Debates of March 7th, 2016

Income Tax Act

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, when we became the government about 10 years ago, we cut taxes in a very specific way. We cut the GST from 7% to 6% and, eventually, to 5%. We also reduced the lowest marginal tax rate. It was important for us to do that because these tax reductions benefited all Canadians, but they focused the benefit particularly upon low-income Canadians.

We did what the government has said it would do but did not do, which is help those who need the help the most: those who are looking to join the middle class.

I know that we disagree about business taxes, but I wonder if the member would reflect upon the differences between those changes to the lowest marginal rate and the GTS compared with the way the current government is proceeding?

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, I was here during those Conservative years, and without a doubt, in all of the Conservatives' so-called help for Canadians, they missed out a whole lot of people.

They did not help women. They put women at a great disadvantage, and they certainly did not help seniors when they raised the age of eligibility for OAS/GIS to age 67. They did not bring in any kind of socially progressive legislation or policies that really would have made a difference to people in our communities.

There was no national housing program. There was no child care. It was all simply a matter of throwing around money, and most of the money landed in the laps of those who did not need it. I would not call that tax fairness by any stretch.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I think the hon. member for London—Fanshawe and I can agree that the last 10 years did not address issues of inequality but contributed to a spreading problem, a real crisis in Canada with inequality.

I would like to ask if the New Democratic Party is willing to join the Greens in supporting a guaranteed livable income so that we can end poverty for all in Canada. I have been encouraged to hear the new Minister of Families, Children and Social Development talk out loud about maybe moving to that progressive policy, and I am hoping the NDP is ready to join us.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, I thank my hon. colleague for her invitation. I would counter by saying that I hope that the Greens will join New Democrats, because we have been talking about the importance of income equality for years and years.

I think that a guaranteed livable income would be a very important step in making sure that those in our communities who have given so much, the seniors, the veterans, the working families, receive the kind of supports that allow them to contribute to our economy.

One of the fallacies in all of this is that somehow these are folks who are simply on the receiving end of government benevolence. They are the backbone of this country and make this country strong. They are the ones who are providing, and we need to acknowledge that.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, when I look at Bill C-2, it is just one of the many things being done to address some of the existing income inequalities that the previous Conservative government somewhat exacerbated.

An important component is that nine million-plus Canadians would benefit directly. Tens of thousands of workers from every region of our country would get tax money going back in their pockets. I see that as a positive thing.

When we take into consideration issues such as our senior pension programs, for which there will be substantial increases, from what I understand, coming in the March 22 budget that I know Canadians are waiting to hear, there is a movement in the other direction, a direction that empowers Canadians and Canada's middle class, which would be healthier for our economy. Would the member not agree?

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, the member from the government caucus talks about all that the Liberals are doing. I do not think so. We are still waiting over here. There has been a whole lot of talk in a chamber filled with thunderous noise and all kinds of assertions, but I have not seen anything tangible.

The reality is that when we look at Bill C-2, we see very clearly that it is rewarding those who have the highest incomes. Those who earn $45,000 or less are not benefiting. How on earth is this construed anywhere as a positive step in helping Canadians?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, it is an honour to rise today in the House to discuss Bill C-2.

I want to start by clearly stating my premise up front and then speak to it throughout the 10 minutes I have. My premise is that fairness for the middle class and societal inequality cannot stand together. We cannot as a society, and nor can the government, decide that the middle class is the be all and end all of tax policy. I will say this bill misses the mark on delivering for the middle class.

We cannot say that fairness for the middle class is the be all and end all for society, because as long as inequality and poverty persist, every part of society is disadvantaged. Every part of society is disadvantaged by the continuation of poverty.

In the last half hour, I heard a Conservative member say that the people who need the tax breaks the most, the people who need the help the most, are the middle class. No, the people who need the help the most are the homeless. The people who need the help the most are the unemployed. The people who need the help the most are the poor.

In terms of inequality, where does Canadian society stand today? By any measure, we are a fairer and more equitable society than the United States. However, in a very real way, we are not as fair or as equitable as we used to be.

During the election campaign, I was digging all the time for stats and arguments for the few leaders' debates in which I was included. While doing research, I was staggered to come across this stunning statistic: the 86 wealthiest families in Canada have more combined wealth than the 11.4 million Canadians in the bottom of income brackets. Eighty-six individual Canadian families have more wealth than 11.4 million Canadians at the bottom.

Is this a problem? I submit it is a serious problem, and it is a problem that Bill C-2 will not address. I do not imagine that anyone thought Bill C-2 would address it. I will say, in fairness to the new government, that I hope that more is planned if it is serious about addressing income inequality.

Let us just look at this on a higher plane of analysis, namely, in regard to the mania for neo-liberalism, for the policies of Milton Friedman and for the Thatcher-Reagan era, in which no politician would say anything other than that we needed smaller government, that we needed tax cuts, that we needed deregulation, that we needed trade liberalism, as though that mantra would deliver great blessings to society overall.

One of the economists who I think has skewered this most effectively with detailed empirical research, and who does not brook a different opinion because he comes fully loaded with the facts, is Nobel prize winning economist and current professor at Columbia University in New York, Joseph Stiglitz. Stiglitz amassed all the information any Parliament would need to decide that inequality is unacceptable for a society that wants to succeed at anything.

Joseph Stiglitz's book, The Price of Inequality, is one that I hope every member of Parliament will read. Stiglitz concludes that:

Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset—its people—is not being fully used.

There are a lot of things one can say about the era of Thatcher-Reagan, neo-liberalism, and the kinds of trickle-down policies that were supposed to deliver benefits for all, but Joseph Stiglitz has pronounced, and I think it is time that we all learned how to say it, that the neo-liberal experiment with tax cuts to deliver wealth has been tried and is a monumental failure. Growth is stagnant. The economy is suffering, not just in Canada but everywhere. In Canada, particularly more than some of our OECD colleagues, we have had stagnant growth for a while now. We are not seeing investment, and I want to touch on what our corporate sector has been doing or not doing.

Trickle-down economics is a joke. The great Canadian economist, the late John Kenneth Galbraith, used to explain trickle-down economics like this. If one feeds a horse enough oats, the sparrows will eventually find a meal in the manure. That is trickle-down economics. In the alternative, as Gus Speth, who used to be head of the United Nations Development Programme, once said, when talking about trade liberalization, a rising tide lifts all boats; we can now fairly say that a rising tide will lift all yachts, not all boats.

We have a real challenge in our society and, boy, do we have a really good opportunity right now. I would urge the new government to actually embrace the idea of tackling inequality in our society. We have seen a foundational shift in our tax system in the last 10 years.

Let me provide this statistic. I am indebted to a great Canadian economist, who I wish had not just moved to Australia, Jim Stanford, for having identified this. Over the 10 years of the previous government, the federal revenues as a share of GDP fell from 16% in 2006 to 14.3% last year. That may be celebrated by some, but tax cuts overall end up with shrinking revenue to do the things that society needs, like make sure the health care system works, deliver child care for all, make sure people are not living in poverty and cannot get adequate housing, because again, I repeat, the empirical evidence is clear that it disadvantages all of society, not just the poor.

If we are going to see a rise in revenue, that means politicians are going to have to get used to saying some words that have been drilled out of our lexicon since the Thatcher-Reagan era began, and that is to ask where we are going to find the taxes to increase government revenue. It is clear that this tax cut modestly, moderately readjusts a tax bracket for our highest income earners. The top 20% basically see $3 billion removed from the very highest taxpayers, so that the next highest taxpayers get a slight benefit. It is not bad in itself, but it is not, on its own, tax relief for the middle class, nor does it strike any significant blow against income inequality. It is a small step, but tepid, and it fails to address the needs of the middle class, nor does it address the needs of the poor, nor does it really deal with the complicated tax code we have.

I would like to propose to the Minister of Finance that we need root and branch tax reform. We need to step back from all the fashionable pandering to individual sectors of a voting electorate, the boutique tax cuts of the previous 10 years. We need to review all of the complications that work against a tax code, that frankly, the fiscal conservatives say they want, and that people in Canadians for Tax Fairness argue we absolutely need. We need to simplify our tax code by taking out the special rewards: for people who happen to have kids who are already in hockey and can get a prize for that, for people who are already taking the bus and can get a prize for that. That is not good tax policy.

We also need to look for where we should be increasing taxes. I would suggest we need to look no further than what happened to the tax code for the corporate tax rate in the previous 10 years. It used to be 28% in the year 2000. By 2006, when the previous administration took over, it had dropped from 28% to 20%. It now stands at 15%. People might be interested to know that, in comparison, the U.S. corporate income tax rate stands at 35%. Other than Ireland, which is at 12%, Canada has the lowest tax rate in the industrialized world, and certainly right now we stand with the lowest tax rate in the G7.

I draw members' attention to the fact that Canada's corporate tax cut has resulted in about $700 billion to date being considered as dead money, as the former governor of the Bank of Canada described it—$700 billion sloshing around as available cash and not being reinvested in our economy where we need it. We may need to look at other tax measures. Down the road, we may need to look at the GST. The Green Party is not advocating raising that tax. We are talking about increasing the corporate tax rate. I believe it should be set where it was in 2008. We really need to look at a guaranteed livable income, because the bottom line is that Canada's society is middle class. All of Canada's society will not experience well-being and prosperity as long as poverty persists.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, you are doing a great job. I really enjoy being in the House with the member who just spoke. I have a great deal of respect for her. She, along with the Prime Minister, is one of the long-time movers of civility in the House, and I really appreciate that.

I appreciated the topic of the member's speech today on equality. It is very interesting that a lot of research has been done on this. It shows that it does not matter whether a country is very wealthy or very poor, but what determines its success is the disparity in income groups and the disparity among various people from the highest range to the lowest range. It is certainly an admirable goal that would lead to profitable economic and social results by reducing income inequality.

The member referred earlier, in a question actually, to the guaranteed annual income. I wonder if she could expound a bit on her vision of that, because it is a very interesting concept, where we would take all of the various supports and put them into a guaranteed annual income. Would she see that going to every single citizen, or would there be a limit so it would be affordable and the lower-income people could get a higher amount? How might that system that she is contemplating work?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I thank my hon. colleague from Yukon. If he is pleased to see me here, I cannot tell him how happy I am to see him here, back again.

The premise of the guaranteed livable income was embraced once by Reverend Martin Luther King as the only true solution to poverty. It must apply to everyone. That is the way it works. Some people describe it as a negative income tax. The essence of it is that every single citizen receives an income from the government. It would replace quite a lot of other programs, and that is why it is a saving. For instance, it could replace welfare and employment insurance, and would be a phenomenal benefit for students in school.

It would be set at a level that would alleviate poverty in its extreme form but would not create a situation where someone did not want to work. In other words, it would not be a sufficient income to induce people to stay home.

What it would do is say to a woman who is a single mother that she should declare her income and that there would be no clawback, whereas the welfare system penalizes a single mother for going back to work or encourages an underground economy. People would keep earning money until they became a taxpayer. That is where it becomes a negative income tax. Higher-income earners of course would have all of their guaranteed livable income taxed back; lower-income earners could work their way out of poverty.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Mr. Speaker, I want to congratulate the member for her speech. She talked about reducing inequality.

Is the bill in front of us not doing exactly the opposite by increasing inequalities? We are seeing in this bill that 70% of the population would not get a tax break. Those who need it the most would actually carry the burden of the deficit created by this measure that would provide a tax break for those who earn more, and those who earn less would be left with a deficit.

My question for the member is this. Is the member supporting the bill? If so, how can we support such a bill that would increase inequality so dramatically for those who need it the most?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I do not see how this bill would increase inequality. I do not think it does enough to attack inequality. However, the increase in tax paid by the highest-income earners, over $200,000, which would be roughly $3 billion, would pretty much offset the small tax break that would go to the higher upper end of the middle class.

Here is one piece that I found in a paper I like. John Geddes' column described it as how the current Prime Minister's plan “takes from the rich and gives to the almost-as-rich”. I think that captures it about right, but it would not increase inequality, nor would it increase deficits, as much as the hon. member might like to wish it would.

[John Brassard, Conservative, Barrie—Innisfil, ON]

Mr. Speaker, it is a great pleasure to rise in the House today to speak to Bill C-2.

I realize that we are near the end of the debate and the vote is coming tonight. Oftentimes when we prepare for these types of things, a lot of what we want to say has already been said. We have heard some good arguments from both sides of the House, but I happen to think that the arguments from this side have been more persuasive.

I have tried to break this issue down to its simplest form, and its simplest form is this. If I were standing in a Tim Hortons in Stroud or Alcona or if I were at Big Bay Point or in Huronia, in Barrie, how would I explain Bill C-2 to the residents of my riding? I would simply start by saying that it is a shell game. I have often used the term “liberalnomics”. If one were to define “liberalnomics”, it would be accurately reflected as a fiscal policy of saying that things will add up when they do not; a fiscal policy that equates to playing pin the tail on the donkey in the dark, where a government keeps missing its targets; and a fiscal policy in which, if government members made decisions using their own money, they certainly would not make the same types of decisions they are making, including those that appear in Bill C-2.

Who is going to pay for this? That is the question we need to ask. The Liberals said they were going to give middle class Canadians a tax break by making taxes fairer. They said they would cut the middle-class tax bracket to 20.5%, and they certainly have done that. However, they also said that this plan would be revenue neutral. All of the speeches that have been presented by members on our side, even information that has been presented to us by the parliamentary budget officer, have indicated that a $1.7 billion deficit will be created by this plan this year and effectively an $8.9 billion deficit over six years. This plan would benefit the top 30% of wage earners. How would I explain this to the people of my riding if I were standing in Tim Hortons?

This may not be a great example for this side to use, but it is an example nonetheless and it comes from Mr. David Macdonald, who is senior economist with the Canadian Centre for Policy Alternatives. In an article in Maclean's magazine Mr. Macdonald, through a study, said that 1.6 million families making $48,000 to $62,000 a year would see roughly $51 a year in tax savings; and for those families making $62,000 to $78,000 a year, they would be making $117 in tax savings. I would define those figures as the middle class, and Mr. Macdonald did as well.

Then Mr. Macdonald moved into an interesting category that he defined as the upper middle class, and I think most of us would agree with his definition. Those Canadians who make $124,000 to $166,000 a year would see a benefit of this middle-class tax decrease of about $521 a year, while those making $166,000 to $211,000 would see a tax saving of $813 a year.

How would I explain that to my residents if I were standing in Tim Hortons? I would simply say to them that this middle-class tax decrease would benefit every single member of the House of Commons more than it would affect those who need it the most.

We have heard the finance minister stand up many times in the House during question period and say that nine million Canadians are going to benefit from this. If the parliamentary budget officer's estimates are correct—and there is no reason to think that anyone in the House would discount them—that means for those nine million Canadians, the amount of deficit that they would have to pay is equal to about $164 each. If I were to explain to my residents in Barrie—Innisfil, with an average median household income of $69,000 in Barrie and $66,000 in Innisfil, that the maximum amount they would get as a result of this middle-class decrease would be $51 but the expectation would be that they would have to pay $164 for the amount of this deficit, not one of them would think this is a good deal.

Yet the Canadian government is running around, because of this election promise, saying that nine million Canadians will actually benefit from it, when in fact, every member of the House knows that it is Canadians who pay the price.

Based on Finance Canada's estimates, the new Liberal tax plan amounts to an average of an extra $6.34 a week for those who qualify, merely a head of cauliflower with the way the prices are today.

The other thing Bill C-2 talks about is the reduction of the TFSA from its current amount down to $5,500. In fact, 11 million Canadians took advantage of the TFSA. My wife and I, who I would classify as middle-class Canadians, and my kids who are in university have used TFSAs as a savings and investment vehicle. It is a tool that lessens the dependence on government. It gives people options. To reduce it just does not make sense because it puts Canadians in control of their future if they choose to do so.

Recently, my financial planner talked about TFSAs and he was quite concerned about the fact that we would see a reduction in them. He told me the story of a 22-year-old student who had invested the maximum amount in a TFSA, which was now worth $220,000. That individual will be able to take that out tax-free and use it for whatever purpose he or she chooses to use it for. The purpose of the TFSA was all about that.

About a century ago, American author and journalist H.L. Mencken wrote that complex problems had simple, easy to understand wrong answers. He may as well have been referring to the idea that budgets balanced themselves or that the Government of Canada could foster economic growth by simply injecting mountains of taxpayer money into the economy.

Government stimulus spending and workers alike can succeed. However, bad public policy, one based on pin the tail on the donkey approach, Liberalnomics, sees companies rushing for the border and everyone else heading straight to the unemployment line. That is exactly the road that the people in my home province have found themselves travelling on over the past 13 years and Canadians are sadly following the same disastrous route under the current government.

Tax breaks that do not help those who need it the most and they create deficits that are not needed. That is Liberalnomics. That is how I would explain to the residents of my riding why I am not supporting Bill C-2. It does not help those who need it the most. It gives members of Parliament a bigger tax decrease than most Canadians, and I will not support it.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, we are giving these tax breaks to hard-working middle-class Canadians. It was an increase in last year's fiscal budget under the former prime minister that took the TFSAs from $5,000 to $10,000. This legislation rectifies the wrong and it brings it back down to $5,000.

In discussions with my constituents, they do not have that extra $5,000 or $10,000 after paying their mortgages and loans, having to provide food and necessities for children or even on their own. This was a policy decision of the previous government and it did not address the needs of Canada's middle class. This legislation goes a long way in addressing those needs, especially when it is part one of another part that will come with a child tax benefit. Would the member not acknowledge that?

[John Brassard, Conservative, Barrie—Innisfil, ON]

Mr. Speaker, I think all members on this side have acknowledged the fact that the Liberal plan is not what it has been made out to be. I said very clearly in my remarks that those who needed it the most would not actually benefit from it. It will be members of Parliament who will benefit from this tax decrease.

As someone who comes from the middle class, I can say, in contrast to the member opposite, that many people in my riding, such as university students and seniors, use tax-free savings accounts as a vehicle, because it gives them choices for their future. Many people in my riding have used tax-free savings accounts as a vehicle to save for their future. To reduce it is morally flawed, because they do not want to live on government dependence. They want to do things on their own. It is just the wrong thing to do.

[Scott Reid, Conservative, Lanark—Frontenac—Kingston, ON]

Mr. Speaker, I want to thank my colleague for mentioning what is arguably my very favourite quote of them all, which is from H. L. Mencken: “...For every complex problem, there is an answer that is clear, simple and [mistaken]”. The government's plans are just full of these kinds of things.

I want to ask the member about the reduction in the size of the TFSA annual donation from $10,000 to $5,000. Also, one of the things that strikes me is that when one is a senior citizen, the assumption that exists under the old RRSP system is that one is no longer a saver but is now supposed to spend for the remaining period of one's life. It is a policy that may have made sense when the average life span was much shorter than it is today. However, people turning 70 or 71 who have to start taking money out of RRSPs may reasonably expect to be around for two or more decades. That is a big problem which the TFSA helps to overcome.

Does the member believe that it is possible setting aside only $5,000 a year in a TFSA to adequately plan for a decent retirement, or is that amount too small?

[John Brassard, Conservative, Barrie—Innisfil, ON]

Mr. Speaker, the amount of $10,000 provided a lot of flexibility to people. I mean, incrementally, people can come into money and they can save a little more throughout the year. For most Canadians, for 11 million Canadians, that investment vehicle was just that. It was an option and vehicle to save, clearly in all of the investment strategies and retirement planning.

I will use myself as an example. I do not just have a TFSA, I have other investment vehicles as well, but I chose the option of a TFSA because it was there.

Many young Canadians are using that option because it is available to them. It provides them with the opportunity to gain income for retirement, or for buying a home, and or for many other circumstances in a tax free way. That is what we should be encouraging among Canadians. It is one option of many.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, it is my pleasure to rise in the House today on behalf of the hard-working taxpayers in my riding of Kitchener—Conestoga. It is with their interests in mind that I speak in opposition to the government motion that does not help the middle class. Instead, it raises taxes on Canadians and makes it harder for my constituents to save their hard-earned money.

What we are debating today in the House is a fundamental difference between the Liberal Party and the Conservative Party of Canada. On this side of the House, we know that ordinary Canadians are best positioned to determine how their money is saved and spent. On this side of the House, we believe the government should be making it easier for Canadians to adequately prepare for their own retirement.

The Conservative Party supports both immediate and long-term, broad-based tax relief. Reducing personal income taxes is a priority for the Conservative Party because it increases take-home pay and raises the living standards of all Canadians. It leaves more money in their pockets and less in the government's, where far too often it is not used efficiently by governments of all stripes.

Over the past 10 years, our Conservative government cut the GST from 7% to 5%. We cut taxes for small business. We created the tax-free savings account, which is now being clawed back. We introduced pension income splitting and the family tax cut. Indeed, since 2006, our Conservative government reduced the overall tax burden to its lowest level in 50 years. We cut taxes over 180 times. As of 2015, our tax relief is saving a typical family of four up to $6,600 per year. I am proud of that record. I have been approached in my riding by parents who were very grateful for the reduced tax burden, which lets them now meet the financial needs of their families.

However, what I cannot be proud of is the current Liberal government's failed election promise of a revenue neutral tax cut to what it has determined to be the middle class and restricting the ways that Canadians can save for that special project, or for their retirement.

These two measures will not help middle-class Canadians, and they are election promises that should be abandoned, as the Liberal government has already done on many of its other election promises.

First is the creation of the middle-class tax cut. It sounds great: a tax cut for the middle class. The Liberals' election promise was that this tax cut would be revenue neutral. We know that this was never true, and it was not until after the election that the current Minister of Finance realized it. This means bigger deficits with no end in sight and higher taxes in the future to pay for this failed election promise. It is money going to pay interest that could be invested in health care, palliative care, and mental health care services.

Let us look at exactly who would be benefiting from this so-called tax cut.

David Macdonald, who is a senior economist with the Canadian Centre for Policy Alternatives, analyzed this so-called middle-class tax cut. The reality is that for those Canadians making between $48,000 to $52,000 a year, the average saving would be $51 a year. That is less than a dollar a week. For Canadians making from $62,000 to $78,000, it would be $117 in savings per year. He classifies what comes as the next level as the upper middle class. Those making $124,000 to $166,000 would gain $521 a year. Then from $166,000 to $211,000, it would be a gain of $813.

As incomes rise, the larger the break from government taxes. Is this really the Liberal message? I am sure all Canadians would like to have a few extra dollars in their pockets, but it seems quite clear that those who the Liberal government consider the middle class are receiving far less from this tax cut than those of us serving as members of Parliament in the House of Commons.

It is very clear that this modification to the income tax rate change the Liberals are championing is not a significant tax cut at all, but it also comes with a very high price tag in deficit financing. The policies of the government will be economically destructive for Canada. These destructive economic policies will create a huge burden for our children, our grandchildren, and, indeed, our great grandchildren.

This small tax break is not enough to stimulate our economy. Nor will throwing money at the middle class stimulate growth. It does not help create jobs. We have not seen anything from the government that will help with innovation, allowing companies to expand, or anything that will help create jobs for Canadians.

However, we know that creating jobs is not a top priority of the Liberal government. Since forming government, the Liberal Party has spent and promised billions of dollars outside of Canada, spent time here in the House repealing laws that increase union transparency, but have not created a single job here in Canada.

While in government, we on this side of the House took our jobs seriously and knew what it took to create jobs, to return to balanced budgets, and create a fairer tax system. In our 10 years as government, we eliminated the deficit while continuing to enhance the integrity and fairness of the tax system while refusing to raise taxes. These are the measures the government should be taking, not an expensive tax cut that benefits members of Parliament here in the House more than middle-class Canadians.

Second is the clawing back of the tax-free savings account. A few days after the throne speech, my office received a phone call from a senior who asked for my help to do everything possible to ensure that the Liberal government did not reduce the limit she could contribute to her primary source of savings. This woman, by the way, was not someone with a large income.

Contrary to what the Liberal government would like Canadians to believe, TFSAs have been a very effective tool for all Canadians, both young and old. Members should not take my word for it, as experts in the business community recognize the value of the higher contribution limit for the TFSA. In fact, one chief actuary from a well-respect HR firm said, “I think it is really quite a positive move for the retirement security in general”. Who said that? It was the chief actuary of the Toronto-based HR firm Morneau Shepell. I would encourage our Minister of Finance to perhaps talk to his former colleagues about the benefits of the TFSA and the increase in contribution limits for all families.

In response to this, the Liberal government will claim that only the top 1% of income earners in Canada benefit from TFSAs and that their plan to increase the mandatory CPP contribution limit is better for Canadians. However, 60% of those who max out their TFSA contributions make under $60,000 per year. Let me repeat that for my colleagues here in the House: 60% of Canadians who utilized the maximum amount they can contribute to their TFSA make less than $60,000 a year. It goes without saying that these are not the top 1% of income earners in Canada.

I would return to my initial point on the differences between our two parties. On this side of the House, we trust Canadians with their own money. We realize that it is our job to create ways that which Canadians can save for their own retirement and make it economically beneficial for them to do so. The Liberals, on the other hand, have decided that they know what is best and that Canadians have no say in how their money is invested for their retirement.

I would humbly ask on behalf of my constituents that the Liberal government abandon its ill-conceived plan and instead introduce real measures that would lower taxes on the middle class and not claw back the TFSA contribution limit. Let Canadians keep more of their hard-earned money in their own pockets where it will be invested wisely and spent judiciously in ways that spur our economy. We do not need more debt and more interest payments.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I enjoyed the member's speech, although his philosophy is different from mine.

I am just curious. If I were a Conservative member, I would be really worried about the vote tonight, because I cannot understand how a Conservative member could vote against a tax cut.

As he said at the beginning of his speech, it is their philosophy to let Canadians keep their money, and this would allow millions of Canadians to keep some more of their income. I assume, had that been a Conservative proposal, he would have voted for it, and so I am sure the Conservatives must be conflicted internally to vote against a tax cut for millions of Canadians.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I want to welcome my colleague back to the House. I had the honour of serving with him on the aboriginal affairs committee a number of years ago.

No, I am not be conflicted to vote against the motion, because as I pointed out in my comments, the Liberals are trying to imply that this is a tax cut for the middle class when in fact it is some of our lower and middle-income earners that will fare the poorest under this system.

If my colleague could say that a $1 a week benefit is something that should take up this amount of time in Parliament to debate and discuss and then implement, when we know that in the end, this so-called tax cut will simply add to our deficit, I can assure him that I will have no conflict in voting against the bill tonight.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

Mr. Speaker, I would like to thank my seatmate for his elucidation on sunny ways.

The comment I want to make to him, notwithstanding the ridiculous question posed by the member from the Liberal Party, is this. Anyone who is a financial advisor or understands financial investment and personal income security would understand that anyone earning less than $40,000 a year currently has no or little-realized benefit from putting their money into an RRSP. That money is better put into a tax-free savings account until the income earner is in an income bracket where it makes more sense for them to put their money into an RRSP.

If we do the math and apply it, if an individual Canadian earning less than $40,000 a year who can save or put, say, $5,000, $6,000, or $7,000 a year into an RRSP were instead to put it into a TFSA—whose extra capacity they will lose under Bill C-2—they would be able to further advance their own income security and income for retirement. By maximizing their contributions to the tax-free savings account early in their careers and then when they become seniors and need to take money out of their RRSPs or their locked-in retirement accounts at the other end, they are taking advantage of the most important financial vehicle that has ever been brought in by a government. The fact that this has been undermined and political games have been played with it is astounding.

Could my colleague talk to the importance of Canadians who can look after themselves and are able to do so with vehicles like a tax-free savings account?

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, it is obvious that my colleague is more of an expert in financial matters than I am. However, let me say that this goes to the heart of the differences between the Liberal Party and our party. We, on this side, do believe that we, as Canadians, should take the primary responsibility for our retirement savings, and the TFSA has been an incredible tool for that.

It has been mentioned a number of times that it only benefits the wealthiest. As I pointed out in my remarks, most of the people who maxed out their contribution to a TFSA were making $60,000 or less. These are not the wealthiest Canadians.

In terms of what we use the TFSAs for, it could be used for retirement. However, I know people who are not even close to retirement who are using it to save up for that special project they want to do three, four, or five years from now. It could be a renovation to their house, or it could be as simple as making a lump-sum payment on their mortgage when it comes due. If they save the money in February, March, April, or May, and put it in a TFSA, then when their annual renewal date comes up, they could make a lump-sum payment on their mortgage and reduce their debt.

The TFSA maximum limit of $10,500 was an incredible tool that should be maintained. It is really disappointing to see the Liberals taking it away.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I want to begin my remarks today with a point of refutation, because in listening to the debate we have heard some discussion around inequality in Canada, with the member for Saanich—Gulf Islands using the phrase a “crisis in Canada with inequality”. We need to review the record with respect to inequality. Frankly, this bill is going in the wrong direction.

However, over the last 10 years as a government we had a really positive record addressing inequality, as the numbers clearly show. As I have mentioned before, at the beginning of our mandate we lowered the GST, which is the tax that all Canadians pay. We also cut the lowest marginal tax rate. This is a very different approach from that of the current government.

In my view, the best way to measure inequality is through something called “intergenerational earnings elasticity”, which is the ability of people to move between different income brackets across generations. In other words, what are someone's chances of being a wealthier person even if he or she had relatively lower income parents and vice versa?

I will refer members to a paper written by Miles Corak from the University of Ottawa. If we look at the data on intergenerational earnings elasticity, the numbers are clear that Canada is near the top when it comes to equality. In terms of intergenerational earnings elasticity, Canada gets a score of 0.19, where low is good. We are fourth in the world. We are far ahead of the United Kingdom, France, Italy, and countries with a very different social system. We are also ahead of the United States. Therefore, we have a combination of factors in Canada that is good for equality. I would argue that it is a combination of certain necessary social programs in areas like education and health care but also of economic opportunity, and what we have had historically over the last 10 years with limited but effective regulation of business and low business taxes. This environment has been good for equality. It is one thing for members to throw out phrases like “crisis in Canada with inequality”, but if we look at the data specifically I would argue that with respect to intergenerational earnings elasticity, we see that Canada is in a very good spot right now.

Nonetheless, I would argue, and here I agree with our colleagues in the NDP, that this bill does not move in the right direction with respect to inequality because it cuts taxes in certain categories but not in others. Many low- and moderate-income Canadians would not benefit at all.

I am concerned about this bill because we might call this a Liberal promise-wrecking ball. It is a bill that breaks through what were clear election commitments by the Liberal Party. The Liberal Party committed in two key categories when it comes to fiscal measures. It promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that all tax changes were revenue-neutral. It also promised to cut taxes for, in their words, the “middle class, or [those] hoping to join it”, and to pay for those tax cuts with tax increases on higher-income earning Canadians. We see very clearly that this bill makes utter nonsense of these two commitments.

In terms of the Liberals' commitment to run only three modest deficits of $10 billion, balance the budget after that, and ensure all tax changes are revenue neutral, we know that the deficits have ballooned significantly since the election, and that even before new spending is promised, we will be running an $18.4 billion deficit in fiscal year 2016-17 and a $15.5 billion deficit in 2017-18. That is again before new spending.

The Minister of Finance had this to say about that:

A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government might see that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago.

I will say it is a rather strange definition of “ambitious” to leave the cupboard bare for the next generation. Let us define our ambition by how much we leave for the next generation, not how little we leave for it.

The Prime Minister has said that Canada has room to run these massive new deficits because of our relatively low debt-to-GDP ratio at the federal level. It is true that our government left Canada with a low debt-to-GDP ratio. In fact, we left a reduced debt-to-GDP ratio compared to when we first took office. However, the combined federal, provincial, and municipal debt-to-GDP ratio is alarmingly high. It is over 90%. It is in the same ballpark as the debt-to-GDP ratio of the U.S. and the U.K., if we combine federal, provincial, and municipal debt.

We actually do not have room at all to run these massive new reckless deficits. Of course, this large debt-to-GDP ratio is led by the very large deficit and debt here in the province of Ontario. The policies of the Kathleen Wynne government, which I think unfortunately the current government wishes to emulate, have made Ontario the most indebted sub-sovereign borrower on earth. We cannot go in that direction at the federal level as well. We are already significantly weighed down by that combination of federal, provincial, and municipal debt.

Bill C-2 makes tax changes that will have a significant cost to our treasury. By ignoring the value of tax-free savings accounts, they will also have a significant cost to our economy. This bill would cut tax-free savings accounts and lower some taxes while raising others, but it is not revenue neutral. According to the parliamentary budget officer, it would cost the treasury $1.7 billion per year. It is clear that the current government is not sticking to its $10 billion per year deficit commitment. The Liberals have no serious plan to balance the budget in year four. Their tax changes would not be revenue neutral, and estimates are that they will increase instead of lowering the debt-to-GDP ratio. Over the next four years, it is projected that the Liberals will increase the debt more than we did in 10 years. They will increase the debt-to-GDP ratio. They will do it, not because of a financial crisis, but because they have no regard for the importance of planning for the next generation. They are spending today with no regard for the future at all, and, again, certainly making nonsense of their initial budget commitment.

The Liberals said as well that they would cut taxes for the middle class and those hoping to join it. The details do not measure up to that commitment at all. Their proposal is a modest tax reduction for those making between $45,000 a year and $90,000 a year. Individuals making less than $45,000 will get nothing. Families with a combined income approaching $90,000 a year will perhaps get nothing. Whether those people consider themselves middle class or those hoping to join it, they in fact would lose because of the proposed changes. Even individuals at the low end of that tax bracket may be worse off because of the other changes that the current government would bring in with respect to tax-free savings accounts.

Those who will benefit most, as has been pointed out, would be those making over $90,000 per year, perhaps families with a combined income approaching $200,000 a year. That is the reality of these changes. As a member of Parliament, I know I make a good salary, and my wife, as a part-time physician, does as well. With two incomes, each individually less than $200,000 a year, we are in the group that would benefit the most from these proposed changes. However, the fact is that members of Parliament and senators do not need tax cuts. Canadians do—hard-working, middle-class Canadians—and those who are hoping to join it. The rhetoric does not match the reality in this bill, at all. Instead, what the Liberals will do by reducing tax-free savings account limits is to hurt those Canadians who need the help the most.

Here are the real numbers on tax-free savings accounts. Over 65% of tax-free savings account holders make less than $60,000 a year. Almost half of TFSA holders make less than $40,000 a year. Over half of those who currently max out their TFSAs make less than $60,000 per year. The Liberals somehow behave as if those making over $90,000 a year count as middle class for the purposes of their rate cut, but those making less than $60,000 a year for the purposes of tax-free savings accounts count as wealthy. This is a clear paradox in their plan. Why would they cut benefits for those who make less than $60,000, while increasing benefits for those who make more than $90,000 a year?

Again, this bill will drive a stake through the Liberals' election commitments. They promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that tax changes are revenue neutral. That was and is nonsense. They promised to cut taxes for, in their words, the middle class and those hoping to join it, and to pay for those tax cuts with tax increases on higher-income Canadian. Again, if we look at the numbers, clearly this is total nonsense.

Those of us who are on the Conservative side of the House, and even our colleagues in the NDP, have convictions. We stick to them and we try to advance them. However, it is clear that the current Liberal government already has no regard for its platform. The Liberals have broken more promises in a mere four months than we did in 10 years. Shame on them for that.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, a few phrases come to my mind, and one of them is “You have to be kidding.”

It was just a couple of weeks ago that I was at a local restaurant, and someone said to me that the new Prime Minister, in his first 100 days, has accomplished more toward making our society a better place to live than the previous prime minister did in his entire 10 years. I do not know where the member gets off with the comments that he is making.

Let me ask the member a question. We talked about an election platform. He seemed to be focused on that. Let us take a look at what Bill C-2 does. It fulfills a major party platform. It will in fact give money to Canada's middle class. This bill is a promise kept. That is something that was promised in the platform. It said that we were going to give an increase to Canada's wealthiest, that 1%. Again, it is a promise that is being kept.

Let us not give up hope. There is more coming on March 22. It is going to give that much more in terms of Canada's middle class and those aspiring to be a part of the middle class, through the Canada child benefit program. We have seen the greatest redistribution of income inequality in trying to address that issue in the last 120-plus days.

Let us be a little more patient. There is a lot more to come. Would the member not recognize, at the very least, that the government has done more for the Canadian middle class than the previous government did in the previous 10 years?

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, the hon. member, as well as other members, has alluded to surprises in the budget.

Frankly, we have had quite enough surprises from the government already. It is great to hear the anecdote about the member going to a restaurant and finding someone there who agrees with him. However, we need to look at the numbers and the facts.

I talked about numbers with regard to inequality and the tax changes. The Liberals have trouble with this. They have trouble with the numbers. It is clear from their budget policy that they have trouble with the numbers. Those who benefit from the tax changes are those making between $45,282 and $90,563. They are the only ones who will get a tax cut. Those making less than that $45,000 mark will pay more because they lose the benefit of the tax-free savings accounts.

This bill benefits members of Parliament who make less than $200,000 but more than $90,000 a year. It benefits other people in that higher-income category. It does not benefit those who need it the most. These are the lines that the Liberals have, but they simply do not match up with the reality of the numbers.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, I thank the member for Sherwood Park—Fort Saskatchewan for introducing the concept of intergenerational mobility into this debate, and I would agree that that is a very important measure of equality of opportunity. Certainly we would not aspire to have a country in which someone could become prime minister largely on the strength of their father having been prime minister.

One of the threats to intergenerational mobility is inheritance. A concern that I would express about tax-free savings accounts is that they could aggravate the amount of wealth that is conferred based on heredity. Not only will people be able to accumulate wealth over the years, but the Conservatives would like them to accumulate much more wealth tax-free.

I wonder if the member for Sherwood Park—Fort Saskatchewan shares this concern about intergenerational inequity being aggravated by tax-free savings accounts.