Mr. Speaker, I rise today to speak about important issues relating to this motion, two issues that are currently eroding the very fabric of Canadian society. The issues are the underground economy and smuggling.
They are issues that are eroding fairness and equity in this country. The underground economy and smuggling are national problems. They are complex problems without simple answers or simple solutions and they are wearing away the respect that Canadians have for law and for the fairness of our tax system.
There are some in our society who feel that evading taxes and smuggling goods are acceptable activities. These people believe that no one is hurt. The fact is people do get hurt.
Underground activity and smuggling are not victimless crimes. They hurt the law-abiding majority of Canadians who obey the law. They are putting honest business men and women out of business. Legitimate business is forced to operate against competition that is not contributing its fair share to the economy.
Honest companies have trouble being competitive both at home and abroad and are forced to charge higher prices to compensate for their own honesty. Jobs are lost. The deficit grows and honest taxpayers carry an unfair load. The playing field is not level.
The greater the illegal activity, the less tax revenue available to governments for essential services and social economic programs. Governments have less revenue to maintain the current high quality of our health care system and our social safety net.
As a result all government programs, including pensions, education, development of the infrastructure, will in due course be at risk.
In 1993 smuggling cost the federal treasury over $1 billion in lost revenue. It cost provincial treasuries another $1 billion. Depending on the estimate, the underground economy ranges from 2.5 per cent to 3 per cent of GDP to over 20 per cent. This means that $20 billion to $140 billion is going untaxed each year. That is billions of tax dollars that the federal and provincial governments do not have to reduce the deficit and finance health, employment and social services.
Because of underground activity it becomes difficult if not almost impossible for governments to meet Canadians' demands for economic growth, deficit reduction and meaningful jobs.
It is clear to me that those who enjoy society's benefits while refusing to contribute to its maintenance are taking advantage of others. They are taking advantage of their honest friends and neighbours. These people whether they realize it or not are expecting others to pay their way. They are expecting their friends and neighbours to pay for the general services they enjoy, including roads, hospitals, schools, fire and police services, while they improve their own personal financial situations. To be extremely blunt, they are freeloaders.
We cannot allow this kind of selfishness to continue. The integrity and the future of our tax system depends on bringing
these people back into the legitimate economy. Canadians have to know that everyone is paying his or her fair share. Canadians need to have confidence and trust in government and in the way their governments handle their money.
As the Minister of National Revenue has publicly stated, tax evasion is not a game. It is a serious issue with serious consequences. It burdens honest taxpayers and hurts businesses throughout the country through unfair competition. While everyone wants the benefit of lower taxes, it must be achieved in line with the law and not by breaking it.
We want tax evaders to voluntarily rejoin the legitimate economy. However we must also continue to send the message that if they continue to deliberately evade taxes we will do all we can to identify and convict them.
I appreciate the opportunity the parties opposite have provided to send this message again today. Tax evaders and smugglers should know that we intend to put a halt to what they are doing. I also appreciate the opportunity to send a strong and clear message to honest Canadians. The law-abiding majority of Canadians need to know that we recognize the fact that they are carrying an unfair share of the burden because of tax evaders and that we are taking action to lift it.
The opposition asked that we sit down with the provinces and with ordinary Canadians to consult on these issues. That is something we do all the time, every single day.
For example, the government recently joined forces with the province of Quebec to combat the underground economy, tax evasion and smuggling, and to improve the way we are using the resources allocated to addressing these issues. Under the new arrangement Revenue Canada and Revenue Quebec have strengthened their relationship in all areas of enforcement with the goal of identifying cases of fraud, non-filers, non-registrants, to sharing access to electronic audit selection systems, co-ordinating audit investigation and collection activities, sharing the results of enforcement measures, sharing the results of research into the causes and symptoms of tax evasion and non-compliance with tax law.
Additional measures under this arrangement include developing complementary audit strategies, putting together joint audit teams to conduct joint audits and investigations, and exchanging the results of these activities.
Furthermore, the government is working closely with the other provinces on these issues as well. Together these measures will allow us to better target our audit activities and improve the ability of both levels of government to co-ordinate their investigation and collection programs. It will also further strengthen the initiatives to combat non-compliance that the Minister of National Revenue announced on November 24, 1993.
Under these latter initiatives Revenue Canada set up special audit teams to focus on business sectors that demonstrate high levels of non-compliance. Targeted sectors include the construction, jewellery, hospitality, home renovations, car repairs and other service sectors.
Revenue Canada also reassigned more resources to auditing, increased the number of joint GST-income tax audits that it conducts and began cross referencing the GST and income tax data bases in order to improve the identification of those not reporting income.
Between 1991-92 and 1992-93 the department added 245 income tax auditors to its field operations, increased the number of income tax audits by 10,000 and raised $200 million in additional taxes. In addition, the amount of corporate income tax collected per auditor rose approximately 280 per cent between 1985-86 and 1993-94.
In short, we have and we are continuing to take action to ensure that the majority of Canadians do not suffer because of those who purposely evade and cheat. We simply cannot allow a minority of individuals to avoid the law.
Everyone must pay their fair share, no more, no less. We owe it to the law-abiding majority of our citizens to ensure that they no longer have to shoulder an unfair burden. It is unacceptable that others who refused to meet their tax obligations can still take advantage of the same services and benefits.
We must continue to enforce the law to its fullest extent to ensure fairness to honest taxpayers. We must be prepared to take all necessary steps to weed out those participating in smuggling and tax evasion. If we are going to maintain the integrity and fairness of our tax system we must send a strong message that participating in the underground economy and engaging in smuggling activity will be a very risky and costly decision.