Finance Committee on June 1st, 2006

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Then how can you even say that the effective tax rate is going to go down?

[A voice]

He didn't. He admitted it's going up.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I didn't necessarily want to talk about the employment tax credit, but you decided to talk about the employment tax credit. All we're talking about is the tax rate. In the bill--

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I know we're all having some partisan fun here, but I wonder, Mr. Chair, whether it's appropriate to drag the officials into this kind of battle. It seems to me the officials should be asked some fairly clear questions but not be used in debate or partisan argument. I think in fairness to them we should maybe leave them out of this.

[The Chair, Conservative, Brian Pallister]

Madam Ablonczy makes a valid point. I think we should endeavour to encourage factual information to emerge from our questions as often as possible with the officials here. We can engage in the partisan rhetoric more effectively with one another, if we so choose.

Mr. Pacetti, to continue.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

All I'm saying is that we're talking about my amendment. All I'm requesting is that the tax rate that is on page 64, subclause 58(2), proposed paragraph (2)(a), the 15.25%, be reduced to 15%. It's black and white. We didn't address the finance officials; I think the other side did. That's it.

[The Chair, Conservative, Brian Pallister]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Again, I think we're lost on the fact that in law the rate is 16%. What we are talking about is reducing the rate in law to 15.5%. And it's part of an overall tax package that means Canadians will pay less tax. Canadians will pay less tax in budget 2006 than in budget 2005, budget 2004, any economic update that ever existed. And what we are asking when we are asking you to support this budget is are you going to support Canadians paying less tax?

This amendment will not support Canadians paying less tax, if implemented, because it would involve changing the budget.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Del Mastro.

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

It's really quite simple.

Mr. Del Mastro is correct in saying that the legislated tax rate is going down. Mr. Del Mastro is correct that most Canadians will pay lower tax overall. But neither of those two things is our point.

Our point, as confirmed by the finance official, is that unless we pass this amendment, the lowest income tax rate that Canadians actually pay will be going up, and we, on this side, are opposed to an increase in that income tax rate.

The second point is that, as Dale Orr stated, many Canadians will in fact be paying more income tax, more total tax overall, as a consequence of this budget. That is absolutely true.

Mr. Orr is a non-partisan economist, and he has calculated that on the basis of what Canadians actually pay, the well-heeled Canadians who live in Mr. Turner's $800,000 homes will be paying less because they pay so much in GST...because they spend so much they will be paying less.

Those with four-year-old children might be paying less, but there will be many taxpayers at the lower end of the scale, according to Mr. Orr's analysis, who as a consequence of this tax hike will be paying more tax. Therefore, the effect of our amendment is to prevent this income tax rate actually paid by Canadians from going up. Therefore, we would turn a misstatement by the Conservatives into a positive statement--i.e., that all Canadians would be paying less tax.

That would only be the case if this committee passes our amendment. Otherwise, there will be many Canadians who as a consequence of the increase in the income tax rate actually paid will end up paying more tax, and we don't want that to happen.

[The Chair, Conservative, Brian Pallister]

Mr. St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I waited a long time before commenting. I thought I'd let the Liberals and Conservatives continue their little show for a few minutes. I think everyone has made their point. Everybody is pretending not to understand what's going on, when in fact everyone does understand. On the one hand, there is the legislated rate, and on the other, what Canadians will actually pay. Similarly, there is income tax, and there is also the overall tax burden. Everyone has made his point. I think we should call the vote on this amendment.

[The Chair, Conservative, Brian Pallister]

Merci, Monsieur.

Mr. St-Cyr sums it up nicely.

Are there any further comments? Can I call the vote?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Chairman, a recorded vote.

[The Chair, Conservative, Brian Pallister]

I have been asked for a recorded vote.

(Amendment negatived: nays 6; yeas 5)

[The Chair, Conservative, Brian Pallister]

The next amendment is L-2.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

You can withdraw that one, because it's a function of the 15%. So 15% of $36,378 would have been $5,339, which is no longer applicable.

[The Chair, Conservative, Brian Pallister]

Amendment L-3.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's the same thing, it's just a calculation. So we can withdraw that one.

[The Chair, Conservative, Brian Pallister]

Now, I have no number on this next one. Amendment L-4.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The same thing.

[The Chair, Conservative, Brian Pallister]

Amendment L-5. This could repeat the debate we previously held, I suppose.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Yes. We can make it a bit simpler. Maybe we can go halfway, since they want to increase the tax rate to 15.25% from 2005 to 2006.

Here we're talking about rates for taxation years after 2006, so perhaps for taxation years after 2006, the committee would reduce the tax rate from.... I think we are now at 15.25%, but the bill states 15.5%, then back down to the normal rate of 15%.

[The Chair, Conservative, Brian Pallister]

Are there any speakers to this? Can I call for the vote? Do you wish a recorded vote? Should I encourage that?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Perhaps a friendly amendment. At least we can reduce it to 15.25%, so that we don't see an additional increase two years in a row, because in effect that is what's going to be happening. We're going to go from 15%, to 15.25%, and then 15.5%.