House of Commons Hansard #132 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was taxes.

Topics

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:35 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Madam Speaker, we have said it before and we will say it again. The government boasts about its tax cut for the middle class and keeps bringing it up. The Conservative member who just spoke said that the measure applies to those with an annual income of $45,000 or more. He is right, except that the majority of the tax cut does not affect those who earn $45,000, $50,000, or $55,000 a year. It is those earning $89,000 or $90,000 a year who are benefiting from this cut. That does not sound like the middle class to me.

I would like to give my colleague the opportunity to go over this broken Liberal promise, where they promised a tax cut for the middle class, but in the end gave a tax cut to people like us, people who earn more than $90,000 a year. That leaves out those who earn less than $45,000 a year and, really, those who earn less than $60,000 a year.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:40 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Madam Speaker, I absolutely agree. Again, the Liberals promised that this middle-class tax cut would be neutral. It was not, and the parliamentary budget office confirmed that.

As I mentioned in my comments, the other place, and I hope the member would support this thinking, tried to make not only the Liberals' so-called tax cut revenue neutral but to also ensure it was more inclusive of people who needed it the most.

It is really a shame that we have to depend on senators and the Conservative side to make the legislation better. The Liberals used the majority to shut down every amendment that we put forward to make that a better bill.

I agree that the Liberals have a lot to learn about how to ensure our economy is more inclusive. That middle-class tax cut is a good example of the work that they still have yet to learn.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:40 a.m.

Moncton—Riverview—Dieppe New Brunswick

Liberal

Ginette Petitpas Taylor LiberalParliamentary Secretary to the Minister of Finance

Madam Speaker, it is an honour for me to rise today in the House for the first time as Parliamentary Secretary to the Minister of Finance and to participate in this debate.

It seems that my opposition colleagues prefer to fight the last war by focusing on a measure that the right hon. Prime Minister said yesterday we were not considering. Nevertheless, I must thank my colleague for this opportunity to outline the important tax measures the government has introduced to help middle-class Canadians.

The government recognized from the start that, even though economic growth has been weak in recent years, Canada has been able to meet those challenges from a position of strength. We are in an enviable financial position. Our debt-to-GDP ratio is well above the average for the G7. That means that we have the flexibility needed to implement our vision of ensuring that Canada's economy works for the middle class.

If the economy works for the middle class, it works for everyone. Measures that support the middle class are what the Canadian economy needs and what all Canadians deserve. Canadians asked for this type of measure and that is what we have given them and will continue to give them.

Since January 1, 2016, the government has been putting more money back in the pockets of nearly nine million Canadians every year. This measure was not just the right thing to do. It was also the smart thing to do for our economy. The tax cut for the middle class and its accompanying measures help make the tax system fairer so that all Canadians can succeed and prosper.

More specifically, the government has taken the following measures: it lowered the tax rate for Canadians in the second personal income tax bracket from 22% to 20.5%; introduced a 33% personal income tax rate on individual taxable income in excess of $200,000; returned the tax-free savings account, TFSA, maximum annual contribution to $5,500 from $10,000; and reinstated indexation of the TFSA annual contribution limit.

Let me very quickly expand on what these changes have achieved.

First and foremost are the personal income tax rate changes. Single individuals who benefited from the reduction of the second personal income tax rate will see an average tax reduction of approximately $330 every year and couples will see an average tax reduction of $540 every year.

Second, only Canada's top income earners are expected to pay more taxes as a result of the introduction of the new top personal income tax rate, that of 33%. As with other bracket thresholds, the top threshold is indexed to inflation. It rose to $202,800 in 2017.

Finally, the government returned the tax-free savings account, the TFSA, annual contribution limit to $5,500 from $10,000, effective January 1, 2016. Returning the TFSA annual contribution limit to $5,500 was consistent with the government's objective of making the tax system fair and helping those who needed it the most. When combined with other registered savings plans, a $5,500 TFSA annual contribution limit will allow most individuals to meet their ongoing needs in a tax-efficient manner.

Indexation of the TFSA annual contribution limit was reinstated so the annual limit would maintain its real value over time.

Another cornerstone of the government’s plan to strengthen the middle class was the Canada child benefit or CCB. The benefit will help parents to better meet the needs of their children. The CCB is simpler and more generous than the old child benefit system it replaced, and it is completely tax-free. In addition, it does a better job targeting the people who need it the most. I firmly believe that the many parents who receive this greatly-needed assistance appreciate it.

This year, the CCB will make it possible to lift hundreds of thousands of children out of poverty, more than in 2014. Since the CCB was implemented in July of 2016, nine out of ten families have received more money than they did under the former child benefit system, or an average of nearly $2,300 per year for the 2016-17 benefits. Parents with children under 18 will receive a maximum annual benefit of $6,400 per child under age 6 and $5,400 per child under 18.

Whether these additional funds are used for things like buying school supplies, covering part of the family grocery bill, or buying warm coats for winter, the CCB helps parents cover the high cost of raising their children.

The Canada child benefit will be indexed to inflation starting in 2020 so that families can continue to count on this additional support for a long time, with their benefits keeping pace with rising expenses.

The Government of Canada also reached a historic agreement with provincial governments to enhance the Canada pension plan, also known as CPP. This plays another key part in providing support to middle-class families. The government undertook this after the Department of Finance examined whether families nearing retirement were adequately prepared for that retirement. Finance officials found that of about one in four Canadian families approaching retirement, 1.1 million families were at risk of not saving enough to maintain their current standard of living and the risk was highest for middle-class income earners. Families without workplace pension plans are at an even greater risk of under-saving for retirement. In fact, a third of these families are at risk.

The government is aware of the need to help Canadians save more. Saving more will mean they are more confident about their futures and about their ability for a secure and dignified retirement.

There was a particular concern regarding young Canadians who tended to have higher debt than the previous generation and, in most cases, would live longer than the previous generations. They face the challenge of securing adequate retirement saving at a time when fewer can expect to work in jobs that will include a workplace pension plan. This is why the government acted to strengthen the Canada pension plan.

Strengthening the middle class and creating conditions for long-term economic growth are the government's top priorities. Tax fairness is an important part of these commitments and adjusting the tax system to ensure it is functioning as intended and contributing to an economy that works for everyone.

The basic Canadian value of fairness is also why, as a part of our international effort to combat tax evasion, budget 2016 confirmed that the government's intention to implement what was known as the common reporting standard.

The introduction of the common reporting standard for the exchange of information between national revenue agencies on financial accounts held by non-residents is an important global development. This multilateral initiative will help enhance tax compliance and reduce opportunities for tax evasion by those who seek to find ways to avoid paying their fair share of taxes.

Under the legislation passed by Parliament last December, Canada is implementing the standard consistent with our commitment to the G20, and similar commitments, by more than 100 other jurisdictions.

Under the new standard, the Canada Revenue Agency will collect information from financial institutions on accounts in Canada held by non-residents. Tax administrations in foreign jurisdictions will likewise collect information from the financial institutions about accounts held by residents of other countries including Canada.

The CRA will formalize exchange agreements with foreign jurisdictions, having verified that each jurisdiction has appropriate capacity and safeguards in place to ensure the confidentiality of its information. The financial account information will be exchanged on a reciprocal bilateral basis.

The budget also announced plans to implement a new requirement for country-by-country reporting. This is an initiative agreed to under a G20 OECD project that aims to address tax avoidance by multinational enterprises through base erosion and profit shifting. Under the new rules, large multinational enterprises will be required to file with tax authorities information providing high level profiles of their activities in each jurisdiction in which they operate. These reports will enhance transparency and assist tax administration in performing effective risk assessments.

Going forward, Canada will continue to work with the international community to ensure a coherent and consistent response to tax avoidance by multinational enterprises.

In addition, budget 2016 also included resources for CRA to address tax evasion and aggressive tax avoidance. This would enable CRA to enhance its assessment capabilities through the hiring of additional auditors and specialists in order to have the resources needed to ensure all taxpayers pay their fair share of taxes.

Finally, our government is committed to ensuring that tax expenditures are fair for all Canadians, efficient, and fiscally responsible.

In budget 2016, the government committed to undertake a comprehensive review of the federal tax expenditures, recognizing that concerns had been expressed regarding the efficiency, fairness, and complexity of the tax system. This work is ongoing and at its heart is the goal of ensuring we invest to grow the middle class and strengthen our economy. We do so in ways that preserve our enviable fiscal position for future generations.

Once again, one of the first measures we took as a government was to lower taxes for the middle class, something that nearly 9 million Canadians benefited from.

We also introduced the Canada child benefit, which provides additional financial assistance to nine out ten families compared to the Conservatives’ intention of sending cheques to millionaires. We have also taken a series of measures to guarantee tax fairness, which is the responsible thing to do.

These measures are in response to our commitment to help the middle class and those working hard to join it. We will continue to work for these Canadians in order to build a stronger and more equitable economy where all families can grow and prosper.

However, as our Prime Minister indicated very clearly yesterday, this will not include a new tax on health and dental benefits.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:50 a.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Madam Speaker, I enjoyed listening to the parliamentary secretary, whom I would like to welcome and congratulate on her appointment as parliamentary secretary. I wish to assure her of my full and complete collaboration, and also of my full and complete vigilance.

The hon. member mentioned that the Prime Minister committed himself yesterday to not creating a tax on health and dental benefits. We shall see what comes of it, soon, during the vote.

Would the parliamentary secretary also commit to not touching tax credits that directly affect Canadian workers and the middle class, specifically tax credits for volunteer firefighters, donations to charities, and public transit?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:50 a.m.

Liberal

Ginette Petitpas Taylor Liberal Moncton—Riverview—Dieppe, NB

Madam Speaker, I thank my hon. colleague for his question. Once again, I look forward to working with him for at least the next year.

It is this government's priority to help the middle class and everyone working hard to join it. One of the first priorities our government put into action was creating the Canada child benefit. This very generous benefit is helping hundreds of thousands of Canadians and their families.

Over the holidays, I received many Christmas cards from families and people in my riding. They thanked the Liberals for the increase they have received, because it is making a difference in their lives. It is helping them buy groceries and all kinds of other things they need for their children. Furthermore, if their kids want to take a dance, music, or any other class, they can now afford it. That benefit is making a huge difference for Canadians.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:50 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Madam Speaker, I would also like to congratulate the member on her new position as Parliamentary Secretary to the Minister of Finance. I am really looking forward to working with her.

She is new to the job, so I will go easy on her, but I would nevertheless like to ask a question about the measure the minister announced to tax private health and dental insurance. It was a trial balloon. The Liberals wanted to see how people would react, and react they certainly did. Now the Liberals are having to back down from the idea.

It is important to note that, when the government announced it was considering this move, it was framed as part of a comprehensive review of Canada's tax system, a review that we are about to begin in committee and that the finance department is already doing.

I would like to know how the government can put this kind of measure out there with no context as a stand-alone thing and claim that it is part of a bigger tax reform picture. I have another question that is related. Does the member have a sense of what that tax system will look like? Honestly, we have not seen much of anything or any big announcements from the government so far.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

Liberal

Ginette Petitpas Taylor Liberal Moncton—Riverview—Dieppe, NB

Madam Speaker, again, I want to thank my colleague for his question. I look forward to working with him in the coming months.

Again, our government's priority is to help the middle class and those working hard to join it. Our government wanted to assess the tax system for everyone. We wanted to evaluate every measure. No decision had been made. Yesterday, our Prime Minister was very clear: a decision has now been made and this is not something we are going to pursue.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

NDP

The Assistant Deputy Speaker NDP Carol Hughes

I want to remind the parliamentary secretary to address the Chair and not the member.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, while the member talks about the middle class, I think the reality is that the government is only interested in the Prime Minister's vacation entourage and those working hard to join it.

I will ask about the tax-free savings account issue that the member raised. I think she knows, and the data are there on the Finance Canada website as to who are most likely to use tax-free savings accounts. We know actually that half of those who are maxing out their tax-free savings accounts are people with relatively modest incomes. We know that is because of the relative economic advantages that accrue to a tax-free savings account versus an RRSP.

When the Liberals talk about helping those in the middle and on the low end, why do they not actually do something for those making $45,000 or less, whom they have done nothing for? Why do the Liberals not reinstate the tax-free savings account limits that were in place under the previous government?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

Liberal

Ginette Petitpas Taylor Liberal Moncton—Riverview—Dieppe, NB

Madam Speaker, I have to say I take objection with the comments of the member opposite.

First and foremost, our government has taken several measures to help people who earn under $45,000 a year. Many Canadians have benefited tremendously from the Canada child benefit program. For example, a single mother who earns $30,000 a year, with a child under the age of six years old, at the end of the year will receive, tax-free, $6,400 cash in her pocket. That is way more than under the other party's child benefit program. Single income seniors in our country now have received an increase of 10% in their guaranteed income supplement. That is much better than what the party opposite did when it was in government.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

NDP

Jenny Kwan NDP Vancouver East, BC

Madam Speaker, today we are debating a motion about taxation of private health and dental care plans, and then there was an amendment with respect to some taxation measures. However, I am curious, given the Prime Minister's track record particularly this week. He has actually broken many promises and betrayed Canadians, starting with electoral reform. He said that 2015 was going to be the last election using first past the post. He has now reneged on that.

How can anyone believe the Prime Minister when he says he is going to commit to not imposing a tax on private health and dental care plans? How can we actually believe him, given that he has misled Canadians over and over again?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

10:55 a.m.

Liberal

Ginette Petitpas Taylor Liberal Moncton—Riverview—Dieppe, NB

Madam Speaker, first and foremost, our Prime Minister and our government are truly listening to Canadians. We have conducted thousands of consultations across the country from coast to coast to coast on a variety of issues, and we are listening to and considering all of the input.

The Government of Canada believes that when we have an economy that works for the middle class, it truly works for everyone. We have evaluated many tax measures, and the Prime Minister has made it very clear that we are not moving forward with this one.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11 a.m.

Conservative

Martin Shields Conservative Bow River, AB

Madam Speaker, I just received an email from one of my constituents. It says, “I've followed the rules all my life. I got a university degree. I've worked hard. I raised my children by myself for the last seven years. I own and maintain my own home. I've paid my taxes and been a good citizen of this country. There are programs in place to help low-income families, but I make too much to qualify for them. There are tax breaks and benefits to help middle-income families, but apparently I don't make enough for those. Where do families like mine fit in? We fall through the cracks. It makes no sense that people who work hard, stable job-holding contributors to this country still fight for a decent standard of living. I should be an example to my children by being able to provide for them and to help them to aspire to be good people, but at the end of the month, I can no longer make my monthly payments.”

People are falling through the cracks. With what the Liberals have done, how are they helping these people?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11 a.m.

Liberal

Ginette Petitpas Taylor Liberal Moncton—Riverview—Dieppe, NB

Madam Speaker, once again, our government's priority is to help the middle class and those who are truly working hard to join it. Our first priority was to cut taxes for middle-class income earners, and many millions of Canadians have benefited from those tax cuts.

I do acknowledge that some Canadians have not perhaps benefited from that measure. However, for those who are even lower income earners, we recognize that the Canada child benefit program has helped thousands of children and families get out of poverty. As I indicated earlier, our low-income seniors who receive a guaranteed income supplement have actually received a 10% increase on their supplement. That is approximately $90 more a month on their cheque. That is a significant difference, because we want to ensure that we help our middle-class people, and those who are working so hard to join it.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Madam Speaker, I am very pleased to rise in the House to speak to this motion.

I can say that we will be voting in favour of this motion even though we disagree with the wording, especially in the preamble and the amended preamble. I think we can have a discussion to determine whether this is a high level of taxation or not. We think it is not that high in comparison to what see in other OECD countries.

As far as the last part of the motion is concerned, we agree that health and dental plans should not be taxed—at least not before the government presents a real context for the comprehensive analysis of the tax system that it is supposedly conducting.

It is very important to look at the tax system as a whole. I will quote from John Ivison of the National Post, who, after learning that the government was contemplating taxing health and dental benefits, wrote on December 2, “Dan Lauzon, a spokesman for [the] Finance Minister...said no decisions have been taken and that any moves would not be made in isolation.” However, what he wrote next was actually more interesting. It states, “The employee-sponsored health care tax exemption is being scrutinized as part of a sweeping review of 150 tax credits worth about $100 billion a year in foregone federal revenue.”

The government has said the tax system does not work. We agree. It has said that the tax system needs to be reviewed. We agree. However, reviewing tax expenditures, tax exemptions, tax deductions, and tax credits is not a review of the tax system. What the government is doing is once again raising the expectations of the population that it will address the real problem, the problem of fairness and equity in the tax system. People do not feel that it is a fair system. They do not feel that everyone is treated equally. By examining the whole range of tax credits and tax deductions, the government is saying that it has done its part and that we have a brand new tax system in this country. This is not the first time a government has taken us in that direction.

The Carter commission conducted the last real review of the existing tax system in the 1960s. I will not get into the details of that commission because many people have already done so. The review was very comprehensive and took a good five years.

The report was one of the most well-received reports in the entire world. Serious work was done to determine how the tax system could be adapted to the reality of the day. It is important to remember that income tax has been around since 1917. In 1960 or 1965, we still had a system that was designed during the Second World War. This was serious work. It was commissioned by John Diefenbaker, the Progressive Conservative prime minister at the time, and continued by Liberal minister Lester B. Pearson.

Prime minister Trudeau was the one who got it across the finish line. He took all of the work that was done and condensed it into a handful of recommendations, which were accepted. The very essence of the report, which was that every dollar of income should be taxed the same, got swept under the rug. In the end, a few changes were made, but we ended up with a system that falls somewhat short of the objectives originally set out for this exhaustive study.

I am reminding members of this little bit of history because we are now witnessing a similar attempt to pull the wool over the eyes of Canadians. The government is telling Canadians that it understands them and that it will do what it takes to make the system fairer.

However, the proposal to tax private health and dental benefits is a trial balloon. It is not meant to make the system fairer. Rather, it is a way for the government to take money out of one pocket while trying to convince taxpayers that it is putting money in the other.

It is a very important question because it is going to be a defining question for the following years not only for this government but for any government in this country.

The last comprehensive review of the tax system took place back in the 1960s. There have not been any significant changes since, except maybe some brought by the finance minister back in the 1980s, Michael Wilson, who made some changes that did not, in our view, bring any more equity or fairness.

In terms of a comprehensive tax review, right now there are 3,000 pages of complex, unintelligible legal text, which even tax experts, who spend their lives studying this, cannot understand. We are facing a situation, a system, that is actually counterproductive for our economy. It is counterproductive for our level of economic growth. It is counterproductive for our productivity.

I am not the only one saying this. Mainstream economists are saying that the complexity of our tax system gives anyone, any tax expert, the ability to actually build an industry based on finding loopholes, which makes the system less and less equitable, less and less fair, and it is actually a drain on our economy. One of the top priorities of any government at this time should be really simplifying the tax system.

Simplifying the tax system does not mean just bringing forth some gimmicks, like a single-tax rate, or a flat tax, as it is called. We should not just be saying that we will be revising those tax credits and will try to find some savings, savings meaning expenditures lost to the pockets of the taxpayer, the citizen. That is not it. That is smoke and mirrors.

In terms of the commitments made during the last election, the Liberals are showing that they are masters of the smoke-and-mirror strategy.

We saw this yesterday, in the much discussed announcement about electoral reform, a lofty promise. They went after NDP and Liberal voters by promising electoral reform that would make every vote count. Today, a year and a half later, voters know that they were duped by this government.

Let us take a look at the Liberals' promises, especially those concerning first nations. This government said that it would cease the previous government's legal actions appealing rulings in favour of indigenous children and various first nations communities. These rulings force the government to honour its traditional commitments towards first nations.

My colleagues from Abitibi—Baie-James—Nunavik—Eeyou, Timmins—James Bay, and my colleague from northern Saskatchewan, whose riding has a very long name, are doing an absolutely incredible job of ensuring that this government honours its promises made to first nations, which they believed.

All the broken promises and unfulfilled commitments are beginning to pile up. Bill C-51 is another example. The government was going to change it, abolish it, or transform it, but nothing is being done.

Nothing is being done. Time and time again, the Liberal government campaigned on real change, but compared to the previous Conservative government, its real change involves keeping the decisions and attitude of the previous government.

The Liberals are saying that they are doing it in a progressive fashion. They are keeping the Conservative target for climate change, but those are progressive targets now. They are keeping the agreement with the European Union, but now it is a progressive agreement. Everything the Conservatives did, they are keeping, and they call it progressive. That is what real change means for the current government.

Now we are facing a situation where the Liberals have promised to simplify the tax system and make it fairer. They were right to make that promise and we are making it also.

Why? It is because the system is actually leaking like a sieve, because the system is actually so complex that, as I said, there is a whole industry built on creating tax loopholes and trying to take advantage of any poor writing in one of the 3,000 pages of the Income Tax Act.

We also know that the system is so complex that the compliance costs for businesses and for citizens are becoming higher and higher. They are increasing. It is becoming more and more costly just to face the obligation as citizens, as people of this country, to actually contribute to the well-being of this country. We have to do it, and it is a good thing that we do it, but we are asking people to actually pay more and more, because the system is more and more difficult to understand.

Even worse is that the complexity of the system is actually increasing. One of the main problems we have for our revenue situation is the problem of tax havens and tax evasion. Because of that industry that actually tries to find loopholes, some of them cross the line, where a loophole is no longer a legal loophole but becomes a mechanism, a strategy, for tax evasion.

It is extremely difficult for the Canada Revenue Agency, which actually I have been very hard on, and I will continue to be very demanding. They do not have the proper resources to actually ensure compliance with the very complex legislation.

Those are all problems that we are now aware of. They are problems that we need to deal with and which require a structured response from the government. It was proposed to the Standing Committee on Finance that it carry out an in-depth study of the tax system. That is what the motion says. It does not provide any details or direction. It does not give the Standing Committee on Finance a mandate. Work will begin next Wednesday. What are we going to do? We will listen to various witnesses, including accountants, as well as representatives, I am sure, of the Canadian Federation of Independent Business and other organizations. I already know what they will say. They will say that the system is too complex, that it has to be changed and simplified.

We will spend three, four, five, or six meetings getting all those witnesses, who will be saying the same things. How do I know they will be saying the same things? It is because I have heard them in the past saying those things. We would be wasting our time in the finance committee, which might be the intention of the motion, actually. We know that the finance department, and we know that from the Minister of Finance's spokesperson, is actually working right now on the same study. However, what they are claiming is a comprehensive tax review is nothing but a review of tax expenditures.

How many pages do tax expenditures take in the whole Income Tax Act? It is maybe a few dozen out of 3,000 pages. We have a system right now that is so complex, as I said, that nobody can really claim to master it all.

I think if the government really had guts and really had the intention of making sure that its commitment to simplify the tax system would be right, it would actually go many steps further. It might actually go, maybe not toward a royal commission, like the Carter commission, back in the sixties, but perhaps toward a blue ribbon commission that hired experts from various fields, including labour, business, and academia, and gave them the task of reviewing the system, because I have very limited faith in the finance department doing it.

I have very limited faith, not because I do not like the people who are part of it but because of the complexity of the task ahead of us, that the finance committee can actually do this work, because we do not have time to do it. We do not have the resources to do it, and we do not have the expertise to do it.

If the government was really serious, and it was not smoke and mirrors and was not just an empty promise that the Liberals will do little about, but claim they have respected, or simply break, because that is what we have witnessed since the government took power, they would look at the possibility of creating that blue ribbon commission, with members who are respected.

They might be divergent, in terms of belief or in terms of political leanings, but they will actually have the same objective, the same view, the same vision, which is to actually adapt an antiquated system, a system that was built in the mid-20th century, before computers, before the mobility of capital, and before globalization, and do what Carter did back in the sixties and adapt it for our times.

I dare the government to actually take that step. I dare the government to actually make us believe that it was not, once again, an empty promise to make Canadians feel comfortable about it but that it understands that we know the system is not fair.

Canadians have a decreasing trust toward the Canadian tax system. They do not believe it is fair anymore. They do not believe everyone is paying their fair share. Nobody likes paying taxes. We can all agree on this. It is always something difficult to accept. People will accept it if they know that their tax dollars are actually well spent, that they are spent for the common good, and that they are spent for the common projects we have in this country.

People will also accept it if they know that everybody is paying their fair share. When we talk to Canadians, one of the first things they say is that they feel they are being had, that there are two systems: one for the rich and one for them. The system for the rich, for the most affluent, is for those who can afford to pay some firms to tell them how to invest their money in the Bahamas, in Switzerland, in Luxembourg or in the Isle of Man, as we have seen, while they are required to pay.

Here is another example to illustrate how unfair the system is. Those people who hide their money away on the Isle of Man, in the Bahamas or elsewhere, knowing full well that they are hiding income from the taxman—if they get caught, they are told that it is no big deal, that they can simply return the money to Canada and pay the taxes that are owed and all will be forgiven. However, if a taxpayer who does not have the means to do that gets caught or even makes a technical mistake, it is a sure bet that the Canada Revenue Agency will not stop until that taxpayer has paid what he or she owes, in addition to interest and penalties.

We can therefore forgive taxpayers and Canadian citizens for thinking that there is a system for one class of people and another system for them.

The thing is that we tried to actually bring up this topic in the finance committee. We, the NDP. We did it in the past too with other NDP members of the committee. We are the ones who actually bring, constantly, motions to study the tax system and tax havens. The last was on the scheme involving KPMG and the Isle of Man.

The first meetings went fairly well, and I will say that all members were really into it. By the fourth meeting, basically all questions, except maybe from this side, were mainly softballs. That does not really help to increase the faith of Canadians in the system and the ability of this House to tackle this very important topic.

In brief, we need to remember that the issue currently being debated is one that the government itself brought forward, that is, the prospect of taxing benefits, such as health insurance and dental insurance, provided by employers. The justification for this was the need to conduct a systematic and thorough review of the tax system. When the pressure became too much, the Liberals rejected the idea. It was a trial balloon.

However, a systematic review of the tax system remains extremely important. It was promised by the government. What I am trying to say is that I am very afraid that this is just another promise like the one about electoral reform and all the others meant to persuade Canadians that the Liberal Party listens to their wants and needs. In the end, these promises were only meant to get people to vote for them so they could change sides and then manage expectations.

That is why I am hoping for real action from the government, either on the Standing Committee on Finance or through the department.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:20 a.m.

Winnipeg North Manitoba

Liberal

Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Madam Speaker, I appreciate the comments from the member. I agree that we need to take a holistic approach. That is, in good part, what the member was saying.

When we do that, when we apply that holistic approach to what the government has done, it is important to recognize Canada's middle class will in fact be advanced. The middle-class tax cut is significant, and nine million-plus Canadians will benefit from it. A special tax on Canada's wealthiest has been created. I suspect almost all members of this House would support that.

The Canada child benefit has a tax-free portion, and we can talk about the guaranteed income supplement. Both of those initiatives will lift tens of thousands of seniors and children out of poverty.

When a holistic approach is taken with the budget, including the tax measures that have been taken, this is a sound, fair budget that Canadians are receiving quite well.

I wonder if the member would at the very least recognize that there are always going to be areas in a budget that individuals will have some concern with. However, as a whole, this budget does deliver what the Prime Minister promised, a break for Canada's middle class and to deliver on important programs, such as our Canada child benefit and relief for our seniors.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:20 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Madam Speaker, it started so well, because I agree with the member about the need for a holistic approach.

However, the end of the speech or question was not that great, because what he was talking about was the holistic approach, that need to take an exhaustive view of the tax system. This can be summarized as modifying tax rates a little and shuffling some funds that exist in the system. We are talking about the whole tax system of 3,000 pages; legislation of 3,000 pages that is so complex that experts who spend their lives studying it cannot claim to understand it.

Now the government is trying to claim that some of the measures they have implemented affect some tax rates and some programs, for which we have not seen much evidence, and actually the number of seniors being lifted out of poverty is contested. We know the tax cut for the middle class was not really for the middle class but more for the upper middle class and the well off.

This is what constitutes the exhaustive tax rate. The comprehensive tax review that they had promised is actually confirming my worst fear, which is that once again the Liberals are promising what they believe Canadians want to hear and now they are trying to manage expectations.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:25 a.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Madam Speaker, it is always interesting and a pleasure to listen to my colleague from Rimouski-Neigette—Témiscouata—Les Basques.

The government prides itself on its so-called progressive tax cuts, saying how wonderful they are for all Canadians, but the hon. member knows full well that 65% of Canadians do not benefit from those cuts. People with an annual income of $45,000 or less are getting no tax cut, when they are the ones who need it most. The people who benefit most from these tax cuts are those who earn an annual income of between $145,000 and $200,000. Someone who earns $200,000 a year is very far from being in the middle class.

I would like to know what a true progressive member like the hon. member for Rimouski-Neigette—Témiscouata—Les Basques thinks about this. In his view, are the Liberal government's progressive tax cuts really all that progressive?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:25 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, I thank the member for his question. It allows me to again confirm that what this government is doing is an illusion. It makes a claim, tries to convince Canadians, and then tries to manage expectations.

The government promised a tax cut for the middle class. However, people with an annual income of $45,000 or less do not benefit from that cut. People earning $60,000 a year might get a bit of extra money every year. However, those who earn over $90,000 a year, those who earn between $145,000 and $200,000, and even those who earn up to $213,000 a year will get a tax cut.

We have tried to make suggestions. To make the government's tax cut truly about the middle class, we suggested not changing the tax rate for Canadians in the second tax bracket, which begins at $45,000, and instead apply the tax cut starting at $11,000. Those earning less than $11,000 do not pay tax because of the basic exemption. The biggest cuts would start at $11,000, and Canadians earning $45,000 would get the cuts as well. People like us would pay more tax. We have the means.

This government turned a deaf ear to these proposals and ended up in a situation where most people are not benefiting at all from the tax cut. In fact, roughly 20% of the population, the wealthiest Canadians, are receiving the maximum.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:25 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Mr. Speaker, I thank my colleague for his excellent speech. I share his feelings about the urgency of reviewing the Income Tax Act in its entirety. Ignorance of the law is no excuse; that is the very essence of our society under the rule of law. Everyone is supposed to know the law. In our legal system, we assume that this is the case.

The Income Tax Act, however, is 3,000 pages long and is relatively complex, as my colleague has just explained so well. Even tax experts cannot claim to understand the act in its entirety, with its 3,000 pages and thousands of sections.

In addition, we are witnessing major technological changes today; in a few seconds, we can transfer funds from one country to another, from one branch of a company to another. This is what we are seeing at present all over the world; the profits of multinational corporations are reported in countries other than the ones where the actual economic activities are going on.

Can my colleague comment on this aspect of the new ways of the world and tell us whether there are solutions to this problem?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:25 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, I thank my colleague from Sherbrooke for his question, which is very much on point. He is correct.

The Income Tax Act is 3,000 pages long, but not because the government thought it would be fun to add some pages. It is because people started taking advantage of the interpretation of the act, and so they took advantage of vague wording in some parts of it to find loopholes.

Since that time, the government has constantly been trying to catch up to those interpretations and loopholes, and so the pages have piled up. In the last Parliament alone, about 1,000 pages were added to the Income Tax Act, primarily interpretations by the Canada Revenue Agency concerning loopholes that had been brought forward and ways of fixing them. There is a fundamental problem in this regard. Our system is so ill-suited that we constantly have to be catching up to the people who are able to take advantage of that complexity.

We are also behind when it comes to international tax policy. There have been tax havens since the 19th century and we have never taken them seriously. The problem accelerated with computers, capital mobility, and globalization. We have never adapted to this situation. We find ourselves with an ever-increasing segment of incomes that we could have access to and that is virtually untaxed, because of this lack of agreement at the international level.

I must say, however, that from what I have seen on the part of the OECD, we are going in the right direction. It is a slow direction, unfortunately, because of the systematic obstruction that some countries, including Canada, have mounted in recent years against the efforts made by other countries. However, we are going in the right direction and I hope the present government will encourage these efforts. These efforts are essential in order to make sure that incomes are being properly taxed where they are received.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:30 a.m.

Liberal

Filomena Tassi Liberal Hamilton West—Ancaster—Dundas, ON

Mr. Speaker, I am glad to hear that my colleague believes we are moving in the right direction. I believe that as well.

As the member for Winnipeg North stated previously in his question, we have focused on the middle class and those striving to get there and our government is proud of that. We have done that through our tax cut. We have done that through the child benefit and the guaranteed income supplement. We are moving hundreds of thousands of people out of poverty.

With this constant focus on the middle class, what is the root of the thinking that this government is going to put this tax on these benefits? Where does this speculation come from?

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:30 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, at the start of my remarks I quoted the spokesperson for the finance minister, who actually said the government was considering it as part of its comprehensive tax review. The government put forth a trial balloon to see what reaction it would get. When a trial balloon is put forward it is because a measure is being considered. Trial balloons are not put forward if there is no intention of putting a measure forward.

In terms of my colleague's first intervention, I would like to simply specify that I do not believe the government is going in the right direction unless she is talking about the creation of a smokescreen. That is the direction I believe the government is going in.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:30 a.m.

Conservative

Marilyn Gladu Conservative Sarnia—Lambton, ON

Mr. Speaker, I will be sharing my time with the member for Renfrew—Nipissing—Pembroke.

We hear again and again, day after day, about how the government is going to help the middle class. The Prime Minister stands whenever he is here to talk about the middle class. I am not sure that anybody can believe anything that comes out of the Prime Minister's mouth, because he has not been very good at keeping his promises. Remember, this is the guy who promised just a little $10-billion deficit and to balance the budget within the mandate. Now we will see maybe $30 billion this year, and stretched out to 2055 that we will be in deficit.

This was the guy who was going to restore home mail delivery. We have not seen that yet. The various promises go on and on, such as the last election under first past the post. I could spend my whole 10 minutes talking about that, but that is not the point. The point is that the Liberals talk a lot about the middle class, but really do not even know who is in the middle class. I might be able to help with that.

In my opinion, the middle class is made up of people who are not poor and not the richest. In our country, we have a definition of who is poor: single people who make less than $23,000 or families who earn less than $40,000. We know who is rich. Those are the people in the highest tax bracket, which might be north of $138,000. There is a really good way to help the finance minister, who seems to have so much trouble figuring out who is in the middle class, so that Liberals could understand whether they are really helping them.

The latest suggestion is that they are going to put a tax on health and dental benefits, striking at the heart of what is important to Canadians. Canadians value health care. They think everybody should have access to basic health care. People need to be able to buy prescription drugs and get their teeth fixed, things the government should not be interfering in, because there will be serious consequences if we start taxing these kinds of benefits.

First, some employers are already squeezed. I will rage on that later in my speech. It does not take too much to get to the tipping point, when they will refuse to offer benefits anymore. Then there will be people who will not have any benefits at all. This is a horrible situation that many Canadians are already in, that they do not have benefits to start with.

Then individuals are going to have to pay an extra $1,000. My colleague, the member for Carleton, mentioned that people making $45,000 would have to pay an extra $1,000 if this tax were put in place. These people simply cannot afford to have additional taxes put on them. That is not to mention the fact that if taxes are put on these types of health benefits, with some people being less well than others and having a lot of health benefit claims, that would drive employers in a direction that is very dangerous in terms of determining whether they would provide coverage to someone who is extremely unwell. This is just a bad idea.

I was extremely happy to hear the Prime Minister state that the government was not going to follow through with this tax. However, with the question being asked 14 other times, hearing the skippity-do, getting no real answer, and then having everybody who responded to questions about that after the Prime Minister do that same dancing routine, I am a little concerned. It is definitely a bad idea and we do not want that, because people are already overtaxed.

A former member talked about the complexity of the tax act, the number of pages, and how nobody can really understand what is in it. When Canadians see their tax bills this year, they are going to be hugely surprised. All the rhetoric has been that the Liberals are helping the middle class, they have created a great child benefit, and they are lowering taxes on the middle class. They are giving people $900 and then taking away $1,100 for CPP taxes.

People with two kids in university would lose $10,000 of tax credit for education and another couple of thousand dollars for books. People who have two or three kids in hockey would lose nearly $3,000 of tax credit. A full-time employee whose spouse only works part time now cannot do income splitting. That is maybe $13,000. When we start adding all of that up, we are talking about thousands and thousands of dollars in additional taxes that people who have not been paying attention would not be aware of. When they get that bill, I think there will be rage in the machine for sure, because it is totally unacceptable.

On top of that, the Liberals want to squeeze small businesses, the generators of jobs. The whole point of going into deficit was to create jobs. Not one net new full-time job was created, but that was the whole point of all this spending. They started taxing small businesses, and that is another broken promise. They did not reduce the tax rate for small businesses. Then on top of that, the Liberals have added the CPP costs to employers, another cost that small businesses will have to bear. Now they are talking about a carbon tax. It is never ending.

The carbon tax will drive prices up on everything for everybody, for the people of Canada as well as for employers. When business people see their taxes this year, they are very squeezed. With what is happening in the U.S. right now, we are becoming uncompetitive. The U.S. is going to lower corporate and personal taxes, and it does not have any carbon tax. I do not know what is so complicated about this, that somebody who is supposed to be the finance minister cannot figure out this will make us uncompetitive.

I will give some specific examples from my riding that might help illustrate how this goes. With the threat of the Ontario cap and trade carbon tax, the $100 million expansion at CF Industries in my riding was cancelled. The company was quoted as saying it was for that reason. My riding has a $2 billion project with NOVA Chemicals that is scheduled to go ahead. It may create as many as 3,000 jobs in my riding. The company has said that with two levels of carbon tax, that project will likely go to the Gulf Coast. That is 3,000 Canadian jobs moving south. The carbon footprint does not leave the planet, but 3,000 jobs are moving south.

CF Industries takes natural gas and turns it into carbon dioxide and fertilizer. With the new carbon tax, it will be hugely burdened, and there is no way it can do anymore than it has already done. In the last 10 years, the company has made exponential reductions in its emissions and its environmental controls, and it is at the limit of its technology. With this extra carbon tax, we expect the facility will be shut down and will open its expansion in Donaldsonville, Louisiana where there is no carbon tax and there will be lower taxes for the corporation. Once again, the carbon footprint is not leaving the planet, just Canadian jobs.

In addition to that, I have a number of refineries in my riding. I hear the Minister of Environment and Climate Change say on a regular basis how Shell definitely supports a price on carbon. The refinery manager in Sarnia—Lambton believes that with the two levels of carbon tax we will see and the environment right now for oil and gas, the company, which has six other plants in the U.S., could de-bottleneck and shut this facility down just like it shut the facility in Montreal a few years ago.

I hear the rhetoric, but once again, that carbon footprint will not leave the planet, but jobs from Canada will move to the U.S. The carbon tax is a bad idea, and the government really needs to rethink that in light of what is happening in the south.

The Liberals are getting a lot of advice from people telling them what to do. The Chamber of Commerce is the representation of all our businesses across Canada. It has said that a carbon tax is a bad idea as are these health and dental taxes. The Liberals are getting that input from the chamber. They are getting it from the Canadian group of municipalities, the FCM. All of these people are giving the government excellent advice, saying that it should not do these things, that they are bad for small business, which creates most of the jobs, and for the people. I do not know about the other MPs here, but I get letters on a daily basis from people complaining they are on fixed incomes and have no more room to move.

I am happy for an opportunity to talk today, but I wish somebody on the other side of the aisle were listening and would actually take action, do the right thing for Canadians and eliminate the carbon tax, reduce the tax burden on people, and reduce the tax burden on small businesses, so we could do what the government was elected to do, which is create jobs for Canadians.

Opposition Motion—Taxes on Health and Dental Care PlansBusiness of SupplyGovernment Orders

11:40 a.m.

Winnipeg North Manitoba

Liberal

Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, the government is listening to what Canadians are saying. That is one of the reasons why we have the tax cut for Canada's middle class, which will impact over nine million Canadians.

The member referenced people on fixed incomes. Thousands of Canada's most vulnerable seniors will receive a significant increase in the GIS, not marginal increases that we witnessed while the Conservatives were in government, to the degree in which some of our poorest seniors will receive an additional $900-plus a year. That is a lot of money for some seniors.

The member spent a lot of time talking about the price on carbon. Will the member not recognize that the price on carbon is already instituted in many of Canada's provinces and Ottawa does not generate one penny that goes into federal coffers? It is something that goes into the provincial coffers and if the provincial governments want to, they can give that money back through all sorts of tax breaks. Does the member not agree to allow provinces to have that option? Does she not agree that it is good to see national leadership on the environmental file, which has been lacking for the last 10 years plus?