House of Commons Hansard #113 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.
The House proceeded to the consideration of Bill C-43, An Act to implement certain provisions of the budget tabled in Parliament on February 23, 2005, as reported (with amendment) from the committee.
Budget Implementation Act, 2005Government Orders
The Speaker
There are eight motions in amendment standing on the notice paper for the report stage of Bill C-43.
Motions Nos. 4 to 6 will not be selected by the Chair because they could have been presented in committee.
All remaining motions have been examined and the Chair is satisfied that they meet the guidelines expressed in the note to Standing Order 76.1(5) regarding the selection of motions in amendment at report stage.
The motions will be grouped for debate as follows:
Group No. 1 will include Motions Nos. 1 to 3.
Group No. 2 will include Motions Nos. 7 and 8.
The voting patterns for the motions within each group are available at the table. The Chair will remind the House of each pattern at the time of voting.
Jim Peterson Liberalfor the Minister of Finance
moved:
Motion No. 1
That Bill C-43, in Clause 9, be amended by replacing lines 2 to 8 on page 7 with the following:
“for a taxation year is
(a) if the taxable capital employed in Canada of the corporation for the taxation year is equal to or less than $50,000,000, that proportion of 4% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year; and
(b) if paragraph (a) does not apply, the percentage determined by the formula
A + B [(C - $50,000,000)/$25,000,000]
where
A is that proportion of 4% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,
B is that proportion of 4% that the number of days in the taxation year that are after 2007 is of the number of days in the taxation year; and
C is the lesser of $75,000,000 and the taxable capital employed in Canada of the corporation for the taxation year.
(3) For the purpose of subsection (2), the taxable capital employed in Canada of a corporation for a particular taxation year is
(a) if the corporation is associated with one or more other corporations in the particular taxation year, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation, or of such an associated corporation, for its last taxation year that ended in the calendar year preceding the calendar year in which the particular taxation year ends; and
(b) if the corporation is not associated with one or more other corporations in the particular taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year.”
Motion No. 2
That Bill C-43 be amended by deleting Clause 10.
Motion No. 3
That Bill C-43 be amended by deleting Clause 11.
John McKay LiberalParliamentary Secretary to the Minister of Finance
Mr. Speaker, I appreciate the opportunity to speak to these motions. As they have been properly grouped, the first group has to do with tax implications and the second has to do with environmental implications.
I note overall that this budget has enjoyed a great deal of support among Canadians. It is clearly a popular budget and has resonated with Canadians. However, we live in a parliamentary democracy and the government needs to have the support of the House. In the course of weeks of debate and some period of time in committee as well, we have had to make some changes to the provisions in the original Bill C-43. If I may, I would like to speak to that first group.
Mr. Speaker, I will be splitting my time with the member for Etobicoke North.
Generally speaking, these amendments have to do with two things.
Rob Nicholson Conservative Niagara Falls, ON
Mr. Speaker, I rise on a point of order and apologize for interrupting the parliamentary secretary. Before we go any further, Mr. Speaker, I wonder if you could perhaps make a ruling. Would Motions Nos. 1, 2 and 3 not be ruled out of order for the same reasons you used in ruling out the motions that were made in my name, Motions Nos. 4, 5 and 6? I wonder if the Chair could address that.
Budget Implementation Act, 2005Government Orders
The Speaker
The hon. chief opposition whip has raised a point. The fact is that in circumstances where motions could have been moved in committee, as in the case of Motions Nos. 1, 2 and 3 which were voted on in committee, there was a submission received from the government by the clerk, as is often the case in these things, asking for a reinstatement of those motions under exceptional circumstances and the request was granted. No such request was received in respect of the three motions that the hon. member put forward last evening, so they were not selected.
The normal procedure is for those kinds of submissions to be made to the clerks at the time of submission or very shortly after. Nothing happened and so the decision was made that there were no exceptional circumstances. This is apparently a common practice in respect of these matters and the usual practice was followed.
Ken Epp Conservative Edmonton—Sherwood Park, AB
Mr. Speaker, in view of that and the fact that we only found out moments ago that our amendments were not to be debated today, would it be in order at this stage to request that we get that extraordinary permission, so that they can be included and debated?
Budget Implementation Act, 2005Government Orders
The Speaker
The hon. member who moved the motions may wish to make submissions. The Chair would not be adverse to hearing those, but he can make up his mind whether he prefers to do that in the course of the debate this morning.
Rob Nicholson Conservative Niagara Falls, ON
Mr. Speaker, I actually would make that point. You indicated that the other ones were in basically the same position as the motions in my name. You said there were exceptional circumstances. I guess that is always a judgment call on your part. I am not quite sure what the exceptional circumstances were. My understanding was that they were defeated and maybe that was the exceptional circumstance or there may be other parts to this, but I would ask for the same consideration. I would ask that you use your discretion and allow those three motions in my name to stand.
Budget Implementation Act, 2005Government Orders
The Speaker
The hon. member has raised a point of order. I suggest he consult a little with the table and sort out his options.
The normal practice, as I said, was for submissions to be made to the Speaker via the clerks once the amendments are submitted. No submissions came from the hon. member in this regard and so the decision was made, as is the usual practice, and would have been the practice with respect to the other submissions.
However, a submission was received from the government House leader asking that special consideration be given to these amendments for technical reasons which are available in a letter.
If the hon. member were to approach the table and receive some advice on this, he might then choose to rise later, but we are on Group No. 1. His would not be in that group in any event, so he has some time.
Perhaps, rather than in the middle of someone's speech, we could hear his submission at a later time. I would be more than happy to consider the matter. I am not wishing to shut him off, but I made a decision based on the submissions that had been received when the decision was reached and there had been no submission.
We took it that these were standard amendments and they were not selected for that reason. It has been the practice for some time in respect of these amendments at report stage to receive submissions, if necessary, and none were received in respect of the amendments put forward by the hon. member for Niagara Falls.
Therefore, that is the simple thing, but I invite him to approach the table and raise the matter later. We will continue with the speech of the hon. Parliamentary Secretary to the Minister of Finance.
John McKay Liberal Scarborough—Guildwood, ON
Mr. Speaker, as I was saying, there is a grouping of tax amendments--
Ken Epp Conservative Edmonton—Sherwood Park, AB
Mr. Speaker, I rise on a point of order and I extend my apologies. I tried to get your attention before the member began. I was taught as a youngster not to interrupt someone else when they are talking, so I really feel uneasy doing this.
However, I would like to have a clarification, if I may. Bill C-43 has been reported back by the committee. The copies that we have available are the ones that were printed at first reading. Has there been any substantial change on report stage in terms of what the committee has reported back and if so, could we have the revised copy of the bill?
Budget Implementation Act, 2005Government Orders
The Speaker
The committee did not order a reprint of the bill as part of its submission of the bill to the House, so it was not reprinted.
I invite the hon. member to get a copy of the committee report and compare it with his copy of the bill and he would see what changes the committee made. Beyond that, I have nothing at the table that is going to assist the hon. member in those circumstances.
Sometimes, if there are substantial amendments made by a committee, the committee orders a reprint of a bill and it is reprinted before report stage, but in this case that was not done.
I am sure that if the hon. member were to listen attentively to the parliamentary secretary, he would hear all about the amendments the committee made because I suspect he will be talking about them in his speech. The hon. Parliamentary Secretary to the Minister of Finance.
John McKay Liberal Scarborough—Guildwood, ON
Mr. Speaker, just for my own clarification, if I may, I had initially said that I was splitting my time with the member for Etobicoke North and I think that is true. Can I assume that is true on report stage?
Budget Implementation Act, 2005Government Orders
The Speaker
It is limited to 10 minute speeches with 5 minutes for questions and comments, so he cannot unless he gets unanimous consent of the House. If the member wants to split his 10 minute speech and have two 5 minute speeches, he can, but he will need consent to do it.
John McKay Liberal Scarborough—Guildwood, ON
Mr. Speaker, we had some concern about that very point. I take it I am no longer splitting my time with my hon. colleague from Etobicoke North. I know we are all disappointed that we will not be hearing from the member because he speaks quite eloquently about these issues and he is quite knowledgeable. Were the member for Etobicoke North able to speak, I know he would be speaking about things such as standard of living which has, over the past number of years, increased somewhat dramatically in this country.
In fact, the Minister of Finance is currently speaking with his colleagues in the G-7. He is in a fairly enviable position because he is the only finance minister at the table who is in a surplus position. These are all of the major industrial nations of the world and Canada is the only one that will be there with a surplus position, that will have a debt to GDP ratio that is declining, that will have a projection forward, as this budget does, of five years of anticipated surpluses. Therefore the finance minister is in something of an enviable position vis-à-vis his colleagues.
He is also in an enviable position vis-à-vis Canada's productivity growth. This is something that we are very concerned about and this budget addressed over the course of both the budget implementation bill and the budget speech itself.
In the G-7 we are second only to the United States in terms of productivity growth. We would like to be closer to the United States in terms of our own productivity growth but in the industrial world Canada is second highest in productivity growth. With productivity growth goes a country's standard of living.
We are therefore very conscious of the issues arising from a competitive business environment, to wit the introduction of a general reduction in corporate taxes and the elimination of the surtax over time. The reason for the original implementation of those provisions into the budget was to maintain something of a competitive tax advantage, vis-à-vis the competition that Canadian industry faces in the United States.
Capital is highly mobile. It can move virtually in an electronic instant from one country to another. if we do not have a competitive environment for our corporations, our businesses, our exports and our imports we will not do well in terms of improvements in the standard of living of the nation and in terms of productivity.
Those were the original reasons that these budget implementation parts were put into the bill. We wanted to have a competitive tax environment. Since 1997, 25 out of 30 OECD countries have implemented statutory corporate tax relief because they are all competing for the same capital, the same increases in the standard of living.
The Government of Canada is focused on improving the competitiveness of Canada's business taxes, the depreciation schedules and various other grants and programs that can be done in order to stimulate industry in this country. That was initially started once we moved into the surplus position in 1997. We implemented shortly thereafter a five year tax reduction plan totalling something in the order of $100 billion, the corporate side of which reduced the general corporate tax rate from 28% to 21%. Were the budget implementation bill passed in its original form, that would in turn have gone from 21% down to 19%.
We are very concerned that we maintain a competitive tax advantage vis-à-vis the United States which is, of course, our main competition in business. We have that rate. We do have some time to maintain that rate but the schedule proposed by the president and congress will erode that advantage over time.
Last year the U.S. legislated a plan to reduce its corporate tax rate on manufacturing income by an equivalent of 3.15 percentage points by the year 2010. Had clauses 9, 10 and 11 of the budget implementation bill been supported by the party opposite, then we would have been able to match that corporate tax advantage.
To maintain Canada's corporate tax advantage, budget 2005 proposed a two percentage point reduction in the general corporate rate from 21% down to 19%, and an elimination of the corporate surtax in 2008. These corporate tax reductions would allow Canada to maintain its corporate tax advantage.
When the budget was introduced in February of this year, that was the budget plan. When Bill C-43 was introduced, that was the budget plan. Regrettably, the Conservative Party withdrew its support of the budget and another configuration had to be entered into. It is with some regret that we introduced Motions Nos. 1, 2 and 3 in order to reflect that new configuration. It is, however, the intention that once the budget implementation bill does pass that these tax measures will be restored on a separate legislated track.
Ken Epp Conservative Edmonton—Sherwood Park, AB
Mr. Speaker, I really wish we could use props in the House because I do not think it is possible for my question to be answered without the use of an overhead projector, power point and a whole bunch of things, because of the complexity of it.
I would like him, if he would not mind, to please explain, so that ordinary folk can understand, the meaning of the formula where it talks about the $50 million in total taxable capital of the corporation. There is a formula there that says that in the event, and I am helping to simplify it here, the amount of capital that is subject to tax is greater than $50 million then there is a paragraph that says: a plus b times (c - $50 million) divided by $25 million. I would like him to explain, if he could, in layman's terms what that means because I know that everyone watching CPAC this morning is intrigued with this concept and would like to know exactly the implications of the measure that the government is trying to put in.
John McKay Liberal Scarborough—Guildwood, ON
Mr. Speaker, I obviously agree with the hon. member. This is a rivetting debate on the budget implementation bill. One of the parts of the motion has to do with the reduction and the general elimination of the corporate surtax.
Currently, if I may try to put it as simple as possible, the budget proposed the elimination of corporate surtax on all corporations. That was the preferred way in which we would proceed. Now the amendment to the budget implementation bill proposes that the schedule of elimination be maintained for corporations that have capital below $50 million. If the corporation's capital base is less than $50 million, the schedule proposed in the original budget, Bill C-43 without amendment, would proceed.
For those corporations that have capital less than $75 million, the elimination of the corporate surtax will proceed on a schedule that is one-half of the rate so that their elimination will be phased in over a greater period of time. For those corporations with capital in excess of $75 million, this amendment to the budget proposes to keep the corporate surtax in place that presently exists.
I hope that is helpful to the hon. member and I too would prefer some charts so that we in turn could help those who want to watch this rivetting debate on corporate surtax.
Guy Côté Bloc Portneuf, QC
Mr. Speaker, first I want to say how happy I am to see that the Parliamentary Secretary to the Minister of Finance used his 10 minutes well. Had he only used half that time, we would not have been almost surprised to hear him clearly say that, ultimately, the only reason this motion is before the House today is to save their skin. In any case, the Liberals have no intention of keeping their end of the bargain with the NDP, since they are going to reintroduce this measure. I want to thank the parliamentary secretary for having used all his time.
That said, a very similar motion was debated in committee. This is yet another fine example of a government that does not respect the work of the House and that intends to go against the opinion of even the Standing Committee on Finance, of which the parliamentary secretary is a member. The government is introducing this measure once again, and I hope we will defeat it.
My question for the parliamentary secretary is relatively simple. How can he seriously tell us today that he will vote in favour of this motion, when it excludes 60% of all businesses and when, in any case, the Liberals intend to reintroduce the motion in different legislation in order to keep the initial wording?
John McKay Liberal Scarborough—Guildwood, ON
Mr. Speaker, it is precisely because we do respect the work of the House and that the government has to enjoy the support of the majority of the House in order to govern.
We respect the work of the finance committee. In fact, the finance committee made suggestions along these very lines. That was incorporated into the budget. When we put forward the budget, these provisions were in the budget. When we had the vote on the budget, we had the support of the House. That was in the budget.
Then, politics being politics, that changed and the reality was that the opposition, particularly the Conservative Party with its friends in the Bloc, decided that the polls were going its way, so the government perceived that it no longer enjoyed the support of the House. It respected the House, so another configuration had to be entered into.
The other configuration is the one that is presently before the House. I would put it to the hon. member that in fact this does respect the will of the House and the will of the committee, and it is a reflection of the way in which parliamentary democracy works.
Rob Nicholson Conservative Niagara Falls, ON
Mr. Speaker, I am pleased to say a few words at the report stage of Bill C-43, the original Liberal budget. At some point soon we will be debating the NDP budget, the companion budget. I am not quite sure how often in Canadian history we have had two budgets, but it is even rarer to have an NDP budget. That has to be a first. I am sure it will be talked about for generations to come.
Rob Nicholson Conservative Niagara Falls, ON
I am sure generations of future socialists will look back at this moment. The NDP budget will rank right up there with changing the name from CCF to NDP or with the time the NDP had 40 seats in the House of Commons. This will be among the landmarks that socialists of future generations will celebrate: the NDP budget of 2005.
The parliamentary secretary made some interesting comments about a “configuration”. What he did not say, and what I think should be said, is whether these things are good for Canada. This is a perfect example, I believe, of where a mistake has been made.
What is taking place here is that the Liberals are trying to amend their own budget, the one that was just what Canada needed, they said, the blueprint for the last half of this decade. Then they came up with different ideas, much to the chagrin of the finance minister, I am sure. I cannot wait to see his memoirs some day, when he talks about this sorry chapter in financial planning. We look forward to that.
In any case, to accommodate this new configuration, the Liberals have made a deal with the New Democratic Party and this particular motion is one of the manifestations of this particular deal. The problem with it is that it is a bad idea. It hurts large employers in this country.
We can believe it or not, but the Liberals had it right the first time, when they wanted to assist the large employers in this country. That is one of the reasons why the Conservative Party was prepared to have it move on to the committee, because there were elements of the budget that we thought were good ideas, and certainly this was one of them.
Then the Liberals started talking to their friends in the New Democratic Party, who are of course allergic to any company making a profit. Somehow New Democrats think that is not as it should be and they are against it.
Nonetheless, at the same time that the New Democrats say they want to help workers, they cannot make the connection that when we hurt the people who employ workers that is bad for workers in this country. Putting in a competitive tax is something they do not want to see. It is part of what they cannot figure out, although I believe the government probably understands it and I believe the Minister of Finance probably has this figured out. That is why he put it in there to begin with. However, to accommodate the NDP, the Liberals were prepared to do anything. We just heard the parliamentary secretary. He said that we had to have a new configuration.
Again, the interests of Canadians and Canadian workers are then forgotten and that is too bad, because making large employers competitive and making the tax system competitive actually helps us in competition with the United States and European countries with which we go head to head to try to get a competitive advantage.
This puts us at a disadvantage. Let us figure it out. If a company wants to invest money and employ people, it will go where it has a reasonable expectation of making a profit and not having all that money taken away by the government. That is only reasonable. I do not expect anybody in the NDP to figure that out. The New Democrats figure that employers must have motives other than those of hiring people and turning a reasonable profit.
I remember when I was here in the 1980s and 1990s that every time a corporation released its financial statements showing it was making a profit, there were always long faces in the NDP. There were immediate calls to to do something about it because, they said, “Look at the money these people are making”. Basically the only thing that makes those members happy is seeing companies lose money, but they cannot make the connection that this actually hurts the employment picture.
We saw that this week with the announcement by General Motors, which I take a particular interest in because it is a major employer in the Niagara region. When General Motors has made money in the past, I have actually applauded. I think it is a good idea that General Motors or Ford Motor Corporation or Chrysler or other companies are making money. Why? Because they employ people in this country. Any tax regime that makes us more competitive also makes more sense to them for locating and staying in Canada and expanding their operations in Canada, and it is something I support.
It causes me and I am sure others quite a bit of distress when we see an announcement in the paper indicating that the company is having difficulty and has to restructure. I see that in the paper and then I hear in the House of Commons today the Liberals backing away from a fairer tax regime for these larger employers. It is too bad. It really is a shame.
I would ask them to stand on their principles. I would ask them to listen to the Minister of Finance. He had it right. He had it right on budget day. The Minister of Finance knew that tax relief for large employers in Canada was a good idea, but the Liberals have had to come up with another configuration. That is too bad, because in their efforts to stay in office and in cutting a deal with their good friends in the New Democratic Party, they have hurt workers.
That is the irony of it, because all of us in this country know it is important that employers find Canada a great place in which to do business and in which our tax regimes are competitive. If we are not competitive, those jobs will go elsewhere. It only makes sense. That is why I believe the Minister of Finance in the first place wanted to have a tax regime system similar to those of the people with whom we compete.
Again, that is not what was not done here and it is too bad. The government has made it very clear that it will do whatever is necessary to stay in office, but that is not quite the same thing as doing what is right for Canada. That is something different. What is right for Canada is not the same thing as keeping the Liberals in power, but that is the route they have chosen. They have made it very clear. They do not make any bones about it. They say, “We need to have a new configuration”.
One has to wonder where the national interest is. In my opinion, certainly, the national interest is not being served by new configurations or deals with the New Democratic Party. It is an amazing turn of circumstances.
This came about as part of a deal between the Prime Minister and the leader of the New Democratic Party. I guess it was written on a napkin in a hotel room in Toronto. Then we got the room service bill and found out it was $4.6 billion. Jeepers, talk about an expense account. Buzz Hargrove was acting as the maître d' in this, and fair enough, but again, we have to keep in mind that party and the national interests.
What has taken place here is too bad. Members of the Conservative Party, because we have to keep the national interests foremost, of course will not be supporting this.
Karen Redman Liberal Kitchener Centre, ON
Mr. Speaker, I rise on a point of order. Discussions have taken place between all parties concerning the recorded divisions scheduled for 6:15 p.m. on Monday, June 13, 2005, on Government Business No. 16. I believe you would find consent for the following order:
That the recorded division on Government Business No. 16 scheduled for Monday, June 13, 2005, take place at 5:15 p.m. rather than 6:15 p.m.
Business of the HouseGovernment Orders
The Speaker
Does the hon. chief government whip have the unanimous consent of the House?
