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.