Good morning. Thank you for inviting us to share our views on the directions in the upcoming federal budget.
I will start by briefly introducing our organization. The Union des consommateurs is a federation made up of several family economics cooperative associations (ACEF), which are spread across Quebec and which give financial advice to people who have trouble making ends meet. So those people go to the associations to find out how to consolidate their budgets. The associations felt the need to create a federation in order to be able to handle files across the province, especially in terms of social and tax policies, in order to help Quebec consumers maintain a decent standard of living.
What brings me here today? You identified a number of issues in the instructions on how to write the brief. Our presentation will focus on the first issue. To achieve a sustained economic recovery, we believe it is important to put efforts into one priority: combatting inequality and poverty. Don't be surprised if this is where you find me.
We believe that the costs associated with poverty are enormous and, if nothing is done to improve the living conditions of people with low incomes, the human and financial consequences will only become more severe and harm all social and economic sectors. So this is of great importance to us.
We see that the most prosperous societies at the moment are those that have succeeded in reducing income disparities between their wealthiest and poorest taxpayers to the extent possible. In our view, effective redistribution of wealth is of paramount importance.
It seems to us that Canada is moving farther and farther away from that formula. The Conference Board released a study this summer, indicating that Canada came fourth among the 215 countries that were assessed based on the increase in income inequality. We believe this is a major setback since, not too long ago, we were able to boast about being one of the most egalitarian countries in the world.
We are very concerned about the record levels of debt among members of the public observed in recent years. We see this as the evidence that Canadians are finding it increasingly difficult to make ends meet without using some form of credit, in particular because of wage stagnation over the last 25 years.
We make the following recommendations. In order to guarantee a sustained economic recovery, we need to accomplish three things. First, access to employment insurance benefits should be improved so that more than half of the unemployed can be eligible. At the moment, less than half of the unemployed have access to employment insurance. Second, we recommend that existing social program funding, legislation and transfers be maintained. Third, we have to take action against the fierce tax competition currently underway at the international level, which is pushing Canada down the tax base list.
In terms of social program funding, legislation and transfers, a number of things are important to us, including maintaining the Canada Social Transfer. We also think it is very important to refrain from changing the Canada Health Act and anything related to taxes. So we need to try and make the taxation system more progressive. We now only have three tax brackets in Canada; the U.S. has six. We know that the more brackets there are, the less of the tax burden the middle class has to bear.
We have recently read in the papers that the government is toying with the idea of lowering corporate taxes even further in order to allow businesses to deduct the losses of their subsidiaries. That seems to us to be the wrong path to take, given that the Harper government has dropped the corporate tax rate on profits to 19% in 2008 and it is soon going to lower it to 15%.