Mr. Speaker, the main part of Bill C-33 proposes a number of amendments to the Income Tax Act that were proposed in budget 2004. It also contains proposals introduced in last year's budget concerning the air travellers security charge, as well as legislation enabling interested Indian bands in Quebec to enter into sales tax agreements with the Government of Quebec.
This is the implementation bill for budget 2004. The measures contained in the bill reflect the agenda set out by the government in budget 2004.
At the core of the 2004 budget was the recognition that to achieve our goal of better lives for all Canadians, our social and economic policies must be mutually reinforcing. Hon. members would no doubt agree that there can be no strong economy without a secure society, and no secure society without a strong economy to support it.
The measures in budget 2004 were designed to meet the test of what Canadians believe are our priorities as a nation, priorities such as health, learning, communities, the economy, and our place in the world. I would like to take a moment to illustrate how each of these priorities are reflected in the measures in this bill.
The first is health. Canadians are justly proud of their social programs and are determined to see them maintained and improved. Canada's universal public health care system gives concrete expression to the principles of fairness and equality of opportunity that are the very essence of who we are as Canadians.
Budget 2004 reaffirmed the government's commitment to work with the provinces and territories to reform and sustain Canada's health care system. To that end, budget 2004 proposed key investments in our health care system, including tax measures designed to help persons with disabilities.
Hon. members will recall the Technical Advisory Committee on Tax Measures for Persons with Disabilities which was announced in the 2003 federal budget. The committee was formed to advise the Minister of Finance and the Minister of National Revenue on how the federal government could make the tax treatment of persons with disabilities fairer.
Building on previous budget measures to strengthen greater inclusion of Canadians with disabilities, Bill C-33 responds to an early proposal by the committee to provide better tax recognition of disability supports expenses, and improve the tax recognition of medical expenses incurred by caregivers on behalf of dependent relatives.
Specifically, starting with the 2004 taxation year, this bill proposes a new deduction for disability supports, for example, sign language interpreters and talking textbooks. This deduction will allow disability supports expenses to be deducted from income if they are incurred for education and employment purposes. As a result, income used to pay for these expenses will not be taxed and will not affect income tested benefits.
Bill C-33 also contains a measure of recognition of the expenses incurred by people who care for disabled family members. The proposed legislation will allow caregivers to claim more of the medical and disability related expenses they incur on behalf of dependent relatives.
I will now turn to learning. Canadians recognize the importance of education and helping individuals reach their full potential. Learning is the cornerstone of Canada's economic and social foundations.
Investments in learning are key to a social economy. Learning produces a workforce qualified to meet the demands of a growing economy and fosters advances in knowledge, the development of new technologies, new products and improved production processes. These in turn increase productivity, generate economic growth and promote Canada's international competitiveness.
The education tax credit recognizes the non-tuition costs of post-secondary education and training, such as textbooks. Currently the credit applies only for full time or part time students. However, employed individuals are not eligible to claim the credit in relation to the costs of the programs directly connected to their current employment, even if they pay the out of pocket expenses for these courses. As can be readily seen, there is an anomaly in the income tax system. One would almost have to quit one's job in order to get the credit, which of course does not make any sense.
In order to help more students undertake lifelong learning connected to their employment, the bill proposes effective January 1, 2004 to allow students to claim the education tax credit for education related to their current employment when the costs are not reimbursed by their employer. This will give Canadians who are upgrading their skills in their field of work access to the same tax benefits that are available to other post-secondary students.
I will now turn to community based non-profit organizations. They are an integral part of Canadian communities. We rely on them for delivery of many services. These organizations are in the fields of education, culture, the arts, delivery of social services, the think based communities, international aid deliverers, health, and the environment. In recognition of their contribution to the well-being of Canadians, budget 2004 contains a number of initiatives benefiting the voluntary sector and social economy.
For example, with respect to registered charities, the bill proposes significant changes to clarify the tax rules and ensure that they are administered fairly. It is important to mention that the initiatives proposed in the bill respond to the recommendations of the joint regulatory table which is a key component of the voluntary sector initiative that was launched in 2000 by the Government of Canada.
The other side of the equation is the economy. The government recognizes the significance of small business and entrepreneurship in securing a solid economy. Moreover, these enterprises are a key source of innovative ideas that are transformed into jobs. In past budgets the government has introduced important numerous measures to help small business and entrepreneurs. Budget 2004 is no exception. It builds on previous initiatives to help Canadian small business. I will explain three.
First, Bill C-33 provides for additional support for Canada's small business sector by helping small businesses retain more of their income for reinvestment and growth. Specifically the bill accelerates the planned increase of the small business deduction limit to $300,000 by one year to the year 2005. It moves forward that first threshold of small business income to $300,000 effective this year.
Second, Bill C-33 extends the non-capital loss carry forward period to 10 years. This initiative will be particularly beneficial to innovative start-up businesses that may experience losses while developing new products and technologies.
Third, Bill C-33 proposes to remove an impediment to ensure that small businesses conducting scientific research and experimental development can raise sufficient funding from common investors not acting as a group and still have full access to a 35% tax credit. This clarifies an anomaly in the interpretation of the tax act which is of great benefit to a certain class of investors.
As we know, the worth of a nation is judged not only by how it treats its citizens, but by its willingness to lend a hand to countries that are in need of assistance. Of course, Canadians responded very generously to the tsunami relief fund and the government matched that generosity going forward over the next five years.
Canada is recognized on the world stage in its role as a ready contributor to ensuring international peace and security. The government recognizes Canada's international obligations in a challenging world environment. Budget 2004 supported this priority by introducing a series of targeted initiatives in defence and foreign aid.
This government also acknowledges the sacrifices made by the men and women in our armed forces and police who take part in dangerous yet important missions. In recognition of these sacrifices, Bill C-33 proposes an exemption from tax on income earned by Canadian Forces personnel and police while serving on international high risk operations.
I mentioned at the outset that Bill C-33 contains other proposed tax measures, one relating to the air traveller security charge and another to aboriginal sales tax.
As hon. members will recall, the air traveller security charge was introduced to fund the enhanced travel security system on a cost recovery basis with a commitment from the government to review the charge to ensure that revenue remains in line with planned expenditures over a five year period.
The government has followed up on this commitment in a timely manner with successive budgets taking into account the impact of revised forecasts for air passenger traffic and updated expenditures for air travel security.
In budget 2003 the rate of the charge for domestic air travel within Canada was reduced by 40%. To ensure air travellers continue to pay only what is required to fund enhanced security for air travel and keep the security on a sustainable basis, budget 2004 proposed further reductions in the charge.
Specifically, the measures in this bill propose to reduce the charge for domestic air travel within Canada from $7 to $6 for one way travel and from $14 to $12 for round trip.
For transborder travel between Canada and the U.S. the reduction is from $12 to $10, and for international travel it is reduced from $24 to $20. Those reduced charges would apply to tickets purchased after April 1, 2004.
The next tax initiative is with respect to first nations people. In the February 2004 Speech from the Throne, the government highlighted the importance of building strong first nations governance. Both the Government of Canada and the aboriginal leaders agree that this can best be achieved by emphasizing the various elements of sound and effective governance.
One of these elements would give the first nations people the authority to operate, on their land, a sales tax system harmonized with the goods and services tax. Bill C-33 contains proposed amendments to the first nations goods and services tax act to facilitate the establishment of such a taxation arrangement between the Government of Quebec and interested first nations situated in Quebec.
I would like to assure hon. members that the government remains willing to work with interested first nations on establishing similar arrangements.
The significance of some of these initiatives are quantified in the budget plan 2004: for the fiscal year 2003-04, $2.5 billion for health; for the fiscal year 2004-2005, on the learning agenda, a further $251 million and a further $466 million in 2005-06; a further $293 million for building on the commercialization of research, investing in offshore development, investing in small business and entrepreneurship, and for strengthening Canada's tax advantage, going forward to a further commitment of $367 million.
Another initiative is the new deal for communities with a commitment of $100 million in 2003-04, ramping that up to $903 million in 2004-05 and going forward in 2005-06 to $776 million.
With respect to our relationship to the world, that initiative was costed out at $397 million for the 2004-05 year and $458 million in 2005-06.
In agriculture, we committed a further $1 billion in 2003-04, going forward to $233 million and then to $302 million. The total spending initiatives in 2003-04 were $3.6 billion; in 2004-05, $2.2 billion; and in 2005-06, $2.5 billion.
As members can see, the Government of Canada has in the past been committed and continues to be committed to the well-being of Canadians in the areas in which Canadians are most interested. I, like all members, am looking forward to the Minister of Finance delivering budget 2005, which I hope will take a realistic but far-reaching forward action into the next number of years and point the way forward for Canadians.