Second Reading (C-2) ac act to Amend the Income Tax Act - Part 1
Mr. Garnett Genuis (Sherwood Park—Fort Saskatchewan, CPC): Mr. Speaker, I want to begin my remarks today on just a point of relative refutation because in listening to the debate we have heard some discussion around inequality in Canada. The member for Saanich—Gulf Islands used the phrase “a crisis of inequality”. We need to review the record with respect to inequality. Frankly, this bill is going in the wrong direction.
However, over the last 10 years as a government we have had a really positive record addressing inequality, as the numbers clearly show. As I have mentioned before, at the beginning of our mandate we lowered the GST, which is the tax that all Canadians pay. We also cut the lowest marginal tax rate. This is a very different approach from that which the current government is taking.
In my view, the best way to measure inequality is through something called “intergenerational earnings elasticity”, which is the ability of people to move between different income brackets across generations; in other words, what is someone's chances of being a wealthier person even if he or she had relatively lower income parents and vice versa?
I will refer members to a paper written by Miles Corak from the University of Ottawa. If we look at the data on intergenerational earnings elasticity, the numbers are clear that Canada is near the top when it comes to equality, when it comes to intergenerational earnings elasticity. Canada gets a score of 0.19, where low is good. We are fourth in the world. We are far ahead of the United Kingdom, France, Italy, and countries with a very different social system. We are also ahead of the United States. Therefore, we have a combination of factors in Canada that is good for equality. I would argue that it is a combination of certain necessary social programs in areas like education and health care but also of economic opportunity, and historically what we have had over the last 10 years of limited but effective regulation of business and low business taxes. This environment has been good for equality. It is one thing for members to throw out phrases like “crisis in inequality”, but if we look at the data specifically I would argue that with respect to intergenerational earnings elasticity we see that Canada is in a very good spot right now.
However, I will argue, and I agree with our colleagues in the NDP, that with respect to equality this bill does not move in the right direction because it cuts taxes in certain categories but not in others. Many low- and moderate-income Canadians would not benefit at all.
I am concerned about this bill because we might call this a Liberal promise wrecking ball. It is one bill that breaks through what were the clear election commitments of the Liberal Party. The Liberal Party committed in two key categories when it comes to fiscal measures. It promised to run three modest deficits of $10 billion, balance the budget after that, and ensure that all tax changes were revenue-neutral. It also promised to cut taxes for, in its words, the middle class and those hoping to join it, and to pay for those tax cuts with tax increases on higher-income earning Canadians. We see very clearly that this bill makes utter nonsense of these two commitments.
In terms of the Liberals' commitment to run only three modest deficits of $10 billion, balance the budget after that, and ensure all tax changes were revenue-neutral, we know that the deficits have ballooned significantly since the election, and that even before new spending is promised we will be running an $18.4 billion deficit in the 2016-17 fiscal year, and a $15.5 billion deficit in 2017-18. That is again before new spending.
The Minister of Finance had this to say about that:
A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government might see that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago.
I will say that this is a rather strange definition of “ambition”, to leave the cupboard bare for the next generation. Let us define our ambition by how much we leave to the next generation not how little we leave to the next generation.
The Prime Minister has said that Canada has room to run these new massive deficits because of our relatively low debt-to-GDP ratio at the federal level. It is true that our government left Canada with a low debt-to-GDP ratio. In fact, we left a reduced debt-to-GDP ratio compared to when we first took office. However, the combined federal, provincial and municipal debt-to-GDP ratio is alarmingly high. It is over 90%. It is in the same ballpark as the debt-to-GDP ratio in the U.S. and the U.K. if we combine federal, provincial and municipal debt.