Madam Speaker, I am extremely happy to participate in today's debate on a subject very close to my heart. When I decided to run for political office, I had two major goals in mind: the first, of course, was to bring about full sovereignty for Quebec, and the second was to create a fairer, more equitable tax system, since it accounts for a large part of the social contract between individuals and the government and is presently the cause of much of the dissatisfaction people feel for their elected representatives.
Today's debate is also, in my view, very timely. Yesterday was the deadline for filing income tax returns. Many people likely spent the weekend working feverishly at the last minute to properly complete their tax returns. Just yesterday, I was completing a tax return for a friend. I enjoy this task, but I know that many people find the process quite difficult and quite complex. There must not be many people who are totally familiar with the ins and outs of the Income Tax Act, given its complexity. Year after year, new amendments are made. The end result is an extremely complex piece of legislation.
The same could be said of the Goods and Services Tax to which some Liberal members made reference a while ago. This tax is also extremely difficult to understand and fraught with complexities and regulations. The GST legislation is almost as voluminous as the Income Tax Act.
In moving his motion, the hon. member for Calgary Centre touched on one alternative that he would like to discuss. While I do not necessarily agree with the aims or technical aspects of his proposal for a single tax rate, I do think that all options deserve to be weighed. This is a serious proposal, one that should be given due consideration.
Having said this, I do have some reservations, although I am not an expert on this single tax. First, I am not convinced that this would really be a more progressive, more equitable tax. Of course, a single tax rate that would apply to all incomes may seem rather simple, but would it really result in a system that was fairer and less regressive than the current one? I somehow doubt it, because there are many ways to avoid declaring income. This option would have to be carefully considered.
On the other hand, it does not leave us any leeway in using taxation as a social and economic development tool. I know this is one of the arguments of those in favour: taxation must not be a social and economic development tool; alternatives must be found.
Personally, I think it can be a very useful tool. Let me give you an example. In 1987, in my region, the economy was going full steam. We came very close to full employment, with 6 per cent employment rate, and we were doing very well. One of the main reasons for this success was mining exploration, an activity strongly encouraged by way of deductions for flow-through shares.
Toward the end of that expansion period, the governments attacked this deduction, and you should have seen the tremendous impact this had on our region. Today, research does not even ensure availability of sufficient reserves any more. Trouble lies ahead ten years down the road, maybe less, because we are not discovering enough mineral reserves. Problems are already starting to show up in our region, and that is a serious situation.
But we used to have a tax incentive, a tool that allowed and encouraged people to make investments. You know how risky it is to invest in a mining exploration company. The taxpayer would put money into shares, but in recognition of the risk factor, the government shared the risk via tax incentives.
Interestingly enough, this is not a direct subsidy by which the government gives money to people and tells them: "Go and do research". Instead, the government is supporting investments made by individuals in the private sector. So, the risk is shared. I think this is the sort of interesting tools afforded by the tax system. Let us not be mistaken in thinking that only high-income taxpayers took advantage of this; many middle-income
people in our region were attracted by all the spin-off benefits their investments could have. The nice thing was that when you picked a company that struck an interesting deposit, then, it was almost like winning the lottery.
How can we encourage these businesses? I would like those who support this kind of tax to explain how they will promote economic development, especially in higher-risk areas. The government has a duty to intervene when investments may be insufficient due to various factors. That is what I wanted to say regarding this tax.
Now, if we look at the current tax system as a whole, I think that, to resolve any problem, we must follow a certain procedure. First, we must analyze the situation carefully; make a diagnosis; identify alternatives and make a choice. But there is also a subsequent step that the government often forgets: following-up on the choices that were made. The Auditor General often talks about it. Many government programs are not assessed properly after their implementation. The same goes for tax measures. That is why we think it would be interesting to look at overall expenditures-not only budget but also tax spending-to examine, assess and follow up on them and to study their impact in the last few years.
Of course, the Liberals were full of good intentions when they were in opposition. It led them to write the red book that I will not quote because I sent it to recycling when I realized it was only wishful thinking. Very little is put forward in this House. I would like the Liberal government to be a little more serious. They cannot always fall back on the argument that their four-year mandate gives them enough time to act. There are always things that need to be done. We cannot wait for four years. They can rest easy, they will not run out of things to do. And we can start right away.
Earlier, the Parliamentary Secretary to the Minister of Finance talked about the committee's heavy workload due to the GST and Bill C-17. However, when the GST report is tabled on June 1, the committee will then be free to deal with family trusts in June. Parliamentarians will be available in June as Parliament will still be sitting. Yes, there will be other minor bills but given how long we worked on the Goods and Services Tax, we could examine family trusts.
However, the government should give out information and put figures on the table. But they prefer to wait until the fall to gain time, to stall for another year; other issues will be raised and they will find other reasons to prevaricate. Playing for time is the best way to avoid dealing with a problem. And that is what they are doing. And they ease their conscience by saying that it is in the latest budget and that they will start to do something. Hold on there-we shall see; I have my doubts.
In the past, some people dealt with taxation. There were important commissions, the Carter commission, the Rowell-Sirois commission; at that time principles were expressed that are still current today. We should deal with them instead of starting all over. The public feels frustrated and their frustration is rather justified. Often, committees and commissions of inquiry are set up to analyze problems. They identify the problems very well and produce very fine three- or four-volume reports; a huge number are printed and copies are available everywhere, but often these recommendations remain on the shelf. Although the problem must be restated for today's conditions, these reports often contain some very worthwhile things.
As I said in my introduction, the tax system is an important part of the social contract; it is how revenue is collected from taxpayers to pay for the government's expenses. Individuals now have a terrible feeling of unfairness which puts a very strong pressure on them to somehow right the balance. What do they do? They encourage the underground economy because they feel that it is the right thing to do for themselves. And you must understand where they are coming from, given some data from the 1980s.
For example, look at the wealthiest 1 per cent of the population. I have some reservations about the figures that I will give, but I heard them from the member for Gatineau-La Lièvre. Even if they are not totally accurate, they certainly are indicative of the trend.
In 1980, the highest percentile, the richest 1 per cent, owned 16 per cent of Canada's total wealth. Ten years later, with the recession in the early 1980s and the economic slowdown in the late 1980s, this top percentile held 26 per cent of the wealth, an increase of 10 per cent in the 1980s.
It is not surprising to hear middle-class people say that they feel they were strangled in the last decade, that they felt a lot of pressure. People live with it every day and resent it and that is what spurs on our underground economy.
Let me give some other figures, Madam Speaker. Let us look at government revenue, starting with 1981, so that we can better see what happened. In 1981, federal and provincial governments together collected $34 billion in personal income taxes. In 1991, that amount had reached $100 billion.
Let us now take a look at corporate income taxes. In 1981, $11.7 billion were collected in such taxes, compared to $18.3 billion in 1991. Obviously, the progression is far from being the same, which explains why a small percentage of Canadians were able to get richer. If you look at the breakdown for each province
and the federal government, you can see that the pattern is the same everywhere.
I want to say a word on personal income tax, because last Friday we learned something which nearly went unnoticed and which is almost outrageous. Revenue Canada employees complain about political interference when auditing corporations. Last Friday, I raised this issue in the House. The Parliamentary Secretary to the Minister of Revenue said that there was no concrete evidence justifying an inquiry. I am sorry, but 300 persons filled out a questionnaire.
As you know, when a survey is conducted by sending out a questionnaire, there is always a space for comments at the end. People usually do not fill out that part. They just quickly answer the multiple-choice questions. However, in that case, 300 people out of 4,000 filled out that part of the questionnaire. Three hundred people bothered to make comments. More than that in fact, but 300 complained about political interference when auditing some company files. This is really serious.
Of course, you may think this was the case only under the previous Conservative government. But how do you know it is not also occurring under the government opposite? After all, once the Liberals and the Conservatives find themselves on the other side of the House, their policies are pretty similar. In fact, they are quite similar, and that is a real concern.
We also referred to the GST. I was not going to discuss this tax, but I have to do it. I am not sure that Canadians and Quebecers fully understand the commitment made by the Liberal Party during the election campaign. The Liberals said they would eliminate the GST, but they also whispered that they would replace it with something else. That was mentioned in the following paragraph. I am not sure how people reacted. However, I can honestly tell you that residents in my riding did not believe the Liberal Party. They felt that the Liberals would somehow take the same amount of money from their pockets. Whether the Liberals were going to change the name or the structure of that tax, people were reluctant to trust them.
I will not get in to what is being done in committee. I am a member of the committee, so I know perfectly well what is happening there, but I must say I am concerned. We get the impression that the expanding underground economy is connected only with the coming into effect of the GST, but it is far more complicated than that, and just reforming the tax is not going to restore confidence, especially since the objective is quite clear. The instructions of the Minister of Finance are to find an alternative that will produce as much revenue: $15 billion. The rates may be different on certain products but on the whole, the objective is still to take another $15 billion out of taxpayers' pockets. How do you expect the consumer to perceive this as a major and effective reform? I agree that in the case of businesses, there are a lot of things that can be done to simplify the system, which would bring costs down, and consumers would benefit to some extent.
However, they are certainly not going to reduce operating costs by $15 billion. That does not make sense. The cost of administering the tax, which is very high, is around $600 million.
A number of Liberal members tend to confuse the issue when they talk about GST administration costs. Now, I do not necessarily want to defend this tax, but I would like to explain what we are talking about here. The total revenue is around $29 billion, but businesses are entitled to claim an input tax credit, which is quite common in the case of a value-added tax. If we take away the cost of input tax credits for businesses, not a tax that must be paid but a refund, and we subtract as well the tax credits for low income individuals, we have $15 billion left.
It is simple mathematics. A number of government members are saying it costs 50 per cent to run the system and to get a dollar you have to spend 50 cents, but that is just not true. It costs $600 million to run the system, and their calculations are all wrong.
It is still too much, of course. However, with this political rhetoric, they are just spreading rumours. This is irresponsible, and they should take the trouble to check their facts.
So what is the answer? I see I have only five minutes left, but I could talk all day about taxation and tax reform.
We must start with a comprehensive evaluation of all tax expenditures. Consider what they were used for and what the objectives were. Were those objectives met? The department publishes information on tax expenditures connected with individual and corporate income tax. When we read this information, we see that a number of data are not available. In the report published this year, the latest year available is 1991, and a number of data are still not available. Is it because they were not calculated or evaluated? I agree in some cases it is very difficult, but in other cases, it is definitely quite feasible.
Is it because they don't want to reveal this information? Is that what the Liberal government and the Minister of Finance mean when they talk about transparency and profess to be very staunch advocates of government transparency? I am not certain, but I hope not. I hope they plan to produce reports that are far more serious. We can give them the benefit of the doubt, since they had only recently been elected. Perhaps this reflects a tendency on the part of this government, but in any case, we will no longer accept publications such as this one.
There are two sides to a balance sheet, the revenue side and the expenditure side. Regardless of the measures taken to improve the fairness of the tax system and the way in which revenues are collected, we cannot forget that there is a serious problem on the expenditure side. Revenues are collected to cover expenditures, but these expenditures are exorbitant. Consumers, who are also voters, view a number of these expenditures as wasteful, and rightly so. The first step toward significantly reducing government spending is to eliminate this waste.
The Prime Minister has told us that it is the responsibility of committees to review spending item by item. The members on this side of the House are not afraid of this task and are ready to take a go at it. I am happy to see that Reform members are also willing to take on this task. However, when we introduced a motion calling on committees to have the responsible ministers testify, only two of the fourteen committees agreed to the motion. Two out of fourteen! Another shining example of the Liberal's brand of transparency!
There is the Minister of Finance, although this is not the biggest operating budget, and there is also the Minister of Human Resources Development who manages a fairly large budget. But does he intend to testify? It is almost scandalous.
Before concluding, I would like to mention a number of areas on which we are prepared to concentrate our efforts. Mention was made of family trusts. I know that one of my colleagues will be speaking about this issue later and that my colleague from Rosemont spoke about it earlier. There is also the matter of a minimum corporate tax. We currently have a capital tax which is a form of minimum tax. However, since it is possible to reduce the tax level to zero, this is not a real minimum tax.
The year 1987 is notorious for a figure now making the rounds in Canada. That year, a number of corporations earned $27 billion in profits without paying a penny in taxes. That is a shocking statistic. The public is hard-pressed to believe that the tax system is fair when it hears statistics like these.
Also scandalous are tax havens, the tax treaties signed with other countries that allow people to evade the tax system to some extent. These were repeatedly denounced by the Auditor General. We will be looking into it shortly at the Finance Committee and I hope the minister will give us clear indications on what he intends to do.
The measures announced in the budget are clearly insufficient and will not solve the problem. We have to review all tax treaties and put into place a truly operative minimum income tax system. One such system was introduced in the United States by Ronald Reagan, who is hardly the greatest socialist in the history of mankind. Why could we not do the same thing here? In terms of corporate tax, the situation is much better in Canada than in other countries.
So, there is food for serious thought here and I would like to draw this parallel with the GST before closing, Madam Speaker. When the tax on business inputs was removed, who gained from the introduction of the GST? The businesses with inputs on which the tax was removed.
Since my time has run out, Madam Speaker, I will simply tell you that we have been in favour of a tax system reform for a long time and are prepared to work at that. The government should act responsibly and, in the year to come, the days to come, it will have to put something on the table so that we can start real discussions and find real solutions to a problem perceived as very serious by consumers and voters.