Debates of April 25th, 1995

Lobbyists Registration Act

[The Acting Speaker (Mr. Kilger)]

In my opinion the nays have it.

And more than five members having risen:

[The Acting Speaker (Mr. Kilger)]

Pursuant to Standing Order 76(8), the recorded division on the proposed motion stands deferred.

The next question is on Motion No. 31. Is it the pleasure of the House to adopt the motion.

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mr. Kilger)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mr. Kilger)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mr. Kilger)]

In my opinion the nays have it.

And more than five members having risen:

[The Acting Speaker (Mr. Kilger)]

Pursuant to Standing Order 76(8), the recorded division on the motion stands deferred.

The House will now proceed to the taking of the deferred divisions at report stage of the bill now before the House.

Call in the members.

And the bells having rung:

[The Acting Speaker (Mr. Kilger)]

Pursuant to Standing Order 45, I have been requested by the chief deputy whip to defer the divisions until 5.30 p.m. today.

Accordingly, pursuant to Standing Order 45, the division on the question now before the House stands deferred until later this day at 5.30 p.m. at which time the bells to call in the members will be sounded for not more than 15 minutes.

The House resumed from April 24 consideration of the motion that Bill C-70, an act to amend the Income Tax Act, the Income Tax Application Rules and related acts, be read the second time and referred to a committee.

Income Tax Act

[The Acting Speaker (Mr. Kilger)]

The hon. parliamentary secretary had approximately 10 minutes remaining. He might choose to elaborate on his previous intervention.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I appreciate having the opportunity to continue to talk about the debate on tax reform.

Something that I believe concerns all members of the House of Commons today is the fact that the world monetary system does not seem to be functioning properly. In all the major financial institutions, the banks, are sections where they are dealing with derivative funds, working around the clock seven days a week. The flow of capital being perpetrated right now affects all countries, managed by a very few men and women in my judgment in an unaccountable way, is one of the major reasons why we have these major fluctuations in interest rates and in exchange rates.

When we look at all the activity around the derivatives, around all the speculation on the stock market, we discover that the amount of productivity related directly to the manufacturing of a product or service is very small in relation to the amount of speculative movement within those markets. Somebody writing

in the New York Times the other day said that for every $1,000 exchanged on the stock market only about $1 is related directly to productivity.

The more we get into this flow of capital, the more we come back to the fact that our basic tax act is in need of major reform. This is an area where all members of the House have to come together to address the problem in a comprehensive way.

This is not a partisan issue. This is an issue that affects every person who generates income in this country. As we all know the current tax system is a disincentive to productivity. The harder one works and the more one makes on the gross income, it seems that the less one has left in one's pocket.

What we see now, whether it be an individual or a corporation, is the flight of capital, the flight of talent out of our country. It is easy today to move capital around, move companies around by pushing buttons but we cannot move people around.

We are a nation. We have built one of the greatest infrastructures in the world in terms of promoting our quality of life, whether it be our health care system, our educational system or our social safety net. All of a sudden, these things are in jeopardy. They are in jeopardy not because of waste and not because people are abusing the system. We must eliminate the abuse of the system, waste and overlap. No one is debating that.

However, we face a more fundamental problem. Because we are now legislators who are on our knees to the capitalist markets, in my judgment we are becoming less liberal in the way we look after some of the disadvantaged people in our community. We are becoming less sensitive to the whole purpose of why we are here.

We come to this Chamber not to dot i 's and cross t 's, we come to debate ideas that will either maintain or improve the quality of life in the country. Right now we are not controlling the agenda. The people who are controlling capital flows outside of sovereign states are the ones who are having the most effect on the decisions we make.

Our whole thrust as the House of Commons for the last 10 or 12 years has been deficit and debt. A lot of the deficit and debt is exacerbated by a world monetary policy which is not working and ultimately by a tax system which is not working. That is why I feel it is very important, as I previously mentioned, that we change the basic tax act.

One of the things we must be aware of is the fact that our neighbours to the south are starting to look at comprehensive tax reform in a very serious way. In fact, just before question period today I was handed an article which was written in the New York Times by William Safire-

Budget Implementation Act, 1995

[The Acting Speaker (Mr. Kilger)]

The Secretary of State for Parliamentary Affairs on a point of order.

[Alfonso Gagliano, Liberal, Secretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons]

Mr. Speaker, it has been impossible to reach an agreement pursuant to Standing Orders 78(1) or 78(2) with respect to second reading of Bill C-76, an act to implement certain provisions of the budget tabled in Parliament on February 27, 1995.

Therefore, pursuant to Standing Order 78(3), I give notice that I will be moving a time allocation motion at the next sitting of the House for the purpose of allotting a specific number of days or hours for further consideration of the bill at this stage and every question necessary in order to dispose of this stage of the bill.

The House resumed consideration of the motion that Bill C-70, an act to amend the Income Tax Act, the Income Tax Application Rules and related acts, be read the second time and referred to a committee.

Income Tax Act

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, the article in the New York Times talked about the new bipartisan spirit that is sweeping the United States Congress right now on comprehensive tax reform. It talks about Republicans Dole and Kemp and Democrats Bradley and Gephardt all working together on this issue. I note the last sentence of the article, which reads: ``This 25 per cent solution builds on the reform that Bradley and Senate finance chairman Bob Packwood, Republican, worked out in the mid-eighties and it need not wait for a Republican president''.

What concerns me about the fact that the United States is seized with this issue is that if it implements this before we do, then once again we will not only be following, we will lose a tremendous amount of investment. Some of our larger corporations, high achievers, income earners and entrepreneurs are naturally going to flow to that market where they can achieve more in the way they earn their incomes. Therefore, we should somehow figure out a way to get involved in this debate in a very aggressive way.

I read a paper just before Christmas written by an economist from the province of Quebec by the name of Pierre Fortin. He is now one of the most respected economists in the province and one of the advisers to the Bloc Quebecois. Obviously, he would give strategy on its future. He may not be a close adviser but he is someone who is listened to by certain members of the Bloc. He too is advocating this type of a system.

The best way to handle the tax act of Canada is to go right back to basics and flush out all the special privileges, preferences and loopholes. If we added up the value of all the preferences and tax loopholes in the last 15 years that were given to foreign multinationals and the top 150 companies in Canada, we would see that those preferences or, as some would call them, tax grants, would add up to close to $500 billion which is equivalent to almost the national debt.

I believe it is time for us, as a country, to get involved in this debate in an aggressive way.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened carefully to the hon. member for Broadview-Greenwood and I must say that I was quite surprised because he made a very sensible and thoughtful speech. The problem is that he stated exactly what we have been saying to the finance minister and the government for the past 15 months. As we said before, we need to review the whole Canadian tax system, because it is full of holes and is preventing us from reaching our goals and ensuring social equity throughout Canada, in the East as well as in the West, and a fair balance between what individual taxpayers and private corporations pay.

So, I want to ask my colleague from Broadview-Greenwood why the members of his own government do not understand his message, which I find quite sensible? Why can he not convince his colleague, the Minister of Finance, of the need, indeed the urgency to remedy the obvious deficiencies in the Canadian tax system, which allow high income earners as well as big corporations to benefit from loopholes such as the tax conventions signed with some tax havens?

Why can we not abolish these loopholes? Could it be because his colleague, the Minister of Finance, is both judge and judged? It is a well known fact that he has a fleet of vessels flying the Panamanian flag, a flag of convenience, and may not have the same interests as his colleague from Broadview-Greenwood.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, I thank the finance critic for the Bloc Quebecois for the question. It is a question I have been asking myself for the last two years.

I have been campaigning on the single tax system for the past five years. When I started the debate I did not understand the complexity of the tax act and its sensitivity toward progressivity for seniors and families with children. We designed and redesigned the tax form over 30 different times in order to try and have something that was doable. Having said all of that I really do believe our last effort on this project was very close to something that was doable and worked for everyone.

I like to think I have a little bit of experience in selling to my colleagues in this House of Commons. I have worked hard for the party for 15 years now. I have discovered regrettably that the lobby system which exists around the tax act and the Department of Finance is the strongest lobby which exists in Canada. The men and women who have lobbied for a particular tax preference within the 1,400 pages of the tax act are all people who believe in their cause. I am not saying they are doing anything subversive or illegal, but their ability to lobby their cause and add their preference to the tax act is certainly more powerful than mine.

I am not alone. Other members on this side of the House believe in comprehensive tax reform as well. I believe that only when we as elected members of Parliament come together as a fist, rather than going in 10 different directions, will we have the ability to move the officials in the Department of Finance. This is something the elected members of Parliament put here by the people can do, not the unaccountable bureaucrats in finance. That is the challenge.

I do not mind saying to members opposite that there are some days when I wonder whether I am spinning my wheels. However, I want members to know that I really believe if we all work together on this, that it is achievable. Why will it be achievable now? It is no different from the music industry. How did some of the best talent in our country make it? They went to the United States, made a hit and came back as superstars.

Now both the Republicans and Democrats in the United States of America are looking very closely at reforming the whole system. We will be consistent, traditional Canadians. If they implement it, we will follow rather than having the guts to take the lead.

[Deborah Grey, Reform, Beaver River, AB]

Mr. Speaker, I would like to applaud the member for the work he has done over the years on the single tax. I know he certainly understands that we on this side of the House support it.

He said there are days when he feels as if he is spinning his wheels. I would like to ask him specifically how he felt a few moments ago when someone from his caucus walked into this Chamber in the middle of his speech and said that time allocation was going to be brought in on this piece of legislation.

The hon. member and I sat together on this side of the House in the last Parliament. It was deplorable then for the Tory government to bring in time allocation.

Could he explain to me if he feels like he is spinning his wheels right now because someone just cut him off with time allocation? This is debate, openness and democracy? Bunk. Could he address that please.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, that is a very tough question for me to answer. There is only one answer and that is the answer one believes in. I have been in opposition where we have had the guillotine of closure put on us. I would say that we did not like it.

Let me say first that the administration of this House because of the legislative agenda and because we do not sit as much requires this from time to time. We have brought in time allocation or closure on bills about 10 per cent compared to the previous government. I think you will find, Mr. Speaker, that any time we have brought in closure it was in the interests of making sure that the administration of certain pieces of legislation got through the system for a very specific purpose, but never in terms of shutting down debate.

We on this side of the House, and I have said this repeatedly, would welcome good, tough, solid debate from the opposition. Quite frankly sometimes we feel that the best debate we have in this Parliament is among ourselves. We have actually talked of having a good intersquad game among ourselves in the House of Commons.

The bottom line is that we have brought in closure less than 10 per cent in comparison to the Tories.

[André Caron, Bloc, Jonquière, QC]

Mr. Speaker, I welcome this opportunity to speak to Bill C-70. I listened to the hon. member for Broadview-Greenwood, and I was both amazed and impressed.

I was amazed to hear a Liberal member, an experienced member of the House of Commons who did a very thorough study of the tax system in Canada, say that the tax lobby is the most powerful lobby in this country and that there is no tax reform in this country because there are powerful interests that do whatever is necessary to influence governments.

I am also impressed, because I see a Liberal member who is swimming against the tide as he tries to advance the cause of fair taxation in this country. I am impressed because, considering his experience, he must realize that his chances of succeeding are very slight. Nevertheless, he belongs to a group that is submitting a proposal for tax reform.

I suppose that five, ten or twenty years from now, he will probably still represent the riding he represents today in the House of Commons and will probably be making the same speech and say: I have these wonderful ideas. I want to reform the tax system, but the big business lobby, the lobby of the haves in this country is so powerful that I cannot do a thing. But I will persevere.

So again, I have nothing but praise for the hon. member, and I would urge him to keep up the good work, because it is a very slow process, as the hon. member for the Reform Party said earlier.

The purpose of Bill C-70 is to implement certain measures announced in the budget of 1994, not the budget tabled a month and a half or two months ago but the one that was tabled 14 months ago. Now this is a good example of an institution that just ambles along, without realizing that some people in Canada are in a hurry for tax reform.

There are people who look at our tax system, and right now, they are probably finishing their income tax returns. They will probably file them at the last minute because, like a lot of people here, they owe money to the government. Taxpayers do their tax returns, saying to themselves: "It seems that Canada's tax system is not quite what it should be". They look at their tax returns, saying to themselves: "I get very few exemptions and tax credits". The people filling out their returns perhaps work for someone else, so evasion is not an option.

At the same time, the same people will see in the papers or on certain television programs that some people in this country are fortunate enough to have tidy fortunes, and to, it would seem, not have to pay taxes or to be able to take advantage of some form of tax evasion scheme, like family trusts, like tax credits such as the research and development credit, which in some cases may be used for praiseworthy pursuits but in reality boil down to a means of not paying a fair share of taxes.

The citizens in question who are in the process of filling in their tax returns may still recall the Auditor General's report last year, which said it was astounding that we continue to tolerate that Canadian income tax laws still contain certain tax haven provisions.

The Auditor General asked the government to review some tax conventions with certain countries, which permit businesses that we believe to be Canadian but are registered in foreign countries with laxer tax laws than Canada, to avoid paying taxes. I hope to be able to prove, in my speech, that Canada's Income Tax Act is very kind to the rich, but that there are other countries where it is even worse, where the tax legislation is even more lenient for those who make profits.

It should be noted that usually these countries are not rich ones, but rather countries which are struggling and belong to the third world. They probably benefit in some way from having such tax provisions. But on second thought, one realizes that they probably do not derive huge profits from signing these

conventions. According to the Auditor General, Canada probably loses vast sums of money in these transactions.

How is it that, in the bill before us today, which enacts certain provisions contained in last year's budget, there is no definite provision concerning tax havens, and tax conventions? Why?

I believe that the speaker who addressed the House before me, the member for Broadview-Greenwood, answered this question. It is because the lobby for rich Canadians is so powerful that the efforts of those who strive for greater and clearer fairness in the tax system are being defeated by people with huge interests.

The member for Broadview-Greenwood, speaking of eliminating privileges, loopholes, and grants in the form of tax breaks, even gave the figure of $500 billion. This is a huge amount of money. I did not do the same research as he did. I trust him.

That figure tells us that maybe there is a good part of the federal debt that we are trying to pay off, or rather that some people in Canada want to pay off by going after the middle class and even the less fortunate, through cuts in tax credits such as the age credit which has been slowly decreased year after year, for example.

Let us say I am happy to see that, on the Liberal side, the social conscience of some members is still strong enough to make them denounce the present situation, although the Liberal Party has done so before.

In the red book, the bible of the last election campaign, they proposed certain measures to increase the fairness of the tax system, certain steps which, according to the Bloc Quebecois, would revive trust in the taxation system, and would make Canadians believe there is justice in taxes after all. But once in office they no longer seem to be interested in such measures.

The speech that the hon. member for Broadview-Greenwood gave today, he could have given it with the same result when he was in opposition and the Conservatives were in office.

[An hon. member]

He probably did.

[André Caron, Bloc, Jonquière, QC]

Yes, he probably did, maybe at that time we did not care so much about federal politics, but I believe that we might have supported it at the time, supported his efforts of clarification regarding the tax privileges some social classes enjoy in Canada. The speech he made today, he could have made it at the time of the Conservatives and he would have had the same result.

People might consider his proposition favourably, like many of us did when we heard about it. They might look at it and say: "There might be something there, maybe we could do something". But next year, when we are going to talk about new amendments to the Income Tax Act, we will probably say the same thing again. There are privileges in Canada. There are people who do not pay the taxes they should be paying. We deplore it, everybody talks about it, newspapers mention it, TV commentators mention it, and tax experts say so too.

The other day, a tax expert was saying that the Income Tax Act is so dense and contains so many exceptions that it takes an expert to find one's way through it. A provincial finance minister is even known to have said that, with our tax system, if a big company pays taxes, it is probably because its accountant is not very good.

So, when we are faced with these kinds of situations, I think that we cannot limit ourselves to proposals like those in Bill C-70, which deals with all kinds of things that are, in fact, secondary. As far as the exemption is concerned, I think that it might be the only provision which would be somewhat sensible for the working class. In the case of funeral arrangements, people would not have to pay taxes on the interest earned on amounts prepaid for these arrangements.

This is not serious. I believe that Canada is in a very difficult fiscal and budgetary situation. Minor improvements such as the ones proposed in Bill C-70 are not going to solve anything. We have to look once and for all at the Canadian tax system that we have had for the last 20 to 25 years and which has not undergone the reform everyone expected. Canadians are waiting for some kind of reform. Taxpayers, Canadians who contribute to social, health and education programs are ready to continue to do so, but they want everyone to do his or her fair share and to realize that taxes due must be paid. But that is not the case nowadays.

When we consider the case of banks and big business and, as I said a moment ago, the whole issue of tax shelters, we see how outrageous the whole situation is. Some would say: "Well, you are not an economist". If, for example, we increase corporate taxes, we are going to lose investments. That might well be but very often this is a point used to scare us, to prevent us from taking measures which would be significant, which would be necessary if we want Canada to have a sound tax system, if we want everyone to pay taxes according to their income and to prevent people from being in a situation where they can avoid paying taxes since this is essential to the survival of this country.

It is not just a question of saving money for all taxpayers. A country where taxes are not considered fair and equitable is on the road to ruin. A country has obligations and must have sufficient revenues to meet them. It has the responsibility to see that the revenues are there and that they come from the population as a whole, not only the middle class and the least fortunate members of our society, but also from big corporations and well-off families. The more fortunate members of our society must also pay their share of taxes because they benefit from the central government and from its services.

No business in Canada would survive if we were in a situation where people are opposed to a certain extent to the tax measures because if they are not sure that justice is the same for everyone, that responsibilities are the same for everyone, people will be less and less interested in paying taxes. They will turn more and more to moonlighting, thus taking away the money needed by government. This would lead us to disaster. That is why I call upon the minister-I do not know if many members did, although all the members of the Bloc who spoke on tax issues did do so-, I call upon the Minister of Finance to show more social understanding and to initiate a genuine tax reform. I hope that we, the members of the Bloc, will see such a reform while we are still in the federal Parliament.