Mr. Speaker, it is a pleasure to rise in the House today. Having listened to the finance minister's comments, I will set aside my initial speech to respond to a couple of those comments.
The minister commented on how the middle-class tax cut would be revolutionary for Canadians. Finance Canada estimates this to be $6.34 a week in tax relief to middle-class Canadians. That is less than $1 a day. In the minds of the finance minister and the Liberals, $6.34 a week is revolutionary.
Today I will divide my speech into separate parts. In the first part I will talk about tax-free savings accounts. In the second part I will talk about the housing market in Canada relative to what tax-free savings accounts provide for individuals. The third part will deal with the middle-class tax cut. However. I could not resist the opportunity to put it in actual numbers that everyday Canadians could understand because the finance minister relied so heavily on it in his speech. Again , it would be $6.34 a week, less than $1 a day. I will then go on to talk a bit about how this would affect Canada under the current economic situation, gathering momentum toward what I will call the fiscal mess and who will pay for it.
I will wrap up my remarks with a general comment about understanding what the Liberal tax plan is really all about.
Throughout my speech today, I hope to cut through the rhetoric that we hear coming time and time again from the new government and talk in terms of real life through the eyes of hard-working Canadians, people like my constituents, who come from largely working-class families. My community of Brantford was born out of industry, hard work, and immigrants, who have worked two or three jobs to raise their families. It is not the most affluent community in the country, but it is the most resilient and one of the most hard-working. I like to describe its makeup as one of the most opportunistic and humble communities in the country.
Not all members in the House were around when the late Jim Flaherty first unveiled the tax-free saving account, but I remember it quite vividly as a historic occasion. I will take this opportunity to remind the House just how popular and widely celebrated this savings vehicle was and is today.
Experts from across the board were unanimous. Tax-free savings accounts represented the most revolutionary savings vehicle since the registered retirement savings plans of over 50 years ago. These accounts were an enormous step forward for the middle class to support a wide array of their financial goals, including but not limited to saving for school, their children's futures, a home, or a comfortable retirement.
The strength of tax-free savings accounts is that when the money is withdrawn, it carries no tax penalties. It is basically tax-free just as the name of it suggests. Another major strength is that tax-free savings accounts offer enormous flexibility, which was lacking in RRSPs. According to experts, tax-free savings accounts can fill any number of short-term and long-term savings goals. Unlike the RRSP, money in a TFSA can be used as collateral, while at the same time, investments in TFSAs are not counted as income to qualify for government benefits or pension supplements that carry a means test. Again, they are not to penalize the most vulnerable people in our society but to add to the free choice of how Canadians can save.
Experts in retirement planning are unanimous that the tax-free savings accounts are a valuable tool to reach personal retirement goals. Our government's efforts to continue growing this revolutionary savings tool represented a major step forward for middle-class Canadians, in particular, Canadians saving for their retirement.
The new government's approach to retirement savings is completely off base. On one hand, it supports the wrong-headed approach of the Government of Ontario to force all workers into a new government-sponsored pension scheme that will cut take-home pay and foist upon and force employers to cut jobs or go out of business in some cases. On the other hand, the Liberals would cut a widely-acclaimed revolutionary savings tool designed to support Canadians in whatever their own unique savings goals might be.
Tax-free savings accounts have been so popular in our country since the beginning, that over 11 million Canadians have opened accounts. However, the Liberals have have said that only the rich can afford to put more into tax-free savings plans, and this, again, is absolutely false. It is an argument that is ignorant to the real cost of saving for a home or retirement, and it is an argument that is not supported by the facts.
I will allude to the speech from the Minister of Finance. I appreciate him coming into the House and explaining the platitudes of all of this, and repeating the rhetoric of the election campaign, but let us hit the facts. The facts are, as I have mentioned, that 11 million Canadians opened tax-free savings accounts. In 2013, people earning less than $80,000 a year accounted for 80% of TFSA holders, and 60% of the individuals contributing the maximum amount to their TFSAs had incomes of less than $60,000. Those are the facts. I did not hear this from the Minister of Finance.
Our motivation in doubling tax-free savings accounts was to build on the momentum of this incredible savings tool for middle-class Canadians in order to give them greater incentive to save and provide retirees with a higher rate of tax-free income. However, this is where we get into the argument of whether the government should be involved in making those decisions, or should individuals. We believe individuals should make those decisions, not the government.
Our motivation in doubling tax-free savings accounts was to build on this momentum. The Liberals' motivation in cutting tax-free savings accounts appears to be nothing more than looking for ways to fund a Liberal spending spree.
I will give credit to the Minister of Finance this morning. He did mention in his speech the fact that had the new limits for tax-free savings accounts been honoured as positive changes, the government revenues would have gone down, a concern by the Liberal government that this takes revenue away from the federal government, instead of thinking about middle-class working Canadians on the ground trying to save for their future and their children's future.
Cutting back tax-free savings accounts may support the Liberals in their plans for massive spending and big-government programs, but it certainly does not support the millions of middle-class Canadians who are working hard to save for their future.
I would like to move to what I believe to be at the heart of what middle-class Canadians desire. I am very familiar with this because I spent my life in this industry, building houses for individuals. This is in regard to the mortgage changes that the Minister of Finance brought out very suddenly and unannounced, without consultation. We have a clear example of how the Liberals are repairing their fiscal plans really on the back of a napkin, without thinking about the long-term financial consequences for Canadian families.
Last month, out of nowhere, the Minister of Finance announced new mandatory minimum down payments on home purchases. We know that buying a home is the most important financial decision most Canadians will ever make and that achieving home ownership is a bedrock issue when we are talking about supporting the middle class. Therefore, one might expect that the finance minister would actually consult with those who know the housing market best before making a massive change, doubling the minimum down payment on some homes.
For example, the Canadian Real Estate Association is Canada's top source of accurate, up-to-date information on statistics on the Canadian real estate market. I know it would have been delighted to have offered its input to the minister on the minister's mortgage changes and would have been eager to work with the new government on issues like housing affordability. Yet it was not consulted.
The Canadian Home Builders' Association employs 800,000 people in the country. It builds approximately 200,000 new homes every year for Canadians. It has such a huge multiplier of economic benefit and spinoff to it, 10 times whatever the value of spending is on housing. It was not consulted.
The minister said that he made these changes to cool the Vancouver and Toronto housing markets. If he had taken the time to consult, he would have realized there were actually eight major Canadian housing markets where the average home price was already more than $500,000.
The Liberals say they support the middle class. However, with a stroke of a pen, the finance minister has made it harder for young people and families to achieve home ownership in places like the Fraser Valley, Victoria, Milton, Mississauga, Markham, Calgary, and Fort McMurray. He has cut many families out of the housing market altogether. He is telling millions of young families that they will now have to save at least $10,000 to achieve home ownership. At the same time, he is cutting the tax-free savings account in half to $5,500.
We have a government on one hand telling us that average Canadians cannot afford to put away $10,000. On the other hand, it is telling us that Canadians have to save $10,000 to buy their new homes. This is just one example of why cutting the tax-free savings account, a revolutionary savings tool, will hurt middle-class Canadians.
There was much in the finance minister's speech about the middle-class tax cut, so let me address that as the third section of my speech today.
Another core part of Bill C-2 is the government's changes to Canada's middle and upper-class tax brackets. What was supposed to be a simple change to the tax code has created a long-term financial mess for Canada. It is worth noting that the tax changes before us would not have anywhere near the impact the Liberals have promised.
The Liberal tax cut most benefits those in the high end of the second highest tax bracket. Those who make close to $200,00 would benefit the most. In fact, the PBO says that the reduction in the second tax bracket will benefit the top 30% of income earners in the country. Those are facts from the Parliamentary Budget Officer. They are not my comments, not my party's comments, not the opposition's comments, but the government's objective overseer of all things economic. For the average Canadian family, this means very little. Based on the finance department's own estimates, and I mentioned this before, the new Liberal tax plan amounts to, on average, $6.34 a week for those who qualify.
Even more troubling is how these tax changes add to a growing trend of this new Liberal government that it cannot get a handle on its baseline numbers.
We had this yesterday in the House of Commons during question period. Actually, it began on Tuesday in the House of Commons during question period, when the Parliamentary Secretary to the Minister of Finance stood up in this House and wilfully misled the House in making a statement that the previous Conservative government left this country in a deficit position. In fact, the finance department and the PBO have put online for all Canadians to see the actual facts and the numbers, where we left the government with a surplus of $600 million. All Canadians can go online to see that if they choose.
Again, those are not the opposition's numbers. Those are the baseline numbers on which the government came to power and had to deal with on day one, a $600 million surplus, not a deficit.
The tax changes we have before us today are not what the Liberals campaigned on. They promised that the tax cuts would be part of a plan that holds the deficit to $10 billion, a promise that they have already thrown out the window, and they campaigned on a commitment. This is the one that is so vivid in many Canadians' minds, the commitment that the tax cuts would be revenue neutral.
The new Prime Minister went across the country and said, “We'll take the money from the rich and we'll give it to the middle class for the income tax cuts, and do not worry, it will not come out of the Treasury. It will be a revenue-neutral deal.” The Prime Minister repeatedly and directly stated that he would introduce, and I quote, a $3-billion tax cut for the middle class paid for by a $3-billion increase on high-income earners. However, the Liberals got their numbers completely wrong, and this tax cut will not be revenue-neutral, not even close.
By the Minister of Finance's own admission, there will be a revenue shortfall of over $1 billion. This is money that will be taken from the Treasury, another $1 billion, plus. In fact, some of the objective observers and economists have looked at it, and I will give the House these numbers. The Institute for Research on Public Policy says the shortfall will be even greater, creating a revenue gap of closer to $1.5 billion, and the C.D. Howe Institute, which the Minister of Finance once chaired, said the Liberal plan will fall short by nearly $2 billion.
Where is that money coming from? It is coming from existing revenues, that puts us into a further deficit, so it already looks as though we are projecting a larger deficit.
I will wrap up by saying that Canadians are concerned and worried about how quickly the Liberals have managed to put the country into a financial hole. Their bad math and the faulty projections behind the measures in Bill C-2 help illustrate why.
Finally, I would like to move an amendment. I move:
That the motion be amended by deleting all the words after the word “That” and substituting the following: “this House. declines to give second reading to Bill C-2, An Act to amend the Income Tax Act, since the principle of the Bill: (a) fails to address the fact, as stated by the Office of the Parliamentary Budget Officer, that the proposals contained therein will not be revenue-neutral, as promised by the government; (b) will drastically impede the ability of Canadians to save, by reducing contribution limits for Tax-Free Savings Accounts; (c) will plunge the country further into deficit than what was originally accounted for; (d) will not sufficiently stimulate the economy; (e) lacks concrete, targeted plans to stimulate economic innovation; and (f) will have a negative impact on Canadians across the socioeconomic spectrum.”