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.
Catherine McKenna LiberalMinister of Environment and Climate Change
moved for leave to introduce Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts.
(Motions deemed adopted, bill read the first time and printed)
Marjolaine Boutin-Sweet NDP Hochelaga, QC
Mr. Speaker, there have been discussions among the parties, and if you were to seek it, I think you would find that there is consent for the following motion:
That, at the conclusion of today's debate on the opposition motion in the name of the member for New Westminster—Burnaby, all questions necessary to dispose of the motion be deemed put and a recorded division deemed requested and deferred to Tuesday, February 13, 2018, at the expiry of the time provided for oral questions.
The Speaker Liberal Geoff Regan
Does the hon. member have the unanimous consent of the House to move this motion?
The Speaker Liberal Geoff Regan
Okay. The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
Mr. Speaker, I have another in a long line of petitions that support the Algoma passenger train. It is signed by people from Wawa, Algoma Mills, Val Caron, Carp River, Batchawana Bay, Toronto, Goulais River, Elmira, and Sault Ste. Marie.
The petitioners remind the government that the Algoma passenger train has not been operating for almost three years, which has resulted in substantial hardships for the area's residents, businesses, and communities. They feel that the economy in the Algoma district cannot afford the loss of train-related employment, its economic impact, and the safe, reliable access to the Algoma wilderness. They also indicate that the loss is felt most of all by the area's small businesses. That is why they are asking the Minister of Transport to put the Algoma passenger train back in service.
Kevin Lamoureux Liberal Winnipeg North, MB
Mr. Speaker, it is my pleasure to present a petition from residents of Winnipeg North dealing with the importance of the visitor super visa. For people from countries like India, the Philippines, and many others, it is of critical importance because it allows individuals to come to Canada for up to two years, go back home, and then return to Canada for another two years. The concern is that many of them are not being allowed to renew their visas for the additional two years after their initial visit.
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
Mr. Speaker, today I am presenting petition e-1209, which was signed electronically by 510 people and on paper by 100 people. The petitioners are calling on the federal government to establish regulations governing navigation on the Richelieu River because there are currently no regulations in place. That means kayakers and speed boaters are using the same space and have to cohabit, which is not always easy. There are safety and environmental concerns. Riverbank erosion and conflict among residents are some of the issues prompting locals to take action. We are hoping for a positive response from the Minister of Transport.
Elizabeth May Green Saanich—Gulf Islands, BC
Mr. Speaker, it is an honour to rise to present a petition from constituents in Saanich—Gulf Islands. They are concerned about the trend of the gathering power of multinational seed companies to control, with patent protection, the use of seeds around the world. They ask that the Government of Canada support international aid policies that support family farmers, particularly women, and that Canadian aid policies and programs focus on consulting with small family farmers and protect their traditional right to use, preserve, and freely exchange seeds.
François Choquette NDP Drummond, QC
Mr. Speaker, it is an honour for me to present dozens of petitions once again on behalf of Canadians who are calling for mandatory labelling of GM foods. They point out that in early August 2017 nearly five tonnes of genetically modified salmon was sold in Canada, that that salmon made its way onto our dinner plates without us knowing it, and that Canadians are concerned about the lack of information about where that genetically modified salmon was sold. That is why the petitioners are calling on the Government of Canada to ban the sale and breeding of genetically modified salmon in Canada until labelling standards to warn consumers are put in place.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I ask that all questions be allowed to stand.
Peter Julian NDP New Westminster—Burnaby, BC
moved:
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.
Mr. Speaker, as you know, we on this side of the House will never back down and never stop working hard to create a fair tax system. We think this is far too important to the Canadians who may be listening to us today. We need to put an end to the existing system.
We are giving the Liberals a second chance. On March 8, 2017, we presented a motion in the House of Commons, presented by my colleague from Rosemont—La Petite-Patrie and seconded by the member for Sherbrooke, to work to crack down on the incredibly abusive use of the stock option deduction loophole and to take aggressive action against tax havens. The NDP motion passed overwhelmingly.
Since then, we have actually seen the government backtrack. We are giving the Liberals a second chance today, and over the next few days, if they vote for our motion next Tuesday. What we are saying, and what over 90% of Canadians are calling for, is that in budget 2018, which is coming down in the next few weeks, the government crack down on the use of the stock option deduction loophole and take aggressive action against tax havens. That is what we believe needs to happen.
Why is that? We believe very strongly that we are seeing unprecedented inequality in this country. We see it every day. Certainly the statistics are very clear about this as well. We have learned, just in the last few months, that two wealthy Canadians, David Thomson and Galen Weston Sr., now have the same level of wealth as 30% of all Canadians. Thirty per cent of all Canadians put together have the same wealth as two Canadian men.
A great deal of why we are seeing that massive increase in inequality is due to the fact that we have an income tax system that is stacked against regular Canadians. Just last month, we saw figures showing that the average income of Canada's wealthiest CEOs is 200 times that of the average Canadian worker. There is no doubt that we are seeing a massive increase in inequality under this government. We are seeing more and more wealth concentrated in fewer and fewer hands.
Regular Canadians are seeing record family debt loads. The figures from Statistics Canada do not lie. Consumer credit, excluding mortgages, has now reached the level of $0.6 trillion. That is $600 billion that Canadian families owe. The average Canadian family now has a record debt load, even worse than under the former Harper government, and we are seeing this debt load increase. We are now number one among the industrialized countries. That is a crushing level of family debt.
What measures has the government put in place to address the income tax inequality, the stock option deduction loophole, and tax havens? Since we adopted the motion on March 8, we have not seen much action at all.
When we talk about the stock option deduction loophole, we are not talking about something that is spread out among Canadians generally. I am going to refer to the Toronto Star of January 6, 2018. The editorial, talking about the issue of tax fairness, says that the widening wage gap we are seeing in this country, with CEOs earning 200 times the income of the average Canadian worker, requires that we move forward promptly with tax fairness. It has identified the stock option loophole as well.
I will quote from the article:
Currently, compensation received in the form of stock options is taxed at a much lower rate than regular income. The tax break was conceived, in part, to help capital-starved startups attract top talent, but has been co-opted by executives at established companies as a way to reduce their tax load. Until recently, Ottawa lost about $1 billion every year through the loophole, more than 90 per cent of which went to the top 1 per cent of earners.
They cite that in 2013, for example, 75 of Canada's 100 top-paid CEOs received part of their income as stock options. This allowed them to accrue combined savings of $495 million, or $6.6 million each. That is half a billion dollars of foregone revenue to subsidize 75 very rich people, half a billion dollars of government funding that provides support for 75 of Canada's richest people. We can do better. We can take those funds and make sure that those very wealthy people pay their fair share of income tax and ensure that we are taking care of regular Canadians. That is what we propose.
When we talk about the stock option being concentrated, half a billion dollars going to subsidize 75 very rich people, we can see the harm in taking that out of the income tax system to give to the very wealthy. It has a profound impact on Canadians.
However, that is not all, and CCPA has outlined this in very effective terms. When we see what has happened with the corporate income taxes, we also see that corporate income taxes are decreasing as a percentage of what is paid compared with regular Canadians but also in terms of the overall effective corporate income tax rate. The CCPA outlined in its study last year that the effective corporate income tax rate in 2017 under the current government is now much lower, 9.8% after preferential tax considerations are included. That is 9.8% in terms of what the effective corporate income tax rate is for the corporate sector.
I can assure members that people who are plumbers, construction workers, child care workers, or nurses are not paying a 9.8% effective income tax rate. Canadians like my family who pay their fair share of taxes, work hard and they want to contribute their taxes because they believe that contributes to the common good. However, that common good is being undermined by the increasing inequality that we are seeing and an income tax system that is profoundly unjust. It is not an income tax system that is fair in any way, shape, or form. It is an income tax system that increasingly takes away from those who really need the supports of that common good, those common investments that Canadians make, and instead provides those investments, as we have seen, to the tune of half a billion dollars for 75 of Canada's wealthiest CEOs.
When we passed this motion last year, we expected the government to take action. It has not. However, the Liberals now have the opportunity with our motion today to take action in the budget in 2018 and crack down on the abusive use of the stock option deduction.
We also talked in our motion last year about tax havens, which are an increasing problem in terms of money going offshore, money that should be paid as income tax in Canada. Part of the reason we are seeing such a low effective corporate income tax rate is due to the use of tax havens, money being transferred offshore to the tune of hundreds of billions of dollars.
The tax havens are a growing problem, and I will explain why in just a moment, but what we are seeing through the use of the tax havens is, at a minimum, $10 billion a year that could be used for so many other things, including affordable housing, providing medication to Canadians, or ensuring that child care is supported when we are seeing extraordinarily high costs for child care for the average Canadian family. All of those things would be taken care of if we actually ensured that the income tax system was fair. However, $10 billion a year at a minimum, and estimates run far higher, is now escaping from the Canada Revenue Agency, which means that the common good, those investments that we make together, is simply being lost.
In addition, we are seeing the use of a new tax haven format, and that is the digital tax haven. Our parliamentary leader and revenue critic have been raising this issue, as have I, repeatedly in the House of Commons. In the digital field, we are now seeing big digital players like Facebook, Netflix, and Google making billions of dollars in Canada and not paying a cent of tax. It is a new format for the Liberals, a digital tax haven, which allows for tax-free profits and tax-free money. They are not even paying the GST, which is a double problem.
Not only do we have these new digital tax havens created by the Liberals, which they allow to continue, but it also means they are undermining legitimate Canadian businesses. In my community, local newspapers are struggling because they have to pay the assortment of taxes, which are part of the common good to contribute to the country, but their competitors do not. The digital tax havens have a profound negative impact on local community resources and cultural industries, yet the Liberals are doing nothing.
When we talk about aggressive action on tax havens, we are also talking about aggressive action on these digital tax havens, where tens of billions of dollars in profit are made in Canada without a cent of taxation being paid. This is something that absolutely needs to change. We can do better.
I mentioned tax havens a few minutes ago. I already talked about these issues in relation to digital tax havens. Since the adoption of this motion last year, we see that the Liberals have taken very aggressive action, but not against tax havens. In fact, they are promoting these tax havens and expanding them by signing one agreement after another. That is what they are doing even though 90% of Canadians are against tax havens. The Liberals are expanding them.
Last year, they ratified an agreement with the Cook Islands, which is a tax haven in the South Pacific. According to Marwah Rizqy, a professor at the Université de Sherbrooke, “it becomes another option for companies to strategically incorporate and repatriate profits tax free”. André Lareau, professor of international taxation at Laval University, said about the agreement that the Liberals just signed, “It is shocking to see Canada take an approach that diminishes its taxation power”. These quotes were reported by an excellent journalist, Boris Proulx, at the Journal de Montréal.
The Liberals have expanded tax havens by concluding another agreement with another tax haven, which will make us lose even more of our common assets that are part of our common tax base. This will give businesses even more options.
There is more. Last week, we learned that the Liberals signed an agreement with Antigua and Barbuda, another tax haven. The agreement clearly states that, once the agreement takes effect, Canada's taxation laws will apply, which means that the active business income from a Canadian company's foreign subsidiary in Antigua and Barbuda can be paid to the Canadian parent company in the form of dividends that are exempt from Canadian taxes.
In the agreement, the bureaucrat, who apparently does not speak French, kept the mention of the Cook Islands, stating that this agreement applies to companies in the Cook Islands. It is indeed the same agreement that was signed with the Cook Islands, except the names were changed, although this was not done properly. For example, the names were changed to add Antigua and Barbuda.
Last week, the government also signed an agreement with Grenada, another well-known tax haven. It was the same type of agreement. Once again, all they did was copy and paste the agreement. The Cook Islands appear in this agreement as well.
What are the Liberals doing? They are broadening the scope of all of these tax havens.
We might ask what the impact of this is. Let me speak to the impact of a couple of cases I know of.
John, who lives in my riding, has paid his taxes all his life. He managed to accumulate a small pension. However, with the increasing cost of rent, and because there has been no investment by the government into affordable housing, he found it more and more difficult to pay his rent. Can members imagine the impact of realizing that we are not able to keep the apartment that we have loved for so long, after working all of our lives, after paying our taxes, and after establishing a modest pension?
He had to leave. He could not pay for his apartment, so he shared a one-bedroom apartment with a friend. He slept on the couch. That worked for a time. However, these seniors who were trying to share that cramped living space just to keep a roof over their heads were unable to. He was then found by an outreach worker sleeping on the floor of a parking lot in downtown New Westminster because of the lack of affordable housing from the government. When the government gives away tens of billions of dollars, allows tax havens to prosper, and allows 75 CEOs to get $6 million each from a stock option deduction, that has an impact on people like John.
Let me talk about Jim. Jim is just outside the Parliament. Any MP here could go and talk to him. He is on the bridge between the Château Laurier and East Block. Every day he has to beg because there is no pharmacare and he has to pay $600 a month for the medication that keeps him alive. I said to him this morning, “Jim, I'm going to talk about you in the House of Commons.” He said, “Yes, go and fight on my behalf. We need fair taxes and a government that actually cares about us.” Jim is hurt when we send tens of billions of dollars overseas and we cannot pay for a pharmacare program in this country.
The government has gone after persons with disabilities. It is getting rid of the tax credit for persons with disabilities and is asking them to reimburse certain amounts paid by the registered disability savings plan.
I want to talk about one more person, but I will not use her real name. I will call her Edith. Edith has cancer and has a child with a disability.
Instead of going after tax havens, the current government is asking her family to repay all this money, because it changed the eligibility criteria for the tax credit for persons with disabilities. The Liberals are not going after tax havens; they are going after persons with disabilities.
We can do better. We can create a system in which people like Edith, Jim, and John, are treated fairly, and we can create a fair tax system.
The final story I am going to talk about is Jagmeet Singh. He is the new leader of the NDP. He was not born with a silver spoon in his mouth. He had to work when his father fell ill and be the breadwinner for his family. He has grown up understanding that one has to work hard and contribute to one's community. That is what he has done all his life.
He has a different vision. He believes that we need to establish a fair income tax system. Like the 90% of Canadians in a most recent poll done by Canadians for Tax Fairness and Leadnow, he believes that we need to shut down these tax havens, and the digital tax havens as well. He is the kind of leader that we need in this country. He is the kind of person who understands that the Jims, Johns, and Idettes of this country should not be pushed aside but rather supported by the government.
That is really what this debate is about today. It is not about the mechanics of money around stock option deductions, tax havens, or digital tax havens. It is about how Canadians are treated, whether they are treated fairly or not. They have not been treated fairly by the government. We can do so much better. The current government could do so much better. In the budget that will be coming in a few weeks' time, it should crack down on the stock option deduction loophole, and take aggressive action against tax havens and digital tax havens. I hope it does that.
Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Madam Speaker, the member said that this debate was about being fair to Canadians. The Prime Minister has been all about that. When we talk about being fair to Canadians, we can talk about the Canada child benefit program, lifting thousands of children out of poverty. We can talk about the guaranteed income supplement, lifting thousands of seniors out of poverty. We can talk about the close to $1 billion being spent to go after and retrieve literally hundreds of millions, going into the billions, of dollars from individuals who are not paying their fair share of taxes. The NDP has voted against virtually all those measures.
When the member across the way talks about that sense of fairness, that is in essence what the government strives to accomplish: to support Canada's middle class and those wanting to be a part of it, and to provide the types of programs that are necessary to those individuals who do not have the economic and financial means.
With respect to many comments raised by the member, all he needs to do is look at what the government has been providing. More and more, we see the contrast between the government and the Conservatives.
Would the member reflect on of some of the voting behaviours? The NDP voted against the tax on Canada's wealthiest 1%. It voted against those social program increases that took seniors and children out of poverty. How would he respond to that vote?
Peter Julian NDP New Westminster—Burnaby, BC
Madam Speaker, the government loves engaging in window dressing, but I would ask the member this. What is fair about providing $10 million for affordable housing right across the country, when there are tens of thousands of Canadians sleeping out in the parks and on the main streets of our country? Right now, people like John, cannot even maintain an affordable apartment because the government has not taken any action on affordable housing.
What is fair about having boil water advisories, no safe drinking water, for hundreds of communities of first nations? How is that ever considered fair when the government does not take action on that? How can he consider it fair when people like Jim, and thousands like him, have to beg in the streets to get enough money to pay $600 a month for medication because the government refuses to bring in pharmacare?
The government refuses to take any action against tax havens. The government refuses to take action against the stock option deduction loophole, even when it votes with the NDP in the House of Commons. What is fair about all those government actions that have been to the detriment of Canadians right across the country?
Elizabeth May Green Saanich—Gulf Islands, BC
Madam Speaker, I thank my hon. colleague for mentioning my friend Jim, who sits in front of the Chateau Laurier, along the bridge there. He is also a veteran. He is in and out of hospital a great deal. He cannot afford his drugs, if not for people stopping and giving him whatever money they have. This is a shameful situation, right on the doorstep of Parliament Hill.
I accept, and I will vote for the NDP motion today, because closing those stock option loopholes was a commitment made. It is part of the Green Party platform as well. We need to stop the use of overseas tax havens, such as were revealed in the paradise papers, and stock option loopholes, which exist legally in our country.
I appreciate my hon. colleague from New Westminster raising the issue of pharmacare. At this point, the current government has not pledged pharmacare. The mandate letter to the minister of health did say that the minister of health should try to find ways for bulk buying of drugs to reduce the cost. I would like my hon. colleague to reflect on the ways we could save Canadians billions of dollars by moving to national pharmacare.
Peter Julian NDP New Westminster—Burnaby, BC
Madam Speaker, I, my hon. colleague and a number of other members of Parliament help to contribute to Jim.
It is appalling to me, and I know it is appalling to her, that we have a person who has worked all his life, who is a veteran, and who is there every day having to beg to get the money to get through the month, to get the medication he needs, yet Liberals walking past him are not willing to come into the House and tell the government to bring in pharmacare now. What is wrong with that picture? Those members of Parliament walk past Jim every day. Have they spoken to him? Do they understand the impact of what Jim and so many other Canadians and Canadian families like him are going through? I just cannot contemplate an MP who can walk past him and not want to take action.
The reality is that Canadians would save $4 billion a year if the government brought in pharmacare, $4 billion that are currently paid in private plans and Canadians have to pay out of pocket, Canadians like Jim. There is no reason not to bring in pharmacare, but the Liberals seem to be absolutely resistant to do something that is in the public interest. However, they are willing to give tens of billions of dollars away, sign tax haven treaty after tax haven treaty, and allow the digital tax havens to exist. Shame on them.
François Choquette NDP Drummond, QC
Madam Speaker, I thank my honourable colleague for his excellent speech. Not only is he doing an excellent job of combatting tax havens and fighting for tax fairness, but he has also been an advocate for people with disabilities throughout his career. He has come to Drummond several times to explain the disability tax credit.
Today, he has again shown me that, unfortunately, the Liberal government goes after these people instead of addressing the real problems, namely tax havens and the people who actually abuse the system. Even in my riding of Drummond, people are talking about how important this credit is. It is shocking that the government is asking them to pay back this money and is attacking these citizens in need.
I recently held a short meeting in my riding to talk about tax havens, and about fifty people showed up. They asked that the Liberal government take concrete action. Tax havens cost Canadians a minimum of $8 billion in taxes every year. We could use this money to renovate the Centre Marcel Dionne in Drummond or invest in a sports complex such as a soccer centre. Just yesterday, representatives of a dozen community organizations came to my office to talk about their chronic underfunding. We could make investments that would help these organizations.
Why does my hon. colleague think the Liberal government is refusing to crack down on tax havens and, even worse, is signing agreements this year again?
Peter Julian NDP New Westminster—Burnaby, BC
Madam Speaker, I would like to thank my colleague from Drummond. I have visited his riding a number of times and I can say that very few members do as much work in their ridings as he does. He works non-stop to help his constituents, and that is why they appreciate him so much. He has also worked with people with disabilities, so he understands.
When we hold town halls in Drummond, sometimes 200 people show up. Some of them are people with disabilities and their families, who need the few programs that are out there to help them. In my riding, I have been meeting with more and more people with disabilities and their families since the Minister of National Revenue decided to go after people with disabilities instead of tax havens. It is shameful that this minister and this government are asking people to pay back the $20,000 they were able to save over the years because the government changed the criteria for the disability tax credit.
Every time we ask the minister about this, she claims that no changes have been made, but we know that that is not true. We know from talking to our constituents that major changes have been made and they are harmful to these people. The government is requiring people with disabilities, the most vulnerable people, to pay money back while large corporations, that is, the 75 millionaires to whom the Liberals are eager to give half a billion dollars in tax breaks, are not required to pay their fair share of taxes. That is shameful, and something has to be done about it. In 2019, we will have the opportunity to change things.
Opposition Motion—Tax Fairness in Budget 2018Business of SupplyGovernment Orders
Louis-Hébert Québec
Liberal
Joël Lightbound LiberalParliamentary Secretary to the Minister of Finance
Madam Speaker, I want to congratulate my colleague, the member for New Westminster—Burnaby, on his new role as finance critic. I also want to thank him, because today is my birthday and, with his opposition day motion, he has allowed to rise in the House to talk about tax fairness, which is very important.
Today I want to talk about tax fairness. That is what the motion is about, and I think it is important. When our government came to power over two years ago, we committed to investing in growth and ensuring fairness for all taxpayers.
Before I get into what we have done to improve tax fairness in Canada, I would like to take a few moments to remind hon. members about the progress we have made so far.
From day one, our government implemented a plan to ensure economic growth, strengthen the middle class, and support social mobility so everyone in Canada can keep moving up in society. We did so by investing in our communities and introducing distinctly progressive measures.
I am proud to say that the investments we made are now paying off. We are seeing definite signs that our plan to boost Canadians' confidence in the future is working. We want them to feel and be better prepared for the future.
With growth averaging 3.2% since mid-2016, Canada's economy is soaring. Our economic growth is stronger than that of any other G7 country. Over the past two years, nearly 700,000 jobs have been created and the youth unemployment rate is near its lowest level ever. The unemployment rate is now at 5.7%, its lowest level in 40 years.
With respect to debt, it is important to remember that the federal debt-to-GDP ratio is shrinking steadily. Canada's balance sheet is the best in the G7. Our government is also working hard to ensure that Canadians have access to opportunities to succeed and that the growth we have seen in recent years benefits as many people as possible.
I would remind hon. members that one of the first things that our government did was lower taxes for nearly nine million Canadians and increase them for the wealthiest 1%. We then put in place a more streamlined, more generous, and better targeted benefit to support families who need it the most in Canada. We did that by replacing the previous child benefit system with the Canada child benefit in our first budget in 2016. In the first year after the child benefit was rolled out, more than 3.3 million families received more than $23 billion. This new benefit helped improve the lives of nine out of 10 families. In the first year of the program, families received on average $2,300 more in benefits for children. It is important to remember that these benefits are non-taxable.
I am proud to say that the Canada child benefit helped lift 300,000 children out of poverty. By the end of 2017, child poverty had been reduced by 40% from its 2013 rate. It should be noted that the Canada child benefit is especially helpful for single-parent families, which are usually headed by a single mother who tends to earn a lower income. Those single mothers are getting the most out of this benefit, which is better targeted and more progressive. I grew up in a single-parent family. According to my calculations, this benefit would have given my mother an extra $1,000 or so a month, tax-free, to raise me and brother. That would have made all the difference to us at the time, just as it is doing today in the lives of thousands of families across the country.
Last fall, when Canada's economic growth was exceeding expectations, thanks in part to the positive impact of the Canada child benefit, we announced that we would continue with the Canada child benefit and build on it in budget 2016 in order to enhance consumers' trust and increase consumer spending. We announced that we would do more and that we would start indexing the benefit to inflation as of July 2018, two years sooner than planned. That means that our government is offering better support more quickly to ensure that the Canada child benefit continues to play a key role in helping families and stimulating our economy. Moving up the date for indexing means that Canadian families will receive $5.6 billion more in benefits from 2018-19 to 2022-23.
This past fall, the government also announced its intention to further enhance the working income tax benefit, or WITB. This is a refundable tax credit that provides important income support and helps offset taxes, supplementing the earnings of low-income earners. It lets low-income workers keep more of their paycheque, encouraging people into the workforce, which has a long-term impact on income security and quality of life. In 2016, the WITB provided more than $1.1 billion in benefits to over 1.4 million Canadians.
To provide even more support and opportunity for lower-income workers, our government proposes to further enhance the WITB by an additional $500 million annually, starting in 2019. This new enhancement will provide even greater support to current recipients by raising maximum benefit levels and will expand the income range of the WITB so more workers can qualify.
Together with the increase of about $250 million annually already set to come into effect in 2019 as part of the enhancement of the CPP, these two actions will boost the total amount the government spends on WITB by about 65% in 2019.
Our government also plans to provide additional support for Canada's SMEs by lowering their federal tax rate.
The small business tax rate will drop to 10% as of January 1, 2018, and to 9% as of January 1, 2019. For the average small business, that means a savings of $1,600 that entrepreneurs and innovators can reinvest in their company and in job creation.
Under this measure, the combined federal, provincial, and territorial tax rate for small businesses will drop from 14.4% to 12.9%, the lowest by far in the G7 and the fourth lowest among OECD countries.
The purpose of these low tax rates is to encourage capital investment in companies, including investments to acquire equipment or more efficient technology, or to hire additional staff, which will make businesses more productive and competitive and enable them to contribute to Canada's economic growth.
This tax cut for small businesses was accompanied by measures to ensure that the benefits of the lower tax rate are shared equitably and that the changes support business owners who invest in their companies, create jobs, and help grow the economy.
For example, in December we issued detailed proposals to simplify and improve the treatment of income sprinkling, which are proposed to be in effect for the 2018 tax year and beyond. The December proposals took into account feedback received from Canadians in the course of the government's consultations on tax planning using private corporations.
As hon. members are aware, income sprinkling involves diverting income from a high-income individual to family members who have lower personal tax rates or who may not be taxable at all. This is not a problem if the family members are making a meaningful contribution to the business. However, in some circumstances, someone earning $300,000, with a spouse and two adult children who do not work in the business, could use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year, about $48,000. If they are not contributing to the business, this is fundamentally unfair to other Canadians, and the government's proposal to address this practice draws a clear distinction between the two.
To assist businesses in complying with the new measures, the CRA has released detailed guidance on its website that explains how it intends to administer them and what they will mean for taxpayers. I would like to assure the House that the CRA will administer any rules that are ultimately enacted in a way that is fair and that recognizes the reality of operating a small business.
It is also important to note that the vast majority of private corporations will not be impacted by the income-sprinkling measures. Based on the revised proposals, fewer than 45,000 family-owned private businesses benefit annually from income sprinkling. Just to put this in perspective, this represents only about 3% of Canadian-controlled private corporations.
This initiative is consistent with our goal and our desire to achieve greater tax fairness in Canada. We know that we must do more to ensure that as many people as possible benefit from a growing and more innovating economy, which creates more opportunities for success for everyone.
A fair tax system allows the government to keep corporate tax rates low and to help support families through such programs as the Canada child benefit, which I spoke about, or the working income tax benefit.
Addressing the unfair aspects of the tax system is central to our plan for sustainable, long-term growth and also fulfils the basic promise made to middle-class Canadians. Tax fairness is a complex goal that requires sustained efforts on many fronts.
Internationally, Canada is working closely with the other members of the G20 and the OECD to make recommendations in order to address what is termed “base erosion and profit shifting”. This expression refers to international tax planning strategies used by multinational companies to minimize tax payments. For example, some companies will carry out transactions for the sole purpose of transferring their taxable profit outside the jurisdiction where the underlying economic activity took place to another jurisdiction with a lower tax rate in order to avoid paying their fair share of taxes.
Our government is also redoubling its efforts to combat international tax evasion by improving the exchange of information between tax administrations. Under the common reporting standard developed by the OECD, the automatic exchange of financial account information held by non-residents is an important tool that promotes compliance with the rules, combats international tax evasion, and ensures that taxpayers report their income from all sources. To date, more than 100 administrations have committed to implementing the new standard.
These measures represent real progress, but our government will continue to identify and combat tax evasion and aggressive tax avoidance to ensure that the system is working as effectively and equitably as possible.
As we continue to implement this plan, making strategic investments and promoting greater social justice, we will continue making our tax system one that is as fair and as equitable as possible for all Canadians.
I think it is always useful and important to remember the potential cost of failing to take action to make our system fairer. An unfair tax system undermines public confidence. We need to have rules that are fair for everyone. The government must take steps to ensure that tax rules apply in a way that is equitable and in line with their original intent. For that reason, as our government lowers the small business tax rate to 9% by 2019, we must also ensure that this tax cut helps small businesses invest in their operations, create more jobs, and grow our economy. It is not meant to give the wealthy another tax advantage that is out of reach for most Canadians. As the economy continues to grow, everyone must pay their fair share and everyone should benefit from this growth.
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Madam Speaker, I wish my friend salutations on this day as well.
It is a remarkable thing the NDP have had to do, because what we are doing today is reminding the Liberals about what they voted for already and what they already said they would fix. The Liberals have a bit of a political attention deficit. They make a promise in a campaign. They make it in a second campaign. They make the promise again in the House of Commons when voting for an NDP opposition day motion to talk about closing a very specific loophole. It is a loophole that costs Revenue Canada $750 million per year, on average. It is the stock option loophole, a technique that was designed in our tax system primarily for entrepreneurs and start-ups.
However, for the top CEOs in Canada, a quarter of their pay is in stock options. We know that 92% of all those new stock options used to avoid paying taxes goes to the top 10% of Canadian income earners. That is what they are now used for. They are not for the scrappy start-ups, although they use them in a different way, and the NDP carved out a special consideration for them.
The Liberals promised to close this loophole. We saw a budget come and go, and the loophole was not closed. The problem is that when they take away the $750 million in revenue, there are a whole bunch of things the government can no longer do.
I would like to pause for a moment on the government's so-called tax cut for the middle class. Do my Liberal colleagues know where that tops out? It is for those earning about $190,000. That is where the middle-class tax cut does the best.
My simple question is this. The Liberals promised to close this loophole. They have not done it. The budget is coming. Can we at least expect that promise to be fulfilled after they commit to it a second time?
Joël Lightbound Liberal Louis-Hébert, QC
Madam Speaker, since we came to power, our government has been focused on improving tax fairness.
To that end, we took some of the steps the member spoke about. For example, there are the tax cuts for the middle class, along with a 1% tax increase on the wealthy. Furthermore, we overhauled the Canada child benefit to make it more progressive. Members will recall that under the former system, cheques were sent to families regardless of income, regardless of whether the families were millionaires. The Canada child benefit was not very progressive and it was also taxable in many cases. These are two examples in which our government tried to make our tax system fairer. It was a tremendous success considering that the Canada child benefit lifted 300,000 children out of poverty, as I mentioned.
Our government did not stop there, however. There is also the increase to TFSA contributions that the Conservatives brought in. The contribution limit essentially doubled, going from $5,500 to $11,000 per year. The American inventor of the concept had said that this would ultimately put the government in a fiscal straitjacket, and that this would prevent the government from carrying out its primary responsibility of providing services to Canadians. Members will recall that the Conservative finance minister at the time, Joe Oliver, said that it was a problem for Stephen Harper’s granddaughter to solve. This is one of the measures we reversed, just now giving the government the means to fulfill its ambitions.
There is also income splitting for families. The parliamentary budget officer said at the time that this would benefit the top 10%. We reversed that.
We went ahead with our proposal for greater tax fairness involving income sprinkling and passive investments. Right from the beginning, the NDP has been a bit on the fence about that. It has not come out strongly in favour of our proposal.
It is quite ironic to hear my colleague say that we are not doing enough about tax fairness when they ran on all sorts of wonderful progressive ideas based on a Stephen Harper austerity budget. It is quite ironic.