Debates of May 12th, 2004

Ken Epp Elk Island, AB

Mr. Speaker, I listened to every word the member said and enjoyed her speech and her argument in favour of eliminating the GST on diapers for children. If I remember correctly, I believe she was the member who carried her first baby while she was a member of Parliament. It was interesting to watch that development, shall we say.

However I would like to thank her for bringing this issue up at this time. We remember it was the Liberals who said that they would eliminate the GST on everything. While her bill purports to favour eliminating it on this one item, the Liberals said that they would get rid of it, kill it, but of course that never happened.

As she said, diapers are necessities and certainly should come under the same category as food and other necessities of life. It also is interesting that we do not have exemptions for clothing which, in our climate, is pretty much essential. Beyond that, we also have GST on food. If we buy small quantities, such as five doughnuts, we have to pay GST, but if we buy six doughnuts we do not. There are many crazy anomalies in the GST program.

I would like to ask this member to comment further on whether it is a good idea to just keep adding lists of items that are exempted from the GST instead of dealing with the issue in its totality.

Caroline St-Hilaire Longueuil, QC

Mr. Speaker, I thank my colleague for his comments and question. I did indeed have the good fortune and privilege to have my first son, Étienne, during my first term here, and, during the second, I had Louis-Félix. Who knows what will happen during a third? But seriously, it was a great honour to give birth to those two boys.

In my functions as an MP, I have met people in my riding who expressed their indignation at having to pay tax on diapers. We must recall that the GST was supposedly a tax on goods and services, but that there essential items were to be exempt. Goodness knows that diapers are essential to anyone with children. I do not know many people who go around with an undiapered infant, and that is probably a good thing.

That being said, when we talk about products that were exempted from the GST, there is something about this government that I do not understand. Particularly, and this is probably the most blatant example, diapers for adults are exempted from the GST. It is appropriate that they are, but the government should explain to me why it does not do so for children. To me, this is an obvious comparison; this is why this bill is important to me and why I wish all members in this House would support it.

Peter Adams Peterborough, ON

Mr. Speaker, I hesitate to ask this question because I have two daughters, a son and eight grandchildren, but are in fact disposable diapers disposable in the environmental sense? Has progress been made to make them truly disposable? I know they are called disposable but are they disposable?

Caroline St-Hilaire Longueuil, QC

Mr. Speaker, I thank the member for his question. Indeed, when the bill was drafted, we were wondering if we would limit the exemption to disposable and re-usable diapers, which is very interesting from the environmental standpoint. However, today, in 2004, most Canadians use disposable diapers. Of course, in terms of the environment, we must find measures to encourage people to use re-usable diapers. The fact still remains that most parents are now using disposable diapers.

Yes, as parliamentarians, we must send environmental messages, but we must be aware that, in 2004, parents are still using disposable diapers.

Sophia Leung Vancouver Kingsway, BC

Mr. Speaker, I am pleased to speak to private member's Bill C-456, which asks Parliament to amend the Excise Tax Act to exempt cloth and disposable diapers for children from the goods and service tax, the GST.

The government recognizes that my colleague's intent of the bill is to assist low income families with young children. I am pleased to hear that she has two young children now. I remember when she was expecting her first child. I am sure she is very busy.

Canadian society is one of caring and compassion and it is up to the government to reflect that attitude in its legislation. In that regard, the federal government has introduced many measures in recent budgets to help Canadians who need it the most, in particular families with children.

I trust my colleagues would agree that while tax reduction must ultimately benefit all Canadians, it must primarily benefit those who need it the most, middle and low income earners, especially families with children. The best way to help these families is to provide targeted tax relief. That has been a priority of this government ever since we achieved a balanced budget in 1998.

Personal income tax cuts can be better targeted to low and middle income families rather than providing GST relief on specific items, such as diapers, that may be purchased by both low and high income individuals.

Let me explain. As a general principle, it is better to tax a broad base of goods and services rather than to exclude a certain GST base. The broad base of the GST allows the tax rate to be set at a relatively low rate, while still ensuring an adequate level of revenue. Moreover, value added taxes such as the GST are more efficient when applied to a wide range of goods and services consumed in Canada.

It is also important to mention here that removing certain items from the GST base could, over time, erode the tax base, hampering the government's ability to keep the GST at a relatively low rate.

To return to the issue of targeted tax relief, for individuals and families, GST relief is provided through the GST credit. The government provides approximately $3 billion a year through the GST credit to help low income families and individuals with the sales tax they paid during the year. The credit has proven to be an effective means of targeting and delivering tax relief, particularly to low income families. This is the fairest and the most efficient means of providing targeted relief from the GST.

As well as the GST, targeted tax relief is provided by way of the $100 billion five year tax reduction plan. This plan was introduced in 2000, and it continues to provide tax relief to low and middle income Canadians. The plan has reduced federal personal income taxes by 21% on average and for families with children, that figure is 27%.

This year's budget builds on prior actions for families with children by helping them accumulate savings for their children's post-secondary education.

Our economy must be powered by ideas, imagination and innovation. Knowledge is the key not only to individual opportunity but also to economic success.

In previous budgets we improved assistance to students, created the Canada study grants, supported lifelong learning, enhanced the education tax credit and added the Canada education savings grant, CESG, to registered education savings plans.

The 2004 budget announced a broad package of measures aimed at promoting learning at every stage of life, including the very young. This budget commits additional resources to the multilateral framework on early learning and child care so more children will be better prepared to learn at school and succeed in life.

The government will also provide increased resources to understanding the early years, a pilot project which will identify children with learning disabilities. The program will be extended to 100 more communities.

Family saving is very hard for low income families who struggle just to make ends meet. To help these families, the government currently provides support through the Canada child tax benefit, in particular the national child benefit supplement. All in all, the annual federal investment in Canadian children and youth through the Canada child tax benefit is about $10 billion, making it one of the nation's most important social programs after medicare.

Too many Canadians from low and middle income families cannot have a college education because the cost is too high. To further assist those families to save for their children's education, the 2004 budget announced three important new measures.

First, beginning this year the government will introduce a learning bond in the amount of $500 which will be available to every child born after 2003 to families earning less than $35,000. Each year thereafter, for 15 years, the Government of Canada will contribute an additional $100 bond for children in low income families. This will provide up to $2,000 for post-secondary education. Even with no additional contributions by parents or others, when placed in an RESP, these funds could grow to nearly $3,000 by the time the child reaches 18, providing a foundation for higher education and a better future. The learning bond will benefit for than 120,000 newborn children this year alone.

Second, for families earning less than $35,000, we will double the Canada education savings grant from 20% to 40% on the first $500 of contributions each year. The means that for every $5 that a low income family contributes to an RESP, the Government of Canada will add $2. As a result, families receiving the learning bond and contributing as little as $5 a week to an RESP could have close to $12,000 by the time their children ready for a college education.

Third, we will provide some 20,000 students from low income families with new grants worth up to $3,000 to cover a portion of the first year of tuition.

Furthermore, for families earning between $35,000 and $70,000, the CESG will increase from 20% to 30% on the $500 of contributions each year. This could benefit more than two million children in middle income families.

Each year the Canada student loan program provides financial support for almost half of the full time students in post-secondary education. Students across Canada will have told the government--

Monte Solberg Medicine Hat, AB

Mr. Speaker, it is a pleasure to rise to address the bill, Bill C-456, an act to amend the Excise Tax Act.

Before I get into that, I just want to say to the speaker who just spoke that we wish her all the best in her career after politics. She is one of many members who will be leaving this place. Although we are on different sides in this case, I think there is a real collegiality in this place at the end of the day and people do want to see the people, who were even their political adversaries, go on to prosper in their careers after they leave Parliament. Certainly that is my wish.

I want to begin by commending the member for bring forward Bill C-456. I really commend the motives behind this. It is a bill that would see the GST on diapers exempted so there would be no GST them. It is motivated by a good thing. The member makes it clear she wants to help people who, in many cases, cannot afford diapers.

I am someone who knows a little about diapers. At one point I was a struggling young man with a family who had to try to pay for diapers, formula, clothing, playpens, all the things required to raise children. I have a tremendous amount of sympathy with people who are struggling with that. It is a very hard situation.

We did not have much money when we first had our children. It is a difficult thing. I changed many diapers. I remember my youngest son was very ill when he was first born and we went through a lot of diapers. Therefore, I have tremendous appreciation for the intent behind the bill. It is difficult to afford all those things, whether it is clothes, formula, some of the accessories and certainly diapers.

Let me address the specifics. The argument the member has made is that although this would not necessarily amount to a lot of money, to someone who is poor, it is substantial. I agree with that. I also think that there are maybe some better ways to address it.

It is pretty clear that if we exempt diapers, then other people would argue for further exemptions, whether it is on clothes or other things. Those things are commendable, but I think a lot of people would argue that a better approach is to lower taxes in general for people on the low end. I think we should have lower taxes for people on the low end.

My leader spoke not long ago in Truro about the need to ensure that families with children received special attention in the future and that there be substantial tax relief for them, irrespective, by the way, of how they looked after their children. A lot of the tax breaks and benefits in Canada today have been based on how we look after our children. We do not think that is the appropriate way to deal with it. The important thing is that we get some tax relief if we have children. We want to honour the fact that people have made the decision to have children and who want to support them.

We want to provide some kind of acknowledgement of that through lower taxes for families with children, whatever their special challenge. If it is a case like mine where we had a very sick child and went through a lot of diapers, then we could use those lower taxes to help with that. If it is a situation that is different, maybe they need extra medication, whatever it is, they would be in a position as the recipient of lower taxes to keep more of that money. They then could decide on their priorities.

I really do appreciate the point of this, and we are very sympathetic to it, but we would take a little different approach.

Generally speaking, taxes in Canada are far too high, I would argue, for everyone. I was looking at the numbers the other day. In Canada today, all three levels of government spend about 42% of GDP.

John McKay Scarborough East, ON

They are down from 45%.