Mr. Speaker, I am pleased to rise in this chamber to speak to the recently concluded consultations of our government on the proposal on tax planning used by private corporations.
The Liberals' plan is to make our tax system fair. It has been part of our commitment. We are also trying to do that by growing the economy and putting more money into the pockets of ordinary Canadians.
Since we formed government, we have been focused on the priorities of strengthening and growing the middle class. How have we done that? We have done it by reducing taxes for middle-income earners, which has benefited nine million Canadians. The Canada child benefit is helping lift hundreds of thousands of children out of poverty. We have also expanded the Canada pension plan to ensure that Canadians will be better off financially in their later years. We continue to invest in our communities and people, which has resulted in a positive change to the economy.
The Canadian economy is in a resurgence. Economic indicators tell us that since the fall of 2015, the Canadian economy has created over 400,000 jobs. The results of the second quarter indicate that there is growth of 4.5% in the GDP. Our economy is now growing faster than any of the other G7 countries. It is through strategic planning and a forward-looking agenda that we have been able to achieve these results.
As our economy grows, we are committed to ensuring that the benefits of economic growth are shared by every Canadian. How do we that? Investing in people and the economy should result in a benefit for all Canadians, but all Canadians are not sharing in this wealth. This is where tax fairness comes in.
Individuals who take advantage of the tax system are able to pay less tax than those who earn the same amount and do not, for example, create a private Canadian corporation. Hence, we need to review the system and see how we can make it fairer.
Consultations have taken place, and we have heard from many individuals by mail and email. From the correspondence I have received, I have realized that there is much misunderstanding as to who would be impacted by the proposal. As such, I held a town hall in my riding to listen to concerns and clarify misperceptions and took that input back to the minister.
What is the proposal really trying to do? Contrary to the Conservatives' spin, this proposal would not impact the carpenter, the plumber, the local shopkeeper, or the restaurant. The premise of the Conservatives' argument is disingenuous, because they are misrepresenting who the tax system is really going to go after.
For example, someone earning $500,000 could take advantage of the maximum RRSP and TFSA and be left with an income of $250,000. If that individual wished to reduce his or her tax, he or she could create a PCC, float the money to his or her spouse, and sprinkle the income. Through this strategy, which is legal, the individual would be able to reduce the amount of tax paid. On the other hand, an individual who did not incorporate and who earned the same amount of money would pay a higher tax rate.
Canadians have told us that they want a fair system in which everyone pays their fair share of taxes. The tax system has not been overhauled since the 1960s. It is time to review the system and ensure that it is fair.
As an accountant, when I posed the question for the Leader of the Opposition asking him which specific section he was talking about that would impact the carpenter or the plumber, I realized that he had not really read the legislation. The proposed legislation would only target the 1% who take advantage to reduce their personal taxes, and the contractor, the plumber, and others would not be impacted by these changes.
I can say from experience, having done many corporate tax returns, that the majority of small and medium-sized enterprises, before they even submit their tax returns, have taken advantage of things that are legally available to them. They have taken advantage of expense deductions, like mortgages, hydro, and car. They have taken advantage of capital gains, which is capped at $800,000.
We understand that small and medium-sized enterprises take risks and work hard. We continue to work with them. That is why our government has invested, and continues to invest, in innovation and technology. Small and medium-sized enterprises have taken advantage of these investment programs.
In my riding, I have many SMEs that have taken advantage of innovation funds. We have recognized creative businesses through our career focus by giving them funds to hire university graduates. This is a win-win for both the employees and the employers. We have increased funding for the Canada summer jobs program so that SMEs can hire students at no, or minimum, cost. These are the benefits that small and medium-sized enterprises can take advantage of.
We have the lowest corporate tax rate for small and medium-sized enterprises in the G7. These are advantages that all of them can take. Small and medium-sized enterprises can also take advantage of deferred taxes. We are not going after those.
If anyone reads the legislation, they will know that only the 1% that probably make $250,000-plus will be impacted once they start sprinkling income. That is what the government is trying to do: make the system fairer. This is about individuals who take out the money.
It is important that we have a robust and respectful discussion and that our conversations are not based on misinformation, speculation, or hyperbole, because it does not benefit anyone. The proposal is not going to affect legitimate corporations or restrict an individual's ability to incorporate.
The Government of Canada continues to work to create a healthy and growing economy in which businesses can generate well-paying jobs and where people can have confidence that they can succeed. We are committed to supporting hard-working entrepreneurs as they invest in their businesses, create good, well-paying jobs, buy new equipment, and re-invest in the economy.
We want to ensure that Canada's tax system continues to help businesses, small and large, expand and create jobs. Our actions are to improve the tax rules to ensure that they benefit individuals as well as a competitive corporate tax system.
We do not want any unintended consequences. That is why all this debate and all these conversations are taking place.
