Debates of Feb. 8th, 2011

Opposition Motion--Tax Rate for Large Corporations

[Mike Wallace, Conservative, Burlington, ON]

Madam Speaker, the fact is that the opposition likes to say that these corporate business tax cuts will go into some fat cat's pocket, but that is just not the case.

What will happen is that those companies and those businesses will reinvest in their companies. They will grow. There is not one company in this country that does not want to increase its sales and produce a better bottom line. That will produce jobs . The money that is saved in taxes will go directly back into the re-investment--

[The Acting Speaker, NDP, Denise Savoie]

Order, please. Resuming debate. The hon. member for Edmonton--Leduc.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, I hesitate to follow the member for Burlington who is such a passionate defender of lowering taxes in this country.

It is my pleasure today to address the motion put forward by the Liberal Party of Canada. I stand today in support of Canada's job creators and against this very irresponsible tax hike proposal by the Liberal Party that would threaten our economic recovery and harm hard-working Canadian families.

Unlike the Liberal Party that wants higher taxes to fuel bigger bureaucracies, our government believes in keeping taxes low for both families and job creators.

Since we took office in 2006, we have aggressively pursued a low tax plan to help create jobs right across this country. It is a plan with over 100 tax cuts to date and it is reducing taxes in every single way the government collects them: personal, consumption, business, excise taxes and more. Our low tax plan has reduced the overall tax burden on Canadians to its lowest level in nearly 50 years. It is a low tax plan that has already removed over one million low income Canadians completely from the tax rolls. It is a low tax plan that has reduced the GST, a tax on every Canadian, from 7% to 5%, that introduced the landmark tax free savings account to help Canadians save and much more. It is a low tax plan that has left nearly $3,000 in the pockets of a typical Canadian family, where it belongs, to save or spend as that family sees fit.

We have also lowered taxes for businesses so they can keep more of their hard-earned money, allowing them to grow and create more jobs for Canadians.

Our plan has included everything from broad-based business tax relief; support to the provinces in their elimination of job-killing capital taxes; lowering the tax rate for small businesses from 12% to 11%; increasing the bracket for the small business tax rate from $300,000 to $500,000; eliminating tariffs on productivity-improving machinery and equipment, which was done in last year's Budget Implementation Act; introducing a temporary accelerated capital cost allowance, which was begun back in budget 2007 on manufacturing or processing machinery and equipment; and much more. This broad-based tax relief has served as the centrepiece of our low tax plan for businesses and has proven successful in spurring investment in Canada and helping to create jobs for Canadians.

In 2007, our government introduced and Parliament passed these broad-based tax reductions that will lower Canada's business tax rate to 15% in 2012.

Since 2007, Canadian businesses have been making their investment decisions and hiring Canadian workers based on this low tax plan for businesses. Over 110,000 businesses in Canada are currently benefiting from our low tax plan to grow and create more and better paying jobs for Canadians.

The economic benefits of our government's low tax plan have been verified by numerous independent observers. A well-respected University of Calgary economist, Jack Mintz, recently released a report showing that the final three point reduction in the business tax rate alone would lead to nearly $50 billion in greater capital investment and over 200,000 new jobs over time.

Similarly, the Canadian Manufacturers & Exporters recently released another report praising our low tax plan as “critical drivers of the Canadian economy” that will, among other things, help to create hundreds of thousands of new jobs, increase the personal incomes of Canadians by over $30 billion, increase per capita personal income by $880, and contribute between $2.6 billion and $3.7 billion in additional net revenues for all levels of government.

I encourage all parliamentarians to read these objective reports to see the facts on this issue.

It has to be noted that the Liberals claimed to support this broad-based tax relief but let us remember that on April 2, 2008, they stood in this chamber to oppose a very similar motion from the NDP. Canadians should review the debate in that Hansard.

I would like to remind the Liberals of that debate and what the Liberal finance critic at the time, my friend, the member for Markham—Unionville, said. He said:

...we need to create a new Canadian advantage to attract capital and jobs to this country and that new Canadian advantage...is to create a low corporate tax rate....

That we believe will replace the weak currency as a new Canadian advantage and will serve this country well to improve productivity, competitiveness and attract jobs....

The federal NDP members are in the class war mentality where any corporate tax cut is just seen as a sop to the rich. They do not understand, as their Swedish, Danish, Norwegian, British fellow social democrats learned long ago, that we have to create wealth before we can redistribute it, and that in order to compete in this world and get jobs it makes sense to have lower corporate tax rates.

Why are the federal NDP members almost alone in the world in being the Neanderthal version of the global social democratic movement.

Those are harsh words, not from me but from the Liberal finance critic at the time. It is just shocking to hear the kind of language they would use. However, his argument was exactly right and his argument is the argument that our government is putting forward in pursuing the path that we are on. It is interesting that the argument used by the Liberal finance critic at the time is something that the Liberal Party and the Liberal leader fail to understand today.

As chair of the finance committee, I have the privilege every year of travelling across the country and hearing from many communities across this great country. We heard from many of the over 110,000 businesses and their representatives, groups like the Mining Association of British Columbia, Canadian Manufacturers & Exporters, the Canadian Automobile Dealers Association, the Conseil du patronat du Québec, the Edmonton Chamber of Commerce and the Canadian institute of Chartered Accountants. All of those groups were unanimous in their support for our low tax plan.

A witness from the Canadian Chamber of Commerce, in his testimony before the committee, said:

The single most important or most damaging thing the government could do at this point to stall the recovery would be to cancel the planned tax reductions. Business has been planning on them. The private sector has been hiring based on them. The private sector has been investing based on them. If suddenly those were repealed at this point, the impact would be to get business to shelve its plans for expansion and getting people back to work.

We in this party are committed to helping create more and more jobs by making Canada the best place to do business with our low tax plan.

Canada's continued job growth shows it is getting positive results. Indeed, we have created over 460,000 jobs since July 2009, a very good statement for the economy, and the strongest job growth in the G7 with nearly 70,000 jobs created in January alone according to Statistics Canada.

However, too many Canadians are still looking for work and the global economic recovery remains fragile. We must stay the course with our low tax plan to protect and create jobs to allow companies to invest across this country.

I encourage all members of this House to reject the Liberal plan to raise taxes and, frankly, embrace the position that it held only a few months ago to continue with this path to allow Canada to remain an economic leader in the world today.

[John Cannis, Liberal, Scarborough Centre, ON]

Madam Speaker, the member from Edmonton—Leduc and the member from Burlington earlier both said that the Conservative government had lowered the lowest personal tax bracket to 15%.

I want to clarify for the record, and if it is challenged we can go back and see it, but the lowest bracket was in our last budget, a Liberal budget, at 15%. The Conservatives then came in with their first budget and raised it to 15.5%. Now the Conservatives stand up and say that they lowered it. If I am wrong, they can stand and say so. If I am right, we should look at the record for clarification for Canadians.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, we did lower the rate to 15% and we have taken about one million people off the tax rolls in this country. We have raised the marginal tax rate so that lower income people are paying less tax. We have lowered the consumption tax in this country from 7% to 5%. We have lowered every type of tax, whether it is personal, business or family tax. We have put $3,000 more in every Canadian families' pockets so that they can save or spend as they best see fit.

This is the tax plan that must go forward and I encourage the member opposite to reject his own motion.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Madam Speaker, it was interesting to listen to my colleague from Edmonton talk about what the Conservatives have lowered. However, what he did not say was what they had raised.

The people of Ontario and B.C. are not very happy with the HST. Billions of dollars came from the Government of Canada to help bribe Ontario and B.C. into implementing the HST, which the citizens of those provinces were not very happy with.

Being from Alberta, I keep hearing that my hon. colleague is called a “pistol” Conservative, although I have never truly met one yet. However, I would like him to stand in this place and say very clearly that since his party has been in power it has added $100 billion to the national debt. We have the largest deficit of all time facing us. Even the Parliamentary Budget Officer, someone the Conservatives employed, said that we now have a structural deficit. Does the member agree? Do we have a structural deficit?

Could the member outline how the government plans to lower the debt and deficit without using the backs of the provinces or ordinary Canadians to do it?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, in terms of the national debt, obviously in the last couple of years we have added to it, but it is important to point out that between 2006 and 2008 our government paid $40 billion on our national debt and every single payment was opposed by parties opposite in terms of putting money toward our savings and actually reducing the debt between 2006 and 2008.

I would also point out that I have encouraged members of the opposition to put on the table any of the spending that it has opposed over the last two years and say that we should not be doing it in terms of infrastructure or any other stimulus spending.

In terms of reducing the deficit going forward, we have a five-year plan to do that by 2015. We will be ending the stimulus program in 2011. We have also frozen the operational budgets of departments. We have frozen the salaries of the Prime Minister, cabinet ministers, all members of Parliament and their budgets.

We will be restraining spending, but we will not, as my colleague from Burlington said, be cutting transfers for health care, education and transfers to the municipalities. Those transfers will continue going forward.

[Laurie Hawn, Conservative, Parliamentary Secretary to the Minister of National Defence]

Madam Speaker, Liberals like to use weasel words to say that they are not talking about raising taxes. The corporate tax rate today is 16.5%. Liberals want the corporate tax rate to be 18%. Could my hon. colleague please comment on how that could possibly be seen as anything other than an increase in taxes and what effect that would have jobs for Canadians?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, the parliamentary secretary is exactly correct. The rate dropped from 18% to 16.5% on January 1. If Liberals get into office, they will increase taxes in this country by 1.5% on any business making over $500,000. That is not just large corporations. That is medium and small corporations as well.

The plan is to go to 15%. As the chambers of commerce across this country have said, they have booked on that, they are investing on that and they are hiring people on that. That will be a tax cut as well. That will be a 3% tax cut on every small, medium and large corporation in this country.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Madam Speaker, I rise to join the debate on corporate tax cuts. I will be sharing my time with my hon. colleague from Humber—St. Barbe—Baie Verte.

Today we are discussing the decision of whether to proceed with tax cuts for large corporations rather than investments in Canadian families, pensions, learning, health care and family care.

Rather than the Conservatives' misguided priorities of spending billions of dollars of borrowed taxpayer dollars on untendered fighter jets, building U.S. style prisons, G20 summits and tax cuts for the largest corporations, this House and the Liberal Party will argue and ask the government to reverse this irresponsible decision of the tax cuts in the upcoming budget.

The government believes that cutting taxes is a panacea to all else and warn that doom and gloom awaits us if we do not continue to cut corporate taxes. The Liberals agree that it is important to tax corporate profits at a competitive rate because we want companies to invest more of their profits here and foreign firms to see Canada as a great place to do business because more investment means a stronger economy and of course more jobs.

As a Toronto Star editorial stated:

But there’s a difference between staying competitive and making a fetish out of one benchmark — ever-lower corporate tax rates.

Canada already has one of the most competitive business tax environments in the world. The federal Liberals started the trend last decade when the deficit had been eliminated and the economy was booming and we were in surplus. We slashed corporate taxes from 28% to 21% in 2004. The Conservatives went further, cutting them to 18% in 2010. That put Canada in third place in the G7, behind only Italy and the U.K.

The Conservatives now want to drop our rate further to 16.5% and then further again to 15% in 2012, costing the treasury $6 billion this fiscal year alone and over $10 billion by 2012. Let us think of what $10 billion could do for our economy.

Every year since 2000, corporations in Canada have received a generous tax cut. When times were good and everyone was getting tax cuts Canadians accepted that Ottawa was giving up billions of dollars of revenue. However, times are no longer good and the government is running a deficit of $56 billion and Canadians have not had a personal income tax cut in over four years.

As other countries continue lowering their corporate taxes, must we continue to do so? Do we really risk the flight of capital, of corporations and of investments to other countries if we do not continue to lower our corporate taxes?

The Conservatives would have us believe so. In fact, they quote Jack Mintz of the University of Calgary who claims we will be left behind other countries with more aggressive tax-cutting regimes if we stop cutting our tax rates.

This is false. Corporations lay down roots for many reasons other than the lowest tax rates. Most of those reasons have little to do with tax levels. Companies locate in Canada because of our highly trained workforce, access to major markets, our lower dollar, sophisticated communications, our lack of corruption, quality social services and social programs, education, an excellent quality of life, and much more. If corporate taxes were all that mattered, Ireland, with its rate of 12.5% would still be booming. No one would do business in Scandinavia where taxes remain high. In the U.S. where corporate taxes vary from state to state, companies would flock to zero tax havens like Nevada and Wyoming, but they are not.

It is also not clear that corporate taxes necessarily lead to more jobs. The evidence is mixed. Other measures, such as spending on infrastructure or cuts to personal income taxes may help foster growth and create even more jobs.

Jim Stanford of the Canadian Auto Workers argues that cutting corporate taxes would actually destroy jobs. Business would hoard not hire, leaving less money in the federal treasury for EI benefits, retraining and infrastructure.

Next year, Ontario businesses will pay a combined federal and provincial rate of 25%, which compares to a rate of 35% in the U.S.

One would think that the growing gap is a big incentive for U.S.-based multinationals to invest in Canada, perhaps even offsetting the higher cost of the Canadian dollar. That is wrong. Tax cuts are of little attraction.

In fact, U.S.-based companies, unlike most foreign multinationals, are taxed by the IRS on their global income. Therefore, profits that are not reinvested but are repatriated are hit with a higher rate back home, not the Canadian rate.

The lower tax rate makes profits looks better in Canada, but that just means Americans are taxed more in the U.S. Therefore, the Conservative tax cut is not a huge draw.

In fact, Scott Clark, a former deputy finance minister, points out that after the recent recession, many companies are reporting losses or depressed profits, making tax breaks a lot less attractive than when the economy was booming. Many large corporations would not be paying taxes on their profits because of many recorded losses during the recession and will be able to record those losses against their profits for many years to come.

Two sectors which weathered the recession well in Canada were the oil and financial services industries, so the tax cuts the Conservatives are willing to provide to their friends in Calgary are in the oil sector and, of course, the big banks, unlike forestry and manufacturing, which did not turn a profit and may have benefited from a cut.

Making a country that is good for business is a lot more complicated than shifting the tax rate a few percentage points. Timing is key. Cutting business taxes when we are in a surplus or when the budget is balanced is one thing, but continuing to cut when the deficit is $56 billion effectively means borrowing more to cover the lost tax revenue.

We need to hit the pause button and get our fiscal house in order. Tax cuts are not the magic bullet for what ails our economy, nor are they the elixir for investment, growth and jobs, as the Conservatives claim. They are a drain on the fiscal purse at a time when there are better ways to create jobs.

According to Philip Cross, Statistics Canada's top economic analyst, Canada's natural resources, the price of oil, currency fluctuations and the state of the country's financial markets have been far more influential on corporate investment decisions than the recent tax cuts. A broad look at how corporate tax rates have changed Canada suggests the impact of small cuts is marginal for most companies. The larger impact is on the government's bottom line.

Other analysts argue that as a result of the tax cuts, corporations sat on their savings, hoarded the cash, bought back shares or sent profits out of the country to their foreign headquarters instead of investing, expanding and hiring in Canada. In fact, the tax cuts do not apply to small businesses, which are the job creators in our economy since they have their own tax rate.

According to Carol Goar, a writer for the Toronto Star, five questions need to be asked of promoters of corporate tax cuts.

First, what evidence does the government have that reducing corporate taxes stimulates job creation?

Second, how does the finance minister know corporations will use their tax cuts to hire workers rather than invest in labour-saving equipment, give executive bonuses, increase their shareholder dividends, facilitate mergers and acquisitions or simply sock the money away?

Third, if the finance minister is eager to encourage hiring, why did he jack up the employment insurance premiums on January 1 by $13 billion? Nothing kills jobs faster than a payroll tax.

Fourth, what proof exists that corporate tax cuts make Canadian companies more competitive? They could have the opposite effect. Instead of investing in research or innovations, firms could use tax cuts to undercut their rivals, buy back shares or give executive bonuses.

Fifth, why is it good economic policy to shift an ever-growing portion of the tax burden from businesses, many of which are highly profitable, to individuals, many of whom are struggling to get back on their feet after the recession?

After five years of the Conservative government, Canadians are worse off and the corporate tax cuts are only borrowing against our children's future. The government's real priorities are fighter jets, U.S.-style mega-prisons and more tax cuts for the largest corporations.

In the five years since the Conservative government was elected, Canada has become less equal. The rich are getting richer and middle-class Canadian families' incomes are stagnating. The pressure on families is increasing and the elastic is stretched really tight.

Liberals would make different choices and defend the priorities of Canadian families. We would cancel the $16 billion jet fighter deal and save billions by replacing the CF-18s in an open competition. We would cancel the government's corporate tax breaks and freeze tax rates at 2010 levels.

Canada's corporate tax rates are already among the lowest of the G7. Liberals would reinvest the savings in reducing the deficit and the priorities of middle-class Canadian families. Pensions, learning, health and family care are the real issues affecting working families and these are the priorities that the Liberal Party will fight for.

[Phil McColeman, Conservative, Brant, ON]

Madam Speaker, I would like the member for Mississauga—Streetsville to respond to the quote from the Mississauga Board of Trade, with which she would be familiar. On January 13, it said:

With Canada still slowly emerging from the recent recession, any potential of eliminating these tax reductions will severely affect Canada's business community, the economy, jobs and investments. Many businesses have already factored in these tax reductions in their long-term financial strategies. Thus, eliminating these reductions would be adding back $4.5 billion of taxes...that business has not accounted for nor are prepared to pay. Business will not only struggle to pay these taxes, but will also be forced to sacrifice in investments of new employees or technologies, which often are key pillars to business growth and success.

Would the member for Mississauga—Streetsville please respond to that?

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Madam Speaker, my argument today is that these tax cuts are reckless and unaffordable.

It was one thing when the Liberals reduced corporate taxes during an economic boom. We were in a surplus of $14 billion and we kept a reserve of $13 billion. However, circumstances are different today. Because of the government's policies, today we have a $56 billion deficit and we have just added $200 billion more in new debt under the government, which will have to be paid back by borrowed money.

These tax cuts are unnecessary as well because we already have some of the lowest corporate tax rates of the G7. They do not include tax rates for small businesses. We know that corporate tax cuts are not the most efficient way to create jobs and drive growth in the economy. For example, infrastructure, housing and family care would help foster growth and jobs.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, most of the people I talk to, both citizens and people in companies, believe corporation taxes are low enough already. In fact, there is a belief that good corporate citizenship comes with added responsibility to want to pay taxes to help the country. Corporations just do not arbitrarily move to the lowest tax jurisdiction. One of the previous speakers already pointed out that tax rates in Las Vegas were extremely low and we do not have an exodus of corporations heading toward Las Vegas.

The fact is corporations have to look at the total package. Canada provides a lot of social benefits like health care, which are not provided in the United States, and other things. There is a whole number of inputs in to making corporate decisions. If the government thinks for one minute that corporations will just pack up and leave, that will not happen.

We already have low corporate tax rates. There is no reason to reduce them, whether we are in a surplus position or a deficit position. We are in a deficit position right now and this is totally irresponsible on the part of the government.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Madam Speaker, I do not think I heard a question, but I certainly concur with the hon. member's comments. We already know that Ireland has the most favourable tax rate of 12.5% and not all companies are flocking to Ireland to do business. In fact, no one would do business in Scandinavia as a result of the high tax rate.

As I have said earlier, tax rates vary from state to state. Some of the most highest taxed states are not the least popular and neither are Nevada and Wyoming, which have the lowest tax trade.

I want to read to few quotes from some citizens who wrote in on the topic of corporate tax breaks. The first one is from Mahmood in Ottawa who says:

With a debt of $500 billion and a massive deficit of $45 billion, this is clearly not the time for tax cuts. All tax cuts must await return of the budget surplus and a substantial reduction in the national debt. Any corporate tax cut at this juncture will only add to the budget deficit and debt.

Jeff from Toronto says:

The Conservatives are not prudent fiscal managers. They spent $1.2 billion on G8/G20 summit security to stop fewer than 100 anarchists, but they cut $22 million [which is actually $43 million] in settlement programs in Toronto...resulting in a loss of 1,000 jobs in the GTA. The security spending was a pork barrel for the Conservative—

[The Acting Speaker, NDP, Denise Savoie]

Order, please. I must interrupt. The hon. member's time has run out.

The hon. member for Humber—St. Barbe—Baie Verte.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Madam Speaker, this is an interesting debate. Perhaps this is the time to re-ground it a bit. The government would like to create the perception among Canadians that this is about stopping the tax cut for all companies and all businesses. It is not.

Small and medium-sized businesses, which are the engine of growth of the economy of our country, will enjoy generous tax breaks supported by the Liberal Party of Canada. In the very title of this debate, this is about tax breaks for large multinational corporations at a time when the taxation rates for those large multinational corporations is at the lowest it has ever been, one of the lowest regimes anywhere in the G8, which the government itself points out.

This debate is a very timely one. We are also having it at a time when we are discussing the fact that Canada has a $56 billion annual deficit this year. According to the government's statistics, numbers and prophecies, it will have this deficit for the next six years. Every chamber of commerce I have ever spoken to always tells me that one of the greatest issues threatening the economic stability of its members and of the provinces those members represent, and of the country, is this massive national debt, which is accumulated through annual deficits year after year. The chambers of commerce always tell me that we must tackle the deficit. When I hear from chambers of commerce, that is their one primary piece of advice.

When we deal with the stimulus and when we talk about the recession, much of the stimulus money the government brought forward went to whom? It went to large multinational corporations, which the Conservatives feel are the genuine engine of the economy of Canada, not small and medium-size enterprises. They do not want to get the information out there that small and medium-size businesses deserve a tax cut and that it is supported by the Liberal Party of Canada. They want to reflect that it is all corporations.

The Conservative Party of Canada has earned, and earned well, the name “the party of big business”. Every time there has been an opportunity to serve the people of Canada, to serve consumers, to serve and to provide support to working class people the Conservatives have failed.

We try to bring in legislation and procedures to protect consumers who are airline passengers. Who makes sure that big business rules the day and consumers do not get a chance? It is the Conservative Party of Canada.

The Conservative Party says that it needs to protect people, that it needs to protect the food supply. Who ensures that does not happen? The Conservative Party of Canada. Who ensures that big business rules the day and controls the public agenda of the Conservative government? It is big business.

We are saying very clearly that we have a problem on our hands, created by the government. We have a $56 billion deficit this year. A lot of the reason why we have that deficit is because there was a lot of stimulus money that was given to big business. Why not ask it to pay back a reasonable portion of that money through reasonable taxation? The Conservatives say no. Why? Because they are the party of big business, not of people, not of small and medium-size businesses, not of working class people.

Let us be clear. When it comes to making a decision between people and the profits of large multinational corporations, the Conservatives are picking the large multinational corporations. It shows in the record time and again.

We have a $56 billion deficit this year. According to the government's own numbers, we are going to have a deficit for the next six years.

Picture this. We have been a confederation for over 144 years. In that entire period of 144 years, we fought two world wars. We sent our men and women to Korea to fight a war there. We sent peacekeepers all around the globe. We financed a chain of post offices right across the entire country. We built a transportation system right across the entire country. We built a railroad right across the entire country. We did big things.

The entire deficit, the debt of Canada over 140 years of Confederation, was $500 billion. It will be $56 billion in one year under the government. It is unbelievable the Conservatives would now say that it is the people who have to pay exclusively for that deficit.

What do the Conservatives do? There is an opportunity to ask large corporations to pay a reasonable amount of tax, to contribute a reasonable amount of money to pay off some of that deficit the Conservative government has dug us into.

However, no, the Conservatives government will cut the pensions of seniors. Because there is an opportunity to shave a few bucks off the pensions of seniors, the government will cancel their eligibility for the guaranteed income supplement and lower Canada pension plan benefits for those who want to retire at the age of 60. The government wants to ensure that those people pay for its expenses. That is the Conservative Government of Canada, that is the Conservative Party of Canada in action, the party of big multinational business. It is rightfully earning the title that it is the government, the party of big business exclusively.

Can the Conservatives defend themselves about it? No. They simply go on with a rant about how if they do not do this, the sky will fall.

If there were a real problem, the Conservatives should have said that they would cut corporate taxes to the level they were in 2008. However, they would not have done that because they denied there was a recession back in 2008 as well as denied they would be in deficit. They denied that the circumstances would ever change back in 2008.

They changed pretty abruptly because not only did the Conservatives then say that the country was in a massive deficit and recession, they spent $56 billion of hard-earned taxpayer money to try to get out of the situation they had denied two short years ago.

There is an alternative. The alternative is supported by the Liberal Party of Canada and many on this side of the House. We all have a responsibility to try to tackle this deficit, to provide reasonable services and programs to the people of Canada, to ensure stability of seniors' pensions, to ensure our children have a reasonable opportunity for an education. That comes from one place and one place only: reasonable taxation and reasonable expenditures of that taxation.

The government does not want large corporations to have to bear a reasonable burden the same as every other citizen of Canada must bear to provide those things. The Conservatives do not feel large corporations should have to bear any amount of responsibility to encourage the innovation agenda by actually contributing to national science and technology. They do not feel as though there is any need whatsoever to provide one modicum of stability to the pensions of our seniors.

What do the Conservatives do? They simply write off $25 billion in an income trust fiasco, a double-cross. They write off the pensions of seniors by secretly changing the rules to the GIS eligibility. Then they cut the pensions of those people who want to retire, based on the rules they understood would be there, at the age of 60. They reduce their pensions to just 64% of what they normally would have been. That is down considerably from what the rules were before.

When the Conservatives spend their $120 million a year on advertising, talking about programs of the Government of Canada, do we hear one word about that in the advertising? Do we hear that the Conservative action plan is to cut the Canada pension plan for those who receive benefits at the age of 60? Not one word.

That is why this has to be spoken about in the House. People have to be informed that the Conservative Party of Canada is the party of big business and that will not change any time soon.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Madam Speaker, I listened with interest to the comments from my colleague across the way. I kind of dispute his attitude on the effect that these tax cuts will have upon small business. Members do not have to believe us, they can believe other people. Bill Stirling, the Newfoundland and Labrador vice president of the Canadian Manufacturers & Exporters, says:

While there are a very small number of very big businesses in Canada that would benefit from the tax cuts, there are hundreds of thousands of small and medium-sized businesses that would also benefit. [...] The reason is that small and medium-sized enterprises take the cash available from those tax savings and plow it back into the business. [...] They spend money on training. [...] The proposed tax cuts are good for the Canadian economy, good for Canadian workers, and good for the country.

That is from a representative from Newfoundland. I am wondering if the hon. member can explain the difference between his opinion on the effect these tax cuts will have and that of the Canadian Manufacturers & Exporters own vice president from Newfoundland.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Madam Speaker, again, small- and medium-sized businesses are scheduled for a tax cut and we support that tax cut.

We do not support it for the large corporations, the ones that have far more ability and flexibility to pay a reasonable portion of the national tax base. We do not feel it is the right time to actually make sure they pay one of the lowest tax rates anywhere on the planet. We feel they have a responsibility.

I will say this about the folks at the Newfoundland and Labrador Manufacturers & Exporters Association. Whenever I talk to them, they all say to me that one of the biggest issues we face as a country is a ballooning national deficit and a growing national debt. They tell me that one of the biggest threats to their members and to the economy of Canada is that the government is not dealing with that. One way to deal with it is by getting revenue from large multinational corporations to help pay that debt. It is pretty simple.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Madam Speaker, I have listened with interest to some of my colleagues on the opposite side who claim that their party does not raise taxes.

I want my colleague, the hon. member who just gave a terrific speech, to comment on this fallacy. We know that in 2006, the Conservatives raised taxes to 15.5% after the Liberals had lowered them to 15%. The Conservatives also taxed income trusts at 34%, which was a loss of $30 billion to many seniors who had investments in income trusts. The Conservatives put a tax on new travellers, the air travellers security tax. The Conservatives just hiked payroll taxes to $13 billion.

Well, no wonder the Parliamentary Budget Officer says that today we are in a structural deficit and that the government is not in a position to balance the books by 2015-16 as the Minister of Finance has promised.

I wonder if my hon. colleague might want to comment on some of that.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Madam Speaker, the party of big business, the Conservative Party of Canada, has indeed raised taxes, whether it be payroll taxes through increases in EI premiums or through actual, direct, straightforward, indisputable increases in the personal income tax rate.

The Conservatives brought the personal income tax rate in this country from 15% to 15.5% when they took office. The Conservatives did so by saying that they simply cancelled the tax cut and did not actually raise taxes. To use their logic, they are definitely raising taxes.

One of the biggest fallacies of this entire argument is what the Conservatives never ever want to talk about, what they will never spend government advertising talking about, and that is the fact that they are raising revenue on the backs of those who can least afford it.

Cutting seniors pensions the way the government has done time and time again, consistently showing contempt for Canada's seniors, is probably the worst thing to happen to this economy. Money is being taken away from those who earned it and who earned it through hard efforts over the course of a working lifetime. They are being told, as the Conservatives are doing it, that secretly, quietly, unabashedly their seniors pensions will be shaved off to help the government pay for its problems.

The Conservative government has a lot to answer for.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, from the outset I wish to inform you that I will be sharing my time with the hon. member for Chambly—Borduas.

We have before us a motion moved by the Liberal Party that reads:

That, in the opinion of the House, the Government’s decision to proceed with cuts to the tax rate for large corporations fails to address the economic needs of Canadian families, and this House urges the Government to reverse these corporate tax cuts and restore the tax rate for large corporations to 2010 levels in the upcoming Budget.

As the hon. member for Hochelaga, our finance critic, said this morning, the Bloc Québécois is in favour of this Liberal motion because we think that at a time when Canada has an extremely large deficit—to the tune of more than $50 billion—we have to ensure that the burden is shared equitably by all sectors of society. When corporate taxes are being cut, that necessarily means the government will get that money one way or another, either by increasing fees and taxes, which will essentially affect the middle class, or by cutting services, which will also affect the middle class and the less fortunate.

I want to point out as well that the Conservative Party, the government and the Minister of Finance have never told us how they will ever be able to return to a balanced budget. They say it will take five years, but they have never provided a real plan. The Bloc Québécois has quite a detailed plan, and I will get back to that later.

For a number of years now, even under the Liberals, the taxes on profits have been constantly reduced. It was Paul Martin who started these cuts, and it is obvious by now that they have not had the desired structural effect.

Productivity has remained a problem in Canada, in comparison with our competitors, and investment still lags. If tax cuts had had the magical effect the Conservatives expect, we would have seen it already. But that has not happened.

I want to draw the attention of the House to a study published in Austria in September, 2010. It is called Do higher tax ratios result in lower economic growth?. Five researchers studied the effect of taxation on economic growth across all the OECD countries and reached the following conclusion:

There is no statistical evidence to the negative relationship between the tax ratio and economic growth.

There is no automatic relationship, therefore, between tax cuts and economic growth, despite what the Conservatives claim. We think that corporations like banks and big oil companies should be required to help, given Canada’s current financial situation. That is why we oppose a general reduction in the tax rates on corporate profits.

The Bloc Québécois is not opposed, of course, to tax cuts for small and medium-sized businesses, which create so many jobs. These tax cuts were actually already implemented under the Conservatives’ so-called recovery plan, and the Liberal motion does not call them into question.

We have also noted all the gifts made to the oil companies in particular over the last few years. In addition, banks are still allowed to use loopholes in the law to send money to tax havens and thereby avoid paying their fair share of the tax burden we all share. The tax system is an expression of society's solidarity and makes it possible to provide services and support to those who need it. This can be in the form of family policies, policies to fight poverty or income support for people who lose their jobs.

We will be voting in favour of this motion because we are opposed to a general reduction in taxes for large corporations.

I will now come back to the oil companies. The government says that it does not directly subsidize oil companies. That is false. The International Institute for Sustainable Development has calculated the direct assistance given to companies in the oil and gas sector. It estimates that, in Canada, oil companies receive $1.3 billion in direct and indirect subsidies from the federal government every year. Moreover, the Conservative government, like the Liberal government before it, has changed how the amounts are calculated.

Previously, mining and oil companies received tax breaks based on their operations. The government decided to change this and to have companies deduct the royalties payable to the provinces from profits before applying federal taxes. In light of the difficulties experienced around the world by the mining sector at a certain point—although not as serious now, there was a crisis a few years ago—the provinces and Quebec significantly reduced the royalties paid by mining companies. However, royalties paid by oil companies have been substantially maintained. In the end, this tax reform gave an advantage to the oil sector and put the mining sector at a disadvantage. This was criticized because it resulted in taxation of the oil sector in Canada being even more advantageous than in the state of Texas. There is room for creating a new balance and a bit of fairness. We believe that oil companies can be taxed appropriately.

Overall, the benefit to the oil industry was estimated at $3.2 billion in 2010. This money should be recovered by the federal government in order to return to a balanced budget and to maintain programs that help Canadians, especially the middle class and the most disadvantaged.

The Bloc Québécois presented proposals to balance the budget, as announced by our finance critic a few weeks ago. I just spoke about what we should be looking for from the oil companies. We must also consider the banks, which resort to tax havens. We could go after a great deal of money. In 2009, the five major banks saved $1.3 billion in taxes by using these tax havens. Barbados is surely the ideal tax haven for Canadian banks.

I know that Scotiabank, for example, has shell companies scattered throughout the Caribbean to ensure that it does not have to pay its share. What is interesting is that, in their annual reports, banks are required to list their tax savings, savings achieved through the use of tax havens. This gives us an idea. There are also other companies, other big corporations, that are able to use these types of strategies to avoid paying their fair share to help the collective effort.

I would like to remind you that, a few years ago, the Auditor General was concerned about the erosion of the tax base because of the use of these tax havens.

In a period like the one we are experiencing today, we must therefore eliminate tax havens and gifts to oil companies and expect those who have had the chance to accumulate a bit more wealth to contribute more. For example, our proposal involves asking members of Parliament to help our. We propose that taxpayers who earn between $150,000 and $250,000 pay a 2% surtax—members of Parliament would not be exempt—and those who earn over $250,000 pay a 3% surtax until the deficit is eliminated. This would produce $4.8 billion.

I would like to close by speaking about two other proposals that are included in our plan, namely, the reduction of federal bureaucratic spending—there are many ways to reduce costs without affecting public servants or services—and the fight against contraband, which is very important. We feel that the Conservative government is still dragging its feet on this issue. As I said in a previous speech, the Conservatives are tough on crime but only on petty crime. Serious criminals are never affected.

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I want to thank the hon. member from the Bloc Québécois for his speech. However, I am a bit confused.

This morning, our Liberal colleague from Kings—Hants had the chance to read a press release and quote the leader of the Bloc Québécois. He said that the leader indicated he would support tax breaks for all companies. I am confused because the hon. member has just said that he is at odds with his leader—the leader of the Bloc Québécois.

I would like to read a quote by the Conseil du patronat du Québec.

Its representatives appeared at the finance committee just recently and stated:

[We] would like to see the government follow through on its plan to reduce corporate income tax to 15% for 2012. The corporate tax reduction would increase private investment, both domestic and foreign, which would enhance our productivity, create good jobs and improve living conditions for Canadians.

How does the hon. member explain this?

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, the thing we disagree with is the broad-based tax cuts. That is our position.

I have already said we are in favour of the tax cuts for small and medium-sized enterprises that have already been made. For some businesses like banks and oil companies, there is certainly a lot more groundwork to be done. We think that not only should these companies not have their taxes cut, but they should be contributing more to the collective effort.

Our position is clear: no to broad-based tax cuts, yes to tax cuts for SMEs and yes to increases for certain businesses that have the means to contribute to the collective effort, especially at a time when the deficit is as big as it is.

The member referred to the Conseil du patronat du Québec. At a caucus meeting with the Quebec chamber of commerce, I asked Ms. Bertrand why, despite the tax cuts, investments were not going up in Canada and Quebec. She said that it was a mystery. To anyone who tries to claim that lowering taxes automatically stimulates growth, I say that that is untrue. There is an old neoclassical, neo-liberal saying that today's tax cuts are tomorrow's profits and the day after's jobs. That is unfounded. Once again, I refer to the study that I mentioned earlier in my speech.

Our position is clear. The leader of the Bloc Québécois, the finance critic and I all agree that there should not be broad-based tax cuts for major corporations.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Madam Speaker, over the years I have sometimes spent time in the member's riding and have noticed the similarities between his riding and mine. A lot of industries in the area depend on national resources and the development of them.

In many cases, when we consider what they do and the larger the corporations are, tax cuts do not seem to be top of mind to them. Whenever I meet with them, tax cuts are certainly not part of the conversation when it comes to the immediate term, but issues such as currency exchange rates, the prices of inputs, labour and a diversified trained workforce. When it comes to the Government of Canada, it always seems that it is more interested in how we invest in the individuals who work within that industry.

I was wondering if the member could comment on that, as it certainly is pertinent to his area.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, I thank the member for his question. It gives me a chance to come back to this subject.

When the economic crisis hit, the Conservatives said that they would lower taxes to help businesses, but that did not help all businesses. In the forestry sector, for example, a sector that we have in my riding, the tax rate could go down to 15% and it would still not help Les entreprises TAG or the mill in Chertsey because they are not earning a profit.

What we are looking for, and what we have set out in our budget expectations—which were made public by the member for Hochelaga—is assistance that targets certain sectors, such as the forestry sector. Tax cuts will not help them. More often than not, tax cuts for major corporations simply go straight into the pockets of senior managers or stakeholders. They do not go into job creation or productive investments. The government must target much more than that.