Madam Speaker, thank you for the opportunity to speak to Bill C-2, an act to amend the Income Tax Act. The proposed changes to the act are the following: first, the reduction of room in the tax-free savings account for hard-working Canadians; and second, a reduction in taxes that have been marketed to Canadians as helping the middle class.
To preface any comments regarding these changes, I would like to begin by stating on the record that prior to my election as the representative for Barrie—Springwater—Oro-Medonte, my career was in finance. From personal, to small business, to commercial finance, I have had experience in planning finances and investment portfolios, with the exception of securities, and reviewing financial statements to understand the solvency of both individuals and businesses.
My remarks today are focused on four clear results of this tax-and-spend Liberal ideology we are seeing. One, the reduction of the tax-free savings account hurts seniors and young people more than anyone else. Two, it discourages Canadians from saving their money for the future. Three, the apparent Liberal tax reduction for the middle-class in fact benefits the top 10% of income earners in this country more than anyone else, while doing absolutely nothing to benefit those earning $45,000 per year or less. Four, a proposal that the Prime Minister, the Minister of Finance, and Liberal government have touted as revenue neutral will single-handedly be responsible for $8.9 billion worth of deficit over the next six years.
One of the most innovative tools ever delivered to Canadians, specifically seniors, is the tax-free savings account. While I understand that the government is looking at these changes from a theoretical perspective, my goal is to properly communicate what the practical advantages of these changes are. In my opinion, the Liberal government is reducing benefits to seniors and to all Canadians, benefits that were introduced and changed by the previous Conservative government.
For example, a widowed senior is required by the Canadian tax code to transition their life savings from a registered retirement savings plan, known as an RRSP, to a registered retirement income fund known as a RRIF. Upon transition to the retirement income fund, this senior must start withdrawing a minimum amount, which they are then taxed on. A withholding tax of up to 30% is then levied against withdrawals exceeding the withdrawal limits. Since retirement savings plans and retirement income funds are not truly liquid assets, a person may want to transition their savings into a more liquid vehicle, which is where the tax-free savings account comes in. The hitch is that, as stated, this person is being taxed as much as 30%. The idea that his or her life savings can be placed in a vehicle that can grow without tax in the future is ideal in most situations.
However, the government has reduced the annual amount a person can place in a tax-free savings account, which results in one of two things happening for seniors. First, the person is not able to remove as much of their life savings from their registered income fund in any given year. Second, the person is taxed based on a higher amount and then taxed again on the growth they attain in their senior years. I do not support separating seniors from their hard-earned money, which is likely being used to secure independent living, a healthy lifestyle, and to live out the remainder of their days as they see fit. I do not support under any circumstances raising taxes on seniors in our society.
Likewise, I do not support tax increases on young people looking to make the most incredible investment of their lifetime, in their first home. The CBC has stated the following:
With the TFSA, young people and home buyers have another option....
By contrast, withdrawals to the TFSA can be repaid to the plan at any time, following the year of withdrawal. “And unlike HBP [the home-buyers plan], failure to repay amounts withdrawn from a TFSA never result in tax on funds not repaid”....
The Liberal government has made it more difficult for young people to save for their first home. These young people in the GTA, Vancouver, and other hot markets throughout the country are being mandated now to save up to 10% for the down payment. At the same time, the Liberal government is clawing back one of the most effective tools to save that 10%. The government's action forces young people either to be taxed on the growth of their savings or use the home buyers' plan and pay back the money to the plan over the ensuing 10 years. Repayment, in these circumstances, can be difficult, as moving into home ownership is a life-changing situation and new homeowners often find these times challenging. What the Liberal government will do, therefore, is make it more difficult for young people to save and more difficult to purchase their first home.
While the Liberal finance minister travels around talking about shrinking household debt and increasing down payments on homes valued over $500,000, his government's policies are actually discouraging Canadians from saving for that same home. Therefore, why does the Liberal government say one thing and do another? The government believes that these tax hikes for seniors and young people trying to save for their first home are necessary. They are necessary in order to pay for its apparent middle-class tax cut.
Following the introduction of this apparent middle-class tax cut, economists stated that it would actually help those earning $190,000 a year, that is, those earning more than anyone else. In other words, no one would receive more help than those sitting in the top 10% of income earners in the country. How could the Liberal government, Liberal Prime Minister, Liberal Minister of Finance, and the Liberal MPs promote cutting taxes for those earning $190,000 a year on the backs of seniors in retirement and young people starting out their lives, or like the family I grew up in? We fought for years, like many Canadian families, to get and gain in home ownership.
I wish I could stop here. I wish this was where, to quote the member for Papineau, the “nonsensical” behaviour of this government ended, but it is not. Not only did the government raise taxes on seniors and young people, reduce incentives for saving, provide lower taxes to the top 10% of society, but when it did it, it also threw the government into deficit.
It was reported last week that the former Conservative government had left a $400 million surplus in November. In December, the finance minister announced that the Liberals would run a $3.5 billion deficit this year. This means the government has projected to spend $4.1 billion between November and March more than it takes in. One might ask how. It is because the revenue neutral middle-class tax cut is not revenue neutral and results in the 2016 fiscal year coming with a $1.7 billion shortfall, according to the Parliamentary Budget Officer. Furthermore, it will result in a total $8.9 billion shortfall over the next six years.
When Canadians elected this government they did so believing that the middle class would be the great benefactor, that young people would be given greater opportunity, and that seniors would be given a new way to live out the remainder of their days. Based on the promises the government has made, it has shown that it will say just about anything to anyone to get elected. Canadians will hold the Liberals to account for the actions they take, for the actions they fail to take, and in what order they do so.
The government's priorities are transparent as a result of the actions it has taken first. As it stands today, the government has not prioritized seniors, young people, lower and middle-class Canadians, and our children by its leaving a greater deficit year after year The government has prioritized tax cuts for the top 10% of income earners in Canada. This what the government will be judged on. This is what it will be known for. This is why, as a Conservative, I cannot support Bill C-2.
