Mr. Speaker, I am pleased to speak to the bill before us here today. This bill was examined in committee and my colleague from the Liberal Party who introduced the bill did a good job summarizing our discussions and the current situation.
I would like to give a bit of background on the evolution of this bill, which basically aims to establish deductions from taxable income for any contributions made to a registered education savings plan, in order to help our young people and our children meet their needs when they are studying. For what it is worth, it is not only a matter of paying tuition fees, but also of paying our students' living expenses. These young people often have to leave the family home, especially if they live in areas that do not have a university. Students must then rent an apartment and have a car, or some means of getting around. We must have measures in place to support them.
To encourage this type of investment in our youth, we want to create a system where contributions would be tax deductible. Currently, the money that is invested in a registered education savings plan grows tax free. In other words, income generated from this investment is not taxable, but the investment is not tax deductible. Of course, the interest is taxed later, when the student withdraws money from the fund.
As far as the progress of the bill is concerned, it was first introduced in this form and in a slightly different form where there was a general credit, equivalent to the same ceiling as the registered retirement savings plan, or 18% of income up to a maximum of $18,000. The Bloc Québécois had a problem with that because we felt this was really a disproportionate tax incentive that essentially benefited the wealthy. When a beneficiary withdraws money from their RRSP, that person pays the tax. An RRSP, is used to defer income tax until a later time. The taxes saved when a person invests in the RRSP are paid at the end, when they withdraw the money for retirement.
This is not the case for a registered education savings plan, or RESP, since we can save taxes and it is the beneficiary, a student, who receives the money and will have to pay taxes. Obviously, since students are in school, for the most part, they will not pay taxes.
I will give a concrete example based on the current state of things with the amendments proposed by the Liberals. For example, in a given year, a taxpayer could earn $150,000 and contribute $50,000 to an RESP. Therefore, he would have a tax refund of $14,500. Then, in the next five years, his child could withdraw $10,000 from that RESP without paying taxes on the money withdrawn. Ultimately, we would have given $14,500 to the rich.
To avoid that, it was proposed in committee to set the yearly maximum at $4,000 or $5,000, adjusted for inflation. Proposals were made, but they no longer work, since they referred to a section in the legislation that, in the meantime—as my colleague explained—has been amended by the ways and means motion on the budget.
At that point, the law became ineffective.
As such, we cannot support this bill in its current form. That is why, at the end of my presentation, I will propose an amendment to the bill to make it acceptable to all.
I am sure that the sponsor of the bill will support this amendment, which limits the amount that a person can contribute in a given year so that the person is obliged to contribute over time. This will benefit the middle class, not just the rich.
The Conservatives will also be able to support this amendment to the amendment because it will limit the cost of the measure by preventing taxpayers from claiming a $50,000 tax credit all at once, for example.
The NDP is also concerned about education. Like the Bloc Québécois, the NDP does not want to bring in tax breaks that will benefit only the rich, not the middle class, so it will surely support my amendment to the amendment.
The committee did a lot of work on this. The vagaries of procedure often yield unexpected results. Nevertheless, I am sure that we can come up with a good version of this bill. The amendment I wish to propose would limit the maximum yearly contribution, or at least the maximum yearly tax deduction, to $5,000, which is better than letting the credit reach the lifetime deduction limit, as set out in the present bill. The Bloc Québécois will not support the bill without this amendment. I am sure that this condition will enable all parties to support this bill.
Consequently, seconded by the member for Berthier—Maskinongé, I move:
That Motion No. 2 be amended by adding after the word “years” the following:
“, to a maximum of $5,000.”