The member is quite right, it kills jobs.
We know what the government said. It said that it would not raise taxes or penalize pensioners, but what did it do? Starting April 1, a couple of weeks from now, employment insurance premiums for employers and employees will increase by almost 9%.
I remember being in this place when a direct question was asked about the raising of taxes and the Parliamentary Secretary to the Minister of Finance said that EI premiums were not taxes. The government does not think they are taxes. I think Canadians know that a payroll tax is a tax. They know it is money coming out of their pockets.
There will be an immediate 9% increase, 15ยข on the current $1.73 per $100 of earnings, and it will continue. In fact, cumulatively over the five years of this budget, it is projected to be about $19 billion. Can anyone imagine? That is quite a large number to suggest that it is doing wonderful things without raising taxes but it represents more than a third of the deficit that it is trying to erase.
What else did the government do? On January 1, 2011, it will be imposing a 31.5% punitive tax on income distributions to income trust holders. That decision was made after it had promised in the 2006 election not to tax income trusts. People believed and trusted the government and yet on the following October 31 the finance minister said that this 31.5% tax would be imposed, that it would be delayed somewhat but that it would happen. That is a 31.5% punitive tax on hard-working Canadians, mostly pensioners.
Do members know what that did to the value of their investments? In one short week it wiped out $35 billion of the hard-earned retirement nest egg of Canadians. What did the government say? It said that it would bring in pension income splitting and that would take care of it.
It sort of sounded like that might work, except that I did a little a homework and found out that only about 25% of seniors have defined benefit pension plans. Only those kinds of pension plans qualify for pension income splitting. However, of those 25%, if we take out those who do not have a partner to split with and take out those who already are at the lowest marginal tax rate, the percentage of seniors who actually can benefit from pension income splitting is 14.2%. Only 14.2% of seniors will be able benefit even one iota from pension income splitting.
Why was the government not honest with Canadians? Why did it not tell them the truth, that it was going to tax 2.5 million seniors, pensioners, people who have their retirement nest egg all set up and cannot take any more risk, people who do not have pensions, people for whom the income trust was a instrument to allow people to make an investment that would provide them with a monthly cash flow that would emulate a pension?
Those people have been destroyed. Fifteen percent of the income trusts have now been bought by foreign interests. It has cost us $1.5 billion in annual tax revenue because of that. Before the end of this calendar year, many more, if not all of the other income trusts, will be dissolved. That instrument disappears. This is pretty serious stuff. This has to do with integrity and accountability.
What else will the government do? It will raise the air travellers transport tax. Two days ago, the transport minister said that cutting taxes creates jobs, provides more hope and more opportunity but we are raising the taxes on travelling for Canadians.
This goes to a question of character and a question of accountability. The government says that it has a $54 billion deficit that it needs to deal with. The Parliamentary Budget Officer says that the government is being too rosy on its growth rates and on the performance of the labour markets. According to the Parliamentary Budget Officer's analysis, the government will still be short over $10 billion to balance the budget, and yet it is focused primarily on a fiscal deficit. What the government does not mention is that concurrently we have a social deficit.
One of the immediate reactions to the budget came from Alex Himelfarb, the former head of the Privy Council who ran the civil service. He was here a long time. Just to paraphrase his statements, he said that no one can be very clear about what is going to happen over the next five years with regard to eliminating the deficit and that nobody knows whether the budget will succeed over the next three, four or five years. However, what we do know, he says, is that Canada faces huge challenges, for example, the impact of an aging population, social and economic programs, health programs and the tax system. He says that those things will make the numbers really problematic. He is concerned that it will be very problematic for the government to achieve fiscal balance again, which the Conservatives squander every time they get in government. They squander surpluses that are passed on to them.
Mr. Himelfarb went on to say that smaller government and lower taxes were not the answers to meeting the challenges. He said that if we are going to meet our challenges on the environment, climate change and deepening inequities, we will need to do other things.
Will the government meet the challenges on creating a competitive economy? Apparently not. To meet those challenges, Mr. Himelfarb concludes that smaller government and lower taxes will not do it.
We could debate this all we want but the critical issue is that the government said that it would not raise taxes. It has clearly misled Canadians and Parliament because it is in fact raising income taxes on the backs of pensioners and hard-working Canadians.