Finance committee  Thank you. I agree with Mr. Heady. A 2% variance in the consumption tax is not what's going to do it; it's the fact that the Canadian dollar has significantly surged from 67¢ up to par that has made the big difference. That really underlines the need for improved productivity in this country, which is one of the reasons we're calling to enhance skills training through the tax credit.

Finance committee  Canadian corporations were less efficient before. That was not as obvious when the Canadian dollar was worth 67¢. Now that it's worth $1, things are much more expensive. Canadian companies are becoming far less competitive abroad. That's why it's very important to focus on Canadian competitiveness above all.

Finance committee  We'd be pleased, because we think HST is one of the things that would really move forward in terms of the simplification of the system. One of the resistances you'll meet for the provinces taking it on is obviously a concern for loss of revenue. There are various ways to recover this perceived lost revenue.

Finance committee  We use the term “patchwork quilt of complex regulation”. The tax act has doubled, or tripled, or quadrupled in size since I took my CA. I'm glad I don't have to do it again. Our first recommendation, which is actually the last recommendation in our study, is to move to a comprehensive review of the tax act to simplify it, because right now there have been so many initiatives one year after another—

Finance committee  We have to bring it down to a base.

Finance committee  I appreciate that. We did indicate we're trying to lessen the proliferation of imbalances across the system. We recognize there have to be some selective incentives in particular areas, but we're just pointing out that the tax act has become so thick, and year after year of budgets—

Finance committee  I think it comes from doing a comprehensive review, and starting from almost ground zero, and then selectively identifying the areas that you want to incent. If we take the CCA classes, for example, right now, embedded in the tax act there are something like 45 CCA classes. You can't find things anymore.

Finance committee  It's interesting that Mr. Dykstra brought up the issue of the affordability of consumption taxes to lower-income earners. Just as you indicated that possibly we shouldn't confuse one objective with another, we have proposed that the GST should not be reduced further. If there is a feeling that an incentive has to be given to lower-income earners, I wouldn't do it through consumption tax.

Finance committee  One of the themes running through our entire submission was simplification, which is why we called for the harmonized sales tax, the group tax reporting, and a review of the tax system. The tax act is huge now, and it's got to be looked at. In terms of environment, I think a study should be undertaken in the same theme for harmonizing across the country.

Finance committee  In our brief, we urged the government to implement mechanisms that support Canadian economic value creators. Canada needs the champions that some of the SR and ED credits, the R and D credits, which is a good system, are promoting. We look at Research in Motion as a prime example of a Canadian corporation that came from nowhere, x number of years ago, and has become a global leader today.

Finance committee  We're saying, as we're looking at where we're spending money, spending on infrastructure that makes Canada more competitive is a good thing. Then when we start thinking about infrastructure, we think about R and D, we think about training, which is one of the reasons we've put forward the investment tax credit concept, to promote Canadian businesses, to do more training of our labour force.

Finance committee  I don't want to get too much into details, but there's actually an interpretation bulletin that specifies that certain types of training are deductible in the current year, and other types, interestingly enough, that are longer term are considered to be of a capital nature, and they need to be capitalized and the deduction spread over years.

Finance committee  Absolutely.

Finance committee  Yes.

Finance committee  One-third of the program spending relates to old age security and health care, something we know is going to increase as the population ages. That should provide us with the incentive to find the money through various means, and one of the ways we were suggesting was to pay down the debt in order to reduce the interest so we have the money to meet the obligations that the elderly and the sick have.