Mr. Speaker, I am pleased to rise tonight to address Motion No. 382, which calls on the government to adopt initiatives to bring people out of the underground economy and back into the legitimate economy of this country.
The member for Mississauga South seems convinced that an enhanced information system campaign, a limited amnesty, and a home improvement tax credit will do just that. Here we have yet another Ottawa Liberal politician pushing for reactive legislation to a problem, which does not address the fundamental question of why people go underground in the first place. It is for reasons like high taxes and confusing, complex, and convoluted tax systems, GST administration and accounting costs and the list goes on.
To set the tone of my speech I would like to read a quote that was made by Alex Doulis, a very successful third generation Canadian who like many has simply packed up and left this county. He states: "I left Canada in 1989 because I began to feel powerless. I could not influence the direction of my life, which was increasingly in the hands of the Government of Canada, and the government was deaf. The problem with Canada is it has responsible government. I was giving them immense amounts of money and they used it to perpetuate their power so they didn't have to listen to me. They were responsible for me, but they did not have to represent me".
The current income tax system in Canada is outdated, overly complex, and overburdens Canadian taxpayers. Many people have lost respect for this system because they cannot understand it. They do not perceive it as fair and as a result they are quietly resisting paying taxes by both legal and illegal means.
The underground economy is evaluated at between $10 billion and $100 billion. High taxes stifle economic growth in every sector of our society, decreasing private sector productivity, increasing unemployment, and above all tempting governments to keep spending at current unsustainable levels.
That is why so many Canadians are angry at politicians and what politics and government have come to represent. For me personally, rhetoric, regulation, waste, and arrogance are just a few words that come to my mind when I think about the Liberal government and the opportunity it has to effect change.
The reality outside this fish bowl is that some people grin and bear PSTs, GSTs, income taxes and sin taxes while others choose to go underground to increase their purchasing power. All these people have to do to justify breaking the law is pick up a daily newspaper and read one of the many stories of government waste on things like grants to study blueberry jam, parliamentary junkets, MP pensions for life, and the list goes on. It is this type of negative reinforcement that encourages many honest Canadians to pay cash for goods, negotiate deals or trade their services, anything to avoid paying excessive taxes to wasteful governments.
These are not simply my views, but those reflected in one of the first speeches made by our Minister of Finance in 1994. He stated: "The rise in the underground economy is what happens when the population of a country no longer believes it is heading in a direction where we all benefit. The underground economy is not all smugglers. It is hundreds of thousands of otherwise honest people who have withdrawn their consent to be governed, who have lost faith in government".
He is aware of that. What is he doing to change it? Nothing. They still spend $40 billion more than they bring in every year. Unfortunately, Motion 382 is an example that the Liberals have done nothing to restore a sense of faith, equality, and equity in our tax system.
Not only are these people avoiding Canadian taxes, many are moving their capital completely out of Canada to invest in foreign countries. According to the Bank of Nova Scotia, in 1993 unaccounted for capital that left Canada was estimated at $7 billion. The estimated figure for previous years was consistently around $700 million. It went from $700 million to $7 billion in just a few years. That is frightening.
The former attorney general of Bermuda puts this into perspective. I read this in a book by Diane Francis, Underground Nation, where the attorney general of Bermuda is quoted as saying: "People in huge numbers are hiding money offshore because they feel overburdened or feel so unfairly treated that they think there is no point in keeping their money captive at home. What is happening is that high tax rates in Canada and elsewhere are turning what used to be hard working honest businessmen into tax evaders. The feeling I get from Canadians and certain island institutions is that they are getting a lot of Canadian money invested outside of Canada which is not there legitimately".
Why will the government not wake up? The best way to solve the problem of the underground economy is by making cheating not worth while, similar to the smugglers' bill: take away the profit from the smugglers and get rid of that tax and smuggling will end. Lower taxes are the answer.
When people see governments like this one blow their hard earned tax money, increased enforcement from a government standpoint is an exercise in futility. Motion 382 calls for voluntary compliance measures to bring these people back into the mainstream economy. Voluntary compliance measures will have little effect on people who truly feel they have been wronged by the government. It is human nature.
Although I do not condone those who knowingly break the law, the reality is that if governments do not play by the rules, what incentives are there for their citizens to play by the rules? Why is there a double standard that when you are a politician you get a pension plan that is three or four times as good as that of the private sector? Do as we say and not as we do is fast becoming the new Liberal slogan, replacing jobs, jobs, jobs.
Although the Liberals campaigned on integrity and a new philosophy of governing, I along with many Canadians feel that we are watching the same play in the same theatre with different actors playing the same roles. The names have changed but it is the same old script.
For example, with Motion No. 382 a member of the government is calling for additional tax dollars to be spent on advertising to inform Canadians of the importance, the incentives, and the obligations to pay taxes. Where is the importance and the incentive and the obligation of the government to justify how it spends money and to eliminate the waste in government spending? Why is that not addressed in the motion?
If the government has to offer incentives to comply with its policies then there is something wrong with those policies. Like the Tories, however, the Liberals do not get it. Rank and file Canadians are protesting the tax system in Canada and their concerns are not registering with this administration. Surely the estimated size of the underground economy and nationwide tax protests should have sounded some alarm bells within the Liberal caucus. Apparently not. Motion No. 382, for example, has an amnesty clause to encourage people to come clean and pay taxes they have avoided without fear of punishment by the government. Where is the common sense logic in this suggestion? An amnesty will only get people to pay the taxes they refused to comply with in the first place. How is that an incentive?
It is time for the Liberals to stop these nickel and dime, band-aid solutions for problems with our tax system and begin the long overdue process of tax reform and tax relief. Attack the disease, not just the symptom. The Reform Party understands the difference between the two. That is why we have committed ourselves to spending reductions and tax reform, including the development of a simple, visible, flat system of taxation for Canada. The single most important aspect of this system is that it would be fair, removing the incentive for many to go underground in the first place.
It is interesting to note that Motion No. 382 is targeted at GST avoidance, which indicates that the Liberals have truly backtracked from the campaign promise to scrap the GST.
Our whole process of tax reform and relief would come under the umbrella of spending reduction and restraint. A Reform government would legislate balanced budgets. We would protect taxpayers dollars by reducing the size of the federal House,not increasing it to 301 as this administration plans to do.
We would pass more responsibility on to provincial governments as well as individual Canadians. The time has come to put money back into the hands of those closest to the problems facing Canadians and, most important, those who will spend it best.
In conclusion, a Reform government would mean effective government, a transparent government with full disclosure. We would introduce proactive legislation to clean up the fiscal mess in the country which many Canadians are doing their best to avoid.
The Liberals on the other hand will continue to propose band-aid solutions like Motion No. 382. I have a message for all angry Canadian taxpayers out there when they come to the end of their financial rope: "Tie a knot, hang on, a Reform government is just around the corner".