Mr. Speaker, today Canadians from coast to coast must be feeling a terrible chill as the shadow of the most regressive tax increase ever to hit our country has just been announced by the Minister of Finance.
Today the government announced the fact that it is going to be increasing the current Canada pension plan payroll tax from 5.85 per cent of earnings to 9.9 per cent. This is a huge increase in personal taxes, taxes that come out at the payroll, taxes that come out before income taxes are paid, taxes that come out even before Canadians get a chance to pay the GST. No matter how we slice it, this is a tax increase to Canadians.
If this were a pension plan, as people understand or contemplate pension plans, it may not be that bad, people providing for their future, but that is not what it is. For example, today if you pay 5.8 per cent of your salary in order to get a pension of $8,724.90 which is the maximum Canada pension plan, you would get $8,724.96 in pension. After the changes are made, you and your employer will have the opportunity to pay $3,193.36 to get the same $8,000. You are paying $3,200 a year to get approximately $9,000 in pension.
Does that make any sense? This is RRSP season. If the government were selling mutual funds, and the government said to each individual taxpayer: "We have this great new plan. This new plan means that you and your employer will get to pay $3,200 a year in premiums and for that you will receive about $9,000 a year", the taxpayer would laugh because it does not make any sense at all. That is the basic problem with this plan. It does not give to the person who owns the plan and puts the money into the plan, the individual Canadian, a balanced, decent and honest return on their invested money.
The government has said it is conscious of the negative impact that payroll taxes have on jobs. This is a historical fact. It is on record. The government has said and has evidenced that in recognition of that, it will reduce the employment insurance premiums by the magnificent sum of 10 cents per $100 of earned income.
To put the increase into context, this increase in payroll taxes is $4.10 per $100 of income. So the government giveth and the government taketh away. When the government taketh away, is it balanced? I think not. And there again is the problem. Canadians are taxed to death. We cannot look at any individual tax alone. We have to look at the cumulative effect on our economy. The tax grab is an anchor that sucks the lifeblood out of our economy.
When the payroll taxes go up for the individual and for the employer-as they will in this circumstance, after six years the tax will go up to $651.90 each-where does that money come from? The employer says: "We have been contributing $1,889.56 per employee annually but now we have to contribute $3,193.36. Where are we going to get that money? Can we raise our prices? No we cannot". We live in a competitive world. It shrinks profit. The shrunk profit means there is less money to reinvest in our economy. What does that mean? It means fewer jobs.
If we want to see what is going to happen to our economy as a direct result of this tax grab because of the fact that we have mismanaged the pension funds over the last 36 years, just watch the unemployment rate rise after this kicks in. What is going to happen? Businesses are going to do the only thing they can do in order to get by. They are going to lay off staff because there is no other way to get money. How can businesses survive when a government thinks of them as a bottomless pit of resources? It just does not happen.
The hon. member opposite used to be a highly placed member of the Toronto Dominion Bank. The Toronto Dominion Bank is going to look at all of those businesses and say: "Gosh, you have 100 employees. Do you realize you are going to have to come up with some $90,000 a year more just to cover the Canada pension plan premiums? Where are you going to get that money? More money will have to be injected into your business".
They businesses are going to say: "But wait a minute. We cannot automatically assume that business is going to increase so the only thing we can do is lay people off or not hire them". That is the problem with this. We must inculcuate a sense of fiscal responsibility within all governments.
When the government says to someone that it is investing this money on his behalf, I ask hon. members and I ask Canadians, what person in their right mind would ask a government that is $600 billion in debt to be his investment adviser? Only a government that is $600 billion in debt could say with a straight face to Canadians: "Give us $3,200 of your money each year and we will invest it for you. For that, after your retirement, you will get almost $9,000 a year". Give me a break.
Anybody investing in even the most moderate RRSP would know that a privately managed investment plan would return more than double the same amount over the same period of time. How can the government possibly look Canadians in the face and say that this is a good deal? It is not a good deal. It is a tragedy.
It is a tragedy for all Canadians because once again the government instead of facing reality is saying: "We can get ourselves out of this problem by increasing taxes". Every time you increase taxes, you poke another hole in the lifeboat of the economy. It makes it harder to keep our national finances in shape.
We as a government and governments all over the country have fiduciary responsibility to our children and to their children to live within our means. That does not mean sucking money out of the country by means of a payroll surtax to lend to other governments at below market rates and make ourselves look better today at the expense of future generations.
The government has no reason to be pleased about this tax increase which will negatively influence employment. It will be terribly detrimental to the employment of young Canadians, especially the most vulnerable young Canadians, those trying to get into the workforce for the first time.
There is no excuse for the fiscal mismanagement of our country, our pension plans and our money which has brought us to the situation we are in today.