Mr. Speaker, as one of the two chartered accountants in the House of Commons today, I cannot resist responding to the member.
The member talked quite a bit about corporate taxation. At the end of his speech he indicated that the percentage of the government revenues contributed by the corporate sector has continued to go down. He painted a picture that somehow there has been some change in the laws, some change in something which has meant corporations are paying less than they were before.
Quite the contrary, there has been no change. The corporate tax rates are still the same. The member should know the difference is there are some rules in the corporate income tax system which account for the reduction or elimination of taxes otherwise payable by corporations. I will give him a lesson later on if he wishes.
There are three ways. The first one has to do with dividend flowthrough. It means that when one company pays a dividend to another and the second company pays it out to its shareholders, the company in the middle has a dividend income but pays no tax because there is an equal and offsetting part IV tax. The income statement shows taxable income, or income from operations or from the business, but no tax is payable because it flowed through.
The second way in which corporations do not pay tax has to do with loss carry forwards and loss carry backs: seven years forward, two years back. It means in bad times corporations can incur substantial losses. While in following years they may have substantial high profits, the taxes payable on those profits will be zero. The reason is that under our current tax act income taxes or losses from
prior years can be carried forward seven years and back three years. There should be a change here.
The third way relates to deferred income taxes. They are not legally owing but they are virtually certain to be owing to the government. It also has to do with the difference in the write offs of capital assets, whether it is capital cost allowance or depreciation.
I am not going to go any further into the tax thing, but I do want to defend the integrity of the CA profession. The member criticized certain of the appointees, one of whom was Mr. Bob Brown of Price Waterhouse. I am proud to say that I worked with Mr. Brown when I articled at Price Waterhouse. I know of no finer professional in Canada, particularly in relation to taxes and with regard to personal integrity. Mr. Brown is a gentleman who has worked and advised this government over many years. Despite the fact that his firm has clients who do certain things, he is a man of integrity. He is a man who will be able to assist in dealing with the questions raised by the finance minister.
It is really presumptuous and possibly inappropriate to personally attack someone who is in a profession that prides itself on integrity in providing service honestly and with professionalism to Canadians as investors, as shareholders and as people looking for professional advice on their financial affairs. That is what is true. I will simply say to the member, let us be careful about being critical of those who are trained to help all Canadians.