Bill C-28 (Historical)

Budget Implementation Act, 2006, No. 2

A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

Part 1 implements the following income tax measures proposed or referenced in Budget 2006:
–       the new Canada Employment Credit;
–       the new Textbook Tax Credit;
–       the new tax credit for public transit passes;
–       the new deduction for tradespeople’s tool expenses;
–       a complete exemption for scholarship income received in connection with enrolment at an institution which qualifies the student for the education tax credit;
–       the new Children’s Fitness Tax Credit;
–       a doubling, to $2,000 from $1,000, of the amount on which the pension income credit is calculated;
–       an extension of the $500,000 lifetime capital gains exemption, and various intergenerational rollovers, to fishers;
–       the new Apprenticeship Job Creation Tax Credit;
–       a reduction of the current 12 per cent small business tax rate to 11.5 per cent for 2008 and to 11 per cent thereafter;
–       an increase, to $400,000 from $300,000, of the amount that a small business can earn at the small business tax rate, effective January 1, 2007; and
–       a reduction of the minimum tax on financial institutions.
Part 2 implements the proposal in Budget 2006 to lower the income tax rate on large corporation dividends received by Canadians.
Part 3 implements the proposal in Budget 2006 to reduce excise duties for Canadian vintners and brewers.

Budget Implementation Act, 2006, No. 2

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, it is interesting to see how these narratives roll out. One of them, certainly, from the Conservatives that we have heard many times is that the NDP just wants to spend more, more, more.

Actually, if we did an audit of NDP governments across the country, we would see that they have the strongest record overall of balanced budgets and dealing with debt.

We have this narrative and the Conservatives cling to it in desperation, but in actual fact the record is very different in terms of fiscal management for the NDP. It is a very good record.

In terms of the other questions that the member put, if we look at this budget, we have to make an assessment overall who were the winners and who were the losers. I would say that ordinary Canadians were the losers. Despite the few little bits and pieces that they might have received overall, they lost out.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I am pleased to comment on Bill C-28.

I am a member of the finance committee. The committee recently completed a tour. We went from Whitehorse to Vancouver to Fort McMurray to Saskatoon and Portage la Prairie and then out on the east coast to St. John's, Halifax, Quebec City and Toronto. We wound up yesterday afternoon. I think we heard from over 400 witnesses. After a while we got a flavour of what Canadians seem to think about this budget. I have to say that they do not seem to think too much of this budget. In fact, after a while there were patterns that developed in the testimony.

I would have thought that thee Chamber of Commerce would have been an organization that would instinctively or intuitively support Conservative budgets. That organization had some rather critical things to say about this particular budget. The Chamber of Commerce said:

We note that Budget 2006 introduced piecemeal personal tax credits for a myriad of items. We believe this only serves to complicate the tax system--

And we all know that the Income Tax Act of Canada is a pretty complicated statute to begin with.

and relief should be delivered more broadly through rate reduction on increasing the bracket thresholds where the next tax rate is levied.

We ask whether the 1% reduction in the Goods and Services Tax rate was the “correct” method to effect a decrease in overall personal tax burdens. Generally, consumption taxes are preferable to income taxes, therefore we recommend reductions to personal income taxes rather than consumption taxes.

This was from a group that I would respectfully suggest is one of the key supporters of the Conservative Party.

We turn to the bill before us and we see immediately what it is that these people are talking about.

The first one is the new Canada employment credit. That sounds like a good idea on the face of it. If a person's income is from something other than employment, for example, a pension, investments, or things of that nature, this tax credit is utterly useless to that person. What is the point? Why would the government do that as opposed to bumping up the personal base exemption or reducing rates generally overall? We want to favour this over that. It speaks to the Chamber of Commerce position that the government has introduced a myriad of tax credits that end up complicating the system way beyond where it needs to be.

There is a textbook tax credit. That is just great. That is just wonderful. A student has 80 bucks worth of tax credits and a $5,000 tuition bill. That is a choice one makes. An $80 tax credit for goodness' sake is going to buy one textbook. That is great. The student can buy the textbook, but he or she cannot get into the school.

Witness after witness would say to the committee that this is lunacy. What people need is better access. That request would come generally from the student groups. They had some good ideas, all of which were ignored in the budget. The university side and the college faculty side want better infrastructure.

What they are really panicked about, and they should be, is that the various foundations that were funded over 13 years of Liberal government, those funds are not being replenished. As a consequence, the universities are afraid that the brain gain that we have had in the last few years will reverse itself again and become a brain drain. This could happen because there is no money available for the new applications that researchers put in.

Those folks are highly mobile people. They can do their research in California as well as they can do it in Toronto. They can do their research in New York as well as they can do it in Halifax. If we do not keep these foundations well funded with the ability to provide grants to do the leading edge research which has made Canada the number one publicly funded research country in the world, then these folks will find other places in which to do their research. What did the Conservative Party offer? An $80 book credit.

Then we come to public transit passes. That sounds great, but it is going to cost something in the order of about $900 million. It will cost $900 million to, in theory, increase ridership by 5%. That is a pretty expensive increase in ridership, $900 million on an annual basis. That does not build one kilometre of subway in my riding, not one kilometre. It does not even build a station. It does not replace any of the TTC buses in my riding, in the city of Toronto or in the GTA. It does none of that.

That is great; I have my tax credit. I am now going to get a tax deduction after I file my tax return, which has become so complicated that I now have to hire somebody to prepare my return. I am going to hand it in but I am not going to take the bus because the bus has flat tires all the time. These are utterly brilliant choices.

Then there is a credit for trades tool expenses. I kind of like that. What is wrong with that? Folks should be able to deduct their tool expenses. If one really thought about it for more than two minutes, one would say that a deduction for employment expenses should be broadly based because most people do not make their living in the trades. Most people make their living in services. We are becoming a services oriented country, so this particular credit is useless to most people.

The children's fitness tax credit is another one. I play hockey. My kid is a swimmer. I paid literally thousands of dollars annually for my daughter to swim. She is a nationally rated swimmer and now swims with McMaster University. I am going to get that credit. I kind of like that idea. I am happy about that, but my other daughter who dances is not going to get a credit. If any of my other children were participating in artistic endeavours, the credit would not be there.

Witness after witness after witness said that dance should be included, painting should be included and all kinds of other activities should be included. No one is ever going to make everybody happy. That is why it is crazy to try to do this.

I do not know whether you caught this, Mr. Speaker. The report to the Minister of Finance on how to handle this was released. The “Report of the Expert Panel for the Children's Fitness Tax Credit” states:

Fees for camps that emphasize physical activity theme.

That sounds simple.

To qualify, the camp program would need to last at least five consecutive days--

--not four--

--during which at least 50% of the activity during the program hours of each day would involve physical activity.

I do not know about you, Mr. Speaker, but I send my kids to camp and I am not sure my kids would qualify. The counsellors run the kids from dawn to dusk and make them do all kinds of things, but the activities are not always physical. Sometimes there are activities for painting, sometimes there are activities for learning about the woods and nature and things such as that. Those camps will not qualify.

This is going to be administratively ridiculous. No one is going to be able to keep track. It will place an administrative burden on all of these camps and then there will have to be a huge audit scheme to find out whether in fact a particular camp at a particular time had a five day program which involved physical fitness and physical fitness only.

In conclusion, the way to go is the way the Liberals set out in our November update, which was to raise the basic personal exemption and lower tax rates across the board if we want to do something in the area of tax relief for Canadians. This hodgepodge, mishmash, myriad of tax credits is administratively ridiculous and simply adds to Canadians' burdens rather than detracts from them.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I wonder if I might ask the member to specifically focus for a few moments on the disaster for post-secondary education students.

He is probably aware that students in Nova Scotia are more hard pressed than any others in the country because of the lowest level of assistance to students and the highest tuition rates. In general, I am wondering if he could speak a bit about the fact that the main impact of these budgetary measures is to increase the debt burden on students as opposed to measures that would really address the debt burden and deal in an effective way with the reduction of post-secondary education expenses.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, that is a good question and it is one on which the finance committee received quite a number of representations.

To try to summarize it in a one minute response is going to be a bit tricky, but we can basically divide the issue into two. The first issue is access of students, which the hon. member is concerned about, and the second issue is basically the infrastructure, the buildings, the labs, et cetera, when the students get there. Both need to be addressed.

The way in which the government seems to have responded at this stage is an $80 tax credit for books. Well good for them, but it is not going to do anything for improving the quality of our schools. Certainly none of the budget responds to the issue of keeping the research councils well funded so that we keep our best researchers here, and certainly nothing happens for the students.

We heard repeated representations from various student groups. It did not matter whether they were on the east coast, the west coast or somewhere in between; they feel that the government has essentially turned its back on improved access to post-secondary education.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I appreciate my hon. friend's comments. It almost seemed for a point there that he was arguing for the Canadian Alliance's old single rate income tax. He was getting to that point.

The hon. member owes it to the House, if he is opposed to all these tax credits, to indicate what he would push for in the next election when his party puts forth its platform. Would the member and his party unequivocally commit to repealing all the tax credits that he has criticized, the tax credit for sports, the tax credit for employees, the tax credit for pensioners, et cetera? Since he is opposed to them, would he be willing to commit that the Liberal Party would definitely repeal all these tax credits should the Liberal Party some day become the government?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I think the member is worried about our getting back into government sooner than he thinks, so in fact we have to be responsible about this issue. Frankly if he had read the November update, he would have almost a complete answer to his question.

The focus of the Liberal Party is to raise the basic personal exemption. The focus of the Liberal Party is to lower the rates at which the thresholds hit and to raise the thresholds themselves. That is broad base tax relief. By getting into a situation of this credit for this person and that credit for that person, all it does is creates a make-work project for a bunch of accountants. It also imposes huge administrative burdens on a variety of people who are in no way able to deal with them.

The answer to his question is that we are in favour of broad base tax relief. Whether it would also include credits, it may well do. The credits would be higher credits an they would be right across the board. The credit would not be just for physical activity. It would have to be activity. If one is going to go down that route, one might as well go the whole way, and the whole way is one has to cover the artists, the musicians, the athletes, pretty well everyone. In which case, one might as well just raise the basic personal exemption and that way everybody benefits.

[The Acting Speaker, Royal Galipeau]

The hon. member for Winnipeg Centre, a short question.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I will be short and specific.

The basic personal exemption as per Revenue Canada's own website actually went down on July 1, 2006. Low income seniors are coming into my office and showing me that their income cheques for this month are $10 less than the ones for June and July. Is the member aware that those guys have actually cut the pay of the lowest income seniors by virtue of this budget?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, that is my point exactly; it has gone up for everybody, as has the threshold rate, the initial rate. The way the Conservatives are paying for this idiocy is by increasing the tax burden on all of us, but particularly on the most vulnerable, of whom seniors are a component.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, in the few minutes that are available to me, I very much appreciate the occasion to participate in the debate on the government's budget implementation bill. It will not surprise any of my colleagues here in the House of Commons to know that, like my NDP colleagues, I will not be supporting this flawed, short-sighted and meanspirited bill.

I am proud of the work that my leader and my colleagues have done, both here in the House of Commons and out across the country, to draw attention to the errors and omissions, the missed opportunities and the misplaced priorities of the bill that is before us.

I have heard from a great many people, certainly, from many parts of the country, in relation to the failure of the budget to in any significant way address areas for which my critic responsibilities apply, those of international development and foreign affairs. I do not have the opportunity to speak at length about that today, except to say that the disappointments in the budget as they relate to dealing with domestic issues certainly are matched by the profound sense of disappointment felt by a great many people across this country that we have yet again shown no significant progress in meeting our international obligations to seriously commit to the eradication of poverty and to preventable disease in the very poorest parts of the world. We have a lot of work to do on that front.

I have also heard, not surprisingly, from a great many of my constituents. I will just very briefly refer to one of many messages received by e-mail, letter and in person. One that came to me is a longer one than I have time to read, but it speaks about the budget, stating that “the Harper government” has confirmed “one of the largest budget surpluses in Canadian history, a whopping $13.2 billion”. It goes on to say:

Even with this excess surplus, the Government is still cutting back on funding for programs relating to women, disabled persons, aboriginals, and other disadvantaged Canadians.

Furthermore, programs for helping disabled persons get jobs are not receiving any additional funding, no additional programs to encourage employers to hire disabled persons, no funding for youth programs, no additional programs to get disabled persons into the workforce, no legislation requiring employers to hire disabled persons.

That is just one example of our most vulnerable citizens who feel very let down by this ultra-conservative budget. Not surprisingly, this is a memo that this young man in my riding entitles “Big Surplus and Betrayal from Conservative Government”.

My colleagues have had an opportunity to speak about the disappointments in the budget with respect to how it is going to increase child care wait lists. Despite all of the talk about addressing child care, it simply does not do so. The fact is that family allowances will effectively be diminished, because the budget is now going to tax the $100 a month allowance and will be eliminating the young child supplement.

The fact is that pollution undoubtedly will go up because, just like the Liberals before them, these Conservatives have no plans to seriously tackle, with detailed plans, targets and timetables, greenhouse gas emissions and to get on with serious reduction of greenhouse gas emissions.

As well, as I have already had an opportunity to point out, student debt will continue to grow because there is no serious commitment to tackling this problem.

I am very, very pleased with the fact that constituents in my community, given the opportunity earlier this week to meet with the NDP finance critic and the NDP critic for post-secondary education and literacy, responded by coming out to participate vigorously and enthusiastically in a discussion about not just the flaws, failures and omissions of the budget implementation bill that is before us, but also the very short-sighted and meanspirited cuts that have been announced subsequently, very much within the same genre, within the same spirit, or lack of spirit, for how to improve the lives of Canadians.

Among those who gathered in that meeting in my riding on Monday night were those who were speaking up for women who are desperate about the threat of cuts to transition houses, which help protect them from the abusive relationships from which they are escaping, and desperate about the threat of cuts to women's programs that are helping women to rebuild their lives.

Others who participated came because they are very concerned about the lack of new housing initiatives in this budget and the continuing failure, right up to as recently as yesterday, to confirm in any kind of detail the continuation of SCPI funds and the commitment to new funds to basically rebuild what was once the best national housing program in the world, which was simply killed by the previous prime minister when he was serving as finance minister. The result, of course, was predictable: incredible numbers of homeless people.

At that meeting on Monday night in my riding, we heard from people who are very concerned about the cuts to the arts and about an attempt to somehow define as illicit lobbying the attempts of those who would champion the arts and try to get the government to understand that this is really about the heart and soul of the nation. It is really about the ability of Canadians to come together around who we are and who we want to be in today's world.

Others were there to speak with real concern about the unbelievable decision, announced since the broader budget framework, of killing the international youth internship program. It is absolutely unbelievable.

In this globalized world in which we live, at a time when our young people are anxious, eager and highly motivated to get out and really contribute their time and energies, and their hopes and dreams and aspirations, to building a better world, in one of the very best programs available to give them overseas experience and help open the doors of opportunity to valuable employment, the doors have just been slammed shut. This has to be one of the most cost effective programs from the point of view of the opportunities given to young people on their way to building careers in international service. This cut also is a real blow to the NGOs that depend upon the very significant contributions and skills of our young people in their hard-pressed, seriously underfunded agencies.

The list goes on and on in regard to the tremendous sense of loss felt across the country.

There is also the community access program, which has been very important, in this knowledge-based economy, in putting people on track to be able to use the Internet for modern communications.

There is the death blow to various volunteer initiatives and organizations.

I am sorry there is not more time, but I have to say that at the end of the day this is a budget that is a series of misplaced priorities and missed opportunities. For that reason, I too will be voting against this budget implementation bill.

[The Acting Speaker, Royal Galipeau]

I did not want to interrupt the member during her oratory but the hon. member will recall that at the beginning of her speech she made reference to another member by his name.

You have 25 years' experience as a legislator and you do care about decorum.

Questions and comments, the hon. member for Fredericton.

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, I would like to put a question to my hon. colleague and thank her for her intervention. I could not agree with all of it, but I agreed with much of it.

I would like her to comment on what this reveals about the ideology behind the government, which really does not believe that the government has any place in financing criticism, that it does not have any place in financing the court challenges program, or in giving money to artistic organizations to do advocacy or to women's groups to do advocacy, to do pure advocacy. Service is important, but so is it necessary for governments that are sometimes isolated, sometimes living in rarefied atmospheres, to hear from people on the ground about what is important to them. I would like to hear her comment on what this says about the government and its ideology.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I welcome the opportunity to address this question. Let me apologize for referring to a member by name. I actually cannot even recall to whom I referred to by name. I apologize, and I am going to have to figure that out later, because I do know better. I am not permitted to do that and I did not intend to do that.

I welcome the question from the member for Fredericton. By chance, the very next item I was going to speak about if I had not run out of time was the court challenges program, which serves as a screaming example of the hypocrisy of this government. I have to say that for a government whose members in opposition constantly talked about being the real grassroots democratic voice of Canadians, it is stunning to watch the many different ways in which they are trying to quash any meaningful advocacy and any meaningful discussion.

It is doubly hypocritical because, with great enthusiasm, the government has taken up the notion that we should really push our overseas development assistance obligations aside, or at least cut down on the extent to which that should be a really high priority, and instead commit to “democracy building” in failing and fragile states.

I absolutely think we should be committed to democracy building in failing and fragile states, but there is an expression, “Physician, heal thyself”, and maybe we could tweak that a little and say, “Politician, would-be democrat, heal thyself”. As for us going around the world on this, I worry about where this government really wants to take us in this democracy building exercise, because that can go as far as talking about regime change that causes chaos in the world.

Even acknowledging that an element of our overseas development commitment should involve contributing to the kind of capacity building and to the political sensitization of people who need and want to build a stronger foundation for democracy, it is unbelievable to me that this government is busy quashing dissent and cutting off opportunities for democratic expression everywhere we turn.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I have been puzzled by the NDP lately and maybe a lot of other people have as well.

[An hon. member]

Lately?