Mr. Speaker, I have to agree with the comments of the previous speaker certainly as they apply to the Reform Party. We have been listening to a lot of innuendo about tax reform and how the Reform members are the defenders of the poor and the downtrodden. However most of their tax policies are to cover up the real issue which is trying to give tax breaks to their buddies and friends, the wealthy people of this country.
This bill is very complex. It involves many sections of the Income Tax Act, charitable donations, along with registered education savings plans which I will touch on a little later, transfer pricing and so on. It is a very large bill and affects many aspects of the Income Tax Act.
I would like to talk about one aspect the member for Saint-Hyacinthe—Bagot mentioned yesterday. He talked about how this bill changes the Canada Shipping Act. He then alluded that somehow the Minister of Finance would have some kind of conflict of interest. I would just like to refer to a number of issues showing the history of these sections of the Canada Shipping Act through the income tax system.
Since at least 1927 Canada has had special tax rules for non-resident companies that earn income from international shipping. The rule is that Canada will not tax that income provided their home country does the same for Canadian companies. Each country taxes its own residents, a fair application of international trade and agreements I would think.
To apply this rule, it has to be known whether the company is a non-resident or not. That was sometimes a problem because under Canadian tax rule, residence is not always easy to decide in advance. Canada was losing business because of this uncertainty.
In 1991 the previous government added a rule to clarify the residency rules for foreign shippers. Basically a foreign company that earns its income from international shipping is not a resident in Canada.
The amendment in today's bill responds to the suggestion from the non-profit International Marine Centre in Vancouver. It simply improved the 1991 clarification rule. It says that it does not matter whether a foreign company carries on its shipping business directly or through subsidiaries.
Another amendment brings the 1927 exemption up to date, including capital gains which were not taxable when the exemption was introduced and so may not have been covered.
Again these are technical amendments. They are not new. They were released in 1995 and were again released with some modifications in 1996.
Through the office of the ethics commissioner, the government has been informed by Canada Steamship Lines that it does not use section 250 of the Income Tax Act for the purposes of offshore operations. Consequently, the proposed amendment does not benefit Canada Steamship Lines and the company has no intention of utilizing this provision.
I would like to carry on with a very specific aspect of these amendments which talk about the registered education savings plan.
The Conference Board of Canada has stated so many times that Canada's education system has somewhat fallen behind in the world. Even though we invest many, many dollars in our education system, it would seem that some of our proficiencies, certainly in science and technology skills, have somewhat fallen behind the norm. That is why this government set up a millennium fund. It is also why we made this amendment to the income tax system.
The registered education savings plan is much like a registered retirement savings plan. The difference is that it allows parents to put money in a separate fund to get a tax deduction to save for their children's future education.
The registered education savings plan has been around for a good number of years but it has never been very effective. The reason it has not been effective is that what happened in these plans is that if your child did not attend a post-secondary education institution, you forfeited your deposit. In other words, you always ran the risk that if Johnny does not go on to university or to college, the money is lost. Of course, most people thought this was not a particularly good investment. This government realized that it was important for families to save for the education of their children and also to get young people access to our educational institutions.
We talk a lot in this House about the importance of access to post-secondary education. This is a place where the government is positively trying to accomplish that with partnerships and with private families.
In addition it eliminates to a large extent the liability that they are going to lose those deposits if Johnny or Mary does not go on to post-secondary education. More important, it raises the limits from $2,000 a year to $4,000 a year. It allows a tax deduction so we can save for the education of children. As a parent who has three children in post-secondary education, it is an expensive proposition. I wish this program had been in place 20 or 30 years ago. I would be utilizing it.
Many families live in the fear that they will not be able to provide for their children when it is time to go to school. This is an excellent opportunity for them. It is a positive way that governments can, together with the private sector, ensure there is education for our young people.
I just came back from the National Research Institute. We talk about brain drain. The member talked about people leaving her province. Memorial University in Newfoundland is one of the premier educators in Canada. These are the roots and the avenues to the future for us. We talk in Canada about having tremendous resources. We usually talk in terms of natural resources. We talk about our petroleum industries. We talk about our metallurgical industries and our forests and aluminium products, but in reality the biggest resource we have in Canada is between our own two ears. We have to do more to ensure that young people have an adequate education and that they are going to engage in those industries that will evolve and be the industries of the future.
I am happy to support this bill and this specific aspect of it. A very important aspect of it is what we are doing to make a positive contribution for those children who may find it difficult to get to school. It gives their parents planning horizons to do that.
I have sat through this debate and I have listened to members of the Reform Party get up and defend the province of Ontario. I guess they are all part of the same material. It seems strange to me that the province of Ontario came in with a program of reducing taxes. At the same time it was going to cut expenditures and do all kinds of wonderful things. Some of the members of the Reform Party keep saying this government did this and that government did that. The reality is most people know their is only one taxpayer. Everybody in Canada has to try to get their books to balance, whether it is the federal government or the provinces.
One of the big things we do is transfer money to the provinces in support of health care. We have created a base level of funding there. Some of it had to be cut and the provinces had to adjust to that.
It is amazing to me that at the same time that cuts to health care and other aspects of our social structure in Ontario were going on, the province of Ontario cut indirectly or reduced taxes by $5 billion. When it made the announcement of the $5 billion, it was running something like $8 billion deficits per year. In other words, the province continued to run deficits on annual rated basis, even though it was also in a program of tax reductions. I heard the minister of finance of the province of Ontario saying they cannot make their budget reductions by the year 2000. They were to balance the books but now they cannot do it. The difference or shortfall was $5 billion.
I ask whether this is in the best interests of Canadians. My constituents are telling me to continue with our deficit and debt reduction targets, enhance our health care system but they do not need tax cuts today because they think there are more important things to do. I think most of the people in Ontario have come to realize that.