Mr. Speaker, I am pleased to support Private Member's Bill C-223, an act to amend the Income Tax Act by introducing a deduction for interest paid on mortgage loans.
From listening to the former speakers, I believe they have really missed the boat. This bill is about putting money in people's pockets. When they have money in their pockets they spend it. When people spend their money we have increased economic activity. That is how the world operates.
I applaud the hon. member for Portage—Lisgar for introducing the bill. It would provide for the deduction of interest paid by a taxpayer on the first $100,000 of a mortgage loan, secured by the first qualifying home acquired by that taxpayer. In other words, that is the ceiling.
If I can simplify this, for a mortgage amount of $100,000 amortized over 20 years at an interest rate of 7%, and the government should take note that interest rates are unfortunately going up today, with that mortgage a buyer will pay an estimated amount of $84,632 in interest.
To simplify this for those members who do not like math, let us divide $84,632 by 20 years. We come up with about $4,231.50. That is potentially $4,231.50 more per year that a first time homebuyer would have to spend on their children, on the purchase of a car, on an RRSP, on things like dental care, on furnishings and on the upkeep of their home. That is potentially $4,231.50 depending on the terms of the mortgage, a homebuyer could put toward paying down a mortgage early, saving even more money.
No matter how we slice it, that is $84,632 more in the pockets of the first time homebuyer. In other words, that is the interest.
What is the philosophy behind this bill? It is simple but profound. As I said in my earlier remarks, a dollar left in the hands of a taxpayer, a consumer, a parent, a citizen, is better used and more beneficial to the economy and all Canadians than that same dollar put in the hands of the tax collector, a minister or a bureaucrat.
Believe it. With a few more dollars in the hands of first time homebuyers this bill will achieve the following. It moves Canadians from renters to homebuyers. Instead of giving money to a landlord, more Canadians would have the opportunity to invest in themselves, their families and their futures.
In Winnipeg, the largest city in my province of Manitoba, 60% of the homes sold from January to September 1997 were purchased by first time homebuyers. According to an article reported in the Winnipeg Sun on October 27, 1997, Terry Kozak, a Canada Mortgage and Housing Corporation spokesman said: “A record high of 25,000 Winnipeg renters could afford to purchase a home. The added incentive of tax deductible interest would encourage renters to take the plunge”.
The second point I want to make is that in 1995 under the Liberal government, housing starts in Manitoba were down by 38.6%. Since then housing starts have seen very modest gains. According to CMHC single family housing starts are up in Manitoba by 10.7% compared to gains of more than 37% in Alberta for 1997. But as I already mentioned, interest rates are headed up. That is not good news for homebuyers. If the government is really interested in sustaining the growth in housing starts, it should pass Bill C-223.
The government should use this tax break for mortgage interest to counteract mortgage interest rates going up. That is good public policy. It is real compassion for families and other potential first time buyers just getting started in life. If all of us can think back 30 or 40 years, we will remember what it was like when we did not have two nickels to pinch.
Even the columnist who is not a fan of the Reform Party, Brian Mulroney's former chief of staff, Hugh Segal, agrees with the objective of this bill. I quote from his column of September 13, 1997. “Middle income Canadians would experience an increase in disposable and discretionary income, there would be an easier transition from renting to owning and the family home would for once be the beneficiary of enlightened tax policy as opposed to a victim”. He goes on to say, “It was right when finance minister Crosby tried to introduce it almost 20 years ago”, as the former speaker alluded to, “and it is even more right today”.
My colleague has enunciated how there are many other benefits with the economic spin-offs that this tax break would create. There is no doubt we would see an increase in job creation, certainly jobs created for carpenters, plumbers, electricians. There would also be a big demand for the manufacturing sector to fill these homes.
Money spent locally in communities usually turns around about seven times. Every dollar that is spent locally spins around seven times.
Real jobs are created when governments put more money into the hands of the consumer. The expenditure of money is what makes the economy go around. The people of Canada are waiting for tax relief. I remind the House that we are the highest taxed people in all of the G-7 countries.
I close by saying that it is time we passed this bill. It would help first time homebuyers create their own homes and enhance the quality of life for their families.