Monte Solberg on Income Tax Amendments Act, 1997

Mr. Speaker, it is a pleasure to address Bill C-28, a bill which Reformers stand in opposition to. I will lay out a number of the reasons that we oppose this legislation.

This bill talks about taxes without talking about tax relief. In a country that has some of the highest taxes in the world, we need to have a bill that lowers our taxes. This bill talks about taxes without talking about tax simplification. As we approach the tax deadline, people preparing their taxes will come to understand how badly we need tax simplification.

This legislation leaves untouched clause 241, a clause we believe puts the finance minister in a conflict of interest position. We will say more about that later.

The legislation imposes a new round of taxes on municipalities and therefore ultimately on consumers themselves. We oppose it for that reason.

This legislation does nothing to prepare us for the impact of the Asian tsunami that will soon occur as a result of the meltdown in Asian markets.

We are concerned about this because it maintains the $6 billion in cuts to the Canada health and social transfer after the government specifically promised it would not cut transfers to the provinces.

This bill does nothing to lighten the load of ordinary Canadians who do so much to move the country forward yet get precious little in the form of any kind of award or acknowledgement from the government.

Those are the various and sundry reasons we oppose this legislation. I will speak to them in more detail shortly.

I draw attention to the language that has come from the government over the past several days since the budget presentation, in particular how government members speak about some of the things that are occurring in Canada. I hope we can uncover what is really going on.

They speak of the Canada Health and Social Transfer, but we find out that they did not cut as much as they said they were going to cut. They said they were going to cut $7.5 billion. Now they are only cutting $6 billion. They call that an increase. When they only slow down the growth of the rise in taxes in this country they call that tax relief. When they do not add to our already staggering high debt they call that debt reduction.

It is important to uncover and expose this because if these things are repeated often enough people may be deceived into believing that the country is moving forward in a meaningful way. We do not want to leave that false impression.

In 1993, in the leaders' debate, the current Prime Minister promised the leader of the Reform Party that he would not cut transfers to the provinces, but he did. He eviscerated health care and higher education in this country, cutting transfers by what amounts to about $6 billion. It is the largest cut to health care in the history of the country. I would argue that this government shut down more hospital beds than any provincial government in this country, probably more than all the provincial governments combined. We need to draw attention to that.

My friends across the way talk about the tax relief of $7 billion that was introduced in the budget. What they do not talk about are the huge increases in taxes that more than offset that $7 billion. A taxpayer earning about $50,000 would be in the top 10% in this country. The top 10% of taxpayers pay almost 50% of the taxes. People who earn $50,000 or more are in the top 10%. Accordingly, the taxpayer will save about $219 in 1999 because of the government's phase out of the 3% surtax. However, the same taxpayer will pay an extra $330 in CPP premiums in 2000, for a net increase of $111. That person's taxes will go up by $111. Let us not be deceived. My friends across the way can talk all they want about tax relief, but it simply is not so.

Jeff Rubin, the chief economist for Wood Gundy said that “for all the Budget's gestures at tax cuts, Canadians' tax bill next year will be some $6 billion higher as a result of the cumulative impact of the last five Liberal budgets”. Yet the minister continues to boast about reduced taxes. It is outrageous.

Finally, I will touch on the issue of debt reduction. We have heard members of the House talk about the government's plan for debt reduction. We oppose this on two separate grounds. They say that the debt to GDP ratio will go down even if not one cent is put toward the debt. In fact that is true, but what does debt to GDP ratio mean to an ordinary taxpaying Canadian? It means virtually nothing. The average family today pays $6,000 in taxes just to pay the interest on the debt. Allowing the debt to diminish as a percentage of the size of the economy will not impact that at all. They will still pay $6,000 a year in taxes just to pay the interest on the debt, so that does no good.

My opponents across the way will say they have a contingency fund of $3 billion which they will use to pay down the debt. Let us assume for a moment that the government does use the contingency fund to pay down the debt. We have a debt in this country of $583.2 billion. It would take 200 years to pay down the debt at that rate and that is only if they do use the contingency fund for that. We have already seen in this year's budget that they blew the contingency fund on new spending. Therefore there is no guarantee that we will ever see that contingency fund used for something as important as paying down the debt.

Why is it important to pay down the debt?

I will simply point out, first of all, that we pay in this country about $45 billion a year in interest payments toward servicing the debt. That is by far the largest cheque that the finance minister writes every year.

Unfortunately, a big chunk of that $45 billion in interest payments goes to bankers from around the world. It does not even stay in this country. It goes to foreign debt holders.

That cannot be good. We oppose that. We want to see more of that money remain in the country. Let us start to pay down the debt.

I think even more important right now is that when we have a debt which is this high we are extraordinarily vulnerable to not just international shocks, but also domestic ones.

The other day I had an analyst in my office from Wall Street. He came to Canada specifically because he goes to countries around the world to check out the financial situation and then he sells the information to people who invest, to brokerage houses and that sort of thing.

This man informed me that he was extraordinarily concerned about Canada's current situation. He pointed out that with a debt of $583 billion, with a current account deficit which will soon become a big deficit, and with a dollar that is very, very vulnerable, Canada is in a precarious position, especially with the pending Asian tsunami about to hit. Those were his words “the Asian tsunami”.

He left me with a document and I want to quote it. This is the forecast that he is giving to his clients. It reads:

Last week there was a batch of economic news from around the world highlighting that the Asian flu is impacting. Because they are much closer to the core Pac Rim turmoil, we are watching Japanese and Australian news particularly closely for early clues as to what will eventually show up here, admittedly with less force.

1. Due to the Asian crisis, Mitsubishi Motors tripled its forecasted loss.

2. Due to collapsing exports to Asia, Australian business confidence plunged to a 2 year low.

3. Due to the Asian crisis, Mexico's pricing power is under pressure.

4. Due to the Asian crisis, U.S. small business confidence has declined.

5. Italy's exports have declined at a 21% annual rate over the past three months.

6. China's production has declined at a 16% annual rate over the past three months.

7. U.S. pricing power declined further—

It goes on and, rather obviously, this country, as well as the world, is really not out of the woods. When we have a debt that is second only to that of Italy in terms of its size, we are very, very vulnerable.

We witnessed, when the Asian crisis first hit, a flight to quality. Where did all the money go that was seeking a safe haven from the turmoil in the world? It did not come to Canada. It went to the United States. There is a very good reason for that. The U.S. debt compared to GDP is about 40% less than ours and they are not as concerned about the situation in the U.S. That is a very good reason why Canada should start the process of paying down the debt.

As I mentioned at the outset there are a number of reasons why Reformers oppose Bill C-28.

I want to talk for a moment about something my friends in the Bloc are very interested in, an issue which they have pushed a lot, and that is, clause 241.

Clause 241 essentially is a clause in this legislation, which was initially sponsored by the finance minister, that would allow changes in the structure of shipping companies that hold assets offshore, which potentially could allow somebody like the finance minister who owns assets offshore, to benefit.

I believe this was done unintentionally. I do not, for a moment, believe that the finance minister or finance department officials were trying to pull a fast one. However, I believe that it raises questions and it should be addressed more seriously than the government has addressed it.

Even more important from my standpoint is that we have a finance minister who has been driven to shelter much of his income offshore because of the high level of taxes in this country. That is what is germane in this issue.

I do not begrudge it for a moment. I know my friends in the NDP were concerned about this matter the other day, but we would point out that it is perfectly legal, that everything the minister is doing is within the bounds of the law. It is not a problem that way.

However, we do think it sends a pretty important message about the kind of trouble this country is in when we have the finance minister of the country who has to shelter assets offshore because taxes in Canada are too high and, as I pointed out a minute ago, are going higher, the government's recent tax relief package notwithstanding. It simply did not come anywhere near to making up for all the tax increases that the government has brought in.

Now we are in a situation where people who have money to invest are sheltering income offshore. I think that really raises some important questions. We need to ask ourselves why we have arrived at a point in this country where people who live in this country have to take their assets offshore to shield the interest income from the high taxes we have in this country.

It does not just end with the finance minister. As I pointed out to colleagues, we have a number of members in this House who have had family members flee the country as economic refugees because they not only cannot find jobs here but, even if they do find a job here, the taxes are so much higher than in a similar job in another country. Many of us have seen friends go to the United States where it has taxes that are about one-third less than what we have in Canada.

I again point to the Nesbitt Burns report which showed that we have all kinds of professionals coming into this country, but for as many professionals that we have coming in we probably have three or four times as many leaving, in part because of the high taxes. I would say it is almost completely because of the high taxes.

I believe high taxes impact the ability not only of people to be able to afford a lifestyle that they would like to have, but also high taxes leave less opportunity and less jobs. Often people graduate from school and then end up having to leave Canada to go to another country where they can find work. Therefore, we have all kinds of professionals fleeing Canada.

Any of us who are from a small town can testify personally to how many doctors we have seen leave the country to go to the United States in particular. We see now in the Nesbitt Burns report that nurses are mentioned. It also deals with teachers. I think that is a new trend. I do not recall teachers having to leave the country before to find jobs and take advantage of the tax regime that the United States has. However, this seems to be the new trend that is happening now according to the Nesbitt Burns report. We also see it with engineers and computer scientists.

Not long ago I was talking to somebody who sits on the board of Waterloo University. They spoke to me very frankly about the newspaper article concerning one-third of the graduating class at Waterloo University being sopped up by Microsoft and going off to Seattle because that was where the opportunity was. This is a serious problem.

I do not believe the government has done anything in Bill C-28 or in any other legislation to seriously address what has become an extraordinarily serious problem.

I also want to talk about some of the smaller but very important provisions of Bill C-28. One thing that galls me is that the government is proposing to introduce new taxes on municipally owned subsidiaries, particularly utilities. We will have one level of government taxing another level of government, something that by tradition we do not do in this country.

Ultimately, I point out to my friends across the way who trumpet their new found belief in tax relief, this is going to be a tax on ordinary consumers. If people are barely making it today in their homes, wherever they live in the country, and they do not have anywhere to cut back, but all of a sudden they face an increase in their utility costs because this government is now going to start taxing those utilities, they have nowhere to take it from. If they have to pay for their natural gas or electricity it means it can only come out of the food budget. If someone is on a fixed income that is the only place it can come from.

My friends across the way, who have made a career and a history in this country of talking about their deep compassion for people, in effect are going to be punishing those people who are most vulnerable amongst us by imposing these new taxes on municipal utilities. There is a history behind this too. I point out that in the 1995 budget the government removed the PUITTA, the Public Utility Income Tax Transfer Act. It essentially provided a rebate to private utilities so they would be on a level playing field with public utilities. The government removed it. It cost the Government of Alberta approximately $250 million, impacting Alberta the most.

Now to level the playing field in a perverse way, I guess, it has decided to start taxing publicly owned utilities. That is ridiculous. Why not just leave it the way it was? The only reason for it obviously is to get more money out of taxpayer pockets. It is another sneaky backdoor tax increase. I object to it. I think it is wrong and I think this government has overstepped its bounds. It has stepped into territory that previously has been almost sacred. It has started to tax another level of government.

I want to talk for a moment about the reference in Bill C-28 to the government's alleged increase in transfers to the provinces. I will do that by referring first of all to a quote from the 1993 election campaign. It was actually the leaders debate and it occurred when the leader of the Reform Party asked the current Prime Minister a question: “What specifically is your commitment to the level of federal transfer payments for health care? Would you keep them at the current level?” The Prime Minister answered: “I said yesterday in replying to Mr. Bouchard that I promise they will not go down and I hope we will be able to increase them”.

Not only did the Liberals not increase them, not only did they not maintain them, they cut them by initially $7.5 billion. That is an absolute blatant breaking of a promise in the 1993 election campaign. A scant two years later they were cutting the heart out of health care.

My friends argue that in Bill C-28 we are actually increasing transfers to the provinces for health care. That is not so. All they are doing is not cutting as much as they said they would. They are still breaking the promise of the 1993 election campaign by $6 billion. What has been the consequence of that? For the first time I think in the history of the country we have seen Canadians' confidence shaken in their health care system like it has never been shaken before.

We have seen protests on the lawns of provincial legislatures. We have seen people threatening to strike, doctors leaving, nurses leaving. We have seen waiting lists skyrocket. Dr. Judith Kazimirski, past president of the Canadian Medical Association, appeared before the finance committee, where I sit as a member, and told us about how waiting lists had become longer and longer for things like prostrate cancer and breast cancer. When you are sitting on a waiting list awaiting surgery for prostrate cancer and breast cancer, I can guarantee you those illnesses do not stop doing what they do, ravaging the bodies of their victims, simply because the government cannot find a way to get them surgery or get them treatment. They continue to do their damage.

This government has blatantly broken its promise and it should pay a price for that. Please, I say to colleagues around the House and to people who are watching on television, do not accept for a moment that this government somehow cares about health care. It is the architect of the great slashing that has gone on. It is the Dr. Kavorkian of health care in this country.

Let us not accept for a moment what is asserted by colleagues across the way that Bill C-28 comes anywhere close to repairing the damage it has done to health care in this country.

I will conclude simply by urging colleagues to consider that there are many priorities Canadians have today. We are a country that has massive levels of debt, second only to Italy in the world for the debt we carry. It is somewhere close to 100% if we include the levels of debt that the provinces have accumulated, 100% of GDP. It is a staggering amount of money. As a result of that we have economic uncertainty. We have countries not wanting to invest here.

My friend from Peace River, the international trade critic for the Reform Party, pointed out the other day that Canada, for the first time ever, has had more money invested outside of the country than people have been investing in Canada. Canada is no longer the shining example, the great place to invest that it once was.

We point out that taxes in this country are just too high. They are staggering. Often in this place we have read letters into the record laying out the human tragedy of high taxes from people who cannot find any place from which to take money to pay the tax bill.

I remember reading a letter from a lady in Quesnel, Margaret Snell. Her son wanted to play baseball and have swimming lessons. She could not find the money because CPP tax hikes were coming along. This is a social tragedy. I urge my friends to remember that while the government is bringing in legislation like this there are huge issues that need to be addressed.

I point to the staggering levels of unemployment. I point to the dramatic jump in unemployment in British Columbia, a province which was first in growth not very long ago and has now fallen to 10th. While friends across in the Liberal Party were patting themselves on the back at the Liberal convention on the weekend talking about the wonderful job they have done with the economy they forgot about British Columbia which is suffering unbelievably these days.

Somehow, even though several cabinet ministers are from British Columbia, British Columbia is completely ignored and the very legitimate concerns of the people of British Columbia never do get addressed by the government even though members in the Reform Party raise them over and over again. We raised the issue of the fishery, for instance. It is just never dealt with. We see Americans vacuuming the sea. Again, the government does not deal with it. When it could be dealing with issues like that we see legislation like this.

There are a number of reasons why we oppose this legislation. I encourage members around the House to search their hearts and ask themselves if there is not a better approach to dealing with the problems of the country, an approach that would secure opportunity for Canadians by lowering taxes, by paying down debt, by providing essential services for people through government without building up a big government again. We do not need that.

I encourage friends to consider the message I have given today. I speak on behalf of many Canadians. I urge them to consider it and in doing so I hope they will be convinced they should not support Bill C-28.