Madam Speaker, I would like to note at the outset that I will be splitting my time.
When I first came to Ottawa I made a point of meeting with the Minister of Finance, in part to get to know him better and in part because I had run on a platform that emphasized debt reduction and tax cuts. We shared a coffee and exchanged views on the current issues of the day. Over the past number of years we have shared quite a number of other coffees, had a few meals and played some pretty lousy golf.
I have always appreciated the Minister of Finance's candour with caucus members, his intellectual grasp of the current issues of the day and his ability to reflect in the budget the issues he is hearing and give them force and effect.
I have also appreciated the support that the Prime Minister has given over the past number of years in fashioning a variety of budgets. Those budgets are in fact attuned to my set of values and beliefs.
When I ran in the last election I said that our debt was way too high and that we were becoming uncompetitive, with the United States in particular and the G-7 in general, in terms of our overall tax burden.
As I potentially face my constituents once again, I think I have a pretty good story to tell. I will be able to say to them that over the past three and a half years in the course of our mandate the debt to GDP ratio has gone down from 71% to about 58%. I will be able to tell them about the absolute reduction in our net national debt of $28 billion. I will be able to say that the reduction in market debt is even greater, at last figure $32 billion, possibly higher. I will be able to say that the Government of Canada has run fiscal surpluses for the last three years. They can reasonably anticipate that debt servicing costs will be down by $1.7 billion and that the debt to GDP ratio will come down to about 40% by 2005.
As I reflect on my conversation with the minister some three years ago, never in my wildest dreams would I have believed I would be able to go back to my constituents and tell them that debt story. I am amazed at the accomplishments of the Minister of Finance and the Prime Minister in directing the resources of the Government of Canada in dealing with its debt burden.
The other part of our conversation had to do with tax relief for Canadians. Frankly I was quite vague about it. I did not really understand what was meant by a $100 reduction, a change in a threshold, or a percentage change. For me, it has been a steep learning curve as the minister has fashioned three budgets and a number of economic updates.
My own instincts have been to start where the impact would be greatest, namely among low and middle income Canadians and then work to upper income Canadians recognizing that when one gives tax relief to low income Canadians, it does filter up our progressive tax system. The system in some respects is relatively simple but to think back three years ago and realize that brackets have gone up substantially and that rates have been going in the other direction is really quite a significant accomplishment.
One has to earn $8,000 of taxable income before one gets taxed. From $8,000 to $35,000 the rate has been reduced from 17% to 16%. From $35,000 to $60,000 the rate has gone down from 26% to 22%. From $60,000 to $100,000 the rate is at 26%. For over $100,000 it is at 29%. Every one of those percentage points literally represents billions of dollars. Cumulatively the impact is $100 billion. These are very significant changes. These are substantive tax reductions which frankly I never would have believed based upon my conversation three years ago with the Minister of Finance.
To be candid, I was not overly enthusiastic about the Canada child tax benefit. However, I have come around to the view that if we really want to benefit low income Canadians, we have to do it through a combination of measures. Otherwise if we simply cut taxes, it becomes terribly expensive to the treasury and it does not necessarily benefit the people whom we want to benefit the most. I was therefore more than pleased that effective July 1, 2001 the Canada child tax benefit will be raised with the maximum benefit for the first child going up to $2,500.
In a similar vein, giving tax relief to Canadians who have disabilities or Canadians who are caregivers, I am pleased to see that the minister has raised the disability tax credit up to $6,000 and the caregiver tax credit up to $3,500.
There is an enduring myth in the House that somehow or another we should ignore Canadians with higher incomes or businesses, notwithstanding the fact that we know that businesses generate income and jobs. We somehow or another believe that they should be ignored and taxed to the max.
I am pleased that the Minister of Finance does not buy into that myth and that Bay Street, to coin a phrase, needs to be recognized for the contribution it does make to the Canadian economy and to the general well-being of Canadians. His commitment is to lower corporate tax rates from 28% down to 21%. He has already implemented a 1% cut and there is a commitment to cut 2% for the next three years legislatively. In my view this brings certainty to the tax structure which is something all businesses can appreciate.
Reducing the capital gains inclusion rate from 75% to 66% to 50% is an accomplishment that all entrepreneurs should welcome. That puts us below comparable American rates. Tax-free rollovers will be expanded and made available to more businesses. The size of an eligible investment will be increased from $500,000 to $2 million and the companies themselves from $10 million to $50 million. This should be of great assistance to those who find the tax structure somewhat restrictive in their entrepreneurial activities.
Finally, on the tax side of things, I want to congratulate the minister and the Prime Minister for the deindexation of the system. This was an item which was argued loud and long in caucus. One of the members who argued it loudest and longest was the hon. member for Durham. I congratulate him for his persistence.
The minister pointed out in his speech yesterday that government is more than simply balancing books. He, the Prime Minister and the Minister of Health stood firm in their resolve that the Canada Health Act be respected, that the provinces recognize that we are more than 10 little independent principalities, that this country has certain health care principles and that those principles are enshrined in the Canada Health Act.
The message is clear. We are not above using cash to make sure that all provinces give consistent quality health care across the country. Health care should not be dependent upon the size of one's wallet, or the various governments' budgets, or wacky right-wing philosophies. People should not have to have a wallet biopsy just to get treatment.
Notwithstanding the pathetic whining by the province of Ontario, the Prime Minister saw fit to increase the cash component of the Canada health and social transfer by $21.2 billion over five years. Members will recall that prior to the February budget, the province of Ontario was taking out ads insisting that the Government of Canada cut taxes, cut taxes, cut taxes. One minute after the delivery of the budget the province of Ontario shifted its focus on more money to the province of Ontario by way of CHST transfer with no strings attached.
The inconsistency and hypocrisy of the province of Ontario is obvious for anyone to observe. Even at the worst of times, the province of Ontario had its transfers reduced by something less than 2% of its overall budget which was restored immediately as soon as funds were available. That was done last year. Misinformation is a modus operandi for the Government of Ontario. A little history is in order here.
In 1997 the CHST was created. The agreement was that the Government of Canada would reduce its tax room and the provinces would take its place. As Ontario's economy has grown, so also has its tax revenues. Therefore, the tax component has grown which has more than made up for the modest reduction in cash. With this new money the cash component of CHST is increased by 35%.
The Government of Canada has hedged its bets though with the mere certainty that the provinces of Quebec, Ontario and Alberta will stretch the notions of affordability, universality and accessibility to the maximum.
I am returning to my constituency this weekend. I will have a pretty good story to tell. I can go back to my constituents and say we reduced taxes substantially, over $100 billion, that we reduced debt substantially, $28 billion, and that we restored Canada's health care system to the tune of $21 billion.