The House resumed consideration of the motion that Bill , be read the second time and referred to a committee, and of the amendment.
Mr. Speaker, before question period started, I had just finished explaining how inflation acted as a tax on ordinary Canadians and that when the government imposed an inflation target, as Canada has, of 2%, that it slowly but surely would eat away at the value of what Canadians had saved. It lets the government off the hook because the liability today to a group, whether that be individuals or other entities, gets eaten away by inflation as the money they end up having to pay back over time is reduced because of the inflationary acts of the central bank policy.
However, I want to shift gears a bit and talk about how savings can be a stimulus. When it comes to economic times, we hear these buzz words of liquidity traps, dead cash, and all these kinds of phantom problems about which we should be concerned. A lot of people have a misconception about what happens when Canadians save money.
When individuals put money into a tax-free savings account, that does not go into a mattress or become dead money. Rather, it gets invested into the market. It becomes capital that businesses and individuals can tap into to expand operations, to invest in new equipment and capital expenditures for their business. It becomes real loanable funds, not the loanable funds the government creates out of thin air through deficit financing or the modern day alchemy like we see in Europe and the United States with quantitative easing, and these types of new monetary tools that many governments around the world have experienced.
It strikes me on how history repeats itself. We hear stories in history books and legends of kings and queens commanding the wizards and astronomers of the day to try to turn lead into gold. We call them alchemists. They used to get the support of the monarchy in the area to take something of no value and turn it into something of great value. The most common example is the practice of alchemy and trying to turn lead into gold. We always see governments around the world doing that with monetary policy, such as quantitative easing, and that somehow printing more dollar bills will improve the economy. We know that is false. Thankfully, under the previous government, we refused to go down that road and engage in that type of trickery.
However, real savings, which is real individuals putting money into investment vehicles, such as a tax-free savings account, mutual funds or bonds, is real capital. That is something tangible. Savings today become a stimulus tomorrow because they are real funds that are there. That is what our economic policy was all about when our party was in power, encouraging private sector stimulus.
As we lead up to the record deficits that we know are coming in the next budget, we have been hearing a lot from the Liberals in the last few days on how we need to stimulate the economy and that the only thing that can do that is government spending. We hear time and again from the parliamentary secretary and from the , who should know better having been on Bay Street before, that somehow if the government could just spend the right amount of money, we would get back to big growth again. This is the problem we are facing. We hear from the other side that the government was not spending enough money. We can look back over the decades to budget documents.
As an aside, I know the Liberals do not like reading budget documents or Finance Canada reports because they show we left them with a surplus. It is becoming quite clear that the only people who do not believe the government was left a surplus are the Liberals themselves.
With respect to private sector stimulus, I want to point to a couple of examples. The first is the energy east pipeline, which is a $15 billion private sector stimulus package that does not require a cent of taxpayer money and will put people to work because there is a market solution, there is a business case for it. We know there is a business case for it. If there were not, the company would not propose it.
A similar example would be the Toronto Island airport. My friend from cares very passionately about this because he represents a lot of very rich condo dwellers in downtown Toronto who do not want the inconvenience of jets landing and spoiling their waterfront view as they wake up in the morning and drink their fancy coffee.
Meanwhile, people in Montreal who work in the aerospace industry have their jobs threatened because there is no ability for the airlines to buy those jets and land them at the airport. This is a classic Liberal example of putting up a wall, blocking an economic stimulant like energy east or the Toronto Island airport, and then coming along with taxpayers' dollars and saying, “Don't worry; we'll bail out the company” or “Don't worry; we'll expand EI benefits for all those people who are out of work for a long period of time.”
That is the difference between the economic approaches of the two parties. On this side of the House, we want the private sector to provide that stimulus. We want to get the government out of the way. We want to tear down those walls that prevent innovation and investment, and allow the market to do what it does best, and that is to allocate resources, make those investments, and get people back to work. We do not think the government should cause the problem in the first place and then come along with a solution that always, invariably, just results in more taxpayers' dollars being spent.
Mr. Speaker, I am pleased to rise in the House today to debate Bill , which was introduced in December and is now being debated in the House.
Middle-class families are losing ground even though they are working harder than ever. What these families need is a government that is concerned about their situation and will fight against growing inequality. Unfortunately, we see that this government is doing the opposite. Liberals have repeated for months and months that they have a plan for the middle class. They promised quick, urgent and positive change. However, we see today that we know very little about how these major changes will happen and even less about when they will happen.
Bill was a golden opportunity to make good on these promises and to put words into action. Unfortunately, the Liberals' plan is quite disappointing.
The Liberals' proposed tax plan does nothing for 60% of Canadians, six out of 10 Canadians. Once again, the wealthy are the ones who will benefit. The NDP put forward solutions that would benefit a large number of Canadians and would allow a fairer distribution of tax cuts: boosting the national child benefit supplement, increasing the guaranteed income supplement, creating a $15-a-day national child care program for all Canadian families, and restoring the tax credit for labour-sponsored funds. These realistic, progressive measures would provide real help for the middle class.
The Liberals campaigned on a platform focused on the middle class. As my colleague from mentioned in his speech in the House, we want to know how the Liberal Party defines the middle class. This is a legitimate and important question. This government keeps promising tax cuts for the middle class. However, as the parliamentary budget officer explained very clearly in his report, the real middle class will not benefit from this government's promised tax cut. A tax cut for the middle class should benefit the middle class.
When we really look at the Liberal plan, it is quite clear that unfortunately, it does not make sense. The median income in Canada is about $31,000 a year. Obviously, this means that half of Canadians earn less than $31,000 a year and the other half earns more than $31,000 a year.
If we imagine a pizzeria worker in my riding who earns $20,000 a year, will he benefit from this tax cut? Unfortunately, no. Will a social worker who earns $43,000 a year benefit from this tax cut? The answer is still no. The reality is that someone who works hard and earns $50,000 a year will probably receive only $20 or $30. Is that real change?
One has to wonder who is really going to benefit from this change. Who is really going to benefit from these cuts? Who could benefit? When we look closely at the figures, we see that this will benefit people who earn more than $90,000 a year. What is more, someone who earns $200,000 a year will get the most out of this tax cut. Saying that this will benefit the middle class is not entirely true.
I hope I did not lose too many of my colleagues with all those figures, but they are important in understanding just how much hard-working families, our seniors who often live in poverty, and the real middle class will unfortunately not benefit from these measures.
If we take the median income, people will receive nothing. If we take the income that everyone associates with the middle class, in other words, $45,000, people will receive nothing. Those who will receive the biggest slice of the tax-cut pie are the top 20% income earners. That is not the middle class. The Liberals' proposed tax cuts will help the rich, not students or young families.
When I talk to groups in my riding and my constituents about this, they are disappointed. Like me, and like most Canadians, they expected the tax cuts to help those who need it most and to benefit the real middle class.
During the election campaign, people who believed they were part of the middle class were told over and over again, for nearly 80 days, that they would finally have room to breathe and that they would be given tax breaks. Today, they are realizing that that is not the case.
Unfortunately, the middle class will not benefit from these measures; only the richest 20% will. That is what the figures say. When middle-class Canadians file their income tax returns, they will be surprised, and not in a good way.
In fact, most Canadians will see that they cannot benefit from the tax cuts that this government promised them. Only 20% of the population will be eligible for the tax cuts, even though they were supposed to give the middle class some breathing room.
The fact that the tax breaks will benefit those who earn $200,00 a year and not those who earn $39,000 shows just how inequitable the proposed tax breaks make the tax system. That is really unfortunate.
After the bill to amend the Income Tax Act was introduced, I read with interest what Luc Godbout, an eminent tax expert in Quebec, had to say about it. When looking at how this would affect couples, he determined that, if a couple had a combined income of $250,000 a year, they could receive a tax break of up to $1,120. However, a hard-working couple in my riding with a combined income of $75,000 a year, who sometimes has trouble making ends meet, would receive an average of zero to four dollars. That is really disappointing.
The NDP developed a plan to fix the Liberals' tax plan, to ensure that the government's measures truly reflect its campaign promises. Our plan would reduce the tax burden on middle-class and lower-class workers. We urge the Liberals to take our suggestions so that we can help those who truly need it.
Our plan is simple. The NDP calls on the government to lower the tax rate for Canadians in the first tax bracket from 15% to 14%, instead of lowering the tax rate for Canadians in the second tax bracket. This way, eight out of ten taxpayers would see a change in the amount of tax they pay. This solution would benefit many more taxpayers. Under our proposal, people earning the median income could see a reduction of up to $250 a year, but these people get nothing under the existing plan.
Our concrete proposal could really help the middle class. That is what the people of Saint-Hyacinthe—Bagot and the 337 other ridings want.
Mr. Speaker, I will be sharing my time with the member for . This is actually the first chance I have had to share my time with him.
The latest election returned a lot of new members from the Quebec City region. We are very proud to have them here in the House of Commons to participate in this important work. I am particularly proud to have my colleague from here with us. He is a passionate and talented MP whom the esteemed journalist, Jacques Samson, even compared to Peter Stastny.
We like having high scorers on our team. These days, we really need good net minders because the Liberal government seems keen on racking up deficits like hat tricks. Unfortunately, taxpayers end up paying the price, particularly those who need help the most.
That is why I am rising in the House today. I want to make it clear that, on behalf of the people of Bellechasse—Les Etchemins—Lévis, I will oppose this bill. In theory, the Liberals seem to want to help the middle class, but the fact is that they will do exactly the opposite, as I am about to show.
Through the tax measures they have proposed, the Liberals seem to want to drive those most in need of help into poverty and debt. These measures will prevent the public, which does not always have access to tax shelters, from saving and setting money aside tax-free.
According to the Institut de la statistique du Québec, the median employment income of workers in Bellechasse between the ages of 25 and 64 is $38,289. The median income for workers in Lévis in the same age bracket is $46,384. Those data are from 2013, so they are quite recent.
The measure we are talking about today does very little, since it is really a tax cut only for those who earn an annual salary of $45,282 or more. Anyone who earns less than $45,282 gets nothing.
What is more, this bill is not revenue-neutral. In other words, in order to pay for a tax cut for those who earn more than $45,000, those who earn less will be forced into debt and therefore into poverty. That is the reality with regard to the bill currently before us. The Liberals are saying that they have something else, but today we are talking about Bill .
People who earn less than $45,000 will see the government debt, our collective debt, increase so that those who earn over $45,282 can pay 1.5% less in taxes. That also applies to those who earn $150,000, $200,000 or $300,000 a year. Everyone with an income in the $45,282 to $90,563 tax bracket, the so-called middle class, will be eligible for these savings.
However, 70% of the population earns less than $35,000, so one can only imagine how many people have incomes less than $45,000. All of these people will get poorer because the measure is not revenue-neutral. Tax savings come at a cost. According to Statistics Canada, the nearly 18 million people who earn less than $35,000 a year will go into debt and become poorer because of this measure.
Speaking of the middle class, it is really a Liberal myth. Who is part of the middle class? It is difficult to determine and could be defined in a number of ways. Some say that the middle class is the portion of the population that is neither rich nor poor. However, what is the middle class? I would like to share what renowned Quebec economist Pierre Fortin has to say on the matter.
He considers the middle class to include families with incomes between $44,660 and $95,700 per year. A typical family has two incomes. Once again, families that fit the definition of middle class do not earn enough to benefit from the Liberals' tax cut. That is the reality.
However, people who earn $150,000, $200,000, $300,000 or $500,000 a year will pass go and collect their savings of 1.5% on the portion of their income that falls within that tax bracket. That speaks volumes. I gave the average income of people in Bellechasse. I gave the average income of people in Les Etchemins. We are talking about $38,000 a year. The measure that the Liberals are proposing kicks in at a minimum of $45,000 per year and therefore does not apply. It is not good for Lévis, it is not good for Bellechasse, and it is not good for nearly 70% of the Canadian population.
What we know is that this will create a deficit. The parliamentary budget officer said so. He said that this measure would lead to a deficit. Obviously it is the taxpayers who will have to pay. That is the main reason I am against the measure before us today. It is in stark contrast to the tax measures and policies that our government put in place over the past 10 years.
Yesterday, I was reading Le Soleil, and Romain Gagné, from Quebec City, said:
From the...2008-09 recession through all the subsequent years until 2014, Canada had the strongest economic growth of the G7 countries, with 15.6% [growth, surpassing the Americans]. The debt burden was the lowest of the G7 countries at 15.6% versus 13.5% for the United States, and the middle class was the wealthiest of the G20 countries, according to a study cited by the New York Times.
Indeed, we have sound fiscal management, but we also put in place effective measures, not like the ones in Bill , which do nothing for the workers in Bellechasse and Les Etchemins who do not earn $45,000 a year, who earn less. Our measures helped those who needed it most. That is what our government did. That is how we ended up in The New York Times with the wealthiest middle class in the G20.
It was because we brought in income splitting for seniors. More than a million senior couples were able to benefit from it. Hon. members will recall that in 2011, we increased the guaranteed income supplement to help the most vulnerable. We also implemented a number of tax measures, including more than 100 tax cuts, ensuring that the average family would benefit from a tax cut of more than $5,000.
We can be very proud of the fact that the tax-free savings account helps 2.7 million seniors. That is another thing that this bill attacks. The Liberals want to restrict this safe and flexible savings option. They want to prevent Canadians from having tax-sheltered savings. They want to push us into debt and give the rich a break, at the expense of those who earn less. In short, that is the rather obvious reason why I oppose this measure.
I would like to remind members that over the past 10 years, under a Conservative government, almost 400,000 seniors were taken off the tax rolls. We did not go looking for money in the tax brackets for those earning a lot of money, but we did, in a way, erode the tax base so that those who earn less no longer pay taxes. Those are the responsible and progressive tax measures that the Conservative Party introduced. That is not at all what we have in Bill .
In closing, it seems that when the Liberals moved from the opposition to the government benches, they forgot what they had said. I would like to quote the member from , who, on May 13, 2015, said:
Mr. Speaker, if the Prime Minister thinks that wealthy families like his and mine should be getting new benefits, then I look forward to the debates.
That is what we are talking about today. Society's highest-earning members are giving themselves a tax cut. Those who earn the least, such as the people of Bellechasse—Les Etchemins—Lévis, are being taken for a ride because they will have to foot the bill for the deficit and pick up the pieces. We are talking about $8.9 billion over the next six years.
We will stand up for taxpayers and families, for the people who most need help, and we will vote against the Liberal government's bill, which will make the neediest even poorer.
Mr. Speaker, I want to thank my seasoned colleague from for sharing his time with me.
What we have before us today is the debate on Bill , which, to some extent, implements the financial commitments made by the Liberal Party, which now forms the Canadian government.
To put it mildly, the reality presented by the Liberal Party during the election campaign is a far cry from the reality facing Canadians today. In fact, the two could not be more opposite. We are talking about black and white, night and day.
I would remind the House that during the election campaign, the current boasted that the Liberals were going to make changes to the tax system that would benefit the middle class, that the wealthy would finally pay their fair share, and that it would all be revenue-neutral. That was a serious mistake. First of all, let us be honest: these Robin Hood stories never work. Should we be surprised to see such a political approach from this Prime Minister? Is this not the same person who said on February 11, 2014, that “the budget will balance itself”?
When someone who believes that the budget will magically balance itself finds himself in government, reality hits hard. The Liberals' promise that the tax changes would be revenue-neutral was nothing but a pipe dream.
The parliamentary budget officer recently announced that the Liberals' promise would result in a $1.7-billion deficit. That is far from a balanced budget, far from revenue-neutral, and far from the 's pipe dream that the budget would balance itself.
The tax changes for the so-called middle class come at a cost. The bill is being sent to our grandchildren and great-grandchildren who are not yet born, but who will be paying for this government's lack of political judgment, as seen in Bill .
Speaking of the middle class, my colleagues, the New Democrat member for and the member for , told us how the interpretation of middle class is rather broad, to say the least, especially when someone who earns more than $180,000 is supposed to be part of the middle class. The scope is quite large.
This brings us to the structural deficits run by the Liberal Party. Let us remember that, during the election campaign, the said over and over again that there would be very small deficits for the first two years. In the third year, the deficit would be even smaller, and then, bam! In the fourth year, the budget would be balanced again. That was what the Liberals were saying during the election campaign. Unfortunately, reality has now caught up to the Liberal Party. What did the say just two weeks ago? He had to confess that Canada was headed for an $18-billion deficit.
Prestigious banking institutions all across Canada have concluded that, in the next four years, we are headed for deficits of $100 billion, $130 billion, and $150 billion. That is a far cry from the very small actuarial deficits that were going to be eliminated during the third year. Is this not the same , who during the election campaign, said that the budget would be balanced by the fourth year? Today, he can no longer say that. In an editorial board meeting with La Presse, he indicated that he could not confirm that the budget would be balanced.
Let us not forget the government's election platform. Unfortunately, the Standing Orders do not permit me to show it, but I have it here with me. The party leader was not present when the platform was released. I have been actively involved in politics for seven years. I was a journalist for 20 years and, honestly, this is the first time I have seen a serious national political party present its economic platform without the party leader being present. Some might say that perhaps it was better that way, because he believes that budgets and deficits balance themselves. However, the minister from Quebec City, my neighbour, was there and I commend him for that.
What did the Liberal government's economic plan say? On page 3, it says, “We will be honest about the government of Canada’s fiscal position”.
Really? In fact, that is not untrue. Last week, they acknowledged that we are headed to an $18.7-billion hole. In terms of being honest, that is a start.
Further on it says, “We will run modest deficits for three years.” That did not happen.
On page 4, it says, “A new Liberal government will release a fall Economic and Fiscal Update.” That is true. We got that update.
In the April to November 2015 Fiscal Monitor published by the Department of Finance, we see that there was a $1-billion budgetary surplus. It is true that in this regard, they kept their promise. They released a report, a positive one when it comes to what they inherited from the Conservative government.
Nonetheless, the sad thing in all of this is to read in black and white on page 7, “With the Liberal plan, the federal government will have a modest short-term deficit of less than $10 billion in each of the next two fiscal years...After the next two fiscal years, the deficit will decline and our investment plan will return Canada to a balanced budget in 2019/20.”
It is a pipe dream. These promises are not worth the paper they are printed on. That is the reality of the current Liberal government.
What really gets us is that the government is in the process of literally killing the rich legacy left by the government led by the right hon. member for . We left the house in order.
I want to remind members of the facts. We took power in 2006 and remained in power until 2014. In 2008, the entire world was hit by the global economic crisis, the worst crisis since the great recession of the 1930s. No one denies that. What did our government do? It took the bull by the horns. It made bold, brave decisions, with the result that in 2014, our record was very good. We had the best debt-to-GDP ratio. That is important, because if debt is under control, it does not cause problems, especially when the ratio is good and our GDP is higher than our debt. That is the legacy of the Conservative government. The best debt-to-GDP ratio in the G7: that is our legacy. The best job creation record in the G7 during the crisis: that is our legacy. The fastest economic recovery in the G7: that is our legacy.
We believe in infrastructure programs. As all sides of the House have noted, we are glad to see the hon. member for back in fine form today. I applaud my colleagues for welcoming him back in a civil and honourable fashion. On his watch, our government introduced the boldest infrastructure plan ever. Our top priority was always to reduce taxes and let people keep more money in their pockets. Our government passed over 140 measures in 10 years. Let me remind everyone that the grandest and most effective of them was reducing the GST from 7% to 6% and from 6% to 5%. We promised, and we delivered. They promised revenue-neutral tax cuts, but they are not delivering. That is why we strongly condemn this government and will not vote in favour of Bill .
Saving money is another issue that is close to our hearts. That is why our government created the TFSA, which this government is trying to water down, unfortunately. That is the wrong approach, and we hope the government will see the light on this.
This government's policies are unrealistic and irresponsible. The government is putting Canada on the road to disaster. It is scuttling the Conservative government's legacy. The Liberal Party has at times left an onerous legacy and at other times left a rich legacy. It is a political party that has vigorously tackled deficits. As the MP for the riding of Louis-Saint-Laurent, I would like to point out that the Right Honourable Louis Saint-Laurent was the prime minister who eliminated the debt after the war. The Right Honourable Paul Martin also steadfastly addressed deficits not so long ago. He made very contentious decisions including the decision to drastically reduce health transfers to the provinces. However he at least wanted to leave a strong economy and, above all, healthy public finances. That is not what the current government is doing.
It is never too late to do the right thing. Bill could be amended to give Canadians a better economy and, above all, to ensure that their government is realistic and responsible.
Mr. Speaker, it is an honour to rise in the House to join the debate on Bill . I would like to spend some of my time speaking on why definitions of the middle class are so important.
In the last election the Liberals campaigned on a promise to reduce taxes for the middle class and support those working hard to enter the middle class. Canadians took them at their word. Like most Canadians, I agree with my NDP caucus that additional benefits should be targeted at the middle class and those who need them the most.
The problem with this legislation is that the Liberal definition of “middle class” seems to have been created by the Donald Trumps of the world. Surely only the very rich would devise a bill that would give most of the tax benefits to those making around $200,000 a year while offering Canadians who make $40,000 a year nothing at all and still call it a tax cut for the middle class. Definitions matter for the middle class.
The bill in its current form would not help Canadians who are working harder than ever, yet falling further behind. The Liberals promised to join the campaign to fight against growing inequalities, which was a big part of why they were elected, but in this legislation they are doing the exact opposite. Canadians do not like to be misled, and the Liberals will have to answer for that. Canadians also do not like empty rhetoric and grandstanding.
Let us see what needs to be done to fix this bill. We were all sent here to work together to deliver positive results for all Canadians, and I believe it is not too late.
The government needs to present its definition of who is included in its understanding of the middle class. There are different ways to define the middle class, but regardless of the definition, those definitions should always at least cover one, if not both, of the following characteristics. First, we could look at the income of all Canadians and see where most people land. This is also considered to be the median income in a country. Second, the population could be divided into groups of equivalent size, such as five blocks each comprising 20% of the population, and targeting the groups in the middle as the middle class.
Let us see if the current definition of “middle class” in the bill meets these requirements.
First, the median income in Canada is $31,000. Under the Liberal plan, any Canadian making the median income, or near it, would receive zero benefit. Second, if we divide the population into equal blocks of 20%, the bill would not benefit the lowest 20%, nor would it benefit the second tier of Canadians. For those in the third or middle block, the bill would still provide no benefit at all. Furthermore, the benefits would only kick in halfway through the fourth block, and they would begin very small. The vast majority of the benefit would go to the highest-income earners in Canada alone.
I will look at my riding of Courtenay—Alberni. In the fifties and the sixties, Alberni Valley was a booming community. It had the highest median income in the country and was sending lots of money to Ottawa. Most recently, it was rejected for a Building Canada grant for scheduled air service at its airport. It was rejected because it did not have scheduled air service.
The people in Alberni Valley feel as though they are being betrayed by Ottawa. The median income is $25,000 a year, and one in three children is living in poverty. Alberni Valley wants to move forward, but it needs help. The Liberal government promised that it was going to help the middle class.
I will talk about another demographic in my riding, the Nuu-chah-nulth people. The median income of the Nuu-chah-nulth people is $17,000 a year. The Liberal government made a lot of promises about a new relationship with aboriginal people, but this legislation does not include aboriginal people across Canada. They feel forgotten.
Seniors feel forgotten. Inequality is at an all-time high, and this legislation does not address it.
The Nuu-chah-nulth people use a word in their language, uu-a-thluk, which means “taking care of”. They use this word in reference to their fishery. They have been in a court case for over 10 years defending their right to catch and sell fish. They feel again that Ottawa has betrayed them with respect to recognizing their aboriginal rights and title. They want to take care of the resource. They want to work with Canadians so we can take care of each other. This legislation forgets to take care of the people in my riding.
Folks in my riding will do anything to support maintaining the tax-free savings account system, but they want a return to the annual cap of $5,500. This would allow my constituents the ability to put more savings away, but it would not open the door that would, in effect, give the richest Canadians a tax break. We know this because 93% of Canadians with tax-free savings accounts were not able to contribute the full amount, so the expanded limit would allow only the wealthiest Canadians—and we have seen this before—to utilize the full amount of the savings account.
To return to the income tax changes, people in my riding in the Alberni Valley, the Comox Valley, and Oceanside, and aboriginal people across this country, are feeling left out. Who will see the biggest benefits from the definition of “middle class”? As I said, clearly it is not the majority of people in my riding, but those who make as much as members of Parliament here. Those who make over $160,000 a year would see their taxes lowered by almost $700, while nearly 60% of Canadians would get nothing at all. This is not fair, and the NDP opposes those measures.
How do we fix this? Instead of targeting the second bracket, as the Liberals have done, the NDP has proposed lowering the first tax bracket.
How would this help? The tax brackets are in layers, and Canadians who earn enough to enter the second and third tax brackets are still taxed on the first layer. Therefore, to focus the benefit on the middle class, one must get a tax break on the first layer rather than the second, which skews the benefits disproportionately to the top earners. The NDP plan would reduce the first tax bracket from 15% to 14%. This would give the largest benefit to those making $45,000, rather than those making $200,000, who would benefit under the Liberal plan. Because the NDP plan actually focuses on the middle class, 83% of taxpayers would benefit from our proposed idea.
It may seem strange to some folks watching at home, but the way we can fix this bill is to implement this reasonable amendment from the NDP to get the bill to committee. New Democrats want to fix this bill so that the substance matches the title. This way, a bill that is supposedly intended to help middle-class families would actually deliver on that promise, instead of giving MPs a $680 tax break that they do not need.
I was elected to hold the government to account and to work with it, wherever possible, to bring much-needed relief to those struggling in my riding. As the Nuu-chah-nulth people say, “Let's use uu-a-thluk. Let's take care of each other.”
I hope members will consider that in this bill and in making this amendment.
Mr. Speaker, there are two provisions to Bill . One is the reduction in the annual limit one can deposit into a tax-free savings account, and the other is a reduction in the second income tax bracket while increasing the top tax bracket. I will begin my discussion with the tax-free savings account.
The TFSA was introduced in the 2008 federal budget, back when the late Jim Flaherty was the minister of finance. Canadian families were able to invest their after-tax dollars and earn income tax-free through their TFSAs. TFSAs can be used to invest in all sorts of eligible financial products, whether they are GICs, mutual funds, or stocks and bonds, to name a few. Canadians were already taxed once on their income. The TFSA allows them to earn income on their savings without having to be taxed again. Unlike RRSPs, the TFSA alleviates the risk that governments will change the tax rates, as withdrawals from the TFSA are not taxed.
It is not surprising, especially with the Liberals set to increase taxes in the upcoming budget, that Canadians at all income levels are choosing to invest in TFSAs. The Liberals would like nothing more than to get their hands on the savings of Canadians. Simply put, the country benefits from Canadians saving their hard-earned money, and the TFSA allows them to do so. We should be encouraging saving and not discouraging it, as Bill will do.
The previous Conservative government was able to increase the TFSA contribution limit because our last full fiscal year in government was in surplus. The Auditor General confirmed this. Indeed, the Minister of Finance's own department, in the monthly “Fiscal Monitor” publication, showed that in the first nine months of the current fiscal year ending in December, Canada's budgetary surplus was $3 billion. Now the Liberals are choosing to squander this surplus and plunge us into massive deficits, including with Bill C-2.
I will now bring my attention to the second part of Bill , which is the proposed adjustment of the income tax brackets. Since I was elected to the House of Commons in October 2008, the rates for the federal tax brackets have not changed. There is a 15% bracket, a 22% bracket, a 26% bracket, and the top bracket of 29%. With this stability, Canadians can reliably predict how much income tax they would be paying.
The new Liberal introduction of a higher tax bracket would create a situation where top-paid and top-performing professionals in Canada will be discouraged from working further and encouraged to look into ways of legally reducing their taxable income levels. In particular, I would like to point out that when we add together the combined federal and provincial marginal tax rates, Canadians who live in over half of our provinces will be paying a top combined tax rate of over 50%. These provinces include Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. This means that people in the top tax bracket will be paying the government more than half of their income for each extra dollar they make.
Does anyone in the House believe that these individuals will be seeking to earn more money when they will be paying more than half of their income in the form of income taxes? We should be encouraging Canadians to work hard and earn more money. This income tax change will have the opposite effect for those highly paid professionals who qualify for the top income tax bracket. There will be a point when people will choose to work less because the money they earn will simply be given to the government. Indeed, I foresee the only growth in high-paying jobs resulting from Bill will be of tax accountants, who will be finding ways to reduce the income tax burden on highly paid professionals. That was maybe the Liberal plan after all.
Speaking of Liberal plans, the other fact that the Liberals promised in their election platform is that the reduction of the second tax bracket will be paid for by the increase in taxes in the top tax bracket. Subsequent projections from the Department of Finance have indicated that Bill will not be revenue-neutral but will put us further into deficit.
Indeed, our previous government's election commitments, including an increase to the TFSA annual contribution rate, were contingent on balancing the budget. Not only have the Liberals squandered the surplus, but they are implementing changes that were clearly from incorrect premises.
In summary, Bill is wrong for Canadians. I will be voting against it in its current form.
Mr. Speaker, I appreciate the opportunity to speak on this important bill. Tax fairness has been an NDP concern for decades. Unfortunately, I am not at all convinced that Bill , an act to amend the Income Tax Act, provides the fairness that Canadians have done without for quite some time.
I will begin by quoting from the Liberal Party's election campaign platform. The Liberals told us that they would 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.”
However, there is a problem here. The Liberal definition of middle class seems to be a moving target. Worse, that vagary seems to be intentional. It wins votes, but at the same time it absolves them of accountability. It leaves us with many questions.
Which Canadian workers fall into the category of middle class? Let us look at the numbers. MoneySense estimates for 2013, based on Statistics Canada data, are that an individual Canadian earning an income between $23,000 and $37,000 annually makes more than the poorest 40% of Canadians and less than the richest 40%. It is reasonable, then, to assume that if one sits in a wage range where the number of Canadians making more and less is equal, one falls in the middle, a middle which at the top end, using this definition, is just under $37,000. In fact, the Liberal tax proposal excludes anyone making less than $45,000. In other words, this tax reform excludes the lowest 60% of wage earners. However, as I pointed out, the Liberal definition of middle class is a little vague.
Let us give the Liberals the benefit of the doubt and look at Canadians with an annual income falling between $48,000 and $62,000 per year. The tax benefit now kicks in at a whopping $50.
As an aside, and because the bill also proposes a rollback in the TFSA limit, it may be sad and somewhat surprising to learn that the claims of the previous minister of employment, the member for Carleton, turned out to be inaccurate when he said that 60% of individuals contributing the maximum amount to their TFSAs had incomes of less than $60,000 in 2013. Were they middle class? Also, for those income earners, the additional $50 tax benefit, or 96¢ a week, does not amount to much. With that increase to one's take-home pay, they would have to wait two weeks just to buy themselves a double-double.
It seems to me that except for the fact that the Conservative Party leader seems to have had a change of heart and is now aligning herself with the 99%, the old Liberal-Tories same old story adage holds true here again today. Under the current 's plan, the highest 30% of Canadian income earners are the main beneficiaries of this legislation while the wealthiest 10% pocket most of the money. One would think that an income tax deduction designed for the middle class should actually benefit a larger proportion of Canadians.
A federal tax system is put into place in order to create and maintain an equal and just society, to provide essential services for Canadians, and to ensure that not one of us is left behind. It is the vehicle of a strong social democracy. I would like to suggest that the plan should be sustainable. New Democrats know that is possible. How can the Liberals justify this change when it will result in a total revenue loss of $8.9 billion between now and 2021?
We have an opportunity to effect real change for the people who need it most, and, in doing that, everyone benefits. Unfortunately, the tax change proposed by the Liberals does not even come close.
Why not aim higher? Why not make changes that would ensure that no Canadian lives in poverty?
New Democrats know that we do not have to get bogged down in the definition of who is middle class to see that Canadians are being left behind as a result of Conservative and Liberal government inaction. The gutting of our manufacturing sector and the loss of well-paying jobs and stable work has affected the economy and the lives of people in London, Ontario and all of Canada for decades. New Democrats understand this reality and know that we can do better. The fact that we have Canadians living in poverty is shameful. The income gap is growing and it becomes increasingly difficult for families to find accessible, affordable housing, and child care, health care, and education.
In their effective opposition, the New Democrats have proposed a number of realistic measures to help families struggling to make ends meet: a national child benefit supplement; guaranteed income supplement; $15-a-day child care for all Canadian families; and reinstatement of the labour-sponsored tax fund credit, to name just a few. The NDP understands the reality of the middle- and lower-income earners of this country.
If the country were to reduce the tax rate for Canadians earning less than $45,000 a year by just 1%, from 15% to 14%, 83% of those people, some nine million Canadians, would benefit. The cost difference would be minimal and could be easily recovered with a very slight increase of one half percentage point to the corporate tax rate. The New Democrats' proposal makes sense in dollars and cents terms. Our proposal would also enable the government to increase the working income tax benefit, which has proven to be very effective for low-income workers, and put more money back into local economies.
As tomorrow is International Women's Day, let us talk a bit about equity.
We know that creating equity for workers with the lowest incomes benefits women. Federal tax policy is structured such that the ratio of profit between women and men is 60-40, more or less. It favours those with higher incomes, and since men by and large earn higher incomes than women, they are advantaged and women are disadvantaged under the current taxation regimes. This disadvantage follows them from the time they enter the workforce to retirement, as women on average fall more often into the category of low-wage earners and since those benefits are often calculated based upon annual income, which is more likely to be part-time, precarious, or interrupted in order for women to raise children.
As members can see, tax cuts to the lowest tier of Canadian income earners, such as those proposed by the NDP, would not only benefit those workers and the communities but would also represent a small and vital step toward gender equality.
The NDP has always worked for seniors. I am very proud to say that we are the only party that has a national strategy on aging, and I am thankful to my staffer, Tara Hogeterp, who worked diligently in the last Parliament, with the aid of our NDP research staff team, to bring that strategy to the public.
We do not believe that an increased TFSA limit is the solution for lifting nearly 200,000 seniors out of poverty, so we support the government's proposal to amend it. We fought against the Conservatives' reckless decision to raise the retirement age from 65 to 67. We proposed to increase funding for the guaranteed income supplement by more than $400 million.
It seems to me that the government is missing an important opportunity here to create fair and equal taxation systems that would benefit all Canadians, missing an opportunity to fulfill one of its election promises. It makes me wonder whether it ever had any intention of doing so in the first place.
Instead of making smoke-and-mirror changes to tax policy that would not benefit anyone but copywriters, why not create a system that would actually serve the Canadian population and work toward real sustainable fairness and equity?
In doing so, the government would be able to say that election promises do matter. That would be a remarkable and refreshing change.
Mr. Speaker, it is an honour to rise today in the House to discuss Bill .
I want to start by clearly stating my premise up front and then speak to it throughout the 10 minutes I have. My premise is that fairness for the middle class and societal inequality cannot stand together. We cannot as a society, and nor can the government, decide that the middle class is the be all and end all of tax policy. I will say this bill misses the mark on delivering for the middle class.
We cannot say that fairness for the middle class is the be all and end all for society, because as long as inequality and poverty persist, every part of society is disadvantaged. Every part of society is disadvantaged by the continuation of poverty.
In the last half hour, I heard a Conservative member say that the people who need the tax breaks the most, the people who need the help the most, are the middle class. No, the people who need the help the most are the homeless. The people who need the help the most are the unemployed. The people who need the help the most are the poor.
In terms of inequality, where does Canadian society stand today? By any measure, we are a fairer and more equitable society than the United States. However, in a very real way, we are not as fair or as equitable as we used to be.
During the election campaign, I was digging all the time for stats and arguments for the few leaders' debates in which I was included. While doing research, I was staggered to come across this stunning statistic: the 86 wealthiest families in Canada have more combined wealth than the 11.4 million Canadians in the bottom of income brackets. Eighty-six individual Canadian families have more wealth than 11.4 million Canadians at the bottom.
Is this a problem? I submit it is a serious problem, and it is a problem that Bill will not address. I do not imagine that anyone thought Bill would address it. I will say, in fairness to the new government, that I hope that more is planned if it is serious about addressing income inequality.
Let us just look at this on a higher plane of analysis, namely, in regard to the mania for neo-liberalism, for the policies of Milton Friedman and for the Thatcher-Reagan era, in which no politician would say anything other than that we needed smaller government, that we needed tax cuts, that we needed deregulation, that we needed trade liberalism, as though that mantra would deliver great blessings to society overall.
One of the economists who I think has skewered this most effectively with detailed empirical research, and who does not brook a different opinion because he comes fully loaded with the facts, is Nobel Prize-winning economist and current professor at Columbia University in New York, Joseph Stiglitz. Stiglitz amassed all the information any Parliament would need to decide that inequality is unacceptable for a society that wants to succeed at anything.
Joseph Stiglitz's book, The Price of Inequality, is one that I hope every member of Parliament will read. Stiglitz concludes that:
Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset—its people—is not being fully used.
There are a lot of things one can say about the era of Thatcher-Reagan, neo-liberalism, and the kinds of trickle-down policies that were supposed to deliver benefits for all, but Joseph Stiglitz has pronounced, and I think it is time that we all learned how to say it, that the neo-liberal experiment with tax cuts to deliver wealth has been tried and is a monumental failure. Growth is stagnant. The economy is suffering, not just in Canada but everywhere. In Canada, particularly more than some of our OECD colleagues, we have had stagnant growth for a while now. We are not seeing investment, and I want to touch on what our corporate sector has been doing or not doing.
Trickle-down economics is a joke. The great Canadian economist, the late John Kenneth Galbraith, used to explain trickle-down economics like this. If one feeds a horse enough oats, the sparrows will eventually find a meal in the manure. That is trickle-down economics. In the alternative, as Gus Speth, who used to be head of the United Nations Development Programme, once said, when talking about trade liberalization, a rising tide lifts all boats; we can now fairly say that a rising tide will lift all yachts, not all boats.
We have a real challenge in our society and, boy, do we have a really good opportunity right now. I would urge the new government to actually embrace the idea of tackling inequality in our society. We have seen a foundational shift in our tax system in the last 10 years.
Let me provide this statistic. I am indebted to a great Canadian economist, who I wish had not just moved to Australia, Jim Stanford, for having identified this. Over the 10 years of the previous government, the federal revenues as a share of GDP fell from 16% in 2006 to 14.3% last year. That may be celebrated by some, but tax cuts overall end up with shrinking revenue to do the things that society needs, like make sure the health care system works, deliver child care for all, make sure people are not living in poverty and cannot get adequate housing, because again, I repeat, the empirical evidence is clear that it disadvantages all of society, not just the poor.
If we are going to see a rise in revenue, that means politicians are going to have to get used to saying some words that have been drilled out of our lexicon since the Thatcher-Reagan era began, and that is to ask where we are going to find the taxes to increase government revenue. It is clear that this tax cut modestly, moderately readjusts a tax bracket for our highest income earners. The top 20% basically see $3 billion removed from the very highest taxpayers, so that the next highest taxpayers get a slight benefit. It is not bad in itself, but it is not, on its own, tax relief for the middle class, nor does it strike any significant blow against income inequality. It is a small step, but tepid, and it fails to address the needs of the middle class, nor does it address the needs of the poor, nor does it really deal with the complicated tax code we have.
I would like to propose to the that we need root and branch tax reform. We need to step back from all the fashionable pandering to individual sectors of a voting electorate, the boutique tax cuts of the previous 10 years. We need to review all of the complications that work against a tax code, that frankly, the fiscal conservatives say they want, and that people in Canadians for Tax Fairness argue we absolutely need. We need to simplify our tax code by taking out the special rewards: for people who happen to have kids who are already in hockey and can get a prize for that, for people who are already taking the bus and can get a prize for that. That is not good tax policy.
We also need to look for where we should be increasing taxes. I would suggest we need to look no further than what happened to the tax code for the corporate tax rate in the previous 10 years. It used to be 28% in the year 2000. By 2006, when the previous administration took over, it had dropped from 28% to 20%. It now stands at 15%. People might be interested to know that, in comparison, the U.S. corporate income tax rate stands at 35%. Other than Ireland, which is at 12%, Canada has the lowest tax rate in the industrialized world, and certainly right now we stand with the lowest tax rate in the G7.
I draw members' attention to the fact that Canada's corporate tax cut has resulted in about $700 billion to date being considered as dead money, as the former governor of the Bank of Canada described it—$700 billion sloshing around as available cash and not being reinvested in our economy where we need it. We may need to look at other tax measures. Down the road, we may need to look at the GST. The Green Party is not advocating raising that tax. We are talking about increasing the corporate tax rate. I believe it should be set where it was in 2008. We really need to look at a guaranteed livable income, because the bottom line is that Canada's society is middle class. All of Canada's society will not experience well-being and prosperity as long as poverty persists.
Mr. Speaker, it is a great pleasure to rise in the House today to speak to Bill .
I realize that we are near the end of the debate and the vote is coming tonight. Oftentimes when we prepare for these types of things, a lot of what we want to say has already been said. We have heard some good arguments from both sides of the House, but I happen to think that the arguments from this side have been more persuasive.
I have tried to break this issue down to its simplest form, and its simplest form is this. If I were standing in a Tim Hortons in Stroud or Alcona or if I were at Big Bay Point or in Huronia, in Barrie, how would I explain Bill to the residents of my riding? I would simply start by saying that it is a shell game. I have often used the term “liberalnomics”. If one were to define “liberalnomics”, it would be accurately reflected as a fiscal policy of saying that things will add up when they do not; a fiscal policy that equates to playing pin the tail on the donkey in the dark, where a government keeps missing its targets; and a fiscal policy in which, if government members made decisions using their own money, they certainly would not make the same types of decisions they are making, including those that appear in Bill .
Who is going to pay for this? That is the question we need to ask. The Liberals said they were going to give middle-class Canadians a tax break by making taxes fairer. They said they would cut the middle-class tax bracket to 20.5%, and they certainly have done that. However, they also said that this plan would be revenue-neutral. All of the speeches that have been presented by members on our side, even information that has been presented to us by the parliamentary budget officer, have indicated that a $1.7 billion deficit will be created by this plan this year and effectively an $8.9 billion deficit over six years. This plan would benefit the top 30% of wage earners. How would I explain this to the people of my riding if I were standing in Tim Hortons?
This may not be a great example for this side to use, but it is an example nonetheless and it comes from Mr. David Macdonald, who is senior economist with the Canadian Centre for Policy Alternatives. In an article in Maclean's magazine Mr. Macdonald, through a study, said that 1.6 million families making $48,000 to $62,000 a year would see roughly $51 a year in tax savings; and for those families making $62,000 to $78,000 a year, they would be making $117 in tax savings. I would define those figures as the middle class, and Mr. Macdonald did as well.
Then Mr. Macdonald moved into an interesting category that he defined as the upper middle class, and I think most of us would agree with his definition. Those Canadians who make $124,000 to $166,000 a year would see a benefit of this middle-class tax decrease of about $521 a year, while those making $166,000 to $211,000 would see a tax saving of $813 a year.
How would I explain that to my residents if I were standing in Tim Hortons? I would simply say to them that this middle-class tax decrease would benefit every single member of the House of Commons more than it would affect those who need it the most.
We have heard the stand up many times in the House during question period and say that nine million Canadians are going to benefit from this. If the parliamentary budget officer's estimates are correct—and there is no reason to think that anyone in the House would discount them—that means for those nine million Canadians, the amount of deficit that they would have to pay is equal to about $164 each. If I were to explain to my residents in Barrie—Innisfil, with an average median household income of $69,000 in Barrie and $66,000 in Innisfil, that the maximum amount they would get as a result of this middle-class decrease would be $51 but the expectation would be that they would have to pay $164 for the amount of this deficit, not one of them would think this is a good deal.
Yet the Canadian government is running around, because of this election promise, saying that nine million Canadians will actually benefit from it, when in fact, every member of the House knows that it is Canadians who pay the price.
Based on Finance Canada's estimates, the new Liberal tax plan amounts to an average of an extra $6.34 a week for those who qualify, merely a head of cauliflower with the way the prices are today.
The other thing Bill talks about is the reduction of the TFSA from its current amount down to $5,500. In fact, 11 million Canadians took advantage of the TFSA. My wife and I, who I would classify as middle-class Canadians, and my kids who are in university have used TFSAs as a savings and investment vehicle. It is a tool that lessens the dependence on government. It gives people options. To reduce it just does not make sense because it puts Canadians in control of their future if they choose to do so.
Recently, my financial planner talked about TFSAs and he was quite concerned about the fact that we would see a reduction in them. He told me the story of a 22-year-old student who had invested the maximum amount in a TFSA, which was now worth $220,000. That individual will be able to take that out tax-free and use it for whatever purpose he or she chooses to use it for. The purpose of the TFSA was all about that.
About a century ago, American author and journalist H.L. Mencken wrote that complex problems had simple, easy to understand wrong answers. He may as well have been referring to the idea that budgets balanced themselves or that the Government of Canada could foster economic growth by simply injecting mountains of taxpayer money into the economy.
Government stimulus spending and workers alike can succeed. However, bad public policy, one based on pin the tail on the donkey approach, Liberalnomics, sees companies rushing for the border and everyone else heading straight to the unemployment line. That is exactly the road that the people in my home province have found themselves travelling on over the past 13 years and Canadians are sadly following the same disastrous route under the current government.
Tax breaks that do not help those who need it the most and they create deficits that are not needed. That is Liberalnomics. That is how I would explain to the residents of my riding why I am not supporting Bill . It does not help those who need it the most. It gives members of Parliament a bigger tax decrease than most Canadians, and I will not support it.
Mr. Speaker, it is my pleasure to rise in the House today on behalf of the hard-working taxpayers in my riding of Kitchener—Conestoga. It is with their interests in mind that I speak in opposition to the government motion that does not help the middle class. Instead, it raises taxes on Canadians and makes it harder for my constituents to save their hard-earned money.
What we are debating today in the House is a fundamental difference between the Liberal Party and the Conservative Party of Canada. On this side of the House, we know that ordinary Canadians are best positioned to determine how their money is saved and spent. On this side of the House, we believe the government should be making it easier for Canadians to adequately prepare for their own retirement.
The Conservative Party supports both immediate and long-term, broad-based tax relief. Reducing personal income taxes is a priority for the Conservative Party because it increases take-home pay and raises the living standards of all Canadians. It leaves more money in their pockets and less in the government's, where far too often it is not used efficiently by governments of all stripes.
Over the past 10 years, our Conservative government cut the GST from 7% to 5%. We cut taxes for small business. We created the tax-free savings account, which is now being clawed back. We introduced pension income splitting and the family tax cut. Indeed, since 2006, our Conservative government reduced the overall tax burden to its lowest level in 50 years. We cut taxes over 180 times. As of 2015, our tax relief is saving a typical family of four up to $6,600 per year. I am proud of that record. I have been approached in my riding by parents who were very grateful for the reduced tax burden, which lets them now meet the financial needs of their families.
However, what I cannot be proud of is the current Liberal government's failed election promise of a revenue-neutral tax cut to what it has determined to be the middle class and restricting the ways that Canadians can save for that special project, or for their retirement.
These two measures will not help middle-class Canadians, and they are election promises that should be abandoned, as the Liberal government has already done on many of its other election promises.
First is the creation of the middle-class tax cut. It sounds great: a tax cut for the middle class. The Liberals' election promise was that this tax cut would be revenue-neutral. We know that this was never true, and it was not until after the election that the current realized it. This means bigger deficits with no end in sight and higher taxes in the future to pay for this failed election promise. It is money going to pay interest that could be invested in health care, palliative care, and mental health care services.
Let us look at exactly who would be benefiting from this so-called tax cut.
David Macdonald, who is a senior economist with the Canadian Centre for Policy Alternatives, analyzed this so-called middle-class tax cut. The reality is that for those Canadians making between $48,000 to $52,000 a year, the average saving would be $51 a year. That is less than a dollar a week. For Canadians making from $62,000 to $78,000, it would be $117 in savings per year. He classifies what comes as the next level as the upper middle class. Those making $124,000 to $166,000 would gain $521 a year. Then from $166,000 to $211,000, it would be a gain of $813.
As incomes rise, the larger the break from government taxes. Is this really the Liberal message? I am sure all Canadians would like to have a few extra dollars in their pockets, but it seems quite clear that those who the Liberal government consider the middle class are receiving far less from this tax cut than those of us serving as members of Parliament in the House of Commons.
It is very clear that this modification to the income tax rate change the Liberals are championing is not a significant tax cut at all, but it also comes with a very high price tag in deficit financing. The policies of the government will be economically destructive for Canada. These destructive economic policies will create a huge burden for our children, our grandchildren, and, indeed, our great-grandchildren.
This small tax break is not enough to stimulate our economy. Nor will throwing money at the middle class stimulate growth. It does not help create jobs. We have not seen anything from the government that will help with innovation, allowing companies to expand, or anything that will help create jobs for Canadians.
However, we know that creating jobs is not a top priority of the Liberal government. Since forming government, the Liberal Party has spent and promised billions of dollars outside of Canada, spent time here in the House repealing laws that increase union transparency, but have not created a single job here in Canada.
While in government, we on this side of the House took our jobs seriously and knew what it took to create jobs, to return to balanced budgets, and create a fairer tax system. In our 10 years as government, we eliminated the deficit while continuing to enhance the integrity and fairness of the tax system while refusing to raise taxes. These are the measures the government should be taking, not an expensive tax cut that benefits members of Parliament here in the House more than middle-class Canadians.
Second is the clawing back of the tax-free savings account. A few days after the throne speech, my office received a phone call from a senior who asked for my help to do everything possible to ensure that the Liberal government did not reduce the limit she could contribute to her primary source of savings. This woman, by the way, was not someone with a large income.
Contrary to what the Liberal government would like Canadians to believe, TFSAs have been a very effective tool for all Canadians, both young and old. Members should not take my word for it, as experts in the business community recognize the value of the higher contribution limit for the TFSA. In fact, one chief actuary from a well-respect HR firm said, “I think it is really quite a positive move for the retirement security in general”. Who said that? It was the chief actuary of the Toronto-based HR firm Morneau Shepell. I would encourage our to perhaps talk to his former colleagues about the benefits of the TFSA and the increase in contribution limits for all families.
In response to this, the Liberal government will claim that only the top 1% of income earners in Canada benefit from TFSAs and that their plan to increase the mandatory CPP contribution limit is better for Canadians. However, 60% of those who max out their TFSA contributions make under $60,000 per year. Let me repeat that for my colleagues here in the House: 60% of Canadians who utilized the maximum amount they can contribute to their TFSA make less than $60,000 a year. It goes without saying that these are not the top 1% of income earners in Canada.
I would return to my initial point on the differences between our two parties. On this side of the House, we trust Canadians with their own money. We realize that it is our job to create ways that which Canadians can save for their own retirement and make it economically beneficial for them to do so. The Liberals, on the other hand, have decided that they know what is best and that Canadians have no say in how their money is invested for their retirement.
I would humbly ask on behalf of my constituents that the Liberal government abandon its ill-conceived plan and instead introduce real measures that would lower taxes on the middle class and not claw back the TFSA contribution limit. Let Canadians keep more of their hard-earned money in their own pockets where it will be invested wisely and spent judiciously in ways that spur our economy. We do not need more debt and more interest payments.
Mr. Speaker, I want to begin my remarks today with a point of refutation, because in listening to the debate we have heard some discussion around inequality in Canada, with the member for using the phrase a “crisis in Canada with inequality”. We need to review the record with respect to inequality. Frankly, this bill is going in the wrong direction.
However, over the last 10 years as a government we had a really positive record addressing inequality, as the numbers clearly show. As I have mentioned before, at the beginning of our mandate we lowered the GST, which is the tax that all Canadians pay. We also cut the lowest marginal tax rate. This is a very different approach from that of the current government.
In my view, the best way to measure inequality is through something called “intergenerational earnings elasticity”, which is the ability of people to move between different income brackets across generations. In other words, what are someone's chances of being a wealthier person even if he or she had relatively lower-income parents and vice versa?
I will refer members to a paper written by Miles Corak from the University of Ottawa. If we look at the data on intergenerational earnings elasticity, the numbers are clear that Canada is near the top when it comes to equality. In terms of intergenerational earnings elasticity, Canada gets a score of 0.19, where low is good. We are fourth in the world. We are far ahead of the United Kingdom, France, Italy, and countries with a very different social system. We are also ahead of the United States. Therefore, we have a combination of factors in Canada that is good for equality. I would argue that it is a combination of certain necessary social programs in areas like education and health care but also of economic opportunity, and what we have had historically over the last 10 years with limited but effective regulation of business and low business taxes. This environment has been good for equality. It is one thing for members to throw out phrases like “crisis in Canada with inequality”, but if we look at the data specifically I would argue that with respect to intergenerational earnings elasticity, we see that Canada is in a very good spot right now.
Nonetheless, I would argue, and here I agree with our colleagues in the NDP, that this bill does not move in the right direction with respect to inequality because it cuts taxes in certain categories but not in others. Many low- and moderate-income Canadians would not benefit at all.
I am concerned about this bill because we might call this a Liberal promise-wrecking ball. It is a bill that breaks through what were clear election commitments by the Liberal Party. The Liberal Party committed in two key categories when it comes to fiscal measures. It promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that all tax changes were revenue-neutral. It also promised to cut taxes for, in their words, the “middle class, or [those] hoping to join it”, and to pay for those tax cuts with tax increases on higher-income earning Canadians. We see very clearly that this bill makes utter nonsense of these two commitments.
In terms of the Liberals' commitment to run only three modest deficits of $10 billion, balance the budget after that, and ensure all tax changes are revenue-neutral, we know that the deficits have ballooned significantly since the election, and that even before new spending is promised, we will be running an $18.4 billion deficit in fiscal year 2016-17 and a $15.5 billion deficit in 2017-18. That is again before new spending.
The had this to say about that:
A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government might see that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago.
I will say it is a rather strange definition of “ambitious” to leave the cupboard bare for the next generation. Let us define our ambition by how much we leave for the next generation, not how little we leave for it.
The has said that Canada has room to run these massive new deficits because of our relatively low debt-to-GDP ratio at the federal level. It is true that our government left Canada with a low debt-to-GDP ratio. In fact, we left a reduced debt-to-GDP ratio compared to when we first took office. However, the combined federal, provincial, and municipal debt-to-GDP ratio is alarmingly high. It is over 90%. It is in the same ballpark as the debt-to-GDP ratio of the U.S. and the U.K., if we combine federal, provincial, and municipal debt.
We actually do not have room at all to run these massive new reckless deficits. Of course, this large debt-to-GDP ratio is led by the very large deficit and debt here in the province of Ontario. The policies of the Kathleen Wynne government, which I think unfortunately the current government wishes to emulate, have made Ontario the most indebted sub-sovereign borrower on earth. We cannot go in that direction at the federal level as well. We are already significantly weighed down by that combination of federal, provincial, and municipal debt.
Bill makes tax changes that will have a significant cost to our treasury. By ignoring the value of tax-free savings accounts, they will also have a significant cost to our economy. This bill would cut tax-free savings accounts and lower some taxes while raising others, but it is not revenue-neutral. According to the parliamentary budget officer, it would cost the treasury $1.7 billion per year. It is clear that the current government is not sticking to its $10 billion per year deficit commitment. The Liberals have no serious plan to balance the budget in year four. Their tax changes would not be revenue-neutral, and estimates are that they will increase instead of lowering the debt-to-GDP ratio. Over the next four years, it is projected that the Liberals will increase the debt more than we did in 10 years. They will increase the debt-to-GDP ratio. They will do it, not because of a financial crisis, but because they have no regard for the importance of planning for the next generation. They are spending today with no regard for the future at all, and, again, certainly making nonsense of their initial budget commitment.
The Liberals said as well that they would cut taxes for the middle class and those hoping to join it. The details do not measure up to that commitment at all. Their proposal is a modest tax reduction for those making between $45,000 a year and $90,000 a year. Individuals making less than $45,000 will get nothing. Families with a combined income approaching $90,000 a year will perhaps get nothing. Whether those people consider themselves middle class or those hoping to join it, they in fact would lose because of the proposed changes. Even individuals at the low end of that tax bracket may be worse off because of the other changes that the current government would bring in with respect to tax-free savings accounts.
Those who will benefit most, as has been pointed out, would be those making over $90,000 per year, perhaps families with a combined income approaching $200,000 a year. That is the reality of these changes. As a member of Parliament, I know I make a good salary, and my wife, as a part-time physician, does as well. With two incomes, each individually less than $200,000 a year, we are in the group that would benefit the most from these proposed changes. However, the fact is that members of Parliament and senators do not need tax cuts. Canadians do—hard-working, middle-class Canadians—and those who are hoping to join it. The rhetoric does not match the reality in this bill, at all. Instead, what the Liberals will do by reducing tax-free savings account limits is to hurt those Canadians who need the help the most.
Here are the real numbers on tax-free savings accounts. Over 65% of tax-free savings account holders make less than $60,000 a year. Almost half of TFSA holders make less than $40,000 a year. Over half of those who currently max out their TFSAs make less than $60,000 per year. The Liberals somehow behave as if those making over $90,000 a year count as middle class for the purposes of their rate cut, but those making less than $60,000 a year for the purposes of tax-free savings accounts count as wealthy. This is a clear paradox in their plan. Why would they cut benefits for those who make less than $60,000, while increasing benefits for those who make more than $90,000 a year?
Again, this bill will drive a stake through the Liberals' election commitments. They promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that tax changes are revenue-neutral. That was and is nonsense. They promised to cut taxes for, in their words, the middle class and those hoping to join it, and to pay for those tax cuts with tax increases on h