The addition is 110 pages. It is amazing. The vast majority of individual Canadians should be able to confidently prepare and file their personal income tax returns without the services of tax consultants. Tax consultants should be busy calculating taxes on profits, not companies going into receivership.
Requirements of a simple and fair income tax system are one flat rate of tax, one personal exemption amount per individual, the same deductions for all individuals and corporations, and a clear understanding of the definition of income. A simplified tax system also allows lower income individuals to claim a personal exemption to avoid taxes on a basic living income. An individual's income is much easier to track than an individual's expenditures.
I would suggest that a proportional tax on income is the most acceptable tax model for Canada. It is a flat tax model that would be ideal for provincial and municipal governments, although I am aware that the federal government cannot and should not force provinces and municipalities to adopt any particular tax policies.
What I mean is that the government determines where it should spend the money, what programs Canadians want and need and how much is required to deliver services. In the process it has to be evaluated which government can better deliver a service. As some of the services are pushed down to lower levels of government and are within provincial jurisdiction, they are given the same points in taxation to raise the money for services because the federal government will no longer need them.
That is how the system would work. That is how we could clean up the current Income Tax Act. That is what I mean by taking out income taxes as the driving vehicle for economic and social development and social policy.
I call our version of the flat tax a proportional tax versus a flat tax or a single tax because it would be calculated in proportion to family size, income and therefore according to the ability to pay. I will explain that a little further on when I get into a sample of a single page tax return that I know members would look forward to filling out one day in the near future.
There is considerable logic to adopting a taxation system that can be efficiently administered. The calculation of income would utilize generally accepted accounting principles without special rules specified by government.
This proposal defines income to be productive income from employment, business and investments, including interest income, capital gains, pensions and dividends. It also allows immediate deduction of capital acquisitions in the year of purchase but would not tax capital gains on an individual's primary personal residence due to many economic variables over a long period of time.
Let me review two tax forms that I believe would improve our international competitive advantage if we adopted them within two years. I am borrowing some of these points from the member for Broadview-Greenwood, but it is very critical at this point to get a handle on excessive spending by governments, have more efficient and effective spending by governments, determine which levels of government should be raising and spending that money for delivery of services to the people, determine which crown corporations should be privatized and which ones are better administered and run by the private sector versus the public sector. I cannot be told that all 380-plus crown corporations are better in the hands of government bureaucracy.
I recommend that over 90 per cent of them are better off in the hands of the private sector.
Yes, there are some businesses and corporations that should be administered by the crown and we should retain them, but we should have a review of which crown corporations should stay in government hands and which ones should go to the private sector.
By deciding which level of government should deliver a service we have removed the need to raise x amount of funds for the federal government. By privatizing we eliminate the need of direct subsidies to crown corporations and businesses of $2.2 billion. That is another saving.
Another aspect is the process of doing a government review of government programs. No standing committee that I know of reviewing the prior year's spendings on the main estimates talked about a sunset clause. We do not have a habit of doing that in the House.
Very few programs expire on a certain date; they go on ad infinitum. In many cases cabinet ministers, ministers of the crown who are currently trying to do the job that they were elected to do a year ago, are in no way, shape or form in control of the purse strings. Money is being spent by administration, by the departments, that they only find out about if it hits the newspapers or if opposition parties point out the misspending of moneys. That just proves my point that we hold cabinet ministers accountable but in effect they are not the ones who are spending the money.
This has to be fixed and we are trying to tell the government how to fix it. We are trying to point it out to the government, yet somehow it refuses to listen to us and ends up embarrassing itself. It knows full well that it is not in charge of these funds in all cases.
Let us get back to the proportional tax system and what a flat tax would be like. It would be one page in length. It would be one side only. The other side would be blank so it could be folded and mailed like that. It would have employment income; investment income which includes interest, dividends, capital gains and rental income; and any other income which includes UI benefits, pensions, old age security payments, alimony, child support payments and foreign income. That would be all the areas of income that would be defined. The key principle under income is that a buck is a buck. All personal income generated in any form should be taxed with no special treatment for various forms of income.
From this income would be deducted, for example, the personal exemption. Everybody would have a personal exemption of $12,000 to generate income; a spousal income of $6,000 less the spouse's income; a child care deduction of $5,000 up to age 7 and $3,000 between ages 7 and 14. RRSP contributions would be deductible but the maximum would be $6,000, not the current $13,500. That would tax higher income people. They would not be able to find loopholes to reduce their taxable income.
This tax form is geared toward the middle income which comprises the majority of Canadians. This taxation system would help them. It is a taxation system geared to help people who make between $45,000 and $65,000 per year so they can raise families, look after their homes, look after their spouses and look after themselves.
There would be an age deduction of about $2,000 for 65 years of age and over. If foreign income is declared, any foreign tax paid would be offset. Other mandatory deductions would be UIC premiums, CPP contributions and any alimony or child support payments.
The deductions I have gone through on a personal tax form are at levels the middle class can afford. It would result in more tax being extracted from the wealthy than is now the case and would leave more disposable income in the hands of taxpayers.