Mr. Speaker, as I remember, the very first bill I spoke to in this House have barely two pages long and contained but five clauses.
Today, we have a bill 177 pages long containing no less than 139 clauses. Of course, we are dealing in this case with the Income Tax Act; that makes a big difference. This goes to show how complex this act is and how hard it is to find one's way through.
I will tell you this is a very technical document, a very technical bill indeed. I will spare you the details, naturally, so as to not to bore you with technicalities, but I would like to say a few words about the process before going any further.
You know, there is always a risk associated with these omnibus bills where many subjects are dealt with at the same time. One gets the impression that a tiny clause, but one with tremendous impact could be hidden in a mass of provisions which are, on the whole, positive. It is like looking for a needle in a haystack and this is to some extent the viewpoint from which I have looked at this bill, especially considering it was initially sent almost at the last minute, leaving us very little time to work on it.
Officials from the Department of Finance did come and explain it to us, but just the same, I got the impression things were going very fast. Furthermore, this is a bill originating for a large part from the previous government, with the exception of the last part concerning research and development and the definition of qualified expenditure.
As for the rest of the measures, they had all been put in place by the former government but not yet translated into legislation. That is always somewhat of a problem of course, because the people who were in charge of analyzing and criticizing the bill at the time are now sitting on the government side. Often, after an election, the members who sit on the opposition side are not the ones who sat there when measures were introduced in the previous Parliament. This is the case in this instance.
Some thought should be given to this process so that, when a Parliament is dissolved and an election is held, legislation like this is not left pending, even if, in all probability, it were to mean rushing the department to put into legal terms the effects of these measures or the latest budget. I think that there would be a way to improve the work of Parliament or in any case to make it a lot easier, to make it unnecessary for the government to pass the former government's bills and for the opposition to criticize measures which already apply anyway but are being made legal.
I would like to say a few words about the Tax Act in general; it is extremely complex. Often the people whom we want to help with changes to the Tax Act are hardly able to benefit from them because they are unaware of their existence. Often, the effects are weakened by other measures as well.
Over time, the Tax Act becomes more and more complex and cumbersome. When we amend it, we should look at all the other sections, what should be changed as a result, and we end up with total confusion. Besides that, business people now have to deal with an increasingly burdensome tax as well, the goods and services tax which imposes a very heavy administrative burden with very complex regulations. This is hardly the way to stimulate entrepreneurship, and in fact, these measures have the reverse effect, because they just make it harder to understand all these mechanisms.
Of course, the people at the Department of National Revenue are experts in this field. The people at the Department of Finance work with these concepts every day. However, I think we should remember that people who are starting a business will have to spend a lot of time promoting their product and making their business a success. This is all very complex for these people. Of course they do consult tax experts and accountants, but why should it all be so complicated.
Even when they consult these accountants and tax experts, they keep coming to our offices for clarification or for an interpretation of the act. They end up filing an appeal with the Tax Court of Canada, and the number of cases is increasing, which goes to show that the process is far too complex.
Since the beginning of this Parliament and even since the Bloc was formed, we have been asking for a thorough tax reform, which is in everyone's interest. It would also involve simplifying the Income Tax Act. I think that a review of our tax system would necessarily mean simplifying the content of this legislation. Unfortunately, what we have here is merely a set of technical amendments, and there is an obvious reluctance to deal with the substance of the legislation.
However, when I look at these 139 sections and 177 pages, it would not have taken much to do a thorough review. If we have to look at so many sections, why not look at them all? This could be done by a group of parliamentarians through existing committees or through a special committee. I am convinced that all parties in this House would be willing to appoint members to make a detailed study. It would prevent a lot of problems.
Everything in society operates on the basis of social contracts. These are not written documents but the way we have agreed to operate as a society. The government spends money according to the options chosen by taxpayers and voters, and in so doing intervenes in the economy to prevent problems that might be
generated by a free economy operating without reference to a moral authority. So the government spends certain sums of money. It provides for individual insurance mechanisms. It maintains a defence force and does a lot of other things.
So there are a certain number of expenditures are necessary, but to make those expenditures, the government must first get the money. And today, this is becoming an increasingly serious problem. First of all, as far as spending is concerned, people are increasingly getting the impression that governments and their elected representatives do not necessarily spend money wisely, and that a lot of money is wasted. Consequently, this makes them highly suspicious about what they contribute to cover these expenditures. They know full well that they are the ones who are picking up the tab.
The numbers involved here are staggering. This year, the government has brought in a budget of roughly $160 billion and is projecting revenues of $120 billion. Despite these $120 billion, we are still $40 million short of a balanced budget. This shortfall could be made up with additional revenues resulting from the reduction of certain expenditures.
It is extremely difficult to raise $120 billion in revenues when people have no confidence in the way this money is spent. People wonder if they are paying their fair share and whether some are paying more than others. Often, when analyses are conducted, the figures prove that this is the case. On examining the taxes paid by individuals and corporations from 1981 to 1991, we see a trend emerging, namely that corporations are paying less tax while individuals are paying more.
We hear it said every day. Everyone agrees that the middle class is being squeezed more and more. These are not merely words, the figures bear it out. We do not have to wait 10 or 20 years for even more sophisticated analyses to tell us that the 1980s were disastrous in terms of the redistribution of wealth. We have the figures right now to show that this was in fact the case. We must wake up to the truth that there is a great deal wrong with our taxation system. Instead of merely making minor technical adjustments to the Income Tax Act, the government should completely review the legislation. We have said as much from the beginning and we are prepared to co-operate in an exercise of this nature.
Obviously, there are a number of proposals that we can make during the budget consultation process this fall. But again, hearings will be held, many groups will give testimony on various matters and it will be difficult to focus as much as we would want on the Income Tax Act per se, on tax measures and expenditures.
When examining government expenditures, we must also look at tax expenditures. This is often overlooked. We examine government expenditures, we look at what is spent on defence and other areas but very little at what we give out in terms of tax credits, that is our tax expenditures.
Recently, I read a Department of National Revenue publication on tax expenditures. In many cases data is said to be unavailable and often information is aggregated or put together in a way that makes it extremely difficult to scrutinize. But before compiling it, information must first be gathered. For the sake of transparency, seeing that this government promised to be transparent during this Parliament, it would be interesting to examine tax expenditures in greater detail, to have more information available on the subject.
Of course, time must always be allowed for compilation. That is understandable, but there is no reason not to carry out serious analyses using as base year the previous year or even an earlier one.
So, as I said earlier, the way revenues are collected and spent, this social contract is crumbling, which causes a perception problem with regard to these revenues.
If we look around us in our daily lives, we can see that people feel justified, I would even say perfectly justified for the most part, to make unrecorded transactions. Take the construction industry for example, the home renovation sector and others as well, the service sector in general and, more and more, the products sector where illegal transactions are supposedly more difficult. It is becoming more and more commonplace because people tell themselves: "That money is misused, wasted anyway. I am paying more than my fair share. Why should I make the deliberate effort of giving all that money to people who squander it?"
Perceptions can sometimes be correct, but they can also be false. To clarify the situation, the relevant information should be made available. We should tell people a little more about how we collect these revenues, how we want to proceed and how we will correct deficiencies in the current system. But not a word on the whole tax system has been said since the election. A few principles are outlined in the red book but there is little else.
Because of this revenue problem, we see that we have a growing underground economy. Of course, depending on who does the analysis, whether at Statistics Canada, at a tax summit or somewhere else, experts cannot agree on an exact figure, on the percentage of the economy that is underground. But they all agree that it is a growing phenomenon. The most optimistic analysts say that the underground economy represents at least 2.5 per cent of our economic activity level, while the most pessimistic put that figure at 15 to 20 per cent.
Even if we take a figure in between, the lost revenues are still enormous. That is why we should tackle this problem seriously and with determination, of course, because it is quite an endeavour. We cannot afford a commission on taxation that will take five years to analyze the problems of five years ago, since its report would already be out of date because of all the things that happened in the meantime.
Basic principles on tax reform have been established and analyzed in the past; they are still valid except that we would, of course, have to improve some technicalities behind all this.
A few cases in point, Mr. Speaker. We have long said that family trusts that shelter large amounts from the tax man must be looked at very closely. I do not want to get into details because we will have the opportunity to debate family trusts in the finance committee in the fall, or we will at least look at this issue. In the meantime, it would be interesting to have the information. We are far from certain that the information required for a good debate will be available. It will be, once again, very difficult. We will argue and disagree on figures because they will not be available or because they will not be provided far enough in advance.
As I know that the parliamentary secretary to the Minister of Finance is listening to me, I would like to ask him to supply us with data from the family trust study. How much did they cost? How much do they represent in lost or deferred taxes in the future for the government? It would be interesting to know these things.
A real minimum tax on corporations has also been talked about for a long time. I remember asking the question to the Minister of Finance in this House and he told me that it already existed and that, if there was no minimum tax, he would be happy to introduce one. Upon checking, I learned that it is not so simple.
The minimum tax is on capital. It can seem like a minimum tax except that there are all sorts of ways to reduce it or cancel it so that it is almost zero or even zero. There goes the concept of minimum tax then. Also, it applies only to those with assets or capital investment of $10 million or more. What happens to those who do not have that much in assets but who do a considerable amount of business?
We could mention medium-sized businesses in general or big businesses with less in assets. This is an interesting problem to explore if we want to have a minimum tax. You do not have to be on the far left to advocate it. The Americans under Mr. Reagan had a minimum corporate tax after a commission investigated it; Mr. Reagan is not known as the greatest socialist in American history, but he decided to bring in a minimum corporate tax.
Turning to the bill itself, I would like to tell you that we have no major objections because some of the measures are already in effect, as for registered savings plans, for example, in order to improve what already existed or to correct deficiencies in the law. There are some more substantial things, but they are mainly very technical improvements to the Tax Act and measures to protect the department from misinterpretations of tax law.
We will give our consent, we will endorse this bill, while reminding that we would like to take a much more thorough look at the whole tax system; tax measures should be considered sooner and care should be taken so that legislation is not passed from one Parliament to another or one session to another and slow to come before Parliament. It should be possible to have debates that are more current, in line with the new government's concern for openness and efficiency.
I conclude by saying that we will support Bill C-27. We still insist that the department, the minister and the government review the whole tax system and the whole Tax Act in order to improve substantially what already exists and restore confidence in the way revenue is collected from taxpayers.
