral damage in the government's little game of cards. The Liberals weren't expecting it.

Now that the bill has received royal assent, they are saying 527 days was not enough time. They want to recognize the changes, but announced that they were going to bring forward new legislation to do what they should have done when the time was right. The level of ineptitude is astounding, and I have a real problem with that.

Those are my comments. I have no questions.

[Peter Fragiskatos, Liberal, London North Centre, ON]

As part of that summary, perhaps you would have seen that Mr. Dufresne made clear when I asked him—I think this question was put to him by others as well—that yesterday's press release clarifies the matter. If clarity was needed, yesterday's press release makes things absolutely crystal clear. That is to say that by recognizing Bill C-208 in the way that the government did yesterday, the matter is a matter of law that came into being through royal assent. While my friends in the opposition can point to one press release, interestingly enough they're pointing to one press release but not yesterday's. They're pointing to one released a few weeks ago.

We've provided clarity here on the matter today through a meeting called by the chair. To his credit, I think it was a good idea to call the meeting. However, there's no air in this balloon, colleagues. I don't understand. We can go around and offer hypotheticals about what might be, what could be, what happens months from now and years from now, but that's all hypothetical. We have to focus on the concrete. I think we have, through the statement that was offered yesterday through the Department of Finance, a very clear understanding now that the government recognizes that Bill C-208 is a matter of law.

Mr. McGowan, you offered an answer when prompted. I'm not sure who put the question. Maybe it was Mr. Fast. I remember your statement that Bill C-208 is now the “law of the land”. Is that accurate? Can we understand it that way?

[Trevor McGowan]

You see, that's part of the difficulty in answering the question, because the announcement was not to delay implementation of a bill passed by Finance. Rather, it was to table a bill in Parliament that would, if passed by Parliament and given royal assent, provide that amendments, or rules in the Income Tax Act that had been implemented through Bill C-208, apply starting as of January 1, 2022. Of course, as we discussed, the amendments to the Income Tax Act were made on June 29. There was nothing that could be delayed on that front.

As I have said before, including before the senate committee on agriculture, the CRA would apply the law as enacted, because it is the law of the land, barring some future Parliament action.

[Trevor McGowan]

As I said, the five-year holding period imposed by the rules enacted by Bill C-208 applies to the purchasing corporation and not the child. The child could sell within that period. It does not actually provide an effective rule that would require the child to indirectly hold shares for five years.

I should say as well that the government's news release that went out yesterday did not provide specific amendments that would be made. Rather, it announced a general set of issues that would be taken into consideration in the development of draft legislative proposals. Those included the transfer of legal and factual ownership of the corporation to the child, the extent to which the involvement of the business is transferred from the parent to the child, and some other measures like that. It was more a description of the types of issues that would be considered in the development of draft legislation than a specific set of draft legislative proposals that was announced yesterday. The draft legislative proposals, I think, would be released at an early opportunity and then subject to comments. The final draft legislative proposals would be released later on.

[Trevor McGowan]

There are a few technical issues with that. First of all, the amendments enacted by Bill C-208 place the five-year, or 60-month, holding period on the corporation that purchases the shares from the parent, and not the child. There's actually no requirement in Bill C-208 that the child maintain any sort of share ownership in the business. It's the corporation that purchased it. The child could, in fact, sell the shares of the [Technical difficulty—Editor] within the five-year window.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

One of the requirements or the amendments being made was that enough time and a specific timeline be put forward for that transition to ensure that it was a legitimate.... It's the idea of a legitimate sale to a child. Within that Bill C-208 legislation, it also says, though, that the person receiving the gift of this farmer or small business would have to own it for five years. Why is that not good enough within the Bill C-208 legislation?

[Trevor McGowan]

That's correct. The amendments relating to Bill C-208 apply only where an individual sells shares to a corporation owned by their child or grandchild. On a direct sale of shares from a parent to their child, the anti-avoidance rule in section 84.1 would not apply, to cause there to be a dividend. In fact, assuming all the conditions are met, the lifetime capital gains exemption can apply to eliminate tax—or up to the lifetime capital gains exemption limit anyway—on any gains.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Okay. That's fair enough.

Could we then discuss those specific amendments that are being brought forward and that were in the newly released press release in which clarification was provided? It's my understanding that the government said that parents could already sell to their children on a tax-free basis, using a lifetime capital gains exemption, before this Bill C-208 was brought forward. Is that true or is that false? I believe it was in a speech from Mr. Gerretsen, actually, when he was discussing Bill C-208.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Thank you, Mr. Chair.

I want to back things up a little and go back into the history of this bill. As Ms. Dzerowicz mentioned, there were several iterations of it. Of course I refer to the NDP version of this, Bill C-274, which was actually voted against by this government, and which we were told would not pass.

However, after the election, in budget 2019, it was indicated that a similar piece of legislation would come forward to help farmers, small businesses and fishing businesses, and in fact it was also in the minister's mandate letter from the Prime Minister.

Can you indicate to this committee what plans and what directions were received from government, from the minister as directed by the PMO, to put forward this legislation? I think, to build upon what my colleague Mr. Ste-Marie was discussing, with all of that time and with those plans in place, why were a lot of the amendments that came forward under Bill C-208 not prepared for legislation?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Pardon me, Mr. McGowan. I don't think I made myself clear. I meant that it was up to members of the government, not public servants or senior officials, to bring forward amendments that would have addressed the concerns you raised with the government regarding this bill.

My question is this. Did the government ask you to draft amendments to rectify the potential problems resulting from Bill C‑208, amendments that could have been proposed when the bill was being studied by the committee? Did the government ask you to draft such amendments?

[Trevor McGowan]

As part of our committee appearance this spring to discuss Bill C-208, the departmental officials were present to help explain the technical aspects of the bill, and I would need to defer to the honourable chair of the committee in terms of the rules. I'm not even aware of whether departmental officials could table amendments to a bill at a committee hearing, or whether that would have to be done by another—

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Very good. Thank you.

Now I'm going to move on to another topic; it has to do with the amendments. As you said, in yesterday's news release, the government announced its intentions to make changes to the amendments set out in Bill C‑208. It is our understanding that a new bill will be introduced to amend the changes contained in Bill C‑208, without altering the bill's intent.

Something about this whole process surprises me. As we heard this morning, the first reading of the bill took place on February 19, 2020. That means the period between when the bill was given first reading and when it received royal assent was 527 days. As Mr. Dufresne, the law clerk, pointed out this morning, at almost every stage of the legislative process, the government could have brought forward the amendments it is now saying it will introduce in a future bill.

I gather from the answers you gave Mr. Fast that, when Bill C‑208 was at committee stage, the government had not asked the Department of Finance to draft amendments to the bill that would close the potential tax loopholes. Is that correct?

[Trevor McGowan]

If I understand the question correctly, right now the rules as enacted by Bill C-208 apply and can be relied upon. It is the law of the land.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

Julie Bissonnette of the Fédération de la relève agricole du Québec wanted us to ask you that question. Both my fellow member Ms. Dzerowicz and I have asked it now. You gave a clear answer, which I appreciate.

Nevertheless, something you said in response to my fellow member's question worried me, and you said it again when you answered my question. You said that it has been that way since yesterday's news release. This morning, however, the law clerk for the House of Commons and former members of the House told the committee that it has actually been that way since the bill received royal assent, regardless of what the news release said. Yesterday's news release reiterated that fact. However, since Bill C‑208 received royal assent, it has been possible to sell a business for the purposes of an intergenerational transfer of a family farm with the usual rights and benefits. Is that correct?

[Trevor McGowan]

Right now that is absolutely correct. What I was saying with respect to the government's July 19 announcement was that while the government has announced its intention to provide additional conditions that may need to be met at the end of a consultation process, those new conditions would not apply before November 2021. Right now the rules in the Income Tax Act that were amended by Bill C-208 are the law and can be relied upon.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I'd like to welcome the witnesses and thank them for being with us today.

Before I get to my questions, I want to recognize the important work that senior officials and all employees at the Department of Finance have done during the pandemic. This committee met often, and we regularly heard from department officials. They have done incredible work to save the economy. I want to commend them and thank them again for all their hard work.

My questions are for Mr. McGowan.

After yesterday's news release and Ms. Bendayan's earlier comments, everything was clear in my mind, but the answers, details and clarifications you gave Ms. Dzerowicz confused me. Therefore, I'm going to ask you the same question.

Since Bill C‑208 received royal assent in June, the provisions in Bill C‑208 have applied in the case of parents who sell their farm or family business to their son or daughter. Is that correct?

[Trevor McGowan]

The relevant provisions of the Income Tax Act as amended by Bill C-208 would apply to a transaction undertaken today. That's based on yesterday's press release. The government announced that any new amendments would not apply before November 2021. For any transaction undertaken between now and the end of October, the government announced that whatever new conditions it might include in the bill, which, again, would need to be passed by Parliament, would not apply.

[Julie Dzerowicz, Liberal, Davenport, ON]

If I sold a farm to my daughter right now, would Bill C-208 apply, including whatever amendments we actually make for the income tax provisions that we introduce after November 1?

[Trevor McGowan]

The July 19 announcement provided that Bill C-208 amendments currently apply and that any new amendments put forward by the government, which as we discussed would need to be included in a bill and passed through Parliament, would not apply before November 1, 2021.

[Julie Dzerowicz, Liberal, Davenport, ON]

If I own a family farm right now and I decide I'm going to sell it to my daughter, and that transaction happens over the next month, what actually happens? Does Bill C-208 apply, or is whatever is passed or introduced as of November 1 retroactive to sales after June 29?

[Trevor McGowan]

I apologize. I'll try to be more brief.

As I said, the coming into force of Bill C-208 was a factual matter. It amended the Income Tax Act on June 29. That's just when it produced its effect.

The proposed amendment would.... Of course, it would have to be included in a bill, as stated. The government would have to propose it to introduce legislation, and that bill would need to receive royal assent. If passed, it would have the effect of providing that the amendments that had been made as a result of Bill C-208 would apply as of January 1, 2022.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you. I'm sorry, but it's past two minutes now, and I have to get to a few more questions. I appreciate your response.

I'll get to it very quickly. What was the intention behind the June 30 news release? Was it to change the coming-into-force date, the date on which Bill C-208 came into law?

[Trevor McGowan]

It is a somewhat arcane thing that doesn't come up much, but it is critically important in the preparation of tax amendments.

As I said initially, for example, the amendments in Bill C-208 came into force on the date they received royal assent; that is to say that the bill amended the Income Tax Act on that date.

That doesn't necessarily mean their application to any particular transaction is going to be clear. In particular, when we're putting together income tax amendments, we typically set out specific application dates. For example, one reading of a coming-into-force date in the middle of a taxation year is that it applies to transactions that occur on or after the date of royal assent. Another reading of the measure is that because a taxpayer's liability for tax crystalizes at the end of the taxation year when it is computed, it's the law at the end of the taxation year that is relevant for the purposes of computing tax.

A coming-into-force date that simply appears in the act on, let's say, June 29, is ambiguous in that it's not clear if it applies to transactions that occur on or after that particular date or for the 2021 taxation year. That's the reason we typically, in drafting income tax amendments, set out specifically when an amendment applies. It could apply, for example, in respect to transactions that occur on or after a particular date. It could apply as of a particular taxation year. There are a number of different formulations. We do that to address that and provide clarity—

[Ed Fast, Conservative, Abbotsford, BC]

On a point of order, Mr. Chair, my comment that “you guys are awful” was not addressed to our civil servants, and it certainly wasn't addressed to Mr. McGowan. It was addressed to my Liberal friends across the table from us, who were heckling and guffawing about our asking very significant questions of Mr. McGowan related to Bill C-208.

[Trevor McGowan]

As I said, it was an announcement of the government's proposal. As we start with the approval process, of course the Department of Finance officials provide advice to the minister, and then we implement the government's decisions. I was simply trying to highlight the fact that this was a government proposal to table a bill in Parliament that would affect the application date of the amendments included in Bill C-208.

[Ed Fast, Conservative, Abbotsford, BC]

Trevor, really, that is a re-characterization of what has happened. The June 30 press release made it very clear that the government was going to withhold implementation of Bill C-208 until it had a chance to amend it. In that, it was moving in a way that effectively defied the will of Parliament. My question, which you didn't answer, is who in Finance or who in government actually made the decision that was then reflected in the press release that was issued on June 30?

[Trevor McGowan]

I suppose there are two things to discuss there. The first relates to the decision-making process in terms of the press release. In that, the department follows the regular approval process that we use for all of our public communications projects, in alignment with the requirements of the federal communications policy.

In terms of the substantive portion of the question, as I said, on June 29 Bill C-208 produced its effect and amended the Income Tax Act. The government's announcement on June 30 was that the government proposes to introduce legislation providing that the amendments would apply only as of January 1, 2022. It's perhaps a technical point that the June 30 amendment would amend the Income Tax Act, which had been amended by Bill C-30 ahead of time, but the government was announcing its intention to table legislation to provide a January 1, 2022, application date.

[Ed Fast, Conservative, Abbotsford, BC]

Well, let me say this: I'm so glad that you're now acknowledging that Bill C-208 became the law on June 29. It's something that was not reflected in your June 30 press release.

I want to know who it was in your department, or who it was in government, who made the decision not to respect Bill C-208 and issue the press release that led to the confusion, and quite frankly the bewilderment, of the small business community in Canada.

[Trevor McGowan]

Just to be technical in the terminology, when Bill C-208 received royal assent, it became effective. It became part of law. It amended the Income Tax Act. On June 29, the date of royal assent, Bill C-208 amended the Income Tax Act. As of that date, the provisions it had amended were part of Canadian law. That's the date on which it came into law. That's just a fact and not something that could be changed.

[Ed Fast, Conservative, Abbotsford, BC]

Okay, so after royal assent, somebody in government, maybe in Finance or maybe in the Prime Minister's Office, made the decision to announce that Bill C-208 would not be applied. In other words, it wouldn't be implemented right away. Is that correct?

[Trevor McGowan]

As was stated, my colleague Shawn Porter and I appeared before the House finance committee and the Senate committee on agriculture to discuss Bill C-208 and provide comments on the technical aspects of the bill. During that time, we provided technical commentary and analysis in respect of the bill, but our involvement was limited to that. We weren't suggesting amendments, but certainly we did raise some of the concerns that are alluded to or mentioned in the July 19 press release.

[Ed Fast, Conservative, Abbotsford, BC]

All right. Your recent press release, the finance department's press release dated July 19, highlights four specific loopholes that it feels should be fixed in Bill C-208. My question to you is, when you appeared before committee as a witness to discuss this bill, did you or any of your officials recommend amendments that would have addressed the shortcomings Bill C-208 had, and specific wording for those amendments?

[Ed Fast, Conservative, Abbotsford, BC]

Well, thank you, Mr. Chair. My questions will be for Mr. McGowan.

Trevor, you've been at parliamentary committees many times before, as the chair has suggested, so you know the drill. When private members' legislation comes before a committee, we generally have a robust discussion about the legislation. The government, through its MPs, has the ability to bring forward amendments that would fix loopholes or deficiencies in those bills.

Mr. McGowan, you were present at committee as a witness, as Bill C-208 was being discussed. Is that correct?

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order. Welcome to meeting number 60 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 108(2), the committee is meeting to study the coming into force of Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).

We went through the rules for this room this morning, on the pandemic and social distancing and so on, so we don't need to go through those again.

We'll start with the witnesses.

I see, Ms. Aitken, you've been working steadily. We've had you on screen here and you've been getting a lot of work done while you've been waiting for us to come on.

We welcome Ms. Aitken, executive director and senior general counsel, finance legal services, law branch. Then we have Mr. Jovanovic, associate assistant deputy minister, tax policy branch; and Trevor McGowan, director general, tax legislation division, tax policy branch.

Trevor is no stranger to this committee. I think he has spent pretty near as many hours as some of us have. Am I right, Ed?

I don't believe there's an opening statement. If there is, raise your hand or yell. Otherwise we'll start with questions, six-minute rounds, with Mr. Fast, Ms. Dzerowicz, Mr. Ste-Marie and Ms. Mathyssen.

Mr. Fast, you're first on deck. Welcome. Go ahead.

[Julie Bissonnette]

Yes, thank you.

I certainly agree with Ms. Robinson and Mr. Ross. As I said earlier, criteria have already been put in place in Quebec, and things seem to work. We really have seen no evidence to the contrary. Perhaps we should start by looking at what is being done there. We heard that recommendation often during the consultations on Bill C‑208.

In addition, as I mentioned earlier, there is no reason why farm transfers should be affected by the criteria, given that tax evasion is not the purpose of business transfers.

Of course, we hope that the safeguards will not add barriers to future transfers.

[Julie Dzerowicz, Liberal, Davenport, ON]

Okay. No problem. Then I have a lot of time.

I want to thank you for convening this session today, and I want to thank all my colleagues for making it out today. It's actually nice to see people in person.

It was quite clear from the news release put out yesterday by our government that we're committed to implementing Bill C-208. We're also committed to protecting the integrity of the tax system.

Ms. Robinson and Ms. Bissonnette, as we are intending to bring forward these amendments, what messages would you send to the federal government as our officials work on these amendments? That's the first part.

Second, Ms. Robinson, you made a very clear plea to make sure that officials connect directly with grassroots farmers. Are there any other groups we should make sure to touch base with?

Maybe we could start with Ms. Robinson, follow with Ms. Bissonnette, and then transfer whatever time I have left to Mr. Gerretsen.

[Rachel Bendayan, Liberal, Outremont, QC]

On a point of order, Mr. Chair, I'd certainly defer to you on the rules regarding relevance, but I believe that this meeting was called to discuss the coming into force of Bill C-208.

[Julie Bissonnette]

Thank you for your question.

As I said, the last few months have not been easy. There has been added stress, but last night we had confirmation that the situation was resolved.

As for the future, for now, Bill C‑208 has come into force and the legislation is being implemented. That's what we've been hearing for the last little while. We assume that the situation is resolved. Of course, every business is different and every transfer is different. It is up to each business to actually validate the farm transfer.

For us, the bill has been in effect since it received royal assent. Clearly, we will be watching with great interest to see what happens next. For now, we are reassured by yesterday's confirmation and this morning's confirmation of the nuance that we were missing. We consider that it is settled.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you very much, Mr. Chair.

First, perhaps because I am not a regular member of the committee, I do not share the enthusiasm of my colleague from the Bloc Québécois about the comments of the parliamentary secretary and yesterday's news release.

I would remind you that Bill C‑208 was voted on by Parliament, but all members of cabinet voted against it. The Department of Finance issued a news release noting that the bill would not be implemented until January 1, 2022.

As a former chief of staff, I can tell you that a news release of this nature is not issued by the Department of Finance without at least someone in the minister's office having seen and approved it. It's a very important item and a major change in terms of finance. More importantly, it is a major change in terms of the implementation of legislation that has been passed by Parliament. A news release of this nature could not be issued without the approval of the office of the Minister of Finance.

My question is for Ms. Bissonnette, whom I know well because I have met her on several occasions.

Without being afraid, would you be able to recommend, today, that a family proceed with the transfer of its farm, knowing that the government has already announced that there will be amendments to Bill C‑208?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Good morning to all the witnesses.

Thank you for your very interesting presentations.

I will begin with a comment for Ms. Bissonnette.

Thank you for your presentation. You had a question. It could even go to the senior officials this afternoon. I was delighted to hear that we already had the answer from Ms. Bendayan, who was speaking on behalf of the government. She assured the companies that will be doing family transfers that the next bill amending Bill C‑208 will not be retroactive.

I commend and thank the government for sharing this commitment with us.

Before I turn to questions, I have a comment in response to the discussions we have heard at this meeting.

Senior officials in the Department of Finance may have had concerns about the implementation of a bill, but I don't think that's at all an excuse. In the previous hour, Mr. Dufresne, the Law Clerk of the House, appeared and told us that. He knows full well, as does everyone here, that, when a bill has no implementation date, it comes into force on the day it receives royal assent.

Mr. Dufresne reminded us that the government, the Minister of Finance, the Prime Minister and everyone else in government, relies on the Department of Justice to advise them on this matter. There is no better resource than the Department of Justice for advice on how legislation works. Everyone in the government knows full well that when royal assent is received, the legislation is in force, that is how it works. Even if the government did not know that, the senior officials have no excuse and cannot say that they did not know either. The minister and the government are responsible. If they didn't know, they are like boy scouts in short pants and that's inexcusable. It is completely unacceptable.

I have one other comment. According to yesterday's Radio‑Canada article, between the first reading of Bill C‑208 and royal assent, there were 527 days, or a year and a half. At each stage, at first reading, second reading, third reading, report stage, committee and Senate, the government could have proposed amendments. If it had done its job as a government in any serious manner and if it had said that it had concerns about tax evasion, which are perfectly valid, why did it let this go on for 527 days? Then it decides to have a new bill, and we gather that it will likely be after the election. They are creating uncertainty by saying that they are going to propose their amendments. Yet they had 527 days to do so. Once again, it smacks of boy scouts in short pants. It is really sad.

My last comment before my questions is this. Yesterday, we received the news release that corrected the situation and the Parliamentary Secretary, Rachel Bendayan, spoke on behalf of the government. Phew! We saved the bill, it's in effect and it will be implemented. I am very pleased about that.

I want to commend the work of all the members of the committee. I think the fact that the committee called an emergency meeting enabled the government to make this correction. I particularly want to raise my hat off to the chair of the committee.

Thank you for this meeting, Mr. Chair. It has changed everything.

Let me proceed with the questions.

I'll start with Ms. Bissonnette.

Your presentation was excellent. You mentioned that 70% of Quebec farmers want family succession. You have a dairy farm. How much is an average dairy farm worth when you include the fields for grain and everything else? On average, what is it worth in Quebec?

[Rachel Bendayan, Liberal, Outremont, QC]

This was mentioned earlier this morning, further to questions from different members. I would really like to unequivocally confirm on behalf of the government that any amendments to safeguard our tax policy or to avoid artificial tax planning in connection with Bill C-208 would not be retroactive. As stated in the press release of yesterday, new proposals would apply as of the later of either November 1, 2021, or the date of publication of the final draft legislation. I hope that clarifies matters for my friends and colleagues.

I also want to add my voice to those of the previous speakers and stress the importance of parliamentary supremacy.

So my first question is for the representatives of two organizations that are here to represent our dear farmers.

Thank you very much for joining us today.

As Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade, I am particularly interested in the issue of intergenerational transfers.

As we all know, most farms are SMEs. The 2016 census showed that more than half of all farms are sole proprietorships, and nearly a quarter of those report as family businesses.

I feel that our government has demonstrated that we are here to support our SMEs in all sectors, including the agricultural sector, which I believe has 200,000 businesses in this country. If we look at our government's record during the pandemic, we see that it has provided $1.4 billion to the agricultural sector through our wage subsidy and $50 million, in the agricultural sector alone, for rent assistance.

There is also $5 billion in additional funding for Farm Credit Canada, $125 million for AgriRecovery to help producers with the additional costs of COVID‑19, $50 million for redistribution of unsold products, and more.

My question is about the Act to amend the Income Tax Act (transfer of a small business or family farm or fishing corporation). Now that we have clarified that this act has actually been in effect since June 30, what are the biggest issues you are facing today, from a tax perspective?

Ms. Bissonnette, you have noted that the transfers are quite complex. Could you start?

Do you have any suggestions or concerns from a tax perspective that you want to mention to the government today?

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Mr. Chair.

Let me begin by thanking you as well, both as chair and as a member of our government's caucus, for your leadership on all things related to finance, and in that vein, also for calling this meeting of the finance committee at the end of July, when the House isn't sitting, in order to clarify matters in relation to the coming into force of Bill C-208. As others have said, I believe you are a giant in the House of Commons, sir, and a mentor to so many of us. I would like to thank you.

[Julie Bissonnette, President, Fédération de la relève agricole du Québec]

Thank you, Mr. Chair.

Good morning everyone, members of Parliament and Mr. Chair.

Thank you for inviting us to share our observations with your committee on the issue of business transfers.

My name is Julie Bissonnette, and I'm a dairy farmer in L'Avenir and the president of the Fédération de la relève agricole du Québec, or FRAQ. With me today is our public affairs coordinator, Véronique Simard Brochu.

We already introduced ourselves at our last appearance, but here is a reminder. The FRAQ is an organization that brings together 16‑ to 39‑year‑olds who share an interest in farming. We represent more than 1,700 members from across Quebec. We are here today to talk about the implementation of the tax measures contained in Bill C‑208.

Let me begin by quoting what I said during our previous appearance before the Standing Committee on Finance, which certainly sets the stage for today's discussion:

The next generation of business owners has been speaking out about the problem for more than 15 years. Hopefully, this time, it will be fixed once and for all.

As we have mentioned before, with the average age of farmers now over 55, there was indeed an urgency for the farming community to act. In fact, 70% of these future transferors would prefer to keep their businesses in the family. It is therefore the preferred method of transfer, especially since it is six times more likely to succeed than an external transfer.

With the bill passing in both Houses and receiving royal assent on June 29, 2021, we were finally able to celebrate this major victory. However, there was a lot of confusion following the Department of Finance's announcement on June 30, suggesting that implementing the legislation would be delayed.

We are very pleased to see that, last night, the department put an end to almost a month of confusion by finally clarifying farmers' questions. As the department states, “the changes contained in this legislation now apply in law.” This answers our biggest question, namely whether related farm transfers are now entitled to the same exemption as third‑party transfers.

However, we would like the department to make it clear that, if a genuine family transfer occurs between now and the passage of this potential bill, it will include those exemptions and will not be penalized by any measures to come. The government should clarify this issue so that tax experts and accountants can feel free to advise their clients on the transfer of their business without fear of misleading them. Members of Parliament may actually want to ask them this question this afternoon.

It is important to clarify this for the agricultural community. Given the importance of such legislation, the department did the right thing yesterday by providing answers to clear up the confusion that was rife. At the FRAQ, we believe that changing our tax system is a serious job that should not be done with a news release. That is why the right way of going about this is to let the current legislation do its job and then propose changes in a future bill, as was explained yesterday.

In terms of the next steps, it is clear that the government's intention is to facilitate farm transfers while protecting the integrity of the tax system. According to the news release, “forthcoming amendments are intended to make sure that it facilitates genuine intergenerational transfers and is not used for artificial tax planning purposes.”

We have no problem with that, as long as it does not interfere with genuine family farm transfers between family members. We therefore encourage the Department of Finance and members of Parliament to follow the example of the Quebec legislation, which has put in place several criteria to ensure the authenticity of family transfers. However, it is essential that the intentions of Bill C‑208 be maintained so that no parents are dissuaded from selling the family business to their children because of the tax system.

We must not forget that transferring a business is a very big step. Many factors need to be considered, and it is not simple. At the end of the day, all transfers are different and unique. Therefore, there cannot be a one‑size‑fits‑all definition for farm transfers. This must be kept in mind when setting future conditions. The inequity that has just been addressed should not be replaced by another barrier.

In conclusion, we wish to reiterate that we are grateful for the department's clarifications and look forward to future proposals. In the meantime, after the confusion over the past few weeks, it is good to know that the legislation is actually in force.

Our thanks to the members of the committee for seeking answers and for inviting us to share our first‑hand experiences.

Thank you for listening.

[Mary Robinson, President, Canadian Federation of Agriculture]

Thank you, Mr. Easter. It's wonderful to be here.

Thank you, Mr. Chair and committee members, for the opportunity to speak to you today. As Wayne said, my name is Mary Robinson. I farm on a sixth-generation family potato, soybean, barley and hay farm in Prince Edward Island. I'm also president of the Canadian Federation of Agriculture, which is Canada's largest general farm organization, representing nearly 200,000 Canadian farm families from coast to coast to coast.

I will start by thanking the committee for convening so quickly and by expressing my appreciation for yesterday's announcement from Minister Freeland, ensuring that the uncertainty around the coming into force of Bill C-208 has, for the time being, been put to rest.

Modern agriculture is capital intensive, with millions of dollars in capital assets involved in the transfer of most farm businesses these days. The passage of Bill C-208 ensures that each family that owns one of the 50,000 incorporated family farms in Canada can finally access the lifetime capital gains and capital gains treatment, avoiding what would potentially cost hundreds of thousands of dollars were this inequity to persist.

While it's commonplace for a farm transfer to involve millions of dollars in capital, nearly all of this is tied up in productive assets that are essential to the maintenance of the farming operation into the next generation. Meanwhile, the retiring farmer needs to fund their retirement from the proceeds of a sale, and the next generation almost assuredly lacks the capital to buy the assets outright. Every dollar matters, and a smooth intergenerational transfer is critical to the financial health of both parties.

For a sector that is almost wholly family owned, the impending transfer of tens of billions of dollars in assets across thousands of family farm transfers has a bearing on the outlook for an entire industry that is key to Canada's short-term economic recovery as well as Canada's long-term growth. Family farming is recognized internationally for sustainable growth, environmental stewardship and a connection to one's community, seen through increased spending in one's local community. It also contributes directly to the vibrancy and social fabric of rural communities across this country.

The long-standing unfairness that Bill C-208 has addressed had been a disincentive to passing these operations on to the next generation and maintaining this way of life for thousands of incorporated family farms across Canada. Those who still wish to do so face undue additional tax liabilities that could very well be in the hundreds of thousands of dollars. Following the bill's royal assent, we were disappointed to hear that farmers and financial advisers were left uncertain as to the status of the bill's implementation, and we were pleased to see yesterday's announcement provide some additional clarity, both for the immediate future and for the government's longer-term plans in this regard.

I would like to take this opportunity to applaud Parliament for passing Bill C-208 and resolving this long-standing inequity facing Canadian farms. I welcome this committee's efforts to ensure there is clarity moving forward. If further measures are needed to address undue tax avoidance, as outlined in yesterday's announcement, we would implore Parliament to ensure that the intent of this bill is maintained, grandfathering family farms' access to capital gains treatment for the transfer of incorporated family farms. Such access can easily be limited if undue administrative burden or significant costs are reintroduced into the system. Given the extensive consultations with farm advisers since 2012, when CFA first called for a resolution of this inequity, we believe the targets for future amendments can be addressed while this access for Canadian farm families is maintained. However, we believe this can be assured only through dialogue with farmers and farm advisers.

The potential for unintended barriers is significant unless there is consultation with those who have direct experience in managing farm succession and financial planning. In 2018, CFA actually convened round tables of farmers and farm advisers across Canada to discuss this subject with Finance Canada officials and to inform their work on this very topic. We would be pleased to facilitate similar engagements again to ensure that any future legislative amendments respect the realities of modern family farm transfers.

In conclusion, we call on the government and Parliament to ensure that the inequity that Bill C-208 resolves is not reintroduced and that Canadian family farmers are never again disincentivized from selling to the next generation by the Canadian tax system.

I thank the committee for its time, expediency and commitment in seeking to provide clarity around the coming into force of Bill C-208.

Thank you.

[The Chair, Liberal, Wayne Easter]

Okay, folks, we'll reconvene.

Welcome, panellists.

I'll just quickly go through this. Pursuant to Standing Order 108(2), we're dealing with panel two. The committee is meeting to study the coming into force of Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), and in this panel, the supremacy of Parliament as well.

With us this morning we have, as individuals, the Honourable Peter Milliken, former Speaker of the House of Commons, and the Honourable Don Boudria, a former House leader. From the Canadian Federation of Agriculture we have Mary Robinson, president, and Scott Ross, assistant executive director. From the Fédération de la relève agricole du Québec we have Julie Bissonnette, president, and Véronique Simard Brochu, public affairs coordinator.

We'll ask all of you to keep your opening remarks fairly short so that we get time for questions.

We'll start with Mr. Milliken. Peter, you're on.

[Ed Fast, Conservative, Abbotsford, BC]

There's absolutely no guarantee from this government that it won't totally gut Bill C-208 when it gets around to amending it.

[Ed Fast, Conservative, Abbotsford, BC]

Did any finance officials or the Prime Minister's Office seek your legal opinion before announcing that they did not intend to implement C-208 before amending it?

[Philippe Dufresne]

Bill C‑208, which was passed by Parliament after three readings in the House and royal assent, is in force. So we are discussing introducing amendments. The news release does not propose to amend the bill in its entirety.

A bill that would essentially undo what has been done and say exactly the opposite would certainly raise a procedural question of whether it is possible to ask the same question in the House when it has already been answered.

However, that is not what is being proposed at all. We are making amendments to uphold the spirit of the legislation to correct what the government perceives as certain shortcomings.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Okay.

Could the government introduce a bill in the House to repeal Bill C‑208?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I will wait until Mr. Gerretsen is listening.

After what I just heard, let me remind you of the basic factors. We are here because something very serious happened. Parliament passed Bill C‑208, which is extremely important. When I first ran for office, it was the first issue people talked to me about. Farmers were saying that they had to choose between their retirement and their children, who wanted to take over the farm. The farmers would lose their pensions if they sold it to them, so they were wondering what to do.

Members from every political party brought this bill forward to the House. As I said earlier, after 527 days, it was passed and it came into force. The government issued a news release saying that it would come into force later. The Liberals are therefore saying that they will not honour the will of the House, which is very serious. That is why members from each party have asked for this emergency committee meeting today, to emphasize the seriousness of what is happening.

Much reference is being made to the news release issued yesterday afternoon, just prior to the committee meeting. I am sure that this correction made through the news release is directly related to the fact that the Standing Committee on Finance did its job and announced an emergency meeting. It is very important to remember that what is voted on in Parliament must be respected and that the government cannot act like a tinpot dictator by not implementing what it does not like. We live in a democracy, and that is not how it works.

Let me come back to you, Mr. Dufresne.

Yesterday, in the press release, the government announced its intention to make amendments in keeping with the spirit of the bill. The Liberals gave us their word. As they have said and as you have reiterated, this must be done through a whole new legislative process. In short, Parliament will have to pass a new piece of legislation.

Is that the case?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Now that they've recused the statement from June 30 by yesterday's press release, let's say in a hypothetical situation they hadn't gone forward with yesterday's case, and they stuck to their original press release and unfairly delayed the implementation of Bill C-208 until January 1 coming up. What recourse could Parliament take against the department?

I mean, this is contempt of Parliament, similar to what the government has done by suing the Speaker. What if it were to happen again? What are Parliament's options here in regard to taking action against the department? The department put out the press release.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Mr. Chair. I want to thank you for the calling of this meeting and our witnesses for being here today.

Mr. Dufresne, in the case of June 30, 2021, when Finance announced the suspension of Bill C-208, what legal authority did the department use to announce this tax policy change?

[Philippe Dufresne]

Bill C‑208 has been in force since June 29. This does not change and the news releases do not affect it.

The June 30 news release indicated the government's intention to change the date of coming into force by means of a future bill. The July 19 news release confirms that this is not the case and that the legislation is in effect now.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

So the current government could announce what it wants, such as making tax changes. Afterwards, aggrieved people would have to go to court.

That possibility creates a lot of uncertainty for all small business owners who want to transfer their business now. The news release creates even more ambiguity because we don't have the details of a possible bill and what the government intends to do.

I have one final question for you.

The news release issued yesterday mentions that the measures are in effect now. But there was another one on June 30. In your opinion, will the people who would have benefited from the good news that Bill C‑208 was enacted between those two dates be adversely affected?

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

What would happen if the government actually decided not to implement Bill C‑208 today and did not get parliamentary approval later?

Who would be held accountable, given that there could be a change of government or an election? What would happen to all the victims, farms and small businesses that could not make the transfer according to the details of Bill C‑208?

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

In your view, would Parliament be breaking the law if it announced now that it intended to make amendments to Bill C‑208 and put the new measures in place immediately?

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Okay. I know we're sort of getting into the nitty-gritty, but is it common, when the government says it plans to introduce amendments that would honour the spirit of Bill C-208? Is there a precedent explaining that? Is that language that's commonly used by government? Is there something more precise to that, legally?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you. That is very clear.

At the beginning of your opening remarks, you reminded us that you advise Parliament, the House, its committees and elected officials, and you said that this is more or less what the Department of Justice does for the government.

Let me add an editorial comment. I would be very surprised if the Department of Justice officials thought that not including a date in the bill meant that the government could put it into effect whenever it wanted.

I think the government, the Prime Minister and his team, thought that this bill was not quite working for them and that they would try something. I am sure that the Department of Justice would never have misled the government in that way, which is why the emergency meeting of the committee today was so important and why I think an updated news release was issued.

Larry Maguire, who is here with us, can correct me if I am wrong. In a CBC article yesterday, we are reminded that the first reading of Bill C‑208 took place on February 19, 2020. It's now 2021. Yesterday, the journalist reminded us that 527 days passed between the first reading of the bill and its implementation following royal assent.

Mr. Dufresne, can you remind the members of the committee and those listening of the normal stages that a bill must go through? Also, at each of these stages and during those 527 days, when could the government officials have suggested amendments or proposals to make the bill consistent with what they wanted to do, as they said they wanted to do through a future bill?

[Philippe Dufresne]

The problem with the first news release was that it pointed out that Bill C‑208 did not provide for an implementation date. It stated so in the beginning, in the first paragraph. It ended by stating that the government intended to include new legislation to clarify that those amendments would apply at the beginning of the next fiscal year.

That's what was more surprising or potentially confusing, because it gave the impression that the absence of a date in the legislation indicated a failure or an area that needed clarification, when this was not the case. The Interpretation Act makes it very clear that a bill comes into force when it receives royal assent. This could have suggested that the entire bill would not come into force until later, retroactively.

The updated news release replaces the first one and indicates that the legislation is in force and that the legislative amendments being considered by the government will address specific issues, not the coming into force date.

[Philippe Dufresne]

I'm satisfied that in the release yesterday, the government has recognized that Bill C-208 is in force and has expressed its intention to introduce future amendments.

[Peter Fragiskatos, Liberal, London North Centre, ON]

As a final point, Mr. Chair, I voted for Bill C-208. I think it's a necessary measure. A number of Liberals voted for Bill C-208 as well.

Mr. Dufresne, you are Parliament's lawyer, if I can put it that way. Once again, are you satisfied that yesterday's press release makes it clear that Bill C-208 is recognized by the government as a bill that will be put in place?

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

My friend and colleague Mr. Kelly did not expand on it—I do not think he had time—but put a forward a claim that yesterday's press release, in his view, indicates that the government is not looking at or serious about moving forward with C-208.

I'm not sure where that observation comes from. I looked at the press release closely, and it says—and you put this is your testimony, sir—that unintended consequences that could come about with C-208 will be addressed. That is not inconsistent with the recognition that this is law and that Parliament is supreme. Would you say that's accurate?

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

It's good to be here in Ottawa after a lot of time. It's nice to see colleagues in person once again, and I hope everybody has kept healthy and safe and that everyone's loved ones are okay too.

Many thanks to you, Chair, along the way. I know this is the final set of meetings the finance committee will have with you at the helm, and it's been absolutely great and a wonderful experience working with you, as I've told you over the years.

To the staff behind the scenes, too, here at Parliament, and our own staff, thank you very much. This committee has been very active over the past year and a half, without any stops, and that continues.

Mr. Dufresne, you've answered this, I think, but I want to be crystal clear here. Is the press release that we saw yesterday consistent with the view that Parliament is indeed supreme and that Bill C-208 is in force? The press release recognizes that, I think, but could you elaborate?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you so much, Mr. Dufresne, for appearing today and for the clarity you've brought to this issue. Let's just get right to it.

Bill C-208 became law on June 29. Is that correct?

[Philippe Dufresne, Law Clerk and Parliamentary Counsel, House of Commons]

Thank you, Mr. Chair, members of the committee, for your invitation to appear today following the Department of Finance Canada's June 30 news release respecting Private Member's Bill C‑208, and the clarification issued by the government yesterday which replaced that June 30 news release.

As the Law Clerk and Parliamentary Counsel for the House of Commons, I am pleased to be here today to address any questions that the committee may have on this matter. My office provides comprehensive legal and legislative services to the Speaker, the Board of Internal Economy, the House and its committees, members of Parliament and the House Administration.

As counsel to the House, its committees and members, we serve the interests of the legislative branch of government, and provide similar types of legal and legislative services to the House as the Department of Justice provides to the government.

I am accompanied by Michel Bédard, Deputy Law Clerk and Parliamentary Counsel, Legal Services, and I hope that our answers will assist the committee.

Before turning to Bill C-208, I want to take a few moments to highlight the rules applicable to the coming into force of legislation. These same rules apply equally to legislation implementing tax measures.

Enacting new laws and amending existing ones is a process that culminates in a legislative text receiving royal assent. However, a distinction must be made between the date on which a legislative measure is enacted by Parliament and the date on which it comes into force. A bill becomes law after it has been passed by both Houses in the same form and has received royal assent, but its provisions will produce their effect and become enforceable only when they are brought into force.

The Interpretation Act, which applies to all federal legislation, contains the provisions governing the coming into force of statutes, including the timing of that coming into force. Generally, a statute will come into force either on the day of assent or on another date as provided by the legislation itself. The other date could be a specific day set out in the act, or the act could leave it to the government to determine the date of the coming into force by an order in council.

If no coming-into-force provision is included in an act, the default rule found in subsection 5(2) of the Interpretation Act applies, and the entire act comes into force on the day on which it receives royal assent.

I will now say a few specific words about the implementation of tax measures.

Governments will, from time to time, implement proposed legislative changes respecting taxation, for example for new capital gain inclusion rates or new GST rates, before their formal legislative enactment. The actions of taxpayers will then be influenced by the proposed measures—that are oftentimes already implemented administratively by the Canada Revenue Agency—in anticipation to the subsequent legislative enactment that would have retroactive effect to the date the proposed legislative changes were announced.

House of Commons Procedure and Practice summarizes this practice as follows:

It is the long‑standing practice of Canadian governments to put tax measures into effect as soon as the notices of the ways and means motions on which they are based are tabled in the House of Commons, with the result that taxes are collected as of the date of this notice, even though it may be months, if not years, before the implementing legislation is actually passed by Parliament.

Implementation of the tax measures often starts when their announcement is made, including by the tabling of a ways and means motion, but is always contingent on the tax measures being ultimately enacted by Parliament.

Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), received royal assent on June 29, 2021.

The bill does not contain a coming-into-force or a commencement provision, so, in accordance with subsection 5(2) of the Interpretation Act, the date of coming into force is the date of royal assent. This means that the new provisions apply as of that date, in this case, June 29, 2021.

There is nothing unusual about this. On June 30 the government proposed legislation to clarify that the Bill C-208 amendments to the Income Tax Act would apply at the beginning of the next taxation year, starting on January 1, 2022.

Yesterday, the government issued a new statement replacing the June 30 news release and affirming that as Bill C-208 has been passed by Parliament and has received royal assent, it has become a part of the Income Tax Act and that the changes contained in Bill C-208 now apply in law.

The government also clarified that it intends to bring forward amendments to the Income Tax Act that honour the spirit of Bill C-208 while safeguarding against any unintended tax-avoidance loopholes that may have been created by the bill.

Because the bill is now law, making any changes to it would require new legislation. Such new legislation could provide for any amendments to the Income Tax Act to apply retroactively, including applying to events that take place before the day on which the new legislation comes into force.

I would now be pleased to answer any questions you may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

We will call the meeting to order.

Welcome, everyone, to meeting number 59 of the House of Commons Standing Committee on Finance. Pursuant to Standing Order 108(2), the committee is meeting to study the coming into force of Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).

Given the ongoing pandemic situation, and in light of the recommendations from health authorities to remain healthy and safe, all of us attending the meeting—it's the first time all of us have been in a committee room for 16 months—are to maintain the two-metre physical distancing. We must wear a mask when circulating in the room. It's highly recommended that a mask be worn at all times—though I don't think members can be expected to—and we must maintain proper hand hygiene by using the hand sanitizer at the room entrance.

I will try to enforce those measures, but I don't think enforcement will be necessary. I know there's only one staff per party allowed in the room. I thank members for their co-operation.

In our first hour of this session, by video we have with us Mr. Philippe Dufresne, the law clerk and parliamentary counsel, who has been before the committee a number of times, and Michel Bédard, deputy law clerk and parliamentary counsel, from the Office of the Law Clerk and Parliamentary Counsel.

Welcome to both of you. I imagine you have an opening statement. There was considerable controversy. A number of us said that.... I think MPs believe Parliament is supreme. There was a little difference of opinion, I think, between us and the Department of Finance and maybe others.

We'll turn to you for an opening statement. Then we'll go to questions.

Budget Implementation Act, 2021, No. 1

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I thank my esteemed colleague from Drummond for his question.

My answer will be mixed. There have indeed been actions taken to support farmers, but often they are inadequate one-offs, involving meagre amounts that, I just said earlier, are used to make “mini-announcements” rather than bring in anything permanent.

There are requests, and I will give three examples. If the House feels strongly about the question asked by my colleague from Drummond and wants to do something for the farming community, Bill C‑216 protects supply management once and for all. All parties voted overwhelmingly in favour of this bill, which was referred to committee and must now come back to the House. I wish it had come back before we leave.

Bill C‑208 is currently before the Senate. I find it very fishy that it is taking so long. I hope the Senate passes it before Parliament rises.

There are several measures like that.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

I understand that you are considering it. I would like to ask you some more questions before my time runs out.

There is a great desire to increase exports, and we agree on that. At the same time, we see the parallel threat of complaints from the U.S. We know that we're respecting the agreement, but it is something that is never ending.

There are two very important bills right now. There's Bill C-216, which addresses that issue, and there's another one on farm succession, Bill C-208. I would imagine that these bills are progressing well and that we can count on the government's support for farm succession, among other things.

This is an issue that is near and dear to your heart, isn't it?

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I am pleased to be speaking this morning about Bill C-30, budget implementation act, 2021, no. 1.

My colleagues will recall that the Bloc Québécois voted against the budget because some of our important conditions were not included. However, we will be voting in favour of the budget implementation bill, which contains plenty of promising measures.

All the same, that does not mean that we will be giving up the fight, in particular with respect to health transfers. In my opinion, it is inconceivable that a government that is running a deficit of more than $350 billion this year still refuses to help the levels of government that have the responsibilities stipulated in the original agreement.

The federal government used to pay 50% of the costs, not 22%. At this rate, it will only be paying 20% five years from now. What the provinces and Quebec are unanimously asking for is 35%. That corresponds to $28 billion, which by purest coincidence is equal to the leeway that the government decided to subtract from its deficit. I certainly think the Liberals could afford this.

Our other major condition was a decent increase in old age pensions. I am not talking about the increase of about $1.75 given to those who received the largest increase. That will just about buy them one extra coffee a year. I am talking about a decent increase of $110 a month, which is not asking much.

It feels like we keep repeating the same things. Sometimes repetition is the only way to get a point across. At a time when the government wants to launch a recovery plan involving more than $100 billion in spending, how can it justify not giving seniors some breathing room by providing $110 a month?

It is a small amount. These people will not be putting it in the bank for later, they will be spending it. That is exactly what we need for our economy this year. We need a recovery, some breathing room, help for these people who were hit so hard by the pandemic.

Another concern we have about Bill C-30 is that it lays the foundation for a Canadian securities regulation regime. Historically, the Bloc Québécois has always been opposed to this, and we are not alone. The Quebec government and Quebec's business community are unanimous in rejecting the idea. The Fédération des chambres de commerce du Québec, the Chamber of Commerce of Metropolitan Montreal, Finance Montréal, the International Financial Center, Mouvement Desjardins, the Fonds de solidarité FTQ and most companies, including Air Transat, Transcontinental, Canam, Québecor, Metro, La Capitale, Cogeco and Molson, all agree.

Why are all of these economic stakeholders in Quebec saying that Quebec should not be losing more control to Ontario?

It is because this amounts to an attempt to move a strong financial centre to Toronto. I know that I am in the House, that I must remain calm and watch my language, but it is pretty darn hard to stay calm when faced with this constant financial expropriation. What the government wants to do is to make Quebeckers dependent, so that they think they need the rest of Canada and that they want to remain a part of it. That is the bottom line.

Why fix something that is not broken?

Quebec's securities commission is extremely effective, and it is important to have a strong economic centre. This is the institution that insisted on keeping the Montreal Stock Exchange in Montreal even after it was sold to the Toronto Stock Exchange. I will be so bold as to say that, if it had been up to Toronto, there would not be a stock exchange in Montreal anymore.

There are many jobs involved. The financial sector accounts for 150,000 jobs and contributes $20 billion to the GDP. Montreal is the 13th-largest financial centre in the world. The 578 head offices in Quebec account for 50,000 jobs. Since these are head offices, these jobs are not just ordinary jobs. They are 50,000 well-paying jobs that create more jobs. When a company's head office is located in Quebec, because that is where the financial centres are and where decisions are made, the company tends to hire within Quebec and to adapt its strategy accordingly.

That is what the federal government wants to eliminate. Well, I have news for the government: We will not allow it. We will work on it and propose amendments. I hope that the people in the government will see reason and defend Quebec's interests. I would remind them that there are elected officials from Quebec in their party.

Of course, Bill C-30 is massive and does not cover everything. We do applaud the extension of the special assistance programs, such as the Canada emergency wage subsidy and the Canada emergency commercial rent assistance program, until September 25.

However, I think that the rates are dropping rapidly. Companies are not quite back on their feet yet; we need to make sure that we do not take this assistance away too soon, since companies need predictability. Last week, I received more calls from companies that have held on so far, but they are telling me that they may not be able to hold on for much longer. This is not the time to cut them off.

The creation of a hiring program is a good idea. Disallowing bonuses for senior executives of companies that received the wage subsidy is an excellent idea. I hope the rule will be applied to the letter.

Speaking of wage subsidies, I cannot help but make a brief interjection. It is a shame that I cannot refer to the presence of members in the House, because I would have definitely named someone. My Conservative colleague who spoke previously referred to the wage subsidy several times, bemoaning the fact that the government gave wage subsidies to companies that give bonuses, and yet the Conservatives, the Liberals and the NDP all received the wage subsidy. They have the gall to make accusations and feign outrage. It is crazy.

Sometimes I think I am dreaming. I hear a member say something and I wonder whether he really dared repeat it. Members ought to have a little decency. I am launching an appeal to the three political parties that misappropriated public funds. That is the polite way of saying what I think. I am asking them to give the money back, because it is Quebec and Canadian taxpayer money. They should not use public funds for campaign purposes, especially if they refuse to amend the laws governing the public financing of political parties. It is doubly sickening.

They announced measures in the budget to tackle tax avoidance. That is fine, but they seem pretty minor to me. More needs to be done. I know that they are sick and tired of hearing us talk about this because it is a really sore spot for them, but when are they going to do something about tax havens? If they had the courage to take action in this matter, we would have a budget surplus rather than a deficit. Let us get moving on this.

The argument that government members cannot vote in favour of Bill C-208, which aims to facilitate the transfer of SMEs, including farms, because this constitutes tax avoidance really raises my hackles. It is mind-boggling.

There are a few small positive measures on zero-emission vehicles. It is also an excellent idea to extend the tax deferral on patronage dividends for cooperatives. The industry has been asking for this for ages. However, I wonder why they have not made this measure permanent rather than extending it for another five years.

Would members like to know the real reason? The government wants to keep these people dependent and in line. In three and a half years, or four years, they will have to start begging their generous government to extend the measures again. People are more compliant in those situations. The government wants to keep us dependent, and so do the Canadian securities regulators.

The Bloc Québécois will be there to fight this.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I will begin by responding to Mr. Dreeshen's comment by simply drawing a parallel with Bill C-208, which the Conservatives themselves introduced. They were able to prioritize that bill, which was then able to pass third reading last month. That is what happened. It was not a priority bill. Yet, it moved from 17th to 2nd in the order of priority, if memory serves. It was even prioritized again for the second hour of debate at third reading. The Conservatives changed the order of their bills so that some of them were given priority consideration during the debate time they had. These sorts of steps are taken to ensure quick passage.

I would also like to respond to Mr. Généreux's comment. If we don't fast-track Bill C-253 back to the House without delay and an election is called, the bill will be a complete failure.

Remember that a bill was passed under a gag order two weeks ago to enact rules for how elections work during a pandemic. In my view, if the government is passing reforms to the Canada Elections Act under a gag order, that sends a very alarming message to me that it wants to call an election.

This is the context in which we must operate. Based on the indicators we have, we could see a lot of bankruptcies this fall, because right now companies are being kept alive on life support. If we don't get Bill C-253 back to the House quickly, we will not be protecting workers from these bankruptcies. We are exposing them to the consequences.

That's why this motion needs to pass quickly. We need to get Bill C-253 back to the House as soon as possible, to at least give ourselves a chance to get it passed on behalf of the people we represent.

Of course, we can't know in advance who we will save from bankruptcy, which constituencies will be affected, and the circumstances in which it will happen. However, the examples we have seen, like White Birch Papers, really scare me.

Income Tax Act

[The Speaker, Liberal, Anthony Rota]

It being 3:12 p.m., pursuant to an order made on Monday, January 25, the House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-208 under Private Members' Business.

Call in the members.

The House resumed from May 5 consideration of the motion that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the third time and passed.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, later this afternoon we will have the final vote on my private member's bill, Bill C-208. The purpose of this bill is straightforward. It will level the playing field by giving families the exact same tax treatment when they transfer their businesses or operations to their children as when they transfer it to a stranger. It would result in more locally owned and operated businesses, the type of businesses that are deeply involved in their communities and provide steady employment for countless individuals.

Bill C-208 sends a message of hope to young farmers who want to carry on what their families started. No longer will parents be given the false choice of having to choose between a larger retirement package after selling to a stranger, or a massive tax bill after selling to a family member, their own child or grandchild.

I urge all members to vote in favour of Bill C-208 and bring tax fairness to the Income Tax Act for all qualifying small businesses.

Agriculture and Agri-Food

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, every year, hundreds of farms are closing down in Quebec. It is obvious that there is an urgent need to encourage the next generation of farmers. However, the federal government is making it more profitable for a farmer to sell their business to outside shareholders than to their own family. The farmer can either sell their land to a third party and secure a decent retirement, since the sale will qualify for the lifetime capital gains exemption, or sell it to their family and forgo a comfortable retirement.

Tomorrow we will have the opportunity to rectify this situation that the Bloc Québécois has opposed for 15 years now. Bill C-208, which aims to facilitate the transfer of businesses, will be put to a vote. I personally co-sponsored this bill, because the Bloc Québécois votes in favour of initiatives that are good for Quebec farmers. That is what being reliable is all about. This vote will be a moment of truth for the future of farming in Quebec, and I urge all parties to truly support the next generation of farmers.

Budget Implementation Act, 2021, No. 1

[Richard Lehoux, Conservative, Beauce, QC]

Mr. Speaker, I am pleased to rise in the House today to speak to budget 2021.

As I always remind my constituents, I am Beauce's representative in Ottawa, not Ottawa's representative in Beauce. That is why I would like to share with the House my many concerns about this budget and the changes that I would like to see made for my constituents and all Canadians.

The fact that the government took two years to announce its budget is unbelievable. One would think that, since the budget took two full years to develop, it would not have so many glaring problems, but it is important to remember that this government is constantly embroiled in scandal and other types of distractions.

Since coming to Ottawa during the last election, I have seen how complicated it is to work in federal politics. Everything moves at a snail's pace. It is extremely discouraging to have such good intentions but to feel as though this government never makes any progress.

As the associate shadow minister for rural economic development, I examined the budget carefully, and there are many things I would like to talk about today.

I would like to start by talking about the labour shortage that is affecting Quebec businesses. Business people across the country have found very creative ways to keep their businesses afloat during these uncertain times. Unfortunately, in rural areas, even before the pandemic, it has always been extremely difficult to fill all the available positions. The government should expand and enhance the existing temporary and seasonal worker programs to help fill the gap for these businesses.

The government also needs to cut the red tape associated with hiring. In some cases, businesses have to deal with three different departments to bring in the workers they themselves recruited in foreign countries. Current departmental wait times are destroying our businesses. The government cannot keep using the pandemic as an excuse. It is time for these ministers to stop gearing up for their next election campaign and start getting to work on these files.

Secondly, I want to talk about something that I have been passionate about for many years and that is public transportation in rural areas. The problem is that the money is simply not there. When the government promises to provide funding to the provinces, most of that funding ends up in major urban centres. With the population aging, keeping seniors in their rural municipalities could be easier with access to a public transportation system that would give them greater autonomy. In the absence of such transportation services, seniors choose to move closer to hospitals and health care centres for a better sense of security.

We see the same thing with newcomers. They also need transportation. In the context of a labour shortage, many businesses are recruiting foreign workers. It is the employer's responsibility to secure transportation to the workplace for employees with temporary work permits. However, these employee have no means of transportation to get to medical appointments, the pharmacy or the grocery store.

Public transportation in rural areas would help these workers and their families better integrate into their host communities. Without public transportation, students have no choice but to own a vehicle, carpool when possible, or live near post-secondary institutions, which are often located in major cities. For rural areas where about 20% of the Canadian population lives, a per capita contribution is not appropriate. Commuting distance should be a criterion for contribution. This approach would support the provision of transportation services in rural areas.

I would now like to quickly address a fairness issue that is not mentioned at all in this budget. It involves the current state of the Income Tax Act when it comes to the transfer of a family business. Currently, the reality for business owners is that it costs them more in taxes to sell their business to a family member than to sell it to a third party.

The current act unjustifiedly disadvantages operators who wish to pass on their family business to their daughter or son, leaving owners to decide whether to keep their life's work in the family or sell it to the highest bidder.

As everyone knows, Beauce is all about small business, and I would like to share an example from my riding. Eddy Berthiaume of Les Escaliers de Beauce in Saint-Elzéar was forced to make the difficult decision I just explained to the House. As the owner of half the business, Eddy is a hard worker who devoted years and years to building his business. When he was ready to retire, he decided to sell his shares in the family business to his children. Unfortunately, he was unfairly forced to pay thousands of dollars in transfer fees.

The worst part is that his business partner sold his half of the business to a third party and had to pay next to nothing in taxes. Why is that unfair? That is just one of many examples of how the government is leaving this country's small businesses out in the cold. We do not need a government that is willing to grant exemptions to some Canadians while penalizing hard-working families like the Berthiaumes.

I therefore hope all parties in the House will support the Conservative Party when it is time to vote on Bill C-208 tomorrow.

I now want to talk about high-speed Internet access and, in particular, the quality of cellular coverage in rural parts of Canada. This is the biggest problem that continues to put rural and remote communities at a disadvantage.

More and more Canadians are required to work and learn from home, so stable and reliable Internet and cellular connections are crucial. The Liberal government has completely bungled this issue, which has lagged for years, through five different programs and three departments.

Fortunately for Quebeckers, our provincial government presented a real plan with dates and objectives to get all homes connected by the end of 2022. The federal plan was so bad that the province implemented its own plan and simply asked the federal government to share the costs. Other parts of Canada are unfortunately quite far behind. We do not need more talk. We need action on this urgent issue.

Budget 2021 does not contain a single initiative to help improve cellular networks in rural areas. In some parts of my riding, people are finally getting access to a decent Internet connection. However, if they walk five minutes down the road, they lose any reliable connection to the cellular network, which makes no sense.

When can we finally hope to have a plan that works from this government to connect all Canadians in rural areas? We need the government to show leadership. It cannot continue to sit on the sidelines and wait for the big telecoms to take the initiative and solve this problem.

Another file that I am very passionate about is our agriculture and agri-food sector, a very important part of Canada's rural economy. This sector has been neglected by the Liberal government for years. To improve the economic development of Canada's rural areas, it is essential that the government help fund not just farmers on the ground, but the entire food chain.

When I was the associate shadow minister for agriculture and agri-food for the Conservative Party, I tried to get the minister to listen to me, but it seems that her hands are tied by a Prime Minister who does not believe in this sector. I still sit on the Standing Committee on Agriculture and Agri-Food, which released a complete report on business risk management programs. Unfortunately, nothing has changed.

It is essential to improve the business risk management programs for agricultural producers. The minister proposed a few changes to the program on condition that the provinces and territories share the cost. Unfortunately, some provinces cannot do that right now because of budget constraints. The minister is probably happy to wash her hands of it and say that she tried. However, agriculture and agri-food need to be considered as a real driver of Canada's economic recovery.

In closing, this budget is nothing more than a campaign tool for the Liberals, who are throwing money around without a real plan. I hope that, before the next election, Canadians will clearly see that the Liberals are just trying to buy votes with this budget.

Income Tax Act

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, my colleagues have outlined all the details at second reading, third reading and previous iterations of this bill, so I will not go into those right now.

Tonight, I want to begin by thanking all those who have helped get Bill C-208 to this point. Without my Conservative colleagues trading the speaking spots for their private members' bills, we would never have gotten to third reading before the summer recess. I am immensely thankful to them for that.

For my colleagues from Prince Albert, Saskatoon—Grasswood and Regina—Qu'Appelle, I am eternally grateful for their support and assistance. For that support, I want them to know we are on the cusp of passing the legislation and sending it to the Senate.

I have spoken to numerous MPs over the past year about the importance of correcting this massive injustice within the Income Tax Act. The purpose of this bill is straightforward. It will level the playing field by giving families the exact same tax treatment whether they transfer their businesses or operations to their children or to a stranger. It will result in more locally owned and operated businesses, as has been outlined by many of my colleagues who have spoken to the bill, the types of businesses that are involved in their communities and provide steady employment for countless individuals. It will help keep farms and fishing operations in the family as well as any other qualifying small business.

Bill C-208 would send a message of hope to young farmers who want to carry on what their families started. Most of all, it would bring tax fairness to the Income Tax Act. No longer will parents have given a false choice of having to choose between a larger retirement package by selling to a stranger or a massive tax bill because they have sold to a family member, their own son, daughter or grandchildren. Every single community in Canada will be positively impacted by the passage of the bill.

As I said in my speech two weeks ago, there is bipartisan support for the legislation. I want to recognize and thank not only my colleagues from Provencher and Dauphin—Swan River—Neepawa for their kind words and informational speeches, but also the members of other parties for their speeches and support at second reading, third reading and at committee as well as all the witnesses who gave testimony.

In particular, I want to thank my colleague from Malpeque, who also happens to be the chair of the finance committee, who announced he would be voting in favour of Bill C-208. I thank him for his kind presentation in the House today as well.

While I know my Liberal colleague from Winnipeg North, and I know him very well, is well-intentioned, I found that during his speech a on the legislation a couple of week, his comments were quite off base. I know, had he taken the time to read the evidence and testimony provided at the finance committee, he would have known his speaking points and the concerns given to him by the finance department were all truly addressed.

For my Liberal colleagues, who, for the most part, all voted against the bill at second reading, I know the process. I know the party whips and the powers that be have likely told them to vote against the bill. However, I implore them to listen to their constituents who want this legislation passed, review what the tax experts have said and reach out to their businesses, farms or organizations in their ridings and ask them if they support the bill. I can assure all my colleagues that if they do reach out, they will find almost universal support for Bill C-208.

Once and for all, we can finally resolve this long-standing problem that countless families have had to endure when selling their businesses or operations to their immediate children or grandchildren.

I look forward to the final vote next week and kindly ask all my colleagues to support the bill, thus allowing for the debate in the other place and passage of it into law.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Madam Speaker, I rise today to speak to a very important bill that would positively impact countless farmers and small business owners across Canada if passed.

I want to sincerely thank my colleague, the member for Brandon—Souris, for introducing the bill to Parliament and making so much progress on this issue. I am fortunate to work with my Manitoba colleague, who gained my profound respect for representing his constituents in an exceptional manner throughout his tenure as a member of Parliament.

Bill C-208, an act to amend the Income Tax Act, would provide tax fairness for farmers and small business owners across our nation.

This may surprise most Canadians, but selling a farm or a small business to an unknown third party receives better tax treatment than selling that same business to a family member. The current structure of the Income Tax Act penalizes farm and small business owners from transferring their operations to a member of their own family. This discrepancy in tax treatment can result in hundreds of thousands of dollars in more taxes if sold to family as opposed to a stranger.

For example, imagine a couple who has owned a local auto repair shop in Manitoba for decades and is ready to retire. These owners have worked hard to support their family and community and their business is now worth $1 million. The couple is approached by a multinational auto repair company that has no roots in the community but wants to buy the business. If owners were to sell their business to this unknown third party, they would incur $29,000 in taxes.

Their son is also interested in buying the local business as he looks to raise a family and make a living in the community in which he grew up. However, if their son were to purchase the same company at the same price, his parents could pay up to $466,000 in taxes, a tax difference of $437,000.

Now the couple who owns the auto repair shop must make a decision. Do the owners sell to the multinational company and maximize their retirement fund or do they sell to their son and keep the business in the family? Why should small business owners be placed in a position to choose between sacrificing their retirement fund or sacrificing the word family in their family business? The answer is obvious: they should not.

However, thousands of business owners spend their entire careers operating their businesses with the expectation of passing it to their children. They do not realize the staggering tax difference they will be indebted with until they part ways with their business. This puts retirement and business plans at risk.

The constituency of Dauphin—Swan River—Neepawa is built on the foundation of small business and agriculture. These sectors are the lifeblood to the vibrant rural communities of our region. I was raised and spent my entire life in rural Manitoba. I understand how these businesses support our communities and the families within.

Last year, I spent a year touring rural Manitoba to meet specifically with small businesses to hear their priorities and concerns. One of the most prominent things I heard was the concern of what the future would look like in rural populations as aging and younger generations moved to urban centres. Many rural communities rely on a single business to provide a good or service.

I think of the No. 5 Store in the rural town of Riding Mountain, located between the community of Neepawa and Ste. Rose. This family run business is the only supplier of essential goods and services to the Riding Mountain community. Locals rely on the No. 5 Store for their everyday essentials like groceries and mail.

Small businesses like these provide families with goods and services needed to successfully make a living in rural communities. If businesses like these close their doors, communities suffer.

Large multinational companies will never replace the locally owned family businesses that are the engines of rural Canada. Family owned small businesses are what give rural communities their identity. We must support them in transferring their businesses to future generations so they can endure. Without small businesses, rural Canada evaporates.

Agriculture is another pillar to our country and to the region I represent. Family farms contribute immensely to the social and cultural fabric of rural Canada. However, by 2025, one in four farmers will be 65 or older and over 110,000 farmers are expected to retire within the coming decade. This means thousands of farmers will be transferring their farm operations as they retire.

I should remind the members of the House that farmers are the people who have a strong connection to the land. They care deeply about keeping their farm in the family in the hopes of watching their children take the same care of the land in the manner they did.

There something to be said about the family farm. The family farm is not just a business, it is not just an operation; it is generational and sentimental. It is a way of life for hundreds of thousands of Canadians and their families. The family farm is an ideal and it is an ideal worth preserving. However, it is clear that agriculture is approaching a demographic revolution and as parliamentarians, it is our duty to support such a massive transition to ensure the future prosperity of Canadian agriculture.

Unfortunately, under the current tax regime, farmers are unable to transfer their family farm to the family without experiencing unfair tax treatment. As parliamentarians, we need to work creating more sustainable rural Canada through job creation and economic prosperity. Bill C-208 would do that.

Bill C-208 would keep the family in the family business. It would provide a future for the family farm. It would create fairness for countless Canadians as well as preserve the rural communities that are the bedrock to our nation.

[Ted Falk, Conservative, Provencher, MB]

Madam Speaker, what a privilege and honour it is to speak to Bill C-208. Not often in the House do we find a private member's bill that has all-party support, and this is one of those unique situations.

For many small business owners, business succession is an important factor to consider when planning for the future. This is no surprise. When they spend so much of their time and energy pouring hour after hour into running their operation, what happens to the fruits of their labour when it is time for them to retire or move on matters to them.

However, surveys tell us that only about half of small businesses have a succession plan. I suspect that is because they are caught up in the day-to-day running of their businesses. However, whether they are thinking about succession early on or are confronting succession decisions near the time of transition, somewhere along the line these entrepreneurs face a frustrating reality: It is more expensive to sell an incorporated small business, or a family farm or fishing enterprise, to a family member than to a stranger.

What is behind this? When a business is sold to a family member, it is considered a dividend. When sold to a stranger, it is considered a capital gain and is eligible for capital gains exemption. In its simplest form, when selling to a family member the tax rate is higher for the seller than when selling to a stranger. That tax rate is significantly lower.

This is not right, and it is not fair. About half of small business owners are hoping to sell or transfer their operations to family members when it is time for them to move on. If members have spent even a little time around family-run businesses, the “why” becomes clear. Sometimes kids are raised in the business and learn the ropes at a young age. They come to know the ins and outs of the business better than anyone. They put in the time, they know the customers and they are established figures in their communities. When the time comes for succession, they are an obvious option for so many reasons.

This is where Bill C-208 comes in. It seeks to achieve tax fairness for business succession by amending the Income Tax Act to level the playing field. It would allow a small business owner the same tax rate when selling their operation to a family member as when selling to a third party. It would correct the injustice within the act that unfairly punishes individuals when they sell their qualifying small business, farm or fishing operation to their own family.

During the finance committee's study of the bill, Brian Janzen, a senior tax manager with Deloitte, gave an example to help members understand just how stark the financial difference currently is between selling to a family member and selling to a stranger. He said:

Right now, if you have a $1-million business and you sell your shares—in a restaurant, let's say—to your neighbour, you will walk away with after-tax proceeds from a $1-million sale of about $971,000. That's only $29,000 of leakage....

There are various ways to sell your shares to your kids under the current regime of section 84.1, but I'll just use the worst-case scenario. The worst-case scenario is that your kid sets up a holding company, or holdco, and buys your shares from you. In Manitoba, that will cost you $466,000 because of the deemed dividend. That's a difference, between the two scenarios, of $437,000. That's just crazy.

He is right. That is crazy, especially when we consider the value small business continuity can have in our communities. Small business owners have often built strong relationships with their customers over the long term. They have employees, whether a couple or a couple dozen, whom they care about and have invested in. They are plugged into their communities in multiple ways. Whether by supporting local food banks, sponsoring sports clubs or donating to construct a new community centre, small businesses are there.

Handing that over to a stranger, perhaps someone from out of town, may not be the best situation for the business owners or their communities. When they have built something and invested plenty of sweat equity in their operation, it is understandable to want to hand it off to someone who can carry on that legacy.

Robyn Young, president-elect of the Insurance Brokers Association of Canada, told the finance committee about her experience of purchasing the family business from her parents. She said:

When my parents decided to sell their business, they received an offer from a large direct writer. They ultimately chose to sell the business to me and my brother, because it was important to them to keep the business they had built within the family. They also wanted to ensure that their clients would continue to receive the same expert advice and personal touch they had come to expect.

She went on to say:

Family-run brokerages are the pillars of the community and the lifeblood of the economy. They serve and support their communities in good times and bad by creating employment and donating time, money and other resources.

These are the considerations for many small business owners looking at succession planning. There needs to be a level playing field that empowers owners to make the best choice for them and their communities.

The current inequity is a reality that impacts a variety of types of small businesses, but I want to take a moment to talk about farm families specifically.

Agriculture is incredibly capital intensive, and as Scott Ross of the Canadian Federation of Agriculture told the finance committee, “effective succession planning is critically important, particularly for a sector that will transfer tens of billions of dollars in assets to the next generation in this decade alone.” Uniquely, the agriculture sector continues to be one where the vast majority of farms, even though they are incorporated, still remain family owned. This has considerable advantages for all Canadians since, as Mr. Ross highlighted, “studies show that family farming encourages sustainable growth, environmental stewardship and increased spending within one’s local community, not to mention its contributions to the social fabric of rural Canada.”

I share several commonalities with the bill's sponsor, the member for Brandon—Souris. For one, we were both elected in the same 2012 by-election. More importantly for today's discussion, we both have “farmer” on our resumes. We are very familiar with the immense benefits that farming and agriculture provide to the communities we represent. By passing Bill C-208, the House can acknowledge the tremendous contributions that our farmers make and can help ensure tax fairness for farm succession.

Throughout debate on this bill, we have heard some members suggest that this change will just benefit the rich or create opportunities for tax avoidance. I want to address this head-on because that is a mischaracterization that finance committee testimony swiftly put to rest.

The bill includes tax-avoidance safeguards mandating that the family member who purchases the operation must maintain their shares for a minimum of five years to avoid penalization. As Deloitte senior tax manager Brian Janzen confirmed, “This bill is helping the lower end of the small business community. It is not helping the huge, rich companies, even if they're family owned.” He also told the finance committee that Bill C-208 has enough guardrails to prevent tax avoidance, even as he urged vigilance so that tweaks could be made if required.

Like all colleagues, I wanted to make sure that the bill did not providing an undue benefit to large corporations. I therefore asked Mr. Jansen very specifically about those concerns. He said it did not benefit large corporations, “partly because of the guardrails you have in this bill, but also because for the larger companies...section 84.1 and the capital gains exemption didn't even come into play. The numbers are big enough that this is just...not material to the larger private businesses. This is really helping the small private business.”

It is clear that this bill strikes the right balance between providing tax fairness and preventing abuse. I encourage any members who feel differently to review the testimony before the finance committee. They will see experts addressing these concerns and urging the bill's swift passage.

There were 145 Liberal members who voted against this common-sense bill at second reading. Meanwhile, members of all the opposition parties supported it, and so did two Liberal MPs. I sincerely appreciate the two Liberal members who voted in favour of this bill. They recognized the positive impact that it would have on their constituents. I hope that the testimony we have heard since that time will help other Liberal MPs better understand why they ought to lend their support to Bill C-208. Their constituents deserve tax fairness.

I want to wrap up by saying thanks to the member for Brandon—Souris for introducing this pertinent legislation. His efforts are going to make a real difference in the lives of many small business owners and farm families. We have seen iterations of this bill brought forward by multiple parties over the years, and this goes to show that there is cross-party support for this bill. It is time to get it over the finish line.

I invite all my colleagues to support small business and vote in favour of Bill C-208. Let us get it passed and get it to the Senate. Hopefully it will deal with it as expeditiously as the House has. I am thankful for the opportunity to speak to the bill.

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

Madam Speaker, it is a great honour to be standing virtually in the House and speaking to Bill C-208. I would like to thank the member for Brandon—Souris for being the sponsor of this bill. He is the latest in a fairly long line of MPs who have been trying to achieve this legislative proposal.

I was present in the 42nd Parliament when my former colleague, Guy Caron, brought in Bill C-274, and I remember his passionate speech in the House of Commons during its second reading. He was trying to illustrate the reasons why that legislation was so important. It was great to witness that speech, but ultimately it was very disappointing to see the vote results when the Liberal government at the time used its majority to prevent the bill from going any further.

I am glad to see this time it has been different, by virtue of the fact that we are in a minority Parliament and the opposition used its combined numbers to send this bill to the Standing Committee on Finance where it had a good airing. We got to hear from many witnesses, and ultimately the committee decided to send the bill back to us for our final consideration. It is my sincere hope that this bill will be sent off to the other place and that we can look forward to royal assent, hopefully in the near future.

When Bill C-274 was being considered in the previous Parliament, I had a meeting with the Port Renfrew Chamber of Commerce. I was given a 10-minute speaking spot during their AGM, and when I talked about Bill C-274 at that time and about what we were hoping to do, I got unanimous positive feedback from the members of that chamber. For those who do not know, Port Renfrew is on the southwest coast of Vancouver Island. Many people there depend on fishing for their livelihoods. They are either commercial fishermen or are in sport fishing, so they have small fishing corporations. To have the ability put forward to transfer their businesses to family members really meant a lot to them. There was overwhelmingly positive feedback. I ultimately had to give them bad news, but here we are with a real opportunity to try to bring about some positive change.

This bill is pretty much tailor-made for the types of small businesses that exist in the riding I represent, Cowichan—Malahat—Langford. Like so many members before me, I want to acknowledge the pain and suffering that small businesses have gone through over the last year. I think it is incumbent upon us not only to have support programs to help them through the pandemic, but also to bring about long-term systemic change to important statutes such as the Income Tax Act, so that we can make their business operations and their succession planning that much easier.

My riding is dominated by farming as well. Here in the Cowichan Valley we have a beautiful climate. It is, I think, Canada's only Mediterranean climate and we have a very long and storied agricultural history. We have generational family farms here. Some have the fifth generation of a family farming the same plot of land. If we can bring about legislative change that makes succession easier and gives them peace of mind, I think we are doing a good thing.

I also want to give a shout-out to the five chambers of commerce in my riding: Chemainus, Cowichan Lake District, Duncan Cowichan, Port Renfrew and WestShore. They have all been incredible advocates for their members. I have been staying in touch with them quite consistently over the last year and their feedback during this pandemic has been invaluable in helping me, as a member, advocate on their behalf in Ottawa to make sure that the federal government's policies and programs are reflecting their needs.

I will concentrate mostly on family farms, given the nature of my riding and the fact that I am the NDP's critic for agriculture and agrifood. When we look at family farms, we are looking at $50 billion in farm assets that are set to change hands over the next 10 years. History has shown us that roughly 8,000 family farms have disappeared over the last decade.

The National Farmers Union has done an incredible report on the status of Canada's farms, called “Tackling the Farm Crisis and the Climate Crisis”. It not only looks at agriculture in the context of climate change, but also the financial footing that many farms are on and how shaky it is. According to the NFU, Canadian farm debt has doubled since the year 2000. That is in 21 short years. It was listed at $106 billion in 2019.

Many farms have to chase income from off-farm work, taxpayer support programs and other farm sources. That is just a reality for so many small farms. What is really concerning is that we have lost two-thirds of our young farmers since 1991. The family farm is pretty much being systematically destroyed in Canada, and we need to put measures in place that are going to help.

Why is Bill C-208 so important? The owners of small businesses, family farms and fishing operations who want to retire want to be able to sell to their children because it is often their children who have been brought up in the family business and on the family farm. From a young age they have learned the culture of the business and what it does, and they often have a lot invested in that business continuing to succeed. The next generation often has very important ideas about where to take that business.

When parents decide to sell their business to their children, the difference between the sale price and the price originally paid is currently considered a dividend, but if they sell their business to an unrelated individual or corporation it is considered a capital gain. Unlike capital gains, a divided does not include the right to a lifetime exemption and is taxed more heavily. We can make a measurable improvement in allowing families to pass on businesses that might have been part of a family for generations to their children, making it easier for that work to get done.

I want to recognize the work done at the Standing Committee on Finance. I appreciate the witnesses who appeared. Many of them also appeared at the agriculture committee. We heard important testimony from the CFIB, the Grain Growers of Canada, L'Union des producteurs agricoles and, of course, the Canadian Federation of Agriculture, which has been such an incredibly important voice for farmers from coast to coast to coast.

They noted at committee that the average age of Canadian farmers is now above 55, and the opportunities these businesses face will carry into the next generation. It is a sector in which the vast majority of businesses remain family owned, and maintaining the financial health of those businesses across generations is critical. At committee, the CFA very clearly said that it supported Bill C-208 because it would ensure that real family farm transfers could access the same capital gains treatment as businesses selling to unrelated parties, rather than treating the difference as a dividend that was taxed at a higher rate and not being able to access the lifetime capital gains exemption.

We have an important opportunity before us. During the vote at second reading, I was sad to see that 145 Liberal MPs voted against this bill. Two Liberal MPs supported it. It is my sincere hope that when this bill comes to a final vote to be sent to the Senate, Liberals can finally see this as an important opportunity and can represent the interests of small businesses, family farms and fishing corporations by making this much-needed change to the Income Tax Act and doing right by their constituents.

I, for one, will be proud to vote in favour of Bill C-208 and send it on its journey. I look forward to the day when we can finally see it receive royal assent.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Madam Speaker, I want to congratulate my colleague on his speech, which was interesting. My speech will be along the same lines as his, as it was all very sensible.

In his speech, my colleague said that Bill C-208, an act to amend the Income Tax Act, is not partisan. The bill does not belong to the Liberal Party, the Conservative Party, the NDP or the Bloc Québécois.

In fact, since there were no questions and comments following the remarks by the previous speaker, I would like to point out an oversight. I believe it was an oversight. Perhaps not, but I hope it was.

He mentioned some of the previous versions of this bill intended to facilitate the transfer of family businesses. Yes, the hon. member for Bourassa did in fact introduce legislation to facilitate the transfer of family businesses when he was in opposition a few years ago. Yes, it is also true that the former member for Rimouski-Neigette—Témiscouata—Les Basques, Guy Caron, had also introduced legislation to facilitate the transfer of family businesses.

However, my colleague may have forgotten that the member speaking right now, in other words me, also had the opportunity to introduce Bill C-275, which sought to facilitate the transfer of family businesses. I introduced it at roughly the same time as my former colleague from Rimouski-Neigette—Témiscouata—Les Basques. In fact, as we were announcing the introduction of this bill, my former colleague from Rimouski-Neigette—Témiscouata—Les Basques thought it was such a good idea that he quickly introduced his bill as well.

There was a bit of a friendly competition about doing the right thing. We wanted parents who want to hand down their business to their children to stop being penalized. This only makes sense, because it is good to see a family's achievement carry on.

Now it is the Conservatives' turn to introduce a similar bill. At the time, when they were in government, the Conservatives were against it, but now they support the cause. Of course we are very pleased to see that, but we are still disappointed to see that the current Liberal government does not seem to want to support the bill. It is hard to understand. How is it that when the Liberal and Conservative parties are in the opposition they want to do the right thing, but when they are in power they do not? That is quite disappointing, to say the least.

When this type of bill is introduced, many people pay attention to the ongoing debates. When the bill was introduced, and then when we began debating it, I immediately alerted certain businesses in my riding as well as some people I went to school with who also wanted to take over their family businesses. After seeing so many bills fail, they were all excited and hoped that this one would come to fruition.

In the meantime, after so many bills failed to pass in previous parliaments, the Quebec government decided to act. Quebec changed its tax legislation to allow the transfer of family businesses. It would seem that the federal government is frozen and incapable of moving forward. When either the Liberals or the Conservatives come to power, everything suddenly stops and fails to move forward.

I am making a heartfelt plea, which I believe echoes the pleas of the people who have been contacting me. They want to know what progress has been made on this bill and whether it will pass. Sometimes I tell them that even if my bill does not pass, some measures might well be included in a budget. In several economic updates and even in some budgets, the government stated that it would work to facilitate the transfer of family businesses and that it would examine the legislation to make certain improvements.

Once again, the government is giving people hope. People are thinking that maybe the government is finally going to do something. It is disappointing, because year after year there is always a holdup. Is it an administrative problem or does the bill run counter to some kind of interest? I do not know who would have an interest in preventing families from passing their business from one family member to another.

Passing a business on to the next generation is not easy. It is rare. People often say that it is difficult to transfer a business and to encourage their children to take over the family business. When their children do want to take over, why are we stopping them from doing so? Why would we financially penalize those who pass their business on to family members but not penalize those who do not? Why is it more profitable to sell one's business to anyone other than one's own children?

For example, I could sell my business to a stranger and make more money. There are many parents who have to think about that option. Obviously, all parents want what is best for their children, but when they see that passing their business on to their children could, in some cases, cost them hundreds of thousands of dollars, many of them have to stop and think about whether doing so is financially viable for them. Not all business owners have millions of dollars put away. Often these business owners invested in their business thinking that they would use it for their retirement. They therefore want to be able to benefit from it.

This is creating quite the dilemma for people. If they pass their business on to their children, then they may have to forgo their retirement. It is really disappointing to see that this situation has not yet been resolved. That is why I wanted to speak today, to bring to light this issue, this problem.

We also have to look further ahead. What happens when there is no one in a family to take over the business? The owner has to seek out someone else, approaching businesses or people who are already well established, such as a competitor, a bigger company. That is what poses a problem.

Family farms can disappear when they are taken over by larger farms. I have nothing against large farms, by why not let small businesses exist and prosper, run by people who are working for themselves and being their own boss? I think that would be nice. However, we are faced with a bill that hinders that possibility.

If we let farms disappear, if we let small businesses disappear because there is nobody to take them over, we are making other people think it is not easy to start a business or start a farm. Ultimately, if we want to allow those transfers, if we want to avoid seeing mega-businesses and mega-farms that are held by shareholders and operated by absentee executives and managers who live who knows where or are very far away from the customer, the consumer, we have to be flexible and attentive to this concern.

I studied accounting. Business owners and I are not the only ones saying we are frustrated. We are also hearing that from accountants, accounting students and professors, who have been saying for ages that the government is not interested in listening or understanding. We were hearing it back in the early 2000s, when I was in university. Professors did not understand why the government was not doing something about this issue. All the students were appalled to learn that, by law, this kind of capital gain was considered a dividend, which meant at least twice as much tax had to be paid on that gain. Financially, that hurts. Like it or not, money influences these decisions and affects the young people who would like to take over.

As I see that my time is almost up and I do not want you to interrupt, Madam Speaker, I will conclude with a heartfelt plea. I implore the government to finally listen to the wishes of the business world, small businesses, members of the House and members of the Standing Committee on Finance and to do the right thing by supporting and passing this much-needed bill.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, I am very pleased to get the opportunity to speak a little further on Bill C-208, an act to amend the Income Tax Act regarding transfer of a small business, a family farm or a fishing corporation, which is sponsored by the member for Brandon—Souris.

As members know, Bill C-208 is now at third reading stage. How did it get here? Simply put, Bill C-208 has had considerable debate in the House and was referred to the finance committee, which I chair. I will make a few comments on what witnesses had to say before committee in a moment. The finance committee referred the bill back to the House without amendment.

Bill C-208 has a long history, and it criss-crosses the political landscape. It was first introduced by the current member of Parliament for Bourassa, a Liberal, two parliaments ago. In the last Parliament, the same bill was brought forward by Guy Caron, an NDP member. Now, in this current Parliament, it is sponsored by the member for Brandon—Souris, a Conservative member.

This long history, across all major political parties in the House, certainly shows that there is a need to bring fairness and equity from a taxation perspective to the transfer of family farm corporations, fisheries enterprises and small family businesses. Quite honestly, it is long past time that this problem was fixed.

During an earlier discussion at third reading, it was suggested by the government spokesman that just maybe the bill could provide opportunities for tax avoidance. I would agree that tax avoidance is a legitimate concern. However, I must point out that at the finance committee we heard from 17 witnesses, and every opportunity was given to address the concern of tax avoidance. We called on the public and Finance Canada to provide witnesses and propose amendments, to anybody who had those kinds of concerns.

I certainly appreciate that the assistant deputy minister of the tax policy branch and the senior director of the tax legislation division in the tax policy branch appeared and answered questions, and their comments appear in the transcript for the finance committee for anybody who wants to see it. To be fair, they did outline some concerns, especially as it relates to what is called “surplus stripping” for the purpose of tax avoidance.

Where does that leave us? On the one hand, we have concerns being expressed by officials, and I do take their concerns seriously. On the other hand, we have a broad section of witnesses who expressed a serious and immediate need for a way to transfer a small business, farming corporation or fishing enterprise without facing unfair taxation when transferring to a family member. We do not see amendments to the bill that would fix this alleged problem.

I would even agree with those who might say that private members' bills are not the best vehicle to change tax policy. They are not. However, we simply cannot allow this inequity disadvantaging intergenerational transfers to family members to continue. It is time to accept the only change that is on the table to fix the problem, and that happens to be Bill C-208.

The sponsor of the bill, the member for Brandon—Souris, gave about the most concise and clear example of this inequity in the tax system. He said:

The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.

The second quote is from Ms. Robyn Young, president-elect of the Insurance Brokers Association of Canada.

She said this:

In closing, this is an issue of equity and fairness. Business owners should not be penalized for selling their business to a family member. Tax implications should never be a consideration when making the decision to sell a business to a family member.

There were many other good witnesses I could quote and make the point on this serious inequity, including the UPA, the Canadian Federation of Agriculture, other farming and fishing organizations, the tax manager at Deloitte, underwriting companies and more, but I think members get my point.

The backbone of many communities are small businesses, farmers and fishermen. Those who can pass a business down from generation to generation create the history and the character of many of our communities in the country. We need to give every opportunity for those families to make that transfer.

It is absolutely true that during this pandemic the federal government has been there in every way possible to support Canadians, businesses, farmers and fishermen. Tax policy, however, should not cause a disincentive to transfer to the next generation. Tax fairness should be the cornerstone on which to encourage intergenerational transfers. This bill would move tax policy in that direction.

Finance Canada, and the government for that matter, always have the option to put forward corrections in a ways and means motion if concerns expressed before committee do arise in reality. That, in itself, is a safeguard. They have the ability to do that fairly quickly through a ways and means motion. However, farmers, fishermen and small business owners, with respect to the unfairness of this taxation system, have been waiting for this change for years.

We have to put the shoe on the other foot. Instead of having those families that want intergenerational transfers sitting in the wings waiting for something to happen, we have to pass this bill and put the shoe on the other foot. If there is a problem, then government has the ability to fix that problem. I am encouraging others to recognize this problem.

I, for sure, will be supporting Bill C-208, and I hope others can do the same.

The House resumed from April 21 consideration of the motion that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the third time and passed.

Financial Statement of Minister of Finance

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I thank the parliamentary secretary for her speech.

This is lavish spending at a time when we are accumulating hundreds of billions of dollars in deficit. Does my colleague not think that there are things missing from the budget, such as the health transfers, money for seniors as of age 65, and the agriculture sector?

My question for the parliamentary secretary has to do with that last point in particular, but it might take me a minute to get there.

A few hundred million dollars in compensation is on the table for processors. That is not a lot. As far as foreign workers are concerned, the biggest investment is in inspections. That is not what the sector needs. It needs support. The government should be increasing money for foreign workers, rather than decreasing it starting in June.

That brings me to farm succession planning. Since we are talking about the future, economic recovery and ensuring food security in this country, can my colleague explain why the government put absolutely nothing in the budget about transferring farms or transferring small businesses in general, even as it seems to be getting ready to vote against Bill C-208?

I would like her to say a few words about that.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

There is probably no one who is better placed to take over a business than the children who have grown up with the family business, obviously.

Economic statistics for Quebec and Canada show that business succession plans fail in 70% of cases, and that only 10% of business owners are able to find a buyer. Apart from Bill C-208, which seeks to correct the current unfair provisions for business succession, what other factors that fall under federal jurisdiction are impeding the transfer of businesses to a new generation?

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

As you probably know, Bill C-208 was debated at third reading at the House of Commons yesterday, which means that things are moving along. I can be quite critical of the way the Conservatives use the House, but on this issue I believe they are showing leadership and are working to ensure that the bill is quickly passed before an election might be called.

Once the federal government finally decides to make changes to eliminate this barrier to business succession, what will be the benefits for the new generation of entrepreneurs?

Income Tax Act

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

Madam Speaker, I am pleased to rise to speak to Bill C-208 on the transfer of small businesses, family farms and fishing corporations between family members.

It is no secret to members in the House that the New Democrats definitely believe that the ultra-rich and wealthy ought to be paying their fair share, and we have done a very good job of making a case for that in this Parliament. We have proposed some concrete measures for how that might be done.

We have also been champions for small businesses in Canada. We know they are the backbone of the Canadian economy, with 80% of the jobs in our economy created by small business owners. We appreciate farmers and fishers and what they contribute to the Canadian economy and to the world, with all the food they export outside of Canada the world over.

These are important industries. The businesses within them, whether it is a farm or business, are developed by families and become part of the family. Those families are known in their communities. As the former member said, they have relations with suppliers and others within their communities. Being able to pass that family business on to their children is important. It is important for the family from an identity point of view and from the family's economic point of view. However, it can also be important to communities as well, that sense of stability and to ensure that the people who are employed at those businesses and people who do business with those businesses continue to enjoy those relationships and the economic benefits of them. This is why I am quite pleased to stand in support of the bill before us.

Earlier, the member for Winnipeg North talked about the NDP's concern for tax evasion, and he is absolutely right. We can talk about tax havens. New Democratic members have had private members' bills before the House, members who are serious about taking action on the biggest tax evaders. However, some of the small businesses in our communities, and I think of a small business I know, a sign company that a husband and wife developed over 30 or 40 years, want to pass the business to their children. They are not the people who are shunting money out to the Barbados, Cayman Islands and other such places.

The fact is that if business owners choose to sell to their children, under the current tax rules, they will pay considerably more than if they sell to a complete stranger, so there is a principle of fairness here. It just does not make sense that by selling a business that is the life's work of a family within the family that it would be penalized and have to pay more. That is what we are trying to address here.

I think the member for Winnipeg North misunderstands the bill, frankly, when he mentions the capital gains exemption. Of course, the very point of the bill is that if people are selling to immediate family members, they do not benefit from the capital gains exemption. That sale is not taxed as a capital gain; it is taxed as a dividend. The whole point of the legislation is to allow those family members to benefit from the very capital gain lifetime exemption to which the member for Winnipeg North was speaking.

I think some members do not necessarily expect that when the member for Winnipeg North gets up to speak, that he will have a very detailed knowledge of what he is speaking about, but that is no excuse for his government, or the ministry or other members of his party for that matter. They should hold themselves to a higher standard and really come to have an appreciation of what is in the legislation.

Why, when the New Democrats are so concerned about tax evasion, do we support the bill? There are a couple of things.

One of measures in the bill is that to get this different tax treatment under capital gains as opposed to dividends, the family member who receives or purchases the business has to continue to be the owner of that business for five years as opposed to the current two years. That is my understanding. It is meant to promote the idea that if the sale is happening, it is happening because someone within the family genuinely wants to take over the business, not just flip it for sale. Therefore, if within those five years, the business is sold again, then it is retroactively treated as a dividend sale and taxed appropriately, taxed as it is under the current legislation. At that point, it is not about successorship within a family, it has become something else.

One of the things that gives me comfort is that the bill is not the product of one political party that might have a particular agenda. A former NDP member of Parliament, Guy Caron, developed this private member's bill. He put a lot of work into it. As the NDP finance critic, he was someone who did excellent work on tax evasion and was very concerned about it. It was one of the things that motivated him to get into politics. He did that not just as an amateur within politics who was assigned the finance portfolio, but he did it as somebody who worked as an economist his whole life prior to getting into politics.

He understood very well not just the issue of tax evasion but also the particular dynamics of the bill. He sought to craft a bill that really would honour the idea of being able to pass a business down within generations of a family and to do that in the right way, so it did not just become a loophole or an excuse to evade taxes, something the New Democrats fiercely oppose.

Those are some of the elements, both concretely within the bill with respect to what the legislation would do but also where the legislation comes from, that give me confidence that this is not about introducing another means for tax evasion into the tax code. It really is about settling a fundamental unfairness, where people who spend their lives pouring their heart and soul into a business and make it a success, whose children have oftentimes been part of that success, and then want to ensure it gets passed on within the family and can do so without paying a large financial penalty. This also helps to ensure that these assets for our communities stay in local hands.

Sometimes the only people with the capital to buy a business are foreign investors, which sometimes happens, whether it is with small businesses or with farms. Either large corporations or foreign investors purchase these things. It makes more sense for the family, if the differential is $400,000 or $500,000 as we have heard in some cases, to come to the decision that it is in fact better off not doing what its heart wants to do, which is to keep that business or that farm within the family, but to make a more hard-nosed financial decision about the family's best interests. This would allow families to take off the table the factor that makes it far more profitable for them to sell to a stranger than to keep it within the family.

Those are some of the issues at play. As I said, this is something that New Democrats believe in, but it is also part of a package of advocacy that New Democrats have brought forward for a long time, and particularly within this Parliament. I have been really impressed with our small business critic, the member of Parliament for Courtenay—Alberni, a former small business owner himself, He was right out of the gate when the pandemic began, advocating for a 75% wage subsidy when the government said it would only be 10%. He knew how important it was to get beyond just covering payroll costs and providing wage replacement. He was the loudest voice out of the gate for the need for a commercial rent subsidy. He has been advocating for an extension of the Canada emergency business account loan program. We saw a small extension in the most recent budget. We are glad to see that, but there is more work to do.

The New Democrats believe in small business. We are advocating for small business. We see this as part of a package that is important for small business and farmers, so they can keep all the hard work of their families with in their families when the time comes to pass that business on.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I am very pleased to speak to Bill C-208, which would significantly help businesses in Quebec and Canada with succession planning.

I once again want to congratulate my colleague from Brandon—Souris for introducing this bill. The Bloc Québécois considers succession planning to be essential to agriculture and all other sectors. We have supported this sector for a very long time. In fact, we started advocating for this idea back in 2005, after the Union des producteurs agricoles and the Fédération de la relève agricole du Québec issued a joint report that talked about the survival of our fishing businesses and farms.

We are talking about taxation, exemptions and various other topics, but what we are really talking about are small and medium-sized businesses, which are the backbone of our economy. We need to keep these businesses alive and make sure they survive. We need to make sure that these small businesses can keep going and that they are not put at a disadvantage where they will end up being bought out by big corporations. The survival of these small businesses is directly connected to the survival of our regions. This is why I am appealing to all of my colleagues.

I will never get used to it, but unfortunately, I once again sense that there is partisanship at play. It does not matter which party introduced the bill. What matters is that members look at the bill and ask themselves whether it is good for people. If it is good for people, then they should vote in favour of it. We need to correct this serious injustice. By protecting our small businesses, we are protecting our economic vitality. This is about sustainability, saving jobs and keeping knowledge in the community. As I just mentioned, it is about stopping the exodus of young people to urban centres. If they are able to take over the family business, then they will stay in the region.

Before I go on, I would like to give a nod to my colleague from Pierre-Boucher—Les Patriotes—Verchères, who introduced a similar bill in a previous Parliament. I commend him for that.

The Bloc Québécois defends the human-scale business model. I talk a lot about agriculture because I am very biased in favour of the farming community, but this is about all kinds of businesses. Human-scale businesses are the ones that keep regions vibrant and schools filled with children because there are families living in the community. We are not talking about a mega-farm that bought the land from eight of its neighbours, leaving only one family. Instead, there are eight families. That is the model we want to promote. In order to defend that model, we need to pass this bill. That is imperative. We have already been talking about it for too long.

Our SMEs are what keep us alive. It is a sector that has not received enough encouragement. I talk a lot about agriculture, but we want to protect innovative SMEs that could also sell their products abroad.

According to a 2018 estimate, between 30,000 and 60,000 Quebec businesses will not find new owners in the years to come. If they do not find new owners, they will die. If they die, 150,000 jobs and $8 billion to $10 billion in revenue will disappear.

In agriculture, it has long been said that every day, a farm disappears. That has not been the case this past year because there has been a slight increase in the number of businesses, which is great. We are happy about that, but it was no thanks to the government. It was because dynamic people started from scratch and created micro-farms. That is a good thing. We are happy about that, but we still see farms disappearing when they should be staying in business. We could do better. We can do better. Why are we not doing better?

I want us to take that step and move forward. Many of my colleagues have talked about numbers and statistics. I have lots of numbers too, but I am once again not sticking to my notes, which is just fine by me.

I want to talk about real people, real cases like the certified organic, 23,000-tap maple syrup operation owned by parents who are paying accountants a fortune to figure out how they can set up the transfer. Does another business have to buy the business? This is the parents' pension fund, and they want to pass it on to their children. They have to make a cruel choice. It makes no sense. That is the kind of example people keep sharing with me to this very day.

The dairy farm in Lac-Saint-Jean is another example. They keep postponing transferring the farm because they cannot come up with a solution, because there is no solution.

I would like to correct something my Liberal colleague said a moment ago. It is not true that the capital gains exemption can be used, otherwise we would not be voting on Bill C-208. I really hope my colleague will have a closer look at this file because in the cases brought to my attention, people are racking their brains for days, weeks and months, even paying a fortune to accountants.

On the other hand, the Liberal government likes to make people fill out complicated paperwork, to the point where they are forced to hire others to fill it out; that is how complicated it is. This seems to make the Liberals happy.

The Bloc Québécois does not think like that. We want to simplify people's lives and support the next generation, our youth and the people who want to live in our regions.

I want to share another example, and this is a true story.

A young person was nearing the end of negotiations to take over the family farm when he left on a trip. While he was away, his parents received an offer from someone outside the family that they could not refuse. The person offered ten times as much. The parents ended up selling the farm to the stranger. That type of situation destroys families and leaves permanent scars.

There are other examples of parents who hand over their business to their children out of a sense of obligation because they would lose sleep if they did not allow their son to take over the farm. As a result, they end up bitter and living in poverty. This also leaves scars. There are inn owners who resign themselves to paying a fortune in taxes. The father resigns himself to living on half of what he anticipated for his retirement. If that is not disgusting then what is?

Come on. We are the government. We have no right not to change this. Bill C-208 is very simple. It amends the Income Tax Act to give people who hand over their business to a relative the same privileges as someone who sells their business to a stranger. That is the right thing to do. Where is the problem? Where is the tax evasion?

Seriously, I sometimes find it difficult to remain calm when I hear the Liberals tell us that this could lead to tax evasion. We have been talking to them forever about tax havens and nothing has happened. Are they kidding me? Are they talking about tax evasion and SMEs? It does not happen often, but I am pretty much speechless. I could not even speak earlier. I told myself that it was not true, that my colleague did not say that, but he just did. We are talking about millions of dollars in tax havens. What about the web giants? How long have the Liberals been waffling to avoid taxing them? The idea is to ensure the survival of other smaller companies, such as our regional media, but they prefer it big and complicated. They favour their friends.

I am tired of a system that goes after and punishes the little guy. Small businesses are forced to fill out 28 forms, which stifles any economic momentum. Let us talk about the money. The Liberals have said that this will cost more than $1 billion, but that is not true. If I recall correctly, in 2017, the cost was estimated at $256 million. This really gets to me.

People thinking in terms of microeconomics see this issue only as a business that ceases to exist. Say the farm is sold to someone outside the family and is merged with a larger company. There is much more at stake here because the suppliers, the employees and the creditors are losing a business partner.

Family transfers are good because they allow for stability and familiarity. People know the business they have been dealing with for 25 or 35 years. When the son takes over the business, it is still the same business. He will keep it going.

Quebec changed its tax laws in 2016, yet another example of how Quebec is ahead. This week, the example was day care. This is good news, as long as we get the money.

I would like the House to come to that realization in this case too. Once again, the federal government is trying to catch up with Quebec laws. I am not saying that in a derogatory way. It is the truth.

Independent studies have shown that 47% of SME owners intend to exit their business within the next five years and 72% of them plan to exit within the next decade. In the fishing industry, a very high percentage of business owners are over the age of 50. Some might say that 50 is the prime of life. It is for me. However, that also means that the next generation needs to take over.

I am making a heartfelt plea and I want to send another message. To the government members who use doublespeak and make promises in private or during meetings by saying that this cause is important and that they are going to work on it, I want to say that now is the time to prove it. This is a good bill, and I am asking members to pass it.

Young people in Quebec and Canada are watching us. Business owners, those who support us and pay taxes are watching the government and waiting for results.

This is the first time that this bill has made it this far. Let us pass it.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the President of the Queen’s Privy Council for Canada and Minister of Intergovernmental Affairs and to the Leader of the Government in the House of Commons]

Madam Speaker, it is a pleasure to speak to my colleague's bill. I can appreciate that he has put in a great deal of effort to get it to this particular point.

There are some very serious concerns in regard to the bill and the impact it will have. I am not 100% convinced that this is the best direction to go. I find it interesting that the member says, for example, that this is all about the family farm and that the family farm needs this particular break. My understanding is that parents can already sell a family business directly to their child, while claiming the lifetime capital gains exemption on the resulting capital gain. I would be interested in hearing my colleague's comments in regard to that aspect.

The issue at hand, in the eyes of many, is not about passing on the family business; rather, it is about corporations. There are all sorts of other issues that come to mind when we talk about corporations.

I am not as familiar with the farming community as the member would be, given his background versus mine. However, what I can say is that I have had the opportunity to visit many farms over the years. Growing up, I can remember being out in Saskatchewan and doing some cultivating on the big John Deere four-wheel tractors on a family farm. There was a belief that the farmers running the farms had them handed down and that they intended to hand them down to their children.

Even though I have some personal, first-hand experience, I do not want to say that I have a complete understanding of all aspects of farming. However, I do support family farms, and I would like to see us enhance them and give them strength.

A lot of family farms are like small businesses, and I think the Government of Canada has very clearly shown its support for small businesses. We have seen that in a variety of ways. A lot of them have been highlighted during the pandemic. We often talk about some of the benefits the government has brought forward, and I suspect that rural communities and even farmers would have been afforded the opportunity to participate in some of the programs. This highlighted the need that is there. It is very real.

Bill C-208 proposes amendments that could easily be misused by corporations, which could look for tax planning opportunities. I do not believe that the member has addressed that issue head on and provided the types of changes necessary to provide assurances.

My New Democratic friends in particular talk a lot about tax avoidance. I would be very interested in hearing them provide their thoughts on that specific issue. Have they looked into that aspect of the legislation? Are we creating opportunities, by passing this legislation, that could provide for tax avoidance?

This is a legitimate question, and it is an area of concern that was not addressed to the degree it could have and should have been addressed at the committee stage. It is a legitimate concern. I would be very interested in hearing what the New Democrats have to say about it.

The former small business minister, who I got to know well because she was the House leader of the government, often talked about the importance of small businesses. I have said in the past that they are the backbone of the economy. We can further add to that to show how important our farmers are. They are the ones putting food on our tables and contributing to Canada's overall GDP and exports. They feed the world. The crops we are able to provide around the world are very impressive. The growth in the Province of Manitoba of the canola industry has been very impressive. It has gone from virtually nowhere years ago to a major crop recognized around the world. We often hear about the importance of prairie wheat and that it is feeding people around the world. We can take a sense of pride in that and look at ways to support it.

In the budget, we heard about a number of initiatives. One that comes to mind right offhand is in the area of drying grains. The budget attempts to deal with that particular issue by supporting farmers.

We could talk about how we supported small businesses through the development of programs during the pandemic, such as the Canada emergency wage subsidy program, which has been very helpful to small businesses in general. We came up with the Canada emergency business account too. Another one I often reference for small businesses in particular is the Canada emergency rent subsidy program. These things are very real and tangible.

We know that many businesses continue to face stress and uncertainty as a direct result of COVID-19. That is why in many ways the government has stepped up to the plate to make sure there is support during these unprecedented times. I referenced the Canada emergency business account, which helped somewhere in the neighbourhood of three-quarters of a million small businesses. We are talking about tens of billions of dollars in loans. The Canada emergency wage subsidy program affected several million people, and, again, tens of billions of dollars were spent on it. There is the additional lockdown support. There was support for the agriculture and agri-food sector. The government recognized it as an essential service and provided support to it. We are committed to supporting producers and businesses so they can continue to provide for Canadians.

We have taken unprecedented action to support farmers, ranchers, food businesses and food processors across the value chain, and have provided support for vulnerable populations. For example, we quickly unlocked the $5 billion in additional Farm Credit Canada lending capacity and launched $100 million for a new agriculture and food business solutions fund to ensure that businesses in the sector have the support they need. We also increased the Canadian Dairy Commission's borrowing capacity by a couple of hundred million dollars. That was to allow us to support costs associated with the temporary storage of things like cheese and butter to avoid food waste.

A number of programs were put into place to support our producers. Programs provided dollars to foreign workers—

[Larry Maguire, Conservative, Brandon—Souris, MB]

moved that the bill be read the third time and passed.

Mr. Speaker, I want to thank my colleagues for bringing this to third reading because it is a privilege to speak in the House to Bill C-208, an act to amend the Income Tax Act, transfer of small business or family farm or a fishing corporation.

I want to begin my remarks by thanking a few of my colleagues who helped get my private member's bill to third reading much quicker than originally planned. Particularly, I want to thank my good friend, the hon. member for Saskatoon—Grasswood, who traded his private member's bill spot during the second reading, which allowed a vote to occur a few weeks earlier than scheduled. I also want to thank my colleague from Regina—Qu'Appelle, who traded his private member's bill spot. That is the reason we are debating Bill C-208 this evening.

The reason I am highlighting and thanking these two specific members is that time is of the essence. No one knows what the future holds or when an election is going to occur. These matters are outside of my control, so I want to focus on getting this legislation passed to support all small businesses. We must correct this massive injustice within the Income Tax Act that unfairly punishes individuals when they sell their qualifying small business, farm or fishing operation to their own family.

For those members who have not been closely following the debate, I will give a brief overview. As it stands, when a qualifying small business, farm or fishing operation is sold to a member of the owner's own family, the Income Tax Act treats the sale differently than if it were sold to an absolute stranger.

Yes, members heard that right. There are currently two sets of rules, and in some cases, it can result in the difference of hundreds of thousands of dollars. For some, that might not sound like a lot, but in many cases it could result in a parent making the tough decision to sell their business to a complete stranger rather than to their own children. That is wrong, and I intend on fixing it once and for all.

During my first hour of debate, I gave two examples of why Bill C-208 is needed.

The first involved a family wanting to sell their bakery to their daughter. If they sold the bakery to a stranger rather than their daughter, they would have an effective tax rate of 10%, after using their lifetime capital gains exemption. However, if they sold their bakery to their daughter, she would be obligated to repay their loan with personal tax dollars, which is a significant tax penalty.

The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.

Since I introduced this legislation, I have been contacted by numerous agricultural and business organizations. People across the country have contacted my office to let me know how important this legislation is to their family. Every single constituency in Canada would be positively impacted by this legislation, and it would result in more locally owned and operated businesses, the type of businesses whose owners are deeply involved in their communities and provide steady employment for countless individuals, and it would help keep farms and fishing operations in the family.

Bill C-208 sends a strong message of hope to young farmers who want to carry on what their family started and to other young family entrepreneurs included with them. Most of all, it would bring tax fairness to the Income Tax Act. No longer would parents have to be given a false choice of having to choose between a larger retirement package by selling to a stranger, which has no charge, or a massive tax bill because they sold to a family member.

Other than Finance Canada officials, I received zero push-back from any of the expert witnesses who appeared in front of the finance committee. Witness after witness came to support the bill and to answer the questions put to them. All my colleagues who sit on the finance committee did their due diligence and asked insightful questions. I want to thank the chair of the finance committee, who helped shepherd this legislation, for scheduling ample time for witnesses.

I am pleased to report that the concerns put forward by the Liberal MPs were fully answered. While I do not know how they will vote at third reading, I would kindly ask for their support. Now that we have had hours of debate and a thorough committee study, there is sufficient evidence to justify the changes I am proposing.

The Income Tax Act is complex. It has been changed and amended over the years, and in many circumstances one needs a lawyer or accountant to decipher its intent. With that in mind, the finance committee prudently invited multiple tax experts. In many cases, they gave real-world examples, so members were able to better grasp the implications of the bill. Due to the member for Kingston and the Islands laying out Finance Canada's concerns during second reading, we knew exactly what questions the Liberal MPs were going to ask. Because the government outlined its argument during second reading, the tax experts and I had time to prepare in order to put its fears to rest.

We know what the bill will cost, due to the Parliamentary Budget Officer's analysis, as I have said in previous speeches. We know there are safeguards built into the legislation to ensure people do not skirt tax rules. We know the legislation is squarely focused on small and medium-sized qualifying businesses. We know the legislation, as drafted, will achieve its intended aim, which is to level the playing field in such transactions.

For those members who want further reasons to support the bill, I will highlight some specific comments and evidence provided to the finance committee.

Brian Janzen, who is a senior tax manager at Deloitte, appeared at the finance committee. As someone who has been handling business transfers for close to 30 years, he understands the Income Tax Act and the implications of section 84.1, which he said has been a thorn in the industry's side for many years.

In his opening remarks, he provided an example of what would happen with or without the current wording of section 84.1 regarding the sale of a business. He gave the example of a restaurant that is worth a million dollars. If the owner sells the restaurant to a stranger, he, according to Mr. Janzen, “will walk away with after-tax proceeds...of around $971,000.” He would pay roughly $29,000 in taxes, but if the restaurant were to sell to a family member, the taxes paid would be roughly “$466,000 because of the deemed dividend. That's a difference, between the two scenarios, of $437,000.”

I think Mr. Janzen summed it up quite nicely when he said, “That's just crazy.” I agree with him. It is crazy. This sort of scenario is playing out every single day, and it needs to stop.

Mr. Janzen also said in his opening remarks, “This bill is helping the lower end of the small business community; it is not helping the huge, rich companies even if they're family owned.”

Cindy David, who is the chair of the board for the Conference for Advanced Life Underwriting in Canada appeared at the finance committee and spoke about the necessity of getting this bill passed. She said:

...there's some urgency around the need for the government to act in amending 84.1.... [as] small businesses employ 70% of the private sector and have been major contributors to employment growth over the past decade. A vast majority of those businesses have fewer than 20 employees.

The last comment I want to highlight was made by Dustin Mansfield, who is a chartered professional accountant at BDO Canada. Mr. Mansfield knows first hand the challenges the current wording of section 84.1 causes for families and how it unfairly taxes them at a different rate.

Of Bill C-208, he said, “the legislation would put a successor child of a business in the same shoes as an unrelated party upon the transaction of the business. Why does a stranger receive better tax treatment than a child, when the purpose is to keep businesses within the family?” I do not think Dustin posed this as a rhetorical question.

The fact remains that there are some who do not want this legislation to pass. However, we were elected to lead, to improve the quality of life of those we represent and to make sure that we pass down a stronger nation than the one we inherited. We cannot take our prosperity for granted.

I urge my colleagues to carefully review the testimony provided at the finance committee; call their chambers of commerce, or local farmers and fishers; go make a few phone calls to local accountants or other tax experts; and speak to those who have been impacted to ask them if they think it is fair that they had to pay more taxes for the business to stay in the family. Members will find almost universal support for this bill. They will also find there is bipartisan support. We need to pass this bill and send it to the Senate.

Private Members' Business gives all of us an opportunity to set aside our political allegiances, and I would kindly ask my Liberal colleagues to allow this legislation to go to a vote. If the debate carries on, it will be even further pushed back. Once again, I thank all my colleagues who supported Bill C-208 and helped to get it this far. Out of all the attempts made to fix this unfair tax treatment, we have made it the furthest in Parliament.

By working together, we can support our entrepreneurs, small businesses, farmers and fishers who make up the backbone of our economy, so let us roll up our sleeves and get this job done.

The House proceeded to the consideration of Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), as reported (without amendment) from the committee.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

I want to bring up another issue related to small businesses, and particularly family businesses. You have taken a position on Bill C-208, by stating in particular that the current rules in the Income Tax Act discourage the sale of a business to a family member. The House is expected to begin consideration of the bill at third reading on May 10.

Why is the passage of this bill important to the Canadian Federation of Independent Business?

Finance

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I have the honour to present, in both official languages, the third report of the Standing Committee on Finance in relation to Bill C-208, an act to amend the Income Tax Act, transfer of small business or family farm or fishing corporation. The committee has studied the bill and has decided to report the bill back to the House without amendment.

[The Chair, Liberal, Wayne Easter]

Thank you very much. That concludes our discussion on Bill C-208, and we're within our time frame so we're not disrupting another committee.

Thank you, everyone.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

The bill before us is very important. Since being elected, I have met quite a few owners of family businesses, farming and non-farming, who were having a horrible time of things. It's a serious matter and they were in deep trouble. We've heard from a group of witnesses, and they all told us that we needed to forge ahead and that the situation made no sense. I know that it's a complex matter from the legislative and other standpoints. We certainly need to take the points that you've made into consideration. I wouldn't want to just hear that it's all very complicated and then find that nothing is being done. It's an urgent problem and the bill should be adopted.

From my point of view, as it's written, Bill C-208 would deal with the situation. After that we could examine the Hansard transcriptions, the debates in the House and the committee evidence to understand the intent of the bill. It's been said many times that we wouldn't want this bill to provide an opportunity for people who are cheating to avoid paying taxes. Its purpose is to facilitate intergenerational business transfers. Government regulations could spell out the details, and if there are problems, we could deal with those afterwards. But it's really essential to forge ahead.

The Quebec finance minister, Mr. Eric Girard, came to the Grand Joliette chamber of commerce before the pandemic, and said he couldn't understand why it hadn't been dealt with in Ottawa yet, when it had in Quebec.

Gentlemen, you've been working on that and you've been able to look at the model used in Quebec, which has guidelines.

What's the problem with what Quebec is doing? Why are you so afraid that we're going to go ahead and adopt a similar bill?

[Trevor McGowan]

Thank you.

I'd like to build upon what my colleague Shawn has already said about the context of the anti-surplus-stripping rules in section 84.1 and the intended purpose of the proposed amendment in Bill C-208, and then discuss how it would apply, looking at the specific legislative proposal.

I'll skip ahead to clause 2. I will mention clause 1 a little bit later, but clause 2 is the one that really deals with intergenerational transfers. It applies where a parent transfers shares of a corporation to a corporation controlled by their child or grandchild. There's a fairly simple trigger for that relief to be provided when it applies. That is the deeming of the purchaser corporation to not be dealing at arm's-length, which effectively turns off the anti-avoidance rule in section 84.1.

The difficulty or some of the challenge with the measure in the bill is how precisely targeted it is to get at what you'd think of as a real intergenerational transfer of a business. Of course, it deals, as I said, with the transfer of shares of a corporation owned by a parent to a corporation controlled by the child. It does not intrinsically deal with the real transfer of the business that is being carried on.

That level of abstraction from the actual business—where a parent wants to hand it over to their child or to their grandchild, so they can carry it on, keep it going, continue building it and continue running the business—is not directly provided in the bill due to this abstraction, just looking at transfers of shares going from one to another. It's that lack of precise targeting that I think we want to highlight as being a concern with the measure.

I could provide a few more details on that. In particular, the rule doesn't require the child, after the transfer, to be involved in the business in any way. It doesn't require the parent to cease to be involved in the business after the transfer of the shares. In fact, the parent could simply wind up the business right after the transfer.

There is a requirement that the purchaser corporation that gets the transfer shares be legally controlled by the child at the time of transfer. “Legally controlled” is generally defined for tax purposes to mean that the child could elect a majority of the board of directors. However, it does not prevent the purchaser corporation from being factually controlled by the parent. Likewise, it doesn't provide that the child will necessarily have any economic exposure to the shares being transferred. In fact, it does not require the child to retain ownership of the purchaser corporation after the transfer.

The requirement that shares be transferred to a purchaser corporation controlled, at the time of transfer, by the parent, is somewhat abstract, but I think it's worth noting the points of departure between that and what you'd normally consider to be a real transfer of a business to a child.

Why do these matter? They matter because while it is generally described as facilitating an intergenerational transfer in certain cases that Shawn set out—basically a transfer of shares to a corporation owned or controlled by the child—it would also open the door to facilitate tax planning, generally for high-net-worth individuals.

Shawn was mentioning the tax rate differential between capital gains and dividends in this anti-surplus-stripping rule. That's at the heart of it. In particular, as Shawn said, for a top-marginal-rate individual in Ontario, that might be the difference between around a 47% tax rate on dividends going down to a tax rate of 26% or so on capital gains.

Likewise, if the parent is able to access the lifetime capital gains exemption, as they would with some fairly simple planning, it could drive their tax rate down to zero. They would effectively be able to extract retained earnings from the corporation they control and continue controlling the corporation, continue running the business. The child need not necessarily have any involvement in the business after the transfer. To the extent their lifetime capital gains exemption is available, their tax would go from, again, for a top-rate Ontario resident—just to use as an example—47% down to nil.

Even in circumstances where a lifetime capital gains exemption is not available, say either because it's already been used up or because the corporation that carries on the business has more than $15 million in taxable capital—as I understand, a component of the rules would provide a grind to prevent a lifetime capital gains exemption from being accessed for larger companies—you would still have a rate delta, as Shawn said, of around 20 percentage points.

That is obviously going to be the most valuable for high-net-worth individuals who are subject to the top marginal tax rates and for individuals who want to extract a sizable amount of money from their corporation, such that the tax savings would be enough to more than offset the transaction fees of putting these kinds of complex arrangements into place.

I'd be happy to walk the committee through exactly how these transactions can be structured. The gist of it is that the parent has shares of a corporation, transfers them to a child or a company owned by the child in exchange for a promissory note. The parent's company pays the child's company an intercorporate dividend, which of course is tax free, and that dividend is then used to repay the promissory note that was used to purchase the shares. In that way, the money gets out of the corporation; you have a capital gain if the anti-avoidance rules of section 84.1 don't apply; and the individual is able to, instead of paying dividend rates, pay the much lower capital gains rates or nil if the lifetime capital gains exemption is applied.

That, hopefully, gives a bit of a flavour about the slight disconnect in the rules. When we look at the legal form of a transfer of shares by a parent to a company owned by their child, there's that bit of a factual disconnect between that and the real bricks-and-mortar transfer of an actual business to their child that the child continues to carry on.

I had mentioned earlier that I wanted to touch on clause 1, as it is different from clause 2. Clause 2 relates to intergenerational transfers and provides an exception for the anti-surplus-stripping rule in section 84.1. Clause 1 doesn't really relate to intergenerational transfers of a business. Rather, it relates to a different anti-avoidance rule, but it relates to siblings.

Just like for an individual moving from a dividend rate down to a capital gains rate means a tax savings, for corporations, transfers between corporations, if they can essentially transmogrify or change a capital gain into a dividend, intercorporate dividends are generally not subject to tax and so they're able to avoid tax in that way. That's what's called capital gains stripping generally. Section 55 is an anti-avoidance rule intended to prevent that.

There are a couple of important exceptions. One of them is that if you have a corporate reorganization between related parties, then you can move amounts around among your corporations. As long as it's all in the same group, there won't be any negative tax consequences.

This measure would allow siblings to escape the application of the anti-avoidance rule in section 55. As a result, one sibling would essentially be allowed to transfer their stake in the business to the other sibling without triggering this anti-avoidance rule that could result in capital gains treatment. It would provide a tax deferral on that sort of transfer between siblings. Again, it's not intergenerational and is dramatically different, which is why I did it in that order. I hope that provides a bit more of a flavour of what clause 1 does.

That, I think, provides a bit of an overview of the bill and some of the observations that we at the department have made about its technical operation. Shawn and I would be happy to answer any questions you might have.

[Shawn Porter]

I have just a handful of observations. I know the committee has heard from a number of witnesses and is pretty familiar with the content, the purpose and the policy underlying Bill C-208, but to level-set, it's obviously intended to facilitate intergenerational transfers of a business that are otherwise caught by a surplus-stripping rule under the existing tax system.

What is surplus stripping? That is an important context-setting question.

Surplus stripping occurs when an individual shareholder reaches into a corporation to access its surplus in a manner that produces a capital gain at the personal level rather than a dividend. The normative expectation is that a corporation would earn income that forms part of surplus and be distributed to the individual shareholder as a dividend. When steps are taken to achieve that kind of result not in the context of a sale of those shares to an arm's-length person, then this section 84.1 rule, which you're all becoming quite familiar with, steps in to characterize that capital gain as a dividend.

That's the starting contextual point, the foundational principle.

Building on that just a little, the rule applies to corporate surplus that is accessed by a parent through a corporation owned by a child. The reason that's the result is that the parent and the child are related for purposes of the tax rules and, for purposes of this surplus-stripping rule, are essentially treated as the same economic unit. There has been no disposition of shares to an arm's-length person in that context. Corporate surplus has merely been accessed by the individual shareholders. The tax system doesn't care who they are if they're related or not dealing at arm's-length.

That's important context as well, the parent and the child, because this is the point we're taken to where surplus stripping bumps up against an intergenerational transfer, which is the point underlying Bill C-208. We know and accept that, in some cases, it could be more attractive to sell the shares of a business corporation to an arm's-length person than to a child, in the expectation that the sale of those shares to an arm's-length person would produce a capital gain whereas there are circumstances in which the sale to a child would produce a dividend.

Trevor will get into the differentials in a little more detail, but again, the context is that those dividends are likely going to be taxed in the mid to high 40% range, and a capital gain in the mid to high 20% range. There is delta of around 20 percentage points as it relates to realizing corporate surplus in the form of a capital gain in the hands of an individual rather than a dividend. That's a fairly significant benefit, and needless to say, one that is sought after in the context of ordinary-course tax planning.

The key point we want to bring to the committee's attention as it relates to your deliberations around Bill C-208 is that, if there is a decision to except from the surplus-stripping rule a genuine intergenerational transfer, say, on neutrality grounds—neutrality in terms of producing the same result as the sale to an arm's-length person—I'm not going to comment on that policy point at the moment, but if that decision were taken, one needs to be mindful of the boundaries that are established between what constitutes surplus stripping and what constitutes a real intergenerational transfer of a business.

In other words, we wouldn't want to make an amendment to the act that would open the system up to vulnerability in the form of a parent being able to access corporate surplus through a corporation owned by a child if that was not in the context of a real or genuine intergenerational transfer of a business. In the hallmarks for assessing whether there has been a real, genuine intergenerational transfer of a business, one would look to the terms and conditions that would be reached between arm's-length parties in the context of the sale of a business and to what extent those terms and conditions exist as between any transaction that might be undertaken between a parent and a corporation owned by a child.

The legislative challenge is in how to delineate in legislative language those boundaries so that the real intergenerational transfer situation could be protected, but at the same time, the system isn't opened up such that it becomes vulnerable to relatively more aggressive or abusive forms of tax planning.

The final point that I would make, before I turn it over to Trevor, is just to remind the committee that this issue only arises when the shares of a small business corporation or a business corporation generally are sold by a parent to a corporation owned by a child. There are no impediments under the tax system to an intergenerational transfer of a business carried on in unincorporated form, whether a sole proprietorship or a partnership. Indeed, there are no impediments under the tax rules to the sale of shares of a business corporation to a child in circumstances where the child does not seek to use the corporate surplus of the acquired company to finance the acquisition itself. That's where the rub occurs.

It's the accessing of the corporate surplus to finance the acquisition by the child that arises at this awkward intersection point between surplus stripping and a transaction that looks like a genuine intergenerational transfer of a business.

With that, I know we'll have ample opportunity for questions.

I would turn it over to you now, Trevor, for a slightly more detailed walk-through with some illustrations and some examples to help highlight that critical point around establishing the boundary.

[Shawn Porter]

Our plan was that I would spend a few minutes providing a little bit in the way of opening remarks and context-setting around Bill C-208, and then I would turn it over to Trevor to provide a little more detail, in the form of examples, to help illustrate the key points we'd like to make today.

Does that work for the committee?

[The Chair, Liberal, Wayne Easter]

We will now go to Bill C-208, Mr. Maguire's bill, an act to amend the Income Tax Act regarding the transfer of a small business or family farm or fishing corporation.

We have, from—

[The Chair, Liberal, Wayne Easter]

We will have to end it there and go to Bill C-208, based on the previous agreement.

I want to sincerely thank officials. They took a lot of their time this afternoon for probably only 40 minutes of questions.

I think Mr. Ste-Marie said it right: We thank you from the bottom of our hearts for your efforts.

When we look back a year ago, when the calls were set up at night, there were always officials on those calls. For the government to roll out a program, it meant we were going to have to fix it as we went, and you were the folks trying to fix it and make the changes. Members of all parties had the opportunity to question you folks well into the night on those calls. I want to sincerely thank you for what you have done for the country over the last year, and thank you for your efforts going forward.

With that, we will release all the witnesses except Mr. McGowan, and I believe Mr. Porter is here now as well.

Thank you very much.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

No. I'm happy to go to the next speaker so that we can get to Bill C-208, but that's an important consideration for officials who advise our policy-makers.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Okay.

Mr. Chair, I will stop now so that we can move on to the study of Bill C-208 a little more quickly.

Thanks to everyone.

[The Chair, Liberal, Wayne Easter]

I think if we give a half-hour to this discussion on Bill C-14, that will put us at about 5:40 Ottawa time. That will give us about 50 minutes for Bill C-208.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I'd like to thank all the officials, senior officials and employees here with us today.

Personally, I have a lot of questions about Bill C-208 and only a few about Bill C-14.

I would suggest that we continue with our questions about Bill C-14 until 5:30 and then move on to our questions about Bill C-208 from 5:30 to 6:30 with the other representatives, as scheduled.

[The Chair, Liberal, Wayne Easter]

We can take an hour with officials and still have a half an hour left for Bill C-208, or we could go 45 minutes with officials and take 45 minutes or thereabout on Bill C-208.

There is one official who is the same. Trevor McGowan from the Department of Finance is on both panels. Shawn Porter, who will be here for Bill C-208, is a different witness.

I think we'll have to deal with Bill C-14 first. We'll take 45 minutes to see where we're at, and then we'll go from there.

Does anyone have any remarks to start? I wasn't told there was. Do we just go directly to questions?

Gabriel Ste-Marie, you had your hand up. Do you have a question?

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

With regard to the next generation of farmers and the transfer of family businesses, please quickly tell us about Bill C-208, which is quite important, I believe. Young people especially are asking us to pass it. Now you seem to have some misgivings about it, but I hope I am wrong.

I would like to hear your thoughts on it.

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to meeting number 26 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of March 8, 2021, the committee is meeting to study Bill C-14, an act to implement certain provisions of the economic statement tabled in Parliament on November 30, 2020, and other measures, for the first two hours. For the third hour, pursuant to the order of reference of February 3, 2021, the committee is meeting to study Bill C-208, an act to amend the Income Tax Act regarding the transfer of a small business or family farm or fishing corporation.

Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021. Therefore, members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. So that you are aware, the website will always show the person speaking rather than the entirety of the committee. I would remind folks that they're not supposed to take photos or screenshots of the proceedings.

I will leave out a lot of the rest of the preliminaries, but I will remind you that members and witnesses should be addressed through the chair.

I'd now like to welcome our witnesses.

I will not at this time go through the departmental witnesses, but will welcome Minister Freeland and officials from the Department of Finance and others. They as well will be here for the presentation with Minister Freeland

Before you start, Minister, we are going to be interrupted by votes. Your ears might have been burning before you sat in your chair, because we were having a discussion about how we could ensure that you're here for an hour. I just don't know how this is going to complicate things, but maybe you could respond to that and then go to your remarks.

[The Chair, Liberal, Wayne Easter]

It will not solve all the problems, but it will help.

Does anybody else want to add a final comment before we release the witnesses?

I want to sincerely thank all the witnesses. We had a very informative discussion. Your personal experience in terms of dealing with individuals on intergenerational transfers, whether it's farms or small business or fishers, certainly showed through in your knowledge during this discussion. I want to thank each and every one of you for that on behalf of the committee.

To the committee, I suggested earlier that we probably have an option on Thursday if we want to continue on with this bill. We could move the in camera meeting on COVID expenses to March 30, so we have the full slate of witnesses. I'm not sure which department we're short, but we're short one.

If you prefer, we can have Minister Freeland on for the first hour, and then we'll have officials. That's on Bill C-14. We could take the third hour and deal with Bill C-208—have officials there and the legislative clerk, and see if we could finish up with Bill C-208. Then we could move the other in camera session to the 30th.

Are we okay with doing that? I see people's heads moving.

Okay then. We'll move the in camera meeting to the 30th, and we'll go with Bill C-208 on Thursday during the third hour.

The meeting is adjourned.

[Peter Braid]

I can perhaps jump in on that one as well.

Historically, private members' bills will fail or succeed for a whole range of reasons, but parliamentarians have a unique opportunity to seize the moment today. I think there is a greater element of political will around this particular bill, Bill C-208.

The backdrop of our circumstances is different. As you all well know and can appreciate, we've been through a year of a global pandemic and the demographics of the small business community have also changed. The time is now.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair. I'll be quick.

Bill C-208 was brought in by Larry Maguire, who is a Conservative member. He made a lot of good arguments in his presentation. We hear a lot of people supporting this. It seems like a logical thing to have families being able to transfer their businesses to their children.

The last time it was raised, in 2017, lots of issues hadn't been resolved. I hear from a lot of people who have been working on this for quite some time. It looks like it's been a thorn in the side of many people on this panel.

Why didn't it happen when the Conservatives were in power? They're now bringing it forward. What stopped it before?

Maybe that's for Dan or Brian.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I want to ask you, if I could, and I'd also like the thoughts of Mr. Janzen and Mr. Mansfield on this.... There's been a criticism of Bill C-208 that I agree with in spirit, in principle. Of course we would want to, as a finance committee, address unfairness—I say that especially as the son of a small business owner—but there has been a criticism along the lines of the lack of a requirement in the bill for a child to be involved in the transferred corporation's business or for the parent to cease to be involved after the transfer.

Do you have any thoughts on how to address that gap in the legislation?

I'll begin with you, Mr. Wark. Then I'll go to Mr. Janzen and wrap up with Mr. Mansfield.

[Ted Falk, Conservative, Provencher, MB]

I was going to ask you about that. Do you think section 84.1 as addressed in Bill C-208 adequately addresses some of those issues that you're struggling with on a day-to-day basis?

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

I want to thank all of our witnesses for coming to committee today. You have brought a lot of clarity in your presentations and in your responses to the questions as to what the bill is, what it will do and your perspective on it.

In my opinion, Bill C-208 is a bill that seeks to do one thing, and that is to address the inequity for small business owners, farmers and fishers who wish to sell their business or their enterprise to their family or their children. What it does is that it allows them to use the capital gains exemption, which they wouldn't be able to use currently for that but are able to use if they sell to a third party.

Mr. Janzen, you're from my home province of Manitoba. I'd like to ask you a few questions. You've indicated that this has been a thorn in your side for 34 years and that it is something you wish had been addressed sooner. How frequently do you encounter a situation where this would apply?

[Cindy David]

Yes. I'll chime in here.

A lot has been said on concerns about the unintended consequences of this legislation with regard to loopholes and large private corporations perhaps taking advantage of something that we hadn't intended. I would point out that if we do nothing, we're riddled with unintended consequences. Since this legislation was put in place.... It has been in place for a number of decades. One may wonder why we continue to push this forward: It's because the way we've taxed small businesses has actually changed within the framework of this legislation. The dividend tax has gone way up compared to what it was back in 1986, when this first affected small businesses.

Again, I'll just point out—if you could write this down on a piece of paper—that in our brief, which you will get on Friday, on page 5 we provide specific examples so that you can see how the tax has changed from 1986 to the current day. It has become very punitive. It actually highlights the fact that family businesses have a clear disadvantage today that they didn't have several decades ago under the exact same legislation that we have in place.

I'll leave you with this. Bill C-208 actually phases in a provision that disallows the exemption for the capital gains for larger companies. It already takes care of any potential leniency for large businesses and really is in favour of smaller businesses, which care more about using the capital gains exemption.

[Brian Janzen]

Thanks for the question.

Yes, I do think Bill C-208 does have enough guardrails, at least initially. As someone who has practised for 34 years, I'm going to preface this by saying that someone will always find something. Even if you think you have the proper guardrails now, you may have to tweak them later. We're all in favour of that.

Getting back to this particular thing, I really think the five-year time frame—if it's sold in the meantime and mom and dad pay their taxes as they would have without this bill—is a great provision. There definitely are some guardrails there.

Second, it just doesn't work to do an internal strip, the way Bill C-208 is set up. The internal strip, where you're taking out surplus without having a real sale, is where all the abuse happened in the early nineties. That is why section 84.1 was introduced. This bill really also helps for that.

Also, as I said with respect to the threshold for the value, these are the smaller businesses. This is not going to be, all of a sudden, undertaken by rich, rich, rich families to try to take advantage of it. With the guardrails, between the value and the time frame, I think this is perfect for the beginning of the bill. If it does need to be tweaked later, so be it. For now, though, this is a great limitation for any abuse, in my mind.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

The last question is for Mr. Kelly.

Mr. Kelly, you have recommended simplifying the LCGE and expanding it to include at least some of the assets and increase the LCGE amount to $1 million. Are you proposing that as additional changes to strengthen Bill C-208, or are you indicating that's something we should be considering moving forward?

Department of Foreign Affairs, Trade and Development Act

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, I am pleased to speak today on Bill C-216.

We are debating this legislation because the Liberal government has not treated supply-managed sectors fairly. They have not supported farmers or producers, and not followed through on their commitments. However, this legislation does not address the issues of farmers and producers.

Conservatives have been strong and vocal supporters of our supply-managed sectors and will continue to be. In fact, Conservatives have a policy declaration that says the following:

...it is in the best interest of Canada and Canadian agriculture that the industries under the protection of supply management remain viable. A Conservative Government will support supply management and its goal to deliver a high quality product to consumers for a fair price with a reasonable return to the producer.

Our leader, our party, and our policy have been clear on this. The Conservative party is an ally, supporter and defender of supply management in Canada. I will talk about these important supply-managed sectors.

When I met with the Chicken Farmers of Canada, they were clear about their priorities. Through correspondence and an appearance at committee, we know that their priorities are new investment programs to support producers as they improve their operations, a market development fund to promote Canadian-raised chicken, a tariff rate quota allocation methodology designed to ensure minimal market distortions, the enforcement of Canadian production standards on imports and the resolution of import control loopholes undermining this sector. One of these is the fraudulent importation of mislabelled broiler meat being declared as spent fowl. There are reports of chicken meat imports being mislabelled in order to bypass import control measures.

When this situation first became apparent in 2012, Canada was importing the equivalent of 101% of the United States’ entire spent fowl production. According to the Chicken Farmers of Canada, these illegal imports have resulted in an estimated annual loss of 1,400 jobs in Canada, $105 million in contributions to the national economy, $35 million in tax revenue and the loss of at least $66 million in government revenues due to tariff evasion.

These illegal imports also raise important food safety concerns relating to traceability for recalls. This issue not only affects our economy and hard-working chicken farmers, but the lives of Canadians are on the line in the case of a food-borne illness.

Where is the action plan to deal with this?

When I spoke to the Egg Farmers of Canada, an industry association that represents over 1,000 family farms across the country that support over 18,000 jobs and $1.3 billion in GDP, they were clear that they wanted the government to stop claiming to support the industry and actually start defending it. I learned of the innovation occurring in this industry.

The egg industry is tired of being strung along by the government. They had to fight tooth and nail for clarity on promised compensation. They expressed their desire for investment in their industry, which is the backbone of rural communities, and for market development support when it comes to the Canadian egg brand.

Where is the desire or action plan to defend our egg industry?

When I spoke to the Dairy Farmers of Canada, they told me how hard it was for the industry to plan for the future due to the government’s lack of transparency, not the least in regard to the disbursement of promised compensation.

Where is the desire and action plan to defend the dairy industry?

These same concerns were raised by the Turkey Farmers of Canada. When I first spoke with them, they were going into year four without any payments of promised compensation by the government.

The Conservatives are the only party who can and will be able to ensure that our world-class producers of dairy, chicken, turkey, and eggs have a partner in government. The Bloc Québécois will never have to negotiate a trade agreement for Canada and be the partner in government that the supply management businesses in Quebec and across the country can rely on. The Conservative Party is the only party that can and will put an end to the failures of the Liberal government when it comes to trade agreements and compensation.

Conservatives will faithfully defend supply management. We were in the House of Commons pressing the government over and over again to fulfill its compensation promises to the supply-managed sectors. We have also raised in the House the meaningful actions that we can take now to protect and support farmers and producers, including in supply-managed sectors. These actions would include modernizing and improving agricultural risk management programs, asking the Competition Bureau to investigate the impacts of abusive trade practices in the grocery industry by the grocery giants, or providing flexibility and clarity on how compensation for supply-managed sectors is allocated.

Why have we seen no plans on these important topics?

I have spent a lot of time talking with businesses and industry representatives. They want consultation, understanding and transparency from the government. They want support from the government, which has been sorely lacking. After all, our agricultural sectors do not compete fairly with other countries that subsidize, both directly and indirectly, their own products.

Creating legislation such as we are debating today, which could target farmers and producers right from the onset as bargaining chips in future trade negotiations, is not a wise strategy. Canada could be outnegotiated and forced to agree to concessions and pay compensation. This would mean more workers losing jobs, and it would do nothing to drive investment, spearhead innovation or protect jobs.

In my home province of British Columbia, supply management is an important part of our economy. B.C. has over three million egg-laying hens across over 140 farms in the province. Chicken farmers in B.C. produce 87 million dozen eggs annually and account for 14,000 jobs, contributing $1.1 billion to Canada's GDP.

B.C. is also the third-largest dairy-producing province in Canada, with 500 farms.

It is the Conservatives who are putting forth private members' bills that are meaningful to the agriculture sector. Conservative private member's bill, Bill C-206, would exempt farmers from paying the carbon tax on gasoline, propane and natural gas. From heating barns to running farm equipment, farmers face steep energy costs, and these have skyrocketed in many parts of the country due to the increasing federal carbon tax. It is a practical measure to help alleviate the financial strain on the agriculture sector. Supporting our food security is more important than ever.

Conservative private member's bill, Bill C-208, would allow the transfer of a small business, family farm or fishing operation at the same tax rate when selling to a family member as when selling to a third party. I was happy to jointly second this bill in the first session of this Parliament. This was a poor tax policy change brought in by the government. This policy bothered me so much when it first came out. It was one of the factors that prompted me to run to become a member of Parliament.

Succession planning is a challenge at the best of times for small businesses, in particular farmers, and it is unfair that it is more financially advantageous to sell to a stranger than to one's own children, who have often grown up around the family business and contributed over time. I have many communications regarding this bill from my constituents in Kelowna—Lake Country on how positively it will affect their businesses and future planning.

Conservative Bill C-205 would amend the animal health act to address trespassing onto farms, into barns or other enclosed areas where the health of animals and safety of Canada’s food supply is potentially at risk. Entering a farm without lawful authority or excuse would become an offence under the act.

We will always support the hard-working farmers and producers in our supply managed sectors who ensure quality foods for Canadians. Dairy products, chicken, turkey and eggs are core staples on our dinner tables, and the pandemic showed us how important it is to protect our supply chains, supply management and food security.

The legislation we are debating today does nothing to address any of the concerns I have outlined. There are more meaningful, productive and long-lasting ways we can stand up for supply management without supporting Bill C-216.

Canada’s Conservatives will continue to support our supply managed sectors and ensure that dairy- and poultry-farming families and producers are consulted and engaged in any trade negotiations in the future.

We will continue to support all farmers and producers in meaningful ways.

[Dustin Mansfield]

Bill C-208 would work to level the playing field in that situation.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Bill C-208 would just level the playing field, is what you're saying.

[Dustin Mansfield]

I think the provisions that are in place are there for anti-avoidance reasons. Obviously, there are many ways in many sections of the act in which anti-avoidance reasons exist. The section 55 one is an interesting one. Bill C-208 tries to tie it to the status of the shares themselves, which creates a protection from that level, which is positive.

You are exactly right. It creates an awkwardness when you're unrelated for these purposes but related for those purposes, so it just becomes very confusing in an already confusing situation.

[The Chair, Liberal, Wayne Easter]

Basically, you're suggesting Bill C-208 go as is and that Finance, as soon as possible, amend 84.1 to deal with the concerns you have.

[Kevin Wark, Tax Advisor, Conference for Advanced Life Underwriting]

We struck a committee in 2016 because of our members' concerns with section 84.1. We recognized at the time that 84.1 was an anti-avoidance rule. It's there for a specific purpose. If Finance was going to consider an amendment to that, to allow an exception for family business transfers, our members still needed to be confident that the underlying purpose of 84.1 would be protected.

Fundamentally, we think there needs to be a change to 84.1, but we also think there's a need for some “guardrails” by this committee, or some limitations put in place. Our submission is based on the work that was done three or four years ago, making recommendations to Finance on how they could allow the exception but eliminate any potentially abusive planning transactions that otherwise should be caught by 84.1.

Bill C-208 has some of those guardrails already incorporated. We are supporting Bill C-208 as is, recognizing that Finance may still have some concerns with whether there are enough guardrails or not, and we assume they could, at some point in time, if they feel it's appropriate, amend the provisions to implement those additional guardrails.

We're very concerned that if Bill C-208 doesn't proceed, we'll be back here three years from now still debating this. We would like to see this provision go through. If it can be easily amended before it gets through, that's fine, but otherwise we think Finance always has the prerogative to amend legislation once it's in place to correct any problems that it perceives exist.

[The Chair, Liberal, Wayne Easter]

Thank you very much to you both.

The question lineup will start with Mrs. Jansen, then Ms. Dzerowicz, Mr. Ste-Marie and Mr. Julian.

Before you start, Mrs. Jansen, I'll take the chairman's prerogative for a moment.

Mr. Janzen and Ms. David, you talked about section 84.1 of the act. We're working at a bit of a disadvantage here, Ms. David, in that because the submission isn't translated, we haven't seen it yet.

You said there needs to be an amendment. Are you suggesting there needs to be an amendment to Bill C-208, or is the amendment that's in Bill C-208 enough to cover your concern?

[Robyn Young, President-Elect, Insurance Brokers Association of Canada]

Thank you, Peter.

Thank you to the committee members for the invitation to speak today.

I am here to speak in support of Bill C-208 because of my experience purchasing the family business from my parents.

When my parents decided to sell their business, they received an offer from a large direct writer. They ultimately chose to sell the business to me and my brother, because it was important to them to keep the business they had built within the family. They also wanted to ensure that their clients would continue to receive the same expert advice and personal touch they had come to expect.

Family-run brokerages are the pillars of the community and the lifeblood of the economy. They serve and support their communities in good times and bad by creating employment and donating time, money and other resources.

Many third parties purchasing family businesses are large companies with no connection to the community. Rather than supporting local organizations and sports programs, they tend to sponsor professional teams and events.

I sit on the board of a local children's charity, and our brokerage actively supports and volunteers for numerous community-based charities and children's sports teams.

Bill C-208 will not only support the family succession of brokerage firms and ensure stability for customers, but also help to maintain the social and economic contributions the insurance brokers provide to their communities.

In closing, this is an issue of equity and fairness. Business owners should not be penalized for selling their business to a family member. Tax implications should never be a consideration when making the decision to sell a business to a family member.

We should make every effort to support and encourage the intergenerational transfer of these businesses.

Thank you for your time.

[Peter Braid, Chief Executive Officer, Insurance Brokers Association of Canada]

That's excellent.

Thank you, Mr. Chair.

Please let me begin by thanking all committee members for their service to their constituents and communities during this past challenging year.

I am Peter Braid, CEO of the Insurance Brokers Association of Canada, also known as IBAC. Joining me today is IBAC's president-elect, Robyn Young. Robyn is also the president and CEO of Excel & Y, based in Calgary.

We are here today to provide our support for Bill C-208 on behalf of IBAC's 11 member associations and 38,000 insurance brokers.

Our member associations represent approximately 3,400 brokerage firms located in every riding across the country. Many committee members will know an insurance broker in their community, and have likely met with them during our annual Hill Day.

Insurance brokers work for their clients, not for insurance companies. They provide consumers with choice, advice and advocacy, while directly serving the best interests of their customers.

Insurance brokerages make an important contribution to the Canadian economy. Member brokerages are primarily small enterprises that employ between one and 15 people. They contribute $5.4 billion to the national GDP, and are responsible for over 58,000 full-time jobs. Many of these businesses are family owned and operated.

In provinces such as Ontario, Quebec and British Columbia, up to 25% of member brokerages are family owned. In smaller provinces and more rural parts of Canada, this number is much higher. In Nova Scotia and Newfoundland and Labrador, for example, the number of family-owned brokerages is 40% and 50% respectively. The changes proposed in Bill C-208 would have a direct benefit for brokerage owners who want to keep the business in the family.

I will now turn it over to Robyn. In addition to serving as IBAC's president-elect, Robyn has experience purchasing and running a family-owned brokerage and will be able to speak to the importance of the intergenerational transfer of businesses.

[Brian Janzen, Senior Tax Manager, Deloitte]

Thank you.

Section 84.1 has been a thorn in my side for 25 to 30 years. I was pleased when I saw the Liberal bill in 2015—which did not get passed—and I'm just ecstatic to see what's transpiring so far. There was a brief example given in the earlier session, but I want to quickly highlight what would happen in Manitoba with and without section 84.1 on a sale to your kids versus a sale to arm's-length parties.

Right now, if you have a $1-million business and you sell your shares—in a restaurant, let's say—to your neighbour, you will walk away with after-tax proceeds from a $1-million sale of about $971,000. That's only $29,000 of leakage.

If you turn around and.... There are various ways to sell your shares to your kids under the current regime of section 84.1, but I'll just use the worst-case scenario. The worst-case scenario is that your kid sets up a holding company, or holdco, and buys your shares from you. In Manitoba, that will cost you $466,000 because of the deemed dividend. That's a difference, between the two scenarios, of $437,000. That's just crazy.

There are various other ways to reduce that difference, but there is always a difference when you sell the shares of a small business corporation. I'll just concentrate on the small business corporation during my discussion, because we've talked a lot about farms.

I understand why section 84.1 was introduced. It was introduced to stop internal surplus stripping when there wasn't a real third party sale or any kind of sale. That's totally understandable, but section 84.1 went too far, and Bill C-208 really goes a way to correcting that.

There are a couple of other things. As I said, it really encourages you to sell to a third party and not your kids. I've seen so many cases of that. I have current clients now, and even family members, who are looking at sales. They're pursuing the third party because it's too expensive to sell to their kids. An American company or a multinational is more attractive than their kids. As we've heard from CALU and from everybody, that is not the way to build a great economy.

On the first example I mentioned, where the person retains $970,000 on a $1-million sale, there's been a lot of commentary that it's a loophole and that it shouldn't be: Why should they pay that little? Well, small business people and farmers should be treated differently, because this person who sold their business for $1 million probably had little or no RRSP. First of all, they probably took little salary out. That's their retirement. If they lose half of it to the government.... I don't lose half of my pension when I retire. This is their RRSP. This is why it's so important to retain as much as they can.

I have a couple of other quick comments. In the earlier session, there was commentary that corporations and holding companies are loopholes. Those are not loopholes. A corporation, as somebody was saying, is mostly required by the bank. Even in Manitoba, if you're a small business manufacturer, you need a corporation to take advantage of Manitoba's investment tax credits. A corporation is not a loophole.

The other thing I want to reiterate is that after the sale—let's say a dad sells to his kid and they paid more tax because of section 84.1—that kid is also left in a worse position on an ongoing basis. Depending on how they structured it, he now has to use his after-tax corporate profits to pay personal tax, or pay his dad off, as opposed to reinvesting. The third party who bought from your neighbour gets to reinvest his 90¢ on the dollar. The guy who bought from his dad does not. That puts him at a disadvantage on an ongoing basis as well.

This bill is a great start. It has some caps on value, which is great. This bill is helping the lower end of the small business community. It is not helping the huge, rich companies, even if they're family owned. The impact of section 84.1on them is a drop in the bucket. This is helping the smaller families.

I didn't think I needed to get technical, because Dustin did a great job on that. These are my comments. As I said, I've worked with small businesses for 34 years, so this is a great help.

Thank you.

[Cindy David, Chair of the Board, Conference for Advanced Life Underwriting]

Thank you, Mr. Chair and committee members, for the opportunity to appear today.

In addition to being an independent financial advisor located in Vancouver, I'm chair of the board for the Conference for Advanced Life Underwriting, or CALU. CALU and our partner organization, Advocis, represent approximately 13,000 insurance and financial advisors who, in turn, provide advice to millions of Canadians and small businesses across the country.

We are of the opinion that Bill C-208 will have a positive impact for small business owners looking to transition their business to the next generation of family entrepreneurs. We have provided a brief to the committee that outlines the reasons CALU believes it's critical to amend section 84.1 of the Income Tax Act. I understand it's still in translation; you should be getting that by Friday.

Our brief highlights how recent tax changes have made the application of these rules to family business transfers even more punitive since the provision was first introduced. Once you get the brief, I draw your attention to pages 4 and 5 in particular, which provide examples. Our brief also outlines various methods the government could use to limit any potential tax abuses that might arise from relaxing the rules to section 84.1.

We believe there's some urgency around the need for the government to act in amending 84.1. I know all committee members are aware of the importance of small businesses to the Canadian economy, but I will highlight that small businesses employ 70% of the private sector and have been major contributors to employment growth over the past decade. A vast majority of those businesses have fewer than 20 employees. They play a significant role in supporting the economies of smaller communities across Canada.

We believe a recovery from the current economic crisis will once again be led by the growth of small businesses. It's not surprising that a number of owners who are at or nearing retirement age have been worn down by the stresses of the past year and are accelerating their plans to retire. Fortunately, many owners have children working in their businesses who have been groomed and are ready to assume control of the operations.

However, we're finding that section 84.1 remains the major impediment to a successful transition of these businesses within the family. This provision can deny the capital gains exemption that has been spoken about quite a lot. Alternatively, it can force new family owners to assume potentially high levels of debt to pay off the purchase price above and beyond what a third party would have to assume.

Accordingly, business owners are often faced with a difficult decision. They can sell their businesses outside of the family to preserve more after-tax proceeds to fund their own retirement, or they can receive less money from their children in order to pass on their businesses, so they can afford to pay the additional taxes that are currently required of them. We don't think it's fair. I've seen several examples of these impacts from my own personal experience with my clients.

To address these issues, CALU is urging the committee to support moving forward with the intent of Bill C-208, but we ask that you recommend that section 84.1 be amended to permit the transfer of incorporated small businesses to the next generation of family owners on a more tax-neutral basis.

This clearly fits within the recommendation made as a part of your pre-budget report to the Department of Finance, which was released in February. We strongly believe this action will facilitate the successful transfer of family businesses and, in turn, protect local jobs and local economies.

Thank you for your time and attention. I will be pleased to respond to any questions you have on this subject matter along with our CALU tax advisor, Kevin Wark, who is here with me today.

[Dustin Mansfield, Chartered Professional Accountant, BDO Canada]

Good afternoon, Mr. Chair and committee members. Thank you for the opportunity to speak to you today regarding the transition of family businesses in Canada.

My name is Dustin Mansfield. I'm a tax professional with BDO Canada, from Boissevain, a vibrant rural farming community in southwestern Manitoba. BDO Canada is a leading professional services firm in the Canadian market, providing tax services to Canadian private businesses and to the families and individuals who own these businesses.

My father and uncle ran a successful small business in Manitoba for about 49 years, and my grandfathers and uncle were also farmers for many decades. My grandfather's farm was in our family for 96 years before it was successfully sold to long-time neighbours, who are also successful multi-generational family farmers. I take pride in my career and the fact that I can help people like my father, my uncle or my grandfather transition their business to the next generation.

I will start by saying that there are many provisions that are helpful in assisting a tax-efficient transfer of these businesses. Bill C-208 seeks to adjust two specific provisions that can create problems in transitioning ownership of a family business to family members in a tax-efficient manner, often hampering the ability to allow continuing success of the business now and into the future.

The first section of the Income Tax Act that I will speak to is section 55. It is a complicated set of rules aimed at preventing avoidance that might be achieved through converting what would otherwise be a taxable capital gain to a tax-free intercorporate dividend. The proposed change is aimed at the fact that, for section 55, siblings are deemed to be unrelated for these purposes. It should be noted that they are still related for the other provisions of the act.

Because siblings are deemed to be unrelated, the ability to divide the business among them in a tax-efficient manner is extremely complicated and not always possible. The siblings must rely on what is called the pro rata butterfly exemption in paragraph 55(3)(b). This provision requires that, when splitting up a corporation, each shareholder must receive an equal pro rata share of each of the cash or near cash business and investment properties of a corporation. The purpose of the provision is to prevent a shareholder from cashing out without paying tax, with the other shareholder continuing to carry on the business. Because they must take equal shares of each asset type with the company being split up, the provision prevents this.

As a result of these requirements, section 55 prevents a disguised sale of a business on a tax-deferred basis. However, problems arise when there is a legitimate splitting of all asset types in the company among siblings but the asset mix that is to be divided between them does not fit squarely within the extremely strict requirements of paragraph 55(3)(b).

Bill C-208 proposes to allow siblings to be related for purposes of section 55, as they are for the other sections of the Income Tax Act, if the corporation split up among the siblings is a family farm corporation or a qualified small business corporation. These are both defined terms in the Income Tax Act that require all or substantially all of the assets of the company to be active farming or business assets. Therefore, since passive assets could not make up more than 10% of the value of the business, and due to the linking of the exemption to these statuses and the fact that the transaction would also have to follow the rules of the existing paragraph 55(3)(a), the integrity of section 55 should be protectable, allowing the business assets or farming assets of the small business to be split up more efficiently among siblings.

There have been comments opposing the change, to the effect that it may erode the tax base. The fact is, due to the punitive results of the rules in section 55, you either have a division that qualifies and is done on a tax-deferred basis, or one that does not qualify, in which case the transaction does not proceed. This is because the family has no liquidity to pay any taxes that would result from the transaction if it's fully taxable. If a successful split cannot happen, what can happen is that the business relationships among the siblings deteriorate, or it becomes difficult to transition the business to the next generation as the family tree grows.

The second section of consideration is section 84.1, which is in place most notably to prevent the use of a person's lifetime capital gains exemption to extract a corporate surplus on a tax-free basis when there is a related corporation used in the acquisition of the shares of that corporation.

In general, a parent can sell the shares of a corporate business to their child personally and use their capital gains exemption on the sale. To the extent the parent has an available exemption, they can receive the proceeds tax-free, but the child must repay the purchase price with personal funds. To fund the purchase, a child would usually have to receive salaries or dividends from the business to pay the personal taxes, and use the after-tax cash to pay their parent.

Alternatively, a parent could sell the business to an unrelated party that is incorporated and claim the capital gains exemption with the same result as the previous example. The difference is that the unrelated party can use corporate funds to repay the purchase price, and corporate level funds are, of course, subject to lower taxes, leaving more funds to repay the exiting shareholder.

In the end, the proposed change to the legislation would put a successor child of a business in the same shoes as an unrelated party upon the transition of the business. Why does a stranger receive better tax treatment than a child, when the purpose is to keep businesses within the family?

In closing, the “deemed unrelated” provisions of section 55 and the inability of a parent to utilize their capital gains exemption on a bona fide transfer of their business to the next generation are obstacles that hamper the transition of family businesses to family members. The proposed changes are designed to add more flexibility to the tax rules and allow for easier transition in these circumstances.

Thank you.

[The Chair, Liberal, Wayne Easter]

I will reconvene the meeting.

Welcome to meeting number 25 of the Standing Committee on Finance. As you know, the committee is studying Bill C-208.

Welcome to the witnesses in this panel. We appreciate your coming in on fairly short notice on an important private member's bill.

Just so panellists know, if the clerk hasn't told you, we're going to go until 6:30 Ottawa time. We've extended it by half an hour. We were able to squeeze out the time. We will need to stop probably five minutes before that, because we need to have a discussion as a committee.

We'll start with BDO Canada and Dustin Mansfield, chartered professional accountant.

Mr. Mansfield, if you're ready to roll, the floor is yours.

[The Chair, Liberal, Wayne Easter]

We will have to end it there with this panel. The other panel is waiting.

I very much thank you, witnesses, for coming forward on this important bill. Thank you very much for your testimony and answering our questions today.

Pat Kelly, on the point you brought up at the beginning, I know there's a lot of push to go to clause-by-clause. We passed the deadline for committee members to propose amendments, but the letter just went out to independent members of the House this week—I believe it was yesterday—on whether they want to propose amendments.

We really do need to hear from officials. I'm sensing strong support for the principle of this bill, but are there any unintended consequences? We need to hear from officials, and we need to get it done as fast as possible.

I understand that the notices went out for Thursday's meeting. In the third hour we're dealing with COVID-19 spending and programs. I understand there's a problem scheduling one of the departments in. We talked about this the other day: the in camera meeting on the spending for COVID-19 contracts, etc. I understand there's one department we're having trouble scheduling witnesses in, from staff at the Department of Finance. However, they can schedule them all in for March 30. We can do an hour in camera then and do Bill C-208 with officials and possibly get to clause-by-clause on Thursday, in that hour, if we want to make that trade.

Think about that while we're dealing with the next panel. I'm not going to pop it on you right now without giving you time to think about it. We'll try to find some time, in the last 10 minutes of the next panel, to come back to this topic.

Mr. Clerk, we will suspend for five minutes while you test the next witnesses.

Thanks, all of you.

[Andre Harpe]

Actually, I'd defer to somebody else for a clear example, but at the same time Bill C-208 would level it, so basically the taxes would be the same with a neighbour versus one of my children.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

I will ask one last question.

Would a parent be able to retain de jure and de facto control of a corporation whose shares are transferred under Bill C-208?

[Marc St-Roch, Accounting and Taxation Coordinator, Research and Agricultural Policy Directorate, Union des producteurs agricoles]

The problem actually has more to do with the financing of transactions than with the capital gains deduction in cases where businesses are owned by individuals.

For example, if the child wants to acquire the assets that are personally held by the parent, the child can finance the transaction and pay the debt using revenue from the business. The interest on the debt can be deducted for tax purposes.

Ultimately, the business's ability to repay is the bigger problem. If the parent decided to sell off all their assets one after the other, they would get a lot more than if they were to transfer the business to their child. As I believe Mr. Harpe pointed out, the farm's value during its operation is less than the value of the assets that can be sold. Parents tend to sell their farm to their children for a fraction of the price so they can afford a bit in the way of capital and live off of it. That's the dilemma.

Bill C-208 applies solely to the sale of incorporated operations. That's the problem. A stranger who wants to purchase the seller's shares will create their own company, and that company will then purchase the seller's shares. The company—or the buyer, in other words—will obtain their own financing and use the money to pay the seller. The company that was created becomes the owner of the shares of the just-purchased operation. Afterwards, the two companies are combined so the revenues from the just-purchased farm operation can be used to pay the debt. In short, a stranger can create a company, purchase the seller's shares, combine the new company and the just-purchased company, and finance the repayment of the purchase price through the operation of the just-purchased company.

If the seller's child wants to do the same thing, that is, create a company, purchase the parent's shares and combine the two companies in order to repay the debt using the revenues of the purchased company, the transaction is no longer deemed a sale subject to the capital gains tax exemption. Instead of a capital gain, the proceeds of the sale are treated as a taxable dividend where the parent is concerned.

For example, if the child wants to purchase their parent's $500,000 in shares and finance the purchase through their company, the parent will have to pay $225,000 in taxes because of the taxable dividend. Conversely, had the parent sold the company to a stranger, the capital gain would have been tax-free and allowed the parent to access a tax deduction. That's the problem with section 84.1 of the Income Tax Act.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much to our guests for joining us today. I really appreciate your insights on this.

Let me just start by saying that I do hope to find a fix to ensure that we can fairly pass on farming operations, and frankly certain other kinds of businesses, to the next generation.

I have a couple of concerns about Bill C-208. I'm interested in learning more about some of the things it doesn't do and some of the things it might do that we don't want. I will acknowledge that it could accomplish the facilitation of intergenerational transfers, which I think is a good thing.

My primary concern right now really dovetails with the conversation about corporate farms versus family farms. Although I deal with it at home, even though I do have a strong agricultural presence for Nova Scotia in my riding, it comes up more often in terms of the commercial fishery. I can't tell you how important this issue is. The rural communities that sort of dot the coastline that I represent are driven, really, by the lobster fishery. One of the troubling issues we have been trying to deal with over the past number of years deals with controlling agreements. In order to protect the inshore fishery, what usually happens is that the owner of the licence will fish under that licence. It becomes a problem when certain larger corporate interests become the legal owner of a fishing vessel and associated licences, because they sometimes would be tempted to lease out the ability to fish on that licence. That has the risk of pulling the economic benefit from the rural communities, like the ones I represent, to the headquarters of the corporate entity that owns those licences.

One of the fears I have is that it could be an unintended consequence of Bill C-208 that it would encourage the adoption of corporate entities to own fishing vessels and licences, which would exacerbate this trend toward pulling the economic benefits out of communities. It's the same fear that you have expressed. I know right now that if you sell a business to a child personally rather than to a corporation owned by that child, you could benefit from, for example, the lifetime capital gains exemption.

For those unincorporated farms or fishing businesses, or frankly other businesses, do you think there are things we could do that would facilitate the transfer without putting at risk the controlling agreement circumstance? In a farming context, it would be like if a major grocer perhaps became the legal owner of the farm, rather than the person who has farmed it for generations.

If you have insight on unincorporated businesses and how we could make that simpler, I'd be very interested in hearing it.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, witnesses, for presenting today and for helping Canadians better understand the bill that's before us here. I think it's an important bill, and it's something that I certainly support.

I'd like to ask the Grain Growers of Canada a few questions. I understand from Mr. Harpe's intervention that 97% of Canadian farms are family-owned and operated. That's a remarkable figure, and I think that's something worth celebrating.

Farm families face a variety of challenges when it comes to succeeding in their operations. Can you explain to the committee some of these challenges and describe how Bill C-208 can help keep businesses under family ownership?

[Marcel Groleau, General President, Union des producteurs agricoles]

Thank you, Mr. Chair.

Good afternoon, members of the committee.

My name is Marcel Groleau, and I am the general president of the Union des producteurs agricoles, or UPA. With me is Marc St-Roch, a specialist in agricultural taxation. He has the expertise to answer more technical questions.

The agriculture and agri-food sector is responsible for one in eight jobs, generating more than $112 billion in annual revenues and exporting more than $60 billion worth of products every year. The backbone of many rural areas, the sector is also vital to the food security of Canadians.

Some 98% of the country's farms are family owned and operated. That business model is a source of pride for Canadians. Family farming promotes sustainable growth, environmental stewardship and reinvestment in local economies.

The legal structure of farm operations has changed in recent years. According to the 2016 Census of Agriculture, the percentage of incorporated farms more than doubled in 20 years, going from 12% to 25%. As the number of farms dropped by approximately 83,000, the number of incorporated farm operations continued to grow in Canada, increasing from 32,700 to 48,600.

As has been pointed out, farmers are getting older: the average age of farm operators is now 55, seven and a half years older than the average age in 1991.

With rising asset values and, by extension, debt, farm operators have turned to incorporation to help finance investments, since corporate tax rates allow operators to pay back borrowed capital more quickly.

According to a 2017 study by the Business Development Bank of Canada, nearly 40% of small businesses will be transferred or sold by the end of 2022 as owners near retirement. More than $50 billion in agricultural assets is expected to change hands in the next decade.

Unfortunately, Canada's tax system treats the transfer of family businesses unfairly. Under the current rules, it is usually much more expensive for a farm owner to sell their business to a family member than to an unrelated buyer. By penalizing retiring farmers and young farmers hoping to take over the business, the tax rules put the country's family farms in financial jeopardy.

Pursuant to section 84.1 of the Income Tax Act, if, in order to finance the sale of a business, a person sells the shares of their corporation to a related party, the capital gain triggered by the sale is deemed a taxable dividend. That means the seller cannot claim the capital gains deduction in relation to a qualified farm property. Conversely, if the owner sells the corporation to a corporation controlled by an unrelated third party, the capital gain realized can be tax-exempt. That is unfair. Consequently, on a $500,000 gain, the taxable portion can vary by $225,000 when it should be tax-free in both cases.

In order to facilitate financing in relation to the sale of a family corporation between related persons and to allow sellers to take advantage of the capital gains deduction, the Quebec government amended its Taxation Act to include an exception to the application of the provincial provision corresponding to section 84.1 of the federal legislation. The Canadian government should follow Quebec's lead.

Canada's Income Tax Act is out of step with the realities and demographic pressures facing family farms. The UPA believes that Bill C-208 would help level the playing field by eliminating the significant costs that put farm and small business owners at a disadvantage when they wish to sell the business to a family member.

In addition, disputes arise from time to time, and as a result, owners of multi-family farms prefer to operate their businesses separately. Section 55 of the Income Tax Act sets out a mechanism whereby the assets of an incorporated business can be shared among the shareholders tax-free as long as the assets are distributed in a proportional manner.

However, the proportional distribution of assets may not be possible. Assets like farmland cannot be separated. In order for the value of the assets to be distributed equally, a shareholder exiting the business may receive more money instead of a corporation asset. In that case, if the assets of the corporation are not distributed equally, they may become taxable in the form of a non-tax-exempt capital gain.

When the business is transferred between related parties, the requirement for proportional distribution does not apply and the cash payment may not be taxable. However, under section 55 of the Income Tax Act, siblings are deemed to be unrelated for the purposes of the section. As everyone knows, these types of businesses are usually divided among siblings, meaning that section 55 penalizes parties when assets cannot be split proportionally, because it triggers taxes. As a result, the viability of each owner's business is undermined.

The UPA is of the view that the amendment in Bill C-208 to exclude transactions between siblings from the application of section 55 would also be appropriate in cases where the cash and other assets transferred to a shareholder exiting the business are invested in another farm operation. That way, the assets would still be invested in farming despite being split among separate businesses.

In conclusion, farm operations could continue to grow. They often support more than one household and are increasingly being incorporated for tax reasons and estate planning. In this new landscape, good tax planning is crucial for family farmers if family farms are to remain viable for future generations.

Thank you.

[Andre Harpe, Chair, Grain Growers of Canada]

Thank you very much, Mr. Chair and honourable members, for the opportunity to be here with you today.

My name is Andre Harpe and I am the chair of the Grain Growers of Canada. Grain Growers is the national voice for Canada's 65,000 grain, pulse and oil seed farmers across all of Canada. I farm in the Peace region of northern Alberta. When we finish harvest this fall, we will become a century farm, which represents one hundred years of our family farming this land. We grow malt barley, and canola is our mainstay. We also rotate other crops year to year.

My father incorporated this farm in 1972, before I took over the farm from him in the 1980s. Like many other farmers my age across the country, I'm beginning to look at the future of my farm. Succession planning is a challenge; it's expensive and must be done right.

I am also the proud father of three girls, and they all love the farm. I can't say for certain just yet, but I believe they are all interested in possibly taking over this farm one day. That decision will ultimately be up to them, but I would love to keep this farm in my family for another hundred years. Beyond that, I would be happy to see our sector benefit from fresh, new ideas for farming from young women like them.

There is an old saying that many farmers are cash poor and asset rich. Although the debt owed on my assets may not jive with the word “rich”, the reality is that my farm is my retirement. The equity I've built through the years of hard work is my RRSP—it's my pension.

The structure of cash flow for a farm necessitates that you're turning profit back into the operations to pay down debt, purchase inputs and prepare for the following growing season. When I sell my farm to my daughters or somebody else, that's when I finally see the results of the years of hard work. Most business owners, farmers or otherwise, are in the same position, and we knew that going in.

I scratch my head to understand why, for even one second, I would have to consider whether or not I should sacrifice any part of my retirement in order to pass my farm on to my children. I should not have to weigh the decision between a lower quality of life in retirement due to significantly higher taxes to keep the farm in my family, and maximizing my retirement by selling it to a third party buyer. This isn't about special treatment; it's about fairness.

I've heard it mentioned that because we are incorporated, it must mean we're not a family farm. This couldn't be further from the truth. My farm is actually part of 97% of farms in Canada that are family farms. In my view, Bill C-208 would help it stay that way.

If my daughters choose to take over the farm, hopefully start families and stay on the land, it is also good for our local communities, which makes it good for Canada. The sustainability of our rural communities is vital, and levelling the playing field so that it is advantageous to sell it to a family member would help keep people on the land. It'll also help keep our schools, sports teams and communities alive.

There have been questions surrounding whether this bill would create tax loopholes that could be taken advantage of. The next panel will include many tax experts, so I will defer to them on the safeguards built into this legislation. What I know is that farmers often have to make decisions based on a risk-benefit analysis every day, just as you do in your roles. I would suggest that the risk of that being prevalent among farms as part of their succession plan, compared to the benefits for family farms in rural communities, is clear.

In closing, the Grain Growers of Canada are strongly in favour of this legislation, and we encourage parliamentarians to pass it into law in an expedited manner to ensure tax fairness for those currently deliberating this issue today. Not all farms are going to be transferred to the next generation, but for those that have the chance, Bill C-208 will go a long way to ensuring that farmers don't have to choose between keeping the farm in the family and getting the most out of retirement.

Thank you, Mr. Chair. I look forward to any questions you may have.

[Julie Bissonnette, President, Fédération de la relève agricole du Québec]

Good afternoon.

Mr. Chair and members of the committee, thank you for inviting us to speak to the committee about the transfer of farms.

My name is Julie Bissonnette. I am a dairy farmer in L'Avenir and the president of the Fédération de la relève agricole du Québec, or FRAQ. With me today is executive director Philippe Pagé, who grew up on a hog farm in Saint-Camille.

Before I turn to the subject at hand, I would like to tell you a little bit about the group I represent.

The FRAQ is an organization that brings together 16- to 39-year-olds who care about farming. With over 1,700 volunteer members across Quebec, the FRAQ is affiliated with the Union des producteurs agricoles.

Our organization is dedicated to advocating for young farmers and achieving better conditions as they start out in farming, whether they are taking over an existing operation or starting a new one.

We are here today to stress the importance of immediately correcting the tax unfairness surrounding the transfer of a business, depending on whether the parties are related or unrelated.

The next generation of business owners has been speaking out about the problem for more than 15 years. Hopefully, this time, it will be fixed once and for all.

We realize the bill concerns all small businesses, but we would like to share the perspective of young farmers in Quebec. There's a problem that needs fixing: right now, it is harder for someone to sell their farm to their son or daughter than to a person outside the family. You should know that many young people in Canada are watching their dreams go up in smoke because of ill-conceived tax rules.

Under the current system, a person looking to sell their farm has two options: sell it to their son or daughter and agree to be taxed to the max or sell it to a stranger and receive better treatment under the Income Tax Act. Basically, a farmer will have to pay more tax if they sell their farm to their son or daughter, and as a result, fewer farms are being transferred to family members.

Naturally, the person looking to sell is going to choose the option that provides the most benefit. After all, the sale of a business is the culmination of a person's life's work. What is unfortunate is that the current provisions of the act force farmers to make the tough choice between keeping the farm in the family and having more money in retirement.

Bill C-208 would amend the Income Tax Act to allow a business owner selling the business to a related party to benefit from the same exemption they would receive when selling to a third party.

The FRAQ strongly supports the bill because it fixes the problem for good.

Bill C-208 is significant for young farmers because we believe it will encourage the transfer of farms to family members and go a long way towards correcting tax unfairness, while supporting a strong farming community.

The numbers speak for themselves. A business that is transferred to a family member is six times more likely to succeed than a business transferred to someone outside the family. What's more, 70% of all entrepreneurs in Quebec would prefer to keep their businesses in the family. Even today, selling a business to a related party is the preferred way to transfer a farm. Our tax system should support all young farmers, no matter their path to business ownership, something the system does not currently do.

With the average age of farmers increasingly nearing retirement age, a large number of farm businesses will be changing hands in the next few years. This is about more than just tax fairness. It's about support for farm growth and development across Canada and proper stewardship of our land. I hear from many young people that their parents are getting older and approaching retirement. Amending the Income Tax Act would change their lives. It is paramount that the government take action now because many farmers will be selling in the coming years.

Farmers are passionate and proud people. You can just imagine the pride and gratitude they feel when a family farm stays in the family. You can also imagine what it feels like when that doesn't happen. Losing a family farm is like giving up on a dream. All that hard work is for naught. That is the reality of the current system.

We urge government and opposition members to work together not only to correct this unfair tax treatment, but also to make the changes that good governance of the Income Tax Act calls for.

In conclusion, I want to reiterate our support for this bill, just as we have supported all of its previous iterations in recent years. Changing the law to treat family business transfers more fairly is a matter of consensus across all sectors.

Selling a business is riddled with challenges as it is; the process is long and complicated, and requires careful planning. Why make it even harder when it is a parent selling their farm to a son or daughter? Is the goal really to keep fewer farms in the family because of unfair tax rules?

Hopefully, young farmers and farm owners who wish to sell will finally be heard.

Thank you.

[Scott Ross, Assistant Executive Director, Canadian Federation of Agriculture]

Thank you, Mr. Chair and committee members, for the opportunity to speak to you today.

My name is Scott Ross. I'm the assistant executive director of the Canadian Federation of Agriculture, Canada's largest general farm organization, representing nearly 200,000 Canadian farm families from coast to coast to coast.

I would like to start by thanking the committee for inviting farm organizations to speak to Bill C-208, as the continued facilitation of farm family transfers is an issue of critical importance to the CFA and its members.

Agriculture is a capital-intensive business, and effective succession planning is critically important, particularly for a sector that will transfer tens of billions of dollars in assets to the next generation in this decade alone. It’s undeniable that COVID-19 has fundamentally affected Canada's and the world’s economic outlook, and while Canadian agriculture is certainly not immune to those effects, the sector is uniquely well positioned to drive Canada’s economic recovery.

However, the average age of Canadian farmers now exceeds 55 years of age, and the opportunities these businesses face will carry into the next generation. As a sector where the vast majority of businesses remain family owned, maintaining the financial health of these businesses across generations is critical. This is in the interests of all Canadians, as studies show that family farming encourages sustainable growth, environmental stewardship and increased spending within one’s local community, not to mention its contributions to the social fabric of rural Canada.

With respect to Bill C-208, I would begin by noting that I’m not a tax expert. However, in 2012, I convened and supported a taxation committee at CFA, comprising tax practitioners and farm leaders from across Canada, with a mandate to identify and review the most critical tax-related issues facing Canadian farmers.

Section 84.1 of the Income Tax Act and the disincentive it presents to family farm transfers—a primary focus of the proposed amendments under Bill C-208—was promptly identified as a priority by this committee and has been a focus of the CFA ever since. This was reiterated just two weeks ago when farm leaders from across Canada passed a resolution at the CFA’s annual general meeting, imploring the federal government and members of Parliament to support and actively contribute to the passage of Bill C-208 before the next federal election, as a priority for Canadian farmers.

Simply put, the current wording of the Income Tax Act penalizes a farmer if they choose to transfer the farm business to a family member as opposed to an anonymous third party. As a result, when a retiring farmer sells their business to their children, they face the prospect of paying a lot more in taxes than if they were to sell to a stranger. This difference in treatment can amount to hundreds of thousands of dollars. This amounts to reduced productivity, increased financial risk and lost opportunities at a time when the sector holds such immense growth potential.

There are over 43,000 family farm corporations across Canada, operating on more than 50 million acres of land. The transfer of each one of these businesses, were they to stay in the family, would be disadvantaged and face this undue tax burden. The CFA supports Bill C-208 because it essentially ensures that real family farm transfers can access the same capital gains treatment as businesses selling to an unrelated party, rather than treating the difference as a dividend that's taxed at a higher rate and cannot access the lifetime capital gains exemption.

The CFA also supports the safeguards in Bill C-208 to prevent surplus stripping by assuring that a real transaction has taken place. For example, if the shares are sold by the child within five years of acquiring them, the transaction is deemed to have involved dividends and taxes will be charged retroactively. We are not seeking an exemption or preferential treatment for family farms, but instead are looking to ensure the Income Tax Act recognizes real intergenerational farm transfers and treats them accordingly.

In conclusion, I'd like to thank the committee for its time and reiterate that the CFA seeks your support for Bill C-208, as it addresses an undue tax disincentive to the continued vibrancy of family farming in Canada.

Thank you. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

I call this meeting to order officially. Welcome to meeting number 25 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of February 3, 2021, the committee is meeting to study Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021, therefore members are attending in person in the room, and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. I would like to remind members to turn off their mikes when they're not speaking.

With that, before we go to witnesses, Mr. Kelly, you have a quick point of order.

Opposition Motion—Measures to Support Canadian Workers

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Speaker, the pandemic has changed people's habits and left many workers and their families in uncertainty. In order to maintain many jobs and promote recovery for various sectors, such as tourism, the federal government should make workers the focus of the recovery.

The next federal budget should provide for better, more flexible support programs that will help maintain good-quality jobs. The federal government should implement sector-specific measures to support workers in highly impacted sectors, such as charities and businesses in the tourism, hospitality, accommodation, arts, entertainment and major events sectors, which experienced major financial losses as a result of the lockdown and public health measures.

For example, the lockdown took a major toll on the tourism industry. International tourists stayed at home, and domestic tourists chose to be cautious. Revenues for seasonal businesses and organizations in the tourism industry are at an all-time low.

With regard to the hotel industry, the lack of international tourists means that hotels throughout Quebec, including those in Quebec City and Montreal, are sitting practically vacant. This was a very challenging season for thousands of inns in welcoming villages across Quebec, such as those along the St. Lawrence River.

The socio-economic impacts on workers in Quebec's major economic sectors have been numerous, including job losses for many young people and students, jobs at small- and large-scale events, bars, restaurants and summer camps. Losing a job is tough. People and families sometimes have to relocate or change careers entirely. This causes stress, especially financial stress. It can even lead to depression. Companies can also lose expertise as a result, putting stress on managers and owners. The topic of bankruptcy is also unavoidable. The health crisis has not affected everyone equally. Some sectors have literally been wiped out, while others will take many months to recover. COVID-19 must not result in a bankruptcy pandemic. Individuals and small and medium-sized businesses that owe the government money because of the assistance they have received must be given time. They must be offered an interest-free deferral. It is also important to support all the local businesses being crushed by multinational e-commerce companies. Improved support programs are therefore needed.

For the past year, the government has been generous. However, its one-size-fits-all programs are costly and ill suited for those hit the hardest. Today, the programs are still plagued by problems with their design, accessibility and processing times.

Job losses and insecurity impact people and their families, our workers and business owners. To minimize job losses and eliminate inadequate programs as much as possible, we need support measures that are effective, targeted and flexible. They are essential for providing support to workers. We must act quickly, because many polls have shown a deterioration in quality of life since March 2020, which is cause for concern.

The future of our small businesses, which are increasingly burdened by debt and must face stiff competition from major chains and multinationals, is also cause for concern. We must support our businesses and organizations better, particularly by reviewing the terms of the assistance measures. For the sectors that have been hit hardest by the crisis and that will be among the last to reopen, the Bloc Québécois is demanding improved support programs, including lending supports for small and medium-sized businesses. The lending supports must be accessible within 30 days of the passage of the motion, to prevent a wave of bankruptcies and layoffs on the horizon.

We also have to consider subsidies and tax credits, without putting businesses further in debt. As they say, an elastic will only stretch so far. If we want to help companies hang onto their jobs and expertise, then subsidies and tax credits are essential. We need skilled employees for the recovery, and we will need intelligence, innovation and experience. Companies should not have to recruit new people, new talent. I am thinking of the tourism and cultural industries, which are currently losing talent, from managers to guides, because they are temporarily closed. The Canada emergency wage subsidy and the Canada emergency rent subsidy, especially for the sectors that will take some time to recover, are necessary to enable tourism and cultural businesses to recover. These programs must be extended until at least the next tourist season to give the industry time to recover. That is an example of the kind of flexibility I am talking about.

This ecosystem has been gutted over the past year, and we will have to invest in human resources to help it rebuild. Tourism companies, festivals and other large-scale events will have to reinvent themselves and rethink the services they provide in the regions of Quebec.

To help Quebec's tourism and cultural businesses get back on their feet, the federal government should gradually move away from its one-size-fits-all programs and focus on programs that are better targeted and more flexible. These types of programs are more effective and promote innovation. For example, for this year only, the federal government should allow for a special $200 tax credit, 80% of which would be refundable, to support cultural and community organizations with their recovery and help them get back on track as soon as possible. Another example would be implementing a generous tax credit to encourage experienced workers to keep working if they want to, instead of retiring.

Speaking of tourism, to go a bit further, what about the allure of the regions? Why not use tourism as a way to spur personal and regional development by and for young people who are looking to settle in the regions for the healthy lifestyle and great quality of life?

We need to ensure that young people, and those who are not so young, feel proud to live in the regions and contribute to the development of not only the land and its natural beauty, but also its expertise and innovative cultural and tourism projects. Let us allow the next generation to show us the regions of Quebec and Canada at their best.

In order for the next generation to be able to settle in the regions, we need to promote the development of certain sectors. I am thinking in particular of the next generation of farmers. Right now, farmers are better off selling their farms to strangers than passing them on to a family member. The Government of Quebec has once again led the way by changing its own tax rules to encourage the transfer of family farms. Let us put an immediate stop to this injustice. The federal government needs to amend the tax rules so that the intergenerational transfer of farms is at least as profitable as selling to strangers. Obviously, I am thinking about Bill C-208, which is currently being examined by the Standing Committee on Finance.

When it comes to agri-food, Quebec has known for a long time, since Confederation, that the federal government is hindering the development of Quebec's agricultural model, particularly today, when it is favouring other export sectors at the expense of Quebec agriculture.

In the agri-food sector, we have seen how fragile the globalized supply chains are. To ensure food security for our people, we must support our farmers and enable them to produce in a fair market that supports healthy products from local businesses that can again be handed down from one generation to the next.

Then there are processors and temporary foreign workers. The federal government must help farmers, processors and businesses continue to bring in temporary foreign workers. We must improve the temporary foreign worker programs to make them more flexible and more tailored to business conditions, without overlooking regional businesses. It takes over eight hours to drive to Abitibi—Témiscamingue, which makes things complicated for a farmer who wants to personally pick up the foreign worker from the airport.

I will conclude with a few words about support for land use and local development. Obviously, the major issue is access to high-speed Internet and the cell network. To support regional economic development, we want the federal government to transfer the necessary funds to Quebec immediately so all Quebeckers can connect to high-speed Internet. The delays are never-ending, and Canada has proven itself incapable of breaking down the biggest barriers to the competition that Quebec telecom companies large and small face to ensure accessible, affordable telecom service in Quebec. There are nine federal programs, each with its own idiosyncrasies. Doing business with the federal government is very complicated.

Quebec also needs the means to create a system that will help restore services to the regions. I am talking about airline service. However, Ottawa must not get in the way of financial support and regional connections Quebec has set up. I will come back to that. Air Canada cannot be subsidized forever. There are companies such as Propair in Abitibi—Témiscamingue that want to serve the regions.

In conclusion, the Bloc Québécois is in favour of the motion. The federal government has now gone nearly two years without presenting a proper budget. The last budget was presented in the spring of 2019, before the election and, of course, before the pandemic. We need action, and we need it now. A great many businesses, their workers and their families are watching. This has been a long wait. Support is needed quickly, so we must act quickly by adopting this motion.

[The Chair, Liberal, Wayne Easter]

I will call the meeting to order. We have quorum.

Welcome to meeting number 24 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2) and the committee's motion adopted on Thursday, November 19, 2020, the committee is meeting to study government spending, WE Charity and the Canada student service grant.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021; therefore, members are attending in person in the room and remotely using the Zoom application.

Proceedings will be made available via the House of Commons website, and the webcast will always show the person speaking rather than the entirety of the committee.

Before I welcome our witnesses, we have two quick pieces of business. One is a request for a project budget for Bill C-208, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation). That request is in the amount of $1,275, and I believe people received a copy of that.

It is moved by Mr. Falk.

(Motion agreed to)

The second is a request for a project budget relating to the COVID-19 spending and programs, and the amount requested for that study at the moment is $3,025. Do I have any movers on that one?

That is moved by Ms. Koutrakis.

(Motion agreed to)

Mr. Clerk, there is authorization for those two budgets.

With that, I see Mr. Fraser is here.

Do you want to do the sound check? Then we'll go to Mr. Dufresne.

[Julie Dzerowicz, Liberal, Davenport, ON]

Since you mentioned the surplus stripping, I'll ask my next question on that. My understanding is that your private member's bill would facilitate surplus stripping, using an individual's lifetime capital gains exemption without ensuring that a genuine intergenerational share transfer has occurred.

With Bill C-208 as proposed, after selling shares of the transferred corporation to a purchaser corporation owned by their child, could a parent immediately purchase the shares of the purchaser corporation from their child?

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Maguire.

I think the intent, the spirit, behind the bill is a good one. That's why I'm genuinely interested in learning more about consequences, but unintended consequences are something that I worry about here too.

In your view, does Bill C-208 perhaps open the door to tax avoidance practices? I'm thinking, for example, of it allowing an individual to avoid tax on the sale of shares to a sibling by selling those shares through a holding corporation. That's just one example that perhaps stands out here as a consequence if the bill went ahead.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Chair.

Thank you, Mr. Maguire.

I will say right at the beginning, Mr. Chair, that I quite like Mr. Kelly. I enjoy working with him as a colleague, but I think he's in a bit of a hurry. I for one want to understand the bill more, and I have some questions that stand out. If there are indeed issues of unfairness facing small businesses and family farms in particular—fishers as well—certainly I want to know more about them, specifically on this issue of intergenerational transfer.

Mr. Maguire, again, thank you for your work on this. It's not an easy thing to put forward a private member's bill. It sounds like—although you have been inspired, if I can put it that way, by Mr. Caron—you've done your work in this regard. I don't discount that.

I do have some questions. First of all, on the estimated forgone tax revenue if Bill C-208 passes, do you have that figure?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you very much. It's a pleasure to be here today to appear before the committee on Bill C-208.

This is a bill to help small businesses, but before I get into that, I just want to thank you as the chair and the committee for meeting today during a constituency week and for allowing us to bring this important bill forward, which many in several industries are supporting across the country. All parties, from what I understand, support this as well. The opposition and some of the members of the governing party voted for this at second reading. I'm very pleased to be able to present it today. I have some others to thank later on as well.

To start off today, this bill gives us an opportunity to work together to champion the causes of those whose time has come, I guess you could say. I want to thank as well Mr. Guy Caron from the NDP. He was formerly the interim leader of the NDP, and this was his bill when it was presented to the House previously. I was able to pick it up because of the draw that comes out of parliamentary procedure, and to bring it forward word for word, basically, to make sure there is support to help small businesses, farming businesses and the fishing industry with qualifying shares. I want to thank Mr. Caron particularly in regard to this.

The essence of the bill is pretty straightforward. Bill C-208 will allow small businesses, farm families and fishing corporations to have the same tax rate when selling their operation to a family member as they would have when selling to a third party. Currently, when a person sells their small business to a family member, the difference between the sale price and the original price is considered a dividend. If it is sold to a non-family member, that is considered a capital gain. That's a pretty straightforward fact. That capital gain is taxed at a lower rate and allows the seller to use the lifetime capital gains exemption. Therefore, it's completely unacceptable that it's more financially advantageous for a parent to sell their farm or small business to an absolute stranger than it is to sell it to their own family, to their own children, son, daughter or grandchildren.

I want to give two specific examples of how this legislation will help families transfer their operations when they decide to make that transition.

I can imagine a bakery that a couple has operated for 30 years. They're now ready to retire, and another company has reached out to indicate that it would like to purchase it from them. However, their daughter has indicated that she wants to take over the family business. In many cases, family members have worked in these businesses and helped them survive and flourish and continue as family businesses.

As is the case for a lot of small business owners and farmers, they couldn't afford to put large sums of money into their RRSPs or savings vehicles as any extra money was reinvested back into the business. This couple, then, will rely on the sale of the bakery to fund their retirement. They call up their accountant to start the conversation about different planning scenarios. The accountant tells them that if they sold their bakery to the other company rather than to their daughter, they would have an effective tax rate of 10%, using their lifetime capital gains exemption. However, the accountant also tells them that if they sold the bakery to their daughter, they would be obliged to repay their loan with personally taxed dollars.

This represents a significant penalty compared to what they would pay if they sold their bakery to the other company, as the effective tax rate would be quite a bit higher, significantly higher. With this information in hand, they have a family huddle and discuss the options. The couple is now seriously considering selling the business outside of the family as they do not want to burden their daughter with a tax obligation that will inhibit her ability to make a living and grow the business successfully as they've done over the years they have run it.

With regard to the shares of the sale of the bakery, in a perfect world this couple should be indifferent to whether they are sold to their daughter or to the other company. Their daughter would not be penalized for purchasing shares from her parents and should be able to fund the purchase with corporate funds as she would if she were to purchase the business from an unrelated party.

If this change were made, it would allow the next generation to become business owners and to keep the ownership of the business local or in the family.

With Bill C-208, we can fix this injustice once and for all. Right now, many of our entrepreneurs are struggling, particularly in this pandemic. It has been one of the most disruptive forces in our lifetimes. Across the country, no community is immune from its impact.

Those entrepreneurs who are listening from where they are run their own businesses. They understand the massive responsibility and stress that come from being the risk-takers, but the legislation we have before us today sends the message to those family-run businesses out there that no longer will it be more financially advantageous to transfer your business or your farm to a stranger rather than to your own child because of tax purposes.

The other example I want to give is that of a farmer who is set to retire in the next couple of years and is reviewing various succession options. The farmer wants his son to take over; however, he wants fair market value for his farm in order to fund his retirement. If a third party were to ask the farmer to purchase the shares of his farming company, the purchaser would have the ability to purchase the shares through the corporation.

Selling the farm to this third party would allow the farmer to use his farm capital gain exemption of $1 million on the sale, resulting in a 13.39% effective tax rate, but if a farmer sold his farm to his son, the sale would be recorded as a dividend, rather than a capital gain, on which the farmer would pay 47.4% in tax. That's 34% more tax, Mr. Chair. I think we can all agree that it is completely unfair for the tax rate to be significantly higher when the farmer sells his operation to his son rather than a third party—in many cases, a complete stranger, as I pointed out before.

Bill C-208 sends a message of hope to young farmers out there who want to carry on what their parents started. There's something special about being connected to the land and to reap what you sow, as there is any small business an attachment, not just in farming and fishing, Mr. Chair.

In Manitoba and other provinces, there are century farms, which celebrate farm families who maintain continuous production for over 100 years, with many of them now over 125 years old. I've attended many of those century farm celebrations, as I'm sure many of my rural colleagues have who are on the committee and in Parliament. You can tell in the faces of the family members how important that milestone is to them.

Farm families face unique pressures in succeeding their operations, including the increasing cost of land, the average age of farm operators and the capital requirements for those entering the industry. The passage of this bill will eliminate the unfair tax rates that make it difficult to keep the farm under family ownership.

Mr. Chair, in closing, I want to also say that I am asking the members of the committee today to consider the importance of making sure that we are able to help small businesses across the country, all those who have eligible shares, and to make sure that they can transfer these operations into the next family. It's not every business that will choose to do that, but it is quite a significant opportunity for families to invest in their own futures and to make sure, with pride, that their families can continue to build on what they have put so much of their heart and soul into over their lifetimes.

In closing, I want to say as well that I thank Mr. Caron and you for allowing this to go forward today, and also Mr. Waugh, from Saskatoon—Grasswood, who allowed me to do my second hour on second reading in early February so that we could get to this point with this bill in today's committee meeting. With that, I would urge my colleagues on the committee to look at allowing this bill to move forward and back into the House for third reading.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

I believe Mr. Maguire is here, and we probably should have a subcommittee meeting as soon as possible to try to sort out where we go. We have quite a few motions, and then Peter issued another one. It doesn't have the 48-hour notice but I think people have a copy of it. He must have watched W5 or The Fifth Estate this week.

Pursuant to the order of reference of Wednesday, February 3, 2021, the committee will now start its study on Bill C-208, an act to amend the Income Tax Act, transfer of small business or family farm or fishing corporation. We welcome as a witness here the sponsor of the bill, Larry Maguire, MP for Brandon-Souris.

Welcome, Mr. Maguire. We'll go to you first, and then we'll go to a round of questions.

Larry, the floor is yours. Welcome.

[The Chair, Liberal, Wayne Easter]

I call the meeting officially to order.

Welcome to meeting number 23 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of January 27, 2021, the committee is meeting to study Bill C-224, an act to amend an act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces. We will be meeting on Bill C-208 in this committee meeting as well. Larry Maguire will present his bill.

Today's meeting is taking place in a hybrid format, which we've all become used to, pursuant to the House order of January 25, 2021. Therefore, members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website.

We will not go through the rest of the formalities.

We will start with Mr. Gabriel Ste-Marie's bill, Bill C-224. We will go through clause-by-clause consideration. I hope people have the bill before them. It's not like we're in Parliament, where we can hand around fairly short bills.

Pursuant to Standing Order 75(1), consideration of the preamble will be postponed.

(On clause 1)

I will call for the vote on clause 1, which has four proposed subsections.

I expect you want a recorded division on this, Mr. Ste-Marie.

[The Chair, Liberal, Wayne Easter]

Next week is tied up with the law clerk and Bill C-208. The following week, there will probably be another session on Bill C-208. That's Larry Maguire's bill. We'll have to see what comes at us from Parliament after that.

Our intent is to keep going with witnesses on COVID-19. You can see the good ideas that are coming forward. We can be helpful to everyone in terms of providing that information up the line. That's the intent.

I'll ask the clerk to confirm, but we already have 40 or 50 witnesses on the lists from the parties. We'll have to sit down as a steering committee and set some priorities after we get through next week.

Thanks to all.

The meeting is adjourned.

[Daniel Kelly, President and Chief Executive Officer, Canadian Federation of Independent Business]

Thank you very much, Chair and members of the committee. It's great to be with you again.

I want to share with you some new data from CFIB—we just put some out this morning. Of course we also have a few recommendations for you.

A deck was sent around in English and French. You should have that, members of the committee. I wanted to walk you through that.

Businesses in Canada remain really shut down. On average across Canada, only 51% of businesses are fully open at this stage. The number is lowest in Ontario, while some provinces, particularly Atlantic Canada and some of the prairie provinces, are doing better than that.

On the staffing side, only about 40% of businesses are at normal levels of staffing, meaning 60% of them have fewer staff than is normal for them at this time of the year. Most concerning of all, only 25% of business have normal or better revenues than they usually do at this stage in the game.

Small businesses are deeply concerned about the economic repercussions of COVID. Of course, this started out as a health care emergency and quickly morphed into an economic emergency, but there are a great many worries on the part of small business owners, such as economic repercussions, consumer spending concerns even following COVID, the sluggish vaccine rollout, their business cash flow, debt and stress. These are some of the things small business owners are telling us.

I want to flag some brand new data that I mentioned we just put out today. One thing the committee should be very concerned about is the amount of COVID-related debt small businesses have incurred since the start of the pandemic. Right now, across Canada, it is $170,000 on average for a small firm in new COVID-related debt directly attributable to the pandemic. Bankers will tell you it's not that businesses have been rushing out and borrowing a whole bunch more money. It's typically unpaid bills that are the largest chunk of the debt. A lot of that is due to landlords, in part due to some of the failures of earlier rent relief programs. I agree with the previous speaker that the new rent support program is a much better version, but it's still not delivering in sufficient quantity to businesses that are being affected. That's $170,000 in debt, on average, across Canada.

Our estimate at CFIB, based on our member data, is that one in six businesses across Canada is at significant risk of closing. That means there could be 181,000 fewer small, independently owned and operated businesses across the country that go bankrupt or wind down permanently, directly as a result of COVID and the damage they sustained over the course of the emergency. That would represent 2.4 million Canadian private sector jobs being taken out at the same time.

Data from StatsCan will tell you that in fact business bankruptcies to date are actually lower than is normal. They too have been affected by the COVID emergency. Many firms are existing right now on government subsidies, and as those subsidies start to be taken out of the economy—and we all hope one day we can replace subsidies with sales—many business owners are worried they're not going to make it, especially, as I shared previously, due to the amount of debt they've gained over the course of the pandemic. That's one in six businesses, or 181,000, on top of the 60,000 Canadian businesses that have already gone bankrupt over the last little while. That means there could be a full wipeout of 20% of Canada's small and medium-sized businesses.

The government has created a number of very helpful programs, and I credit the finance committee and the government itself—with opposition parties, of course, contributing to this as well—for the creation of many of these programs. It was slow. It was incomplete. There remain hundreds and hundreds of different exemptions and rules that have made tens of thousands of business owners slip through the cracks of the program, but many have been helped. Sixty-five per cent of our members have used the CEBA bank account, which has now been topped up to $60,000 loans. Fifty-nine per cent of our members have used the wage subsidy—the CEWS program.

The Canada emergency response benefit—CERB—or the new one under EI has been used by entrepreneurs themselves. Twenty-eight per cent of business owners have used those programs. However, even now only 26% of small businesses are able to use the rent support program, because there remain a number of significant gaps.

We've put forward six major recommendations. We've presented these to Finance. Let me just run through them quickly.

We're asking the government to extend and expand COVID support until the entire economy can recover, including reopening Canada's borders. Really, the sign that government can start to scale back subsidies is when federal and provincial governments can stop telling Canadians to stay at home. Until we're at that point, we would not advise ratcheting back the subsidies that are provided to businesses to keep them alive, because so many businesses need that face-to-face interaction with a customer in order to make a living.

We're asking you—we're pleading with you—to put a moratorium on any new taxes and costs to small businesses. We just can't handle them. We're unhappy that CPP premiums went up at the beginning of this year, in the middle of this terrible time. We're asking you to delay further increases in CPP and the increases planned for the carbon tax—or at least to provide a full rebate to the businesses that are affected by it—and to freeze the liquor tax escalation.

We really think that forgiving more small business debt is a chunk of the solution here, and there are pathways in existing programs. One-third of CEBA is now forgivable if you repay the balance. Something similar to that could be adopted with the new HASCAP program, which we think has some potential.

A hiring incentive would be a good idea as we transition from a shut-down economy to a reopened one. Cutting red tape should be made a priority, as should holding off on any consumer stimulus. I'm really worried that the government may embark upon a big consumer stimulus measure. While that might be helpful to some, if we do that too early, businesses that rely on face-to-face transactions, which have been the ones that have been hardest hit, will not benefit from it, because of course that money will be going to the parts of the economy that have remained open.

As I close, I also just want to commend the finance committee on the great recommendations in its recent report. Many of the all-party recommendations, as well as some that were put forward by the parties, make a lot of sense.

One of the ones I want to highlight, which we love, is making good on the Liberal party promise to small business owners to eliminate credit card processing fees on sales taxes. That, we believe, would save small businesses $500,000 a year. It was a promise in the 2019 Liberal party platform, but we've seen no signs of that proceeding and we urge the committee to keep the pressure up.

We strongly support Bill C-208, which the Conservatives have put forward. That would allow for the same tax benefits for parents selling their farm or small business to a child or family member. That's a great move and would be welcomed by farmers and business people across the country. We have listed a few others there as well, but I know we're tight on time.

Thank you, again, committee. A lot of good work has been done, and I'm happy to take any questions at the appropriate time.

[The Chair, Liberal, Wayne Easter]

Okay, we are going to have to end it there. We have a hard stop at 6:00 tonight Ottawa time.

I think Julie raised a question raised on where and how many job losses outside of Quebec. Whether you can answer that or not, I'm not sure, but if you could send any information on that to the clerk, that would be helpful.

Usually when we talk to CRA, it isn't an exciting discussion as a rule, but as Julie and Michael said, this was a really interesting discussion this afternoon, and I want to thank all of you for outlining your points pretty directly. We had a very good discussion, so thank you very much to the witnesses for that.

To committee members, on Bill C-208, we haven't made a lot of decisions on how we want to handle that. We know that Mr. Maguire is coming before the committee.

Could I suggest, for the moment, that we try to arrange a three-hour meeting for witnesses on Mr. Maguire's bill? We could have two panels, an hour and a half each, and four witnesses on each of those panels. We could start with eight witnesses. That would be a start. It might be enough to complete it; I don't know.

In any event, if members could have their witnesses in as soon as possible from the various parties, that would be great. We'll start with eight, we'll try for a three-hour meeting and we might be able to get it. We'll see what happens.

If there's no disagreement on that point, all right, folks, the meeting is adjourned.

Again, thank you to the witnesses for the presentations today and a very interesting discussion.

Agriculture Day

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, today is Canada's Agriculture Day, when we show our appreciation to our resilient and hard-working farmers and farm families. I have heard first-hand from farmers in my riding how they have overcome immense adversity since the start of the pandemic, with processing delays and border restrictions affecting the movement of workers and products.

The government has the opportunity now to take action and reduce the burdens on our farmers by implementing rapid testing at the border, to reduce the isolation period for temporary foreign workers, thus allowing workers to start on time; by adopting Bill C-206, which would cut costs for farm families by exempting propane and natural gas from the carbon tax for farmers; and by adopting Bill C-208, in order to maintain the strong tradition of family farms in Ontario and Canada. Finally, the government must stand up for Enbridge's Line 5, as it is a crucial lifeline for our farmers, other industries and the environment. Replacing this pipeline would require 2,000 trucks or 800 rail cars daily to meet the current need.

On Canada's Agriculture Day, I urge the government to implement these tangible measures to support our farmers. For all they do for us, it is the least we can do for them.

[Raj Saini, Liberal, Kitchener Centre, ON]

Mr. Albas, as you can appreciate, M-34 was sent by the House, just like Bill C-206, I believe, or Bill C-208 was sent from the House. Those are two separate things. This is a Liberal Party motion, just like the other parties are putting in other motions, but the other two studies referred to are from the House, not from a particular political party.

Canada Labour Code

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Speaker, it is a pleasure to rise here today in support of the positive words and well-deserved comments made so far on Bill C-220. I congratulate my colleague from Edmonton Riverbend for his work on this and for garnering support. Hopefully, if we go by the optimism and tone tonight, we can get it to committee to get more feedback and work together on how we can support caregivers and people in their time of need.

I am proud to be one of the members to have seconded this bill. It was good to get bipartisan support for the idea it puts forth in the first hour of debate we had on this bill last fall.

We have had a pretty good week when it comes to votes on private members' bills. There was Bill C-208, a Conservative bill, on the transfer of family farms. It got good bipartisan support. It is a very good common-sense piece of legislation that is moving forward. There was also Bill C-204, which takes real action on environmental protections by banning the export of plastic waste. When we get back from the break week, if we have a vote on this, I hope we will have another Conservative private member's bill that is making good progress and helping people.

For those who are not as familiar with it, the bill before us deals with compassionate care leave. We have that in our country for up to to 28 weeks through the EI system to help those who need to provide care to loved ones in their final days. One of the challenges we have is as an NDP member said in the first hour of debate in noting that there is a bit of a rough edge when it comes to the end of compassionate care leave. When caregivers lose their loved ones, they are expected to go back to work quickly. We need to address that. This bill certainly makes progress in doing that.

I want to give context and clarification to my constituents in Stormont—Dundas—South Glengarry who are watching this and Canadians who are interested in supporting this bill.

Due to a technicality in the private members' bills process, my colleague from Edmonton Riverbend cannot propose the spending of dollars without a royal recommendation and technical process. We cannot force the government to spend dollars through the regular EI program; that would have to be proposed by the government. I think getting this bill further, making that progress and passing this bill would build momentum to encourage the government to act on this.

What we are able to do as a Parliament through the private members' bills process is to amend the Canada Labour Code covering federally regulated workplaces, such as air transportation, banks, radio and television communications, railways, Crown corporations like Canada Post, and telecommunications. I think of our family trucking business, which would fall under this because of our cross-country work. Many trucking businesses would fall under this. Therefore, through this private member's bill we are able to address it in the Canada Labour Code.

The bill addresses a gap in compassionate care leave with respect to bereavement. The statistics show that about one in every four workers is a caregiver to someone in need. Currently, we have the EI process that has seen a lot of positive modernizations by governments. I am proud of our Conservative record when we were in government of expanding EI for maternity leave, looking at compassionate care leave, and making enhancements over the years. This is something that can build on that next layer, that next level of support that we need to do.

Here is why we need to do this. There are about three key points in this.

First, if the loved ones of family caregivers pass away, the family have to go back to work within a matter of a couple of days. We are lacking in that respect in our compassionate care policy in this country.

Second, there are a lot of things that family members need to attend to from a technical perspective, such as a funeral, insurance benefits and estate situations. In my constituency office we work with a lot of families on the CPP death benefit or other paperwork and things that need to be returned or closed on a file.

The third point is very relevant, but we have not talked about it as much during this whole debate, and that is the mental health of those caregivers as part of the bereavement process. It certainly has been tough during COVID-19, but that has always been the case when people have to return back to work quite quickly. I was proud to see many colleagues from all parties celebrate the amazing progress we have made with the Bell Let's Talk Day in raising awareness and reducing the stigma of mental health challenges.

This bill is a perfect example that we can go back to our constituents with and say that we are actually making things better, that we are doing things here in Ottawa that can help people in their time of need.

My colleague's bill, which I am proud to support, does that. It looks at where we are able to make these changes so that we can give up to three weeks of additional compassionate care leave in federally regulated workplaces to an employee to deal with grieving and bereavement after their loved one's life has ended.

What I like about this is our effort on this side of the aisle to show pragmatism and talk about a sliding scale, where someone could get up to three weeks of compassionate leave, depending on how much leave they had taken before their loved one's passing. I think it is pragmatic and reasonable, and it is exactly what we need to do to make a step in the right direction. If we can get this is in place we could also encourage the government and Canadians to support enhancements to EI in how we do this.

I want to note the overwhelming support from stakeholders who deal with caregivers, bereavement and illness across this country. There is a great cross-section of people on board in support of this bill: the Canadian Grief Alliance, the Canadian Cancer Society, the MS Society of Canada, the Heart and Stroke Foundation—

Opposition Motion—Special Committee on Canada-United States Economic Relationship

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, it is an honour to be able to speak to the opposition day motion put forward today. I want to thank my colleague, the member for Calgary Centre, for his excellent presentation and for sharing his time with me today.

When we look at the nations Canada trades with, we see there is nothing more important than our relationship with the United States. As with all relationships, though, we cannot take this one for granted. As a farm leader, an MLA and now a member of Parliament, I have had a front row seat to some of the ups and downs of the politics of that trade relationship.

Throughout the years, I have attended many Midwestern legislative conferences in the U.S., as well as some in Manitoba when I was there, which provide an opportunity for elected Canadian representatives across the Prairies to meet with their American counterparts from the Great Plains and Midwest industrial states.

At those conferences, there was an opportunity to meet countless people, and I quickly learned that they are facing many of the same challenges we are. I mentioned the Midwestern legislative forums. I attended them in Michigan; Kansas; Des Moines, Iowa; and one in the Pacific Northwest, out in Whitefish, Montana, as well.

At these conferences, we learned a lot about the interchange of the relationship that we have with our American counterparts. As I said earlier, many of the issues are very common, particularly on the trade side. When the U.S. put its first farm bill in place in 1986, I was in Kansas.

Whether it is logistical or regulatory barriers, or just plain old politics, we get a better understanding of what is at the root of some of the trade disputes that still linger to this day. We do not have to look far for those examples, such as with softwood lumber or the country-of-origin labelling that we had for beef.

Trade disruptions over the years have negatively impacted numerous Canadian exports. More recently, NAFTA was renegotiated, and we witnessed the former U.S. administration impose a 25% tariff on imports of Canadian steel, and a 10% tariff on imports of Canadian aluminum.

Regardless of who occupies the White House or controls Congress, we must always be cognizant that with the stroke of a pen many of our industries and people's jobs could be severely impacted. I applaud our Leader of the Opposition for taking the proactive step of putting forward this motion to create this new special committee.

When I was first elected to the House of Commons in 2013, the now Leader of the Opposition was the parliamentary secretary to the Minister of International Trade. At that time, the Canada-Europe trade agreement was still being negotiated. The member for Durham visited my constituency to meet with agricultural and business leaders about this new opportunity, and what an opportunity it was.

Trade is at the heart of our region's economy. Western Manitoba's exports are based primarily on agriculture, livestock and natural resources, alongside manufacturers, such as Behlen Industries, which are major employers in our region. To put a number on it, the latest data from the Government of Manitoba on agricultural exports stated that the American domestic market is worth over $2.6 billion per year for the province of Manitoba.

Let us never forget, there are almost as many people living in the National Capital Region as in the entire province of Manitoba. By far, Americans are Manitoba's largest foreign customer, with the second-largest being Japan. Trade with Japan amounts to roughly $896 million a year.

Manitoba's canola exports alone to the United States are worth over half a billion dollars, followed by processed potatoes, oilseed cakes, hogs and cattle. The economic prosperity of almost every community in my region is directly tied to the success of exporting many of these agricultural products.

Due to the importance of this trade relationship, coupled with the new U.S. administration, it is imperative we have an ability to work on this issue, in conjunction with whatever our committees decide to study.

As with many issues, there is a lot of crossover between the various parliamentary committees and stakeholders. The agriculture, industry, natural resources and transport sectors want to be heard and will want to know the government's strategy moving forward.

Just this week in Congress, Tom Vilsack, who was nominated by President Biden to be his agricultural secretary, received a unanimous vote from the Senate agriculture committee and is expected to be confirmed by the overall Senate in the days ahead. Secretary Vilsack even joked that it felt like Groundhog Day during his Senate confirmation hearing, as he was President Obama's agriculture secretary during his entire eight years in office.

The United States and Canada enjoy the world's largest bilateral agricultural trade relationship, with almost 120 million dollars' worth of food and farm products crossing the border every day. In the last couple of years, the United States Department of Agriculture has created an undersecretary of trade position within the Department of Agriculture itself to work solely on trade policies directly related to agriculture. I say this just to emphasize the importance of that trade arrangement.

As is to be expected, the U.S. is on the offence. It is looking to expand its market opportunities not only here in Canada but also around the world. Americans might be our friends and allies, but I have always stated they are also our competition.

In the spirit of collaboration, I truly hope we can pass this motion and immediately get this new committee up and running, because I think the Liberal government could benefit from the insights and experience of many of our Conservative caucus members. While I am not lamenting this, there is not a Liberal MP from Winnipeg to the greater Vancouver area, and between those two points there are thousands of farmers and agri-food industries. As a member who represents a lot of farmers, I have grave concerns about the government's track record on agriculture.

As an example, we saw how long it took the government to respond to the Chinese government blocking Canadian canola shipments. In fact, we had to call emergency committee meetings to even discuss the issue. I remember the procedural manoeuvres the government took to ensure we could not even request an emergency debate in the House. My point is not to rehash these issues, but to learn from them. We must be proactive on potential trade disruptions. I believe this new special committee will provide an appropriate avenue to do so.

We know there are going to be issues in the coming months relating to pipelines, as has been mentioned by many of my colleagues today, and the buy America procurement rules. Our Canadian economy cannot afford any more trade disruptions. We need to get all our sectors back up and running, and we cannot afford to be caught asleep at the wheel. Our constituents are counting on us to get this right.

As a believer in free trade and free markets, I want to create the right conditions for entrepreneurs, business people and farmers to flourish. It is part of the reason I brought forward Bill C-208 yesterday in the House. I thank my colleagues for their support on that. Canada must be a place where no ambition is too big and no federal government will stand in the way of people working hard to get ahead.

A dynamic economy where businesses are forming and hiring is what is needed. A free market economy is a social institution that harnesses human creativity and ingenuity for the benefit of everyone. There is not enough money in all the government coffers in Ottawa to replicate what entrepreneurs and risk-takers do every single day. Let us work together to make sure our farmers, businesses and manufacturers have a stable and predictable American market they can sell into.

(The sitting of the House was suspended at 5:39 p.m.)

(The House resumed at 5:55 p.m.)

The House resumed from February 1 consideration of the motion that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the second time and referred to a committee.

Income Tax Act

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, I ask for a recorded vote on my private member's bill, Bill C-208.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, it is my privilege to be here in the House today. As I said on November 25, “it truly is a humbling moment to stand in this chamber and put one's name to legislation and ask one's colleagues to support it.” That is an extremely important part of private members' bills and it has been recognized by my Liberal colleague today, and I thank him for his comments as well. I will refer to that in a moment.

I want to thank my colleagues in the House for supporting this bill on small businesses and the idea making it fairer for people to sell their business to their own family members directly, as opposed to selling it to a complete stranger or a third party that they may not have any connection with.

The bill and the bipartisan support I have seen in the House are tremendously important. Here I want to congratulate my former colleague, the interim leader of the NDP, Mr. Guy Caron, for bringing this bill forward to start with and for the support of the Bloc, which a couple of speakers have pointed out here today, as well as in the first hour of the second reading of the bill on November 25.

This legislation impacts every corner of Canada. It impacts every one of us in the House, all 338 of us. We all have small businesses in our ridings and I want to refer to the words “small businesses”, as some of my colleagues who have spoken today have addressed the fact that this is for small businesses, not big businesses. There is a huge difference that I want to point out to my colleagues in the House, and they know that.

The bill refers to family operations in fishing, farming and other small businesses in Canada that have been built on the pride of ownership and the hard work that their families have done throughout Canada, and it in no way is trying to provide any kind of loopholes. In fact, the bill is very clear and has gone to great lengths, which Mr. Caron and I have studied, to make sure that its wording will not allow those types of situations. As I said, it would be pride of ownership for people to be able to build a small business into a larger business, but once they do that, the things we are talking about in this bill are not relevant to those businesses.

The outcome of bill will have very little impact on the government, as my colleagues have pointed out today. It will have very little financial impact on the federal government, but a huge impact on the currency that is available through small businesses to every region of this country, particularly during this pandemic. All small businesses are struggling. It is not their fault, but they are struggling right now and the bill would go a long way toward helping all of them alleviate some of the stress and strain of being able to hand their business directly down to their own son, daughter, granddaughter or grandson. That is whom this applies to. It is very narrow in its scope in that way.

It is inherently unfair for small business persons to pay disproportionately higher taxes if they sell their operation to their own children than if they did to a complete and absolute stranger. We have referred to the difference between selling to their family as a dividend, or to a stranger as a capital gains exemption, which amounts to a difference of hundreds of thousands of dollars to small businesses.

In making this change, it will allow the next generation to become business owners and to be able to carry on those businesses and to keep jobs in their local areas. Moreover, the funds the younger generation provide to the older generation are generally used for retirement, because a lot of funds that are earned during the small business development are going into the business to keep it afloat and expanding so that they can have that pride of ownership for their families in the future.

I want to close by asking all members to support Bill C-208 to encourage small business development in our country.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Speaker, today's debate is about Bill C-208, an act to amend the Income Tax Act with respect to the transfer of small business or family farm or fishing corporation. This is a very important issue, and I am concerned about the government's ongoing failure to take action on it. This problem comes back year after year, and it has still not been resolved.

In Quebec, one in three SMEs is a buy-out. That means that one-third of Quebec's small businesses were existing businesses bought by someone else. That is a big deal, yet the government penalizes people who want to transfer their business to a family member. In 2018, it was estimated that 30,000 to 60,000 Quebec businesses would not find a buyer in the years to come, yet the government is actively penalizing people who want to buy out the family business. It would rather those businesses disappear or be sold to strangers. That is just great.

In the agricultural sector, Quebec is losing one farm a day. We know this, we talk about it and we speak out against it. The fishing sector is no different. Fifty years ago, fisheries were flourishing in the regions, but today, fishing villages are disappearing one after the other. This is sad, but it is partly due to inaction by this government and, obviously, governments before it.

During my previous term, from 2015 to 2019, I introduced Bill C-275 to address this issue by allowing family businesses to be transferred to members of the same family. I was made aware of this issue by some of my constituents, including Mr. Tremblay, from Armoires Tremblay in Saint-Mathieu-de-Belœil. Mr. Tremblay was in his 30s and his father owned a small, family-owned cabinetmaking business. His father wanted to retire and was waiting to sell his business to his children, in the hopes that one day the act would be amended and allow him to do so without being penalized.

Right now, the government assumes that people who sell their business to their children are fraudsters. It thinks that they will not set the price at fair market value, so it decided to tax the entire profit generated by the transaction. The problem is that a small company can quickly grow to be worth one, two or three million dollars, even if it does not employ a million people, but rather three, four, five, six or 20.

We cannot ask young people who want to take over from their parents to withdraw two million dollars from their bank account. Very few people in their twenties and thirties can withdraw one million dollars from their bank account. That is the problem. The government thinks that people who sell their business to their children are fraudsters because they will give them a better price.

That means that they will not be able to sell unless they sell to strangers. Businesses will have to close because there will be no one to take the reins. It is really frustrating to see how the government refuses to recognize and resolve this problem year after year.

Not so long ago, I was discussing this with an old school friend, Marc-André Daigneault. His parents have a company called Revêtement RJ. The same thing happened to him. His parents wanted to wait to sell their company in the hope that the rules would one day change. He is saddened by the fact that young people cannot take over their parents’ companies because the government does not want to modernize and change the legislation.

At the time, I had tabled a bill that was similar to Bill C-208. The NDP found the bill so appealing that it decided to copy it, and the former NDP member for Rimouski, Guy Caron, tabled it himself. I would not want to take all the credit for the bill, because this is something the Bloc Québécois has been fighting for for 15 years. As early as 2005, a Bloc Québécois member introduced a bill seeking to address the problem of passing down family businesses from one generation to the next.

I am an accountant by training. In my university years, when I learned the tax rules and understood that people could not pass a business down to their children—well, it is possible but very disadvantageous from a tax perspective—I was really frustrated and could not get over it. All of my classmates and professors agreed with me. If we visited a tax school, an accounting office, a lawyer’s office or any university and asked an accounting or tax professor what they thought of this, they would tell us that it makes absolutely no sense. Unfortunately, the government is digging in its heels and preventing family businesses from being passed down to the next generation.

In June 2015, however, the Liberal member for Bourassa introduced a bill concerning the passing down of family businesses. He said that it was his first bill and that it was extremely important. That was in June 2015. When the Liberals came to power in October 2015, just a few months later, they were suddenly against it. It seems that the Liberals promise all sorts of things when they are in the opposition but do not follow through when they get to power .

As my colleague from Rivière-du-Loup pointed out earlier, this is not a partisan approach. My Conservative colleague said he thinks transferring family businesses is important. I mentioned my NDP colleague earlier. I do not know the Green Party's position, but I know a lot of Liberals are not happy with their party's position and agree that it is ridiculous, so much so that the government now finds itself in an awkward position.

We have seen several economic updates and budgets since 2015. The government said it would tackle the problem and try to fix it. Now here we are in 2021, and it is still not fixed. The Bloc has been fighting for this since 2005. This is unacceptable.

There are solutions, however. The government is going to tell us that we would be opening up loopholes, but our tax law is full of loopholes. People use tax havens, and the government does not go after them, but it prevents the transfer of family businesses. How does that make any sense?

The government says that it is impossible, but we have tabled a number of bills to resolve the problem. In 2016, Quebec's Minister of Finance announced a solution to the problem in his budget. Since January 1, 2017, four years ago, Quebeckers have been able to pass down their business to their children without a tax penalty, but the federal government is unable to do the same. We do not know why, but it cannot do it. I think that the problem is stubbornness more than anything else.

Let us examine this question more in depth. The capital gains deduction in 2021 is $892,000. That means that you can sell a business you spent your entire life building without paying income tax on the first $892,000. It is similar to the sale of a tax-exempt home.

We also know that people with small businesses often do not have an RRSP. They pay themselves dividends or a small salary, and they have just as much as they need to get by. I am thinking about the neighbourhood mechanic or your local farmer. Often, they do not have any money put aside because they put everything back into the business. When they come to retire, they are very happy to have the $892,000, because retirement is expensive, and they need enough money to last the rest of their lives.

Unfortunately, the government does not allow them this $892,000 if they sell their business to their children. Selling their business to a stranger gets them an $892,000 deduction, but they have to pay tax on that amount if they sell to their children. Even worse, the tax payable on capital gains is normally half the amount. If they sell the business to their children, they have to pay income tax on the profit as if it were ordinary income or a dividend.

It boggles the mind that the government insists on voting against the bill when it is well aware of the problem, when we have been telling it for years, and when a number of bills have been tabled to resolve the situation. I try to understand, but I cannot. That is why I am very pleased that we have a minority government today and that, with the three opposition parties, we will be able to pass the bill.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I thank the Bloc member for raising that point of order.

Bill C-208 also proposes amendments to section 55 of the act, which generally applies to corporations that seek to inappropriately reduce capital gains by paying excessive tax-free dividends between corporations, which the act considers to be a capital gain.

Two exemptions to these anti-avoidance rules authorize businesses that are restructuring to allow company shareholders to split company shares between them while deferring taxes. The first exemption applies to the restructuring of related corporations, and the second applies to all corporate restructurings. Bill C-208 would broaden the first exemption so that it applies to brothers and sisters, despite a standing long-term tax policy that considers brothers and sisters to have separate and independent economic interests for these purposes. Any changes to this exemption could risk eroding the tax base.

Spouses, as well as parents and their children, are already eligible for this exemption because it is presumed they have shared economic interests. Although brothers and sisters cannot restructure their participation in a corporation on a tax-deferred basis under the related corporation's exemption, they can do it under the second exemption of section 55, which applies to all corporate restructurings. This is called the butterfly exemption, and there are fewer tax avoidance opportunities under it.

If the proposed amendments of section 55 included in Bill C-208 were passed, siblings could undertake business restructurings in which otherwise taxable capital gains realized between corporations would be converted into tax-free intercorporate dividends. This would create new opportunities for tax avoidance.

In conclusion, these are important considerations to take into account when reviewing the merits of Bill C-208. Our government remains committed to working with family businesses, including farming and fishing businesses, to make it more efficient, or less difficult, to hand down their businesses to the next generation. However, we must exercise caution to not create loopholes and opportunities for the wealthy to use private corporations for tax avoidance purposes. This would dilute our base protection of anti-avoidance tax rules. Moreover, this would create a tax system that caters to the wealthy at the expense of the middle class.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I thank the member for Brandon—Souris for bringing forward this bill. I know that private members' business can generate some good bills from throughout the House. A lot of people do not fully appreciate the amount of work that goes into private members' business, which one only knows if one has gone down that road. Just for taking the time to go through the process to bring this piece of legislation forward, and all the work that went into it, the member deserve a lot of credit.

I am pleased to take part in the debate today over this private member's bill, Bill C-208, which aims to facilitate the transfer of family businesses between family members. This is an admirable goal. Indeed, our government recognizes this important issue, as evidenced by the mandate given by the Prime Minister to the Minister of Finance and the Minister of Agriculture and Agri-Food to work together on tax measures to facilitate the intergenerational transfer of farms.

Ensuring the sustainability of small businesses, family farms and fishing corporations is essential to our economy and to the communities these businesses serve. This has been underscored by their crucial role in supporting families and communities as we continue to fight against COVID-19.

Our government understands that this is a fact. From the onset of the pandemic, through Canada's COVID-19 economic response plan, we have introduced a range of supports for small business owners to help bridge them to the other side. Simply put, we have their backs, and this extends to helping family businesses thrive for generations to come.

Encouraging the sale of businesses to family members often means those businesses will remain in and continue to benefit their communities, as well as their families, who have fought hard, sacrificed and, through pure determination and entrepreneurial spirit, succeeded. It is with this spirit in mind that Bill C-208 is to bear full and careful consideration.

Bill C-208 seeks to amend two of the Income Tax Act's most important and complex anti-avoidance rules. These rules deal with intercorporate dividends, share sales and circumstances in which the lifetime capital gains exemption is claimed. Any relieving changes to these sections of the act must be done cautiously and follow rigorous study and debate to avoid the unintentional creation of loopholes that would disproportionately benefit the wealthy, instead of protecting the middle class and those who are struggling to join it.

Section 84.1 of the act, in particular, is in place to apply anti-avoidance rules when, as appropriate, an individual sells shares of one corporation to another corporation that is linked to the individual, such as one of a family member. When the individual sells shares of a Canadian corporation to a linked corporation, section 84.1 of the act deems, in certain circumstances, that the individual has received a taxable dividend from the linked corporation rather than the capital gain.

This prevents the individual from realizing the proceeds from the sale on the tax-free basis using the lifetime capital gains exemption. This rule is meant to ensure that taxpayers cannot use linked corporations to, in effect, remove earnings from their corporations using a contract sale. Without this rule, such sales between related parties could be used to convert what should be dividends of an individual shareholder into capital gains that are tax-free under the lifetime capital gains exemption.

Bill C-208 proposes narrowing the scope of section 84.1 by removing the sale of certain shares of small businesses, family farms or fishing corporations from its application when being sold by an individual to another corporation that is owned by their adult child or grandchild. This change would allow the owner-operator of a family business to convert the dividends of the corporation into tax-free capital gains.

In order to better illustrate how this would work, I will use an example. Let us say Darryl and Emily own a potato farm in P.E.I., which has grown to be a major regional supplier. After decades of hard work, they are now planning their retirement and want to pass down their business to their two adult children, both of whom already own successful small businesses in the community.

By applying the proposed amendments in Bill C-208, Darryl and Emily would sell non-voting preferred shares from their farm corporation to the two corporations controlled by their children. In doing this, they could claim tax-free treatment of the resulting capital gain from the sale under the lifetime capital gains exemption in a manner that allows the sale to be financed by the sold corporation's own assets without relinquishing control of the farm corporation.

Darryl and Emily could then use this planning to convert their annual dividend income into tax-free capital gains as often as they want, up to an amount equal to their lifetime capital gains limit. In this case, each parent could reduce his or her income tax by up to about $45,000 for each $100,000 of business profits distributed.

It is important to note that there is currently nothing in the act to stop a parent from selling their shares of their family business directly to their child or grandchild on a tax-free basis by using the lifetime capital gains exemption, which currently shelters up to $1 million in capital gains on qualified farm and fishing properties.

The issues sought to be addressed by Bill C-208 arise only in multi-tier corporate structures in which one corporation owns a second corporation. Adopting the proposed changes to section 84.1 could open the door to new tax avoidance opportunities. This would unfairly benefit wealthy individuals instead of the middle class.

Bill C-208 also proposes amendments to section 55 of the act, which generally applies to corporations that are seeking to inappropriately reduce their capital gains by paying excessive tax-free dividends between corporations, which the act considers to be a capital gain.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am honoured to rise today in support of Bill C-208 introduced by my hon. colleague, the member for Brandon—Souris, to amend the Income Tax Act to facilitate the transfer of small businesses or family farms or fishing corporations.

We already knew how important this issue was when this bill was introduced for first reading in February 2020. Who would have thought that, barely a month later, COVID-19 would come along and drastically change the landscape for Canada's SMEs?

As an entrepreneur and representative of a region that consistently ranks as one of the most entrepreneurial areas in the country, I was very sad to see the latest survey that the Canadian Federation of Independent Business, or CFIB, released last week, warning that 181,000 small business owners in Canada were considering closing their businesses. That means one in five businesses could close down, despite all the programs and billions of dollars spent by different levels of government and the support services we have provided in our respective ridings.

This is a frightening prospect, since 2.4 milion jobs are at risk if the pandemic continues, which is why I want to reiterate how important it is that the government do whatever it takes to fix the vaccine supply problem. We cannot sit back and wait until 2022. After all, we are barely into 2021.

Workers in the tourism and cultural sector are very much on my mind. Last year was devastating for them. The federal government really needs to get creative with its vaccine strategy, and it needs to do it fast so we can at least hope for some degree of recovery for the sector this summer.

September is too late, and 2022 is even worse. Until very recently, small and medium-sized businesses were the backbone of our economy. They created more than 77% of all new jobs between 2002 and 2012. As a Conservative, I am very proud of the Harper government for creating an environment that helped SMEs grow by reducing the corporate tax rate from 22% to 15%, lowering the small business tax rate to 11%, and increasing the income limit for applying this tax rate from $300,000 to $500,000.

As a business owner who created nearly 30 printing and communications jobs in my region, I understand the importance of ensuring our tax system encourages entrepreneurship.

It is important to understand what motivates entrepreneurs to risk all of their savings and their financial security to set up or buy a new business. People go into business for a variety of reasons. Some are motivated by their passion, while others see a service gap in their community that needs to be filled. However, most people go into business to provide for their family, with the hope that, one day, their children will be able to take over the business and build a better future.

In my case, I intend to one day transfer my family business to my daughter, of whom I am obviously very proud. However, I was very surprised to learn that, under the existing Income Tax Act of Canada, it would be better for me to sell my business to a stranger than to a member of my own family. When a business is sold to a family member, the difference between the sale price and the original price of the business is considered a dividend and is taxable at 100%. However, if the sale is between two strangers, the difference is considered a capital gain, only half of which is taxed. What is more, in Canada, the lifetime capital gains exemption that normally applies to small and medium-sized businesses does not apply when the business is sold to a family member.

What message are we sending? Are we trying to discourage people from going to business? I am not the only one asking these questions. According to a 2012 CFIB study, approximately 310,000 business owners, or around 30%, planned to sell or transfer their business within five years. That figure jumped to around 550,000 within 10 years. The figure may have changed during the COVID-19 crisis, which makes passing Bill C-208 all the more urgent for the many family businesses whose future is at stake. It is already bad enough that so many businesses plan to hand their keys over to creditors during this economic crisis.

We must not allow the unfairness in the Income Tax Act to force so many small businesses to hand their keys over to the government. According to the Canadian Federation of Agriculture, “Over $50 billion in farm assets are set to change hands over the next 10 years”. That does not even include the more than 8,000 family farms that have already folded in the past 10 years. Just half of them had a succession plan. As the population ages, three in four farmers plan to retire in the next decade. We need to act quickly to fix this anomaly in the Income Tax Act to prepare for the demographic reality we are facing, in the agricultural sector especially.

That is why I support Bill C-208, introduced by my colleague from Brandon—Souris, and I urge the Liberals to do the same. I remind my colleagues that during the 42nd Parliament, we debated a similar bill that had been introduced by Guy Caron, the former member of Parliament for a riding next to mine. This is a unifying bill. This is not a left or right issue; it unites us all.

I would like to remind members that Bill C-274 received the support of the Conservative Party, the Bloc Québécois and the NDP, but was defeated by the Liberals, who had a majority at the time, because they heeded the advice of public servants rather than that of the people who elected them. Many organizations across Quebec support the bill. The Association des marchands dépanneurs et épiciers du Québec has spoken out against the current situation, and the Union des producteurs agricoles and the Board of Trade of Metropolitan Montreal both indicated that they supported the bill.

This issue was also brought to my attention during the last campaign, in 2019, when I met with UPA producers in Cap-Saint-Ignace, which is in my riding. Last Friday, I received an email from Andre Harpe of Grain Growers of Canada asking us to support Bill C-208.

I want to point out that the agriculture sector is following the debate very closely today. As the saying goes, better late than never. If the Liberal Party really wants to back SMEs, it must support this bill and pass it quickly because Bill C-208 will ensure that all these family businesses will continue to operate and remain intact by facilitating their intergenerational transfer. If this does not happen, a Conservative government will have no problem ensuring that it does.

I would add that with the speeches my colleagues made ahead of me, I think it is clear that the Liberals have no choice but to move forward and support this bill. In any event, they are in a minority. We will move forward with this bill. Whatever it may cost to implement it, not doing so would cost even more, because the value and pride that comes from handing down a family business is priceless. Considering that for the most part, all Canadian businesses started as family businesses, that they represent 90% of the Canadian economy, and that they are the backbone of Canadian entrepreneurship and businesses with fewer than 10 employees, it is essential that people be able to transfer these businesses to members of their own family without being penalized.

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

Mr. Speaker, many in this country are away from their loved ones, so before I get started, I note that today is my oldest daughter's 21st birthday. She is on the other side of the country, but I wish Maddie a happy 21st birthday and give her lots of love from everyone here at home.

It is always an honour to rise on behalf of the federal NDP to fight for small business. We know that small business owners are the job creators. Right now they are are creating 80% of all new jobs in our country. Bill C-208 is very important for supporting small businesses and local communities and for stopping the economic leakages from small communities in our country. These leakages often end up in the hands of large corporations because of flawed and broken tax rules that create a benefit for selling a business to those at arm's length versus a family member.

I want to thank the member for Brandon—Souris for reintroducing the bill, which shows that there is non-partisanship when it comes to supporting it. As members are well aware, the bill was first tabled as Bill C-274 by the former NDP finance critic and former member from Rimouski, Guy Caron. He fought hard, as the New Democrats continue to do, for small business.

I want to talk about what Bill C-208 would mean for small communities. We know that owners of small businesses, such as family farms and fishing businesses, as in the communities around where I live in coastal Canada, are often selling their businesses to family members. Specifically, the bill would give business owners the same rights they would normally get if they were selling to someone at arm's length. This is important, because nobody should be penalized for selling a family business to a family member, but it is happening now with the current taxation system. The bill is very important to us, and we are excited to be speaking in support of it given what it would mean to rural communities.

I cited the importance of small business for job creation. If people see a barrier to selling to someone at arm's length and will pay more tax, they will do everything they can to pay less tax. With the current structure, for example, if a person sold a family business worth $1 million to a family member, they would end up paying a dividend tax rate of about $350,000. However, if a person were to sell that same million-dollar business to a stranger, someone at arm's-length, they would end up saving $306,000 of the tax they would have paid otherwise. It makes absolutely no sense.

We want to encourage people to keep businesses in the hands of family members and encourage intergenerational business ownership, because we know that it keeps money and profits in our communities. For example, in fishing, if a person were to sell a family fishing operation to someone in their family, they would keep the quota and the jobs in the family. However, if a family member had to pay more tax, they would be more likely to sell to an international company or large conglomerate, which would hoard fishing licences and then lease them out to fishers. The same applies to farmers. Profits then leave the community at the end of the day, which is a huge economic leakage. The money is leaving the community and leaving our country in many cases, and this needs to stop.

Mr. Caron's bill tabled in the last Parliament would have supported small businesses, farmers and fishers, but it was defeated by a margin of only 12 votes. It was voted on after the government misled Parliament. The government cited that the fiscal losses would be up to $1.2 billion, but the PBO put the fiscal revenue shortfall between $126 million and $249 million. That is quite a gap. The Liberal government could have stated what it would have cost Canadians taxpayers to do the right thing to help support the sale of intergenerational businesses by not making them pay more, but instead it said the loss would be an astronomical amount of money. In fact, the PBO's numbers were somewhere between 10% and 18% of what the government had initially cited, which is a big gap.

The cost of the economic leakage and its impact on small communities across our country, and on family members, is worth the price of what we are going to lose in the long run, as we see those profits leave our communities.

We are heading into a huge period of succession in our country. A lot of small business owners belong to an aging demographic. People want to sell their businesses to their family members and keep the ownership in the community, which I assume we want to encourage. We expect over $50 billion in farm assets alone to change hands over the next 10 years, so we are heading into a huge period of succession. For farming alone it is critical that we fix this now, because we have lost 8,000 family farms in the last decade. We need to do everything we can to curb that trend because it is obviously not working for Canadians. Only half of those small business owners actually have a succession plan, while 76% of them are planning to retire over the next decade.

That is important for a lot of people who have developed and built businesses in their families. I had a business for many years. When I started it, I was not informed that if I were to sell my business to one of my three children I would be penalized with a heavy tax bill. If I sold it to someone at arm's length, I would not have incurred that same tax. It makes absolutely no sense, but most Canadians do not know that this is the current situation.

This is something we need to remedy. I hope that the government will talk about the real numbers that the PBO shared. We saw some Liberal members support the opposition in the last Parliament, so I am hoping those Liberals who decided to vote with their government's misleading information will actually support the PBO and do the right thing to support their communities and small business owners, especially those family businesses that want to maintain intergenerational ownership. In rural communities such as Courtenay—Alberni, where a large part of our main street is made up of local or small businesses, this is a really important piece to our long-term survival. We want to encourage local ownership.

Again, this bill did not pass based on misinformation in the last Parliament. The Liberals continue to make excuses on this bill. They say they will relax the rule for tax avoidance, but we want it to be done carefully to avoid these difficulties and challenges of people avoiding tax rules. If the purchaser or family member retains the shares for five years, the Canada Revenue Agency's concern is that, in the absence of a specific provision, the shares would pass from one family to another. If that five-year provision were in place, it would make that impossible. We want to make sure that we take all the excuses away from the government and alleviate the concerns of taxpayers, so that there are provisions and a system in place to protect against flipping these businesses to avoid paying taxes. This is to keep them in the hands of small business owners.

According to a 2012 CIBC study, close to 30%, or 310,000, business owners were planning to exit ownership or transfer control of their businesses by 2017, in one year alone. We do not have the recent figures. That means that a lot of businesses are changing hands right now.

I want to talk about economic leakages, because we are seeing more businesses being sold and ending up in the hands of large conglomerates. We constantly see local ownership being reduced. This kind of taxation creates a threat to local communities. We want to invest in small communities, and this is a very good way to invest in families and small communities.

Returning to closing economic leakages, we need to do everything we can. This legislation is important, but we also need to make sure that the big banks pay their share, that we cap merchant fees and that we continue to take a holistic approach to supporting small businesses. This is a good bill and I hope the government will support it as well.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, for those who may not know, the city of Joliette, for which my riding is named, was established after Barthélemy Joliette built a mill on the bank of the L'Assomption River. At that time, the city was named L'industrie, which cleary shows the importance of entrepreneurship for our regional county municipality and for the northern Lanaudière region.

I already knew that before I was elected in 2015, when my riding was booming both socially and economically. However, I have heard from many entrepreneurs about how difficult it is to transfer their business to their children, since it is less profitable than selling it to a stranger. That is unbelievable. The Bloc Québécois and I are obviously in favour of Bill C-208. We have been working on this issue for many years. In fact, my colleague from Pierre-Boucher—Les Patriotes—Verchères introduced a similar bill in the previous Parliament.

If this bill were to pass, it would have a very significant impact on Quebec. Nearly one-third of Quebec's SMEs were buy-outs, whereas that number is one-quarter for Canadian businesses. According to Marc Duhamel, a professor at Université du Québec à Trois-Rivières, the rate of business buy-outs in rural areas is around 45%. Helping the next generation of business owners would be good for Quebec, and when something is good for Quebec, the Bloc Québécois votes in favour of it.

I also know that these changes will be good for my region. My riding has numerous farms in practically every one of its municipalities, including places like Saint-Thomas, Rawdon and Saint-Ambroise. We all know a farmer, and we are proud to support our local producers in our farmers' markets, grocery stores and even the little stands we see on pretty much every major roadway.

Right now, the crux of the issue is that a business transferred to a family member is treated as a dividend, not a capital gain, unlike a business sold to someone at arm's length. People who want to sell their small or medium-sized business or their farm or fishing operation to their children are not entitled to the lifetime capital gains exemption, but if they sell to a third party, they are.

I get that the government wants to prevent potential fraud and tax avoidance, but this situation complicates the lives of everyone who genuinely wants to take over the family business. This is like asking people to slow down to 80 kilometres per hour because some people are speeding along at over 130 kilometres per hour. The government should fix this situation by allowing transfers to family members. If a transaction is fraudulent, the government can investigate it, kind of like how a police officer would ticket someone speeding on Highway 50, but would let everyone who obeys the speed limit carry on.

Speaking of tax avoidance, there are other much more concerning cases. Here are three examples the government should tackle. First, the government should immediately start taxing web giants doing business in Quebec and Canada. Second, web giants' digital services should be subject to GST. Quebec already collects QST from them. These two measures have been announced, but they should be implemented right away. Third, the government should shut down the tax haven loophole. That was my goal in 2016 with Motion No. 42.

This is a serious problem, and many people in my riding are suffering as a result. Year after year, I meet entrepreneurs who are looking for someone, the next generation, a young person, to take over the family business. Rather than taking examples from my own family, among my uncles, aunts and cousins, let me give an example that illustrates how ridiculous this situation is. I will tell you about Charles, who went to high school with my assistant.

I have met Charles a number of times since my first election campaign in 2015. Ever since he was old enough to work, Charles has been toiling in his family business, a great sound, multimedia and lighting services company, the kind you often see at festivals, fundraisers and community events in the Lanaudière region and beyond. Not too long ago, Charles and his business partner bought the company. However, the family member who owned the business would have been better off selling it only to the partner, who was already working for the business, rather than including his own son in the transaction. How is that right?

Another incongruity has to do with selling to a competitor, which would actually be more profitable than selling to the next generation, the ones who know the distributors, the customers, the activities and the local reality. This would reduce competition in the sector, possibly increase the price of services and cause the loss of local expertise.

Unlike many other businesses that have no choice but to close up shop because of tax regulations, that SME was able to keep running back home in Joliette. If I open my curtains, I can see it from my window. I could talk at length about the problems facing this industry and even more so now because of the wide-scale cancellation of activities. However, that is not what this bill is about.

I would point out that the Canadian Federation of Independent Business, the CFIB, would like to see this bill pass, which is only natural.

There are many reasons we need to keep these SMEs in the hands of the next generation. First, this would allow several regions to develop their industry. We need to fix this problem for all SMEs, but even more so for businesses in the fisheries and agricultural sectors. In Quebec and in the regions, fisheries and agriculture are among our biggest industries.

Things are looking rather bleak when it comes to the next generation taking the reins of SMEs in the future. Statistics show that in 2016, fewer than 25% of farms had secured a successor and that rate has remained the same since 2011.

Between 500 and 800 young farmers are taking over a farm each year, when in fact 1,000 are required to maintain the number of farms in Quebec. Roughly one farm a day is disappearing back home.

In the fisheries sector, there are three major obstacles to the acquisition of a business. Léa Richard, of the Comité sectoriel de main-d'œuvre des pêches maritimes, said the following:

...what is truly difficult for this next generation is access to financing, the transfer of licences and the administrative complexity. These are the three elements that make it difficult for the next generation to acquire a fishing business.

We know that it is already difficult to take over a business. It is that much more difficult in sectors that require a sizeable capital investment. For these people who have poured their heart and soul into their business, which most of the time represents their retirement nest egg, it seems unfair that it costs them an arm and a leg to sell their business to their children.

It is difficult for people to go into business and later to let go of what they have spent most of their life building. If we could at least make it easier for them to sell their business to a family member, that would be a good thing.

The government will probably remind us that we need to make choices and that this measure comes at a significant cost. In fact, the Parliamentary Budget Officer reviewed a similar bill in 2017 and estimated the cost at about $376 million. To put that in terms the Liberals will understand, that is equivalent to a little more than one-third of a contribution agreement with WE Charity, or about 40% more than the sole-source contract awarded to Frank Baylis.

This measure may be costly, but it is nothing considering how much the next generation could help business owners. Losing a business is hard on the owners, but the impact of that loss ripples beyond the owner and their loved ones. Suppliers, creditors, employees and customers lose an important partner. We often think about how the closure of a large company can have repercussions on a region, as was the case with Electrolux a few years ago in Assomption, near my riding. However, we rarely consider that the loss of multiple small businesses can have a less immediate but equally serious impact on the socio-economic fabric.

Ensuring the succession and continuity of SMEs is not only good for our economy and governments' fiscal capacity, but it is necessary for efficient land occupancy. From the North Shore to Abitibi, from Gaspé to Nunavik, Quebec has chosen to have vibrant regions, each with its own strengths, growth sectors and educational institutions, such as CEGEPs. According to Maripier Tremblay, an associate professor in the department of management in Université Laval's faculty of business administration, “Quebec's economy depends on its SMEs, but also on its regions. It is very important for businesses in the regions to retain their pools of workers.”

I will close by saying that to have strong regions, we need to have people living there. For the period from 2014 to 2023, the Board of Trade of Metropolitan Montreal estimates that between 79,000 and 140,000 jobs in our SMEs could be lost due to the entrepreneurial deficit. That is a gigantic number.

That is like one or two whole ridings of workers disappearing in 10 years. When many families leave a region, it has significant consequences for the entire ecosystem.

The House resumed from November 25, 2020, consideration of the motion that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the second time and referred to a committee.

[Richard Lehoux, Conservative, Beauce, QC]

Madam Speaker, I am pleased to speak in support of Bill C-208, an act to amend the Income Tax Act with regard to the transfer of a small business or family farm or fishing corporation, which was introduced by my colleague, the member for Brandon—Souris.

The amendments made by this bill are necessary to standardize the process for selling family businesses. These amendments would considerably improve the Income Tax Act with respect to the transfer of a small business or family farm to a family member.

In the current state of affairs, the sad reality faced by business owners is that they must pay more taxes if they sell to a family member than if they sell to a third party. The current act puts operators who want to transfer their family business to their son or daughter at an unfair disadvantage. This forces owners to decide whether they want to keep their life's work in the family or sell it to the highest bidder.

If this bill were adopted, it would facilitate many more family business successions. It would also guarantee the retirement savings that business owners worked so hard to earn and enable more local businesses to prosper, which would strengthen the Canadian economy and local economies. We must never lose sight of the fact that SMEs are the cornerstone of our economy.

Everyone in the House knows a factory, a family restaurant, a corner store or a farm in their riding that has been around for generations. These family businesses are well liked and extremely important to the local economy. These small businesses are the backbone of our society. Some of these businesses not only help feed our communities, but they also provide important jobs for the people in our ridings.

The dynamic of keeping a family business in the family is unprecedented. The idea that an owner could be forced to sell their business to a third party simply because of overtaxation is simply shocking. When a third-party purchaser buys a business, many unknowns come into play. Will the new owner cut jobs? Will they move the business to a different region or even a different country? These are the questions the seller must keep in mind, but also their employees and family members.

We know that Beauce is a haven for SMEs. I will provide two real-life examples from my riding.

My first example is Eddy Berthiaume, the owner of Les escaliers de Beauce, located in my hometown of Saint-Elzéar, who was forced to make the difficult decision that I just explained to the House. He owned 50% of this business for many years. He is a good, hard-working man who spent years building his business. When he was ready to retire, he decided to sell his shares in the family business to his children, but unfortunately, he was unfairly forced to pay thousands of dollars in transfer fees. The worst part of this story is that his business partner was able to sell his 50% stake to a third party and pay a pittance in taxes. He paid essentially nothing.

Some may wonder how this is unfair. There are other examples like this one that show how the government is letting down business owners across the country. We need a government that is prepared to grant exemptions to Canadians and that does not penalize tenacious families like the Berthiaumes.

My second example is Estampro, a business in Saint-Évariste-de-Forsyth owned by the Fortin family, who dealt with the same rules for transferring the business to a family member. The business, which was founded in 1984, is already run by the third generation of Fortins. The family had to work extremely hard to get there, however. The time and money they spent on filling out forms for the transfer certainly could have been used to hire extra machinists or to make more progress on automation. Instead, the family was trapped in all of the red tape required by the existing legislation, and we cannot underestimate the impact this has had on the family. I spoke with them this week, and I know that they are seriously wondering what problems they will encounter if the business is transferred to the next generation.

I am sure many of my colleagues are aware of cases like these. There are many others throughout my riding. If the House does not act now, then wonderful, healthy, viable, proudly Canadian companies will end up in the hands of people other than the families that built them or, even worse, in the hands of foreign countries.

This bill will also help Canadian business owners by advancing women's entrepreneurship. Only 16% of businesses and 29% of family farms are majority female-owned. If the government stopped penalizing owners of small businesses and family farms who sell their businesses to their daughters, it would help foster entrepreneurship among women and increase their participation in the Canadian economy.

It is very unfortunate that our party is obliged to introduce bills like this one when we have a government that claims to always be there for women and small businesses. We need the government to get involved and quickly examine the issues raised by bills like this one.

This bill is not partisan in any way. I think that the amendments to this private member's bill are not only a matter of fairness, as many of my colleagues mentioned, but also a matter of common sense.

I cannot believe that this government has not already introduced amendments to the Income Tax Act in this area.

We need to treat business owners fairly. These tax policies are unfair when the time comes for them to step down from their family business. Leaving a family business can be a positive thing if they know they are leaving it in the hands of someone they love and, more importantly, someone who will love and honour the values and culture of the business, as the owner did for many years.

Business owners should not feel like they have to sell their business to a third party simply because it will cost them less. Business owners must also obey the law. We would not want them to make concessions or act fraudulently in order to save the hard-earned pension or retirement savings they would otherwise lose in taxes. That is why it is important that Bill C-208 pass in the House as quickly as possible.

I heard some of my colleagues say that changes to this bill could lead to more fraud and tax evasion. That is why our party wrote protection mechanisms into the bill. To forestall those potential problems, the bill provides that the family member purchasing the business must keep their shares for at least five years to avoid the penalty. This will thwart attempts to exploit the system.

Right now, and especially during this global pandemic, Canadian businesses need our help, not just to stay afloat while we fight the pandemic together, but also in the future when the time comes to sell and buy their family businesses. Canadians want to remain self-sufficient. They want to support their local businesses. Most of all, they want their local businesses to succeed from one generation to the next.

I hope the Conservative Party can count on all parties to vote for this bill, which is so important to our family businesses. I speak from experience, because I myself was part of the fourth generation of a family business.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Madam Speaker, I am pleased to rise on behalf of the NDP caucus today at second reading of Bill C-208. We will be according our support at second reading to take it to committee. As I already indicated, we will be looking potentially for some clarifications around the bill when it goes to committee.

I need to praise Guy Caron, the former member of Parliament for Rimouski-Neigette—Témiscouata—Les Basques, for his good work in advancing this issue. This is not an insignificant issue. It is extremely important for the next generation of people running small businesses across the length and breadth of our country, for family farms to be passed down from one generation to the next and for fishing corporations to be passed down as well to maintain the vital fishing industry on our coasts across the country.

These are important points that Guy Caron brought forward to Parliament which we are now debating to take to committee. These extremely important things must be put into place.

I am a long-time member of the New Westminster Chamber of Commerce and the Burnaby Board of Trade. Because of that long-time involvement in the Board of Trade and Chamber of Commerce, I have worked with small businesses. I also ran a social enterprise myself.

It is extremely important to maintain those family-run businesses across the country. In many communities, family-run businesses are really the backbone of a community's economic development. Ending what is a very perverse aspect of our tax system and facilitating, in a sense, small businesses under $1 million to be passed from one generation to the next without penalties being incurred makes a big difference for family-owned business.

As well, I come from a farming family. My mother's family ran a farm in Alberta when it originally came from Norway and settled in the Cariboo Hill area of Burnaby. The area now known as Cariboo Park was the family farm.

Families that have run farms for generations have nothing but my deepest respect. Again, we have to end the perverse penalties that exist right now for families that want to pass their farms from one generation to the next.

I am going to set aside my speech for a moment because I would like to respond to the member for Newmarket—Aurora, who spoke to the bill on behalf of the Liberal government. He basically questioned the impacts on the tax base of putting forward these measures.

The Liberal government has completely collapsed the tax base in the country. I find it incredible, quite frankly, for any Liberal to stand in the House and say that he or she is concerned about the tax base for something that is of far less significance on the scale of the federal budget than it is in the positive impacts small businesses and farms would feel across the country.

The reality is, as the Parliamentary Budget Officer has pointed out, the government has undermined the tax base to the point that we lose over $25 billion a year to overseas tax havens. In terms of housing, education, health care expanding to pharmacare and dental care, $25 billion lost each and every year, $125 billion since the Liberals came to power, is an astronomical amount.

CRA representatives who came before the finance committee indicated that the reason nobody had ever been prosecuted for the Panama papers or the paradise papers, the well-known documentation around the use of overseas tax havens, was because they had never been given the tools by the Liberal government to crack down on these overseas tax havens. For the government to pretend its concern is the tax base, when it has done anything but, as an excuse, a pretext, for opposing the bill is difficult to believe.

In addition, as you well know, Madam Speaker, the NDP has brought forward provisions around the wealth tax and the excess profits tax. The leader of the NDP, the member for Burnaby South, has been very clear in this respect. The federal Liberal government has simply refused to undertake those measures, even though we know Canadian billionaires have added to their wealth, over $37 billion since the beginning of this pandemic.

The banking sector has received over $750 billion in liquidity supports and their profits have been astronomical as well. Just in the first two quarters, over $15 billion in profits have been supported by federal government institutions, ensuring, with as much largesse as possible, that they have everything taken care of during this pandemic.

In previous crises that the country has gone through, for example, the Second World War, there were strict laws against profiteering. There was an effective corporate tax rate to ensure we were all in this together. The government has refused to do the right thing, whether it is cracking down on overseas tax havens, bringing in a wealth tax or proposing an excess profits tax. It has undermined and destroyed our tax base.

What many Canadians are concerned about is the fact that this could well lead to austerity when Canadians are not getting the supports, in so many cases, they need to get through this pandemic.

The last point I would like to make in reply to the member for Newmarket—Aurora is that he seemed to be very proud about the government support for small businesses. If he spoke with small businesses, the member would know that nothing could be further from the truth. The NDP put pressure on the government to bring in the wage subsidy. The NDP was able to achieve that in this minority Parliament.

However, the rent relief program was a massive failure. The member for Courtenay—Alberni, the NDP small business critic, has raised this repeatedly. Now we have a rent relief program that will fix all the problems with the old one, but the federal Liberal government has refused to put into place the retroactivity that would allow small business that did not get any rent relief in the first version, because it was so badly botched, to apply retroactively for rent relief.

The pretensions of why Liberal members would oppose the bill are disingenuous, to say the least, when the Liberal government has done everything to destroy our tax base, while at the same time has not offered the supports for small business, which are so desperately needed.

A number of people have talked very positively about the bill.

Dan Kelly, president of the CFIB, has said, “Many small business owners are telling us that tax rules discourage them from passing on their firm to their children.”

This time Mr. Kelly was speaking about Guy Caron's work, when he said that the “Bill addresses this unfairness and will help small business owners ensure their firm remains locally owned, creating and protecting local jobs.”

Ron Bennett, president of Canadian Federation of Agriculture, has said, “Simply put, if taxation barriers aren't addressed, we will see fewer and fewer family farms in Canada. We support Mr. Caron and his colleague's commitment to addressing these tax burdens that could cause significant administrative burden.”

The bill introduced by Guy Caron, the former member for Rimouski-Neigette—Témiscouata—Les Basques, was supported by many organizations, including the Fédération des chambres de commerce du Québec, the Board of Trade of Metropolitan Montreal, the Union des producteurs agricoles du Québec, the Agricultural Alliance of New Brunswick and the Producteurs de lait du Québec, not to mention several other organizations representing supply-managed farms.

This is part of what should be done to preserve family farms while above all continuing to support a stronger supply management system. We will be supporting the bill and hope to discuss it at greater length in committee.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Madam Speaker, it is an honour for me to rise in the House.

Before I got into politics, I was the secretary to the Fédération de la relève agricole de l'Abitibi—Témiscamingue. My colleague, the member for Brandon—Souris, might be interested to know that.

The matter of transfers, particularly transfers to family members, is very important in Abitibi—Témiscamingue. I remember participating in a workshop about transfers hosted by the Réseau Agriconseils. A number of people attended because they were concerned about this issue, particularly since land value is different in Abitibi—Témiscamingue. Since our land is worth less than land in other parts of Quebec, it cannot be used as security as often. That is not the subject of this speech, but it is relevant when we are talking about the facility of transfer when a business is being transferred to a family member.

I had the opportunity to talk about this when I participated in the convention of the Fédération de la relève agricole du Québec, which took place in March in Rouyn-Noranda, located in my riding of Abitibi—Témiscamingue. As impossible as it may seem, still today, business owners are better off transferring their business to external shareholders than to a member of their own family.

I want to thank the member for Brandon—Souris for introducing his bill. I would have liked to introduce it myself, much like the member for Berthier—Maskinongé, as it is a fundamental issue. The Bloc Québécois supports Bill C-208. For several years now, my party has been calling for measures to encourage and facilitate the transfer of family businesses, especially in the agriculture and fisheries sectors. In fact, I would point out to my colleagues in the House that the member for Pierre-Boucher—Les Patriotes—Verchères introduced Bill C-275, an act to amend the Income Tax Act regarding business transfer in the previous Parliament.

The Bloc Québécois has been calling for measures to encourage and facilitate the transfer of family businesses for more than 15 years. For Quebeckers, for the Bloc Québécois, and for me, business succession is important. The next generation is important for the future of our SMEs in general, but especially for the family farming businesses in the Abitibi—Témiscamingue region.

Business succession is a major and promising phenomenon across Canada and especially in Quebec. Nearly one-third of Quebec's small and medium-sized businesses were buy-outs. In 2017, one-quarter of Canadian SMEs were takeovers. In Quebec, the majority of business buy-outs are in rural areas, where 44% of the SMEs belong to entrepreneurs who have taken over a business. In Canada, that figure is around 31%, according to UQTR professor Marc Duhamel, a regular researcher at the UQTR's small business research institute. Unfortunately, the government's unfavourable tax rules do little to encourage business succession.

The risk of sales to foreign buyers and businesses being lost is very real. In 2018, it was estimated that between 30,000 and 60,000 Quebec businesses would not find a buyer in the years to come and would die as a result. That represents around 150,000 jobs and $8 billion to $10 billion in revenue.

Right now, Quebec is losing one farm a day. That is alarming. The risk of sales to foreign buyers and businesses being lost is very real. In Quebec, the next generation of entrepreneurs is suffering badly. Unfortunately, this Parliament is not doing enough to support business succession.

Why does the Liberal Party not want to put a family member on equal ground with a foreign investor? Here are the facts. Under the existing legislation, the transfer of a business to a family member is treated as a dividend and not as a capital gain, unlike a sale to a third party. As a result, owners are not entitled to the lifetime capital gains exemption if they decide to sell the business to their children. The existing legislation is an affront to common sense.

Why does the Liberal Party of Canada refuse to amend the Income Tax Act? As we just heard, they appear to be worried about condoning tax evasion. That would explain why the Income Tax Act makes no mention of the notions of transferring, shuttering or selling a small business to a family member, for fear of potential abuse or tax fraud. If abuse and tax fraud are actual reasons, I am having trouble understanding why the Liberal Party continues to do nothing about tax havens.

As the member of Parliament for Abitibi—Témiscamingue, I have had the honour, along with members of my team, to speak with many farmers in my region week after week. I want to acknowledge the president of the Fédération de la relève agricole, Meghan Jarry. The federation and all business owners in Quebec see business succession as a key way to stop the outflow of businesses and Quebeckers to urban centres and to make it easier for young entrepreneurs to take over the family business.

Business succession is essential for Abitibi—Témiscamingue. It is essential for all of Quebec. The future of the Abitibi—Témiscamingue region is in the hands of the next generation of farmers.

I want to quote a farmer from the region, Simon Leblond, who is also a friend and a member of the Fédération de la relève agricole du Québec. He was the president of FRAQ when I was the secretary there. He said the following:

I am certainly going to have challenges, starting with the financing and development of my company, of course. There are also other issues unique to my region, including maintaining a large enough pool of producers to maintain services for farms and, more generally, to ensure the vitality of the industry and make it known to those outside the world of agriculture.

The next generation of farmers is essential because it ensures the vitality of agriculture, which in turn ensures the vitality of the towns in our regions. The vitality of our regions ensures the vitality of Quebec, the dynamic use of our land.

I think we need to talk about distress. In Abitibi-Témiscamingue and other parts of Quebec, farmers young and old are struggling. They have to deal with red tape, paperwork, long hours of work, their roles as mothers or fathers, bills, the stress of everyday life, the stress of being in debt, equipment that breaks down and has to be repaired or replaced, short production and crop seasons, poor weather conditions and all of the other pressures they are under.

Farmers are in real distress. Encouraging and facilitating the transfer of family businesses could alleviate some of that distress. I think that is an important reason for members of the House to support Bill C-208.

Now I would like to talk about what things are really like for new farmers. We all know farmers are stubborn and tenacious people. They are probably the most resilient members of our society. Young farmers are constantly looking for ways to access assets and encourage the transfer and start-up of agricultural businesses in Quebec. They face major challenges, including land grabbing and land financialization, income security, vet services for farm animals, crop insurance and agricultural drainage. These are major challenges. Improving access to land and improving quality of life for Quebec's young farmers is one way to ensure a future in agriculture for Quebec's youth.

It is the duty of this Parliament to create conditions conducive to establishing the next generation of farmers in order to attract that next generation and secure the future of small and medium family farms. That cannot happen without easier access to land. Transferring a farm is the best way to get a start in farming because starting a farm from scratch is very hard.

On top of that, land prices, the cost of quotas and production standards are increasing every year. Farm values are increasing. It takes longer and longer and is increasingly difficult to transfer the farm to one's children. Paying back the loans needed to purchase a farm takes so long and the red tape is becoming increasingly cumbersome, making it increasingly difficult for farmers to access land and operate their businesses. Farmers want the process for purchasing a farm to be simplified. Some are calling for a single-desk model to avoid having to speak to too many stakeholders in a transfer process. Everything I have mentioned from the beginning of my speech reflects opinions expressed by the Fédération de la relève agricole du Québec, which works to improve the lives of young farmers in Quebec.

Just today, actually, I spoke with Julie Bissonnette, the president of the FRAC, and its executive director, Philippe Pagé. Regarding the transfer of a family farm, the Fédération de la relève agricole du Québec is unanimous: It is just wrong that it is more advantageous to sell the family farm to a stranger than to a family member. Julie Bissonnette told me today that she is always asked about this issue no matter where she goes. Young farmers in Quebec and the Abitibi—Témiscamingue region have been calling for legislative changes for several years now.

She also told me that it was a problem on both sides. The transferors also want this to change. The oldest farmers in Abitibi-Témiscamingue want to transfer their farms to family members. This means that local farming will be put on hold. Dozens, if not hundreds of young future farmers and transferors want to be able to make transactions. This is a global issue. This desire to transfer their farm to their children is part of what has been driving older farmers to work as hard as they do and invest so much time in it for 30, 40 or 50 years. It may even span two, three, four or five generations. Farmers work like mad to provide a future to their kids. Selling their farm to a stranger can lead to feelings of failure or profound grief.

For farmers, it is a big step to hand over the farm to their children out of love and devotion. That is what I have heard from FRAQ members, young and old alike, who feel concerned. Their greatest wish is to be able to hand over their farms to their families.

I will conclude by mentioning that the tax arguments raised when the last point was rejected do not hold up well if we look at the PBO study. In my opinion, if things are not moving right now, it is because there is a flagrant lack of political will on the part of the Government of Canada. This lack of will needs to stop, and that is why the Bloc Québécois supports Bill C-208.

I expect the House to unanimously support this bill in order to prevent this outflow of people to urban centres and to foster the entrepreneurial spirit of our young farmers.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Madam Speaker, I grew up on a small 50-acre farm and, in spite of having 11 labour-cost-free children, my father still required off-the-farm income because he realized it was not easy to feed 11 children with what we could produce on the farm.

I am pleased to take part in the debate today on private member's bill, Bill C-208, which aims to facilitate the transfer of family businesses between family members.

Ensuring the sustainability of small businesses, family farms and fishing corporations is essential to our economy and to the communities that they serve. This has been underscored by the critical need to support families and communities as we continue to fight COVID-19. Our government understands this. From the outset of the pandemic, Canada's economic response to COVID-19 has introduced a range of support measures for small businesses to help bridge them to the other side.

Simply put, we have their backs. That extends to helping family businesses thrive for generations to come.

Encouraging the sale of family businesses to family members often means those businesses will remain in, and continue to benefit, their communities as well as the families that fought hard, sacrificed and succeeded through pure determination and entrepreneurial spirit. It is with this spirit in mind that Bill C-208 bears careful consideration.

Bill C-208 seeks to amend two of the Income Tax Act's most important and complex anti-avoidance rules. These rules deal with inter-corporate dividends, share sales and circumstances under which the lifetime capital gains exemption is charged. Any relieving changes to these sections of the act must be done cautiously, following rigorous study and debate, to avoid unintentionally creating loopholes that would disproportionately benefit the wealthy instead of protecting the middle class and those working hard to join it.

Section 84.1 of the act, in particular, is in place to apply an anti-avoidance rule where, when appropriate, an individual sells shares of one corporation to another corporation that is linked to an individual, such as a family member. When an individual sells shares of a Canadian corporation to a linked corporation, section 84.1 of the act deems, in certain circumstances, that the individual has received a taxable dividend from the linked corporation rather than a capital gain. This prevents the individual from realizing the proceeds of the sale on a tax-free basis using the lifetime capital gains exemption.

This rule is meant to ensure that taxpayers cannot use linked corporations to, in effect, remove earnings from their corporations, using a sale as a basis to do so. Without this rule, such sales between related parties could be used to convert what should be dividends to an individual shareholder into capital gains that are tax free under the lifetime capital gains exemption.

Bill C-208 proposes narrowing the scope of section 84.1 by removing the sale of shares of small businesses, family farms or fishing corporations from its application, when they are being sold by an individual to another corporation that is owned by their adult child or their grandchild. This change would allow the owner-operator of a family business to convert dividends to the corporation into a tax-free capital gain.

It is important to note that there is currently nothing in the act stopping a parent from selling the shares of a family business directly to their child or grandchild on a tax-free basis using the lifetime capital gains exemption, which currently shelters up to $1 million in capital gains on qualified farm and fishing properties. The issues sought to be addressed by Bill C-208 arise only in multi-tier corporate structures, where one corporation owns a second corporation. Adopting the proposed changes to section 84.1 could open the door to new tax-avoidance opportunities.

Bill C-208 also proposes amendments to section 55 of the act, which generally applies to corporations that seek to inappropriately reduce capital gains by paying excessive tax-free dividends between corporations, which the act considers to be a capital gain.

Two exemptions to these anti-avoidance rules authorize businesses that are restructuring to allow company shareholders to split company shares between them while deferring taxes. The first exemption applies to the restructuring of related corporations and the second applies to all corporate restructuring.

Bill C-208 would broaden the first exemption so that it applies to brothers and sisters, despite long-standing tax policy that considers brothers and sisters to have separate and independent economic interests for these purposes. Any change to this exemption would risk eroding our tax base.

Spouses, as well as parents and their children, are already eligible for this exemption, because it is presumed that they have shared economic interests. Although brothers and sisters cannot restructure their participation in a corporation on a tax-deferred basis under the related corporations exemption, they can do it under the second exemption of section 55, which applies to all corporate restructurings.

This is called the butterfly exemption, and there are few tax avoidance opportunities under it. If the proposed amendments under section 55 included in Bill C-208 were passed, siblings could undertake business restructurings in which otherwise taxable capital gains realized between corporations would be converted into tax-free intercorporate dividends, which would create new opportunities for tax avoidance in Canada.

I will conclude by saying that we know many businesses are continuing to face stress and uncertainty due to COVID-19. Our government has stepped up to the plate to make sure that they have the support during these unprecedented times.

We have made unprecedented support available to Canadian businesses, including the Canadian emergency business account, which has provided 758,000 business loans totalling $30 billion. The Canada emergency wage subsidy has supported the wages of more than 3.5 million employees totalling $36.7 billion.

Just this week applications were opened for the new Canada emergency rent subsidy, which will provide simple and easy-to-access commercial rent support and an additional lockdown support of 25% for businesses that have temporarily shut down due to mandatory public orders. Combined, this will mean the hard-hit businesses subject to lockdown will receive rent support up to 90%.

Our message to businesses remains the same. We have their back.

There are important considerations to take into account when we are reviewing the merits of Bill C-208. Our government remains committed to working with family businesses, including farming and fishing businesses, to make it efficient, or less difficult, to hand down their businesses to a next generation. However, we must exercise caution when making amendments to the Income Tax Act.

[Larry Maguire, Conservative, Brandon—Souris, MB]

moved that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the second time and referred to a committee.

Madam Speaker, it truly is a humbling moment to stand in this chamber and put one's name to legislation and ask one's colleagues to support it. As fate would have it, today marks the seventh anniversary of my representing Brandon—Souris since the by-election that took place on November 25, 2013.

Private members' bills give us the opportunity to set aside our political allegiances, to rise as parliamentarians and to champion the causes of issues whose time has come. In that spirit, I reached out to all the MPs in this House from other parties, to speak about this legislation back before the first reading. I want to specifically thank Guy Caron, who spearheaded this legislation in the last Parliament. Now it is up to us to pick up where he left off and pass it into law.

The essence of this bill is pretty straightforward. Bill C-208 would allow small businesses, farm families and family fishing corporations the same tax rate when selling their operations to a family member as they would if they sold it to a third party. Currently, when a person sells their small business to a family member, the difference between the sale price and the original purchase price is considered to be a dividend. However, if the business is sold to a non-family member, the sale is considered a capital gain. A capital gain is taxed at a much lower rate and allows the seller to use the lifetime capital gains exemption.

It is completely unacceptable that it is more financially advantageous for a parent to sell their farm or small business to an absolute stranger than it is to their own children. I want to give two specific examples this afternoon on how this legislation will help families transfer their operations when they decide to make that transition.

Imagine a bakery that a couple have owned for about 30 years. The couple running the bakery are now ready to retire and another bakery has reached out to indicate that they would like to purchase it from them. However, their daughter has worked with the couple throughout the years in that bakery as she has grown up and has indicated that she wants to take over the family business. Like a lot of small business owners and farmers, they could not afford to put large sums of money away into RRSPs and other saving vehicles, as any extra money that they had went into their own small business.

This couple would rely on the sale of the bakery to basically fund their retirement plans, so they call upon an accountant to start a conversation about different planning scenarios. Their accountant comes back to them, saying if they sold the bakery to the other company, rather than their daughter, they would have an effective tax rate of 10% after using their lifetime capital gains exemption. Their accountant also told them that if they sold the bakery to their daughter, she would be obligated to repay their loan with personal tax dollars, which is a significant penalty. Compared to selling their bakery to the other company, it would render the effective tax rate to be significantly higher. With that information in hand, they have a family huddle and discuss the options.

The couple is now seriously considering selling the business outside of the family as they do to want to put the burden of their tax obligation on their daughter. It would inhibit her ability to make a living and grow the business. On the sale of shares to the bakery, this couple should be indifferent to selling shares to their daughter or the other company. Their daughter should not be penalized for purchasing shares from her parents and should be able to fund the purchase with corporate funds, as she would if she were to purchase the business from an unrelated party.

Bill C-208 would allow the next generation to become business owners and to keep businesses locally owned. With this bill, Bill C-208, we can fix this injustice once and for all. Right now many small businesses are struggling. This pandemic has been one of the most disruptive times in our lifetime. Across our country, no community is immune from its impact. To those entrepreneurs who are listening to this speech tonight, I have their back. Anyone who has ever run their own business understands the massive responsibility and stress that comes with being one's own boss. They are risk takers and job creators. Small business owners make up the backbone of our economy.

From tradespeople to grocers, and everything in between, entrepreneurs are the pillars of our communities. It is not easy to start a business. Some people must take out massive loans just to get their doors open. They put everything on the line to make their operations a success. Hopefully, after many years of hard work, they slowly and surely pay off their debt, expand their business and create even more jobs in their own communities. They pour their hearts and souls into their businesses and, when they are ready to enjoy retirement, there would be no greater joy for them than to see what they built be transferred to their child or grandchild.

As a young entrepreneur, I was one of those who was able to carry on the legacy of my parents. In 1948, my mom and dad carved out a little slice of heaven and started our farm near Elgin, Manitoba. My brother and I are proud to be the sons of farmers.

In the words of Paul Harvey:

And on the 8th day, God looked down on his planned paradise and said, “I need a caretaker.” So God made a farmer. God said, “I need somebody willing to get up before dawn, milk cows, work all day in the fields, milk cows again, eat supper and then go to town and stay past midnight at a meeting of the school board.” So God made a farmer.

I learned a lot from my parents. There were times when they were incredibly tough. Sometimes commodity prices were in the basement. There were other times when equipment would break down just when it was needed the most. I know life is not always easy. It never has been, and it probably never will be.

However, the legislation we have before us today sends a strong message to all those family-run businesses that it will no longer be more financially advantageous to transfer a business or farm to a stranger than to their own children because of tax purposes.

The other example I want to give is of a farmer who is set to retire in the next couple of years and is reviewing succession options. The farmer wants his son to take over; however, he wants fair market value for his farm in order to fund his retirement, as well.

If a third party were to ask to purchase the shares of the farming company, the purchaser would be able to purchase those shares through a corporation. By selling his farm to this third party, the farmer could use his farm capital gain exemption on the sale, resulting in a 13.39% effective tax rate.

However, if the farmer sold his farm to his son, that sale would be recorded as a dividend, rather than a capital gain, and the farmer would pay 47.4% in tax. That is over 34% more in tax. I think we can all agree that it is completely unfair for the tax rate to be significantly higher when the farmer sells his operation to his son rather than to a third party who, in many cases, is a complete stranger.

Bill C-208 sends a message of hope to young farmers who want to carry on what their parents started. There is something special about being connected to the land and reaping what one sows, as is true for any small business. It is an attachment.

In Manitoba and other provinces, there are Century Farm Awards to celebrate farm families who have maintained continuous production for 100 years or more. Many of these in the Prairies are now well over 125 years. I have attended many centennial farm celebration ceremonies, and the faces of the family members involved show how important this milestone is for them.

Farm families face unique pressures in succeeding their operations, including the increasing cost of land, the average age of farm operators and the capital requirements for those entering the industry. The passage of this bill would eliminate the unfair tax rates that make it difficult to keep businesses under family ownership.

With that, I ask my colleagues to reach out to their constituents and ask them if they should support this legislation. Ask those constituents if they think it is unfair that selling a business to their children should be more expensive than selling to a stranger.

This legislation would impact every single constituency in Canada. From a family run farm in Cumberland—Colchester to a family run business in Winnipeg North or a fishing enterprise in Miramichi, people are looking to their members of Parliament to support this bill.

With that, I ask all members to join me in passing Bill C-208. By working together, we can support our entrepreneurs, small businesses, farmers and fishers who make up the backbone of our economy. Let us roll up our sleeves and get this job done.

[The Chair, Liberal, Ginette Petitpas Taylor]

No. Thank you so much for that. That's great.

Perhaps now we can proceed through each item. To be efficient with our time, we could maybe just go through them item by item, and if there are no questions or comments, we can dispose of them fairly quickly. We'll be able to address the ones for which there is debate.

Does that sound appropriate to everyone?

We'll start off, then, with Bill C-210. Does anyone have any issues or comments about that one? No.

Next is Bill C-238.

I see there are no comments, so we'll move right along to Bill C-224. Good.

Next is Bill C-215. No comments.

Next is Bill C-204, and now Bill C-229.

I'm not going to jinx it, but we're on a roll.

Now we have Bill C-218 and a motion, M-34.

Next we have Bill C-214, Bill C-220, Bill C-221, Bill C-222 and Bill C-213.

I love working with women.

Next is Bill C-223, followed by M-35.

Now we have Bill C-206, Bill C-216, Bill C-208, Bill C-205, Bill C-237, Bill C-225, Bill C-228, Bill C-236, Bill C-230 and Bill C-232.

[Larry Maguire, Conservative, Brandon—Souris, MB]

moved for leave to introduce Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation) .

Mr. Speaker, I am pleased to rise today to introduce my private member's bill, an act to amend the Income Tax Act regarding the transfer of small businesses or family farms or fishing corporations. This legislation would level the playing field for small businesses, family farms or fishing corporation owners when transferring their operation to a family member.

Currently, when a person sells his or her business to a family member, the difference between the sale price and the original purchase price is deemed to be a dividend. However, if this business is sold to a non-family member, it is considered a capital gain, which is taxed at a lower rate and allows the seller to use his or her lifetime capital gains exemption.

The bill would allow small businesses, family farms and fishing corporations the same tax rate when selling their operations to their family member as they would selling it to a third party.

I encourage all members to support this bill to promote sustainable small business succession, enhance opportunities for entrepreneurship and end the inequitable taxation of those transferring a small business, farm or fishing corporation to a family member.

(Motions deemed adopted, bill read the first time and printed)