Mr. Speaker, as we approach this year's tabling of the budget the government is faced with a tremendous debt which has surpassed half a trillion dollars and a record deficit of nearly $46 billion. Given the magnitude of these numbers this government's fiscal and budgetary policies will impact many generations to come.
In the words of Mr. Leonard Cohen, we have a wonderful opportunity to steer this ship of state to the shores of need past the reefs of greed. It will take wisdom, courage and firm resolve to steer a course which will benefit Canada and be equitable to all Canadians.
Before going any further, I would like to congratulate the Minister of Finance for his pre-budget consultations with Canadians representing various views as well as with the members of this House. If we are to steer Canada in a new direction, we will need the support of all Canadians.
Over the past few years we have been told by some economists, bankers and business leaders that we can no longer afford the quality of life Canada has attained. This may be true. But should Canada abandon its commitment to its social programs, programs which are the envy of the world? Is our fiscal deficit the result of our aspiration to be a just and compassionate society? I think not.
I believe that by fine tuning and adjusting social programs, by plugging tax loopholes and by creating and maintaining incentives for all Canadians to work and contribute to our economy we will increase revenues and address the deficit and the debt.
I said earlier in this House that I believe we have a revenue crisis and not a spending crisis. A symptom that this is a revenue crisis is the way Canadians perceive Canada's tax system.
There is an unprecedented lack of trust in our tax policies among Canadians, as reflected by the increase in popularity of the underground economy, and particularly cigarette smuggling, following the introduction of the GST. If we want the Canadian people to obey the law, they have to be convinced that these laws are fair and equitable.
Patrick Grady's 1992 study clearly demonstrates that the tax burden has not been shared fairly in the past decade. Lower middle income families have borne the brunt of tax increases. An average Canadian family earning between $45,000 and $75,000 has had to pay an average of $1,900 more in taxes than they did a decade ago. However, the amount of tax increases paid by income earners making $150,000 or more has been $3,782. According to the author, this amount is much less in proportion to the middle income Canadians.
It is important to compare the proportion of taxes paid by individuals and corporations. Personal income tax is the biggest source of federal revenue, accounting for almost 50 per cent of total revenue. This proportion is bigger today than in the last two decades.
Meanwhile, corporate taxes are at their lowest level ever. They now account for 7 per cent of federal revenue compared with about 15 per cent in the 1970s.
While personal tax levels have kept growing in the last ten years, corporate levels have fallen from 36 to 28 per cent.
We must also examine the tax exemptions and deductions available to these corporations and wealthy Canadians. There exist loopholes associated with off-shore affiliates of Canadian companies, the family trust rules, deductions of limited partnership losses and non-taxation of lottery and gambling winnings.
Business people are allowed to claim 80 per cent of the cost of entertainment and meals. If this were reduced to 50 per cent, business would still receive a tax deduction. In addition, restaurant, hotel and resort businesses would continue to receive the revenue generated by these deductions.
There have been suggestions that this budget should reduce the amount of RRSP contributions. I do not support this proposal because I feel it would be a disincentive to the self-employed small business persons and professionals. These are the people who will provide the jobs called for in our election platform.
Also we hear that the Canada pension fund as is presently structured may not be able to provide for the retirement needs of Canadians. Therefore it makes little sense to restrict Canadians' ability to provide for their own retirement. We must also remember that the RRSP contributions are only tax deferrals and not complete tax avoidance.
I have already written to the finance minister asking him to extend the RRSP home buyers plan. The program has been very successful in enabling first time buyers to purchase a home that they otherwise would be unable to acquire. The RRSP home buyers plan has had and would continue to have a tremendous affect on our country's economic renewal. We must take into account that the immediate costs incurred by the federal government for this program will undoubtedly be offset in the long term.
I have cited some examples of revenue losses which must be corrected to bring fairness to our system. However we must also recognize that government can and must operate more efficiently in delivering services. The Auditor General's recent report underscores the need to evaluate every department and program. This should be done to fetter out unnecessary spending and waste while maintaining the integrity of these programs.
Simcoe North constituents tell me they want changes to our tax system and a full review of our social programs without a reduction in the quality of services.
I think this government has recognized that the problem lies with our tax system and that our social programs must be renewed. I am happy to know that the government will take action.
The throne speech clearly stated that our priority must be job creation. This approach is essential if we are to put our fiscal affairs in order and successfully bring the deficit down to an acceptable level. By putting people back to work we will not only save on unemployment insurance and welfare but also broaden our tax base.
In conclusion let me summarize what I suggest we need and what we do not need. We need to remember that job creation is this government's number one priority. We need more people paying taxes and not people paying more taxes. We need plans and incentives for those currently unemployed to gain meaningful employment. We need to examine the privileges and tax loopholes currently enjoyed by the wealthy while maintaining incentives for business to remain competitive and provide employment. We need to remember that our social programs require constructive reassessment to make them realistic and responsive to those in need.
We do not need a slash and burn approach that would ultimately deny social services to the poorest and most needy citizens in this country. We do not need reactionary simplistic solutions to complex problems. We do not need to abandon our liberal roots of tolerance, fairness and compassion by reacting in a knee-jerk fashion to neo-Conservative agendas.
I know we can bring in a budget that will promote wise and careful spending while increasing revenues by broadening the tax base to include Canadians moved from the ranks of the unemployed to employment.