First and foremost, we would like to thank the hundreds of
organisations, businesses and individuals who took the time to share their
experiences and ideas with the Standing Committee on Finance.
In the main report the Committee has limited its
recommendations to policies that either explicitly endorse the status quo or
have already been endorsed by the government. By doing so, the Committee has
missed an important opportunity to provide its insight on the greater economic,
demographic and environmental challenges facing Canada.
While the recommendations adopted by the Committee naturally
reflect the views of the majority of its members, this Committee traditionally
endeavours to strike a balance in the body of the report by ensuring a
diversity of perspectives is included. We are deeply concerned that the main
body of this report strays from this tradition and fails to reflect the
divergence of views expressed by witnesses during the Committee’s pre-budget
consultations. While testimony which flatters the government is
well-represented, the same cannot be said for many points of view that could be
seen as critical of the status quo, even when such views were expressed by
numerous witnesses. A review of the testimony heard by the Committee suggests
there are significant omissions in this report regarding the state of the
economy, Canada’s growing income gap and challenges faced by low-income
Canadians.
JOBS AND THE ECONOMY
In addition to the more optimistic views contained in the
main report, the Committee heard from numerous witnesses who were concerned
about the growing possibility of the Canadian economy entering into a prolonged
state of either very weak growth or even another recession. Absent from the
report is the fact that persistently high rates of unemployment and
underemployment, particularly among young Canadians and aboriginal peoples,
were repeatedly identified as a significant risk to Canada’s future prosperity.
Witnesses asked the government to actively support job creation and cancel its planned
increase in job-killing payroll taxes in order to avoid making the situation
worse.
The Liberal Party recommends that the government:
- Freeze Employment Insurance (E.I.) premium rates at 2011 levels
so as to not risk Canadian jobs in today’s fragile economy.
- Extend the two-year Accelerated Capital Cost Allowance (ACCA) for
a period of at least five years so that Canadian employers can make strategic
investments to boost productivity and create Canadian jobs.
- Maintain and expand the refundability provision of the Scientific
Research and Experimental Development (SR&ED) tax credit that is currently only
available to smaller businesses. Larger companies need similar incentives to
invest in Canadian research and development and create Canadian jobs.
- Introduce an angel tax credit to increase the amount of risk
capital available for start-up companies in order to build an environment that
fosters innovation, entrepreneurship and creates Canadian jobs.
- Index the federal Gas Tax Fund transfer for Canada’s cities and
towns in order to help address Canada’s infrastructure deficit and create
Canadian jobs. The federal government should not allow the size of its investments
in municipal infrastructure to be eroded over time by inflation.
- Improve the measurement of youth unemployment in Canada by having
Statistics Canada regularly publish Canada’s “NEET” (Not in Education,
Employment or Training) statistic.
- Allow the deferral of previously written-off depreciation
(Capital Cost Allowance) on an investment property when owners sell in order to
reinvest. Encouraging owners to redevelop properties will help spur economic
activity and create Canadian jobs.
SOCIAL INFRASTRUCTURE AND CANADA’S GROWING INCOME GAP
Omitted from the main report is the fact that numerous
witnesses identified Canada’s growing income gap as a threat to the country’s
social fabric. The Committee heard that the recent growth in income disparities
has been aided by the policies of this Conservative government, including the
introduction of new non-refundable tax credits in the Income Tax Act. As
Rob Rainer, Executive Director of Canada Without Poverty, stated before the
Committee:
“The evidence so far is that the take-up on these kinds
of tax credits is in fact not by those who they are ostensibly meant to help.
It's more the middle-income and upper-income households that may benefit from
these tax credits. So that further increases the inequity in our society.”
When tax credits are non-refundable, Canadians who do not
earn enough money to pay federal income tax cannot benefit from the credits.
Witnesses identified this as an issue of fairness and implored the government
to make some of the tax credits (such as the caregiver tax credits, disability
tax credit, age tax credit, and children’s fitness tax credit) fully refundable
so that low-income Canadians could also receive support through these programs.
More specifically, organizations representing caregivers informed the Committee
that many family caregivers who work fewer paid hours or quit their jobs in
order to take care of loved ones at home will not be able to benefit from the non-refundable
family caregiver tax credit introduced in Budget 2011. As Susan Eng of CARP
told the Committee:
“We encourage [the government] to put forward a
refundable tax credit, particularly for the more narrow segment of caregivers
who perform 24/7 care. They are the people who have had to quit their jobs to
look after their families. They are not going to be in a position to benefit
from a non-refundable tax credit.”
The Committee heard from several Aboriginal leaders who
implored the government to increase its investments in the areas of education,
health care (including mental health services) and affordable housing.
Witnesses discussed the negative and pervasive effects that current housing
shortages are having in many northern and remote communities, including the
profound impact they are having on women with children who are trying to escape
violence.
The Liberal Party recommends that the government:
- Move toward making the disability tax credit fully refundable, as
well as tax credits for caregivers, volunteer firefighters, and children’s arts
and fitness activities, so that low-income Canadians can also qualify for
benefits under these programs. In the meantime, refrain from introducing new non-refundable
boutique tax credits in areas where comparable federal support is not available
for low-income Canadians.
- Work with the provinces, territories and Aboriginal leaders to
design and implement a national poverty reduction strategy that includes
targets and timelines for poverty reduction and elimination.
- Work with the provinces and territories toward a new Health
Accord that provides predictable and stable funding and promotes a home care
strategy with national standards of care, funding and accountability.
- Lift the 2% funding cap on spending increases to the Aboriginal
Affairs and Northern Development Canada (AANDC) Post–Secondary Student Support
Program.
- Work with the provinces, territories and Aboriginal leaders to develop
and implement a national plan for affordable housing with more adequate federal
funding to address Canada’s shortage of affordable housing units.
- Work with the provinces and territories and Aboriginal leaders to
invest in a national strategy and funding framework for early childhood care
with universal access and national quality standards.
- Implement a Yearly Basic Exemption (YBE) to the Employment
Insurance system that is similar to the YBE for the Canada Pension Plan as a
way to alleviate the tax burden on low-income Canadians and their employers.
- Work with the provinces and territories to introduce a voluntary,
supplemental program under the Canada Pension Plan with defined benefits so
that Canadians and their employers have access to a retirement savings option
with lower risks and lower administrative costs.
- Develop a program to provide partial disability income support to
complement earned income from part-time work for people who are living with
lifelong episodic disabilities. Workers with partial capacity to work should be
supported to find employment and enter or remain in the workforce.
- Stimulate charitable giving by establishing a Stretch Tax Credit
for Charitable Giving and work toward expanding the current capital gains tax
exemption to include gifts of two other significant appreciated capital assets:
private company shares and real estate.
ENVIRONMENT
The Committee heard from numerous witnesses who asked the
government to invest in climate change reduction policies that will help Canada
compete in a global carbon-constrained economy while creating Canadian jobs.
The Liberal Party recommends that the government:
- Accelerate the transition to a low-carbon economy in a manner
that is revenue-neutral for the government.
- Invest in energy efficiency through a National Green Homes
Strategy, a green bonds program, and renewable energy solutions, with a
particular focus on meeting the green energy demands of Canada’s rural, remote
and northern communities.