Mr. Speaker, it is with pleasure that I rise to speak to Motion No. 198, which is a motion to amend the child benefit. I am pleased to have the opportunity to join any debate where I can denounce the Liberal government for its high tax policies and increased use of stealth taxes.
That is what we are debating here, another stealth tax that this Liberal government is using to fill its tax coffers.
A person needs to review the history of the child benefit to fully comprehend what is happening.
In 1985 Tory finance minister Michael Wilson set out to reduce the children's tax exemption and to increase the refundable child tax credit for lower income families. In the 1985 budget he introduced a 3% threshold for full indexing. The benefit would only increase if inflation exceeded 3% in any given year. That was not a concern in the 1980s, as the lowest rate of inflation in that decade was in 1985 when it was 3.9%.
In 1988 the children's tax exemption was replaced by a non-refundable credit. In 1991 Canada was in the midst of a recession. By 1992 the inflation rate had dropped below 3%.
In 1993, the last year of the Tory government, the three major child benefit programs were replaced, which were the family allowance, the non-refundable child tax credit and the refundable child tax credit.
That government replaced them with a single income tested child tax benefit that is similar to the old refundable child tax credit. It meant that the maximum benefit would go to families with a net income under $25,921.
I want to talk about the threshold effect. Since inflation has not topped 3% since 1991 that means that neither the amount families receive for the child benefit nor the income tax level at which people can collect the maximum benefit have been adjusted for inflation, yet inflation has risen by a cumulative amount of 10% since 1991. That means that the real value of the child benefit has been reduced by 10%.
The non-indexing of the threshold level to receive benefits means that many families whose income has just kept up with inflation are now receiving lower benefits. This is the true legacy of this government: stealth tax.
By not allowing full indexing, this government saves money by allowing the real value of the benefit it pays out to decline. By not indexing the income threshold, it means that more families are collecting lower benefits and paying more taxes.
This is not the only place this government is using stealth tax technology. I mentioned it the other day when I was talking about bracket creep. I would like to make a comparison using that. Bracket creep occurs when an individual's pay rises to the point where they enter a higher tax bracket. While salaries have inched up over the past six years, the tax brackets have not. Like the child benefit payments and income thresholds, tax brackets are only adjusted when the consumer price index rises by 3% or more in any given year. Thus, individuals whose salaries have just kept up with inflation often find themselves in a higher tax bracket.
It looks like we have developed a pattern here. However, what is even worse than allowing this to happen is the fact that this Liberal government is doing it deliberately.
In his budget speech the finance minister made it clear that this is a deliberate move and that he intends to continue with this practice. He stated “Upon coming into office, the government and the Bank of Canada agreed to hold inflation inside a range of 1% to 3% to the end of 1998. That policy has worked. That is why we are announcing today that we will extend the current agreement with the Bank of Canada for a further three years”.
Thus, this government has made it perfectly clear that it intends to keep gouging the Canadian taxpayer in this fashion. Where is this government's commitment to child poverty?
It would appear that the Liberals only believe in fully indexing pensions when it comes to their own gold plated MP pensions and those of their political cronies in the Senate. They think that someone like former Senator Andrew Thompson, who showed up for work only 12 times in the past 8 years, deserves full indexing of his pension. They think it is fine for someone like Thompson, who received $600,000 in taxpayers' money over the last eight years, or $50,000 for every time he appeared in the Senate, to receive an indexed pension. They have no problems that a man who rarely ever showed up for work should now be receiving $48,000 a year in a fully indexed pension. That is almost twice what the average Canadian wage earner receives.
The Liberals eagerly support full indexing for Andrew Thompson, but when it comes to single mothers or low income families they are against full indexing. Members on the government side of this House should be ashamed of themselves.
That brings us to the motion currently before the House, M-198, and the attached amendment. The original motion read:
That, in the opinion of this House, the government should review the level at which the child benefit is indexed.
Unfortunately, I think the Liberals have already reviewed the level at which the child benefit is indexed and they like it just fine. Full indexing would cost this government millions of dollars in tax revenue and that could lead them to actually having to make cuts. They might even have to lay off a few of the political hacks they have appointed to patronage positions or they might have to take away the full indexing of Andrew Thompson's Senate pension.
The amended version of the motion reads:
That, in the opinion of this House, the government should review the possibility of fully indexing the child benefit.
I am sure this government has reviewed the possibility of fully indexing the child benefit. If I were a betting person, I would say that the possibilities of the government agreeing to it are slim or none.
I congratulate the member for Shefford for her motion and her efforts to make the child benefit fairer. I assure her of my support and hopefully the support of my colleagues. But unless a few government members find their consciences and live up to their commitment to battle child poverty I do not see this government rushing to create a fair tax system.