Mr. Speaker, I will be sharing my time with the hon. member for .
I rise in the House today support of Bill , an act to amend the Income Tax Act, or as I prefer to call it, an act to finally give a helping hand to middle-class families and those hoping to join the middle class.
Our government believes in listening to the people. For years, Canadians have been telling us one thing loud and clear: they need a hand. Middle-class families have increasingly been struggling to make ends meet. Too many families are having to make difficult choices: should they pay the rent or put food on the table; should they save money for their children's education or save for a secure and comfortable retirement; do they buy a new suit for their job interview or a birthday present for their son. These are not easy choices and they are causing stress and hardship for so many families.
I have the privilege of representing the riding of Scarborough Centre. We are a community of middle-class families. Scarborough families are exactly the sort of families that we need to be helping. We need to help families like one I met when knocking on doors in Scarborough last summer. I spoke with a mother outside her door in an apartment tower who told me how her husband was working full time at a warehouse and she worked nights in the service industry. They hardly got to see each other. Still, each cheque did not go quite far enough. She was trying to find a second job so they could keep up with the bills. However, she was worried about who would take care of her two young daughters while she was away. Like so many families I met, they are struggling with bills that are always going up and income that is not keeping pace.
Middle-class families are the backbone of our country. These are hard-working families willing to put in the long hours and make the sacrifices necessary to build a better life for their children. They value hard work and are instilling those values in the next generation. However, middle-class families have gone without a raise for too long. It is time we take action to help them.
I was honoured to stand with the at a grocery store in the Leaside neighbourhood of Toronto last fall when he promised the first act of a Liberal government would be to lower taxes for middle-class families. I am pleased to say, that promise made is a promise kept. That is Bill .
As of January 1, nine million Canadians will be receiving tax relief. Bill amends the Income Tax Act to reduce the second personal income tax rate from 22% to 20.5%. It also creates a new personal marginal tax rate of 33% for taxable income in excess of $200,000. What does that mean? It means that in order to help those who need help the most we are asking the wealthiest to give just a little more.
We are also reversing the previous government's costly and misguided plan to nearly double the annual contribution limit for tax-free savings accounts. Raising the limit would only help the wealthiest Canadians at a cost of several hundred million dollars over the next five years, while doing nothing to help middle-class families. There are not many families in my riding who could afford to make the maximum $10,000 annual contribution to their TFSA, not when many are more concerned with paying the rent. In fact, in 2013, just 6.7% of eligible Canadians made the maximum TFSA contribution.
Our government was elected to help those who need help the most, and that is exactly what we are going to do.
Our tax changes will benefit over nine million Canadians in 2016. A single person will see an average annual tax savings of $330, and the average couple will save $540 every year. That is money that will help families pay the rent and buy groceries, and it will make it a little easier to put some money away for the future. It is a helping hand for those who need it the most.
Over the holidays I had the opportunity to visit the Scarborough branch of the Salvation Army, and the Dorset Park Community Hub in my great riding of Scarborough Centre. I saw so many young families visiting the food banks. I saw mothers pushing their children in strollers who needed help to put food on the table, and workers and volunteers struggling to keep up with the demand. It makes one's heart break to think those young children would be going hungry.
This is Canada. We can do better, we must do better, and we will do better. Bill and our middle-class tax cuts are just the beginning. There will be much more to come when the brings the next budget to this House. A key element will be the new Canada child benefit, which will deliver targeted help to those families who need it the most. When fully implemented, the Canada child benefit will help nine out of 10 Canadian families, and lift hundreds of thousands of children out of poverty. Canada needs a healthy and prosperous middle class. When the middle class succeeds, we all succeed. We are blessed to live in one of the greatest countries in the world. We are blessed with a population that is educated, hard-working, and industrious. If we give them the opportunity to succeed there is nothing they cannot do.
This government was elected on a plan to grow the economy, and we have already started. With the changes to Bill , a fair tax system, which asks the wealthiest among us to pay just a little more while giving help to families who need it the most, is being delivered.
With the upcoming Canada child benefit and our historic investments in transportation and social infrastructure, we are laying the foundation for economic growth and a stronger economy that will allow every Canadian to reach his or her potential to build an even stronger, more prosperous country.
I encourage all hon. members to join me in supporting this important legislation and middle-class families. Let us ensure that Canada's middle class gets the help it deserves.
Madam Speaker, it is a pleasure to add my voice to today's discussion on the government's middle-income tax cut, which we introduced in December 2015.
Before I touch on the legislation, I will begin by taking a few moments to extend my congratulations to the and his parliamentary secretary for pursuing one of the most comprehensive pre-budget consultations in recent history.
The 2016 pre-budget consultations began when the held a Google hangout with eight Canadian universities on January 6 to get the views of students and faculty on how to best grow the economy. On January 11, the minister and his parliamentary secretary struck out on a six-day tour in an effort to speak to as many Canadians as possible. They hosted upwards of 26 separate meetings and round tables with stakeholders and Canadians across the country, beginning in Halifax.
In addition to these meetings, the minister spoke to full-capacity crowds at the Halifax Chamber of Commerce, the Montreal Council on Foreign Relations, and the Surrey Board of Trade, with a total attendance of well over 1,500 people.
For those Canadians who have not been able to make it out to meet the minister and the parliamentary secretary personally, they can continue to share their ideas and comments through various online channels, such as the Your Money Matters Facebook page and hashtag #pbc16.
Through our pre-budget consultations, we are engaging with Canadians, looking for input on how the federal government can best support the middle class and those working hard to join it, meet infrastructure needs and help grow the economy, protect the environment and meet local needs, as well as ensure that the most vulnerable do not get left behind. It is an ambitious list, to say the least, but one that respects Canadian values of honesty, hard work, and fiscal prudence.
I would like to thank all those who have and will contribute to the pre-budget consultations, whether in person or online. This input will be vital to ensuring that Canadians can direct and focus the decisions that our federal government can make. More importantly, Canadians will be able to see their contributions when the 2016 budget is tabled.
I want to assure Canadians that we are listening and we hope that this renewed interest by Canadians will make a better country for all of us; for our families and for our communities. We are hearing that Canadians want to push forward with our plan to grow the economy, strengthen the middle class, and help the vulnerable.
We have a clear mandate, and expectations are high. First and foremost, we are here to serve Canadians. They expect us to implement our ambitious economic agenda. They want a government that is open to the world. They want a more transparent government.
No one will be surprised to hear me say that the economy is going through a very difficult period. However, in the face of this real challenge, there is also real opportunity to put in place the conditions to create long-term growth that will create good jobs and help our middle class—the lifeblood of our economy—prosper. The plan for growth is more important now than ever.
The good news is that we have a plan to grow the economy, and we have already begun to implement the plan: we introduced the middle-class tax cut in December and tabled Bill .
As of January 1, the middle-class tax cut is putting more money in the pockets of nine million Canadians each year. We are focused on smart investments that promote economic growth while maintaining a commitment to fiscal responsibility. We will improve economic prospects for our middle class, which is the backbone of our economy. We simply cannot call ourselves prosperous as a country if our middle class is struggling. This is why Bill is so important to Canadians.
I will now touch on the specifics.
Our middle-class tax cut and accompanying proposals would help make the tax system fairer by reducing the second personal income tax rate to 20.5% from 22%; introducing a 33% personal income tax rate on individual taxable income in excess of $200,000; returning the tax-free savings account, TFSA, annual contribution to $5,500 from $10,000; and reinstating indexation of the TFSA annual contribution limit.
We expect nine million Canadians will benefit from the reduction of the personal income tax rates, which are to take effect on January 1 of this year. Single individuals would see an annual tax reduction of $330 per year, and couples would see an average tax reduction of $540 every year. This measure would put more money in the pockets of Canadians to save, to invest, and to grow the economy.
In addition, the government is introducing a new personal income tax rate of 33% that would apply to individual taxable income in excess of $200,000. This means that only Canada's top income earners are expected to pay more tax as a result of the government's proposed changes to personal income tax. As with other bracket thresholds, the $200,000 threshold would be indexed to inflation.
Finally, the government is returning the tax-free savings account annual contribution limit to $5,500 from $10,000 effective January 1 of this year. Returning the TFSA annual contribution to $5,500 is consistent with the government's objective of making the tax system fairer and helping those who need it most. When combined with other registered savings plans, a $5,500 TFSA annual contribution limit would permit most individuals to meet their ongoing savings needs in a tax-effective manner. Indexation of a TFSA annual contribution limit would be reinstated so that the annual limit maintains real value over time.
Finally, let me quickly review some of the other measures that are included in today's legislation.
The bill proposes to change the current flat top taxation rules applicable to trusts to use the new 33% tax rate. It proposes to set the tax on split income to the new rate of 33%. It would amend the charitable donation tax credit to allow higher income donors to claim a 33% tax credit on the portion of donations made from income that is subject to the new 33% marginal tax rate. Finally, the bill would increase the special refundable tax and the related refund rate imposed on the investment income of private corporations to reflect the proposed new 33% personal income tax rate.
There has never been a better time to make targeted investments to support economic growth in this country. We are confident that our plan will accomplish this, and that is one reason why I am optimistic about our prospects going forward. Given that, I encourage all members to support this legislation.
Madam Speaker, it is a pleasure to rise in the House to speak on behalf of my constituents in Battle River—Crowfoot. Battle River—Crowfoot is a new constituency. The boundaries changed in the last election, and I am fortunate enough to represent a new northern section. I want to thank them for their support in the last election. I pledge to work very hard for them in Ottawa.
I also want to thank my election campaign team and long-term supporters. In six elections, they were ready to campaign and help out, not just in my riding but around the country. Obviously I want to thank my family. I want to thank my wife Darlene and our children, Kristen and Ryan, and Kristen's husband Matthew for their love and support over the many years of doing this. I know all members know that without the support of their families and those they love most, they would be unable to do this. Whether it is my immediate family, my parents, or others, I want to thank them.
We are debating the Liberal government's destructive tax plan for all Canadians, including the middle class. It tears down many of the efforts that were developed to help families and workers, to ensure that taxes remained low for all Canadians, that there were balanced budgets, and that jobs were created for Canadians. These measures are affected by part of Bill . The former government ensured that economic growth for Canada's economy was a priority.
I neglected to inform you, Madam Speaker, that I will be splitting my time with the member for .
Since this bill was tabled in December of last year, we are very aware that the numbers of the Liberals simply do not add up. The Liberals' assault on higher income earners will not work. This is a tax hike on those who traditionally create jobs and grow our overall economy. It is a tax increase on professionals and on the educated. It is a tax increase on those who work hard and succeed.
By increasing taxes on job creators, we would be discouraging their success and jobs for Canadians with the passage of this bill. Canada's higher income earners would immediately launch many measures to protect themselves from paying such high taxes. The Liberals will not realize the rise in tax revenue that they are counting on to finance their small increase in benefits to the middle class on which the bill is supposed to deliver.
Not only are the high income earners going to task their accountants with pursuing and implementing measures that will ultimately prevent them from paying higher tax increases, but some of them will abandon their lucrative endeavours in Canada to reduce their incomes so they do not have to pay the increase. They will move their projects, in some cases offshore, Canadians will lose jobs, investors will follow these business leaders to their new locations, and Canada will lose investments.
We have seen this under former Liberal governments. When I ran in the elections in 2000 and 2004 as a new young MP coming in, like many here today, the top issue of the day was what we called the brain drain. We asked ourselves what we would do to bring back Canada's young, to bring back those who had moved to the states or Europe with their potential futures. What would we do to solve the brain drain? Economists are again predicting significant brain drain from Canada as the result of Bill .
The federal government will not have the tax revenues to fund the schemes put forward by Bill . The worst part of Bill C-2 for my constituents is the reduction of the annual contribution limit for the tax-free savings account, from $10,000 at its previous level to $5,500 starting January 1 this year.
Right now many families are experiencing the pain of unemployment. Many of my constituents work for companies that service the oil patch, and their lives are being disrupted. Households are being disrupted. Savings are being used in an attempt, in some cases, to save family homes, or to make the next payment.
TFSAs have been a very effective tool for all Canadians, young and old. Tax-free savings accounts are being cashed in by many constituents of mine in Alberta right now. Families are using their tax-free savings accounts to try to reduce their economic vulnerability to the oil price and also, in some cases, to their pending unemployment.
Meanwhile, the Liberal government is refusing to help get our petroleum products to seawater ports so we can export our products to our customers who are waiting and wanting to buy our products. When that happens, unemployment climbs. We are seeing that right now.
Any family that is not suffering significant loss of jobs is looking to save whatever amount of money it can. Families are saving now for the coming hard times they know will happen under the Liberal government.
The Liberals have promised numerous budgetary deficits that will expand our nation's debt and ultimately lead to higher taxes. In other parts of Canada, places not yet suffering from the downturn in the oil patch, some Canadians are still managing to put money into their retirement funds.
Many Canadians are saving as much as they can. Many Canadians are simply trying to park their savings, because they know that the downstream effects of the current downturn in Canada's energy sector will soon hit them in their pocketbooks.
We found out just a couple of days ago that Japan adopted a negative interest rate policy. Now where money is being held in the bank, it is now looking at ways of taxing it. In an uncertain climate there, people are sitting on their savings.
The loss in federal revenue from the oil patch in the coming years is going to affect Canada. Make no mistake, it will affect how the Liberal government will operate. It will affect how the Governor of the Bank of Canada sets rates. It will affect all Canadians, in the rural parts of Canada, in big cities, and in the remote areas of Canada.
Already, after three or four months, Canadians have no faith that the government will help the people in business in Canada's once-prosperous sector. They know about the coming hard times their families will suffer during the failure of the Liberal plans. They know they will see massive amounts of tax dollars that the federal government does not have being spent on misguided efforts, job creation efforts, and token attempts at diversifying local economies. The way the Liberals will deliver on those is yet to be seen. We are still waiting for a budget.
All I know is that Canadians are disappointed with a lack of action from the government. Many Canadians know that the Liberal government is in serious trouble. Based on Finance Canada's estimates, the new Liberal tax plan amounts to an average of $6.34 per week for those individuals who qualify. Canadians feel betrayed; $6.34 to the middle class, and yet taxing those who are job creators.
We know this small tax break is not enough to stimulate our economy. Nor will throwing money at the middle class stimulate growth and innovation. It does not help create jobs. We have not seen anything from the government that is going to help with innovation, investing back into companies, or anything that is going to help create jobs.
Our Conservative government reduced taxes more than 140 times. This modification to the income tax rate that the Liberals are bringing forward is not significant tax relief and it comes with a high price tag in deficit financing. The policies of the government will be economically destructive. We know it will be for many decades down the road.
The has already conceded that this tax plan is not revenue-neutral. In Bill , it will plunge the Government of Canada further into deficits and debt. I guess that is what the Liberals deliver on. This is debt that will eventually put our social programs at risk, a debt that our children and our grandchildren will have to pay off. This bill fails.
Consequently, in representing my constituents, I will be voting against Bill .
Madam Speaker, it gives me great pleasure to rise on this occasion as the member of Parliament in the 42nd Parliament of Canada. The people of Renfrew—Nipissing—Pembroke have my sincere gratitude for giving me the honour and the privilege of being their representative in this sixth consecutive election.
Now that the election is over, I renew my pledge that I never forget the people who made this possible, the good people of Renfrew—Nipissing—Pembroke. They can be assured that I will continue to fight for the issues that they tell me are important. As always, I am their servant.
There are many individuals to whom I owe a great debt of gratitude for the confidence they have placed in me, for their hard work, and for the long selfless hours they put in to build a winning streak that has become our standard for successful campaigns.
For the many newly elected MPs who are not aware of the history, the Ottawa Valley became the eastern beachhead of democracy in the year 2000. That marked the beginning of meaningful change as Canadians entered the 21st century, and from the period 2006 and on, a period that will be fondly remembered as the good old days of responsible leadership while today's Conservatives take a short break from government.
I extend my heartfelt thanks to our entire campaign team, my spouse Jamie, and the many hundreds of volunteers who demonstrated what a truly grassroots campaign Ottawa Valley style is really all about.
Before I begin my comments regarding Bill , I want to make it fundamentally clear that the Conservative Party I am proudly a member of stands for lower taxes and less government interference in the daily lives of Canadians. The best anti-poverty program is a job. We do not create employment by taxing, borrowing, and spending more than we can afford.
My constituents support lower taxation. They sent me to Ottawa to reduce government and to fight for lower taxes. Bill C-2 is about a misleading campaign promise that was presented to a distracted public as reducing taxes at the expense of raising taxes for others, when in fact all this does is raise taxes for everyone.
In the case of this so-called middle-class tax cut, it was claimed during the last election that taxes would be reduced on the middle class by asking the wealthiest Canadians to pay more. Canadians have since learned that higher taxes for the wealthiest Canadians will not begin to pay for this campaign promise that is the basis of the legislation before us today. The promise was made without even the most superficial analysis. It was made to get elected.
More from the wealthiest does not go far among the rest of the population. The middle class will end up paying for its own tax cut, plus the interest on billions borrowed to cover the tax change, and to cover successive deficits that were promised by the Liberals, a promise they intend to keep, and more, and that should be meant to be broken.
The mark of Liberal generosity is with other people's money. Deficits are just deferred taxes, which is our children's financial inheritance. The irony is that ample evidence shows that government loses revenue when it targets individuals who can afford to pay for avoidance, including by moving their financial affairs to places like Bermuda, which was the tax haven of choice of the last Liberal prime minister before the current occupant.
The legislation before us today, being introduced as the first finance bill in the opening session of a new Parliament, and before the federal budget, when these tax measures could easily have waited to be included in the next federal budget, is intended to fulfill a signature campaign promise. I get that.
It was former Ontario Conservative Premier Mike Harris who set the bar when it comes to keeping one's election promises, so I understand that a political party does not want to be accused of lying to get elected, which is what a government is doing when it breaks its promises. For the Liberal Party, it would seem, then, that there are two types of campaign promises: those made to get elected and those meant to be broken.
I actually had an individual who worked for a major Canadian chartered bank tell my office that he believed that once elected, the Liberal Party would do what it had always done and break election promises it had made to appeal to those confused between election promises made to get elected and election promises made to be broken. He could not believe that the Liberals would attack the middle class by tampering with TFSAs, which, in his professional estimation, were better than RRSPs as a savings instrument, particularly for seniors, and certainly for young families aspiring to be middle class and saving for their first home.
If the debate about Bill is actually about helping the middle class, there are many other campaign promises that should be broken.
A measurement of a vibrant middle class in a society is home ownership. A recent study by the Canadian Centre for Economic Analysis has identified those under the age of 45, families with two income earners, who cannot find affordable housing without a long commute as being those most under pressure.
I know a dual-income family in Toronto where both spouses are lawyers, and they are shut out of the housing market, where a starter, fixer-upper home costs $1 million in the neighbourhood where they rent.
TFSAs are being used by young families to save for their first homes. Housing is a need, just like food or water, and if we need it, there is a greater and greater pressure on us to get it, regardless of the cost.
What is occurring at the moment in places like Toronto and Vancouver is not sustainable. The fear in places like my riding of , in eastern Ontario, is that eventually, the dream of home ownership that has died in the big cities will start to die in areas like ours, smaller local areas, and that rising taxes, electricity costs, transportation, and other big-city problems will also contribute to barriers to home ownership locally.
Take away the dream of home ownership in Canada and we take away the middle class. It is no secret in Ontario that this province is struggling because of a misguided energy policy that has caused the exodus of jobs, fleeing some of the highest electricity prices in North America, to U.S. border states. Lower electricity prices will spur economic activity. Lower energy costs are good for consumers and manufacturers.
Where there was once a burgeoning middle class based on blue collar manufacturing jobs, the decision, in the words PMO principal secretary Gerald Butts puts in the mouth of the , to transition away from manufacturing jobs has cost the middle class dearly in Ontario.
I urge members of the Liberal caucus and the rest of Canada to pay attention to Ontario's problems. The same people who ran the corrupt McGuinty provincial government have fled the sinking provincial ship and are now backroom operators in Ottawa, and they promise to take the entire country down the same deficit-spending, tax-the-rich, let-them-eat-cake attitude that is so toxic in Ontario today.
Focus on the one thing that would really improve the economy and help the middle class: create employment. Avoid the incessant talk about the environment. The greed energy act in Ontario, which was brought in under the guise of helping the environment, caused the loss of tens of thousands of jobs, of good-paying jobs, in Ontario's manufacturing sector.
Madam Speaker, before I begin, I would like to mention that I will be splitting my time with the hon. member for .
It is my honour to rise in the House today in debate for the first time as the member of Parliament for York Centre. I would like to take this opportunity to thank the residents of my riding for entrusting me with such an important responsibility to speak and vote on their behalf in this chamber. I would also like to thank all the volunteers and supporters, and especially my family, who have been so supportive in sharing the vision that all of us here share for a better, fairer, more prosperous Canada.
I have walked through every neighbourhood and talked to tens of thousands of residents of York Centre. People from all over Canada and around the world call my riding home. What I heard from so many people of all backgrounds was that making ends meet is becoming increasingly difficult. The cost of living is rising faster than incomes. Indeed, middle-class income growth has been and is still stagnant. Middle-class families drive our economy, and right now they are stuck in neutral. That is why I would like to take this time to express my support for the government's middle-class tax cut introduced in December and explain why it would help grow the economy.
As we embark on an agenda of economic growth and long-term prosperity, there is no doubt that we are facing considerable headwinds. Globally, we continue to experience what Christine Lagarde, the International Monetary Fund managing director, famously called the “new mediocre”.
In its latest economic outlook in January, the IMF expected global growth to pick up modestly to 3.4% in 2016 and 3.6% in 2017. This is down 0.2 percentage points from both 2016 and 2017 compared to its October 2015 world economic outlook. Although the recent performance of the U.S. economy is encouraging, the European and Chinese economies are still facing challenges.
Global crude oil prices remain less than half of what they were in mid-2014, reflecting softening demand and a global oil surplus. What is happening beyond our borders has real and tangible consequences for all of us. In Canada, our economic performance in the first half of 2015 was poor, mainly due to the collapse in oil prices in 2014.
Last April the government projected that the price of oil per barrel would reach $71 U.S. by the end of this year. As I speak, oil is trading at less than half that amount. We now know that growth will be lower than was expected in the last budget projections. This, of course, has important implications for our currency and our fiscal situation. The good news is that the IMF, in its latest economic outlook released on January 19, expects growth in Canada to pick up over the next two years relative to 2015. We also maintain an enviable position with a low debt-to-GDP ratio, abundant natural resources, and one of the world's most educated workforces. Keeping our debt-to-GDP ratio on a downward path throughout this government's mandate remains fundamental to our economic vision for Canada, alongside balancing the budget. To achieve this, our policies will strike a balance between fiscal responsibility and controlled investments that result in a smaller debt-to-GDP ratio, which promotes economic growth.
One of the most important components is restoring middle-class economic progress, the backbone of our economy. That is why one of the government's first orders of business was to table a ways and means motion to cut taxes for the middle class. That was the right thing to do and the smart thing to do for our economy.
The proposed middle-class tax cut and accompanying proposals would help make the tax system fairer so that all Canadians would have the opportunity to succeed and prosper.
Specifically, the bill proposes to reduce the second personal income tax rate to 20.5% from 22%, introduce a 33% personal income tax rate on individual taxable income above $200,000, return the tax-free savings account annual contribution limit to $5,500, and reinstate indexation of the TFSA and annual contribution limit.
Let me very quickly expand on these three points.
First, the personal income tax rate changes took effect on January 1. It is expected that about nine million Canadians would benefit from this measure in 2016. Individuals would see an average tax reduction of $330 each year, and couples would see an average tax reduction of $540 each year.
Second, the government is introducing a new personal income tax rate of 33% that would apply to individual taxable incomes above $200,000. This means that only Canada's very top income earners are expected to pay more taxes as a result of the proposed changes. As with other thresholds, the $200,000 tax threshold will be indexed to inflation.
Third, the government will be returning the tax-free savings account annual contribution limit to $5,500, also effective January 1 of this year. Let me reassure all members of the House that the change is not retroactive. The TFSA annual contribution limit for 2015 would remain at $10,000. Returning the TFSA annual contribution limit to $5,500 is consistent with making the tax system fairer and helping those who need it the most. When combined with other registered savings plans, a $5,500 TFSA annual contribution limit gives most individuals the opportunity to meet their ongoing savings needs in a tax-efficient manner. Indexation of the TFSA annual contribution limit would also be reinstated so that the annual limit remains at its real value over time.
Finally, before I conclude, I would like to highlight some of the other measures that are included in today's legislation.
Today's bill proposes to change the current flat top rate taxation rules applicable to trusts to use the new rate of 33%. The bill proposes to set the tax on split income to the new rate of 33%. It would amend the charitable donation tax credit to allow higher income donors to claim a 33% tax credit on the portion of donations made from income that is subject to the new 33% marginal tax rate, and it would increase the special refundable tax and the related refund rate imposed on investment income of private corporations to reflect the new proposed 33% personal income tax rate.
Going forward, the government will introduce proposals in the budget to create a new Canada child benefit payment, which would begin in July of this year. In addition to replacing the universal child care benefit, which is not tied to income, the proposed Canada child tax benefit would simplify and consolidate existing child benefits. It is also targeted to those who need it the most. By simplifying and consolidating these benefits, people will understand how to access and take advantage of them. That is why the tax credit was introduced initially.
All of these initiatives demonstrate that our sights are clearly set on the future. This legislation would strengthen the middle class by putting more money in the pockets of Canadians to save, invest, and grow our economy. More broadly, it would help grow our economy in the context of a difficult global economic climate so that all Canadians can benefit. Therefore, I encourage all members of the House to support this legislation.
Madam Speaker, I have the honour of speaking about the tax cut for the middle class, which will help millions of Canadians. We are determined to strengthen the middle class and help it grow because a strong middle class is key to a healthy economy and gives all Canadians a real and fair chance to succeed.
That is exactly what the bill before the House today will do. This bill reduces the tax rate from 22% to 20.5% for Canadians who earn between $45,282 and $90,563 in 2016. What is more, it introduces a new 33% income tax rate on income over $200,000, in other words, the higher income brackets in Canada.
Effective January 1, the government is making it possible for approximately nine million Canadians to keep more of their income each year. This is the smart thing to do and the measure is fair. Members will have the opportunity to hear more about this from other stakeholders in committee.
We already know that the response to the measures announced in December was favourable. We also know that the tax cut for the second personal income tax bracket will not solve all of the problems Canadians are facing today. That is why the government's commitment to be transparent and consult with Canadians will take on increasing importance. The government is taking this approach because it recognizes that it does not have a monopoly on good ideas.
The minister and the parliamentary secretary recently travelled across the country to talk to Canadians directly about what measures the government could take to help the middle class. They met with indigenous, business and cultural leaders to hear what Canadians had to say and initiate discussions to find practical solutions to the problems they are facing.
In my riding, Edmonton Centre, nine consultations were held on various round table topics in order to gain a clear understanding of what the people of Edmonton are concerned about. National consultations continued online and are still taking place today. The response rate and comments received show that Canadians strongly support the government's efforts. Since the online consultation began, the website has received more than 20,000 visits, and more than 2,500 separate observations have been submitted by individuals and focus groups.
The government also reached out to young Canadians by holding three separate live chat sessions with university students. Those sessions gave the government invaluable insight into the concerns of young Canadians all across the country. A total of 8,000 people participated in the live event on Facebook organized by Dalhousie University, and over 1,000 people have replayed it online.
I am encouraged that young Canadians have found new reasons to become engaged with their government. More than 80,000 people have engaged with us through various live events. That is almost the entire population of Prince George. Throughout the consultation process, Canadians confirmed that they want a government that will strengthen the middle class and help those working hard to join it.
I would love to focus only on the positive things we heard, but that would not reflect all the opinions and comments that were provided. For example, the Canadian Taxpayers Federation shared its concerns over what impact returning the tax-free savings account annual contribution limit to $5,500 might have on individuals' future savings. It does not like the new income tax bracket.
The government respects the opinion of the Canadian Taxpayers Federation, but does not agree that roughly 18% of the almost 11 million Canadians with a TFSA had made the maximum contribution to their accounts by the end of 2013. What is more, the government is reinstating indexation of the TFSA annual contribution limit so that the annual limit maintains its real value over time.
The measures in this bill will contribute to strengthening the middle class. That is the Government of Canada's priority. It has become increasingly clear through the pre-budget consultations that Canada's economic outlook has changed since the election.
This has only bolstered the government's resolve to accomplish what we were elected to do.
What is even more important is that discussions with fellow Canadians have given us new insights and allowed us to fine-tune measures that will be included in the next federal budget. The government's plan will be realistic, sustainable, prudent and transparent. The plan will also include other information on measures that will steer Canada towards a more prosperous, inclusive and sustainable economic future.
The government's plan includes introducing proposals to create a new Canada child benefit. Our objective is to start benefit payments in July 2016. This proposed benefit will simplify and consolidate current child benefits. It will replace the universal child care benefit, which is not income tested. The new child benefit will better target those who need it the most.
The government's approach to consultation recognizes that co-operation is essential in order to have real change. The government undertook to listen to MPs from all parties, have discussions and collaborate with them, and identify solutions in order to prevent the needless escalation of conflict. It has already shown its willingness to do so.
We have already heard from Canadians and many members of other parties, and therefore I look forward to discussing and debating the best way to serve Canadians.
Before my time runs out, I would like to take a minute to speak to the MPs present and Canadians at home today. This bill's proposed tax cut will help millions of Canadians. This tax cut will give middle-class Canadians more income to spend and invest, which will result in economic growth. I am eager to hold discussions with my colleagues from all parties in order to find solutions to the problems Canadians are facing. I very much hope that they will support this initiative.
I will split my time with the member for .
Madam Speaker, I join this debate with some enthusiasm. I think we have struck upon something here today in the Liberals' centrepiece in their tax promises to Canadians. Bill attempts to do two things. One is to address the TFSA, the tax-free savings accounts, and bring the limit back down to $5,500. Two is somewhat regressive changes to the tax code that the Liberals are bringing in. After so much talk and time spent on their efforts to help the middle class, the best answer we have had from a Liberal today, in an attempt to define the “middle class” is he said that it was not up to him to define it. Then he went on to repeat how much help the Liberals were giving this class of Canadians that Liberals refuse to define.
If anybody else finds that odd and somewhat worrisome, let us look through the tax plan that the Liberals have put forward. Revenue Canada breaks down those filing taxes into five groups: the bottom 20%; second 20%; third 20%; fourth 20%; and up to the very top tier of 20% income earners.
Let us just take the middle group. That is an odd way to define “middle class”, to use the middle group. That group, under this Liberal tax plan, gets very little. Perhaps that is why Liberals do not want to actually define the middle class. If they just keep referring to it over and over again, Canadians who are in the middle class, in fact, might think that the Liberals are talking about them when looking at this tax plan.
Let us look at those Canadians who are earning what might seem as middle-class money. Let us take one group that can be defined and get specific. Those earning between $48,000 and $62,000 get $50 under this Liberal tax plan. Perhaps Liberals do not think those are middle-class Canadians, but I am going to walk out on a limb and say they are. They might think that is nice. However, one increase in energy bills in northern British Columbia will take care of that $50.
Now, those earning quite a bit more, up in the top 20%, let us say, between $166,000 and $211,000, will get more than $800 back, not $50.
Liberals can stand in the House today and argue that somebody making $200,000 a year needs the 800 bucks. I know some of my Conservative colleagues used to make the same arguments, but at least they had the effrontery to do it.
What worries me is that the Liberals continue to reference a group of Canadians without ever defining it, hoping that Canadians might be tricked into thinking that they might be talking about them. When they get their tax returns back they will look at $50 extra and ask what happened to that big middle-class tax help that was meant to come. What happened to that election that we watched week after week where the , who is now being echoed by his MPs here in the House, talked incessantly about the middle class and yet is unwilling, unable to define it? Then, when the proof comes in the pudding, when it is time to actually see what those in the middle-income brackets get out of this, it is little or nothing.
In fact, for 18 million Canadians who will file taxes next year, do members know what they get out of this Liberal tax plan? Nothing. Not a thing.
Liberals say they are helping out so many people. This is actually a trick.
We have to give credit where credit is due. This is something Conservatives used to do. They would throw out a big number and say, “We're helping eight million, nine million people. Aren't we wonderful?” They would pull a muscle patting themselves on the back so often. We would say, let us see how that actually proportions out. Is it an equal amount of help across those eight or nine million people? Well, no, of course not. The help sloshes up toward the upper end. It gets better the more you make. That is the way the Canadian tax system works. If the Liberals make the cut that they are proposing to do in Bill , those earning north of $200,000 would see a benefit of close to $815. Those who are not fortunate, not able to earn that kind of money, would see something in the order of $50 or, if they are really unfortunate, nothing.
We have to place this into some context, as some of my Liberal colleagues speaking today have.
The economy is in significant and serious trouble, I would argue, as many have in part, due to previous policies by Conservative and Liberal governments. Over the past decade, we have lost half a million value-added jobs in factories and plants that were good family-supporting jobs. Half a million jobs disappeared over that time and there was not a whisper of worry from the previous government and not much from the Liberals when they sat in opposition. They said this is transition.
I suppose it looked like a cute turn of phrase for the 's speech writers when he was in Davos, suggesting that we are known for our resources, but we will leave that behind and we will be known for our resourcefulness, as if somehow those two things do not go together, that being resourceful with our resources should be the primary role and governing directive of any government in a country as wealthy as Canada with our endowment of such natural resources. Somehow the Prime Minister and his speech writers wanted to contradict those two concepts of our economy, that it is no good to be known for our resources, tut-tut, that is where we get our hands dirty. We will be known for our resourcefulness and our creativity. That is something counterpoised.
I live in a resource-dependent part of this country. I would suggest that the Canadian economy, as is being borne witness every day on the stock exchange, is still somewhat reliant on the natural resource sector. I hope the has walked some of this stuff back. Sometimes these cute phrases work so well in the drafting room, until they are put out and real people actually hear them and say, wait a second, is he talking about me? Is he talking about my job in the forestry sector or the mining sector, in the petroleum and gas sector, in the green energy sector? I am being resourceful with our resources and I would like to continue to be. That was not a lot of help.
Now let us talk about something that is good. It is important to be hopeful and optimistic and see where work hard will get us. The rolling back of the TFSA limit from $10,000 to $5,500 is important simply because this exercise that the Conservatives undertook was incredibly expensive to the treasury in a very short period of time. We know that the people who were able to max out at $5,500 a year, and certainly people who had $10,000 extra at the end of the year burning a hole in their pocket, were not the middle class, and certainly were not the lower end of the economy. They were folks of means.
We also know from the finance department's own research on this that with the introduction of the TFSA in 2009, simply another retirement and savings vehicle, retirement rates did not actually increase. If we bring in a new policy and it does not do what it is meant to do, then it is worth reconsidering. The government should be credited for at least doing that. A price tag of $13 billion to the treasury in 15 short years is expensive. If it is not helping retirement as so many of my Conservative colleagues said it would, then this is a problem.
Picking up from a government, as the Liberals are now doing, that blew $150 billion on top of the national debt, lost half a million manufacturing jobs in the process, and left a very fragile and weakened economy, it is very important to define the middle class if we are going to help it. If a doctor cannot actually name the problem, I would be pretty suspicious of any prescription that I got from that doctor. Here we are with Liberal after Liberal getting the term “middle class” in as often as they can, peppering it through their speeches. Yet in very simple direct questioning one after another, the best answer we have had from a Liberal so far is that “it is not my job to define”. Fascinating. I guess it is just a Liberal job to talk about it.
If we are unwilling to define it, that causes a lot of people consternation and here is why.
When we break down and get into the actual details of what the Liberals are proposing, the vast majority of benefit is going to those who need it the least. A vast majority of Canadians, some 18 million tax filers this year, will get nothing from the Liberal government and are only going to be disappointed. Expectations are high. The red team across the way made a lot of promises, cited time and time again how help is on its way. After the many dark years under the previous government, here was a new government coming in that understood the middle class. While the leader did not come from the middle class, he understood what it was to pay electricity bills and pick up the kids from school. They were going to go ahead and bring something in that would actually help Canadians struggling to make ends meet.
When we look at the actual numbers we realize that those at the very top end will get 16 times more benefit out of this Liberal plan than those in the middle, which is an infinite amount more than those at the very bottom.
Madam Speaker, I would like to thank the hon. member for . He has done an amazing job in the House since 2004 on behalf of his constituents, and I will certainly do my best to follow such an amazing performance.
It is an honour to rise again in the House to speak on behalf of my wonderful constituents in Cowichan—Malahat—Langford and to take part in the debate on Bill . As we all know, this bill would make various changes to the Income Tax Act, but today I will concentrate on two of them: the changes to the income tax brackets and to the contribution limit to the tax-free savings account.
The Liberals were elected on the promise of bringing tax relief to the “middle class”. Indeed, the words from the Liberals' campaign website painted a cozy picture for the average middle-class Canadian. Let me just read some of the words: “We will give middle class Canadians a tax break, by making taxes more fair. When middle class Canadians have more money in their pockets to save, invest, and grow the economy, we all benefit”.
It sounds pretty rosy.
Before I get to the crux of the matter with the tax changes, I want to speak first about the tax-free savings account because this is on something that the NDP can agree on with the Liberal Party.
When the Conservatives were in power, we heard time and again that the TFSA was an excellent tool for helping seniors. I know very well from hearing from seniors across my riding that the TFSA contribution limit would be of little help compared to many of the NDP's proposals. It was a step in the right direction to lower the TFSA contribution limit placed by the Conservatives, because the higher limit yields disproportionate benefits to the richest Canadians. The TFSA contribution limit increase would have cost the treasury billions of dollars in the decades to come. In fact, it is estimated that the combined federal–provincial cost would have been $132 billion by the year 2080. Where is that money going to be recouped?
We know that the Conservatives' responses included the point that it was not a problem for the previous prime minister's grandchildren. We heard Joe Oliver's comments on that mentioned in the last speech. However, we in the NDP believe in creating a sustainable future where no one is left behind. The problem lies in what we have seen through many Liberal governments in the past. They acted on some small measures but really did nothing to deal with the issues that middle- and working-class Canadians face. Presently, we are dealing with a very difficult economy. There are lay-offs and the power of our dollar has been shrinking by the week. This is making our already-precarious seniors' living and food insecurity even more insecure.
Now I will speak to the matter that I am looking forward to addressing, the so-called middle-class tax cut.
The Liberals have decided not to use their first piece of legislation, Bill , to deal with our ruined economy but to propose lowering taxes in a way that would not benefit 60% of Canadians. In my riding, if someone earns the average income of $37,000 a year, he or she would receive precisely zero dollars in benefits. We know that the price of vegetables has gone up by 10% in the last year and we have seen a report from the University of Guelph that predicts that food prices will again rise faster than inflation. This price of food disproportionately affects the most vulnerable Canadians and is something that hurts the real middle class in this country. The seniors and indigenous people in my riding are some of the most adversely affected by this drastic price increase. If we get to the people who are lucky enough to get into the middle-class tax bracket, the maximum benefit that many of them would see, as alluded to earlier, is precisely $50. That figure is negated when we take into account the cost of inflation. In fact, that $50 would basically be eaten up by five stalks of cauliflower over the year at the supermarket with the way food prices are going.
It is important for us to point out the contrasts here today. I want to show members some of the figures that we have from Statistics Canada: for the average office worker earning $39,000 a year, the benefit would be zero dollars; for hairstylists earning an average of $27,000, zero dollars; and even the fish plant worker earning $26,000 a year, it would be zero dollars. However, I do want every Liberal member of Parliament to understand they are giving themselves a tax break of $679. Moreover, every parliamentary secretary on the government side is giving themselves a tax break of $679. They are doing it for lawyers, well-paid bankers, and so on. However, for the average middle-class Canadians, they will get precisely zero dollars under the bill.
We have a constituency week coming up next week when we will all get to travel back to our ridings and meet with our communities, which I am very much looking forward to. However, I would love to see how Liberal members of Parliament will explain to the so-called common folk in their riding, the middle-class Canadians, what the real deal is with their tax break, and how they are giving themselves $679 in tax breaks, but for the rest of the people in the riding, precisely zero or $50.
This middle-class tax cut is nothing more than smoke and mirrors. The Liberals have never been able to define precisely what the middle class is, and they have never answered the question. The median income, defined as the halfway point between the higher half of a data sample and the lower half, and probably a good place to define the middle class, is $31,000. However, this group will receive precisely zero dollars.
On the proposal for middle-class tax cuts, the legislation before us would work for families that make between $166,000 to $200,000. They fall among the richest 90% to 95% of Canadians. I believe this action seems to suggest that either the Liberals are not here to help the real middle class or they believe the middle class is people earning the 90th percentile of income.
The cost of helping such a small portion of the richest Canadians will exert an incredible amount of pressure on the government's books. In fact, it is estimated that this tax cut overall will cost our revenue stream $8.9 billion over the next six years. This plan was a piece of election hyperbole that was meant to seem progressive, but is actually detrimental to our middle and working classes.
Liberal governments of the past have been able to flash left and then turn right while they were in power. We in the NDP do not intend to let the Liberals get by without a struggle on that front.
This change is not the way we take care of our most vulnerable population like seniors, let alone the actual middle class. This is not the change that our most vulnerable citizens were looking for.
The NDP is here not just to point out the inconsistencies in the Liberal plan, but to propose alternatives. We will be doing so here and in committee. A progressive opposition will stand for the values of fairness for all instead of an economy rigged for the highest earners. We believe in helping the real middle class, and not just the high-income earners that the Liberals have labelled as the middle class.
We have developed proposals that will fix the Liberal plan, which would make it correspond with their campaign promise to Canadians. We believe that if we lowered the first income tax bracket by 1%, then 83% of taxpayers would benefit from this proposal. This solution would benefit many more Canadians, and the cost difference would be minimal.
We could further minimize the cost to the treasury if Liberals would just agree with the NDP to increase corporate tax rates by just a smidgen more, and ask corporations to pay a little more of their fair share instead of downloading costs onto Canadians.
I will end my speech by quoting a few validators who have studied the bill.
According to the research chair in Taxation and Public Finance at the University of Sherbrooke, couples with a combined income of $250,000 a year would gain about $1,100 in tax cuts, while couples with a combined income of $75,000 a year would get an average of zero to $4.
Finally, Gordon Pape, certainly no friend of the NDP, wrote the following in The Globe and Mail:
Finally, let's consider low-income earners. There are a lot more of them than those who fall into the middle-income category.... The Liberals didn't offer them any relief so the only break they get is from the indexing of the tax brackets.
Pape continues that they “are the ones that really could have used a tax cut but somehow they got lost in the election hyperbole. Too bad.”
Madam Speaker, I will start by focusing on exactly what the bill is about. I have listened to opposition members talk about what is not in the bill. Quite often, what is not in the bill is because that is not what the bill is about. We can talk about daycare, pipelines, the need for doctors in remote communities, and we will get to those issues in time, but this bill deals with some specific issues for a couple of reasons.
First, this is an amendment to the Income Tax Act. In order to have it apply to the year in which we want the tax cut to occur, it required us to come back before the new year to get those measures in place ahead of the calendar year. It is a technicality. One of the reasons why it was such a critical priority and why there was speed involved in getting this to the floor of Parliament and off to committee was so it could take place in the calendar year where the relief was expected.
What is the proposal? The proposal focuses on two critical issues. One is a tax cut for a very specific set of incomes, between $45,000 approximately and $91,000 approximately, to reduce taxes for income earners situated in that category. The other thing is to roll back a boutique tax cut that was presented to us last year by the previous government, a tax that does not deliver significant relief to a broad band of Canadians but rather privileges a very specific few in a very specific situation. In order to give us some resources to try to balance the budget and deliver more a general and a more targeted tax relief to very specific groups that we think need it, that very specific measure is needed.
The tax cut is very simple. It is relief for middle-income earners who are quite clearly, in volatile economic times, experiencing extraordinary stress on the incomes they earn. Does it provide income support for all Canadians and, in particular, the lowest-income Canadians? No. Other measures are on their way to deliver that sort of tax relief, but we committed to this one in the campaign. In order to get it in place in this calendar year in preparation for this year's budget, it needed to be introduced in a timely way.
It is an important measure, though. It starts to make the tax system fair. One of the complaints we have heard about the previous layer upon layer of tax relief presented to us by the previous government, which it skewed toward more affluent and, quite frankly, Canadians who did well, is that it needs to be changed in order to give people the confidence that the taxes they pay are fair. We started to change the tone of the conversation about tax relief and targeted areas and groups of people who did not feel the previous government's tax relief measures were fair.
The TFSA dynamic is the most obvious one. Yes, a lot of people participate in the program. We are not eliminating the program; we are simply not expanding it. The bulk of the people who participate, in particular, lower-income Canadians, do not max out those tax-free savings accounts. The folks who are maxing out the tax-free savings accounts, after all of the year's bills have been paid and all of the taxes and expenses have been addressed, are the ones who have $10,000 lying around to invest into one of these tax-free savings accounts, the folks who tend to be doing very well.
We are simply saying that rather than benefit those who are doing well, let us drive the support to those who are struggling to deliver services to their families and support their communities, and aim those tax breaks at middle income earners.
Quite clearly, this is not the last thing we will do. If the proposal were to do this and nothing else for the next three and a half years other than simply manage the government's finances and programs as they are currently configured, much of the criticisms I have heard in this debate so far and read in the newspapers would be justified.
However, we have also committed to sustaining some of the other components of our campaign platform. For example, the minister has already committed to a review of EI eligibility and processing times. Members have also heard us talk about the need to re-evaluate that program to ensure that the people who pay into the system get the support they need, especially in times when economic volatility creates surges of unemployment, as we see in the province of Alberta right now with the resource sector.
Members have also heard us talk about the need to ensure that CPP is reformed, in particular, for seniors who suddenly find themselves in a situation, as life rolls through and the demographic changes happen to their families, where suddenly two pensioners in a single house with rent is now one pensioner with the same rent.
We believe it is an appropriate reform to start targeting support for single seniors who face particular problems as a way of alleviating poverty in a very defined group of people. These people will not benefit from this tax cut, but will benefit from other measures that we will see defined in the budget that will be presented.
Most important, for the family that was previously described in a speech, a family with children that earns $75,000 collectively within its household, this tax measure does not specifically target relief for that circumstance. However, we have promised to double the child tax benefit, not get rid of it. Instead of taxing it as the previous government had done, we will make it tax-free. We made this commitment in the campaign. This specific initiative benefits that group of individuals in a very targeted way and provides the kind of support for lower-income Canadians, especially those with children, in a way that will alleviate poverty in particular for children, perhaps the most vulnerable group in that population. That is one of the ways in which the targeted approach by this government, which will be unveiled in the budget, will be rolled out.
We are also talking about a whole series of other measures which do not necessarily put more dollars directly into the pocket of families, but will start to alleviate some of the significant pressures that low-income Canadians are under, such as housing and transportation costs when taken as a bundle. Where I come from, for low-income Canadians and the income group that has been described in the previous speech, this constitutes about 71% of household costs for a typical working family. When we add housing to transportation, close to 71% of the disposable income for a family is sucked into those two categories. If we do not move the yardsticks on those two issues, if we do not deliver better transit and better housing supports right across the full spectrum of housing needs, we will not address the issue that is motivating the call for income support.
If we can get housing and transit costs down, we do support low-income Canadians in a comprehensive, across-the-board way that is direct and meaningful. However, we also put people back to work to earn the incomes they need to pay those bills. It is not enough to simply cut taxes for people if we do not also provide jobs for them to earn the income to pay the taxes. Therefore, we have to look at these things in a holistic manner, and we have in our program.
However, we cannot start building housing in the first week of the new government. There are agreements to be struck and negotiated with the provinces and housing providers. Programs need to be rekindled. Unfortunately the previous government put all of the eggs in one basket. This time I am not talking about the petroleum industry but rather the housing industry.
The focus on chez soi or on housing first, which simply prioritizes rent supplements over a housing construction program, means we are not starting with a robust housing market that allows us to house lower-income Canadians effectively. We have to rekindle that program and get it moving forward again. That takes a bit more time than simply introducing a tax measure. Therefore, those provisions will come out and will be seen as part of our infrastructure program.
However, members should make no mistake about it. Our commitment to infrastructure is not just about building stronger communities, better cities, and helping provinces get people back to work. It is also about reconstructing the fabric of our country to provide support for low-income Canadians who need housing and transit support in order to access education, work and services, and move forward with a higher quality of life. Income support is part of it, as is direct support through a rethinking of some of the current programs that support low-income Canadians, in particular CPP and EI. Employment programs that deliver the infrastructure to create much stronger urban and infrastructure fabric is part of it. It also delivers the work we need to see Canadians get back to supporting themselves, and moving the whole agenda forward as a complete comprehensive package.
That is the campaign platform, but it is also the agenda of our government. We will not see all of it in the first 10 weeks of a new government. It takes time to bring partnerships together to make those things a reality, in particular in housing and transit. It is not a question of just simply cutting a cheque and seeing a transit program get built overnight. Programs take time. Unfortunately, in many of these instances we are starting from a standstill. Nowhere is that more obvious than in the resettlement of refugees from Syria.
I heard a question last week from a member across the way with respect to why there was no housing available for all refugees. The reason there is no housing available is because the previous government had virtually no housing program.
As a result of that, 25,000 people cannot be housed overnight. It takes time to fund the housing, approve the housing, and then ensure the houses are built in the right places where people will be able to use them. We are moving forward on those programs in a comprehensive, steady way, but it is not the thing that is done first. It is one of the things that is done as part of a comprehensive package that will be contained in the budget.
While members of the House may be frustrated that Liberals are saying many of the answers to the questions lie in the budget, which will be presented in weeks, not months, to the House, as part of a comprehensive strategy toward those issues which are not addressed directly by the current bill in front of us, that is the reality. We have only been governing for about 10 or 11 weeks. That is just short of the length of the campaign. Think about it. The entire election campaign was 78 days and we have only been in power for close to 100 days. A bit of patience, as we move toward our first budget, is in the order.
However, as I said, this bill requires being introduced ahead of the calendar year to ensure it is in place to accommodate the changes to the tax code that are required, and the changes are very specific. The changes in the bill are designed to support middle-income earners who earn between $45,000 and $91,000, approximately, to reduce their tax rate by about 7% and, in doing so, to give some relief to a very critical part of the population struggling right now with inflation, increased housing costs, and other dynamics that are putting pressure on household budgets.
To criticize the bill for what is not in it misses the point. Many of the questions, debates, and speeches need to be more finely attuned to the budget debate than to this one. That needs to be said. As I sit here and listen to all the criticism being thrown at the bill, it is not actually about the substance of the bill. It is hard to answer and say that this bill should do x, y, and z when it is quite clearly designed to one very specific thing.
I have heard criticism that the amount of money being provided. Some members favour much deeper tax cuts. I have heard others in the opposition say that the support is not deep enough. Finding a balance in troubled and volatile economic times is something that we will all have to work very hard to articulate and achieve. We cannot solve the complexity of the problems that have been presented to us with one-size-fits-all, magic bullet solutions.
The complete list of programs which I have just described is forthcoming. They can be seen in the Liberal campaign platform and ministers have talked about them in the House as they have answered questions of the opposition. That is the totality of our approach. That is the holistic in which way we hope to not only grow the middle class but create a stronger economic platform for our country to thrive, and with the investments that we are talking about, not just build back the capacity of the middle class to thrive and move forward, but to ensure our partners in municipal and provincial governments have the capacity to also make investments and do the other things required to strengthen the Canadian economy and diversify it so it does not enter these periods of volatility quite as vulnerably as it has in the past year.
Things like investments in housing, the environment, social infrastructure, and transportation and transit are, again, part of the larger agenda: to strengthen the middle class with job creation, sustain the capacity of the middle class with tax cuts and reforms to programs which sustain their ability to participate in a strong and valued way, but, at the same time, also ensure we keep an eye on poverty.
I appreciate the comments, concerns, and issues that have been raised around poverty, poverty within the aboriginal, first nations, Métis, and Inuit communities, both on and off reserve, in particular, in urban settings, which concerns the riding I represent. I appreciate the focus on seniors who are struggling as private pensions sometimes become fragile and public pensions do not keep pace with some of the cost pressures that are arising. As we move toward demographic changes, we will have many more seniors in vulnerable situations moving forward. I understand there is a need to act there.
In particular, child poverty was something which the House committed to eliminate, but has not. If members look at the riding that I represent, there are more poor children within an hour of the downtown core of Toronto than there are in all of Atlantic Canada combined. These are serious issues that we have to solve. Will this bill, in and of itself, solve those specific issues immediately? Of course not. One would be crazy to think so. We have to get to those issues as part of the larger budget process and throughout the mandate of this government. However, this is the first step we are taking to provide very specific and targeted tax relief to a very defined group of people in our country.
Rest assured that there is more to come as we start the project of building back the size, capacity, and health of the middle class in our country.
I want to end by talking about how housing fits into this, because it is critical. The debate cannot just begin and end with a simple tax cut. We need to start delivering across the full spectrum of housing needs in the country. This is an issue that will actually define whether or not we succeed in rebuilding the middle class and giving it the strength it needs.
It is not just about affordable housing. It is about housing affordability. There are housing markets in our country where a sudden housing correction, a sudden spike in mortgage payments, or a drop in equity in people's households would create poverty the likes of which our country has not seen for decades. We need to manage the full spectrum of housing needs in the country. We need to ensure a way to get from the street into a shelter, from the shelter into affordable housing, from affordable housing into home ownership, and from there, on a path to the middle class.
The housing strategies that we will hear in the House are, to me, fundamentally the most important conversation we are going to have about alleviating poverty and strengthening the middle class. If we do not get to that conversation, if we get hung up on simply measuring the percentages of tax cuts, the size of the deficit, and the size of the debt as it moves forward, if all we do is focus on the numbers and not focus on the actual living conditions of Canadians right across the housing spectrum in the country, we will never solve these issues. Therefore, in the weeks and months ahead, what we need to focus on, as we build capacity of the middle class, is creating the housing required to accommodate aspirations to middle class in the country. We have to do that. If we fail to do that, this Parliament and this debate will have been for nothing. We can cut taxes all we want, but if the quality of life does not change and the capacity to move forward as an individual or a community does not get shifted, nothing will have been achieved.
Housing lies at the heart of it. Housing is no longer just a wealth transfer, and it cannot be. It is also about protecting middle-class investments. It has to be about making sure low-income Canadians have a place to thrive, and vulnerable Canadians are sheltered and protected properly.
However, we also have to look at it as a tool that solves most of the other challenges we face in the country. It is the tool we need to solve some of our energy crisis and climate change dynamics. It is the tool we need to use to deal with child poverty. It is an important tool in making sure aboriginal—first nations, Inuit, and Métis—Canadians have access to stable and thriving life opportunities.
Housing is the solution, and that is where we are going to have the most complex debate. That is where many of the issues that are defined are going to have the most impact, because if we can get that piece right—the tax cuts we talked about, the changes to unemployment insurance, the changes to CPP, and the changes to the way we support vulnerable Canadians—if we have the platform for their lives solidified and protected and moved forward as a federal agenda, we are going to achieve great things in this Parliament.
It starts with this tax cut for technical reasons, and perhaps symbolic reasons, but the entire program is what is about to be presented in the next budget. The entire program is what we will be debating over the next three to four years. Many of the questions that have been raised, which are important questions, will be directly addressed in those days to come. However, in the meantime, this is the first step. I look forward to members' support, and I look forward to members' questions.
Madam Speaker, I would like to advise you that I will be sharing my time with the member for , and I would like to take this opportunity to congratulate him on his election to the House.
This is the first time I have had the opportunity to rise to speak in the 42nd Parliament. Therefore, first, I would like to thank the constituents of my beautiful riding of Haldimand—Norfolk for electing me for my fifth term and for trusting me once again to represent them here in Ottawa.
I would like to acknowledge the team of volunteers in my community who worked so very hard each and every day over that 11-week period. Without them, I know that I would not be here today.
I would also like to congratulate my colleagues on all sides of the House for their election, and I look forward to working with them over the coming years.
I am incredibly proud to call the riding Haldimand—Norfolk my home, and I will continue to work hard to be the strong Conservative voice my constituents have asked for in Ottawa. I will fight to make our riding an even more wonderful place in which to live, work, and raise a family.
Haldimand—Norfolk is full of hard-working individuals who know the value of a dollar. Our Conservative government always believed that Canadians' money belonged to them and that they know what is best for themselves and their families.
Canadians in all income groups have seen their take-home incomes rise since 2006. The federal tax burden is at its lowest in over 50 years, thanks to our then Conservative government and the more than 180 tax cuts we made. These tax reductions gave Canadians the flexibility to make choices that were right for them to help build a solid foundation for their future economic growth and a higher standard of living for themselves and their children.
Canadians at all levels are benefiting from that tax relief, with low- and middle-class Canadian families receiving proportionately greater benefits. More than one million low-income Canadians were removed from the federal tax rolls altogether due to our Conservative government's tax policies. We significantly improved the lives of Canadians, while at the same time, we kept our promise to balance the budget and stay fiscally responsible.
As we all know, the current Liberal government made it clear in its platform that it would be taking the surplus the previous government left it and would be entering into multi-year deficits. One of the problems with that is that there was once a promise to keep the deficit to $10 billion, which has now ballooned to $20 billion or possibly even $30 billion.
Every week we hear more holes in the Liberal costing of their platform. More recently, the parliamentary budget officer contradicted the Liberals' claim of a cost-neutral tax increase to Canadians.
It is clear to Canadians that there is one party that will always look out for hard-working taxpayers, and that, of course, is the Conservative Party.
Among the multitude of tax-relief measures our government introduced, perhaps the most popular was the tax-free savings account, or TFSA. The TFSA is the most important new savings vehicle introduced in Canada since the RRSP was introduced more than 50 years ago.
Available since its introduction by our Conservative government in 2009, the TFSA is a flexible, registered general purpose savings vehicle that allows Canadians age 18 or older to earn tax-free investment income. I should point out that this is a voluntary procedure.
Millions of Canadians have taken advantage of the very popular TFSA. They are an excellent way for Canadians to save tax-free and to have the money available for their own personal needs.
As a matter of fact, according to Revenue Canada, as of the end of 2013, nearly 11 million individuals, that is roughly one in three Canadians, had opened TFSAs, and the value of the total assets held in those TFSAs was nearly $120 billion.
The TFSA gives Canadians the flexibility to save for purchases like a new home or car, to start a business, or to save for retirement. Many Canadians have maxed out the old $5,500 limit, and many would contribute more if allowed. Our Conservative government made that possible when we raised the maximum contribution limit to $10,000, effective 2015 and for subsequent years.
The opposition claims that TFSAs only benefit the rich. That is blatantly false. In fact, at the end of 2013, individuals with annual incomes of less than $80,000 accounted for more than 80% of all TFSA holders, and about half of TFSA holders had annual incomes of less than $42,000. About 1.9 million individuals have contributed the maximum amount to their TFSAs. About 46% of these individuals were seniors, and over 70% were aged 55 and older. Roughly 60% of the individuals contributing the maximum amount to their TFSAs had incomes of less than $60,000.
Many seniors in my beautiful riding of Haldimand—Norfolk have shared their concerns with me about the changes proposed by the new Liberal government. Some retirees on fixed incomes struggle to save for their future, and the TFSA, with its limit increase, was one way to make that easier.
The fact is that Canadians are living longer than ever, which is great news for all of us. Since 2006, seniors have been benefiting from important money-saving measures such as pension income splitting and tax-free savings accounts. As of the end of 2013, close to 2.7 million seniors had TFSAs.
The previous government understood that Canadian society thrives in a low-tax environment. It is a shame that the Liberal government is opposed to the enhancements made to the tax-free savings account. They do not realize the benefits it would bring to Canadians across the country. Unlike the prudent fiscal approach the Conservatives took, the Liberals fundamentally believe in irresponsibly high taxes, recklessly high spending, and what seems to be an aspiration toward structural deficits.
Through Bill , the government would significantly cut back on the amount individuals can contribute to their TFSAs, in spite of the fact that all data shows that those in the middle- and low-income classes are far more likely to use their TFSAs. Meanwhile, the new tax changes the government is trying to bring in would provide absolutely no tax relief to those earning less than $45,000 a year. Instead, many low-income people who are using TFSAs would now be worse off under this new Liberal government's proposed plan.
Our government fulfilled its commitment of doubling the TFSA contribution limit to $10,000, something that was helpful to all Canadians, young and old. The Liberal government should be encouraging responsibility in saving, regardless of how irresponsibly it chooses to run the nation's finances.
The Liberals promised Canadians that their plan was revenue-neutral. Since then, the revenue minister has conceded that the plan is not revenue-neutral; it would leave a $1-billion hole. The Parliamentary Budget Officer released a report estimating that the cost will be closer to $1.7 billion. This is a broken promise that proves that the Liberal plan has been grossly miscalculated.
Canadians know that the Liberal tax plan will end up costing them, so they deserve to know where the money will come from. It is my hope that the Liberal government will see the impact these changes will have on Canadians and will change direction so that all Canadians may benefit from TFSAs to the max.
Madam Speaker, thank you for the opportunity to speak to Bill . The proposed changes to the act are the following: first, the reduction of room in the tax-free savings account for hard-working Canadians; and second, a reduction in taxes that have been marketed to Canadians as helping the middle class.
To preface any comments regarding these changes, I would like to begin by stating on the record that prior to my election as the representative for Barrie—Springwater—Oro-Medonte, my career was in finance. From personal, to small business, to commercial finance, I have had experience in planning finances and investment portfolios, with the exception of securities, and reviewing financial statements to understand the solvency of both individuals and businesses.
My remarks today are focused on four clear results of this tax-and-spend Liberal ideology we are seeing. One, the reduction of the tax-free savings account hurts seniors and young people more than anyone else. Two, it discourages Canadians from saving their money for the future. Three, the apparent Liberal tax reduction for the middle class in fact benefits the top 10% of income earners in this country more than anyone else, while doing absolutely nothing to benefit those earning $45,000 per year or less. Four, a proposal that the Prime Minister, the Minister of Finance, and Liberal government have touted as revenue neutral will single-handedly be responsible for $8.9 billion worth of deficit over the next six years.
One of the most innovative tools ever delivered to Canadians, specifically seniors, is the tax-free savings account. While I understand that the government is looking at these changes from a theoretical perspective, my goal is to properly communicate what the practical advantages of these changes are. In my opinion, the Liberal government is reducing benefits to seniors and to all Canadians, benefits that were introduced and changed by the previous Conservative government.
For example, a widowed senior is required by the Canadian tax code to transition their life savings from a registered retirement savings plan, known as an RRSP, to a registered retirement income fund known as a RRIF. Upon transition to the retirement income fund, this senior must start withdrawing a minimum amount, which they are then taxed on. A withholding tax of up to 30% is then levied against withdrawals exceeding the withdrawal limits. Since retirement savings plans and retirement income funds are not truly liquid assets, a person may want to transition their savings into a more liquid vehicle, which is where the tax-free savings account comes in. The hitch is that, as stated, this person is being taxed as much as 30%. The idea that his or her life savings can be placed in a vehicle that can grow without tax in the future is ideal in most situations.
However, the government has reduced the annual amount a person can place in a tax-free savings account, which results in one of two things happening for seniors. First, the person is not able to remove as much of their life savings from their registered income fund in any given year. Second, the person is taxed based on a higher amount and then taxed again on the growth they attain in their senior years. I do not support separating seniors from their hard-earned money, which is likely being used to secure independent living, a healthy lifestyle, and to live out the remainder of their days as they see fit. I do not support under any circumstances raising taxes on seniors in our society.
Likewise, I do not support tax increases on young people looking to make the most incredible investment of their lifetime, in their first home. The CBC has stated the following:
With the TFSA, young people and home buyers have another option....
By contrast, withdrawals to the TFSA can be repaid to the plan at any time, following the year of withdrawal. “And unlike HBP [the home-buyers plan], failure to repay amounts withdrawn from a TFSA never result in tax on funds not repaid”....
The Liberal government has made it more difficult for young people to save for their first home. These young people in the GTA, Vancouver, and other hot markets throughout the country are being mandated now to save up to 10% for the down payment. At the same time, the Liberal government is clawing back one of the most effective tools to save that 10%. The government's action forces young people either to be taxed on the growth of their savings or use the home buyers' plan and pay back the money to the plan over the ensuing 10 years. Repayment, in these circumstances, can be difficult, as moving into home ownership is a life-changing situation and new homeowners often find these times challenging. What the Liberal government will do, therefore, is make it more difficult for young people to save and more difficult to purchase their first home.
While the Liberal finance minister travels around talking about shrinking household debt and increasing down payments on homes valued over $500,000, his government's policies are actually discouraging Canadians from saving for that same home. Therefore, why does the Liberal government say one thing and do another? The government believes that these tax hikes for seniors and young people trying to save for their first home are necessary. They are necessary in order to pay for its apparent middle-class tax cut.
Following the introduction of this apparent middle-class tax cut, economists stated that it would actually help those earning $190,000 a year, that is, those earning more than anyone else. In other words, no one would receive more help than those sitting in the top 10% of income earners in the country. How could the Liberal government, Liberal Prime Minister, Liberal Minister of Finance, and the Liberal MPs promote cutting taxes for those earning $190,000 a year on the backs of seniors in retirement and young people starting out their lives, or like the family I grew up in? We fought for years, like many Canadian families, to get and gain in home ownership.
I wish I could stop here. I wish this was where, to quote the member for Papineau, the “nonsensical” behaviour of this government ended, but it is not. Not only did the government raise taxes on seniors and young people, reduce incentives for saving, provide lower taxes to the top 10% of society, but when it did it, it also threw the government into deficit.
It was reported last week that the former Conservative government had left a $400 million surplus in November. In December, the finance minister announced that the Liberals would run a $3.5 billion deficit this year. This means the government has projected to spend $4.1 billion between November and March more than it takes in. One might ask how. It is because the revenue neutral middle-class tax cut is not revenue neutral and results in the 2016 fiscal year coming with a $1.7 billion shortfall, according to the Parliamentary Budget Officer. Furthermore, it will result in a total $8.9 billion shortfall over the next six years.
When Canadians elected this government they did so believing that the middle class would be the great benefactor, that young people would be given greater opportunity, and that seniors would be given a new way to live out the remainder of their days. Based on the promises the government has made, it has shown that it will say just about anything to anyone to get elected. Canadians will hold the Liberals to account for the actions they take, for the actions they fail to take, and in what order they do so.
The government's priorities are transparent as a result of the actions it has taken first. As it stands today, the government has not prioritized seniors, young people, lower- and middle-class Canadians, and our children by its leaving a greater deficit year after year. The government has prioritized tax cuts for the top 10% of income earners in Canada. This what the government will be judged on. This is what it will be known for. This is why, as a Conservative, I cannot support Bill .