Mr. Speaker, I am pleased to speak today in the prebudget debate. It gives me a chance to outline on behalf of my constituents and as a member of the Progressive Conservative Party a series of realistic achievable solutions to improve Canada's economy.
Despite the rhetoric of the finance minister and Liberals such as the member for Vaughan—King—Aurora who chairs the finance committee, the present economic situation is far from ideal.
Canada's unemployment rate stands at 8%, nearly double the rate of the U.S., our number one trading partner. Meanwhile Canada's youth unemployment rate is almost twice the national rate.
Canadians took home $400 less last year than they did two years ago and their after tax income has dropped 7.2% over the past decade. Personal debt levels also grew faster in Canada than in any other G-7 country over the past decade. Last year consumer bankruptcies reached 85,297, an all-time high. Never in Canadian history have more people gone bankrupt.
Those are just the figures relative to individuals. When we examine several key economic indicators, more weaknesses in our economy are uncovered.
Canada's productivity growth over the past 20 years has been slower than every other G-7 country. Canada also has the second highest debt to GDP ratio in the G-7. There is nothing for the Liberals to brag about. We already know, thanks to credible publications such as The Economist , that any economic growth during the Liberal government's term is because of the policies of former Conservative governments.
What is the actual Liberal economic record? It is a record of less real disposable income since the 1993 election according to Statistics Canada. It is one of a government that collected 38% more in personal income taxes during the past five years. With statistics such as these, it is hardly surprising that Canada's taxes are among the highest in the industrial world.
High taxes come at a considerable cost. They stifle economic development. They kill entrepreneurial initiatives. They discourage investment. Perhaps worst of all, they cause a brain drain, a trend that results in Canada losing a lot of its best and brightest to more favourable tax jurisdictions.
The brain drain inflicts plenty of damage on Canada's economy. A recent study by the C.D. Howe Institute estimated that for lost managers and professionals alone, the net cost to Canadian society from 1982 to 1996 was $6.7 billion.
According to the United States Immigration and Naturalization Service, more than half of all permanent immigrants from Canada were admitted on employment based preferences. This means that over 8,300 highly skilled Canadians were granted permanent residence status so they could fill important jobs in the U.S. economy. Another 44,000 Canadians were granted temporary work permits in the U.S. This must sound like a drop in the bucket for Canada's labour force of 14 million people but these people by virtue of American immigration rules are highly skilled and well paid more often than not.
The C.D. Howe Institute study found that six managers and professionals went south in 1996 for every one moving the other way. This is a major loss to Canadian companies and governments.
It is more than a corporate problem. The departure of thousands of highly skilled and highly paid Canadians also weakens our tax base and endangers the services supported by that tax base. That hurts everyone indiscriminately.
Before my colleagues on the Liberal and NDP benches start ranting and raving about making the wealthy pay, I would also like to cite some figures from Revenue Canada.
In 1995 more than 800,000 Canadians earned $70,000 or more. This group represents just 4% of tax filers, 6% of taxpayers and 19% of total income, yet this relatively small group of Canadians contributes 31% of all federal tax and 35% of all provincial tax paid. This tiny group of Canadians paid more than $30 billion in federal and provincial income taxes alone.
For every 1% of our high income tax earners who leave the country, some 8,360 emigrants, Canada loses more than $300 million in federal and provincial income taxes.
Keeping in mind the U.S. government's immigration figures for 1996, that means the Canadian government lost more than $1 billion in income tax revenue that year alone.
In short, Canadians from all walks of life and all income levels are paying a heavy price for our high income taxes. By significantly cutting taxes the Liberal government could help fill the gaping holes in the Canadian economy. The weak half hearted measures contained in last year's budget do not qualify as significant tax cuts.
We have seen the benefit of reducing taxes in my home province of Ontario. When the PC government was elected in 1995, Ontario had an economic basket case thanks to a decade of Liberal and NDP misrule. Thanks to the provincial PC government's ambitious plan of tax cuts Ontario with a third of Canada's population has accounted for well over half of the job growth in Canada for almost two years now.
Not only did cutting taxes help create jobs in Ontario, it had a positive effect on the province's financial situation which was in disastrous shape after Bob Rae's stewardship. The economic growth that resulted from lower taxes increased the province's revenues. That fact should not be dismissed out of hand.
Yesterday in the House of Commons the member for Mississauga West, a former member of the Ontario legislature, mistakenly claimed that provincial tax cuts took money out of health care in Ontario. Nothing could be further from the truth. The fact is the Ontario government is spending $1.5 billion more on health care than the government did in 1995, even with the $1.1 billion cut in health and the $2.7 billion cut in the CHST payments.
The Ontario record is clear: more money for health care, more money in the pockets of Ontario taxpayers, more tax revenues in the province's treasury thanks to economic growth resulting from tax cuts.
Liberals like my colleague from Mississauga West try to mislead people into believing there is a choice between more money for health care and tax cuts. It is as if the Liberals were convinced of the impossibility of walking and chewing gum at the same time.
Unlike the federal Liberals, the Harris Conservatives have made good on their promise with a stronger economy as a result. I can understand the Liberals and the NDP for that matter not wanting to discuss the economic successes achieved by the Conservative Government of Ontario. I would therefore cite an international example on the advantage of lowering taxes.
The chief economist of the investment dealer Nesbitt Burns, Dr. Sherry Cooper, highlighted the experience of the republic of Ireland, a country that cut taxes and saw its economy take off. Investors have been attracted to Ireland's low corporate tax rates that start as low as 10% versus Canada's approximate rate of 46%. Indeed the Irish economy is growing at almost double digit annual rates during the past two years. When was the last time Canada achieved such growth?
Another international case representing the benefits of low taxes is Finland. With the lowest corporate taxes in the OECD, Finland has real GDP growth of 6% and a sharply declining unemployment rate.
In case after case, example after example, the verdict is in. Tax cuts stimulate economic growth and economic growth creates jobs and generates revenue needed by governments to provide services. That is why we need real tax cuts in this budget. We need to reduce high unemployment insurance premiums. In 1995 the minister of finance called payroll taxes such as EI premiums a cancer on jobs. Yet the government insists on gouging employers and employees through the EI fund.
Perhaps my Liberal colleagues from the GTA should heed the warning of Elyse Allan, president of the metro council board of trade, who told the finance committee last fall that high premiums stifle private sector creation and reduce personal disposable income. The actuary of the EI fund stated that premiums can be lowered to a rate of $2 per $100 of insurable earnings without being fiscally irresponsible.
We in the PC caucus agree with this independent, non-partisan recommendation. I doubt the minister of finance would move in this direction. After all, according to finance department documents released by the Canadian Taxpayers Federation, almost a third of the $39 billion in increased federal revenues is directly attributed to bracket creep. As with high EI premiums, bracket creep is one of the cash cows of the minister of finance.
I urge the minister of finance to use this budget to bring in the broad based tax relief needed to develop our economy, improve our standard of living, stem the tide of our best an brightest leaving this country and set a vision for this country for the next millennium.