Mr. Speaker, I would like to address the amendments that have been put forward to the House today.
First, dealing with Motion No. 13. This amendment is being made in response to a recent court decision affecting school boards that has a result contrary to the longstanding and well understood intention of the GST law. The result of the court decision is also contrary to the manner in which school boards themselves have been complying with the GST legislation since 1991.
The government's decision to apply the amendment retroactively took into account the government's established criteria for making changes to the tax law on a retroactive basis. These criteria were enunciated in a 1995 report to the public accounts committee after the committee had declared, not only the appropriateness but indeed the imperative use of retroactivity in certain circumstances.
The government's announcement of December 2001 made it clear that the amendment would apply to all school authorities, with the exception that, in the case of the school boards which had received a court judgment prior to December 2001, those would not apply. This is in accordance with the federal government's practice of not reversing a court decision rendered in a particular case prior to the announcement in the change of tax law.
Those who pursued court cases after the announcement were clearly aware that retroactive legislation would be coming forth and proposed to Parliament. They chose to carry on in spite of that.
An amendment to substantially the same effect presented by the Bloc Quebecois was defeated at the standing committee.
Report stage Motions Nos. 14 and 15 propose to delete clauses 74 and 75.
I would point out that Motion No. 14 would delete clause 74 of the bill. Clause 74 provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding or dressing oneself for the purpose of establishing entitlement to the disability tax credit.
In contrast, existing text of the law provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding and dressing oneself.
In the absence of this bill, therefore, there is an ambiguity in the law to the potential detriment of Canadians with disabilities. Does one have to be impaired in both feeding and dressing oneself, or does either impairment establish an entitlement on its own?
The Standing Committee on Human Resources Development and the Status of Persons with Disabilities recommended this ambiguity be corrected.
Accordingly, clause 74 clarifies that an individual need not be impaired both in terms of feeding and dressing oneself to have access to the disability tax credit; one or the other will suffice.
Motion No. 14 would reinstate the ambiguity to the detriment of Canadians with disabilities and therefore cannot be supported.
Motion No. 15 would delete clause 75 of the bill. Clause 75 clarifies the eligibility criteria for the disability tax credit.
In March 2002 the Federal Court of Appeal rendered a decision that has been interpreted as expanding the eligibility for the disability tax credits to individuals who, because of food allergies or other similar conditions, must spend an inordinate amount of time to shop for and prepare suitable food.
Such expansion of eligibility goes far beyond the intent of the DTC and could increase the fiscal costs significantly, and certainly the New Democratic Party is well aware of that.
Following the consultations on draft amendments to clarify the DTC eligibility criteria that were released on August 30, 2002, the 2003 budget proposed to rework the language of the proposed amendments to clarify that the activity of “feeding oneself” does not include any of the activities of identifying, finding, shopping for or otherwise procuring food, or activities associated with preparing food that would not have been necessary in the absence of dietary restriction or regime.
This aspect of the legislation is important. It means that individuals who are markedly restricted in their ability to prepare a meal for reasons other than dietary restriction, such as severe arthritis, will continue to be eligible for the DTC.
Clause 75 also clarifies that the activity of dressing oneself does not include the activities of finding, shopping for and otherwise procuring clothes.
It should also be noted that the amendments were developed only after consultations with the affected groups. These amendments reflect those consultations.
Further, the 2003 budget proposed, and this bill includes, an extension of the medical expense tax credit for incremental costs of gluten free foods for persons who suffer from celiac disease and must follow a gluten free diet. In fact, we are expanding, not reducing, as some members might suggest, eligibility.
Motion No. 15 proposes amendments that would reverse the effect of the bill by explicitly extending eligibility for the disability tax credit to the activities sought to be excluded. As such, the motion goes far beyond the intended policy of the disability tax credit and does so in a manner that could significantly increase the fiscal cost of the credit. Therefore the government will not support Motion No. 15.
Motion No. 17 proposes to amend the provisions of Bill C-28 relating to retirement savings. Similarly, Bill C-28, in this case, includes clause 84 amendments to the definition “money purchase limit” , to increase the limit of $15,500 for 2003 to $16,500 for 2004 and $18,000 for 2005 and subsequent taxation years.
Setting appropriate limits on tax assisted retirement savings in RPPs, RRSPs and DPSPs is an important means of encouraging and assisting Canadians to save for retirement, reducing the tax burden on savings and allowing employers to attract and retain key personnel.
The proposed motions would not only eliminate these improvements to the system for tax assisted retirement savings, but would reverse the increases that were scheduled to take effect next year under the existing income tax law and on which Canadians depend. Clearly we cannot support that.
Motions Nos. 18 and 19 deal with the federal capital tax and are linked in substance. I will speak to both of them.
Unlike income taxes, which are paid when a corporation has taxable income, capital taxes must be paid even where a corporation has not been profitable. Capital taxes have been identified as a significant impediment to investment in Canada.
The federal capital tax was introduced in 1989 as Part I.3 of the Income Tax Act. The tax is levied annually at a rate of 0.225% of a corporation's taxable capital employed in Canada in excess of $10 million capital deduction. A corporation is taxable capital is generally described as the total of its shareholders' equity, surpluses and reserves, as well as loans and advances to the corporation, less certain types of investments in other corporations. A corporation's federal income surtax, which is 1.12% of taxable income, is deductible against the corporation's capital tax liability.
In order to promote investment, the 2003 budget proposed to eliminate this federal capital tax over the next few years starting on January 1, 2004.
Clauses 85 and 86 of the bill would implement this proposal by increasing the threshold for application of the federal capital tax from $10 million to $50 million of capital for taxation years ending after 2003, and by reducing the rate of tax over the period 2004 to 2010.
Under the bill, the federal capital tax liability will be eliminated for almost 5,000 medium size corporations in 2004. The federal capital tax will be completely eliminated in 2010, over the next seven years.
Motions Nos. 18 and 19, if adopted, would deny these benefits and clearly the government cannot support them.
I urge hon. members to defeat these amendments, which were defeated in committee, because they clearly do not reflect the fact of a very progressive budget moving on a number of areas including, as I say, capital taxes, as well as the disability tax credit to improve the lives of individual Canadians. I say, let us get on with it.