Mr. Speaker, I am very pleased to participate in this very important discussion today. I want to speak to the matter of taxes generally and why both tax legislation and a well-functioning tax system are so important to Canadians. Well-functioning is key, and I am very happy to hear my colleague across the way say a mere few minutes ago that it is not working the way it is, so I will appreciate her support of the bill when it comes to a vote.
All of this is underlined in today's legislation, the technical tax amendments act, 2012. As most Canadians appreciate, creating jobs and growing our economy is top priority for our government and the main objective of Canada's economic action plan. Since being elected in 2006, our government has been working on a number of important fronts to create optimal conditions for sustained growth. Indeed, we are making it easier for Canadian employers and entrepreneurs to successfully compete in the global economy and to make it more attractive for others to invest in this country.
The end goals here obviously are more jobs for Canadians and a healthy and thriving economy, and that “low tax in Canada” brand is getting noticed around the world. Indeed, here is what John Chambers, CEO of Cisco Systems, a major global technology company, recently had to say about Canada's economic leadership on an American television program entitled Charlie Rose:
The number one country in the world to do business is which one? It's Canada and that was a surprise to me when I first started seeing this occurring several years ago, but they have a government that partners with business to solve issues.... They are willing to work together to create an environment to say, “What does it take you to keep your jobs here or bring more jobs here?”
Key among those strategies that we are employing is our government's low-tax plan for jobs and growth that has made Canada a great place to invest. It began in 2007, when our Conservative government passed a bold tax reduction plan that started us down the road to branding Canada as a low-tax jurisdiction for business investment. At the same time, our government also encouraged the provinces and territories to collaborate in supporting investment, job creation and growth in all sectors of the Canadian economy by establishing low combined federal-provincial corporate income tax rates.
Today, we have made substantial progress toward that objective, which has lowered the federal business tax rate to 15%. Also, in 2012, the last of the provincial general capital taxes was eliminated. This follows the elimination in 2006 of the federal capital tax and the introduction in 2007 of a temporary financial incentive to encourage provinces to eliminate their general capital taxes.
There are other key measures that we have taken since 2006 to fuel job creation and spur our economic growth. They include implementing a temporary hiring credit for small business to encourage additional hiring by this vital sector; reducing the small business tax rate to 11% and increasing the amount of income eligible for this rate to $500,000; supporting manufacturers by introducing a temporary accelerated capital cost allowance rate for investment in manufacturing or processing machinery and equipment, and extending it; eliminating tariffs on imported machinery and equipment and manufacturing inputs, to make Canada a tariff-free zone for industrial manufacturers by 2015; improving the ability of Canadian businesses to attract foreign venture capital by narrowing the definition of taxable Canadian property, thereby eliminating the need for tax reporting under section 116 of the Income Tax Act for many investments; and much, much more.
The fact is that our government's low-tax plan is working, and the world is increasingly noticing, as the quote from John Chambers clearly indicated. As a result of these and other tax changes, Canada now has an overall tax rate on new business investment that is substantially lower than any other G7 country and below the average of the member countries in the Organisation for Economic Co-operation and Development. That is both an incredible achievement and a draw for investment. It has proven invaluable in helping Canada skirt the worst of the global recession.
Let me quote at length what the Canadian Manufacturers and Exporters had to say about Canada's low-tax advantage and our Conservative government's business tax cuts, and I am quoting directly:
If federal tax rates had not been reduced, Canada's unemployment rate would have exceeded nine per cent in 2009 during the recession. Today, our unemployment rate would be higher than that of the United States, with about 200,000 fewer Canadians working....
Investment meanwhile has also increased. Canada's business sector invested $25 billion more in capital assets last year than in 2007, and $50 billion more than at the depth of the recession in 2009. Investment in industrial machinery and equipment, which has been given an additional boost by the rapid depreciation that the federal government has made available to manufacturers, has risen 12 per cent since 2007, and has jumped by 37 per cent since the end of the economic downturn....
It's time we get the facts on the table. Business investment has been a key driver of economic and job growth over the past five years, and lower taxes have contributed significantly to that growth.
This is a significant advantage for Canada in the global economy and will be a key contributor to Canada's long-term economic prosperity, and we are not going to stop there.
Canada's economic action plan is continuing our efforts to preserve this country's advantage in the global economy, to strengthen the financial security of Canadian workers, seniors and families, and to provide the stability necessary to secure our recovery in an uncertain world. Canada weathered the global economic and financial crisis well compared to a lot of countries, particularly when we compare it to most other developed nations.
As the Toronto Sun noted in a March 2013 article:
Since the Tories took over, no other G-7 country has surpassed Canada in per capita job growth. Canada has added 1.5 million net jobs since 2006.
...Canada is in good shape compared to all the other industrialized countries of the West.
Nevertheless, Canada is not immune to the global challenges that emanate from beyond our borders, especially in Europe and the United States.
That is why I was extremely pleased to note that our government has stated clearly that this is not the time for dangerous new spending that would increase deficits or raise taxes, like those proposed by the NDP with its dangerous carbon tax proposal.
We have heard time and time again in uncertain global economic times such as these that the most important contribution the government can make to bolster confidence and growth is to maintain our sound fiscal position. That means maintaining our focus on fostering prosperity for Canadians and their families by growing the economy and helping to create high-quality jobs. In other words, we have to do everything we can to keep taxes low for Canadian families and businesses and also make the tax system predictable for taxpayers. That is exactly what we would do through today's legislation, the technical tax amendments act, 2012.
As members know, the Auditor General released her study in the fall of 2009 on the existing backlog of outstanding income tax legislation, a backlog that this legislation seeks to address. While outlining the delay in addressing the current backlog of outstanding income tax amendments, the Auditor General also made some important observations about the impact of not dealing with this issue in a timely manner, an impact with far-reaching implications.
Among the many negative effects for taxpayers caused by the uncertainty of the backlog of outstanding income tax amendments, the Auditor General's report identified higher costs of obtaining professional advice to comply with tax law; less efficiency in doing business transactions; inability of publicly traded corporations to use proposed tax changes in their financial reporting, as they have not been substantively enacted; and increased willingness to engage in aggressive tax planning.
Therefore, we will applaud this government for taking action to finally end this more than a decade-long backlog and the Office of the Auditor General for its report that really helped crystallize this issue for parliamentarians.
Furthermore, the Auditor General made a series of recommendations to help deal with this issue going forward, and as we stated at the outset, we agree with each of her recommendations.
For instance, the Auditor General recommended that the Department of Finance use an integrated and consistent process for recording, tracking and prioritizing all technical issues for possible legislative amendment. We agreed, and we moved to consolidate the system of the Department of Finance for ensuring that technical issues are documented and catalogued consistently, and that this system is maintained and kept up to date.
The Auditor General also recommended that the Department of Finance regularly develop and release draft technical amendments, including those that arise from comfort letters, so that taxpayers and tax practitioners know what changes will be made and can provide input. Again, we agreed, and we formally committed to bring technical amendment packages forward for consideration where appropriate, notwithstanding the fact that the prior technical amendments had not yet been adopted by Parliament.
In fact, this past December, the Department of Finance released a package of draft legislative proposals for public comment relating to a number of technical changes to the Income Tax Act and the income tax regulations.
Since there is only one level of taxpayer, we must work together to ensure Canada's taxpayers are treated with respect and taxes are kept low. An important way to keep taxes low is by returning to balanced budgets. We must recognize that balanced budgets are important for what they make possible and what they avoid.
Reducing debt frees up tax dollars that would otherwise be absorbed by interest costs. These dollars can then be reinvested in the things that matter most to Canadians, including lower taxes. Reducing debt keeps interest rates low, encouraging businesses to create jobs and invest in the future. It preserves the gains made in Canada's low-tax plan, fostering the long-term growth that will create more and better paying jobs for Canadians.
Canadian tax reductions that play an important role in supporting economic growth are those that enable businesses to invest more of their revenues in their operations. Such investments boost efficiency and productivity. It is this productivity growth that allows businesses to hire additional workers or offer higher wages in order to expand production and earn more profits.
Our government is committed to lower taxes for all Canadians. That is why we have introduced broad-based tax relief, with more than 150 tax reductions such as lowering the GST from 7% to 6% to 5% and introducing the landmark tax-free savings account.
Our strong record of tax relief is saving the typical Canadian family of four more than $3,200 each year. That is great news for Canada and great news for taxpayers. When we make these cuts, not every taxpayer benefits, but when we get an overall average savings of $3,200 per year, that means a lot to young families especially, and I have a lot of those in my riding, as many members do.
What is more—as is demonstrated in today's legislation, the technical tax amendments act, 2012—our government has been aggressive in closing tax loopholes used by a small group of taxpayers to avoid paying their fair share of taxes. I even hear there are some people in this House who have been using those loopholes. We will close them.
Ensuring tax fairness helps keep taxes low for all Canadians and their families, not only a select few. This is very important and reflects the feedback we have received from Canadians, who have consistently told us that they want a tax system that is both simpler to understand and comply with and ensures everyone pays their fair share of the national tax bill.
That is exactly what our government would deliver with this legislation. Put simply, this legislation would help ensure everyone is treated equitably under our tax laws.
Among the measures in the bill are enhancements to the Income Tax Act to better target and simplify rules relating to non-resident trusts. There are also modifications to rules to simplify and make more equitable the taxation of Canadian multinational corporations that have foreign affiliates.
In short, this legislation would close tax loopholes, crack down on tax avoidance and create greater fairness for all taxpayers.
I want to reiterate and stress in no uncertain terms tax fairness is a basic principle that our government is committed to upholding. We are proud to build upon it here today. I hope my friends across the way share our commitment. Who among us could oppose action to improve the integrity and fairness of the tax system? Who among us would oppose closing loopholes that allow a few businesses and individuals to avoid paying their fair share of tax? No one on this side of the House.
In all fairness, no one likes to pay taxes, but anyone who looks at it with a dose of reality at all realizes that without taxes we could not enjoy our standard of living, health care and all the things that sometimes we all take for granted.
Since 2006, our government has introduced more than 75 measures to close tax loopholes and ensure that taxes are fair for all. By ensuring this integrity, we help make our tax system even more attractive for new business investment, which is a key goal of our government. The fact is that we want to make sure the world knows that Canada is open for business and is the best place to invest.
In closing, tax reductions brought in by our government are allowing individuals and families to keep more of their hard-earned money and are improving incentives to work, to save and to invest, while also contributing to the government's long-term economic agenda. What is more, once the federal budget returns to balance, we have committed to building on our record with additional broad-based tax relief.
Ensuring tax fairness through today's legislation helps keep taxes low for all Canadians and their families. This will help keep our economy strong and lead to a better quality of life for every Canadian. I encourage all members to support the legislation before us today and to help create a better tax system and greater fairness for all Canadians.
