Mr. Speaker, I am pleased to speak to Bill C-92, which in a way brings the Income Tax Act and another act related to the Income
Tax Act in line with the 1996 budget, last year's budget in other words.
Before I begin, I would like to indicate my agreement with my hon. colleague from the Reform Party when he says:
"This government closed more hospitals than was ever done before by any other government". He is absolutely right. That is the reality of things.
There was absolutely nothing new in the 1996 budget and, ever since it came to the House, the Bloc Quebecois has, as you know, been calling for a complete reworking of the Canadian taxation system in order to bring it up to date. Since our arrival, we have been recommending an item-by-item analysis of all government expenditures.
This was not to be found in last year's budget, nor will it be in this year's. At the very most, the Minister of Finance announced in the last budget the creation of a technical committee on corporate taxation, or more specifically on tax havens.
The mandate of this committee is, however, too narrow for these recommendations to lead to the changes required to get Quebecers and Canadians back to work. It contained no measures specifically related to employment or to ensuring an equitable division of the tax burden between individuals and businesses on the one hand, and major corporations and small and medium size businesses on the other, the latter being the true creators of employment in both Canada and Quebec.
There are still serious doubts about the objectivity of the members of this committee. Several come from big private companies which advise wealthy clients and major corporations on how to avoid paying taxes. Certain members of the committee are, therefore, in a definite conflict-of-interest situation, and we spoke out against this situation last year.
We know that this committee has had an extension and must table its report by the end of 1997, after the election of course, and we also know that the majority of members of the committee examining the use of tax shelters by corporations themselves make use of tax shelters, and often have businesses in the tax havens they are supposed to be studying.
Yet, in its 1996 budget, the government attacked one tax measure, perhaps the only one, while unemployment is still rampant, and the Liberals have not succeeded in meeting their election promise of jobs, jobs, jobs. It has not been said often enough, nor can it ever be said often enough: the Minister of Finance has directly attacked a priority tool for job creation. The Liberal government has cut the tax assistance to workers' funds, in particular by reducing the federal tax credit linked to these funds, and by decreasing the annual maximum that can be invested in them.
The Bloc Quebecois was very critical of this decision, as you know, and even suggested, when tabling its documents on tax reform, that the maximum annual amount should be restored to the level it was before the cuts were made. We must not forget that the purpose of these funds is to create or protect jobs, mostly in Quebec. The FTQ fund alone was able to preserve or create 38,000 jobs.
The government remains inconsistent. It talks about job creation and then savagely attacks the only tax measure we could be absolutely sure would create jobs. This measure, as we said before, mainly affects Quebec, because half of the money in these funds comes from Quebec. The Bloc Quebecois has constantly been after the government on the tax system. We did so in the case of family trusts, and although the response was not always satisfactory, we have done this systematically. We did so in the case of the GST, a government promise that was not kept, and in the case of the shocking abuse of tax havens.
From the outset the Bloc has been asking for a thorough review of both corporate and personal taxes. This aspect of our tax system has not been updated for many years.
But we did more than criticize. Since we were well aware that last year the government did nothing and had no intention of doing anything in this year's budget, which has been confirmed, the Bloc did some research and drafted two papers, one on corporate taxation which received the approval of the Minister of Finance, who said we did a professional job. He took the report we wrote but has now probably dumped it in file 13.
We produced two analyses that consider all aspects of corporate and personal taxes, something that normally should have been done by the government. I may remind you it has been quite some time since Canada's tax laws were reviewed. I may also remind you that this is the first time an opposition party did the government's job by doing its own analysis of the tax system, something the government should have done.
The opposition parties have a relatively small budget for research and compared with the government, their resources are extremely limited. Nevertheless, we took the trouble to produce this study and do a full analysis of the tax system.
I would like to give you some idea of the work that was done on corporate taxation, for instance. But first, I would like explain, for the benefit of our listeners, what a tax expenditure is. When we sit on committees, the first thing tax experts tell us when they come to meet members and individuals sitting in is: "Tax laws are extremely complicated. You will need our help plus a whole battery of lawyers to understand the system". I would say that tax laws are
purposely obscure so the general public cannot understand what they mean.
I recommend reading Linda McQuaig's book recently published in English in Toronto as The Lion's Share and translated into French as La part du lion . The book shows, over a period of 30 or 40 years, precisely how wealthy Canadians used tax leverage to their advantage and to the disadvantage of the ever poorer middle class.
Fiscal spending occurs when a tax deduction is accorded for some reason to a corporation or an individual. When an individual is accorded a tax deduction of $1,000, it is as if the government sent them a cheque for $1,000-because this amount was owing to the government-as in the example given, but it looks better.
Clearly if the government sent a $50,000 cheque to a company, the public would understand what was happening and would object, so it gives a $50,000 tax credit under some provision described in a book somewhere in a huge pile of books. Nobody sees what goes on, but the $50,000 will be paid by someone other than the company-the general public.
So, if this sort of tax arrangement is made for all companies, which is what is happening in Canada, little by little, the tax burden is displaced and transferred from corporations, the rich, to the middle class, which is becoming poorer for having to pay others' taxes.
I would like to point out that we used the Carter report from 1962, which remains valid today in many cases, to prepare our analysis, which comprises some 100 pages on corporate taxes alone. We have clearly shown this in a table based on statistics on personal taxes for the 1993 taxation year taken from government documents.
We have clearly shown that, since 1950 to date, more and more taxes have been transferred from companies that should be paying them to individuals who are in fact paying them now. I would like to cite five key dates as examples, even though the trend remains constant from year to year. These five dates reveal the extent to which the tax burden has shifted from the companies-the wealthy-to individuals: in 1952, 51 per cent of Canada's income taxes were paid by corporations; in 1962, 36 per cent; in 1972,20 per cent of taxes were paid by companies; in 1982, 17 per cent; and, in 1992, 7.6 per cent. These figures are from Statistics Canada.
As we can see, from 1950 on, the burden has shifted, with the tax load being transferred from the rich to the middle class. So, today, when we look at the number of unemployed, the number of people on welfare and the number of poor people in Canada, we see that the rich have succeeded in transferring their tax debt to the people in the middle class, who are becoming increasingly poorer.
We would have liked the Minister of Finance to really examine and utilize both last year and this year the reports we provided, which he himself described as highly professional and which are based on Statistics Canada figures.
I close on this point. In the 1996 and 1997 budgets, we saw no effort by the minister to look hard at Canadian taxation.