Mr. Speaker, the late Saskatchewan premier Allan Blakeney defined social democracy as a “fair share for all in a free society”, and the NDP certainly believes in a free society.
In the last Parliament, we were the only party to stand up and vote against Bill C-51, the Conservative surveillance law. In the current Parliament, we were the only party to stand up and oppose the Conservative motion calling on the state to condemn controversial speech about Israel.
However, as important as civil liberties are, and as good as the NDP's record is in this area, civil liberties are not what define us fundamentally as social democrats. “Liberal” is also a derivative of “liberty”. Even in the Conservative Party, there is a libertarian strain, even if it was pretty difficult to detect under the last Conservative government. What really defines us as social democrats is our concern for what former premier Blakeney described as a fair share: a more equitable distribution of income and wealth.
We believe in equality, not just for its own sake, but also because all the evidence indicates that a more equitable distribution of income and wealth leads to more happiness, better health, and less crime. Therefore, the trend toward worsening inequality is quite troubling.
In recent years and decades, a vastly disproportionate share of income gains have been concentrated in too few hands at the very top of the scale. The tax system is one of the most powerful tools available to government to address those inequalities. Therefore, I believe the House should evaluate Bill C-2 in terms of its effect on income inequality.
At this point, I will shift from quoting Allan Blakeney to invoking Clint Eastwood, because Bill C-2 has the consistency of a spaghetti western. Allow me to review the good, the bad, and yes, the ugly aspects of the legislation before us.
The good thing about Bill C-2 is that it includes tangible measures to collect a fairer share of tax from the rich. Specifically, it would increase by 4% the top income tax rate on incomes over $200,000.
This is entirely consistent with what the NDP has achieved at the provincial level. In Nova Scotia, the NDP government increased by 4% the top rate on incomes over $150,000. In a minority legislature in Ontario, the NDP amended a budget to add two points of income tax on incomes over half a million dollars. The most excellent NDP government in Alberta has quite correctly gone from a flat tax to a progressive income tax system. As part of our election platform in Saskatchewan, the NDP is proposing an additional percentage point of tax on incomes over $175,000.
The other positive aspect of this legislation is to restore the TFSA contribution limit to $5,500 per year. I think it is important to note that the previous Conservative government's proposal to increase that limit to $10,000 would only affect people who have extra money left over after the 18% of income that can be contributed to RRSPs and after the $5,500 that can still be contributed to TFSAs.
In 2013, fewer than 7% of eligible Canadians made the maximum TFSA contribution. It stands to reason that probably only up to that 7% of Canadians would stand to gain anything from a higher limit on TFSA contributions. Therefore, restoring that limit to $5,500 is clearly a progressive move. That is the good.
Now I am moving on to the bad.
Bill C-2 would include a so-called middle-class tax cut that would not actually help the middle class. I think the Liberals might be a bit confused between cutting the middle tax bracket and changing taxes in such a way as to help people with middle incomes, because what the bill proposes is a tax cut that only applies to incomes above $45,000, and that is more than the median Canadian income. To receive the maximum benefit, someone would need to have an income of more than $90,000 per year.
To put that into perspective, someone working as a nanny for the Prime Minister would receive nothing from the middle-class tax cut. However, the Prime Minister himself, and indeed all members of this House, would get the maximum benefit of about $700—but we do not need the money.
What are the alternatives?
We in the NDP had proposed to reduce the first tax bracket, which applies to everyone. We also proposed to boost the working income tax benefit, which is more targeted toward lower incomes.
In our election platform in Saskatchewan, the provincial NDP is proposing to boost the basic personal exemption, which again applies to everyone.
It would be extremely easy to design and implement a middle-class tax cut that would actually go to the middle class. However, in all the discussion we have heard about the bill, I have not heard a coherent explanation from the Liberals as to why they are pushing ahead with a tax cut that would only go to incomes above $45,000, rather than enacting a tax cut that would include all Canadian taxpayers.
I notice that many people on this side of the House are speaking today because the Liberals have given up their speaking slots in this debate. I would suggest that is because they do not actually have a very good answer to this question.
That is the bad.
Now, I am moving on to the ugly.
The bill would not even add up. I would argue that the Liberal tax proposal during the election was palatable to many progressive Canadians because it was promised to pay for itself. Even though the Liberal proposal was not very well targeted, it at least seemed that a redistribution from the very rich to the upper middle class might be a move in the direction of equality.
It has since been revealed that the bill would not pay for itself, that it would cost more than $1 billion a year in lost federal revenue. In effect, what the government is proposing is to borrow money to fund a tax break for people who do not really need it.
How could we make up the lost revenue?
Since 2000, Liberal and Conservative governments have slashed the federal corporate tax rate in half. We have not seen the promised boost in investment. On the contrary, we see private non-financial corporations sitting on a record hoard of cash.
The parliamentary budget officer estimates that each point of corporate income tax that we might restore would collect $2 billion of revenue.
One might argue that, with low commodity prices and depressed corporate profits, the corporate tax would not actually bring in that much. However, that is the beauty of corporate taxes: they function as an automatic stabilizer. When the economy is depressed and profits are low, they do not take very much money out of it, but as the economy starts to recover and we want to move toward a balanced budget, corporate taxes will automatically collect more revenue.
I would urge the government to very seriously consider at least partially reversing corporate tax cuts as a way of starting to collect the additional revenue that will be wanted as our economy begins to recover.
In conclusion, there are enough positive elements in Bill C-2 that the NDP is prepared to support it on second reading. However, there is a huge amount of room for improvement in targeting the so-called middle-class tax cut to those who really need it and in collecting the revenue that will ultimately be needed if the government is ever going to balance the budget.
