:
Mr. Speaker, before we were interrupted for question period, I was talking about the process. I was suggesting that perhaps the Liberals, instead of reading the talking points generated by their leadership, should be listening to some experts. I have three experts I was talking about.
I am going to go back to the quote from the B.C. Chamber of Commerce. This is a group that prides itself on trying to be non-partisan, but in this case, it had to talk policy. We are talking about the process. It said:
The federal government has engaged in rhetoric that divides the country, directly stating that small business owners do not “contribute” to the wellbeing of the country and implying poor character on their part if they employ tax planning strategies that were established many years ago, to encourage the growth and sustainability of innovation and entrepreneurship and to compensate small business owners for the higher level of risk they undertake in their venture, compared to that of an employee.
That is a very important group in Canada that represents business owners.
The next person I want to quote is a tax accountant, a very experienced person who works with small businesses. He was at a round table in the riding. Regarding the process, he said that there are consultation papers released all the time. They tend to be very mundane and very boring but are important to people like him. He said that the language in this release was very political. It said that the wealthy need to pay their fair share. The even tweeted that if people do not support changes then they oppose tax fairness.
The accountant said that this was supposed to be an open consultation, when the initial consultation paper and tweets from the finance minister indicated that it would be anything but. He went on to say that most of the organizations that will be impacted are not wealthy. They are mom-and-pop businesses, and they will be deeply affected. He said that the statement by the finance minister that it would not affect the middle class is absolutely false. It is not closing loopholes. These are policies that were developed for very purposeful reasons. As the chamber indicated, these are policies that were developed to support organizations, not loopholes. Even before the famous video by the member for about the pizza shop, he said that there is a pizza shop in the riding of Kamloops—Thompson—Cariboo that will also be impacted.
His next concern was the layers of bureaucracy for monitoring compliance. It will take a new horde of CRA auditors to monitor and watch that very nebulous language. This is an accountant who has very important knowledge and does this work all the time.
The next person who had something to say was an experienced tax lawyer. One of the things I thought was very interesting was that he said that tax changes are very complicated, and he doubts that most of the members in the House actually understand the implications and what the language in the proposed changes means. It is people like the accountant and the lawyer who really understand what is being proposed by the government. His bottom line was that the government has taken a sledgehammer when all it needed was a scalpel.
I suggest that the Liberals listen to these three experts, one who represents business, one who represents accounting organizations, and one who understands tax law. Perhaps they should look at the suggestion that we have an additional bit of a consultation period.
That is about the process. The process obviously has been botched. People are very upset. They are feeling insulted, hurt, and angry.
I want to talk about a couple of specific examples. First, I talked earlier about the ranching families in my riding. We were in a state of emergency until the long weekend in September. They are busy fixing their fences, looking for their cattle, and trying to recover their lives.
How can Liberals actually suggest that there has been adequate time for consultation, when people across British Columbia have been dealing with very difficult circumstances all summer? Tourism businesses have been incredibly impacted by the fire season. People do not have time right now to even consider what the changes are going to mean, much less provide meaningful consultation.
Finally, when we were in Winnipeg, I met with an aboriginal entrepreneur. She said she has never had a grant and has never asked the government for money. She was a single mom and started a business with her sweat and tears and many sleepless nights, like so many entrepreneurs. She grew her business. She is now in a position where she wants to turn her business over to her son, and her accountant has said that it is going to be much more difficult for her. The government talks a lot about consultation. The Liberals should be asking themselves if they have talked to aboriginal entrepreneurs across this country.
There is a reasoned argument to continue this consultation period, at least into January. It is certainly unprecedented to have so many dramatic changes in such a short time, during the dog days of summer and during an emergency situation in British Columbia. I urge all Liberals to vote for the motion.
:
Madam Speaker, it is a pleasure to rise today to speak to the opposition motion. I have been in the House pretty much the entire time, listening to the debate. Hearing what has been exchanged, I do have some concerns.
From time to time, we might be straying from the facts a little. I thought I would try to take this opportunity to outline my position on this, where I am coming from, what my constituents have said to me, and where I see the importance as it reflects to those timelines.
For starters, I think we all believe in fairness and the idea that in Canada we live in country where fairness is afforded to everybody, so everybody can have a fair shot. That is why it is so important to make sure that the tax system we implement and adopt is fair, so that we can grow the entire economy, so that the middle class, who contribute to the economy, who genuinely help it grow, can succeed and continue to further the enhancement and the growth of our economy.
Unfortunately, the reality that we have seen over the last 20 years is a growing divide, a matter of inequality between the haves and the have-nots.
We voted in favour of, and introduced, a tax break for the middle class not that long ago. Unfortunately that was not unanimous in this House. There were members, particularly Conservative and NDP members, who voted against lowering the taxes on the middle class and increasing them on the one per cent. That does not contribute to the fairness.
We can talk about social equities, we can talk about the social elevators, and we can have genuine policy debates about how we should implement and bring about different ideas to lift people up. Those are all good. There are genuine and good ideas that come from all parties.
However, when we talk about fairness, there is a concept that everybody needs to have a fair start. Unfortunately, the reality is that it is not the case. We come to the proposed changes. Will they make it totally fair? Absolutely not, but they are a step towards making it fair. Income sprinkling, which we have been talking about, is the concept that, if individuals have a corporation, they should not be able to take money that they are genuinely making for themselves and split it or sprinkle it amongst their spouses and adult children.
I am not coming at this just as a member of Parliament. I am a shareholder in a corporation. I own half of a corporation. I do not understand how it is fair that, as a corporate owner, I can effectively put my kids through school for cheaper than my employee can. It is just not fair.
Let us move on to passive investments. I will say this is probably the part of the debate that this motion really focuses on, because it is really the only part that is in the consultation period now. If we talk about extending the consultation period, we are talking about extending the consultation on passive investments.
I will say that there have been unintended consequences that have come forward as a result of the discussion around passive investments, but that is exactly why there is a consultation period going on now.
What I have been hearing about passive investments quite clearly is that people are worried about money that they put into a corporation and saved in a legitimate way. They are worried about how they can then take that money out later on, and rightly so. I heard from doctors, Craig and Ruth from my community, who have been saving this way for 20 years now, planning for their retirement. They are about to retire. Should the rug be pulled out from underneath them, because they have been using legitimate ways to save? No, I do not think it should.
That is why the parliamentary secretary made it very clear this morning, when he spoke, that we are focusing on this point and moving forward as it relates to the passive investments.
Then, of course, there is the capital gains aspect of this, which probably has had the least amount of focus, and how different mechanisms are used to transfer for succession planning in a corporation. These are legitimate concerns. I share the concerns of succession planning. As I indicated, I have a corporation that one day I plan to pass on to my children, in whole or in part. I am worried about that.
During the discussion that has been going on, the themes are continuous and they are the same. No new ideas are really coming up. People love to income sprinkle and want to continue to do it, and that is just a matter of policy or principle amongst different individuals in the House.
With respect to passive investing, the government is only consulting on this now so that it can propose legislation, so we can then debate that legislation.
With respect to capital gains, some people have brought forward real concerns about unintended consequences, which I believe the government will look at and will address in the legislation.
I would also note that corporations are quite different now from 40 years ago, the last time that the tax code was changed. Forty years ago, the majority of corporations were manufacturing enterprises, large corporations. A “corporation” 40 years ago was not an individual person or a couple of people. That has significantly changed. The idea that the tax code should change to reflect that is, at least in my opinion, entirely appropriate.
It has been pointed out on a number of occasions in the House today what is an extremely valid point to continue to put on the table, and that is the fact that Canada has the lowest corporate income tax rate of the G7 countries. That continues to give us a competitive advantage, and that continues to drive the incentive for businesses to grow.
I meant to say at the beginning of my comments that I will be splitting my time with the member for . I apologize, and I will put that on the table now.
I did have a town hall meeting. I have had a number of opportunities to engage with people from my constituency. I was invited to a town hall where I heard what people had to say. I met with the Ontario Medical Association and local members from my community. I met with a number of people in my office. I continue to hear the same things over and over again. I have identified their problems and I appreciate what they have to say. There are some genuine concerns there.
However, I am not seeing any new information coming forward. I am not sure how extending the time by another four months would generate new concerns. We have to listen to the concerns that we are hearing and see how they can be reflected in the proposed legislation and the new legislation that will come forward in terms of passive investing.
I would like to take this opportunity to thank the Kingston Advocacy for Small Business. This is a group of tax professionals and accountants who came together on their own without my trying to set them up or feed them any information or anything. They looked at the genuine proposals and they brought their concerns to me. It was not a bashing session about taking shots at the government. This group had genuine concerns that they wanted to bring to my attention, and they helped me deliver them back to the government. A lot of the same concerns have been shared in the House and are starting to come to the surface.
There is opportunity now to take what we have consulted on, to take the draft legislation, to see the new draft legislation that will come forward, so that we can start to have some serious discussions on what that legislation will look like.
I believe in the concept of fairness. As an individual who owns a corporation, I do not think it is fair that I should have advantages over my employees when it comes to saving for my kids' education or saving for retirement. We all need to be on a level playing field. We can talk about the social elevators and how to make things different for particular groups in society, but at the end of the day what is so important is that everybody is on the same playing field. That is not the case when a police officer making $98,000 can effectively pay a higher rate of income tax than somebody making $230,000 and sprinkling that through his or her entire family.
:
Madam Speaker, I am very pleased to have this opportunity to rise to speak to this motion today. I would just like to say where I am from, what I do, and what I have done in the past.
I am a small business owner, and I am also a tax lawyer. I used to teach tax at the Faculty of Law at the University of Ottawa, and I used to teach corporate tax at the Faculty of Management at Laurentian University. As well, my wife is a physician and is incorporated.
[Translation]
On July 18, many MPs and members of the general public were quite interested in the guidelines our party was going to release regarding the tax reform we want to bring in.
Considering my family background, I was very lucky to become a tax lawyer and to have studied the law, much like my wife. My father was a welder at the pulp and paper plant in Kapuskasing, and my wife's father was an electrician. We come from modest families, but we were lucky, because we managed to go to university back in the day. This dream is becoming increasingly harder to achieve.
That is why we need to take a closer look at our tax system to make sure it is fair and equitable. We need to determine whether looking into our social ladder is the right way to correct the inequities that exist in our society and give everyone a chance to fulfill their dreams. It is not easy these days. My party and I agree that we need to have a closer look at these growing inequities.
[English]
As soon as I found out what the reform was going to be, I sat down and read the whole document. I looked at the draft legislation as well. I had multiple discussions with colleagues, tax lawyers, tax accountants, and business owners across the country. I met with the chamber of commerce. I had town halls. I replied to many phone calls from people from different walks of life: small business owners, very successful physicians, very successful dentists, tax lawyers on Bay Street, and tax lawyers in rural areas of Canada.
At the end of the day, when we take a step back and look at what we have in Canada, right now we have the lowest small business tax rate of the G7 countries. It is 15%. The government could decide to raise it, and at the end of the day, everything would be fixed, but we do not want to do that. We want to continue having small businesses with the lowest tax rate. Why? It is because we want them to continue to invest. It is important that they continue to invest in equipment, grow their companies, and hire more people. In my opinion, that is the purpose of having a low tax rate.
A lot of people have made their plans and structured their companies legitimately, and the has said this multiple times. Everyone has the ability to follow the rules and do this legitimately. However, I certainly believe that there is reform to be made in the Income Tax Act.
Right now, people can use what we call surplus stripping. If there is a high amount of cash in a corporation, one can do a fictitious transaction by using a family member or by incorporating another company, and after signing a few documents, one can convert what would be a dividend into a capital gain and reduce the tax rate by 20%.
Over the last 60 years, the Department of Finance has been trying to address this problem in the Income Tax Act. Actually, in the 1980s, when the Conservatives were in power, they brought in the general anti-avoidance rule, or GAR, to address surplus stripping. However, after 30 years, clearly the courts have not followed.
Therefore, there needs to be a fix. Every tax lawyer and every tax accountant I have talked to says that this needs to be done. The minister has talked about unintended consequences. There are other issues that have arisen in the draft legislation and in the discussion paper, which is why the minister has said that there are issues, we have heard from people, we are listening, and we need to address them.
The other thing I find unfair, and I am surprised that the Conservatives are not talking about it, is the fact that if people set up their affairs properly, right now, with the current rules we have, if they sell their business, they can actually have their child, two months old, get a capital gains exemption of $830,000. A child who cannot even contract but is a beneficiary of a trust can have a capital gains exemption of $830,000. Are you saying that is fair? I do not think so—
:
Madam Speaker, I know that the Conservatives believe it is fair. I do not believe it is fair.
As well, one of the things that has come up in the draft legislation is whether these rules would be retroactive. What happens after July 18? Are people going to be affected by these new rules? Again, the minister has said that these rules would not be retroactive. However, if we read the draft legislation, there appears to be some retroactivity. That is why we need to listen. I have had a lot of documentation sent my way by different groups. Yesterday it was the Canadian Bar Association. They want to help us address inequities in the system. Certainly retroactivity is a major issue that needs to be addressed.
The party opposite wants us to vote tonight to extend the consultation, which I find a bit ironic. Earlier today someone said that there is uncertainty right now. Business owners do not know what the rules are, yet they want to continue this until January 31. What I am hearing on the ground is that business owners need to know what the rules are before they can make decisions.
A month ago, I talked to an old friend of mine who said he needs to draft his will and he is not sure what to do, because he is not sure how the rules will end up. The longer we continue this, the less certainty there will be in the markets. There need to be assurances, because when we are in consultations, the cannot make pronouncements. He cannot give direction to the Canadian population, to business owners, and to the House. Now that the consultation period is done, he can do that, but before he can to that, he needs to take into consideration all the comments. Many good suggestions have come our way.
The debate will continue, even though the consultation period stopped yesterday. I will meet again with my constituents. I am returning phone calls. I want their suggestions. I am addressing these with the Department of Finance, with my Liberal colleagues, and with members in the House to try to make it right. As the said, we are going to get this right. We want to make the system more fair to address the inequities that exist right now in the Income Tax Act.
When we talk about passive income, I know a lot of the comments from members of the opposition are about the whole issue of a 73% tax. Right now that is hypothetical. We have a discussion paper. There is a discussion paper that has provided certain hypothetical scenarios. We do not have draft legislation. The sooner we have draft legislation to study that we can question and improve, the better off small businesses will be.
I have had a few calls from concerned people who have saved money to invest. They are being told that they will have to pay an inordinate amount of tax on that money. I am telling them that this is not the way I am reading the draft legislation. That is not the way I am reading the discussion paper. However, before people do anything, they should wait and see what the results are to have certainty. That is normal. There will always be uncertainty in the law until we draft and bring a bill to the House to discuss and vote on.
I am very happy that the consultation period is over. The discussion will continue. It has to continue. On a go-forward basis, we need to address a lot of what is in the draft legislation and the discussion paper and how this will be rolled out.
[Translation]
I am very proud that we are tackling this issue and talking about tax fairness in our system. I have heard from many entrepreneurs and doctors who are very concerned about their situation. At the same time, obviously we want these entrepreneurs to succeed, reinvest their money in their business, and create the best possible lifestyle for themselves. We will continue to reinvest and give them opportunities to reinvest. We will not stop, and I am very glad that we are going to carry on with this plan.
:
Madam Speaker, I will be sharing my time with the member for .
I am fortunate to rise to speak in the House regarding the Liberals' proposed changes to the taxation of private corporations in Canada. I received hundreds of phone calls, emails, and letters from my constituents, most from small business owners, expressing their deep concerns about how these changes would affect their ability to run their businesses.
The and want Canadians to believe this tax hike is about fairness for the middle class. I fail to see what is fair about a family farm having to pay more tax, while the Prime Minister's self-proclaimed family fortune will be unaffected. The same goes for the finance minister, whose multinational family business, worth millions of dollars, will not be touched by these changes.
These policies are going to hurt the very people they were supposedly designed to help, the middle class. That is why the members on this side of the House will fight this tax hike every step of the way.
My riding of Souris—Moose Mountain is a rural riding in the southeast corner of Saskatchewan. Small businesses are the backbone of the economy there, with ranchers, farmers, and family farm operations making up a good chunk of those businesses. These farmers and their families work hard to feed Canada and the world, and they deserve the utmost respect for the hard work they do.
The does not seem to agree with that, however. The timing of the consultation period for these tax changes showed a blatant disregard for farmers as it fell during harvest, one of the busiest times of the year for the agriculture industry.
I have had farmers calling me from their combines, while sitting in the middle of a field, to voice their dissatisfaction with the proposed changes. I find it incredibly short-sighted that the government thought it was wise to initiate a very short, very limited consultation period during the time of year when one of the most affected groups, farmers, would be unavailable to submit their thoughts and opinions. If the minister did not know, then it shows an even greater disregard for our farmers. It is yet another example of how out of touch the Liberals really are.
I would like to set out just how the proposed tax hikes will affect farmers and their operations in my riding. Later I will touch on the effects to other small businesses, but for now I would like to speak more about farmers and the negative impacts these tax changes will have on their livelihoods.
Anyone who knows a farming family knows that running a farm involves everyone, from young children, to teenagers, to parents and grandparents, and sometimes great-grandparents. It is expected that all will help out with whatever tasks need to be done at any given time.
The government's tax hike proposal will now impose a reasonableness test to determine if family members are earning their income. This means there will be higher compliance costs for farmers and other small business owners as this reasonableness test will only serve to increase the administrative burden these small businesses already face. It is clear that the and his government have no regard for what this means for farmers and small business owners, especially since large businesses, such as the one owned by the 's family, will be unaffected.
Another tax planning measure that will have an impact on farmers is tax on passive investments. When money is saved inside of a corporation, it is for business investment purposes. This is extremely important for farmers whose ability to generate income depends heavily on variable and unpredictable factors, such as weather and expensive equipment costs, like $500,000 for a combine.
Farmers are not trying to shield massive sums of money within their operations. They are not trying to cheat the system. The so-called loophole they use is what allows them to plan for their retirement.
Passive investment income is a necessary hedge against economic uncertainty for these small business owners who get no sick leave, no vacation pay, no health care, and no dental plan. Now the government will tax small business owners twice, once inside the company and again when paid out to the owner. Again, I fail to see the fairness in this when big corporations will not be subjected to this change.
I have a number of century farms in my riding of which I am very proud. These families have been farming in the area for over 100 years and have passed their operations down through generations. This, however, may not be an option for them any longer. Under the Liberal tax plan, the government will tax the proceeds of asset sales to non-arm's-length buyers at the higher dividend rate rather than at the lower rate. This means farmers could face a significantly higher tax rate selling their farms to their children than if they sold them to a multinational corporation. This is not supporting local small business. This is killing local small business and killing the jobs they create.
I have heard from a number of constituents who are now afraid they will need to sell their century family farms as their best financial option rather than to pass it on to the next generation. How can the Liberals support tax changes that will effectively kill small businesses like century family farms, an important part of Canadian heritage?
Farmers face a lot of adversity in their day-to-day lives. They need their government to support them in every way possible, but these tax changes will do exactly the opposite. On top of this, the forced carbon tax will hurt farmers even more, despite the fact the reports show that hitting farmers with a carbon tax will not reduce emissions faster. As I have said before, and will say again, the government is simply out of touch and rural Canada is paying a price for that.
The talks a lot about the need for innovation in our country. I am not sure he realizes this but small businesses are at the very heart of innovation. The tax hikes that the government wants to impose will only act as a disincentive for those people looking to start a small business in Canada. This means a lack of innovation, which in turn means economic growth is stifled.
It is not just the farmers in my riding who have serious concerns about the tax hike. Small business owners and a number of different industries have been in contact with me, asking me to be their voice on this matter since the government clearly refuses to be. These include veterinarians, insurance brokers, small oil and gas companies, doctors, store owners, and even rural municipalities. I have never seen such an extensive response from the people of southeast Saskatchewan than I have on this issue, and the government needs to pay attention.
I would like to ensure that the Liberals understand the level of risk small business owners take on when deciding to operate a business. They hire employees and manage their overhead. They pay CPP and EI for those employees. They do not receive any health care or dental benefits, and have to pay out of pocket when these expenses arise. They are not entitled to any kind of vacation or sick leave, so they do not usually take time off. They do not get overtime. They are wholly responsible for financially planning for their retirement. Most of the time they have invested a significant amount, if not all of their savings, into the business and if it fails, this is lost. They take the chance, they take the risk.
I say all of this because the tax planning measures the Liberals hope to change actually help to mitigate some of these risks. There will be no benefit for small business owners to take those risks. Instead, they will encourage people to stay in employment rather than pursue entrepreneurship. Why? Because employees often get benefits with their pay. This means that no new jobs will be created and innovation and economic growth will be slow. Why? Because employers, the risk takers, cover these benefits for their employees.
These people are not the 1%. Many of them are firmly middle class and are offended by the notion they conduct their business in a dishonest way. If the truly wants to target the richest Canadians, as he says, then perhaps he should look to his right, where the sits in the House, instead of looking at the barns and pastures of our farmers or at the books and back offices of our small businesses.
Clearly, the west has yet again been forgotten about under the Liberal government. While we believe that higher taxes help no one, and we continue to be the voice of the small business owner in Canada, we call upon the government to extend the consultation period on these measures until January 31, 2018.
The visited a Saskatchewan farm in April and spoke to farmers on issues they were facing in their line of work. It was clear to me that was just a photo op. He targeted our farmers and instead of helping them, he basically insinuated the constituents were tax cheats.
I would like to conclude by reading a quote that was sent to me by one of my constituents, a veterinarian and rancher who is also an employer within his community. His letter to me stated the following by William B. Boetcker:
“You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong....You cannot lift the wage earner by pulling down the wage payer. You cannot help the poor by destroying the rich....You cannot further the brotherhood of man by inciting class hatred. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by destroying men's initiative and independence. And you cannot help men permanently by doing for them what they can and should do for themselves.”
:
Madam Speaker, I just want to clarify for people who are watching that the motion before us today states:
That, given the proposed changes to the taxation of private corporations as outlined in the Minister of Finance's paper “Tax Planning Using Private Corporations” will have a drastic negative impact on small and medium sized local businesses, the House call on the government to continue, until January 31, 2018, its consultations on these measures.
Many of my colleagues today have made the point that they have heard that this proposal would be detrimental to small business and the middle class in Canada, but I want to focus on the substance of the motion and hopefully convince some of my colleagues to vote for it, because I do think that a reasonable motion to extend the consultation period is something that would cross party lines and that many Canadians watching this today would find reasonable. I will try to go through all of the reasons.
The government cannot and has not communicated the actual impact of this tax hike on the Canadian economy in real terms. The Liberals have not communicated the impact of this on small businesses that will not of this be able to take on new projects, that is, the small businesses that will not be created, or the employees that will be let go because of these measures. They have not calculated that or communicated it. They have not talked about the resulting drain on our social assistance programs when people who have put in place retirement savings under this tax regime right now would have to draw upon social assistance if they cannot access their retirement savings, thanks to these draconian tax measures.
The minister cannot say how much net revenue it would create and on what assumptions the Liberals are basing that revenue. The fact that they have not been able to communicate how much revenue this would generate is problematic. We need to consult Canadians to make sure that they buy into a tax hike from which the and cannot even say how much revenue would result from it. We also do not know how much it would decrease tax revenue for the government. We know that in our former Conservative government, we saw the lowest federal tax burden in over 50 years, yet something interesting that happened was that government revenue went up. That is because the economy was growing. What is concerning for me is that today we heard from the Macdonald–Laurier Institute that we have had the fourth straight month of weak growth. Their report was done by senior and lauded economists. If we look at the federal budget this year, we see an increase year over year in deficit spending and debt, and a decrease in projected economic growth.
The fact that the finance minister cannot say what this would do is a problem. He also cannot say how much this would cost the government. We do not know how much government revenue would decrease and we do not know how much this would cost to administer. How many more bureaucrats will we have to hire for the CRA to chase small business owners as a result of these punitive new tax measures?
The government has also not explained why it is raising taxes. The Liberals use vague, very discriminative, very terrible, divisive terms like “tax cheats” and “tax on the wealthy” to describe hard-working small business owners who form part of the middle class, but they cannot tell them why they would take this money from them. There is no discernible benefit for the Canadian economy from their deficit right now. It is over $30 billion, and for what? I have not seen any increases in growth. In my province, the economy has certainly continued to worsen.
In sum, the Liberals cannot say how much revenue the government is going to bring in from this and why they are doing this. Why are they taxing Canadians? Why are they bringing this up? The fact that this has not come out begs the question of more consultation.
The Liberals also cannot explain why they broke their promises to small business owners. Not only did they break their promise to not increase the small business tax rate, but they are also raising taxes on small businesses. The reason we need more consultation is that the should be able to explain that broken promise to the many small business owners who gave him the benefit of the doubt in the last election.
I also think that the Liberals have not explained why they are raising taxes on the middle class instead of getting their spending under control. I am the official opposition critic for citizenship and immigration. This year alone, not including social assistance payments, any sort of welfare scheme, or deportation, just the cost of processing people who are legally crossing the U.S.–Canada land border will be half a billion dollars.
The Liberals cannot explain how much revenue the government is going to bring in or how much this would hurt the Canadian economy. They cannot say how much this would benefit the Canadians whom they are taking this from and they cannot explain why they are not getting their spending under control.
I could list hundreds of other measures the government has taken in which it has just blown the federal budget, and on what? Liberals should be talking about this and explaining their lack of spending controls to Canadians before they go back to them to try to raid their pockets for more money.
The government should extend the consultation period because people are furious and this is not a partisan issue. This is about people who voted Liberal in the last election, who hoped in the and are now saying, “No, I do not think so”, because the Liberals broke their promise and are now not even listening to the people. The Prime Minister owes it to these people who gave him the benefit of the doubt to hear their concerns.
I have had over 1,000 Canadians write to me or contact me at my office, either by email or phone. I had over 300 people who showed up at a town hall with virtually no notice. I have had tens of thousands of messages on social media. In a one-month period, over 43,000 Canadians signed a petition that I sponsored, e-1239, against these tax measures. That is unheard of. People are furious and the owes it to them, given his lack of detail on this, to hear them out because this is the future of the Canadian economy.
A further consultation period would also create an opportunity for the Liberals to correct their divisive, insulting rhetoric about small business owners. That is something that I have heard in virtually every email that has come into my office. They say: “Why is the calling me a tax cheat? Do you know how much extra I pay as a small business owner to employ tax lawyers, to prevent auditors from coming in and looking at me? And you are calling me a tax cheat? Now you are going to call me wealthy, like somehow he has no understanding that small business owners are actually part of the middle class.”
An extended consultation period would give the Liberals and the an opportunity to perhaps correct the record in this regard. It would also give us a further opportunity in the House to say what we value as a country. Are we going to punish small business owners for the fact they take on risk and create jobs without the safety net of sick days, vacation time and guaranteed pensions? Are we going to say to them that we as their representatives want to take away their entrepreneurial spirit, tax them, and change the rules such that they cannot see further out? That is something that could also be addressed in a further consultation period.
It would also be an opportunity for the Liberals to clarify the following egregious statement by the : “The longer we're talking about this, the more people are concerned that they will be impacted, which is really raising a fear and not allowing people to be as productive as possible.” That is an old fearmongering canard. It is fantastical.
The Liberals have been taking so much heat on this that every single Liberal member of Parliament is getting called by everyone in their riding. What did the small business minister do? Imagine being a Liberal backbencher and watching the small business minister say that if we're consulting, we're fearmongering. It is kind of crazy. I would love to have a little more time for the small business minister to go out, correct the record on this, clarify what she meant, and perhaps take more heat from the small business community.
This also came out in the dead of summer when farmers were at their busiest. There were floods in Quebec and fires in B.C. The owes it to people in these communities to extend the consultation period. It would also allow us to fully examine the regional consequences of this proposal.
My province of Alberta has been struggling with the detrimental policies of the government with its changes to the rules for downstream regulations on emissions for our pipelines when the government does not do the same for Saudi oil. My province has been struggling with the minimum wage increase and municipal property tax increases. The government has made political decisions to block the build-out of northern gateway pipeline and has worked against the energy east proposal. This small business tax hike is kicking Alberta while it is down and I would love it if the came to my riding to hear how my constituents feel about it.
I wish I had time to read all the messages that were sent to my riding, but to anyone watching at home today, we need them to amplify their concerns and their voice. Canadians do not have a lot of time on this. They need to pick up the phone and call every single Liberal backbench MP and hold them to account for the fact that those MPs will be voting against something as simple as extending the consultation period. The Liberals are a government that consults on everything. Canadians should get out and call a Liberal MP.
:
Madam Speaker, for me the outstanding feature of the whole debate that was launched in July is that when the government decided to put out a discussion document about how to change the tax code, there were some proposals, but there was not actually a complete proposal for how to change the tax code.
The government identified three key areas where they think the tax code lacks fairness. The NDP has been a long-standing champion for tax fairness. We recognize that there are incentives within the existing tax code for people to incorporate, some for the right reasons and some for the wrong reasons. It is something we are keen to get to the bottom of, but it is hard to get to the bottom of it when the government announces just half a proposal.
It bears repeating that the tax code is one of the most complicated pieces of legislation we have in Canada, so for anyone to say that somehow this is going to be a simple debate is just simply not on.
We are discussing one of the most complex bits of legislation in the country. We want to get to the bottom of what are some pretty clever moves, in some cases, by certain individuals in order to be able to avoid paying their fair share of taxes. It is unfortunate that there is a legal structure, sanctioned by Liberals and Conservatives over the years, that gives them the legal tools to be able to do that.
What happened when that partial proposal came down in July was that all of a sudden people were taking very strong and clear-cut positions about the substance of the so-called proposal itself, when in fact that proposal has yet to land. We have some concrete proposals when it comes to income sprinkling within a corporation and when it comes to capital gains, but the government itself has said that those may not ultimately be what are tabled in the House, that those may not ultimately be the proposals it goes ahead with, that other mitigating measures may be introduced that have not been discussed and are not part of the discussion paper.
Here we are now, with everybody wanting to take a strong position on one of the most complex matters in Canadian law, but we do not know what it is yet. I kind of scratch my head, because I do not understand how we could come to such fervent conclusions about such an uncertain proposal. I hesitate even to call it that.
We have, in the Conservative motion today, some strong language about what these proposals are going to entail. For instance, the Conservatives say that the proposed changes to the taxation of private corporations would have a drastic negative impact on small and medium-sized local businesses. What I want to contribute to this debate is that I think that this language is far too strong, because we do not yet know what the impact of proposed potential legislation would be. We have some proposed legislation that was meant to be discussed, but it is not necessarily what is going to be tabled in the House, so I think it is far too soon to say that it is going to drastically negatively affect small business.
Of course, if it does, that would not be fair, and then as advocates for tax fairness, the NDP is going to have to oppose measures that have a drastic negative impact on all small businesses in Canada. That is not what tax fairness is about, but we are not in a position yet to make that judgment, because we do not have the full proposal.
There is an issue of rhetoric on the one side from the Conservatives, who want to say, I think prematurely, that this measure is going to have a drastic negative impact on small businesses, and then there is a problem of rhetoric on the other side from the Liberals, who want to vaunt an incomplete proposal as somehow ushering in a new era of tax fairness. We can hardly say that either, because they have not even tabled the legislation in Parliament yet. We have not had a study of what the real legislation is going to be, and we have not had an opportunity to try to understand what its effect is going to be in a very complicated legal structure that has to do with how certain Canadians pay their taxes.
What we have heard in the media since July and in the House since we have come back has been this polemic debate that has been set up between those who are fighting for tax fairness—although we do not really know how, because we do not know what the proposal is—and those who are certain that those proposals are going to harm small business, although it is not clear how we can be certain of that, since we do not know what the proposal is.
I hope Canadians listening at home will hear the message, which in this case is the truth: we do not know what we are talking about yet because we do not actually have a real proposal.
The only thing that is going to affect how small businesses pay their taxes in the country is real changes to the law, and until we have a bill, we do not have concrete suggestions about how the government is going to change those laws. If someone were to go to an accountant today and ask how this was going to affect his business, any professional accountant would have to say that they could not tell him how the Liberals' proposal was going to affect his business, because the proposal is not complete. If that person was engaged in any passive investment, the accountant, unless he knows how the Liberals are going to change the rules on passive investment for companies, cannot in good conscience, as a professional, tell him how his business is going to be affected.
That is why the NDP has called for, first, more consultation. The motion does that, but it does it in a way that does not do what we really need to do, which is tone down the rhetoric on both sides, get a concrete proposal, and then be able to talk about it. In that sense, the language of the motion contributes to the problem. It seem we are not able to have—or anyway we have not yet had—a sober conversation about how small businesses are taxed in Canada, about what is fair about it, what is not, how it might change, or how changing it in a particular way would affect particular businesses and classes of small businesses. If unfair negative impacts to small businesses—like a mom-and-pop shop, or whatever else—are going to have a serious effect on the owners' retirement plan, which they made in good faith under the existing rules, then we can have the conversation about what kind of mitigating measures we might make so that the unfair effect does not end up prevailing.
There are a lot of pieces to this puzzle. We are not there yet in terms of taking polemic positions. We do not have enough information. That is where the motion, unfortunately, contributes to that lack of clarity. It contributes to what has been a pretty poor quality of debate overall on how small businesses are taxed.
In addition to calling for more consultation because we want to better understand how the proposals the government has put out would affect small businesses, we are also anxious to know the other part of the proposal so that we can consult on the clear and full picture.
The other piece of the puzzle is that conversations on tax fairness are not just about how small businesses are taxed. They are about whether CEOs get sweetheart tax deals because they are paid in stock options instead of salaries. They are conversations about whether big companies or rich individuals get to stash their money in other countries because we have sweetheart deals between the Government of Canada and those other countries, such as Barbados—and we could name others—that allow them to do that.
Ordinary Canadians, even if they have a little savings, would never have the resources or know the right people to figure out how to take advantage of those tax shelters. Even if they could, that would not be right either, because taxation is important if we want to deliver good health services in Canada, if we want to build roads and bridges, if we want to make sure that people who cannot work because they have a disability continue to have an income and can live with dignity. Taxation has to be part of that conversation.
That is the other problem with this discussion. The rhetoric has been super-elevated, and we have not been getting to some of the real issues in terms of where the real revenue loss is when it comes to tax fairness. The biggest companies and the richest individuals are getting away with sheltering the largest amount of money from government and are therefore not paying their fair share.
That is the issue in this debate. We do not have the full proposal. We have not consulted enough or had lengthy enough consultations to know what the effect of a proposal would be.
If we do not have the full proposal, it seems to me that once the rest of the proposal is announced, any consultation they did earlier is not going to be that relevant because whatever the other measures are, they will change the overall tax situation for those small businesses, for better or worse. The Liberals will have to re-launch the consultation, as far as I am concerned, once they table their full proposals here in the House.
Not only did we not have enough of a consultation period—and I think we need more in order to understand better—but the hope would also be that at some point during that extended consultation period, the Liberals would reveal the rest of their plan so that it could be part of the consultation as well. If not, there would be a need for further consultation once we have the full picture.
We would hope, of course, that then, when we are considering the bill here in the House, it would not just be time allocated and we would not have just two committee meetings to look at it, because we would essentially have to redo a lot of the work that was done or was supposed to have been done by the government during the summer.
We do not have the full proposal and we have not had full consultation. We also are not talking about the full picture, and in some ways the real picture, when it comes to tax fairness, because the government is going after the small fish and letting the big fish off the hook. Members may have heard that phrase here in the House before. I repeat it because it is a good one. It captures well what is going on. Here we have two parties, which for their own reasons want to have a polemic, high-rhetoric debate about taxation, and the government is wasting a good opportunity to have a real conversation about tax fairness because they do not want to spend the time on consultation that they really ought to spend and they apparently do not want to table their full proposal before ending that consultation period, which to me just seems absurd.
To the extent that this motion contributes to the problem in terms of rhetoric, it is unfortunate. Again, that was a missed opportunity by our colleagues in the official opposition to try to tone down the rhetoric and get to the real crux of the issue, which is this: who in Canada are paying their fair share and who are not?
When I watch the news and when I read the paper, that is not what we are actually talking about. What we are talking about is just a classic dichotomy between “We are standing up for business because any tax is a bad tax” and the government's saying, “We are going to implement tax fairness, except we are not going to say how we are going to do it, so no one can judge if it is really fair or not.” They want to get people on board and write in the details afterward, and if the details are not what the government led people to believe, too bad.
. God knows, we saw that in the election, when civil servants were led to believe that they would have a government that they could actually bargain with and maybe get somewhere with at the bargaining table. That was certainly implied. First nations people in Canada got a big dose of that in the last election, when they were led to believe that they were going to have a government that was going to meaningfully embark on a path toward reconciliation, and then we continue to see the government fighting first nations people in court and not providing the kind of funding that is needed in first nations communities to bring fairness to those communities. We saw it on advocates for the environment, who believed that they were going to get a new National Energy Board, one that actually took into consideration what the climate change effects of large natural resources projects were going to be, and that the big projects that were already on the table would be reconsidered if they did not meet those standards. However, we did not get that either.
When it came to electoral reform, people clearly expected more. I do not know they how got the impression that 2015 might be the last election under the first-past-the-post system. It might be because the repeated it ad nauseam during the campaign and afterward, but of course that did not come to pass.
Now the Liberals are saying to trust them that they are going for tax fairness, but they are not going to show people the whole program. No, they want people to sign up to support something very general and trust them to write in the details later. I am sorry, but we have seen too many times that the current government is great on high rhetoric, which is why the Liberals are happy to engage in this unreal debate with the Conservatives on tax reform. We are not even talking about concrete reforms yet, but they want to marshal support for whatever it is they are going to do at the end of the day. That is something I object to. I object to it as a Canadian who wants some straight talk from my government and I object to it as a parliamentarian who is being asked to take a position on something that I do not know the details of yet, and I refuse to be bullied into that position.
We do have a great opportunity to talk about tax fairness. We do not realize the potential of that debate, because the other two parties have an interest in ramping up the rhetoric on this and not getting into the details.
The government has not provided us with the details that we would need to be able to get into it. It has not given us the time we would need in order to consult once we have those details. The government does not have sufficient scope for that study either, because a lot more people are legally evading taxes than some of the small business people who are being targeted by these so-called proposals. That is where we are at.
I hope people listening at home feel this is a worthy contribution to the debate. It is a different point of view from the one they have been hearing from Conservatives and Liberals today. Accepting those insights is just the first step toward having a real conversation in this country about tax fairness. I hope we can get there. What we have so far is not that, and that is disappointing.
The high level of rhetoric in this debate has not served people well. I have heard from people in Elmwood—Transcona who now, because of the way this debate has unfolded, are worried. They are worried about their retirement security and they are worried about their income. They are worried about whether they are going to be able to keep their business open. Why is that? It because they are being told, by people who do not have the full picture, that this is going to happen.
This is not a foregone conclusion. It is not being responsible when we make people fearful of losing their business when we do not have the full proposal yet. That is why the rhetoric needs to come down and consultation needs to increase. The details need to be provided and the scope needs to be expanded, so that we capture the CEOs and the large corporations that are by far the worst tax evaders.
That would help to bring some comfort to small business owners in Elmwood—Transcona and across the country who are worried about losing their business. They should not be worried until we see the government's full proposal. It would be nice to hear someone today tell us when we could expect that, because then we would have an idea about when we could have a meaningful consultation and start talking about taking a position on a concrete government measure.
:
Madam Speaker, I am proud to rise with my colleagues in the Conservative caucus today to point out the hypocrisy of the government when it comes to the changes it is making to how small businesses in Canada are taxed.
Our opposition motion is calling for the consultations to be extended, because of the outrage we are hearing from farmers, small businesses, tech start-ups, and entrepreneurs and their employees across the country. We have been talking about some of the farming families and small business owners affected by these changes, who are outraged, but there are hundreds of thousands of employees who are also caught by these changes as well.
The consultations need to be extended because of the subterfuge by the government on the issue. Announcing the most comprehensive changes to how our CCPCs, small private corporations, are taxed in a generation in the dead of summer when the consultation period would end only a few weeks into the House of Commons' sitting is shameful. For a government that came in on a platform of open and transparent governance, to do this in the midst of the summer was outrageous. That is certainly why we are hearing the Canadian Federation of Independent Business, chambers of commerce, and Liberal members of Parliament agreeing that it is outrageous.
At a bare minimum, I would like to see the hon. member from Toronto, the , extend the consultation period to at least allow those people who are very fearful of these changes to be heard. He started a call list a few weeks ago, and called one or two farmers. However, now that other people have been calling him, the finance minister has been leaving them hanging.
We have seen the staged consultation round tables, where the repeats his talking points in the midst of rooms where people are emotional, because they feel they are under attack by a government that is claiming, or setting up this debate to suggest, that they are not paying their fair share.
This and owe it to Canadians to at least hear them out. I think this is a modest request by the opposition today, and I hope that some members of the government caucus will see the extension of consultations as such.
We remember the big walk up to Rideau Hall, but in the two years since then, what has the government, with all its openness and transparency, done in that time?
It has raised taxes more than any government in the history of our country: an income tax increase; a small business tax increase with the end of the phased-in reduction for small business to 9%, which it had promised to maintain, as the MP for raised in the House of Commons today; a CPP payroll tax increase that taxes employers; changes to tax-free savings accounts, which many Canadians have relied on in their own tax planning for their future; and beer and wine taxes, so that if people have to drown their sorrows in the age of Liberal tax increases, the government is taxing them too; and a tax on ride sharing via an Uber tax; and now the CCPC small business tax changes.
That is seven substantial tax increases in less than two years. In the Canada of this , if something moves, it gets taxed. In fact, the rate of tax increases and the creation of new taxes is truly astounding. It is the centrepiece of the government. While it is breaking dozens of promises from electoral reform to support for our military, the one thing the government has not stopped is raising taxes.
What concerns me, as someone who worked in the private sector and with entrepreneurs, the engine of growth in our economy, is the way the government is framing this debate. I have never seen such a divisive approach to taxation and relations within our country when it comes to the government's suggestion that small business owners and farmers are somehow tax evaders. I was writing an essay a few weeks ago on this and the most common two-word phrase the uses is “wealthiest 1%”. When I researched this some time ago, he had used that phrase 65 times as Prime Minister, a phrase that is only surpassed by his most common expression, “the middle class and those working hard to join it”. I know, Madam Speaker, you probably join us in groaning when we hear the use of that term in the House, but why is he juxtaposing those things with each other and now bringing farmers and small businesses into it?
The is suggesting to Canadians that there are people who are not contributing. He is suggesting that the small business owner, the entrepreneur, the tech start-up, or the sixth generation farming family are somehow making things harder for middle-class Canadians. That is shameful. We have a progressive tax system in Canada that has long ensured that people making more will pay more and that those consuming more will pay more because of the GST. The Harper government cut the GST because it impacted lower-income people the most, so it was reduced.
I neglected to mention that I will be splitting my time with the member for . I got so passionate that I left that out at the beginning of my speech.
One can see that the is juxtaposing the people who he is claiming are causing the middle class to be held back, when in reality a lot of middle-class Canadians are employed by these same people, such as the manufacturers in my riding of Durham, the tech start-ups that I visited in Waterloo, and the farming families and processing businesses related to it. This is whom he is attacking. I have never seen such an approach in Canada, and it is shameful the way the government is framing it and limiting debate when proposing to make the most substantive changes to the small business tax rate in a generation.
The issue is that there is no revenue problem in Canada. We should not be raising taxes at all. The government and the have a spending problem, not a revenue problem. In fact, in 2015-16, there was almost $300 billion in revenue. When the Harper government had to run a deficit in the midst of the biggest global recession since the 1930s, revenues were $233 billion. If it had had the revenues the government now has, there would have been no deficit. That is a difference of over $60 billion, but the problem is that the Prime Minister is spending more than the government is bringing in. It is bringing in more, but it keeps spending more.
When the Liberals asked Canadians for their trust in 2015 and promised that they would never run a deficit of more than $10 billion, they broke that promise in a few months. They cannot even get a deficit under $20 billion, and most of the money has not gone to infrastructure, as they like to suggest it has to Canadians. It is just over-spending. Why do they think they can get away with that? It is because, as I said, they have raised taxes seven times in under two years, and now they are targeting entrepreneurs and businesses, our employers.
What the does not tell the middle class and those working hard to join it is that entrepreneurs do not have EI, do not have maternity leave, do not have pensions, and do not have paid holidays. They are employing people in our communities and saving for their future. Female physicians are making sure they have enough to provide for their families while they take care of their own maternity leave. I am glad that a doctor in B.C. informed the of this, who is making tax changes while admitting that he does not even understand how they will impact the people he serves.
The Conservatives have a modest proposal: let us extend the consultations. This opposition day motion is not asking to shut down the whole thing like thousands of Canadians are asking. The Liberals should at least have the dignity to hear Canadians out.