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View Peter Julian Profile
NDP (BC)
Mr. Speaker, I just want to say that I am coming to you from the traditional unceded territory of the QayQayt First Nation and the Coast Salish peoples. I thank them for this privilege.
I would like to start off by paying tribute to frontline workers, health care workers and emergency responders across the country. We have seen over the last 15 months, as our country has entered into this unparalleled health crisis, incredible bravery and incredible dedication on behalf of all those Canadians who have tried to keep us alive and well, and who continue to serve us during this pandemic.
Now, we can look, and there is a potential light at the end of the tunnel, as we start to see, slowly, the number of infections going down. We still have much work to do, there is no doubt, but we can start to envisage what kind of society we can actually build post-COVID.
I do that from my background as a financial administrator. As members know, I started out my adult working life as a factory worker and eventually was able to save up enough money to go back to school and learn about finances and financial management. I was able, fortunately, to use that in a variety of social enterprises and organizations.
The one thing I learned that is fundamental, when we talk about financial administration, is that we have to follow the money to see what the priorities of a social enterprise, business or organization are. What the priorities are is often dictated by where the flow of money goes. In this debate and this discussion around the main estimates and where we are as a country, it is fundamentally important to ask the question “Where is the money flowing to?” That is why this main estimates process and this debate tonight are so fundamentally important.
As members well know, in our corner of the House, and this dates back to the time of Tommy Douglas, within the NDP we have always believed that it is fundamentally important to make sure that those who are the wealthiest in society pay their fair share. Tommy Douglas was able to, in the first democratic socialist government in North America, actually put in place universal health care. He was able to do that because he put in place a fair tax system.
We can look at the NDP governments since that time. I am certainly not telling tales out of school. As members are well aware, the federal ministry of finance is not a hotbed of New Democrats. However, the federal ministries of finance have consistently, over the last decades, acknowledged that NDP governments have been the best in terms of balancing budgets and providing services for people. That is the same approach that we will take, one day, to provide the type of stewardship that we believe is fundamental to renewing our country, providing the supports, and building a society where everyone matters.
Let us look at where the current government stands, in terms of that flow of money. Prior to the budget, we put forward, and it should have been reflected in the estimates process, a variety of smart ideas that other countries have already incorporated as we go through this pandemic. We believe that we should be putting into place, as other countries have done, a wealth tax. We should be saying to the billionaires and the ultrarich of this country that they have to pay their fair share. They benefited from this pandemic and their wealth has increased, and now they have to give some of that back, to make sure that we all have the wherewithal to move forward.
We also proposed a pandemic profits tax, because we have seen in previous crises, like the Second World War, that putting that type of practice into place ensures that companies maintain the same profit levels but are not profiting unduly from the suffering that so many people have experienced through COVID-19.
We have also been foremost with regard to cracking down on overseas tax havens. As members know, I have spoken out about this. The member for Burnaby South, our national leader, the member for Hamilton Centre and the rest of the NDP caucus have been vociferous in this regard because these lose an astounding amount of taxpayers' money every year. They are the result of both Conservative actions and Liberal actions.
The Parliamentary Budget Officer pointed out two years ago that Canadians lose $25 billion every year to overseas tax havens. That $25 billion could meet an enormous amount of need. It could serve in job creation or the transition to a clean energy economy. All of those things could be accomplished, but what we see is an intricate network of tax havens that has built up over the years because of both Conservative and Liberal government decisions. The cost to Canadians is profoundly strong when we think of $25 billion a year in taxpayers' money being lost to overseas tax havens.
When we couple that $25 billion with a pandemic profits tax, which the Parliamentary Budget Officer evaluated at $8 billion, and a wealth tax, which would bring in $10 billion a year, we start to see what financial underpinnings could be put into place to actually meet the needs of Canadians across the country. We often see that there is a flow of money to the ultrarich: the wealthiest banks and billionaires in this country. At the same time, we often see that those who have the most critical needs do not even get a trickle of that financial flow.
At the beginning of this crisis, where did the government decide to flow its money? We know this now. This is no secret. In fact, the Liberal government seems to be proud of this fact. Within four days of the pandemic hitting in Canada, an astounding, unbelievable, record amount of $750 billion was made available in liquidity supports to Canada's big banks through a variety of mechanisms and federal institutions: OSFI, the CMHC and the Bank of Canada. That is $750 billion. It is unparalleled in our history and unprecedented.
If we go back to the Harper government, there were criticisms at that time because during the global financial crisis $116 billion in liquidity support was provided to the banking sector. Of course the banking sector prospered enormously from it, but $750 billion is so difficult to get our minds around. It is a vast amount of money. It is a colossal flow of an unprecedented amount of cash in liquidity supports to the banking sector.
The banks have responded accordingly. There were no conditions attached. They jacked up their service fees, as so many Canadians know. They did not reduce their interest rates to zero, as we saw in the credit union movement. Credit unions, such as Community Savings Credit Union in Vancouver, reduced their line of credit interest to zero and their credit card rates to zero because they knew Canadians were suffering. Canadians had to struggle to put food on the table, and the credit union sector in many respects responded to that, but the banking sector did not. It just kept seeing that money roll in. During the pandemic, its profits have been $60 billion so far. It is unbelievable.
I pointed out earlier that there is no pandemic profits tax and there is no wealth tax. Canada's billionaires have increased their wealth during this pandemic by an astounding $80 billion, yet there are no measures for any sort of fairness or to make sure the ultrarich pay their fair share. We can follow the money and see, with the Liberal government, that as we went through an unprecedented crisis its first and foremost thought was for the banks and billionaires of this country. This is unique in the responses of governments through crises in the past.
During the Second World War when we needed to win the battle against Nazism and fascism, the federal government put into place an excess profits tax and wealth taxes to ensure that we had the wherewithal to win the war effort. After the Second World War, we were able to build an unprecedented amount of public housing, hospitals and educational institutions across the country and to build the transportation sector. The country boomed in so many respects because the investments were there starting with a fair tax system, but not this time. There is no wealth tax, no pandemic profits tax and no cracking down on overseas tax havens.
What did the NDP do? We hear rumours that the Prime Minister desperately wants to call an election, and we will all be asked what we did during the pandemic.
Under the leadership of the member for Burnaby South, the NDP went to work immediately. We saw the huge amounts of money that were made available to the banking sector right off the bat, and we started pushing for an emergency response benefit that could lift people above the poverty line. We forced and pushed because we had seen from the best examples of other countries that we needed to put in a place a 75% wage subsidy. We pushed hard, as members know, to make that a reality.
The track record is very clear. We pushed in the House of Commons for supports for students, seniors and people with disabilities, with the big caveat that the Liberal government never put in place wholesale supports for all people with disabilities. It has now asked them to wait three years before there is any hope of support. People with disabilities will have to wait three years while banks had to wait four days in the midst of a pandemic. That is the national tragedy we see with the flow of money going to the ultrarich, the wealthiest, to make sure that banks and billionaires benefit first.
New Democrats fought those fights and won many of them over the course of the past year. I know that has made a difference. We still see suffering. We still see people lining up at food banks in unprecedented numbers. Tragically we still see people with disabilities who are barely getting by. Tragically we still see people closing, for the last time, the doors of businesses that they may have devoted their lives to building up. These are community businesses that served the public and created jobs in communities across this country, but in so many cases those small businesses have had to close their doors. Nothing could be more tragic.
As we come out of such a profound crisis, we see many people being left behind; however, the government has put forward a budget that slashes the CERB benefits even more. The CRB was slashed from $500 a week to $300 a week, which is below the poverty level. We see the government responding to the economic crisis of seniors by saying that those over 75 get a top-up on their OAS to lift them up to the poverty line, but those under 75 are out of luck with the government.
That contrasts vividly with the government paying out money through the wage subsidy to profitable companies that then paid huge executive bonuses or often paid dividends to their investors. The government says that is okay, despite the NDP's warnings from the very beginning that it had to put measures into place. It is not a problem: It will recover money elsewhere, but then it slashes the CERB benefits for people who need them the most.
What does this mean, in terms of an estimates process, and how would the NDP approach the issue of making sure we meet the needs of Canadians and respond to the crisis that so many people are living through in this country? As I have already mentioned, New Democrats would tackle it from the revenue side. We would make sure that the ultrarich pay their fair share. We would crack down on overseas tax havens. The government never introduced a single piece of legislation that adequately responded to the crisis in financing we see with the hemorrhaging of $25 billion a year to overseas tax havens.
The CRA was before the finance committee last week. The year before, I asked who had been prosecuted in the Panama papers, the Bahama papers, the Paradise papers and the Isle of Man scam. A year ago, CRA was forced to say it had never prosecuted anybody. This year I asked the same question, and the result was exactly the same. No company and no individual has ever been prosecuted. We have thousands of names of people who have been using these particular strategies to not pay taxes, yet the CRA has never had the tools in place to take them on.
New Democrats would make sure that everyone pays their fair share, that the ultrarich actually pay their fair share, that billionaires do not get off scot free and that the companies that try to take their earnings overseas have to pay income tax and corporate tax. We would make sure of that.
What would we do in the estimates? What would an NDP estimates process look like? We have already seen signs of that over the past year. We have been tabling legislation, bringing forward bills and making sure that we actually put into place the programs Canadians need.
Members will recall I tabled Bill C-213, the Canada pharmacare act, ably supported by my colleagues for Vancouver Kingsway and Vancouver East. We brought that to a vote with the support of 100,000 Canadians who had written to their members of Parliament. Liberals and Conservatives voted that down, even though we know pharmacare is something that will make a huge difference in the quality of life for Canadians. It is estimated that 10 million Canadians cannot pay for their medication. Hundreds die every year because they cannot afford their medication. For thousands of others, families are forced to choose between putting food on the table and paying for their medication. We can end that suffering. At the same time the Parliamentary Budget Officer, that independent officer of Parliament who can tell us with such accuracy what the net impacts of policies are, has told us we would save about $4 billion overall as a people. We would be able to reduce the costs of medications, so the estimates process would include universal public pharmacare in this country.
As we saw with the member for St. John's East just last night, we would be bringing in dental care for all those who do not have access to dental care. Why is that important? We heard yesterday about a person in Sioux Lookout, Ontario, who passed away because they did not have the financial ability to pay for the dental work that was vitally important for them to be able to eat. These are tragedies that are repeated so often in this country.
What else would we see in the estimates? The guaranteed livable basic income was brought to the House of Commons by the member for Winnipeg Centre. We have seen how so many members of our caucus have fought for the rights of indigenous peoples. It should be a source of shame for the government that dozens of indigenous communities still do not have safe drinking water, six years after the Prime Minister's promise. As the member for Burnaby South said in response to a question from a journalist, how would we ever accept the cities of Toronto, Vancouver or Montreal not having safe drinking water? It is simply astounding, yet we have no wealth tax or pandemic profit tax in place. We have no set of priorities that allows us to ensure that all communities in this country have safe drinking water.
We saw the incredible tragedy of the genocide in residential schools. There are first nations communities that do not have the funding to find their missing, murdered, dead and disappeared children. This has to be a national priority as part of reconciliation. It cannot simply be pretty words. We have to act, and that means ensuring that when we say “follow the money”, it is no longer the very wealthy or ultrarich who receive the vast majority of federal funds, but the people across this country, indigenous peoples, who get the supports that they need and the quality of life they deserve.
There is the issue of the right to housing. Again, it would be part of our estimates to ensure that all Canadians have roofs over their heads at night. This is not rocket science. It takes investment. Other countries have had the right to housing instilled. In a country with a climate as cold as Canada's, housing should be a fundamental right of every Canadian.
We would provide supports to peoples with disabilities, students and seniors. People have been struggling through this pandemic, yet students are still paying their student loans, seniors are being denied the increased OAS if they are under age 75 and people with disabilities are being asked to wait three years. The Prime Minister wants to pump $20 billion into the TMX pipeline instead of investing in clean energy that would result in hundreds of thousands of new jobs.
The estimates process with an NDP government would be different and better. We will continue to fight for a country where no one is left behind.
View Peter Julian Profile
NDP (BC)
Madam Chair, we are far more concerned about the stability of regular Canadian families, seniors, students, people who have been hard hit by this pandemic. As we see the government cutting back on supports, they will be the most impacted.
Let us look at people with disabilities. The banks got $750 billion in liquidity supports within four days. People with disabilities get a three-year consultation with absolutely nothing in the budget. This is a contrast that all Canadians can see.
I wrote to the finance minister on January 5 to ask her to release the amounts that large corporations have used from the Canada emergency wage subsidy when they laid off workers and paid dividends or paid big executive bonuses. How much was misused in this way? When are the companies going to pay that misused money back?
View Chrystia Freeland Profile
Lib. (ON)
Madam Chair, there are a lot of questions there, so let me go through them quickly.
I know the member opposite sincerely cares about workers, seniors and students. So do I, and I know that a collapse of the financial sector would hurt each one of those groups. That is why, in a once-in-a-generation crisis, the government, the Bank of Canada and OSFI acted as they ought to do and as they needed to do.
Let me point out that when it comes to disabilities, the budget includes important measures to provide additional support to students with serious but temporary disabilities. I am really glad that it is there.
When it comes to the wage subsidy, the most important thing for us to bear in mind is that it has supported 5.3 million jobs across the country.
View Luc Berthold Profile
CPC (QC)
View Luc Berthold Profile
2021-05-13 14:33 [p.7189]
Mr. Speaker, thousands of small businesses have had to close their doors because they could not get help during the pandemic, yet the Prime Minister gave $1 billion in wage subsidies to big corporations that were not in need and paid millions in dividends to their executives.
Extendicare, Canada's largest operator of private seniors' residences, applied for and received $21 million in wage subsidies on the grounds that demand for care dropped during the pandemic.
Why did the Prime Minister favour the Liberal elite over Canadian workers?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Speaker, our government always chooses to support Canadians and Quebeckers. That is exactly what we did.
The Canada emergency wage subsidy supported 5.3 million workers in Canada, 1.29 million of them in Quebec alone.
It is very important to support Canadians now, and that is exactly what our government will do.
View Luc Berthold Profile
CPC (QC)
View Luc Berthold Profile
2021-05-13 14:34 [p.7189]
Mr. Speaker, the Minister of Finance should know that the reality is that the wealthiest got richer during the pandemic at the expense of struggling Canadians.
Marcel Bourassa, president and CEO of Savaria, received $3.4 million in dividends, and his company received $4.5 million in wage subsidies.
Alain Bédard, CEO of TFI International, paid $2.3 million in dividends to his executives, and his company received $25 million in public funds.
Why did the President of the Treasury Board authorize these payments to wealthy friends of the Liberal Party?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Speaker, the reality is that our government has been there for Canadians since the pandemic began, and we will continue to be there.
All told, 873,000 small businesses received assistance from our government through the Canada emergency business account, or CEBA. Our government has supported over 10 million working Canadians. We know that we must support Canadians, and that is exactly what we are doing.
View Marty Morantz Profile
CPC (MB)
Madam Speaker, I am pleased to put some thoughts on the record today regarding Bill C-253. This bill would put pension plans in priority to secured creditors in the event of bankruptcy proceedings.
Prior to my life in politics, I practised commercial law for over 20 years as a partner in a downtown Winnipeg law firm. Much of my practice involved doing commercial loan securitization for financial institutions. For the most part, it was my job to ensure that proper legal documentation was in place to ensure a first charge against the assets of the borrower on behalf of the lender. A first charge was always essential to the security requirements of the lender.
The concept of a secured creditor having a first charge is also fundamental to the functioning of our economic system. Without that guarantee, lenders would be far more reluctant to make loans and would view this as a major risk in their security position. Many businesses require debt financing to function, do business, provide jobs for their communities and hire employees.
When I saw this bill, my first concern was what would financial institutions do if this law was changed, in other words, if pension funds had priority over the secured position of lending institutions. How would it affect existing indebtedness? In other words, that would be loans that have already been made predicated on a first charge against the borrower's assets.
I suspect many financial institutions would be very concerned and we could see some instances where they might say that if pensions were to come first, they could no longer take the risk and call in their loan. This is a likely outcome of this legislation as it is currently presented and could pose a serious threat to businesses that fall under federal jurisdiction for pensions and result in challenges for them. In other words, the bill could have the exact opposite effect from what it intends. It could force businesses to close if the lenders see this as an increase in the risk profile, an unacceptable risk, jeopardizing pension plans and pensioners.
On the other hand, one could also argue that this law would incentivize banks for new loans to insist that pension funds were secured and in solid shape by the company before they would agree to make a loan. The problem with this approach is that in the case of defined benefit plans, if there is a precipitous drop in the value of the assets of the fund or of the company after the loans are made, then it may still be difficult for the company to pay back the bank if it must first satisfy the pension plan. This could create a drive toward conversion of many plans to a defined contribution model.
Another problem can occur where a company is failing and needs to restructure its debt but cannot find a lender to take on the additional risk if it is forced to subordinate to pension obligations.
It is clear there are serious issues with any bill that has, as its goal, a fundamental shift in security prioritization away from lending institutions. However, as a society, we must also recognize the importance of labour. I can see the argument being made of why a bank should have priority over people who have worked their entire lives for the company. It is not the fault of those workers that the company went bankrupt and so their pensions should be protected. It is here that we have a conundrum. If lenders cannot be first, they may not lend. If they do not lend, there may not be a job. If pensioners do not receive their pensions in the event of a corporate bankruptcy, workers might not work and, again, there may not be a job.
This is a difficult predicament and as I was writing this speech, it made me think of the biblical tale of King Solomon’s baby. In that tale, two women claimed to be the mother of the child. To settle the dispute, Solomon decreed that the child be cut in two, upon which the true mother revealed herself by insisting the baby be given to the other woman to save its life.
I do not have any such Solomonesque wisdom in the case of pensions, banks and public companies, but I do think this bill, as it is presently constituted, could result in the end of some companies for lack of willing bank capitalization.
What this debate does make clear is that we must find a better way to support businesses and their employees, and I think we would be hard pressed to find anyone who disagrees with this idea. When bankruptcies occur, far too often there is a long list of creditors and individuals who need to be made whole and there is unfortunately not enough money to go around in many instances.
We also must consider the effects on the supply chain of a company that is unable to restructure its debt. What happens to the employees that work for the suppliers? There are all kinds of small business suppliers that could be shut out in the event of a bankruptcy.
A working paper by the OECD regarding priority creditor rights for pension funds discusses this issue. One of the arguments against measures like what Bill C-253 proposes is that, if this were allowed, a range of social issues could come forward claiming priority rights, such as health benefits or environmental claims to name a couple. Would these be prioritized over pensions? How would we decide that?
The OECD working paper makes also makes a strong case against changing the position of pension claims within the creditor rankings. This argument centres upon the fact that, aside from the complications of changing bankruptcy legislation, doing so may be harmful to capital markets and damaging to the investment climate.
If pension funds are given superpriority status, other creditors, who may be small trades and personal creditors, would be bumped down the line, increasing their credit risk. These suppliers may also be hesitant to provide their services in a pension superpriority environment. Also, lenders, given the additional risk, could in turn pass this risk on to businesses in the form of more expensive interest rates and capital. As well, the marketplace could be adversely impacted with increased bad debts and potential failures. This could result in less confidence in our financial markets. It could also make Canadian businesses less competitive vis-à-vis foreign jurisdictions that do not have such a law.
It could also be argued that any change in the ranking of pension obligations would have a negative impact on credit cost and availability. One alternative to help address the issue might instead be to make it illegal for shareholders to strip a company of its cash in the form of dividends when there is a pension shortfall. If we look at what happened with Sears Canada, it is an example of where this type of change would have benefited pensioners.
Its majority shareholder, an American hedge fund, took out billions in cash from the company. In 2005, the hedge fund took out $1.5 billion. In 2010, it took out $750 million, and in 2012, it took out $100 million. However, in 2007 there was already a pension shortfall of $36 million and that shortfall continued to widen, reaching $267 million by 2015. There would have been more than enough cash available to Sears Canada to cover its $36-million pension shortfall in 2007, and any other future shortfall, if cash were not being withdrawn from the company at a challenging time, so rules to prohibit dividend stripping when a pension is in a shortfall could be beneficial by allowing a company access to more cash to cover its losses. As a result, that could serve as an effective tool.
Another option could be pension plan insurance, which companies would pay into in the event a pension is unfunded and a company faces insolvency.
There are different alternatives to solving the problem this bill proposes to address. I believe at committee there will be more alternatives discussed. There we will have a chance to have a full discussion of the benefits and pitfalls to be brought forward and addressed by hearing from witnesses, such as workers, employers, academics, financial institutions and others. I think as we work toward a solution on this issue, we must remain focused on ensuring there is a balanced approach.
The security of pension plans for workers must remain top of mind, but we must also avoid measures that could discourage investors and lenders from trying to save a company in despair. King Solomon would expect nothing less of us.
View Daniel Blaikie Profile
NDP (MB)
View Daniel Blaikie Profile
2021-05-11 18:06 [p.7090]
Madam Speaker, I am pleased to rise today to speak to a bill that we in the NDP think is long overdue. Of course, one of my colleagues from Hamilton presented a similar bill in the last Parliament to finally address pension obligations and the benefits that workers expect to receive when they pay into a pension plan over the course of their working life. They deserve their due.
It is one thing for members to talk about hypothetical situations, such as what this might mean for bank lending practices or what it might mean for creditors of various kinds. However, what is not hypothetical is that right now, when a company does go bankrupt, the pensions that workers have paid into for their entire working lives are not given the respect and priority they are due. What is not hypothetical is that real working people are losing out on the retirement that they paid into and saved for through a company pension. That is wrong. What is not hypothetical is that right now, when there is a bankruptcy proceeding, the very real investment on the part of the worker is not given the same due as the investment made by international hedge funds that expect to get their money back.
Frankly, we can work out the details, and the market will adjust to a new framework. We hear in other instances of the incredible faith, on the part of the Conservatives and Liberals alike, in the power of the market to adjust to new circumstances. Our argument is that there is a moral imperative here to ensure that people who have their entire future, their entire retirement, wrapped up in the future of a company and its plans get what they are owed. Of course, in some cases they may not be able to get everything they are owed because there is simply not enough money. However, they should not be last in the pecking order. They should not be waiting for the scraps off the table of international investors. They should be given their due alongside investors and lenders to ensure that their lives are not ruined.
We understand very well that lending institutions have to assess risk when they offer loans and that it has to be worked into a business plan. However, our current practice says that when businesses are making those business plans and lenders are assessing that risk, they can literally bank on being able to take away the pension contributions of workers. There is something fundamentally wrong with the idea of them knowing from the outset, whether it is a company, lender or investor, that they can take it to the bank, and that workers who currently work at a company and, in good faith, pay into a pension plan will get screwed in the event of a bankruptcy so that those investors or lenders can get paid out. Workers do not have an equal say at the table. That is what companies are allowed right now. It is wrong, and it is not a hypothetical situation. It is a real injustice that is taking place right now.
The role of government, if nothing else, is to set a fairer framework and a fairer set of rules for the economy to work under. Then it is up to players within the market to adapt to those rules. The NDP thinks it is of fundamental importance that we recognize the status of workers and their retirement funds and ensure that they have to be part of the business plan of a business and part of the business plan of lenders and investors so that they pay workers their due.
It is frustrating to have to keep talking about this, particularly in light of an election commitment by the Liberal Party, which is running the government right now. The Liberals keep saying they respect workers, that this is very important and that they are going to get to it, but they never really get around to it. However, we see proposal after proposal being brought forward by private members in order to fix this fundamental unfairness. The sooner we fix it, the sooner the markets can adjust to the new reality, and it is an adjustment that needs to come.
Workers need to know that they can pay into a pension plan and have it be there for them, and that they are not always going to be playing second fiddle to investors and others, as was the case in the example of Sears raised earlier. It is not hypothetical that the Sears pensioners lost a massive amount of their pension: It is true. They lost it at the point of bankruptcy, and a whole bunch of that money went to Sears' creditors. They lost it before, too, in terms of investors coming in and stripping the business of all its cash, and the company not making the payments it ought to have made into the pension fund.
There is a large issue around pensions. There are other issues and injustices with respect to how the system is set up that prejudices itself against workers and their pensions, which ought to be addressed. That is not an excuse not to move forward with a perfectly good proposal that would change the situation. It would, and actors within the market would have to adjust to that. That is the point.
The point is that the situation needs to change, because right now there is a serious wrong being done to workers who deserve an equal seat at the table, just as when Nortel went into bankruptcy and workers lost over half of their pension earnings.
These are the kinds of things that we need to do if we want to talk about the larger issue of pension reform. Employers should be making their regular contributions to company pension funds. We often see that employers are allowed to take vacations on contributions to their pension funds when things are going well, but of course the plan for pension funds is that contributions are made in poor years and in good years, and that the contributions made in the good years help put enough capital in the fund for it to ride out the bad years. When employers are allowed to take vacations on that, we sometimes see the accumulation of really extraordinary pension fund deficits.
Other arguments are trotted out about how pension funds are not sustainable and employers would have to contribute totally unrealistic amounts to the pension funds in order to keep them going. That is because in good years, instead of continuing to contribute to the funds, in some cases employers are allowed to not contribute anything at all. That is certainly a problem.
Many Conservative members in the House refer to the Canada pension plan as a simple payroll tax, which I think is a serious deception. It is something that employees and employers pay into as part of their wage package, in order to provide further retirement security once employees' working years are done.
When it was set up, the CPP was meant to be a third of a person's pension income. Their company pension would provide another third, and their personal savings would provide the final third. Frankly, we are talking about how to better protect company pensions for those who are fortunate enough to still have them. The fact is that many companies have been divesting themselves of pension risk altogether and are not providing real pension plans, certainly not defined pension plans. Something like 7 in 10 workers in Canada today do not have a pension at all.
We have not seen the Canada pension plan really pick up the slack in the way that it needs to in order to make sure that everybody could be contributing towards a defined benefit that would provide the cornerstone of their retirement income. Even now when we see a proposal from the government to raise the old age security amount, it is doing it in a way that, again, is unhelpful, by creating two classes of seniors rather than offering the same increase to all seniors 65 years old and older. The government is only offering it to seniors aged 75 and up, when we know that the very same income and cost pressures are there for seniors regardless of whether they are 75 or older, or 65 or older.
This piece of legislation is very important. It is important from a moral point of view. It is important from an economic point of view: There are advantages to protecting the incomes of seniors in our local communities who spend that money in our communities. Let us absolutely make it part of a larger package of reform to better protect and strengthen the pensions of Canadians from coast to coast to coast.
View Peter Julian Profile
NDP (BC)
Mr. Speaker, that was no answer at all.
Here is yet another case of the Liberal free ride for the ultrarich. We learned last weekend that billions of dollars in public funds through the wage subsidy that should have gone to protecting jobs and workers, instead went to dividend payments, stock buybacks and big executive bonuses.
The Liberals have gone after regular Canadians, the victims of CERB fraud, demanding the victims pay for the criminals. It is shameful. Will the Liberals make the ultrarich, those companies and CEOs who misused these funds, pay the money back?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Speaker, I would like to thank the member for his concern for working Canadians.
Let me take this opportunity to point out to him that the wage subsidy has protected the jobs of 621,000 workers in his province of British Columbia. Across Canada, more than 5.3 million jobs have been supported by the wage subsidy.
The CRA website makes clear that the wage subsidy can only be claimed for employee remuneration. It cannot be used for other purposes.
View Wayne Easter Profile
Lib. (PE)
As members know, Bill C-208 is now at third reading stage. How did it get here? Simply put, Bill C-208 has had considerable debate in the House and was referred to the finance committee, which I chair. I will make a few comments on what witnesses had to say before committee in a moment. The finance committee referred the bill back to the House without amendment.
Bill C-208 has a long history, and it criss-crosses the political landscape. It was first introduced by the current member of Parliament for Bourassa, a Liberal, two parliaments ago. In the last Parliament, the same bill was brought forward by Guy Caron, an NDP member. Now, in this current Parliament, it is sponsored by the member for Brandon—Souris, a Conservative member.
This long history, across all major political parties in the House, certainly shows that there is a need to bring fairness and equity from a taxation perspective to the transfer of family farm corporations, fisheries enterprises and small family businesses. Quite honestly, it is long past time that this problem was fixed.
During an earlier discussion at third reading, it was suggested by the government spokesman that just maybe the bill could provide opportunities for tax avoidance. I would agree that tax avoidance is a legitimate concern. However, I must point out that at the finance committee we heard from 17 witnesses, and every opportunity was given to address the concern of tax avoidance. We called on the public and Finance Canada to provide witnesses and propose amendments, to anybody who had those kinds of concerns.
I certainly appreciate that the assistant deputy minister of the tax policy branch and the senior director of the tax legislation division in the tax policy branch appeared and answered questions, and their comments appear in the transcript for the finance committee for anybody who wants to see it. To be fair, they did outline some concerns, especially as it relates to what is called “surplus stripping” for the purpose of tax avoidance.
Where does that leave us? On the one hand, we have concerns being expressed by officials, and I do take their concerns seriously. On the other hand, we have a broad section of witnesses who expressed a serious and immediate need for a way to transfer a small business, farming corporation or fishing enterprise without facing unfair taxation when transferring to a family member. We do not see amendments to the bill that would fix this alleged problem.
I would even agree with those who might say that private members' bills are not the best vehicle to change tax policy. They are not. However, we simply cannot allow this inequity disadvantaging intergenerational transfers to family members to continue. It is time to accept the only change that is on the table to fix the problem, and that happens to be Bill C-208.
The sponsor of the bill, the member for Brandon—Souris, gave about the most concise and clear example of this inequity in the tax system. He said:
The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.
The second quote is from Ms. Robyn Young, president-elect of the Insurance Brokers Association of Canada.
She said this:
In closing, this is an issue of equity and fairness. Business owners should not be penalized for selling their business to a family member. Tax implications should never be a consideration when making the decision to sell a business to a family member.
There were many other good witnesses I could quote and make the point on this serious inequity, including the UPA, the Canadian Federation of Agriculture, other farming and fishing organizations, the tax manager at Deloitte, underwriting companies and more, but I think members get my point.
The backbone of many communities are small businesses, farmers and fishermen. Those who can pass a business down from generation to generation create the history and the character of many of our communities in the country. We need to give every opportunity for those families to make that transfer.
It is absolutely true that during this pandemic the federal government has been there in every way possible to support Canadians, businesses, farmers and fishermen. Tax policy, however, should not cause a disincentive to transfer to the next generation. Tax fairness should be the cornerstone on which to encourage intergenerational transfers. This bill would move tax policy in that direction.
Finance Canada, and the government for that matter, always have the option to put forward corrections in a ways and means motion if concerns expressed before committee do arise in reality. That, in itself, is a safeguard. They have the ability to do that fairly quickly through a ways and means motion. However, farmers, fishermen and small business owners, with respect to the unfairness of this taxation system, have been waiting for this change for years.
We have to put the shoe on the other foot. Instead of having those families that want intergenerational transfers sitting in the wings waiting for something to happen, we have to pass this bill and put the shoe on the other foot. If there is a problem, then government has the ability to fix that problem. I am encouraging others to recognize this problem.
I, for sure, will be supporting Bill C-208, and I hope others can do the same.
View Alistair MacGregor Profile
NDP (BC)
Madam Speaker, it is a great honour to be standing virtually in the House and speaking to Bill C-208. I would like to thank the member for Brandon—Souris for being the sponsor of this bill. He is the latest in a fairly long line of MPs who have been trying to achieve this legislative proposal.
I was present in the 42nd Parliament when my former colleague, Guy Caron, brought in Bill C-274, and I remember his passionate speech in the House of Commons during its second reading. He was trying to illustrate the reasons why that legislation was so important. It was great to witness that speech, but ultimately it was very disappointing to see the vote results when the Liberal government at the time used its majority to prevent the bill from going any further.
I am glad to see this time it has been different, by virtue of the fact that we are in a minority Parliament and the opposition used its combined numbers to send this bill to the Standing Committee on Finance where it had a good airing. We got to hear from many witnesses, and ultimately the committee decided to send the bill back to us for our final consideration. It is my sincere hope that this bill will be sent off to the other place and that we can look forward to royal assent, hopefully in the near future.
When Bill C-274 was being considered in the previous Parliament, I had a meeting with the Port Renfrew Chamber of Commerce. I was given a 10-minute speaking spot during their AGM, and when I talked about Bill C-274 at that time and about what we were hoping to do, I got unanimous positive feedback from the members of that chamber. For those who do not know, Port Renfrew is on the southwest coast of Vancouver Island. Many people there depend on fishing for their livelihoods. They are either commercial fishermen or are in sport fishing, so they have small fishing corporations. To have the ability put forward to transfer their businesses to family members really meant a lot to them. There was overwhelmingly positive feedback. I ultimately had to give them bad news, but here we are with a real opportunity to try to bring about some positive change.
This bill is pretty much tailor-made for the types of small businesses that exist in the riding I represent, Cowichan—Malahat—Langford. Like so many members before me, I want to acknowledge the pain and suffering that small businesses have gone through over the last year. I think it is incumbent upon us not only to have support programs to help them through the pandemic, but also to bring about long-term systemic change to important statutes such as the Income Tax Act, so that we can make their business operations and their succession planning that much easier.
My riding is dominated by farming as well. Here in the Cowichan Valley we have a beautiful climate. It is, I think, Canada's only Mediterranean climate and we have a very long and storied agricultural history. We have generational family farms here. Some have the fifth generation of a family farming the same plot of land. If we can bring about legislative change that makes succession easier and gives them peace of mind, I think we are doing a good thing.
I also want to give a shout-out to the five chambers of commerce in my riding: Chemainus, Cowichan Lake District, Duncan Cowichan, Port Renfrew and WestShore. They have all been incredible advocates for their members. I have been staying in touch with them quite consistently over the last year and their feedback during this pandemic has been invaluable in helping me, as a member, advocate on their behalf in Ottawa to make sure that the federal government's policies and programs are reflecting their needs.
I will concentrate mostly on family farms, given the nature of my riding and the fact that I am the NDP's critic for agriculture and agrifood. When we look at family farms, we are looking at $50 billion in farm assets that are set to change hands over the next 10 years. History has shown us that roughly 8,000 family farms have disappeared over the last decade.
The National Farmers Union has done an incredible report on the status of Canada's farms, called “Tackling the Farm Crisis and the Climate Crisis”. It not only looks at agriculture in the context of climate change, but also the financial footing that many farms are on and how shaky it is. According to the NFU, Canadian farm debt has doubled since the year 2000. That is in 21 short years. It was listed at $106 billion in 2019.
Many farms have to chase income from off-farm work, taxpayer support programs and other farm sources. That is just a reality for so many small farms. What is really concerning is that we have lost two-thirds of our young farmers since 1991. The family farm is pretty much being systematically destroyed in Canada, and we need to put measures in place that are going to help.
Why is Bill C-208 so important? The owners of small businesses, family farms and fishing operations who want to retire want to be able to sell to their children because it is often their children who have been brought up in the family business and on the family farm. From a young age they have learned the culture of the business and what it does, and they often have a lot invested in that business continuing to succeed. The next generation often has very important ideas about where to take that business.
When parents decide to sell their business to their children, the difference between the sale price and the price originally paid is currently considered a dividend, but if they sell their business to an unrelated individual or corporation it is considered a capital gain. Unlike capital gains, a divided does not include the right to a lifetime exemption and is taxed more heavily. We can make a measurable improvement in allowing families to pass on businesses that might have been part of a family for generations to their children, making it easier for that work to get done.
I want to recognize the work done at the Standing Committee on Finance. I appreciate the witnesses who appeared. Many of them also appeared at the agriculture committee. We heard important testimony from the CFIB, the Grain Growers of Canada, L'Union des producteurs agricoles and, of course, the Canadian Federation of Agriculture, which has been such an incredibly important voice for farmers from coast to coast to coast.
They noted at committee that the average age of Canadian farmers is now above 55, and the opportunities these businesses face will carry into the next generation. It is a sector in which the vast majority of businesses remain family owned, and maintaining the financial health of those businesses across generations is critical. At committee, the CFA very clearly said that it supported Bill C-208 because it would ensure that real family farm transfers could access the same capital gains treatment as businesses selling to unrelated parties, rather than treating the difference as a dividend that was taxed at a higher rate and not being able to access the lifetime capital gains exemption.
We have an important opportunity before us. During the vote at second reading, I was sad to see that 145 Liberal MPs voted against this bill. Two Liberal MPs supported it. It is my sincere hope that when this bill comes to a final vote to be sent to the Senate, Liberals can finally see this as an important opportunity and can represent the interests of small businesses, family farms and fishing corporations by making this much-needed change to the Income Tax Act and doing right by their constituents.
I, for one, will be proud to vote in favour of Bill C-208 and send it on its journey. I look forward to the day when we can finally see it receive royal assent.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2021-05-05 18:24 [p.6708]
Madam Speaker, what a privilege and honour it is to speak to Bill C-208. Not often in the House do we find a private member's bill that has all-party support, and this is one of those unique situations.
For many small business owners, business succession is an important factor to consider when planning for the future. This is no surprise. When they spend so much of their time and energy pouring hour after hour into running their operation, what happens to the fruits of their labour when it is time for them to retire or move on matters to them.
However, surveys tell us that only about half of small businesses have a succession plan. I suspect that is because they are caught up in the day-to-day running of their businesses. However, whether they are thinking about succession early on or are confronting succession decisions near the time of transition, somewhere along the line these entrepreneurs face a frustrating reality: It is more expensive to sell an incorporated small business, or a family farm or fishing enterprise, to a family member than to a stranger.
What is behind this? When a business is sold to a family member, it is considered a dividend. When sold to a stranger, it is considered a capital gain and is eligible for capital gains exemption. In its simplest form, when selling to a family member the tax rate is higher for the seller than when selling to a stranger. That tax rate is significantly lower.
This is not right, and it is not fair. About half of small business owners are hoping to sell or transfer their operations to family members when it is time for them to move on. If members have spent even a little time around family-run businesses, the “why” becomes clear. Sometimes kids are raised in the business and learn the ropes at a young age. They come to know the ins and outs of the business better than anyone. They put in the time, they know the customers and they are established figures in their communities. When the time comes for succession, they are an obvious option for so many reasons.
This is where Bill C-208 comes in. It seeks to achieve tax fairness for business succession by amending the Income Tax Act to level the playing field. It would allow a small business owner the same tax rate when selling their operation to a family member as when selling to a third party. It would correct the injustice within the act that unfairly punishes individuals when they sell their qualifying small business, farm or fishing operation to their own family.
During the finance committee's study of the bill, Brian Janzen, a senior tax manager with Deloitte, gave an example to help members understand just how stark the financial difference currently is between selling to a family member and selling to a stranger. He said:
Right now, if you have a $1-million business and you sell your shares—in a restaurant, let's say—to your neighbour, you will walk away with after-tax proceeds from a $1-million sale of about $971,000. That's only $29,000 of leakage....
There are various ways to sell your shares to your kids under the current regime of section 84.1, but I'll just use the worst-case scenario. The worst-case scenario is that your kid sets up a holding company, or holdco, and buys your shares from you. In Manitoba, that will cost you $466,000 because of the deemed dividend. That's a difference, between the two scenarios, of $437,000. That's just crazy.
He is right. That is crazy, especially when we consider the value small business continuity can have in our communities. Small business owners have often built strong relationships with their customers over the long term. They have employees, whether a couple or a couple dozen, whom they care about and have invested in. They are plugged into their communities in multiple ways. Whether by supporting local food banks, sponsoring sports clubs or donating to construct a new community centre, small businesses are there.
Handing that over to a stranger, perhaps someone from out of town, may not be the best situation for the business owners or their communities. When they have built something and invested plenty of sweat equity in their operation, it is understandable to want to hand it off to someone who can carry on that legacy.
Robyn Young, president-elect of the Insurance Brokers Association of Canada, told the finance committee about her experience of purchasing the family business from her parents. She said:
When my parents decided to sell their business, they received an offer from a large direct writer. They ultimately chose to sell the business to me and my brother, because it was important to them to keep the business they had built within the family. They also wanted to ensure that their clients would continue to receive the same expert advice and personal touch they had come to expect.
She went on to say:
Family-run brokerages are the pillars of the community and the lifeblood of the economy. They serve and support their communities in good times and bad by creating employment and donating time, money and other resources.
These are the considerations for many small business owners looking at succession planning. There needs to be a level playing field that empowers owners to make the best choice for them and their communities.
The current inequity is a reality that impacts a variety of types of small businesses, but I want to take a moment to talk about farm families specifically.
Agriculture is incredibly capital intensive, and as Scott Ross of the Canadian Federation of Agriculture told the finance committee, “effective succession planning is critically important, particularly for a sector that will transfer tens of billions of dollars in assets to the next generation in this decade alone.” Uniquely, the agriculture sector continues to be one where the vast majority of farms, even though they are incorporated, still remain family owned. This has considerable advantages for all Canadians since, as Mr. Ross highlighted, “studies show that family farming encourages sustainable growth, environmental stewardship and increased spending within one’s local community, not to mention its contributions to the social fabric of rural Canada.”
I share several commonalities with the bill's sponsor, the member for Brandon—Souris. For one, we were both elected in the same 2012 by-election. More importantly for today's discussion, we both have “farmer” on our resumes. We are very familiar with the immense benefits that farming and agriculture provide to the communities we represent. By passing Bill C-208, the House can acknowledge the tremendous contributions that our farmers make and can help ensure tax fairness for farm succession.
Throughout debate on this bill, we have heard some members suggest that this change will just benefit the rich or create opportunities for tax avoidance. I want to address this head-on because that is a mischaracterization that finance committee testimony swiftly put to rest.
The bill includes tax-avoidance safeguards mandating that the family member who purchases the operation must maintain their shares for a minimum of five years to avoid penalization. As Deloitte senior tax manager Brian Janzen confirmed, “This bill is helping the lower end of the small business community. It is not helping the huge, rich companies, even if they're family owned.” He also told the finance committee that Bill C-208 has enough guardrails to prevent tax avoidance, even as he urged vigilance so that tweaks could be made if required.
Like all colleagues, I wanted to make sure that the bill did not providing an undue benefit to large corporations. I therefore asked Mr. Jansen very specifically about those concerns. He said it did not benefit large corporations, “partly because of the guardrails you have in this bill, but also because for the larger companies...section 84.1 and the capital gains exemption didn't even come into play. The numbers are big enough that this is just...not material to the larger private businesses. This is really helping the small private business.”
It is clear that this bill strikes the right balance between providing tax fairness and preventing abuse. I encourage any members who feel differently to review the testimony before the finance committee. They will see experts addressing these concerns and urging the bill's swift passage.
There were 145 Liberal members who voted against this common-sense bill at second reading. Meanwhile, members of all the opposition parties supported it, and so did two Liberal MPs. I sincerely appreciate the two Liberal members who voted in favour of this bill. They recognized the positive impact that it would have on their constituents. I hope that the testimony we have heard since that time will help other Liberal MPs better understand why they ought to lend their support to Bill C-208. Their constituents deserve tax fairness.
I want to wrap up by saying thanks to the member for Brandon—Souris for introducing this pertinent legislation. His efforts are going to make a real difference in the lives of many small business owners and farm families. We have seen iterations of this bill brought forward by multiple parties over the years, and this goes to show that there is cross-party support for this bill. It is time to get it over the finish line.
I invite all my colleagues to support small business and vote in favour of Bill C-208. Let us get it passed and get it to the Senate. Hopefully it will deal with it as expeditiously as the House has. I am thankful for the opportunity to speak to the bill.
View Sébastien Lemire Profile
BQ (QC)
Madam Speaker, it is an honour and a privilege for me to speak to this bill at third reading stage.
At its annual general meeting, the Syndicat de la relève agricole d'Abitibi-Témiscamingue called on MPs from the Abitibi-Témiscamingue area to support Bill C-208 and to actively contribute to its passage before the next election. That is my role today in bringing debate to a close at third reading.
The resolution of the Syndicat de la relève agricole d'Abitibi-Témiscamingue speaks of fairness when transferring agricultural farms. At present, when an individual sells their shares in their small business or family farm corporation to a family member, the difference between the sale price and the initial purchase price is treated as a dividend. However, if the business or corporation is sold to someone other than a family member, this transaction is treated as a capital gain.
Bill C-208 would give small businesses, farming families and fishing families the same tax treatment whether they sell their business to a family member or a third party. The economic landscape of our region is made up of a growing number of incorporated farms and family fishing corporations, which is why the Syndicat de la relève agricole d'Abitibi-Témiscamingue adopted this resolution, and I am here to honour it.
I had the opportunity to take part in the debate on this bill in November 2020, and I remember that my presentation centred on the fact that, incredible as it may seem, a business owner is currently better off selling their business to outside shareholders than to members of their own family. As I said, under the existing legislation, the transfer of a business to a family member is treated as a dividend and not as a capital gain, unlike a sale to a third party. As a result, owners are not entitled to the lifetime capital gains exemption if they decide to sell the business to their children.
The Bloc Québécois is in favour of Bill C-208. For several years now, my party has been calling for measures to encourage and facilitate the transfer of family businesses, especially in the agriculture and fisheries sectors. I would also like to acknowledge the work of my colleague, the member for Pierre-Boucher—Les Patriotes—Verchères, who had the opportunity to speak before me and who introduced Bill C-275 back in the day.
The Bloc Québécois has been calling for measures to encourage and facilitate the transfer of family businesses for over 15 years. For Quebeckers, the Bloc Québécois and myself, business succession is important. It is also important for our SMEs in general, but especially for family farms in the regions, like the Abitibi-Témiscamingue region. Perhaps we will soon have the opportunity to speak of Bill C-208 and its consequences in the past tense, a thought that fills me with excitement.
The existing legislation makes no sense at all. What is prompting the Liberal Party to vote against Bill C-208? They are raising the possibility of tax abuse and tax fraud, but we know that the Parliamentary Budget Officer questioned the amount of money that the Liberal government estimated would be lost, calculating that it would be tens or hundreds of millions instead of billions of dollars. Speaking of losses, I still do not understand why the government is not cracking down on tax havens.
I would like to share the comments of a farmer from my riding, a friend of mine named Simon Leblond, who was the president of the Fédération de la relève agricole du Québec when I was working for the union. With regard to the transfer of family farms, he said that it is important to maintain a large enough pool of farmers to maintain services for farms and, more generally, to ensure the vitality of the industry, make it known to those outside the world of agriculture, and ensure interest.
Farmers face major challenges, and I think it is important to point that out. Some of the challenges faced by farmers in Abitibi-Témiscamingue and everywhere else include land grabbing, farmland financialization, the whole issue of income security, vet services for farm animals, crop insurance and agricultural drainage. These are major challenges, and improving access to land and quality of life for Quebec's young farmers is one way to ensure a future in agriculture for Quebec's youth.
The more people we have who are willing to take over farms, the more services we will be able to provide. It is a cycle, but unfortunately that cycle has been broken. I hope that we can get that cycle going again and that we will see more and more young people taking over farms. Land prices, quota prices and new forms of agricultural production are leading to higher costs every year, and the red tape is becoming increasingly cumbersome, making it harder and harder for farmers to access land and operate their business. As politicians, we have a responsibility in that regard. I repeat: It is not right that a business owner is better off selling the business to a third party than to their own family members.
The Government of Quebec included measures in its 2016 budget to facilitate the transfer of family businesses in the primary and manufacturing sectors. A change to Quebec's Taxation Act relaxed the rule that prohibited the seller from using the capital gains tax exemption. Quebec has addressed this issue, while the federal government still lags behind, or at least it was lagging until now. I remind members that the Parliamentary Budget Officer assessed the cost of these measures, and his figure was lower than what the federal government was claiming.
I want to get back to the speech my colleague from Berthier—Maskinongé made about Bill C-208 at second reading. I want to make a little aside, though, and I want to acknowledge and commend our colleague, the member for Brandon—Souris, for his leadership. I would like to congratulate the Conservative Party for its leadership in this debate, because Bill C-208 has been given priority on two occasions at third reading. That is why we are debating it today. I hope that we will be able to vote on this bill by next week so that it can be sent to the Senate and then get royal assent. That would be the blessing that so many have hoped for. I will give some examples soon, but I just wanted to mention that.
The member for Berthier—Maskinongé said:
...what we are really talking about are small and medium-sized businesses, which are the backbone of our economy. We need to keep these businesses alive and make sure they survive. We need to make sure that these small businesses can keep going and that they are not put at a disadvantage where they will end up being bought out by big corporations. The survival of these small businesses is directly connected to the survival of our regions. This is why I am appealing to all of my colleagues.
I second my colleague from Berthier—Maskinongé's appeal because the Bloc Québécois stands for human-scale enterprises.
I also want to say that I got to be part of the debates that took place when Bill C-208 was sent to the Standing Committee on Finance. On March 9, Julie Bissonnette, a dairy farmer in L'Avenir and the president of the Fédération de la relève agricole du Québec, and Philippe Pagé, the FRAQ's general director and mayor of Saint-Camille, had this to say:
Bill C-208 is significant for young farmers because we believe it will encourage the transfer of farms to family members and go a long way towards correcting tax unfairness, while supporting a strong farming community.
As an organization whose mission is to protect the interests of the next generation of farmers and improve conditions for those starting out, it has taken a clear position. The FRAQ representatives also wanted the committee to know that some young Canadians are seeing their dreams evaporate because of ill-conceived tax rules. They said:
The numbers speak for themselves. A business that is transferred to a family member is six times more likely to succeed than a business transferred to someone outside the family. What's more, 70% of all entrepreneurs in Quebec would prefer to keep their businesses in the family. Even today, selling a business to a related party is the preferred way to transfer a farm. Our tax system should support all young farmers, no matter their path to business ownership, something the system does not currently do.
Marcel Groleau, from the Union des producteurs agricoles, echoed these comments. During the same meeting, he mentioned the pride that comes from completing a successful transfer, saying:
Some 98% of the country's farms are family owned and operated. That business model is a source of pride for Canadians. Family farming promotes sustainable growth, environmental stewardship and reinvestment in local economies.
He added:
According to a 2017 study by the Business Development Bank of Canada, nearly 40% of small businesses will be transferred or sold by the end of 2022 as owners near retirement.
There is an urgent need for action. Obviously, the reference to subsection 84(1) of the Income Tax Act is one of the things that needs to be revised. The act has not evolved to reflect the context and the demographic pressure that applies to farms.
I also want to mention the support of Daniel Kelly, the president and CEO of the Canadian Federation of Independent Business, or CFIB, who appeared before the Standing Committee on Finance and was quite happy to express CFIB's very favourable position on the bill. I should note that 17% of business owners are seriously considering shutting down, that Bill C-208 would facilitate business transfers and, most importantly, that it is time for a resolution and for significant action.
I will conclude by recalling two points raised by Mr. Groleau, who shared some data from the Commission de protection du territoire agricole, Quebec's farmland protection commission. He pointed out that everything is documented and that we are seeing an increasing number of transactions involving farmland being carried out by investors rather than by producers. The investors' interest lies in renting out the land while they wait to potentially do something else with it.
The devil is in the details, and it will be important to move on in order to meet the needs of the next generation of farmers.
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