Mr. Speaker, I would like to speak to both sides of the motion presented by the hon. member for Mississauga South.
One positive side is that the member is looking for solutions to a problem. I endorse that. I encourage members to do that type of thing. The other positive side to the motion is that it reflects what many constituents are thinking. There are constituents who are saying that the present situation is unfair to legitimate business. There are other constituents who are saying that we can work our way out of it.
I refer to a letter from a constituent who came to see me in my constituency office in Nanaimo some weeks ago. His name is Gary Chandler. His thoughts were to give each taxpayer a new deduction on income tax which would represent 5 per cent to 10 per cent of taxable income for improvements to a principal residence. Canadians have more savings per capita than the people of most countries. The measure would free up enough of that money to reduce unemployment. It would also cut into the underground market as legitimate receipts would be required.
When I read the letter and talked with the gentleman I thought it was an attractive idea, that it was something positive to undercut the burgeoning underground economy. I am not an expert in this regard so I decided to find out what my colleagues in the Reform caucus thought. I passed it on to them and the caucus financial committee discussed it. They went at it in some detail. However they found that they could not support it for the following reasons.
First, they said the taxes that would be forgone by this type of exemption would make it quite costly. The next point they brought to my attention was that it would therefore be necessary to extend the same tax privilege to other areas such as car repair, small appliance repair and household appliance repair. All sorts of areas would stand in line and say: "Us too". Before we knew it we would have a whole series of exemptions that would affect the way we do business.
The third reason they gave was that it would move us, certainly as a party, away from our proposal for a flat tax system. A lot of Canadians are complaining about the tax system. We have to make it simpler and easier to understand. The forms have to be simpler and so on. This type of exemption would move us away from that area.
The final reason they could not support it was found when examining the reason for having the underground economy. This is the principal one. The reason we have an underground economy is the same reason my colleague pointed out a few minutes ago. The government's spending level is too high. Therefore the taxation level is too high. We keep pounding at that over and over again. We realize we have a $550 billion debt and it is growing. We have to do something about it.
The government is now taking some small steps toward reducing deficit spending. We do not feel it is enough, but it is the basic reason behind the fact that we have an underground economy. Unless we tackle that first we will not solve the bigger problems.
I compliment the member for Mississauga South for raising this initiative and for trying to solve the problems. While it is reflective of the thinking among constituents asking how to solve the problems, nevertheless overspending and the high taxation rate on the part of government must be overcome first.