Debates of April 21st, 2021

Financial Statement of Minister of Finance

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I am sorry to interrupt the hon. member. He had time for a brief answer, although I know there is a lot to say about the budget.

The hon. member for Vancouver East.

[Jenny Kwan, NDP, Vancouver East, BC]

Madam Speaker, I will be splitting my time with the member for New Westminster—Burnaby.

I am very pleased to speak to budget 2021, a long-awaited budget, but I want to first congratulate the child care advocates for their years of dedication. I remember attending rally after rally, and participating in campaign after campaign organized by the Coalition of Child Care Advocates of BC, the YWCA and many others. I congratulate Sharon Gregson, the champion of the $10-a-day child care here in Vancouver East and across British Columbia, for her tireless work.

New Democrats have campaigned on this election after election and, frankly, generations of children have gone without this kind of support. I am glad to see that the Liberals, after promising it for 27 years, are now finally committing to it in budget 2021. The NDP stands ready to realize the dream of universal child care for Canadians, and we will do anything to help motivate and move it forward. I would like to know from the government what its plans are to really realize this universal child care support for Canadians. With respect to action that needs to be taken, what sort of legislation is required? Let us get it done. Let us get this done once and for all so that we are not back debating this again, and so that we are not waiting another 27 years with empty promises from the Liberals on this very important issue.

I would be remiss if I did not touch on the issue of pharmacare. For more than two decades, the Liberals have repeatedly promised pharmacare to Canadians and have yet to act. In 1997, it was a campaign promise; in 2019, it was a pledge to implement the Hoskins report; in 2020, it was in the throne speech and; most recently, as we all know, it was in the Liberals' own convention from their own members demanding that pharmacare be prioritized. Yet, here we are, and it is not in the budget. When offered the opportunity to vote on this, the Liberals voted it down. They voted down the NDP's Canada pharmacare act. I can tell members that the government has to really commit to this. Budget 2021 did not deliver universal pharmacare, and that is a shame. The budget also does not include funding or measures to implement other important measures.

On universal pharmacare, government members often talk about it as a jurisdictional issue and, frankly, the jurisdictional argument is lame. Just like universal child care, we can manage those issues. Just like universal child care, the NDP will not stop fighting for a comprehensive, universal, public, single-payer pharmacare system for all Canadians until it gets done.

Turning to the issue of housing, I am pleased to see that there is an increase for rapid housing. We have said from the beginning that the initial amount that was announced from the government was not sufficient. However, we do note that it still falls short on what was called for by the FCM, which shared its view that the funding that was announced “doesn't yet meet our shared goal of ending chronic homelessness”.

We will continue to push for a significant expansion of the RHI, a $7-billion investment for no fewer than 24,000 units over the next two to three years. Likewise, we support the increase in the reaching home initiative and the funding dedicated to provide shelter for women and girls fleeing violence. However, the federal government must also step up to partner with all levels of government and non-profit housing providers to ensure that operating costs as well as supportive wraparound services are provided to those who need them.

I would note that I am glad that the the budget announced that section 95 of the co-op and non-profit subsidies have been put in place. However, when I asked the minister and CMHC in November about the need to renew supports for section 95 co-operatives and non-profits that were arbitrarily excluded from receiving support under phase 2 of the federal community housing initiative, the response was that the funding was already given and that existing programs were enough.

I am happy to see the Liberals admit that they were wrong and reverse course to acknowledge the issue following the NDP's and CHF's call for action for this critical funding to be maintained and the subsidies to be maintained to the existing stock of section 95 co-ops and non-profits that the Liberals had left out of the national housing strategy.

One devastating disappointment in the budget is the absence of a for-indigenous, by-indigenous urban, rural and northern housing strategy. Robert Byers, chair of the CHRA Indigenous Caucus, said, “For years, government officials have told us that an urban, rural and northern Indigenous housing strategy was a priority. The absence of such a strategy in today’s Budget will mean that urban and rural Indigenous peoples will continue to face inequality and lack of access to safe and affordable housing, and that is a disgrace.”

Indigenous peoples are 11 times more likely to use a homeless shelter and there remains no for-indigenous, by-indigenous strategy to close the housing gap between indigenous peoples and non-indigenous people, despite the minister's mandate letter. It is a national disgrace that budget 2021 still fails to deliver on this commitment. I join with the indigenous leadership and all housing advocates to call on the federal government to address this missed opportunity by immediately committing, in the days ahead, to announce a for-indigenous, by-indigenous urban, rural and northern indigenous housing strategy.

Tim Richter, president and CEO of the Canadian Alliance to End Homelessness and who, by the way, is the co-chair of the government's National Housing Council, about the budget, stated, “An estimated 235,000 Canadians experience homelessness every year and 1.7 million households are in core housing need. The National Housing Strategy aims to create between 150,000 to 160,000 units of new affordable housing over 10 years – much which will be unaffordable to those experiencing homelessness or core housing need.”

It is clear to anyone who is honest about the grim reality of the housing crisis that the Liberals' national housing strategy will not achieve what the Liberals claim they are committed to. This week, over 40 housing organizations and advocates from across Canada jointly signed a letter to the housing minister listing 11 concrete actions that the government must take to address the housing affordability crisis. The NDP fully supports these calls, which all along predated the government's budget considerations, such as the need to limit the ability of the REITs and large cap funds in the fuelling of the rising costs of housing and rent. This includes the creation of a housing acquisition fund that provides non-profits quick access to capital for acquiring properties that are at risk of going to these funds.

Former UN special rapporteur on housing Leilani Farha wrote to the federal government in the early months of the pandemic highlighting the importance of supporting the non-profit sector with such a fund and subsequently called for in “Recovery for All” and by FCM as a separate piece from the rapid housing initiative.

Lastly, it is good to see the government finally taking steps in limiting foreign investment. However, a 1% tax on vacant homes owned by people who are both non-residents and non-citizens is largely symbolic when we see that the average cost of housing has increased by 31% in 2020 alone, a rate that is simply unsustainable. In B.C., vacancy and foreign ownership stacked up independently to 2.5% combined with a 20% foreign buyers tax in Metro Vancouver. This demonstrates that the federal government should be able to at least match B.C.'s initiative for affected housing markets to curb foreign market speculators, but is choosing not to, which is in line with the baby steps, by the way, that the government claims to be taking.

The NDP will continue to push the government in strengthening these measures, as well as for more stringent housing ownership reporting requirements to ensure more transparency on ownership and to make it more difficult for money launderers and the evasion of capital gains taxes on secondary residences. Oftentimes people ask how we will pay for the measures that the NDP—

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Unfortunately, the hon. member's time for debate has ended. There also is no time for questions and comments.

It being 5:15 p.m., it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the amendment to the amendment before the House.

The question is on the amendment to the amendment. If a member of a recognized party present in the House wishes to request a recorded division or that the amendment to the amendment be adopted on division, I would invite them to rise and indicate it to the Chair.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Madam Speaker, I would request a recorded division on the amendment to the amendment.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

Call in the members.

(The House divided on the amendment to the amendment, which was negatived on the following division:)

Vote #94

The Budget

[The Speaker, Liberal, Anthony Rota]

I declare the amendment to the amendment defeated.

I want to bring everyone's attention to someone who is sneaking out right now, Mr. Scott Lemoine. Tonight was his first night calling votes.

The House proceeded to the consideration of Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), as reported (without amendment) from the committee.

Income Tax Act

[The Speaker, Liberal, Anthony Rota]

There being no motions at report stage, the House will now proceed, without debate, to the putting of the question on the motion to concur in the bill at report stage.

[Larry Maguire, Conservative, Brandon—Souris, MB]

moved that the bill be concurred in.

[The Speaker, Liberal, Anthony Rota]

The question is on the motion. If a member of a recognized party present in the House wishes to request a recorded division or the motion be adopted on division, I would invite them to rise and indicate to the Chair.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I believe, if you seek it, you will find unanimous consent to carry this at report stage.

[The Speaker, Liberal, Anthony Rota]

Is there unanimous consent?

[Some hon. members]

Agreed.

[The Speaker, Liberal, Anthony Rota]

(Motion agreed to)

When shall the bill be read the third time? By leave, now?

[Some hon. members]

Agreed.

[Larry Maguire, Conservative, Brandon—Souris, MB]

moved that the bill be read the third time and passed.

Mr. Speaker, I want to thank my colleagues for bringing this to third reading because it is a privilege to speak in the House to Bill C-208, an act to amend the Income Tax Act, transfer of small business or family farm or a fishing corporation.

I want to begin my remarks by thanking a few of my colleagues who helped get my private member's bill to third reading much quicker than originally planned. Particularly, I want to thank my good friend, the hon. member for Saskatoon—Grasswood, who traded his private member's bill spot during the second reading, which allowed a vote to occur a few weeks earlier than scheduled. I also want to thank my colleague from Regina—Qu'Appelle, who traded his private member's bill spot. That is the reason we are debating Bill C-208 this evening.

The reason I am highlighting and thanking these two specific members is that time is of the essence. No one knows what the future holds or when an election is going to occur. These matters are outside of my control, so I want to focus on getting this legislation passed to support all small businesses. We must correct this massive injustice within the Income Tax Act that unfairly punishes individuals when they sell their qualifying small business, farm or fishing operation to their own family.

For those members who have not been closely following the debate, I will give a brief overview. As it stands, when a qualifying small business, farm or fishing operation is sold to a member of the owner's own family, the Income Tax Act treats the sale differently than if it were sold to an absolute stranger.

Yes, members heard that right. There are currently two sets of rules, and in some cases, it can result in the difference of hundreds of thousands of dollars. For some, that might not sound like a lot, but in many cases it could result in a parent making the tough decision to sell their business to a complete stranger rather than to their own children. That is wrong, and I intend on fixing it once and for all.

During my first hour of debate, I gave two examples of why Bill C-208 is needed.

The first involved a family wanting to sell their bakery to their daughter. If they sold the bakery to a stranger rather than their daughter, they would have an effective tax rate of 10%, after using their lifetime capital gains exemption. However, if they sold their bakery to their daughter, she would be obligated to repay their loan with personal tax dollars, which is a significant tax penalty.

The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.

Since I introduced this legislation, I have been contacted by numerous agricultural and business organizations. People across the country have contacted my office to let me know how important this legislation is to their family. Every single constituency in Canada would be positively impacted by this legislation, and it would result in more locally owned and operated businesses, the type of businesses whose owners are deeply involved in their communities and provide steady employment for countless individuals, and it would help keep farms and fishing operations in the family.

Bill C-208 sends a strong message of hope to young farmers who want to carry on what their family started and to other young family entrepreneurs included with them. Most of all, it would bring tax fairness to the Income Tax Act. No longer would parents have to be given a false choice of having to choose between a larger retirement package by selling to a stranger, which has no charge, or a massive tax bill because they sold to a family member.

Other than Finance Canada officials, I received zero push-back from any of the expert witnesses who appeared in front of the finance committee. Witness after witness came to support the bill and to answer the questions put to them. All my colleagues who sit on the finance committee did their due diligence and asked insightful questions. I want to thank the chair of the finance committee, who helped shepherd this legislation, for scheduling ample time for witnesses.

I am pleased to report that the concerns put forward by the Liberal MPs were fully answered. While I do not know how they will vote at third reading, I would kindly ask for their support. Now that we have had hours of debate and a thorough committee study, there is sufficient evidence to justify the changes I am proposing.

The Income Tax Act is complex. It has been changed and amended over the years, and in many circumstances one needs a lawyer or accountant to decipher its intent. With that in mind, the finance committee prudently invited multiple tax experts. In many cases, they gave real-world examples, so members were able to better grasp the implications of the bill. Due to the member for Kingston and the Islands laying out Finance Canada's concerns during second reading, we knew exactly what questions the Liberal MPs were going to ask. Because the government outlined its argument during second reading, the tax experts and I had time to prepare in order to put its fears to rest.

We know what the bill will cost, due to the Parliamentary Budget Officer's analysis, as I have said in previous speeches. We know there are safeguards built into the legislation to ensure people do not skirt tax rules. We know the legislation is squarely focused on small and medium-sized qualifying businesses. We know the legislation, as drafted, will achieve its intended aim, which is to level the playing field in such transactions.

For those members who want further reasons to support the bill, I will highlight some specific comments and evidence provided to the finance committee.

Brian Janzen, who is a senior tax manager at Deloitte, appeared at the finance committee. As someone who has been handling business transfers for close to 30 years, he understands the Income Tax Act and the implications of section 84.1, which he said has been a thorn in the industry's side for many years.

In his opening remarks, he provided an example of what would happen with or without the current wording of section 84.1 regarding the sale of a business. He gave the example of a restaurant that is worth a million dollars. If the owner sells the restaurant to a stranger, he, according to Mr. Janzen, “will walk away with after-tax proceeds...of around $971,000.” He would pay roughly $29,000 in taxes, but if the restaurant were to sell to a family member, the taxes paid would be roughly “$466,000 because of the deemed dividend. That's a difference, between the two scenarios, of $437,000.”

I think Mr. Janzen summed it up quite nicely when he said, “That's just crazy.” I agree with him. It is crazy. This sort of scenario is playing out every single day, and it needs to stop.

Mr. Janzen also said in his opening remarks, “This bill is helping the lower end of the small business community; it is not helping the huge, rich companies even if they're family owned.”

Cindy David, who is the chair of the board for the Conference for Advanced Life Underwriting in Canada appeared at the finance committee and spoke about the necessity of getting this bill passed. She said:

...there's some urgency around the need for the government to act in amending 84.1.... [as] small businesses employ 70% of the private sector and have been major contributors to employment growth over the past decade. A vast majority of those businesses have fewer than 20 employees.

The last comment I want to highlight was made by Dustin Mansfield, who is a chartered professional accountant at BDO Canada. Mr. Mansfield knows first hand the challenges the current wording of section 84.1 causes for families and how it unfairly taxes them at a different rate.

Of Bill C-208, he said, “the legislation would put a successor child of a business in the same shoes as an unrelated party upon the transaction of the business. Why does a stranger receive better tax treatment than a child, when the purpose is to keep businesses within the family?” I do not think Dustin posed this as a rhetorical question.

The fact remains that there are some who do not want this legislation to pass. However, we were elected to lead, to improve the quality of life of those we represent and to make sure that we pass down a stronger nation than the one we inherited. We cannot take our prosperity for granted.

I urge my colleagues to carefully review the testimony provided at the finance committee; call their chambers of commerce, or local farmers and fishers; go make a few phone calls to local accountants or other tax experts; and speak to those who have been impacted to ask them if they think it is fair that they had to pay more taxes for the business to stay in the family. Members will find almost universal support for this bill. They will also find there is bipartisan support. We need to pass this bill and send it to the Senate.

Private Members' Business gives all of us an opportunity to set aside our political allegiances, and I would kindly ask my Liberal colleagues to allow this legislation to go to a vote. If the debate carries on, it will be even further pushed back. Once again, I thank all my colleagues who supported Bill C-208 and helped to get it this far. Out of all the attempts made to fix this unfair tax treatment, we have made it the furthest in Parliament.

By working together, we can support our entrepreneurs, small businesses, farmers and fishers who make up the backbone of our economy, so let us roll up our sleeves and get this job done.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I want to congratulate my colleague on his excellent speech and, most importantly, on his excellent bill. I also thank him for approaching me right after this bill was introduced and for giving me the opportunity to endorse this bill on behalf of the Bloc Québécois.

I would like to know whether my colleague has spoken with Liberal members.

I also want to know what reasons he has been given for the lack of support for Bill C-208, when this is something that everyone wants.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, I cannot answer for the government in regard to those areas. There was some discussion of tax cheats earlier in some of the discussions that were going on, and I heard things such as we cannot allow wealthy people to get loopholes in the Income Tax Act, but that is clearly not the issue here.

Small business is the backbone. As the person from the Conference for Advanced Life Underwriting indicated, 70% of small businesses provide 70% of the employment in that area. There are, as I mentioned, clauses built into this particular legislation that would prevent things like fraud. There is nothing to stop the Canada Revenue Agency from auditing anyone, as they would normally in any other time, and so we feel strongly about a lot of those questions, and that is why I congratulated the finance committee. It is because its members gave very good questions at the committee, and the answers were very clearly in support of the bill.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, I want to congratulate my colleague on the progress of his bill. One of the first conversations I had with another member of Parliament upon my arrival in Ottawa after the last election, before the pandemic, was with the sponsor of this bill in a cab, if members can imagine sharing a taxicab now. There were no masks or anything.

Our conversation was about his interest in former member Guy Caron's bill. He was letting me know he was going to be taking that on and bringing it forward, so I am glad to see the progress made in Parliament on this bill.

I am just wondering if he could expand a bit more on some of those measures that would help make sure that this is not about tax evasion, but is really about facilitating the transfer of family businesses between generations.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, I want to congratulate my colleague from the NDP. He is very correct on that. It was very gracious of Mr. Caron to come to my office to discuss this particular bill with me, my colleague and my chief of staff. It is a very good bill, and it is exactly the same bill that he brought forward. I have mentioned that in previous debates in the House, and I want to thank him for doing that. Unfortunately, that bill was defeated at the time. I felt, being drawn early in the program this time, I would move it forward.

It is very self-explanatory. There is a huge difference in the tax rules that create a huge disincentive to sell someone's small business to their own family, as opposed to a complete stranger. Most small business owners I know of use those funds for retirement because they have invested their earnings back into the business throughout those 10, 20, 30 or sometimes 40 years to build it to the point—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

I did not want to have to interrupt the member, but we have one last question.

The hon. member for Edmonton Manning,

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, I congratulate my colleague. This is amazing. The first time I heard about this problem was in the last Parliament when I was serving on the finance committee. There is a fair bit of farmland in Edmonton Manning, and people there have concerns all the time about this issue.

Why does the hon. member think it is important for the bill to pass? We must secure the continuation of family ownership among small businesses, which is part of our tradition in this country in an industry that is very close to the heart of many Canadians.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, the bill is supported by the Canadian Federation of Agriculture, the Grain Growers of Canada, the Chicken Farmers of Canada, many of the canola growers and wheat growers, many keystone agricultural producers in my province, general farm organizations across the country and fishers. However, I think the big thing here is that all small businesses support it as well, whether that means a shoe store, dress shop, bakery or corner store in a small town or a big city. It is very supportive of making sure that we can transfer small businesses—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

We have to resume debate.

The hon. Parliamentary Secretary to the President of the Queen’s Privy Council.