Bill C-32

Fall Economic Statement Implementation Act, 2022

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act ;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act , the Excise Tax Act , the Air Travellers Security Charge Act , the Excise Act, 2001 , Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations .
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act .
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act .
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

Fall Economic Statement Implementation Act, 2022

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, the member talked about the importance of the environment and the economy and how they interrelate, so I just want to give an example of a very environmentally friendly farmer in my riding. He uses no-till seeding methods, intensive rotational grazing of ruminant animals and rest land for his bird habitats. He protects the waterways, uses fossil fuels minimally and uses zero-chemical fertilizers and herbicides.

He normally has 30 to 50 customers in a given year, but this past year alone, he is down to three customers. He asked these folks why they are not buying from him, a local, environmentally friendly farmer. The answer was they cannot afford it. They are not purchasing local beef or lamb because they cannot afford gas, are struggling to pay their bills and have to select between food, utilities and fuel bills.

What is in the economic statement that is going to help rural Canadians afford to buy local and support this great environmental farmer?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I thank the member for Bruce—Grey—Owen Sound for mentioning that local farmer. We want to support all our farmers across Canada, whether in northern Ontario or any part of the country.

In terms of the affordability crisis and inflation crisis that has impacted the entire world, we are assisting Canadians. We have put in place a number of measures, including doubling the GST rebate for over 11 million Canadian families, the $500 payment through the rental supplement and putting in place a dental care program. About 92% of day care centres in Ontario have, from my understanding, signed on to the child care agreement, which is saving families literally thousands and thousands of dollars.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Mr. Speaker, I would like to begin by thanking my colleague for his speech. It is always nice to hear speeches with a focus on the economy.

As an economist myself, I would like to ask him the following question. Is it not true that a healthy competition regime is the cornerstone of a healthy economy? If that is the case, why is it that the 2022 budget talked about reforming the Competition Bureau, yet there was absolutely nothing about it in the economic statement that just came out? The commissioner of competition has been saying for months, as did the previous commissioner, that there are serious problems in the competition regime. These problems are not only affecting current prices, because of inflation, but also the productivity of our businesses.

Is it not time we reformed the Competition Bureau to improve the quality of life of Canadians and Quebeckers?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I thank my colleague from Terrebonne for her question.

I will say this. I completely agree with requiring more competition in our economy. Corporate concentration and crony capitalism are two things I detest. I dislike them very much.

In the summertime, changes to the Competition Act were made via the Competition Bureau. I will go back and check my notes to see if I am incorrect on that. I look forward to having a further discussion with the hon. member from la belle province on this exact issue.

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

Mr. Speaker, one thing I have heard a lot about, not from this economic statement, unfortunately, but certainly from a lot of my constituents and folks working in the industry, is the escalator tax and the excise tax on alcohol.

I have a lot of small craft breweries in my riding. I know that many of my colleagues are very interested in this, yet the government has not addressed, in any way, shape or form, how there is going to be quite a huge escalation in taxes because of the rate of inflation.

Could the hon. member comment on why it was not in the fall economic statement? What is his government doing to ensure that small craft breweries and medium-sized breweries will be able to survive?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I am very familiar with the issue the hon. member has raised. I continue to advocate that we look at the escalator tax and the inflation index rates that could potentially occur within these sectors.

I represent a very vibrant wine industry. Magnotta Winery is located in my riding, as is Two Sisters winery. The founders are very good friends of mine. Our wineries, craft brewers and beer companies all draw tourism to the region of Niagara. I will continue to advocate for the wine industry, the beer industry and craft brewers from coast to coast to coast.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, it is always an honour and a true privilege to rise in the House and speak on behalf of the great people of Vancouver Kingsway to reflect their realities in the House and urge policies that I think will be of great impact and assistance to them. I think what they would first want me to point out to the House is that at this point in history, we are facing difficult economic times. People are really struggling, and that is very much the case in Vancouver Kingsway.

The prices for everyday staples such as food, gas, rent, energy and utilities, and for cars, are up. People cannot find affordable housing. This has been a crisis for many years in the Lower Mainland and Vancouver, but it is particularly acute now. I think the word “crisis” is not a hyperbole to describe a situation where people cannot find a secure, dignified and affordable place for themselves and their families.

I would point out on housing that, of the many financial issues facing people, some are foundational, and I think housing is one of them. Housing anchors us in our community and it is what connects us to our neighbours. It is that from which we launch our connections to school and work, where we build relationships with neighbours and where we express ourselves as people. When we cannot find affordable housing and when we are constantly having to move because of renovictions and rising prices, that is destabilizing in a manner that is truly profound.

Wages are not keeping up with price inflation, and I am going to touch on this a bit, because I think understanding the true causes of the current economic situation is vital to getting the policies that will address them correctly. This is particularly difficult for those on fixed incomes. Many of us who are working have access to regular salary increases, but seniors or those who are at the lower income levels, especially if they are not unionized, often have to contend with these dramatically rising prices with fixed incomes. It is important for the House to recognize how difficult that situation is for them.

Food bank use is up. We are hearing reports that families are even reducing their meals. Can members imagine that in a country as wealthy as Canada, a G7 country, in the year 2022, citizens actually have to reduce their calorie intake because of the economic situation?

I just want to mention small businesses. In my riding of Vancouver Kingsway, we are really powered by small businesses, and small businesses are having a particularly difficult time as well. Their input costs have gone up, and although they are raising their prices, there are limits to how far they can go. I think it is particularly important for us as a federal Parliament to craft policies that recognize the difficulty that small businesses are facing and that acknowledge the vital importance that small businesses and medium-sized businesses have in our economy. Let us craft policies that are responsive to their needs so that we can empower them and provide the context and opportunities they need to grow.

The causes of the current situation are varied, and we have heard a sample of them in the House. Some in the House blame government spending. Others say this is the result of government deficits. For us in the New Democratic Party, we believe that if we look at the data and look at the actual evidence before us, it is clear that the current situation is the result of several factors. For one, there are clearly supply chain interruptions that really took off when the COVID pandemic hit in early 2020. They clearly have played an important role in driving up the price of goods. We also have the war in Ukraine. Whenever we have a major global destabilizing event like this, there are inevitably negative economic ripples, and I think it must be acknowledged that this is playing a role.

However, I think uniquely in the House, the contribution the New Democrats are bringing to this economic discussion is one that, frankly, the Conservatives deny and the Liberals ignore. It is the impact of corporate price increases. In other words, it is the gouging that is going on by the corporate sector in many cases. The greedflation that is being caused has to be acknowledged, I would think, as not only a major cause of the current economic travails that are affecting our country, but the major cause of them.

In my view, and in the view of many economists like Jim Stanford, corporations are using the cover of macro-events, such as the global issues around supply chains and the war in Ukraine, as an opportunity to drastically increase their prices and blame that on other factors. I think that is quite clear. If we asked any worker in this country if their wages have gone up by 7% this year, we would find out very quickly that the current economic situation is not caused by a rapid increase in wages. If we go to a store and see the prices on the shelves, we will find out very quickly what is causing the increase in prices.

Let us look at this with a bit of a sectoral analysis. The oil and gas industry last year racked up $140 billion in profits in one year alone. It was the highest profits in a year on record for the oil and gas sector. We have the FIRE industry, the finance, insurance and real estate industry, where profit margins, which I will talk about in a brief second, have gone up by a factor of threefold. We also have the food monopolies. There are three major food chains in the country, and their profits have increased dramatically, in some cases by an additional $1 million per day. One of those companies, Loblaws, outperformed its best years ever in both Q1 and Q2 of this year.

While Canadians are suffering and struggling, those corporate sectors are prospering like they have never done before. That is an economic imbalance the New Democrats believe has to be acknowledged and addressed.

I want to speak just for a moment about profit margins, because some apologists for the corporate sector deny this reality. They say that profits are up because input costs are up and that profits are in line with what is normally expected. That is empirically wrong. If we look at profit margins, which are not about gross profits but the percentage of profits these sectors have made, invariably they are up dramatically in almost every major sector in this country. That speaks to companies that are taking advantage of the current situation for their private interests.

If we do not get the diagnosis correct, it is very difficult to get a proper treatment. The Bank of Canada is attempting to treat the current situation by offering the solution of increasing interest rates. Unless I have missed it, I have not yet heard a word from the Bank of Canada about how we address or curb excessive corporate profits. Their approach is an outdated one. Basically, they want to use the club of interest rates as a cudgel to pound down inflation.

When we raise interest rates, as they are doing, there are obvious economic impacts and we see what they are. It increases the cost of housing. It increases mortgage rates for all those hundreds of thousands or millions of Canadians who currently hold a mortgage that is going to come due. They will pay more. Of course, if we increase mortgage rates, there is a derivative effect: We end up impacting and increasing rents, because landlords who own properties and have to pay more on a mortgage need more in rent. Raising rates also increases the cost of loans and credit cards. In other words, what they are trying to do is suppress employment and wages, and I think that is improper.

Bill C-32 is worthy of support because it has some salutary benefits. It would remove the interest on the federal portion of student loans and apprentice loans, something the New Democrats have long called for. It has the Canada recovery dividend too, which would make banks and life insurance groups pay a temporary, one-time 15% tax on taxable income over $1 billion over five years.

We want this legislation to pass but we want much more. We want to see the Canada recovery dividend extended to big box stores and oil and gas companies and want a permanent surtax on the profits of the oil and gas industry. We want to see the government finally go after the offshore tax evasion that costs to the tune of $30 billion, and we want to see employment insurance reform. Furthermore, we want policies that help working Canadians, not the big corporate sectors that the Conservatives and the Liberals have been favouring in the House for decades.

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

Mr. Speaker, I would like to pick up on the progressive side of what we have been able to accomplish. We hear about issues such as health care, and I think my friend and I have some commonality on the importance of national health care. There might be some concerns related to financing.

We have the dental plan for children under the age 12. The member referenced the important issue of student interest rates being taken away, which is again a very strong progressive measure. That is going to be done on a permanent basis.

I am wondering if my friend could provide his thoughts on how, in a relatively short period of time, we are making significant gains in providing these supports. This is a national government demonstrating strong leadership by supporting Canadians directly.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, yes, I would agree with my hon. colleague that improving public programs such as dental care has an important economic effect on Canadians, as well as, of course, a profoundly important beneficial impact on their health. That is why the New Democrats put dental care on the national agenda. That is why we campaigned on it, drove it forward and demanded it be part of the confidence of supply agreement. Make no mistake, there would be no dental care progress in the House whatsoever if there were not 25 New Democrat MPs who demanded it to be the case.

It will have an economic impact because, by the time our plan is put in place, some nine million Canadians who do not have it now will have access to dental insurance. If they had had to pay out of pocket for dental services, that means there would have been expenses that they would not have had to spend later. There is an example where we can not only improve Canadians' health but also relieve pressure on their pocketbooks at the same time. The NDP is going to keep driving that forward until every Canadian gets the dental care they deserve.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Mr. Speaker, I was just going through some numbers I received from the Library of Parliament on tax revenue to the Government of Canada from the oil and gas sector. Back in 2019, it was as high as $807 million. When we talk about oil and gas companies bringing in record profits, we know the government is also bringing in record taxes from the oil and gas sector.

The member talked about his dental care bill. If they succeed in killing off the oil and gas sector, where are they going to get the money to pay for their programs? These are programs such as the dental care bill, which has passed through the House of Commons, and which has a much larger bill than the tax revenue from the oil and gas companies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, a really important question the House needs to start taking into account is the cost of not dealing with the climate crisis. What are the costs of dealing with the massive damage that was done in the Atlantic provinces through the climate crisis, the hurricane that just hit there? What are the economic costs of having a drought in British Columbia, or having wildfires and towns being incinerated, such as what happened in Lytton? The costs are in the hundreds of billions of dollars.

We better start accounting for that. If we do not deal with the climate crisis, if we continue to allow the untrammelled burning of carbon on this planet, as the Conservatives want, then economic activity is going to be ground to a halt in many cases. What we need in this country is to transition our economy to a sustainable one.

I, for one, believe that is a way our country could benefit the 21st century. I do not think dealing with the climate crisis is a cost. It is an essential transition that will position our economy to be even more profitable in the 21st century. Ignoring the climate crisis, allowing disasters to occur and having our natural environment degraded to the point where the planet is sending a strong message that we cannot keep burning carbon the way we do, as the Conservatives want us to, is no economic plan that I can get behind.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Mr. Speaker, I thank my hon. colleague for his speech, in which he talked about the economic consequences of the climate crisis. I wonder if he could comment on the fact that even today, in 2022, the government continues to give billions of dollars in subsidies to oil and gas companies.

Does he not think that we will pay for this later in terms of climate change adaptation?

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Speaker, I agree completely with my hon. colleague. There is not a single case to be made for any government in the world to be subsidizing the oil and gas industry or the production of fossil fuels. Not only is it unnecessary, but it is also counterproductive to what the world needs to be doing, which is reducing our carbon output.

[The Deputy Speaker, Chris d'Entremont]

While I appreciate the long questions and the long answers because the debate is interesting, let us try to keep them a little shorter so we have the opportunity to get as many people in as we possibly can on the debate. Unfortunately, we are out of time for this member and will have to move on to the next one.

The hon. member for Winnipeg South Centre.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Mr. Speaker, it is always a great pleasure to rise in the House to speak on behalf of my constituents in Winnipeg South Centre, especially at this moment.

We are coming through a pandemic, and its impact on the country's balance sheet was a once-in-a-lifetime stress on the nation's fiscal framework, with unprecedented demand and need, and there was urgency to protect individuals and businesses whose very financial survival depended on a government that was positioned and prepared to help immediately. We responded effectively and urgently, but perfection is elusive. We were not perfect, but I think there is a consensus that, under the circumstances and with the urgency that was felt by government, we did a good job. However, we cycled back to individuals and businesses, took their feedback and rolled that into an iteration that was responsive to what we heard from the people who mattered the most, and those are Canadians.

The role of government was at the centre stage of determining the appropriate response to this pandemic, and I think that the entire country learned to understand the collective responsibility that lay in front of us during this unprecedented time. To effectively deal with this once-in-a-lifetime set of circumstances, we had to respond not only in a way that was sensitive to the needs of today but also with an eye to what comes later. The fall economic statement understands that, because there is inevitably a balance between wealth creation and wealth distribution.

We are very good in this country at debating whether or not we think we should spend the nation's resources on health care or education, or maybe we should give more money to symphony orchestras. We can have honest debates about that, but those debates would be sterile if nobody was producing the wealth. That is the job of the private sector, and the spirit of entrepreneurship has so well characterized our capacity to grow as a nation in ways that offer opportunity to our citizens.

There is a difference in the way the three political parties respond to this balance, which we need. The NDP, I think, has historically been pretty good at determining ways in which we can justly distribute the nation's wealth, but I do not hear an awful lot of talk about how we create it, who should create it and the necessary framework within which it can be done effectively. I would like to hear more from my New Democratic friends and colleagues about the importance of the entrepreneurial spirit. I do not hear those words very often. From the Conservatives, I do not very often hear talk about a just and equitable distribution of wealth.

If the Liberal Party, my party, has been successful, really since the very earliest days of Confederation, we have been successful because we have found the sweet spot in the centre between those two imperative values of creating and distributing wealth. The reason we have been successful, I think, is because that is where Canadians are, and we have been able to tune in to what we believe to be the centre of the Canadian electorate and Canadian thinking, as we have to be.

The fall economic statement recognizes the importance of that balance, and the finance minister has said so repeatedly. I believe that we, as a party in government, are very well positioned to understand the sensitivity of that balance, and that is evident in the fall economic statement. It is very important to recognize programs in that way and in that context, and I think that the Deputy Prime Minister and Minister of Finance has done an excellent job.

She knows from her own experience. Having been raised in Alberta, she understands the importance of the energy sector to the Canadian economy, past, present and future. The prairie economy is very exciting, and having been a prairie dweller my entire life, I see it.

My father used to say to me when I was a very small boy, “Jimmy, what is good for the farmer is good for our family.” I have said that many times in this chamber and in the Manitoba legislature, where I also served, because, without understanding the production of food and value-added crops, trade with the world, and the value of the contribution of producers to the Canadian economy, we will not understand the driver of not only economic growth and the creation of wealth, but also of what is essential for the sustenance of a healthy life.

The prairie economy is so much more than that. It is trading with the world. It is providing value-added services to nations around the world that rely on Canada to be the supplier not only of food, but also of what powers our economy. Let us take canola as an example. Who would have thought, even 10 or 20 years ago, that the power contained in canola would help power the world, in addition to it being such an integral part of the food supply that keeps us healthy and keeps us strong? With respect to the future of the energy sector, we have very important debates about that. There is no question in my mind that the prairie region will also lead that growth, just as we have in the past.

Therefore, I am very optimistic about the understanding that is apparent in the fall economic statement. The minister and our government understand this question of balance and of timing. So much of what we do is about how we pace reform, and it has to be commensurate with the population's embrace of that pace. That requires sensitivity. We have to have our ears open all the time. We have to take the message to these regions that produce the wealth and be prepared to change course as circumstances change.

I want to make one more point. It is not only about the substance of these important debates, but it is also the style and the tone with which we deliver our messaging. I was in the House yesterday, and I could not believe what I saw hiding behind a curtain. There were members of this chamber who called for the quorum, while others were conspiring behind the curtain, to see if they could embarrass the government. I could not help but think to myself that it looked like a grade six stunt.

Why is it that we think that we can get away with that kind of behaviour? We shout at each other, some more than others. I am not a very good shouter. I think one can be very effective whispering, and actually maybe even more effective because, if we are whispering, they have to pay attention. The style in which we engage in these debates in this chamber also characterizes the capacity to move on.

I am very happy that this fall economic statement understands the importance of balance between taking the nation's wealth and distributing it equitably, and putting a lot of emphasis on the capacity of the private sector to create that wealth.