Mr. Speaker, I am pleased to have this opportunity to make a few comments on Motion No. 382 sponsored by the member for Mississauga South.
Let me say from the outset that I have spoken with a number of people who run businesses in my riding of Lambton-Middlesex about the underground economy. Those who respect the law and pay their taxes do not appreciate having to pay higher taxes simply because others are trying to cheat the system.
Entrepreneurs and small business people who are trying very hard to make a living do not like being at a competitive disadvantage of businesses and tradespeople who ask for cash payment to avoid paying taxes. My constituents also worry over how lost revenue is affecting the government's ability to maintain Canada's social and economic programs which are so important to our well-being.
The issue that is the focus of this motion is of major importance to all Canadians right across the country. The greater the activity in the underground economy, the less revenue there is available to government. 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.
There has been a great deal written about the size, extent, nature and causes of the underground economy. As members are probably aware, estimates on the size of the underground economy vary widely depending upon the methodology used, anywhere from 2.5 per cent to 3 per cent of GDP to over 20 per cent, or from $20 billion to $140 billion a year. Regardless of its size, there is no disputing the fact that the underground economy exists and its corrosive efforts are exacting a huge toll on Canadian society.
Why then do people make the decision to go underground? There are many reasons. However, I would submit that none of these reasons is legitimate. There is the myth that everyone is doing it, so I may as well. There is the perception of the GST as an unfair tax which enables someone to rationalize their behaviour as acceptable. Others perceive the tax system as too complex and cumbersome to even bother with it. Then there are those who feel that it is easy to get away with it, so why not take the chance?
We have to also acknowledge a widespread disrespect for government and politicians and the accompanying perception that government is wasting the money it takes in from Canadians and that they are getting poor value for their tax dollars.
While none of these reasons can justify not paying one's fair share of taxes, the fact remains that an unfortunate snowballing effect is created once the decision is made to go underground. There is the fear that once one has gone underground, it is too difficult to come out.
There is the perception that if people have gone underground long enough, they might not be able to come out even if they wanted to because there would be no possibility to pay the taxes, let alone the interest and penalties, simply because there would be no paper trail made up of bills, invoices and so on. Faced with this set of circumstances, those who would like to reform their bad habits perceive it cannot be done. They are somehow stuck.
One of the most attractive aspects of Motion No. 382 is the provision for a limited amnesty on interest and penalties otherwise payable when a taxpayer voluntarily declares income previously undeclared. The inducement to go straight would allow the previously delinquent taxpayers to voluntarily come forward without penalty for a limited time and start paying his or her fair share of taxes once again.
Another component of the motion is a proposed tax credit to taxpayers on home improvements and renovations. This would provide an inducement to create an essential paper trail and to serve as one of the primary vehicles for a country wide information campaign.
The motion before the House demonstrates a desire on the part of the member for Mississauga South to get Canadians talking about the negative consequences of the underground economy and to hopefully find ways to encourage as many people as possible to return to the legitimate economy.
There must be a public campaign which emphasizes that tax evasion is a crime and that it is certainly not a victimless crime as is often argued. All Canadians are victims, because tax evasion leads to job loss, increase in the deficit, honest taxpayers carrying more of the burden, and legitimate businesses operating in an environment of unfair competition, sometimes leading to their bankruptcy.
I believe the co-existence of the amnesty program and the tax credit for home renovations with more traditional public awareness campaigns would serve to educate Canadians on the facts of the seriousness of the existence of the underground economy and how they can help to eliminate it. I also believe there will be a change in the attitude of Canadians toward paying their fair share of taxes if they can be convinced that government is upholding its responsibility in enforcing the law in a tough but fair fashion.
To his credit, the Minister of National Revenue, through a series of thoughtful initiatives over the past year and a half, has been successful in recovering over $800 million in unpaid taxes. But the department has done more than just collect unpaid taxes. Through
consultation with over 240 groups and associations, the department has learned how to refine its strategies, identify areas of non-compliance, and explore measures for improving compliance. For example, the government's recent budget announcement of a measure to address the problem of the underground economy in the construction industry is a direct result of its consultation efforts.
The department has increased its publicity of convictions for tax evasion. As a result, there has been a doubling of the number of voluntary disclosures. The department now receives about 19,000 referrals a year from Canadians who are tired of some of their neighbours and friends not paying their fair share of taxes.
The motion before the House demonstrates a desire on the part of members to get Canadians talking about the negative consequences of the underground economy and hopefully find ways of encouraging as many people as possible to return to the legitimate workplace within the mainstream economy.
I would like to take this opportunity to fully endorse the motion brought forward by the member for Mississauga South and I would encourage all members of the House to do likewise.