Mr. Speaker, Bill C-28 is a rather large bill containing more than 300 clauses. It is a real grab bag of provisions dealing with a variety of topics from employment insurance to transfer payments to the Income Tax Act.
Regardless of what my government colleagues might think or say, it is obvious that the Minister of Finance is trying to pull a fast one on us.
During the 10 minutes allotted to me, I will focus on two main points: the measures relating to federal transfer payments and certain provisions regarding the Income Tax Act. Hon. members will see for themselves how bad Bill C-28 is.
First of all, let us look at transfer payments to the provinces. These past few years, the federal government saved huge amounts of money at the expense of the provinces and the workers, both employed and unemployed. Bill C-28 could have been an opportunity for the Liberals to alleviate the sacrifices it has asked of them so far and for the coming years.
By the end of its second mandate, the Liberal government will have cut $42 billion in social transfers to the provinces. These transfers would normally be used to fund hospitals, postsecondary education and social assistance. These savings enable the federal government to play the knight in shining armour, while the provinces have to do the dirty job of implementing cutbacks.
The President of the Treasury Board spoke eloquently when he stated in the March 8, 1996, edition of Le Soleil : “When Bouchard will have to cut, we in Ottawa will be able to show that we can afford to preserve social programs for the future”.
In 1993, cash transfers for social programs totalled $18.8 billion a year. This year, even after including the changes proposed in Bill C-28, they will amount to a mere $12.5 billion. This is small consolation because the same calculation for Quebec alone shows a total cut of approximately $13 billion instead of $15 billion between 1993 and 2003.
Now, let us take a look at how the Liberals have been dipping into the EI fund. Besides making cuts, the federal government literally steals from workers and employers who make contributions to the employment insurance fund, claiming that the surpluses are used to absorb the deficit, while the unemployed must contend with reduced benefits.
In 1993, the unemployment insurance fund had a $1.2 billion annual deficit, and a cumulative deficit of $5.9 billion. In 1997, following the Liberal reforms, the fund posted a $7 billion annual surplus and a cumulative surplus of close to $13 billion. Let us keep in mind that there is not one cent of the government's money in this program.
Meanwhile, the unemployed have less and less access to the meagre benefits, even in a crisis situation, as was the case for thousands of people in recent weeks.
The Minister of Finance has also presented us with highly inflated deficit targets in order to dodge around the debates on the necessity for cuts in transfers for health, education and unemployment insurance.
Last March, the hon. member for Roberval asked the following question: “Today, after ten months, the cumulative deficit is reported to be $7.3 billion, which could mean a real deficit of $10 billion to $12 billion in 1996-97 instead of the $19 billion he announced—Is the Minister of Finance sneaky or incompetent?” The Minister of Finance's response to this: “But where does this $12 billion figure come from? I do not know. I think it is a figure pulled out of the air”.
Whether sneaky or incompetent, the question is a legitimate one and, in all honesty, both answers may be right. One thing is certain, he does not deserve any of the credit. The provincial finance ministers were the ones who had to do the dirty work for him. With Bill C-28, the minister is missing a great opportunity to show a bit of gratitude toward those who have really been the ones to make the sacrifices.
Let us speak of the taxation system. Honest citizens who pay their taxes to Ottawa are asking, demanding, of the government that everyone at least pay his fair share. That is the least that can be asked, but it seems to me that it is already too much for this government.
In his May 1996 report, the Auditor General indicated his “serious concerns about the administration of the Income Tax Act involving the movement out of Canada of at least $2 billion of assets held in family trusts”.
On October 2, 1996, the Minister of Finance tabled a ways and means motion intended, he said, to plug this loophole. Over a year later, even with Bill C-28, we are still waiting.
If he is going to amend the tax rules with Bill C-28, the Minister of Finance should have followed the lead of the Bloc Quebecois, which, in the fall of 1996, introduced concrete proposals with respect to corporate taxation, two of them concerning the use of tax havens.
With respect to the deductibility of interest expenses—this is the first measure we suggested to the government—when a Canadian company has a subsidiary in a tax haven, first of all it benefits from very low tax rates on profits realized outside the country, but in addition it can deduct from its Canadian revenues the interest on loans used to invest in its subsidiary. We think that, in this particular case, the tax expenditure is too generous.
As for the deduction of intercorporate dividends, when a Canadian company has a subsidiary in a country with which Canada has a tax convention, the dividends paid by the subsidiary to head office are not taxed in Canada, under certain conditions. This Canadian rule is more generous than the practice in the United States. We are asking the federal government to amend the Income Tax Act so as to tax dividends from foreign subsidiaries in Canada and to grant a credit for tax already paid by a foreign subsidiary. These are proposals the government would do very well to bear in mind for its next budget.
But, although they say they want to put a stop to tax havens, the Liberals are in no hurry. Each year, the government loses billions of dollars because of loopholes in the present tax system. These shameless tax avoidance schemes deprive the government of huge amounts that could indirectly benefit Quebec and Canadian taxpayers. Bill C-28 raises once again, but in a negative way, the infamous issue of tax havens, particularly as regards the taxation of capital goods in the context of the foreign accrual property income, or FAPI.
We are talking here about subsidiaries or companies whose primary activity is to generate revenues from the ownership of goods or stocks. These non-active ventures must pay taxes to Canada on the revenues generated through their goods or stocks, unlike the companies that are actually involved in and making profits from shipping operations.
Clause 241 of Bill C-28 would amend subsection 250(6) of the Income Tax Act to allow a Canadian corporation that owns but does not operate shipping subsidiaries to have these treated as the equivalent of an actual shipping company.
So, instead of telling companies involved in shipping activities abroad that they will now have to pay taxes to Canada like any other corporation, the government is saying to those currently paying taxes that they will no longer have to do so. The minister has a rather strange notion of fairness.
One has to wonder what is in it for ordinary taxpayers. The federal government keeps asking them to tighten their belts and put up with the savage cuts in transfers for health, education and social assistance, but it makes it even easier to move capital abroad.
For these reasons, and for many others that will be raised by my colleagues, I cannot support Bill C-28.