Mr. Speaker, I commend the member for Mississauga South for his interest in bringing this important subject to the House. There is absolutely no question our Minister of National Revenue and members on both sides of the House are very concerned about the direction of our underground economy. The issue has the focus of all Canadians and is very important to all Canadians across the country.
The greater the activity in the underground economy, the less revenue there is for governments. Underground economic activity creates unfair competition for honest businesses. Jobs are lost and honest taxpayers are forced to pay more of an unfair system in taxes when the underground economy flourishes.
For many individuals and businesses the underground economy has become a convenient way to avoid paying taxes, not to pay their fair share. When these people take their financial transactions underground they are failing to support Canada's social and economic programs. These people do not pay for the services they use. Instead other Canadians are forced to pay more. Other Canadians are forced to pay for those who participate in the underground economy.
I am very surprised the member for Calgary Centre suggested and almost condoned the underground economy and gave reasoning for it. It is serious to all Canadians that no one condone the practice. It is certainly not morally sound or fair to Canadians.
People who deal in the underground economy may feel their financial situation justifies the actions. It may be because they have not had a raise in several years. It may be because they feel the taxes are too difficult for them to comprehend. It may be just because of basic greed. They see it as cheating the tax department. It is not a simple matter of cheating a victimless tax department. It is cheating friends, the people who live next door
and the people who do business in the community. It is cheating every Canadian, forcing them to pay more in an unfair system.
I ask members as well as all Canadians to consider the real cost of the underground activity. The cost is large. It shows up in reduced essential services, higher taxes than we would otherwise be paying, unfair competition and a reduced standard of living to the honest taxpayers.
How does the underground economy affect the legitimate businessman trying to be competitive? The Canadian Homebuilders Association is concerned. Home renovators who evade taxes have an unfair advantage over other home contractors. Right from the start, honest businesses are at a competitive disadvantage because they cannot offer the consumer the same deal offered by someone who will not collect the taxes. The end result is that legitimate businesses face unfair competition and jobs are lost.
We must not forget dishonest consumers. Dishonest consumers who take a lower price and pay cash are cheating the system. They are becoming party to the evasion of taxes. These same consumers benefit from a full range of government services but are not paying their fair share. All they have done is take part in the transaction which jeopardizes our health, education and other essential services. This is simply unfair and very short sighted.
The motion before us suggests the government educate the public and encourage its participation in addressing the problems. I agree Canadians need to know the facts about the seriousness of the underground economy and what it is doing to hurt Canadians. I also agree governments cannot solve the problem alone. We all must take part and fulfil our responsibilities.
The government has recognized solutions to this problem it is now facing are not in isolation by themselves. We must understand the problem and its consequences. It is for this reason that in November 1993 the Minister of National Revenue made education a fundamental element to address the underground economy.
During this past year, officials of Revenue Canada have actively been consulting with individuals and associations across the country. Revenue Canada is seeking support of groups and individuals throughout the country. With the Canadian Institute of Chartered Accountants, for example, the department established a working committee to investigate the causes of the underground economy, to examine audit techniques and identify training that would assist in tracking down unreported or under reported income and identify the opportunities for reducing the cost of the administrative burden for compliance for businesses and individuals.
These groups are taking the message of the risks of dealing in the underground back to their memberships. 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 trades people who ask for cash payments. Businesses can do their part by turning down demands to do work off the books by making sure that does not happen.
To ensure everyone is aware the government is serious about prosecuting those who deliberately defraud the system, the Minister of National Revenue is publicizing convictions for tax evasion. The increased publicity has had a deterrent effect. The number of voluntary disclosures received by the department in which people have come forward to correct their tax affairs has doubled in the past year. In addition, the number of referrals received from people each year providing the department with leads on potential tax fraud has risen to about 19,000.
I am confident we are making the right progress in dealing with the underground economy and I am hopeful all Canadians and all members of the House will applaud the efforts of the member for Mississauga South for stimulating this debate in the House.
I urge members of the House to carry the message back to their constituents. I urge the members of the House to actively seek solutions for the underground economy and create a better and fairer nation for every business.