Senator Gignac at third reading of Bill C-69, Budget Implementation Act, 2024, No. 1

By: The Hon. Clément Gignac

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Colourful homes, St Johns, Newfoundland

Hon. Clément Gignac: Colleagues, I too would like to speak on Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.

Clearly, there’s no need for me to elaborate on each of the measures contained in the bill, since the bill’s sponsor, Senator Loffreda, did so eloquently — and, I might add, enthusiastically — yesterday evening. Since you’re all now up to speed on the content of Bill C-69, my speech will be brief and shouldn’t go over five minutes.

As a member of the Standing Committee on National Finance, I would like to revisit one of the numerous observations contained in the committee’s report tabled last night in this chamber.

I also want to acknowledge the excellent work done by our clerk and the leadership shown by the new chair of the Standing Senate Committee on National Finance, who has passed the test of two budget implementation bills in the same week. We wish him long-lasting success as committee chair.

I would like to thank my committee colleagues for agreeing to include my observation, which I’ll tell you about now.

Despite being over 600 pages long and including many measures unrelated to financial matters, Bill C-69 is notably missing one key Budget 2024 measure: the proposed changes to the capital gains tax regime.

Despite its absence, we heard Canadians from all walks of life voice serious concerns about the uncertainty surrounding the proposed changes. The government has proposed June 25, which is next week, as the coming into force date of the increased capital gains inclusion rate, even though the relevant bill has not been tabled yet. The committee has questions about this approach, particularly since this is a measure that will have a major impact on Canadians’ finances at a time of economic uncertainty.

Honourable senators, we are not dealing with a simple increase in the tax on gas or tobacco. This is a major change to tax rules that have been in place for almost 25 years, since 2000, when the then Liberal finance minister, the Right Honourable Paul Martin, decided to lower the inclusion rate from 75% to 66% in February 2000 and then to 50% in September of the same year.

Colleagues, when we return to the Senate in September, I look forward to sharing with you the economic reasons cited by former minister of finance Paul Martin to justify reducing the capital gains inclusion rate.

I should point out that this Liberal bagman had a very conservative management style at the time. He restored order to public finances and balanced the budget.

Colleagues, I find it unfortunate that, in this case, the Standing Senate Committee on National Finance was unable to carry out its duty of sober second thought before this measure comes into effect on Tuesday. We did not get to hear from experts, propose amendments or even confirm the Minister of Finance’s assertions that this measure will affect only a tiny segment of society, namely the wealthiest Canadians, and that it will not affect the economy, investment decisions or economic growth.

Technically, it’s true that the Minister of Finance had no legal obligation to include this tax measure in Bill C-69, the budget implementation bill. Instead, the government chose to table, on June 10, a notice of ways and means motion to amend the Income Tax Act before this measure took effect. That was the government’s choice.

I should note that there is no deadline for tabling a bill to implement a tax measure set out in a budget before Parliament for tax measures that come into force following the tabling of a notice of ways and means motion. There is no deadline. The only constraint is that it has to be tabled before the session ends.

Honourable senators, if the reason for choosing not to include this tax measure in the bill was that officials need time to properly prepare the documentation on the future capital gains bill, the government could have opted for a later date, such as October 1 or even January 1, as many experts suggested.

Let’s not forget the last time a minister of finance chose to increase the capital gains inclusion rate in Canada, 45 years ago. The then finance minister, the Honourable Michael Wilson, tabled a white book six months in advance, in June 1987, in which he announced that the capital gains inclusion rate would be increasing from 50% to 66% on January 1 of the following year. He gave six months’ notice. When he decided to increase it to 75%, he announced that two and a half years in advance.

Honourable colleagues, since it is not our practice in this chamber to comment on a tax measure that is not included in the bill, I will conclude by stating that this approach to capital gains tax reform is not a desirable practice from a legislative standpoint. I would even add that it doesn’t live up to the expectations of investors and Canadians in this great country, this G7 nation with a AAA credit rating. The government should be aiming higher when it comes to practices, good governance and a predictable tax system. It should also give this chamber a chance to play its role of sober second thought if it truly believes in the independence of the Senate.

Thank you.

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