Mr. Speaker, it is my turn to take part in this debate. First, I will read the motion:
That, in the opinion of the House, the drastic increase in income inequality under recent Liberal and Conservative governments harms Canadian society; and that the House express its opposition to the Conservative income splitting proposal which will make this problem worse and provide no benefit to 86% of Canadians.
I will not get into how the NDP wrote this motion because, as usual, it is off the mark. The Liberals want to help the middle class so that it can have a better future. Income splitting is at the very heart of this motion. It is important to know how to draft a motion and set partisanship aside when the measure is this important.
The increase in income inequality is a significant source of concern in almost all developed countries, and governments of all stripes, including provincial New Democrat governments, need to do more to fight it. The Liberals are against income splitting as proposed by the Conservatives.
In their 2011 election platform, the Conservatives promised to implement income splitting, but that promise was conditional on the government being able to balance the budget in 2015.
The Conservatives are getting ready to do that in 2015, since that will be an election year, but it will be the first time, given that they squandered the surplus that we Liberals had left when they came to power.
Their proposal is clear: allow couples with children under 18 to split their income, up to $50,000, for income tax purposes. According to their platform, that measure would cost the public purse $2.5 billion, at the federal level alone, not to mention what it would cost the provincial governments, if they go along with it.
How does income splitting work? I will explain, for the people of Bourassa, why we are debating this today, so they understand the meaning of income splitting.
It is simple. Take the example of two spouses who earn $100,000 and $20,000 per year. Together, they pay $15,993 in federal income tax. By splitting their income, that is, transferring up to $50,000 from one spouse to the other, so they declare $60,000 each, they will save $1,807. However, this does not provide any benefit for a couple in Bourassa, for example, who together earn $50,000.
The Conservatives have taken the idea of income splitting even further. In fact, in the budget they presented, they gave the example of a couple with two children: Bernard and Laurence, who earn $48,000 and $72,000 respectively. Even with those incomes, that couple will get no benefit from income splitting, however.
It is therefore clear that they want to implement income splitting in order to help the wealthiest Canadians.
That is the Conservatives’ approach. In fact, there is a very clear example that tells us that if, in a family, one spouse earns $327,000 or more, the equivalent of the Prime Minister’s salary, and the other earns only $3,000 or does not work, that couple will get $6,500 per year with income splitting. There is the proof. It is clear.
During the election campaign, the Prime Minister had said that income splitting should be one of our main priorities. However, as we have now seen, income splitting does nothing to benefit the middle class.
In fact, the study by the Canadian Centre for Policy Alternatives confirms that when the budget is balanced, this promise will absolutely have the opposite effect: 10% of taxpayers will cash in and 50% of the poorest Canadians will get virtually no benefit. According to that study, families with income of $50,000 or less will save only $50. There is the proof.
As well, the C.D. Howe Institute and the Canadian Centre for Policy Alternatives report that some 85% of households will not benefit from this measure at all. According to La Presse, since this measure is aimed only at the wealthiest Canadians with children under 18, that means there are a lot of people who will not benefit from income splitting. They include single people, couples without children and single-parent families. There is nothing for families with adult children, even if they live with the parents. There is nothing for families in which both children earn relatively similar incomes, which is most often the case in Quebec. Lastly, there is nothing for parents who earn less than $42,000 per year.
In Canada, the middle class has not had any real wage increase in over 30 years, in spite of the fact that the economy has more than doubled in size.
To summarize, with this measure, the rich will get richer and the poor will get poorer. There is nothing for single people or single-parent families. In a word, there is nothing for the middle class.
It must be said that this measure also affects women to a certain extent, because all too often women have lower incomes in couples. That is what a study by the Research Chair in Taxation and Public Finance at the Université de Sherbrooke tells us. The labour force participation rate of women with children is higher in Quebec, at about 82%, compared to 78% for all of Canada. The income gap between men and women is not as wide in Quebec as it is in other provinces like Alberta, where men make on average twice as much as women.
To conclude, it is quite natural for this measure to be controversial, even among the Conservatives.
I would like to quote the late Jim Flaherty:
It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all. And I like to think I'm analytical as finance minister, so I will, when we discuss it eventually in cabinet, in caucus, I will present my analysis to my colleagues.
Unfortunately, I feel that he is one of the only people who could have talked some sense into the Conservatives. We, on this side of the House, are against this measure, because we want it to support the middle class instead of giving the equivalent of $5 billion to the wealthiest Canadians.
