Mr. Speaker, I am pleased to be able to start off the second reading debate on Bill C-92, the Income Tax Budget Amendments Act, 1996.
The Minister of Finance has asked the House to approve this procedure so that it can be passed quickly, while allowing members to examine the bill in detail.
We cannot emphasize enough how important it is for this bill to be passed quickly. It includes a whole series of important measures for increasing the fairness and effectiveness of the Canadian tax system. The measures were initially unveiled in the 1996 budget, a
budget that received the support of the Canadian public and of this House.
Since that time a large number of Canadians have planned their affairs on the basis of these measures, many of which are of a relieving nature.
The introduction of this bill was delayed for an important reason. Most of my colleagues will recall that the 1966 budget included provisions to enhance the working income supplement of the child tax benefit, the so-called WIS.
In the period following the 1996 budget it became clear to the government that it had the opportunity and the obligation to do more to advance the well-being of Canadian children. This meant, among other things, revisiting the proposed changes to the working income supplement set out in the 1996 budget.
After extensive discussions with the provinces and territories, the federal government decided to propose in the 1997 budget the Canada child tax benefit. This new benefit would eventually combine the working income supplement with an enriched child tax benefit. This proposal represented a major step toward a national child benefit system. As a result, the changes to the WIS that would have otherwise been contained in the bill have not been included.
The bill was available to taxpayers in draft form late in 1996. Since that time, in keeping with the government's usual practice, taxpayers have had the opportunity to comment on the legislation and consult with the Department of Finance.
Let me now review briefly some of the measures included in the bill before us. As the legislation deals with taxation, probably the most important point to note is that it does not raise taxes, not corporate, not excise, not personal. Indeed, as my hon. colleagues know, the government has never raised personal income tax rates in any of the four budgets it has brought before the House. This is no small achievement, given the magnitude of the fiscal problem we inherited. Moreover, the Minister of Finance has made it clear we will lower taxes once we can afford to do so and once we know that it is permanent.
What the government has done in the meantime, and what was done in the 1996 budget, was to propose a number of measures to enhance the fairness of the tax system and ensure that it operates as effectively as possible. These measures included changes affecting registered pensions plans, RPPs and registered retirement savings plans. Those changes will help to ensure the sustainability of those programs while better targeting assistance to modest and middle income Canadians.
For instance, the bill proposes the elimination of the seven-year limit on carrying forward any unused portion of a maximum allowable RRSP contribution. This will make it easier for many Canadians who find it hard to make full RRSP contributions in their younger years to eventually benefit from the RRSP system when they can afford to do so. This is a very important change.
The bill also proposes to increase tax assistance to students and their families.
First, in the area of registered education savings plans or RESPs, the bill proposes to increase the annual contribution limit from $1,500 to $2,000 per beneficiary. It would increase the lifetime limit from $31,500 to $42,000. The 1997 budget proposed to enhance tax assistance delivered through RESPs further still. The bill also proposes to increase the amount in which the education tax credit is calculated from $80 to $100. Once again this is an amount the 1997 budget has proposed to increase still further.
The bill will also increase from $4,000 to $5,000 per year the limit on the unused tuition fees and education amounts that students may transfer to spouses or parents. This measure will also be further enhanced by the proposals in the 1997 budget.
Today's bill will also improve access to training and retraining for many Canadians who have young families to care for. Specifically, it proposes to broaden eligibility for the child care expense deduction by allowing parents who are full time students to claim the deduction against all types of income.
The bill will also raise the age limit for children for whom child care expenses may be claimed from 14 to 16, thereby providing increased tax savings for families with older children. A further measure in the bill that will benefit taxpayers caring for children is the change to the rules governing child support. The bill provides that child support paid under a court order or written agreement made after April 1997 not be deductible by the payer nor included in the recipient's income. This change reflects the widely held view that the old system of deduction inclusion was not working for the benefit of children.
This tax measure is one in a series of measures affecting child support payments that were recently approved by the House. In addition to the tax changes in the bill, this series of measures includes guidelines for the fair and uniform awarding of child support, as well as new measures for enforcing related orders.
Not only does the bill increase support for education and assistance to children, but it also increases tax assistance to the charitable organization sector. The bill reflects the government's policy of giving charitable organizations the tools they need to do their work.
For that reason the 1996 budget increased from 20 per cent to50 per cent the annual limit on the amount of a taxpayer's net income eligible for tax assisted charitable donations. Once again this is an area in which the 1997 budget has further substantially increased tax assistance.
I will skim very quickly over some other major measures in the bill. I begin with labour sponsored venture capital corporations. Generous federal and provincial tax credits have helped these funds, sponsored by labour organizations, attract large amounts of venture capital for investment in small and medium size businesses. By the time of the 1996 budget they had more than a three-year supply of capital. In view of the substantial level of capital accumulation, the bill includes a range of measures that will help keep the level of special tax assistance to these funds in line with current fiscal realities.
The bill also includes some important measures for the energy and resource sectors. For the oil, gas and mining industries, the bill would modify rules relating to the resource allowance, thereby resulting in a more stable and consistent tax structure. As for the oil, gas and mining industries the bill proposes significant improvements to the flow through share regime, improvements that will make the system less restrictive and will remove existing incentives to economically inefficient corporate decisions.
The bill also includes measures designed to promote sustainable development of energy resources by providing an essentially level playing field between certain renewable and non-renewable energy investments.
The measures I have outlined will make the tax system fairer and more efficient. They were announced as part of a budget that has been debated and approved by the House and favourably received by Canadians. Sending the bill to committee before second reading will expedite its passage while it enhances the ability of this House to review the bill intelligently. With these considerations in mind I have no hesitation in urging my hon. colleagues to approve today's motion.