Madam Speaker, I am pleased to rise to speak to Bill C-208 on the transfer of small businesses, family farms and fishing corporations between family members.
It is no secret to members in the House that the New Democrats definitely believe that the ultra-rich and wealthy ought to be paying their fair share, and we have done a very good job of making a case for that in this Parliament. We have proposed some concrete measures for how that might be done.
We have also been champions for small businesses in Canada. We know they are the backbone of the Canadian economy, with 80% of the jobs in our economy created by small business owners. We appreciate farmers and fishers and what they contribute to the Canadian economy and to the world, with all the food they export outside of Canada the world over.
These are important industries. The businesses within them, whether it is a farm or business, are developed by families and become part of the family. Those families are known in their communities. As the former member said, they have relations with suppliers and others within their communities. Being able to pass that family business on to their children is important. It is important for the family from an identity point of view and from the family's economic point of view. However, it can also be important to communities as well, that sense of stability and to ensure that the people who are employed at those businesses and people who do business with those businesses continue to enjoy those relationships and the economic benefits of them. This is why I am quite pleased to stand in support of the bill before us.
Earlier, the member for Winnipeg North talked about the NDP's concern for tax evasion, and he is absolutely right. We can talk about tax havens. New Democratic members have had private members' bills before the House, members who are serious about taking action on the biggest tax evaders. However, some of the small businesses in our communities, and I think of a small business I know, a sign company that a husband and wife developed over 30 or 40 years, want to pass the business to their children. They are not the people who are shunting money out to the Barbados, Cayman Islands and other such places.
The fact is that if business owners choose to sell to their children, under the current tax rules, they will pay considerably more than if they sell to a complete stranger, so there is a principle of fairness here. It just does not make sense that by selling a business that is the life's work of a family within the family that it would be penalized and have to pay more. That is what we are trying to address here.
I think the member for Winnipeg North misunderstands the bill, frankly, when he mentions the capital gains exemption. Of course, the very point of the bill is that if people are selling to immediate family members, they do not benefit from the capital gains exemption. That sale is not taxed as a capital gain; it is taxed as a dividend. The whole point of the legislation is to allow those family members to benefit from the very capital gain lifetime exemption to which the member for Winnipeg North was speaking.
I think some members do not necessarily expect that when the member for Winnipeg North gets up to speak, that he will have a very detailed knowledge of what he is speaking about, but that is no excuse for his government, or the ministry or other members of his party for that matter. They should hold themselves to a higher standard and really come to have an appreciation of what is in the legislation.
Why, when the New Democrats are so concerned about tax evasion, do we support the bill? There are a couple of things.
One of measures in the bill is that to get this different tax treatment under capital gains as opposed to dividends, the family member who receives or purchases the business has to continue to be the owner of that business for five years as opposed to the current two years. That is my understanding. It is meant to promote the idea that if the sale is happening, it is happening because someone within the family genuinely wants to take over the business, not just flip it for sale. Therefore, if within those five years, the business is sold again, then it is retroactively treated as a dividend sale and taxed appropriately, taxed as it is under the current legislation. At that point, it is not about successorship within a family, it has become something else.
One of the things that gives me comfort is that the bill is not the product of one political party that might have a particular agenda. A former NDP member of Parliament, Guy Caron, developed this private member's bill. He put a lot of work into it. As the NDP finance critic, he was someone who did excellent work on tax evasion and was very concerned about it. It was one of the things that motivated him to get into politics. He did that not just as an amateur within politics who was assigned the finance portfolio, but he did it as somebody who worked as an economist his whole life prior to getting into politics.
He understood very well not just the issue of tax evasion but also the particular dynamics of the bill. He sought to craft a bill that really would honour the idea of being able to pass a business down within generations of a family and to do that in the right way, so it did not just become a loophole or an excuse to evade taxes, something the New Democrats fiercely oppose.
Those are some of the elements, both concretely within the bill with respect to what the legislation would do but also where the legislation comes from, that give me confidence that this is not about introducing another means for tax evasion into the tax code. It really is about settling a fundamental unfairness, where people who spend their lives pouring their heart and soul into a business and make it a success, whose children have oftentimes been part of that success, and then want to ensure it gets passed on within the family and can do so without paying a large financial penalty. This also helps to ensure that these assets for our communities stay in local hands.
Sometimes the only people with the capital to buy a business are foreign investors, which sometimes happens, whether it is with small businesses or with farms. Either large corporations or foreign investors purchase these things. It makes more sense for the family, if the differential is $400,000 or $500,000 as we have heard in some cases, to come to the decision that it is in fact better off not doing what its heart wants to do, which is to keep that business or that farm within the family, but to make a more hard-nosed financial decision about the family's best interests. This would allow families to take off the table the factor that makes it far more profitable for them to sell to a stranger than to keep it within the family.
Those are some of the issues at play. As I said, this is something that New Democrats believe in, but it is also part of a package of advocacy that New Democrats have brought forward for a long time, and particularly within this Parliament. I have been really impressed with our small business critic, the member of Parliament for Courtenay—Alberni, a former small business owner himself, He was right out of the gate when the pandemic began, advocating for a 75% wage subsidy when the government said it would only be 10%. He knew how important it was to get beyond just covering payroll costs and providing wage replacement. He was the loudest voice out of the gate for the need for a commercial rent subsidy. He has been advocating for an extension of the Canada emergency business account loan program. We saw a small extension in the most recent budget. We are glad to see that, but there is more work to do.
The New Democrats believe in small business. We are advocating for small business. We see this as part of a package that is important for small business and farmers, so they can keep all the hard work of their families with in their families when the time comes to pass that business on.