Madam Speaker, I will be sharing my time with the Parliamentary Secretary to the Minister of Finance. Thank you very much for the opportunity to speak today at the second reading stage of Bill C-25, the 1999 income tax amendments act.
Last fall Canadians were promised, in both the speech from the throne and the Minister of Finance's economic and fiscal update, that the government would set out a multi-year plan for further tax reductions.
Budget 2000 delivered on that commitment through a five year tax reduction plan that indexes the tax system against inflation, reduces the middle tax rate and overall cuts taxes by at least $58 billion by the year 2004, an average annual tax cut of 15%, with even greater relief for families with children. It is a plan that will provide further real and lasting tax relief for all Canadians. It is also a plan that had its foundations laid in previous budgets, including that of 1999.
Bill C-25 deals with the measures announced in the 1999 budget. The measures in Bill C-25 demonstrate the following principles of tax fairness: tax relief must be fair and we must start with those who need it most, low and middle income Canadians, especially families with children; priority must be placed on personal income taxes where the burden is greatest and where we are most out of line with other countries; ensure that Canada has an internationally competitive business tax system; and, tax relief must not be financed with borrowed money.
Bill C-25 goes a long way in addressing these issues. Many of these measures are the result of consultations with the industry or clients affected, a process to which our government is dedicated in any major policy change. Each measure addresses an inequity, inconsistency or a discrepancy in the tax system.
I want to focus on the measures that deal with the concerns of low and middle income Canadians and those who need it most. In particular, I want to speak about the following measures: tax credits for individuals, the Canada child tax benefits, medical expense tax credits and tax co-ordination with first nations.
On the issue of personal tax credits, which will bring tax relief to all Canadians, with the high cost of living in the north this will go a long way to alleviating some of the strain on families, especially those with children. Women will also benefit greatly as they remain among the poorest of the poor in Canada. Nearly half of the retired widows live below the poverty line.
The following personal tax credit measures will be of great assistance. First, the 1998 budget raised the amount of money that low income Canadians could receive on a tax-free basis by $500. The 1999 budget extends this relief to all taxpayers and increases that amount by $175. As a result of these two measures, all taxpayers will benefit from a basic personal credit sufficient to allow the receipt of up to $7,131 of tax free income. That is an increase of $675 over what was available in 1997.
The amount upon which the spousal credit is calculated will also be increased by $675 to $6,055. The threshold where the spousal credit begins to be reduced will increase from $538 to $606.
The 1998 budget began the process of eliminating the 3% surtax that was brought in by the previous Conservative government. The surtax was eliminated for taxpayers with incomes of up to $50,000 and reduced it for those with incomes between $50,000 to $65,000.
The 1999 budget completes the process by eliminating the 3% surtax for all taxpayers, so all Canadians will no longer have to pay the 3% surtax. This is a very significant amendment.
In addition there is the removal of 600,000 Canadians from the tax rolls. Together the 1998 and 1999 budget measures removed 600,000 Canadians from the tax rolls and reduced taxes for all 15.7 million Canadian taxpayers.
While all taxpayers will benefit from these measures, low income earners have the most to gain. A typical one earner family of four that receives an annual income of $30,000 or less will pay no net federal income tax. A similar family earning $40,000 will enjoy a 15% federal income tax reduction.
The next point is the Canada child tax credit. The 1998 budget announced a further $850 million under the child tax benefit for the national child benefit system. The 1999 budget sets out the design for the increased assistance agreed to by the federal, provincial and territorial governments targeted at low income families with children.
Effective July 1, 1999 the national child benefit supplement is $785 for the first child, $585 for the second and $510 for each subsequent child. As of July 2000 the supplement will be increased to $955 for the first child, $755 for the second child and $680 for each subsequent child. The increases are quite evident. This will be an increase of $350 for each eligible child.
For both Canada and the Northwest Territories the percentage of lone parent families has steadily increased over the past 15 years and slightly faster in the Northwest Territories. They have faced greater challenges in terms of income and labour force activity. Some 57.1% of single parent families led by women with children under the age of 18 live in poverty based on the 1997 statistics. The child tax benefit will be of benefit to these families in particular.
Turning to tax relief for Canadians with disabilities, hon. members are aware of how this will affect those individuals. They are aware of the government's continuing commitment to help these Canadians by building on the assistance that is already available.
In the last two years additional assistance has been provided through such measures as a caregiver tax credit, a refundable tax credit for low income earners with high medical expenses and the addition of new eligible expenses under the medical expense credit known as METC.
The METC is being extended further to cover expenses for the care of people with severe disabilities living in a group home, therapy for those with severe disabilities and tutoring for the learning disabled with severe disabilities.
In addition talking textbooks for individuals with perceptual disabilities who are enrolled in educational institutions will be included on the list of eligible equipment for persons with disabilities. This will make the lives of those people immeasurably easier. It will help. It will not be the total solution but it will help. This measure will be of great assistance to those who need it most in our society.
The first nations taxation co-ordination measure was not announced as part of the 1999 budget. It is designed to help implement taxation agreements with the first nations providing for a reduction in federal tax for individuals who are subject to the income tax legislation of certain first nations. This amendment puts the federal government's tax sharing agreements with self-governing Yukon first nations into force.
With respect to the personal income tax collected from residents of these Yukon first nations settlement lands, the federal government will vacate 75% of its tax room for the Yukon first nations government to occupy. The bill will also ensure that the tax burden of an individual subject to first nations taxation is the same as in its surrounding jurisdiction. This is an example of great progress on the issue of first nations taxation and self-government.
As hon. members know, the government remains committed to providing substantial tax relief to Canadians on an ongoing basis. Bill C-25 and budget 2000 deliver on this commitment.
I conclude by saying there are many measures here that are going to help the average Canadian and which will help those people who need it the most. We must not forget when we as government take certain steps to alleviate pressure on those impacted groups that we do it with the sensitivity that is needed and in a universal manner that reaches all those people who need it the most.
