The House resumed consideration of the motion that Bill , be read the second time and referred to a committee.
Mr. Speaker, I am very pleased to rise today in the House to talk about something that is particularly dear to my heart, and that is reducing inequalities. When it comes right down to it, that is what Bill , an act to amend the Income Tax Act, is all about.
Obviously, I do not consider Bill to be the final destination. There will always be work to do when it comes to reducing inequalities, but this bill is a step in the right direction, a step that the government took at the earliest opportunity. This bill is a step in the right direction because it makes our income tax system more progressive by creating a new 33% tax bracket for incomes over $200,000, while lowering taxes for over nine million Canadians who earn less than $90,000.
As a forward-thinking individual, I cannot help but be pleased to see our tax system becoming more progressive through the creation of a new tax bracket under this bill. However, I am also pleased because this bill repeals what can only be described as a regressive measure implemented by the previous Conservative government that increased the maximum TFSA contribution from $5,500 to $10,000.
I do not expect members to take my word for it that this tax measure was regressive. You could listen to economist Rhys Kesselman, from Simon Fraser University, who helped lay the foundation for the introduction of the TFSA in 2009. This is what he had to say about the previous government's proposal to increase the TFSA limit to $2,000.
Before dropping the second shoe, the government should reconsider its pledge to initiate a tax change that would impose a fiscal straightjacket on future administrations that undercuts tax progressivity and increases income inequality.
There are two interesting concepts in this short quote from Mr. Kesselman, who, I remind members, is credited with helping to bring in the TFSA. An increase in contributions would have imposed a fiscal straitjacket on future administrations, while undercutting tax progressivity and increasing inequality.
I will come back to the concept of a fiscal straitjacket, but first I want to look at how increasing the TFSA undermined our tax progressivity and drastically increased income inequality.
I have heard my Conservative colleagues on the other side say over and over, quite rightly, that 60% of TFSAs are held by individuals with incomes below $60,000. However, this statistic overlooks the fact that, often, the people who invest in a TFSA have a spouse with a substantially higher income. My Conservative colleagues should know that TFSA rules allow a spouse to contribute to both their own and their lower-income spouse's TFSA, up to a total of $11,000 under the former regime, before the Conservatives' increase.
In Kesselman's view, if you want to have a clearer picture, it is important to look at households, not at individuals. If you look at households, including single-person households, that contribute to TFSAs and have an income of less than $60,000, they represent 52% of TFSA holders, but they hold only 31% of all the money invested in TFSAs. In contrast, 4.4% of households that contribute to TFSAs and earn $200,000 or more hold 15% of all TFSA balances.
It should also be noted that the returns generated by families with the highest incomes are higher than those of other taxpayers, and on that particular issue, I would again like to quote Mr. Kesselman, who, I would remind the House, is the intellectual father of TFSAs in Canada:
Upper-income families enjoy TFSA tax savings to an even more unbalanced degree than those statistics might suggest: they typically generate higher investment returns on their TFSA assets than lower earners, and they avoid the higher personal tax rates that would otherwise apply on the income from assets shifted into their tax-free accounts.
Lastly, it is interesting to also note that, proportionally, not all Canadians contribute to their TFSAs equally. While only 29.2% of Canadians who earn under $50,000 contribute to their TFSA, 99% of Canadians who earn over $150,000 contribute.
It was not surprising, therefore, that the former parliamentary budget officer, Kevin Page, had something to say about the Conservatives' plan to increase the TFSA contribution limit. He wondered if it would really generate any savings for the middle class and low-income households. He pointed out that one would have to be pretty comfortable to be able to set aside $11,000 in a TFSA at the end of the year and that the priority should be investing in infrastructure, since the larger issue was growing the economy.
I could not agree more with Mr. Page, and clearly, Canadians agreed with him too. They chose growth and a more just and accountable society.
It should come as no surprise that when our American neighbours added TFSAs to their tax regime, they limited contributions to $5,500 and made TFSAs off limits to single individuals whose income exceeds $116,000 and households whose income exceeds $183,000.
Getting back to the concept of the fiscal straitjacket that Mr. Kesselman described, according to the parliamentary budget officer in a study published in February 2015, raising the TFSA limit would cost the federal government $14.7 billion a year in lost revenue by 2060. The provinces would lose $7.6 billion a year.
Interest rates are low, we need to stimulate the economy, and there is a pressing need to invest in our communities and our infrastructure, yet surreally, the Conservatives bemoan our government building up a deficit that will put future generations in debt while simultaneously tearing their hair out arguing in favour of maintaining an irresponsibly high TFSA contribution limit that will benefit only the wealthiest 10%, which would be an abdication of fiscal responsibility on the part of the government. It is utterly surreal.
I can understand why they are so attached to this policy. It was a hat trick for them. It was the triple crown. Not only did this irresponsible policy allow them to deprive the government of significant revenues, which then allowed them to justify its disengagement, but it also gave an undue and outrageous advantage to the wealthy, whose interests the Conservatives have always cared deeply about, as we know. That may be understandable, but it is not defensible.
Bill makes our tax system more progressive by a adding a tax bracket and giving back to nine million Canadians. It also undoes one of the previous government's most regressive and irresponsible policies. Overall, Bill is a step toward reducing inequality in Canada. At the beginning of my speech, I said that this issue is especially important to me. It may even be the reason I entered politics. It is important to me because I am seeing a worrisome trend in Canada. Since World War II, there has been a steady increase in worker productivity, but compensation has not kept pace. The gap between productivity and compensation keeps getting wider.
Since the 1980s, the disposable income of the top 1% of income earners has increased by 77%, while that of the 0.01% at the top of the pyramid has grown by 160%. During that same period, the other 90% have seen their incomes increase by only 19%.
In Canada, roughly 70% of all net worth belongs to 20% of the top income earners. Historically, economic growth is more robust when the trend leans toward income equality. From the 1950s until the 1970s, in developed countries, lower income inequality went hand in hand with high economic growth. The IMF was able to quantify the gains to be made by narrowing income gaps. I would like to share a quote:
If the income share of the top 20 percent increases by 1 percentage point, GDP growth is actually 0.08 percentage point lower in the following five years, suggesting that the benefits do not trickle down. Instead, a similar increase in the income share of the bottom 20 percent (the poor) is associated with 0.38 percentage point higher growth.
For all these reasons, I will enthusiastically support Bill , because I believe that prosperity in Canada must be inclusive and that sustainable growth is inevitably dependent on equitable growth.
Mr. Speaker, changes to the Income Tax Act as proposed by the new government are a major concern for entrepreneurs and professionals from coast to coast to coast.
These are the people who drive our economy, the small business owners who have taken a chance in their life, and through their hard work are now being rewarded. Now the government has taken the initiative out of the most ambitious people in our country, like the doctors who have studied for years, have made huge sacrifices, and have built up huge debt, knowing there was a reward for them at the end of the day.
Last week, I went to a young optometrist in Saskatoon. She was just starting her career. She is under 30 years of age. The professional spent the better part of her twenties in school. She graduated with a mountain of debt. This was a concern. However, at the same time, this young professional was confident that over time she could make it up.
Now we are not too sure about this young optometrist. With this plan of more taxes for higher income earners, we are discouraging success and are actually punishing those who are high achievers in this country.
Saskatoon will be the home of a much-needed children's hospital. This has been a dream of ours and our province of 1.2 million for decades. Many families in our province were forced to send their sick children to centres like Calgary, Edmonton, Toronto, and even to Minneapolis, Rochester, and New York.
We now have the opportunity in our province to have the sick children stay at home and be well attended to. Construction has started on this project in the Saskatoon area, and optimism is very high. However, there is a legitimate concern about where the doctors will come from to feed this fabulous facility.
This is a specialty area, and it is competitive for these specialists. Not only do we compete with other provinces like Alberta, B.C., and Ontario, but with these proposed changes in the Income Tax Act, we will be losing our professionals to other parts of the world. What good is the bricks and mortar, if we cannot staff this facility with highly qualified professionals? How can we be competitive with this extra burden on those who are in this tax bracket? They will simply pick up and leave Saskatchewan, and leave Canada.
This is called “brain drain”. This Liberal tax plan will certainly lead to an exit of professionals right out of this country. I have talked to many doctors and dentists who employ a lot of people in our city. They do not need to be putting in extra hours, knowing they will be paying more taxes to the government. Many have said they will simply cut back on their hours. Instead of serving the public for six or even seven days a week, they have all said they are going to cut back their hours.
Professional athletes already have apprehension about playing in Canada. Let us take the NHL players in Ottawa, Montreal, or Toronto, along with Calgary, Edmonton, and Vancouver. With higher taxes, they can make the decision, telling their agents when they are free agents, that they simply do not want to play in Canada. When free agency hits, they have the option. They can actually put a no-trade clause into their contract not to be based on a Canadian team.
The reason is simple. Hockey is a business, and players know they only have a small window of opportunity to make their living. Taxes matter in this age group. It is no coincidence that if the playoffs were to open today in the NHL, not one Canadian-based team would make the NHL playoffs today.
Yesterday, the President of the United States made a reference right in front of the , asking where was the Stanley Cup. Well, guess what? The cup is in the President's home town of Chicago. Do we think that is a level playing field? It certainly is not.
How about the members across from me? Could it be another 50 years before Maple Leaf fans can plan a Stanley Cup parade down Yonge Street with this tax plan? The same goes for the entertainment business. Canada's most talented people today come from a zip code instead of a postal code, and this is going to make it worse.
I can tell the House that Canadian charities are very concerned with this Liberal tax plan and this bill. High-wage earners over the years have been very generous with their money in our communities in Canada. If not for this group, many social organizations would not be around today. These are the people who dig deep for charities so they can provide the necessary programs needed in our communities. I have sat on many charities in my city over the years, and if it were not for some of these professionals, organizations would have closed their doors long before now. Charities that do not need federal handouts can continue operations because of this class of people who give back to the community in many ways. We have all been in offices that have local art on the walls. That is because people give back to their communities so that others can enjoy their lifestyles and passion.
When the Liberals originally introduced this new system of tax breaks, they promised it was going to be revenue neutral. Four months later, though, the finance minister conceded in the House that this plan is not revenue neutral at all. A recent report from the parliamentary budget officer estimates that the cost could actually be closer to $1.7 billion. We already know that the government has blown by its $10-billion deficit per year that it promised during the election campaign. We are at least at $18.4 billion, and climbing every day. Conservatives cannot wait for the budget to come down to see the number on March 22.
I ask, who is going to pay for this? It will have to be repaid at some time. Is it our kids or our grandchildren who will pay for this Liberal tax plan? It is a broken promise because it was grossly miscalculated. I might add that it will completely eliminate the $1 billion surplus that the Conservative government handed over to the Liberals last year.
The Conservative government, and rightfully so, believed in the concept that people need to save for the future, a future that requires at one point or another taking money out of the popular TFSAs for an emergency. This was designed to take the burden off the federal government so that it could redirect much-needed money to other programs in this country. Now there is no incentive at all to put money away. The very popular TFSAs have been sliced back. Many families and seniors in my riding of Saskatoon—Grasswood are not happy at all with this new Liberal tax plan.
The report yesterday said it all in The Globe and Mail. It stated, “The more we get to know TFSAs, the more they demand attention as a vehicle for retirement saving.” The previous Conservative government introduced this program. It was a great tool for investing, even for a first home.
Canadian household debt is at an all-time high today. This country lost 2,300 jobs last month, instead of the expected gain of 10,000. Canada's unemployment rate is at 7.3% today. That is the highest level in three years. It is only going to get worse with this new Liberal tax plan. I will not support Bill today.
Mr. Speaker, the Liberals have said over and over again that they have a plan for the middle class. They promised quick, urgent and very positive change. However, since coming into office, they have given very few details about their plan, the deadlines and the proposed targets.
Bill , is the starting point for a plan. For that reason, I applaud the proposal to reduce the contribution limit for the tax-free savings account, known as the TFSA.
However, the Liberals added to this bill a provision to change taxation rates that will not benefit those most in need, that is, those who earn less than $45,000. The Conservatives' $10,000 limit did not make sense. When it was introduced in 2015, many analysts and economists pointed out that it would benefit only the wealthiest 30% in our society.
Who can afford to sock away $10,000 every year in a tax shelter? It is obviously not recent university graduates or new entrants to the job market. Nor is it average workers in Quebec or Canada who earn a median income of $31,000 or anyone earning less than $45,000 per year. Those people make up about two-thirds of the population.
Such a measure would cost the government a huge amount of money. Over a 10-year period, the Conservatives became adept at reducing government revenue, and increasing the TFSA limit to $10,000 was the icing on the cake. To substantiate that, I have a quote from Gilles L. Bourque, Éditions Vie Économique coordinator and Institut de recherche en économie contemporaine researcher:
...this tax advantage is a ticking time bomb for federal and provincial public finances.
...it is clear that maintaining and expanding this kind of measure flies in the face of every principle of social solidarity and fiscal fairness and will worsen every aspect of social inequality.
I have another quotation I would like to read, because I find it incredible that the wealthy are being allowed to put more and more money aside, while those most in need simply cannot do the same. Furthermore, this measure would have affected several social programs.
For instance, Malcolm Hamilton, a senior fellow at the C. D. Howe Institute, said, “Raising the TFSA limit is a short-sighted election tactic that will lead to real problems 10 to 15 years from now.”
Why? By allowing more people to set money aside tax-free, future governments would have less financial resources to pay for other national social programs, such as pharmacare, old age security, GST rebates, and long-term health care.
That is why the proposal to bring the limit back down to $5,500 makes sense, in my view. It is a step in the right direction. Unfortunately, Bill has a major flaw, specifically a change in the tax rates that makes no sense, but I hope we can correct it at the committee stage.
The current economic context is bleak. In Quebec, hundreds of Bombardier workers are going to be laid off. The weak dollar has increased the cost of groceries. Just look at the price of fruits and vegetables and the number of people, seniors, low-income families, and single mothers who are having a hard time preparing meals with fresh fruit and vegetables on a daily basis.
The Liberals presented a plan to the House not to help those having a hard time making ends meet, but to help the well-off, the wealthiest in our society. One of the key measures in this bill gives a break to the second tax bracket, those who earn between $45,000 and $90,000 a year. Does the realize that the median annual income in Canada is only $31,000?
As a result, the first tax bracket, or nearly two-thirds of Canadians, will get nothing, nada, niet, no help, when they could use a bit of breathing room.
According to the parliamentary budget officer, almost 17.9 million people will not benefit in any way from this Liberal measure. Even worse, those with the highest income will continue to receive a generous tax credit thanks to the Liberal plan. Thus, every member of Parliament will receive an additional $679.22. I imagine that we should thank the minister for that. I am obviously being very sarcastic.
According to Statistics Canada, in my riding of Salaberry—Suroît, almost nine in ten people, which is a huge number, earn less than $50,000 and will receive next to nothing, or just a few crumbs if they earn between $45,000 and $50,000. The income of almost half the households in my riding is less than $45,000, and they will receive absolutely nothing. I am certain that most of my colleagues, like me, would prefer to give my tax credit to a cashier working in a grocery store in Salaberry-de-Valleyfield, a labourer in Saint-Zotique, or a social worker in Huntingdon, who struggle to provide services every day for the greater well-being of their fellow citizens.
We must do much better for Canadians. In recent days, we have heard a lot about the KPMG scandal, which the Liberal government did not handle very well. The CRA made a secret deal with this accounting firm and millionaires who committed fraud. Under this agreement, the millionaires will only pay their taxes, but no fines and virtually no interest. The CBC talked about an amnesty.
What message is the Liberal government sending? Tax avoidance is for those with millions of dollars in the bank. There will be no additional cost and, in exchange, the tax rate will increase slightly. However, let us keep it quiet; we are not going to tell anyone.
This Liberal plan will clearly not address the growing inequality in our society and the CRA's attitude could well contribute to it.
The NDP's proposal would give more breathing room to a large part of the population that does not have access to specific programs, such as income splitting.
Rather than reducing the tax rate for the second tax bracket, the NDP is asking the government to lower the rate for the first tax bracket by one percentage point, from 15% to 14%, for those who earn less than $45,000 a year. That would allow 83% of Canadians, those who earn less than $45,000 a year, to pay less tax and keep more money in their pockets, which is not what will happen under the proposed Bill .
According to the parliamentary budget officer, nine million Canadians would benefit from the measures proposed by the NDP. It would also give a little extra help to a hairdresser in Coteau-du-Lac, an office worker in Beauharnois, or a cook in Hemmingford, for example. That is why we are in politics. We are supposed to work to reduce inequalities, so that there is less and less social and economic injustice.
The difference in cost when compared to the Liberal's proposal would be minimal, and it would be offset by a slight tax increase of half a percentage point for large corporations. That is the least that our large banks, in particular, could do. This increase in corporate taxes would even generate a surplus that could be used to develop the working income tax benefit, an effective program that increases the income of workers with low annual incomes.
Bill needs a lot of work, and I hope that the government will listen to our suggestions. The NDP is a progressive party and we are proposing realistic measures to help the real middle class, the people who truly need help.
I want to share some measures that could change the daily lives of my constituents: the national child benefit supplement, a $400 increase to the guaranteed income supplement for seniors, and the return of the tax credit for labour-sponsored funds that help small businesses in Salaberry—Suroît and Quebec.
We will continue to pressure the Liberals to follow through on the changes they announced and to work towards reducing inequalities across Canada.
I hope that Bill can be amended in committee to reflect the NDP's suggestions on taxation.
Mr. Speaker, when the Liberals originally introduced this new system of tax breaks, they promised it would be revenue neutral. Shortly after taking office, however, they abandoned this promise. It is projected by the parliamentary budget officer that Bill 's changes will cost Canadians $8.9 billion over the next six years.
This gross miscalculation speaks to the government's incompetence, and the fact that the Liberals are proceeding with this legislation after admitting they have broken this promise to Canadians speaks to their integrity.
In fact, many of the government commitments seem to be falling by the wayside: a $10-billion deficit cap, consultation with opposition, openness and transparency. That is three months and three major broken promises. So much for sunny ways.
This leads to a lack of trust in the government's future plans. There is a lack of transparency with this promise. Who knows how much higher these costs will go? There is a lack of evidence or explanation for why Bill 's changes would stimulate economic growth and development for Canadians.
Tax breaks for the middle class are not, in themselves, sufficient to stimulate economic growth and development. It is, therefore, quite likely that more initiatives will have to be introduced.
These will require even more money from the government. This money will either have to be drawn from reduced spending on public services or from the taxpayer base. Given the vulnerable economic state of Canada, tapping further into government revenue is particularly risky for this country as a whole, and also for individual Canadians.
The government continues to move ahead with these types of long-term commitments, even amidst a struggling economy, a weakening dollar, and plummeting oil prices. Canadians are asking how much higher the cost will go. These kinds of commitments are one more chip into creating long-term structural deficits, and in turn they discourage investment and growth in a struggling economy.
Our Conservative government worked very hard every day in office to stretch every cent. We left the government a surplus and expected that to be spent with caution. It seems that work was all for nothing.
The Liberals continue signalling that they plan to run massive, long-term structural deficits, which will increase the burden on taxpayers and leave Canada more vulnerable to sudden economic shocks. Our Conservative caucus will continue to stand up for taxpayers, and press the government to approach spending in a responsible manner, to protect against risk, to ensure stability and long-term prosperity.
On the subject of changes to the tax-free savings account, all Canadians over 18 may contribute to TFSAs for all purposes, not just education and retirement savings. This makes the savings mechanism the most flexible way for all to save. It is because of this that many Canadians of all backgrounds have come to rely on the tax-free savings accounts.
We have heard from students saving for higher education, families saving to start a family, entrepreneurs saving for their businesses, parents saving for their children, and low-income seniors saving for retirement, all of whom are investing in TFSAs.
It is Canadians of all kinds of financial backgrounds too. The majority of TFSA accounts belong to low- and middle-income earners. The fact is that two-thirds of TFSAs are held by tax filers with incomes less than $60,000.
What kind of message is the government projecting when it is taking away the ability for Canadians to save for their future, while racking up massive deficits?
Why does the government continue down the path of a nanny-state approach, limiting choice for Canadians to save their own money?
These are not mandatory contributions. In contrast, the Ontario Liberal plan for a provincial pension plan is. If the argument is that very few Canadians have the ability to afford a maximum contribution, why is the member opposite so opposed to offering that choice, while in other instances forcing it upon others?
Personal fiscal responsibility is something that our government should be encouraging, regardless if it refuses to lead by example.
We are in uncertain times, with dropping commodity prices, a dipping dollar, and slowing economic growth.
Recently, the PBO released a report on the state of household indebtedness and financial vulnerability in Canadians, showing that household debt-servicing capacity continues to trend upward, while capacity to meet debt obligations diminishes.
Households now face overwhelming exposure to negative income and interest rates, and are more likely to become delinquent in debt payments.
Responsible Canadians are looking for a way to save when times are good, so they can be protected. Reducing TFSA contribution limits would reduce the abilities of real Canadians to save for retirement and to protect themselves from economic shock.
This would translate to a greater burden upon all taxpayers to support those who will be unable to support themselves. Why is the government hiding these future costs from its taxpayers?
In contrast to Liberal deficit spending, whose purposes are unclear, TFSAs provide a concrete vehicle for financial independence for Canadians. Instead of encouraging consumption, they encourage saving—promoting independent control over funds—which shields Canadians from economic shock.
The burden of economic shocks on vulnerable Canadians will ultimately fall on the overall taxpaying base if the government must step in and support these individuals. Money will come from taxpayers, or public services will be compromised for the expense of increased government financial support.
TFSAs remove barriers for all Canadians to maximize their financial positions. TFSAs are open to all Canadians over 18 years of age with valid social insurance numbers. They are simple and accessible. Anyone can contribute any amount. They encourage financial literacy and curiosity.
In fact, the majority of TFSA accounts belong to low- and middle-income earners. TFSAs allow investments—any sort of investment—deposited into them to grow tax-free. TFSAs make retirement savings more accessible, simple, and compelling. If individuals do not save enough for retirement, all taxpaying Canadians will ultimately be responsible for the burden.
The government's spending plans, including its nebulous deficits, are risky. We have seen no concrete evidence for targeted growth plans. Savings will shield vulnerable Canadians from the risks involved.
Conversely, limiting savings tools will limit economic self-protection and make Canadians more economically dependent upon the government. This is dangerous, given the lack of clear economic plans and directions from the government. Government dependence will likely translate to higher taxes for Canadians across a wide socioeconomic spectrum.
In popular debate, the media, and academic research, a brain drain out of Canada is cited as a very real possibility. Most doctors, lawyers, and other skilled professionals are found in the upper tax bracket, and their departure could be very dangerous for Canada.
Progressive taxation reduces investment, risk-taking, and entrepreneurial activities, since a large share of these activities is done by high-income earners.
The substitution effect is a principle that essentially states, “I'm getting less money for each hour I work; therefore, I should work fewer hours”.
Tax avoidance activities such as reporting less income, using tax-planning techniques to reduce the tax burden, working fewer hours, or even not seeking job promotions are very real possibilities.
Progressive income taxes reduce the returns to education, since high incomes are associated with high levels of education. They reduce incentives to build human capital, the kind of investment the talked about in Davos, while turning his back on our resources sector.
Academic consensus among experts is that taxes on both corporate and personal income are particularly harmful to economic growth, as economic growth ultimately comes from production, innovation, and risk-taking.
The conclusion is that tax rates of over 50% will not raise revenue. Between provincial and federal income taxes for top income earners, this is what would happen under Bill .
I will not support Bill .
Mr. Speaker, I too am pleased to join in the debate today. This is, of course, really the first substantial piece of legislation that has been put forward by the Liberals. It is interesting that we have mostly been focused on the change in the marginal tax rate and the TFSA, and I am going to spend most of my time on those two issues, but for people who might be following the debate, this legislation does have a couple of other pieces to it: charitable donation tax credits, income earned by a child, income earned by a trust, and taxation of corporations and shareholders.
If our party, when we were government, had put this particular bill forward, I think the Liberals would have said we had put forward an omnibus bill. They would have asked what we were doing and they would have said it was an omnibus bill because it included six different pieces.
I recognize that within an important piece of legislation it is sometimes sensible to do things that perhaps are not that controversial and are a bit of housecleaning, so there are some more pieces to this bill. It is not an omnibus bill, although the Liberals would have characterized it as such if we had put it forward, but there are some additional pieces.
As I indicated, the focus of my comments is going to be on the two pieces that most people are making comments on today. One of my colleagues called it the bill that giveth and taketh away. I think I would describe it as a bill that represents the first broken promise of the Liberal government.
The Liberals are saying they went to Canadians and were given this mandate. They told Canadians they were going to tax the rich and give it to the middle class. The Liberals did indeed tell Canadians that particular piece of information, but what they also said when they were going to Canadians during the election period was that the change would be revenue neutral. That is broken promise number one, and it is a big broken promise. It is an $8.9-billion broken promise over six years. This is not about fulfilling a promise, but about breaking a promise to Canadians.
What is that change in the tax structure that giveth to the middle class and taketh from the rich? Apparently just today, I understand, the of Canada called it a tiny bit of redistribution. That is what he called that change in the tax level for people who earn over $200,000. Moving from 29% to 33%, he said, is just a tiny bit of redistribution.
If we do the math, what he has actually done is given them a 12% increase in their taxes. Going from 29% to 33% is 12%. People can make $200,000, and it is a lot of money, but people with a large family who all of a sudden are hit with a 12% hike in their taxes will find it is a pretty significant hit. Everyone's circumstances can be a little bit different, but for those people who earn over $200,000 who are maybe paying off student debt or who have other elements, calling it a tiny bit of redistribution is a bit of a fallacy.
When the said he was going to give the money to the middle class, he never really defined the middle class. I do not think Canadians would consider the parliamentarians in this House, who are making good money, to be part of the middle class. I think our salaries are available on a website, and we are just below the $200,000. Some of the parliamentary secretaries are probably butting up to that level. They are actually benefiting the most from this tax break. If Canadians had been told that fact, they would have perhaps been less enthusiastic. They might have asked about those people making $190,000 getting tax breaks, and not only getting tax breaks but adding to the debt of our nation by doing so.
To be quite frank, the Conservative government believed in keeping our taxes as low as possible. Conservatives always support lower taxes. To be frank, when $6 a week is being added directly to the debt of this country, I think that if I had to make a choice, I would say, “Please do not put that $6 a week onto my children. I will pay that $6 a week myself.”
There are a lot of problems with this measure, which is absolutely unsupportable from our perspective. The biggest concern is that it would create a structural deficit when we actually handed the Liberals a surplus. Wrong promises and miscalculations have created a significant problem for them. We have called this a “whoops” in other speeches. This will be a burden on our children.
Now I want to shift to the tax-free savings account. The Liberals seem to love the stick approach to getting people to do things when it comes to government programs, making things mandatory, increasing the CPP, like the Ontario government is doing. They do not like carrots. They would rather have a big government program that makes people do things. Our party believes we need to provide Canadians with the opportunity and the flexibility to make their own choices.
The Liberals talk about only the rich being able to afford $10,000. I will give the House a couple of real-life examples about why the TFSA is an incredibly important tool for Canadians and that the $10,000 contribution limit is quite reasonable.
My first example is that of a young adult who has come into a small inheritance. This young person has never been able to contribute to a tax-free savings account, having just finished school. This young adult decides to put that money into a tax-free savings account and is able to grow that investment instead of spending that inheritance right away. This individual has decided to use it for the future, and in a couple of years buys a first house. Is that an inappropriate thing to do? It is a reasonable and sensible choice for someone who otherwise would have had no options.
Many seniors are now selling their homes and moving to assisted living facilities, or to a complex that provides support. They might have made some money on the sale of their homes. They have maxed out their RRSPs, but they have room to put some of that money into a tax-free savings vehicle that will help them in the future to pay their monthly expenses.
These are just two examples of why having a robust tax-free savings account is important. I recognize that not all Canadians can put in $10,000 every year, but there are times in their lives when they could. That is the beauty of the product. It is not that individuals had to contribute $10,000 every year. There are years where people might not be able to put a penny in, and there might be some years where they could top it up to where they needed to be.
I have demonstrated today that Bill , the first substantial bill to be put forward in the House by the Liberal Party, has some serious and significant flaws. It would add to Canada's structural deficit. It would not do all that much in terms of the middle class. It would take away an important tool that people have in terms of saving for their future, whether they be young or old.
I would ask that the Liberals perhaps reconsider this legislation. They have been given a surplus. I would urge them to not keep adding to the debt. We are $18 billion, we are $30 billion in deficit. Those are frightening numbers. Perhaps the Liberals should rethink their plan and look at what they are going to leave for their children and their grandchildren.
Mr. Speaker, I rise in opposition this afternoon to Bill , an act to amend the Income Tax Act.
Bill would implement the so-called Liberal middle-class tax cut. The biggest problem with that so-called Liberal middle-class tax cut is that it does not actually cut taxes for middle-income Canadians. I will get to that in just a minute.
Bill would reduce the income tax rate from 22% to 20.5% for Canadians earning less than $200,000. It sounds pretty good on the surface, and I guess during the election campaign a lot of Canadians thought it sounded pretty good, but, like everything, the devil is in the details. What does it actually mean? How much are Canadians actually going to save? The answer is not a lot.
Take, for example, a Canadian who earns between $62,000 and $78,000. How much would that Canadian save under the so-called Liberal middle-class tax cut? The answer is about $117 a year or $2.25 a week. What does $2.25 get someone in Canada these days? I think a person would be lucky to get a double-double at Tim Hortons.
What about someone who is making $48,000 to $52,000? How much would that individual get back by way of the so-called Liberal middle-class tax cut? It would be $51 a year, or less than a $1 a day. That person would be lucky to get a doughnut or a muffin at Tim Hortons in the morning for less than $1, but that is what the Liberals are offering Canadians earning $48,000 to $52,000 a year.
How about Canadians who earn $45,000? I would say that is pretty well smack dab in the middle of the middle class. How much will get under the so-called Liberal middle-class tax cut? The answer is zero, zip, nada. As I say, the biggest problem with the so-called Liberal middle-class tax cut is that it does not cut taxes for middle-class Canadians.
What is the cost of the so-called Liberal middle-class tax cut? The , during the election campaign, went all over Canada with his sunny ways and blue skies, saying it would be revenue neutral. Then barely after the ballots were counted, the had his finance minister, because I guess he did not have the courage to do so himself, say it would not be revenue neutral.
Mr. Michael Cooper: Whoops, Mr. Speaker, it would blow a $1-billion hole in the deficit. I repeat, $1 billion.
Then we just found out from the parliamentary budget officer that, no, it will not be a $1-billion hole, but more like a $1.7-billion hole in the deficit. That is on top of the billions and billions and billions of dollars the government keeps on digging as it blows through the $1-billion surplus the previous Conservative government gave it.
Who is going to bear the burden of the so-called Liberal middle-class tax cut? We guessed it: middle-class Canadians. In order to pay for the so-called Liberal middle-class tax cut, the government is going to roll back TFSAs, the tax-free savings accounts, the most flexible investment mechanism available to Canadians.
It would roll back the opportunity for students to save for higher education, roll back the opportunity for families to save for their children, roll back the opportunity for entrepreneurs to save for their small businesses, and roll back the opportunity for seniors to save for a later day. That is what the current government wants to do. The Liberals want to roll back TFSAs from middle-income Canadians.
The frightening part is that the Liberals are just getting started, because the and members opposite keep talking about boutique tax credits. The Liberals effectively want to roll back all of the tax relief that the previous Conservative government provided Canadians. Canadians on average got back $6,600 in tax relief. All of that is in jeopardy because of the Liberals' so-called middle-class tax cut.
I heard one of my colleagues say “smoke and mirrors”. I would say that the Liberal middle-class tax cut is really a Liberal middle-class tax cut fraud. That is what it is.
The so-called Liberal middle-class tax cut would do absolutely nothing to give back to hard-working Canadians who work hard every single day in order to move ahead. It would give them back absolutely nothing. The so-called Liberal middle-class tax cut would do absolutely nothing. In fact, it would take away the opportunity for hard-working Canadians to save and invest. On top of that, it would burden middle-class Canadians with billions of dollars of additional debt that other middle-class Canadians would in the end repay.
It is absolutely essential and imperative for the sake of middle-class Canadians that Bill be defeated.
Mr. Speaker, I would like to take the opportunity at the beginning of this speech to thank all of the people of Peace River—Westlock for giving me the opportunity to stand in the House and make this speech.
Today, I rise to address the issue of fiscal responsibility. The previous Conservative government left the Liberal government a $1 billion surplus. At a time when the rest of the world was in economic turmoil, we kept a steady hand on the wheel and steered our country through that turmoil. Not only did we manage our resources prudently, but we paved a $1 billion road into the future.
In a few short months, the Liberals have squandered that surplus. When they originally introduced their new tax plan, they promised it would be revenue neutral. Since then, the has conceded that the plan was not revenue neutral and would in fact leave us with a $1 billion in the hole.
A report from the parliamentary budget officer estimates the costs to be closer to $1.7 billion. This gross miscalculation speaks to the government's incompetence, and the fact that the Liberals are proceeding with legislation after admitting they have broken this promise to Canadians. This speaks to their integrity.
In my riding in northern Alberta, we have a number of industries, agriculture, oil and gas, and lumber, to name a few. We are a province of entrepreneurs, business people who understand the necessity of practising fiscal responsibility if they want their businesses to grow and thrive.
A spending spree on the taxpayers' dime is not only a sign of poor fiscal management; it is an irresponsible behaviour that has drastic consequences down the road.
Who is going to pay for this shortfall? The Liberal Party has talked about eliminating a number of tax credits. When we look at the available tax credits, it is clear who will pay for the shortfall. It might be first-time home buyers, or families with kids in sports or the arts, or students or apprentices. The very people who need the tax credits will be the ones paying off the Liberals' billion dollar spending spree.
As everyone here knows, the price of a barrel of oil has negatively impacted Alberta. There have been massive layoffs in the oil patch, and this has had a ripple effect in many of our communities.
In my riding, unemployment is up, EI applications are up, and the outlook for businesses, especially those connected with the oil patch, is grim. I had a call from a transport truck driver the other day. He is in his fifties and has worked hard his entire life. Now, he cannot find work. Trucking outfits are scaling back, and no one is hiring. His EI has run out, his savings are dwindling, and his rent is past due.
Why is the government focusing on tax credits and income tax hikes when what we need is a plan to create jobs? We need a plan to get Canada back on solid ground.
There is a lack of evidence or explanation on why the changes in Bill would stimulate economic growth and development for Canadians. The believes that small businesses are tax havens. Does he plan on increasing payroll taxes on job creators?
It is important to remember that small businesses create a large percentage of the jobs in Canada. Increasing payroll taxes on our job creators creates an extra burden on companies that are already struggling in these economic times. The fact is that many companies are downsizing right now. Now is not the time to increase business taxes.
Neither is it time to raise taxes on higher income earners. These are the people who traditionally create jobs and grow our overall economy. By increasing taxes on these job creators, we are discouraging success, and punishing those who have done well for themselves. We cannot spend our way to growth, and we cannot tax our way to prosperity.
We have looked at all the tax cuts the Liberals are proposing for the middle class. Based on Finance Canada's estimates, the new Liberal tax plan amounts to, on average, an extra $6.34 per week for those individuals who qualify, and $6.34 might buy a block of cheese or a few litres of gas. This tax break would not be enough to grow our economy. It would not stimulate growth or innovation. This modification to the income tax rate would hardly qualify as a significant tax relief for Canadians and it comes with a much larger price tag.
When the previous Conservative government was in office, we reduced taxes more than 140 times. We have a proud legacy of tax fairness. We cut taxes through targeted measures that were responsible.
We would all be better off if the government worried less about the income tax rate and instead focused on creating jobs so more people could pay in.
There is another amendment I would like to address, and that is the issue of tax-free savings accounts. The Liberals have unaccountably decided to slash contribution limits for the tax-free savings account to $5,500.
Many Canadians rely on these savings accounts to plan for their future. Students save for higher education, couples save to start a family, entrepreneurs save to start a business, parents save for their children, and low-income seniors save for their retirement. These changes would make life less affordable for Canadians who are trying to save for their vulnerable years.
Financial literacy is a subject now taught in some schools. As a parent, I will teach my own children practical money skills. It is an important concept to grasp, that if we want to keep ourselves financially secure and free of uncontrollable debt, financial responsibility is important to the well-being of individuals, families, businesses, and our nation.
A recent report from the parliamentary budget officer points out that Canadians are taking on uncontrollable levels of debt, and we have the highest debt in the G7 at 171% of our annual income. Households now face overwhelming exposure to negative income and interest rates and will likely become delinquent in their debt payment.
Responsible Canadians are looking for a way to save when times are good so that they can be protected. Reducing TFSA contribution limits would reduce the ability of Canadians to save for their retirement and to protect themselves in economic downturns.
TFSAs provide a concrete vehicle for financial independence for Canadians. We should be encouraging responsible saving. Instead, the Liberals are turning a blind eye to financial literacy. They are taking options away for saving and are putting more Canadians at risk. This will translate into a greater burden on all taxpayers to support those who are unable to support themselves.
I would like to point out that this future cost to taxpayers is what the Liberals have neglected to calculate. Fiscal responsibility is a fundamental component of good government. The Liberal tax plan, a plan that runs massive and long-term deficits, will burden the taxpayer and leave Canada more vulnerable to sudden, economic shock.
Our Conservative caucus will stand up for taxpayers and press the government to approach spending in a responsible manner, to protect against risk, and to ensure stability and long-term prosperity.
Mr. Speaker, I am pleased to rise to speak to Bill . I am interested in finding out why the Liberals think that someone earning $200,000 a year deserves more tax credits. That is completely irrational and makes no sense.
My riding encompasses Montmagny, L'Islet, Kamouraska, and Rivière-du-Loup, as the name suggests. My riding borders the riding of my colleague from and it includes Rivière-du-Loup and La Pocatière. La Pocatière is the gateway to the Lower St. Lawrence region, which is considered to be the poorest region in Canada. In some municipalities, the people are very far from rich.
Under this bill, Canadians who earn less than $45,000 a year, which represents the vast majority of my constituents, will not get any money at all.
The Liberals are implementing policies to supposedly help the middle class. This party boasts about being the middle-class party, but in reality, it is not helping 99% of middle-class Canadians, who do not earn more than $45,000 a year.
In my riding, family income does not exceed an average of $50,000 a year, which is very low.
As members of Parliament, we earn $167,500 a year, and we will soon earn nearly $170,000. Parliamentary secretaries earn a little more than $200,000. I will not even get into how much ministers earn. The fact remains that people in our tax bracket do not need this. We earn enough money and we do not need this money to justify tax cuts. We are the ones who will benefit the most. That makes absolutely no sense.
I repeat: in my riding, the middle class does not earn $170,000 a year. It earns less than $45,000 a year. I am a business owner, and I can tell you that I do not pay average wages of $45,000 a year if I want to keep my business afloat and continue to invest.
According to the government, this measure should be revenue neutral, in other words, it should not cause a deficit. The parliamentary budget officer said that the deficit will not be $1 billion, as announced, but rather $1.7 billion. It is completely irrational and makes no sense. What is more, that amount is permanent. It will be a permanent item in the budget in the years to come. By all accounts, this measure is ill-conceived and flawed. It needs to be changed. In any case, more than two-thirds of the population will not get one cent from this measure. It is not fair to anyone.
On average, a family might get an extra $6.50 a week. That is totally ridiculous. That is not even enough for two cups of coffee. The government needs to realize that it cannot use borrowed money to put the country in debt for policies like these, just to give a small group of people some extra money that is significant for that particular group. The majority of the Canadian middle class earns $45,000 or less a year. There is no doubt that changes need to be made to this legislation.
The other item is the TFSA. I am a business owner and I invest a great deal in my business. Over the past 10 or 15 years, I did not have the opportunity to take advantage of an RRSP or the TFSA because I invested my money in my business. Not everyone can count on owning a business to save for the future.
This measure allowed people to save $5,000. Then the ceiling was raised to $5,500, and then finally to $10,000. The Liberals just took away the $5,000 we added in our budget.
That is no way to help people save for the future. People have to understand that just because there is a ceiling does not mean that everyone is going to reach it one day.
That is not what that means at all. It means that people are being given tax room so that they can save.
I think it was the member for who said earlier that, in her riding, there are poor people who cannot invest a single penny because the cost of staying in their house or apartment is so high.
That is the reality. It is not just true in her riding. It is the same everywhere. When we develop a policy, we need to do so for all Canadians. Some people are successful and can save money. I forget the exact name, but there are organizations, I think they are called ACEF, that provide education, information, and training on how to save for adults and youth with good incomes. Tax room in the form of TFSAs or RRSPs is needed so that people can save money.
These are programs or mechanisms that allow people to save money. If these mechanisms, this room to save, were not available, people would not save money. People need to save. They need to start thinking about the future when they are young. When they get close to retirement and they have more money to invest, they need to be able to make tax-sheltered investments so that they can live comfortably for as long as possible.
The bill is badly flawed. I repeat: the middle class does not earn $170,000 a year. Everyone agrees that Canada's real middle class, people who earn less than $45,000, will not benefit at all from this bill. It is therefore a bad bill.