Mr. Speaker, I am pleased to participate in the debate, which is an important one. The Liberal member for Scarborough Centre has proposed a motion regarding income trusts. The motion essentially demands that our government's decision on income trusts be reversed and replaced with a 10% tax.
Sadly, the motion is a misguided attempt by the Liberal Party to rewrite its own sorry history on this issue. In fact, the motion would be a huge step backward for Canada. It would make us the laughingstock of other nations that long ago eliminated tax free treatment of income trusts or in fact banned them outright.
Indeed, the Liberal motion contains recommendations that if adopted would again create an unlevel playing field between income trusts and corporations. It would again cause federal and provincial governments to lose significant tax revenues to highly profitable Canadian corporations. It would again reintroduce unfairness into the Canadian tax system.
Who would be left holding the bag again? Ordinary hard-working Canadian taxpayers and families.
Let me refresh my colleague's memory. On March 19, 2007, Canada's new Conservative government presented its second budget. The budget was aimed at helping hard-working Canadian families, families that for far too many years have borne the burden of excessive Liberal taxes.
Our budget also took significant steps forward in helping our country achieve its full potential so that the world will see an aggressive, competitive and re-energized Canadian economy.
In the budget, our new government proposed bold new measures to preserve our environment. We also committed to delivering on what is important to Canadians, things like the quality of our health care system, making our communities safer and more secure, and supporting the men and women of our armed forces, including our veterans.
Budget 2007 also will implement major elements of Canada's long term economic plan, entitled Advantage Canada. Our plan creates greater opportunities for Canadians to fulfill their dreams of a good job, a world class education for their children, a home of their own, and a retirement they can count on.
In Advantage Canada, our government committed to reducing taxes to give Canada the lowest overall tax rate among the G-7 countries on new business investment. Our new government recognizes that in a global economy we need to establish a tax advantage to attract and retain business investment in our country. That is why Advantage Canada also includes a plan to create an entrepreneurial advantage by reducing the unnecessary regulation and red tape and lowering corporate taxes to unlock business investment.
By the building of a more competitive business environment, consumers will have access to goods at lower prices and Canadian businesses will compete more effectively in the global market. Advantage Canada will build a strong economy that not only competes in the 21st century but is equipped to lead the world in the 21st century.
Most importantly, our budget promised to proceed with the tax fairness plan that we announced on October 31 of last year. Unlike the motion by the Liberal member for Scarborough Centre, our plan will restore balance and fairness to the federal tax system by creating a level playing field between income trusts and corporations. There will be no more tax free treatment for wealthy corporations that earn millions and indeed billions of dollars in profits each year.
Under the old Liberal plan, more and more Canadian corporations were planning on converting to income trusts to avoid corporate tax. Let us consider this. At the time of our income trust announcement, Canada's well respected oil and gas company, EnCana, was considering a plan to convert to an income trust. We cannot blame it. Last year EnCana earned almost $7 billion in profits. As an income trust it could legally earn these profits without paying a penny of corporate tax on the portion paid out as distributions to unitholders.
I am not one who considers profit a dirty word. Quite to the contrary, we want to see our Canadian companies being profitable, but it is difficult to find any Canadians who would agree that such wealthy companies should be able to avoid paying taxes, especially on millions and billions of dollars in profits.
Our Conservative government went even further to ensure tax fairness. We shut down certain offshore trusts, eliminated double-dipping investment writeoffs and closed other tax loopholes that have been used to shift the tax burden from wealthy corporations and individuals. Who was the burden being shifted to? We can guess: the Canadian moms and dads who work so hard to provide for their families, moms and dads who cannot take advantage of tax loopholes that are used by the wealthy corporations.
Those days of Liberal inaction and unfairness are over. From now on, all Canadian corporations again will pay their fair share of taxes.
Our tax fairness plan was the result of months of careful consideration and evaluation, and we came to the conclusion that the measures brought forth by our government are essential to ensure that our economy continues to grow and prosper. They bring Canada into line with other jurisdictions that have banned the tax free treatment of income trusts. Our Conservative government does not and will not support tax avoidance.
In short, our plan levels the playing field between corporations that pay their fair share of tax and those that do not.
Some members of the House, most notably the Liberals, cannot stand the thought of tax fairness. They cannot stand the thought of changing the rules so that Canadians are treated fairly and equally. In fact, the Liberal opposition has become vicious in its attack on our fairness plan.
I decided to look at what other people have to say about our plan. I looked at the words of the finance minister of British Columbia, Carole Taylor, who is very supportive of our plan. Then I looked to a person whom I admire very much, one of Canada's most successful business people, Jimmy Pattison, who has built a billion dollar empire, and did it the right way.
Apparently Mr. Pattison did have investments in income trusts. We would expect that he would be quite upset about our decision to again tax income trusts but we would be wrong. Here is what he said: “I think it was the right thing to do...fundamentally, it was the right thing for the country”.
The article I am quoting from continued:
How could he say such a thing? Easy. Over time, he created a $6-billion company by continually reinvesting its profits...But an income trust CEO [president] has no such option. “In my opinion, it's important to manage for the long term,” Mr. Pattison said.
“And when the pressure is on management for distributions all the time, there's a tendency by some to not put the money into [research and development] or spending capital...because the pressure is the distribution.”
The pressure is on distributing these tax free profits.
I have 10 pages of quotes from economists, business people, bankers and even Liberal politicians, and all of them support our tax fairness plan. I know time is short, Mr. Speaker, and I will have to forgo giving you some more quotes.
The motion before us does not in any way address the federal and provincial revenue losses caused by income trusts. We have estimated that the revenue loss to the federal government was about half a billion dollars in 2006 alone, and that was a conservative estimate. The same thing applies to the provinces across Canada. Some of the largest corporations in Canada were lining up to get similar tax free treatment. Failure to implement the tax fairness plan would harm our country's finances.
Sadly, the proposals in the Liberal motion before us would do nothing for those investors who have already sold their trust units. What the Liberals are doing is raising false hopes. Our government, on the other hand, is committed to levelling the playing field between corporations and income trusts. Our decision to tax income trusts is all about fairness, fairness for Canadian taxpayers and families, fairness within the corporate sector, and fairness for all Canadian governments, which includes the provinces.
As always, the proof is in the pudding. We, as a new Conservative government, are delivering for our taxpayers. We are delivering for Canadians.
In closing, I will say that the Liberals' position on income trusts, as reflected in the motion before us, has changed so many times that it is hard to keep up with it. First they wanted to shut down the tax free treatment. Then there was an RCMP investigation. Then they changed their minds and did not support taxation. Today the motion says they will support it but they only want a 10% tax.
This is all pure political posturing on the part of the Liberals. I would ask members of the House to do what is right for all Canadians and vote against this ill-advised motion.