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House of Commons Hansard #62 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was taxes.

Topics

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12:40 p.m.

Liberal

Dennis Mills Liberal Broadview—Greenwood, ON

Madam Speaker, I want to begin by saying to the member that in no way, shape or form did I mean to cast aspersions on the people who are generating great personal wealth in this country. Neither did I want to say that they were not paying tax through illegal means.

The bottom line is that there are opportunities that exist for tax deductions or tax options within the tax act that would allow a person with great wealth to reduce that income tax payable.

I am not going to get into any specifics today, but I did give an example in a recent householder. I will give the one example that was actually advertised in a magazine a couple of months ago: "Now your income tax dollars can help you invest in a beautiful home in the sun". I am sure members remember that ad: "This investment opportunity is designed to be of maximum tax benefit to individuals like you with a total family income of over $50,000 per year, Intelevest Group. You can either redirect your income tax dollars to help you invest in luxurious townhouses in beautiful Sarasota or you can continue to send all that hard earned money to the government in income taxes".

In other words, this is an example of how the tax preferences discriminate against those with lower income tax. In other words, you would have to be over that amount. It allows a higher income earner to use his higher income to participate in this luxury townhouse rental income at an after tax cost of zero. That is one specific example but there are many others.

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12:40 p.m.

Reform

Philip Mayfield Reform Cariboo—Chilcotin, BC

Madam Speaker, I would like to compliment the hon. member for Broadview-Greenwood for his statement, his intervention. I appreciate very much the way he has laid it out, citing simplicity, fairness and efficiency.

As I was listening I realized that he talks about the doability of it as well. I am pleased to hear the practical thoughts he has. This Parliament is not the first Parliament to take a run at tax reform. Names like Carter and Macdonald are well known in this exercise. As I have read about these other attempts there has always been the story of the obstacles that have been placed in the way of simplifying the tax system and of reforming it.

I was wanting to ask if the hon. member would perhaps outline some of the obstacles to tax reform. Who are the vested interests that resist reforming the tax system so that it may pass the test of simplicity, fairness and efficiency so that it is a doable tax system?

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12:40 p.m.

Liberal

Dennis Mills Liberal Broadview—Greenwood, ON

Madam Speaker, I would like to deal with the question in two parts.

First, naturally there are people who have thought for years, on behalf of industry, to put their tax preference or their tax loophole or their tax break, whatever you want to call it, into the tax act. Those people who have fought for years and worked over the Department of Finance for their special privilege are defenders of the status quo. They believe in that with the same passion as the member would believe in his particular approach.

However, I am going to say that the biggest obstacle to tax reform in my mind are the people of Canada. The people of Canada are not interested in tax reform. They talk about it a lot and I know we talk about it. I am somebody who has worked on the issue for five years, but when push comes to shove it is not the kind of issue that makes people roll up their sleeves and get turned on about. I know there are tax groups out there that band together and rally from time to time. In relation to the whole, Canadians at large, they are a very small number.

In fairness to the member, my biggest frustration with the issue of tax reform in the last five years-and my party has been supportive of the issue-is that we cannot seem to get the people of Canada charged up and asking for tax reform. They have little

moments or little flutters when they call about it, but there is no real thrust from the people.

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12:45 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Madam Speaker, I will be very brief. I compliment the hon. member for Broadview-Greenwood on all the work he has done for the last four or five years. We would like that to snowball and not have to wait another three or four years before something happens.

In defence of his simple, fair and efficient tax system, whether we call it a flat tax, a single tax or proportional tax, how many more years is he willing to wait before his government supports or rejects the proposal?

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12:45 p.m.

Liberal

Dennis Mills Liberal Broadview—Greenwood, ON

They are playing hardball with me today, Madam Speaker.

First let me be very specific. I have always said that the single tax is an effort to advance the tax reform debate in a constructive, open way. If there are better ideas out there than the single tax, I welcome them. In other words if it is proportional tax or if the men and women of the finance committee come up with some new tax design that is better than the single tax, as good as or whatever, I am for it. I do not want to be in a position-and the Prime Minister has said he does not want to be in that position either-of defending the status quo. He said it again yesterday.

We must understand that it is most important not to make the same mistake the Conservatives made. They came in so quickly with this GST that they fractured and tax shocked the people of Canada. That set us back 10 years.

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12:45 p.m.

Reform

Jim Abbott Reform Kootenay East, BC

Madam Speaker, my topic as it relates to the subject today is that Canada is an exporting nation. Our livelihood, our personal incomes depend on exports. Our present tax system must be altered to maintain our international competitiveness because our national economy depends on it.

On January 27 I rose and spoke in the House. If I may I would like to repeat a small part of what I said then. It was interesting that in a recent news article in the Kimberley Bulletin a headline read: Cominco irked at city tax rate''. The complaint of the mining company was that the major industrial tax rate in Kimberley was 69 per cent higher than the tax rate in Cranbrook. In justifying the position of the city, the mayor of Kimberley argued that Cominco taxes were high but said that the tax rate was justified. He said that the mining company has had it easy on taxes because it did not start paying taxes until 1968 when Cominco was incorporated into the city limits. The mayor said:That is when Cominco started shutting down plants and laying off people''.

I am not criticizing the mayor of Kimberley for his comments. I simply cite that quotation as an accurate representation of what happens when an industry is taxed. The fact is that when taxes go up jobs in an industry decrease.

Capital for mining is fleeing Canada. The country of Chile is one of the greatest beneficiaries of this flight. It has an effective tax rate of 15 per cent. Countries like Mexico and Papua, New Guinea have a mining tax rate of 35 per cent. The Philippines and even the United States have a tax rate on mining companies of 38 per cent, whereas the mining companies in the province of British Columbia suffer a mining income tax rate of 50 per cent for hard rock mining. In coal mining, although it is hard to believe, in four years between 1987 and 1991 the B.C. coal industry paid $454 million or almost half a billion in direct taxes while net returns to the industry were only $8 million. I say taxes kill jobs.

I am a member of the standing committee on the environment of the House of Commons. We are concerned, as we should be, about carbon dioxide emissions. The objective is to return CO2 emissions to 1990 levels by the year 2000. I support that objective. However we must recognize doing that, particularly if we do it by taxation, will have a very detrimental effect on the electric power industry in Alberta.

I represent British Columbia and I have Canada's largest coal mine in my constituency. Therefore I am very concerned about the informal discussion there has been about green tax and about carbon tax. If we use taxation to alter behaviour then we kill our ability to be internationally competitive.

If we want to change behaviour I suggest we may choose to institute penalties. We may choose to institute levies. We may choose to institute fines but they should be considered to be as revenue neutral as possible. In other words taxation is for the purpose of raising revenue. If we manage through green taxes and carbon taxes to alter behaviour, having altered the behaviour we lose the revenue. It is totally contrary and totally counterproductive.

Most of my constituents and perhaps a lot of constituents of members of the House suffer from the same problem and the same concern about the overlapping of all the levies, the penalties, the fines and the permits.

I have a letter from a business in my constituency which was written to the Prime Minister, a company in the business of blacktop. In part it reads:

Over the past three years, we have kept a record of government permits, inspection and controls from different levels of bureaucracy. To everyone's astonishment, we were exposed to, hassled or intimidated by 35 different government officials all looking for their pound of flesh. Furthermore, if we don't take the time from our busy schedule to treat these people as "all important" we could face costly delays and problems.

Being in a smaller constituency businesses have to deal with many municipalities. When they do so they come up against city engineering which has material specifications, traffic control rules and regulations. They also have independent assessments with respect to fire department regulations and registration. They need a business licence and a municipal licence for registration of trucks. That is at the municipal level.

At the provincial level these firms have to deal with-and this is amazing-the pesticide branch for a permit, pollution control branch for a permit, gas inspection for inspection, electrical inspection, employment standard branch for an audit, gravel pit inspection, safety permit and bond. What is very interesting about the gravel pit inspection is that within the provincial jurisdiction they have to deal with the mines department and with workers' compensation. In certain situations with respect to the gravel pit they cannot comply with both sets of regulations. Within that single provincial jurisdiction they have to work with conflicting regulations: motor carrier inspection, dangerous goods inspection, safety inspection, weight restriction, over width permits, over height permits, provincial sales tax audit and licence, paving branch inspection and standards, material inspection branch, workers' compensation inspection, workers' compensation audit, pressure vessel inspection and permit, fire marshal inspection and regulation, and air use permit.

I should mention what struck me as terribly weird was that they actually pay for the amount of air they consume. It just goes on and on: air use permit, traffic control permit, ICBC licensing and regulation, and capital tax.

Then there is the overlap of many of these regulations into the federal jurisdiction: Canada pension plan rules, regulations and audit; UIC rules, regulations and audit; and Revenue Canada income tax and corporate tax. Included in that would be remission of taxes collected from employees; GST rules, regulation and audit; radio licensing and regulations; Public Works Canada material supply inspection, electrical inspection, mechanical inspection; and finally more inspection and regulation under work hazard training.

This is indicative of what we are doing to the people of Canada. Whether we are talking about individuals or about businesses, fundamentally we are regulating these people out of existence. We are fining. We are getting permits. We are finding all sorts of ways at various government levels to get more and more money from people.

I suggest as I started that Canada is an exporting nation. Our livelihood, our personal incomes depend on exports. Our present tax system must be altered to maintain our international competitiveness because our national economy depends on it.

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12:55 p.m.

Reform

Randy White Reform Fraser Valley West, BC

Madam Speaker, I am pleased to rise to speak today about reforming the tax system. I want to talk today about the tax revolt which has started across the country. It has been going on for some years but it is becoming more predominant. I am going to cover why and how that is.

I want to talk a bit about why people are angry today about taxes, how we got here in the first place, what the government is doing about it, and the result which is the tax revolt itself.

We often hear people asking: "How do we own a small business in Canada today?" A lot of people respond by saying: "If you want to own a small business in Canada today, buy a large one and wait two tax years". While some find those words humorous they are quite discouraging. In fact they are very true in most cases.

Why are we angry? There are three fundamental reasons. First, there is little value in the tax dollar people are getting today. They see smaller disposable incomes and increasing costs. That is one of the reasons we are angry.

Second, people across the country see governments as fat cats spending inappropriately, spending well beyond their means. Quite frankly that is at all levels of government.

The third reason we are angry is that there is only one taxpayer. The trouble is that all three levels of government see only their perspective in raising taxes. It is like the infrastructure program of the federal government. It says it is spending only $2 billion, but it is spending $6 billion of taxpayers' money. It is $2 billion provincial, $2 billion municipal, and $2 billion federal.

Taxpayers do not really give two hoots about who is sharing in the small packages of dollars. They care about the big package and how much it is costing us.

How did we get to where we are? This all started with a temporary tax measure to support the war spending in 1917. Since then all levels of government have the feeling that even though there is no war they can get into the pockets of the average citizen on virtually everything they can name.

Also, we got here because of incompetence and mismanagement. We do not have to go very far to see the mismanagement and incompetent spending. I refer to a couple of items from "The Tales of the Tax Trough" by the National Citizens Coalition. It found that we spent $37,363 to study the effects of colour in advertising. We also spent $58,000 for an examination of what it is like to work for the Dominion grocery stores. We

spent $21,566 to examine experimental studies of interactive gestures.

Those kinds of costs go on year after year after year and in the same year after year after year governments say they are going to make a change. However the taxpayers do not see that; they only see more government rhetoric.

Another way we got here is because Canadians are passive people. We tend to think that governments are going to pull us out of this crazy spending, but it never seems to happen.

The tax revolt is going to go on. It is going to get larger and larger. There are several formal tax revolt structures in place in this country. I am going to speak about those in just a second.

What has this government done? We have already seen that this government has tacked on about $3 billion more in expenditures, but it has said that revenues should increase to offset that. Governments have played that trick on Canadian taxpayers for two generations now.

The government promised to spend about $1.5 billion on child care, if the economy should rise about 3 per cent. But it says: "No, it is not $1.5 billion. It is only $750 million because the provinces have to contribute $750 million". Well, their $750 million and the federal government's $750 million is $1.5 billion to the taxpayer. That is what we have to get into our minds.

The government has closed some bases which was a little premature because they are into a one year study. I have said before it is like bailing out a sinking ship with a thimble. We owe $40 billion. Getting $750 million here and there or $2 million and saving a few on perks and so on is not enough. We have to go deeper.

What is the result? We are into an underground economy the size of which nobody can estimate but we know it is big. The last election was part of the result. We saw a party virtually disappear off the face of the political map.

Then we have the revolt. A number of organizations are springing up across this country and I have talked to two of them. One is the Tax Revolt Network News run by Gerry Rogers in Halifax. He prints a monthly document and I will be quoting from it. There is also a gentleman by the name of Gebert from my home riding of Fraser Valley West who is well aware of Mr. Rogers' activities. By no means is this a limited list. There are all kinds of people out there.

I did get a call from a fellow by the name of George MacDonald in Calgary who is on a fixed income. He basically said: "Why not add the museum in the Prime Minister's riding to the cost of the inordinate expenditures, or the $100,000 grant to study riddles", and so on and so forth. That just came from Mr. MacDonald a few minutes ago. People out there are sick and tired of this.

Let me quote the Tax Revolt Network News: "Today nobody trusts governments will do what they say they will do, or say what they are planning to do without deceit". Gerry Rogers is a small businessman. He is not a politician. He is just ticked right off.

Other things in the Tax Revolt Network News: "The system is too complicated. A small business should be able to run and be accounted for by a person of average intelligence with a basic high school education. Please, governments, do not lend us money and do not give us grants. We are capable of governing ourselves. We need a more participatory form of government for the 21st century".

Another quote: "Taxes can be lowered without law breaking. The secret in the control of politicians and their pathological need to tax and spend: Control the money. Take away their privilege of taxation and borrowing and they will become more reasonable to deal with". This is all over the place in this country.

Another fellow has formed a citizens tax coalition. One hon. member talked about banding together from time to time. These people are not just banding together; this is big stuff in this country. I quote: "The thing Mr. Rogers and I have in common is the contempt for the political system that ignores common sense in taxation. It is bound to result in chaos in our economy. The first casualty will be our system of government followed by the politicians who failed to represent the wishes of the people who elected them".

I have one more quote which is interesting. It goes back a little bit. The quote is this: "The national budget must be balanced. The public debt must be reduced. The arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced if the nation does not want to go bankrupt. People must again learn to work instead of living on public assistance". This is not my quote; it came from a senator of ancient Rome, Marcus Tullius Cicero speaking in 55 B.C. What has changed since 55 B.C. you ask. Not much in this country.

The Romans misread the mood of the people and the civilization went up in flames. We are in danger of that happening too and I think this Liberal government should take heed.

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1:05 p.m.

Liberal

Dianne Brushett Liberal Cumberland—Colchester, NS

Madam Speaker, I truly enjoyed the hon. member's remarks, particularly the humour. When there is humour and wit in a taxation debate it does make it a lot more enjoyable.

One comment is in terms of the Rogers report on taxation revolt out of Halifax. My riding of Cumberland-Colchester is in Nova Scotia, that beautiful province. Just yesterday I attended a ribbon cutting and sod turning ceremony at a factory. It

is a manufacturing plant of Intertape Polymer Group. This factory has been in existence in Truro for close to 20 years. About every five years it has been able to expand with a little bit of Atlantic Canada opportunities or ACOA funding.

Yesterday we presented it with a grant of $1.5 million. Seventy per cent of that was federal funds and 30 per cent was a provincial co-operative sharing financial grant. The amount we presented as government of $1.5 million was matched with $9.8 million from the plant. This was to expand into new products that would go on the international marketplace. It already employs close to 400 people and will take on an additional 45 people. These are long term sustainable jobs.

The point I wish to make is that the manager of this plant had to compete with his other plants. One in Florida, one in North Carolina, one in Ontario, one in England, and the one in Nova Scotia: five manufacturing plants that manufacture a plastic tape that goes on the back of carpets, that makes polysacs for carrying all kinds of large bulk products. This fibre is made, competed with and sold internationally.

This plant in Truro was able to get the $9.8 million from the conglomerate because we were able to assist a little bit with an ACOA grant in the Atlantic region.

That is the benefit of cost sharing, stimulating, promoting those jobs. As the hon. member will know, in our red book we did advocate jobs for this country. If he has read the recent reports the economy today is at the highest it has been in the past five years. It is growing. It is growing slowly but it is growing and he must agree that we have taken some appropriate measures by reducing those taxes, the 3 per cent in the UI premiums. That was a constructive, positive measure to increase jobs and to increase job potential for this country.

I wanted to point out to the hon. member the fact that when we do cost share as a government, if the owner or manufacturer puts in a substantial amount and there are long term jobs, long term sustainability in manufacturing for the export market, I must remind him of the tremendous products, then it is a good investment and we are on the right track.

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1:10 p.m.

Reform

Randy White Reform Fraser Valley West, BC

Madam Speaker, good comments from the hon. member. I assure her it is not easy getting a laugh out of a tax revolt or a tax system in this country but one has to try once in awhile.

There is such a thing as government trying to assist business. I guess it is the perspective one has on how it is done. I can name time after time where government has put money into business and it has just gone out the back door. It has been a waste.

I spent some time down in Halifax not too long ago. Many people I talked to down there said: "Get rid of ACOA. It is just another tax bonus for those who can get into the trough".

I was in Anglemont up in the Shuswap in British Columbia this weekend. A fellow there said: "A friend of mine is going to start a business. He just got a $17,000 grant to start a business". I know the name of the business but I will not say it here.

The fact is that perhaps his friend should have borrowed the money from a bank or a business somewhere. You cannot just go around this country handing out tax dollars from the people of British Columbia or Alberta to somebody in the territories who wants to start a business. That is what is ticking people off today. Their money is being given away to some businesses that are totally unproductive.

Westray mines in Nova Scotia is a good example. That mine kept a lot of people working but it was tax dollars being transferred right across this country. What was the end result? There never was money earned in that place and many people died in a very unfortunate accident.

I received a letter not too long ago from the Canadian Kennel Club after my criticism of its receiving a $5,000 bilingualism grant. The club told me it had an income of $4 million to $5 million, yet it was getting a $5,000 grant. What for? Let it spend its own money.

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1:10 p.m.

The Acting Speaker (Mrs. Maheu)

I am sorry, the hon. member's time has expired.

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1:10 p.m.

Liberal

Alfonso Gagliano Liberal Saint-Léonard, QC

Madam Speaker, I am pleased to rise during this opposition day to debate the motion tabled by the hon. member for Calgary Centre which reads: "That this House implore the government to initiate immediate consultations with Canadian taxpayers-"

I do not know if the hon. member remembers, but before tabling his budget, the Minister of Finance consulted Canadian taxpayers across the country. Thanks to modern technology, those who did not participate in these consultations were able to follow this exercise on TV. Consequently, the first point mentioned in the motion does not accurately reflect the situation.

Also, since the motion talks about initiating consultations, I thought that, especially in the case of the Reform Party, details would have been provided as to the kind of consultations to hold, because such a process costs money. What about expected results? I have not heard anything concrete on this since the debate began this morning.

The motion then refers to consultations with "provincial governments on the creation of a fair and integrated reform of the entire tax system-" I believe the hon. member is alluding to tax harmonization and I agree with the Reform Party on that. I

think that the Minister of Finance has already had meetings with his provincial counterparts, and it goes without saying that there is work to do. I also believe that, in its efforts to determine how to replace the GST, the finance committee is reviewing this whole issue.

This government has taken concrete measures since it took office. The hon. member mentioned earlier that we grant subsidies to companies or institutions and that this was a bad investment. We did say during the election campaign, as well as in our red book, that subsidies to companies will be drastically reduced, and I believe we are doing that. So we are going in the right direction concerning this aspect of public finances.

In fact, we have taken several realistic measures to put some order in public finances. During the election campaign, we did not make unrealistic promises, as did the Conservatives and the Reformists who promised to totally eliminate the deficit in three or five years.

The federal administration also includes the vision of a society. This is why it is not as easy as the Reform Party would have you believe to make cuts to reduce the deficit.

We made a very logical and realistic proposal in our red book. We said that we were going to lower the deficit to 3 per cent of our gross national product, over a period of three years. And when he tabled the budget, the Minister of Finance showed how he was going to fulfill that promise.

This is what we managed to do in the six months since we took office. The results are starting to show.

Reform Party members are very critical of the infrastructure program, and this from a political party that believes in public consultation and local government. I have been a member of Parliament for ten years now, and every time I meet mayors of municipalities, members of municipal, provincial and regional councils and members of the Federation of Canadian municipalities, they always demand federal involvement in an infrastructure program, because that is our role as a government. The Reform Party has no vision. A government must have a vision of society. A modern society without a modern and adequate infrastructure cannot develop its economy, and our economy must be in good shape if we are going to reduce the deficit and the debt. And that is what we are doing.

We responded initially to a request from the municipalities and we put this request before the provinces, which agreed to share the cost three ways. We will not only create jobs needed in the short term to boost economic recovery but also respond to a real need for infrastructures in our regions, our communities, our towns and our villages. The infrastructure program will help communities and existing entrepreneurs to expand and help new entrepreneurs get started.

It is not just a matter of dollars and cents. We must have an all-encompassing vision, which the Reform Party does not have when it insists on talking about a tax revolt.

To my knowledge, there have always been protest movements, and these are sometimes necessary because they make us think. As members we often sit in this House five days a week and do not always have time to go and listen to our constituents. However, we don't think we can say there is a revolt. Of course some people are angry, and a few may have good reason to be, but I think that today we should be more constructive and try to get together and deal with these problems with the government, and I think we should stress the positive aspects so that we can suggest how the government should deal with these problems. We did.

Speaking of consultations, as part of our parliamentary reform at the beginning of this session, our first item was to ensure that members of the finance committee would be able to prepare the next budget with the Minister of Finance, something unheard of in the past. Until now, the contents of the budget were announced to members in this House at the same time as they were to Canadians watching on television, in other words, when the budget was brought down in Parliament.

Members of Parliament will be able to contribute. This system will enable us to submit proposals, make suggestions and express the people's concerns to the Minister of Finance. That is what we call real consultation!

The motion reads:

-implore the government to initiate immediate consultations with Canadian taxpayers-

That is what we have been doing since the opening of the session. In fact, that was one of the commitments we had taken during the election campaign.

We, members of Parliament, are here to represent the people of Canada. As such, we can let the Minister of Finance know what they think and the committee will be able to prepare a budget, together with the minister, and to tackle the problems facing the Canadian economy. This way, we will be prepared to face the problems of the 21st century, have a sound financial position and be able to compete in the modern economy.

On September 4, ten years ago, I was elected federal member of Parliament and I have spent at least six of the past ten years examining problems the small and medium-sized businesses are grappling with. In the budget speech, I was pleased and proud to notice that the Minister of Finance had tried to settle once and for all the question of small business deductions. Small business need tax deductions, but the Income Tax Act allowed large

corporations to take advantage of the system, up to $200,000 worth in income. The Minister of Finance corrected the situation and he will certainly address small business.

In the budget also, large corporations like financial institutions were told that they would have to pay their fair share. Of course, complaints were received from the Restaurant Association because deductions for entertainment expenses were reduced from 80 to 50 per cent. The Minister of Finance's budget actually established equity, as requested in the motion before us, but this means everybody has to do his share. I must admit that the federal government was dragging behind in that respect. Measures to that effect had long been in place in Quebec, as well as in Ontario and in the United States. I am sure that restaurant owners will realize that their businesses will not suffer from these measures; the fact that people can only deduct 50 per cent of their expenses will not stop them from going to the restaurant.

It is therefore very important to pursue our efforts in that area. That is in fact the first thing we will do after receiving the finance committee's report on the GST. Consumption tax is a major element of our tax system. We are going to provide the Canadian people with a fair and equitable tax system. We will start by finding an equitable alternative to the GST and I hope that this time, the provinces will accept to harmonize their programs with ours and that we can have a tax system that every- one can understand.

Madam Speaker, you and I come from Quebec. Today, someone who goes to a service station or a garage to get their car fixed would have trouble understanding their bill. As an accountant myself, I have difficulty understanding my bill.

Because there is a 4 per cent tax, a 7 per cent tax, a 9 or 8 per cent tax, and every tax kicks in after a certain amount. So the small entrepreneur who should be in his garage working as a mechanical specialist and serving his customers is busy with all this paperwork, and God knows what will happen in two or three years, when the auditor from the revenue department drops by his garage. Did he figure out the taxes properly?

Imagine how our small and medium-sized businesses feel who have to live with this GST system. I think this year we should make the effort to design a consumption tax system. Because with our financial situation, we cannot tell Canadians that we will abolish the GST and that there will be no consumption taxes.

The Right Hon. Prime Minister, whether in opposition or in government, has always been very clear: we will replace the GST. However, once we have dealt with this important part of the tax system, namely consumption taxes, we will move on to the other part of the system, income and capital taxes. What system should we have? I think with the structure, reforms and regulations established in this House by our parliamentary committees, especially the finance committee, we will be able at this time next year, with the next budget, to really put our fiscal house in order and give hope to Canadians that we can have a fair, equitable and efficient tax system.

But it is only by working together and supporting the Minister of Finance-and I am confident that our finance minister will see it through to the end. Before becoming involved in politics, he was a businessman; he knows the problems, he listens to Canadians-and I am sure that together we will succeed.

I know that the hon. member for Gatineau-La Lièvre would like to participate in this debate so, Madam Speaker, with the consent of the House, I will sit down and allow him to speak his mind.

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1:25 p.m.

The Acting Speaker (Mrs. Maheu)

On a point of order, the hon. member for Calgary Centre.

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1:25 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Madam Speaker, do we not get to ask some questions of the hon. member for Saint-Léonard?

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1:25 p.m.

The Acting Speaker (Mrs. Maheu)

The member was asking if he finished early whether he could give a chance to the member for Gatineau-La Lièvre to make comments or ask questions.

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1:25 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Madam Speaker, I would like to congratulate the member for Saint-Léonard for his contribution to today's debate. I am a little disappointed that he has just focused on the GST as a partial solution to our taxation problem. Perhaps he is too busy being the Liberal whip to put full concentration on this area of taxation.

He brought up a point about the cost of consultation and as a Reformer I feel I should address this particular issue. Current hearings are always held by most standing committees, especially the Standing Committee on Finance.

With the replacement tax for the GST provincial governments are certainly encouraged to look at the issue of harmonization and therefore the government and/or committees will be meeting with provincial finance people. When they are doing that and for the same cost at the same time the government can be bringing up other areas of taxation that provinces, individuals or witnesses may want to contribute toward an overhaul of the taxation system. In the next year and a half, at no extra cost, this extra review can be initiated with Canadians and provincial governments.

On the order of public finances the member indicates that he feels his government is bringing order to the public finances. I counter that position as a comment by saying that the government has increased overall spending by $3.3 billion and is

concentrating on the revenue side to generate more revenue for the government.

By borrowing $2 billion on the infrastructure all the government is going to get back at most is $400 million in taxes with the extra jobs it creates if it creates them.

That will be a net loss on the infrastructure program so it is headed the wrong way.

I compliment the hon. member for Saint-Léonard as party whip for handling the budget of the Board of Internal Economy. I do not know whether it is $250 million or $270 million, but he and his committee, and I believe it was through his efforts, came up with a $5 million saving for this House and the taxpayers of Canada.

I wish that he would take his insight and his understanding of how cuts should really work and apply it to the Department of National Revenue. When the deputy minister of National Revenue and Taxation was asked to come up with some cuts, he came up with an amalgamation of two departments. Out of a budget of $2.2 billion all that he could come up with, not that it is insignificant, was $36 million.

On a proportionate and percentage basis, I would like to know if the hon. member would be willing to serve as the cabinet minister of National Revenue and Taxation. He knows how to cut.

SupplyGovernment Orders

1:30 p.m.

Liberal

Alfonso Gagliano Liberal Saint-Léonard, QC

Madam Speaker, maybe the member should speak to the Prime Minister.

I thank him for his congratulatory remarks. With the help of some of my colleagues, we realized the cuts that the member mentioned. The budget of the Internal Board of Economy for 295 members of Parliament and this House is between $200 million and $230 million a year. Five million dollars may be saved by the end of the year and we hope to save even more. This is not a big reduction but we have to start somewhere.

We have to start from the top. That was the aim of this government. The Prime Minister did it with cabinet. We collectively did it here in the House. We are giving a good signal to the public administration in all departments. I would not like to pick on only one department. The member mentioned national revenue. It should be all departments.

The Prime Minister is reminding every cabinet minister on a daily basis to make sure that they are responsible. We are going that way.

In terms of consultation, the member and I agree. The rules are already in place through the finance committee. The least expensive consultation that we can have is through the finance committee of this House. We are doing it on the GST. Once the GST is finished, I am sure that with the budgetary process that we have in place this fall the finance committee will look at all the other tax expenditures and we will make progress.

Like I said, we all have to participate. I could quote letters. It is incredible how such a thing could happen. We are trying to serve almost 27 million people. We have a system, but it is a complicated system. If all of us sincerely want to help we can do our own little thing for which we are responsible as a member of Parliament. We can go a long way.

I hope that in this 35th Parliament this new spirit of co-operation and so on that we have shown in the past four months will continue. I am convinced that in the end we can achieve a greater result and Canadians will be better off. We run for office and get elected so that we can help Canadians feel good about this country. We want them to be better off. They can compete and look for a bright future.

I thank the member for his congratulations. Our difference is not that far apart. Sometimes we have to look at more than just dollars and cents. The hon. member said that through taxes we may get only $100 million back from our $2 billion. I do not want to dispute those figures. I did not do the calculation.

We also have to look at the wealth and the infrastructure that we put into our communities that will help to create a better business structure, a better lifestyle which in general helps people to feel better and feel more secure in our communities and therefore be more productive and more active.

That is the problem in our society. If we make sure that all Canadians are active, I think we will reduce the deficit and the debt and we will have a better society.

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1:35 p.m.

Bloc

Gérard Asselin Bloc Charlevoix, QC

Madam Speaker, I am pleased to address the House this afternoon on the subject of the government's tax system. Since the Bloc Quebecois was elected last October 25, it has tabled a motion calling on the government of Canada to strike a committee to review all government spending.

For many months now, the Bloc Quebecois has been demanding an in-depth review of the tax system, the aim being the elimination of tax inequities. Having brought down a $164.7 billion budget providing for a spending increase of $4 billion for 1994, the Liberal government should review its spending practices because it has chosen the easiest course of action, which is to raise taxes.

Finance minister Paul Martin's recent budget sets a second record in this House, what with a deficit of $9.7 billion and $110 million in interest charges per day. Given the current state of the economy and the high levels of unemployment and poverty in Quebec and in Canada, the $110 million in interest charges which the federal government pays to financial institutions could surely have been put to some other use. It could have been

invested in a variety of other areas such as social housing or in business recovery programs aimed at job creation.

There is an urgent need for the government to review the entire tax system. Furthermore, as I stated earlier, it is also very important that the government agree to the motion presented in this House by the Bloc Quebecois which calls for a committee to be established to review government spending item by item and to give the government some control mechanisms.

When the Minister of Finance appeared before the Standing Committee on Finance, of which I am a member, I asked him whether it was the public servants who were mismanaging programs, or the politicians who were spending too much. Of course, since the minister wanted to protect some public servants and deputy ministers, he had to take full responsibility and reply that it was the politicians who were spending too much.

I believe that politicians should give themselves monitoring tools, because they are the ones who must take responsibility when the government tables a budget and has a deficit. Every four years, political parties have to go before the best judges of their actions: Canadians and Quebecers. We cannot afford a budget like this one, with a deficit of $39.7 billion. The government is trying to eliminate a deficit by creating another one.

You will remember that when the Conservatives tabled a budget with a deficit of $32 billion, the largest ever at the time, it caused an uproar. The Liberals just hit the roof. This was unprecedented. But this was just rhetoric on their part to get elected. Indeed, the Liberals' recent budget is proof that they are no better managers than the Conservatives of the time.

It is important that the government implement all the Auditor General's recommendations. His services are costly. In fact, it costs the government $60 million over three years for this audit of its books, a job which the Auditor General has always done well and will continue to do well. We are not asking for cuts affecting social programs, low-income and single-parent families, or social housing. We are asking the government to make cuts in its own fat. It is the Auditor's mandate to find out where that fat is, and he does a very good job at that.

The Bloc Quebecois is also asking that a committee be set up to review all government expenditures. The Reform Party agrees with us on this score. This committee would include members of all political parties, mainly the government, the Bloc Quebecois and the Reform Party, who, along with the Minister of Finance and the Minister of National Revenue, would take a look at all expenditures which are not essential to the operations of this House.

It is important that the government give itself means to control each department. And if in its budget, the government approves the budget for the Department of Transport, and if the Minister of Finance includes in his budget a budget for health programs for the Department of National Health and Welfare, the officials who run this program must be responsible for its administration, and the ministers responsible for their respective departments must be accountable for those departments.

A minister who is there just for the prestige is pretty useless. I think ministers should be responsible for their individual departments and for the programs in those departments. If the minister does not do his job or if the official doesn't do his job, in that case, let us get someone else. However, we cannot afford to approve a budget with a $39.7 billion deficit, knowing full well that in the end, if the economy or employment recovery is not up to expectations, we may end up with a deficit of $45 billion or even $50 billion.

Public servants and the ministers in their respective departments must be aware of their responsibilities and administer the programs and budgets they have been given to administer by the government.

I have been sitting on the finance committee for about two months, and we heard many witnesses for the municipalities, Chambers of Commerce, unions of municipalities, restaurant owners, and so forth, and everyone is trying to find ways for the government to raise revenue without affecting the consumer. I think the government should stop worrying about how to raise revenue, because workers and consumers are already paying far too much.

What the government should worry about is how to cut its spending, and it doesn't take very long to find out how to do that. What it takes is a good committee that looks at departmental budgets item by item. Its work would be cut out for it. For a start, we should act on all the recommendations made by the Auditor General. We pay too many taxes and too much income tax, and we should try to eliminate monumental mistakes like the contract at Pearson Airport in Toronto. This is the only federal airport in Canada that makes a profit, that generates a total of $50 million annually, and the previous government decided to privatize it.

Did the government decide to reward indirectly those who had contributed to the election campaign? The Bloc Quebecois is asking for a public inquiry to prove that the present government did not enjoy certain advantages as result of actions taken by the previous government, actions which have penalized taxpayers in Quebec and Canada. Quebecers and Canadians pay too much tax, and people are wondering whether they are getting their money's worth.

We pay taxes to the federal government and to Quebec. We turn over $28 billion per year in taxes to the federal government, in addition to paying provincial taxes, the GST, the TVQ, municipal taxes and school taxes.

Quebecers are prepared to pay a single harmonized tax, one that would give the provincial government control of all tax dollars and combine the GST and the TVQ into a single tax for a single country. This will come to pass when Quebec achieves independence.

As I was saying, workers and consumers are the ones left to pick up the tab. From the moment he is born, a Canadian child owes $20,000 to the federal government. And this same child will be paying until the day he dies.

Allow me to explain myself, Madam Speaker. As I was saying, when a child is born, he inherits a $20,000 share of the deficit. From the time they are old enough to attend grade school and high school, CEGEP or university, students pay taxes on books, goods and services and computers, etc. In short, even their education is taxed.

For parents who must incur a number of expenses related to their children's education, the process can be quite costly. Not every municipality or region in Quebec or in Canada has a CEGEP or a university. There is a CEGEP in the Charlevoix region. However, when students wish to go to university, they must travel outside the region and this can be very expensive.

A student from Baie-Comeau who decides to further his education in Montreal or in Quebec City will probably have to pay anywhere from $8,000 to $10,000 per year. Quite often, his father or mother, or sometimes both, end up unemployed, or even on welfare because a plant was forced to close, jobs were cut or a contract terminated.

If the student wishes to stay in school, he is forced to rely on loans and bursaries. When they graduate from university three or four years later, students find themselves $20,000 to $25,000 in debt and this, without any guarantee of finding work when they get out of school.

Naturally, these parents cannot afford to pay the required $8,000 to $10,000 a year and the child, having taken out loans, often must abandon his studies, for lack of funds.

There should be a tax deduction form for parents, to help children who study away from home. Let me explain. At present, when a couple divorces and the father is ordered to pay alimony to his ex-wife, the portion of his income which is paid in alimony is tax deductible. On the other hand, the same parent, if he is a good father and puts one, two and sometimes as many as three children through university, incurs very high expenses, but the money invested by parents in the education of children attending university is not tax deductible. The government should come up with programs to help, through the tax system, working taxpayers who pay to send their children away to get an education. These young people are our future. I also think that it would help prevent dropping out.

It is also urgent, both at the federal and the provincial level, that vocational schools be reopened. There will always be intellectuals with the skills and financial means to enter university, but there are also young people who do not have the skills or the financial means to go to university. There is an intermediate level that used to exist in the seventies-I am talking about vocational training.

You know that these jobs are increasingly occupied by women. Equal pay for equal work! These would be much sought-after trades because in construction, we will always need plumbers, electricians, carpenters, mechanics and the likes. There are only two classes: labourers, almost like welfare recipients, and professionals. But the construction market will always exist and I think governments should re-open vocational training centres to help those who lack the skills to go on to university.

The government tried to compensate for taxes by promising "jobs, jobs, jobs" in its red book. They will have to take action. Six months after the Liberal Party was elected, 23,000 more people live on social assistance in Quebec. They have exhausted their unemployment insurance benefits and are now on welfare. As I said last week when the Prime Minister declared that the unemployment rate was down 2 per cent in Quebec, it is because social assistance has gone up by 2 per cent.

The only reasonable thing in the Liberal Party's platform is the infrastructure program. Of course, this program will help small municipalities and some regional county municipalities. But $2 billion for the infrastructure program is not enough. The Federation of Canadian Municipalities recommended that the government should invest at least $15 billion in the program. The infrastructure program will not cure the unemployment cancer. Part of the problem in Quebec and Canada can be solved by a $2 billion infrastructure program, but not all of it.

One does not treat a broken leg with a Band-Aid or a general cancer with aspirin. The government must inject more money into this program to create jobs and help municipalities; this, in my opinion, would turn a good program into an excellent program. Again, what ratepayers do not have to borrow, they do not have to pay. I will be happy to resume my comments after question period.

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1:50 p.m.

Liberal

Mark Assad Liberal Gatineau—La Lièvre, QC

Madam Speaker, after listening to the member for Charlevoix who dealt with many subjects, I will come back to the issue of taxation, because that is what we were discussing this morning.

He talked about the need to reform the tax system. Of course many people have called for that. The hon. member is on the finance committee. Last night, I had the opportunity, as a member of Parliament, to testify before that committee and talk about the need for tax reform. In the brief I presented, I spoke of the need to reform the tax system.

There is something we can refer to. Twenty-five years ago, maybe more, there was a well-known royal commission of inquiry on the tax system, the Carter Commission. Twenty-five years later, the Carter Commission's recommendations are still valid today. The tax system must be improved to make it fairer and more equitable. We need consider only a few figures to realize that in the past 15 or 20 years, the tax system has worked against the welfare and interests of the middle class, which for all practical purposes is the backbone of any modern economy.

Of course, in a society like ours, when the middle class has disposable income, the economy is moving. But as the years go by and taxes are so high that incomes go down, we see the problems that we have in Canada now. These are only some indications of the reform that must be made to our whole tax system, including the GST, of course, which was a disastrous error for the country.

I would like to draw your attention to some figures and show you how unbalanced our system is. Back in 1980, the richest 1 per cent of Canadians at that time held 16 per cent of all the wealth and income in the country. That is just to give you an idea. Ten years later, only ten years, which is not much in the history of a country, in 1990, the same top 1 per cent held 26 per cent of all the income and wealth in our country.

Did those people invest? Did they make wonderful investments in the country? Not at all. They used the tax system to their advantage. Please note that everything they did was not illegal, far from it; it was legal, they were protecting their own interests. They used the tax system; they found loopholes in the act to protect as much as possible their wealth and revenue. This gives you an idea of the imbalance which prevails.

Another figure also shows that problems exist. Everyone agrees that the accumulated deficit is enormous, but 44 per cent of that deficit is due to compound interest. This means that 44 per cent of our accumulated deficit is not due to any actual spending. That part of the deficit is the result of compound interest. As you know, interest rates were very high for a period of 12 years. Even our interest rate was one third higher than the American average for 12 consecutive years. You can see the damage caused by that situation to an economy.

Is my time up, Mr. Speaker?

SupplyGovernment Orders

1:55 p.m.

The Speaker

No, not yet. The hon. member has about six minutes left. He can resume after Question Period, that is after the vote which will take place this afternoon. I remind the hon. member that he must always speak to the Chair.

It being two o'clock, pursuant to Standing Order 30(5), the House will now proceed to Statements by Members, pursuant to Standing Order 31.

Rights Of The FamilyStatements By Members

1:55 p.m.

Liberal

Roseanne Skoke Liberal Central Nova, NS

Mr. Speaker, in recognition of International Year of the Family my statement is prepared in defence of the family.

The conventional terms of debate in matters of political, economic and legal issues tend to focus on individual rights and the rights of state, not the rights of the family.

This is unfortunate and must change, for the family is the most important reality in our lives. To redefine the family to include homosexual and lesbian relationships is immoral, unjust and a violation of the rights of the family which are well founded in both Canadian and natural law.

The family unit is the basic institution of life and the solid foundation on which our forefathers built this great nation. The protection of families, family life and family values must be a priority with this government.

MulticulturalismStatements By Members

1:55 p.m.

Bloc

Christiane Gagnon Bloc Québec, QC

Mr. Speaker, yesterday, the member for Saint-Léonard said that the future government of Quebec will reject multiculturalism and will not uphold its commitments to cultural communities.

The member's statement is a perfect example of the kind of disinformation which is being spread around by advocates of a Trudeau-like multiculturalism, an archaic concept whose noble and bold principles no longer ring true in Quebec.

Quebec sovereignists are resolutely forward-looking. They are actively promoting, both in Quebec and in this House, a free society where social, political and economic policies make room for everybody, no matter their origins.

For us, Bloc members, as for the members of the Parti Quebecois, there can be no doubt: a sovereign Quebec will respect the rights of its communities in a free, democratic and French society. That is the truth.

Ayrton SennaStatements By Members

1:55 p.m.

Reform

Grant Hill Reform Macleod, AB

Mr. Speaker, the auto racing fraternity was saddened by the death of Ayrton Senna in a racing accident Sunday during the Grand Prix at Imola. Senna, three time world champion and a hero in his home country of Brazil, died doing what he did best. He was the acknowledged master of his craft and surely he seemed immortal.

His death is very similar to the untimely end of Canada's equally talented driver, Gilles Villeneuve.

To Ayrton Senna's family, his country and to all his close friends I extend my sympathy and my support in this sorrowful time.

JusticeStatements By Members

1:55 p.m.

Liberal

Rex Crawford Liberal Kent, ON

Get tough with criminals is the message I am hearing in my riding, Mr. Speaker. Chatham, Ontario, with a population of only 43,000, is still reeling in shock and horror at the brutal murder last week of seven-year old Daniel Miller at the hands of a teenager.

Some residents are calling for vigilante justice and curfews. Mothers with kids in elementary school are calling me. Their children are afraid to go to school.

Let us beef up our justice system so Canadians feel secure that criminals are punished with more than a slap on the wrist. Calm and level heads must prevail. With sinister events recently in Chatham and Hull shaking our faith, I encourage and support the Minister of Justice as he reviews the Young Offenders Act.

The nation is waiting for the minister to act.

General MotorsStatements By Members

1:55 p.m.

Liberal

Ivan Grose Liberal Oshawa, ON

Mr. Speaker, today I address you to correct an impression that was left with this House last Thursday.

It was suggested that the largest, most efficient, highest quality General Motors plant in the world was in the federal riding of Durham. That is incorrect. Since this happened a letter and a telephone call have come to me. I therefore want to set the matter straight.

The aforementioned General Motors plant is located in the federal riding of Oshawa. The citizens of Oshawa have honoured me by sending me to this Chamber to defend their honour and pride against all those who would deign to move the best corporate citizen in this land into an adjoining riding.

I promise my constituents to be ever vigilant and never allow this type of hijacking of any of our assets.

Medic AlertStatements By Members

May 3rd, 1994 / 1:55 p.m.

Liberal

Andy Scott Liberal Fredericton—York—Sunbury, NB

Mr. Speaker, it is my pleasure to remind the House that May is Medic Alert month. Medic Alert is an emergency medical information network accessible around the world. Over three-quarters of a million Canadians rely on Medic Alert bracelets and necklets to ensure emergency medical personnel are aware of their specific needs, whatever they may be.

Life Underwriters Association also holds an awareness campaign each May to promote the benefits of Medic Alert to Canadians.

Medic Alert identification can help save the lives of people suffering from diabetes, epilepsy, asthma, food and drug allergies and any hidden condition.

Please join me in congratulating the Medic Alert Foundation and the Life Underwriters Association for their excellent contribution to the health of Canadians.