Madam Speaker, I rise today on behalf of the Reform Party to address Bill S-2 which in essence establishes conventions between Canada and a number of other countries so as to prevent income tax evasion and double taxation of workers from Canada, Hungary, Nigeria, Zimbabwe, Argentina and the Netherlands while working abroad in these countries.
After listening to the hon. member for the Bloc Quebecois who just delivered his comments, perhaps a lot of us will be looking at how to enter into an arrangement with the Barbados and making a deal there since its taxation system is so favourable.
My party supports Bill S-2 but would like to point out to members in both Houses, this House and the other place, that there are millions of Canadians who do not work abroad who could surely use a break from the high taxes they are forced to pay at the federal, provincial and municipal levels. Implementing tax conventions between Canada and countries like Hungary is noble, but what about implementing similar conventions between federal, provincial and municipal levels of government within our own borders, ensuring that the Canadian taxpayer is not overburdened with double taxation?
For instance, the agreement between Hungary and Canada is 20 pages thick. I read it because my parents are Hungarian, I speak Hungarian, and I have a bit of a vested interest in Hungary and what happens there. If the principles in this agreement between Canada and Hungary were looked at and reviewed by this Liberal government, and it tried to negotiate and apply some of these principles with the provincial governments, what it would gain from that are the principles that would lead to removal of some of the interprovincial barriers to trade. That could save the country, our country, our economy and our taxpayers. The cost of doing business could be reduced by $4 billion to $5 billion.
One of the most common complaints about the goods and services tax that has been raised in finance meetings is the fact that when people purchase goods they are hit with a provincial sales tax of between 8 and 12 per cent and a GST of 7 per cent. In the eyes of most Canadians, this is seen as a double hit on their pocketbooks and has encouraged them to take billions of dollars in taxable revenue underground.
At a meeting in Vancouver either yesterday or today there is a presentation on the underground economy and the value of it. Why does one exist? It exists because this House and this government is continuing the practices of tax and spend and has not addressed the real issue of reduced spending, spending cuts, putting the money back into the taxpayers' hands so people would be willing to pay taxes on an equitable and fair basis and not go into the underground economy. It is becoming too expensive to be honest in this country. Even the finance minister has acknowledged that fact.
In the eyes of most Canadians the double taxation system with sales taxes, hidden taxes and income taxes is more than a double hit on their pocketbooks. It is a triple, quadruple whammy and it has encouraged them, as I said earlier, to deal in ways that they can save money.
According to Canadian Business magazine: ``Canada now enjoys the dubious distinction of imposing one of the highest taxation rates among the group of seven industrialized countries''.
I hope the government does not follow the practices of the previous Conservative government of always quoting the group of seven nations and how the United Nations said that this country is number one. We are no longer number one in anything except high spending on a per capita basis.
When will the government wake up and realize that the present system of tax and spend will no longer be tolerated by investors, lenders and consumers?
One of my constituents wrote in reply to a questionnaire that I sent out: "Only the federal government could find ways to make people pay for the privilege of living more simply and moderately".
For too long governments have forced people to live within their means and exercise fiscal restraint while politicians have lived in the world of guaranteed pensions and expensive junkets. While many Canadians are sitting around the kitchen table planning a budget, deciding what they need versus what they want, members of Parliament have travelled the globe, costing taxpayers millions of dollars. Parliamentary committees travel the country, justified on the basis that they are consulting with the people.
The cost of all these committee travels, combined with the junkets, is not in the millions of dollars, it is over a billion dollars. Yet the government will not look at ways and means of saving the taxpayers' money and getting input from taxpayers through householders or through visiting their constituencies every once in a while and finding out what they want.
It takes the Clerk of the House to look at ways and means of saving money for committees. It is a noble effort on the Clerk's part and the government should be looking and encouraging more effort on that basis.
How many trips have there been by members of Parliament, their spouses and their aides to Hungary, Nigeria, the Netherlands, Argentina, or Zimbabwe to hammer out the particulars of S-2?
I was invited to go to Hungary as a parliamentarian. I speak Hungarian. It would have been a wonderful opportunity to visit the country where I was born, but I turned it down. I turned it down because there was nothing to be gained there. There is more to be gained here. If they want to do a deal with us they can come here.
By doing that I hope I have sent the message that we will co-operate with other countries but we have problems to solve at home without trying to solve other people's problems for them. They have a responsibility to work on that themselves, including Hungarians.
Bill S-2 is largely a housekeeping bill. The federal government should consider housekeeping measures in our income tax system. It should stop dusting around the edges. I encourage
government members to take their gloves off and start throwing things out, such as unnecessary programs.
The Liberals should start by throwing out the Income Tax Act with its over 2,500 pages. They should develop a new proportional simple tax based on equity and understanding. It should be geared to family size, the amount of income and the family's ability to pay taxes on that income.
It is our high taxation level that is responsible for people fleeing to countries like those mentioned in Bill S-2. That is why the government is forced to draw up these conventions.
We have a system of overseas tax credits. People who work outside Canada for extended periods it is believed ought not to pay full taxes since they do not consume their full share of government services. That virtually eliminates tax on 80 per cent of their total income if they have been out of the country for six months.
On that basis an engineer making $70,000 would barely pay $7,000 whereas that engineer working at home would pay $23,000. When I questioned a certified accountant in my riding of Calgary Centre he told me about this and that it is a huge incentive. It makes it worthwhile for people to leave their families and work in Russia or Hungary for half the year to make this extra income.
The nature of this bill is technical and serves to provide a better understanding between Canada and foreign countries. Let me leave the government with some constructive questions that arise out of reviewing this bill, which I hope will lead to some improvements for Canada.
Bill S-2 is a good first step. But why are we only signing on with the countries mentioned in the bill and not some of the emerging markets we will be trading with in the future?
The reason for these conventions is that tax evasion exists in Canada due to our comparatively high level of taxation. Is the government willing to prevent this problem from occurring by bringing our tax level in line with other countries?
Is it realistic to expect these conventions to be workable when Canada's tax system is considerably more complicated than the countries we are signing conventions with?
Is our high taxation level responsible for people fleeing to these countries and is that why we need these conventions? My answer to that is yes.
In conclusion, it is Canada's high tax burden which must be addressed in order to attract investment in Canada and have a positive net cash flow of foreign investments to add to our gross national product.