Tony Valeri

[Income Tax Amendments Act, 1998, May 10th, 1999]

I see the Conservatives at the other end of the Chamber hollering across the way. I think they are hollering in support of Bill C-72. The hon. member for Kings—Hants is yelling at a number of individuals on the Liberal side. I would assume he is merely saying that he is supportive of Bill C-72 and finds that the tax relief is quite adequate as a starting point. It is certainly something that we on this side of the house agree with and we will continue to provide tax relief.

If, for a moment, the hon. member for Kings—Hants could pay attention to what is going on, then he would understand what tax policy is all about and be able to provide some constructive suggestions in the debate. However, I am not sure if that is possible.

Bill C-72 is essentially in line with the government's principles of tax policy. We feel that its relief measures are fair. The initial focus for broad based tax relief is on personal income taxes, where the burden is the greatest. The government has said continually that personal income taxes are where relief is needed first and that is what the 1998 and 1999 budgets have provided.

Most importantly, especially in the context of a lot of rhetoric that goes on in the House, given that there is an Ontario election campaign on right now and there is a lot of talk about tax relief, the measures for tax relief in the 1998 and 1999 budgets are not financed with borrowed money. It is the first time in decades that a government is providing tax relief to Canadians and is not borrowing to provide that relief. In essence, what we have is a reduction in tax relief. We do not have an increase in the deficit. We do not have an increase in the debt. What we also do not have is what most—

[Income Tax Amendments Act, 1998, May 10th, 1999]

The hon. member says that I am keeping him awake. I am thankful, and I am sure his constituents are very thankful, that he is staying awake. It is not often that the member stays awake in this Chamber. I thank him for the compliment.

This tax credit complements other student assistance measures announced in the 1998 budget, such as graduated interest relief and extended loan repayment periods which will assist a further 100,000 students.

To help Canadians upgrade their skills through full time study, often difficult for those in the workplace, Bill C-72 includes measures such as tax free RRSP withdrawals for lifelong learning. It is not uncommon, as I am sure hon. members across the way and certainly members on this side of the House are aware, to find that there are constituents back home who find themselves in a job, in a position, they are employed. They have been able to put away some money in RRSPs, but they need to upgrade their skills and they find themselves unable to access money to do that. Much like the homeowner program which utilizes the registered retirement savings plan, this program would allow Canadians to access tax free RRSP money for lifelong learning in order for them to upgrade their skills and to further their education.

An individual who is enrolled in full time training for at least three months can withdraw a maximum of $10,000 per year from their RRSP up to a limit of $20,000 over four years. The money must be repaid to their RRSP program over a 10 year period.

Another measure in Bill C-72 extends the education credit to many part time students who are trying to balance work, family and other commitments. Students can claim a credit for each month they are enrolled in a qualifying course which is at least three weeks in duration and meets a minimum of 12 hours per month. That also facilitates lifelong learning for about 250,000 part time students.

I am sure members will recall that in the 1998 budget the government made some improvements to what is known as the registered education savings plan. The 1998 budget introduced the Canada education savings grant. I have received a number of calls and a number of constituents have contacted me to find out about the program. I am sure the same is true for hon. members across the way. They include grandparents, parents, aunts and uncles who want to contribute to their niece's or nephew's, grandson's or granddaughter's educational savings program. The government has provided a 20% grant on the first $2,000 put into a registered education savings plan for children under 18. That is a maximum of $400 per year that the federal government will contribute to that program to help young Canadians access post-secondary education.

Bill C-72 also proposes additional changes to RESPs. It is important to note that disabled part time students will now be eligible for educational assistance payments from RESPs for the first time. Families whose children do not pursue higher education would be able to transfer up to $50,000 from their registered education savings plan to their registered retirement savings plan. That is an increase of $10,000. That creates a bit more flexibility in the registered education savings plan which will encourage more Canadians to contribute.

There is also the new caregiver credit which provides Canadians caring for an elderly parent or a disabled family member a tax reduction. This credit will assist about 450,000 caregivers who are not normally eligible for it.

Another important measure which was included in the 1998 budget, and I am hopeful that members opposite will draw attention to it because many of their constituents will benefit from it, will benefit self-employed Canadians. As a result of the 1998 budget self-employed Canadians will now be able to deduct health and dental insurance premiums from their business incomes. We have allowed that particular measure to go forward. I know that the Canadian Federation of Independent Business was a big promoter of that measure, as well as a number of members opposite. Members on this side of the House have consistently fought for self-employed Canadians. This is an example of an initiative that will help that sector of the business community.

Volunteer firefighters, under previous legislation, received $500 tax free for their volunteer efforts. In the 1998 budget we have increased it to $1,000 and will extend it to other emergency service volunteers such as ambulance technicians and search and rescue volunteers. There is also a recognition of volunteerism in the 1998 budget because we know that individuals, like volunteer firefighters, give of their time and contribute to their communities. This is a way for the federal government to provide some tax free moneys to them as reimbursement for expenses they incur in the work they do for their community.

The 1998 budget continued the government's policy of providing targeted tax relief and began the process of ensuring general tax relief, starting with low and middle income Canadians. The 1999 budget builds on these measures and is part of a long term strategy to reduce taxes. Of course members opposite will simply say “Cut taxes at any cost”. They do not understand that the commitment the government has made is to remain in balance. We have provided targeted tax relief in the 1999 budget. We have provided $16.5 billion in tax relief and we have never said that this is the end of our tax strategy. We have always said that this is the beginning of our tax strategy.

Together the 1998 and 1999 budgets set us on the track for tax relief and will continue to provide tax relief to Canadians.

[Income Tax Amendments Act, 1998, May 10th, 1999]

Madam Speaker, in the time allotted to me this morning, I will provide some context for the thinking behind the 1998 budget and then highlight some of the measures that were included in this particular bill which forms the income tax side of the 1998 budget itself.

First, the 1998 budget reconfirmed our balanced approach to building a strong economy and a secure society. The federal books are balanced. We have put an end to credit card government. We indicated in the 1998 budget and have continued to reduce Canada's debt burden through a two-front strategy of stronger economic growth and a concrete debt repayment plan.

As government members, we have always said and we recognize that a healthy bottom line is a means to an end, not an end in itself. In the 1998 budget we have also included the Canadian opportunities strategy, which included the millennium scholarship program, as well as other programs.

The 1998 budget represents the second stage of a three part plan that we put together in 1994. The Minister of Finance said that this plan was not simply a theme for one budget or one year. It has defined our approach from the beginning and will define our approach in the future.

First, as in the previous budgets, we reduced the deficit. With the 1998 budget we balanced the books and have begun the process of debt reduction. In future budgets we will stay the course. The 1999 budget proved these words.

Second, we have invested in the future. Over 80% of the spending in the 1998 budget reflected two of the highest priorities of Canadians: access to knowledge and skills, and support for health and education through increased transfers to the provinces.

Third, we reduced taxes initially in the 1998 budget in a targeted way. As soon as the country's resources permit we will broaden and deepen the process. As we saw in the 1999 budget, that is exactly what the government did. Collectively, the 1998 and 1999 budgets provided $16.5 billion of tax relief to Canadians. This is an approach that is delivering real benefits for Canadians today. It is certainly a robust outlook for Canada as we start the new millennium.

As I go through and highlight some of Bill C-72, I will take a moment and comment on what members will probably hear from the Reform Party, the Bloc and other opposition parties. These parties will say that the government is off track. We will argue that we are not. The true test will be what Canadians think.

As we conclude our prebudget deliberations from year to year, and we are about to start in June and into the fall for the upcoming budget, over and over again Canadians reflect on our approach. We have taken a balanced approach in both the 1998 and 1999 budgets, which is what we will continue to do.

Let me highlight some of what is included in Bill C-72. When the finance minister presented the 1998 budget, he noted that these measures represent the first steps toward general income tax relief. Each of the budgets have provided targeted tax relief where it would be most beneficial. With the deficit behind us, the government is now in a position to introduce broad based tax relief while adhering to the principle that such relief must not jeopardize our regained fiscal health or impinge on the priorities like health care and education.

General tax relief as indicated in the 1999 budget will speak for itself. The measures in the bill reduce taxes for low and middle income Canadians, those least able to pay. Two of the measures in the 1998 budget provide general tax. For low income Canadians, the amount of $6,456 that can be earned tax free is increased by $500 effective July 1, 1998.

Most people will ask, as I am sure the hon. member for Elk Island has asked before, how this can actually work. It was explained to the member in committee. He seems to understand the technical matters of this particular bill so I will leave the member to refer to the report from committee. The spousal and equivalent to spousal maximums of $5,380 were also increased by $500.

What does this mean? It means that single taxpayers with incomes under $20,000 can earn up to an extra $500 tax free; for a family earning under $40,000, the maximum increase would be $1,000 tax free. As a result of this measure, 400,000 low income individuals will be removed from the tax rolls and another 4.6 million taxpayers will pay less income tax.

The 1999 budget was a follow up on the 1998 budget and in fact continued on the same track. The 1999 budget extended this $500 increase to all taxpayers and raised it by a further $175, increasing the basic exemption by $675. Canadians are now able to earn $7,044 tax free in 1999 and $7,131 in the year 2000. In addition, the maximum spousal and equivalent to spousal amounts will increase to $6,055.

These measures will benefit 600,000 low income Canadians, 400,000 will pay no federal tax as a result of Bill C-72 and another 200,000 will disappear from the tax rolls because of the 1999 measures.

The second measure providing tax relief in the 1998 budget is the elimination of the 3% general surtax for people earning under $50,000 and a reduction in the surtax for those with incomes between $50,000 and $65,000. Members may recall, and there may be people in the gallery who will recall, that when the Conservatives were in office they put in place a 3% surtax to pay for the deficit. What we have always said is that once the books were balanced the 3% surtax would be the first tax measure we would deal with, and the 1998 budget did so in a targeted fashion. The surtax has been eliminated for almost 13 million filers and it has been reduced for another one million Canadians.

The 1999 budget is very much intertwined with the 1998 budget. In 1998 we targeted the reduction of the 3% surtax to those earning below $50,000 and in the 1999 budget we will have eliminated the surtax completely for 15.1 million Canadian taxpayers as of July 1, 1999.

In every budget our government has provided targeted tax relief where the need was greatest and the benefits most substantial. The 1998 budget was no different. It introduced the Canadian opportunities strategy which was designed to ensure that all Canadians have an equal opportunity to participate in the changing economy.

Hon. members know that many students have limited access to post-secondary education because of financial barriers. Bill C-72 implements several measures which will financially benefit students.

For example, for some students a federal tax credit of 17% of interest paid on federal and provincial student loans was introduced, which will provide tax relief for about one million students. A student with a $25,000 loan, which is the average, would typically see a federal-provincial tax reduction of $530 in the first year alone. The new credit would mean about $3,200 in tax relief over a 10 year pay down period.

[Employment, May 7th, 1999]

Mr. Speaker, like the Deputy Prime Minister said, we have to look at the trend and the trend is in fact improving.

Over 900,000 jobs have been created in this country since December. Over 15,000 jobs were created in April. What has happened is that the participation rate has gone up. It has gone up because the economy is solid. It has gone up because the fundamentals are right. We have low inflation, low interest rates, a balanced budget and declining debt to GDP. The economy is poised to do well. The help wanted index has gone up and that is always a precursor to better job opportunities. That is what has happened. I would hope the hon. member would take that into consideration.

[Taxation, May 7th, 1999]

Mr. Speaker, I am so very thankful the hon. member pointed to Alberta as an example. I would like to quote from a CP wire story:

I've questioned really the wisdom of the dramatic and drastic tax cuts in light of deficit financing. It's not how we would have gone about it. In fact, it's not the way we did go about it...We were able to eliminate the deficit first, take it one step at a time, start a debt repayment program and then look at taxation.

It is the Alberta guru. It is what the Reform Party stands for. It is what it aspires to be. It is Alberta Premier Ralph Klein. He said take a step at a time.

[Taxation, May 7th, 1999]

Mr. Speaker, with respect to the labour rate there is no question the hon. member across the way has to recognize that the 15,300 new jobs created this last month is good news.

Only the Reform Party would believe that job creation is bad news. When we look at the impact of the unemployment rate, the participation rate has come up.

Why do people come back into the marketplace? It is because they have confidence that they can find a job. That is why Canadians are re-entering the labour force.

I hope the hon. member across the way would recognize that fact and use that information in his next question.

[Budget Implementation Act, 1999, May 6th, 1999]

Mr. Speaker, I listened attentively and I have again come to the same conclusion: Bloc members continually pit one against the other and continue to pit Quebec against the rest of Canada. That is their mission. Since that is why they are here, what else can one expect?

The member also talked about how, when we moved to the equal per capita formula, Ontario somehow benefited more than Quebec and that B.C. and Alberta somehow benefited more than Quebec. I point out to the hon. member that Quebec did in fact balance its provincial budget when it received a $1.4 billion increase in equalization payments.

I want to remind the hon. member that the province of Quebec also benefited from an increase in equalization payments. The province of Quebec receives 34% of transfers from the federal government. It has, as the hon. member mentioned in his speech, just under 25% of the population. One has some difficulty understanding how a Bloc member can continue to stand up and say that somehow the rest of Canada is being so unfair to the province of Quebec.

He asked why we had moved to the equal per capita? Is the hon. member actually saying that in the eyes of the federal government—and there are a number of people sitting in the gallery today—some Canadians are more equal than others depending upon which province they live in?

We inherited a system which was a cap on cap. When we were able to find the resources, we moved to an equal per capita so that every Canadian, regardless of what province they lived in, would receive an equal amount of money in transfers that go to the provinces for health care services and education. I do not understand how the hon. member can say that we are being unfair to Quebec because we are moving to an equal per capita system for all Canadians.

The member also talked about economic dependency. Has the hon. member ever thought that perhaps the economic dependency that he is talking about is really triggered by the consistent push by the Bloc for separation? That underlying theme does have an impact on Quebec's economic development each and every day.

I guess the bottom line is that they have nothing to add to the debate so they will just pit the rest of Canada against Quebec and say, “oh, my God, we are being unfair again”.

As a member of parliament, he should at least have the decency to say that there are things the federal government offers to the province of Quebec and to all Canadians, regardless of where they live, that are of benefit. There is a reason to be part of this great country and that is to ensure that we all move into the next millennium in a way that we are able to prosper together.

[Budget Implementation Act, 1999, May 6th, 1999]

Mr. Speaker, I am always reluctant to rise on a point of order when a member is in the middle of his speech, but I find it somewhat difficult to sit here and listen to comments about the CRA and other matters that do not have anything to do with the particular bill.

I know that under your guidance you offer that kind of latitude, Mr. Speaker, but I wonder if you could ask the hon. member to speak to the bill rather than everything under the sun except the bill.

[Budget Implementation Act, 1999, May 6th, 1999]

Madam Speaker, I sat and listened attentively to the hon. member. He just made a comment about how mothers and fathers raising children on social assistance were in essence paying tax and that the budget did nothing to deal with that segment of society.

I caution the hon. member that as a result of the 1998-99 budget any Canadian family raising children would pay no net federal tax on an income of $30,000 or less. I am not saying that is in any way an achievement for which we would stand, pound our chests and say our job is done. We obviously need to do more in terms of helping families raise children and ensuring that Canadians have a better quality of life. However, with those two budgets, Canadian families who are raising children and earning $30,000 or less will be paying no net federal tax.

As well the hon. member made mention of the fact that health care funding was somewhat of a sham. I caution the hon. member that the restoration of funding to the provinces with respect to health care took two forms. One was the $8 billion over a period of time. The $3.5 billion immediately was meant to address what the provinces were saying and what Canadians were saying.

The member sits on the finance committee. He toured the country along with myself and other members of parliament. We heard from Canadians who said that they needed additional moneys put back into the health care system. The $3.5 billion allows the provinces to draw that down as they see fit. I understand Manitoba is drawing down its portion as quickly as it can. It can do so over a three year period. I caution the hon. member when he says it is a sham. I would tend to disagree. Hopefully the additional information I am providing will give him an opportunity to clarify his position.

In terms of trickle down economics, I am certainly familiar with the theory. It is a something the United States was very accustomed to following under Reagan and Reaganomics. However I would disagree with the hon. member. We have put in place a number of economic policies which deal with certain segments of society. We targeted our tax cuts initially. We took 600,000 Canadians off the tax rolls at the low end.

I go back to the elimination of the 3% surtax. As soon as we had the money we eliminated it for individuals who were earning $50,000 or less. We targeted our approach to those at the lower end of the income scale.

With that information I only hope the hon. member would say that he might not agree with everything the government does but he could agree with the thrust and the direction of the government and urge us to do more. I welcome the opportunity for the member to urge us to do more as Canadians are doing. We fully respect the priorities of Canadians and are committed to doing more.

[Budget Implementation Act, 1999, May 6th, 1999]

Mr. Speaker, I certainly appreciate the opportunity to speak at third reading of Bill C-71.

Along with strengthening health care, increasing the Canada child tax benefit and assisting below and modest income Canadians, Bill C-71 also covers a range of other measures such as debt management, income tax administration, first nations taxation and public service pensions, among other things.

While wide ranging, I would say, and I am sure hon. members would agree, that all these measures are connected. They fall within the sphere of the government's ongoing commitment to an effective, efficient and fiscally responsible government.

I would like to briefly summarize some of the bill's highlights. Bill C-71 provides for the transfer announced in the 1999 budget of an additional $11.5 billion in health care funding to the provinces under the Canada health and social transfer.

It is also important to note that this increase will be distributed equally for every Canadian in every province. By eliminating the per capita disparities in the distribution of the CHST, all provinces by 2001-02 will receive identical per capita entitlements, thereby providing equal support for health and other social services to all Canadians.

The provinces will receive $8 billion of the $11.5 billion through the CHST over four years beginning April 1, 2000. The additional $3.5 billion will be paid in the form of an immediate one time supplement to the CHST from funds available this fiscal year. The provinces can decide for themselves how much they will draw down each and every year over the next three years.

The purpose of the immediate one time supplement of $3.5 billion is to respond directly to the concerns that Canadians had from coast to coast to coast about the lack of emergency services that they were able to access, as well as the long waiting lists. The $3.5 billion will be in the hands of the provinces to immediately draw down as they see fit in order to meet the needs of their particular constituents.

When the funding increase reaches $2.5 billion in 2001-02, direct federal cash support under the CHST will be $15 billion a year. The health component then of the CHST will be as high as it was before the expenditure restraint in the mid-1990s.

The next measure in Bill C-71 deals with two components of the Canada child tax benefit: the base benefit and the national child benefit supplement. Both are changed in the 1999 budget. Bill C-71 sets out the design of the 1998 budget commitment to provide an additional $850 million increase in the national child benefit supplement payments to low income families. The maximum national child benefit supplement benefit level is being increased by $350 in two stages: $180 in July 1999 and $170 in July 2000. The net income level at which the national child benefit supplement is fully phased out is also being increased to $27,750 in July 1999 and $29,590 in July 2000.

These changes mean that a family with two children earning $20,000 will receive an increased benefit of $700 for a total of $3,750 per year. As well, a $300 million enrichment of the base benefit in July 2000 will increase benefits for modest and middle income families by $184 per family. It will also be accomplished by means of an increase to the $29,590 in the net income threshold of these benefits.

The bill also addresses assistance for children in another area by ensuring that the full amount of the single supplement of the GST credit will go to single parents earning under $25,921. Unfortunately some very low income families with children may not have been receiving the full GST credit supplement. This bill addresses this problem by increasing the GST credit benefits for low income single parents to complement the national child benefit by providing these parents with the full $105 amount of the single supplement.

The bill also addresses first nations taxation issues. The 1999 budget confirmed the government's willingness to continue discussions about taxation matters with first nations and to implement arrangements with first nations members.

Bill C-71 gives the B.C. Sliammon first nation authority to add a value added tax on all tobacco products and fuels sold on reserves. B.C.'s Westbank first nation, which already taxes tobacco products and alcoholic beverages, will now be able to charge a 7% GST style tax on its on reserve sales of fuel. In addition, the Yukon First Nation Self-Government Act will be amended to give effect to the GST rebate provisions which were added to their self-government agreements last year.

There are also measures involving the administration of taxation. A service agreement signed last October between Revenue Canada and Nova Scotia allows for a limited release of taxpayer information to Nova Scotia Workers Compensation Board. The bill also allows for co-operation in audits. Certainly this exchange of information helps ensure amounts owed are indeed paid.

Members will be pleased to note that before exchanging any information the federal government will ensure that the workers compensation board fully adheres to the current confidentiality safeguards that apply to the sharing of information with agencies outside Revenue Canada.

Another part of Bill C-71 deals with good financial management. Hon. members are aware that the government is committed to managing its debt cost as effectively as possible. This bill amends the Financial Administration Act to enhance the effectiveness of debt and risk management.

The amendments, many of which are technical, confirm some existing practices. They clarify the authority governing the government's borrowing and distribution of its debt and modernize the government's fiscal and risk management powers. The bill also spells out the government's standing authority under the FAA to ensure that maturing debt can only be refinanced within a given fiscal year, a practice the government has followed for years.

New borrowing authority to finance a deficit would be obtained as in the past through a borrowing authority bill. It is important to ensure that all members understand that the amendments to the FAA are in no way compromising the authority that is required to finance a deficit. In fact, that authority would be obtained as in the past through a borrowing authority bill.

Other measures guarantee that parliament will receive information annually on the government's debt management programs and plans which speaks to the transparency and openness of the management of our debt.

As I mentioned at the beginning of my speech, some of the other measures of Bill C-71 have to do with amending the basic pension formula in the public service, Canadian forces and RCMP superannuation acts which calculate benefits on a five year rather than the current six year average salary. That is an improvement to the existing plan.

Also included in the bill are provisions for amending the Patent Act to clarify the Minister of Health's authority to pay the provinces moneys collected by the Patented Medicine Prices Review Board from excessive pricing of products by patented manufacturers.

Also included in the bill is a measure clarifying the scope of federal loan guarantees under the Agricultural Marketing Programs Act to financial institutions that fund advance payments to our agricultural producers.

Finally, the bill also includes a measure that will provide the Minister of Finance with the authority to undertake financial operations necessary to meet Canada's commitments under the European Bank for Reconstruction and Development Act.

The 1999 budget omnibus bill establishes important foundation blocks for the future in terms of new funding for our public health care system. It benefits children and families in need and implements measures that improve the operations of government, all while sustaining our commitment to financial discipline.

Generally and overall it is important to note the 1999 budget extends the government's plan to build a strong economy and a secure society. It is an approach that we as a government have consistently followed, an approach which is designed to advance living standards of Canadians. It is a strategy that we have applied through each of the government's six budgets to date. We essentially take action on three fronts: maintaining sound economic and financial management; investing in key economic and social priorities; and providing tax relief and improving tax fairness.

First, certainly strong economic growth and reduced debt burden better enable the government to provide tax relief and make key investments. The 1999 budget again confirms that the era of deficit financing is over. We will continue to deliver balanced budgets or better.

Second, our investments in health care and research and innovation and other key areas improve Canadians' ability to work and their quality of life.

The third pillar of our strategy tax relief is very clear. In essence the 1999 budget delivers tax reductions of $16.5 billion with the 1998 budget collectively. When we include the reduction in unemployment insurance that number escalates to $17.3 billion.

It is important to note that our approach will be one of balance and it will remain balanced. We have demonstrated a three front strategy over the last number of budgets. We will continue with that approach. The government has eliminated the deficit faster than anyone expected. We have seen the results of our financial management in low inflation, low interest rates, the increase in job creation and the ongoing economic activity.

It is important to note as well that the work of the government in this area is still not complete. We still must continue to provide improvements to the quality of life and the standard of living of Canadians. We need to continue to provide tax relief. We need to continue to provide opportunities for Canadians to work and enjoy the quality of life they are accustomed to in this great country.

It is clear that many benefits will result from Bill C-71. I urge my hon. colleagues to pass this legislation without delay.