Madam Speaker, thank you very much for the opportunity to second the motion of my hon. colleague from Calgary Centre. The motion before us is very straightforward. It asks for a major tax review under the current circumstances that we face as Canadians.
As has been mentioned by the hon. member for Durham, all of us have just faced the rigorous task of doing and redoing our income tax for 1993 so we know the problems that are there. They are very fresh in our minds as well as in the minds of all Canadians. It is very appropriate that we have this motion before us today in which we are looking at better ways of utilizing the income tax system, better ways to apply excise tax, a better way to apply consumption taxes. The review today is very appropriate.
There is no way that all of us in the House are going to agree on the fact that there may be only one way to do it. There are a variety of ways of approaching tax review and tax revisions.
What I want to do today in my few moments is look at it under the criteria of whether taxation is fair, whether there is simplicity, efficiency and effectiveness. In his earlier remarks the Parliamentary Secretary to the Minister of Finance mentioned that the government accepts those principles in evaluating the tax system. I would have to accept him and the government at their word that they have a criteria and that if there are to be revisions, the revisions or the changes in the tax policy would be based on those very basic principles.
When we look at the taxation system we have to recognize that there is no real consensus as to what the problem is. I do not believe we have a consensus in Canada nor will we have in this assembly here today as to what the solution is. I think we must look first of all at what the problem may be.
I believe that the problem stems from the overspending of governments. That is the first major problem that we must deal with. No matter how we collect the taxes, it is very frustrating when Canadians say that we as legislators and leaders waste the money that they give to us. We have to deal first with the problem of overspending. The major question before this assembly is how it should be done.
Canadians are certainly overtaxed. They believe they are no longer receiving value for their tax dollars, and Canadians are certainly correct on that premise. It is very obvious when we look at the current circumstances and the finances of this country. For every dollar that Canadians send to Ottawa, and this is on the downscale rather than the upscale, 65 cents is applied to government program spending, programs for Canadians.
Why is that happening? We have a $500 billion plus debt facing us.
Second, in the current budget $41 billion is being applied to interest payments which do nothing in terms of productivity or helping people in Canada with regard to health programs, social programs, transportation programs or whatever they may be. The interest payment takes away access to the positive use of a tax dollar.
In terms of the government's plan we also face another $100 billion of debt in the next two to three fiscal years being added to the current $500 billion debt. This means that of the tax dollar, the $1 that comes to Ottawa, the amount available for programs
will certainly be less than 65 cents. It will most likely approach a 60-cent dollar to run our country. That is not good enough.
The point I want to make is that there cannot be effective tax reform without effective expenditure reform and dealing with the debt and the deficit of the country. This is not to say that GST and tax reform are not necessary. I only wish to point out the futility in trying to fix the tax system without reigning in the spending of governments.
Let me deal with defining a fair tax system. That will be the thrust of my remarks today. How do we put together a fair tax system? I will list six points which I feel are relevant.
The first is equity. A fair tax system implies equity. Equity implies that Canadians feel that all taxpayers are sharing equally in the tax burden. Any redesign of a tax system must distribute the burden of tax equality among Canadians.
The second is punishing success. A fair tax system does not punish success. Equity demands that Canadians be allowed to keep the rewards for working harder, for working smarter and for being successful. This component of tax reform is often overlooked. It is often an area wherein those putting together tax policy say that a person is earning a lot and let us take it away from him or her. It is not fair. By overtaxing the monetary rewards of success the incentive for Canadians to invest in a future for Canada is removed. We rob ourselves by punishing success through the taxation system in this land of ours.
The third is dealing with the less fortunate. What should a tax policy do there? A fair tax system does not punish the unfortunate in our society. A tax system that overtaxes those who cannot defend themselves is a double hit on the less fortunate in our society.
The fourth is a point that is often made. I know it has been made many times in this assembly. There is only one taxpayer. On that basis I make two points. First, we must recognize that taxation of businesses eventually falls on individuals. It does so through lower wages, higher prices, reduced dividends and an internationally uncompetitive industrial base. While I am not advocating the elimination of taxes on all businesses, we should recognize that a corporation of any size does not bear the burden of these taxes as is often assumed. These taxes are borne by one taxpayer or individual Canadians.
The second way our tax system must recognize that there is only one taxpayer is with respect to provincial and federal powers of taxation. The current overlap of consumption taxation means that Canadians face 10 different sales taxes. This increases the cost of doing business and overly complicates the tax system.
Last I want to deal with what I call economic choices. A fair tax system does not bias the economic choices of taxpayers. Through special cases and exceptions the current tax system discriminates against certain activities and promotes others. Canadians more than ever before are recognizing their activities to avoid tax. This is what we mean when we talk about a tax revolt.
The tax system should not be a mechanism for a large range of public policy initiatives. My hon. colleague from Calgary Centre covered this point earlier.
These public policies are often designed with all the best intentions. They often result in the reorganization of economic activity in a way in which they were not intended in the first place. When this is done, the true cost of policy is difficult to determine and the reorganization of economic activity creates negative and unintended consequences.
In the last few moments I have I want to raise the following question. How does our current system stack up? Let us look at equity first of all. Canadians do not feel that everybody is paying their share. Second, in punishing success, our current system punishes success. Third, we now have a tax system with a marginal tax rate that at many points exceeds 50 per cent, the percentage believed to have a disincentive effect to earn more. The economic effect of this damaging policy is nearly impossible to measure as it must measure what Canadians are not doing but could be doing under a better and fairer tax system. The fourth point is punishing the less fortunate. Today many people are paying taxes with incomes of $7,000. Last I would make the point with regard to complication. It is clear that a current tax system is complicated with the many forms of tax that are before Canadians. What is the solution?