Debates of March 18th, 1999

Income Tax Amendments Act, 1998

[Jason Kenney, Reform, Calgary Southeast, AB]

I thank the member from Etobicoke for his thoughtful questions.

With respect to the last question, perhaps he should ask his Liberal colleagues on the House of Commons finance committee who voted to recommend that the foreign content limit be raised to 30%. This is not simply a Reform idea. Apparently the wisdom of allowing Canadians greater flexibility in the management of their retirement savings has even struck a chord with his own Liberal colleagues. The answer to his question of why should we allow people to do this, it is because it is their money. That is why.

The member's question reflects the premise that it really belongs to the government and we allow Canadians to do what they will with their own money. No, we start from a different premise which is that it is their money and they have the prior right to decide how to allocate it.

I would like to give further consideration to the private member's bill put forward by my colleague from Medicine Hat which would in fact eliminate any limit on the foreign content. But I would at least go so far as to adopt the recommendation of the House of Commons finance committee.

With respect to the purportedly balanced budget that the member boasts about, I remind him that that budget came about because 75% of the deficit reduction came about because of increases in revenue. Only 3% came about through real program spending cuts in Ottawa's own budget. The balance was cuts to transfers to persons and transfers to provinces, cutting health care, raising taxes. That was the Liberal solution, not ours.

Finally, with respect to the brilliant, historic budget introduced last week by Stockwell Day, the provincial treasurer in Alberta, I was honoured to be in that legislature when that budget came down. It was day one in a common sense revolution to change and reform the tax system in Canada. That budget provides a generous exemption of $11,500 per person, or $23,000 for a family of two. It is not a flat tax because a family that earns $23,000 in income will be zero rated. They will not pay a dime in provincial income taxes.

Single moms are getting taxed by this government even if they are below the poverty line because the exemptions are so low and have not kept pace with inflation. But in Alberta a couple who earns $23,000 under the brilliant tax reform strategy proposed by the Alberta government will pay zero tax. On earnings of $46,000 they will pay 5.5% provincial tax, but on earnings of $92,000 they will pay 11% tax.

It has the advantage of being both progressive and simple. It has the advantage of being family friendly. It removes the tax discrimination against single income families perpetuated by this federal government by delinking from the federal system. At the same time it has the advantage of not penalizing people who are successful and earn more revenue.

I thank the hon. member for bringing that to our attention because the Alberta tax plan is an ideal model for federal tax reform.

[Maurice Vellacott, Reform, Wanuskewin, SK]

Mr. Speaker, I happened to read a letter today from a lady who was talking about the inequities in the Canadian Income Tax Act. She made the point that she wanted the choice to stay at home and care for her children during their critical years. She also said, “If I am in the home, if I am in the kitchen, it is my own choice. If I am pregnant, the Reform Party most assuredly had nothing to do with it. If I am barefoot, however, the Liberal Party has made a major contribution to my condition”.

I would like the member to respond to this whole issue, particularly on the matter of the Reform proposal for an increased spousal equivalent that would be allowed for a dependent child of a single parent.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I thank the member for that difficult question. I have received literally hundreds of letters similar to the one to which the member referred which appeared in today's Vancouver Sun where she indicated that if she is homeless it is the Liberal Party that has made the contribution to her condition because of the increases in the tax burden.

This bill increases the inequity between single and double income families. We see from this year's budget documents in very concrete terms how that increase happens. The average differential in the taxes paid by single and double income families will go from 60% to 64% under this budget in large part because of the provisions of this bill. It will do that by raising the child care expense deduction without any commensurate relief for single income families who provide their child care at home.

I was doing a talk show on a Winnipeg station last week. A lady called and said she was a qualified engineer who had given up her $70,000 a year salary to stay at home full time and care for her children. She said this was a decision she and her husband had made because they felt it was best for their family. She said she did not regret it.

She went on to say, “Please tell the Secretary of State for Multiculturalism that I gave up my entire paycheque for child care, not just a portion of it, not just $7,000 or $8,000 which is reflected in the child care expense deduction, I gave up my whole paycheque to finance our child care at home”.

That is something we ought to keep in mind. That is why this parliament ought to adopt at least a refundable credit available to all parents, that does not discriminate against one family model or another, that does not pit single income families against double income families, but treats them all as being equal under the law.

[Mark Assad, Liberal, Gatineau, QC]

Mr. Speaker, for some time now the House has been addressing income tax, what can be done, and what cannot. But I think that in a debate such as this one, a retrospective might be necessary, to look at what is already in place before making any changes to the Income Tax Act.

It has been some years since Canada had the opportunity to have a royal commission into its taxation system. One was struck in 1962, and dubbed the Carter Commission. That commission was chaired by a man named Kenneth Carter. Mr. Carter worked for over four and a half years before putting forward recommendations to correct our tax system and make it fairer and more equitable.

What is interesting is what happened when the Carter report was released. This truly was a revolutionary document on taxation. The recommendations on our tax system were so well thought out that Harvard University, in the United States, decided that this program could be used in industrialized countries to show how tax systems can be reformed so as to make them fairer and more equitable.

Unfortunately, for reasons that we do not know, it was decided not to publish the commission's report. This was rather strange but, for the first time in the history of our country, the report of a royal commission was not published. Canadians were not informed of the recommendations made by these economists. People who might have wished to examine these recommendations to improve our tax system were not able to do so.

Also, after the commission completed its Canadian tour, there seemed to be a consensus that the report was an important discussion paper. But this was completely ignored, until now.

Although the royal commission now dates back more than 30 years, consideration was given to a number of the Carter Commission's findings in 1992 or 1993, I think. While the recommendations made at the time still hold true today, unfortunately, once again, they were ignored.

Regardless of which party is in government, the problem has never been faced that we need an in-depth reform before examining any ideas, whether a single rate of 20% or tax deductions for homemakers. There is a great deal of confusion surrounding the Income Tax Act. The reform must be done in detail.

I would just like to raise a few points to demonstrate the distortions that have been introduced into our system over the years. From 1984 to 1988, there was about a 10% increase in the income tax paid by people of average income. That was a substantial increase. At the same time, between 1984 and 1988, there was a barely 6% increase in the income tax paid by those who were better off.

The distortion in the income tax system for these two categories of taxpayers is immediately obvious. I am giving just a few points. We are aware that there are many more. Four or five years ago, witnesses appearing before the Finance Committee indicated that there were 75 to 80 items needing correction in the Income Tax Act.

One of the examples they gave was that of people earning in excess of $100,000, who benefited most generously from capital gains exemptions. In all, such persons had refunds of over $1 billion. Fifty one per cent of people with an income over $100,000 benefited. However, of those with an income of $50,000 or less, only 8% benefited from capital gains.

That shows that the richest enjoy the greatest benefits. They are more likely to pay less income tax and obviously to become ever richer.

Without going into detail, I wanted just to point out a few things. I have a lot here to show that, first and foremost, and it must be repeated, we need an in depth reform, as we had in 1962, either through a royal commission or some other means, to look thoroughly at ways to correct the gaps in our system. If every year only adjustments are made, we will never have a fair and equitable system.

Over time, our fellow citizens must be convinced to tell their representatives that we need a global solution to the problem, that it is not enough to correct it one page at a time, given that there are over 1,400 pages in the Income Tax Act.

Another matter that does not come directly under the Income Tax Act is the fact that we have a money policy that proved to be disastrous for us during the period starting in 1985. For a number of years, the Bank of Canada set the interest rates at four percentage points, sometimes five percentage points higher than those in the United States. It caused our national debt to grow by leaps and bounds.

In 1984, our national debt was $160 billion; nine years later, it had reached $460 billion. The debt was increasing every year and the government had to collect more and more taxes to pay the interest on it.

Again, it is not simply a matter of amending minor provisions of the Income Tax Act. We must consider all the components of our national tax system. We need a comprehensive reform of our monetary policy, which is a critical tool for the government. Very few know how this policy works, or why it is in place.

Again, and I conclude on this note, the most important thing we can do for our fellow Canadians is to urge this government, and I have done it many times, to undertake a comprehensive tax reform. We must not merely ask for changes here and there. We must look at the overall picture and decide that we need another commission such as the one we had in the past.

If, at the time, we had followed up on that revolutionary document, perhaps we would have a solution to make our tax system as fair and equitable as possible for all Canadians.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, with all due respect to my colleague, this country does not need more studies, it needs action. The time for studying is over. We know what the problem is, as my hon. friend articulated very well in his short speech. Many solutions have been brought forth not only in the House but by articulate individuals from around the country and around the world. Those solutions are eminently doable.

If we had a royal commission we know what would happen. The royal commission would drag on for a month of Sundays. It would cost the taxpayers tens of millions of dollars and would only force the House to engage in another series of studies to study what we have already studied. That is what we tend to do in this place. Rather than act we study.

I know my hon. colleague has a very big interest in this. Study after study has shown that Canada is lacking in productivity. Canada's competitiveness has been dropping for many years. What we need to do is drop our tax rate fairly. We need to decrease the rules and regulations that choke the private sector. We need to invest in those pillars of our economy that are very supportive and useful in getting people back to work and in improving the lifestyles of Canadians, pillars like research and development, education and many others.

If we are able to do that we will build a secure economy and we will have a strong network of social programs to take care of those individuals who cannot take care of themselves, a concern of this hon. member and all hon. members.

The erosion of our economy does more than hurt the rich. It hurts primarily the poor and middle class. The rich can go anywhere they want. The poor and middle class are stuck here doing what they have to do. They do not have the choice. The rich have a choice, the poor do not.

Would my hon. colleague plead with finance minister to bring in the suggestions raised here, to lower the tax rate fairly, increase the minimum allowance on a personal basis, immediately call for rationalization of the rules and regulations, keep what we need, eliminate what we do not, and give Canadians the power to be the best they can become.

[Mark Assad, Liberal, Gatineau, QC]

Mr. Speaker, we all like to hear that we should immediately get into action and take decisions. Most Canadians think, and we have repeated it here, that we have had enough study.

Nevertheless, when we are dealing with something like the tax system we cannot do it without having profound knowledge of the implications for everybody. That is why I wanted to bring up the idea of a royal commission like we had in the past. Maybe we can go back to the Carter commission of 1967. There was a review some four or five years ago that showed that scholars at Harvard recognized the Carter commission as a revolutionary document. Scandinavian countries used part of the commission's report to make reforms. The only country that never used any of the commission's recommendations was our country.

To get back to what the member asked, I believe we have to understand the implications of our tax system. We can go back to the Carter commission but we cannot immediately jump in an cut taxes. Like I pointed out, the whole income tax system is flawed and detrimental to the middle class. We do not have to be economists to realize this. That is what we have to look at and it requires a lot.

The member mentioned that we have a lot of people in Canada who are very knowledgeable. I could name a few I have met through the years who came to the commission. Quite often they tell us afterwards that their recommendations over the years have been ignored. I believe it is not only the finance department that has had a monopoly on brains through the years. We have had some very qualified people. I have come to know individuals like Pierre Fortin from Montreal. He is one of our foremost economists and has written extensively. I have discussed this with him on many occasions without going into any details. I do not consider myself an expert, far from it.

The overall tax system has to be reformed. That is what we have to realize. Everybody would like to have lower taxes. Everybody would like to see changes whereby our taxes would go down and they would have more disposable income. That would give us a shot in the arm. Before we can start cutting or doing this we have to know what the flaws are in our system. That will not be easy. There are a lot of people in this country who are very satisfied with the tax system. The richest 1% would rather it not be touched.

Without going into more detail, before we can start one thing or another with the tax system, we have to reform it.

[Maurice Dumas, Bloc, Argenteuil—Papineau, QC]

Mr. Speaker, I have a question for my hon. colleague and neighbor.

In 1962, the Carter Commission was set up. If memory serves, the Prime Minister of Canada at the time was Mr. Diefenbaker. So the commission was created by the Progressive Conservatives.

My colleague told me this commission completed its work four years later when the Liberals were in power. Is what I am now saying correct?

[Mark Assad, Liberal, Gatineau, QC]

Mr. Speaker, yes. The commission report was made public in 1967, four and a half years later. It is true that the government changed during that time.

When the Carter Commission made its recommendations public, it toured the country. This is a rather interesting story. Many people in mining and other industries had interests to protect. Various sectors of the economy wanted to have their say.

The minutes of this tour are a real mixed bag. Everyone came to complain, to say what suited them best. They did not look at the bigger picture of how all Canadians could be affected. Whether it was the oil industry, the mining industry or others, everybody was out to look after their own interests. There were a lot of pressures at the time not to do this or that.

In a democratic system, it is only natural for the government to be under pressure to do one thing or another. There were pressures from everywhere. The building industry even threatened to stop working. It feared the government might impose recommendations made by the Carter commission.

As the result of all these pressures, the government more or less decided to take its time, let things cool down and gradually implement the Carter commission's recommendations.

It took a number of years, but the first attempt was made by Allan MacEachen. In 1980, he made several recommendations. There was a very heated debate in the House. When later I raised the issue with the Hon. Allan MaEachen, I told him that the recommendations put forward would have been beneficial. He agreed. However, there were as usual so many outside pressures, threats to shut down entire sectors of the economy, that he withdrew his proposals. That is unfortunately how it went.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak to Bill C-72 on income tax amendments.

Once again we have missed the boat. Once again the government has not dealt in a profound and fundamental way with an issue that is affecting Canadians across this country.

The Prime Minister has said in the last two weeks that Canada is doing fine. Our productivity is fine. He says this based on one study, the KPMG study, paid for by his government. This flies in the face of every single other study, any other analysis I have ever seen in and outside Canada.

The Canadian economy, our productivity and our competitiveness are among the lowest in the industrialized world. Among all G-8 nations we are the bottom of the barrel. That is nothing to be proud of because it is far less than what we can strive for as a nation.

The government is telling the Canadian public, patting us on the head, “Smile, be happy. Don't worry, we have social programs that will take care of you”. What a bunch of nonsense. What a pile of tripe. That is totally unacceptable. All we need to do is speak to Canadians and ask what is bothering them. Are they happy with the economy? Are they happy with their job opportunities? Are they happy with the opportunities their children have? Most of them are not. This is not a figment of their imagination. This did not appear overnight. This is not something that has been happening over the last few weeks. This has been happening for years and it is not getting better. It is getting worse.

We are not lacking in solutions. My colleague from the other side articulated a number of them. He mentioned the problems. Members from the Reform Party and other parties have articulated solutions. There is much that binds us together and there is much that is in agreement. What we do not have is somebody to take the bull by the horns and say that these are the best solutions we can find, these are the reasons we are going to this and, by heaven, we are going to do this.

This country has seen a lot of studying; it has not seen a lot of action. What Canadians are sick and tired of is the malady of studyitis that we have in the House of Commons, an ailment that causes intellectual gridlock. This whole place grinds to a halt. It does not function well. It is a poor use of taxpayers' money and does not serve the people of this country, who elect us to do a job, to help them help themselves, and indeed to help those who cannot help themselves. We have failed.

Let us look at some of the facts. Should we be happy with unemployment? No. Our unemployment rate is much higher than that of the country to the south of us. It is much higher than many of the G-8 countries.

Our productivity is sliding. It is the lowest in the G-8.

Our competitiveness has been dropping too. Why? The primary reason, and we all sound like broken records, is taxes. To take into consideration the concern that members on all sides of the House have, we do not want to introduce tax cuts that will compromise anybody, particularly the poor and middle classes. We want to make sure that the people of this country, regardless of their income, have the power to be the best that they can become and the power to take care of themselves.

Perhaps a fundamental difference between ourselves and the traditional Liberal thinking is that we believe most Canadians can take care of themselves better than governments can and we want to give people the power to do that.

The other side of the coin is to make sure that Canadians who cannot take care of themselves have a social network that can provide for them.

Thank heavens we are not like the United States. Historically we have had good social programs which have been there to take care of those who cannot take care of themselves. However, we do not speak about the current threat and future threats to those programs. Pensions, health care, education and welfare programs are all in jeopardy. They are in jeopardy because we do not have a healthy economy. We cannot have strong social programs unless we have a healthy economy.

By maintaining high tax levels, by not rationalizing the rules and regulations that choke off the private sector, by not keeping the rules that we need and removing those that we do not, we compromise the very essence and the ability of our economy to perform. Canadians cannot provide for themselves and pay the taxes that will enable the government to provide the social programs to provide for those people who cannot provide for themselves.

It is all intertwined. The failure of this government to do what we and others have been telling it to do for years is an abrogation of its responsibility. It is a violation of its duty, primarily to those people who are the most underprivileged individuals in our society. It is an abrogation of its responsibility to the beleaguered middle class, which is having increasing difficulty being able to acquire the basics for themselves and their families.

Government members like to talk about research and development. They want to provide money for it and we applaud that. What is the single most important factor in enabling research and development to occur in this country? The most important thing the government can do, and recent studies show this, is to give companies the money to do the research and development themselves. They do not necessarily want government handouts, but they at least want the ability to do this. The way they can do this is to have tax cuts, which will enable them to reinvest in their companies and become more competitive.

One of the saddest things we often hear about is the brain drain. The brain drain is a complex situation and is linked to many factors. Many Canadians who go south do not want to go south necessarily because they will make a little more money. They want to go because they have the ability to work in companies, work in universities, work in institutions where they have the opportunity to put their skills to the best possible use. The U.S. actually enables that to happen. That is something which we in Canada need to take a cold hard look at.

Let us consider tax rates and the money left in people's pockets after taxes and compare that to the United States. A couple working in the United States makes 44% more in after tax dollars than the same couple in Canada. How can we justify that? How can we be competitive?

Even the Prime Minister's own pollster, Mr. Marzolini, said very clearly in the last month that it is the high tax rates in this country which choke off the ability of the Canadian economy to function properly.

The woeful neglect of this situation is a damning indignation on this government which cannot be tolerated, let alone respected.

Governments will not provide money for education if they have a poor economy. In my riding there are high schools in which students have to write exams on paper that resembles toilet paper. They have had to downgrade to paper that is pathetic. Kids, even when they are trying to rub out their answers, rip right through it because schools do not have enough money to buy reasonable paper.

In British Columbia students are sharing textbooks. They do not even have their own textbooks. The schools do not have the money to teach our students who can then become employed in the future.

The government may take comfort in saying that we have the social programs to provide welfare and employment insurance, but that is no comfort to Canadians who want to work. Most Canadians do not want to be on welfare or EI, they want to work.

The unemployment rates we talk about do not take into consideration the underemployment rates we have in the country. There are legions of university students who come out with good training only to find that the job opportunities in their chosen fields are few to non-existent. What kind of message are we sending the youth of today? That after all their hard work they will end up slinging hot dogs or burgers at McDonald's? That is what is happening now. It is a waste to our economy and the potential of our country. It cannot be allowed to happen.

My colleague spoke about the pension issue and how the Reform Party has put together constructive solutions to rescue our pensions. The CPP will not be there for the people of my generation and subsequent generations because the amount of money that will be required to fund the CPP will simply not be there.

In the next 20 years the number of people who will be over 65 years of age will go from the 12% to 25%. The number of people who will be working to provide the tax base to pay for the CPP and other social programs will simply not be there. What do we do? Will the government do what it recently did and jack up CPP rates almost 50%? It certainly will not be able to do that in the future because at some point in time there will be a collapse. We cannot continue to raise taxes and the demands on the individual without the system falling apart.

Let us talk about solutions. Let us talk about how to fix this system. There is much we can do. One thing we talked about is productivity. I have spoken about tax cuts. Let us increase the minimum personal exemption. There are a number of innovative things we have discussed today and in previous times concerning education, in terms of enabling schools to have the money to do what they have to do to train the kids of today. We should also consider innovative projects like those in Europe which link up the educational facilities with the private sector, enabling students to get work experience early on. There are also innovative ways of looking at tax credits to do that.

We could consider a flat tax or a flattened tax, which has just been introduced in Alberta. Rather than having the complex tax system we have now, by flattening it or by having a flat tax we could simplify the system. It would be a lot simpler and easier to employ. It would save the individual and indeed the economy a lot of money. The proof is in the pudding when we look at other countries.

In the Nordic countries and other European countries people were labouring under very, very high tax rates in the 1970s and 1980s. For example, in the case of Sweden, its interest rates went up to 500% overnight. There was a huge exodus of capital from the country. Interest rates had to be jacked up to stop that.

In England, the tax rates jumped to almost 90%. All the best and the brightest, and those with money to invest, create jobs and build the companies within England left. There was an economic collapse within England. The people who were hurt the most were the poor and the middle class. They could not get jobs any more. The jobs had left.

Furthermore, the resources that were required by the government to provide social programs were not there. They saw the collapse of their health institutions. Many people suffered needlessly as a result of the high taxes.

The Nordic countries got smart; a lot smarter then we are. They lowered their tax rates and simplified their tax system.

What has happened? England is a lion in Europe and indeed in the world in terms of not only its economic performance, but more important, the health and welfare of its citizens.

In the Nordic countries we have seen something similar happening. The socialist mentality that was embedded within those countries, which said that the government would be there to take care of its people, is gradually being eroded. People are now beginning to provide for themselves.

This is ending the culture of dependence that was ingrained into that society; a culture of dependence that, sadly, is becoming more ingrained in our society. That is lethal for any economy and worse for the health and welfare of citizens.

With respect to the basic personal income tax exemption, there is no reason, as the hon. member opposite mentioned, the government could not do that tomorrow. The government could bring a bill to the House. It could do it by order in council, which is what it does 80% of the time on important decisions. Cabinet just says “We are going to do this” and it is done. It does not come to the House.

Twenty per cent of the decisions to be made are brought to the House. Unfortunately, most of them are about as essential to the workings of this country as a healthy dose of pabulum. It does a huge disservice to the collective ability of members to bring what they can to the debate in a meaningful way.

There are many people in this House from all political parties who have an extraordinary amount of experience, intelligence and energy to bring to important debates, if the Prime Minister and his friends in the PMO would only allow that to happen. The issue of democracy in this country and the lack thereof is perhaps best spoken about in another very interesting debate.

With respect to the child care tax deduction, why do we not treat families equally, those who choose to have one parent stay at home to care for the children and those who choose to have both parents work? Why do we not have equity in the tax system? There is no reason that cannot happen.

I send this message to the government members who have spoken in a disparaging way about parents who choose to stay at home to care for their children. There is no more valuable job in this country than a parent who stays at home to care for their children.

It is not only the most valuable job, I would submit that it is the most difficult job. I would not want to trade places with those parents who stay at home to do the very difficult job of bringing up children in the society we live in today, but it is essential.

There have been medical studies and analyses done around the world. The Minister of Labour will attest to this because of the hard work which she and her husband have done on the head start program in Moncton.

The impact of a parent on the development of a child particularly in the first eight years of life is unparalleled. The positive and negative impact that can have is unlike anything else that can take place in the development of that child toward becoming an adolescent and after that an adult.

The positive impact of loving, caring parents in the development of children through providing a secure environment and the basic needs is far more important than any money they may have in their pockets. It is far more important than any material goods that can be given to children. Parents staying home and doing that are not only contributing to society in the most valuable way possible but they are contributing to the development of children in a way that nothing else can compare to.

The last point is on pensions. Our party has put forth constructive solutions to have super RRSPs, to increase the amounts Canadians are allowed to invest in their RRSPs. Certainly the CPP will not be there for them. Why the government does not give Canadians an opportunity to take care of themselves is beyond me.

If we have super RRSPs and increase the amounts Canadians can invest in markets outside Canada, if we enable people to invest in their own health and welfare and give them the tools to take care of themselves, that is the greatest gift we can give to Canadians. By doing that there will be more money to provide for those people who are poor and middle class who cannot take care of themselves. The solutions are out there. We do not need more studies, we need action. I challenge the government to take up that challenge today and to act now.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I will try to be as brief as possible. I know the hon. member had a number of things to say but I draw him back to the 1999 Reform budget plan which talks about what the opposition would propose.

The Reform plan does not include any economic prudence. It talks about surpluses of $30 billion to $35 billion. It talks about average GDP growth over the next three years of 5.5%, almost two times the private sector. Reformers want to cut taxes by $9 billion a year. They want to reduce the debt by $9 billion. They want to cut EI premiums by $7 billion for a total bill of $25 billion. It is very important that Reformers tell Canadians and certainly members of the House how they would finance it. We would go back into deficit. What would they cut? Is it health care? Is it research? Is it education?

If we built budgets the way the Reform Party did we would have—

[The Speaker]

The hon. member for Esquimalt—Juan de Fuca.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, the proof in the pudding is looking at the real world. If we look at provinces that have cut taxes like Alberta and Ontario, we see booming economies. If we look at my province of British Columbia which is running a $500 million deficit and has the highest tax rates in the country, do we see a good economy? We see a province that is the worst place to do business in North America. That is not success, that is failure. If we want to listen to success, I implore the hon. member to look at the Reform budget, cut taxes and enable to our economy to be the best it can become.

[Rob Anders, Reform, Calgary West, AB]

Mr. Speaker, I take that to mean Calgary West. Calgary is a grand city. I would be proud to be of any of the ridings in the city of Calgary. My seatmate, the hon. member for Crowfoot, had a question. He has a constituent who earns $11,600 a year, not a large sum of money. Of that $11,600 this individual pays $700 in taxes, $800 in other deductions and $130 on income from interest on an inheritance system that constituent will be getting as part of a pension.

The constituent is paying over $1,600 in taxes when making only $11,600 a year. I would like to ask my hon. colleague whether he thinks that type of Liberal taxation and Liberal fairness is justice in taxation.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, that is called robbing the poor to pay the government. That is what that is all about. How anyone lives on $11,600 is beyond me. All of us in the House have constituents who are in the same boat.

I have had constituents who are pensioners who come to me with their income tax forms and say “Look at this. I am making $20,000 a year and the government is making me pay thousands of dollars of income tax. How can I and my wife survive on this?”

That is not a question for me to answer. That is a question on the conscience of the government to answer because Reformers would not tolerate that for a minute.

[Stéphan Tremblay, Bloc, Lac-Saint-Jean, QC]

Mr. Speaker, my colleague from the Reform Party said earlier that what we need is action, not more studies. I will point out to him that, sometimes, a good understanding of what is going on can help us be more coherent in our actions.

The Carter commission of 1962 was mentioned earlier. We heard that it was an exemplary commission whose recommendations were not followed up.

It may be good to see where this is all coming from. It has been proven that in some countries, including Canada, the tax system is no longer progressive. It is no longer true that the poorer you are, the less tax you pay, and vice versa. Middle class Canadians do pay a great amount of tax.

In a study released in 1994, Mr. Mimoto, an economist, said, with regard to—

[The Speaker]

I am sorry to interrupt the member, but his time is up.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my colleague for his question.

The hon. member mentioned something that is extremely important. He is talking about studies. We need to study something when we do not know what the answer is. There is a warehouse of studies somewhere on the Hill collecting dust. We spend millions and millions of dollars on studies. As the hon. member mentioned, we do not use them. They get tossed on a shelf to collect dust.

There are oodles of studies done by the House, done outside the House, done outside the country. We do not need more studies. We need action. We do not get action

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I thank the hon. member for the opportunity to ask him a question and to wish him well in his upcoming leadership campaign.

I agree with the member completely with respect to the importance of a fairer tax system. I want to ask a very straightforward question. Under the proposed budget changes of the Liberal government a millionaire will receive a tax cut of $8,000 this year. A single mother with two children living in Metrotown in my community struggling to get by on welfare will receive not a penny. Under Reform taxation policies that same millionaire who gets $8,000 from Liberals would get $70,000 in Reform Party tax cuts.

Where is the fairness? Where is the justice when under Reform Party tax proposals a millionaire gets a $70,000 tax cut and a single mom in Esquimalt or in Metrotown, Burnaby gets not a penny?

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, that is simply not true. The Reform Party's budget plan would take over 200,000 of the poorest Canadians right off the tax rolls. They would not pay a penny of tax.

We are equally appalled by any kind of changes to the tax system which preferentially give tax breaks to the rich and not to the poor. What we support is that the poor and middle class in particular get the tax breaks they need. Our proposal explicitly states how we would get 200,000 of the poorest people to pay no tax at all.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I was listening to the hon. member from Esquimalt talking about how important it is for families to have a stay at home parent raise their children.

Prior to becoming a politician the member was a family physician. Therefore he most definitely knows what he is talking about. When he says something like that I think we should all listen and whenever we can we should encourage parents to stay at home to raise their children.

[The Speaker]

That is a pretty nice comment. I would say thank you and then go to the next person.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, these are words of wisdom. He is absolutely right. What we need is a fair tax system that enables parents to have the choice to stay home rather than penalizing them for staying at home, which is what is happening now.

[John Finlay, Liberal, Oxford, ON]

Mr. Speaker, I want to put a little different slant on the last two speakers. My colleague from Prince Albert seems to have bought into what the member from Esquimalt said so passionately, that it is far better for a parent to look after the children at home and so on.

I wonder whether that does not have something to do with the parent's abilities. The member did say the positive impact of a loving parent, which helps a little. There are societies that believe care given by appropriate caregivers to allow both parents to work or do what they like and need to do is a good idea.

I refer the member to kibbutzim in Israel which do a wonderful job of raising children. I think they have a very simple answer to a complex question.

[The Speaker]

The hon. member for Esquimalt—Juan de Fuca.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, children need a loving and caring environment to grow up in. The best person to provide that is a competent parent. What the Reform Party is trying to do is give families the choice and not penalize them for staying at home. Whichever way we cut this, a loving, caring and competent parent is the best person to take care of the children.