Mr. Speaker, I am pleased to rise in debate on Motion No. 360, put so eloquently this evening by my colleague from Kamloops, that in the opinion of the House the government should consider making employer provided transit passes an income tax benefit.
At the outset I sincerely commend my colleague from Kamloops for his very thoughtful presentation and initiative. He has brought before us a very considered approach to providing an incentive for a responsible transportation policy which would have a positive impact on the environment.
It is refreshing to find that the first government speaker following the member from Kamloops was not the obligatory parliamentary secretary standing up to read a speech written by bureaucrats opposing a good initiative from a private member. It is encouraging to see that pattern broken this evening.
I am open to supporting this motion, but I have several significant concerns which I will outline and which I hope my hon. colleague will have an opportunity to respond to.
My principal concern is that tax policy should be neutral. One of the guiding principles of good sound tax policy should be neutrality and we ought not to design the tax code as a lever of social engineering. We ought not to try to force or create false incentives for people to act in a way we think is desirable.
To do so is really beyond the principal purpose of the tax system which is simply to raise revenues in the most efficient way possible to finance the needs of government.
Instead of a tax system free of exemptions, deductions and credits of the nature proposed this evening, I prefer one which is much lower overall, with much more generous basic personal and spousal exemptions which in effect would allow people to make decisions about how they spend their money and conduct their lives by themselves, according to their own priorities and not the priorities of politicians and bureaucrats.
I have a deep theoretical reservation to supporting initiatives of this nature. I was the only member of my party to vote against a private member's bill which came before us earlier this year from my hon. colleague from Portage—Lisgar to allow for the deductibility of mortgage interest payments on principal residences. While this would have been an enormously popular incentive for people to invest in home ownership, it occurred to me that it would have been an enormous addition of a complex, special credit in the tax system which would make it even more costly to administer and would again create these kinds of false incentives rather than letting people face a completely neutral tax system.
I opposed the motion for mortgage deductibility then and that is why I have some serious theoretical concerns with this kind of exemption.
I would much prefer to completely overhaul the Byzantine, 1,300 page Income Tax Act which we have constructed in this parliament over the past 80 years since the temporary Income Tax Act of 1917 by adopting some kind of simple, pure, clean, neutral, flat or single tax similar to that proposed by the hon. member for Broadview—Greenwood in his various versions of a single tax or in some of the propositions for a flat tax offered by members of my own party.
This kind of tax reform would allow Canadians to decide whether or not they are going to use their after tax income on transit passes, on parking or on other priorities. It would not create a government incentive for social engineering.
I have other questions that relate to other potential objections that I hope the hon. member will have a chance to respond to.
It occurs to me that the adoption of employer provided transit passes and the tax exemption thereon would create an inequity between those who have these transit passes provided by their employers and those who do not have such a privilege, those who by circumstance of their employment agreements have to pay for their transportation costs individually through after tax dollars.
It seems to me that this would weight the playing field and reduce the neutrality of the tax system in favour of some taxpayers who happen to have employers who subsidize their transportation against those who would end up having to pay after tax dollars for their transportation. That is the kind of inequity that arises when we play with the neutrality of the tax code.
I am also concerned with the cost issue. The national task force to promote employer provided, tax exempt transit passes estimates, in its very thoughtful submission to the House of Commons finance committee, that the potential gross loss in federal revenue through this measure would be between $18 million and $28 million.
This contradicts quite significantly the estimate made by the Department of Finance which suggests that the cost to the public treasury in reduced revenues would be as much as $140 million.
I do not think any of us in this House are capable of examining in detail the assumptions used in these competing estimates, but there is such an enormous disparity between the $18 million estimate and the $140 million estimate provided by the Department of Finance that I think before we support this motion we really ought to have a clearer and better answer to the question of how much potential revenue we are prepared to forgo through the adoption of this exemption.
Let me also say that there is another potential inequity, in that many millions of Canadians do not live in urban areas and do not have access to or need major transit systems and would not use a bus or a subway system. I can imagine many people who drive to work through necessity, whether they live and work in the suburbs, in smaller towns or in rural communities. These are people who have to pay for their own personal transportation costs through after tax dollars. It seems to me, again, inequitable to suggest that only those who live in major urban centres and have access to major urban transit systems would get a special tax exemption.
For all of those reasons I would like to reserve judgment on this motion, although I am very open to supporting it. I hope we can get clearer information on the potential cost to be incurred by the treasury. I also think that we should look more closely at the question of the potential inequities that this kind of special tax exemption would create.
In closing, I would call on all members to work toward a simpler, less costly, more efficient and more neutral tax system, with a much lower overall burden, which would allow Canadians themselves to make decisions about how they will spend their after tax dollars, rather than we as parliamentarians making those decisions for them through the adoption of special incentives of this nature.