Mr. Speaker, I am rising today to speak to this motion by the hon. member for Calgary Centre on reforming, simplifying and making more equitable our income tax and other tax systems in Canada.
I originally had planned today to speak primarily on the issues of fiscal federalism in the few minutes that I have. In this country right now we are undergoing a series of studies and serious examinations of a number of policy areas that include social policy, not just transfers to individuals but transfers to provinces, and we have a budget that is impacting on a number of transfer programs to provinces, both this year and in future years.
All of those things are really proceeding in a number of different ways. There are intergovernmental negotiations going on. We do not have any details about that but we know it is happening. We have a social policy review. Of course we have budgetary policy and a review of the GST.
There is a wide number of studies into issues of fiscal federalism but there is no overall integrated approach to making the tax system fairer and more efficient between levels of government. That is the primary point I want to address today, some of the things that some organizations are putting out that could be done, some of the things that our various academics have proposed.
I have been sidetracked somewhat by an issue that I got into last week. It came up on the floor of the House yesterday. I want to digress and spend most of my time on that because it seemed after what was said yesterday in the House that it was a perfect opportunity to address this particular issue because it is really so relevant to the way taxes and the tax system are functioning in our country today.
I am referring to the mini controversy we have over the federal overseas tax credit. This is a tax credit that is available to Canadian workers who are working overseas for six months or more of the year, enduring hardship and separation from their families and work related expenses in that capacity. There have been recent stories, one in particular in Alberta Report , that draws attention to the fact that the federal revenue department is basically considering retroactively disallowing the use of the overseas tax credit by certain Canadian workers, much to their detriment.
This story appeared and has been on the scene. I know members of Parliament, not just myself but other members have been making inquiries into this particular matter for some time because this has been on the public record now for a couple of months. They are not getting very far with Revenue Canada I understand.
I am not a tax expert and I am not a lawyer. I would never claim to be for obvious political reasons. By implication neither am I a tax lawyer. But I did find this story quite interesting. Given the government's current unwillingness to address the issue I decided to raise it in the Commons in statements.
Yesterday in response to one of these gratuitous set up questions we have periodically, the Minister of National Revenue said I had erred in my statement and provided the House with some incorrect information and that there were in fact no legislative changes involved in this area.
What is wrong with that statement is that it has nothing to do with what I in fact said to the House or what the problem is here. Mr. Speaker, you may have seen the movie last year, The Firm . It was one of my favourite movies last year. In one particular scene-it is about tax lawyers-Gene Hackman plays Avery Tolar speaking to Tom Cruise who is playing Mitchell McDeer. He is teasing him about his upcoming tax law exam. He has a multiple choice question for the young upstart. He says: ``What is the difference between tax avoidance and tax evasion? Is it: (a) what the IRS says it is? (b) A good tax lawyer? (c) Five years in jail? (d) All of the above?''.
Just to Canadianize that we will substitute Revenue Canada for the IRS, the Internal Revenue Service in the United States, and I think the same applies here. The point I am making is that whether there have been legislative changes is too often irrelevant. Tax law in this country rarely has much to do with legislation.
We recently have been passing in this House tax changes that were brought in by the previous government, well over a year before its defeat in some cases. We have been passing those things. We have been agreeing to them on this side. We have no choice. They have been implemented for some period of time. Legislation has little to do with it and little to do with the question I raised.
The question I was raising was not a question of legal technicality or of the latest version of Revenue Canada tax rules. It has to do with the administration of the tax system in the country and the application of tax law which often leads to the second point I was raising, the far more important point, the whole issue of tax fairness and in particular issues of scope and timing.
Timing in this case is the whole issue of retroactivity of administrative and application changes in terms of the administration of the law. Scope is in terms of the application of this particular provision to some workers and not others, in particular this one provision that depending on how interpreted or how applied affects workers of foreign parented companies differently than workers of Canadian parented companies whether or not those workers are Canadian.
These are very important questions and I do not profess, nor did I in my statement, to know the right answer or what the correct policy should be. I do not know and I can understand that there are certainly legitimate costs involved in these kinds of working arrangements.
My point is that if we are going to administer a sensible, fair and improved tax system in this country it is important that we take these kinds of issues seriously and listen carefully. Neither of those things was reflected in the kind of answer that the minister gave in the House to this dilemma yesterday.
Specifically, whether or not one agrees with the overseas tax credit it is not difficult to understand the concept that fairness and retroactivity of application are two entirely different things. We should be very careful in retroactivity of either legislation or application especially when it involves substantive tax penalties for some people.
Second, it is also not hard to understand in terms of fairness that all Canadian workers should be treated as equally and as equitably as possible. I happen to believe that in the kind of new economy we are moving into capital, with the porous international borders we have and with the technical evolution we have and with many of the well run countries in the world, will do a pretty good job in the long haul of taking care of itself. I do not think it needs protectionist measures such as this.
I noticed that the revenue minister rationalized this measure as effectively a protectionist support for Canadian based companies. However, Canadian labour in the future is going to need not necessarily our help in the old sense of giving handouts but help in the sense of ensuring its full participation in this dynamic, capital driven economy. This kind of tax measure is a perfect example of one that is driven by needs, old kinds of protectionist, nationalist needs that are not consistent with the needs of Canadian workers.
Whether this particular tax credit is essential or well structured or not, I do not know. I do know that if a Canadian worker is participating in his economy, whether here or abroad, surely the application of that should not be based on the status of his employer. Canadian workers and Canadian labour should be the focus of those kinds of measures.
I see, Mr. Speaker, you are asking me to wind up. I did want to spend my time on that. I hope the government is listening and I hope it takes not just the big concerns that we have about the tax system but some of these smaller day to day tax problems that Canadians have much more seriously in the future.