44th Parl. 1st Sess.
March 21, 2022 11:00AM
- Mar/21/22 12:52:43 p.m.
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Madam Speaker, I listened to the entire speech by my colleague across the way and he seemed to focus on what I believe to be a misconception that has been continually floated around by Conservatives since Reaganism. That is this idea that if taxes are increased on the wealthy, they are somehow going to migrate away to other locations that have lower taxes. It is a very well talked about idea and concept. However, there is very little data that supports that it happens in practicality.
I am wondering if the member can cite any data, any study or any conclusive review that indicates that it actually happens. I am willing to admit I am wrong if I am missing something, but I have never been able to find that when I look for actual data to support that claim.
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- Mar/21/22 12:53:45 p.m.
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Madam Speaker, I would like to thank the hon. member for his question, which allows me to point back to his own government's data. In 2016, we raised the top marginal rate on the highest income earners in Canada. What happened? The government told us that we were going to get about $3 billion in extra taxes. What did we get? We received less than $1 billion, which is a third of what we were expecting to get. In fact, we had a record number of tax filers leave the country after that was introduced.
I refer the hon. member back to his own government's statistics on this matter.
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- Mar/21/22 12:54:31 p.m.
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Madam Speaker, I thank my colleague for his excellent speech. I was very intrigued as I listened to all his comments, and I was glad to hear that he supports the motion put forward by the member for Burnaby South.
The NDP is proposing that, among other things, a certain percentage be taken of banks' and other businesses' excess profits, but one thing that worries me is what they plan to do with that money. They talk about redistributing it to help people deal with the skyrocketing cost of living these days, but how exactly will that be done?
At the Bloc Québécois, we have been insisting for a long time that health transfers need to be increased. We feel this would be a good opportunity to restore and ensure the physical and mental well-being of Quebeckers and Canadians.
I would like to hear what my colleague thinks about what should be done with the money. How can we help Canadians and Quebeckers cope with the alarming rise in the cost of living?
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- Mar/21/22 12:55:32 p.m.
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Madam Speaker, to clarify, while I find some portions of the NDP motion acceptable, I do not think we can support the motion in its entirety as it is currently written. I do not believe that growing the size of government is going to address the cost-of-living crisis.
My submission would be that we need to let consumers take these excess profits from companies in the form of lower prices. In fact, with respect to public transfers and what we would do with money should we have an excess amount of revenue, and by the way government revenues are increasing substantially during inflation, absolutely, we should be giving no-strings-attached additional money to provinces for health care transfers and other social programs.
I think the provinces well understand how to best use that money to support their own jurisdictions. I would support my hon. colleague with that suggestion.
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- Mar/21/22 12:56:44 p.m.
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Madam Speaker, just to follow up on my colleague's question, I think it is something Conservatives traditionally have always said, which is to give big business and the ultrarich the tax breaks and they will create the jobs. They believe in the trickle-down theories. I am wondering if my colleague could provide any sort of report or evidence that clearly shows that this is, in fact, the case, because that is not my understanding.
Conservatives continue to espouse that and I do not think it is a fair contribution to the debate, unless they can substantiate their comments.
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- Mar/21/22 12:57:31 p.m.
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Madam Speaker, I am pleased to answer this question again. We look at the federal budget from 2017 and it talks about how much revenue was gained from the tax increase on the wealthiest Canadians. It was one-third of what the government projected, so it received far less revenue than it thought it would because people left.
If we increase taxes on large businesses that can easily shift profits and operations overseas, we will find that they will leave this country and we will have less investment.
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- Mar/21/22 12:58:09 p.m.
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Madam Speaker, I rise today to oppose this motion put forward by the NDP, the content of which borders on the ridiculous: It sounds like it was written by a 4th-grade student.
We certainly agree that we are experiencing a cost of living crisis. There is no mistaking that. In fact, the Conservatives were the first to speak out against the skyrocketing prices Canadians have been and still are facing, whether it is the price of gasoline, groceries or other consumer goods.
However, the NDP seems oblivious to what caused these price increases. In my opinion, the remedies it is proposing will only exacerbate the inflation we are currently seeing. It seems to think that everything is going to be magically solved with this 3% surtax on banks and insurance companies proposed by the Liberals. It wants to extend the surtax to the New Democratic Party's arch-enemies, the oil companies, and to big box stores. I do not know why it is targeting these two economic sectors in particular, since many other economic sectors could be taxed.
The first sector they are targeting provides jobs for hundreds of thousands of Canadians across the country. It makes a significant contribution to Canada's economic development and the social services funded by the huge tax dollars it already pays. I am talking about the oil sector, which fortunately meets a major share of Canada's and the United States' energy needs at a time of multiple conflicts around the world and in an era where alternatives to this energy source will take us years to access.
We find the NDP's decision to target big box stores even more perplexing because they are kind of the saving grace of the middle and working classes. These people and their buying power depend on the impressive supply chains that deliver essential goods across Canada.
I will not sing the praises of major chains because I am from a region where people have to do whatever they can to promote buying local. However, these chains are one option for the things we need to buy. Over the past two years, local markets have been hit hard by COVID‑19. That is why chambers of commerce have worked so hard to encourage buying local as a way to help our small businesses, which have had such a tough time, stay alive.
The fact is that big corporate chains play an important role in everyday life by offering products that are as affordable as possible to a clientele that does not necessarily have the financial means or the time to visit small specialty shops.
We are under no illusions. Merchants are very much affected by increases in the cost of living and supply chain challenges. CP Rail employees are on strike at this very moment, for goodness' sake. Once again, we are talking about a major hurdle that will further increase the cost of living. As we know very well, basic commodities like western Canadian wheat and barley will not be able to leave Canada, inevitably preventing them from getting to processors.
Retail prices are not the only ones that have gone up. Wholesale prices have risen, too. Farmers are having to spend more money on soaring energy costs. Processors are being forced to increase wages to attract and retain staff. Goodness knows I can speak to this from my own personal experience with my business. Trucking companies are struggling with both a driver shortage as well as increases in the cost of fuel, which has risen by 30% in recent months.
Inevitably, merchants also have to pay to get products in a competitive market like ours. It is not always easy to increase prices quickly, since consumers have fortunately learned to use coupons, now that everyone is forced to deal with the skyrocketing price of products in stores. Profit margins are not huge at these major chains, nor at our local stores, who have to recover their loss somewhere.
Prices have also increased considerably at grocery stores. I went grocery shopping on the weekend. I could not get over how much the price of butter, milk or bacon has gone up in a year. It makes no sense. People are worried that these prices will continue to go up since all the other costs in the supply chain are going up as well.
I just listed a host of factors that led to these price increases over the past year.
Does the NDP truly believe that the big box stores will simply accept this new proposed tax and not pass it on to the consumer?
It is absolutely ridiculous to think so. Make no mistake: If there is a government-proposed tax or surtax, even with the billion dollars or more in profits that those companies are making, they will pass it on to the consumer. There is no doubt about it. That is what will happen. At the end of the day, it will still be the consumer and every socioeconomic group who will be paying.
Let me give an example. I live in La Pocatière, or, more specifically, Saint‑Roch‑des‑Aulnaies, which is an hour and fifteen minutes away from Quebec City and major chains like Costco and so on. What kind of compensation would I get with the surtax, compared to someone who lives in Lévis and is a two-minute walk from the major chain in question?
That is what life is like in the regions. Longueuil, for example, is not a big region. My region covers 7,500 square kilometres. When I am travelling around my riding, it can take three hours to get from one end to the other. I do not cycle that. When I go shopping, I obviously try to shop as close to home as possible, but if I want to shop elsewhere, I have to pay for gas, travel and my time. That will obviously have an impact on my total costs.
Why is the NDP not trying to address the root cause of these price increases?
It must know that printing money to finance the Liberal government's astronomical deficits has devalued the Canadian dollar. It is sad to say, but the current government's poor management has weakened our petrodollars, which, in the past, increased along with the price of a barrel of oil. This is definitely not the case at present.
Members will recall that in 2007 and 2011, under the Conservative government, the Canadian dollar was practically on par with the U.S. dollar, and even briefly pushed above it, in some cases. Not everyone was pleased, especially exporters, but it did at least give consumers some breathing room and let them take advantage of prices that were stable and even dropped for some imported goods, such as food items that we cannot grow because of our climate.
This year, however, we find ourselves with the worst of both worlds: gas prices that continue to increase significantly and the purchasing power of our dollar that is decreasing across the board. We all know the results of the government's record over the past six years, which consists of financing deficits not just with borrowed money, but with printed money as well.
Why does the NDP believe that everything can be solved by increasing taxes?
I cannot wrap my head around that. I cannot understand it. What we need to do is lower taxes and reduce the size of the government to try to save money in a lot of different places.
I would remind the House that, in 2015, the Liberal government said that it would run three small deficits of $10 billion, but it ran a $100-billion deficit after three years. Then, the pandemic hit. Imagine what that would mean if a recession were to hit. That would add fuel to the fire. The Liberals are going to make the inflationary spiral we are experiencing in Canada even worse.
Canada must be able to compete in a global economy, and the worst thing that can be done for investment in Canada is to entrust this government with the task of determining which industries are more deserving of preferential tax rates and which ones should be given punitive tax rates. It can take years before a company takes off and becomes profitable. There is still a lot of uncertainty in the business community right now. The government cannot just suddenly decide how a society will pay taxes based on public discontent. We need to maintain a predictable business environment.
Did the NDP think about how many more public servants it will take to administer this new tax and to redistribute the funding? How much will that cost in paperwork alone?
The government is slow enough as it is in delivering its current programs. This would only make things worse. In rural ridings like mine, people are tired of paying more and more taxes. This only increases the cost of travelling long distances to work, to school, to kids' activities or simply to the grocery store.
We say no to any more taxes. The cost of living is high enough as it is.
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- Mar/21/22 1:07:51 p.m.
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Madam Speaker, the member said that the Liberal government has devalued the Canadian dollar. I am wondering by which measure he is making this claim.
If the member is claiming it is based on valuing it against the U.S. dollar, the exchange rate is actually among the highest in the last five years. If he is talking about it in terms of what inflation has done to the Canadian dollar, indeed that inflationary impact has been felt around the entire globe. The value of our dollar still remains significantly higher than other countries'.
Can the member clarify what he meant when he said the Liberal government has devalued the Canadian dollar? By most measures, that is just factually untrue.
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- Mar/21/22 1:08:44 p.m.
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Madam Speaker, what is true is that the government has spent $600 billion over the past six years. That is the reality, and no one can ever take that away from them. Unfortunately, they will be stuck with that legacy forever.
That is why everyone is paying, and will continue to pay, more money in interest. It is beyond belief that the Liberals have more than doubled the debt in six years.
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- Mar/21/22 1:09:07 p.m.
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Madam Speaker, I thank my hon. colleague for his speech. He did a good job outlining the cost of the paperwork that would result from this new tax increase. How many public servants does he think it will take to change a “5” to an “8” on a tax return?
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- Mar/21/22 1:09:26 p.m.
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Madam Speaker, knowing the federal government, it will surely take thousands of people to change a “5” to an “8” on tax returns.
In reality, the math is not as simple as it sounds. The money collected will have to be redistributed, but how will that be done and who will receive it?
The federal government has grown as big as an elephant. This measure will do nothing to stop it from getting any bigger.
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- Mar/21/22 1:09:59 p.m.
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Madam Speaker, I am stunned, unfortunately, and so disappointed by the comments from the hon. member across the way. I do not think that he read the motion and I would hope that he looks at it more closely.
In no way have we ever talked about increasing taxation on people. In no way have we talked about increasing taxes on small businesses. This is specifically for those large organizations and corporations that have made excess record profits. They do not pass those along to people. They already do not pay their fair share in taxes, and people are feeling that on the ground.
Scotiabank had a net profit of $10.1 billion and it paid its shareholders, but it does not go into the pockets of people. They take that from people and they take that from their customers. Loblaws had $1.9 billion. They take that—
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- Mar/21/22 1:10:58 p.m.
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I would ask the hon. member to ask a question, please.
The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.
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- Mar/21/22 1:11:02 p.m.
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Madam Speaker, my colleague and I have a totally different view of this. I do business. When I sell a product to someone, I try to sell it to them at the best possible price and under the best possible conditions.
Inevitably, the tax or the surtax—I read it—proposed for banks, insurance companies and others will be passed on to consumers. It is completely ridiculous to think otherwise. Does my colleague really believe that these companies will not pass on the surtax to consumers? They will automatically raise their prices by 3%, there is no other way.
The surtax will inevitably be passed on to consumers. The goal, however, is not to tax consumers directly, but the big banks.
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- Mar/21/22 1:11:52 p.m.
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Madam Speaker, I have another question for my colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup. I am not sure if the member for Kingston and the Islands already asked this.
The Conservatives think the value of our dollar has dropped relative to other countries. Is that just because of inflation? I do not think I understood his response.
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- Mar/21/22 1:12:25 p.m.
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Madam Speaker, our country's debt has doubled over the past six years. It took 150 years for the debt to reach $600 billion. Now it is over $1.2 trillion. The size of Canada's debt is almost inconceivable. We have to pay all that borrowed money back, and that affects the value of our dollar.
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- Mar/21/22 1:12:58 p.m.
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Madam Speaker, let me begin by saying I will be sharing my time with the member for Terrebonne.
On this first day of spring, and I wish you an excellent spring, Madam Speaker, I see that the NDP is dedicating its opposition day to the Liberal Party's election platform. I wonder why. Part of the Liberal platform was to charge this surtax on the profits of the big banks.
I think maybe the NDP no longer has confidence in the Liberals. However, the budget is coming up and I have seen the NDP declare its confidence in the Liberals several times. It even did so when it came time to support the emergency measures, even though several legal experts confirmed that those measures breached the fundamental rights of Canadians. I wonder what has the NDP so concerned on the eve of the budget. The Liberals themselves proposed going after the big banks to the tune of $10 billion over four years.
I am thinking that it is probably because the Liberals are in the habit of listening to what Bay Street has to say. What happened when the Liberals suggested imposing this small surtax on banks during the election campaign? The banks made threats. Top bankers and their associations came out and started saying that they would increase consumer fees and eliminate jobs in the banking sector and that this would be catastrophic.
We are all worried that the Liberals will listen to Bay Street bankers. Not so long ago, a former finance minister came from Bay Street. We understand that he is no longer talking to them, but he was so charming that he surely still has friends there.
What surprises me the most is that we are discussing a surtax. The reality is that our banks are undertaxed. Our banks and the businesses that provide all manner of other goods and services are not on an equal footing.
Do we pay the GST on financial services? No, because financial services are generally exempt from pretty much all taxes. However, when we purchase goods and other services, they are taxed, even in the riding of the member who just spoke about buying goods.
Banks offer financial services and are funded in a somewhat underhanded way. We know what happens. When my constituents put their money in the bank, what kind of interest rate do they get? They basically get no return on their investment. However, the bank turns around and lends money at a rate of 22% on credit cards, 15% on lines of credit, 5% on other things and so on. The bank makes money because of this credit spread, but there are never any financial service transactions. That circumvents the principle of value-added taxation, which all other businesses support.
Banks are undertaxed, but there are ways to tax them. Great Britain's Mirrlees Review, a major tax commission led by a Nobel prize recipient, explained that, in order to remedy this problem, banks' cash flow and financial services could be taxed. However, it is surprising that no tax is proposed when it comes time to collect from banks to level the playing field for our companies.
When banks need funding, they turn to the Bank of Canada, which loaned them money at a rate of a quarter of a percentage point during the pandemic. This system is supported by the public trust and the taxpayer. Did banks complain when they were charging higher mortgage rates in a completely inflationary market? The answer is no. Bank lobbyists never told us that people were paying too much.
When banks seek funding by issuing debt obligations or bonds, they pay less than all other companies with similar capitalizations, and this is because banks will not be able to declare bankruptcy. They are too big to fail. People purchasing obligations from banks know very well that if disaster ever strikes a bank and there are problems with the financial system, Canadian and Quebec taxpayers will come to their rescue through the Bank of Canada as the lender of last resort.
This means that banks make more profit because they pay less for their debt certificates. We must stop calling this proposal a surtax. Our banks have access to many tax advantages based on the nature of the services they provide and on the fact that they benefit from a system that is less competitive than in other places, which means that they make more profit.
For the sake of fairness, justice and efficiency, we need to get an additional contribution, in the absence of more appropriate tax reform.
We hear them talk about the banks. We hear the Conservatives. There is no shortage of arguments against this tax. The first argument is that the banks are owned by large Canadian investment funds and those Canadian investment funds generate dividends. We hear them say that there will be fewer dividends if we tax the banks' profits a little more and that the big investment funds will pay, except that during the pandemic, profits were higher than normal. There were excess profits. No investment fund manager in Canada, whether they work for the Caisse de dépôt et placement du Québec, the Ontario Teachers' Pension Plan or private funds, had anticipated those returns and the difference in performance from companies whose security is not guaranteed by the Government of Canada. We are in a situation where, if we tax a portion of excess profits, we are not even getting back to the profits already anticipated by all Canadian investment fund managers. This is therefore a bad argument.
Now we are being told this will affect housing prices. That is both practically and theoretically untrue. Why? The reason is that our banks structure their costs in such a way as to maximize profit. They have revenue and expenses, and their goal is to achieve the biggest gap between the two. That is called profit.
However, whether the government taxes that profit at 15% or 18%, the bank's recipe is exactly the same. It will still maximize profit, the same as before. Higher tax rates will make absolutely no difference. In fact, this approach to taxing banks' excessive profits is one of the most effective and one of the least likely to create distortion and to be passed on to consumers.
I have been listening to my Conservative colleagues. It almost sounds like they are talking about a sales tax. Taxes vary in the type of damage they can do, in their economic impact. This particular tax is justified and equitable.
The Bloc Québécois has already put a similar idea forward. We proposed a retroactive tax because the situation with excessive bank profits was unusual. Our thinking was that, in a full-blown pandemic, what people need is health care and health transfers. Governments are under extreme pressure, and never before have we been in such dire need of government support. That is exactly why we suggested it.
When I meet people in my riding, people who have lived through two years of a pandemic, and the hospitals are cutting staff, when the Quebec government is asking for transfers and the nine other provinces and the territories agree but Ottawa turns a deaf ear, I figure that at some point we will have to find a way to finance these services. Now the federal government has a way.
I am tired of hearing that the banks will pass on the costs to consumers, and so on. What we are proposing is justice. Banks are undertaxed and are legally avoiding paying tax. Since the 2006 crisis, taxes on corporate profits have been significantly and systematically reduced for all businesses. We are now at a crossroads where we must reflect on this and decide whether all businesses should be treated equally or banks should be taxed differently.
Are banks really different? Obviously, the answer is yes. Should we find other ways of taxing financial products and the credit spread? The answer is yes.
Let us think about this logically. The government is under pressure. It had to increase service delivery. It has to increase health transfers, listen to the provinces and find new sources of revenue. It is not surprising that the Conservatives and some of my colleagues are against this. They are against everything.
The only way they understand how to finance any service is through oil, oil, and more oil. However, because of their oil, before the last increase in the price of a barrel, the government of Alberta projected a $500-million deficit. It is obvious to me that taxes need to be fair and equitable. This is a motion that, in principle, supports this idea, and that is why I will vote in favour.
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- Mar/21/22 1:22:52 p.m.
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Madam Speaker, I listened to my colleague and friend across the way, and I think there is some discontent within the coalition of the Bloc and the Conservative Party.
At the end of the day, we hear a lot about banks, as we should. We want to ensure that everyone pays their fair share. However, one of the things that is important to recognize when we talk about banks is it is not one person who owns, for example, the Bank of Montreal. It is not the super wealthy who own our banks. It is often union members, pension funds and so forth, and they too are dependent on these dividends.
I would just ask the member to follow up his comments with the best way to tax so it is most effective and not hurting the consumer. Could he provide further thoughts on that?
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- Mar/21/22 1:23:53 p.m.
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Madam Speaker, my colleague from Winnipeg North knows how much I admire him.
I find it fascinating that the Liberals are forming a coalition government with the NDP and are now claiming that there is a coalition of the opposition. Perhaps they are a bit embarrassed.
That being said, I have mentioned this before. It is true that large corporations pay out dividends. It is true for banks, which must observe minimum Canadian ownership tresholds. It is also true that profits have exceeded all projections. What the Bloc Québécois is asking is to consider the projections. No investment fund manager saw this coming.
During the election campaign, the Bloc Québécois suggested seizing some of these profits, because they have nothing to do with our banks’ business acumen. They are the result of circumstances, not the banks’ actions. We should take some of these profits. It would be both effective and fair.
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- Mar/21/22 1:25:05 p.m.
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Madam Speaker, I do have to make a comment at the beginning on the idea of a coalition. I mean, words have to mean something. The last time I checked, there were not any New Democrats in the cabinet meeting, and the last time I looked at the voting records, all three of the opposition parties voted with the Liberals from time to time in roughly equal proportions.
However, I want to thank the member for Mirabel for pointing out the absurdity of the Conservatives' arguments. I think he must agree with me that the Conservatives are really saying that, since taxes to businesses are always passed on to consumers, we should never tax businesses. Is that not where the Conservatives' arguments are really leading today?
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