Madam Speaker, I am very pleased to have this opportunity to rise to speak to this motion today. I would just like to say where I am from, what I do, and what I have done in the past.
I am a small business owner, and I am also a tax lawyer. I used to teach tax at the Faculty of Law at the University of Ottawa, and I used to teach corporate tax at the Faculty of Management at Laurentian University. As well, my wife is a physician and is incorporated.
On July 18, many MPs and members of the general public were quite interested in the guidelines our party was going to release regarding the tax reform we want to bring in.
Considering my family background, I was very lucky to become a tax lawyer and to have studied the law, much like my wife. My father was a welder at the pulp and paper plant in Kapuskasing, and my wife's father was an electrician. We come from modest families, but we were lucky, because we managed to go to university back in the day. This dream is becoming increasingly harder to achieve.
That is why we need to take a closer look at our tax system to make sure it is fair and equitable. We need to determine whether looking into our social ladder is the right way to correct the inequities that exist in our society and give everyone a chance to fulfill their dreams. It is not easy these days. My party and I agree that we need to have a closer look at these growing inequities.
As soon as I found out what the reform was going to be, I sat down and read the whole document. I looked at the draft legislation as well. I had multiple discussions with colleagues, tax lawyers, tax accountants, and business owners across the country. I met with the chamber of commerce. I had town halls. I replied to many phone calls from people from different walks of life: small business owners, very successful physicians, very successful dentists, tax lawyers on Bay Street, and tax lawyers in rural areas of Canada.
At the end of the day, when we take a step back and look at what we have in Canada, right now we have the lowest small business tax rate of the G7 countries. It is 15%. The government could decide to raise it, and at the end of the day, everything would be fixed, but we do not want to do that. We want to continue having small businesses with the lowest tax rate. Why? It is because we want them to continue to invest. It is important that they continue to invest in equipment, grow their companies, and hire more people. In my opinion, that is the purpose of having a low tax rate.
A lot of people have made their plans and structured their companies legitimately, and the Minister of Finance has said this multiple times. Everyone has the ability to follow the rules and do this legitimately. However, I certainly believe that there is reform to be made in the Income Tax Act.
Right now, people can use what we call surplus stripping. If there is a high amount of cash in a corporation, one can do a fictitious transaction by using a family member or by incorporating another company, and after signing a few documents, one can convert what would be a dividend into a capital gain and reduce the tax rate by 20%.
Over the last 60 years, the Department of Finance has been trying to address this problem in the Income Tax Act. Actually, in the 1980s, when the Conservatives were in power, they brought in the general anti-avoidance rule, or GAR, to address surplus stripping. However, after 30 years, clearly the courts have not followed.
Therefore, there needs to be a fix. Every tax lawyer and every tax accountant I have talked to says that this needs to be done. The minister has talked about unintended consequences. There are other issues that have arisen in the draft legislation and in the discussion paper, which is why the minister has said that there are issues, we have heard from people, we are listening, and we need to address them.
The other thing I find unfair, and I am surprised that the Conservatives are not talking about it, is the fact that if people set up their affairs properly, right now, with the current rules we have, if they sell their business, they can actually have their child, two months old, get a capital gains exemption of $830,000. A child who cannot even contract but is a beneficiary of a trust can have a capital gains exemption of $830,000. Are you saying that is fair? I do not think so—