Debates of Nov. 4th, 1998

Criminal Code

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I listened carefully to the speech of the hon. member. It had precious little to do with Bill C-51. He seemed not to be interested in addressing the issues raised by Bill C-51. In particular he did not address the two issues I raised. He did not address some of the more profound social issues.

As to the specific issue of when the legislation will be introduced, that is well within the prerogative of the minister. She has generated fairly substantive support based on a report from the justice committee. I expect to see that drafting in a timely fashion, as she would say.

[The Deputy Speaker]

It being 5.30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Transit Passes

[Nelson Riis, NDP, Kamloops, BC]

moved:

That, in the opinion of this House, the government should consider making employer-provided transit passes an income tax-exempt benefit.

Mr. Speaker, I thank the member who seconded this motion which does not reflect a new request. The Canadian Urban Transit Association and the Federation of Canadian Municipalities have been lobbying for this policy change for many years.

In 1997 they were joined in their quest by the Amalgamated Transit Union Canadian Council, the Canadian Labour Congress, the Ontario Lung Association and Pollution Probe. These groups together have now formed a national task force to promote this issue.

I would be remiss if I did not give special mention and recognition to the two project managers for the national task force, Amelia Shaw and Donna-Lynn Ahee. These two individuals turned this initiative into a national grassroots campaign. I speak from personal experience when I say that if anyone had the opportunity to meet with these two exceptionally committed people they could not help but be convinced of the absolute need, the extreme importance and the widespread support for this initiative.

We all pay tax on our earnings. Some benefits we receive from our employer must also be declared as income and are therefore income taxable. Employer provided parking and employer provided transit passes are both examples of benefits that are considered taxable under the federal Income Tax Act.

However, Revenue Canada's interpretation of this act provides loopholes allowing most employees to receive their free parking income tax free. Workers with this benefit save approximately $1,722 annually. This is an incentive for commuters to drive and represents a significant loss of income tax revenue.

The government can address this bias by making employer provided transit passes an income tax exempt benefit. This change would provide a rare opportunity for the federal government to seriously affect public policy at the local level.

I would say, if nobody in the House minds, that employer provided tax exempt transit passes is a form of linguistic juggling so I will refer to it by the acronym many of its supporters use, TEI

In the United States TEI became available under the deficit reduction act, 1984, and the tax reform act, 1986. While both the amounts and the manner in which a transit subsidy could be offered were limited, transit use increased on average 25% among employees offered this benefit. Obviously it was a significant change in emphasis.

In San Francisco, for example, transit use among participating employees increased by 31%, removing an estimated 17 million vehicles miles from the Bay area, avoiding 61 million tons of pollutants and generating $1.6 million of new transit revenue.

More recently American highway policy legislation known as the ISTEA bill is expected to further promote the use of public transit. Employers will be able to offer up to $100 per month of transit benefits and some of the barriers that discourage many employers from participating have now been eliminated.

Canada is the only OECD nation where the national government is not involved in funding urban transit. Why should the government be interested in promoting public transit? Because, by almost every measure, transportation in Canada is heading on an unsustainable path. Transportation is the largest single sector source of Canada's carbon emissions at 32%, accounting for 30% of energy used and 65% of all petroleum consumed. Half these emissions occur by cars and light trucks in cities where public transit is available.

Transportation emissions are expected to rise 52% between the years 1991 and 2020. If we are serious about reducing our greenhouse gas emissions we must find a way to promote the use of public transportation. Making employer provided transit passes a tax exempt benefit would be a good first step.

If we do not act to reduce greenhouse gas emissions we will face a long term set of consequences. No Canadians have been able to escape the consequences of global warming. In Canada our average temperature for the first six months of 1998 was 2.7° above normal and 5° above normal in parts of the Northwest Territories. Our first eight months have been the hottest in 600 years. We are beginning to see the impact our actions in urban settings are having on ourselves and on our rural neighbours.

We were all shocked by the graphic images of the devastation that occurred as a result of the floods in the Saguenay and Winnipeg. The cleanup of the ice storms that hit eastern Ontario and Quebec has cost more than both floods with rural communities and farmers bearing the brunt of the disaster. The frequency of hail storms in Calgary has increased from one every four years in the 1980s to two every year in the 1990s. There has been a twofold increase in Canadian forest fires and pest outbreaks to the cost of $210 million each year.

A 10% to 30% reduction in crop yields across the prairies is being predicted by Environment Canada's environmental adaptation research group. The range of disease carrying insects, in other words the number of Canadians contacting malaria in foreign countries, has doubled. In 1998 a Toronto woman became the first Canadian to contract malaria from a local mosquito. We have yet to examine the cost of introducing new diseases to our country.

Canadians are quickly realizing the seriousness of the challenge before them. Any incentive encouraging the use of public transport is an important step in our struggle to meet the Kyoto protocol.

The same increases in auto use that have profoundly contributed to our greenhouse gas emissions also affect Canadians locally both in terms of health and the infrastructure needed to support vehicular use. Despite tighter vehicle emissions regulations and reductions in some pollutants, smog increased by 20% over the past decade in Canada largely because of an increase in the number of vehicles and the distance these vehicles were driven.

The Minister of Transport made this observation in a recent address in the city of Toronto:

You don't need to see the seat belt sign to know you are coming into Toronto. You recognize it by the brown haze of smog.

Therein is a very telling tale. As we approach most significant urban areas of our country we are well aware of the advancing city by the haze hanging over it.

Transportation related air pollution is particularly harmful to people at risk, meaning young children, the elderly and those with asthma or chronic lung and heart disease. Hospitalization for young Canadian children with asthma increased 28% among boys and 18% among girls between the years 1980 and 1990.

In greater Vancouver, part of the world with which I am most familiar, air is killing 900 people each year. Air pollution wipes out 2,100 people across the province of British Columbia and 16,000 people across Canada each year. For each death 100 more received expensive medical treatment. If nothing else, these statistics speak for themselves. We are dealing with a major killer component in our environment as a result of pollution.

Provincial governments are struggling in their own ways to deliver the health services required by our aging population while preventable pollution related illnesses escalate. Hundreds of millions of dollars can be saved by reducing smog. TEI is a proven incentive to get many people from using their cars and back into public transit of one kind or another.

Municipalities have been asking for this tax exemption for many years to promote their public transit systems. In the greater Toronto area commuter growth of 50% is expected within the GTA and 100% outside the GTA in the next 25 years. I think we all agree that with every visit to the greater Toronto metropolitan area we are reminded of the increasing traffic flow in that part of the country.

We ought to acknowledge that traffic congestion increases the travel time required by individuals, vehicle costs, pollution of the area, and demand for parking and other forms of vehicular infrastructure. Improving transit service is a less expensive alternative than adding lanes, widening bridges and intersections, and increasing parking availability.

The Regional Municipality of Ottawa-Carleton estimates that taxes devoted to transportation will triple if it cannot achieve its target to reduce rush hour car traffic. Municipal governments do not have the resources, that is the taxes, to maintain and expand their transportation infrastructure. In many cities such as Vancouver and Montreal expansion of highway systems is limited by geographic location.

Canadians can no longer afford to support indefinite increases in automobile use. Implementing the TEI would provide the incentive necessary for many commuters to switch to a mode of transportation with lower costs to society as a whole.

I have heard several comments being made as an excuse for inaction on this suggestion. It would cost too much in revenue loss. There would be a perceived inequity between those using public transport and others. There is the question of whether or not taxation is an appropriate or an effective tool to motivate people's behaviour, the question about subsidies to public transportation, and the question about it setting a precedent for excluding other benefits from taxation. I would like to take a moment or two in the time remaining to address each of these major concerns.

Can we afford the revenue loss? The Canadian Urban Transit Association estimates revenue loss to be between $18 million and $28 million based on U.S. data that 10% of employees will be offered $40 per month as the average benefit. This is potential loss as few Canadian employers currently provide transit passes. Real losses can only occur when employers substitute transit benefits for currently taxed wages.

Transit benefits are generally cheaper to provide than parking benefits. Employees who trade a parking spot for a transit pass increase their employer's taxable corporate profits or their own taxable income. This would result in a new tax revenue. A net gain is expected with higher modal shifts to transit. As well, for reasons previously cited it could save hundreds of millions of dollars in health care and municipal infrastructure costs should the TEI be implemented.

There is only one taxpayer. As we all know, an investment from one level of government that results in reduced cost or new revenues at other levels of government ultimately benefits the individual taxpayer. We cannot afford any further inaction in this sector.

Would this create inequities within the tax system? Some equity concerns provide a convenient although rather ludicrous argument in my judgment. I have heard critics say that allowing this income tax exemption would be unfair to employees with bosses that would not provide this benefit. I cannot believe that any Canadian thinks it is unfair that different jobs pay different wages and benefits even though we may be underpaid for the work we do as a rule. What Canadians think is unfair is discrimination, when an employer is paying a different wage or benefit to two employees at the same company doing exactly the same job.

Sixty-two per cent of Canadian commuters enjoy free or heavily subsidized parking while less than five per cent pay income taxes on this benefit. Co-workers without a car receive no comparable benefit. Tax losses from this benefit are estimated at $260 million.

By the year 2000, 80% of the Canadian population will live in urban centres with access to public transportation. Incentives that result in increased public transit use benefits all transit users, lower income families, women, students and the elderly, by increasing transit revenues and transit service.

All taxpayers benefit from decreased congestion. They also benefit from health care savings, reduced infrastructure costs and reduced greenhouse gas emissions. Very few tax policies impact so favourably on so many Canadians.

It is unfair that cuts to transit service have occurred in order to deal with unstable funding. It is unfair that low income families have been left with less access to educational and job opportunities simply because they do not own a vehicle. It is grossly unfair that hospital emergency rooms fill on “smog” days with young children who cannot breathe properly.

Would TEI be an effective and appropriate tool for increasing transit ridership? Taxation is already effectively used to manipulate behaviours. We increase taxes on alcohol and cigarette use. We give tax credits to oil companies for land reclamation costs. We allow tax deductions for charitable donations, political donations and RRSPs.

In the United States this tax exemption is a proven incentive to increase transit use. The Department of Finance, quoting the U.S. general accounting office study, concurs that ridership will increase about 25%.

Perhaps the greatest benefit of TEI is its potential to interact with other transportation demand management measures to increase the effectiveness of both. While local and provincial governments can develop transit systems and control land use, fiscal incentives are essential to maximize the results.

The Victoria Institute for Transportation Policy, a research facility in British Columbia, suggests that any transportation demand management policies implemented at the local and provincial level will be approximately 20% less effective without this incentive.

The other question is transit properties constantly hear that higher excise taxes on gasoline and substantial subsidies from provincial and local governments currently favour the use of public transport.

Most provincial subsidies have been slashed. When they did exist, the hidden subsidies of car drivers almost equalled per passenger per kilometre the more visible transit subsidies.

Our taxes pay for road construction, road maintenance, policing, health care for pollution areas and accidents. Car drivers tend to travel more miles than transit users which increases their individual subsidy substantially. A 1993 study showed that Ottawa-Carleton residents paid $425 annually to support each car user and only $121 to support transit users.

The finance department is concerned that promotion of this initiative would be precedent setting. The red book claimed a Liberal government would establish a framework in which environmental and economic policy point in the same direction. What better way to green the hill then to provide our employees with transit passes in lieu of parking?

We need many precedent setting strategies to fulfill our Kyoto commitment to combat climate change and to reduce traffic congestion. Implementing the TEI would be a sign of good faith that this government is interested in working toward a sustainable economic future.

Reducing congestion, pollution and the environmental and health impacts requires a number of strategies. One easily implementable first step the federal government could take is to make employer provided transit passes an income tax exempt benefit. This is a win-win situation. Implementation requires only a policy change from the federal government. It is the responsibility of individual transit properties to successfully market this service. Potential revenue losses are an insignificant investment compared to the long term social, economic, environmental and health benefits of supporting sustainable transportation use.

It is interesting that both the Saskatoon Chamber of Commerce and the Toronto Board of Trade are now calling on the government to allow this tax exemption to proceed. Businesses are voicing their concern over the impact and high cost of congestion. This is viewed as an important demonstration of the government's commitment to achieving emission reduction targets. We need proactive policies providing long term savings and avoidance of tax impacts as we plan our society for the new millennium.

Supporting public transit is not solely a transit issue. It is a health issue. It is a social issue. It is a pollution issue. It is an environmental issue. It surely is an economic issue as well. It is a solid foot forward in the battle to meet our Kyoto obligations. It makes sense. It is cost effective. It has proven to be effective in other jurisdictions.

If we cannot agree to provide an incentive for Canadians to use public transportation when so many groups and organizations are supportive and we have no clear opposition, how will we ever be able to make that much bolder and controversial step necessary to create a sustainable future? It is time to make employer provided transit passes as tax exempt benefit.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I am pleased to stand today to discuss the issue of whether the government should consider making employee provided transit passes an income tax benefit.

In my many years in municipal politics I supported this position. As the president of the Federation of Canadian Municipalities I lobbied the government on this very point.

My friend across the way talks about the support of the FCM and the Canadian Urban Transit Association. There is no question that the government should consider the motion proposed by my hon. colleague.

The House of Commons Standing Committee on the Environment and Sustainable Development has stated that it is incumbent on the government to ensure that environmental policy is not hampered by fiscal policy. It is unfortunate that at the moment Canada has not joined other industrialized countries such as the United States and several countries in western Europe in making employee provided transit passes a non-taxable benefit. Under current federal income tax policy, employer provided parking benefits are officially taxable, but most employees qualify for exemptions. Employer provided transit passes are fully taxed, providing an estimated $570 per year federal tax advantage to the average automobile commuter.

The value of an urban parking space and GST avoidance result in an average $1,726 annual financial incentive to commute by automobile rather than public transit.

For those of us who live in the greater Toronto area or the Vancouver area or in Montreal, we certainly know the impact of congestion of automobiles.

This proposal would assist in our Kyoto commitments. It has been estimated that as many as 300 million kilometres annually of urban automobile travel within 10 years would be eliminated if this proposal were adopted.

It has also been estimated that it would reduce by 35% the expected growth in peak period travel in our major urban centres. We would save billions of dollars in road construction costs as well.

It would also prevent tens of thousands of tonnes of greenhouse gas emission. Clearly the battle to deal with reducing C02 emissions is going to occur in our cities. Therefore this proposal will assist in that reduction to meet our commitments, those targets at Kyoto.

It would relieve traffic congestion, thereby reducing transportation costs. It would enhances economic efficiency. No doubt it would lead to a reduction in health costs and fewer respiratory related illnesses.

Current taxation policies favour the automobile over public transit. Let me elaborate. We could amend the Income Tax Act so that employer contributions toward employee transit commuting expenses are not treated as a taxable benefit. Alternatively, the same effect could be achieved by the Ministry of Finance at the administrative level publishing a statement of regulations in an interpretation bulletin. In either case employers could pay some or all of the cost of employee transit commuting expenses without listing them on employee T-4 tax forms as taxable benefits and employees would pay no income tax on them.

The proposal has the support of the Canadian Urban Transit Association, the Transportation Association of Canada, the House of Commons Standing Committee on the Environment and Sustainable Development and the national round table on the environment and the economy. I had the pleasure of participating in that round table when I was president of the FCM in November 1996. The climate change task group of the national air issues co-ordinating committee also supports it.

Making transit benefits tax exempt leverages a much greater value by giving employers an incentive to offer such benefits. A typical transit benefit would total $480 per year plus $182 in tax exemption for a total benefit of $662.

Experience in other countries such as the United States and western Europe indicates that many employers would offer transit benefits if they were tax exempt. This is an effective strategy for increasing transit commuting, particularly for communities that develop other incentives for transit use.

For this reason transit benefits are tax exempt in most other developed countries. Several European countries provide tax credits to employers or employees for transit pass purchases. U.S. income tax law exempts up to $65 worth of employee transit benefits per month, about $88 Canadian, although it would be a little higher now.

Transit benefits can take various forms. Employers could give free monthly transit passes, tickets, tokens or transit fare vouchers including bus, rail, ferries and form van pools, but not car pools.

In the United States transit benefits typically average $20 to $30 U.S. per month or about half the full price of a transit pass. Employers typically offer transit benefits to an employee who agrees to commute by transit at least a few days a month. The results of a transit benefit tax exemption are that transit voucher programs are being established in many major American cities. Transit vouchers are produced by transit agencies or independent firms and they are equivalent to a money order or a cheque that can only be used for purchasing transit passes or tickets.

As an example, an employee might receive a $30 voucher with his or her monthly paycheque. They may pay the balance, perhaps another $30, to purchase passes or tickets from any local transit agency. These programs are popular because they minimize employer administrative costs and they allow one instrument to be used in an area with multiple transit companies.

I believe this proposal clearly has merit. This proposal, as the hon. member indicated, should be considered. We need to look at those benefits and say that fiscal policy should not hamper good public policy in terms of improving and encouraging public transit, improving our environment and improving the overall health of Canadians.

I suggest current federal tax policy is both economically inefficient and unfair because it provides automobile commuters with a valuable benefit that is unavailable to other modes. This policy is at cross purposes with municipal, provincial and even federal transportation objectives to develop a more efficient and sustainable transport system.

In conclusion, federal income tax exemptions have a significant leverage effect. They induce employers to provide benefits that meet exemption criteria and as a result most Canadian employers are offered parking benefits but virtually none are offered transit benefits. The total value of untaxed parking benefits represents $1,726 in annual economic incentive to commute by automobile rather than by public transit. We need to look at this and we need to take action. I hope the House will consider the motion and support it.

[Jason Kenney, Reform, Calgary Southeast, AB]

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.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, it is indeed my pleasure to have the opportunity today to speak to Motion No. M-360 moved by the member from Kamloops.

First, I would like to say that the Progressive Conservative Party of Canada is very pleased to support this motion.

I would like to suggest why this piece of legislation has been brought forward.

The premise that the member from Kamloops utilized throughout the course of his speech was the need to actually address the serious challenge of climate change.

Last December, a mere 11 months ago, the international community met en masse in Kyoto, Japan. It was the first time that the industrialized nations actually met to begin setting targets and timelines to address the serious issue of climate change. Climate change is something that will ultimately affect every region in the world and predominately those countries situated in a northern climate.

This issue of achieving our targets with respect to Kyoto really stems back to the sort of country we have. Perhaps no other country in the world lives off its natural resources more than Canada. We have a diverse country and with our geographical land mass transportation has always been a historical challenge for Canadians. We also live in a colder climate. That means that our economy is very energy intensive. It is resource based and is also export driven. We need to ensure that we actually find some initiatives that are market driven and incentive based for us to actually begin to address the serious issue of climate change.

There is no single solution available today, and I believe well into the future, that will enable us as a country and the world community to be able to reduce our greenhouse gases. This initiative is a step in the right direction.

Before I get back to the motion, on the issue of climate change, this is a very positive and well thought out initiative. There is a change in the political tide to some degree because the New Democratic Party of Canada is advocating a tax cut. I applaud the New Democrats for doing that. All individuals in this country are overtaxed. Any time we provide Canadians with any kind of tax relief it is a step in the right direction.

I want to address an issue that was addressed by my colleague from Calgary Southeast. He was discussing whether this would be too interventionist from a taxation perspective. He said that government tax initiatives should never have a role in society. I prefer broad based tax relief for Canadians. This motion heads in a very positive direction and should be given some thought.

The hon. member for Kamloops, Thompson and Highland Valleys and the Liberal member who spoke both addressed the issue of climate change. The member for Calgary Southeast never mentioned the issue of climate change. The member said that it would be good for the environment. Yes, it would reduce emissions in terms of smog and other things that are harmful to human health, but he missed the opportunity to say once and for all that the Reform Party of Canada understands that climate change is a global problem.

My Liberal and NDP colleagues will remember that the member for Calgary Southwest stood in this House on the eve of the world community meeting in Kyoto to address this real and serious issue. The member for Calgary Southwest denied there was a problem with respect to climate change. He actually said that the science was inconclusive and that perhaps more study should be done. Saying that the science is divided is the same kind of logic as saying that cigarette smoking is good for you.

There are individuals who advocate a so-called meeting of the minds. They ask why the two conservative parties do not have some kind of fusion, alliance or coalition. But there are some fundamental issues that differentiate the Reform Party and the PC Party. One issue is our environmental commitment and our understanding with respect to the big picture.

The hon. member pointed out that transportation accounts for 32% of all carbon dioxide emissions or greenhouse gases within Canada. Local transportation is a significant component of that figure.

Why would we not want to go forward with this? Canadians in general are overtaxed. This would encourage Canadians to use public transportation en masse. It would reduce consumption of automobile gases and smog which would be very good for human health.

I applaud the member from Kamloops for his initiative and for saying that there is only one taxpayer. He is right. We spend billions of dollars allocating moneys to maintain our rural and urban highways. This would enable us to lessen some of the day to day pressures on our roads.

I challenge the government to adopt this motion. The government says time and time again that it is committed to early action in order to address the serious issue of climate change. I would submit that Canadians would look for any action or at least a little more.

A case in point is that this government has still to bring in initiatives and aggressive tax incentives with respect to research and development on energy efficiency. The government has yet to bring in aggressive tax incentives for the use of renewable sources of energy.

In terms of home heating, only 1% of all homes being constructed in Canada today are R-2000 compatible. There are many solutions out there. The government has a role in leading the way so we can actually make it market driven, incentive based and get Canadians engaged in the issue. Another solution is producing less emissions of carbon dioxide. Public transportation would head us in that direction.

As I said earlier Canadians are overtaxed. I understand the concern is that perhaps this would favour individuals who live in urban areas and some individuals such as myself who reside in the beautiful riding of Fundy—Royal, which is very rural, and may not have the opportunity to use transportation en masse. I would also indicate that many communities would have to do that.

In my riding half the population lives in a suburban area just outside the city of Saint John. Nearly 35,000 individuals are within five or six miles of the city of Saint John. There is no public transportation system for individuals who would choose to use public transportation in terms of the bus to go into the city of St. John.

That is not necessarily because of a lack of will on the part of our valued municipal leaders such as Mr. Bill Artiss, mayor of Rothesay, and Alyson Leslie Brown-Hamilton, mayor of Quispamsis. I do not blame it on these individuals. They would be committed to public transportation if they had the critical mass to do so. Providing a tax incentive for more individuals to take the bus would be most cost effective. The people in the Kennebecasis Valley in my riding of Fundy—Royal could ultimately develop the critical mass to use a public transportation system.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I thank the member opposite for the motion. The government should consider making employer provided transit passes a tax exempt benefit.

I must admit that when this initiative came across my desk I thought it was a provocative thought, so I enter into the debate with that kind of mindset. These are interesting initiatives from members who are trying to address real and valid issues that exist in society.

This is a bit of a peephole reaction to creating tax legislation. One is forever looking through a narrow glass and not necessarily getting the entire picture. I offer this as more of a response than a criticism. It does not address the fact that all employers do not offer transit passes. It does not do anything for those people who use transit who are not employees, people such as seniors, students and the unemployed. It does not do anything for these folks. I am not entirely convinced that we can confer a certain kind of benefit on one class of citizen without expanding the benefit to other classes of citizen, all of whom are transit riders.

I would like to see a proposal, if this was the kind of direction in which the government wished to go, where the benefits of using transit were readily apparent and were of some use to all classes of citizens.

The second consideration that bothers me is the peephole approach to public policy. Municipal, federal and provincial governments already give substantial subsidies to transit.

It is my understanding that at this point in time approximately 48% of transit costs are subsidized costs. Ridership or public riding contributes only 52%. This brings me to one of the more critical components of the argument of my friend opposite, that there is an implicit assumption that with this exemption ridership will increase.

It was not clear to me in debate or in reading his support materials that ridership would increase. Again I react anecdotally here. I would have thought that employees who are using transit already will not necessarily increase the ridership. They will continue to use the transit regardless of whether or not they get a tax exempt benefit. I am not at all persuaded that ridership will be increased. If ridership is not increased, we do not achieve what we want to achieve in terms of harm reduction to the environment or trying to meet Kyoto targets.

I would ask the hon. member to think, if this debate goes forward, about the issue of how he can give assurances that ridership will increase. The only clear evidence at this point is that tax revenues will be reduced. I do not find this argument to be a persuasive one.

We all wish to reduce greenhouse gases and to meet our Kyoto requirements. The linkage is not necessarily demonstrable. The assumption is that cars will be taken off the road—and I hope that is true—by giving this exemption. If cars are taken off the road our greenhouse gas emissions will be reduced and we will be able to meet our Kyoto requirements.

The linkage again is not clear in my mind. This is in some respects an article of faith rather than a clear evidential linkage. Those are the criticisms I have of the motion. As can be seen in the phrasing of my criticisms, I am not at all opposed to the thought or to the general direction. I would like to suggest that possibly the exemption may be only one way of achieving the benefit the hon. member wishes to obtain. There may well be better ways to achieve these laudable goals by not taking a kind of peephole approach to little pieces and sections of the Income Tax Act which in and of themselves may create inconsistencies that are not necessarily anticipated.

Again I laud the hon. member for his initiative. As I said, when this initiative came across my desk I thought it was a good idea. It was not one that readily yielded criticism. I offer my observations to him in the form of encouragement to a fellow parliamentarian.

[Rick Laliberte, NDP, Churchill River, SK]

Mr. Speaker, I would like to comment on my colleague's initiative. This is a very bold challenge for the government to consider.

I must highlight that my hon. colleague who has just risen and spoken to some of the considerations that should be taken into account raised the issue of the effect a transit pass exemption for employees would have on the environment.

My hon. colleague mentioned a statistic from San Francisco as an example. Transit use among participating employees increased by 31%. This in turn generated $1.6 million of new transit revenue.

Other members mentioned inequality. If employees were given these benefits and incentives to use transit as opposed to driving their vehicles it would mean the transit companies would have more resources and more capabilities to decrease the costs to the public, the unemployed, the students, the elderly, the people who are using the present day transit systems in the cities.

This incentive is a challenge for this government to consider. Today 32% of emissions in Canada are caused by our transportation system. We are per capita the second highest emitter of greenhouse gases in the world. We have to correct our ways. We have to readjust our way of living, our day to day urban lifestyle, which this incentive is directed at. The government has said that we will reduce our 1990 levels of emissions by 6% by the year 2005. Today we are 12% beyond that. Add 12% to the 6% promised and that is an 18% reduction. But there is no incentive.

This government has not acted on greenhouse gas reductions since coming back from Kyoto. It has not done anything except consult. It has 12 specific tables which were created by the greenhouse emissions secretariat. These people are continuing to discuss but there is no action plan.

The hon. member has created an incentive through Revenue Canada which would be revenue neutral for employers. It would be a major incentive for employees to consider. If they are getting a benefit from their employers and then having to pay a tax portion of that at the end of the year, that is a disincentive. It reverses the whole process and our commitments.

I ask all members to consider this motion and vote in favour of it. The government would then be challenged to take it back to the environment committee, because this is a major environmental initiative, or to Revenue Canada. The finance committee would then seriously have to look at the impact of this.

Again, it should not have banked on the taxation of employer benefits for their employees to get to work. A lot of these employees travel from suburban areas. If we look at the outskirts of the capital region of Ottawa our transit system does not even go the airport. Somebody in downtown Ottawa wanting to utilize the public transit system has to stop at the Hunt Club region. Then they have to walk the rest of the way, or take a taxi, or hitchhike, or use emit more greenhouse gases in some other shape or form. It we had employer incentives that increase the use of transit it would increase the extent of our transit system in our cities. It would be an incentive for the employees and the transit systems.

The hon. member mentioned that municipal transit associations and municipal authorities throughout the country would be very much in favour of this. Major cities have lent their support to this issue.

I beg all members to seriously consider this. Vote in favour of the motion. It deals with the conscience of the country in making legal commitments for greenhouse gas reductions and making decisions on a tax exemption our citizens truly deserve. When an employer hands them a transit pass as a benefit and then asks them to pay taxes on top of this it is a disincentive.

This is repealing a practice by the government to create revenue that is uncalled for. It is a very small investment by repealing a tax revenue that could have many benefits.

I must highlight some statistics. San Francisco employers passed out transit passes to their employees as an incentive and transit use increased by 31%. That would mean 17 million vehicle miles in the bay area of San Francisco. Pollutants were decreased by 61 million tonnes and $1.6 million in new revenue was generated for the transit system in San Francisco. The hon. member across the way challenged us to come up with some sort of example. Those are the statistics we can come up with.

There would be further time to research the issues through committee and I think the topic of the motion would come back into the House for further debate. The challenge is given to the hon. member who has presented the motion and he would have another opportunity to speak to it.

I would ask that those members who are suspicious of the motion in terms of a tax loophole reconsider. The benefits are beyond what the government can afford in terms of the greenhouse gas emissions. Our cities are being challenged with the whole aspect of transportation and the redesigning of our lifestyle.

In the new millennium—

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I rise on a point of order. I seek the unanimous consent of the House to move concurrence in a committee report.

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

Committees Of The House

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I would ask for unanimous consent of the House that the 13th report of the Standing Committee on Procedure and House Affairs presented on Wednesday, November 26, 1997 be concurred in.

(Motion agreed to)

The House resumed consideration of the motion.

Transit Passes

[Rick Laliberte, NDP, Churchill River, SK]

Mr. Speaker, I would like to reaffirm that Canada is the only OECD country where the national government is not involved in funding public urban transit systems. That is a major challenge for us and it is an opportunity for the government to show leadership and act on it.

[The Deputy Speaker]

The time provided for the consideration of Private Members' Business is now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

It being after 6.30 p.m., this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6.32 p.m.)