House of Commons Hansard #60 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Petitions
Routine Proceedings

12:20 p.m.

NDP

Joe Comartin Windsor—St. Clair, ON

Madam Speaker, I rise to present a petition, pursuant to Standing Order 36, from my constituents and other members of the city of Windsor in the county of Essex.

The petitioners are looking for support in their drive to have a small area of land, known as the Ojibway industrial site, preserved in perpetuity for the members of the community. This is property that is on federal land managed by the Windsor Port Authority.

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Scarborough—Rouge River
Ontario

Liberal

Derek Lee Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, the following questions will be answered today: Nos. 24, 30 and 33. .[Text]

Question No. 24—

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Liberal

Charles Caccia Davenport, ON

What are the total estimated greenhouse gases emissions from: ( a ) Suncor Energy Inc. project millenium oil sands development project; and ( b ) the Shell Canada Athabasca oil sands project?

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Wascana
Saskatchewan

Liberal

Ralph Goodale Minister of Natural Resources and Minister responsible for the Canadian Wheat Board

(a) Suncor Energy Inc. project millenium oil sands development project includes a new mine and mining equipment, additional bitumen extraction facilities, a new bitumen upgrading complex and a combined cycle cogeneration plant. This will increase production from 6.1 million m3 oil equivalent in 1999 to 12.6 million m3 of crude oil and fuel products in 2002.

Suncor does not publish project specific emission targets. The company expects to gain energy efficiency improvements throughout the operation of project millenium. Green house gas, GHG, emissions will be managed as an integral part of the overall operations. Suncor contributes reports regularly to the climate change voluntary challenge and registry program. The reported actual emissions per unit of production was 0.728 tonnes CO2 equivalent per m3 of production in 1999, 30% below the 1990 baseline.

Suncor estimates that in 2002, when project millenium is operational average GHG emissions from oil sands will be .606 tonnes CO2 equivalent/m3 of production. Based on this, and the anticipated production of 6.5 m3 per year from project millenium, GHG emissions from the project can be estimated to be 3.9 million tonnes CO2 equivalent per year.

(b) Shell Canada Athabasca Oil Sands project:

The Athabasca oil sands, AOS, project, with a production capacity of 24,646 m3/d, 9.9 million m3 per calendar year, was officially launched in December 1999 with start-up planned for 2002. The AOS project in committed to a 50% reduction in GHG emissions from those estimated when the project was officially launched in 1999.

In its current design the project is expected to emit 3.5 million tonnes of CO2 equivalent per year. This captures the project's own direct emissions and those form cogeneration facilities that will supply electricity and heat. This figure is projected, based on improvements made to the original feasibility study and the company's environmental impact assessment, which had estimated 4.8 million tonnes of CO2 equivalent per year.

Action to reach 3.5 million tonnes of CO2 equivalent per year includes addition of cogeneration facilities. The target emission level to be attained by 2010 is 1.75 million tonnes of CO2 equivalent per year.

Both Suncor and Shell have adopted ISO 14000, the international environmental management system standard. The companies are also involved in the oil sands task force of the Canadian industry program for energy conservation, CIPEC, in their pursuit of energy management.

Question No. 30—

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Canadian Alliance

John Duncan Vancouver Island North, BC

What have been the total costs since 1995 for the project to replace the old foghorn at the Cape Mudge light station in British Columbia with an electronic foghorn, including: ( a ) the cost of the solar unit, batteries and horns; ( b ) the cost to repair or replace original components or failures; ( c ) the cost of maintenance; and ( d ) the cost of technician transportation and labour?

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Vancouver South—Burnaby
B.C.

Liberal

Herb Dhaliwal Minister of Fisheries and Oceans

(a) The following equipment was installed at Cape Mudge light station as part of the lightstation service project.

This amount includes the total cost of equipment and hardware.

(b) The first electronic foghorn installed on October 21, 1997, was an AB560 model with a frequency of 645Hz. The foghorn's two emitters were defective at the time of installation and replaced under warranty, however the Canadian Coast Guard, CCG, spent approximately $900 to replace the emitters.

(c) Following the installation of the electric foghorn, complaints were received by local residents that the horn was too loud. The foghorn was subsequently replaced on April 9, 1998, by a smaller AP/FA390 foghorn with a frequency of 390Hz that has a lower frequency and less range. This is the horn that is currently operating at Cape Mudge. The AB560 foghorn was returned to inventory to be redeployed to another location. The cost to replace the foghorn with the AP/FA390 was approximately $1,400.

(d) The light station is serviced by CCG technicians on a six month schedule at an annual cost of $2,000 including the cost of labour helicopter time and travel costs.

In terms of additional costs, every attempt has been made to correct outages at Cape Mudge by combining with other regular maintenance trips. No other significant costs have been incurred since 1995.

Question No. 33—

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Progressive Conservative

Bill Casey Cumberland—Colchester, NS

With respect to the ethics counsellor, Howard Wilson, who was appointed by the Prime Minister On June 16, 1994: ( a ) what is the salary range for the position of ethics counsellor; ( b ) what are the terms and conditions of his employment; ( c ) when is his term of employment up for renewal; and ( d ) what is the operating budget for the office of the ethics counsellor?

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Scarborough—Rouge River
Ontario

Liberal

Derek Lee Parliamentary Secretary to Leader of the Government in the House of Commons

I am informed by the Privy Council Office and Industry Canada as follows:

(a) Effective April 1, 2000, the salary range for the ethics counsellor is $145,000 to $170,700.

(b) The ethics counsellor is subject to the terms and conditions of employment in the executive group in the public service.

(c) The ethics counsellor serves for an indeterminate period of time.

(d) The office of the ethics counsellor's total operating budget for the year 2001-02 is $1,965,893 of which $1,683,515 is for salaries and $282,378 is for general operating expenditures.

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Liberal

Derek Lee Scarborough—Rouge River, ON

I ask, Madam Speaker, that the remaining questions be allowed to stand.

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

The Acting Speaker (Ms. Bakopanos)

Is that agreed?

Questions On The Order Paper
Routine Proceedings

12:20 p.m.

Some hon. members

Agreed.

The House resumed consideration of the motion that Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain Acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another Act related to the Excise Tax Act, be read the third time and passed.

Income Tax Amendments Act, 2000
Government Orders

12:25 p.m.

NDP

Joe Comartin Windsor—St. Clair, ON

Madam Speaker, before we broke for question period I was detailing some of the difficulties our population was facing because of the type of budgetary processes we have had over the last number of years while this government has been in power. I was explaining how the financial positions of a number of Canadian families have altered to a significantly lower level.

I would now like to address the question of wealth. I will cite only one statistic. In 1999 the top 10% of Canadian families had a medium net worth of $703,500. The lowest 10% had a negative net worth of approximately minus $2,010. The top 10% are wealthy and the bottom 10% are in a negative position. That is the type of society that has been created by these types of budgetary processes.

The other point I would like to address concerns the capital gains break that the government has given mostly to the wealthy. The tax rate on capital gains had been set at 75%. The bill would reduce that to 66.7%, which is a substantial reduction.

It is interesting to note that as the bill was working its way through the process, there was other work going on as well. Neil Brooks, a tax expert, was making a compelling case against the capital gains tax break in the Senate committee. He pointed out the impact this capital gains tax break had on substantial wealth. He made the argument that it violated the fundamental tax principle, which is that taxpayers with the same ability to pay should pay the same regardless of their income sources. He went on to point out that its impact encouraged speculation not just in the stock market but in real estate, commodity futures and collectibles. We have seen some of the negative consequences of that type of speculation, especially in the stock market in the last six to twelve months.

Professor Brooks made another point, which was a bit more subtle but still important. As we encourage the type of investment that results in capital gains, it takes away from other areas of the market and the economy. He said that this provided incentives for the conversion of dividends and even labour income into capital gains as opposed to allowing those to continue, and the benefit that it would give to the economy generally. His final point was that it also complicated the tax system and actually reduced tax revenue.

It is important to appreciate the size of the gain. In 1996 taxpayers with incomes of more than $250,000 a year reported average capital gains of $74,000. That was almost 500 times the average capital gain of $150 reported by taxpayers earning between $20,000 and $40,000. That is the kind of system the bill would encourage and continue.

We heard from some of the other speakers today that over the next five years the bill would reduce taxes by $100 billion. Of course the government takes great credit for this. I would like to go back and look at that.

On the simple basis of fairness, does it make sense to be doing this? Do those tax breaks do anything at all to reduce the inequality that I mentioned earlier in my address? The answer is no, it does not. In fact it perpetuates and increases the inequality between that lower 10% or 20% of the families in Canada and the upper 10% and 20% of the families in Canada. It will follow an American model that is even worse than what we have now, but toward which we are very rapidly going. This will result in the same type of inequalities from which that country suffers.

The other point I would make about the $100 billion is that it just cries out, as I made the point earlier, of the hypocrisy of the government supporting the motion we had on safe water earlier this week, then not spending it on an infrastructure program that was at all meaningful in terms of treating our water and our sewage, thereby creating a safe water system for all of Canada. This government level is the only one that has the ability, in terms of revenue, to deal with the problem.

In that regard, it is not as though it can claim any ignorance of the need for these funds. I have already mentioned that the Canadian Federation of Municipalities had a figure out there for some time of $16.5 billion that would be needed over the next 10 years. I mentioned earlier that CMHC, Canada Mortgage and Housing Corporation, had a study three years ago that set out the need for $4 billion a year in infrastructure over the next 15 years to deal with the water problem and crisis and to provide the country with safe water.

Somehow the government missed those two studies, those figures and that information. We had Walkerton and that was before the bill was introduced. We saw the tragedy in that community as a result of an unsafe water system.

In conclusion, it is a bill that obviously my party cannot support and is one that we will vote against for all the reasons that I mentioned today.

Income Tax Amendments Act, 2000
Government Orders

12:30 p.m.

Bloc

Yvan Loubier Saint-Hyacinthe—Bagot, QC

Madam Speaker, I am pleased to address this important legislation, but I want to say from the outset that my party will oppose Bill C-22.

Why? Because of the lack of concrete measures that would serve the public interest, particularly low and middle income earners.

I want to discuss the tax cuts that were mentioned in the last federal budget and that will now become reality with Bill C-22. These tax cuts by the Minister of Finance are great for very high income earners.

If we look at measures such as lower tax rates or the new tax rate on capital gains, we realize that those who will benefit the most from the Minister of Finance's budget and tax cuts are the people who earn at least $250,000. The Minister of Finance targeted these people first and foremost. As of this year, this group will save about $19,000 in taxes.

Instead, we are shocked to see how minimal the tax cuts and savings for low and middle income families are.

Taking the example of a single parent with one dependent child and an income of $30,000, this person will have a tax saving of $750 and will continue to pay taxes. Is it normal for a single parent family, with a single wage-earner and one child to earn $30,000 and still pay some $1,545 in income tax, even after a tax cut? Is this normal for a family that has to live on $30,000? That is the cut-off figure for the poverty line, according to Statistics Canada.

Is it normal for the federal government to continue to impoverish this family still further, even with the tax cuts, by making it pay an average of $1,500 in federal income tax? No, it is not. A single parent with one child and an income of $30,000 ought not to be paying any federal income tax.

That is the way it is in Quebec. For some time now the Government of Quebec has been revising its tax categories. It has revised the marginal tax rates with the following result: a family of two adults and two children with an annual income of $47,000 will pay hardly any tax. How is it that a family with one child and one wage earner is still in the situation of having to pay more than $1,500 in tax?

I can already hear the Parliamentary Secretary to the Minister of Finance replying “That is wrong, it makes no sense”. I have news for him. It is wrong to say that it makes no sense. He should save his breath. People have just finished filing their income tax and they have it fresh in their memories that, once again this year, they have paid federal tax even though they are in the low income category.

When we look at the tax cuts for low and middle income families, we see that the tax savings this year, for example, will be no more than $300 or $350. That is for this year, because these tax cuts are being phased in between now and 2004; that is about the average.

But the high income earners get great breaks. As I mentioned earlier, on average, those earning $250,000 and up will save $19,000 this year. There is a double standard here. The government has also forgotten that it is low and middle income earners who have brought down the deficit since 1993, who have contributed to the huge surpluses, and we will come back to this later.

Middle income families are the federal government's cash cow. They are the source of most of the money collected in income taxes. The government should have been a bit more sensitive when it came to this category of revenue. These families should have been given a few more credits for having played such a major role in helping put the fiscal house in order.

It can never be said often enough that all the cuts made by this government since 1994, such as in the Canada social transfer for funding health, education and social assistance, have taken their toll on these families. These are the people really responsible for putting the fiscal house in order and generating surpluses. They are still doing it today. It must never be forgotten that every year the Liberals greedily help themselves to the surpluses accumulating in the EI fund because of the premiums paid by workers and employers.

It is not right that barely 40% of unemployed workers qualify for EI benefits. It is not right. The system is too restrictive. It excludes too many people who should normally have been entitled to EI benefits, since everyone pays into the plan now.

There is something wrong when these people are being hung to dry by the last budget, actually the last two budgets, and asked to help with fiscal consolidation through their contributions. The government does not have to worry any more.

Everything left in the employment insurance fund, once it has paid benefits to only 40% of the unemployed, the rest, that is 60%, goes into the consolidated revenue fund. It is added to general revenues, therefore contributing to fiscal consolidation and general surplus.

Why is it that these people could not benefit from true employment insurance reform; a real reform, not a “reformette”, a true reform of the employment insurance plan using most of the accumulated surplus to really help the unemployed instead of excluding 60% of them?

What we have instead is tax relief especially for millionaires, probably those who contribute the most to the Liberal Party coffers. We have unemployed workers who are excluded from the employment insurance plan. Low income single parent families with one child, making $30,000, are still paying $1,500 in federal income tax. It is despicable.

Is there a justice in this country? Are we eventually going to do something for these people or are we going to shamelessly forge ahead with the same budgetary policy we have being following so far?

As for social housing, why was there nothing in the past two budgets, that is, those of February and October 2000, the October mini budget geared to the election, of the Prime Minister in waiting. He has long been in waiting, but he is still hoping.

How is it they failed to consider social housing? It is an important issue that probably affects the single parent family, with one dependant and an income of $30,000 or less, which I cited as an example earlier.

How is it that this family is being put off once again? Why is not one cent provided for social housing? Is this a matter of no importance?

And yet, when we look at the statistics, the number of people spending over 50% of their income on housing has increased alarmingly, especially since the start of the 1990s.

At the moment, if we look at the statistics, there are 833,000 households—nearly a million households—that should be offered social housing, because they spend over 50% of their income on housing. That means that the other 50% is left for all the rest: food, electricity, telephone, clothing the children, child care and heating in winter.

When we think of the scandalous profits of the oil companies, which have raised prices significantly in the past two years, we could say there is collusion—let us not beat about the bush—in the oil industry.

They get together and raise prices at the same time. This is what the major oil companies do, and the government does nothing about it. Who is hit by the oil crisis, a crisis created by the big oil companies through collusion? Again, it is the poor, it is those who, after spending 50% of their income on rent, must spend part of the other 50% on heating.

Given such glaring needs, why did the federal government not think for one second of including new money for social housing in its budget?

If the government had continued to spend proportionally the same amount on social housing that it did before 1994, if it had maintained these expenditures since 1994, there would be 30,000 additional social housing units in Quebec alone. The government should have invested $3.5 billion in social housing since 1994, but it did not.

I cannot believe that, with surpluses coming out of his ears—even with the downturn—the Minister of Finance is not ashamed when he gets up in the morning and looks at himself in the mirror, because he did not show any consideration for the poor, who are not the main beneficiaries of his tax cuts and of all the measures implemented by the government since 1993.

I can hardly believe that. Why did he not also consider—after talking about it for so long—the possibility of transferring $500 million from the employment insurance fund to Quebec, to set up a true parental leave program?

Instead, they are putting the $6 billion surplus in their pockets to increase the surplus and to promote the image of the Prime Minister in waiting, that is the current Minister of Finance. Why have these people, who claim to be civilized, who claim to support social justice, not think of transferring, as provided under section 69 of the Employment Insurance Act, the $500 million that is required to set up a parental leave program in Quebec?

Because of this and because of them—and they are not in the least ashamed—the introduction of this plan has been put off until 2003. How is it that they are making young couples postpone having children? Are children not important to this government? Why will it not agree to transfer to Quebec the amount allowed under the Employment Insurance Act? Is it because Quebec is asking? Do they have it in for young families in Quebec?

It is sometimes hard to understand, to keep one's cool, in the face of such deceit, such an obstinate refusal, such incredible closed-mindedness, when by rights we should have had a parental leave plan in Quebec in 2001 or 2002, thus helping not just young parents working for businesses or the government, but also those who are self-employed.

Unlike the federal plan, the Quebec parental leave plan pays benefits to self-employed workers and takes the reality of the labour market into account. Not only are we still dealing with dinosaurs when it comes to a single currency, but also when it comes to parental leave. They are incapable of adapting to the labour market and keeping the public interest in mind.

Let us not forget that not only does federal parental leave not cover self-employed workers, but the eligibility criteria for this leave are the same as for employment insurance. This means that most people are excluded right off the bat. That is the situation right now. A little over 40% of unemployed workers qualify for EI benefits; if these are the same criteria used for the federal parental leave policy, quite a few people besides self-employed workers will not qualify.

In Quebec no one is excluded, not the self-employed, not the parents who wish to take advantage of our parental leave program. It is a far superior program. Because of the obstinate refusal of this government, however, young parents cannot take advantage of such a program.

How can it be that there has been no thought given, with billions of dollars in surplus again this year, to indexing the social transfers to the provinces, for health and education in particular? How can it be that, seeing what is going on in the hospitals, with the lack of funds and increasing demand, no thought is being given to putting more into transfer payments for health and education?

They say “But we must be prudent. The surplus is not all that big”. This is false. Contrary to the Minister of Finance's forecast in last year's budget, the surplus will not be $4 billion—insignificant, even taking into account the tax cuts in the October mini budget—but rather in excess of $17 billion, or four times his predicted figure. When it comes down to it, the Minister of Finance's sole plan was to use figures that have nothing in common with reality for petty political gain.

That is what he has done ever since he has been Minister of Finance. When there was a federal government deficit, he inflated the deficit figure, telling people “Look out, we need to be careful, because we do not have all the manoeuvrability we need, and the battle is far from over”.

He even told the members of his own party “We need to be careful”. But there is always a limit to prudence. We are all in favour of being careful, of having a contingency fund, but we are not in favour of lying to the population by not giving the real figures and by avoiding any debate on how to use the surplus.

When he forecasts a $4 billion surplus and that in reality the surplus is $17 billion, the $13 billion that was not forecast is used directly to pay down the debt. He avoids any debate and puts everything on the debt. There is no democratic debate, no transparency. This is hypocrisy, big time, and he wants us to swallow it.

I made a bet with a reporter. Did he know what the Finance Minister will say next week in his economic statement? He will say “There is no unanimity among economists; some say that things may go well, others that they may go wrong”. One of his former assistants, Mr. Drummond, who has been Assistant Deputy Minister of Finance and who is now the chief economist at the Toronto Dominion Bank, said “We have to be careful. We could come back to deficits in three years”, and he knows what he is talking about. Having been an assistant to the Minister of Finance for several years, Mr. Drummond cannot go wrong that easily and talk nonsense.

The Minister of Finance is setting the stage for next week by saying “Surpluses will not be as high next year. The economy is slowing down, we could go into a recession, find ourselves in the red. We may not necessarily be headed toward a deficit, but we still have to be careful. Since there is no unanimity among economists, I prefer to draw a line down the middle and say that surpluses will not be as high”. In other words, he is still going to tell us nonsense.

He is setting the stage. Some economists are optimistic. Yesterday, Thomas Wilson, a well known forecaster, forecast a surplus of $14 billion for the fiscal year ending March 31, 2001. He is a bit closer to reality. Our own figure is $17 billion. Even with last October's tax cuts and the new spending for Genome Canada, we still come up with $17 billion.

Next week, the Minister of Finance will tell us we have to be careful. That is a lie. It is hard to believe how much the public has been fooled since this man has become the Minister of Finance.

It is so much so that the economic statement exercise is losing its credibility, according to several analysts, particularly Mr. Piché, of La Presse , because the figures we are given are false. They are just not the right figures. We cannot rely on them to tell whether government management is good or bad. Does it follow certain priorities in its management, or does it take into account the interest of the population? There is no way for us to know, because we do not have the right figures. We have to find them for ourselves.

For the last fiscal year ending on March 31, we have a surplus of at least $17 billion. For each of the last five years, I have tried to lower the figures because of an economic downturn, but I cannot see the day when we will have a deficit.

The government could have done a lot of things with this money. It chose to side with the millionaires and not with the population. For all these reasons, we are going to vote against the bill.

Income Tax Amendments Act, 2000
Government Orders

12:50 p.m.

Etobicoke North
Ontario

Liberal

Roy Cullen Parliamentary Secretary to Minister of Finance

Madam Speaker, as usual, the member for Saint-Hyacinthe—Bagot is all mixed up. I will, if I may, try to provide a few clarifications.

The member gave the impression that the focus of the October 2000 budget update was on the high income Canadians, and not on low and middle income Canadians. On the contrary, the update was aimed at the low and middle income Canadians.

I will give two small examples, if I may. For a two-earner family of four with a combined income of $60,000, in less than four years, taxes will be reduced by 34%.

Here is another example. For a family with two children and a single income of $40,000 a year, the reduction will be 59% within four years.

The member also talked about affordable housing. In our election platform the government committed to working with the provinces to deliver affordable housing programs.

Yesterday in committee the member talked about his lap top computer and its modelling capabilities. Has he made the same errors on his income tax calculations as he did with his economic projections?