House of Commons Hansard #260 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was income.

Topics

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

3:50 p.m.

NDP

Gord Johns NDP Courtenay—Alberni, BC

Madam Speaker, that is a lot to unpack.

To start with, $11 billion would have done a lot to get closer to balancing the budget.

The government is on a spending spree. The Liberals are helping out their friends on Bay Street. They are careless in how they are managing their money. They talk about a middle-class tax break that cost $3.2 billion. It benefited nine million Canadians in the upper threshold of the so-called middle class, but they forgot about 17.9 million Canadians.

We could talk about tax fairness. We could talk about what $11 billion could do and what we would do to at least achieve a better way of moving forward managing the finances of this country. We have done that. We have presented our ideas.

Certainly, this is a measure the government could do fairly quickly. It is important. This is not a measure that is important for economic growth for Canadians. It is only for the ultra-rich. It is misleading to be telling this side and Canadians that we need these tax agreements in place. Who are they for? We know who they are for. They are for the ultra-rich, the well connected, and Liberal insiders.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

3:55 p.m.

NDP

Jenny Kwan NDP Vancouver East, BC

Madam Speaker, I am very pleased to rise in the House today to support the motion introduced by my colleague, the member for New Westminster—Burnaby.

Eleven months ago, government members voted in support of an NDP motion that recognized that the federal government was losing tens of billions of dollars annually to tax loopholes, deductions, and exemptions that mostly benefited the ultra-rich, and that the use of offshore tax havens was costing the government more than $7 billion annually. Government members voted in support of the NDP's call to close those loopholes.

Almost a year later, where are we on the promise to act? Sadly, we are still losing more than $7 billion annually due to offshore tax havens and nearly $1 billion annually to the stock option deduction loophole. By continuing to refuse to tackle tax havens and tax loopholes, the Liberal government is showing us what its priorities really are. Those priorities are not everyday Canadians, or even our national heroes.

Breaking an election promise, the Liberals have refused to reinstate lifelong disability pensions for veterans. The Prime Minister even had the audacity to tell a wounded veteran in Edmonton last Monday that the government cannot afford to take care of the people who have sacrificed their health, their limbs, and their lives for our country. Worse still, in Vancouver, there are some 100 veterans who are homeless or at risk of becoming homeless. Housing is a basic human right that should be afforded to every single Canadian, especially those who have fought to protect our rights and freedoms.

On the topic of basic human rights, in B.C. right now there are 19 drinking water advisories in effect in 17 first nation communities. Three of them are do-not-consume advisories. That means that for those first nation communities, the water is not safe to use even after boiling. I would ask members of the House to imagine what that is like and ask themselves this question: do they find this acceptable, when Canada is one of the wealthiest countries in the world, or do they think that Canada can do better? Should we not use the billions of dollars of lost tax revenues from CEO stock options and tax havens to pay for these critical services?

This week, The Hill Times, as part of a series on constituency offices, profiled my staff and office in Vancouver East. Vancouver East is an incredibly diverse riding, with over 70 different languages spoken and an incredibly vocal group of activists who always keep me on my toes.

In the heart of my riding, in the Downtown Eastside, a person dies almost every other day from an overdose. It was estimated in December 2017 that the number of opioid-related deaths in Canada could exceed 4,000 for 2017, yet the federal government still refuses to acknowledge this crisis as a national health emergency. How is that possible?

The Downtown Eastside is the epicentre of Canada's opioid crisis. Front-line workers and first responders in my riding are struggling to keep up. Over the holiday season, I visited all the fire halls in my riding. Firefighters told me about the trauma they were experiencing in witnessing not just one person overdose during a shift but multiple overdoses. The impact of responding to these tragedies takes a toll, and our first responders deserve to be taken care of too. The former Minister of Health promised to provide resources for first responders, yet to date, there is nothing.

For the chronically addicted, no action has been taken to ensure that there is a full range of treatment options available to them. If the government had the courage to act, redirecting just a small portion of the lost revenues from offshore tax havens to programs to address the opioid crisis, it would save lives.

Similarly, it would mean that seniors and veterans struggling to pay for prescription medications and dental care would have the care they deserve. An aboriginal mother in my riding who has, over the years, donated hundreds of artworks and cedar weavings to local schools is skipping her cancer medications because she cannot afford them.

For the life of me I do not understand why the Liberals voted with every one of the Conservative members to reject the motion of the member for Vancouver Kingsway to begin negotiations for a universal pharmacare program. I do not believe that is what Canadians want from a government that promised real change. I believe Canadians think that we can do better.

If loopholes for offshore tax havens were closed, many of the government's departments could use a boost in funding. Why? Processing delays continue to plague every government department. Let us look at immigration. People have to wait years to get a hearing with the IRB because there is a backlog of over 40,000 cases. Government phone lines, whether they are for IRCC, Service Canada or the CRA, are underfunded and understaffed. My constituents complain every day that they cannot get through to anyone on these phone lines. Last week a constituent called my office in tears because she could not get through to Service Canada to report her father's death and requested that our office call instead and relay this information on her behalf. The fact is that when the government chooses not to properly fund programs and services, people suffer, the real people in our communities, not the people who can go on vacation to a private island or who forget that they have a French villa.

It is not that our government does not have the tools for collecting money. The issue is who it wants to go after. My constituents tell me every day that our government is very good at collecting money. I have a constituent who makes an income of about $4,000 a year from the sale of her art whose taxes have been sent to collection. The government has the tools in place to go after those individuals. I know another single mother whose child tax benefit is being held back because she cannot produce receipts to demonstrate that she has child care. She does not have child care because she cannot afford child care, yet her child tax benefits are being held back because of that. How does that make sense when we have these kinds of situations going on?

When we look at what the government is doing, it promised almost a year ago that it would go after the ultra rich, the top 1% of the income earners, to close these loopholes. Almost a year later not only has it not closed those loopholes, but it has signed more treaties with tax havens to allow for more advances on this front. Then we have the government members saying it was the only way they could establish a path to close those loopholes and go after those tax evaders. That is simply not true. If they had read the agreement, they would know that those new agreements indicate that it is entirely a path to ensure that they do not have to pay any Canadian taxes at all. It further legitimizes these kinds of tax-evasive manoeuvres. Frankly, it legalizes them and authorizes them to go forward.

When we are talking about tens of billions of dollars, imagine what that money could do in every single riding represented in this entire chamber. Imagine what that would mean for a family who could not afford to put food on the table, for people who are living from paycheque to paycheque, for people who suffer mental health challenges and all of a sudden find themselves on the street. Imagine what our Canada would look like if we made this change.

The government has said that it cannot do it, that it is doing so much already, and that the NDP is always demanding more. Of course we are demanding more. Who are we demanding this for? Why are we sitting in this place? I am sitting in this place because my constituents need their voices heard. They want Parliament to work for them, not for those who the government has said are the middle class and those working hard to try to get there, because the government is not really working for them. It is working for the fat cats. It is working for the people who have already made it.

That is not what this motion is about. This motion is about making change. Will the government have the courage to do that? If it does, it should show it in budget 2018.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

Spadina—Fort York Ontario

Liberal

Adam Vaughan LiberalParliamentary Secretary to the Minister of Families

Madam Speaker, I want to make it very clear that the priorities listed by my colleague across the way are shared on this side of the House. It is why the $40 billion investment in housing has been produced. It is why we did not declare the opioid crisis a national crisis. Declaring it does not change the money put into it, but we invested into it, changed laws, made safe injection sites approval easier and faster. We delisted many of the drugs that are required to revive people when they overdose.

I share the analysis that going after tax evasion brings resources back to the country and allows us to spend it on things like the Canada child benefit and fix the water situation on reserves and traditional territories. These are all really good ideas and it is why this government is so heavily invested in producing results in them.

However, to get at those tax revenues that are hidden offshore, we need tax treaties. We need a legal framework in order to access the court system in other countries, so we need accords. When the NDP members say they do not want tax treaties, how would they access foreign courts without those treaties?

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Not subject to Canadian tax; that's what the agreement says. It exempts taxation.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

NDP

The Assistant Deputy Speaker NDP Carol Hughes

I want to remind the member for New Westminster—Burnaby to please refrain from yelling out. I am sure that he can attempt to get up and ask a question.

The hon. member for Vancouver East.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

NDP

Jenny Kwan NDP Vancouver East, BC

Madam Speaker, if the member actually read the tax treaty agreement, he would know that the agreement would allow for the revenues to not be subject to Canadian taxes. That actually allows for and legalizes tax evasion.

The member says that they care so deeply and have done so much. Let me go back on that a little. On the issue around housing, let us remind the entire House that it was the federal Liberals who cancelled the national affordable housing program in 1993. As a result of that, this country lost more than half a million units of affordable housing that otherwise would be in our communities today.

By the way, with respect to the big fanfare that the Liberals announced about the national housing program, 90% of that funding will not flow until after the next election. As for people who are homeless today, they will have to wait until after the next election to find housing. We need action. The question is, will the government act?

On the opioid crisis, the difference is that declaring a national health emergency would mean that the government would be obliged to act in every single community and not have people dying and family members and front-line workers who are struggling to deal with the issue on their own and begging for the government to step up.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

NDP

The Assistant Deputy Speaker NDP Carol Hughes

I also want to remind the hon. parliamentary secretary that he had an opportunity to ask a question and understood what I was saying to the member for New Westminster—Burnaby to wait, stand up, and ask a question as opposed to interrupting people while they are speaking.

The hon. member for Aurora—Oak Ridges—Richmond Hill.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:05 p.m.

Liberal

Leona Alleslev Liberal Aurora—Oak Ridges—Richmond Hill, ON

Madam Speaker, I did not hear an answer to my colleague's question, so I would like to give the member opposite one more opportunity to clarify for us. Does that mean that the NDP position is that the NDP is against having these tax treaties with other nations to be able to give us the opportunity to go after those tax evaders?

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:10 p.m.

NDP

Jenny Kwan NDP Vancouver East, BC

Madam Speaker, this means that we want the government to do what it said it would do. The Liberals voted 11 months ago to close these tax loopholes. What did they do? They did nothing. They did not proceed with that.

Here is another chance. In this upcoming budget, maybe the government could for once do what it said it would do and close the tax loopholes, close the loopholes of tax havens, close the loopholes for CEO stock options. That would make a difference with real people, with real lives.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:10 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Madam Speaker, it is a pleasure to rise and speak to today's opposition motion from the NDP.

I will be sharing my time with the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.

It is always a pleasure to speak in the House. There is much in today's motion from the NDP. There is much sentiment behind it, for which I have much sympathy, and I may agree with some of the objectives; however, I am not going to be supporting it, and I am going to explain why.

It is a two-part motion. Part A talks about what the NDP characterizes as the loophole for stock option deduction. I do not agree that the ability to declare income from exercising stock options is a capital gain as opposed to income is a loophole. A loophole is something that is an unintended consequence or a runaround that one does to get around the intent of the law or a rule.

The existence of the ability to deduct exercised profits from stock options was a deliberate policy choice. It was not a loophole, something that people are sneaking around to do. It was a policy choice originally made for important reasons. It was designed to encourage entrepreneurialism. It was designed to encourage Canadians—and not just Canadians; this is tax policy that exists in other countries as well—to go into business and be able to offer employees, or proprietors of a business, to defer compensation, to be able at the start-up stage of an enterprise to put all of the money that is available and all capital into getting the business off the ground.

When people agree to compensation by stock option, they are inherently taking on significant risk. If the enterprise fails, then there is no compensation. When a start-up company, particularly in the high-tech sector, is struggling to capitalize itself and struggling to compete for talent, being able to defer compensation through stock options is an important way for the company to more efficiently and effectively capitalize its business.

While indeed stock options are a common form of CEO compensation, they are also a common form of compensation not only in the high-tech business, but also in the resource sector, in mining, or oil and gas exploration. It allows companies to capitalize themselves without paying as much in salary compensation. It is often throughout the enterprise that stock options are available.

In my career in the mortgage business in Calgary, I saw many examples of decidedly non-CEOs and non-one percenters who earned compensation from stock options. Sometimes it is every person in the company who might be eligible for stock options. They have taken substantial risk by putting their personal compensation into the hands of the enterprise and its success.

It was a fairly deliberate decision to allow this, so it is not a loophole. I presume we will agree to disagree on whether it is a good thing and agree to disagree that the taxation should be treated differently, but I do not believe it is a loophole, nor is it correct to characterize it as such. I will not support the motion because I do not agree with that part of it.

Moving to part B of the motion, I agree. As a Conservative, and indeed as a Canadian citizen, I absolutely support the rule of law. I support ensuring that all Canadians follow the law, and that the Canada Revenue Agency follow the law and collect taxes from those Canadians who are not paying what they are required to under law. It is extremely important, especially in the self-reporting system, that Canadians all understand that following and obeying the law is important.

It is troubling to know there are people who deliberately subvert the law through offshore tax arrangements, and that in some cases Canadians are following the law but subverting its intent or spirit. Where that is the case, the law should indeed be changed as required.

We have heard a lot in this debate about tax fairness. We have heard it in speeches for the motion, and we have heard it from the government side. When we have heard those speaking from the government side of the aisle, it is quite troubling to hear some of the things that have been brought into the discussion, the patting on the back for a job well done. The speaker before the NDP talked about $1 billion going into tax avoidance and evasion, but was unable to answer the question about how much of that was targeted to offshore evasion, which is the subject of the motion.

The truth is that numbers like those of the expenditures of the agency have been thrown about repeatedly in debate in this House. The Minister of National Revenue's own department has revealed that much of this is quite misleading. In answers to questions from the NDP about recovering offshore evasion, we have heard about recovering 20 billion dollars' worth of taxes, and in fact budgeting that money. The minister's own department reveals that it believes that only a small fraction of that will ever be captured, and that most of the money under that number is really domestic taxes and not the foreign taxes that were the subject of that motion and of this motion, and many of the questions that have been raised.

The Liberals speak of fairness. What does tax fairness look like under the Liberals and this minister's Canada Revenue Agency? Is it tax fairness to target disabled Canadians by changing the documentation on the disability tax credit, on May 2, and then denying for months that anything has changed, even while the rate goes from an 80% acceptance rate to an 80% rejection rate?

Is it fairness to change the folio, which gives instruction to professional tax preparers, so that they tax the employee discounts for retail and restaurant workers, and then again blame it on the bureaucrats once it comes to light, saying that it was not actual government policy? Well, it was. It was published in the folio, and it came to the attention of Canadians only when the agency itself reported it to the media. Is going after low-wage workers tax fairness?

In one of the speeches earlier, we heard about targeting single parents. Is denying the child tax benefit to single moms and single dads tax fairness? It is not fairness to say to single parents that they have to hire a lawyer, prepare a separation agreement, go through all the work in a failed marriage or partnership to find the other parent and have him or her agree to it, submit it to the CRA, and then have the CRA again say that it is not good enough, that it is not acceptable evidence of being a single parent. We have heard these stories from MPs and their constituency offices. Targeting single parents, diabetics, and low-wage workers is not many people's idea of tax fairness.

We talked about all the additional money going to the Canada Revenue Agency. This money has been going in each year. We are in the third year of this government. Right now, there is an 18-month delay for appeals at the Canada Revenue Agency. If the agency improperly assesses someone and that person goes to appeal, the interest clock starts ticking, and there are 18 months of delay before the hearing takes place. Is that tax fairness?

We will not support the motion. I will leave it at that for questions and comments.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:20 p.m.

NDP

Gord Johns NDP Courtenay—Alberni, BC

Madam Speaker, the member talked about the stock option loophole for CEOs not being a loophole. When there is a capital gain that is taxed at half the rate of regular income and 92% of that money is flowing to the richest Canadians, I would call it a loophole.

We heard the Prime Minister in Edmonton, in the member's home province of Alberta, last week tell a veteran, a veteran who had been promised pension benefits, which the government was not fulfilling, that the government could not afford to pay the benefits that the Liberals promised. I have a really hard time with that.

CEOs are not paying their fair share of taxes. They are getting a tax break. They are paying half the tax of regular income. At the same time, the government is saying that it cannot fulfill the promises to the people who have paid the ultimate sacrifice, going to war for our country, serving our country.

I hope the member can speak to that.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:20 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Madam Speaker, I completely share the member's outrage over what happened in Edmonton. It was shameful. We will just have to agree to disagree on whether the deductions should exist.

I will grant the NDP members this. They have every right to be upset and to point out that this constitutes a broken promise. Whether I agree that it is bad policy or good policy to allow the deduction for stock options, the Liberals promised to make that change and they did not do it.

We can add that to the litany of broken promises that include broken promises to veterans, broken promises on the size of the deficit, broken promises on the return to surplus, and the list goes on. I share in the disappointment over a broken promise, and so do millions of Canadians.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:20 p.m.

Spadina—Fort York Ontario

Liberal

Adam Vaughan LiberalParliamentary Secretary to the Minister of Families

Madam Speaker, first, I would like to correct the record. There is no obligation under the legislation or the program that requires people to get signed letters from spouses in order to receive the Canada child benefit if they are divorced. That is unequivocally, absolutely clear in the regulations. It is an option, where it is possible, but there are several other ways, including getting letters from lawyers, police, and clergy to support the claim.

I want Canadians listening at home to understand that the benefit does not require women to be in harm's way to receive a benefit to which they are entitled, and appropriately so. I think that needs to be clear. If people are being told that by Service Canada, it is wrong. Their MPs and our ministry will ensure they get the benefits they are entitled to in the safest way possible.

I am not going to correct all the rhetoric on this because I only have so much time. The NDP members have said that tax treaties are really bad, because tax treaties are used effectively to support tax shelters. While they clearly frame how foreign taxes and Canadian taxes are paid where there is a split jurisdiction, and there is reason to debate and be concerned about that and that is why the government has put $1 billion into trying to find those dollars being illegally hidden, the issue is this. Tax treaties are also the legal framework by which we access other governments' legal systems, other governments' tax records, and other government's situations to ascertain exactly what the appropriate level of Canadian taxes should be paid.

It is fair that there could be a debate about what kind of tax should be paid, but do you not agree that tax treaties are fundamental to the justice framework and the tax law structure in order to access taxes that may be or may not be being paid appropriately? Do you support tax treaties? Does your party support tax treaties?

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:25 p.m.

NDP

The Assistant Deputy Speaker NDP Carol Hughes

Again, I would like to remind the parliamentary secretary, who has had a lot of experience in the House, that he is to address the questions and comments to the Chair and not to individual members or parties.

The hon. member for Calgary Rocky Ridge.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:25 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Madam Speaker, I certainly do not disagree that there ought to be appropriate tax treaties. In my remarks, I did not criticize the existence of treaties. Indeed, treaties were signed under the previous government.

I will also point out that I do not think there was any need to correct any part of the record of what I said, because I made no representation of what the law said around separation agreements. I merely reported in my remarks that Canadians were being told this. They are being told that they need a separation agreement and then they are being told that they need even more than a separation agreement.

It is a disaster at CRA, and the member underscores my point. If Canadians cannot get the information they need, then it undermines what the law and the rules actually are.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:25 p.m.

Conservative

Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Madam Speaker, I have been listening to the debate since this morning and I am pleased to rise in the House today to speak to the NDP's motion. However, I must warn my colleagues that we have already decided to vote against this motion for various reasons that I will try to explain. I would like to thank my colleague from New Westminster—Burnaby for moving this motion since it gives us an opportunity to debate issues that are important to Canadians and to discuss our response to and our concerns about this.

At first glance, the motion is a bit misleading because it combines two very separate issues. First, it deals with the taxation of stock options for business executives. Second, it deals with the matter of tax evasion, which we already know is a serious problem in Canada.

The first issue is stock options, which are a completely legal means of compensation under the Income Tax Act, a law that was passed by various former governments since it has been amended a number of times in the past. The purpose of this law is to allow the government to collect enough money to keep the government and the country running properly and to promote an entrpreneurial climate that will enhance the economic vitality of the country and by extension the quality of life of Canadians. That is very important.

The second issue is tax evasion, which is a major problem. All parties in the House recognize that this is an illegal practice. I think everyone agrees on that. Tax evasion flouts the obligation that all Canadians have to declare all of their earnings. If they do not, they may be subject to fines and even face criminal charges. That is what is happening in a number of cases across the country. The government has high ambitions in that regard. I will talk more about that a little later.

Before speaking to both topics, I must protest against the NDP trying to force a vote by creating a false dichotomy: either you are with them, or you are with the bad guys. This is not a black and white issue; there are grey areas. Unfortunately, in this motion, it is either one or the other. As such, we will not be able to support it.

On the issue of tax credits for stock options, I must point out that this is an essential tool for start-ups, since not all of them can afford to pay big salaries to their employees. Offering shares is a way of rewarding all the owners to some degree by compensating for the income that they will not be earning, since they will need to regularly invest in the business. It is a type of compensation that depends entirely on the company’s success.

I know of what I speak, even if my business is not listed on a stock exchange and I do not own any stocks. I have already played that game, but not anymore. As an entrepreneur, I know first-hand that starting a business can have very negative consequences on the family and on the business itself. There are ups and downs. I have owned a business for 25 years and I can say that it is not always easy to create and keep jobs, and what is even more challenging is to grow a business, which means taking risks. Business owners are the ones to bear those risks.

I am pleased to say that the top entrepreneurial city for 2017 was Rivière-du-Loup, in my riding. My region has a strong business climate, but it is not because small businesses are publicly traded or because these people are being paid in dividends through stock options, quite the contrary. Small businesses make up 90% of Canada’s economy and not all small businesses are like those listed on an exchange and able to afford to provide stock options. Despite that, entrepreneurs like me are personally working hard to develop the local economy.

A lot of people are included in the middle class. Entrepreneurs starting up a business often find themselves in precarious situations, risking their own money and not having a stable income or a pension fund or employment insurance. It is a reality that I face and have faced in the past.

I can assure my colleagues that I have taken family risks for the good of my business, which is doing very well today. However, when I was starting out, that was not necessarily the case. Things were extremely challenging. Success is really not guaranteed.

According to Industry Canada, only 50% of small businesses make it through the first five years. Some will certainly be quite successful, but others will fail. The NDP takes issue with the fact that the sale of shares obtained through stock options is taxed at only 50% of the amount, but they also disregard the fact that many, if not half, of entrepreneurs will end up with stock that has no value.

The reality of the stock market is that it is always fluctuating. Just a few minutes ago I saw on the Internet that the stock market lost 1,000 points today, following a 2,000-point loss last week. Over the course of four days, the stock market lost about 4% of its value, which also has an impact on stock options. It seems, then, that New Democrats are being misleading by trying to stir up resentment against the wealthy, who they claim are not doing their part.

Here are the facts. Anyone in Canada earning an average income of up to $46,000 per year pays 15% in federal tax. That is actually closer to 11% because of the basic exemption on the first $12,000. A member of the 1% who earns over $230,000 annually pays 33% in federal tax on any amount over $205,000. Even taking into account the current stock options credit, one percenters who risked everything to grow their business and then sell the shares they got instead of paycheques still have to pay a 16.5% federal tax when they sell those shares. That is in addition to corporate tax, which is 11% to 15% and would already have been paid. That is another tax the NDP would like to raise. Those people are already paying as much tax as Canadians earning an average income, if not more.

If the NDP were to eliminate the stock option credit, companies would no longer have this tool, which is essential in helping companies start up in Canada. This fact makes his motion completely unacceptable to us. What is worse, the tax increases that the NDP would enforce would make businesses flee to other countries, which brings us to the topic of tax evasion.

We think that the best way to combat tax evasion is to foster a competitive business climate in Canada, eliminating any temptation to look elsewhere. Yes, it is true that there are some unscrupulous people who are looking for ways to avoid their legal responsibility to declare all of their assets and foreign income. The parties in this House all agree that this in unacceptable. We expect that, no matter which government is in power, the Canada Revenue Agency will use its investigative and judicial powers to deter people from breaking the law. I encourage Canadians to speak out against all forms of tax evasion.

The CRA, under the leadership of the Minister of National Revenue, has proven itself to be absolutely incompetent in recent years in going after the bad people. The minister is constantly repeating the same answer, regardless of the question. She tells us that the government has invested $1 billion in fighting tax evasion, and that it has recouped nearly $25 billion. We know the story, but the fact remains that before Christmas, the minister was forced to apologize for having misled the House. She admitted that much-touted figure of $25 billion was not based on the facts, and that she had quite obviously made it up.

The media is reporting that not one Canadian named in the paradise papers has been prosecuted so far, but we see that a troubling number of ordinary Canadians are falling victim to the CRA's excessively dogged determination. I am talking about single mothers who are being asked to pay back $8,000 they received through the Canada child benefit either because the CRA did not believe that their children truly existed or because they thought that the mothers were no longer with their spouses. In an interview with Radio-Canada the taxpayers' ombudsman described the situation as problematic and criticized, as we have, the CRA for attacking the vulnerable.

In my riding, a company wanted to switch banks and an employee in charge of the company's finances made a transpositional error in the date and the company was penalized financially for that. The company has been around for 40 years and has always paid its taxes, but now it is being slapped with a $3,000 bill, which is totally unacceptable. The CRA should target the right people. Unfortunately, that is currently not the case.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:35 p.m.

NDP

Gord Johns NDP Courtenay—Alberni, BC

Madam Speaker, I want to thank my hon. colleague for his speech. As the critic for small business and tourism, I always love to hear entrepreneurs speak about business.

Certainly, it is an interesting place for the NDP and the Conservatives, because we do have some things in common. We support small business. We supported the small business tax reduction from 11% to 9%. We want to see people, the risk-takers especially, thrive. We want to see them have success and benefit from that success. However, where we differ is certainly around what we call a stock option loophole. The member says it is a capital gain for those who have taken the risk and are getting taxed at half the rate.

If 92% of this tax, this capital gain, is going to the wealthiest Canadians, maybe he can explain if he supports that there should be some changes. Clearly, the money is going to the wealthiest and not going to the backs of the small business people, the hard-working people in our country. I would like the member to elaborate a bit more on why he still supports this when 92% is going to the highest earners in our country.

Again, I have talked with CEOs. They are saying that this is not going to make or break whether they are going to do business in Canada. Programs like SR and ED and investments in innovation are what will make the difference.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:35 p.m.

Conservative

Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Madam Speaker, I thank my colleague for his question.

Obviously, looking at this, one might get the impression that only a small number of people, people or business owners, own stock options and are getting a lot of money from stock option deductions. It may seem appalling.

The fact is that, even with this motion, the government would be recovering only about $1 billion. The New Democrats recently moved a motion regarding a universal pharmacare program for the entire country. They seem to believe that any money that is recovered could be used to pay for that program, but according to the parliamentary budget officer, pharmacare would cost about $20 billion, so something does not add up.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:35 p.m.

Winnipeg North Manitoba

Liberal

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

Madam Speaker, I appreciate that sense of entrepreneurship that the member across the way is referencing. Small businesses are the backbone of our economy. The minister responsible for small business has talked a great deal about it. In fact, since the very first budget, we talked to small businesses about what they wanted and their customers. It is one of the reasons we increased disposable income through the middle-class tax break, and just last year we announced the reduction of the small business tax. These are all positive things for small businesses.

Could my colleague provide some of his thoughts on the importance of having these tax treaties so that Revenue Canada has a better ability to be able to find out the kind of money that Canadians might be using offshore?

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:40 p.m.

Conservative

Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Madam Speaker, we cannot be against virtue.

It is obvious that part of the CRA's job is to collect money that is hidden in tax havens. Contrary to what the government says, it has raised taxes over the past two years. What is more, we, the Conservatives, planned to drop the small business tax rate from 11% to 9% before the Liberals came to power. When they took office, they said that they were only going to lower it to 10%, even though they promised to lower it to 9%. They went ahead with their original plan in the end, but other forms of taxes, such as payroll taxes and EI premiums, have gone up. The end result of all of these tax hikes on families and businesses is that everyone is paying more.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:40 p.m.

NDP

The Assistant Deputy Speaker NDP Carol Hughes

Order. It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Calgary Rocky Ridge, Taxation; the hon. member for Saanich—Gulf Islands, The Environment; and the hon. member for Drummond, Official Languages.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:40 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Madam Speaker, it is a privilege to rise to speak in support of this motion moved by my colleague, the hon member for New Westminster—Burnaby, which reads as follows:

That the House recall its resolution adopted March 8, 2017, which asked the government to keep its promise to cap the stock option deduction loophole and to take aggressive action to combat tax havens, and that the House call on the government to respect that vote by ensuring that both measures are included in Budget 2018.

I, on behalf of the good people of Vancouver Kingsway, rise to state my full support for the motion and urge all members of the House to support it. Frankly, reading the motion, it is going to be difficult to understand how any member of the House can vote against it, but we will see what happens when it comes to a vote.

From a general philosophical point of view, I want to start by saying that we as parliamentarians are elected by the people of our ridings to come here to Ottawa to pass laws for the governance of Canada. When we do so, a question that is with us every day is this: what are the fundamental underlying principles and objectives and values that ought to come into play when we discharge those duties?

First and foremost, one of our most sacred obligations here as parliamentarians entrusted with the governance of our country is to make sure that the citizens of our country are safe and secure. Safety of course starts from a basic physical point of view. We want to make sure that every person in this country has the right to fully embrace the rights afforded by our Constitution and that are given in a free and democratic society such as Canada, and that they do so with their physical integrity completely intact.

At the same time, I do not think safety and security are limited just to the physical realm. I know that I, as a member of the New Democratic Party, come here with a very fundamental commitment to the concept that all citizens of this country also have a right to live their lives with a decent security of person, economically, socially, and culturally as well.

One of the fundamental issues in society and one of our fundamental obligations as parliamentarians is to pass laws and take measures that have, as their uppermost consideration, the welfare of our citizens. The ability of each individual in our country, every man, woman, and child, and people who identify in every expression in between, to achieve a decent standard of living is something that we as Canadians are proud of. We believe that every single person in this country should have a minimum standard of living as a feature of the dignity of living in a modern democratic advanced society.

At least we in the New Democratic Party understand the critical role that government plays in that. We wholly respect that the market is a critical part of our economy and delivers many things in an efficient and effective way that only the market can do. The full breadth of consumer items, the services that Canadians rely on, the innovation, creation, and production of all of the gamut of commodities and services and resources that Canadians treasure and that are a part and parcel of a modern economy in the 21st century are adequately provided by our market.

However, we in the New Democrats fundamentally understand that the market does not produce everything. There are some things that the market cannot do effectively or efficiently. It cannot produce housing for every single person. The market cannot make sure that every single child is educated in this country. I am not just saying that as a matter of philosophy. Anybody who understands history will know that left completely to the marketplace, which is motivated by the underlying profit criterion, capital will flow to where it is most profitably applied.

There are victims of that. There are people who, for various reasons, whether they are poor, disabled, or whether the vagaries of life's circumstances have put them in that place, are not able to prosper or compete, and they get left behind. That is where the role of government and the state come in. Most Canadians want a strong government that will fill in those gaps that the market cannot provide, and will help provide the standard of living that we want every single citizen in this country to achieve.

The government provides health care, education, and social programs, things like employment insurance, to be a social safety net to catch people when, through no fault of their own, they find themselves out of work, whether by technological change or by business failure. Social programs include worker's compensation for workers who through no fault of their own get hurt at work and are unable to work any longer. Social programs assist them, so that they are not cast upon the heap of poverty. We as a society recognize that there has to be a safety net for people like that.

We as a country of immigrants, and I dare say everybody, other than the indigenous members of this House, can trace our roots to immigrants at one point or another who have received support of some type to integrate, because we recognize that people need some assistance to fully integrate into society. We recognize that this basic financial protection and standard of living we want for everyone in this country is actually a foundation that makes meaningful participation in our democracy possible.

People cannot fully exercise their rights as citizens in this country to pursue their dreams, careers, and participate in our democratic traditions if they do not have their fundamental needs met, things like basic housing, enough food, and basic clothing, the essential ingredients that make meaningful participation in our society possible.

The question then becomes, how does the government fund these programs? How much money must the government raise in order to adequately provide the funds to discharge those responsibilities that I think everybody in the New Democratic Party believes every citizen deserves? The second question is, how do we raise that money, and from whom? These raise fundamental questions as to why we are here as parliamentarians, and strike at the heart of government and what we do.

The motion here touches on those fundamental questions in the following way. It calls on the government to act on a promise it made to Canadians in the 2015 election, where the Prime Minister and other Liberal candidates, who ran for office, told the electors in their ridings that if they were elected, if they received the trust of those voters, that they would come to this place and address an issue of inequity in our tax system.

What they said they would do is close or cap the stock option loophole, and take aggressive action to combat tax havens. In keeping with this, once the Liberal government was elected, 2015 and 2016 passed with little or no action on those promises.

That led the New Democrats to move a motion last year, which was passed in this House on March 8, 2017, almost a full year ago. It asked the government to address tax loopholes that primarily benefit the wealthy, including keeping that Liberal campaign promise of closing the stock option deduction loophole. It also called on the government to crack down on the use of tax havens by tightening rules for shell companies, renegotiating tax treaties that let companies repatriate profits from tax havens to Canada tax free, and ending penalty free amnesty deals for individuals suspected of tax evasion.

I am going to stop there and talk about the broader context. We are seeing two worlds in Canada. The world for most Canadians is becoming increasingly unaffordable. It involves more precarious work, and it is a harder place in which to get by.

In the riding I represent and come from, in Vancouver, an entire generation is unable to house themselves. Young people, students, young families, seniors, and middle-class families are being driven out of Vancouver and the Lower Mainland. They are being driven out of places like Victoria, and not because they want to. They have lived in these communities, made careers there, and had family there, but they are being driven out, because they cannot afford to locate any kind of housing that is affordable, whether to own or rent. That story is replicating itself in communities across the country, including the GTA and other places.

People in their 20s will say that with every year that passes it is increasingly difficult to find permanent, full-time jobs that have pensions and pay benefits, like people of my generation, once counted on as a matter of course. Instead, they are faced with part-time jobs, temporary jobs, jobs with no benefits, jobs that are, as we call them, precarious. This is the reality for people.

On a global scale, Oxfam released a study recently that said that 82% of the global wealth that was created last year went to the top 1%, and that fully 50%, half of the human beings walking on this earth, 3.5 billion human beings, received 0% of that wealth. Not only is there inequity in our society but the trend is getting worse.

The other world from the one I just described that most Canadians live in is one that could be described as an exclusive club for the wealthy, who get special access and are exempt from many of the rules the rest of Canadians play by. Tax avoidance and tax evasion by the rich undermine faith in our society and our democracy by starving social programs and public services. They send a message to ordinary citizens that the rules of the economic game do not work for them and are, in fact, rigged against them. I believe it will take strong political will to reverse the trend of rising inequality, which began decades ago, and has continued under both Conservative and Liberal governments.

Interestingly, the Liberals voted in favour of the motion that I spoke of that New Democrats moved in the House last March. Since then, not only have they failed to act on it but, increasingly, they have signed tax haven treaties with other countries like Cook Islands, Antigua, Barbuda, and Grenada. With the budget approaching, we think it is time for the Liberals to keep their promise.

I will throw out a few other statistics that describe the reality for people in Canada. By 11 a.m., on January 2, Canada's top paid CEOs had already earned what the average Canadian earns in a year. In other words, the top paid Canadian CEOs earn more in a day and a half than millions of hard-working Canadians will take home in a full year.

Canada's top CEOs earn 200 times the average person's salary, which, incidentally, places Canada in a very rarified crowd that is way out of proportion to the gaps in other countries between the wealthiest and the poor. Two Canadian billionaires possess the same amount of wealth as 11 million Canadians. The top 20% of Canadians in 2016 owned 67% of all wealth or net worth in Canada, and over four million Canadians, including 1.15 million children, live in homes that struggle to put food on the table every day.

In light of this, Canada has a tax code that is full of loopholes, after decades of Conservative and Liberal stewardship of our tax system, that benefit Canada's wealthiest, but leave most hard-working Canadians behind.

The Liberals have failed to fix tax loopholes or address tax havens that primarily benefit the wealthy. The last time I checked, the working people in my riding did not have bank accounts in Luxembourg, Canary Islands, or Bahamas. Liberals are, instead, embracing former Prime Minister Harper's corporate tax approach, and are putting the private interests of their wealthy few ahead of everyday Canadians who are struggling to get ahead.

I will briefly mention a few facts about tax loopholes.

A study by the Canadian Centre for Policy Alternatives showed that 59 tax measures that mostly benefit people with above-average income levels cost the government more than $100 billion in 2011 in foregone tax revenue. The wealth of the ultra-rich in Canada includes salaries, bonuses, share grants, and stock options, and those are aided by these loopholes. We now know these very people also aggressively lobbied the Liberal government to keep those loopholes in place, obviously so they could further grow and protect their wealth. One such loophole is the stock option deduction, which allows those that have stock options to have the revenue created by that stock option taxed at a highly preferential rate.

There was at one time a commission in this country that looked at tax fairness. I still remember the conclusion after it talked to many Canadians and examined our tax system as a whole. Its conclusion was this: a dollar is a dollar is a dollar. Its recommendation was that a dollar earned ought to be taxed the same way for everybody.

A worker who goes to work every day and puts in eight hours and gets paid by salary or by hourly wage at the end of the week gets taxed on that dollar. A CEO who works and makes a vastly increased income should have that income taxed in the same way that the worker does. That, however, is not the way the system works in this country. Instead, perversely, ironically, and most unjustly, people who make the most amount of money pay the least amount of tax on the money that they earned in these cases. That is what today's motion is calling on the government to fix.

In terms of tax havens, tax evasion, which is always illegal, involves the non-declaration or falsification of tax-related information in order to evade paying one's fair share of taxes. Tax avoidance, on the other hand, involves specific transactions to lower the amount of tax payable as a result of a technical reading or application of the law.

In this case, while it may be technically legal it goes against the spirit of Canada's tax laws for Canadians who are wealthy to use tax havens, which are jurisdictions with very low tax rates or other tax incentives that are used to basically wash money that is earned in Canada so it is paid at a lower tax rate and then those profits are repatriated to our country. These are the kinds of mechanisms that are available to a small percentage of Canadians in this country and it starves the government of revenue that ought to be paid here, which would then be used to address those fundamental obligations that I described at the beginning of my speech.

What could we do with that money? The Liberal government has a policy choice here. It can continue to favour ultra-wealthy people and allow them to make use of these tax havens and tax loopholes to keep the bulk of that revenue for themselves, or it can close these loopholes. It can address these tax havens to make sure that income pays its legitimate fair share in Canada to the government. That will result in billions of dollars coming to the federal government that can then be used for other things.

From New Democrats' point of view, we would urge the government to do that and here is what we would urge the government to do with those billions of dollars. We could pay for a national pharmacare program. We could pay for a national dental care program. We could make sure that every family in this country has access to affordable, secure, quality day care for every single child. We could lower tuition rates for students in this country so that we make sure that the next generation of young people can achieve an education that is not only important for their dreams and aspirations but actually is the foundation of our economic growth.

We could implement what New Democrats have been calling for for a decade and that is a national housing program. The federal government could once again re-enter the housing field in this country and start to build tens of thousands of co-operative units, fund social housing for seniors, for young families, for low income individuals, for the special needs community. The federal government has been absent from housing in this country since 1992.

I want to conclude by talking about integrity in the process. The Liberals told Canadians that if they were elected they would close the stock option loophole in 2015. Now they are saying they will not do it.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:55 p.m.

An hon. member

No, we didn't.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

4:55 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

I hear a member say they did not do it. Any Canadian can read the Liberal platform.

The Liberals said they would bring in electoral reform. When the government of Brian Mulroney took CMHC out of the social housing field, the Liberals promised Canadians in their little red book in 1993 that they would restore that and then they broke that promise. They broke it in 1993, 1997, 2001, 2004, and 2006.

Here we are a generation later, and the federal government has been out of the social housing game for basically 25 years. The government's response is that it will get back into it, but the bulk of the money will flow in 2022.

It is time to put integrity back into politics. I am calling on the government to keep its promise and close this loophole.

Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders

5 p.m.

Spadina—Fort York Ontario

Liberal

Adam Vaughan LiberalParliamentary Secretary to the Minister of Families

Madam Speaker, the member opposite said that one of the things the NDP would use reclaimed tax dollars for was for the federal government to once again spend money on housing. I appreciate that. I was on the front lines protesting back in the early nineties when a Liberal Party cut transfers to the provinces and transferred authority to spend on housing to the provinces. Some provinces, like B.C. and Quebec, picked up the responsibility and invested in housing. Other provinces, Ontario in particular, did not.

However, I was also there when the federal government re-entered the housing market in 1997 with additional billions of dollars. More importantly, I ran for Parliament and was part of the government that two years ago doubled the amount of money going into homelessness and added $4.8 billion for housing and now has put $40 billion into housing. Those dollars are starting to flow this very year. I appreciate that the NDP members do not think that it is happening, and I cannot convince them that it is, but I can point to projects in Vancouver, where we were cutting ribbons, quite literally, last week, where federal dollars are being spent..

I have also heard it referenced that the NDP does not like the fact that it is a 10-year program. They think it comes after the next election. There are two years left in the mandate. It is a 10-year program. Eight years come after the next election. I cannot change that. Is the NDP really serious that they do not want multi-year funding for housing, that they want only short-term funding for housing, and that multi-year funding investments do not work?

Second to that, are the NDP also insistent that—