Mr. Speaker, I rise in the House to speak on Motion No. 93, which reads:
That in the opinion of this House, the government should consider the advisability of increasing literacy in Canada by removing the goods and services tax on all reading materials.
I applaud the member for Dartmouth for presenting this motion. My constituency of Edmonton—Strathcona is home to the University of Alberta, an institution that is poised to become one of the finest in Canada. So I can appreciate how important it is to address the question of taxes on reading materials.
In fact, I even support the argument presented by the hon. member that the GST on books and other reading material works to discourage reading. As the cost of books and reading materials goes up, the demand goes down. That is the irrefutable law of supply and demand.
I am surprised to learn, however, that the member from the New Democratic Party has embraced such an important free market concept. I wait eagerly for the day when the NDP caucus stands in solidarity in the House and declares that taxes kill jobs. It will be a great day for Canada.
At the heart of the motion is the claim that taxes can create perverse incentives. In this case it is argued that taxes on books discourage people from purchasing books. This was not the intended purpose of the tax but the unintended and unseen consequences of the tax.
This argument is completely valid and it is an argument that has been made throughout history by many great scholars. It was an argument made by 17th century satirist Frederick Bastiat in his classic essay What is Seen, What is Not Seen , and it is an argument that is being made today by Nobel prize winning economists like James Buchannan and others.
What I find curious, however, is that while the members of the New Democratic Party understand the principle of supply and demand when it applies to books, they do not understand this principle in other applications.
For instance, when Reform argues that increases to the CPP contributions are a tax on jobs, the members of the NDP seem confused. However, when the cost of labour goes up, demand for that labour goes down. Taxes kill jobs.
When the cost of books goes up, the demand goes down. It is a very simple law of economics that has been proven over the course of history.
Let me provide the House with another example. The Liberal government taxes consumption at 15%. That means that when we spend our money we are now paying about 15% in taxes on average. When we save our money we are taxed at 54%.
This is another example of the perverse incentives which taxes can create. The incentive in this case is not to save. With the state of our CPP, encouraging Canadians not to save is a very bad idea, and yet I have heard so many individuals on the ideological left claiming that RRSP tax exemptions should be eliminated because they are a tax avoidance measure employed by the wealthy.
There is also the question of capital gains tax. This is a tax on productivity. When people are taxed for creating wealth, disincentives are created for productivity. Yet those on the ideological left are often heard calling for a higher capital gains tax. That is a recipe for economic stagnation and unemployment.
I could go on and on. For every tax and government regulation created there is an unseen and unintended consequence. Overtaxed cigarettes and liquor create underground, illegal black market industries. Increased payroll taxes create unemployment.
It is simple. Big government is the very source of our economic problems and not the source of the solutions. Big government is a disease masquerading as its own cure. I wish the NDP could come to appreciate this fact.
Having said all that, I regret that neither I nor the members of my caucus can support the motion. Reformers believe in tax cuts and we hate the dreaded GST, but it is our position that tax cuts should be broad based so that one product or one industry is not given preferential treatment.
I am sceptical of the merit of eliminating taxes on certain products or even on certain industries while neglecting other products or industries.
We subsidize Canadian book publishers to the tune of almost $20 million. Now the Liberals are adding another $15 million to this subsidy in the interests of promoting Canadian culture. A GST tax exemption would add to this preferential treatment.
Do not get me wrong. Canadian businesses are overtaxed. Canadian consumers are overtaxed. However, a fair tax system is one which provides for broad based tax relief.
Every Canadian business makes the claim that its product or industry makes a vital contribution to Canadian society and should be granted certain tax concessions. I am very sympathetic to this claim. Canadian businesses are overtaxed and they are looking for any way to get out from under the thumb of the federal government, but we must be extremely careful when we create tax concessions which give certain industries preferential treatment.
My hon. colleague from the NDP will very likely point out the many preferential tax concessions which are currently in place, but I would counter that by promising that a Reform government will implement a more simplified tax system which will be built on the principles of equality and fairness.
Having said all this, I am not convinced that GST on books is affecting literacy in Canada. Access to literature through public libraries and public schools ensures that those who wish to have access to books can do so. However, I would agree that access to the latest information may be hampered as universities and public schools try to find money in their budgets. But this is not a threat to literacy in the country.
I can understand the frustration which the hon. member feels for this issue. The Liberals broke their promise to scrap the GST as it applies to books. The Reform Party has criticized the government's lack of accountability in this House. Campaigning promises should be kept.
We support the member of the NDP in so far as she is bringing the question of accountability to the attention of this House. We cannot, however, support the motion for the reasons I have already stated.
In closing, I applaud the hon. member for the NDP for her clear economic thinking and for bringing the issue of accountability to this House.