moved:
That this House implore the government to initiate immediate consultations with Canadian taxpayers and provincial governments on the creation of a fair and integrated reform of the entire tax system which incorporates the principles of equity, efficiency and effectiveness, thereby reducing the tax burden on Canadians.
Madam Speaker, on behalf of the whip of the Reform Party I would like to advise the House that pursuant to Standing Order 43(2) our speakers on this motion will be dividing their time today.
Someone once said that you cannot get there from here. Nowhere is this saying more applicable than to the Canadian government's reliance on a confusing, complicated and convoluted system of tax and revenue collection. I rise on this opposition day as the first of many Reform speakers to call on the government for a complete overhaul of Canada's taxation system.
The Chair read the motion so I will not do the same.
Every year Canadians spend countless millions of dollars on accountants and lawyers to have their income tax prepared. The 2,091 page Income Tax Act is an unmitigated mess of rules and regulations and is screaming for reform, as are millions of Canadians.
This red book, which is not to be confused with the Liberal red ink book, has in the rules and regulations and various forms that make it so confusing that all the people who tried to do their own tax returns this year had a hard time coming up with the right answers, myself included.
The Liberal government with its red ink book promised to find ways to achieve tax fairness, simplicity and harmonization, implying some sort of reform to our tax system itself. Are Canadians truly getting the changes that they demanded and were promised? The answer is no.
After six months all we hear in answer to our questions is "jobs, jobs, jobs". All the Liberal government has done is pass old Tory bills, introduce no new bills of their own and we have not been able to question the government whatsoever on the direction that it wants to take this country.
What has happened is that the Liberals have dangled reform in front of the noses of Canadian taxpayers but they have not delivered.
In question period yesterday-I hear an hon. member talking who was not here, so he might listen to this-the Prime Minister stated that the only way to reduce taxes is to get Canadians back to work. This is a noble gesture, but has the Prime Minister not considered that it is the high tax burden that Canadians face which is stifling our economy and economic growth?
The fact is that revenue collected from personal income tax has more than doubled since the 1984-85 fiscal year. Tax collected from corporations has remained stagnant at approximately $10 billion because profits have been sluggish due to our recession.
Canada's overall tax burden has become the second highest of the G-7 countries in recent years and the taxpayers, as we all know, have moved to the underground economy that is valued anywhere from a low of $20 billion to a high of $120 billion.
The government has failed to address the problem. In its last budget it increased spending by $3.3 billion instead of holding the line or reducing the spending. This makes the private sector less productive which leads to greater unemployment. Will governments acknowledge that they are in fact part of the problem and not the solution?
The current high taxation rates serve as a temptation for government to keep spending at its current levels which will not solve our problems of high debt and high unemployment expeditiously. We must learn to live within our means like all Canadians and cannot look to the Canadian taxpayer before accomplishing this goal.
It is our belief that to stimulate the economy and to increase revenues for government, lenders, investors and consumers must possess a larger pool of disposable income. In this light, the Liberals should start by throwing this Income Tax Act out the window and replacing it with a completely new, entire tax system.
Why not reform the tax system? I would submit to the finance minister that less is more. Lower taxes will mean more revenue to the government. In this vein I would recommend the implementation of a flat tax on individual and corporate income. This model may work. We would suggest to start with a premise that would require input and consultation with Canadians, the provinces and individuals in the House, that the first $12,000 be tax free. One per cent of charitable donations would be deductible, but RRSPs would be limited to $5,000 to $6,000 for deductions so that the wealthy would not get the higher amount of deductions. There would be a spousal deduction and a child care deduction, and that would be it. We would draw a line, multiply it by 15 per cent or 20 per cent and send in our tax return.
Corporations would pay the same rate. The difference with corporations would be that their dividends would be deductible. We would not be taxing that and giving it out as after tax dollars. Dividends to individuals who invest would be deductible and taxable in the hands of the recipients. All investments in the future, all loopholes, exemptions and deductions defined here with rules, exceptions and counterexceptions would be gone. We would be investing as individuals with after tax dollars, and the corporations would be paying us based on their profits.
The objective of this tax would be threefold. It would simplify the current complicated tax forms so that all Canadians could understand them. It would restore equity in the tax system, eliminating the perception that one group of taxpayers is favoured over another and people with the same level of income would pay relatively the same amount of tax. The inequity right now is that there are people making $100,000 a year and one person pays $40,000 in taxes and the other person pays $20,000 because they might have better advice or they might have better borrowing power. That is not fair. Third, this tax would eliminate the triple hits that Canadians are taking in their pocketbooks with PSTs, GSTs and income taxes.
Under this system there would be no loopholes for anyone and we would be rid of the expensive bureaucracies now required to co-ordinate tax collection.
In National Revenue and Taxation, Customs and Excise, there are 44,000 employees at a cost of $2.2 billion. Savings to the Department of National Revenue in tax collection and the monitoring of all personal and corporate tax exemptions would be in the billions, not just the $36 million the government has proposed to save by the wonderful amalgamation of two deputy ministers, one of taxation revenue and the other of customs and
excise. We need more savings than just $36 million out of a $2.2 billion budget. That is ludicrous and the government should be embarrassed.
Introducing a simple, fair and integrated system of taxation would lower these costs substantially while checking the powers of the bureaucracy. If the bureaucracy in Canada is left unchecked it will continue to increase costs and taxes, continuing the country on its present downward spiral. Canadians will never have an opportunity to pay less taxes in a current year than they did the year before.
An example of the high cost of the bureaucratic action was brought to my attention by a CA firm in Calgary, Bogle, Duska, Robinson and Perry. Mr. George Duska did an analysis in a six-month period. The number of forms and taxation slips whether or not they were required that changed for him to do his job on a file, to make copies and do the necessary changes, was about an inch and a half thick over a period of a month and a half.
Witnessing the cost in changes in tax forms that had taken place over the past 10 years, Mr. Duska did an analysis of the revised tax forms over the six months to see if these changes were truly necessary. In his opinion 16 per cent of the revisions were required by the tax system, while 84 per cent "were useless and a waste of taxpayers' money". This indicates that as usual bureaucracy is out of control.
I challenge the government and cabinet to give existing standing committees more authority to look at the expenditures and the budget estimates. They should let them come back to cabinet and recommend cuts, prioritize them and cut off the bottom two, to start the government toward a balanced budget. It is a small area relative to government expenditures, but it illustrates the fact that our present system is becoming a bureaucratic nightmare.
I would like to conclude by educating the Liberal government, which might be nearly impossible, on the reality of the private sector, not the perceived reality of the Liberal government. Government overspending results in the raising of tax dollars. Higher taxation means less capital available in the marketplace which leads to a drop in demand. When demand drops, consumption drops, businesses close their doors and the cycle continues.
This vicious circle is the main reason why over one million Canadians are unemployed. It takes money to create wealth. The government takes too much of it and then wonders why unemployment goes up. Business people in the House know this but politicians in the House do not understand this. They do not understand the difference between the spending of debt capital, borrowed money and equity capital, especially when the government has not paid back $1 of the money it has borrowed since 1968, the first years of Trudeau.
Is that not embarrassing? Who in the House borrows money from the bank and has never had to repay $1 of it over 23 years? I would venture to guess nobody. Why is the government being treated differently or why is it treating itself differently? The private sector understands the difference. It is time that politicians did as well.
It should not be beyond our means to create a more equitable system of taxation, one that inspires prosperity for Canadians and economic growth for the country. Let us work toward the restoration of public trust in taxation and create a tax system that reflects the principles of equity, efficiency and effectiveness, thereby reducing the tax burden on Canadians.
We must listen to the comments of all members in the House today and see if we come up with some solutions. The real problem is a balanced budget. It is important. No tax system in the world is good if it does not address the real problem. If we continue to spend $160 billion and do not raise $160 billion, we are contributing to the problem, not solving it.