Income Tax: The Last Six Months
Of Federal Activity

About

This Report

This is a computer-generated report that shows all of the federal activity with respect to the keyword "Income Tax" over the last six months. This is a demonstration of the power of our government relations automation software.

Hansard

House: 156 Speeches
Senate: 51 Speeches

House Senate

Bills

Active: 0

Regulations

Filed: 0
Proposed: 0

The House

Sheri Benson (NDP)

May 11th
Hansard Link

Privilege

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act.””

Bardish Chagger (Liberal)

May 8th
Hansard Link

Government Orders

“... Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act, and the Income Tax Act.

Under the provisions of Standing Order 78(3), I give notice that a minister of...”

Patty Hajdu (Liberal)

May 5th
Hansard Link

Government Orders

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act, this House disagrees with the amendments made by the Senate.

She said: Madam S...”

Pierre Poilievre (Conservative)

May 5th
Hansard Link

Government Orders

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act be now read a second time and concurred in.”

I am thankful for the opportunit...”

Tom Kmiec (Conservative)

May 5th
Hansard Link

Government Orders

“...im expand on that, with this ridiculous tax plan the government has proposed, this so-called middle income tax cut, which gave the biggest tax cut to the wealthiest. Those of us in this chamber earn just enough to be eligible for the full benefit of the supposed middle-income tax cut.

I would also like to hear more from him on the national debt. The Liberal gove...”

Kevin Lamoureux (Liberal)

May 4th
Hansard Link

Government Orders

“... way said tax, deficit, and debt. When the Minister of Finance came up with the largest decrease in income tax for Canada's middle class—nine million Canadians benefited, hundreds of millions of dol...”

Gary Anandasangaree (Liberal)

May 4th
Hansard Link

Government Orders

“...hat it has changed their way of life. Our office has assisted constituents who needed to file their income tax to qualify for the CCB. They have told us the impact it will have on their lives. The CCB...”

Richard Cannings (NDP)

May 4th
Hansard Link

Government Orders

“...le class by doing absolutely nothing for those making less than $45,000 a year, instead bringing in income tax changes that gave tax relief primarily to those making $150,000 to $200,000 a year.

..”

Kim Rudd (Liberal)

May 4th
Hansard Link

Adjournment Proceedings

“...ople who need it the most by giving the money back to families through rebates, by cutting personal income tax and small business taxes, and by investing to support entrepreneurs and clean technologie...”

Gérard Deltell (Conservative)

May 3rd
Hansard Link

Government Orders

“...rliamentary budget officer. It appears that 65% of Canadians will see absolutely no change to their income tax, including those who earn $45,000 or less per year, who are the real middle class. Those ...”

Alexandre Boulerice (NDP)

May 3rd
Hansard Link

Privilege

“...ify, as was done in the past, the costs of purchasing the F-35s, for example, or of the Liberals’ income tax reduction which, in the end, has benefited only the very wealthy. The freedom of action o...”

Rodger Cuzner (Liberal)

May 1st
Hansard Link

Adjournment Proceedings

“...xibility to deal with recessions and pressures from an aging population.

We began by reducing income taxes for nearly nine million middle-class Canadians. We have made more strategic investments...”

Joël Godin (Conservative)

April 4th
Hansard Link

The Budget

“...n the policy paper. Canadian farmers will see their taxes go up because the Liberals eliminated the income tax exemption for insurers. Insurance companies gave our farmers and fishers some breathing r...”

Pierre Breton (Liberal)

April 4th
Hansard Link

Privilege

“...nerous, better targeted and non-taxable Canada child tax benefit was instituted, and after reducing income tax for middle-class people by 7%, a measure that affects 20,000 families in my riding, we wi...”

Kevin Lamoureux (Liberal)

April 4th
Hansard Link

Privilege

“...All we need to do is take a look at one of the most significant, sizable tax cuts given on personal income tax in decades. It was just last year. Hundreds of millions of dollars were put back into the...”

Pierre-Luc Dusseault (NDP)

April 4th
Hansard Link

Adjournment Proceedings

“...he CRA 171,000 files related to objections to notices of assessment. Average taxpayers submit their income tax returns. It is timely that we are discussing this right now, because this is the time of ...”

Kamal Khera (Liberal)

April 4th
Hansard Link

Adjournment Proceedings

“... opportunity to speak about the diligent work that our government is undertaking to improve the way income tax objections are managed and processed.

As the hon. member opposite is aware, in November 2016 the Auditor General examined how efficiently the Canada Revenue Agency processes income tax objections. The CRA agrees with the eight recommendations and has developed an action plan to address each of them. The work is already under way to improve service to Canadians.

Canadians must have access to the highest level of quality service when they engage with the CRA. This is at the heart of the minister's mandate letter, which was developed after listening to Canadians. I am wholeheartedly committed to making every effort to reach this level of service.

Canadians want a government that delivers on its commitments, which is why the CRA is working to make real change happen. The CRA is using funding from budget 2016 to start improving its services by increasing its capacity to efficiently resolve taxpayer objections.

Every year the CRA carries out millions of actions related to individual and business tax returns. Of the 66 million transactions with taxpayers in 2014-15, only 0.1% resulted in an objection.

The CRA has already taken concrete steps to strengthen the way it manages tax objections. It has identified areas of delay and conducted a full review of the objection process. Since January, the CRA has started to implement changes to its processes to reduce lengthy processing times. As such, it is looking to other comparable organizations to leverage best practices, and it continues to transform its operations.

Our government has made a firm commitment to supporting Canadian taxpayers by providing complete, timely, and accurate information. This is a priority for our government, which continuously strives to uphold the Taxpayer Bill of Rights.

The CRA's current way of measuring processing time is based on the complexity of an objection. In November 2016, we published descriptions of the different levels of complexity on our website. In April of this year, just a few weeks ago, we added updates to include actual and expected times for processing objections, as well as our new service standard for assigning and resolving low-complexity objections.

The CRA will strive to respond to taxpayers on low-complexity objections within 180 days 80% of the time. These represent 60% of all objections. Better service for Canadians means service delivered in a way that makes taxpayers feel respected and valued.

In line with the CRA's guiding value of collaboration, we will also ensure that decisions on objections and appeals are shared internally with all assessing and audit areas. This will be done through an enhanced and formalized feedback process. By sharing explanations on why decisions are made, employees will be able to learn from these changes, and processes will be revised where required.

The Auditor General has spoken, and the CRA is taking action. By working to resolve income tax objections in a timely manner, the CRA will give Canadians the certainty they need about their tax affairs to make informed decisions for themselves and their family. We recognize the importance of resolving income tax objections in a timely manner and we will build on the progress that the CRA has made to ...”

Pierre-Luc Dusseault (NDP)

April 4th
Hansard Link

Adjournment Proceedings

“...ust looking into what is being done in other countries with regard to the time frame for processing income tax objections when the minister promised that the job would be done by early 2017. It is very surprising to hear my colleague say today that she intends to resolve low-complexity objections in 180 days or less, while talking about efficiency and effectiveness.

I do not think that the average taxpayer who sends something in to the Canada Revenue Agency would agree that waiting 180 days to get an answer is acceptable, effective, or efficient. What is more, the government is admitting that it believes that this time frame is acceptable. In my opinion, it is not acceptable for taxpayers to have to wait 180 days before getting an answer from the Canada Revenue Agency.

I would like my colleague to provide a detailed explanation of what actions have been taken to date since the minister promised to get the job done and improve the time frame for the processing of income tax objections. What has been accomplished to date? I do not want her to tell me about what i...”

Kamal Khera (Liberal)

April 4th
Hansard Link

Adjournment Proceedings

“...cesses and early communication with taxpayers, appeals officers will be able to efficiently process income tax objections in a timely manner.

CRA regularly reviews the way it does business to en...”

Jenny Kwan (NDP)

April 3rd
Hansard Link

The Budget

“...ord it? We can. If we choose to reduce the corporate welfare to big corporations with the corporate income tax, we could more than pay for a national pharmacare program.

I will now turn to anoth...”

Harold Albrecht (Conservative)

April 3rd
Hansard Link

The Budget

“...and fishermen may face higher insurance premiums resulting from the Liberals' decision to scrap the income tax exemption for insurers of farming and fishing property. In addition, the Liberals have indicated they plan to eliminate the income tax deferral for grain producers. By failing to provide any details regarding the next agricu...”

James Bezan (Conservative)

April 3rd
Hansard Link

Adjournment Proceedings

“...n will they have all that back pay, which goes up to about $1,800 a month in increased salaries, in income tax treatment, and other benefits that accrue to them? When is that actually going to be paid...”

Rona Ambrose (Conservative)

March 21st
Hansard Link

Business of Supply

“... return for that investment. That is not what we are seeing now. We are seeing, across the country, income taxes over 50%. The Prime Minister talked about helping youth, and that has just been thrown ...”

Richard Cannings (NDP)

March 21st
Hansard Link

Business of Supply

“...cits that Canadian taxpayers are facing over the next decade.

The Conservatives cut corporate income taxes by over one-third over a six-year period. The parliamentary budget officer found that these cuts were costing the Canadian taxpayer $12 billion a year. That is a lot of money and could go a long way to helping the government pay off its debts. What is more, there is no evidence at all that these cuts stimulated any industrial growth or jobs, and so they were a pure debt on society.

Right now, corporate income tax is well below that in the United States, our competitors. I am just wondering what the Li...”

Karen Vecchio (Conservative)

March 21st
Hansard Link

Business of Supply

“...a disadvantage to attract and retain skilled labour, investment, and entrepreneurs, due to personal income tax rates that in response, truly failed to meet the expected increase in revenues to the gov...”

Jenny Kwan (NDP)

March 21st
Hansard Link

Business of Supply

“...er, one of which is that the Conservative government, for six years in a row, lowered the corporate income tax for big corporations. The Conservatives are probably proud of that, but let us just put the figures on the record and analyze them for a minute.

The corporate income tax went down from 22% to 15% over the course of six years. That meant that $12 billion in revenue was lost for Canadians and for the government. That is money that could have been invested in a variety of fashions.

The evidence indicates that these cuts actually did not stimulate investments or deliver the promised job creation. Barbados and the Bahamas, two countries that are tax havens because of their lower tax rates, have unemployment rates of about 12%. In the context of that, would the member agree that there should be a redirection with respect to the corporate income tax and that those monies be regained and invested for Canadians where they need it the most?...”

Jean-Yves Duclos (Liberal)

March 20th
Hansard Link

Oral Questions

“...ud to notice the interest of our colleague in real facts: facts around the decrease in middle-class income taxes, while increasing taxes for the top 1% of Canadians; facts around 900,000 seniors getti...”

Cheryl Gallant (Conservative)

March 9th
Hansard Link

Business of Supply

“...e, and 15 of them are at a U.S. air base, Camp Arifjan. They are not getting the same danger pay or income tax considerations as the rest of our troops in Kuwait

Are you committed to fixing this...”

Jean Rioux (Liberal)

March 9th
Hansard Link

Business of Supply

“...embers of the House, the issue is not about the pay itself but rather the applicable tax break. The Income Tax Act states in black and white that risk allowances for medium- and high-risk missions are eligible for tax relief. Any mission with a risk score of 2.50 or higher receives the relief automatically. Missions that score between 2.00 and 2.49 receive the relief when the Minister of Finance designates them as medium risk.

The Minister of National Defence has always asked the Minister of Finance for that “medium risk” designation for our troops. He has always sought that tax break for our soldiers, and he has always received it. Once a mission’s risk level falls below medium-risk threshold, however, it is out of the Minister of National Defence’s hands.

The Income Tax Act simply does not allow for tax breaks on relatively low-risk missions. The two locatio...”

Mark Gerretsen (Liberal)

March 9th
Hansard Link

Private Members' Business

“... my constituents of Kingston and the Islands to speak in support of Bill C-323, an act to amend the Income Tax Act. I will begin by thanking my colleague for York—Simcoe for putting forward this sub...”

John Nater (Conservative)

March 9th
Hansard Link

Private Members' Business

“... the same conditions of the tax credit. It would do so by allowing a minor reduction on the owner's income tax for the costs of rehabilitating the building. This would ensure that when owners of an hi...”

Ginette Petitpas Taylor (Liberal)

March 7th
Hansard Link

Business of Supply

“...o reduce taxes for the middle class.

Specifically, the government reduced the second personal income tax rate to 20.5% from 22%. In addition, only those individuals earning the highest incomes in Canada, or the richest 1%, should pay more taxes after the introduction of the new 33% tax rate for individuals earning over $200,000. Since January 1, 2016, nearly nine million Canadians have seen more money in their pockets as a result of the middle-class tax cut. Not only was this a good thing to do, but it was also the intelligent thing to do for our economy.

The tax cut for the middle class and the measures that go with it have helped make the tax system fairer to ensure that Canadians can succeed and prosper in their lives. Single individuals who benefit from the reduced second personal income tax rate will see an average tax reduction of $330 per year, while couples will see an average tax reduction of $540 per year.

At the same time, the government returned the tax-free savings account, or TFSA, annual contribution limit to $5,500 from $10,000, effective January 1, 2016. Returning the TFSA annual contribution limit to $5,500 was in line with the government’s objective of making the tax system fairer and helping those who need it the most.

When other registered savings plans are taken into account, the $5,500 contribution limit will enable most taxpayers to meet their ongoing savings needs in a tax-efficient manner. Furthermore, indexation of the TFSA annual contribution limit was reinstated so that the amount will retain its real value over time.

We have also taken action to improve the child benefit that Canadians receive. In our 2016 budget, we implemented the Canada child benefit, which is completely tax-free, in addition to being simpler and more generous than the old benefit system it replaced.

It also does a better job than the previous system of targeting the people who most need it. I firmly believe that the many parents who receive this greatly needed assistance agree with me. Thanks to the introduction of a much better-targeted Canada child benefit, about 300,000 fewer children will be living in poverty in 2017, as compared to 2014. This represents a nearly 40% drop in the child poverty rate since 2014.

Since the Canada child benefit was introduced in July 2016, nine out of ten families are now receiving more money than they did under the previous system, or nearly $2,300 more on average in 2016-17. Parents with children under 18 will receive annually up to $6,400 more per child under age 6 and $5,400 more per child aged 6 to 17.

Whether these additional funds are used for things like buying school supplies, covering part of the family grocery bill, or buying warm coats for winter, the Canada child benefit helps parents cover the high cost of raising their children. (1045) [English]

As announced in budget 2016, the government is currently conducting a comprehensive review of the federal tax expenditures. It is doing so in recognition of concerns that have been expressed regarding the efficiency, fairness, and complexity of the tax system. The objective of this review is to ensure that federal tax expenditures are fair for Canadians, efficient, and fiscally responsible for all. External experts have been engaged to provide advice to the Department of Finance. This approach ensures the review is informed by a range of perspectives.

I can assure all hon. members that the government remains committed to ensuring federal tax expenditures are doing what they are meant to do and that they are doing it to help middle-class Canadians. In addition, the government is committed to strengthening efforts to combat international tax evasion and avoidance, and we have taken, and will continue to take, this important step and actions to do so.

These efforts help protect the revenues base and give Canadians greater confidence that the system is fair for everyone. Canadians work hard for their money, and the majority of Canadians pay their fair share of taxes. However, some wealthy individuals participate in complex tax schemes to avoid paying their fair share of taxes. This is unacceptable, and it needs to change.

The Government of Canada is working hard to crack down on offshore tax evasion and aggressive tax avoidance in order to ensure a tax system that is fair and responsive for all Canadians. In budget 2016, we invested $444 million over five years for the Canada Revenue Agency, better known as the CRA, to crack down on international tax evasion and combat tax avoidance.

These investments by the government are enabling the CRA to hire additional auditors, develop robust business intelligence infrastructure, increase verification activities, and improve the quality of its investigative work. These new investments to support the CRA's effort to crack down on tax evasion and combat tax avoidance are expected to generate around $2.6 billion in taxes over the next five years.

In April 2016, the offshore compliance advisory committee was created to advise the Minister of National Revenue and the CRA on strategies to combat offshore tax evasion and avoidance. However, we also recognize that assessing tax revenues alone is not enough. Once we do an assessment, we need to be able to collect the unpaid amounts. That is why budget 2016 invests an additional $351.6 million over five years to improve CRA's ability to collect these outstanding tax debts.

Canada has been a very active participant in international efforts to address tax evasion. Canada is an active member of the Global Forum which was established to ensure that high standards of transparency and exchange of information for tax purposes are in place around the world. Canada has developed an extensive network of bilateral tax treaties and tax information exchange agreements which provide for the exchange of information that could be extremely critical in investigation processes.

Another international development with regard to addressing tax evasion is the new common reporting standard developed by the OECD and endorsed by the G20 leaders. The standard provides a framework under which information on financial accounts in a country held by non-residents will be automatically shared with tax authorities of the jurisdiction in which the account holder is a resident. Legislation has now been adopted to implement the common reporting standard in Canada, starting July 1, 2017, joining more than 100 other countries.

With our partners in the G20 and the OECD, Canada has been an active participant in the multilateral project to address base erosion and profit shifting, BEPS. BEPS refers to aggressive international tax-planning arrangements undertaken by some multinational enterprises to inappropriately minimize their taxes. Budget 2016 announced a series of actions Canada is taking to implement recommendations from the BEPS project. (1050)

First, Canada has enacted new legislation to require country-by-country reporting for large multinational enterprises. Second, the CRA is applying revised international guidance on transfer pricing. Third, we participated in international work that developed a multilateral instrument to streamline the implementation of treaty-related BEPS recommendations, including addressing treaty abuse. Finally, the CRA is undertaking a spontaneous exchange with other jurisdictions of certain tax rulings.

Going forward, the government will continue to work with the international community to ensure a coherent and consistent response to the BEPS. The government is also taking action in other areas to protect the integrity of Canada's international tax rules. In particular, budget 2016 introduced measures to extend the application of the income tax back-to-back loan rule to royalty arrangements, and to prevent unintended tax-free cross-...”

Dan Albas (Conservative)

March 7th
Hansard Link

Business of Supply

“...rs for taxpayers who have failed to report income from a specified foreign property on their annual income tax returns and have failed to properly file the foreign income verification statement; revising form T1135 reporting to provide more detailed information, including the names of specific foreign institutions and countries where offshore assets are located and the foreign income earned on those assets; and streamlining the process for the Canada Revenue Agency to obtain information concerning unnamed persons from third parties, such as banks.

Conservatives also launched the international tax evasion program aimed at reducing international tax evasion and avoidance. Under this program, the CRA would pay rewards to individuals with knowledge of major international tax non-compliance when they provided information to the CRA that led to the collection of outstanding taxes due. This program helped target high-income taxpayers attempting to evade or avoid tax using complex international arrangements.

Economic action plan 2015 built on these measures and announced an additional $25.3 million over five years to expand its activities to combat international tax evasion, and $58.2 million over five years to specifically deal with large and complex business entities that were undertaking tax evasion. I would note that the Parliamentary Secretary to the Minister of Finance has mentioned some of the investments the government makes, which shows that there are progressive efforts to curb tax evasion in this country. (1110)

These measures help make sure that every Canadian pays their fair share. In fact, between 2006 and 2015, the Conservative government aggressively moved to close more than 85 tax loopholes. Closing these loopholes amounted to billions of dollars saved annually. That meant lower taxes for all Canadians, not just a select few.

It is not just us who believe that these measures have helped. In the fall of 2013, when the Auditor General conducted a review of offshore banking, it was concluded that CRA was diligent and that the new measures were helping. Our plan worked on this very issue and is continuing to help CRA crack down on tax evaders. We will continue to advocate that the Liberal government consistently review how it can best address the problem.

Beyond taking direct action to combat international tax evasion, the Conservative Party also took steps to encourage new investment to come to Canada by building a tax-friendly environment for businesses. Conservatives understand that we need to be tough on tax cheaters while also making sure that our tax system is not driving people away. That is why we introduced a number of measures that reduced the overall tax burden in Canada to its lowest level in 50 years. In fact, the Conservative government cut taxes more than 180 times. That is because we do not simply say we will do something; we follow through with those commitments we make to Canadians.

Our record on taxes is clear. We lowered the federal corporate income tax rate to 15% to help create jobs and economic growth for Canadian communities. We lowered ...”

Jenny Kwan (NDP)

March 7th
Hansard Link

Business of Supply

“... should think again. Over the years, between the Conservatives and the Liberals, Canada's corporate income tax rate has dropped dramatically, from 37% to 15%. Members heard me correctly. That is a 22-...”

Jenny Kwan (NDP)

March 7th
Hansard Link

Business of Supply

“...of the measures were good, but the government could do a whole lot more if it reduced the corporate income tax. By the way, successive governments have reduced corporate income tax, Conservatives to Liberals, Liberals to Conservatives, from 37% to 15%, and the Liberals ...”

Jenny Kwan (NDP)

March 7th
Hansard Link

Business of Supply

“...ould reduce taxes. I obviously meant the opposite, that the Liberals need to increase the corporate income tax rate in order to recoup the monies that could be invested into the community. I want to be clear about that.

To the member's question, these things are all interrelated, of course. We are talking about tax havens, where the ultra rich can hide their money so they do not have to pay Canadian taxes. We are talking about a corporate income tax that successive governments have reduced over the years, which actually gave a huge windf...”

Raj Grewal (Liberal)

March 7th
Hansard Link

Business of Supply

“...% of Canadians so we could cut taxes for the middle class. Specifically, we reduced the 22% federal income tax rate to 20.5% for 2016 and all subsequent tax years, and we raised the taxes on the wealthiest Canadians by introducing a new top income tax rate of 33% for individuals with a taxable income of over $200,000. As a result, nearly n...”

Xavier Barsalou-Duval (Bloc Québécois)

March 7th
Hansard Link

Business of Supply

“...e Agency is also granting amnesty to fraudsters who come up with shell games to avoid having to pay income tax.

In his speech, my colleague talked about reducing income tax. Not too long ago, Alain Deneault wrote a book in which he asked whether Canada was becom...”

Tracey Ramsey (NDP)

March 7th
Hansard Link

Business of Supply

“...icy I would like to draw my colleagues' attention to is the impact of drastic cuts to the corporate income tax. The Conservatives cut the rate by one-third, from 22% to 15%, over six years, and the Li...”

Rachel Blaney (NDP)

March 7th
Hansard Link

Business of Supply

“...ot give in, that we can slowly and smartly take steps to dismantle these schemes and strengthen our Income Tax Act. This is so important. It is about the hard-working people in Canada who are paying m...”

Ruby Sahota (Liberal)

March 7th
Hansard Link

Business of Supply

“...taxes on the wealthiest 1%, so we could lower taxes on the middle class. We reduced the 22% federal income tax rate to 20.5% for 2016 and subsequent taxation years. This tax cut is already benefiting nearly nine million Canadians. Single individuals who benefit will see an average tax reduction of $330 every year and couples will benefit by seeing an average tax reduction of $540 every year. This means more money in the pockets of the middle class. To help pay for the middle-class tax cuts, the government raised taxes on the wealthiest Canadians by introducing a new top income tax rate of 33% for individuals with a taxable income of more than $200,000 per year.

O...”

Linda Lapointe (Liberal)

March 7th
Hansard Link

Business of Supply

“...things done by our government was to reduce taxes for the middle class. We have reduced the federal income tax rate to 20.5% from 22%, for 2016 and the years after that. This tax reduction is already benefiting nearly nine million Canadians. Individuals without spouses who benefit from this will see their tax burden lightened by an average of $330 each year, and couples who benefit will have their burden lightened by an average of $540 each year. That means that these people will have more money in their pockets, and that will result in a stronger middle class.

To help finance this tax reduction for the middle class, the government raised taxes for the wealthiest Canadians by introducing a new personal income tax rate of 33% for individuals with taxable income in excess of $200,000 per year.

Our...”

Linda Lapointe (Liberal)

March 7th
Hansard Link

Business of Supply

“Madam Speaker, you spoke of tax measures. In our budget 2016, income tax rates fell from 22% to 20.5%, while the rate for people with an annual income of $200,000...”

Gabriel Ste-Marie (Bloc Québécois)

March 7th
Hansard Link

Business of Supply

“...n it comes to helping its banker buddies, the government is happy to play an active role.

The Income Tax Act prohibits the use of tax havens. Parliamentarians never voted for that. A close look at the tax treaties shows that the use of tax havens is not allowed. For example, article 30 of the treaty with Barbados explicitly excludes all businesses with special tax benefits in Barbados. According to the treaty, profits sent to Barbados have to be taxed in Canada. The treaty is clear, and its implementation act is rock-solid. The act states that provisions in this treaty take precedence over incompatible provisions in any other act or regulation. In other words, under the act to implement the Canada-Barbados treaty, the government is obligated to tax repatriated profits.

As for the agreements that Canada has concluded with the other 22 tax havens, they are nothing but information sharing agreements. They too do not give anyone the right not to pay income tax in Canada. The tax treaties and the Income Tax Act are not the problem; the problem is the regulations which contradict the treaties and...”

Robert Aubin (NDP)

March 7th
Hansard Link

Business of Supply

“...I would like to briefly comment on the relevance of our motion. Many people are finalizing their income tax returns and doing their duty as citizens. However, for those for whom the T4 is everything, or in other words, those who file the simplest income tax return with just one source of revenue, there are no loopholes available. That is the case for most Canadians, but late filers beware because there will inevitably be penalties. That means that average Canadians, and I am not talking about those with an average salary, but most Canadians who file their income tax return using only a single T4, will have to pay penalties at even the slightest sign of a...”

Pierre-Luc Dusseault (NDP)

March 7th
Hansard Link

Business of Supply

“...ok at the figures, we see that since 2006, not one charge has been filed under section 163.2 of the Income Tax Act. That section allows for prosecution for misleading tax plans, in other words, prosec...”

Cheryl Hardcastle (NDP)

March 7th
Hansard Link

Business of Supply

“...colleague for her very intriguing and inspiring speech. We know that Harper's cuts to the corporate income tax rate did not boost investment in Canada. They did not lead to promised job creation, and ...”

Joël Godin (Conservative)

March 7th
Hansard Link

Business of Supply

“...ealthy fiscal environment for businesses thanks to its tax cuts which brought the general corporate income tax rate down from 22% to 15%. It lowered taxes for small businesses and created measures to ...”

Bernard Généreux (Conservative)

March 7th
Hansard Link

Business of Supply

“...ll the hon. member introduce a private member's bill that identifies precisely which section of the Income Tax Act needs to be amended, repealed, or added? Is he going to propose amendments to the Cri...”

Rhéal Fortin (Bloc Québécois)

March 6th
Hansard Link

Oral Questions

“Mr. Speaker, KPMG allowed Canadian multimillionaires to violate the Income Tax Act with impunity thanks to an agreement with the Canada Revenue Agency, or CRA. This is ...”

Jonathan Wilkinson (Liberal)

March 6th
Hansard Link

Adjournment Proceedings

“...% for the middle class and to provide rebates. British Columbia now has the lowest overall personal income taxes in Canada thanks to its carbon pricing system.

Many of the world's largest econom...”

Jonathan Wilkinson (Liberal)

March 6th
Hansard Link

Adjournment Proceedings

“...people who are not earning a lot of money. British Columbia does that and actually reduced personal income taxes to achieve the lowest personal income tax rate in Canada.

There are many ways we can have a carbon price that tries to get at...”

Wayne Easter (Liberal)

February 23rd
Hansard Link

Routine Proceedings

“...the 13th report of the Standing Committee on Finance in relation to Bill C-240, An Act to amend the Income Tax Act (tax credit — first aid). The committee has studied the bill and recommends that th...”

Pierre Poilievre (Conservative)

February 23rd
Hansard Link

Business of Supply

“...d return to taxpayers everything collected through that price on carbon, in the form of rebates and income tax cuts. The only way to test that proposition is to know what people are paying in the firs...”

Ginette Petitpas Taylor (Liberal)

February 23rd
Hansard Link

Business of Supply

“...ortunity to succeed.

Specifically, the government lowered the tax rate in the second personal income tax bracket from 22% to 20.5%. Single individuals who benefit from the reduced second personal income tax rate will see an average tax reduction of $330 every year, while couples will see an average tax reduction of $540 every year. Only the higher income earners, the wealthiest 1%, will pay more taxes with the introduction of the 33% personal income tax rate on individual taxable income in excess of $200,000. (1055)

Finally, the gover...”

Cheryl Gallant (Conservative)

February 23rd
Hansard Link

Business of Supply

“Mr. Speaker:

Carbon taxes are before income tax operating expenses and at least partially deductible from royalties payable by resource e...”

David Lametti (Liberal)

February 23rd
Hansard Link

Business of Supply

“... credit for low-income families and has made its direct price on carbon revenue-neutral by reducing income taxes for British Columbians and for businesses operating in the province.

Alberta's po...”

Geng Tan (Liberal)

February 23rd
Hansard Link

Statements by Members

“... CRA-approved clinic is managed through my constituency office. Our volunteers are ready to prepare income tax returns for all eligible individuals from mid-February to the end of April.

I encou...”

Jonathan Wilkinson (Liberal)

February 23rd
Hansard Link

Business of Supply

“...and how it has used those revenues. The bulk of those revenues, if he would look, are used to lower income taxes for the lowest-income people in British Columbia, to provide a tax credit, a rebate, fo...”

David McGuinty (Liberal)

February 23rd
Hansard Link

Business of Supply

“...hority to decide what they want to do with those revenues. If Saskatchewan wants to reduce personal income taxes, it can do so.

Could the member produce the same analysis she calls for now, the ...”

Garnett Genuis (Conservative)

February 23rd
Hansard Link

Business of Supply

“...ent actually did not make any changes to the tax rates for high-income earners. We only lowered the income tax rates for the lowest tax bracket, and we made other tax reductions and changes that stimu...”

Pierre Poilievre (Conservative)

February 23rd
Hansard Link

Adjournment Proceedings

“...y would theoretically be returned to them through offsetting tax reductions. Some say, for example, income taxes could be reduced. The old saying is “We will tax what you burn, not what you earn”....”

Jonathan Wilkinson (Liberal)

February 21st
Hansard Link

Oral Questions

“...the pricing of carbon pollution to give the money back to families through rebates, to cut personal income taxes and corporate taxes, and to invest and to create jobs in the clean growth economy.

<...”

Kelly McCauley (Conservative)

February 21st
Hansard Link

Oral Questions

“...ecision alone. Now the government employees are getting incorrect T4s as they prepare to file their income tax, and no one is willing to help them or respond. What does the minister have planned to he...”

Len Webber (Conservative)

February 16th
Hansard Link

Routine Proceedings

“...register as an organ donor easier. This would be achieved by adding a simple question to our annual income tax returns. Currently, 90% of Canadians support organ donations, but only 25% are registered...”

Andy Fillmore (Liberal)

February 16th
Hansard Link

Adjournment Proceedings

“...carbon price. For example, with a carbon price of $20 per tonne, Saskatchewan could reduce personal income taxes by over one-third, and cut its provincial sales tax by two-thirds. At $30 per tonne, Sa...”

Peter Van Loan (Conservative)

February 10th
Hansard Link

Private Members' Business

“moved that Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property), be read the second time and referred to a comm...”

Ginette Petitpas Taylor (Liberal)

February 10th
Hansard Link

Private Members' Business

“...323. The bill before the House today, sponsored by the member for York—Simcoe, seeks to amend the Income Tax Act “to establish a tax credit for expenses related to the rehabilitation of a historic property”.

Tax changes should ideally be made as part of the budgetary process. This gives the government a chance to fully examine all options, strike a balance between priorities, and make new fiscal commitments only when they are affordable and the government can do so responsibly.

Bill C-323 raises a number of issues that must be fully and thoughtfully considered. Of course, cost is one important element, but it is not the only one.

According to Parks Canada, there are approximately 13,000 historic sites in the Canadian Register of Historic Places. However, the number of distinct heritage properties is probably much higher. Indeed, the register includes heritage districts that could include more than one property. For instance, in Ontario alone, there are 121 heritage districts that comprise over 23,000 properties.

I would also like to point out another challenge when it comes to determining cost. The bill does not cap the amount people can apply for for tax purposes. It is completely irresponsible.

We also have to consider whether this kind of tax credit would actually promote the preservation of historic property rather than just provide an unexpected perk to the owners for doing work that they are already obliged to do.

Equality among homeowners is another very important issue we need to discuss. Some people will be eligible for the home renovation credit while their neighbours, who do not own a designated historic property, would not be eligible even though costs are incurred in both cases. That would be totally unfair.

This bill is also likely to result in a sharp increase in applications for historic designation. The government will have to assess Parks Canada's ability to meet that increased demand. That will result in more costs.

Moreover, as with any new tax credit, the government will have to evaluate the administrative burden on the Canada Revenue Agency.

The Government of Canada is committed to promoting equality and efficiency for the middle class and all Canadians, especially when it comes to our tax system. That is why, in budget 2016, the government announced that it would do a comprehensive review of tax expenditures. This effort is part of the government's overall commitment to eliminate poorly targeted and ineffective programs, wasteful spending, and ineffective and obsolete government initiatives. We are striving for equality and efficiency for the middle class.

The government recognizes the importance of preserving Canada's heritage in the interest of the middle class and all Canadians. As a matter of fact, the Income Tax Act already contains incentives to encourage individuals and corporations to make donatio...”

Wayne Stetski (NDP)

February 10th
Hansard Link

Private Members' Business

“...p>Mr. Speaker, I am very pleased to rise today to speak directly to Bill C-323, an act to amend the Income Tax Act (rehabilitation of historic property). Again, I would like to thank my colleague from...”

Dianne L. Watts (Conservative)

February 10th
Hansard Link

Private Members' Business

“Mr. Speaker, I am pleased to rise and speak to Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property).

This private member's bill from my colle...”

Sheila Malcolmson (NDP)

February 10th
Hansard Link

Private Members' Business

“... represent, for its very detailed letter supporting the benefits of Bill C-323, an act to amend the Income Tax Act for the rehabilitation of historic property.

Chris Sholberg, who is a planner w...”

Gérard Deltell (Conservative)

February 9th
Hansard Link

Business of Supply

“...n it comes to managing public funds; they were unable to keep their campaign promise concerning the income tax cuts promised to businesses; and they were unable to reduce Canadians’ tax burden on a ...”

Ginette Petitpas Taylor (Liberal)

February 9th
Hansard Link

Oral Questions

“...are taking on mortgages that they can afford even if the rates go up. The government also announced income tax measures to improve the fairness and integrity of the tax system. We will continue to mon...”

Ginette Petitpas Taylor (Liberal)

February 9th
Hansard Link

Oral Questions

“...are taking on mortgages that they can afford even if the rates go up. The government also announced income tax measures to improve the fairness and integrity of the tax system.”

Pat Kelly (Conservative)

February 8th
Hansard Link

Government Orders

“...n Calgary.

I heard from a small business owner whose sales and profits are down. His personal income taxes are up. He did not receive a promised small business tax reduction. His payroll deducti...”

Bernard Généreux (Conservative)

February 6th
Hansard Link

Private Members' Business

“...ntend to retire in the next 10 years. It is therefore urgent that we correct the discrepancy in the Income Tax Act so that we are prepared for the upcoming demographic reality. That is why I support B...”

Karine Trudel (NDP)

February 6th
Hansard Link

Private Members' Business

“...ed to add my voice to the chorus of those across Canada who support Bill C-274, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation). I would like to thank my colleague from Rimouski-Neigette—Témiscouata—Les Basques for introducing this bill. I know he worked long and hard to make sure this bill is written in such a way as to protect everything that matters to our small businesses.

As we all know, our small and medium-sized businesses are the bedrock of our economy. Whole families make a living thanks to them.

I am from Saguenay—Lac-Saint-Jean, where life can be very different from that in big cities. Many of my colleagues, such as those from Abitibi and the Lower St. Lawrence, as well as some of the other provinces, are familiar with those differences.

The reality in our regions, in places like Saguenay—Lac-Saint-Jean, is that there are often only two, three, or four large businesses that contribute to their economies. Most of the time, small and medium-sized businesses are the main contributors. Many of our small businesses have only three or four employees, but they are what are sustaining our regions. We are seeing this more and more. The men and women of our regions are developing projects and new ideas and are doing their part every day to keep our regional economies going.

At the same time, our small and medium-sized businesses are facing many problems that make it harder for people back home to succeed. For example, the customer base is much smaller in our region.

Another problem is the shortage of young people willing to take over these businesses. It is really hard for SMEs to find people to take over, so when an entrepreneur is lucky enough to have someone in their family they can count on to take over the family business, that creates wealth for our communities. When people are lucky enough to have a family member to carry on a family business, it means they can pass down traditions, and for some, even memories. It means they can pass on what they have learned through experience and hard work.

Unfortunately, there is a great injustice. Federal legislation penalizes business owners and dissuades from passing on their life's work to members of their family. The reason is quite simple: when a business is sold to the owner's children or another relative, the profit from the sale is considered a dividend and is taxed as such under the Income Tax Act. On average in Canada, a dividend is taxed at roughly 35%.

If the business is sold to someone who is not part of the family, who is not a relative but a stranger, then the profit is considered a capital gain. In that case, there is a lifetime exemption of roughly $825,000 for a business and about $1 million for a farm or a fishing vessel. The remaining capital gain is taxed at about 25%, on average. That explains the difference between the sale to a stranger and the sale to a child or another family member.

We have to do something about this unfair situation. I have met with business owners in my region. They all agree on this. That is why various stakeholders in the Saguenay—Lac-Saint-Jean region support Bill C-274. (1115)

I will quote Carl Côté of the Saguenay-Le Fjord chamber of commerce and industry.

Business succession is a major economic issue, especially in remote areas. Family businesses play an important role in economic development and they must have support. At present, they are subject to very unfair tax treatment. Family business succession is an issue that we are following closely...

The former president of the Union des producteurs agricoles du Saguenay—Lac-Saint-Jean, Yvon Simard, believes that it is appalling that, in 2016, the dismantling and sale of companies to a stranger is subject to less tax than the sale or transfer to a family member, someone who could pursue their parents' dream and continue farming in the Saguenay—Lac-Saint-Jean region.

When we contacted businesses in my riding, dozens responded and supported the NDP's efforts. Many deplore the current situation and hope that this injustice will be addressed.

I would like to read a few comments I received about this. They paint a clear picture of the reality facing small businesses and what the people of Saguenay—Lac-Saint-Jean are going through.

A motel owner said that this is a major problem and that his father thought about selling the business to a stranger because it was more beneficial for him than to sell it to a family member.

Another business owner said the following: “I co-own a business with my son, so who do you think I will sell my shares to? However, by selling to my son, I am going to lose a lot of money. It is not fair.”

Finally, the owner of a small business said, “Two years ago, I sold my business to my son. It is unacceptable that I was penalized because of this unfair provision. It is a double standard.”

It is completely unacceptable for these business owners to be penalized for selling their company to a family member. We are not talking about opening the door to tax avoidance. We are talking about correcting the inequity that exists in the Income Tax Act, which considers the sale of a family business or farm to be a capital gain. Things s...”

Emmanuel Dubourg (Liberal)

February 6th
Hansard Link

Private Members' Business

“...r of possible solutions in her report.

This bill targets one of the most complex parts of the Income Tax Act: the sections about transfers and the capital gains deduction, among others. We are t...”

Jacques Gourde (Conservative)

February 6th
Hansard Link

Private Members' Business

“... to thank my colleague from the New Democratic Party for introducing this bill, an act to amend the Income Tax Act regarding the transfer of small business or family farm or fishing corporation. The member for Rimouski-Neigette—Témiscouata—Les Basques, from the province of Quebec, is the finance critic for the second opposition party.

I feel compelled to speak to this issue because many people in my riding, Lévis—Lotbinière, have expressed their concerns about this matter and what the Canada Revenue Agency is supposed to do.

Furthermore, my colleague from Portneuf—Jacques-Cartier had intended to move a motion or introduce a bill to change this situation after a number of his constituents expressed their serious concerns and fears. As everyone here knows, all parliamentarians have to wait their turn in order to introduce a bill or motion in the House. Unfortunately, my colleague was 214th in line to be able to introduce his bill, which meant he was very unlikely to introduce it before the end of the 42nd Parliament, which will end in October 2019.

This bill should go through second reading so that we can study all the tax implications and, most importantly, determine how it will contribute to the economic development of the regions of Quebec and Canada.

We believe that this government has not done what is necessary to support the economic development of our regions, and here is why. It appointed just one minister to look after Canada's six economic development agencies, when that minister is not familiar with the realities of all the regions of Canada, particularly those of Quebec, and likely never will be.

The Liberals have been in office for over a year, yet they still have not managed to sign a softwood lumber agreement. They also have not managed to create any jobs in Canada, except perhaps at the Office of the Conflict of Interest and Ethics Commissioner. They are setting up an infrastructure bank for projects of $100 million or more. They are even saying that investors would prefer projects of $500 million or more. However, if projects of $100 million or more or $500 million or more are required, the Lotbinière RCM, whose municipalities have an average population of 2,200, will not see a penny of that money for many years to come.

What is more, the government set up only a modest compensation program for farmers and cheese producers. However, these days, our dairy producers are very concerned, particularly with regard to the new and upcoming NAFTA negotiations. I can see why they are concerned, given the government across the way.

Let us not forget the most important thing: the government did all of this while completely losing control of the deficit. It announced a $10-billion deficit, which is huge, but now it seems the deficit is going to be closer to $30 billion. What is worse, the budget will not be balanced until 2055. There are many people here in the House who will not even live to see that happen.

This bill has to pass second reading stage so that we can provide a tool to help protect our seasoned Canadian entrepreneurs. This will also help ensure the prosperity of a business supervised by a parent who is committed to the success of the business. Parents are excellent mentors for the business, especially if they have been working at the business for 40 years. They have weathered a few storms and are certainly able to give the best advice to the future generation, often their own children or grandchildren. These entrepreneurs worked hard on developing their businesses. The least we can do is take the time to address this issue in the House.

Let us build on what Quebec did when faced with the same problem involving the sale of businesses between members of the same family. In 2015, the finance minister included measures in his budget to ensure that this type of transaction is taxed fairly and equitably for family members of small-business owners.

We must also encourage family solidarity and in doing so, protect our small and medium-sized businesses to ensure their survival and allow children and grandchildren to take over the operations and maintenance of their family business, both in Canada's cities and its vast rural regions. (1135)

Many business people are not motivated to transfer their cherished business to a family member. Imagine that you had to pay between $250,000 and $1 million more in taxes on a small business. This is quite different than selling the business to a non-family member. That is the lesser evil. What is scandalous is the demise of these businesses, which results in the loss of 15, 20, or 30 jobs in small communities of 1,000 people.

Future generations work in the family business. However, when the owners want to retire and enjoy a well-deserved lifestyle after having worked to build a good business, they do not want to give their money to the different levels of government. We all know that the best place to invest money in order for it to grow is in the pockets of Canadians and not in those of a Liberal government.

Anyone who can count and who is an entrepreneur at heart will perhaps prefer, unfortunately, to sell their business to someone else rather than to a family member, because today's tax system is not accountable to anyone and does not respect the contributions of those who have developed these businesses for the past 40 years.

We believe that the aging of our population will result in increased business transfers, and that most small businesses will sadly not make it out in one piece. The survival of small businesses is vital to job markets all across Canada, especially in the regions. Young entrepreneurs are having a hard time coming up with the capital needed to take over the business, especially since they have to borrow 30% more to ensure that their parents can have a decent retirement. Many entrepreneurs want their children or grandchildren to take over their business, which is only natural. When people invest 40 years of their life in a business, they usually want it to continue after they are gone.

We believe that horizontal equity, when it comes to taxation, is a fundamental part of ensuring a fair and competitive business environment. It is only fair that all Canadians should be treated equally when it comes to taxation, and not two different ways. It is unfair that there are two separate tax structures depending on whether business owners sell to their children or grandchildren, or to a stranger. We believe that the Income Tax Act penalizes families who want to keep the business in the family.

In closing, for...”

Ginette Petitpas Taylor (Liberal)

February 6th
Hansard Link

Private Members' Business

“...Government of Canada cannot allow that possibility. The stated purpose of this bill is to amend the Income Tax Act to facilitate the transfer of small businesses and family farm and fishing corporations among family members.

To that end, the bill would dilute two longstanding anti-avoidance rules found in the Income Tax Act. First, we must answer the following important question: why are these anti-avoidance rules in place? Their objective is certainly not to discourage the transfer of small businesses to family members. These rules exist because without them certain individuals would have greater opportunities to engage in inappropriate tax avoidance.

Measures that would introduce tax loopholes would not be consistent with the principles of fairness, economic efficiency, and responsible fiscal management.

As I mentioned, the bill would dilute two longstanding anti-avoidance rules found in the Income Tax Act; specifically, it would amend sections 55 and 84.1 of the act.

I would now like to focus on section 84.1. This anti-avoidance rule may apply when an individual sells shares of one corporation to another corporation that is linked to the individual. When an individual sells shares of a Canadian corporation to a linked corporation, section 84.1 of the Income Tax Act deems that the individual has received a taxable dividend from the linked corporation rather than a capital gain, which is taxed at a lower rate in certain circumstances. Why? It is because the linked corporation could use the proceeds of the dividend paid by the Canadian corporation and give it to the individual in exchange for shares.

In other words, the individual is taxed based on the principle whereby dividends can be extracted from the Canadian corporation in order to be paid to the individual and should be taxable in his or her hands as dividends. Without this rule, such sales between related parties could be used to convert dividends for an individual into capital gains that are taxed at a lower rate, including gains eligible for a lifetime capital gains exemption.

Bill C-274 proposes narrowing the scope of section 84.1 by removing the sale of shares of certain companies from its application. These companies include eligible small businesses and family farm or fishing corporations sold by an individual to another firm owned by an adult child or grandchild of that individual.

This change will allow the owner-operator of a family business to convert the dividends of the corporation into taxable capital gains at a lower tax rate. Such conversions of corporate dividends into capital gains taxed at a lower rate could be done as often as the owner-operator wants to extract the corporation's surpluses and receive a fiscal benefit.

While the main purpose of section 84.1 is to limit the application of the lifetime capital gains exemption, there are similar concerns regarding cases where no exemption is requested because of different personal income tax rates that apply to taxable dividends and capital gains. (1150)

In 2017, the highest combined federal-provincial personal income tax rate on capital gains is roughly 17.8 percentage points lower than the rate applicable to dividends.

This difference in personal income tax rates means that for every extra $100,000 that is converted into a taxable capital gain, ...”

Gord Johns (NDP)

February 6th
Hansard Link

Private Members' Business

“Madam Speaker, it is an honour to rise in support of Bill C-274, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation).

As the small-business critic for the progressive opposition, as a former business owner and executive director of a chamber of commerce, and as the co-chair of the all-party entrepreneur caucus, I am proud to stand today in support of Bill C-274 and speak to its many strengths. I am grateful for the work of my colleague, the member for Rimouski-Neigette—Témiscouata—Les Basques, for putting forward an excellent piece of legislation on tax fairness for Canadian small-business owners.

In debates, committee meetings, and in legislation, small business is an important focus for parliamentarians. We understand that small-business owners are the real job creators in Canada, as 80% of all jobs are created by small business. Some 30% of our GDP comes from small business. Small businesses are an economic driver of our local economies.

The bill is about keeping jobs in Canada, keeping our wealth in our local communities, supporting family-owned businesses, and supporting community economic development by plugging economic leakages. It is about fair tax laws for Canadians. It is about correcting an unreasonable provision in the Income Tax Act. It makes no sense that our current laws make it easier to sell a business to a stranger than to a family member. Why would we do that? Let us make it easier to enable Canadian businesses to be passed from generation to generation, not harder. Let us not penalize the very people who have put their heart and soul and a lifetime into developing their local businesses. Let us support Canadians who support their communities.

I know I do not have time to do a full speech, so in closing, the government has an opportunity to show Canadians it is fighting for working-class Canadians by supporting the bill. The working class is family business. It is hard-working entrepreneurs who are the foundation of our economy and the real job creators. Nobody has a deeper connection to community or understands the importance of keeping the wealth in their community better than family business owners.

Canadians deserve fair succession tax laws on their family-owned small businesses. We need to make it easier to sell a business to a family member. We need to keep jobs local, and our money in our local economies. We need to give our business owners the tools to thrive in our communities. Right now, the Income Tax Act makes it easier to sell a business, like I said, to a stranger than to a family membe...”

Ginette Petitpas Taylor (Liberal)

February 3rd
Hansard Link

Oral Questions

“...for his question.

Bill C-274 would weaken two anti-avoidance rules that have been part of the Income Tax Act for a long time. The government is concerned about the changes, which would increase ...”

Ginette Petitpas Taylor (Liberal)

February 2nd
Hansard Link

Business of Supply

“...ment has taken the following measures: it lowered the tax rate for Canadians in the second personal income tax bracket from 22% to 20.5%; introduced a 33% personal income tax rate on individual taxable income in excess of $200,000; returned the tax-free savings account, TFSA, maximum annual contribution to $5,500 from $10,000; and reinstated indexation of the TFSA annual contribution limit.[English]

Let me very quickly expand on what these changes have achieved.

First and foremost are the personal income tax rate changes. Single individuals who benefited from the reduction of the second personal income tax rate will see an average tax reduction of approximately $330 every year and couples will see an average tax reduction of $540 every year.

Second, only Canada's top income earners are expected to pay more taxes as a result of the introduction of the new top personal income tax rate, that of 33%. As with other bracket thresholds, the top threshold is indexed to infl...”

Guy Caron (NDP)

February 2nd
Hansard Link

Business of Supply

“...ine how the tax system could be adapted to the reality of the day. It is important to remember that income tax has been around since 1917. In 1960 or 1965, we still had a system that was designed during the Second World War. This was serious work. It was commissioned by John Diefenbaker, the Progressive Conservative prime minister at the time, and continued by Liberal minister Lester B. Pearson.

Prime minister Trudeau was the one who got it across the finish line. He took all of the work that was done and condensed it into a handful of recommendations, which were accepted. The very essence of the report, which was that every dollar of income should be taxed the same, got swept under the rug. In the end, a few changes were made, but we ended up with a system that falls somewhat short of the objectives originally set out for this exhaustive study.

I am reminding members of this little bit of history because we are now witnessing a similar attempt to pull the wool over the eyes of Canadians. The government is telling Canadians that it understands them and that it will do what it takes to make the system fairer.

However, the proposal to tax private health and dental benefits is a trial balloon. It is not meant to make the system fairer. Rather, it is a way for the government to take money out of one pocket while trying to convince taxpayers that it is putting money in the other.[English]

It is a very important question because it is going to be a defining question for the following years not only for this government but for any government in this country.

The last comprehensive review of the tax system took place back in the 1960s. There have not been any significant changes since, except maybe some brought by the finance minister back in the 1980s, Michael Wilson, who made some changes that did not, in our view, bring any more equity or fairness.

In terms of a comprehensive tax review, right now there are 3,000 pages of complex, unintelligible legal text, which even tax experts, who spend their lives studying this, cannot understand. We are facing a situation, a system, that is actually counterproductive for our economy. It is counterproductive for our level of economic growth. It is counterproductive for our productivity.

I am not the only one saying this. Mainstream economists are saying that the complexity of our tax system gives anyone, any tax expert, the ability to actually build an industry based on finding loopholes, which makes the system less and less equitable, less and less fair, and it is actually a drain on our economy. One of the top priorities of any government at this time should be really simplifying the tax system.

Simplifying the tax system does not mean just bringing forth some gimmicks, like a single-tax rate, or a flat tax, as it is called. We should not just be saying that we will be revising those tax credits and will try to find some savings, savings meaning expenditures lost to the pockets of the taxpayer, the citizen. That is not it. That is smoke and mirrors.

In terms of the commitments made during the last election, the Liberals are showing that they are masters of the smoke-and-mirror strategy.[Translation]

We saw this yesterday, in the much discussed announcement about electoral reform, a lofty promise. They went after NDP and Liberal voters by promising electoral reform that would make every vote count. Today, a year and a half later, voters know that they were duped by this government.

Let us take a look at the Liberals' promises, especially those concerning first nations. This government said that it would cease the previous government's legal actions appealing rulings in favour of indigenous children and various first nations communities. These rulings force the government to honour its traditional commitments towards first nations.

My colleagues from Abitibi—Baie-James—Nunavik—Eeyou, Timmins—James Bay, and my colleague from northern Saskatchewan, whose riding has a very long name, are doing an absolutely incredible job of ensuring that this government honours its promises made to first nations, which they believed.

All the broken promises and unfulfilled commitments are beginning to pile up. Bill C-51 is another example. The government was going to change it, abolish it, or transform it, but nothing is being done. (1110) [English]

Nothing is being done. Time and time again, the Liberal government campaigned on real change, but compared to the previous Conservative government, its real change involves keeping the decisions and attitude of the previous government.

The Liberals are saying that they are doing it in a progressive fashion. They are keeping the Conservative target for climate change, but those are progressive targets now. They are keeping the agreement with the European Union, but now it is a progressive agreement. Everything the Conservatives did, they are keeping, and they call it progressive. That is what real change means for the current government.[Translation]

Now we are facing a situation where the Liberals have promised to simplify the tax system and make it fairer. They were right to make that promise and we are making it also.[English]

Why? It is because the system is actually leaking like a sieve, because the system is actually so complex that, as I said, there is a whole industry built on creating tax loopholes and trying to take advantage of any poor writing in one of the 3,000 pages of the Income Tax Act.

We also know that the system is so complex that the compliance costs for businesses and for citizens are becoming higher and higher. They are increasing. It is becoming more and more costly just to face the obligation as citizens, as people of this country, to actually contribute to the well-being of this country. We have to do it, and it is a good thing that we do it, but we are asking people to actually pay more and more, because the system is more and more difficult to understand.

Even worse is that the complexity of the system is actually increasing. One of the main problems we have for our revenue situation is the problem of tax havens and tax evasion. Because of that industry that actually tries to find loopholes, some of them cross the line, where a loophole is no longer a legal loophole but becomes a mechanism, a strategy, for tax evasion.

It is extremely difficult for the Canada Revenue Agency, which actually I have been very hard on, and I will continue to be very demanding. They do not have the proper resources to actually ensure compliance with the very complex legislation.[Translation]

Those are all problems that we are now aware of. They are problems that we need to deal with and which require a structured response from the government. It was proposed to the Standing Committee on Finance that it carry out an in-depth study of the tax system. That is what the motion says. It does not provide any details or direction. It does not give the Standing Committee on Finance a mandate. Work will begin next Wednesday. What are we going to do? We will listen to various witnesses, including accountants, as well as representatives, I am sure, of the Canadian Federation of Independent Business and other organizations. I already know what they will say. They will say that the system is too complex, that it has to be changed and simplified. (1115) [English]

We will spend three, four, five, or six meetings getting all those witnesses, who will be saying the same things. How do I know they will be saying the same things? It is because I have heard them in the past saying those things. We would be wasting our time in the finance committee, which might be the intention of the motion, actually. We know that the finance department, and we know that from the Minister of Finance's spokesperson, is actually working right now on the same study. However, what they are claiming is a comprehensive tax review is nothing but a review of tax expenditures.

How many pages do tax expenditures take in the whole Income Tax Act? It is maybe a few dozen out of 3,000 pages. We have a system right now that is so co...”

Pierre-Luc Dusseault (NDP)

February 2nd
Hansard Link

Business of Supply

“...hank my colleague for his excellent speech. I share his feelings about the urgency of reviewing the Income Tax Act in its entirety. Ignorance of the law is no excuse; that is the very essence of our society under the rule of law. Everyone is supposed to know the law. In our legal system, we assume that this is the case.

The Income Tax Act, however, is 3,000 pages long and is relatively complex, as my colleague has just exp...”

Guy Caron (NDP)

February 2nd
Hansard Link

Business of Supply

“...y colleague from Sherbrooke for his question, which is very much on point. He is correct.

The Income Tax Act is 3,000 pages long, but not because the government thought it would be fun to add some pages. It is because people started taking advantage of the interpretation of the act, and so they took advantage of vague wording in some parts of it to find loopholes.

Since that time, the government has constantly been trying to catch up to those interpretations and loopholes, and so the pages have piled up. In the last Parliament alone, about 1,000 pages were added to the Income Tax Act, primarily interpretations by the Canada Revenue Agency concerning loopholes that had...”

Jennifer O'Connell (Liberal)

February 2nd
Hansard Link

Business of Supply

“...lass. This tax cut is already benefiting nearly nine million Canadians. By reducing the 22% federal income tax rate to 20.5% for 2016, and subsequent taxation years, single individuals who benefit will see an average tax reduction of $330 every year and couples who benefit will see an average tax reduction of $540 every year.

To help pay for this important tax relief for the middle class, the government raised taxes on the wealthiest Canadians by introducing a new top income tax rate of 33% for individuals with a taxable income of more than $200,000 per year.

W...”

Pam Damoff (Liberal)

February 2nd
Hansard Link

Business of Supply

“...llion Canadians are benefiting from lower taxes on every paycheque. By reducing the second personal income tax rate to 20.5% from 22%, a 7% reduction, our middle-class tax cut represented a major firs...”

Pierre-Luc Dusseault (NDP)

February 2nd
Hansard Link

Business of Supply

“...ndable. That certainly does not improve the fairness of the tax system, since people who do not pay income tax do not have access to those tax credits. In addition, as my colleague said, most people w...”

Linda Lapointe (Liberal)

February 2nd
Hansard Link

Business of Supply

“...w, nearly nine million Canadians are paying less tax on every paycheque.

Cutting the personal income tax rate for the middle class by 1.5 percentage points, from 22% to 20.5%, was our first big ...”

Michael Cooper (Conservative)

February 2nd
Hansard Link

Business of Supply

“...ro in tax reduction. By contrast, our government cut taxes in all shapes and sizes. We cut personal income tax. We cut small business tax. We reduced taxes on Canadians to the lowest level in more tha...”

Bardish Chagger (Liberal)

December 14th
Hansard Link

Oral Questions

“...the best interests of middle-class Canadians. That is the approach we took when we cut middle-class income taxes, and that is the approach we took when we introduced the tax-free Canada child benefit....”

Gérard Deltell (Conservative)

December 14th
Hansard Link

Government Orders

“...on this. As a member, I am among Bill C-29's privileged few, which means that I will be paying less income tax. I do not feel that this is a good thing. The people who earn $44,000 are members of the ...”

François-Philippe Champagne (Liberal)

December 14th
Hansard Link

Government Orders

“...sed internationally to eliminate tax barriers to trade and investment.

Canada's network of 92 income tax treaties currently enforces one of the most extensive in the world, and that is something...”

Xavier Barsalou-Duval (Bloc Québécois)

December 14th
Hansard Link

Government Orders

“...rchères, which is in Boucherville, which is in Quebec, which is in Canada, at least for now. I pay income tax to Quebec and I pay income tax to Canada even though I do not really like doing so.

However, all citizens must pay...”

Pam Damoff (Liberal)

December 13th
Hansard Link

Routine Proceedings

“...t for people with hearing loss.

The petition calls upon the Government of Canada to amend the Income Tax Act to change the requirements for a person with hearing loss, so they can qualify for th...”

Peter Van Loan (Conservative)

December 13th
Hansard Link

Oral Questions

“...arbon tax on everything. This comes after tax hikes on textbooks, children's sports, music lessons, income taxes, and more.

Why do the Liberals now want to tax Canadians more just to use the Int...”

Scott Duvall (NDP)

December 12th
Hansard Link

Private Members' Business

“...is my pleasure to rise today to speak to the private member's bill, Bill C-301, an act to amend the Income Tax Act and to make a related amendment to another act, which will affect registered retireme...”

Karen Vecchio (Conservative)

December 12th
Hansard Link

Private Members' Business

“...Mr. Speaker, I am honoured to rise and speak in the House today on Bill C-301, an act to amend the Income Tax Act.

I frequently dealt with this issue as a former constituency assistant. So I fi...”

Erin Weir (NDP)

December 9th
Hansard Link

Government Orders

“...where it is due, so I want to recognize that this government did modestly increase the top personal income tax rate. However, the government failed to close the loophole that allows half of stock options to be exempt from personal income tax. This stock option loophole delivers the largest benefit to highly paid CEOs and corporate executives, so we need to close that loophole to address executive compensation.

Something else that the federal government could do is to limit the amount of executive compensation that a corporation can deduct in calculating its corporate taxes. (1010)

The United States currently limits the amount of CEO compensation that can be deducted in calculating corporate taxes to $1 million. Unfortunately, this limit is not very effective in the United States because it does not apply to performance-based compensation, such as stock options. However, we could easily apply a limit to all forms of executive compensation and ensure that they cannot be deducted in calculating corporate income taxes.

In conclusion, out-of-control executive compensation is a significant source of ...”

Erin Weir (NDP)

December 9th
Hansard Link

Government Orders

“... high pay for professional athletes. Part of the solution certainly is to increase the top personal income tax rate as the government has done.

The problem derives from the fact that people are ...”

François Choquette (NDP)

December 9th
Hansard Link

Government Orders

“...s electoral platform. This loophole allows the senior officers of corporations to pay only half the income tax on their compensation paid as stock options, or 50% of the prescribed rate. If a citizen from Drummond were to do that, the Canada Revenue Agency would call him right away and order him to pay his full income tax. Yet for executives this is a legal loophole that exists. (1025)

There are certai...”

François-Philippe Champagne (Liberal)

December 8th
Hansard Link

Government Orders

“...h will mean that taxpayers will pay tax only once on a given income. This will also help to prevent income tax evasion, which is undermining the tax base and our taxation system.

Bill S-4 relates to the ongoing efforts being made by Canada to update and modernize its network of tax conventions with other territories. As was mentioned earlier, Canada relies on one of the most extensive tax convention networks in the world, with 92 tax treaties currently in force.[English]

I want to make it clear that Bill S-4 does not represent any new or significant change in policy. In fact, the double taxation convention and arrangement covered by the bill, like its predecessors, is patterned on the model tax convention of the Organisation for Economic Co-operation and Development, OECD, which is accepted by most jurisdictions around the world.

The provisions in the particular double taxation convention and arrangement comply with the international norms that apply to such double tax conventions and arrangements. [Translation]

As Canada’s economy is increasingly integrated with the global economy, the elimination of fiscal barriers to trade and international investment has become more important. Double taxation conventions and arrangements such as those we are discussing today are specifically designed to facilitate cross-border trade, investment, and other activities between Canada and each of the signatory jurisdictions.

The expression “tax convention” primarily designates income tax conventions and arrangements that establish the extent to which a jurisdiction can apply personal and corporate income tax to a resident of another jurisdiction.[English]

For Canada, our tax treaty gives us assurances of how Canadians and Canadian businesses will be taxed abroad. Conversely, for our tax treaty partners, Canada's tax treaties give them the assurance of how their residents will be treated in Canada. Our tax treaties are all designed with two general objectives in mind. The first objective is to remove barriers to cross-border trade and investment, most notably the double taxation of income. I am sure that is something that every member in the House would agree with.

The second objective, and I am sure members would also agree, is to prevent tax evasion by encouraging co-operation between Canada's tax authorities and the tax authorities of the other signatory jurisdictions.

Those are two objectives that I am sure will get unanimous consent from all the members in the House.

Allow me to take a few minutes to expand on each of these very important objectives for our country. Let us talk first about removing barriers to trade and investment. (1320) [Translation]

First of all, removing barriers to trade and investment is essential in today’s global economic context. Without question, investors, traders, merchants, and other stakeholders doing business on an international scale want to be certain of the tax repercussions of their activities in Canada and abroad.

Similarly, Canadians doing business or investing overseas want to be sure that they will be treated fairly and consistently with respect to the income tax they pay.[English]

In other words, they want to know the rules of the game and they want to know the rules will not change in the middle of the game. That is one of the objectives of Bill S-4, to remove uncertainty about the tax implications associated with doing business, working, or investing abroad. Tax treaties establish a mutual understanding of how the tax regime of one jurisdiction will interface with that of another. This can only promote certainty and stability and help produce a better business climate especially with respect to eliminating double taxation.

Let me turn to double taxation.[Translation]

No one wants to have their income taxed twice, something that should never happen in any case. However, in the absence of a convention or arrangement to avoid double taxation, such as those contained in Bill S-4, that is exactly what could happen. For example, in cross-border transactions, the two jurisdictions might apply their income tax without granting taxpayers relief with respect to the income tax paid to the other jurisdiction.

To reduce the possibility of double taxation, tax conventions apply either of two general methods, depending on the particular situation.

In some cases, the exclusive right to tax a particular income is granted to the jurisdiction where the taxpayer resides.

In other cases, that right is shared.[English]

For example, if a Canadian resident employed by a Canadian company is sent on a short-term assignment, say for three months, to any one of the two signatory jurisdictions in this bill, Canada has the exclusive right to tax that person's employment income. If, on the other hand, that same person is employed abroad for a longer period of time, say for one year, then the jurisdiction where that person works can also tax the employment income. However, in this case, under the terms of the double taxation convention and arrangement in Bill S-4, Canada must credit the tax paid in that other country against the Canadian tax otherwise payable on that income. This is one example of how the allocation of taxing rights between jurisdictions under tax treaties ensures that individuals and businesses are taxed fairly.

Let me move to withholding tax.[Translation]

One way to reduce the potential of double taxation is to reduce withholding taxes. These taxes are a common feature in international taxation. It is imposed by an authority on certain items of income earned within its jurisdiction and paid to the residents of another jurisdiction. Types of income usually subject to withholding taxes include, for example, interest, dividends, and royalties.

Withholding taxes are levied on the gross amount paid to non-residents and represent their final obligation with respect to income tax payable to Canada. [English]

Without a tax treaty in place, Canada usually taxes this income at a rate of 25%, which is the rate set out under our own domestic tax legislation, the Income Tax Act. The double taxation convention and arrangement in Bill S-4, however, would provide f...”

Pierre-Luc Dusseault (NDP)

December 8th
Hansard Link

Government Orders

“...riating the funds to Canada, telling the Canadian tax authorities that they have already paid their income tax and cannot be made to pay more, because they are sheltered by the treaty to avoid double ...”

Garnett Genuis (Conservative)

December 8th
Hansard Link

Government Orders

“...s well as a tax arrangement with the Government of Taiwan. It would also amend the Canada-Hong Kong Income Tax Agreement.

These types of tax treaties are very important for facilitating internat...”

Pierre-Luc Dusseault (NDP)

December 8th
Hansard Link

Government Orders

“... wonder if he, like me, became suspicious when he read the bill's title, which refers to preventing income tax evasion. Does he really believe that this bill and its scheduled conventions will fight t...”

Pierre-Luc Dusseault (NDP)

December 8th
Hansard Link

Government Orders

“... when they are signed with low or no tax jurisdictions. Indeed, there are countries that require no income tax to be paid whatsoever and that take part in this tax competition that puts downward pressure on tax rates. It is a serious problem for our society, and one that needs to be resolved. We need to pay particular attention to those countries. In this particular case, there is no problem. (1525)

However, as I was saying earlier, we have a tax treaty with Barbados. One of my colleagues in the Bloc Québécois raised this issue a few months ago and moved a motion to have this tax treaty with Barbados reviewed. That treaty is of the same nature as the ones we are studying today and very similar to the Organization for Economic Co-Operation and Development model, a convention adopted in 1980, and similar to the ones we are studying today. There are a few differences, because at the time, the OECD model was a little less detailed, but it is essentially the same model used today.

What might suggest that the tax treaty with Barbados is perhaps being used for the wrong reasons is that, in 2014, Barbados ranked second in terms of Canada's foreign investments abroad, after the United States of course, which is our largest trading partner given its proximity and the fact that our administrations are similar from a legal standpoint for both corporations and individuals. It goes without saying that the U.S. is our most important economic partner.

It is surprising, however, that according to Statistics Canada figures, Barbados ranked second in 2014—and not only in 2014, since Barbados was also near the top of the list in 2015, in third place. It also ranked second in 2013.

There is reason to wonder why the second largest recipient of Canadian foreign investment is Barbados, a tiny Caribbean country that has no major economic activity to speak of. It does raise questions.

Looking at the numbers, one cannot help but wonder what is going on there, what could possibly attract so much Canadian investment in Barbados, and whether an investigation is in order. However, there is no need to dig very deep to find out why Barbados is the number two destination for all of our foreign investments in the world. The main reason is that we have an agreement with Barbados to avoid double taxation.

That allows companies who decide to take advantage of this agreement to send money from their subsidiary in Barbados to Canada and then declare to the Canadian tax authorities that they have already paid their 0.5% tax in Barbados. As a result, they do not pay taxes in Canada because, according to the agreement, when a party pays taxes in another country and brings the money back to Canada, there is no second taxation.

As I said earlier, there is no problem with Taiwan and Israel. In other cases, however, there are huge issues because we allow companies to pay a lot less in taxes than what they would pay if taxation levels were similar to Canada's.

That is why it is with a note of caution that I support Bill S-4 today. I want to highlight the problem and raise a red flag for the government's benefit. The parliamentary secretary did not seem to know what the problem was when it was raised by my colleague—he did not seem to know what the problem was or want to consider it. Unfortunately, the Liberals voted against a motion to review the Canada-Barbados tax treaty. I would like to remind my honourable colleagues of that, and I call upon the government to at the very least commit to reviewing the 92 conventions we have with other governments around the world, because problems could arise.

If today we say yes to a treaty with Taiwan to avoid double taxation and if, a few years later, Taiwan decides to modify its regulations to become a competitor in the race to the lowest tax rates, then maybe our conventions would need to be reviewed.

That is the crux of the message I wanted to send the government today. It should start taking a close look at the tax situation in every country with which we have a convention because there could come a time when such conventions are used to subvert the very ideals underpinning them. (1530)

The title of the bill mentions preventing tax evasion. We have to ensure that these conventions stand the test of time as tools to prevent tax evasion, not to facilitate it. In some cases, they facilitate tax evasion.

I hope there will be at least one mechanism that enables the government to examine and monitor the tax situation in the jurisdictions with which we have tax conventions. It would be very disappointing if the government did not commit to monitoring the situation in those jurisdictions because such neglect could lead to serious problems. We know that tax evasion is an extremely serious problem, and it is definitely one of my priorities as the national revenue critic.

This is a problem for every country in the world and every person on the planet seeking better government services. The government's role is to provide services to citizens, but when companies and individuals have more and more ways to avoid paying their fair share, our societies pay the price. The honest ones who pay their fair share end up having to pay more every year. They have to contribute more because some taxpayers decide to play by different rules and avail themselves of the services of unscrupulous tax experts who have no ethical qualms about trying to make their clients pay as little tax as possible. Sometimes they use questionable schemes that the Canada Revenue Agency disputes, thankfully. More often than not, it turns out that these schemes are perfectly legal.

These conventions to avoid double taxation are one of the components of the Income Tax Act that make tax evasion legal. There are many other ways to review our policies and leg...”

David de Burgh Graham (Liberal)

December 8th
Hansard Link

Government Orders

“...da usually taxes this income at the rate of 25%, which is a set rate under our own legislation for income tax, more specifically, the Income Tax Act. Withholding tax rates in other countries are often as high or even higher. (1605)

Gérard Deltell (Conservative)

December 8th
Hansard Link

Government Orders

“...hen it comes to more general laws. However, the details of trade agreements or agreements affecting income tax returns can be a very sensitive subject. That is why we need experts to draft these laws....”

Gord Johns (NDP)

December 8th
Hansard Link

Government Orders

“...code to prevent tax cheats from using our lenient laws to avoid paying their fair share of Canadian income taxes?

As I said, we know that $5 billion to $7 billion are being lost through this tre...”

Dan Albas (Conservative)

December 6th
Hansard Link

Government Orders

“...lumbia also charges monthly medical service premiums, MSP, which is over and above what is paid in income tax. Hopefully, the Liberal MPs from B.C. have raised that point with the finance minister.

Guy Caron (NDP)

December 6th
Hansard Link

Government Orders

“...es. The consumers, the users, will already have paid for the infrastructures in part, through their income taxes.

Of course the Liberals never mention this, but it will have to be considered wit...”

Anthony Housefather (Liberal)

December 6th
Hansard Link

Government Orders

“... basis, for little Maggie, they could see up to $6,400. They will not, because they are in a higher income tax bracket, but they will see more money. For children under six, it is $6,400, and for kids...”

Tom Kmiec (Conservative)

December 6th
Hansard Link

Government Orders

“...remiss if I did not mention this other assumption that has deceived the Liberals, which is on their income tax cut. We know from the good work in the Senate that this income tax cut is anything but a cut for the middle class. What we see is that those people earning a $48,000 salary actually would enjoy a cut of $81.44. For those earning $60,000, it would be $261.44. For those earning $89,000, it is $696.44. Actually, the people receiving the greatest benefit from this tax cut would be those people who do not need it, people like those who sit in this chamber, as it so happens, because they earn a much higher income than the average Canadian. In fact, the highest 20% in the income quartiles, of unattached individuals, earn $55,499. The other 80% of Canadians earn less than that. For families of two or more, it is $125,000 or less, which means that 80% of Canadians are earning less than that amount. In fact, we know this so-called middle-income tax cut is anything but for the middle class. It would not actually benefit a great many of t...”

Gérard Deltell (Conservative)

December 6th
Hansard Link

Government Orders

“.... That is what we need to do.[Translation]

This government makes such a big deal about making income tax changes and about being like Robin Hood, taking from the rich and giving to the poor. Sto...”

Glen Motz (Conservative)

December 6th
Hansard Link

Government Orders

“... focused on the priorities of Canadians by helping families to make ends meet through reductions in income tax, and the creation and protection of jobs.

As I said earlier, the Conservative recor...”

Rona Ambrose (Conservative)

December 6th
Hansard Link

Oral Questions

“...ster say he would tax health and dental benefits, but that is not a surprise, because he has raised income taxes, carbon taxes, and CPP taxes. He has hiked taxes on Canadians' savings and he is even r...”

Karen Vecchio (Conservative)

December 6th
Hansard Link

Government Orders

“...pacts of Bill C-29, and, “the complicated, administratively burdensome, and compliance challenged income tax provision” that will be placed on businesses. Who would want, and why would we want, th...”

Matt Jeneroux (Conservative)

December 6th
Hansard Link

Government Orders

“...ds:

I urge the federal government to amend Clause 13 of the Legislative Proposals Relating to Income Tax, Sales Tax and Excise Duties by exempting group medical structures and health care delivery from the proposed changes to S. 125 of the Income Tax Act regarding multiplication of access to the small business deduction.

The proposa...”

Kevin Lamoureux (Liberal)

December 6th
Hansard Link

Government Orders

“...At the end of the day, if we have premiers who want to take that revenue generated and reduce their income tax or another form of tax, they can do that. It is going back to the individual provinces. I...”

Tom Kmiec (Conservative)

December 6th
Hansard Link

Government Orders

“... a shell game with taxes. On one side, the Liberals say that they are going to be reducing personal income taxes. However, I have explained to the House repeatedly that it does not benefit middle-class Canadians, because in fact the highest 20% of income earners make over $55,000, and we know that those earning $60,000 can expect $261.44 in an income tax decrease.

With these pretend tax decreases and the carbon tax and the health and de...”

Mark Strahl (Conservative)

December 5th
Hansard Link

Government Orders

“...kick in at $45,000 a year. Therefore, the person who actually makes the most money from the Liberal income tax cuts is someone making $199,000 a year. That might be who the Liberals represent, but in ...”

François-Philippe Champagne (Liberal)

December 5th
Hansard Link

Government Orders

“...s that they need a financial breather.

One of the budget’s primary measures is therefore an income tax reduction. Almost nine million Canadians have more money in their pockets thanks to one of our government’s very first measures. That measure has been to reduce income taxes for the middle class, putting them in a better position to save or invest in their own priorities.

Families are at the heart of the middle class. In this bold budget, we find a social innovation that directly affects families living in each of the constituencies represented here in the House. This innovation, called the Canada child benefit, came into effect last July 1. I will cite the numbers for the House, since they speak for themselves. Those who are watching us today know this very well. For each child under six years of age, a family can receive up to $6,400 a year, that is, $533 per month for each child.

For children between six and 17 years of age, the allowance is up to $5,400 per year, or a maximum of $450 per month for each child. This is an innovation because it is a direct investment in the country’s middle class. The Canada child benefit is producing results which can be felt all over the country, in each of our constituencies.

First of all, the Canada child benefit is much more generous than the previous benefit. For the families affected by this change, this represents close to an average of $2,300 for the 2016-17 benefit year. Next, it is simpler: families get a single payment every month. It is also tax-free, as the money received does not have to be partially refunded on the income tax return. It is also better targeted, since low- or medium-income families receive higher b...”

Alistair MacGregor (NDP)

December 5th
Hansard Link

Government Orders

“...ut they are also going to miss out because they not pay themselves enough to qualify for the middle-income tax bracket.

I would like to hear the parliamentary secretary's response to those peopl...”

Rona Ambrose (Conservative)

December 5th
Hansard Link

Oral Questions

“...dental benefits provided by employers, which will mean working Canadians will have to pay even more income tax. Can the Prime Minister now promise in the House that he is not going to tax the health a...”

François-Philippe Champagne (Liberal)

December 5th
Hansard Link

Oral Questions

“Mr. Speaker, as I just said a moment ago, we are in the process of reviewing the Income Tax Act in its entirety, to make it more acceptable from a fiscal standpoint and ensure fairn...”

Alistair MacGregor (NDP)

December 5th
Hansard Link

Government Orders

“...he middle-class tax cut, and I think what Canadians need to realize is that it is actually a middle-income tax break, that the people who receive the most benefits are those with incomes between $100,...”

Pierre Poilievre (Conservative)

December 2nd
Hansard Link

Government Orders

“...onal exemption by $1,500, lifting a million people off the tax rolls altogether. We lowered federal income taxes for people earning less than $30,000 a year by 90%. The result was people were able to ...”

Bill Morneau (Liberal)

November 30th
Hansard Link

Government Orders

“moved that Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, be read the third time and passed.”

François-Philippe Champagne (Liberal)

November 30th
Hansard Link

Government Orders

“... nation, as well as employees, time to adjust to these changes.

Let me talk about the working income tax benefit. (1615) [Translation]

As I mentioned, the improvements we are proposing include a modest increase in contributions. We know that despite the long-term benefits of enhancing the Canada pension plan, some low-income workers might have a hard time making room in their budget for higher CPP contributions.

Our government is focused on developing policies and implementing programs based on fairness and on helping those less fortunate in our society. Enhancing the Canada pension plan aligns with that perspective and our government's approach.

To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the Government of Canada will enhance the working income tax benefit, or WITB. The WITB is a refundable tax credit that supplements the earnings of lo...”

Scott Duvall (NDP)

November 30th
Hansard Link

Government Orders

“...C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

In my remarks on Monday, I focused on how we in the NDP have found a mistake i...”

Rachael Harder (Conservative)

November 30th
Hansard Link

Private Members' Business

“... relationship.

Our Conservative government championed Canadian jobs. We cut payroll taxes and income taxes for small and medium-sized businesses. We signed free trade deals to give Canadian companies new markets to which to export. We cut red tape and reduced the cost of dealing with the federal government. All of these measures created intense demand for Canadian workers. In my province of Alberta, we had some of the lowest unemployment rates that Canada had seen for a decade. Even if people worked at Subway or Tim Hortons, they still made significantly more than minimum wage. (1800)

This did great things for reducing poverty of course.

Fast-forward to today and what do we see? Today we see a federal government that has raised income taxes and is talking about bringing in even more taxes. These taxes will be hugely detrimenta...”

Bardish Chagger (Liberal)

November 29th
Hansard Link

Government Orders

“...C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, not more than one further sitting day shall be allotted to the consideration of the ...”

Karina Gould (Liberal)

November 29th
Hansard Link

Government Orders

“...o compensate low-income workers for CPP contributions. They may be eligible for an enhanced working income tax benefit. Their retirement income will be higher, but their family's budget will not be af...”

Chandra Arya (Liberal)

November 29th
Hansard Link

Government Orders

“...is bill, an act to amend Canada pension plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act, as I mentioned earlier, is the most important thing. Let us summarize what the bill would do.

The bill proposes to amend the Canada pension plan to increase the amount of the retirement pension as well as survivors and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years for which those contributions are made; increase the maximum level of pensionable earnings by 14% as of 2025; provide for the making of additional contributions beginning in 2019; provide for the creation of additional Canada pension plan accounts and the accounting of funds in relation to it; and, finally, include the additional contributions and increased benefits in the financial review provisions of the act, and authorize the Governor in Council to make regulations in relation to those provisions.

I know this on its own cannot operate and deliver the results, so there are other related acts that need to be amended. Therefore, part 2 of the bill seeks amendments to the Income Tax Act to increase the working income tax benefit and to provide a deduction for additional employee contributions.

The first...”

Marco Mendicino (Liberal)

November 29th
Hansard Link

Government Orders

“...C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

Let me outline the purpose of the bill.

It would, among other things, increase the amount of the retirement pension, as well as the survivor's and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions were made. It would increase the maximum level of pensionable earnings by 14% as of 2025. It would provide for the making of additional contributions, beginning in 2019. It would provide for the creation of the additional Canada pension plan account and the accounting of funds in relation to it. It would include the additional contributions and increased benefits in the financial review provisions of the act and authorize the Governor in Council to make regulations in relation to those provisions.

For the benefit of the House, let me provide a number of reasons why the government has put Bill C-26 forward.

We are concerned about the long-term retirement security for those Canadians who have worked hard all of their lives and expect, rightfully, that they will enjoy security in their retirement years.

The fact is that middle-class Canadians are working harder than ever, but many are worried that they will not have put away enough money for their retirement. Fewer and fewer Canadians have workplace pensions based on defined benefits or defined contribution plans to fall back on. To help those Canadians achieve their goal of a safe, secure, and dignified retirement, in the face of these challenges, the Government of Canada is committed to working with the provinces to strengthen the CPP.

Co-operative efforts as joint stewards of the program led to Canada's Minister of Finance reaching a historic agreement, in principle, on June 20 to enhance the CPP. All of my colleagues on this side of the House were very proud of that accomplishment.

What would this agreement mean in principle for Canadians?

Once it is fully in place, the CPP enhancement will increase the maximum CPP retirement by about 50%. Right now, the current maximum is just a little over $13,000, which is not enough by most living standards across the country. In today's dollar terms, the enhanced CPP would represent an increase of nearly $7,000 to a maximum benefit of nearly $20,000. Enhanced benefits will accumulate gradually as individuals pay into the enhanced CPP.

Young Canadians, and this is a group about which I know all members of the House are concerned, just entering the workforce would see the largest increase in benefits.

To fund these enhanced benefits, annual CPP contributions would increase modestly over seven years, starting in 2019. For example, an individual with earnings of about $54,000 or $55,000 would contribute about an additional $6 a month in 2019, an amount that should be manageable for most hard-working Canadians. By the end of the seven year phase-in period, contributions for that same individual earning that same income amount would be about an additional $43 per month.

To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the Government of Canada would enhance the working income tax benefit, an existing benefit that is designed to keep people in the workforce and encoura...”

Alice Wong (Conservative)

November 29th
Hansard Link

Government Orders

“...lation. To make matters worse, when they withdraw those CPP funds, they once again will have to pay income tax on them.

Finally, I would like to talk about Canadian seniors. My colleagues know t...”

Luc Berthold (Conservative)

November 29th
Hansard Link

Government Orders

“...ting thousands of jobs in companies of every sector. Despite having committed to reducing corporate income taxes from 10.5% to 9%, this government does not seem the want to act on or keep that promise...”

Pierre Paul-Hus (Conservative)

November 29th
Hansard Link

Government Orders

“...away by the various levels of government in the form of sales tax, premiums, permits, licences, and income tax. There is no shortage of words to describe how the government picks the pockets of the mi...”

Julie Dzerowicz (Liberal)

November 29th
Hansard Link

Government Orders

“...counterparts have agreed to an expansion of the existing refundable tax credit known as the working income tax benefit, to offset any higher premiums. The maximum payout for this program is currently ...”

Raj Grewal (Liberal)

November 28th
Hansard Link

Government Orders

“...cially burdened as a result of their extra contributions. It would do this by enhancing the working income tax benefit to roughly offset the incremental CPP contributions, leaving eligible low-income ...”

Salma Zahid (Liberal)

November 28th
Hansard Link

Government Orders

“...C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, our government is fulfilling its campaign commitment to reform and enhance the Canad...”

Gagan Sikand (Liberal)

November 28th
Hansard Link

Government Orders

“... like to remind the members opposite that the bill would also provide an enhancement to the working income tax benefit, which would provide additional benefits that would ultimately offset the increme...”

Kamal Khera (Liberal)

November 28th
Hansard Link

Government Orders

“...C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. This is an extremely important piece of legislation that will help millions of hard-...”

Kamal Khera (Liberal)

November 28th
Hansard Link

Government Orders

“... change. To ensure that our most vulnerable Canadians are not held back by the changes, the working income tax benefit will be increased. The increase in the working income tax benefit will roughly offset the incremental Canada pension plan contribution for low-inco...”

Scott Duvall (NDP)

November 28th
Hansard Link

Government Orders

“...ker, earlier the member mentioned what a great result it is for people in the middle class with the income tax breaks, but they do not include people who make $44,000 or less with no children or their...”

Jati Sidhu (Liberal)

November 28th
Hansard Link

Government Orders

“...cially burdened as a result of their extra contributions. It would do this by enhancing the working income tax benefit to roughly offset incremental CPP contributions, leaving eligible low-income Cana...”

Michelle Rempel (Conservative)

November 28th
Hansard Link

Government Orders

“...nistered, and we should not create incentives for them to terminate.

What about a new working income tax benefit? Is that fair? Have we targeted the correct audience for this reform?

The b...”

Kelly Block (Conservative)

November 28th
Hansard Link

Government Orders

“...C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, at third reading. I feel strongly that this will be one of the largest tax increases...”

Bardish Chagger (Liberal)

November 28th
Hansard Link

Government Orders

“...C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

Under the provisions of Standing Order 78(3), I give notice that a minister of...”

Wayne Easter (Liberal)

November 24th
Hansard Link

Routine Proceedings

“...C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

The committee has studied the bill and has decided to report the bill back to ...”

Guy Caron (NDP)

November 24th
Hansard Link

Private Members' Business

“moved that Bill C-274, an Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the second time and referred to a committee.

He said: Mr. Speaker, I have to admit that I am very pleased to debate this bill. It is the first time that I have had the opportunity to introduce and debate a private member's bill in the House as I was unable to do so in the last Parliament.

Bill C-274 would correct and eliminate a gross injustice concerning the transfer of our farms and SMEs. This issue is more important than ever. Demographically speaking, 76% of small business owners plan to transfer ownership of their companies so that they can retire within the next 10 years, and 50% of farm owners want to do the same thing, also within the next 10 years.

The injustice that this bill is intended to remedy is that, if someone has a small business, a farm, or even a fishing boat and wants to sell it to his or her children, in a corporate structure, the seller, who is the owner of the small business or family farm in question, will pay much more income tax than if he or she decided to sell to a stranger.

In a very large number of cases, that means choosing between having a larger pension fund by selling to a stranger—since a pension fund is what business owners get when they sell their business—and having a smaller pension fund by selling to one’s children. The difference can be extremely large. If we ignore the tax planning that such a transaction can entail, for the sale of a farm worth $10 million, which, with all the assets, is quite often a reasonable price, selling to a child can cost up to $1.2 million more in income tax than if the farm is sold to a stranger. In the case of the sale of a business worth $1 million, the difference can be more than $300,000 in income tax.

The reason is very simple: if people want to sell to their children, to someone related to them, the difference between the sale price and the original price at the time of purchase is considered a dividend under the Income Tax Act. Consequently, it is treated like a dividend for tax purposes. Across the country, dividends are taxed at about 35% on average.

If business owners sell to someone who is not a family member, in other words, an unrelated person, a stranger, the difference between the sale price and the original price at the time of purchase is considered a capital gain. In that case, there is a lifetime exemption of about $825,000 for a business and about $1 million for a farm or a fishing boat. The remaining capital gain is taxed at about 25% on average. This explains the difference between selling to a stranger and selling to a child.

Obviously, it is unfair. In every constituency, we have business owners. People who want to sell their small business, their family farm, or their fishing boat in the Atlantic provinces, for example, are faced with an extremely heart-rending choice. Will they agree to sell their business to a family member and have $100,000, $125,000, or $150,000 less in their pension fund because they want their child to succeed them, because they want someone in the family to take over a business that they built with their own hands? They may not have the opportunity to do so if their pension fund is not large enough. Unfortunately, instead of selling to their child, who would be willing to take over, they have to consider selling to a stranger.

My bill seeks to correct this injustice. I admit that the bill is somewhat self-serving because this has been an ongoing problem in my constituency. In fact, the bill was prepared in co-operation with the farmers and SMEs in my riding. Rimouski-Neigette—Témiscouata—Les Basques is in the Lower St. Lawrence region, and 12% of the region’s economy is dependent on agriculture.

We have many family farms, especially dairy farms, as well as some maple sugar operations. In my constituency, it is not big companies that drive the economy. It is small businesses.

People, particularly those in the farming community, have been telling me about this situation since I first took office in 2011. They are being forced to choose between selling to a child at a tax loss and selling to a stranger.

The situation has become even more worrisome since there has been talk of land speculation. Certain people want to buy farmland to speculate on its value. (1735)

Such people have an advantage right from the start, since their offer means that the person selling the company or farm will have a lot less income tax to pay. The current situation is unfair.

My bill is designed to resolve the situation so that the sale of a family business or farm to a child will be treated as a capital gain, the same as if it were sold to a stranger.

There is no real reason to oppose such a measure. There are three reasons why such a measure may have been opposed in the past. First, this type of measure could open the door to aggressive tax avoidance, which is why things are the way they are now. However, my bill eliminates that possibility by requiring the buyer to retain his shares for a minimum of five years, except in case of death. People who retain their shares for five years do so because the family transfer was genuine and not because they were trying to work the system to avoid paying income tax.

The second reason why such a measure may have been opposed in the past is the argument that only the richest farmers or entrepreneurs would benefit from the measure. Once again, that is not the case with my bill because it deals only with transactions of $15 million or less. All transactions over $15 million, like those involving big farms or companies, are excluded from the terms of Bill C-274.

The third reason why such a measure could have been opposed, the last one I can think of, is the cost of the bill. Obviously, there will be a cost in lost revenue for the government. However, that cost is estimated not in the hundreds of millions of dollars, but between $75 million and $90 million. I know that different figures are being advanced, particularly by the finance department, but mine have been corroborated by many tax experts. The reason why we are talking about $75 million to $90 million is that, at present, all of this potential income tax paid by people who are selling small businesses or family farms is reduced through tax planning.

I can back up these figures with the following facts. Quebec, which has its own income taxation system, identified the same problem. It corrected it in its 2015 budget, and the correction has been implemented since March 2016. Its approach to fixing this problem is somewhat different than mine, but ultimately, Quebec estimates that eliminating this injustice will cost it some $15 million in lost revenue.

If Quebec loses $15 million, I think it is quite plausible that the lost revenue at the federal level would be around $75 million to $90 million.

This flagrant injustice has to be corrected. Speaking of injustice, imagine for a moment if the situation were reversed. Imagine if, currently, the rules for selling to a stranger and selling to one's child were the same, and then imagine if a member tabled a bill seeking to make selling to a stranger more appealing, would the House find that acceptable? Would it pass such a bill? Of course not; the question answers itself.

I would like to point out that I am not the only person in the House to note the problem. From what I understand, I should have the support of a great many, if not all, of the opposition members. I am eager to hear the speeches.

Let us not forget that, in June 2015, before the last election, the Liberal member for Bourassa tabled Bill C-691, which sought to correct this injustice regarding SMEs. My bill, at least so far as the SME component is concerned, was modelled on his bill as well as on that of my colleague from Berthier—Maskinongé, who drafted a number of clauses for farms and for fishing companies. My colleague from Joliette at the time also drafted a section on transactions between siblings.

My Liberal colleague at the time acknowledged the problem, and so did the government of Quebec, which then corrected it. I expect the hon. members to consider all of the small businesses and family farms in their ridings. I would also like members representing coastal constituencies to consider the impact this might have on fishing companies. (1740)

We are talking about small businesses and people who have worked all their lives to try and earn a living, people who, often, found themselves having to get their family business up and running again, as well as those who created it from scratch and now want it to stay in the family.

What this government has always been telling these Canadians is that they have to suffer this injustice when they sell their business to their children. In my opinion, that is totally unfair. Allow me to explain.

My colleague from Pierre-Boucher—Les Patriotes—Verchères had tried to table a bill in the wake of a situation that occurred in his riding and that made the headlines in May. Christian Tremblay, of Armoires Tremblay, in Saint-Mathieu-de-Beloeil, wanted to sell his company to his son Patrick, a company worth $1.7 million.

Imagine his surprise when he found out that, if he sold it to his son rather than to a stranger, he would have to pay $100,000 more in income tax. He considers the situation quite unfair. Will he sell to his son and make $100,000 less ...”

Pierre Paul-Hus (Conservative)

November 24th
Hansard Link

Private Members' Business

“...ay the taxes that will be applied to my estate. Since my children will have to pay a huge amount of income tax when they inherit the business, I am obliged to take out insurance.

Will this bill ...”

Guy Caron (NDP)

November 24th
Hansard Link

Private Members' Business

“...dance. If he sells his shares before five years are up, he will be obliged to retroactively pay the income tax that should have been paid. If he dies, however, the estate will not have to do this, for...”

François-Philippe Champagne (Liberal)

November 24th
Hansard Link

Private Members' Business

“...e across the aisle. His proposed approach is to amend two long-standing anti-avoidance rules in the Income Tax Act. Those two measures have been in the Canadian tax code for a long time.

I am so pleased to be here this evening to discuss the repercussions that these fiscal changes may have. We often talk about unexpected consequences. My colleague's principle is worthy, but we have to take a close look at the measures themselves and really understand the fiscal consequences this could have for the country. I am sure all members of the House will agree that the intention behind this bill is good, and I want to go on the record as saying that my colleague's intention is very good. There is no doubt about that. Many of us are from rural parts of Quebec and Canada. We understand how things are for our farmers and entrepreneurs. I represent Shawinigan, which is, in a way, the beating heart of entrepreneurship in Quebec. We know all about entrepreneurship. We all come from places where small businesses can prosper, and we all want a fair tax system for all Canadians.

However, when weighing the merits of this bill, it is important to consider all the potential consequences of passing it. We must not lose sight of the fact that the tax rules that Bill C-274 proposes to amend exist for a reason, and that is to prevent people from engaging in inappropriate tax avoidance in Canada. Let us be clear about what Bill C-274 is proposing, and that is to soften the rules designed to prevent tax avoidance in Canada.

Let me explain. The proposed changes would dilute the anti-avoidance rules in sections 55 and 84.1 of the Income Tax Act. To help my colleagues fully understand what that means, let us first look at section 55 of the Income Tax Act. As currently worded, section 55 of the act applies to corporations that seek to inappropriately reduce capital gains by paying tax-free dividends between corporations. In short, the anti-avoidance rules consider such dividends to be a capital gain.

Two exemptions to the anti-avoidance rule authorize business restructuring by allowing company shareholders to split company shares between them, while deferring taxes. When those exemptions apply, any dividend paid between companies in the context of restructuring is not considered a capital gain.

The first exemption applies to the restructuring of related corporations, and the second applies to all corporate restructurings. Bill C-274 would broaden that first exemption, which we can call the related corporations exemption, so that it applies to brothers and sisters.

Spouses, as well as parents and their children, are eligible for this exemption because it is presumed that they have shared economic interests. However, brothers and sisters are considered to have separate and independent economic interests and are therefore not eligible for the related corporations exemption. That is consistent with other tax rules. For example, a family farm or fishing corporation cannot be transferred among brothers and sisters on a tax-deferred basis.

That being said, although brothers and sisters cannot restructure their participation in a corporation on a tax-deferred basis under the related corporations exemption, they can do it under the second exemption I mentioned earlier, which applies to all corporate restructuring. It is called the “butterfly exemption”. (1755)

Now the question is why siblings and their companies would want to have access to the first exemption if they can already achieve the same thing through the second exemption. The answer is that the conditions are less rigorous under the first exemption. The conditions are less rigorous because the companies are linked and are considered part of the same economic group at the time of restructuring. As a result, assets can be transferred on a tax deferred basis within a group of related companies regardless of the composition of assets.

Under the second exemption, known as the “butterfly exemption”, one condition requires a proportional distribution of the various types of assets transferred. The goal of this condition is to prevent tax avoidance.

By way of illustration, I would return to the example my colleague used of three siblings who each own one-third of a family farm corporation. Those siblings could reorganize the company's assets by transferring, on a tax deferred basis, those assets to their individual farm corporations by transferring their proportionate share of each type of asset from the family farm corporation.

There are fewer tax avoidance opportunities under the butterfly exemption because of the requirement that each of the brothers’ and sisters’ corporations must receive its proportional share of the assets of the corporation being restructured. If the proposed amendment to section 55 were passed, as my colleague suggests, the siblings could undertake a business restructuring in which the dividends paid between their corporations would not be treated as capital gains. The consequence of that would be to create new opportunities for tax avoidance in Canada.

I would also like to point out that Bill C-15, which received royal assent in June 2016, included an amendment that tightened the anti-avoidance rule set out in section 55, a rule that Bill C-274 would loosen. Consequently, if Bill C-274 were passed into law, we would be sending a message that conflicts with what Parliament recently decided concerning this particular provision.

I would now like to say a few words about the other anti-avoidance rule that Bill C-274 would loosen, the rule set out in section 84.1 of the Income Tax Act. This anti-avoidance rule may apply when an individual sells shares of one corporation to another corporation that is related to the individual.

For example, an individual might sell shares to a corporation owned by his child or grandchild. In such a case, the proceeds of the sale received by the seller may be considered, in certain circumstances, to be a taxable dividend instead of a capital gain, which is taxed at a lower rate or even exempt from tax if the lifetime capital gains exemption is available to the individual.

Bill C-274 would limit the application of the anti-avoidance rule by excluding the sale of shares of a corporation owned by an individual to corporations controlled by his children and grandchildren. However, that would facilitate the conversion of dividends into capital gains that are taxed at a lower rate or tax exempt. Such conversions of corporate dividends into capital gains taxed at a lower rate could be made as often as the managing owner wants to extract the corporation’s surpluses with tax deferral.

Significant tax planning would occur if Bill C-274 were passed. For example, a high-income shareholder could reduce his income tax by $17,500 for each $100,000 in business profits.

Another important point to consider is the fact that nothing is stopping a parent from selling shares of his family corporation directly to his child or grandchild and claiming the lifetime capital gains exemption on the capital gains arising from the transaction.

In closing, I think that the most important thing to say today is that nothing in Canada’s Income Tax Act prevents corporate transfers. My colleague’s proposal would create opportunities fo...”

Erin Weir (NDP)

November 24th
Hansard Link

Adjournment Proceedings

“...it has presented no plan to address the fact that employees will have incorrect figures on their T4 income tax forms if these cases are not resolved by the end of the calendar year, which is now just ...”


The Senate

Hon. Patricia Bovey

May 9th
Hansard Link

The Senate Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program—Motion in Amendment—Debate Suspended

“...g the situation of Canada's poor, recommending a guaranteed annual income in the form of a negative income tax. Not viewed as a panacea for all society's problems, guaranteed income was viewed a game-...”

Hon. Joseph A. Day (Leader of the Senate Liberals)

May 8th
Hansard Link

Budget Implementation Bill, 2017, No. 1 Certain Committees Authorized to Study Subject Matter

“... of the topics.

In addition to the normal and traditional budget bill amendments, such as the Income Tax Act, under Bill C-44, the bill would amend the Immigration and Refugee Protection Act, th...”

Hon. Jean-Guy Dagenais

April 11th
Hansard Link

Canada Labour Code Motion in Amendment

“...) The definition of labour relations activities in subsection 149.01(1) of the Income Tax Act is repealed.

(2) Subsection 149.01(3) of the Act is replaced by t...”

Senator Baker

April 11th
Hansard Link

Canada Labour Code Motion in Amendment

“...t the union was one of sanitary workers in a town of 200 people and that as a requirement under the Income Tax Act that would mean that any officer of that union would have to comply with very stringent income tax requirements, there were many objections that, in those cases, that would be very onerous...”

Senator Baker

April 11th
Hansard Link

Canada Labour Code Motion in Amendment

“... in my mind is that an officer of a very small union would be under the same requirements under the Income Tax Act as a large union representing tens of thousands of people, as was the position of the...”

Hon. Renée Dupuis

April 11th
Hansard Link

The Senate Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program—Motion in Amendment—Debate Continued

“...he cost and impact of implementing a national basic income program based on the concept of negative income tax in order to help Canadians escape poverty.

As we all know, dear colleagues, and as Prime Minister Trudeau publicly stated, poverty in Canada has a gender. The poor in Canada are women. A society's true worth is measured by the way it treats its most vulnerable members, who are often among the poorest, as compared to the way it subsidizes its wealthiest members and organisations.

Known by many names, whether "basic income," "negative income tax," "guaranteed minimum income" or "social welfare," the concept was often discussed in the...”

Hon. Betty Unger

March 29th
Hansard Link

Alberta Economic Measures

“...l be no carbon tax in the U.S., and instead of raising taxes, President Trump plans to cut personal income tax and to slash the corporate tax rate from 35 to 15 per cent.

As the Fraser Institute...”

Hon. Donald Neil Plett

March 28th
Hansard Link

Finance Tax Deferral for Producers of Certain Grains

“... the Senate.

Leader, the federal budget announced a public consultation of the utility of the income tax deferral for producers of certain listed grains with respect to grain transactions and deliveries. The Western Canadian Wheat Growers Association said in response that eliminating this income tax deferral would ". . . fundamentally change the way western grain farms operate their busi...”

Senator Plett

March 28th
Hansard Link

Finance Tax Deferral for Producers of Certain Grains

“...e worry about the impact of the Prime Minister's carbon tax. For example, the budget eliminates the income tax exemption for insurers of farming and fishing property. This could very well lead to insu...”

Hon. Tobias C. Enverga, Jr.

March 28th
Hansard Link

Finance Small Business Tax Regime

“... the 2017 budget as the Liberal government announced the elimination of billed-basis accounting for income tax purposes. This method of accounting is used by accountants, chiropractors, dentists and v...”

Hon. Joseph A. Day (Leader of the Senate Liberals)

March 2nd
Hansard Link

Canada Labour Code Bill to Amend—Third Reading—Debate Continued

“...ed before June 16, 2015.

It goes on to say:

It also amends the Income Tax Act to remove from that Act the requirement that labour organizations and labour trusts provide annually to the Minister of National Revenue certain information returns containing specific information that would be made available to the public.

Those two groups of provisions appear in this bill. With a check of the provisions, one will see that the first part of the summary was Bill C-525, which was passed and then came into force on June 16, 2015. Bill C-377 was also a separate bill but dealt with the same general subject matter, so it was deemed expedient by the current government to put the subject matter of both of those bills into Bill C-4.

Like other honourable senators have done, I will refer to Bill C- 377 and Bill C-525, because that is the convenient way to refer to the debate that had taken place previously. Those two older bills are reflected in Bill C-4, which is in fact proposing to revoke those two previous bills.

Honourable senators, I would like to add my voice in support of Bill C-4. Bill C-377 and Bill C-525 were passed in the last Parliament. I will address each of these bills separately and will undoubtedly emphasize some of the points that have been made previously by honourable colleagues. But hopefully I will also touch on why I believe it appropriate to revoke Bill C-377 and Bill C-525.

I'll start with the provisions that were in Bill C-377. This bill is very familiar to those senators who were in this chamber in the previous Parliament. It was a private member's bill from the other place. That bill purported to amend the Income Tax Act but was considered by many in this chamber and elsewhere to be actually a thinly disguised attack on the labour unions and the labour union movement in this country.

The current Minister of Labour, Patricia Hajdu, described it well when she appeared before the Legal and Constitutional Affairs Committee just last month to speak on Bill C-4. She said:

The perspective of this government is first that Bill C-377 is unconstitutional, that it was not a fair and balanced approach, and that it in fact undermined the integrity of the unions and put them at a disadvantage that could weaken the labour movement in Canada.

Carrying on with the quote:

[Bill C-377] was designed to actually diminish the strength of unions. We believe —

—as an aside, she's talking about the current government —

—that a strong union movement in Canada is essential to maintaining the middle class that we have, growing it to include others, and reducing income inequality in Canada.

I agree with the minister in relation to that earlier legislation, Bill C-377. I spoke on that and expressed that view when the bill was before us three or four years ago.

Many of us on both sides of this chamber at that time were deeply troubled by Bill C-377, going back to when it was first tabled in this place in 2012. It called for an unprecedented invasion of Canadians' privacy and wreaked havoc with a balance that is so critical in healthy labour relations.

Meanwhile, it was unnecessary — a solution in search of a problem. Union members already can already obtain the financial disclosure they need from their unions. So it wasn't for the union members to be informed; it was for the broader public to be informed about what was going on in unions.

Last but most definitely not least, it became clear that the bill was unconstitutional, dealing with a matter within provincial, and not federal, jurisdiction. Indeed, seven provinces representing over 80 per cent of the Canadian population came forward to oppose Bill C-377 and urged us not to pass it.

One could spend several hours detailing the many problems with the bill. My time is limited, but I would commend to our newer colleagues in the chamber that they read the Debates of the Senate with respect to Bill C-377 to get a sense of the many frankly shocking problems with that legislation when it was passed. For now, I will highlight just a few examples that may provide you with some insight as to why many of us found the bill so egregious.

The bill singled out a number of people who work for labour unions. And the bill was not limited to national offices of labour unions but included every union local, however small, and imposed on them unprecedented obligations of public disclosure of their highly personal financial information. These requirements applied to officers, directors and employees earning over $100,000 per year and — here's the important part — also to ". . . persons in positions of authority who would reasonably be expected to have, in the ordinary course, access to material information about the business, operations, assets or revenue of the labour organization or labour trust . . . ."

(1530)

Colleagues, under this definition, we could be describing a union steward in your small town or in your area, earning something less than $30,000 a year. We could be describing a part- time assistant who has access to a filing cabinet and a key.

Going on, the bill then required all of these people to publicly disclose a long list of highly personal financial information, including their individual salaries, their benefits, and any bonuses they might have received.

And all this, with their name attached, was to be posted on the Internet for their neighbours, relatives, office colleagues and, in fact, the whole world to see.

This isn't transparency; it is voyeurism, and we felt that at the time. You can understand why many suspected that these new requirements were really all about discouraging anyone from being part of, or working for, a union.

That was not all, honourable colleagues. These same individuals were required to post a statement of the amount of time that each spent on "political activities, lobbying activities and other non- labour relations activities," and to post all that information on the Internet for the world to see, including maybe another union that wished to raid that particular union, or maybe their employers with whom they had to bargain in the next while.

Colleagues, a person's right to engage in political activities is the foundation of a healthy democracy. That is a right that is, and must remain, sacrosanct to all Canadians, whether they are the CEO of a multi-billion dollar corporation or the union steward in a small local in a rural community.

And what does it mean to require individuals to report and to post on the Internet details — and this is in the legislation — of their time on "other non-labour relations activities"?

I repeat, that information was required by the legislation to be posted for all to see. The bill didn't limit its application to the employee's working hours, so from a plain reading, the bill required all these people to monitor and then disclose the details of their private lives and their private activities, just because, during the day, they worked for a labour union, or they were part of a labour union.

Successive privacy commissioners came forward to voice their concerns with respect to the bill at the time. The then-Privacy Commissioner, Jennifer Stoddart, referred to the "significant invasion" of privacy that was effected under the bill.

The present Privacy Commissioner, Daniel Therrien, was equally blunt. He recently told the other place, during its consideration of Bill C-4, which is now before us, that Bill C- 377 was "disproportionately intrusive from a privacy perspective." Privacy Commissioner Therrien was very clear that he supports Bill C-4 because it will remove these provisions from our law.

As I said, seven provinces, representing over 80 per cent of Canada's population and every region of our country came forward to oppose passage of the bill.

Let me read to you from some of the provincial submissions we received during consideration of Bill C-377.

The Government of Nova Scotia wrote:

This bill has the potential to disrupt collective bargaining at a time when we need greater cooperation between governments, organized labour and business to resolve our economic challenges.

Indeed, the Minister of Labour for the then-government of Nova Scotia took the time to come to Ottawa to testify in opposition to the bill. That was on June 6, 2013. He told our Banking Committee that Bill C-377 was so disruptive to collective bargaining that it was like " . . . a grenade in the room of collective bargaining."

The Ontario government was equally clear, writing:

This bill has the potential to drastically derail collective bargaining in Ontario. In these tough economic times we need governments, organized labour, and management to work together, and this bill would needlessly intervene in that process.

Continuing with the quote:

Balance is essential. Putting a thumb on the scale in either direction damages this delicate balance. By imposing unnecessary and draconian costs on one side, and not the other, this bill might unbalance that scale.

We heard from the Government of Manitoba who sounded the same caution.

[T]he Bill's requirement to publicly disclose confidential financial information will likely unbalance and seriously disrupt labour relations between employers and unions, and adversely affect the collective bargaining process in Manitoba. It is not clear what benefit, if any, this Bill offers that would counter the harm it will do to our labour relations climate, our economy, and our communities.

Honourable colleagues, we heard from provincial governments of all political stripes — Liberal, NDP and Conservative — and all sounded the same warnings and urged us not to pass that legislation.

These were messages many of us took to heart. We were further troubled when leading constitutional experts came to testify, questioning whether the Parliament of Canada had the constitutional power to pass Bill C-377.

Bruce Ryder, a constitutional law professor from Osgoode Hall Law School, testified very powerfully. He said:

I am here to share the bad news that Bill C-377 is beyond the legislative jurisdiction of the Parliament of Canada. Its dominant characteristic is the regulation of the activities of labour organizations, a matter that falls predominantly within provincial jurisdiction to pass laws in relation to property and civil rights pursuant to section 92.13 of the Constitution Act, 1867. If Bill C-377 is passed by Parliament, it will be declared unconstitutional and of no force and effect by the courts.

Professor Ryder recently appeared before our Legal and Constitutional Affairs Committee with respect to Bill C-4, and he repeated his conclusion that the provisions of Bill C-377 were, and continue to be, unconstitutional.

He told our committee that the Income Tax Act, under which this legislation purported to fall, was being used as a Trojan Horse for...”

Senator Day

March 2nd
Hansard Link

Canada Labour Code Bill to Amend—Third Reading—Debate Continued

“...y Bill C-525, because honourable senators will recall that the other bill, Bill C- 377, amended the Income Tax Act and that that becomes effective as of the date that the Income Tax Act amendment comes into force. That's under Bill C-4.

The other ones, some things ...”

Hon. Mobina S. B. Jaffer

February 28th
Hansard Link

Canada Labour Code Bill to Amend—Third Reading—Debate Continued

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act.

If passed, Bill C-4 will repeal several problematic provisions found in Bill C-37 and Bill C-525. As honourable senators will remember, this chamber studied these bills thoroughly and had many challenges.

I support this bill for two reasons. On one hand, it restores balance in the federal labour regime, and on the other it restores the constitutionality of our labour laws.

I would like to begin on the first topic by quoting Hassan Yussuff, President of the Canadian Labour Congress, when he appeared before the Standing Senate Committee of Legal and Constitutional Affairs:

Careful study, consultation and deliberation have always created stability, predictability and a balance in the federal labour relations regime. Bills C-377 and C-525 threaten to undermine this achievement.

In particular, Bill C-377 singled out unions, undermining them by making their reporting conditions so demanding that it infringed on their ability to operate. The bill also ordered unions to disclose publicly any information regarding their actions pending and their members. That last requirement is especially concerning since people would fear being singled out for repercussions by this reporting, especially since it required them to disclose any political activities. If a union could not comply with these heavy reporting requirements, they would be faced with a heavy fine.

The legislation was unnecessary. When the bill was passed, section 110 of the Labour Code already required unions to provide financial statements to their members upon request and free of charge. The legislation was not about promoting transparency, since it was already present in the law.

Instead, Bill C-377 undermined unions by making their reporting conditions so demanding that it damaged unions' ability to operate and placed a chill on potential union members who risked having their personal information revealed.

Meanwhile, Bill C-525 replaced the previous card check system used for the certification and decertification of unions with a mandatory secret vote system. The former government claimed that this change was necessary because many complaints had come up regarding union intimidation.

In fact, no federal stakeholder stated this was an issue. Further, only two cases of union intimidation could be found between 2004 and 2014. Instead, Bill C-525 created a system that only weakened unions. When Minister of Employment, Workforce Development and Labour, the Honourable Patricia Hajdu, appeared before the committee, she told us that her department had determined that the mandatory secret vote system declared that decreased union density, further changing the threshold to trigger a decertification vote from a majority to 40 per cent, threatened unions by making their decertification far easier.

Honourable senators, the restrictions that these two bills placed upon unions were unjust and unnecessary. I welcome that Bill C-4 will restore balance in the federal labour regime and remove undue restrictions on the actions of unions.

To conclude on this subject, I would like to quote Mr. Yussuff once more:

Honourable senators, the labour relations regime that Bill C-4 will restore has evolved over decades and has generally worked well in the federal jurisdiction. It has led to stability and predictability in federal labour relations. The vast majority of contracts negotiated and re-negotiated in the federal jurisdiction are settled without work stoppages. This is an important value and achievement in the regime that we have built.

Honourable senators, as I mentioned before, I also support Bill C-4 because it restores the constitutionality of our labour laws. In particular, Bill C-4 repeals sections of Bill C-317 that were blatantly unconstitutional. First, Bill C-377 intruded on provincial jurisdiction over labour relations without any form of provincial consultation or consent.

Honourable senators, we live in a federation. This speaks to the kind of country Canada is. Our country differs greatly from sea to sea to sea, with several provinces that have their own circumstances. That is why the Fathers of Confederation chose to split responsibility between the federal and provincial levels of government.

One of those areas is labour. The Constitution only provides the federal level with jurisdiction of labour that falls into two categories: Labour within the federal public sector and federally regulated private sector labour.

Under section 92(13) of the Constitution Act, 1867, all other labour relations are under the jurisdiction of the provinces. Bill C- 377, which Bill C-4 will be repealing, clearly fell under provincial jurisdiction.

According to Professor Bruce Ryder of York University, who appeared before the Standing Committee on Legal and Constitutional Affairs, less than 10 per cent of all labour organizations are under federal jurisdiction; therefore, legislating on an area that the provinces have 90 per cent jurisdiction over without consultation or consent would be unconstitutional.

When Bill C-377 was being debated in 2015, the previous government tried to avoid this by stating that the bill was amending the Income Tax Act, and claimed that it would use the federal power to legislate that area. I rejected t...”

Hon. Diane Bellemare (Legislative Deputy to the Government Representative in the Senate)

February 14th
Hansard Link

Canada Labour Code Bill to Amend—Third Reading—Debate Suspended

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act.

She said: Honourable senators, I ask you to promptly pass Bill C-4. As you kno...”

Hon. André Pratte

February 14th
Hansard Link

Canada Labour Code Bill to Amend—Third Reading—Debate Suspended

“...s, I rise today to express my support for part of Bill C-4, the one that contains amendments to the Income Tax Act, naturally. I have to say that I had some reservations about the union certification part.

[English]

Before I explain my reasoning, I would like to tell you a little bit about where I stand on the labour movement.

As regards ideology I like to say, tongue-in-cheek, that I'm a hardline centrist. I usually take a middle-of-the-road stance on everything. I have a natural tendency to see the other side of the coin. That's why I often play devil's advocate.

As a result, during my many years in journalism and in particular during the 15 years I worked as editor-in-chief at La Presse, readers would often incorrectly lump me into one ideological camp or another. However, in general I was usually identified as being more right than left, leaning more toward the management side than toward the union side. Why is that? That is because on public finance matters I have always advocated for some management, zero deficit and debt reduction, which goes generally against the union line. As an indication that I identified with employers, it was the Quebec Employers Council that put my name forward to be appointed to this chamber.

That said, I'm not hostile at all to unions. I believe that they are instrumental in protecting the rights of workers and they are tools of social progress. I believe, as they do, that we need strong social programs that help out the most vulnerable citizens and that promote equity. Where we may differ is that in my opinion the viability of those social programs depends on dynamic economic growth and sound public finances.

I believe that in a developed society there needs to be a balance of power between employers, unions and the state. If the employer's side is too powerful, workers are poorly treated, their working conditions worsen, their purchasing power decreases and the social climate deteriorates. If unions are too strong, businesses become less productive, the economy risks becoming stagnant and workers eventually suffer.

[Translation]

In Canada, the unionization rate has been in decline for more than 30 years. It was at 38 per cent in the early 1980s and at 29 per cent in 2014. In the private sector, only 15 per cent of workers are unionized, which means that 85 per cent of private-sector workers are not unionized.

Most people agree that income inequality is one of the most serious problems facing contemporary Western societies. That being the case, the erosion of organized labour in Canada is bad news indeed. If unions cannot fight for workers and working conditions, who will? The appropriate balance is in danger of being upset. That's the backdrop against which Bill C-377 and Bill C-525 were adopted.

(1530)

Bill C-377 amended the Income Tax Act to require that all unions file a lot of extremely detailed information about their a...”

Hon. Bob Runciman,

February 9th
Hansard Link

Canada Labour Code Bill to Amend—Eleventh Report of Legal and Constitutional Affairs Committee Presented

“...e Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act, has, in obedience to the order of reference of December 15, 2016, examined the said ...”

Senator Housakos

February 8th
Hansard Link

Industry Bombardier Inc.—Government Support

“...ve. I think this government should be focused on creating a competitive climate, lowering corporate income tax, lowering personal income tax and giving our companies the most competitive climate in the marketplace for our companie...”

Hon. Art Eggleton

January 31st
Hansard Link

The Senate Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program—Motion in Amendment—Debate Continued

“...to 5 per cent.

We also have additional programs like the Canada Child Benefit and the Working Income Tax Benefit, which are all part of income security, but none of them in total have been able to make a dent in terms of poverty, aside from seniors poverty, in this country.

The support for doing these pilot projects is gaining momentum. Ontario announced in their last budget they intend to do that. As a volunteer, they got our former colleague Hugh Segal to write up a paper on how that project might proceed. Quebec is looking at the matter as well. In P.E.I., all the party leaders — the NDP, Liberal and Conservative leaders of that province — all said that they would like to engage in a pilot project relevant to basic income. There are mayors and counsellors right across this country in major cities who have also come on board.

(1630)

A study done a couple of years ago by Environics found that 52 per cent of the people they polled indicated they thought it was something worth pursuing.

Why is this kind of momentum happening? Why are people talking about this now and saying, "Let's look at it a little further and see if it will work"? I'd say there are three reasons for this. First is the persistence of poverty. Statistics Canada says that one in seven Canadians live below the poverty line. That's 5 million people in this country, and 1 million of them are children. Back in 1989, the House of Commons said it wanted to eliminate child poverty by the year 2000. Today, child poverty is actually a higher percentage than it was then.

So there is still a long way to go. The Canada Child Benefit has certainly helped a lot, but there are certainly still of lot of children it is not bringing out of poverty.

Almost 900,000 people use food banks every month, and 38 per cent of the people who depend upon food banks are children. Four million are in need of decent, affordable housing in this country, and there are thousands of homeless people struggling with street life. For these people, our fellow citizens, every day is a battle with insufficient income, unaffordable housing, inadequate clothing and unsatisfactory nutrition.

It affects people's health. That's one of the things they found regarding income. The Canadian Medical Association has picked up on that by saying that poverty makes us sick. They wrote a report on it. They noted that the lowest income quartile has twice the health care costs as the highest quartile in this country. One in seven children is going to school hungry in this country. There are dreadful living conditions for much of the Aboriginal population. There is greater vulnerability to poverty for them, persons with disabilities, single parents, new immigrants and people of colour. How shameful it is in a country as rich as Canada that we have so many of these poor statistics.

Make no mistake: Poverty is not being defeated or diminished. It still had as a stranglehold on many Canadian lives. As our former colleague Hugh Segal said, "Our present system doesn't fight poverty; it institutionalizes it."

Poverty doesn't just affect the poor. Poverty affects us all. Study after study has indicated that this is costing taxpayers billions and billions of dollars every year. And homelessness: It's been proven many times again that it's three to four times more costly to leave someone on the street than to give them housing support.

The kind of system we've developed is failing. The current support systems fail. I particularly would single out social welfare, a system that is degrading, puts a stigma on people, marginalizes people and it is one that I think is a very key object of these studies — to replace it with something that would be a better safety net.

Another senator, David Croll, said back in 1970 that we're pouring billions of dollars every year into a social welfare system that merely treats the symptoms of poverty but leaves the disease itself untouched. It's time to take a new path — at least to explore a new path. It's time to end the indignity, the stigma and marginalization of the current welfare social assistance system. It fails us socially; it fails us from an economic perspective. It's time to end the Band-Aid approach and explore a new direction.

The second reason that I think we are seeing rising momentum to support basic income or at least the pilot projects is rising inequality. A wide gap in wealth and income levels has evolved in the past three decades in this country. Our society is becoming more unequal. When you have the top 100 CEOs in this country making on average $9.2 million a year and the average salary of a Canadian is just over $47,000, you can see that the prosperity is not being shared. Twenty per cent of the population controls 68 per cent of the wealth.

City neighbourhoods are becoming more polarized — a threat I would suggest to our social fabric.

In Toronto, there's one statistic that I think is worth noting. In Leaside, one of the neighbourhoods in Toronto, there is 4 per cent child poverty. You take a five-minute drive into the Thorncliffe area and child poverty is 53 per cent.

In Hamilton, two neighbourhoods five kilometres apart have a 21-year difference in life expectancy. In one neighbourhood, the life expectancy is 83; five kilometres away, it's only 62.

The third reason that basic income is gaining momentum is that the labour market is changing. Globalization, outsourcing, new technology, automation, robotics, artificial intelligence — all of these things are coming into play in terms of changing the labour market as we have known it. There's a substantial loss of manufacturing jobs — blue-collar jobs — being replaced by precarious employment: more part-time work, fewer benefits. People are without the kind of secure, well-paying jobs that they've had in the past.

Professor Richard Florida at the University of Toronto says we are in the midst of the greatest, more thorough economic transformation in all of history. The Mowat Centre recently reported that 42 per cent of employment in Canada is at high risk of automation in the next two decades, particularly with new artificial intelligence and robotics technologies.

Those three reasons — poverty, inequality and the changing labour market, together with a feeble economy — contribute to the growing stress for many people to make ends meet as they live paycheque to paycheque, which half our population does, we're told. Insufficient pensions, too much household debt — these all lead to greater anxiety and a search for a better safety net.

What would a basic income pilot look like? Hugh Segal, in his report to the Province of Ontario, says it should be based on a negative income tax, or it should be like a refundable tax credit. It should top people up who are below what...”

Senator Eggleton

January 31st
Hansard Link

The Senate Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program—Motion in Amendment—Debate Continued

“... necessities. It should move people off the costly welfare rolls and the indignities involved in an income tax managed formula — a negative income tax — and top them up to a better position.

The current systems have failed. The curr...”

Hon. Frances Lankin

December 15th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Third Reading

“... An Act to amend the Canadian Pension Plan, the Canadian Pension Plan Investment Board Act and the Income Tax Act.

I want to speak briefly to this to put on the record my support for this par...”

Hon. Yonah Martin (Deputy Leader of the Opposition)

December 15th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Third Reading

“...f Bill C-26, An Act to amend the Canada Pension Plan, the Canada Plan Investment Board Act and the Income Tax Act.

As other senators have stated, the CPP is important and is a good plan, but ...”

Hon. Claude Carignan (Leader of the Opposition)

December 15th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Third Reading

“...ob is to create wealth. Unfortunately, it is killing jobs by creating new taxes. Whether it is the income tax hike for certain Canadians, higher pension plan contributions or the notorious carbon ta...”

Hon. Carolyn Stewart Olsen

December 14th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

The legislation before us which passed committee on division, but unamended, ...”

Hon. Larry W. Smith

December 13th
Hansard Link

Budget Implementation Bill, 2016, No. 2 Eleventh Report of National Finance Committee Adopted

“...clause 44. This section deals with a change to the small business deductions in section 125 of the Income Tax Act. You have already heard that the Income Tax Act needs to be simplified, yet Bill C-29 adds another 10 pages to the act.

For t...”

Hon. Salma Ataullahjan

December 13th
Hansard Link

Budget Implementation Bill, 2016, No. 2 Third Reading—Motion in Amendment Negatived

“...and provide medical education to young practitioners. Clause 44 seeks to amend section 125 of the Income Tax Act.

In section 125 there are subsections that govern the rules with respect to s...”

Hon. Claude Carignan (Leader of the Opposition)

December 12th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Vote Deferred

“...my honourable colleagues for giving me this opportunity to speak to Bill C-2, An Act to amend the Income Tax Act.

My speech was ready last Thursday, but I was surprised by some of the comments made by the Honourable Senator Woo, so I wanted to take some time to carefully reread my speech and add a few points. I don't think that Senator Woo's comments contributed in any way to people's understanding of Bill C-2.

Honourable colleagues, as senators, we must be aware of the weight of our words and the consequences of our actions. The legislation we debate and sometimes pass has a genuine impact on real people. It does not do justice to the arguments made against Bill C-2 to simply say, "Oh, well, that's mathematics."

[English]

Let me quote Senator Woo:

Again, I submit there is no ill intent here; it is simply a function of arithmetic. Much as we may not like this result, I regret to say that no amount of sober second thought can change the law of mathematics.

[Translation]

The role of the Parliament of Canada is certainly not to debate the laws of physics or the laws mathematics; that is obvious. However, it's important to remember that we are talking about the Income Tax Act. No, this is not a law of nature or a divine law, but rather something that was created by human beings and that can be changed by human beings. Tax rates are not simply a function of arithmetic; they are government decisions that are approved by Parliament. That is what we are talking about in this debate on Bill C-2. Senator Smith illustrated this really well with the amendment he proposed. It is entirely possible and realistic to amend the Income Tax Act in order to relieve the strain on the middle class. It is possible to achieve the ob...”

Hon. Tony Dean

December 12th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Third Reading—Debate Adjourned

“...burdened as a result of making additional contributions. It would do that by enhancing the Working Income Tax Benefit to roughly offset incremental employee CPP contributions, leaving eligible low-...”

Hon. Kelvin Kenneth Ogilvie,

December 8th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Tenth Report of Legal and Constitutional Affairs Committee Presented

“...26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, has, in obedience to the order of reference of December 5, 2016, examined the said ...”

Hon. Nancy Greene Raine

December 8th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“Thank you, honourable senators, for the opportunity to speak to Bill C-2, An Act to amend the Income Tax Act. My comments will be brief.

This past Friday I had the opportunity to questio...”

Hon. Peter Harder (Government Representative in the Senate)

December 8th
Hansard Link

Budget Implementation Bill, 2016, No. 2 Second Reading

“...all senators and their staff yesterday.

Part 1 of Bill C-29 makes various amendments to the Income Tax Act. Some of the many amendments include the indexing of the Canada Child Benefit, techn...”

Hon. Larry W. Smith

December 8th
Hansard Link

Budget Implementation Bill, 2016, No. 2 Second Reading

“...al laws.

[Translation]

Bill C-29 is divided into four parts. Part 1 amends the Income Tax Act with respect to rules governing tax avoidance.

Parts 2 and 3 amend the Excise Tax Act with respect to goods and services tax and harmonized sales tax measures.

Part 4 amends other measures in the following acts: the Employment Insurance Act, the Old Age Security Act and the Bank Act.

[English]

Bill C-29 is divided into four parts. Part 1 focuses on amendments to the anti-avoidance rules in the Income Tax Act. Parts 2 and 3 focus on amendments to the GST/HST — the goods and services and harmonization taxes — and excise measures. Part 4 implements various other measures by amending several acts, including the Employment Insurance Act, the Old Age Security Act and the Bank Act. We had federal officials in to go through each of these divisions, which was quite an interesting exercise.

(1520)

The committee is currently studying Bill C-29 under the motion to allow pre-study. We have had four meetings to date, heard from officials, the Minister of Finance and eight outside witnesses. I can report some of what we have heard but will report in greater detail when the committee has completed its study.

In Part 1, the bill amends the small business deductions and back-to-back arrangements, eliminates the eligible capital property deduction and replaces it with a new class of depreciable property. Part 1 also implements the OECD's common reporting standards and a host of other technical amendments to the Income Tax Act.

Mr. Kim Moody, a tax specialist from the Canadian Tax Advisory, testified la...”

Hon. Percy Mockler

December 7th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...nators, I thank you for giving me this opportunity today to speak to Bill C-2, An Act to amend the Income Tax Act. I would also like to thank Senator Smith, Senator Marshall and Senator Neufeld for their enlightening contributions to the debate, which clearly showed the impact that Bill C-2 will have on Canadians.

[English]

Your Honour, what started not too long ago as "sunny ways" have now become "funny ways."

[Translation]

As Senator Smith, chair of the National Finance Committee, Senator Neufeld and Senator Marshall clearly explained, the Trudeau government broke its promise to help middle-class Canadians and chose instead to give the greatest tax relief to the wealthy.

[English]

Your Honour, I want to share with you that I'm very sensitive to Bill C-2 and Bill C-29. I want to share the fact that, where I come from, I was the son of a single mother, born on welfare. With my first student loan, I put the toilet and running water into the little house where my grandfather, grandmother, sister, mother and I lived.

When I look at Bill C-2, there is no doubt in my mind, with my career of 24 years in another Parliament, that I've always stood up to defend what I have always thought in my heart: Defend the most vulnerable. I cannot be muted when I look at Bill C-2, but as a democrat respecting democracy, I will respect the ruling that Your Honour presented not too long ago.

However, as parliamentarians we need to stand up and defend the most vulnerable.

[Translation]

The members of the Standing Senate Committee on National Finance studied Bill C-2 at length. We were, and still are, alarmed by the calculations presented by the chair of the committee. Common sense would have told us that those who are part of Canada's middle class earn an annual income of between $45,000 and $90,000. However, when the Minister of Finance, senior officials, and representatives of various organizations appeared before the committee, no one was able to provide us with a real definition of the middle class. Since we can only work with what we are given, we decided to work with what the government proposed, namely that those whose annual income is between $45,000 and $90,000 are part of the middle class.

Those who stand to gain the most tax-wise from Bill C-2 are people with an annual income between $100,000 and $200,000, which, in my opinion, is unacceptable. Those whose annual income is between $45,000 and $90,000 benefit a little less, and those whose annual income is less than $45,000 barely benefit at all.

(1450)

The idea of growing the middle class, which this government promised to do, sounds a lot like the title of a book that its author forgot to read. That's why I moved a motion in support of Senator Smith's proposed amendment to the bill that would give less to wealthy taxpayers who earn between $100,000 and $200,000, more to middle-income Canadians who earn between $45,000 and $90,000, and even more to those who earn less than $45,000 per year.

By targeting hard-working middle-income taxpayers, this amendment will enable Bill C-2 to achieve its objective. That is how we can ...”

Hon. Frances Lankin

December 6th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...ey look to other measures like the Child Tax Credit and other things to create that relief for low-income taxpayers. But I would love to have seen more progressiveness here.

That said, I'm le...”

Hon. Richard Neufeld

December 6th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“... you, honourable senators. I rise today to speak at third reading of Bill C-2, An Act to amend the Income Tax Act.

As a member of the National Finance Committee, I was present for four of the five meetings on Bill C-2, during which we heard from many witnesses, including the Finance Minister, his officials, the Parliamentary Budget Officer and other subject-matter experts. Regrettably, I missed the November 15 meeting as I was travelling with the Energy Committee. I was also present at the November 22 meeting for the clause-by-clause consideration of the bill and the adoption of Senator Smith's amendment.

At the outset, I want to put on the record that I don't for a moment buy the argument that Bill C-2 should be studied as part of a larger suite of government tax policies or benefits. I was mandated, as a member of the committee, to study a single piece of legislation, Bill C-2. I was not asked to study a suite of past, current or future tax benefits.

I am not an economist, nor am I a financial guru, so I will not get into the weeds of this bill. Other colleagues have already summarized it very well. My remarks today will focus on why I supported Senator Smith's amendment to clause 1 of the bill and why I cannot support Bill C-2. I supported the amendment because I truly believed it was the right thing to do for Canadians. I put partisanship aside and voted with my conscience.

The government has argued that this bill is intended to grow the middle class. I don't buy it. In his second-reading speech in the other place, Minister Morneau touted that Canada's middle class has gone too long without a raise, and in challenging times this government has taken action to help them.

This statement is a bit misleading. Sure, middle-income earners are getting a tax cut, but it's some of the wealthiest Canadians who are benefiting the most. In light of the witness testimony we heard in committee, I believe Bill C-2 does not meet the government's intended objective.

Most Canadians in the so-called middle class would welcome the changes suggested in Bill C-2 since they reduce the tax rate for those making between $45,000 and $90,000 from 22 per cent to 20.5 per cent. Who doesn't like a tax break?

The bill also creates a new marginal tax rate of 33 per cent for taxable income in excess of $200,000. The taxes collected in the new 33 per cent bracket were supposed to compensate for the tax break for those earning between $45,000 and $90,000. Revenue neutral. Makes sense, doesn't it? Reduce the tax burden on the middle class and make the wealthiest 1 per cent of Canadians pay more.

On the surface, this all seems to make sense. But once you dive into the details — as we have in committee — we soon realized that those who benefit the most from these tax changes are the wealthiest 30 per cent of Canadians. In truth, this bill doesn't really help my friends Fred and Martha all that much.

As Senator Smith argued last week, there are two major flaws with Bill C-2: First, Canadians with incomes above $90,000 are in the income tax brackets that gets the biggest benefits, and second, the tax cut from 22 per cent to 20.5 per cent in the second bracket results in a $1.7 billion deficit yearly.

Contrary to what the government had hoped, this bill is not revenue neutral. The additional tax dollars collected with the new 33 per cent tax rate do not compensate for the tax cut in the second bracket.

Angella MacEwen, Senior Economist with the Canadian Labour Congress, told the committee:

Another way to evaluate this proposed middle class tax cut is on its stated purpose. During the last election, the promise was made to lower taxes for the middle class and to pay for that by raising taxes on the wealthiest. The government bill does not fulfill the spirit of this promise. . . . the tax cut as designed does not benefit middle-income earners, and the government has since admitted that the increase at the top end will fall at least $1 billion short of paying for what is really an upper middle class tax cut.

The Federal Director of the Canadian Taxpayers Federation appeared before the committee on October 26. He too believes the bill does not meet its intended objective, which was to tax the higher income earners to help the middle class:

That promise was designed as a trade-off, a straight trade. We're going to take it from this bracket and give it to these people. That is not what's going to happen. Not only will there be less revenue from the wealthy, but it's going to be more expensive, lost revenue on the other side, and that becomes more important if we then step back and look at the broader fiscal picture. We have a government that has tripled its promise in terms of the size of its deficit. I would argue that is a significant change in terms of policy, and . . . that will have consequences down the road in terms of repaying it.

According to the Parliamentary Budget Officer, Bill C-2 would also cost the public purse $1.7 billion in fiscal year 2016-17 and nearly $9 billion through to 2020-21. This would add important sums of money to the ever-increasing federal deficit. Senator Marshall made a compelling case yesterday on the dangers of accumulating massive deficits.

Honourable senators, consider this: Bill C-2 gives Fred and Martha, average Canadians who make $60,000 a year, an annual tax cut of $261.44. With Senator Smith's amendment, they would have received an annual tax cut of $570.12. That's more than double the amount under this bill. The amendment that we passed in committee truly helped Fred and Martha. I suggest you never lose sight of that when you consider this bill.

Let's take another example: The government's proposed legislation gives those who make $145,400 an annual tax cut of $820.43, more than three times the tax cut of $261.44 to Fred and Martha, who make $60,000. With this amendment, those same Canadians making $145,400 would have received a tax cut of $141.21, a reduction of $620.

If we want to grow the middle class, would it not make more sense for someone who makes $60,000 a year to have a bigger tax cut than the person who makes more than twice that amount?

Colleagues, I used these two examples for a reason. You may have noticed I used the 2016 sessional allowance for senators as an example. Senators make $145,400 a year. As Senator Smith argued yesterday, Bill C-2 gives all of us in this chamber a larger tax cut than a Canadian who makes $60,000 a year.

To put that into perspective, Bill C-2 gives us a bigger return than most of our staff members. How is that fair?

If you are in favour of giving our country's wealthiest Canadians a bigger tax cut, then by all means, you should vote in favour of Bill C-2.

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I, for one, believe middle income Canadians deserve a larger tax cut than me.

Apparently that's what the Liberals wanted to do. The party's election platform was called A New Plan for a Strong Middle Class, and the Trudeau government's 2016 Budget was called Growing the Middle Class. First of all, the government seems unable to actually define the middle class, as per Minister Morneau's appearance before the committee.

Secondly, this bill is the wrong plan to grow the middle class. With this bill, the government prefers giving more to the rich and less to lower-income Canadians.

Even the minister's parliamentary secretary likes to talk about the middle class. Here's what he said in his third-reading speech on Bill C-2:

The confidence of many middle-class Canadians in the economy was shaken, and we wanted to restore it. For once, Canadians have a government that is standing up for them by taking measures that will promote economic development, while at the same time taking into account the most vulnerable people in our society, those who are in the middle class, and those who want to join it.

I think the honourable member of the other house has it wrong. This government is not taking into account those in the middle class and those who want to join it with this legislation. In fact, I strongly believe that the Senate Finance Committee stood up for the middle class and rightfully defended their interests when adopting Senator Smith's amendment.

The proposed amendment would have actually given more money to Canadians who find themselves in the middle-income tax bracket. I was hopeful that the Senate as a whole could have done what is right for thos...”

Hon. Elaine McCoy

December 6th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...e subject of a confidence motion there; and third, if it is a bill that would, by amendment, raise income taxes. In all of those cases, parliamentary convention, which has been around longer, in fac...”

Hon. Joseph A. Day (Leader of the Senate Liberals)

December 5th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...at we're now dealing with at third reading.

Bill C-2 makes three fundamental changes to the Income Tax Act.

First, the bill enacts in the Income Tax Act what has been called "the middle class tax cut." That reduces the federal personal income tax rate from 22 per cent to 20.5 per cent for individuals with taxable income of $45,000 to $90,000. Those are approximate figures.

The second change would create a new tax bracket in the Income Tax Act for taxable income above $200,000. That income would be taxed at a new rate of 33 per cent.

Both those changes were major planks in the Liberal party platform in the last federal election.

The third major change contained in Bill C-2 concerns Tax-Free Savings Accounts, or TFSAs, as they are commonly referred to. Colleagues will recall that the previous government had increased the maximum annual contribution limit for these Tax-Free Savings Accounts, doubling it from $5,000 to $10,000 per year, at the same time that it did away with the annual indexation of the contribution limit to account for inflation. When that change was announced by the previous government, the current Prime Minister, Justin Trudeau, announced that a Liberal government would reverse that increase.

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Bill C-2 makes good on that promise and returns the annual maximum contribution limit to the previous limit of $5,000 while also returning indexation for inflation, which means a limit of $5,500, which will increase in line with inflation in years to come. We heard evidence at committee that the projected next increase to $6,000 is likely to occur in 2018.

Following traditional practice in financial budgetary matters, these three changes took effect January 1, 2016, shortly after they were announced. That means that Canadian taxpayers will have had the advantage of these initiatives for nearly one year now.

Colleagues, many of us who participated in the work of the committee on this bill were disappointed to learn that 65 per cent of Canadians would not benefit from the tax reduction in Bill C-2, and furthermore that most of the benefits would be concentrated in the top 20 per cent of Canadians, leaving the bottom 80 per cent with very little change in their after-tax income.

Part of the reason for this is that the median income in Canada, honourable senators, is just over $30,000. This means that half of Canadians have annual incomes below $30,000. In fact, 35 per cent of Canadians don't pay any tax at all; their incomes are too low. Another 31 per cent pay taxes but have taxable income below the $45,000 threshold for that bracket of $45,000 to $90,000 that we're referring to, that has the reduced rate from 22 to 20.5 per cent. They do not benefit at all from these tax savings because their income is too low.

As witnesses told our committee, most of the gains from the new tax rate accrue to the top 20 per cent of Canadian families, that is, families that make over $97,000 a year.

I believe that this is part of what motivated Senator Smith to propose his amendment. His amendment also proposed to increase revenue to make the changes revenue neutral.

But, honourable senators, the Liberal Party didn't promise the broader tax reduction for all taxpayers, as much as many of us would like to have seen. They promised to do exactly what is set out in Bill C-2.

Let me read to you from the election platform of the Liberal Party of Canada. It said:

We will cut the middle income tax bracket to 20.5 percent from 22 percent — a seven percent reduction. Canadians with taxable annual income between $44,700 and $89,401 will see their income tax rate fall.

We often round that off to $45,000 to $90,000.

Those people will see their income tax rate fall. Honourable senators, that is what the government felt it could do at this time, taking into consideration all of the other government initiatives, including a major change relating to the Canada Child Benefit.

Colleagues, that was a very clear, unequivocal promise. The bill before us is numbered Bill C-2 because it was the first substantive bill introduced by the newly elected government, introduced specifically to implement this central promise in the Liberal platform.

As senators, we have to respect the policy decisions of the elected branch of government, especially so when that policy alternative had been put to the people of Canada in a general election and approved by Canadians. It is not for us to say that we have a better plan. This is the plan promised by the Liberal Party, approved by Canadians in the general election and waiting to be passed into law by Bill C-2. That is what is before us today.

Indeed, one might suggest that if the Liberal government had done anything else, including the arguably more progressive tax changes proposed by Senator Smith, that many Canadians, including some in this chamber, might have felt betrayed, arguing that a major promise had been broken by the government.

As Sir John A. Macdonald said in his famous quote that has been so often referenced in this chamber. The Senate:

. . . must be an independent House, having a free action of its own, for it is only valuable as being a regulating body, calmly considering the legislation initiated by the popular branch, and preventing any hasty or ill considered legislation which may come from that body —

This is the part of that quote I would like to emphasize.

— but it will never set itself in opposition against the deliberate and understood wishes of the people.

Let me repeat that:

. . . it will never set itself in opposition against the deliberate and understood wishes of the people.

If we ever needed an example of what that particular quote meant, Bill C-2 is a perfect example.

Honourable senators, the second change in Bill C-2, the new tax bracket of taxable income over $200,000 a year with a new tax rate of 33 per cent for income in that top bracket, that too fits into that definition of what Sir John A. Macdonald said, "never set itself in opposition against the deliberate and understood wishes of the people."

The Liberal platform with respect to this particular matter says:

To pay for this tax cut —

The middle class tax cut, that is.

— we will ask the wealthiest one per cent of Canadians to give a little more. We will introduce a new tax bracket of 33 per cent for individuals earning more than $200,000 each year.

With respect to the Tax-Free Savings Account, which is the third element in this bill that I mentioned at the beginning, it was also another clear election promise. In fact, very few Canadians, only 6.7 per cent, were investing the maximum in the Tax-Free Savings Account when that maximum was $5,500. The average contribution, the committee was informed, was $2,880 a year, and that was before the change to $10,000. So doubling the maximum annual contribution limit to $10,000 was a benefit that would have gone to a very small group of Canadians.

A number of senators were concerned that this change would have a particular impact on senior citizens. The argument is that quite a few seniors who have accumulated considerable wealth in their RRSP encountered the mandatory withdrawal from the RRIF, and you convert an RRSP to a Registered Retirement Income Fund, so that they take the money out of their RRIF and put it into the Tax-Free Savings Account. That was the argument being made.

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Many people have assumed that seniors want the higher Tax- Free Savings Account contribution level to be able to move from a RRIF to a Tax-Free Savings Account. But, colleagues, we heard from Wanda Morris of the Canadian Association of Retired Persons. Her organization, which represents some 300,000 individuals across the country, conducted a recent poll of their membership to dig down into what tax options their members actually want. They learned that in fact increasing the contribution level for the Tax-Free Savings Account is not the first priority of most seniors.

The most important issue for their members is to remove the mandatory withdrawal of the RRIF, or the Registered Retirement Income Fund. They wanted the mandatory percentage withdrawal each year reduced. Almost half their members listed that as their first or second choice of policy priority for a tax option.

As Ms. Morris explained, the second policy matter, with 43 per cent of CARP members ranking it either as first or second, was to follow through with the government's promise of a special index for seniors in Old Age Security and Guaranteed Income Supplement. They wanted a special index for those two items for seniors in order to keep up with inflation.

This illustrates how various fiscal initiatives are inter-related, but we don't have all programs before us for consideration when we consider Bill C-2. That's the important point, honourable senators. There are many other things that we might want to look at, and maybe we should look at, but we're dealing with some very narrow issues in Bill C-2.

The previous higher limit for the Tax-Free Savings Account was quite far back on the list of priorities for seniors; that is, leaving the Tax-Free Savings Account at $10,000 as opposed to the current government changing it back to $5,500. It was tied for third place, with only 38 per cent of members choosing it. That is the same number who chose returning the age to qualify for Old Age Security to 65 rather than staying at age 67, which had been planned by the previous government.

Those of us who were concerned about the possible impact of this policy change on seniors can take some comfort from this, reassurance from seniors themselves that they have more concern about items other than these particular changes to the TFSAs.

Colleagues, Bill C-2 is a short, straightforward bill that would fulfill and enshrine in the Income Tax Act three important promises made during the last election. This is something I think everyone in this chamber supports, that this government keep its promises to Canadians.

Before I conclude, I want to highlight an issue that I know is of concern to a number of us, which has not yet been addressed by the government, and that is the extreme complexity of the Income Tax Act. Several witnesses who appeared before our National Finance Committee on Bill C-2 highlighted this as an increasingly critical issue.

Aaron Wudrick of the Canadian Taxpayers Federation told us that his organization tracks the size of the Income Tax Act, and it is now over a million words, twice as long, honourable colleagues, as Tolstoy's epic War and Peace.

There has not been a thorough review of the Income Tax Act since the Royal Commission on Taxation, the well-known Carter commission in 1966. Ho...”

Hon. Larry W. Smith

December 5th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...rst part of the bill deals with the proposed middle-class tax cut. This proposal reduces personal income tax rates on income between $45,000 and $90,000 a year and then increases tax rates on incom...”

Senator Marshall

December 5th
Hansard Link

Income Tax Act Bill to Amend—Third Reading—Debate Continued

“...their pockets to save, invest, and grow the economy, we all benefit.

We will cut the middle income tax bracket to 20.5 per cent from 22 per cent — a seven per cent reduction. Canadians with taxable annual income between $44,700 and $89,401 will see their income tax rate fall.

This tax relief is worth up to $670 per person, per year — or $1,340 for a two-income household.

The platform goes on to say:

To pay for this tax cut, we will ask the wealthiest one per cent of Canadians to give a little more. We will introduce a new tax bracket of 33 per cent for individuals earning more than $200,000 each year.

There are approximately 340,000 taxpayers in this group.

So in their election platform, the government makes a commitment to reduce the tax rate on taxable income for taxpayers with a taxable income between $44,700 and $89,400. They continue on and say that it is worth up to $670 per person.

I would like to point out that the taxpayer, as Senator Smith has already indicated, has to be at the very top of the second tax bracket to save $670 in taxes. The individual at the lower end, with taxable income, say, of $45,000, will only save $21.

Individuals at the lower end of the tax bracket receive the least benefit. By focusing on the "middle class" in their election platform, the government is defining the "middle class" as Canadians with a taxable annual income between $44,700 and $89,400. However, when I look further at the impact of Bill C-2, it is obvious that individuals with taxable income above the defined range will benefit the most.

For example, an individual with a taxable income of $120,000 will have their taxes reduced by $766 under Bill C-2, while those individuals in the targeted tax bracket will receive significantly less.

Let me summarize: An individual at the lower end of the targeted tax bracket, at $45,000, will save $21. An individual at the top end of the targeted tax bracket of $89,000 will save $696. But an individual who is not in the targeted tax bracket, because their taxable income is higher, for example $120,000, will save the most, with a tax savings of $766.

Obviously, the greater benefit is not going to those in the targeted "middle income" tax bracket. Rather, it is going to those individuals whose income exceeds the targeted tax bracket; that is, those Canadians who are more affluent.

In fact, under Bill C-2, taxpayers with up to $220,000 of taxable annual income will see their taxes reduced.

This was first issue that I had with Bill C-2, honourable senators.

The second issue I had with Bill C-2 relates to the government's commitment that the reduction to the middle income tax bracket would be revenue neutral and that it would be paid for by the new 33 per cent tax rate on taxable income exceeding $200,000.

Specifically, the government had committed that, to pay for the tax cut, the wealthiest 1 per cent of Canadians would pay more. This would be achieved, they said, by introducing a new tax rate of 33 per cent for the approximately 340,000 individuals with a taxable income of more than $200,000 a year.

The Liberal platform specifically states, and I quote, ". . . to pay for this tax cut, we will ask the wealthiest 1 per cent of Canadians to give a little more." In other words, the tax cut would be revenue neutral.

We now know that the tax cut is not revenue neutral. That brings me to my third issue with Bill C-2.

The Parliamentary Budget Officer has told us that the net cost of Bill C-2 will be $1.7 billion annually. This is a net cost of tax changes made only to the second tax bracket and the new 33 per cent tax bracket.

What is the cost of the tax cuts to individuals with taxable income above the targeted tax bracket? In other words, those individuals with taxable income between $89,400 and $200,000 — individuals such as those making the $120,000, as I previously mentioned?

If you look at the website of the Department of Finance, there's a table there outlining the fiscal cost of the proposed tax changes. The Department of Finance estimates that reducing the second personal income tax rate from 22 per cent to 20.5 per cent will cost $3.4 billion and introducing the 33 per...”

Hon. Carolyn Stewart Olsen

December 5th
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Second Reading

“...-26, An act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

As you can see by the title of this legislation, it is very broad and impacts the government's retirement plan for Canada as well as Canada's general financial status through its changes to the Income Tax Act.

Bill C-26 proposes amendments to the Canada Pension Plan, CPP, which would provide for a gradual increase in premiums by both employers and employees, starting in 2019.

To justify this, it promises a matching increase in the Canada Pension Plan payouts, which will not take effect for at least 40 years.

There are other amendments in the bill which provide for changes to additional benefits like disability payouts or funds for those whose spouses have died, and also amendments which raise questions as to how the government will deal internally with the money they collect through CPP deductions.

Finally, Bill C-26 amends the Income Tax Act to increase the working income tax benefit, and this is a measure the government introduced in 2008, to ease the tax load on the working poor.

These amendments would, among other things, raise the maximum amount of the working income tax benefit to $1,192 for single individuals and $2,165 for families. This is an increase from the currently posted $1,015 for single people and $1,844 for families.

The government's intention behind this part of the legislation is to offset the increase in CPP deductions that people will be burdened with when Bill C-26 comes into effect.

According to Finance Canada, the increased working income tax benefit will lead to $250 million in extra spending. This represents yet another increase in our budget deficit.

The direct cost to individual Canadians will be an extra payroll deduction of up to $1,100 for some and a matching expense for businesses of all sizes.

The financial implications of this bill will impact everyone. It is a general hit to Canada's balance sheet, and a personal blow to the paycheques of every single Canadian worker in the businesses which employ them.

At a certain point, these numbers become an abstraction for some, and it is easy for them to forget that we are talking about real Canadians and real businesses.

To make it clearer, let me give you an example of how this will impact us. No adult who is alive today will likely see the full Canada Pension Plan payout that this bill proposes.

Those who would be the first to benefit are now 16 years old. They will start paying in as of 2019, and will need to pay for 40 years before they see a cent of this.

But all Canadians will be paying after Bill C-26 passes, starting in 2019, including the working poor and those in the middle of their careers now. Almost none of the seniors who currently live in poverty and who seem to be the inspiration for the government to make these changes will be alive to see the increased payout.

As of September, the average wage for a Canadian worker was just under $50,000 per year. With Bill C-26 in effect, a business of 40 to 50 employees will lose this amount each year, $50,000 coming off your small businesses.

Senators, when you look at it this way, it is not just a number anymore. It is a person's job. You know what will happen in a bad year. The businesses may have to do layoffs or terminations of good, middle class jobs that will simply disappear.

It is important to keep in mind the government's self-declared emphasis on growing and strengthening our middle class. When it comes down to it, workers and business owners are worried about this bill and this does nothing to calm their fears.

Hendrik Brakel, senior director for the Economic, Financial & Tax Policy at the Canadian Chamber of Commerce said in May:

. . . we're worried a big tax increase is headed for the middle class like an elbow to the chest.

He continued:

. . . this comes at the worst possible time — an economy reeling from weak commodity prices and slower consumer spending will be lucky to eke out the growth of 1.5% next year. It's difficult to stimulate the economy while pulling money out of the pockets of Canadians.

(1930)

This bill will take the money from the pockets of all working Canadians and they will have no choice about this, so that talk of "contributions" and "forced savings" is really just talk about a tax.

In a survey conducted by the Canadian Federation of Independent Business, it was found that less than 20 per cent of Canadians would opt to put more of their savings into the Canada Pension Plan. In another Canadian Federation of Independent Business survey, over one third of employed Canadians say that the proposed increases are unaffordable.

Only 11.4 per cent will ever draw the maximum from the Canada Pension Plan. As of July, the average payout was $550 a month, but few seniors today need the maximum from the Canada Pension Plan when they retire, which means this tax is disproportionately levied on the middle class for benefits they will never receive.

It is also worth noting that you cannot tax your way to prosperity. In this case, you cannot positively impact the lives of Canadians by taxing them for a benefit they will never collect.

For those who will receive the payouts tied to this tax hike, they will have to wait for the far-off-distant future. And these changes, should they still be there at that point, will do nothing to help today's seniors or our workers who are soon to retire.

The real tragedy of this is that the public's perception of the government's action does not match the reality of the legislation. A recent Ipsos poll found that over 25 per cent of those who are currently retired think they will see bigger Canada Pension Plan cheques, and 70 per cent of those asked did not realize that current seniors will not see a single dime from this effort.

Senators, Canadians are simply unaware of the implications of this bill. An Angus Reid poll found only 9 per cent were following the CPP changes closely, which is disturbing since this legislation ultimately affects everyone. If we cannot really say how this bill affects average Canadians in the long term, what can we say about it in the near term?

Simon Gaudreault, the Chief Economist at the Canadian Federation of Independent Business, stated that this:

. . . will have serious negative impacts on workers and the Canadian economy. The announced changes, including increased contributions, may put Canadian wages, hours and jobs in jeopardy.

In 2015, the Canadian Federation of Independent Business looked at a similar scenario for changing the Canada Pension Plan and found it would result in the loss of 110,000 jobs and a 1 per cent permanent pay cut for everyone.

The Fraser Institute, in a separate study, found that a 1 per cent increase in Canada Pension Plan premiums causes a 0.9 per cent cut in the personal savings rate.

This legislation is paternalistic. It assumes that Canadians are not taking advantage of private savings vehicles, like the Registered Retirement Savings Plan or the Tax-Free Savings Account.

It's worth considering whether this government had this legislation in mind when they reduced the maximum contribution levels for the Tax-Free Savings Account. I wonder.

In his speech, Senator Dean said that Canadians sleep well knowing someone is looking after them, and he characterized Bill C-26 as an example of federalism working at its best. The government knows best, senators, and this is the attitude that Bill C-26 envisions. The facts, of course, do not match the perception at all.

According to C.D. Howe, Canada's rate of individual savings has climbed from 7.7 per cent in 1990 to 14.1 per cent today. Canadians are saving more than ever, and we should trust them to make the right decisions with their own money. If this bill passes, Canadians will take less money home with every paycheque. Senators, every penny the government takes is a penny people cannot save.

When the Canada Pension Plan was originally conceived, it was never intended to be a complete income replacement scheme. The government of the day intended for the Canada Pension Plan to be an aid for poor seniors, not the primary vehicle for a secure retirement.

Judy LaMarsh, who was then Lester Pearson's Minister of National Health and Welfare, crafted the Canada Pension Plan and what was to become Canada's medicare system. When asked about the Canada Pension Plan, she said:

. . . it is not intended to provide all the retirement income which many Canadians wish to have. This is a matter of individual choice and in the Government's view, should properly be left to personal savings and private pension plans.

Individual choice is the main driver of our economic system. That's why we enjoy great wealth in Canada, and the lack of it is why some countries have great poverty.

The government claims that the increase in benefits will result in a boost to the economy because of seniors having more money to spend, but their own numbers, when compared to long-term projections, show that the GDP will be reduced by 0.3 per cent to 0.5 per cent as a result of this tax.

Finance Canada's analysis shows that the higher pension plan premiums will do real damage to our economy. They will reduce employment by 0.04 to 0.07 per cent, which in real terms means 1,050 fewer jobs per year for 10 years. You don't have to be an economist to figure out that fewer jobs and less growth mean more poverty for working Canadians.

As it stands, our retirement system is internationally recognized as one of the best. Poverty among seniors has been falling. Figures from Statistics Canada show that the share of Canadian seniors today living in poverty has dropped from 29 per cent in 1970 to just 3.7 per cent today.

Let me be clear, senators. No senior should live in poverty. It is a duty of our government to help those in need live with dignity.

It is true that it has been a long time since the Canada Pension Plan was last altered. All parties in Canada have at one time or another advocated for some kind of change in the system since the last set of amendments passed in 1997.

At the time, these amendments changed the plan from a pay-as- you-go kind of system to a fully funded benefit. The change was made to protect the viability of the plan, and this difference meant you can be guaranteed under the current Canada Pension Plan that you get what you have actually paid for.

The most recent report of the Chief Actuary of Canada suggests that the Canada Pension Plan fund is very healthy and will be solvent for the next 75 years. Officials who briefed me on the legislation assured me that the Canada Pension Plan is not just performing well, it is actually performing above their expectations.

With this healthy balance sheet in the Canada Pension Plan fund and the increase in personal savings rates we have seen, I do not see the rationale for this vast imposition on all working Canadians and all businesses.

In June, Charles Lammam and Hugh MacIntyre from the Fraser Institute authored a piece in the Financial Post, stating:

Instead of expending political energy on debating CPP expansion in the misguided belief that many middle- and upper-income Canadians are not saving enough for retirement, the focus of public debate should be on how to best help financially vulnerable seniors.

I would expand on that to suggest we should be looking at how to really help the poor right now, not debating a middle class tax grab.

I support reasonable, evidence-based policies that help real people. The expansion of the Guaranteed Income Supplement was highly successful and it immediately helped those who are in the most need.

If families are at risk of not saving enough for retirement, then the natural solution would be for the government to make it easier for them to save through increased economic growth and policies like the tax-free savings accounts, which are widely used by the middle class.

If the decline of workplace pension plans is a problem, then how on earth does imposing a tax on all businesses help incentivize employers to expand them?

Less money for Canadians means less cash in hand for students paying off their loans, or a smaller savings account for the young couple trying to make a down payment on a new home. Less money for businesses means hiring freezes, layoffs and an added obstacle to new investments and innovation.

(1940)

The government, and Senator Dean in his speech, characterized the increase in Canada Pension Plan premiums as "modest"; but, when asked, the Canadian Federation of Independent Business noted that 70 per cent of small-business owners disagreed with the idea that this tax hike will have a "limited" impact on their businesses.

In March, Dan Kelly, President and Chief Executive Officer of the Canadian Federation of Independent Business said:

Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike.

If this is what things will look like for small businesses, what will things look like for the working poor and low-income Canadians? The actual benefit the poor will receive is questionable. Low-income seniors receive the Guaranteed Income Supplement in addition to their Old Age Security payments. The Guaranteed Income Supplement is means tested. If you earn a certain amount of money or have a high enough income, the government claws back the Guaranteed Income Supplement, dollar for dollar. If increased Canada Pension Plan benefits result in more income for a senior, then the GIS payment to that senior will, in turn, be reduced. Senators, if this is the case, then do seniors in poverty end up with more or remain in a status quo situation?

The C.D. Howe Institute addressed this question in a paper they released on the government's Canada Pension Plan strategy. They noted that low-income workers will see no benefit from this. They will be taxed now when the premiums go up, and they will see little increase later when the higher Canada Pension Plan payment they have been promised is offset by clawbacks to their Guaranteed Income Supplement.

Another issue we must consider is how the government can ensure that the proposed taxes in the Working Income Tax Benefit are coordinated with similar programs at the provincial level. Finance Canada's ...”

Hon. Kelvin Kenneth Ogilvie

December 5th
Hansard Link

Social Affairs, Science and Technology Committee Authorized to Meet During the Sitting of the Senate

“...-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, is read a second time and referred to Standing Senate Committee on Social Affairs, ...”

Hon. Diane Bellemare (Legislative Deputy to the Government Representative in the Senate)

December 2nd
Hansard Link

Social Affairs, Science and Technology Notice of Motion to Authorize Committee to Meet During Sitting of the Senate

“...-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, is read a second time and referred to the Standing Senate Committee on Social Affai...”

Hon. Tony Dean

December 2nd
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Second Reading—Debate Adjourned

“...26, an Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

Before I do that, I ask for your indulgence in taking a few minutes to refle...”

Senator Dean

December 2nd
Hansard Link

Canada Pension Plan Canada Pension Plan Investment Board Act Income Tax Act Bill to Amend—Second Reading—Debate Adjourned

“...y burdened as a result of these additional contributions. It will do that by enhancing the Working Income Tax Benefit to roughly offset incremental CPP contributions, leaving eligible low-income Ca...”

Hon. Jean-Guy Dagenais

December 1st
Hansard Link

Canada Labour Code Bill to Amend—Second Reading—Debate Continued

“... Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act". What a nice long title.

Those who received briefing notes from the Department of Employment and Social Development need only go to page 2 to understand the objectives. These two paragraphs sum up quite well the government's intentions.

The first paragraph reads as follows:

The primary objective is to overturn the provisions of Bill 377 that come under the Department of National Revenue and force unions to submit their financial statements.

The second paragraph says:

The second objective is to repeal the rules in Bill 525 that come under the Department of Labour, on the secret ballot.

I will be brief, but I would like to take a moment of your time to explain the insidious nature of these provisions, should they be passed. First, you should know that I am a former union leader and that I sponsored Bill C-377, which was adopted by the previous government and sought to require unions to submit their financial statements to the Canada Revenue Agency.

I fought for that measure. It was the result of the careful consideration and disturbing observations made by the Charbonneau Commission of Inquiry in Quebec, which shed light on the unscrupulous wrongdoing of union leaders who personally benefitted from their members' union dues. Something similar happened in Ontario where, last year, Ontario Provincial Police Association leaders misappropriated members' money and invested it for personal gain. Despite calls for greater transparency, union leaders are putting pressure on politicians to excuse them from this obligation

Why are very powerful unions, which have become virtual corporations larger than small and medium-sized businesses, not subject to this transparency requirement and the same obligations as Canadian charities, which are required to open their books?

Why do they deserve special treatment? Why are some politicians willing to give in to these union bosses who, may I remind you, were so quick to orchestrate a disinformation campaign and positioned themselves as poor victims of a union- busting government?

Contrary to what some would have you believe, Bill C-377 was not anti-union in the least. Would anyone openly suggest that the government is anti-charity because non-profits have to open their books?

I have never heard anyone say anything like that, and everyone obeys the law. Bill C-377 was designed to protect union members from wrongdoing on the part of their leaders, but the current government fell right into their trap. Then, to get union leaders' support in the last election campaign, the Liberals promised to overturn the bill once in office. Now we're paying the price for that election promise.

What are some of the arguments being used by the proponents of Bill C-4? They will tell you that it is an onerous requirement and that it will be costly for unions. They will also tell you that having to process all those financial statements means an additional expenditure for the Canada Revenue Agency. Personally, I don't think that those arguments hold water.

As for the argument that it is an onerous and costly requirement for unions, I'm having a really hard time understanding that. On the one hand, we are told that the provision is not needed given that union members already have access to their union's financial statements. If union members really do have access, how is that requirement going to be costly? In fact, the accountant would only have to make an extra copy.

Let me go even further. I would guess that many proponents of Bill C-4 have never seen the financial statements of a union. I would like to show them a copy of one so that they are not influenced when it comes time for us to vote on this bill.

I brought copies of some of the financial statements I prepared every year when I was president of Quebec's provincial police association, statements that I had to submit to the Autorité des marchés financiers du Québec for insurance purposes. These are audited financial statements. In this ten-page document, there is no mention of the names of the head of the association, the director, nor the names of suppliers or any professionals such as lawyers or actuaries. The document contains only budgetary items and figures that show how the union dues were used. The only name in the financial statements is mine, which appears at the bottom of the last page because I had to sign the document as president of the association.

I am telling you this because I prepared financial statements for eight years as vice-president of finance, and I approved them for seven years in my capacity as president. Those who support Bill C-4 would have you believe that privacy rights could be compromised by the presence of identifying information in financial statements. When you look at these financial statements, you will see that they do not violate privacy rights.

Some presidents of police unions stated that their names appearing on financial statements could endanger their safety. I invite you to view the financial statements of the Association des policières et policiers provinciaux du Québec. You will see the president's photograph. If having one's photo on a website does not pose a risk, having one's name appear on financial statements sure doesn't. There are no names on our financial statements, so there is not much of a risk.

I would like to come back to the costs that this measure will create. Unless the union's photocopiers use gold paper, every copy costs all of four cents.

Let us do the math. It will take 40 cents for the photocopy to be sent to the Canada Revenue Agency, and let us not forget the 85- cent stamp. It will cost $1.25. What a burden. In my opinion, we are nowhere near overwhelming a union with that kind of cost.

To justify the repeal of Bill C-377, the Minister of Employment, Workforce Development and Labour, MaryAnn Mihychuk, said that the provisions in question were "punitive and unnecessary". It is no more punitive for a union to file financial statements than it is for a charitable organization.

I will ask you the following question once again: Why is the government giving unions this gift? Why is it giving more privileges to unions than to charitable organizations that are required to file their financial statements every year?

(1520)

I am asking you a very important question. I sincerely hope that you'll think about it before endorsing the bill that is before you.

Bill C-377, which was passed in 2015, was the result of several years of work by Russ Hiebert. He introduced a private member's bill that led to countless consultations at the other place and even here, in the Senate. Serious work was done by parliamentarians, work that the current government and the minister want to undo, claiming that was the mandate the public gave them in the 2015 election.

Minister Mihychuk even said that Canadians were consulted on the matter during the election. I believe that the only people this government consulted were union leaders.

Today, what we have here is nothing more than a shameless election promise that was made to powerful union leaders to the detriment of protecting workers who pay their dues. We also have here a silly and ridiculous argument about the cost of such a measure to the Canada Revenue Agency.

Am I living in an alternate reality or is there a chance that this argument might one day lead us to voting on exempting an individual, a business, or an organization from filing an annual income tax return because it is too hard and too expensive for officials to verify? Let's get serio...”

Hon. Pierrette Ringuette

November 28th
Hansard Link

Canada Labour Code Bill to Amend—Second Reading—Debate Continued

“... Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act.

You might be wondering why the Income Tax Act is part of all these changes which, at first blush, all have to do with labour relations.

This part of Bill C-4 corrects Bill C-377, for which I served as critic from 2011 to 2015, or for four years. This long, sad tale started in the last Parliament as a campaign masquerading as private members' business launched by the PMO as a sort of retribution against unionized workers for their freedom of expression with regard to the electoral process.

Before I go on, I would like to acknowledge the vital participation of 23 Conservative senators who resisted undue pressure from the Prime Minister's Office on this matter in 2013. Those senators include former senators Pierre Claude Nolin and Hugh Segal and current senators Bellemare, Wallace, Lang, McIntyre, Nancy Ruth, Neufeld, Doyle, Greene, and others. As I said, there were 23 of them.

I take my hat off to you for your courage and for recognizing the malicious intent behind Bill C-377.

It would take more than a few minutes to properly catalogue all of the errors in Bill C-377. However, if any senators want to know more, I have five boxes of documents related to the bill in my office.

[English]

Bill C-377 was a direct violation of the Canadian Constitution regarding provincial jurisdiction. It violated the Canadian Charter of Rights and Freedoms. It contravened our international obligations under Convention No. 87 of the International Labour Organization of the United Nations that was ratified in 1972. It breached our Privacy Act. It put at risk Canadians, particularly those engaged in law enforcement, and would have cost the Canada Revenue Agency over $60 million a year to administer, notwithstanding the administrative cost of each unit of the roughly 50,000 different labour organizations.

Bill C-377 required each labour organization unit to provide full disclosure on a proposed CRA public website of any amount of benefits or expenses of $5,000 to persons or entities, such as service providers, even janitors, and disclosure of political activities, lobby activities, legal activities and salaries of labour union employees.

Summing up, you will now understand why it was a full-fledged attack on Canadian workers and their unions.

[Translation]

Most importantly, Bill C-377 was unconstitutional, because it tried to take a back-door approach to changing labour relations laws that are under provincial jurisdiction. Many provinces, including Alberta, Ontario, Quebec, Manitoba, New Brunswick, Nova Scotia and Prince Edward Island, wrote to us stating the unconstitutionality of Bill C-377, showing how it indeed infringed on provincial jurisdiction over labour relations and was not primarily a tax bill despite the assertions of an MP, certain senators and the government of the day.

(2010)

Basically, the only jurisdiction the federal government has when it comes to labour relations is strictly in the area of activities that are national in scope, such as Canada Post, CN, Air Canada and federal government employees. This represents only about 10 per cent of unionized workers.

[English]

Many constitutional experts appearing at our committee hearings confirmed the unconstitutionality of Bill C-377.

Bruce Ryder, Professor of Law at Osgoode Hall Law Scholl, said:

I am here to share the bad news that Bill C-377 is beyond legislative jurisdiction of the Parliament of Canada. Its dominant characteristic is the regulation of the activities of labour organizations, a matter that falls predominantly within provincial jurisdiction . . . .

Alain Barre of Laval University said:

I arrived at the conclusion that this was a backdoor legislation. The legislator is attempting to use an appropriate legal structure to increase the chances of obtaining a favourable decision, were there to be a constitutional challenge.

Pierre Brun, from the Canadian Association of Labour Lawyers told us:

In other words, what is being requested is disclosure of information in order to limit these organizations' ability to express themselves on a political level.

[Translation]

In addition, by requiring the online disclosure of union activities, Bill C-377 violates the right to freedom of expression and freedom of association set out in the Canadian Charter of Rights and Freedoms.

It is important to understand that the public disclosure required by this bill would interfere with the activities of an association and its members. Furthermore, by making the political activities of lobbyists public, Bill C-377 violated the right to freedom of expression that is so important in our democracy.

Most of the witnesses who appeared before our committee also indicated that, by making such public disclosures mandatory, the bill negatively affected employer-employee relationships and gave an undue strategic advantage to employers, who were not required to disclose the same information.

[English]

Many union representatives at our committee meetings expressed their concerns as follows:

Bob Blakely from AFL/CIO:

Unions are democratic self-regulating organizations. What we spend is authorized in advance by our members. Spending can be viewed by them as a matter of law in most of the provinces of Canada and federally.

Ken Georgetti of the Canadian Labour Congress indicated that Bill C-377 was a solution in search of a problem.

It wrongly violates Canada's Constitution and the Charter. . . . it relates not to tax authority of the federal Parliament but the regulation of trade unions or labour relations. It causes Canada's Privacy Commissioner concern and offends the intent of federal and provincial privacy laws. It creates unfair advantage for non-union construction contractors and an uneven playing field in the labour market. It ignores the basic facts of the democratic structures of trade unions and the legal framework within which trade unions already operate.

The Canadian Teachers Federation said:

C-377 is not accountability; it is red tape and paperwork. It is the destruction of the balance in labour relations that has served this country well for over a century.

Claude Poirier of the Association of Professional Employees said:

C-377 was discriminatory, unconstitutional and unjustified."

Jim Stanford of the Canadian Auto Workers expressed:

. . . unions consider engagement in those broader debates to be part of our core function, and our right to do so was affirmed clearly by the Supreme Court of Canada in 1991 in the Lavigne case."

Carole Presseault of the Certified General Accountants Association addressed the bill by saying:

Bill C-377 is not a tax bill. Using the Income Tax Act in this manner, we believe, is inappropriate. The ITA is not an instrument to regulate the behavior of unions, and it is not an instrument to regulate transparency of organizations.

As Jennifer Stoddart, Privacy Commissioner of Canada, appeared before our committee I directly asked her the following question:

Does C-377 pass the Privacy Act smell test?

Her reply was:

No, you cannot put names of people on a public website.

Honourable senators, I could go on revealing comments of experts at our committee study; its unconstitutionality in regard to provincial exclusive jurisdiction and our Charter; its violation of our Privacy Act; its disguise as an income tax act, et cetera.

Earlier in my comments I referred to the United Nations Internatio...”

Hon. Peter Harder (Government Representative in the Senate)

November 24th
Hansard Link

Income Tax Act Point of Order

“...ent that was adopted by the National Finance Committee in respect of Bill C-2, An Act to amend the Income Tax Act. The amendment in question would have the effect of increasing the tax burden on certain individuals, and therefore I submit that this proposed amendment should be ruled out of order.

Section 53 of the Constitution Act, 1867, states:

Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

In 1998, in the Eurig case, the Supreme Court provided some insight into the rationale behind section 53. In the words of Justice Major:

The provision codifies the principle of no taxation without representation. . . . it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord.

Along these lines, Elmer Driedger, a leading authority on statutory interpretation, explains that this restriction is an acknowledgment that:

The elected representatives of the people sit in the Commons, and not in the Senate, and, consistently with history and tradition, they may well insist that they alone have the right to decide to the last cent what money is to be granted and what taxes are to be imposed.

This is consistent with the Ross report adopted by the Senate on May 22, 1918, concerning the rights of the Senate in matters of financial legislation. The report states:

The Senate of Canada has and always had since it was created, the power to amend bills originating in the House of Commons appropriating any part of the revenue or imposing a tax by reducing the amounts therein, but it has not the right to increase the same without the consent of the Crown.

The report also states that:

The foundation of all Parliamentary taxation is the necessity for the public service as declared by the Crown through its constitutional advisers. The Senate therefore cannot directly or indirectly originate one cent of expenditure of public funds or impose a cent of taxation on the people.

Page 142 of Senate Procedure in Practice concerning the admissibility of the amendments states:

The Senate respects the constitutional provisions relating to the initiation of financial legislation . . . . Senate committees in turn respect the Senate's interpretation of these provisions. In keeping with the Senate's asserted powers in this field, a committee may amend financial legislation, provided that it does not increase the amount of the appropriation or tax.

I submit that this would be the precise effect of the amendment that was adopted by the National Finance Committee in relation to Bill C-2. While reducing taxes for certain individuals relative to Bill C-2, the amendment also raises taxes on certain individuals.

Under Bill C-2, individuals with taxable income over $90,563 will have to calculate two amounts to determine their tax liability and pay the lesser. The tax reduction proposed by the amendment would start to be clawed back as soon as the taxable increase exceeds $90,563, using a tax rate of 50 per cent to do this, and would be fully eliminated when the taxable income reaches $94,679.

Relative to Bill C-2, the proposed amendment would increase the tax burden on individuals with taxable income above $91,851, with an additional tax burden of $679 in almost all cases.

If one is to compare the result of the proposed amendment with the income tax as it currently stands, the proposed amendment would also create an additional tax increase on the tax burden for individuals earning more than $200,000 in comparison to the act as it is currently written. For instance, an individual earning $216,975 would be subject to an additional tax burden of, again, $679. This increase of $679 would be in addition to the tax increase resulting from the introduction of the new top income tax rate of 33 per cent contained in Bill C-2.

While some senators may see the policy merit in proposing this amendment, it is inadmissible on procedural grounds. It follows that for some individuals, this amendment is a tax increase relative to Bill C-2 but also relative to the law as it currently stands. The change is therefore out of order.

In summary, relative to Bill C-2, the proposed amendment would increase the tax burden on individuals with taxable income above $91,851 with an additional tax burden of $679 in almost all cases. While some senators may see the policy merit, again, it is inadmissible on procedural grounds.

Honourable senators, pages 775 of the twenty-fourth edition of Erskine May Parliamentary Practice states:

Not only is it out of order to seek to amend a bill [founded upon a Ways and Means resolution] so as to increase the rate or extend the incidence of a tax beyond that authorized in the relevant founding Ways and Means resolution, but it also is out of order to seek to introduce new material . . . which is not covered by the founding resolutions.

On December 9, 2015, the other place adopted a ways and means motion respecting Bill C-2, An Act to amend the Income Tax Act. That resolution set the terms of taxation and authorized the taxation for the purpo...”

Hon. Larry W. Smith

November 24th
Hansard Link

Income Tax Act Point of Order

“... to address this issue.

(1440)

Currently, there are four marginal tax brackets in the Income Tax Act, and I think it's important to go through this, because it positions the whole issue of whether there's an increase or not. They are 15 per cent, 22 per cent, 26 per cent and 29 per cent. That's what exists in the Income Tax Act. Bill C-2 proposes two changes. It reduces from 22 per cent to 20.5 per cent the second tax bracket. It creates a fifth tax bracket of 33 per cent for people earning income above $200,000.

Going back to what I said earlier, if you remember the Prime Minister said that he wants the wealthy people to contribute a little more to help the middle-income individuals, because no one can define what middle class is.

The amendment proposes two changes. It limits the reduction from 22 per cent to 20.5 per cent to the taxpayers who have a total income within that tax bracket, which is the second tax bracket, and provides a further tax reduction for those individuals for the money earned at the beginning of the second tax bracket, 16.5 per cent between $45,000 and $52,000.

So in this second tax bracket, that's where this amendment changes and reduces taxes to give more to those people in terms of a tax credit. It is alleged that the amendment is inadmissible as it would increase taxes. The argument is the amendment increases taxes because taxpayers with an income above $200,000 will pay more taxes as they would not benefit from the tax reduction from 22 per cent to 20.5 per cent in the lower end, which would, with the amendment, be limited to the middle class, those with income between $45,000 and $95,000.

I believe you should reject the point of order on two grounds. First, the amendment does not raise taxes. Bill C-2 does raise taxes.

Second, I respectfully submit that it's beyond the authority of the Speaker to rule on that point of order. Currently, in the second marginal rate of the Income Tax Act, it is 22 per cent. This rate is found in section 117(2)(b) of the Income Tax Act.

Bill C-2 proposes to reduce that rate to 20.5 per cent. The amendment proposed by the committee accepts in part the amendment proposed by Bill C-2; it maintains that the reduction for individuals with total taxable income within the second bracket, within more or less than $45,000 and $95,000. The amendment also provides them with an additional tax reduction for their income earned at the beginning of the second marginal rate. The amendment does in no way go beyond the marginal rate of 22 per cent currently provided in the Income Tax Act. That's an important phrase. Any increase in taxation that would result from Bill C-2 does not derive from changes proposed by the amendment in sections 117(2)(b) and (c) of the Income Tax Act. Any increase in taxation results from the new fifth marginal rate proposed by the government in Bill C-2. It is argued that indirectly the amendment increases taxes on individuals earning more than $200,000 as they would not benefit from the tax reduction from 22 per cent to 20.5 per cent for the money earned between $45,000 and $95,000.

I respectfully submit that the proposed amendment must be evaluated with respect to the law as it is at 22 per cent and not, with respect, by the measures proposed by Bill C-2. You have to go back to the law, because by means and measures is not in law at this particular time.

I will provide the example to illustrate my point. Let's say an existing tax is at 10 per cent. A bill from the House of Commons proposes to reduce the rate to 7 per cent. Then if we adopt the position that the amendment must be assessed with a bill and not the current law, it implies that the Senate could not accept in part the reduction to establish it at 8 per cent or 9 per cent. But the Senate could — and the right of Senate to vote against taxation bills has never been challenged — vote against the entire proposal, which would have the effect of maintaining the rate at 10 per cent. I therefore submit that this amendment does not raise taxes. Bill C-2 does.

I turn now to my second point respecting the authority to rule on the point of order. Rule 2-1(1)(b) states that the Speaker shall rule on points of order.

I submit to you that the point of order raised is not a valid point of order. The only argument that could be made against the amendment is that it indirectly raises taxes, and it is therefore infringing on the privileges of the House of Commons, stated in section 53 of the Constitution Act of 1867, to initiate taxation bills. Section 53 reads as follows:

Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons

The amendment does not appropriate any part of public revenue or of any tax or impost. It does not appropriate public money. There is no issue with the amendment as to be potentially contrary to our rule 10-7, which embodies section 54 of the Constitution Act of 1867.

As a purely tax-related amendment, the only provision the amendment could infringe upon is section 53 of the Constitution Act of 1867. This Constitution provision is, however, not reproduced in our Rules. The wording of rule 10-7 is clear. It only imposes a limitation on the Senate for appropriation bills, not taxation bills. Rule 10-7 embodies the exclusive initiative of the Crown for spending bills. It mirrors section 54 of the Constitution Act of 1867.

The reference after rule 10-7 makes that clear. There is nothing in our Rules that embodies the privilege of the House of Commons in respect of taxation bills, and section 53 of the Constitution Act of 1867 tax legislation is only referred once, and it is the mandate for the Standing Senate Committee on Banking, Trade and Commerce rule 12-7(8). There is also no reference in our Rules to section 54 of the Constitution Act of 1867.

The question is, therefore, a question of law, of constitutional law, and the relationship between the two houses. It is a well- established principle of parliamentary law and procedure that the Speaker does not have the authority to rule on questions of law, constitutional questions. I refer to a ruling rendered by one of your predecessors on December 8, 2011, reproduced on pages 719 and 720 of our journals:

As previously indicated, the putative question of privilege pertains to the introduction of Bill C-18. Basically, this question involves the interpretation of law. Thus, it does not fall under the Speaker's authority. The chair refers to the fundamental principle that the Speaker can rule only on procedural matters and not on questions of law. Page 636 of the second edition of House of Commons Procedure and Practice says that constitutional questions or questions of law cannot be addressed to the Speaker. Other Canadian works on parliamentary procedure and other decisions rendered in this chamber have emphasized this point.

I would also refer you to precedents from the other place where so-called taxation bills initiated in the Senate were ruled out of order. The other place or the House of Commons has specific rules of procedure dealing with the ways and means process, which gives the government the exclusivity of tabled ways and means motions and therefore bills that are based on ways and means motions, which includes bills that raise taxes.

I refer you to section 83-1 of the Standing Orders of the House of Commons. These rules were relied upon by the Speaker of the other place when taxation bills initiated in the Senate were considered and ruled upon.

On December 2, 1998, Speaker Parent concluded his rulings on the inadmissibility of Bill S-13 as follows:

Simply put, any bill imposing a tax must originate in the House of Commons and must be preceded by a ways and means motion. Since Bill S-13 proposes a tax, did not originate in the House of Commons and thus was not preceded by a ways and means motion, I therefore find that it is not properly before the House.

I also refer you to a ruling rendered by Speaker Milliken on June 12, 2001 to the same effect. While there are rules of procedure in the House of Commons embodying and referring to its privileges in respect of taxation bills, there is nothing in the rules that does so.

I therefore respectfully submit that the Speaker does not have the jurisdiction to rule on this point of order as it involves a constitutional law question. It would be a question for the House of Commons to decide whether it insists upon its privileges.

I'm in a position to suggest that the point of order should be rejected.

Now, I have just a quick point, Your Honour. I would reinforce for all senators that under no circumstances would a Canadian pay more tax dollars or a higher overall rate than what was paid in 2015.

(1450)

Our calculations are based on the laws of 2015, which are the laws in the Income Tax Act. Until the bill is passed on third reading and becomes law, that's when Bill C-2 bil...”

Hon. Diane Bellemare (Legislative Deputy to the Government Representative in the Senate)

November 24th
Hansard Link

Income Tax Act Point of Order

“...er, to take into account the fact that Senator Smith's amendment is not a direct amendment to the Income Tax Act. Senator Smith is claiming that it amends the Income Tax Act, but it actually amends a government bill, Bill C-2, which was passed in the other ...”

Hon. Joan Fraser

November 24th
Hansard Link

Income Tax Act Point of Order

“...s intensely political peroration, I found them interesting, but Lord knows, I am no expert on the Income Tax Act, nor, I suspect, are most of the people here.

What I would like to respond to is Senator Smith's assertion that this is beyond your jurisdiction for ruling. Quite the contrary, it seems to me this is squarely within the realm of business that we need Speakers to rule on.

Your job is not to determine whether the proposed amendment is desirable politically, socially or even economically. Your job is to determine whether or not it is technically in order. In order to do that, one of the things you have to look at is whether this is a matter of law or parliamentary amendment to a bill before us.

It seems pretty clear to me that this is not a matter of law; it is a matter of what is parliamentarily admissible.

The second question, then, for you to examine is whether it is an amendment that the Senate has the jurisdiction to make.

My understanding of these matters is that the Senate can amend bills to reduce taxation. The Senate can pass bills to impose specific, purpose-oriented levies.

In this case, even Senator Smith agreed, as the other speakers have asserted, that part of the effect of this amendment would be to raise income taxes for a certain class of persons. That is not a purpose-focused levy. That is a general group of Canadians who would find their income taxes raised beyond what is, as I understand it, now the case, and certainly beyond what would be the case under the terms of this bill.

Therefore, it sounds to me — and I will trust your interpretation of the facts when you get to study the numbers — as if the amendment is inadmissible, because it does raise income taxes — not for everyone, but for a general group of Canadians.

I further think, as...”

Hon. Diane Bellemare (Legislative Deputy to the Government Representative in the Senate)

November 24th
Hansard Link

Tax Convention and Arrangement Implementation Bill, 2016 Bill to Amend—Second Reading—Debate Continued

“...ada and the State of Israel, thereby preventing double taxation and fiscal evasion with respect to income tax.

Part 2 implements an arrangement between the Canadian Trade Office in Taipei and...”

Hon. Larry W. Smith,

November 23rd
Hansard Link

Income Tax Act Bill to Amend—Eighth Report of National Finance Committee Presented

“...HTH REPORT

Your committee, to which was referred Bill C-2, An Act to amend the Income Tax Act, has, in obedience to the order of reference of October 6, 2016, examined the said b...”


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