Mr. Speaker, today's debate is about Bill C-208, an act to amend the Income Tax Act with respect to the transfer of small business or family farm or fishing corporation. This is a very important issue, and I am concerned about the government's ongoing failure to take action on it. This problem comes back year after year, and it has still not been resolved.
In Quebec, one in three SMEs is a buyout. That means that one-third of Quebec's small businesses were existing businesses bought by someone else. That is a big deal, yet the government penalizes people who want to transfer their business to a family member. In 2018, it was estimated that 30,000 to 60,000 Quebec businesses would not find a buyer in the years to come, yet the government is actively penalizing people who want to buy out the family business. It would rather those businesses disappear or be sold to strangers. That is just great.
In the agricultural sector, Quebec is losing one farm a day. We know this, we talk about it and we speak out against it. The fishing sector is no different. Fifty years ago, fisheries were flourishing in the regions, but today, fishing villages are disappearing one after the other. This is sad, but it is partly due to inaction by this government and, obviously, governments before it.
During my previous term, from 2015 to 2019, I introduced Bill C-275 to address this issue by allowing family businesses to be transferred to members of the same family. I was made aware of this issue by some of my constituents, including Mr. Tremblay, from Armoires Tremblay in Saint-Mathieu-de-Belœil. Mr. Tremblay was in his 30s and his father owned a small, family-owned cabinetmaking business. His father wanted to retire and was waiting to sell his business to his children, in the hopes that one day the act would be amended and allow him to do so without being penalized.
Right now, the government assumes that people who sell their business to their children are fraudsters. It thinks that they will not set the price at fair market value, so it decided to tax the entire profit generated by the transaction. The problem is that a small company can quickly grow to be worth one, two or three million dollars, even if it does not employ a million people, but rather three, four, five, six or 20.
We cannot ask young people who want to take over from their parents to withdraw two million dollars from their bank account. Very few people in their twenties and thirties can withdraw one million dollars from their bank account. That is the problem. The government thinks that people who sell their business to their children are fraudsters because they will give them a better price.
That means that they will not be able to sell unless they sell to strangers. Businesses will have to close because there will be no one to take the reins. It is really frustrating to see how the government refuses to recognize and resolve this problem year after year.
Not so long ago, I was discussing this with an old school friend, Marc-André Daigneault. His parents have a company called Revêtement RJ. The same thing happened to him. His parents wanted to wait to sell their company in the hope that the rules would one day change. He is saddened by the fact that young people cannot take over their parents’ companies because the government does not want to modernize and change the legislation.
At the time, I had tabled a bill that was similar to Bill C-208. The NDP found the bill so appealing that it decided to copy it, and the former NDP member for Rimouski, Guy Caron, tabled it himself. I would not want to take all the credit for the bill, because this is something the Bloc Québécois has been fighting for for 15 years. As early as 2005, a Bloc Québécois member introduced a bill seeking to address the problem of passing down family businesses from one generation to the next.
I am an accountant by training. In my university years, when I learned the tax rules and understood that people could not pass a business down to their children—well, it is possible but very disadvantageous from a tax perspective—I was really frustrated and could not get over it. All of my classmates and professors agreed with me. If we visited a tax school, an accounting office, a lawyer’s office or any university and asked an accounting or tax professor what they thought of this, they would tell us that it makes absolutely no sense. Unfortunately, the government is digging in its heels and preventing family businesses from being passed down to the next generation.
In June 2015, however, the Liberal member for Bourassa introduced a bill concerning the passing down of family businesses. He said that it was his first bill and that it was extremely important. That was in June 2015. When the Liberals came to power in October 2015, just a few months later, they were suddenly against it. It seems that the Liberals promise all sorts of things when they are in the opposition but do not follow through when they get to power.
As my colleague from Rivière-du-Loup pointed out earlier, this is not a partisan approach. My Conservative colleague said he thinks transferring family businesses is important. I mentioned my NDP colleague earlier. I do not know the Green Party's position, but I know a lot of Liberals are not happy with their party's position and agree that it is ridiculous, so much so that the government now finds itself in an awkward position.
We have seen several economic updates and budgets since 2015. The government said it would tackle the problem and try to fix it. Now here we are in 2021, and it is still not fixed. The Bloc has been fighting for this since 2005. This is unacceptable.
There are solutions, however. The government is going to tell us that we would be opening up loopholes, but our tax law is full of loopholes. People use tax havens, and the government does not go after them, but it prevents the transfer of family businesses. How does that make any sense?
The government says that it is impossible, but we have tabled a number of bills to resolve the problem. In 2016, Quebec's Minister of Finance announced a solution to the problem in his budget. Since January 1, 2017, four years ago, Quebeckers have been able to pass down their business to their children without a tax penalty, but the federal government is unable to do the same. We do not know why, but it cannot do it. I think that the problem is stubbornness more than anything else.
Let us examine this question more in depth. The capital gains deduction in 2021 is $892,000. That means that you can sell a business you spent your entire life building without paying income tax on the first $892,000. It is similar to the sale of a tax-exempt home.
We also know that people with small businesses often do not have an RRSP. They pay themselves dividends or a small salary, and they have just as much as they need to get by. I am thinking about the neighbourhood mechanic or your local farmer. Often, they do not have any money put aside because they put everything back into the business. When they come to retire, they are very happy to have the $892,000, because retirement is expensive, and they need enough money to last the rest of their lives.
Unfortunately, the government does not allow them this $892,000 if they sell their business to their children. Selling their business to a stranger gets them an $892,000 deduction, but they have to pay tax on that amount if they sell to their children. Even worse, the tax payable on capital gains is normally half the amount. If they sell the business to their children, they have to pay income tax on the profit as if it were ordinary income or a dividend.
It boggles the mind that the government insists on voting against the bill when it is well aware of the problem, when we have been telling it for years, and when a number of bills have been tabled to resolve the situation. I try to understand, but I cannot. That is why I am very pleased that we have a minority government today and that, with the three opposition parties, we will be able to pass the bill.
