Madam Speaker, I am very pleased to rise today to speak about our government's plan to address the problem of tax planning using private corporations and about what we are doing to help the middle class and reduce inequality.
As many of us in the House already know, yesterday the government concluded consultations on its tax fairness proposals. As part of the consultations, we heard from Canadians from coast to coast to coast. I myself had the chance to meet with a great many Canadians to talk about these proposals. Just last week, I was in Regina, Saskatchewan, where I met with owners of small and medium-sized businesses, farmers, and representatives from the agricultural industry.
On behalf of the Minister of Finance, I would like to thank the many stakeholders who participated in this discussion, because the issues we are to consider today are very important ones. What is the best approach to achieving strong economic growth that benefits the middle class? How do we level the playing field when it comes to tax fairness?
The government wants to get a wide range of views on these issues, and that is why we launched consultations that enabled us to hear from Canadians across the country.
However, it is clear that there is now a lot of false information out there about our government's intentions and the impact of the tax fairness proposals. That is quite evident from the comments made here as well as the content and tone of the motion tabled today.
First and foremost, I would like to assure you all that our government is committed to guaranteeing a healthy, business-friendly economic environment, as well as protecting the ability of Canadian businesses to invest, grow, and create jobs.
Our government wants to ensure all Canadians are set up for success in our fast-changing economy. From the beginning, one of our government's main priorities has been to level the playing field so that every Canadian has a chance to succeed.
Allow me to underline and outline key achievements of our government to bring about this increased fairness and to help support middle-class Canadians.
When our government came into office two years ago, it made a commitment to invest in Canada's middle class. We started by lowering personal income taxes for the middle class and raising them for the top 1% of income earners. In so doing, we reduced taxes for nine million Canadians, a measure the opposition voted against.
We introduced the Canada child benefit, which puts more money in the pockets of nine out of 10 families. The CCB is better targeted to the families who need it most, low- and middle-income Canadians. With payments delivered to eligible families every month, the CCB is helping lift approximately 300,000 children out of poverty in Canada. That represents a reduction of approximately in 40% in child poverty in 2017 from what it was just back in 2013. The introduction of the Canada child benefit represents the most significant social policy innovation in a generation.
The Canada child benefit is complemented by other initiatives to support children and families, such as the multilateral early learning and child care framework signed with the provinces and territories on June 12, 2017.
The government has also prioritized the movement of people and goods by investing in infrastructure. The government invested for the long term in our infrastructure because we saw infrastructure investment as critically important to the future of our country and our economy. Recognizing the important role infrastructure plays in building strong communities, creating jobs, and growing the economy, budget 2016 provided $14.4 billion for public transit, green infrastructure, social infrastructure, infrastructure at post-secondary institutions, and for rural broadband.
In addition, budget 2017 laid out our long-term plan with an additional $81.2 billion over 11 years. This money is going to support public transit, green infrastructure, social infrastructure, transportation that supports trade, Canada's rural and northern communities, and smart cities, improving the way Canadians live, move, and work. Transit investments will allow Canadians to benefit from shorter commute times, reduced air pollution, access to more good, well-paying jobs, and stronger economic growth.
I would like to spend a few minutes talking about Canada's economic performance, and more specifically our impressive economic performance over the past two years.
Ours is currently the fastest-growing economy by far in the G7. Our economy is growing at an impressive 4.5%, the highest growth rate since the beginning of 2006. In the two years since we came into office, 400,000 jobs have been created, most of them full-time. Thanks in part to strong economic growth and our government's prudent investments, our fiscal position is better than forecast in March. For the fiscal year that ended on March 31, we had a budget deficit of $17.8 billion, which is $11.6 billion less than was forecast in 2015.
We are the first to recognize that small businesses are the cornerstone of our economy, and it is thanks to them that our economy is thriving today. Our goal is to encourage businesses to grow and create jobs. That is why we have the lowest combined federal-provincial-territorial average tax rate for small businesses in the G7. Canada has a combined general corporate tax rate that is 12 percentage points lower than that of our largest trading partner, the United States, and those rates are going to remain low.
We also have a lifetime capital gains exemption of more than $835,000 for capital gains realized by individuals on the disposition of qualified small business shares. The exemption is $1 million for qualified farm and fishing properties.
All of these things add up to Canada being a great place to do business, which is all good news, yet business investment in Canada is not as strong as we would like. Canada's business sector labour productivity growth has generally lagged that of the U.S., on average, over the last 25 years. Part of the reason is that American businesses invest more than double, on average, on things like information and communications technology. These investments lead to higher productivity and create more growth and jobs.
In Canada, we have a system that encourages wealthy individuals to incorporate just to get tax advantages not accessible to the vast majority of middle-class Canadians. We do not think it is fair and we will take action to level the playing field. We understand that setting up a private corporation offers hard-working middle-class business owners the ability to sell shares, raise capital, and limit liability. As I mentioned earlier, it also gives them access to the lowest small business tax rate in the G7.
However, we know that for some, incorporation offers something different. That is what we want to address. In some cases, it can allow a high-income incorporated professional to be taxed at a lower rate on his or her personal income than a salaried Canadian.
During our consultations on tax planning using private corporations, we wanted to hear from business owners on how we can encourage them to invest in their active businesses to help create more growth and even more jobs. After all, that is what Canada's low and competitive tax rates are meant to do: they are meant to support and encourage active business investment to spur productivity, growth, and job creation.
Creating growth is one thing, but we also want to work to ensure that growth and prosperity in this country is inclusive. We need an economy in which all Canadians, not just the wealthiest, can participate and take advantage of economic opportunities.
There is work to do to ensure fairness for middle-class Canadians. That is what we are talking about when we talk about improving our tax system: ensuring that everyone benefits from economic growth, not just the wealthy few.
From the very beginning, we have been perfectly clear about our goal. We want to create an economy that works for the middle class and all of those working hard to join it. At the heart of that goal is a very simple premise: every Canadian needs to pay his or her fair share.
Before I wrap up, I also want to correct some of the false information that is out there. First of all, we did not raise the small business tax rate. SMEs in Canada will continue to benefit from one of the lowest small business income tax rates in the G7.
The government wants to make sure that these proposals do not impact the ability of SMEs to save for business purposes. The tax fairness proposals will not impact the ability of individuals to incorporate. They will also not prevent business owners from hiring family members. The proposed changes do not in any way target middle-class Canadians.
For example, in order for passive investment income to be more beneficial than the savings plans offered to all Canadians through RRSPs and tax-free savings accounts, or TFSAs, a company must make over $150,000. According to the Coalition for Small Business Tax Fairness, two-thirds of businesses in Canada earn less than $73,000 a year. We are also aware that business owners and professionals have saved and planned for their retirement under the existing regulations.
I want to be very clear on this point and reassure everyone that the changes we are proposing with regard to taxing passive income will apply only on a go-forward basis. Our intention is to ensure that neither existing savings nor investment income from those savings will be affected. Lastly, we have heard from many women entrepreneurs and professionals who face unique challenges. We want to thank them for bringing their concerns forward, and we are particularly interested in better understanding how these changes could affect women differently than men.
We can assure the House that the measures we are taking will help, not hinder, women's success. We also commend small business owners for reminding us of the undeniable fact that what they do takes guts, and that the risks they take are very real. The changes that the government proposed to make to the tax regime during the consultations on tax planning using private corporations will in no way detract from businesses' ability to invest, compete, and grow.
Our proposals focus on the tax treatment of passive investment income, not money that is invested in the business. They target money that is taken out of the business to make sure that it is taxed fairly. We heard from thousands of Canadians across the country who took part in this important discussion during our consultation process. They shared their thoughts during open discussions, round tables, live online events, and meetings held from Vancouver to St. John's.
The Minister of Finance also met with parliamentarians, specifically members of the House of Commons Standing Committee on Finance. A fair tax system helps all Canadians. It allows hard-working small business owners to be compensated for their work. It helps small and large businesses develop and create jobs. However, when it benefits certain individuals at the expense of the vast majority, it needs to be changed. The government asked Canadians for their help in order to get this right. We have listened.
Again, the government will not raise tax rates on businesses or make it more difficult for them to incorporate. Business owners can continue to have family members actively involved in and appropriately compensated by their business. As I have already mentioned, changes to passive income taxation would only apply on a go-forward basis; the changes would not affect existing savings or investment income from those savings. The government will take no actions that would impair a business owner's ability to invest, to compete, and to grow his or her business.
Canadians have made it clear that they want a fairer tax system, and that is what we are going to deliver. As the economy grows, Canadians need to know and deserve to know that their tax system is fair. Right now, such is not always the case, and we can do better.
