Madam Speaker, the bill tabled by the hon. member for Portage—Lisgar meets an urgent need to revitalize the construction sector. It also represents an interesting way of helping future first-time home buyers by giving them a tax break on the first $100,000.
As we know, the interest on a mortgage costs the average homeowner a bundle, and this is true throughout the country, including in Quebec. Often the interest on a mortgage prevents young families from buying a home. It is therefore time for the federal government to take concrete action to encourage the housing industry, an important lever in the Canadian, Quebec and regional economies.
Interest rates are now within the reach of most people. It is therefore appropriate that the government bring in legislation to encourage young families to buy homes more suited to their needs. If the government were to go ahead with certain tax measures, it could thus lighten the financial burden on future homeowners.
The Reform member from Manitoba mentions that he would like to see tax deductions for future home buyers. The Bloc Quebecois has some doubts about the Reform Party's intentions.
This deduction, which would be based on individual income, would help the richer members of society, and once again put the less well off at a serious disadvantage. Here again, we recognize the Reform philosophy lurking behind this bill: protect those with higher incomes and forget about the poorer members of society.
It does not surprise anyone that the Reform Party thinks along these lines, because this clearly right leaning party has frequently had its own contribution to make to the social nightmare created by the Liberals since they came to power in October 1993.
I will, if I may, refresh my colleagues' memory concerning the tax measures that have done great harm to our social climate: unemployment insurance reform, and cuts in provincial transfer payments that have created problems in health services, social programs and education.
What have Reformers done about these destructive Liberal policies? I can think of nothing.
The recent Speech from the Throne and the economic statement by the Minister of Finance show no signs of relief for the less privileged in society, and there again Reform members remain silent. We can get an idea in fact of the Reform Party's social conscience when we look at their position in the current debate on the greenhouse effect throughout Canada. The Reform Party acts as if there were only one province involved in this matter and neglects to propose a comprehensive solution to this global problem.
Let us come back to the bill itself. Although its first objective is to improve the social climate, the Bloc Quebecois has serious concerns about the provisions proposed by the Reform Party to amend the Income Tax Act. We believe these proposals will do nothing to meet the real needs of future home buyers.
In its own income tax policy, the Bloc Quebecois is very clear on the issue of tax deductions versus tax credits. In its policy statement, it makes the following distinctions, which I would like now to examine with you.
There is a difference between a tax credit and a tax deduction. Tax expenditures can take the form of tax deductions or tax credits. Tax deductions are taken into account in the calculation of the taxpayer's net income. They are factored in before the amount of tax payable is determined and they therefore reduce the taxpayer's taxable income. They allow him to benefit from tax savings. These can vary according to the tax rate for that income bracket. Tax deductions are regressive, because the higher the taxable revenue, the higher the savings. In the present system, the higher the tax rates, the greater the tax savings provided by tax deductions.
On the other hand, tax credits are subtracted from the amount of tax payable. They are used to determine the net amount of tax payable. Tax credits are neutral. Tax savings through tax credits are the same for every taxpayer, whatever his or her taxable income.
Let us take the example of three incomes: one less than $29,590, one in the range between $29,590 and $59,180 and one more than $59,180. For each $1000, a taxpayer with an income of less than $29,590 would benefit from an identical tax saving, whether in the form of a tax deduction or a tax credit.
A taxpayer with a taxable income in the $29,590 to $59,180 range would save $260 in taxes if he takes advantage of a tax deduction, whereas he would receive only $170 in the form of a tax credit for each $1,000.
A taxpayer with an income in excess of $59,180 would save $290 in tax if he was entitled to a tax deduction, whereas he would receive only $170 in the form of a tax credit.
It can be seen, then, that federal assistance to individuals via a tax deduction can vary enormously according to the individual's taxable income. A person earning less than $30,000 would receive $170 in assistance per $1,000 of tax deduction, while one earning $60,000 receives $290 in assistance for the same deduction.
The better off therefore receive $120 more in assistance per $1,000 in deduction, when their tax savings are compared to those of people with a taxable income of less than $29,590. There is, therefore, a flagrant injustice.
Our party therefore approves of the principle set out in Bill C-223, but we intend to call for a major amendment. We would like to see the proposed tax deductions changed to tax credits, which would, in our opinion, be fairer for all those affected by this bill.