44th Parl. 1st Sess.
September 29, 2022 10:00AM
- Sep/29/22 10:06:50 a.m.
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moved:
That, given that the cost of government is driving up inflation, making the price of goods Canadians buy and the interest they pay unaffordable, this House call on the government to commit to no new taxes on gas, groceries, home heating and pay cheques.
He said: Mr. Speaker, it is an honour to rise today to speak to this very important and timely motion.
The government's economic policy can be summed up in four simple words: smaller paycheques, higher prices. The cost of government is driving up the cost of living. What do the Conservatives mean when we say that? If we look at why prices are rising, it is directly linked to the massive deficits the Prime Minister has been racking up pretty much since his first day in office. In its first year in power, the government made a conscious decision to spend more money than it received and plunge this country into those deficits. That weakened our economy before the pandemic.
It is fair to say that nobody could have seen the COVID pandemic coming, but it is also prudent for a government to predict that the unknown could occur. We might not have known that it was going to be this crisis, but governments must be prepared for any number of world or global events that it might be forced to respond to. Plunging the country into those deficits when times were good was therefore a foolish thing to do. Obviously, in retrospect, it was massively unhelpful, as our country had to deal with the COVID pandemic from a weakened position because of the government's policies.
I know so many of my colleagues want to speak to this very important motion, because it is affecting people's lives in such a real and practical way, so I will be splitting my time this morning to allow for more members to participate in this debate.
How did the government's deficits lead to that higher spending? Well, the government had to go out and borrow a bunch of money that it did not have, so it turned to the Bank of Canada, and the Bank of Canada made a decision to underwrite the government's deficit spending by purchasing government bonds, or IOUs. When a government has to borrow money, it writes a promise to pay the money back. That is called a bond. Normally, individuals or institutions can buy those bonds and expect to get paid the interest, and the government pays the bond back at the end of the term. However, the Bank of Canada did something a little different: It created new money right out of thin air to buy those government bonds.
It started creating five billion dollars in new currency every single week, starting in March 2020, to buy those government bonds. That new money, not backed up by new production, not backed up by economic growth and not backed up by any extra production of goods or services, washed through the system.
There could be big winners when the government creates money out of thin air. The big winners are the large financial institutions that get the money first, because they go out and gobble up assets. They buy property and commodities. They do that with the new money before everybody realizes there is a whole new influx of currency in the system. When everybody else gets that money when it eventually makes its way through the economy, prices start to go up. Those large financial institutions and wealthy investors can then sell those commodities and make money on the difference. That is why prices have gone up, and it is also why we have seen record profits at large financial institutions like the big banks.
That is why we say that the cost of government has driven up the cost of living. Literally, the government's extra spending, wasteful spending, forced the Bank of Canada to underwrite those deficits, creating that new money and causing prices to rise. That is the higher prices.
What about the smaller paycheques? Well, what the government is planning to do on January 1 is take a bigger bite out of Canadians' paycheques with an increase in paycheque taxes. Canadians are going to be forced to pay more right off the top on their paycheques, and the government is going to take part of the extra tax it collects, scoop it out of the EI fund and spend it.
We know this. We know the government's plan for the EI increase is simply going to be gobbled up by regular government spending. In fact, the extra premiums the government will collect will put the EI fund into a $10-billion surplus over the short term, and all of that will be taken by the Prime Minister to finance his pet spending projects.
Where is a big chunk of that extra money going? It is going to the interest on our national debt. The Prime Minister has racked up more debt than every single other prime minister combined, and the PBO report indicates that just the interest on our national debt, which Canadian taxpayers will be forced to pay, will double. Soon, the portion of our tax dollars that go to pay just the interest on that national debt will be higher than the amount that is spent on the Canadian Armed Forces. That is the scale we are talking about.
What is the result? Well, we have all heard the heart-wrenching stories in our ridings. We have all heard from the seniors who have had to delay their retirement and watch their life savings evaporate with inflation. Thirty year-olds are trapped in tiny, 400-square-foot apartments in our large cities or, even worse, are still living in their parents' basement because the price of homes has doubled under the Liberals. Single mothers are putting water in their children's milk so they can afford the 10% year-over-year increase in the price of groceries.
It is no wonder that people are worried. Most are lucky just to get by, but so many are falling far behind. There are people in this country who are just barely hanging on. These are our friends and neighbours, and we in the House are their servants. It is up to us to take real action to address this Liberal-caused inflation crisis.
The Conservatives are bringing forward very simple and practical solutions to help Canadians across the country. Today, the Conservatives are calling on the government to not make the situation worse. The Liberals have already done damage with higher prices. They do not need to shrink Canadians' paycheques, which is what this government is planning to do. Not only are they adding inflationary fuel on the fire with their continued plans to increase spending, but they are reducing Canadians' ability to cope with the government-caused inflation by shrinking those paycheques.
A new poll out today is just jaw-dropping: 90% of Canadians are tightening their household budgets due to inflation. Almost half, or 46%, say they are worse off now than they were at the same time last year when it comes to their own finances, which represents a 12-year high. Over half say that it is difficult to feed their household, and this number rises to seven in 10, or 68%, among those with household incomes below $50,000. Canadians cannot keep up.
As for grocery prices, I have five children and our grocery bill is big enough as it is with a few teenagers in the house. Those prices have skyrocketed, up over 10% and rising at the fastest pace in 40 years. With inflationary pressures at this rate, the government's supports do not even help the problem but contribute to it, as that extra spending is added to the amount of money the government needs to borrow, which is causing that vicious circle of higher inflation.
The average Canadian family now spends more of its income on taxes than it does on basic necessities such as food, shelter and clothing combined. By comparison, 33.5% of the average family's income went to pay taxes in 1961. Thirty-three per cent of income in 1961 went to taxes and now that number is 43%, so more is spent on taxes than food, shelter and clothing combined. It is simply jaw-dropping.
On Tuesday, the Conservatives proposed that the government should cancel its plan to triple the carbon tax. The cost of everything is set to skyrocket as the government triples the amount that it charges Canadians on home heating and fuel, with all the effects that has on literally everything else that Canadians have to buy. Groceries, lumber and household items all go up when the government raises the carbon tax by 300%.
Today, we have another practical solution: The government should get its hands off Canadians' paycheques and let Canadians keep more of their hard-earned dollars. It has already robbed Canadians of the purchasing power that they are already earning, and their existing paycheques are already devalued because of the government's inflationary policies. It is never a good time to raise taxes, but the absolute worst time to raise taxes on Canadians' paycheques is when they are already struggling so hard to get by with day-to-day goods.
I hope every member of the House supports this common-sense, practical motion to stop the government's tax hikes on Canadians' paycheques.
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- Sep/29/22 10:51:38 a.m.
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Madam Speaker, I would refer Canadians to the content of my speech. If I could refer back to my experience in British Columbia, we have had a price on pollution since 2008. We have had the fastest growing economy in the country. Our plan actually makes life more affordable for 80% of Canadian households.
It is a good plan that fights climate change and grows the economy at the same time.
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- Sep/29/22 10:58:51 a.m.
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Madam Speaker, it was interesting listening to the parliamentary secretary talk about the fact that EI and CPP were not taxes. I would refer him to his government's own website, where it clearly states, under the tax basics section, that they are, in fact, taxes. I am not sure if he is aware of that, so I wanted to make him aware of it.
Also, the member talked a lot about the ways that the government is shovelling money into the economy during a period of high inflation. Again, a basic economic principle that Liberals seem to misunderstand is that whatever the cause of inflation, and we may disagree on the cause, part of the solution is in the hands of government. One of the things that hurts inflation and makes it worse is when the government continues to pile money into the economy.
I wonder if he understands that and if he wants to do something about it.
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- Sep/29/22 10:59:45 a.m.
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Madam Speaker, the Conservatives have been very ambiguous on which piles of money they disagree. Is it the CERB, which supported millions of Canadians across the country when they were out of work? Is it the wage subsidy, which supported small and medium-sized businesses across the country to support their workers? They have been very ambiguous with respect to which piles of money the government has been shovelling into the economy.
As somebody who grew up in a low-income household, my mother received HST/GST refunds, and they helped her pay the bills. I am really confident with these increases: the doubling of that GST credit; a little rental support for low-income Canadians; and ensuring that kids under 12 get dental care, and I can think of nothing more important than that. If the member opposite thinks that providing dental care for Canadians is shovelling money into the economy, then I think we would tend to disagree on that.
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- Sep/29/22 12:21:58 p.m.
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Madam Speaker, today we are talking about inflation, which is taking a toll on Canadians. This inflation was entirely foreseeable. The government could not keep printing stack after stack of money and not expect any consequences.
The ratio between the money supply and our GDP has increased drastically lately. It is unfortunate that nothing was done earlier on to regain control of the money supply. From the start, the government has been blaming inflation on the global situation, more specifically, supply chain disruptions. True, these disruptions are having an impact on supply and demand, but there are many other factors for which the Liberals have been responsible from the moment they took office, and those factors are behind this economic situation.
I do not want to be all doom and gloom today, but the Liberals' policies are leading us right for a cliff. There are two things that stand out to me regarding the situation we are now. The first is the Liberal government's inordinately large deficit, which is undermining Canada's financial stability and, even worse, endangering the economic prosperity of future generations.
When the Liberal Party formed government in 2015, Canada was in an enviable economic position. Not only did we have one of the lowest debt-to-GDP ratios in the G7, but we also had a budget surplus accompanied by positive economic growth. Canada was one of the best countries to invest in.
When the Liberals took office, they embarked on a spending spree that was unnecessary, considering the economic context. Canada's debt rose dramatically, going from $626 billion in 2014 to $1.049 trillion in 2021. Of course, part of that increase is a result of managing the pandemic. I want to talk about that management, though. Canada borrowed more than any other industrialized country, except Japan, and got little in return. Canada ranked 21st out of 33 industrialized countries in terms of average economic growth in 2020 and 2021, with the fifth-highest average unemployment rate.
Even so, this is still a level of debt that, all in all, could be managed well with historically low interest rates. However, by being short-sighted and failing to plan ahead, which is a recurring theme in the Liberal Party, the government was playing with fire. This situation could not continue if certain parameters changed, and now they are changing. As interest rates rise, servicing the debt will become increasingly expensive. Government forecasts will have to be revised.
The yield curve is inverted, probably signalling that a recession is coming. The 10-year treasury yield is rising very quickly, pointing to a growing lack of confidence in the Canadian treasury. Lastly, the increase in 10-year treasury bonds is making Canadian debt more expensive.
Who is going to pay for this debt? Who is going to pay the interest on it? Will it be Canadians? Can the government assure the House today that it will not raise taxes and other charges on Canadians, who are already struggling to fill up their cars and put food on the table?
The Liberals' silence speaks for itself. Why is that? This brings me to my second point about why the Liberals are responsible for the current situation. The Liberal government has been waging war on Canada's energy sector since 2015, which has made it hard for us to respond to global energy shocks. Canada has the third-largest oil reserves in the world and the 18th-largest natural gas reserves. Not only do we have quantity, but we also have quality, because we produce oil and gas more cleanly than countries like Saudi Arabia and Venezuela.
With energy and gas prices soaring, let us imagine what Canada could do if it were an energy superpower. First, we could put more barrels on the global market, which would increase the supply and ultimately lower prices. Second, we could meet the energy needs of countries that really need it right now. I am thinking in particular of our allies in Europe, who are being held hostage by an authoritarian regime that controls the flow of energy into western Europe. Being an energy superpower is not just about meeting local demand, it is also about meeting an international need.
Instead, the Liberal government is trying to convince itself that Canada's energy industry is a thing of the past and that exporting our energy would be difficult because the product is far from the coasts. However, this is the same government that killed off over $100 billion worth of Canadian energy projects and cancelled the development of key infrastructure meant to reach export terminals on the east and west coasts.
President Biden would rather ask Saudi Arabia to increase its production, even though we are the United States' closest neighbour. That is shameful and embarrassing, not to mention hypocritical.
Yes, it is hypocritical, because the Liberals keep talking about fighting climate change, but they have done nothing to stop the supply of dirtier oil from Saudi Arabia and Venezuela.
Canada's Minister of Natural Resources is talking about increasing natural gas exports to the United States, which will then export it to Europe. How out of touch is that? Instead of putting Canadians to work, developing Canadian expertise and creating Canadian wealth, which would help fight inflation, we are acting as the United States' lackey.
Canada's energy policy is a disaster for Canadians' pocketbooks. It is also a disaster in terms of making a positive contribution to the fight against climate change. Furthermore, it is directly responsible for the significant increase in energy and gas prices.
The government plans to triple the carbon tax soon. Is that still in the cards? Is it really a good idea to increase gas prices when Canadians are struggling to make ends meet?
Gas is essential for transportation, in particular the transportation of food. Last August, food prices rose 10.8% over the previous year, when they were already trending upwards.
Is it reasonable to consider adding an indirect tax on food by increasing the price on carbon at a time when food prices have jumped by nearly 15% in two years? It is utterly ridiculous to even be considering it.
Families are losing faith in the economy and are going deeper into debt. The ratio of household debt to income is now 181.7%. It is not just a question of what rising interest rates will do to Canada's ability to service its debt. We also have to consider what Canadians will do as interest rates continue to rise. How will they be able to pay down their debt if everything gets more expensive and their loans get more expensive but their income does not keep pace with inflation?
We could be headed for some dark days if we do not address this crisis quickly. The government must first provide certainty for Canadians by committing to not increasing taxes of any kind in an attempt to make up for its own oversights, mistakes and inaction.
The current situation paints a bleak picture for Canadians who will end up in debt slavery if this trend continues. It will be extremely difficult for the next generation to buy property. We cannot afford to ignore the economic importance of property. Canadians see it as a symbol of prosperity and independence. For many, it is a retirement fund; for others, it is financial leverage. It is a place to raise a family, the bedrock of society. We have to put families first and give them all the tools they need to prosper.
We are talking about the rising cost of consumer goods, but I would like to conclude with some comments about the other issues hanging over our heads. The 0% interest rate policy was in place for years. How did that affect the structure of Canada's economy? That is a question we have to consider, because our party's motion makes even more sense given how much money was injected into the system and the unnecessary risks that companies and governments take when money really has no value because interest rates are near zero.
To get back to the main point of my speech, the government must give Canadians as much certainty as possible by not increasing their taxes.
I urge all parties to support our motion. To resolve the current inflationary crisis, I urge them to be prudent when it comes to government spending in the future and to stop the war on Canadian energy.
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- Sep/29/22 12:35:52 p.m.
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Madam Speaker, if the government had properly managed the budget from the beginning, we likely never would have gotten to this point.
I recall that in 2015, stimulus measures meant that there was no need to inject money into infrastructure or the economy, because the stimulus drove economic growth.
This government is unable to predict anything. Everyone knows that what goes up must come down. The economy goes through highs and lows. The economy was on a high and the government was just throwing money around. Now, we are struggling. People are struggling. Interest rates are skyrocketing. People are struggling to put food on the table. People no longer know what to do. They are very worried about debt.
The government has been irresponsible.
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- Sep/29/22 12:47:52 p.m.
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Madam Speaker, in terms of where our economy is, as we saw in the GDP report that came out this morning, the Canadian economy continues to grow. We are seeing the impact of uncertainties in global dynamics and of higher interest rates brought on by the Bank of Canada, but I will say this. We have continued to strengthen our social safety net, whether through the Canada child benefit, the third improvement to the Canada workers benefit, a program I really love, the 10% increase to the GIS, the 10% increase to old age security or creating the environment to grow our economy. That is why I ran as a Liberal MP in 2015 for the economy. I saw the anemic growth that was happening under the prior government.
It is important to take all those things into consideration. We are moving the economy forward and have a strong fiscal framework. We can respond when we need to.
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- Sep/29/22 12:49:52 p.m.
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Madam Speaker, first, on any sort of consumer gouging that is happening, we introduced in prior legislation, which I think was in the BIA, changes to the Competition Act to give the Competition Bureau more power when that occurs. We never want to see that occur. I hate crony capitalism; I very much dislike it. The Competition Bureau needs to be strengthened and we are doing that.
With regard to taxation, very frankly, every Canadian and every organization needs to pay their fair share of taxes. We have a progressive tax system. We have actually made it more progressive over the last six years. We cut the middle-class tax rate when we first came in. We are raising the basic personal expenditure amount to $15,000 and not providing it to those in the upper incomes. It is a great policy. We are taking people off tax rolls, including seniors and hard-working Canadians, and we will continue to do that. Recently, we increased the corporate tax rate on banks and financial institutions, again asking those organizations that can pay extra to do so.
We will continue to do what is right for our economy. We will continue to ensure that everyone pays their fair share so we can deliver the services that Canadians depend on day in and day out.
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- Sep/29/22 2:34:50 p.m.
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Mr. Speaker, it is time to get serious about the big issues facing our country.
I believe that we need climate action, and I hope that all members of the House will agree. As Minister of Finance, I understand very well how important climate action is to our economy. If we do not create a green economy, it will be impossible for Canada to succeed in a green world.
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- Sep/29/22 3:23:41 p.m.
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Mr. Speaker, it will be my absolute pleasure to split my time with the great member for Thornhill.
It an honour to be in the House today to address the affordability crisis that is gripping Canadians across our land, from coast to coast to coast, including in my great riding of Northumberland—Peterborough South.
Milton Friedman once said, “Many people want the government to protect the consumer [but the] much more urgent problem is to protect the consumer from the government.”
This is particularly true today, as the Liberal government is driving up the cost of living. For two years now, the Conservative leader has been pushing the government to put people first and to start fighting inflation. However, inflation continues to rise, at this point, over 7%. Canadians are feeling that pain.
Today, I am honoured to call on the government, along with the rest of my colleagues, to scrap its planned tax increases, including the payroll tax hikes slated for January 1, and the tax hike on gas, groceries and home heating scheduled for this April.
To give some context to the opposition motion, I think it is important to understand the relationship between the government and the economy.
A fundamental principle, which must be the bedrock of all political discussions of the economy, is the indisputable fact that wealth or prosperity is created by the businesses and workers of our communities. It is through the production of goods and the delivery of services that a country adds value to the economy. When the country increases its ability to produce goods or to deliver a service, or, in other words, enhances its productivity, that country, by definition, becomes wealthier and its people more prosperous.
A country can temporarily and artificially increase its economic performance through the printing of money or quantitative easing. However, this is always short-lived, and the consequences are nearly always worse than the initial increase in improvement in the economic times.
What happens with this government spending, is that some of it wasted, of course, but some of it hits Canadians' bank accounts. When this money hits the bank accounts, what happens to that money is that, by the time it is available to be spent, the cost of everything has increased. The illusion of the windfall is quickly taken away, and we see we are left with nothing but inflation.
The true path to a more prosperous nation, a wealthier Canada, a more successful Canada, is through productivity. In fact, enhancing productivity is really the only way that this affordability crisis will be cured. When we improve productivity, we increase real wages. We increase real profits, and we create jobs. Unfortunately, the government appears to be doing everything it can to reduce the productivity of Canadians.
There are at least three significant policy directions that the government must reverse course on if it really is serious about tackling the affordability crisis. The government must cap its spending. Excessive spending is eventually paid for either through taxation or inflation, which reduces the ability of our productive sector to make things competitively, be profitable and be prosperous. Worse yet, it continues to drive inflation.
Who ultimately pays the cost of inflation? It is not the wealthy in our communities. It is not the super rich. It is not the government. It is our workers, our workers who are going out there.
I ask members to think of the worker who is earning $50,000 a year. They are already subject to a high rate of taxation. Now, they have seen inflation eat thousands of dollars away from their real buying power. These are people who are already struggling to get by. Thomas Sowell famously wrote that inflation is one of the biggest and oldest forms of taxation.
The effect of our government's overspending is to starve the productive sector, or the private sector, of resources. Those resources are needed.
If one listens to my friends in the NDP, one will hear them say that those monies are just wasted on yachts and wealthy billionaires, and I am sure there is probably some of that. The reality is that the majority of that money is invested back into businesses.
Right now we are starving Canadian businesses of the ability to reinvest. We are dead last in the OECD in capital investment. For every dollar that the U.S. invests in capital investments, we are investing 43¢.
That is the money that is building our businesses in the future. These are the dollars that will make us competitive in the future. We are losing ground at a tremendous rate every single day. That will make our economy less productive and every worker less effective. It will impoverish our country today, as well as tomorrow.
The government must commit to no further tax increases. Tax increases, and it is simple and as plain as day, by very definition, increase costs for workers and for consumers. That will drive inflation. In fact, do not take my word for it.
Earlier this year, I had the opportunity to ask questions of the Governor of the Bank of Canada, Tiff Macklem. I asked him if the carbon tax was a driver of inflation and he unequivocally agreed. In fact, he said that it was a significant driver of inflation. I think all sides of the House would acknowledge that we are in an affordability crisis. We are at really high rate of inflation and that is making life more difficult for Canadians.
We would think the Liberal government would understand that the carbon tax at its current rate is driving inflation, so it should pause the carbon tax or maybe reduce it, but the government is taking the unthinkable action of tripling the carbon tax, which the Governor of the Bank of Canada has already said is fuelling the fire of inflation. Now it is going to triple it. It is really unthinkable.
Further, with every new tax increase, we are taking away the rewards and incentives of hard work. When entrepreneurs go out and put their whole lives on the line, risking their homes and families' futures, they need to be rewarded. When those workers work 20 out of 24 hours to ensure their families are fed at the end of the month, they should be rewarded for it, and they need to be incentivized. Because of our progressive tax systems and the clawbacks that exist in our current system, middle-class wage earners, and even low-income Canadians, are facing income tax rates of 30%, 40% or 50%. It is not fair that Canadians who are working the hardest should have to pay an exorbitant amount of taxes. This is really unconscionable.
Once again, what has been our Liberal government's response to that? It is going to increase taxes. The Liberals are going to dramatically increase the payroll taxes. This is not fair to Canadians. It also is detrimental to our economy. If we take away the rewards, the very dollars that people have worked so hard for, we reduce the incentive and the rewards for which these people have worked so hard.
Finally, we need to invest in those sectors of the economy that are extremely productive. We have a huge productivity gap. Productivity is measured by the contribution to the GDP per hour worked. Currently, Canada is at $50. Contrast that to Switzerland at $60; the United States at $65; and Ireland at $85. However, we do have sectors in the economy that are doing exceptionally well. In the oil and gas extraction sector it is at $664 per hour. To make life more affordable for Canadians, we need Canadian energy.
It is inescapable that we are all dealing with the consequences of these failed Liberal economic policies. Perhaps no problem is as pressing as food inflation. This is creating challenges for Canadians from coast to coast. According to Statistics Canada, 20% of Canadians are utilizing food banks. Life is getting more challenging for Canadians. Many are experiencing these incredibly difficult economic challenges: inflation is at near highs, rising interest rates and punitive rates of taxation. The government, however, has the opportunity to reduce people's pain, to give them some hope by cancelling their proposed and planned tax increases on gas, home heating and groceries as well as on paycheques.
It is time that the government stops blindly following its ideology and actually help Canadians by cancelling its proposed tax hikes.
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- Sep/29/22 4:16:50 p.m.
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Mr. Speaker, I will be splitting my time with the member for Lethbridge.
I am happy to be here today supporting our opposition motion, which states:
That, given that the cost of government is driving up inflation, making the price of goods Canadians buy and the interest they pay unaffordable, this House call on the government to commit to no new taxes on gas, groceries, home heating and pay cheques.
I want to bring the voices of my constituents from Kelowna—Lake Country to Ottawa, not the other way around. Over many months this year, I have sent out several surveys to hear how people are struggling with the government's 40-year-high inflation. I had thousands of responses. Robyn in Lake Country said, “People can't afford to eat, to get to work, to take care of the basics for their families in this economy.” Rollie in Kelowna wrote that the government must “slow down on their spending. They're putting people in the poor house. It's a real shame.”
Tax relief is what my constituents are asking for, and the vast majority agree. With the record gas prices we are seeing today in British Columbia, that relief is more desperately needed than ever.
Recently, as a member of the industry committee, I questioned Aaron Wudrick, director of domestic policy at the Macdonald-Laurier Institute. In response to my questioning about Canada's regulatory burden, high taxes and expensive housing affecting young adults, Mr. Wudrick said, “In short, they're discouraging.”
I agree with his assessment, especially after speaking with many young people in Kelowna—Lake Country and across B.C. over the summer. They feel hopeless. They feel hopeless when seeing the value of their paycheques decline, hopeless in finding the money they need to start a business and hopeless in finding an affordable apartment, let alone ever dreaming of owning a home of their own.
International students often pursue education in high-demand fields. They have lost hope in being able to afford to live in Canada. We have a labour crisis in everything from health care to farming to tourism. The government's high-spend, high-cost agenda will see us lose their ingenuity and entrepreneurship.
A recent Leger poll showed that 46% of young immigrants say they are now less likely to stay in Canada. When asked why they would not recommend Canada to future immigrants, the top two reasons given were the cost of living and the current government.
Higher taxes are not the solution either. How do we know? It is because under the last Conservative government, we oversaw the lowest federal tax burden in over half a century, nobody needed to wait month after month for passport renewals past deadlines and homes were half the price. Furthermore, it should come as no surprise that new taxes, as well as presently automatic tax increases, would have a significant impact on small business owners.
As the shadow minister for small business recovery and growth, I have had the opportunity to speak with numerous workers and owners of small businesses in Kelowna—Lake Country and across the country to hear their perspectives, the challenges facing them and what needs to be done, or not done, by the federal government to allow them not just to survive but to succeed. We have a 40-year-high inflation rate, labour shortages, supply chain issues, increasing business debt and federal tax increases on businesses, and they are already increasing costs at an unmanageable level for small businesses.
Small businesses have been hit particularly hard as a result of the volatile open-and-shut cycle over the last two and a half years, with 54% of businesses still reporting below-normal revenues. About 62% of small businesses are still carrying debt from the pandemic, according to the CFIB. It also notes that small business insolvencies are on the rise, with a reported one in six businesses considering closing their doors. Downtowns and business districts have been hollowed out, with small businesses in those areas struggling to even keep their doors open given limited customers.
I spoke to a BIA organization this week, a business improvement area organization, that often represents main streets. It is saying that now the heart of some of its issues deal with mental health and addiction crises. It also said its members are burdened with debt. They are having a very challenging time.
Many are barely hanging on. It is nothing short of cold-hearted to increase multiple taxes that would further hit their bottom lines. I know what a small business owner is going through, as I have been one myself. Small business owners have not forgotten the 2017 Liberal-proposed tax changes that party attempted to ram through on small businesses, which would have been devastating to entrepreneurship in our country. These tax changes would have had “significant, unintended effects on all SMEs, particularly middle-class, family businesses.” Those are the words that came from the Greater Vancouver Board of Trade back in 2018.
Thanks to the advocacy of small businesses, chambers of commerce, BIAs, boards of trades and Conservatives pressing the issue day in and day out, the government finally backed down. This just shows the government's mindset.
What are the main taxes that are going up soon? We have the payroll tax, the excise tax and the carbon tax, which affects the cost of everything. Dan Kelly at the CFIB put it well recently in explaining why a payroll tax is, in fact, a tax. As he put it, “1. They are mandatory, with penalties for not paying. 2. While there are benefits that come back to some of those paying premiums, they are not proportionate to the amount paid. 3. For the business that pays 60% of EI & 50% of CPP costs, they are unquestionably payroll taxes as the benefits are for workers, not employers.”
Regardless of what the government says and tries to obfuscate, even the Prime Minister has called these payroll taxes, and many other Liberals have as well. These taxes are going up every year, hitting the paycheques of workers and the bottom lines of small businesses, and should not be increasing during a time of 40-year-high inflation.
The excise tax is an escalator tax, which is a fancy bureaucratic word for “automatic”. It is a tax that does not have to come to Parliament to increase. It automatically goes up. The excise tax is on beer, wine, ciders and spirits. These industries raise concerns about this every year while the government ignores them, and 95% are small businesses.
Every year these taxes go up automatically, hitting our local producers with more taxes, as well as the retailers and restauranteurs who buy these products and who then have to pass on the price to people who buy them. This ultimately adds further to inflation. As Restaurants Canada said, the government introducing the automatic escalator in 2017 “made an already bad situation worse” for restaurants.
Recently at the industry committee, we heard from Beer Canada, which called excise tax increases “counterproductive and harmful” to their sector, and “simply not sustainable over the long term.” Let us not forget this escalator is tied to the CPI and, therefore, inflation, meaning it will go even higher next year, adding more to inflation. It is set to increase again on April 1.
On the carbon tax, after the government said it would cap it at $50 a tonne, it is now planning to bring it up to $150 a tonne, more than three times what was initially promised and at a rate that small businesses are still disproportionately paying into without the appropriate rebates to offset it. Carbon tax increases make the cost of fuel, food and goods shipped anywhere more expensive.
It is time for the government to recognize that adding taxes only increases costs and inflation. The government has provided no solutions to address inflation itself, and now, on top of 40-year-high inflation and interest rate hikes, small businesses' bottom lines are being further squeezed with higher costs for imported goods due to the Canadian dollar falling to the lowest point in almost two years.
Stop the pain. Stop the tax increases.
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- Sep/29/22 4:30:01 p.m.
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Madam Speaker, I am sorry that I am stuck on talking about small businesses, which are actually the backbone of our Canadian economy and the backbone of communities all across the country. Right now, with the situation we are in, and I talked a lot about small businesses, they are experiencing crushing debt. They cannot even afford to pay some of their bills.
While the member is chirping at me and not allowing me to answer, small businesses are in a situation right now where one in six are considering closing. That is the reality. That is the situation they are in. Now is not the time to be increasing any taxes that affect people and small businesses.
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- Sep/29/22 5:02:42 p.m.
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Madam Speaker, I thank my colleague for his question, even though it was not asked in French. Perhaps he will try next time.
The trickle-down theory, which refers to the notion of creating wealth before distributing it, was popular in the 1970s, 1980s and 1990s. I would say that it was possible to continue embracing the theory up until the 1990s. It was an ideological vision. Since the 1990s, however, this theory has been clearly debunked. Nothing ends up trickling down, so it is not a theory that can be supported.
As for the second part of my colleague's question, I will use the example of England, which is really not doing well right now. The Bank of England has adopted a restrictive policy, but the government has adopted an expansionist budgetary policy. Together, these short-sighted policies cancel each other out and result in debt.
It is wishful thinking to believe that cutting taxes will significantly stimulate the economy, especially at a time when the economy is overheated and inflation is high. When I taught in CEGEP, we taught the Laffer curve, which espoused this theory and was developed by an American economist. It never worked. It is a myth. Experience has shown that it does not work.
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