Mr. Speaker, it is my pleasure to speak to Bill C-48 and participate in this debate.
While this legislation is indeed a technical bill, as its name suggests, it is nevertheless important. The bill before us today has been over a decade in the making and represents over 10 years of miscellaneous tax announcements.
While Canadians have been repeatedly and broadly consulted on these measures, because they have not yet been formally enacted by Parliament, the tax system has become overwhelmingly backlogged. Previous attempts to pass technical tax legislation by governments of all stripes have been unsuccessful for a variety of reasons. Not only have governments attempted to address this backlog, the Auditor General has identified it as a matter of significant concern as far back as 2009.
All members can agree the time has come to formally legislate these technical amendments into our tax system. We all know that a sound tax system is one of the cornerstones of a strong economy and a strong economy is a top priority for our Conservative government. Through Canada's economic action plan, we are helping to ensure that all entrepreneurs and businesses have the opportunity to succeed in the global economy and continue to create jobs. That means keeping taxes low and the tax system predictable, as we are doing through today's legislation.
It also means we should have a tax system that is simple and fair for all. Indeed, our government is firmly and strongly aware of the importance of tax fairness, truly a concept that all members should understand and support. It is a basic principle that our government is committed to upholding, something that everyone, especially members, needs to remember if they try to skip out on their own taxes.
I will address that and other important tax issues in my time today as I discuss Bill C-48 in great detail. As members know, this technical bill would amend the Income Tax Act, the Excise Tax Act and other related legislation to simplify the tax system and make it more predictable, while also closing tax loopholes and creating a stronger and fairer tax system for all Canadians.
I should note that this bill and its measures were previously released for a repeated public consultation before its introduction in late 2012. To highlight the importance of that consultation, especially with tax professionals, the Office of the Auditor General at a recent meeting of the finance committee stated:
It was certainly part of our recommendation that the draft legislation be released for comment so that practitioners could provide input. That's an important part of the process. This means that before it actually gets tabled in the House, it's had input and it's not going to be a surprise to the practitioners. If there are any glitches, they can be straightened out.
As members can see, the proposals in this bill reflect the feedback our government has received from all Canadians, especially those tax professionals. Indeed, Bill C-48 has received its due diligence and our Conservative government is ready to move forward with ensuring tax fairness for all Canadians.
I should note that even the all-party finance committee endorsed this bill, without amendment, after a very detailed study. Witness after witness spoke in favour of the bill. This is what some of those witnesses had to say.
I will first quote from Gabe Hayos, Vice-President of Taxation, Canadian Institute of Chartered Accountants, who stated:
We support Bill C-48. The CICA understands how important it is for taxpayers to have greater certainty and a clearer understanding of Canada's federal income tax system.... Bill C-48 helps improve clarity and certainty, and it mitigates the negative effects of uncertainty identified by the Auditor General.
Second, Larry Chapman, executive director and chief executive officer of the Canadian Tax Foundation said at committee:
Bill C-48, the Technical Tax Amendments Act, 2012...represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. You heard that in the earlier presentation. I want to emphasize it again. Its passage is very important to all Canadians....Delays in the passage of tax legislation leave taxpayers and their advisers in a no man's land of uncertainty. My message for the Standing Committee on Finance is that you should encourage passage of this legislation...
Paul Hickey, a tax partner of KPMG, added in his testimony at committee:
[I] ask Parliament to act decisively and to pass Bill C-48 to essentially clean the slate of this old pending legislation and to finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their business, and the CRA could carry on administering and collecting tax in a more stable system.
Finally, we heard from Carole Presseault, vice-president of government and regulatory affairs, Certified General Accountants Association of Canada, who said at committee:
—I wish to say that we support the tabling of the bill and that we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.
That is just a very small sampling of the support that the committee heard for the bill.
Let me highlight a number of points in the bill. I will do my best to recap it succinctly and as briefly as possible, especially in light of its technical nature.
Part 1 of the bill proposes enhancements to the Income Tax Act to better target and simplify rules relating to the non-residents trust, taking into account comments received during public conversation.
Parts 2 and 3 relate to the taxation of Canadian multinational corporations in respect to their foreign affiliates, the result of which would be a more fair and equitable international tax system.
Part 4 deals with ensuring that the tax rules work well under both common and civil law, while part 5 would close tax loopholes and create greater fairness for taxpayers.
This part of the bill would implement a number of integrity tax measures that were first publicly released in 2010, on which we have consulted extensively since then.
These particular measures would close loopholes relating to specific leasing of properties and ensure that conversion of specific investments flow-through trusts and partnerships into corporations would be subject to rules similar to those governing transactions between corporations.
It would deal with schemes designed to artificially increase foreign tax credits in order to reduce taxes. In fact, it would prevent that from happening.
Finally, it would implement a regime for information reporting on tax avoidance and of transactions.
As an overall package of items, these key initiatives would help crack down on tax avoidance and ensure that every Canadian paid their fair share of tax.
At the same time, part 5 also includes a number of very technical changes essentially designed to ensure that the income tax system functions in accordance to policy that it is intended to operate under.
Most of these technical changes would address issues identified by everyday Canadian taxpayers working through the application of the income tax rules in their own personal or working studies.
Part 5 would also implement an income tax amendment relating to the enactment of the Fairness of Self-Employment Act. It would provide a tax credit in respect of employment insurance premiums paid by self-employed individuals, a change that this government has made.
Part 6 of the bill would implement the technical amendments to the GST and HST, including relieving the GST and HST on the administrative services of collecting and distributing the levy on blank media imposed under the Copyright Act, which we updated.
Part 7 would amend the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to provide for technical changes concerning tax administration agreements.
Finally, Part 8 consists of coordinating amendments that would ensure that the tax amendments in this legislation interact properly with other legislation.
While these measures may seem technical, they are crucial to the fair and efficient functioning of our tax system and they have been consulted on a repeated basis. Now is the time to pass the bill.
Tax professional Carole Presseault again, who was one of the many expert witnesses who appeared before finance committee to speak to the importance of the bill and its passage, said:
—this bill needs to get passed. My concern doesn't result in the study of this bill. This bill has been studied; it's been consulted. My colleagues here, the witnesses, have also expressed that it's been extensively studied. Stakeholders have had an opportunity over the last decade to comment on the various provisions of this bill, and, yes, please, what's required is for it to be passed expeditiously.
Tax fairness and a competitive tax system are important to this government. As taxpayers, we are all forced to give up a part of our hard-earned income to fund government programs like health care, policing and other services for Canadians. We do so willingly and honestly and under the understanding that everyone is paying their fair share. Canadians who play by the rules do not like tax cheats and neither does this Conservative government. That is exactly why today's legislation would help fight tax cheats.
To quote noted tax practitioner Greg Boehmer of Ernst & Young, who also appeared in front of finance committee:
It's very clear that this legislation is aimed at fairness, that it does close a number of loopholes, and that it does broaden the base in certain circumstances.
Additionally, as part of our government's broader efforts to keep taxes low for Canadian families and ensure integrity in our tax system, economic action plan 2013 included a number of measures to close tax loopholes, address aggressive tax planning, clarify tax rules and reduce international tax evasion and aggressive tax avoidance.
As everyone knows, our government is very committed to closing tax loopholes that allowed a select few businesses and individuals to avoid paying their fair share. Ensuring that everyone pays their fair share also helps to keep taxes low for Canadian families and businesses, thereby improving incentives to work, save and invest in Canada.
Since 2006, as has been said before, our Conservative government has introduced a whopping 75-plus measures to improve the integrity of the tax system. Bill C-48 would work in partnership with other governments, improving efforts to promote tax fairness, a fact which did not go unnoticed during finance committee's careful consideration of this legislation.
When it comes to our Conservative government's priorities, the witnesses were absolutely correct. However, in addition to ensuring its integrity and fairness, our government remains dedicated to ensuring the tax system remains competitive so we can attract vital new business investment to Canada and to grow the economy and create jobs.
Lower Canadian taxes are critical in supporting economic growth by enabling Canadian business to invest more of their revenues back into their operations and into their workers. These businesses invest in machinery, equipment, information technology and other physical capital that are components of an improving Canadian productivity.
Taken as a whole, there is no question that our government's actions have made a noticeable difference. Canada now has the lowest overall tax rate on a new business investment in the G7, a policy proven to increase productivity and to contribute to a higher standard of living for all of us.
In conclusion, our government strongly believes that Canadians deserve lower taxes, not just a select few. That is why, since coming into office in 2006, Canadians from every walk of life are benefiting from the tax relief introduced by our government, such as the lowering of the GST and the landmark TFSA.
I would like to add that I have a 22-year-old daughter who is just starting out in the world. One of her questions to me recently was whether she should invest in a TFSA and whether that would that help her in the long run.
Our message is getting out there. I did not give her that message. She came to me about it. There are opportunities and the need for Canadians to invest and save.
Also, one million low-income Canadians have been removed from our tax rolls. This is a fact.
Our strong record of tax relief is saving the typical Canadian family of four more than $3,200 each year.
Also, our government has shut down tax loopholes in the system in order to stop people avoiding to pay their fair share of tax. Ensuring tax fairness is just another way that our Conservative government will keep taxes low for Canadians and their families. I am proud that the bill before us today will help us go even further in meeting that objective.
I encourage all my colleagues to vote in favour of tax fairness and to support this important legislation here this evening.