Mr. Speaker, I am pleased to go over for Canadians some of the measures in the government's first budget which was passed earlier today but on which we will add some thoughts in this take note debate.
Before I outline the measures contained in the bill, I would like to mention that in preparing our first budget, the new government heard from literally hundreds of Canadians. In spite of a fairly short timeframe, this was an exercise in which we opened the whole budget decision making process to input from Canadians from all walks of life and in communities large and small across Canada.
Part of this was our very first online prebudget consultations. I commend the Minister of Finance for this new initiative which allowed Canadians to very quickly put in their thoughts and their recommendations about the budget.
The first thing Canadians told us in the election and in the consultations following the election was that they were not getting ahead because of the tax bites from their incomes. Canadians said that they work hard and that they do what they can to maximize their household incomes but that the tax bites taken out of their incomes and put into the government coffers were too much.
We listened to Canadians and we did not believe middle class Canadians and their families, who work hard but receive less and less in return, were being treated fairly in our tax system. We also knew, from the election and from Canadians across the country, that they wanted a change in the level of taxes they were paying. We believe Canadians should not be kept waiting for tax relief.
We also heard that Canadians did not want to be kept waiting for government to be cleaned up and made more accountable and transparent. We heard that Canadians wanted real and lasting tax relief and support for real choice in child care. We also heard that Canadians did not want to wait any longer for health care delivery times to be improved.
Our new government promised that we would take action on these priorities and we have kept our word in this budget. In some cases the budget delivered more than promised. We are taking action and will continue to keep the promises we made to Canadians. The measures contained in the budget bill, Bill C-13, which was passed in the House today, do reflect those promises to Canadians and they reflect the priorities of Canadians.
I would like to share with hon. members some of the proposals in the bill that illustrate how the government is keeping its promises to Canadians.
The first issue was the reduction of taxes. In this budget we moved very strongly toward reducing taxes for individuals. Our tax relief in this budget is more than in the last four budgets combined. I would like to outline some of the tax reduction measures.
The bill reduces the GST by 1%, which was an election commitment by this government and one on which we followed through. Starting on Canada Day, the GST will be lowered by one percentage point. This measure will benefit Canadians in a tangible way. Every time they buy something for themselves, their families or their homes they will see the results in the bottom line. This is money in Canadians' pockets and it is money that can be used by Canadians for other family priorities.
The savings from this GST reduction of 1% will amount to approximately $3.5 billion in this fiscal year, 2006-07, and even more in the following year with $5.2 billion. This government went beyond this measure in giving tax relief because to provide further tax relief to low and modest income Canadians we will maintain the GST credit at current levels, even though the GST rate will be reduced. That will protect some of the money that low and modest income Canadians were counting on from the GST credit.
We will retain the existing GST-HST rebate rates for new housing and purchases made by public sector bodies. This will ensure that these entities will continue to benefit from the same level of GST relief as was available before.
Although the GST cap is an important step in the right direction, we have a whole package of tax relief for Canadians, one being a reduction in personal income tax rates. We permanently lowered the basic personal income tax amount for Canadians. As part of this, we increased the basic personal amount, the amount that an individual can earn tax free, so it grows every year and remains above currently legislated levels for 2005, 2006 and 2007. This includes preserving the $500 increase scheduled for 2005. The basic personal amount will continue to grow with indexation, in addition to a permanent $100 increase in 2007.
Canada Day will be a good celebration in many ways. As of July 1, the bill permanently reduces the lowest personal income tax rate to 15.5%. This rate applies on about the first $36,400 of Canadian income.
These measures will provide personal income tax relief of almost $2.8 billion in this year and $1.9 billion in the following year. The total tax relief for individuals is valued at almost $20 billion over the next two years, money that will go back into the hands of Canadians. About 655,000 Canadians will be removed from the tax rolls entirely. Our tax plan will leave substantially more money in the pockets of Canadians than the previous government's proposals.
My friend across the way, who will be speaking shortly to this issue, makes much of the fact that the Liberals proposed and, indeed, put into action a reduction in personal income tax even though legislation was never passed. However, Canadians know that our package, taken altogether with the GST reduction and some of the other measures surrounding it, with the increase in the basic personal exemption, with the permanent legislated reduction in the personal tax rate and with the employment tax rate, far exceed the tax relief promised by the Liberals but never passed into law.
The Liberals talk about their promises but they need to explain themselves. If they were so committed to their promised taxation rates, why did they not pass them into law and make them permanent? Why did they wait until the 11th hour, to the electoral deathbed, so to speak, to promise this to Canadians and then have the nerve to say that their tax package, which they did not have enough of a commitment to pass into law, should replace the tax package we have in this budget that was passed in the House? Canadians know that our package taken altogether exceeds the Liberal promises.
Businesses are the job creators of our economy. Not only do they create jobs but they create wealth and that wealth creates taxation. We wanted to ensure that our businesses, our job creators, remained competitive. We did not want them to have a ball and chain of heavy taxes around their ankles when they were competing in the global marketplace so we provided tax relief to both large and small businesses.
The same tax relief was promised by the previous government, and although it was in office nearly 13 years, promises were all Canadians received. The previous government's promises were never legislated and made permanent. We made them permanent. The budget, which was just passed, reduces the general corporate from 21% to 19% effective January 1, 2010. The federal capital tax, which will end as of January 1, 2006, is two years ahead of schedule. The corporate surtax for all corporations will also be eliminated as of January 1, 2008.
These and other tax measures will really help our small businesses which create about 50% of the jobs in this country. It is very important that we give them the freedom to soar without weighing them down with unnecessarily heavy taxes.
We have taken measures to treat businesses equitably and repealed the excise tax on jewellery, which was effective May 2, 2006, the date of the budget announcement. The announcement was just in time for Mother's Day. I hope a number of my colleagues in the House took advantage of that to celebrate Mother's Day with gifts of jewellery to their partner.
We want our businesses to compete with the best the world has to offer which is why we took these measures in the budget.
The budget contains measures to benefit our charitable organizations which play an important role in assisting Canadians and in contributing to our sense of community. A far away government having a one size fits all program is not nearly as effective as community based charitable organizations that personally and individually become involved with those in need. The budget bill exempts donations of publicly listed securities that go to public charities. These will be exempted from capital gains tax. This will give our charities a powerful set of tools for raising the funds they need to meet the needs of Canadians.
Because there is a great deal of interest now, thankfully, in environmental matters and in the ecology, we will be encouraging Canadians to make gifts of ecologically sensitive land, eco-gifts they are called. We will exempt those from capital gains tax, also effective on budget day, May 2.
Much has been said about child care in our budget. There is a difference of philosophy. Some people want a one size fits all government run program of day care for our kids. Many Canadians choose other forms of care for their children. They care for their children themselves at home. Relatives or friends provide child care depending on the work schedule of parents. Therefore, we believe that government should support all the child care choices of Canadians and not just one method of child care.
With the consent and support of Canadians in the election, we have provided support to all parents of preschool children, no matter what their child care choices are, because we know that no two families are alike. We do not believe that government is in the best position to make the right choices for our kids. It is the parents who are in that position.
We have introduced in this bill the universal child care benefit providing all families with $100 per month per child under the age of six to help support their child care choices, whatever those might be for a particular family. This will come into effect on Canada Day when the bill, as we are hoping, receives royal assent, which we know Canadians with young children are looking forward to. The universal child care benefit will provide almost $4 billion in funding over two years to about 1.5 million Canadian families with preschool children. I would add that this benefit does not affect the federal income tested programs, nor does it reduce the amount that can be claimed under the child care expense deduction.
Because choice in child care for families has created demand for day care, we are allocating $250 million per year to create real child care spaces as part of our child care plan. We want to support the needs of all families and make sure that their choices are meaningful.
Also, so that they will not be left out, we have a number of measures in the budget to assist families who are facing special challenges. Groups with special needs are not forgotten in the budget. We are increasing the child disability benefit for children with disabilities and we are making it available to more families.
We also point out that these measures go beyond the recommendations of the technical advisory committee on tax measures for persons with disabilities. We carried out those recommendations and we went even further. We are extending the eligibility for the child disability benefit to middle and higher income families caring for a child who is eligible for the disability tax credit. Virtually all families that are currently eligible for the Canada child tax base benefit will also be able to access the disability tax credit. We have gone that extra step to help improve the lives of Canadians.
In summary, from the proposals that I have outlined here today and many others one can see that it is a far-reaching budget in many ways. There are many other sectors that have been assisted and many other issues that have been addressed in the budget. I do not have time to mention every single one of them, but we want to emphasize that our government is committed to practical and forward thinking investments that are part of making Canadians' lives better.
This budget is a foundation. It is our first budget and it is a foundation for budgets to come. I know our friends in the other parties in the House and indeed Canadians across the country will have a lot of advice to give the finance minister and the government as we work to produce our next budget in a few months' time. We welcome that debate. No one has all the answers. We know that other concerns need to be thoroughly debated. We are glad that takes place in this House and in other forums. We all want a good foundation for Canadian society and budgets are a part of that.
In just a few short months we have honoured Canadians' choice for a new approach to government, one which pledged to be more accountable and that would treat the tax dollars of Canadians with great respect and make sure that they actually deliver value for Canadians. We make it clear in the budget that we have kept our word on many of those promises. Many more are being worked on today and will be delivered in a very short time.
We are delivering substantial tax relief that is going to be permanent, legislated and right up front. We are not waiting until we have been in office for a decade to finally promise something. We mean business and we are putting it into legislation now. We are leaving more tax dollars where they belong and that is in the pockets of Canadians. We are investing in families and communities, education, security and infrastructure. We are doing it by being fiscally responsible and focusing on results and value for money.
The budget charts a new course for a stronger and more prosperous and more secure Canada. We thank members of the House for their support for the budget bill. We look forward to it passing into law after the Senate looks at it and it receives royal assent. This is a good day. Canadians are very pleased with the budget. We know they will be equally pleased as we go forward.