Mr. Speaker, it is with great pleasure that I address the House today on Bill C-223.
The Progressive Conservative Party feels strongly about encouraging the opportunities for Canadians to purchase their homes. Our party introduced a home buyers plan where Canadians could borrow up to $20,000 from their RRSPs for their first home and first home loan insurance program through CMHC.
These initiatives have successfully assisted thousands of Canadian families to buy their first homes. Thus the PC Party has demonstrated unequivocally its commitment through action to allowing ordinary Canadians to reach the goal of purchasing their first home.
In 1998 we continue to believe that home ownership should be an attainable goal for Canadians. The Liberal government policies have made home ownership less attainable than it has ever been before.
Excessively invasive government policies such as high income tax rates, the highest in the G-7; payroll taxes which prevent the growth of employment and frankly represent the single greatest impediment to the growth of employment in Canada; and interprovincial trade barriers, excessive regulations, have contributed to a 6% drop in personal disposable income in recent years. It is certainly an abysmal performance relative to that of the United States.
High unemployment and lack of job security are the scourges that affect the Canadian public at this time. Interest rates are of little importance if there is little job security or if jobs cannot be found when one is determining whether or not to purchase a home. The biggest obstacle that stands between Canadians and the attainment of their goals is the Liberal government.
Clearly the best way to assist Canadians to achieve their goals is for government to provide a plan for growth. We need to reduce payroll taxes. We need to reduce income taxes. Our party is calling for a broadly based income tax reduction which will benefit all Canadians.
We trust Canadians. We believe putting more money in their pockets will help them attain and achieve their goals. Lower tax rates will contribute to higher job growth. Working Canadians with higher disposable incomes will have more money to purchase items they want to purchase such as homes and to pay for the education of their children. This will better their lives and the lives of future generations of their families.
Our plan for growth will work for Canadians and will put more Canadians back to work. We need meaningful tax reform and we need a holistic approach to tax reform. Taxes are designed to pay for services provided by government. Effective tax policy should be neutral. It should be non-directional. It should be basically focused on the initial goal of raising funds for the operation of government.
Why do people in Canada need to hire accountants or lawyers to deal with their own government? It is fundamentally wrong. Governments have overtaxed Canadians and then have manipulated Canadians through egregious and excessive loopholes. These are what I refer to as people control mechanisms which the government utilizes to push people in a particular direction. Its Pavlovian, paternalistic tax policy tries to control Canadians and their behaviour.
The tax code is meant to raise revenue. It is not meant to be directional in terms of affecting the spending habits of Canadians.
Yesterday I listened at length to Reform members pontificate about Bill C-28. I believe that they too espoused a simpler, flatter tax code.
Yesterday the member for Prince George—Bulkley Valley said that the Liberals, instead of wanting to fix the tax code, were simply making changes to make it more confusing for Canadians. The member for St. Albert said:
Is it any wonder that Canadians are losing faith with their tax system and the complexity of the Income Tax Act?
What a difference a day makes. I guess hypocrisy is only half a mortal sin. It strikes me that Bill C-223 provides a subsidy for a particular activity and to a considerable extent complicates further a tax code that is already far too complex.
Will Reform table the costing of the bill? When Canadians need a simpler tax code the Reform Party wants a more complex one. Tax changes have to be holistic and are not developed in a vacuum or in isolation. We cannot forget the most fundamental rule of public policy, that is unintended consequences of public policy, especially when considering tax policy. We have to be very careful.
Targeted subsidies are a slippery slope. I thought the Reform Party was opposed to subsidies. This is in effect a subsidy for a particular group of Canadians and serves in some ways to discriminate against many Canadians, the poorest of Canadians who may not be in a position to buy a home but who would benefit from broadly based tax cuts and from an increase in personal deductions to about $10,000, which is part of our platform.
The Reform Party would like us to endorse bigger and more invasive government. The Reform Party has suddenly decided to side with the government. It is on the side of fiscal interventionists. Why not provide a tax break to all Canadians?
The PC Party dropped taxes as a percentage of GDP from 14% to 13% from 1989 to 1993. That is what we did with personal income tax. The Liberals have increased it since by 1% back up to 14%.
Reformers like to talk about a flat tax but while they talk the talk of flat tax they walk the walk of fiscal interventionists.
Let us face it. A targeted tax break is better than no tax relief at all. Let us take a serious look at the effectiveness of mortgage interest deductibility and the risks, for instance, in the U.S. example. I realize the Reform Party imports wholesale a significant part of its platform from the U.S. Republicans, but it would be better off to listen to Jack Kemp than Jesse Helms on many of its policies.
The fact is that people like Jack Kemp and other advocates for flatter tax codes would like to see the removal of things like the mortgage deductibility of interest, which is essentially diametrically opposed to the whole concept of flatter tax. I assumed Reformers were flat tax people based on their platform but that they may have changed as of late. Some of their other policies have evolved as well. We can only hope their members join in these policies.
If we compare ownership rates, Canada and Japan with no interest deductibility have essentially the same ownership rate as the U.S. with interest deductibility. The question is has it affected the purchasing patterns of Americans significantly. France and the Netherlands have lower ownership rates than Canada with interest deductibility.
I will reiterate that a tax break in absence of an overall holistic tax reform is better than no tax break at all. We cannot argue with the intention of the bill to allow more Canadians to purchase their first home. That is a very positive goal for any legislation. However, we must not forget that the most important goal for the House should be to simplify Canada's tax code and reduce the tax burden for all Canadians.
In closing, we cannot forget the first law of public policy is the law of unintended consequences. As many economists predict, we are about to enter a level of unprecedented deflation. In a deflationary environment, if we create government policy incentives for individual Canadians to assume larger debt than they would otherwise assume, potentially we might create a situation that would actually punish many Canadians for wanting to do the right thing.
A tax break is better than no tax reform at all, but let us keep our eye on the ball and focused on what Canadians really need: broad based tax reductions, tax reform and tax simplification.