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View Anne Minh-Thu Quach Profile
View Anne Minh-Thu Quach Profile
2018-11-27 12:54 [p.24017]
Mr. Speaker, today we are talking about the Liberals, who are proposing a hefty 850-page bill. It is an omnibus bill. It is the largest bill ever introduced in the House of Commons. The omnibus bills that the Conservatives used to introduce were 75 pages long. Today we are seeing an 800% or even 900% increase with this 851-page bill. The Liberals were elected on a promise to be more transparent and more accountable.
Furthermore, we are debating this unusually large bill under a gag order. This morning, the Minister of Employment, Workforce Development and Labour was boasting about how she has already given opposition members 15 hours of debate.
According to my calculations, 15 hours of debate divided by 851 pages equals one minute and five seconds per page. Is it responsible to allocate so little time to debate a bill? I use the phrase “debate a bill” loosely, because only eight NDP MPs and five Conservative MPs spoke to this bill before today, if memory serves.
The Liberals say that they are more democratic, more transparent and more accountable, but I have my doubts. I think that everyone has reason to doubt the goodwill and good faith of the Liberals.
As my colleague from Jonquière said, this bill amends seven acts. The Liberals have never been able to tell us how many clauses and subclauses are in this mammoth bill. They themselves do not even know. They do not even know all the things they put in this bill. It is ridiculous to have to debate it under time allocation.
I will focus on just a few points in my speech because, unfortunately, nobody in the House can cover all the measures introduced in the nearly 900-page bill in just 10 minutes.
Women have been waiting 42 years for the Liberals to keep their promises on pay equity. Unions have been fighting Canada Post in court over that for 30 years. The government is yet again telling women they will have to wait. Pay equity legislation will come into force not in a matter of weeks or months, but in four years.
Our party has been a tireless advocate for this important issue. We have even proposed changes in the past. As we heard from my colleague from Jonquière, the NDP proposed 36 amendments. The Conservatives proposed amendments. The other parties proposed amendments. How many amendments did the Liberals accept? Not one single amendment was accepted, despite the fact that they reflected the demands of unions and the demands of various women's groups. Not one amendment was accepted to improve the bill, to give women a stronger voice. The Liberals did not agree to any of our suggestions.
Canada is facing some major challenges that require a bolder approach than the one the Liberals are using. The first initiatives requiring employers to determine how many people must receive more pay are a step in the right direction. However, what could possibly justify how long it will take to implement this? Is it acceptable that women continue to be underpaid for another four years under this government?
In 2018, women earn on average $12,700 less than men. If we multiply that by four, that means nearly $51,000 less for women. The government says it is proud to have introduced pay equity legislation. However, women will still have $51,000 less in their pockets, which is a lot.
If I had to summarize the government's action, I would have to say that it is nothing but half measures. The time it will take to implement pay equity is the biggest problem lurking behind the government's facade of good intentions, but it is not the only one. There is also the fact that budget implementation act, 2018, No. 2 does not require employers to apply pay equity to workers who were already under contract if changes are subsequently made to the contract following a call for tenders. Why? We do not know.
The bill also does not include any of the pay transparency measures that advocates have called for. Salaries cannot be compared when pay equity issues are being addressed. What is wrong with that picture? Will the pay equity commissioner have the resources needed to do his or her work properly? We do not know that either.
Speaking of half measures, why did the government not adopt the recommendations set out in the Bilson report, including the creation of a pay equity hearings tribunal? Lastly, the Liberals are once again professing to support equality while telling a segment of the population that is being treated unfairly to grin and bear it. I would like to remind the government that women represent 51% of the population.
The government made its choice. It chose not to make the investments needed to ensure that women receive equal pay, and chose instead to give big business, the richest people in the world, $14 billion in tax cuts. This measure was introduced last week in the Minister of Finance's fall economic statement. Did the rich and these big corporations really need that $14 billion this fall? I do not think so. They are getting help, yet many of them evade taxes or openly use tax havens to avoid paying taxes.
The same is true for web giants like Netflix, Apple and Facebook, which pay virtually nothing in taxes and then get tax breaks. However, they use our services and are quite happy to hire highly skilled workers from Quebec and Canada. The Liberals claim that our SMEs are important and that they want to support buying local, but they support the web giants that do not need to worry about all of the taxes imposed on our SMEs under Canadian law.
How much of this money will go to rural areas? We have no idea. The government is allocating billions of dollars for businesses to buy new equipment and innovate, but how can we innovate when our rural areas do not even have access to high-speed Internet or a 3G or LTE cellular network?
The Auditor General criticized the government for its lack of judgment in managing public money allocated to the connect to innovate program. Some municipalities in my riding are turned down for this program or CRTC funds for ridiculous reasons, such as the fact that there is already a home with high-speed Internet within a 25-kilometre radius. This is happening in Saint-Louis-de-Gonzague, and all the areas served by Coop CSUR in the Soulanges area are under the same restriction. Do we really want a double standard for our rural and urban areas?
On another subject, how will the poverty reduction strategy be funded? Apparently, it will be made up of existing programs without any additional money. I think the Liberals are just thumbing their noses at us. They have targets, but no plan. That seems to be a theme with this government, because it does not have a plan for the environment either. The Liberals got themselves elected in 2015 by saying, “We have a plan, we have a plan, we have a plan”. Today, there is no plan, there is no plan, there is no plan. I think I will use that in an ad.
Are they going to help the most vulnerable citizens access health care services more easily? No. There is no plan for pharmacare either, even though we know that we could save $3 billion a year according to conservative estimates. We could make a lot of investments in health care with that money.
What other measures does the bill include to drastically reduce our CO2 and methane emissions starting this year? None. Is the government planning to help rural areas go green, develop public transit, make their homes more energy efficient, or use solar and wind power? No.
Is the government going to implement restrictions to help big corporations reduce their greenhouse gas emissions? No, of course there is no plan to do that. Will the federal government finally have a costed plan for reducing its own greenhouse gas emissions? No, it has no plan for that either.
It has been pointed out that many citizen movements have been launched. In Quebec, artists, scientists, economists and citizens have signed A Pact for the Transition. Millennials have been criticized for not being more involved in all kinds of things, but yesterday, young people who realized that the government is not doing anything for the environment took action, and a youth environmental group called ENvironnement JEUnesse brought suit against the federal government for failing to take action on the environment.
I have to stop now because I am out of time, but that shows just how important the environment is to people 35 and under and how absurd it was for the government to spend $4.5 billion of taxpayers' money on a pipeline.
That move was not a plan or investment for keeping our planet healthy for current and future generations. It is shameful.
View Jamie Schmale Profile
Mr. Speaker, I have the pleasure to rise today to speak to an important piece of legislation, Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. The bill would, upon royal assent, modify up to 75 of Canada's bilateral tax treaties, also known as covered tax agreements, or CTAs, in order to combat base erosion and profit sharing, or BEPS, as it is more commonly known in taxation vernacular, for those watching at home.
For those Canadians I just mentioned, and indeed for the members of the House who are not tax lawyers, including me, Bill C-82 is quite a mouthful, but basically, the bill purports to make it more difficult for corporations to hide money in offshore tax havens. At this early stage in debate, it is worth discussing a few of the concepts inherent in the bill so that we can have a more fulsome discussion moving forward.
First, the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting is a multilateral instrument, or MLI, which is the product of the Organisation for Economic Co-operation and Development's G20 BEPS project, which began in 2013. Base erosion and profit shifting, or BEPS, refers to tax-planning strategies that exploit loopholes in tax rules to artificially shift profits to low- or no-tax jurisdictions where there is little or no economic activity, allowing little to no corporate tax to be paid. Moderate estimates indicate annual losses of anywhere from 4% to 10% of global corporate income tax revenues, or $177 billion to $425 billion annually. In Canada, we are looking at somewhere between $3 billion and $6 billion annually in taxes that could go to pay for any number of important programs or projects to benefit all Canadians. It might even buy us a pipeline or maybe pay off a third of the annual deficit, if the Liberals were so inclined.
Leaders of the OECD and G20 countries, as well as over 60 other countries, jointly developed 15 actions to tackle tax avoidance, improve the coherence of international tax rules and ensure more transparent tax regimes. The purpose of the MLI is to allow signatories to swiftly implement tax treaty related measures to prevent BEPS. The goal of implementing the measures in the MLI is to end treaty abuse and treaty shopping by transposing, in existing tax treaties, these jurisdictions' commitment to minimally include in their tax treaties tools to ensure that these treaties were used the way the signatories initially envisioned. Once implemented, the MLI would modify up to 75 existing bilateral tax treaties with, at minimum, the adoption of the OECD treaty-abuse and improved dispute-resolution standards.
It is important to note that there are scales on which Canada can adopt the 15 actions included in the MLI. Its treaty-abuse standard consists of two parts. First is an amended preamble, suggesting that covered tax treaties are intended to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance. Second is a broad anti-avoidance rule, referred to as the principal purpose test, or PPT. Under the PPT, any tax benefit could be denied where it was reasonable to conclude that one of the main reasons for the transaction was to avoid paying taxes unless it was established that granting the benefit would be in accordance with the object and purposes of the relevant provisions within the treaty.
The other minimum standard is the adoption of mandatory binding arbitration to assist in resolving treaty-based disputes in a timely and efficient manner. Initially, Canada took a conservative approach toward the MLI, agreeing to implement the minimum standards. However, recently, the government has shifted that approach and has announced its intention to remove some of its initial reservations on optional MLI provisions, namely, those pertaining to dividends, article 8; capital gains, article 9; dual residency tie-breaker rules, article 4; and relief from double taxation, article 5.
I believe that this is an important factor to consider, because following ratification, Canada would be unable to add any reservations. However, signatories could withdraw or narrow a reservation following ratification.
The provisional MLI position of each country indicates the tax treaties it intends to cover, the options it has chosen and the reservations it has made. Signatories can amend their MLI positions until ratification. After ratification, countries choose to opt in with respect to optional provisions or to withdraw reservations. This makes the debate and analysis of Bill C-82 very important at committee stage.
Make no mistake, the Conservatives do support, in principle, Bill C-82. We want a full vetting at committee and we want to ensure the bill will meet the expectations of Canadians from coast to coast to coast. I think everyone in the House would agree we must get this right.
I would like to turn our attention now to the four additional provisions added to Bill C-82.
The first addition is to implement a one-year holding period to access treaty-based withholding tax reductions on dividends under a covered tax agreement. A covered tax agreement, or CTA, is an agreement for the avoidance of double taxation enforced between countries to the MLI and for which countries have made a notification that they wish to modify the agreement using the MLI. Double taxation is a taxation principle referring to income taxes paid twice on the same amount of earned income. It could occur when income is taxed at both the corporate level and the personal level.
Double taxation also occurs in international trade, when the same income is taxed in two different jurisdictions, and that is the area we are most concerned with here today. Income may be taxed in the jurisdiction where it is earned then taxed again when it is repatriated in the business's home country. To avoid these issues, countries sign treaties for the avoidance of double taxation. It is the abuse of that system which fosters the need for the bill we are discussing today.
The withholding tax reductions on dividends generally apply where the recipient of a dividend is a company that owns, holds or controls more than a certain amount of the shares or voting power of the dividend-paying company. However, article 8 of the MLI will deny access to the special relief if those ownership conditions are not met throughout a one-year period, including the day of the payment of the dividends.
The second optional provision would add an examination period of one year preceding alienation of the property in determining whether a CTA would exempt capital gains on the sale of equity interests that would not derive their value principally from immovable property.
According to Osler, Hoskin & Harcourt LLP's article, “Canada tables NWMM to ratify MLI; Updates MLI reservations”: It states:
Canada’s domestic “taxable Canadian property” rules impose a five-year lookback period for determining whether shares derive their value principally from certain types of Canadian properties (such as real property and resource properties). By contrast, many of Canada’s tax treaties exempt gains from being taxed in Canada where the shares sold by a resident of the other state do not derive their value principally from immovable property in Canada at the time of disposition. Article 9(1) of the MLI, which Canada proposes to adopt, will allow the source country to tax such gains if the relevant value threshold is met at any time during the 365 days preceding the disposition.
The new provision on capital gains will also extend the application of existing provisions in Covered Tax Agreements that do not already provide for such taxation to allow taxation of gains from both shares and other equity interests (such as interests in partnerships and trusts), in each case provided the relevant immovable property threshold is met during the 365-day testing period.
The third change [Article 4] is to adopt a provision for resolving dual resident entity cases...Article 4 of the MLI adds certain factors that the competent authorities should take into account when determining residency status: place of effective management, place where the entity is incorporated or otherwise constituted, “and any other relevant factors.”
The fourth and last addition is the adoption of a provision of the MLI that will allow certain treaty partners to move from an exemption system as their method of relieving double taxation, to a foreign tax credit system.
There are a number of considerations I would like to raise, considerations I hope will be addressed at committee.
On article 4, Osler, Hoskin & Harcourt LLP, in its analysis, warns:
The new article on dual resident entities does not provide for a clear result where the entity is a dual resident by virtue of a corporate continuance. Some such entities may be governed by the laws of both the jurisdiction under which they are created and the one to which they are continued. The U.S.-Canada treaty contains a tie-breaker rule that provides that such an entity would be resident only in the jurisdiction where the entity was created. By referring to the place where the entity is incorporated or otherwise constituted as a relevant factor, the new MLI provision may be signalling that a similar approach should be applied...
Whether there is a one-size-fits-all template that can be applied to address the concern or that this is best solved by an agreement between signatories is not clear. I again encourage the committee to look into this matter and provide some clarity on this.
Article 5 of the MLI allows countries to adopt one of three different options when removing such treaty-based guarantees. It is unclear at this moment which of the three options the government intends to implement. This may be a matter for the government to decide after ratification or it may not.
In any event, some time to consider witness testimony on the options available to eliminate the issues of double taxation will provide some guidance, I think, for the government when the time comes to implement an option.
The government did not announce an intention to remove its reservation on article 7(4), which would specifically allow treaty benefits that would otherwise be denied under the PPT to be granted in full or in part by the competent authorities in appropriate circumstances.
Osler, Hoskin & Harcourt LLP cautions that this is problem, illustrated with this example. It states:
...assume that an investor would be entitled to a 15% withholding tax rate on dividends had it made a direct investment into Canada, but instead invests into Canada through an intermediary that would have been entitled to a 10% withholding tax rate. A denial of treaty benefits under the PPT could lead to a 25% withholding tax rate on dividends to the investor.
Without the provisions in Article 7(4) the mechanism to allow for remedies will not exist.
According to Osler:
This is particularly important, for example, for private equity and other collective investors that may be resident in multiple jurisdictions. Canada has also not provided any additional guidance on when or how the PPT is intended to apply to private equity and other collective investment vehicles--despite many suggestions that further guidance is needed (either on a unilateral or bilateral basis).
I would strongly encourage the committee to examine this matter and pay particular attention to the very broadly worded PPT, which may be open to various interpretations.
Gowling WLG's partner, Laura Gheorghiu, in her article on the MLI tax treaty and what it means for taxpayers, brings to our attention concerns regarding article 8. She states that article 8:
...addresses the reduction of the 25% domestic dividend withholding rate under most CTAs to 5% where the dividend is paid to a corporation that, at the time of the payment, owns, holds or controls directly (and in certain CTAs, indirectly) at least 10% of votes (or in certain cases holds more than 10% of the shares) of the dividend payor. Article 8 will deny the reduced treaty withholding tax rate unless the applicable ownership conditions are met throughout a 365-day period that includes the day of the payment of the dividends. For this purpose, ownership changes resulting from corporate reorganizations (e.g. amalgamations) of the dividend payor or shareholder are ignored. This...holding period is meant to ensure that non-resident companies that engage in certain short-term share acquisitions will not benefit from the lower treaty dividend withholding tax rates.
The application of the hold period rule will be problematic in practice because the 365-day period can straddle the transaction date. Where the holding period test has not been met at the transaction time, the corporate dividend payor has a difficult choice to make. If it withholds at the lower rate, it exposes itself to the risk that the shareholder will not meet the holding period test and, therefore, the payor will be liable for the additional withholding tax and penalties. Alternatively, if it withholds on the dividend at the domestic rate, and the test is met, the shareholder will then need to apply for a refund of the excess withholding, which will engender additional costs and delays.
As of today, 84 countries have signed the MLI including Canada. Six more are interested in signing and 10 have ratified the convention.
It is interesting to me that the United States has chosen not to sign the MLI. Rather than pursuing legislation to recoup unpaid taxes in an investment like the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, the U.S. has chosen a different approach.
When the OECD first announced its plan to go after tax planning and double taxation by multinationals, the U.S. had the highest statutory corporate tax rate in the OECD. Since then, the U.S. has passed historic corporate tax cuts as part of the tax cuts and jobs act, lowering its headline corporate tax rate from 35% to 21%, less than the OECD average.
The U.S. has also made significant changes to the international taxation of its U.S. multinationals.
The U.S. has taken steps to address BEPS and non-taxation of multilateral income by creating strong incentives for companies to relocate investment, economic activity and profits in the U.S. through a more competitive tax code..
To be clear, I am not advocating for the abandonment of Bill C-82 As I mentioned earlier, the Conservatives support the principles behind the bill, but we also support lower taxes for Canadians and businesses. Lower corporate taxes, reducing red tape and creating an investor-friendly climate is something we need to do in concert with Bill C-82. The more investment dollars we can attract and retain in Canada, the less taxes we need to spend in pursuit of those who exploit loopholes in tax rules.
In 2013, the previous Conservative government supported the effort to establish the OECD G20 BEPS working group to curtail profit shifting and tax avoidance.
The Conservatives support measures to crack down on tax evasion. Aggressive tax avoidance is a major source of lost tax revenue for high tax jurisdictions like Canada. However, let us remember that the vast majority of citizens, residents and businesses in Canada pay their taxes and follow the rules. Having a fair tax system for all Canadians and corporations that do business in Canada is fundamental to a healthy and equitable economy.
I want to quickly talk about what is happening when there is a lower-tax environment, something we do when we lower regulations and red tape and allow businesses to thrive in open and free markets. We are seeing that, as I mentioned, in the United States. The last number I saw was that there were 6.7 million unfilled jobs in the United States. Obviously, when that happens, wages go up, which we are seeing that all across the board, unemployment goes down, bonuses are given out and employees are better off than they were before. More money in more people's pockets gives them more options, more choices in their own lives to spend on projects and things they feel are important to them.
When we look at what is going on in Canada, we are almost doing the exact opposite: taxes are going up; red tape and regulations are grabbing onto businesses, they are strangling them; and businesses are looking for options elsewhere. We are already seeing it in the energy sector.
We have lost out on tens of billions of dollars worth of investment because of the government. Investment is fleeing; we are losing jobs, families are worse off than they were before; and we are going in the opposite direction in what most countries are doing, including one of our competitors, the United States. This is important to note because those of us on this side of the House believe that lowering taxes, allowing free markets to weed out bad actors, allowing people to have more choice and freedom in their daily lives is the best way to have a free and open society, like we do here.
With careful consideration of the bill and amendments at committee, these measures would prevent treaty abuse, improve dispute resolution and reduce the incidence of tax avoidance. However, I also laid out another case as well.
View Dean Allison Profile
View Dean Allison Profile
2017-11-08 16:13 [p.15150]
Mr. Speaker, with regard the budget implementation act, I would like to talk about the climate around investment these days.
It is important to understand that while the government can create jobs, programs, and a number of different things, it is ultimately entrepreneurs who create the work, the employment, and the wealth in our country. I say that because one of the things the government fails to understand, or one of the challenges it has had over the last little while, is the uncertainty that small businesses face.
There is a number of issues and a number of things the Liberals are trying to do in stimulating the country, such as universal child benefit and other that obviously will make families better off. We do not have a problem with that. The challenge we have is the instability of what entrepreneurs face. Let me give an example.
While we were in government, we did a number of things to try to encourage entrepreneurs to start businesses. I used the acronym called “TIRE” because it was a multi-pronged approach. We lowered corporate taxes to one of the lowest in the G7, down to 25%. We can say okay, it was great that we lowered corporate taxes, but what did that do? That was just one thing in a number of things we did, but it was important to create certainty for entrepreneurs to flourish.
Let me talk about the acronym of TIRE and what it stands for. The “T” stands for taxes and trade. One of the things we did was lowered taxes for corporations because we wanted to increase investment in Canada and we wanted to create a favourable environment to encourage other crown corporations and individuals to invest here.
The second thing we did was trade. We worked on the CETA deal, which we pretty much got to the finish line. It was nice to see the Liberals complete it. However, we were there. We negotiated it over the four years we were in government.
The second one was TPP, another agreement we worked on and had actually signed it but were waiting for ratification on it. This is important because Canada has about 35 million people and they cannot possibly sell all their goods to each other. We are definitely a trading nation. These are important things. We count very heavily on the U.S. That number used to be 85% to 90%. I realize now it is down to 75%. However, we need to create other opportunities. This was one of the reasons why we worked on trade along with taxes.
The “I” in TIRE, is infrastructure, investments, and immigration reform. We worked on these things. We spent major amounts of money in infrastructure across the country, and we got it out in record time. The Liberal government has also promised infrastructure money, but we have not seen a whole lot in the first two years. There is always some concern with a half billion dollars going to the Asia Infrastructure Bank, but the budget officer has said that almost $2 billion have been unspent at this point in time.
The “R” stands for research and development, and red tape reduction. If we look at the R and D, the government continues to spend money on it and continues to commit money to it. These are good things, but sometimes it misses the mark. We have talked about superclusters being important. My challenge is that as a small business person, it is very hard to access those things. Most businesses in the country are small businesses. While there is probably nothing wrong with the concept of superclusters, the challenge is that money needs to go to entrepreneurs and small businesses.
Entrepreneurs tell us all the time that it is always difficult to raise capital. If we look at some of these things, this always seems to be the number one issue. When we look at places like San Francisco, silicon valley, Boston, Israel, and a number of other places around the world, there is great entrepreneurship. A lot of times Canadian companies have to go south of the border to raise money for second rounds, third rounds, VC rounds, and those kinds of things. These are some of the things with which we are challenged. When we look at R and D, absolutely important is the number of programs. The government has programs such as SR&ED a few others that are effective and helpful.
I sat on the red tape reduction committee. We travelled the country, and red tape was another thing that frustrated entrepreneurs to no end. We have to find ways to continue. One of the things we implemented was the one for one rule. When a new regulation was introduced, we would reduce a regulation.
One of the challenges is this. The federal government regulates a number of areas. However, then there are provincial and municipal jurisdictions and each of these add a layer and make it difficult for entrepreneurs to get started.
The last thing, the “E” in TIRE, is entrepreneurship and the economy. One of the things I always tell people when I talk to them about business is that there is a whole suite of things that we need to do in order to encourage entrepreneurship in this country. Right now, there are obviously a number of incubators and accelerators. Members are obviously familiar with Communitech in Waterloo, which does an amazing job. There are a number of other incubators and accelerators across this country. I always wonder if it would not make sense, as we move forward, to encourage colleges and universities to look at making that part of their mandate. I realize that is not always possible, but I think if we are going to teach entrepreneurship, if we are going to talk to people about starting businesses, then we also have to give them a place to actually help hone their craft.
Some of the things that are helpful for incubators are, obviously, that there is access to capital and money, that there are mentors, and that there is an environment where there is a chance to work and feed off what is going on with other individuals. As I visited a number of incubators in Silicon Valley, one of the things that was amazing was this whole issue of like-mindedness. People could come together, share their ideas, have access to capital, and all those other things.
However, one of the things we struggle with in this country is that we do not have a culture of entrepreneurship. I talk to students taking business programs all the time and ask them what they think they are going to do. They tell me that once they get their MBA, they want to work for a big company. Now, there is nothing wrong with working for a big company, but one of the challenges we have in this country is that we do not have enough people willing to start businesses and be entrepreneurial.
As I look at these things that we worked on as a government, I use TIRE, where the “T” is for taxes and trade; the “I” is for infrastructure, investments, and immigration reform, which is trying to help businesses bring in the people they need; the “R” is for R and D, and red tape reduction; and, of course, the “E” is for entrepreneurship and economy.
One of the things that has been a challenge with the latest implementation, or the thought process of taxes and taxation, has been the uncertainty for small businesses. I have literally had all kinds of phone calls coming into my office. People were saying that they were not happy and were not sure what they were going to do.
I co-hosted a round table here on Parliament Hill as the co-chair of the entrepreneur caucus with my colleagues. We had the CFIB and a number of individuals. We had a high-net-worth accountant, who represents a lot of money. He said that since this has happened, over $1 billion has gone south of the border. Now, we are never going to see a press release sent out on who was going to invest in Canada but will not now. Money is fluid, and it can move in different directions. Quite frankly, when there is uncertainty, it makes it a challenge.
I also want to talk about the unintended consequences of some of the proposed tax changes. Remember, in previous years, it took the Carter commission four years to look at tax changes and another six years to implement them, which is over a decade. However, this was done in less than 75 days in the middle of the summer.
Doctors are a segment of people who were singled out as not paying their fair share of taxes. I have an individual in my office who lives in my riding but has a practice in Welland. She is a dermatologist, and her husband is an orthopaedic surgeon. She feels totally vilified with what is going on here. She and her husband have over $400,000 in debt, with another $100,000 for her to set up her practice in Welland. She said that if things do not change that, in two years when her lease runs out, she will be moving south of the border. I am not saying that every doctor is leaving, but there are certainly individuals out there who do not feel like the hard work and time they put in is going to be rewarded.
As I look at some of the budget implementation act, I see large deficits, which are for a time when the economy is not doing that well. Right now, the economy has been doing relatively well. What happens if we continue to spend all of this money that is for a rainy day? Our growth is better than average, and maybe better than expected, but I believe that on the horizon we will see less than 2% growth, or 1% and change, over the next couple of years.
If we stack up some of things that are going on here, such as the uncertainty with the tax proposals, the fact remains that it is still hard for entrepreneurs to access money. When we look at taxing passive income, it makes it very discouraging for people trying to grow the economy, create jobs, and, quite frankly, trying to help Canada grow as a nation.
I would encourage my friends on the other side of the House to reconsider what they are looking at, where they are going with these tax changes, and the deficit, because there will be lasting and long-term results.
View Francesco Sorbara Profile
Lib. (ON)
View Francesco Sorbara Profile
2017-02-03 13:06 [p.8456]
Mr. Speaker, it is with great pleasure that I rise to speak to Bill C-30 for the second time now. It is a great event when we can implement a progressive trade agenda between Canada and our second-largest trading partner, the European Union.
It gives me great pleasure as the chair of the Canada-Italy Interparliamentary Group, as an Italian citizen, a European citizen, as well as a Canadian citizen to say that our two communities are working together. This is an unprecedented trade deal in the world we live in. It will bring great benefits to the Canadian economy as well as the European economy. It will open up new markets for our manufacturers and our service providers, firms looking to create personal wealth for their citizens. It will drive long-term economic growth.
When I look at the trade deal that we brought over the finish line, that we completed as a government, I must congratulate our current Minister of Foreign Affairs for her work on completing the agreement, and I congratulate the European Parliament for passing the agreement and now it will go to the individual European Union members.
When I look at what we are putting in place as a government, I say how are we growing the middle class, how are we strengthening the middle class, which is the backbone of our economy, the backbone of Canadian society for generations, and that is the way it will continue.
This morning we created a thing called Toronto Global, where we joined with our municipal partners and our provincial partners and we invested funds to help grow the Toronto economy, an investment hub in Toronto. Toronto as we know is an economic generator in Canada, along with the oil patch in Alberta, along with the manufacturing sector in the heartland of Ontario, and here we are investing.
A few months ago, the Minister of Foreign Affairs created this Investment Canada hub downtown, $218 million over five years, again, to attract investment to Canada. Why? To create good-paying, middle-class jobs for all Canadians, for the future of my daughters, and for folks here who may be grandparents or parents, so that they will have good jobs for their kids.
I look at our progressive trade agenda that has been implemented with the European Union. I look at some of the things we have done with this deal. There is a chapter on environmental protection, a chapter on sustainable development, and a chapter on labour. This is what I would call a trade deal that is win-win, fair, right, and progressive. We need to underscore it, because that is important for our relationship with all countries around the world, and specifically with the European Union.
I look at companies such as Fiat Chrysler Canada, which is part of FCA group headed out of Turin, Italy. I look at investments they have made in cities like Windsor and Brampton. I look at the jobs that they are creating, the good middle-class jobs that they are providing for Canadians from coast to coast to coast. It is very important.
I look at my own personal background and what trade has done for me. I grew up in northern British Columbia. To pay for my university education, I worked at the Canadian grain elevator, which as we can imagine exported wheat, barley, and oats through Prince Rupert to countries all over the world. These were very good, and still are very good, above-average paying middle-class jobs.
It gives me great pride to acknowledge that trade grows our Canadian economy. Trade is good, and that is what this deal does. The European Union alone imports over $2 trillion worth of goods and services. That is larger than the Canadian economy. We think about the opportunities that Canadian companies will have to export their manufactured goods, but even above that, above the manufacturing sector, we think of the services, so we think of consultants, we think of organizations. We look at the opportunities for procurement, for transportation companies to not only bid on jobs in the European Union, but also to employ Canadians. The opportunities are tremendous.
We look at what we have done to strengthen the middle class in addition to CETA. We look at our plan for infrastructure in Canada. Obviously that will be a plan that will strengthen our ports, our airports, and our waterways, so goods and services can be exported expeditiously and efficiently to countries in Europe.
Another bonus is our plan for middle-class Canadians in terms of taxes. We lowered taxes last year. Nine million Canadians now pay lower taxes in Canada. Over $20 billion of tax relief is another measure to strengthen the middle class. The Canada child benefit is something to strengthen the middle class. CETA is something that will strengthen the middle class. I am very proud to speak to this measure today.
When I look at the country of Italy where my parents came from, the trade that goes back and forth and the strong cultural and historic ties, I can only say that CETA is a win-win for both where I came from and for the country we now call home and love. CETA provides us with a tremendous opportunity to strengthen ties, to invest in both countries, and to create those good-paying middle-class jobs.
I would say to my colleagues on the other side of the aisle that if they look at the economic data on Canada, we have had very strong gross domestic product and employment numbers in the last two to three months. We have seen a pick-up in Canada. There is uncertainty, but the only thing we can do with uncertainty is to have a steady hand. That is why we have a foreign affairs minister doing what she is doing and a trade minister doing what he is doing, which is reaching out to our counterparts and allies. We will stand together with them, grow the economy through CETA, and continue to do that. I am proud to be a part of that.
On the infrastructure side, there is $181 billion over 12 years. As we know, infrastructure allows for the strengthening of economic growth, today and tomorrow. We will continue to implement that. In a few months, in the riding I am from, they will open a new subway, the York-Spadina subway extension from the city of Toronto. That is infrastructure that is being put to use. Approximately three or four weeks ago, I was proud to announce an investment by the Canadian government for a new inter-regional transit terminal in the city of Vaughan. That will again strengthen the local economy, move goods and services, move people, and strengthen the middle class.
CETA is a trade deal that will help us grow the economy, create good jobs, and at the same time strengthen the middle class. I have to underline that.
CETA's improvements for services, investments, labour mobility, and government procurement are groundbreaking. It will be a model for other trade deals that will occur throughout the world. For Canadian companies, 98% of Europe's tariff lines will be eliminated. Again, this is all great for the economy.
As I have heard this morning and in past days, we have been hit with uncertainty on the horizon. However, CETA provides an avenue of certainty for Canadian firms to know that they can trade and invest with the second-largest economy in the world and the second-largest trading partner for Canada. That will allow us to grow a stronger economy.
I will also look at the other measures we have implemented to strengthen the middle class, such as the CPP enhancement, which was groundbreaking for us. It will allow the next generation to know that they will have a strong and healthy retirement, and allow them to retire in dignity.
I think my time is almost up. However, I would like to say this with respect to the CETA deal. It demonstrates to us just how important relationships are in today's world. I believe that the majority of members in the House are in support of the deal. It demonstrates to all of us the path forward that we, as a government, must take with our international allies, a path forward where progressive trade deals and a progressive agenda win. That is the way we will grow our economy. That is the way we will strengthen our middle class. I continue to underline that.
In reading over CETA and the chapters on environmental protection, the innovative approach to investor protection and investment dispute resolution provisions, and the safeguards that are in place regarding our manufacturers—we have obviously excluded the social services aspect from the deal—this deal is groundbreaking. We have finished it, and I am proud of that fact.
To conclude, as someone who has worked internationally, both in New York City and for some time in London, England, and has travelled extensively in Europe and the United States, I look at this deal as almost guaranteeing for my children the opportunities that I have had. That is effectively what it does. It allows us to grow our economy and provide opportunities for individuals and businesses who want to trade, invest, create wealth, and create good-paying Canadian jobs.
View Cathy McLeod Profile
Madam Speaker, I am very pleased to rise to speak to the budget implementation act, 2016, No. 2.
For people who might be watching or listening, a brief summary of the process may be helpful in terms of why we are here and what we are debating.
In the spring, the Liberals presented their first budget. The actual implementation comes in two phases. There was Bill C-15, the Budget Implementation Act, 2016, No. 1, which of course was passed last spring. Now we are implementing the next phase of the budget. It is known as the budget implementation act, 2016, No. 2. These are the technical measures to move the budget into law.
The Liberals always used to talk about the Conservatives and the omnibus nature of our legislation. I am not going to call this omnibus, although we can see that it has many different features. It is necessary, sometimes, to move a budget into law that impacts lots of different pieces of legislation. The Liberals called it omnibus. I just call it good governance and how a budget is actually put into action.
Part 1 is a number of income tax measures. Part 2 focuses on the goods and services tax, the harmonized sales tax, and some commitments made there. Part 3 focuses on the excise tax. Part 4 has a number of different pieces, including the Employment Insurance Act, the Old Age Security Act, the Canada Education Savings Act, the Canada Disability Savings Act, the Financial Consumer Protection Framework, the Royal Canadian Mint Act, and funds management, etcetera. What we can see is a broad piece of legislation impacting many acts of Parliament. It is not called omnibus. It really is just a government doing its business.
Before I talk about my concerns about this particular budget and the budget implementation bill, not all is bad. There are perhaps one or two features that I actually think are reasonable.
We all know of lower-income senior citizen couples who are perhaps separated. Perhaps one needs additional care and has to go into a home. Their benefits are still calculated as a couple. I think it is reasonable to say that if a couple is separated and someone has to go into a home, they now have double the living expenses, so the calculation of the GIS and OAS will not be impacted.
I want to note that there are one or two pieces that I think are reasonable.
More importantly, I think the budget is a disaster for Canada and overall is totally unsupportable.
I remember very fondly when I had the privilege of serving on the finance committee when Canada entered the global recession. The late hon. Jim Flaherty was our finance minister. He was also named the best finance minister in Canada.
It was a global crisis at the time. It was a catastrophe. We were very concerned. Leaders around the world had many sleepless nights because of the global recession. I can remember that the hon. Jim Flaherty came up with a plan. He articulated that plan to Canadians. He said what he was going to do over a number of years. Not only did he articulate the plan, he executed the plan, and he executed the plan in almost exactly the way he said he would when he first announced that we were going to have to take extraordinary measures to deal with the global recession.
It is important to say that it was a plan. It was articulated to Canadians, it was executed, and the results speak for themselves.
Up to about 2008-09, things were moving along very well. About $30 million or $40 million was paid back on the debt, then we were struck by the global recession.
The plan at the time was a number of years of deficit spending. The reason I am going over this is to contrast the current plan of the Liberals with the plan we had back then. It was deficit spending to deal with an extraordinary situation, but it was declining deficit spending, starting at approximately $55 billion, and over five years getting back to surplus. That was the plan. It was seen as short term. We needed an infusion to get the wheels going when the systems were failing around us.
Canada can be incredibly proud of having the stimulus. I would say to the Liberals that it was truly infrastructure stimulus. It got out the door fast. It was something that actually gave a jolt to the economy. We did not make mistakes and create deficits because of calculation errors.
Jim Flaherty also knew that once we opened the taps of government spending, it becomes incredibly difficult to turn those taps off. Any of us who lived through the 1990s, when we were in an absolutely horrendous position, realize that turning off those taps is very painful. It was very painful for the provinces. They saw health care transfers come down. There was a lot of pain and effort to get our finances back into a reasonable condition. That was a lesson we recognized.
The late hon. Jim Flaherty would have been incredibly proud to know that he achieved his plan. He did not live long enough to see the results. There are some lessons the Liberal government needs to take from that exercise.
It is also important to note that for 2015-16, the parliamentary budget officer recently confirmed that had it not been for the Liberal spending spree once it took office in October and November, we would have had a $2.9 billion surplus.
Different times require different remedies. Canada came through the global recession. None of our banks failed. We had a short-term stimulus for the economy, we had the best job creation record in the G7, and we moved into a bit of a steady state.
Yes, we have slow growth, but we are not in a recession. That is critical to remember. Slow growth is not a recession, and a different remedy is required economically. The Liberals seem to feel that it needs the kind of jolt we had during the global recession. We need a different remedy to deal with the slow-growth situation we are in, as opposed to the catastrophe we faced with the global recession.
I want to talk about how the Liberals believe they need to craft a budget. In the last year we heard that the budget would balance itself and the economy would grow from the heart out. Nothing could be further from the truth. The budget will not balance itself, and the economy is not going to grow from the heart out. It takes a lot of work and a lot of specific policies to ensure that the government does its part in creating an environment for the economy to grow, and balancing a budget requires some spending discipline. That is something we have not been seeing.
I talked about how we had a plan and that it was not a structural deficit but stimulus spending. It was roads and bridges and different investments that created short-term jobs.
What we are creating with the policies of this new government is a structural deficit that is growing and growing and is going to be more concerning as time goes on.
First, on the middle-class tax cut the Liberals so proudly talk about, they miscalculated by a couple of billion dollars. It was going to be revenue neutral. What the rich pay, the middle-class was going to benefit from, but they missed by a billion or two in the structural deficit.
It was a difficult decision to move the age of eligibility for old age security from 65 to 67. Canadians are living longer, and that is what a lot of other countries are doing. A number of countries in the world have moved the eligibility age for old age security from 65 to 67, because times are different. People are living a lot longer. This was something that would create a sustainable structure for old age security. The Liberals have obliterated that. It is now back to age 65. They have not taken into account the huge structural deficit that will be created with that.
The Liberals talk very proudly about their child care benefit. However, they did not index it. They have learned from the parliamentary budget officer that in a few years it will not be as good as the program we had in place. Therefore, they are indexing it through this budget implementation act. However, the cost of indexing it is $4.2 billion over five years. We have not heard what they are doing to create that revenue, so that will also become part of this structural deficit.
During the election, the Liberals claimed they had to run a small deficit of $10 billion because we had a sluggish economy. It was $30 billion, give or take, when they presented the budget. We will see what the minister has to say next week about this whole economic forecast. I hope I can be optimistic, but I am worried about that $30 billion deficit increasing. What we have is a deficit that continues to grow. There is no plan to create a fiscal anchor to bring it back to balance. They speak of the debt-to-GDP ratio, but have no anchor. Rather, they have a horrific spending problem.
At the same time, the middle class appears to be the touchstone word that we hear from the Liberals. To be frank, instead of growing the middle class, the Liberals are breaking it. They are creating an environment that is very difficult for businesses to thrive in.
Another broken promise is with respect to small business, which is the foundation of our economy. It is critical for employment and the revenues that come into government. The Liberals made a promise, reversed it, and now the small business tax has gone up.
During the election, every party committed to a low small business tax, because we recognized that what the government did not take in, the businesses would put into growing their business and increasing their payroll. Therefore, we felt that supporting small business with low taxes would be fundamentally important for the economy. The Liberals backtracked on that promise.
The next thing the Liberals did to small business owners was cook up a deal with respect to the Canada pension plan. Not only has small business had its tax raised, but it will cost an additional $2,000 a year for every employee: $1,000 paid by the employer and $1,000 by the employee. That might not sound like a lot, but for a new business with 20 employees that is struggling to make payroll, $20,000 can make a huge difference as to what it does and how it deals with its business. A number of these measures are creating some significant issues for the middle class.
I need to make a quick comment with respect to rural communities. Again, rural communities are incredibly important. We do not have a softwood lumber agreement signed. We are concerned about these good-paying, middle-class jobs, which keep the fabric of our rural communities alive. It will be an especially important issue for British Columbia. There does not seem to be any concern at all for rural communities.
Today, our colleague who represents Vegreville, which is a small community of 1,000 people, made reference to the fact that 200 immigration jobs would be moved to Edmonton. That will potentially destroy that community. It will have a huge impact.
The minister justified that by suggesting there were economies of scale. It does not take much to recognize that the commercial rates in Edmonton are going to be a whole lot different from the commercial rates in a small town. I really doubt that the business model is going to have that much impact. In the meanwhile, what they are doing is destroying a small town, and those who choose to move to Edmonton, all of a sudden, are going to face huge challenges because housing prices are extremely different.
We have talked about the middle class. I really do not think the middle class is benefiting from this particular budget. We certainly know that our small businesses are not benefiting from the budget. We certainly know the additional complications that are being created around environmental assessment processes, which are really causing pause. I heard from an investor from Korea who was looking at making significant investments in our country, but who is now backing away. He was saying there's now no certainty, that they do not know what the environmental assessment process will look like and how the carbon tax will fit in. People are looking at Canada and saying that maybe their money would be better spent in another place.
What the government does not realize is that money is mobile and for people to invest in Canada, they need to have confidence in Canada, but the changing landscape with government processes is really creating some challenges. They need to have certainty. They need to know what the process is. They need to know how long the process is.
Yesterday, we had a pretty powerful discussion about the indigenous child welfare system. The fact was brought up that during the first 100 days in office, the Prime Minister committed to spending billions of dollars in other countries. I am not sure those billions are really creating a positive impact in Canada. I do agree that we need to do our part to help address some of the challenges facing other countries. However, when we have in Canada some aboriginal communities facing underfunding of their child welfare services, that is a problem.
In conclusion, the government has time to take pause. It is not too late. But please, before you create this structural deficit, those the government says it is helping, the children, are the ones who are going to have to pay it back.
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