Proceedings of the Standing Senate Committee on
National Finance

Issue No. 19 - Evidence - November 22, 2016


OTTAWA, Tuesday, November 22, 2016

The Standing Senate Committee on National Finance, to which was referred Bill C-2, An Act to amend the Income Tax Act, met this day in public at 9:40 a.m. to give consideration to the bill; and in camera for the consideration of a draft agenda (future business) regarding its study on the federal government's multi-billion dollar infrastructure program.

Senator Larry W. Smith (Chair) in the chair.

[English]

The Chair: Good morning to our viewing public. I see we have a good group of people here today.

Colleagues and members of the viewing public, my name is Larry Smith, I am a senator from Quebec. We are meeting today to study Bill C-2, An Act to amend the Income Tax Act. As you know, we have heard from several witnesses over the course of several meetings. We are now at the stage where we will soon begin going through the bill clause by clause.

Before we begin, I would like to advise you that I have an amendment to propose. I asked Senator Cools previously if she would take the chair for the particular clause so that we can be fair and thorough. Senator Cools suggested that I would remain as chair.

Before we do this, I would like to remind senators of a number of points. I know that all members are very eager to ensure that, in this committee, we do the best work we possibly can do so that, when the Senate takes up this bill again at third reading, it has before it the best possible product.

[Translation]

If, at any point, a senator is not clear on where we are in the process, please ask for clarification.

[English]

We must do our utmost to ensure that we, at all times, have the same understanding of where we are in the process.

In terms of the mechanics of the process, I wish to remind senators that, when more than one amendment is going to be moved in a clause, the amendments should be proposed in the order of the lines of the clause, meaning that the amendments should be proposed following the order of the text to be amended.

Therefore, before we take up an amendment in a clause, I will be verifying whether any senators had intended to move an amendment earlier in that clause. If senators do intend to move an earlier amendment, they will be given the chance to do so.

One small point: If a senator is opposed to an entire clause, I would remind us that, in committee, the proper process is not to move a motion to delete the entire clause but rather to vote against the clause standing as part of the bill. Therefore, an amendment is out of order if it simply attempts to delete a clause since, in that case, all that needs to be done is to vote against the adoption of the clause in question.

I would also remind senators that some amendments that are moved may have consequential effects on other parts of the bill. It is very important that the committee remain consistent in its decisions and that they be consistently applied throughout the bill. In this spirit, it would be useful to this process if a senator moving an amendment identified to the committee other clauses in this bill where this amendment could have an effect. Otherwise, it could be very difficult for members of the committee to remain consistent in their decision making.

Staff will endeavour to keep track of these places where subsequent amendments need to be moved and will draw our attention to them. Because no notice is required to move amendments, there can, of course, have been no preliminary analysis of amendments to establish which ones may be consequent to others and which may be contradictory.

If members ever have questions about process or the propriety of anything going on, they can raise a point of order. The chair will listen to the argument, decide when there has been sufficient discussion on the matter of order and make a ruling. The committee is, of course, the ultimate master of its business within the bounds set on it by the Senate, and a ruling can be appealed to the full committee by asking whether the ruling shall be sustained.

As chair, I will do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation and ask all of you to think of other senators and to keep your remarks to the point and as brief as possible.

Finally, I wish to remind all honourable senators that, if there is ever uncertainty as to the results of a voice vote or a show of hands, the cleanest route is to request a roll-call vote, which provides clear results. Senators are aware that any tied vote negates the motion in question.

Are there any questions on any of the above points? If not, I believe we can proceed.

Senator Mitchell: Thanks, chair. I think this is probably more a point of order; it is a point of order rather than a question. I appreciate your opening remarks, and I certainly appreciate the dignity and fairness, as well as the sense of humour, with which you manage this committee. So I'm probably going to press on your sense of humour with what I'm about to say.

These amendments, which I have never seen, I haven't had explained to me. I've heard rumours of what they were going to be. They are changing things probably significantly, I'm assuming. Otherwise, I know you're a serious person; you wouldn't do it if they weren't of some significance. They are changing significantly a budget bill, which follows from a mandate from a recent election from a government that won a majority, raising and heightening the significance and importance of this bill and any changes to it.

It seems to me that, under these circumstances specifically but more generally under circumstances of any bill being amended in a significant way, it wouldn't be unreasonable for us to have had advance notice and a chance to analyze and consider these proposals. We have spent a number of weeks, many hours, analyzing the bill itself. Now it could be that we're getting amendments that will fundamentally restructure the bill in a way that is every bit as significant as the bill was in the first place, and we'll have no time whatsoever to analyze and consider its implications for Canadians, for middle-income families that this bill is directed at and so on.

So I can reserve further judgment until I see the amendments because I don't know specifically what they are, but I would like to make the point for people to keep in mind as we proceed that perhaps, if we get to a point where there is an amendment that is of consequence, we need to step back and say, "Why don't we do this clause-by-clause consideration at least at the next meeting,'' to give those of us who have no idea what's coming forward — what they are — and have no chance to analyze them, a chance to step aside, even just for 24 hours. I don't think that's too much to ask. Give us a chance to analyze it so that we can have an open, full debate. I'm not saying we are, but I don't know why we would be afraid of taking the time to have an open, full debate on this. I'm just saying 24 hours. I think we need to keep that in mind. It would be very respectful for us to have had advance warning so that we could analyze these proposals because we're being put in a very difficult position.

The Chair: I thank you for your comments, Senator Mitchell. I think what's probably important to do is that we go through. If there is one amendment or two amendments, I think we'll find out.

I have been very open with you to explain that I have an amendment to propose. I was the critic of the bill. I recognize the fact that in my own mind I'm an honourable and truthful person. I don't play games with people.

We discussed how we should approach this situation, and getting someone else to present at the end of the day wouldn't necessarily be truthful. What's important is to have an approach whereby let's put it out on the table and have open discussion about the actual concept, but let's get to the point first so that we can have that information shared amongst us and see where it takes us.

Senator Mitchell: Is there a possibility we could do that and say collaboratively maybe we should wait until tomorrow and give it more thought?

The Chair: It's important to go through the process and see where it takes us, and we will make our decision accordingly.

Senator Mitchell: I don't have a problem with you sitting in the chair. I'm not questioning your fairness at all. I know you will be, so I wasn't trying to imply that in any way, shape or form.

The Chair: I didn't take it that way, Senator Mitchell. I respect you, as I do everyone in this room. I'm passionate about helping Canadians advance their cause. This is not a partisan issue; this is important to understand. This is about Canadians in Canada. This is about our country. This is about making sure that if we make a commitment in terms of an expectation to middle-class people then let's get a new term "middle-income people,'' that we deliver. If we can deliver and make this better, there is a real opportunity to help Canadians and the government, frankly, in terms of making sure they have excellent execution.

[Translation]

Senator Bellemare: I should first say that I am not disputing your good intentions. That is not my intent. However, I know that there are a number of ways of conceiving the middle class reality and a number of ways of seeing how things can be improved. Our visions here may end up being complementary or incompatible.

I want to make sure I fully understand. Normally, the procedure is that amendments are submitted during the clause-by-clause study. What I would like, and I believe it is probably what you have in mind, is that we submit amendments before we begin the clause-by-clause study.

I was listening to you, but you were speaking in English and I was looking at my papers at the same time. In terms of the procedure, are you going to ask each person to present their amendments before the clause-by-clause vote, or are you going to present them as we move through the bill?

The Chair: As I understand it, the process is to do the study clause by clause study. If someone has an amendment to present, they do so at that time.

Senator Bellemare: If I may, since I put it on the table, I know that that is the procedure. In a situation with a finance bill like this one, which can have impacts — we are talking about a ways and means bill that has been in effect since January 2016 — it would actually be helpful to know what the amendments are.

[English]

Senator Cools: It's a piece of taxation, but it's not a ways and means bill.

[Translation]

Senator Bellemare: It was passed in the House of Commons as a ways and means bill.

The Chair: Senator Mitchell pointed out something we discussed. You suggested that the process continue in another way. I am asking honourable senators if we can continue and put the elements of the process on the table so that we can do our work properly.

Senator Mockler: I have a question and a comment about the point of order that Senator Mitchell raised.

First, we have reached the study stage of Bill C-2. The discussions we are having are quite normal in determining the procedure we want to follow when we have to accept the bill clause by clause. Second, I have no doubt that the amendment the chair wishes to propose complies with parliamentary regulations and procedures. At the moment, Mr. Chair, you are asking us to consider the bill clause by clause and then, later in the meeting, you are going to present us with an amendment to Bill C-2.

My other question is as follows. Senator Mitchell asked at what point the amendment will be distributed. Will the amendment be distributed when you introduce it?

The Chair: Yes.

Senator Mockler: So that will allow us to find out what the amendment is and to proceed.

The Chair: I would like to answer the question.

[English]

I think we're putting the cart before the horse in that we haven't done anything at this point. Nothing has happened. Let's go through the process. We're not dealing with the motion at this point. We're trying to deal procedurally with how we want to advance.

If an amendment is raised, it would be positioned in such a way that people would understand the amendment and understand the consequences and impact of it. This would be explained to the committee. We would then engage in discussion and question so that we can go through the process and air out questions and thoughts, et cetera, so that we can advance and move forward.

Senator Mitchell: In fact, something has happened. You opened up with comments and asked for questions on procedure, so that's pretty significant. Thank you.

I'd just like to reinforce Senator Bellemare's points. Yes, I outlined perhaps a different approach, but there is much to recommend on hers. I haven't been told, but there are at least two amendments. If we go clause by clause, amendment by amendment, and we pass one amendment, without knowing what the next amendment is, we might be passing an amendment that will have huge implications for the next amendment, and we don't know what the next amendment is.

We're being asked to vote on a bill that isn't complete, in a sense, at an earlier point than it will be complete. It wouldn't be a bad idea to start with seeing the amendments now, having an open and collaborative discussion and see how they intertwine and mix.

This is a hugely significant bill. This is a budget bill. People have had tax reductions throughout this year, and the consequences of this could be considerable, and we don't even have time to think about it. This is sober second thought in the Senate.

The Chair: I respect what you're saying, Senator Mitchell. Let's be clear: There is no point of order because we're ahead of ourselves. Let's go through the process, and if there are issues, put your issue on the table. I respect your point and comments, but at this juncture, we are ahead of ourselves.

I'd like to move forward and proceed, if you agree, to clause-by-clause consideration. But before we do that, let's make sure we're clear on who is a member in good standing on the committee and therefore allowed to vote on any motion. I would ask the clerk to read out the membership as it stands this morning so we are clear amongst the people in the room.

Gaëtane Lemay, Clerk of the Committee: We have the Honourable Larry Smith, chair; the Honourable Senator Andreychuk; the Honourable Senator Ataullahjan; the Honourable Senator Bellemare; the Honourable Senator Martin; the Honourable Senator Cools; the Honourable Senator Eaton; the Honourable Senator Marshall; the Honourable Senator Mitchell; the Honourable Senator Mockler; the Honourable Senator Neufeld; and the Honourable Senator Pratte.

The Chair: So that, colleagues, in terms of the breakdown of members of our committee today, is clear. I'd like to move forward, if the committee would agree, to start the clause-by-clause consideration.

Senator Mockler: Mr. Chair, for the record, I recommend that we proceed to clause-by-clause consideration, as per the directives of the chair and then, when we come to the amendment, that the amendment be distributed to each senator.

The Chair: Of course, Senator Mockler; we will not withhold any information. Again, this is a discussion that is very important to our committee but, more importantly, to the taxpayers of Canada.

So if we could proceed, is it agreed that the committee proceed to clause-by-clause consideration of Bill C-2, An Act to amend the Income Tax Act?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

Senator Neufeld: On division?

Senator Mitchell: Well, I'm not so sure. Maybe we should do a recorded vote.

The Chair: Fine. Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-2, An Act to amend the Income Tax Act?

Ms. Lemay: The Honourable Senator Smith?

Senator Smith: Yea.

Ms. Lemay: The Honourable Senator Andreychuk?

Senator Andreychuk: Agreed.

Ms. Lemay: The Honourable Senator Ataullahjan?

Senator Ataullahjan: Agreed.

Ms. Lemay: The Honourable Senator Bellemare?

Senator Bellemare: No.

Ms. Lemay: The Honourable Senator Cools?

Senator Cools: Yes.

Ms. Lemay: The Honourable Senator Eaton?

Senator Eaton: Yes.

Ms. Lemay: The Honourable Senator Marshall?

Senator Marshall: Yes.

Ms. Lemay: The Honourable Senator Martin?

Senator Martin: Yes.

Ms. Lemay: The Honourable Senator Mitchell?

Senator Mitchell: No.

Ms. Lemay: The Honourable Senator Mockler?

Senator Mockler: Yes.

Ms. Lemay: The Honourable Senator Neufeld?

Senator Neufeld: Yes.

Ms. Lemay: The Honourable Senator Pratte?

Senator Pratte: No.

Ms. Lemay: Yea, 9; nay, 3.

The Chair: Motion carried. Moving forward, shall the title stand postponed?

Senator Mitchell: No.

Some Hon. Senators: Agreed.

The Chair: On division. Thank you. Shall clause 1 carry?

Hon. Senators: Agreed.

The Chair: Colleagues, this is where I'd like to make the amendment on clause 1. We have a handout for you that will show you the amendment.

[Translation]

It will show you the benefits of the bill for Canadians before and after.

[English]

It will show you the before and after, how we can improve this particular bill. I'll wait for you to receive the information.

In reference to Senator Mitchell's point before, we've tried to set this up in a way that will be clear for the members to understand the implications of how we can improve this particular bill.

[Translation]

The information is available in both official languages.

[English]

We have our information distributed in English and French.

The amendment moved is that Bill C-2 be amended in clause 1, on page 1, by replacing lines 16 to 21 with the following: If the amount taxable is greater than 45,282 but is equal to or less than $90,563, the maximum amount determinable in respect of the taxation year under paragraph (a), plus —

If you go to subheading (i), this sheet will be very helpful for you. I would ask that you take a look at this sheet here.

Under Bill C-2, as proposed, up to $45,282. Take a look; it's important to understand. One, two, three, four, five, five tax brackets. The first tax bracket is at 15 per cent, up to $45,282. No change.

The second bracket, taxable income, $45,282 to $90,563. Bill C-2 proposed to reduce the bracket to 20.5 per cent from, I understand, 22 per cent. The amendment, if you go to the amended tax, would be two tranches in that second bracket, 45 to $52,999, would be at 16.5 per cent. $53,000 to $90,563 would be at 20.5 per cent.

So what's proposed is for that bracket from 45 to 90, which was the intended group that the Prime Minister was talking about in the election campaign, assisting and putting more resources in the hands of that group of Canadians so that they would benefit more.

So 16.5 of the amount, if you go back to the amendment, explains what I've just shown you in this graph here. From $45,282 to $52,999, 16.5 per cent; 20.5 per cent, the amount taxable for the year exceeds $53,000. Then the next point goes down to (c), if the amount taxable is greater than $90,563. So the bracket goes from $45,282 to $90,563, but is equal to or less than $140,000 which is the third bracket. The maximum amount determinable in respect to a taxation year under paragraph (b) plus 50 per cent of the amount if the taxable exceeds $90,563. The maximum amount determinable in respect of the taxation year under paragraph (a) plus 22 per cent of the amount by which the amount exceeds $45,282, but is equal to or less than $90,563.

This is where you get some complication, but take a look at the graph here. Basically, as you start your climb in terms of taxable income, you're at 15 per cent up to $45,282; $45,282 to $52,999, 16.5; 53 to $90,563, 20.5 per cent. So that the people in this bracket, under the original Bill C-2, at $48,000, were getting $81.44. In the new suggested amendment, you were at $190.16. At $60,000, previously you were getting $261.44. You would now get $570.12. At $89,000, you would get, in the original, $696.44 and, in the new, $1,005.12. So it's a significant improvement to the actual area where the Prime Minister wanted to benefit middle-income Canadians.

If you earn $110,000, how that would work is simple. Up to 45, you're paying 15 per cent. From $45,000 to $90,000, basically you would fall back into the original 22 per cent. And then as you go up the scale to 110, you would go at 26 per cent. Effectively, when you earn income over a certain point you're going back, and the threshold is around $95,000.

Historically in the original tax bill, the money was going, in terms of the tax credit, to people between $90,563 and up to $200,000. The intent was not met by the bill, so far. Let's just say so far. Do people understand how this functions?

Senator Pratte: Frankly, I refuse to go through this. I think sober second thought is not doing calculations on a napkin.

We went through experts and witnesses when we were studying Bill C-2, trying to understand the impact of it. I can't see myself trying, in a couple of hours, to understand what is proposed here without any sober second thought, reflection and expert analysis as to what the impact of this is on taxpayers and on other aspects of the income tax regime. I think this is not a serious exercise. It may be good policy, I don't know. I'm not competent enough to judge that. I would need expert analysis.

I put myself in the shoes of a taxpayer, of a voter who voted for the Liberal government based on a major aspect of their platform and who sees that the House of Commons has passed that bill and now sees an appointed house doing all these calculations and deciding that what has been voted on by the electorate, and then by the elected house, and decides this is not good. In fact, what they have benefitted from with their income tax report is not good now, that the Senate has decided that this is the new way the income tax regime will be from now on.

I think it will be seen as illegitimate. I think this is not a serious exercise, and I refuse to be part of it.

Senator Mitchell: Chair, I don't doubt your sincerity in this at all and I don't doubt that you've done a great deal of analysis and work. I think there's a theme and a theory behind this that will make a strong argument for, but this is remarkably complex and that's what we've got.

This is sober second thought in the Senate, if we proceed with this. We don't know what the implications of this are going to be for single people over families; we don't know what the implication of this is for seniors versus married couples. We haven't had any objective evaluation or witnessing on what the costs of this will or will not be. You tell us it's revenue neutral, and I'm not saying you are trying to mislead us, but we certainly haven't tested that theory in any way, shape or form. I'm not certain that this isn't representing a tax increase in certain ways, which we're not permitted to do.

We heard consistently one of the concerns with the higher level of tax bracket is that it's a disincentive to people to invest and earn at higher levels. Well, actually, you're increasing the taxes on the highest level of tax bracket, if I read this as you presented.

There is no fundamental analysis. Just to compare the kind of data we got on the old bill, so we have the impact on single individuals under 65. We have the impact on couples with children, under 65 without children. We have single parents, 2016. We have couples with children, 2016. We have single seniors without children, 2016. I could go on. We have senior couples without children.

The Chair: Let me make a statement here, in terms of giving more information. If you'll allow me to present what we've done to this point, we can bring out all of the analysis done by the Parliamentary Budget Officer. A study was done six to seven months ago which clearly demonstrated the pitfalls of Bill C-2. If you allow me to explain this, because it would appear that at this particular time there is a frustration in terms of even listening to the concept.

Let's go through the concept. Let's have questions. I've always learned in life that you never say no before you at least hear someone's presentation. If you would allow the presentation to be made, we can show you all the facts and figures about people who have done analysis — chartered accountants, the PBO, we've had people who have spent the last six months analyzing this particular bill — the objective is trying to make something better for Canadians.

I gave you this sheet because this basically shows before and after.

If I could just take a couple of minutes, the objectives were to take from the wealthy and ask them to pay a little more. That was the campaign slogan of the Prime Minister during the election, to give back to the middle class. The middle class has not been defined.

In fairness to the Prime Minister and to the Minister of Finance, it's a nebulous term because people have a difficult time, economists included, trying to define what "middle class'' really means. However, the target was for people in the brackets from $45,000 to $90,000.

The problem with Bill C-2 as it was introduced is that Bill C-2 benefits people from $100,000 to $200,000 more than it does the people at the area that was targeted. That is number one.

The objectives are noble. I understand there's one measure among several; however, we have this bill to evaluate, and let's do it that way. Let's look at Bill C-2.

We don't need to get into the child tax credit because that is another issue which can be combined together, but we are asked to study Bill C-2.

Let's look at the problems. When you reduce tax in the second bracket, all the brackets of higher income earners get the benefit. Sixty-five per cent of the benefit goes to people between $100,000 and $200,000.

Point number two. The change in the second bracket results in a $1.7 billion cost, which is a tax reduction to the wealthiest 30 per cent, which is not revenue neutral. One of the promises made during the election was this was going to be revenue neutral. It's not. $1.7 billion a year over four years is $8.9 billion. When I asked the Minister of Finance in our committee meeting recently, I said: Is this deficit being added to the $25.1 billion that you announced at your update? He didn't answer the question.

Our concern is why do we have to have something that our grandchildren, in our cases, are going to have to pay for? Because we're increasing the debt and we're not giving the benefit to the people who are supposed to get it. That's the whole premise, besides trying to make the bill better.

If you earn $200,000, basically you go through the various tax brackets to get to how much tax you pay. That's the way the system works. The problem is, the way Bill C-2 is set up, is that the people who are supposed to benefit are not going to benefit in the way they should.

All we're trying to do here is to make an amendment that would allow that to take place. This is the amendment that we propose at this point. How do we fix the bill?

One, we drop the rate at 20.5 to 16.5 for a tranche within the second bracket. We leave the Bill C-2 rate in the second tranche from $53,000 to $90,000; we leave it at 20.5. This way we're able to generate more money to the people who need it, and we're able to eliminate the deficit. It's revenue neutral. This has been reviewed not only by the PBO, but we've had various chartered accountants review this and people agree that this would be revenue neutral.

We're meeting two objectives. Basically, no citizen will pay more than was paid in 2015 except those above $200,000. We haven't brought that point up, which is a very important point of is it a disincentive? We're not focused on that particular issue. Be that as it may, if that's going to be supported and paid by people who earn more money, that's the program. That's not in debate today. What's in debate at this particular juncture is how do we fix the middle two income levels.

As you see, someone at $60,000 would have gotten a tax credit of $261.44. Now they'll get one at $570, which is almost double. At $89,000, it will go from $696 to $1,500. You'll notice between $100,000 and $200,000, basically that credit will diminish significantly. Those people are in a position that is no different tax-wise than they were last year, because they're going through the original brackets when you earn over that amount of money.

So this is not complicated; it's straightforward. What's complicated is that 99 per cent of us have a chartered accountant doing our taxes, if we're honest. We all did our taxes when we were younger, and maybe some of us do our taxes now because we're interested, but the vast majority of people will be getting some form of tax accountant to do the taxes, at least the type of people in our room here.

No citizen will pay more than was paid in 2015, except those above $200,000. Middle-income Canadians see a more substantial credit, and the cost to the government is revenue neutral. This has been certified by experts.

Senator Bellemare: With all due respect, I say there is a flaw, and a very important one, in this proposition. The fact is that with your tax rate of 22 per cent, you have a double tax rate for a tranche of revenue. This will have a behavioural effect. There will be an inclination to not increase wages above a certain amount because you will probably have a decrease in net pay, if you do the calculation, just at face value. It's a very complex structure that you are imposing. You are adding a tax rate.

Also, when you say that you studied Bill C-2 in a bowl, I think that's not an honest, intellectual way to study Bill C-2, which is part of the budget and which its effect is balanced by other measures. To play Robin des Bois with this piece of legislation is not doing any good for Canadians at all and it will have a bad effect, so I won't vote for that amendment.

Senator Mitchell: Senator, again with due respect, you've done a lot of work and you've given this a great deal of thought and you can make a very strong argument. You mentioned a couple of things, and I would like to make another proposal.

One is that you say all kinds of experts and so on agree that this is revenue neutral, but we haven't had the chance to ask the government whether they agree that it's revenue neutral. The government has the responsibility to govern with its budget. We at least should give them a chance to analyze it and agree or disagree that it's revenue neutral.

Second, you place a lot of emphasis on the PBO. The PBO has a point of view and an opinion, but he also uses a very specific model that happens to be different than the government. One thing that skews his model is that he uses a broader base of individuals in assessing the percentage of individuals that will be benefited because he includes children in the broader base of individuals. They are not taxpayers.

When you actually look at the final figures, the Parliamentary Budget Officer says that the cost of the government's proposal is $8.9 billion over six years. The government says that it's $8.2 billion. We're talking about $100 million a year difference. That's a pretty fine line.

Third, why do we pick $45,000 to $52,000? What is it about the people earning $45,000 to $52,000? Why isn't it $55,000 or $60,000? We don't have that analysis. That's critical.

How many will be affected? How many are in the group that will be paying 16.5 per cent versus 20.5 per cent? We don't have that information. We don't know what its reasonable impact will be. We don't know what its socio-economic impact will be.

The 90-plus people will be paying back money. They may not be paying more than they paid in 2015, but they will be paying back taxes that weren't collected at this point in the year.

What I would say is that this is a strong and legitimate argument to make in debate, but there are many ways to make it without a precipitous amendment that fundamentally restructures a bill that the government has in its budgetary plan and that can have serious consequences.

We could do observations. We can make them very elaborate and explain — in more than the hour or two that you are going to try to explain by holding this up, very valiantly — and we could have in-depth observations, a set of observations that contest the government's point of view. That's absolutely legitimate. You'll be able to make in-depth speeches at report stage and at third reading, again making those points. You can write an elaborate and detailed analytical letter to the Minister of Finance for consideration. He's got another budget coming up in three months.

You could phone the Minister of Finance and sit down and talk to the Minister of Finance and say these are your positions. We could bring the Minister of Finance here and have a detailed discussion about your proposal.

All of these things are ways that we in the Senate can express disagreement or express new ideas and different ideas in a legitimate, thoughtful way, without restructuring an $8.9 billion consequence in 15 minutes. It can't be explained ultimately by your fundamental, base argument, which is that a whole bunch of chartered accountants and others have said it's okay. The government hasn't said it's okay, and they certainly have a stake in this.

The Chair: What the people have done is just qualified that the actual formulas and numbers were correct.

Senator Mitchell: We don't know that. I don't know that. I haven't had a chance to ask them, to question them.

I should also point out that ultimately there are certain witnesses who might have had a different view of the government's — a positive view — that we weren't even allowed to call. That's another point, but the point is that I think we need to analyze this further.

The Chair: With respect, we're not going to bring in people that are under payroll with the government as consultants.

Senator Mitchell: Can we bring in the government to talk about this?

The Chair: We can do that. We have two people from the Finance Department. Again, let's go through the process.

Senator Mockler, please.

Senator Cools: I would really like to know — the subject before the committee is not all the research and study that was done prior to today is clause by clause —

The Chair: Excuse me, Senator Cools.

Senator Cools: What is before us right now is clause by clause. It's been quite some time now; we haven't moved beyond clause 1. I'm not sure what exactly Senator Mitchell is proposing. Maybe he can make that clear.

We can only act through motions. The system can only move — somebody moves a motion, but we cannot move and we cannot continue indefinitely this way.

The Chair: Please.

Senator Cools: I have many thoughts on this matter, but —

The Chair: Senator Mockler, you have a point? We are debating the amendment at this particular point.

Senator Mockler: Without making a debate — and I've heard other senators mention that we did not have sufficient debate. The procedure, as a chair, highlighted to all of us, is that they can bring in the amendment. We can discuss the amendment. The sober second thought is here, too, and then we can have it when we go and bring it to the Senate chamber and have the debate on what is being proposed with this amendment.

That said, at the outset, we had a vote. It was registered. Nine said yea; three said nay. We went clause by clause. I think we should have clause by clause and then come back to the amendment, or we proceed with the amendment and vote on it and continue clause by clause and finish and send it to the Senate.

If not, I'd like, if you permit me, to add onto the motion. Therefore, we proceed, chair, with debating the motion and moving on, either clause by clause like it was agreed at the outset, and accept the amendment at the end of the clause by clause, or we move immediately to voting on the amendment. If you want any debate of sober second thought, there's no problem. We have that. We call it the Senate.

[Translation]

Senator Pratte: I would like to raise a point that I feel is important. Despite all the admiration and affection I have for you, I feel that the way in which this amendment is being debated is downright irresponsible. I am aware that the committee has been working on this matter for several weeks, but, in my opinion, this bill should have been submitted to the members of the committee several weeks in advance so that the committee could hear from various experts, including the Minister of Finance and the Parliamentary Budget Officer.

You say that experts have the studied the bill. I believe that we should have let the committee study the bill so that, if indeed all experts agree that this formula is the best, the committee can also conclude that it is the best.

For you to submit this amendment at the last minute, stating that you have had the time to study it with experts that we know nothing about, is wholly irresponsible. And, Mr. Chair, "irresponsible'' is the mildest word I found, in order not to insult you. Having the committee pass an amendment as complex as this in a few minutes is the opposite of what the Senate's mission should be. So I will be voting against this amendment.

Senator Bellemare: I would like to propose that this session adjourn and that we continue our work tomorrow evening.

The Chair: We have to vote on your proposal, Senator Bellemare.

[English]

Would we have a roll call? Senator Bellemare is suggesting that we adjourn and recommence tomorrow night.

[Translation]

Senator Mockler: Mr. Chair, we never vote on suggestions. If the senator wants to make a motion, she should do that and we will see what the majority thinks about it.

Senator Bellemare: I move that this committee now adjourn.

Senator Cools: Give us reasons.

Senator Bellemare: Because the amendment that we have in front of us needs us to think about it at least. The chair wants to move the amendment today because we are doing clause by clause. I think that's irresponsible because of the fact that the consequences of that amendment have not been studied, and they are real consequences. It had two tax rates, and it implies also that people will be taxed on different rates depending on their level of income. So it may well be that an individual who is just above the $90,000 threshold will have a net income much lower than ones that has revenue below $90,000. That will have a lot of impact on the wage structure within enterprises, on vertical and horizontal equity. You know about human resources, so you know that if the people that have high incomes —

[Translation]

— pay more tax. Their tax rate is higher than for others in the same income bracket. The effect will be to create an imbalance and it will reduce the net income of people earning more than $90,000. Their net income will be lower than people earning $45,000-$90,000 because of the way in which you are proposing the amendment, which is very complicated.

It will also have an impact on negotiating collective agreements in companies, because people with a higher net income now find themselves with a lower net income. For example, managers or directors will have lower net incomes than their employees. That is certainly fine for Robin Hood, but is it really what you are proposing? Should we not instead be proposing an income structure according to levels of responsibility? We want the tax system to be progressive; we do not want it to be in chaos because of what you are proposing.

I would like us to take the time to understand this reality. That is why I am proposing that we interrupt the clause- by-clause study of the bill so that we can discuss it informally. Then we can resume debate.

[English]

Senator Mitchell: I can defer if you want, just so you don't miss me.

Senator Andreychuk: We're talking about an adjournment here. And I'm not sure why we're having a discussion with an adjournment. Either we wish an adjournment or we don't.

I have a little bit of trouble with a committee when one member says that it is not an intelligent way to behave to the chair. I just hope we don't use that kind of language again.

Senator Bellemare: I'm sorry if I said intelligent, I meant irresponsible.

Senator Andreychuk: Even that, irresponsible. I think we should have a dialogue. That's what the Senate normally does, and I would appreciate that.

Also, we have been debating all of this. The minister came in, and he used "middle class, middle class.'' I asked him to define what middle class was. I can only assume he thinks the middle class is somewhere from $45,000 to nearly $200,000, and he gave reasons for his structuring.

I think Senator Smith is saying that he's going to define middle class or benefit what he thinks is middle class at the lower end rather than the high end. To start debating what that's going to do, the minister, quite rightly, and the officials said that, obviously, taxation affects behaviour. We were trying to get at what behaviour would be affected from Bill C-2, and we didn't really quite get the answers because you're anticipating what I might do, what you might do, depending on the tax.

In fairness to Senator Smith, I don't know what the behaviour will be out of his either, but I'm getting this, that it is not a Robin Hood measure; it's an honest difference of opinion in how you define middle class because the entire strategy of the government was to help the middle class. I am in favour of that. But the minister has defined middle class in one way, and Senator Smith may be defining it differently. All I see that the amendment does is to give more benefit to the lower end of whatever class we're discussing, whatever label we may put on it.

I think we've had a lot of debate. My final point, which is the reason I put my hand up — and I apologize for going off of it — is that I have sat in the Senate for quite some time and have received many amendments or observations the day of that I did not have time to study. I received sometimes more than one amendment or two amendments, many amendments dropped on the table, and we moved on. The explanation was that everyone is entitled to introduce their amendments, and we have a right to vote for them or against them. We also get a second time to discuss it at third reading. I don't see it being unusual that they come to us without debate. Senator Mitchell will remember a few times where we had some great discussions about how to do it, and I guess we're still doing it with some difficulty.

I don't think it's irregular. It may not be the best way to go, but it is the way we've often done it.

The Chair: Senator Mitchell and then Senator Pratte. But I want to make sure we try to conclude our thoughts relatively quickly. We need to move forward.

Senator Mitchell: I'd like to respond to a couple of points and make an observation. Senator Mockler, I respect your position. You say that we'll have time for sober second thought in the next stage, but certainly we will be able to debate it.

Senator Neufeld: Actually, we're talking about the adjournment.

Senator Mitchell: I'm getting to it. I'm going to argue why we need to adjourn it.

Senator Neufeld: Senator Mockler hasn't talked to the adjournment.

Senator Mitchell: I'm making my argument. Thank you.

We have no chance in that process to have witnesses. Senator Andreychuk said we have an honest different of opinion, yes, but the government's opinion has been evaluated for weeks. This opinion hasn't been evaluated by witnesses at all. So I think we need to adjourn so we have time to establish a regime of witnesses at the very least to look at it.

This amendment seems to fundamentally change the bill in a way that if you were to write a senator's private member's bill, you wouldn't be allowed to do it, within the Rules. You have essentially written a senator's public bill that is a budget bill, and we're not permitted under the Rules of Parliament to do that.

I would argue that at the very least we need some time to step back and assess the nature of this bill; second, we need time to step back and set up a regime of witnesses, including the government and other witnesses, to give this fundamentally broad change at least the same consideration that the government's proposal gave in the first place.

Senator Cools: Chairman, I find this dialogue and debate extremely disturbing. The committee has been told that it's irresponsible and other things. I find these remarks provocative and inflammatory, in addition to being disruptive. The debate is not over.

This committee has set aside this morning's meeting for clause by clause; it is customary to do that. It is not unusual that amendments are distributed at these meetings. None of this is very unusual. It may surprise Senator Pratte, but this is quite routine business.

It seems to me that Senator Bellemare has moved a motion just as an act to impede the business of the committee. We should vote on it and move ahead. This is clause by clause. Everyone knew that clause by clause was going to be today, and there are a host of other things.

I began many months ago by saying this bill should not come to this committee, but Senator Harder wanted it to come to this committee. I think, en passant, quite frankly, the committee chairman has performed quite an indulgence already on this committee, because taxation bills usually do not go to the National Finance Committee because it is not about national finance; it's on banking issues, and it should have gone to the Banking Committee.

For the sake of the record, if we would look to our Rules:

12-7(8) the Standing Senate Committee on Banking, Trade and Commerce, to which may be referred matters relating to banking, trade and commerce generally, including:

And if you look at sub-section (c), "taxation legislation.''

I raised that point a long time ago with Senator Harder, and obviously someone on behalf of the government chose to refer it to this committee. We have already taken quite a chunk of our time slots to look at this matter, and I really feel the committee has done a just service in so examining.

Senators Bellemare, Pratte and Mitchell disagree on the amendment. Well, there is a way to deal with that.

Senator Mitchell: I don't know what it is.

Senator Cools: I'm sorry that you do not know; however, you have been very strong and a little insulting in your objections.

The Chair: Senator Neufeld and then we're going to take a vote on the motion proposed by Senator Bellemare.

Senator Neufeld: I want to get us back to the motion on the floor and call a question on the adjournment motion and let's get on with it.

The Chair: The question on the motion to adjourn: It is moved by Senator Bellemare that the committee do now adjourn.

Is it your pleasure, honourable senators, to adopt the motion?

Some Hon. Senators: No.

Some Hon. Senators: Yes.

The Chair: We will have a recorded vote.

Ms. Lemay: The Honourable Senator Smith.

Senator Smith: I do not support the motion.

Ms. Lemay: The Honourable Senator Andreychuk?

Senator Andreychuk: No.

Ms. Lemay: The Honourable Senator Ataullahjan?

Senator Ataullahjan: No.

[Translation]

Ms. Lemay: The Honourable Senator Bellemare?

Senator Bellemare: Yes.

[English]

Ms. Lemay: The Honourable Senator Cools?

Senator Cools: No.

Ms. Lemay: The Honourable Senator Eaton?

Senator Eaton: No.

Ms. Lemay: The Honourable Senator Marshall?

Senator Marshall: No.

Ms. Lemay: The Honourable Senator Martin?

Senator Martin: No.

Ms. Lemay: The Honourable Senator Mitchell?

Senator Mitchell: Yes.

[Translation]

Ms. Lemay: The Honourable Senator Mockler?

Senator Mockler: No.

[English]

Ms. Lemay: The Honourable Senator Neufeld?

Senator Neufeld: No.

[Translation]

Ms. Lemay: The Honourable Senator Pratte?

Senator Pratte: Yes.

[English]

Ms. Lemay: Yeas, 3; nays 9; abstentions, zero.

The Chair: Motion defeated.

We'd like to move forward on this amendment, and we're at a point in time where we need to make a decision.

Senator Mockler: I move, Mr. Chair, that we accept the amendment.

Senator Mitchell: I'm not sure we're at that point.

Senator Mockler: I move that we accept the amendment, and I want to add to the debate. Before I do, I do not want to start another debate, but when I hear a senator saying the chair is irresponsible and/or that the calculations were written on a napkin, I object to that. That is non-parliamentary, and I ask the senator to withdraw the comment about you being irresponsible. However, that is his decision.

On why we should proceed to the amendment, after due process and research, I'd like to read the following for honourable senators: The amendment is procedurally admissible. It does not raise taxes but it rather reduces taxes.

Mr. Chair, if you permit me, with the indulgence of the chair, section 53 of the Constitution Act, 1867, reads as follows:

53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

I agree with that. In 1918, the Ross Report adopted by the Senate of Canada interpreted this section. It states clearly that the Senate has the power to amend money bills to reduce taxes. This amendment is precisely what the mover of the amendment is saying.

I will continue. I read from the Senate Procedure in Practice, page 153, referring to the Ross report:

A main conclusion of the report was that the Senate has the power to amend money bills that appropriate any part of the revenue or impose a tax by reducing the amounts therein, but that it does not possess the right to increase the same without the consent of the Crown. The memorandum contained in the Ross report further explains that sections 53 and 54 of the Constitution Act, 1867, together with the sections defining the executive power, are the only limitations put on the Senate with regard to money bills. It goes on to say that "[i]n all other respects the Act leaves with [the Senate] co-ordinate powers with the House of Commons to amend or reject such Bills.''

Therefore, Mr. Chair, your amendment is in order.

[Translation]

It is in order and the committee must examine it and call the question.

[English]

Then I continue. I am not finished, madam. Sorry. To the chair, I'm not finished, if you permit me.

The amendment does not increase the income tax of any individual. The amendment provides an additional tax reduction for the individual whose total income is within the second marginal tax bracket.

It also maintains the 22 per cent rate for the individuals with a total income higher than $90,563 for their income between $45,282 and $90,563. This 22 per cent rate is the current rate in the Income Tax Act for those individuals, Mr. Chair. Any increase in taxation that would result from Bill C-2 is caused by new paragraph 117(2)(e) proposed by the government, establishing a new fifth marginal tax rate and not the amendment that is being proposed to the committee.

The Chair: Right. That's at 33 per cent.

Senator Mockler: So you are totally in order in making the amendment, and if further discussion wants to continue, it can happen at third reading.

[Translation]

This can be done in the Senate of Canada, in the spirit of sober second thought.

Senator Bellemare: I would like to point out to honourable senators that, if we actually look at the proposal before us, since it is revenue neutral, and since it lowers the taxes for a certain group of people, that means that other people's taxes will go up. If that were not the case, the proposal would not be neutral in tax terms.

As you said, it is neutral because those earning more than $90,000 will have a 22 per cent tax rate on the part of their income between $45,000 and $90,000. It is true that that was the rate in effect before January 2016. However, since January 2016, the tax rate in effect has been the one passed by the House of Commons last December in a ways and means instrument. The rate payable on that part of the income is 20.5 per cent.

The effect of your amendment is to go backwards. So people with an income higher than $90,000 will have to pay back taxes for 2016. That is not quite accurate. You are redistributing income, which does not reduce everyone's taxes in general. If it did, the effect of your amendment would be to create a deficit. You would be ill-advised to do that: you do not want to increase the deficit because that is a bad thing for future generations. But your amendment will have that effect.

So the proposal cannot be neutral and lower taxes at the same time. It either decreases taxes, which will result in a deficit, or it is neutral, with the decrease in taxes financed by an increase elsewhere. At the moment, we know that the tax rate is 20.5 per cent for income up to $90,000. The effect of your amendment is to increase it to 22 per cent. That is what I wanted to mention.

[English]

The Chair: We will hear from Senator Pratte and then we're going to move forward and vote on the amendment.

Senator Pratte: Just very briefly. Senator Mockler asked me to apologize because I supposedly said that the chair was an irresponsible person. That's not what I said. I've been dealing with words and language all my life.

I said that in this instance, I believe the chairman has acted in an irresponsible manner, but that is not the same as saying the chairman is an irresponsible person. There is a difference. I maintain what I said and there is a difference.

Senator Neufeld: How about the napkin part?

Senator Pratte: Well, I still believe that those calculations are not as detailed as calculations done by the Department of Finance and looked at and analyzed by all the witnesses we had. Those calculations may have been looked at by experts, but we haven't heard from those experts or from witnesses, so I believe they're not as rigorous or at least have not been as tested as those that are behind Bill C-2.

The Chair: If I can make just a quick comment, I've been on this committee since I came to the Senate six years ago, and the discussion we had today was one of the first times I've actually really heard an intense debate in terms of finance on an amendment. It shows me that there is great interest and great commitment on both sides of the platforms to really analyze what we're doing to make it better for Canadians.

Certainly, senator, I don't take anything you said today as a personal affront.

Senator Pratte: It was certainly not intended.

The Chair: I appreciate the fact that we have all the people in this room.

Let's go back to the intent. Is our intent to make the system better for Canadians, yes or no? Is there a problem with the proposed Bill C-2 legislation as it exists today? I think it's clear to say that the target group, $45,000 to $90,000, is not benefiting as per the expectations that were presented to the public.

That's just a point of view, and everybody has their point of view. I have no problem with other points of view.

Senator Mitchell: One point of order. On this document, which is pretty seminal to this discussion, every sample salary that is noted falls within the income bracket range against with which it is compared, except the sample salary for the $45,000 to $52,000 bracket, where the sample salary is $60,000. So it's not within that range. That $570 is, I don't know, probably misleading. The fact is, every other sample salary falls within the range. That salary falls above the range and therefore skews the analysis we're looking at.

What it underlines to me is you can't do this in 45 minutes. If that basic mistake is made, so basic, you can't do it in 45 minutes. We need time.

Senator Mockler: I believe that's not a point of order. That's another debate.

The Chair: It's a comment.

Senator Mockler: I asked honourable senators to take into consideration the Ross Report. We are entitled to do what we are doing, and if you want to continue debating it, honourable senators —

[Translation]

— you have no problem, do it in the Senate.

[English]

But in the meantime, I call for the vote.

The Chair: Agreed. Would you like me to reread the motion?

Some Hon. Senators: Yes.

The Chair: The amendment is as follows:

That Bill C-2 be amended in clause 1, on page 1,

(a) by replacing lines 16 to 21 with the following:

"paragraph (a), plus

(i) 16.5% of the amount by which the amount taxable for the year exceeds $45,282, but is equal to or less than $52,999, and

(ii) 20.5% of the amount by which the amount taxable for the year exceeds $52,999;

(c) if the amount taxable is greater than $90,563, but is equal to or less than $140,388, the lesser of

(i) the maximum amount determinable in respect of the taxation year under paragraph (b), plus one-half of the amount by which the amount taxable exceeds $90,563 for the year, and

(ii) the maximum amount determinable in respect of the taxation year under paragraph (a), plus 22% of the amount by which the amount taxable exceeds $45,282, but is equal to or less than $90,563, and 26% of the amount by which''; and

(b) by replacing line 26 with the following:

"under subparagraph (c)(ii), plus 29% of the amount by which''.

I think we've had sufficient debate at this particular point. Is it your pleasure, honourable senators, to adopt the motion in amendment?

Some Hon. Senators: Yes.

Some Hon. Senators: No.

The Chair: Shall we have a roll call vote on this?

Some Hon. Senators: Yes.

Ms. Lemay: The Honourable Senator Smith?

Senator Smith: Yes.

Ms. Lemay: The Honourable Senator Andreychuk?

Senator Andreychuk: Yes.

Ms. Lemay: The Honourable Senator Ataullahjan?

Senator Ataullahjan: Yes.

[Translation]

Ms. Lemay: The Honourable Senator Bellemare?

Senator Bellemare: No.

[English]

Ms. Lemay: The Honourable Senator Cools?

Senator Cools: Yes.

Ms. Lemay: The Honourable Senator Eaton?

Senator Eaton: Yes.

Ms. Lemay: The Honourable Senator Marshall?

Senator Marshall: Yes.

Ms. Lemay: The Honourable Senator Martin?

Senator Martin: Yes.

Ms. Lemay: The Honourable Senator Mitchell?

Senator Mitchell: No.

[Translation]

Ms. Lemay: The Honourable Senator Mockler?

Senator Mockler: Yes.

[English]

Ms. Lemay: The Honourable Senator Neufeld?

Senator Neufeld: Yes.

[Translation]

Ms. Lemay: The Honourable Senator Pratte?

Senator Pratte: No.

[English]

Ms. Lemay: Yeas, 9; nays, 3.

The Chair: Motion in amendment carried.

Shall cause 1, as amended, carry?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

The Chair: On division. We had the vote.

Ms. Lemay: You had the vote on the amendment.

Senator Cools: On division.

The Chair: Thank you, senator.

Moving forward on clauses, let's go to the next clause. Shall clause 2 carry?

Some Hon. Senators: Agreed.

[Translation]

Senator Bellemare: I have a question: do the amendments to clause 1 have any impact on clause 2?

The Chair: Can you explain your question?

Senator Bellemare: My question is this: as we have just changed the tax rates, is there an impact on the rate of tax on donations to charitable organizations? Given that there is a formula, I would like an explanation of whether the fact that we have two tax rates for the same income bracket will have an impact on the way in which charitable donations from individuals will be handled, depending on the income bracket and the tax rate. Will there be an impact?

The question is clear, I think.

[English]

The Chair: Any comments on that particular issue? If you follow the changes to the tax code, for gifts they set up a formula — of course, what you see in 2(c) is that the highest individual percentage of the year is the lesser of — the model itself is consistent.

What are you asking exactly, Senator Bellemare? Are you asking whether the formula changes?

[Translation]

Senator Bellemare: Yes, because there is a 29 per cent tax rate in this clause somewhere. Does clause 1, as amended, have an impact on the formula and the tax rate? If you are sure that it will not, you should be able to say so, since you have studied the amendment.

The Chair: Do not forget that the impact is biggest for people whose taxable income is $200,000 or more. I think that number 2 was aimed at people in the high tax brackets. Do not forget that it goes from 29 per cent to 33 per cent.

[English]

Senator Marshall: In my recollection, I had asked that during the study of Bill C-2, but I'd also asked it when we were studying some other bill. My understanding and recollection is that that change was made to accommodate the new tax rate of 33 per cent, because the maximum before Bill C-2 was 29 per cent, and that it was done to accommodate the 33 per cent. So the 33 per cent still remains. I don't expect that would have any change. That was my opinion.

The Chair: Actually, I answered the question correctly.

Shall clause 2 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 3 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 4 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 5 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 6 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 7 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 8 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 9 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 10 carry?

Hon. Senators: Agreed.

The Chair: Shall the title carry?

Hon. Senators: Agreed.

Senator Mitchell: Chair, these consequential amendments that we've just gone through very quickly I think were tailored to adjust to the taxation changes that were in the bill as it was originally fashioned, because they have implications for Canadian corporations and dividends and how much tax and so on.

Was any analysis done to see whether your tax regime would require a different accommodation with rates so that somebody who's getting income from a Canadian corporation — a small Canadian corporation, for example — isn't going to be actually paying more taxes inadvertently because of unintended consequences with respect to your changes? That's why these are here; they're to adjust. Has any analysis been done on that? I'm just wondering.

The Chair: What we focused on is the actual tax brackets of Canadians. The dividend tax credit for corporations goes from 29 to 33 per cent with a tax increase. We did not do formal analysis, because that seems to be clear in terms of how it deals with corporations, either a small business or a large business.

So if you receive a dividend tax credit, the difference you're going to see this year would be that you'll end up paying 33 per cent. In some cases, depending on the type — because there are two or three different types in here — you'll go up to 38 per cent. The reason I know that is because I've had my own speaking business for 25 years. I'm a small business person, and my dividend tax credit will increase up to 38 per cent this year. So it goes from 29 to 33, and in the case of a dividend tax credit it goes up to 38.

Again, we didn't get into the weeds of trying to analyze the benefits of increasing taxes at the top end because what we wanted to focus on was the group that the Prime Minister targeted, which is really the mid-income group.

Again, we've carried the clauses. I guess I want to understand exactly what you are trying to get at.

Senator Mitchell: So you're clearly earning above $200,000, I would expect, so this accommodation will work for you, but let's say somebody is in the 45 —

The Chair: Excuse me, Senator Mitchell, the issue here has nothing to do with me. The issue is —

Senator Mitchell: No, but you used your own example. I'm sorry; I back off. But let's say you're earning between $45,000 and $52,000, and now your tax has dropped. But let's say you're earning some dividend income from a small corporation. Can you tell me definitively that these accommodations will make sure that that person isn't actually paying net more tax on those dividends than they would be? Because those accommodations work for somebody who is in the unchanged 33 per cent tax bracket but may — I don't know — not work for somebody in the new 45 to $52,000 tax bracket. Can you give us some idea of whether that's the case or not?

The Chair: Senator Marshall, could you help me out with that question? Because I'm not sure where he's going with this question, to be honest with you.

Senator Marshall: I don't know. Like Senator Smith, I can only relate it to my own circumstance.

Senator Mitchell: But we're here legislating for 34 million Canadians, and a number of them — we don't know how many — will fall into the $45,000 to $52,000 tax bracket. It's not about us, as the chair so rightly said. It's about the people we're representing. We don't have a key answer that could affect the way people conduct their business because it could be an incentive or a disincentive. Nobody can give me the answer. I'd just like to have a witness down there, and I'd just turn the witness and say, "Could you please answer the question?''

Senator Mockler: The comments made by the honourable senator — and I'm not the chair but as a parliamentarian — can be debated in the house.

In the meantime, you've asked, chair, "Shall the title carry?'' I would hope that we will continue to the last, and, if there are other comments, we can take comments later and the report.

Senator Cools: We didn't complete it. We have to get to the stage where you inquire whether or not we shall report the bill, so we should continue and make the process complete.

Senator Mockler: If there are any observations to be made, they can be made by any senators.

The Chair: Let's move forward. Shall the title carry?

Hon. Senators: Agreed.

The Chair: Carried. Shall the bill, as amended, carry?

Some Hon. Senators: Yes.

Some Hon. Senators: No.

The Chair: On division.

Senator Mitchell: No, we should record that.

Senator Mockler: Okay, let's have a recorded vote.

[Translation]

Senator Bellemare: I have a question, an observation.

The Chair: Let's vote, senator, and then you can make your point

[English]

Ms. Lemay: So the motion is: Shall the bill, as amended, carry?

The Chair: Somebody asked for a recorded vote. I think it was Senator Mitchell. So let's have your recorded votes, please.

Ms. Lemay: The Honourable Senator Smith?

Senator Smith: Yes.

Ms. Lemay: The Honourable Senator Andreychuk?

Senator Andreychuk: Yes.

Ms. Lemay: The Honourable Senator Ataullahjan?

Senator Ataullahjan: Yes.

[Translation]

Ms. Lemay: The Honourable Senator Bellemare?

Senator Bellemare: No.

[English]

Ms. Lemay: The Honourable Senator Cools?

Senator Cools: Yes.

Ms. Lemay: The Honourable Senator Eaton?

Senator Eaton: Yes.

Ms. Lemay: The Honourable Senator Marshall?

Senator Marshall: Agreed.

Ms. Lemay: The Honourable Senator Martin?

Senator Martin: Yes.

Ms. Lemay: The Honourable Senator Mitchell?

Senator Mitchell: No.

[Translation]

Ms. Lemay: The Honourable Senator Mockler?

Senator Mockler: Yes.

[English]

Ms. Lemay: The Honourable Senator Neufeld?

Senator Neufeld: Yes.

[Translation]

Ms. Lemay: The Honourable Senator Pratte?

Senator Pratte: No.

[English]

Ms. Lemay: Yeas, 9; nays, 3; abstentions, zero.

The Chair: Motion carried. Is it agreed that I report this bill, as amended, to the Senate?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

Ms. Lemay: On division.

The Chair: On division.

Senator Cools: Are you proposing that he doesn't report the bill?

Senator Bellemare: No, he has to report.

Senator Cools: Astounding.

The Chair: Agreed, on division. Any other comments? We have about 10 minutes before we need to break.

[Translation]

Senator Bellemare: I would like to ask for a five-minute break so that I can confer with my colleague or with those who want to confer with me about the possibility of providing you with some observations to add to your report. I cannot tell you what they are just yet. I would like to be able to discuss them. Normally, it is possible to provide a dissenting opinion.

[English]

The Chair: Does the committee wish to consider appending observations to the report?

Senator Cools: We just voted to report. Those kinds of decisions are made before you vote, and then you would vote on that with the report.

[Translation]

Senator Bellemare: Could Senator Cools please let me clarify what Senator Smith and the others have told me?

[English]

When I had my hand up to add observations, somebody told me, "After.''

Senator Cools: That was before, but you add it before he reports because that motion would then read that the bill be reported with observations.

The Chair: Senator Mitchell, we're going to conclude this.

Senator Mitchell: We don't know what the observations ultimately would be until the votes are finalized. I don't know how we could write observations before the vote is finalized, so, logically, we would have the chance to do that.

Senator Cools: No.

The Chair: Hold on, please. Order.

Senator Eaton: Do colleagues issue a minority report in the Senate?

Ms. Lemay: No, it's not allowed.

Senator Bellemare: I know we won't vote on the observations. I'm not asking to vote on observations. I want them to be annexed to the report —

Senator Cools: But we vote that they go forward.

Senator Bellemare: So people know for history that it's not all people who agreed with what happened today and that we specify some arguments. I suspect that people will be really surprised at what we did today because, in fact, many people, many Canadians, will have an increase in taxation because of what we did. Some will have a decrease in taxation, but, with respect to 2016, some will have an increase because it's neutral. If you give an income tax reduction to a class of people, others receive an increase, and those people who receive an increase are those who will pay 22 per cent income tax on part of their revenue. This is how it is financed.

The Chair: I think we're going to adjourn this discussion. I thank you for your input, and we will report as appropriate.

We have a presentation, if we could take 10 or 15 minutes, that relates to infrastructure. I think it's important that we have it. It's a tool that's going to be proposed that we could develop so that we can track infrastructure. Could I have 15 minutes? Could we say until 11:35? Is that possible?

I think this is important for us to look at from our infrastructure study point of view.

(The committee continued in camera.)

Back to top