Bill C-8

Economic and Fiscal Update Implementation Act, 2021

An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures

Part 1 amends the Income Tax Act and the Income Tax Regulations in order to
(a) introduce a new refundable tax credit for eligible businesses on qualifying ventilation expenses made to improve air quality;
(b) expand the travel component of the northern residents deduction by giving all northern residents the option to claim up to $1,200 in eligible travel expenses even if the individual has not received travel assistance from their employer;
(c) expand the School Supplies Tax Credit from 15% to 25% and expand the eligibility criteria to include electronic devices used by eligible educators; and
(d) introduce a new refundable tax credit to return fuel charge proceeds to farming businesses in backstop jurisdictions.
Part 2 enacts the Underused Housing Tax Act . This Act implements an annual tax of 1% on the value of vacant or underused residential property directly or indirectly owned by non-resident non-Canadians. It sets out rules for the purpose of establishing owners’ liability for the tax. It also sets out applicable reporting and filing requirements. Finally, to promote compliance with its provisions, this Act includes modern administration and enforcement provisions aligned with those found in other taxation statutes.
Part 3 provides for a six-year limitation or prescription period for the recovery of amounts owing with respect to a loan provided under the Canada Emergency Business Account program established by Export Development Canada.
Part 4 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of supporting ventilation improvement projects in schools.
Part 5 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of supporting coronavirus disease 2019 (COVID-19) proof-of-vaccination initiatives.
Part 6 authorizes the Minister of Health to make payments of up to $1.72 billion out of the Consolidated Revenue Fund in relation to coronavirus disease 2019 (COVID-19) tests. It also sets out reporting requirements for the Minister of Health.
Part 7 amends the Employment Insurance Act to specify the maximum number of weeks for which benefits may be paid in a benefit period to certain seasonal workers.

The House proceeded to the consideration of Bill C-8, An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures, as reported (with amendment) from the committee.

Speaker's Ruling

[The Deputy Speaker, Chris d'Entremont]

There are 10 motions in amendment standing on the Notice Paper for the report stage of Bill C-8.

Motions Nos. 1 to 10 will be grouped for debate and voted upon according to the voting pattern available on the table.

Motions in Amendment

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

moved:

Motion No. 1

That Bill C-8 be amended by deleting Clause 2.

Motion No. 2

That Bill C-8 be amended by deleting Clause 3.

Motion No. 3

That Bill C-8 be amended by deleting Clause 4.

Motion No. 4

That Bill C-8 be amended by deleting Clause 5.

Motion No. 5

That Bill C-8 be amended by deleting Clause 6.

Motion No. 6

That Bill C-8 be amended by deleting Clause 7.

Motion No. 7

That Bill C-8 be amended by deleting Clause 8.

Motion No. 8

That Bill C-8 be amended by deleting Clause 9.

Motion No. 9

That Bill C-8 be amended by deleting Clause 44.

Motion No. 10

That Bill C-8 be amended by deleting Clause 45.

Mr. Speaker, happy Friday. I believe few would dispute that we live in highly unusual times. Indeed, we are charting a path through a pandemic without a playbook. This is not the fault of the government: Every government is in the same situation, and as we all know, different governments have proposed different ways of moving forward. We must recognize that we agree, and I say “we” because we have to in large part unanimously agree, on most fiscal measures to this point. Canadians sent a minority Parliament to Ottawa and aside from the Prime Minister's shameless attempt to stage a power grab by calling an expensive and unnecessary election, here we are again in this minority Parliament.

We must recognize that, rightly or wrongly, our fiscal cupboards were literally spent dry responding to this pandemic. I am not here today to debate the past. I am simply pointing out the obvious. A significant portion of Canada's fiscal capacity has been spent. It is gone and we must recognize that. Why? Because in the event we run into any type of future emergency situation, we will have less fiscal room to respond.

Again, I do not raise that to point a finger of blame. I raise that because we must recognize that, going forward, we must be very careful how we proceed fiscally. Let me give an example. If anything, during this pandemic we have learned that our health care system was ill equipped to deal with the stresses and demands placed on it, more so when we see fully vaccinated Canadians who find themselves in our hospitals in the ICU. Every premier of every political stripe is clear that current Canada health care transfers are not enough to meet the needs of Canadians now or going forward.

Here is something I would like to share with every member of this place. The Canadian health care transfer stands at over $45 billion a year. In the current fiscal update bill, spending is forecast to increase to over $55 billion in fiscal 2026-27. In other words, there is an increase of over $10 billion in that time frame. I am hopeful that my friends in the fourth party hear that clearly, as they have a bad habit of referring to increases in health care spending as cuts.

I will get back to this increase in health care spending. The increase in health care transfer spending between now and fiscal 2026-27 is $10 billion. Here is the problem. Today, the interest we are paying on servicing our debt is just over $20 billion. Over the same time, it too will increase. The same budget bill forecasts that debt servicing costs will increase to almost $41 billion by fiscal 2026-27.

I can already hear members of the government say, “But debt-to-GDP ratio”. They will say, “The AAA credit rating”. They will say, “But now there is another thing”. Between now and fiscal 2026-27, we know two things will happen. The health care transfer will increase by $10 billion, but servicing our debt will increase by over $20 billion. That is $10 billion on health and $20 billion on debt.

To be clear, our interest costs of servicing our debt are climbing at twice the rate as our increases in the Canada health transfer. Does anyone not see that as being as a serious problem? The Parliamentary Budget Officer put out a report recently that said that the numbers the government put out in its last fall fiscal update actually underestimate our debt servicing costs in 2026-27 by $6 billion.

When the government talks about all the things it wants to do on the economy, and when it talks about all the action it wants to take, we really have to understand that we are putting ourselves in a situation where we will not have the fiscal room to respond in cases of further external or internal events. In external events, we have nowhere further to look than the situation that is happening in Ukraine.

We heard from the Governor of the Bank of Canada last night. We see that now the talk about inflation being transitory has washed away. We are now seeing that Canadians are being told by economists they face a perfect storm of higher gas prices, rising interest rates and the costs that go with that, and rising food prices.

The Dalhousie report that came out earlier this year said the average family would be paying over $1,000 more in just grocery costs alone. That is not even factoring in the hit to their income with Canada pension plan increases that the government has put forward.

We do not have the fiscal capacity, in my mind, to be able to say to Canadians that we can handle external events. Why? It is because the government has baked extra spending into it and, according to the Parliamentary Budget Officer, it is not giving proper projections of that. It is probably going to be higher. Government needs to be better than this. Our citizens are worried and anxious about their financial future, and the government continues to kind of walk around the issues that we have.

My particular area of focus right now, both on the finance committee and here in the House, has been given to me by our leader of the official opposition. I have been given the task of focusing on housing and inflation. Here is what I have to say on that matter: There has been a 43% increase in home prices. Right now, the average Canadian home price is $811,000 and rapidly rising. We are seeing where the number of people purchasing homes and the low supply, coupled with many of the things that are causing those fundamentals to go up, are pushing away the dream of home ownership. The government continues to put forward policies, inadequate policies in my view, that simply walk around the issues.

The great MP for Simcoe North put forward a very reasonable amendment. In fact, members are probably going to be a little shocked here. We actually were trying to help the government by putting forward that amendment. It was around banning foreign ownership of residential properties. It would have been for two years so we could take a look. The government says that it wants to look at data. We could have given it a two-year ban, and essentially we would then be able to see if it pushed down demand in the market and allowed more young Canadian families to have that first shot at home ownership, by pulling out, for a temporary time, foreign bids.

The government voted against the amendment. We were only trying to help this Prime Minister who, by the way, in multiple elections has said that he wants to address skyrocketing housing prices, which are a gobsmacking 43% higher than in 2019. The Liberals voted against the amendment. That is the main problem with the current government. It has underestimated how much money it has spent. We will see much of that $6-billion gap that the Parliamentary Budget Officer has identified in our fiscal track, so we are going to have less firepower from that.

We also have, at the same time, the perfect storm in which economists have told us that Canadians are going to be subjected to gas prices that they have never seen. I was born in Victoria, and I saw yesterday reporters pointing out that the cheapest form of gas was priced at $1.94 on the island. I have never seen that. In April, we will see the carbon tax go up to $50 a tonne, the backstop as well, and we will see where gas becomes increasingly unaffordable.

I have put forward with my able colleague, our industry critic, some very reasoned amendments to help improve the legislation that has been brought forward. Really, we can no longer simply let the government talk around the issues. It needs to start putting forward real policies, such as banning foreign owners from purchasing Canadian properties to give Canadians that first chance at home ownership. The government continues to bring forward legislation that is not up to the task.

Let me say again that it is always an honour to rise in this place. Again, I am imploring the government for my own riding. Those flooding victims in Merritt, Princeton and other rural areas of British Columbia are counting on the government. Unfortunately, they are told to wait as well. This is the problem I have with the current government. It is not addressing these important needs that Canadians have right now.

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

Mr. Speaker, I want to thank my hon. colleague for putting forward some very reasonable amendments to the bill and for his advocacy on the housing file.

I would like him to expand a little more on the excessive spending and where we will be going when the cost of this borrowing goes up. I note in particular his comment about the over $20 billion a year that we are currently spending just to service the national debt. That is more money than we are putting into national defence despite how volatile the world is right now. We are seeing what is going on with Russia and its invasion into Ukraine.

I would like him to comment on that, because I believe we need to make a serious investment in national defence in the coming years.

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

Mr. Speaker, that is an excellent question from my colleague. As I said earlier in my speech, other important spending that Canadians count on, like health care, is set to go up at a certain rate, but our debt servicing will be far in demand. In fact, the debt servicing rate will be far over what we will spend in the fiscal year 2026-27 on military.

Yesterday, the Minister of National Defence tried to assure the House that our Arctic sovereignty is not at risk, but we can look at where other countries have been putting their resources. Russia has been investing heavily in nuclear ships so that it can push its sovereignty claims further into the Arctic. We need to ask ourselves if we are prepared to do the same. With the way the government has spent, I would say we are not.

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

Mr. Speaker, I want to begin by congratulating my colleague from the Standing Committee on Finance for his speech.

There is one thing about Bill C-8 that the Bloc Québécois members find particularly bothersome, and that is the 1% tax on underused housing owned by non-resident non-Canadians.

We could discuss the policy to determine whether it is a good measure in the context of the current housing shortage. The problem is that the policy sets a precedent. By collecting property taxes, for the first time in history, the federal government will be getting involved in a taxation area that, until now, has fallen under the exclusive jurisdiction of the municipalities and therefore the provinces.

I would like my colleague to share his thoughts on respecting provincial and municipal jurisdictions.

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

Mr. Speaker, I certainly appreciate the work the member does on behalf of his constituents.

In our Constitution, it is very clear that the federal government, rightly or wrongly, has the ability to tax in areas like property. It has taxing powers that provinces and municipalities do not share. It has a very wide range of tools. However, typically governments have trended not to go into those areas, because first of all, there is only one taxpayer, and second of all, the federal government does not have an established line of view into that area. This is the problem we have. The Liberals introduce all these new things whether or not the 1% would be effective and whether or not they are violating what is traditionally considered a provincial area, because municipalities and property taxes are provincial. I would say they are walking around the issue, not addressing it.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, my colleague was talking about his concerns with the federal government's fiscal capacity. Do members know who does not have concerns about fiscal capacity? It is the companies that made off like bandits by profiteering during a pandemic and that collected benefits from the federal government while paying out stockholder dividends and so on.

In an effort to invest in people and workers to make our communities all they can be, why do the Conservatives neglect the fiscal capacity of the very richest and wealthiest corporations in this country? They never put measures in place to actually tackle that gross inequality, which is expanding and has accelerated over the last two years.

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

Mr. Speaker, my friend from the island will probably recognize that we have been very critical of the government regarding the Canada emergency wage subsidy for allowing profitable companies to access it while at the same time increasing dividends to shareholders and allowing bonuses for executives. This is unlike when Minister Jim Flaherty made some concessions on pensions with Air Canada. He put tight controls to make sure that executives could not profit from that.

We are on the record as opposing those kinds of payments, but I will remind the member that we are not in government. If he has an issue, he should be pointing the finger across the way and not at the Conservatives, because this program was designed by the government, and what it would describe as a bug is actually a feature.

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

Mr. Speaker, we are at report stage for Bill C-8, the economic and fiscal update implementation act of 2021, which contains a number of measures.

The Bloc Québécois agrees with the thrust of the bill. However, from the beginning, we have been pointing out a major problem, and that is the fact that the federal government is sticking its finger in the property tax pie. This is the first time that has happened.

There is a housing shortage. The proposed measure will mean that foreign residents who are not permanent residents or citizens will pay more if they have a residence in Canada that they are not living in. This measure could marginally assist in addressing the housing crisis. We do not disagree with the principle, but as the song by Jacques Brel says, il y a la manière, there is a right way to do things.

We see this as a dangerous precedent that brings to mind other similar cases in Canadian history. Today, Ottawa is proposing to interfere in a new taxation area, the only remaining area that it is not already involved in, and that is property taxes.

The part of Bill C‑8 that targets non-residents proposes a 1% tax on underused housing. As I said, the idea may be a good one, but is it right for Ottawa to do this in such a cavalier fashion without consulting the municipalities and the provinces? I have a bad feeling about it, and we see this as a serious problem because different levels of government all have their own taxation powers.

Property tax is under the jurisdiction of the municipalities and other creations of the provinces, such as school boards. Revenue sources are limited, so when Ottawa steps in and helps itself to a portion of the property tax base, that sets an unfair precedent. Moreover, the federal government will collect this tax without even talking to the people, the organizations and the levels of government that handle this area of taxation. That is a serious problem.

We are only talking about some $100 million annually, which will not have a huge impact on the fiscal imbalance. The real problem here is precedent. To collect this new tax, the federal government, its departments and the Canada Revenue Agency will have to develop a brand-new mechanism and will have the power to collect this revenue from property taxes. The history of taxation in Canada gives us reason to worry.

During the First World War, the government decided to introduce a corporate tax to fund the war effort, citing exceptional circumstances. That tax was justified and was supposed to be temporary, but Ottawa never cancelled it and is still collecting it to this day.

The same scenario reappeared during the Second World War, when Ottawa introduced individual income tax to pay for the war. This exceptional tax was supposed to be temporary too, but Ottawa is still collecting it to this day.

Everyone in Quebec remembers Mr. Duplessis's rallying cry “give us back our loot”, which I would like to co-opt today for property taxes. This is how Ottawa works. Once it takes hold of a taxation area, it never gives it up, even if temporary and extraordinary circumstances might seemingly justify it.

That is the problem with this machine. It is always getting bigger and taking over everything, aiming to be the be-all and end-all.

We are telling the federal government to be careful. Municipalities, school boards, and organizations associated with the provinces and Quebec have the opportunity and the power to manage this area, which they do while drawing only limited resources. We have to be careful not to let the federal government get its hands on this area of taxation, since the provinces and municipalities are already under-resourced and struggling to provide all the services within their jurisdictions.

As we know, the Parliamentary Budget Officer publishes a fiscal sustainability report nearly every year. Even with Ottawa's extraordinary spending during the pandemic, his findings have not changed. In the long run, over the next few decades, Ottawa will have a budget surplus, and without major changes, the provinces will be saddled with debt levels from which they will never recover.

That is why all the provinces are asking Ottawa to fund health care at 35%, or just over a third of spending, simply to restore some balance. Studies by the Conference Board of Canada have reached similar conclusions. The Council of the Federation also says that balance needs to be restored. The Parliamentary Budget Officer's studies remind us of this every year.

Rather than agreeing with us and saying that the federal government is taking too much tax for the services provided and will therefore increase health transfers or leave tax points, now Ottawa wants to get its hands on the last taxation area that it has not waded into until now. This is unacceptable. It makes no sense.

This is what constitutionalist and law professor Patrick Taillon said on February 17, in parliamentary committee:

However, being a good idea is not an excuse to flout our constitutional principles. From the Charter of Rights and Freedoms to the division of powers, the spirit and letter of the Constitution must be respected. Without the prior consultation of the provinces or an agreement with them—in other words, without some legal due diligence—this good idea has vulnerabilities.

It is clear that the pith and substance of the measure involve the regulation of housing law, and there is no doubt that the provinces have exclusive jurisdiction over housing when it comes to private law, specifically, property and civil law and, generally, in relation to social policies and local affairs.

What the constitutional expert, Mr. Taillon, is saying is that because the purpose of this tax is to change behaviour in housing, an area of jurisdiction, it is highly likely that it is a regulation in disguise and would in fact be unconstitutional. He said that unfortunately, it is the courts that will have to rule on this.

It would have been interesting, smart and pragmatic to check all this ahead of time instead of exposing ourselves to court challenges that could end up overturning the legislation, knowing that if the act were to be struck down, the federal government's entire property tax infrastructure would already be in place and spending already committed. The damage would have been done. This would undermine the municipalities.

Should it not be deemed unconstitutional—we cannot assume how the courts will rule—it would nonetheless set a dangerous precedent because the tax will have been introduced without co-operative federalism, which could worsen the fragile fiscal balance within the federation. The balance would be unfair, and that is truly a serious problem.

In closing, the Bloc Québécois proposed a very simple amendment in committee stating that if Ottawa wants to move ahead with this tax, it must have the province's agreement to impose it, ensuring that there are consultations with the municipalities.

In closing, I take exception to your decision, Mr. Speaker. I take issue with you this morning, because you, and I am obviously directing my comments to the table, deemed that our amendment was out of order.

We do not agree with that decision. Our amendment did not broaden the scope of the act, nor did it alter it. It merely sought to make the bill respect the Constitution. We are therefore very disappointed with your decision, which makes the historic precedent set by Bill C-8 against the rights of the municipalities and provinces even worse.

In spite of my rebuke, Mr. Speaker, I thank you.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, I thank the member for his excellent speech.

This bill includes measures to provide funding for health care and COVID-19 tests. Every day, the Bloc asks for an increase in health transfers for Quebec.

What does the member think of these measures? Will he support them?

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

Mr. Speaker, I thank my esteemed colleague from Sarnia—Lambton for her question.

Bill C-8 provides funding for COVID-19 tests. Ottawa is going to pay for COVID-19 tests and send them to the provinces.

We want transparency and the ability to follow up. We naturally agree with this necessary expenditure. However, it reminds us that Ottawa is not contributing its share to health care.

In the 1990s, the Liberal government decided to fix its deficit problem by reducing transfers to the provinces. Since then, Ottawa's revenues have far exceeded the services it provides. Health care funding must be rebalanced. We do not want conditions, we want money now.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I am sure my colleague will agree with me that a lot of water has passed under the bridge since the fall economic update was presented to the House back in mid-December, both here in Canada and all around the world.

I know the member and his party have been very active on the issue of climate change. I would like to hear his thoughts on what kind of fiscal capacity he would like to see the federal government direct toward climate change going forward because of the economic costs that will be incurred if we do nothing or too little.

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

Mr. Speaker, these days, we seem to be jumping from one crisis to the next. The Emergencies Act was applied recently in response to the siege in Ottawa. Now there is a barbaric war going on, in which crimes against humanity are being perpetrated. This is unconscionable in 2022.

All of this is going on against the backdrop of an environmental crisis. Yesterday, the Governor of the Bank of Canada appeared in committee and told us again that we are underestimating the economic consequences of the climate emergency. The clock is ticking. We must act now.

Quebec has adopted a carbon market system, which is an excellent system. We are disappointed that the United States and the Canadian provinces have not gotten on board, because this system could have worked well.

Yes, we must do more. The Bloc Québécois is proposing an ambitious green finance plan that would allow private funds to support green infrastructure and net-zero projects rather than polluting projects.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Speaker, my colleague gave a brilliant speech about the federal government's proposed interference into provincial jurisdictions.

Not only would this create a precedent, but it also seems as though the way the tax is designed, how it will be applied and collected, will not do much to help with the housing shortage.

I have to wonder whether the federal government should be using other methods, such as Quebec's proposal to try to address the housing shortage. What would my colleague suggest?