Mr. Speaker, I understand that the member for Scarborough—Rouge River is seeking to rise on a question of privilege at about 1:55, so I am going to cut my comments off so that he will have the opportunity to do that before question period.
First of all, I am absolutely astounded that last week the government put a motion forward that “the question be now put”. In other words, let us close down debate on the budget. It must be understood that Canadians want to know what their parliamentarians have to say about important elements of the budget. We must consider the last round of controversy in this place having to do with the Atlantic accord and indeed not just Atlantic Canada but Saskatchewan as well.
Promises made, promises broken. This is a very disturbing pattern on behalf of the government wanting to shut down debate so that we do not have an opportunity to confirm to Canadians what the facts are. The Auditor General once said Parliamentarians have to have fact-based information on matters related to the taxation of Canadians. There are a number of examples touching on the budget which show frankly that the government has done absolutely everything to frustrate the tabling of factual information it continues to deny. There is no credibility here. There is no trust. The government is trying to shut down debate because it does not want Canadians to know.
When the finance minister did a poll about the budget and asked the question “Are you receiving a benefit from the current budget?” The last time I spoke at an earlier legislative stage of the budget the poll showed that 93% of the respondents said that the budget did not benefit them. What happened the very next day? The finance minister yanked the poll off his website. He did not want Canadians to see exactly what other Canadians were thinking. There has to be something about it when 93% of respondents to the finance minister's website said they would receive no benefit from the budget.
There are some Canadians who not only did not receive a benefit, but they received cuts, serious cuts. I do not have to go into the Atlantic accord or the Saskatchewan agreement. I know what it means to those provinces.
Some hon. members have stood up and laid it on the table and what does the government do? It says that is not the case, they have their choice, they can do this, or this, trying somehow to explain away what the premiers of those provinces have clearly said to the Government of Canada, that it broke its promise, a written agreement. Remember the line “broke your promise”. The Prime Minister, during the last election, put out a piece of literature which said, “There is no greater fraud than a promise not kept”.
I assume that the Prime Minister now is beginning to accept that he has committed a fraud because he has broken a promise. He said he would not raise taxes, but in the first budget he raised taxes. He denies that he raised taxes, but we all know that the taxes on the first tax bracket went from 15% to 15.5%. It is on the tax returns. Conservatives are arguing that the budget implementation did not pass, but every Canadian who filed a tax return for that year knows exactly what the tax rate was on the tax return.
I assume that the tax return provided by the finance minister himself is correct in terms of what the real rate is. So why would the Conservatives come in the House and deny that they raised taxes? It is a fact. They should say they did, but they had to do it to pay for the GST cut that they also promised.
Apparently, the value of the increased taxes that a taxpayer would pay through the increase in the tax rate from 15% to 15.5% on the first bracket works out to $400. Do we know how much we would have to spend to save on or to offset the $400 increase? For that 1% in GST, it would be $40,000. We actually have to spend $40,000 on GST taxable goods and services to save the $400 tax increase.
Who in Canada spends $40,000 on GST taxable goods and services? They are people who buy very expensive cars and houses, the major things. What does this do for someone who is living from paycheque to paycheque? What does it do for someone like that?
Obviously this is a very regressive move that the government has made. I would love to reduce the income taxes of Canadians rather than reduce the GST. It is a fairer way to do it. People who have a lot of money have more disposable income. They have greater latitude and control over what they have to spend it on, but not with regard to GST.
Deny, deny, deny: the credibility is not there. I do not trust the government. I do not believe that Canadians trust the government. Its word is not good. Credibility is the issue. The Atlantic accord shows it.
There is another thing. The Conservatives said they were going to have a good, responsible government that is open and transparent. Let us look at income trusts. My goodness, here is another broken promise.
Let me stop here and simply indicate that the Canadian Association of Income Trust Investors and their president, Mr. Brent Fullard, have been very active in representing the interests of those who are income trust investors. I have to say that I do not agree with absolutely everything that they have said and written. They have been getting very involved in the communications process with members of Parliament.
However, I can tell members that with regard to the broken promise of the government on income trusts they are 100% correct. They have given parliamentarians every opportunity to see that the decision taken to break that promise, to impose a punitive 31.5% tax increase on income trusts, which led to a $25 billion meltdown of the marketplace, means that people who owned income trusts lost $25 billion of their investment value. These are people who were saving for their retirement or who are in retirement. They were depending on the cashflow.
I have to say that this was so enormous that we could not believe it actually happened. I went to the finance committee and participated in the hearings in which the finance minister came before committee to explain the tax leakage. The government was saying that the corporation that pays dividends pays a certain amount of tax and an income trust does not pay any tax so it is awful.
The previous speaker, during private members' business, said that corporations pay taxes and income trusts do not pay taxes. We have to look at the tax burden of everyone involved in that transaction. When the corporation makes money, it pays corporate income tax, yes, and corporations also pay dividends, and those dividends are taxable in the hands of the investor. As well, there is a dividend tax credit to lower the burden of the double taxation. Thus, a corporation and the individual investors pay a certain amount of tax.
Income trusts as an instrument do not. An income trust organization does not pay tax at the so-called corporate level. The earnings are distributed to the investors. It is the investors who pay tax on the full amount at their own personal rate. Someone who already makes an awful lot of money is paying 47% on every distribution from an income trust. There is no corporation that is paying 47% tax to compare it to, so I do not know how the government ever figured this out. In fact, I would bet that the finance minister does not even know how it was figured out, because he could not even explain to the finance committee how he did it.
With regard to the finance minister's presentation, he showed a nice little chart that looked like a kindergarten chart and concluded that there was $500 million of tax leakage in 2006. Over six years, that would be $3 billion; if we multiply that one year by six, we get $3 billion. This is a terrible amount of money that we are losing on tax leakage.
The finance minister was the first to speak. All the people who spoke with him, the people the Conservatives brought in to pat him on the back, were all going on the basis of the information provided by the finance minister himself. However, on the second day, there were witnesses who wanted to bring another perspective to this.
The Canadian Association of Income Trust Investors, CAITI, was there, but there was one I really liked because it raised a very important challenge for all members of Parliament. That was HDR/HLB Decision. Its representatives came before us and said they had worked with the finance department step by step on all of the factors that one would take into account to determine what the leakage was or was not, but they found that there were three or four areas in which the government did something a little different.
Number one was that Parliament passed some legislative changes for tax law effective in 2007 and related to corporate taxation. The finance minister did not include those tax changes in his computations. The calculation is therefore wrong. The finance minister simply should have said that he made a mistake and that he should have incorporated the legislative tax changes in the determination of the tax leakage. Did he do that? No. He is still saying the same stuff. He is denying it. He will not admit it. He is not believable and he is not truthful on these matters.
The Auditor General says we need to have true, full and plain disclosure. We need to have openness so that we can debate these things honestly and make decisions based on information. The finance minister is playing some game with the House. Those are facts. They are not even debatable. This is objectively determinable. Legislative tax changes were not included in his calculation. He made an error. He should admit it and he should change it, but he did not and he will not and the Conservatives are trying to shut down debate because they do not want us to talk about it any more.
The last time I raised this in the House the finance minister was in his place and started to yell at me. He started to shout me down. He wanted me to shut up. That is not the way this place operates. If the finance minister is agitated by the truth, I am sorry, but he should also say that he is sorry for making calculations based on incorrect information.
What else did HDR/HLB bring out? It said the finance department does not include any tax revenue from income trust distributions where the holder of the income trust is a pension plan, an RRSP or a RRIF, a registered retirement income fund. The reason is that when an income trust makes a distribution to a person in a registered retirement savings plan or a pension plan, there are no taxes paid immediately. They are payable only when the money ultimately comes out and passes on to the investor. Thus, the government excluded any revenue component whatsoever with regard to distributions of income trusts to pension plans.
If we take that to its logical extreme, we would say that if every income trust was owned by a pension plan, the Government of Canada, according to the finance minister, receives zero revenue. He never receives a penny from day one to infinity. That is ludicrous. Obviously the money eventually comes. That has to be taken into account and the government did not.
At the finance committee meeting, members would have seen another chart by the minister in which he actually stated that the effective taxation rate of corporate energy companies was 6.2%. In the calculations, the government assumed that it was at the full corporate rate. It did not take into account all of the other machinations by which corporations that are capital spenders, et cetera, can defer taxes on all these other things. There is one other point, which I have forgotten. I think it had to do with exempt investors.
Those are three or four very good examples of where the finance minister's calculation of the tax leakage was erroneous or absolutely had false assumptions. As a consequence, I would say, because I want to finish now to make sure that the member for Scarborough—Rouge River gets his opportunity, that in regard to the income trust thing, I believe the government has made a very serious mistake. Two and a half million Canadians, most of them seniors, have lost $25 billion of their hard-earned savings for retirement.
There is another way to do it. The Liberals have proposed a 10% tax refundable to Canadians so that ultimately the tax is only paid by foreign investors, which is where the major leakage actually occurs and which the finance minister also denies.
I cannot believe this. We need the Auditor General to do a full enquiry into the lack of information and what the truth is with regard to income trusts so that parliamentarians can make the best decision possible.
