Mr. Speaker, I will make a few comments in support of Motion No. 382, sponsored by the member for Mississauga South.
We as as government are asking people to make significant sacrifices in the name of deficit reduction. I believe most Canadians understand the seriousness of the situation and are prepared to make these sacrifices.
While they may grumble about taxation, Canadians in general are quite prepared to contribute a fair portion of their income in return for the services they want. They have made it very clear the services they want include medical care, solid infrastructure and transportation systems, safe communities and income security for all Canadians.
However, I also believe they are fed up with seeing their hard earned money wasted over the years in ways they never counted on. They want us to spend their money the same way they spend it, carefully, thoughtfully, with due consideration of what it took to earn the money in the first place. That expectation is fair because after all it is their money.
The public is watching us very closely. When it hears of lavish spending or wasted funds at any level of government, federal, provincial or municipal, its confidence in all governments is eroded.
We as a government recognized this right from the start and have taken many steps to ensure that taxpayers get their money's worth. This is extremely important and I urge all members to keep up their vigilance in this area.
When people see government as a black hole, sucking their money in and giving nothing back, they tend to wonder why they should pay tax on that kitchen renovation or that load of gravel.
For many individuals and businesses participating in the underground economy it has become a convenient way not only to avoid paying taxes but to take some small action against what they see as governments they do not trust placing unfair burdens on them.
They may feel their financial situation justifies their actions. It may be several years since their last pay raise or even their last regular pay cheque. They may have lost their previous job because of government cutbacks or downsizing. They may feel the tax system is too complex or unfair.
Whatever the reason, it is of paramount importance they come to understand the damage they are doing to the economy of the country and ultimately to themselves. Estimates on the size of the underground economy vary widely depending on the methodology used from $20 billion to $140 billion a year.
Even if one were to assume the lower figure is more correct, that is still $20 billion not available to governments to provide necessary services for their taxpayers.
Underground economic activity creates unfair competition for honest businesses, jobs are lost and honest taxpayers are forced to pay more than their fair share of taxes, and once again they feel cheated. It is a vicious cycle and people must understand the underground economy makes victims of us all.
We in the House as well as all Canadians must consider the real cost of underground economic activity. This cost is huge. It shows up in reduced essential services, taxes that are higher than they would otherwise be, unfair competition and a reduced standard of living for the honest taxpayer.
How does the underground economy affect the legitimate business person trying to be competitive? Right from the start honest business people are at a competitive disadvantage because they cannot offer a customer the same deal offered by someone who will do the work but not collect the taxes. The end result is that the legitimate business person faces unfair competition and jobs are lost.
The consumer who takes the lower price and pays cash must understand that he or she is cheating the system and becoming party to the evasion of taxes. They must come to understand they are benefiting from the full range of government services but that by engaging in the underground economy they are no longer paying their fair share. They are taking part in a transaction that
jeopardizes our health, education and other essential economic and social services.
The motion before the House suggests the government educate the public and encourage its participation in addressing the problem. I support the suggestion wholeheartedly. Canadians need to know the facts about the seriousness of the underground economy and what can be done to reduce it.
The government has recognized this essential truth and has made education a fundamental element of its action plan to address the underground economy.
During the past year officials of Revenue Canada have been actively consulting with individuals and associations across Canada.
With the Canadian Institute of Chartered Accountants, for example, the department established a working committee to investigate the causes of the underground economy, examine audit techniques and identify training that would assist in tracking down unreported or under reported income and identify opportunities for reducing the cost and administrative burden of compliance for businesses and individuals.
These groups are taking the message of the risks of dealing in the underground economy back to their membership. The message is simple: Every citizen and every business has a role to play in eliminating the underground economy. Individuals can start by refusing to deal with businesses and tradespeople who ask for cash payments. Businesses can do their part by turning down demands to do work off the books.
The increased publicity given this problem by the minister of National Revenue is having an effect. The number of voluntary disclosures where people come forward to voluntarily correct their tax affairs has doubled in the past year. The member's suggestion that a limited amnesty on interest and penalties be offered to taxpayers who voluntarily declare income previously undeclared is a good one and will result in even more honest Canadians coming forward.
I am confident that we are making progress in dealing with the underground economy and other forms of tax evasion. I applaud the member for Mississauga South for his efforts to stimulate discussion on the issue. I urge members of the House to carry the message back to their constituents.
We in government have recognized that we must take positive action to restore respect, trust and confidence in government and we are doing our part. I urge members to talk to their constituents about the underground economy, its seriousness and how it can be reduced. I urge Canadians to do their part to discourage this harmful activity.