House of Commons Hansard #199 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was grain.


Income Tax Amendments Act, 1998Government Orders

10:40 a.m.


Gerry Ritz Reform Battlefords—Lloydminster, SK

Madam Speaker, I thank the members of the House for that consideration.

Today we are studying Bill C-72, an act to amend the Income Tax Act, to implement measures that are consequential on changes to the Canada-U.S. tax convention, and its full title is quite a mouthful. Quite frankly this bill has a loaded title to go along with all the clauses and subclauses which make it up, a lot of rhetoric and a lot of grey areas. This government should be ashamed of itself.

This is the same government that is in such a rush to get through its legislative agenda that it has invoked closure 49 times to date. It is so worried about shutting down the opposition that it has cut off debate on bill after bill, but for what?

Income Tax Amendments Act, 1998Government Orders

10:40 a.m.


Peter Adams Liberal Peterborough, ON

Madam Speaker, I rise on a point of order. I have been listening now for a couple of minutes and I hear discussion of closure and various things—

Income Tax Amendments Act, 1998Government Orders

10:40 a.m.

The Acting Speaker (Ms. Thibeault)

The hon. member has just started his speech. I am sure he is just about to make his comments relevant.

Income Tax Amendments Act, 1998Government Orders

10:40 a.m.


Gerry Ritz Reform Battlefords—Lloydminster, SK

Madam Speaker, I am just getting warmed up here. All of this is relevant because now we can send it to a Liberal controlled committee where debate is also curtailed by the heavy-handed democracy there.

Our day is so filled with crucial legislation that everyone awaits with eager anticipation to see what new pearl of wisdom will come out of this administration. My constituents tell me day after day that they would meet the suggestion with a few rude comments which I really cannot explain here.

It seems our days are going to be filled with sloppy bills that are badly designed and which go mere inches toward what the Canadian people are most in need of: real tax relief. Canada has miles to go to make up for decades of neglect and mismanagement. We can still vaguely remember the days when the dollar was at par or even above the U.S. dollar and when it was a real tragedy when unemployment rose above 5% or 6%.

The Liberals become masters at taking the proposals made by other parties, watering them down and offering the struggles of average Canadians as proof that their administrations were good for this country. That is not so. We have never had more proof than now in that Canadians are struggling to overcome the suffocating, self-righteous intrusions of this government. What success we enjoy as individuals or as small businesses is in spite of this government, not because of its misguided programs.

That is not to say the government cannot have a good idea once in a while. Bill C-72 has a clause that restores the previous $5,000 credit for investment in labour sponsored venture capital funds. Some of these funds are quite active and really serve a need.

Quite a few people lobbied hard for that inclusion last year and now we see it takes the finance minister only 12 months to get on board with the idea. This gives us hope that perhaps he will wise up to other proposals that interest Canadians.

The child care expense deduction has been raised to $7,000. That is a good start. We are always in favour of allowing Canadians to keep their own money. But this deduction is not available to all parents and that is a tragedy.

We have heard ministers opposite plant their Florsheims in their dental work time after time and spend precious days in this House arguing over what they really meant and who they meant to offend or not offend. We have wasted time arguing over who cares and does not care in this House. I suspect we have succeeded in showing the majority of Canadians that this place is more about playing politics than shaping public policy. That is a travesty.

The truth of the matter is that there are clauses in this bill that can be commended in principle. The life learning plan allows Canadian residents to take money out of their RRSPs, if they can afford to have any, to pay for full time training for themselves or their spouses. That is a great idea. I do not know if everyone in that situation can afford full time training as opposed to something a little more flexible, but the intent is a noble effort.

We are aware that RRSP contributions have fallen off in the last two years as well. There is something like $126 billion in unused contribution room outstanding. As I said, it is a noble effort and let us hope there are a few Canadians out there who can actually afford to get retrained and plan on using that retraining here in Canada rather than being forced to go to other countries by our high taxes.

I suggest the same analysis applies to another program concerning part time education. Eligible part time students can use education tax credits and child care expense deductions to go back to school. I presume that helps young single mothers in particular. There is a lot of merit in doing that.

I wish I could be more specific with these measures but the fact is that this government has pulled a fast one on all of us. The Library of Parliament was caught flat footed with this bill and it expressed extreme frustration that there was no time to properly analyze the clauses in this bill.

Even though Bill C-72 was supposedly printed on March 9, the date on the folder, the library had no access to a copy of it until March 17. The researcher complained that this omnibus bill was just too thick to get through and really understand it in less than a week. Yet we are expected to speak to it with two days' notice. What on earth is this government up to? Are we on a fast track again? The calendar is not crowded enough with significant legislation to justify this kind of bullying and arm twisting.

On top of that we are dealing with the tax code, probably the most thick-headed and misguided document in the English language. It is convoluted, complex, and all of those great terminologies. Lawyers have written in their own secret codes, 1,600 pages of every possible definition of every possible object, and they still have to take people to court to apply the statutes. It seems that Quebec can have plain language legislation to make legal documents truly available to the people they apply to, but this government shows no interest in that.

In thousands of cases every year, thousands of Canadians citizens and businesses are put through a wringer to get them to conform to an incomprehensible juggernaut of legalise and secret passwords that even Revenue Canada has to admit it gets wrong on occasion. However, it does not do that often because in the way of this government it has taken on the corporate culture of self-righteousness and the attitude that big government knows best.

What we do not see in Bill C-72 is any admission by the finance minister, his bureaucrats or any of the Liberal members on the finance committee that this system is out of control. We cannot afford it. We see a clause that reduces the individual surtax by a few more dollars. That is a good idea, but who on the government side would dare to stand to defend putting taxes on taxes in the first place? Yet this goes on year after year. Canadians are still waiting for this government and the previous government to wake up and straighten out the mess they have made.

The 5% surcharge which remains untouched for now falls on incomes as low as $60,000. There are thousands of workers in high tech industries or specialized manufacturing who can make that much. What do they do? They take their skills and their incomes and they maximize them south of the border. Brain drain is a common phenomenon. The Liberals maintain their punitive tax structures and wonder why Canadian artists, entrepreneurs, doctors and scientists head for a friendly climate. We could add hockey players to that list too.

It is not like they cannot see it coming. My home province of Saskatchewan started driving out opportunity and entrepreneurship years ago. It has been rewarded as being a have not province by the government in Ottawa. No wonder Roy Romanow and the Prime Minister get along so well. They have the same tax philosophy. We have a government that sees nothing wrong with discriminating against single income families and that perpetuates applying taxes on taxes, punishing the very people it relies on to pay the bills through taxes.

This government really has nothing important to contribute so it keeps its head down, trying really hard not to upset anybody, while it rushes half-baked legislation through the House. It hides behind self-fulfilling opinion polls and paid for studies that tell it what it wants to think. It only adds to the pile that makes up the tax code, never thinking that there might be something worthwhile underneath or another way to approach the subject.

It has been proven that lower taxation leads to higher revenues. Alberta and Ontario are certain proof of that. Ireland has just reduced its tax regime and it is booming. Why can we not catch on to that ideology?

Worst of all, it tables bills like this which announce all over again what Canadians have already heard and paid for in the previous budget.

The government is hungry for any positive PR spin. We heard the finance minister claim that the country can only afford his style of nickel and dime tax adjustments and that it costs the government to give people their money back. What a ludicrous idea. We have a new program to help farmers in the prairies; $85 million to top up their NISA accounts. The unfortunate part is that it is an insult. One very seldom qualifies for NISA. It is a net income thing. So the $85 million is really a teaser.

We know what it costs because year after year the finance minister announces that his programs will cost the treasury so many billions of dollars. He goes ahead and subtracts that amount from the nation's books. He takes it right out of the taxpayers' pockets.

I do not know if Canadians are picking up on this yet, but the day is rapidly approaching when they will finally put their finger on what bugs them about this government. The auditor general has done a great job of painting a picture of what the minister and his finance cronies are up to. Maybe Canadians view public accounting in much the same way as they do the tax code. It is very convoluted and complex. Nobody really understands it. But this practice is pretty easy to follow.

The minister makes an announcement of, say, $2.5 billion. Then, without parliamentary approval, he charges that to the expenditure side. The government says “Look we would like to give you that tax break, but you can see that there is no money left on the bottom line”. The money has taken wings and flown off to pay for a scholarship fund that nobody asked for. Few will enjoy it and it will not even come into existence for another full year. The way our Canadian dollar is shrinking the students may get 50 cents on the dollar by then. According to our tax code anyone who tried to run a business booking expenses that way would find themselves in deep trouble with Revenue Canada.

We are hiding it very well in this country, with our low productivity and so on, because of the strength of the American economy south of us, but we cannot count on that forever. We need to stand alone. The bills will come due and then everyone will see where these years of Liberal mismanagement have led us.

We are really lagging behind in our productivity against our American counterpart and others in the G-7. We have a low dollar, very high taxes and low productivity. The polls show us that no one really identifies with this concept of productivity. Maybe that is because it has been so long since we have had any that nobody recognizes it any more.

The Minister of Industry made several comments to that extent, which I would like to quote. He was addressing the issue of the standard of living in this country. He pointed out that since 1987, just a mere decade ago, Canada's standard of living has increased by only 7%. The standard of living of our counterpart to the south has increased by 17%. That is a 10% difference.

According to the slide that he was showing, the income gap between the U.S. and Canada is 30%, and growing at a rate of about a $9,000 difference in income between Canada and the United States. That correlates into about $28,000 for a family of four. Those are Statistics Canada's numbers.

With respect to the impact on Canada's productivity, the industry minister went on to say “Canada has the lowest growth rate in productivity in the G-7”. We are 17th in the world, which is certainly not good enough. Why? It is because of high taxes and the low dollar. We are paying more and getting less. It is very unfortunate.

The industry minister also pointed out that we have much higher taxes in Canada than they do in the United States. Our tax rate is 130% of that of the United States. If we couple that tax rate with the low dollar, we are on a downhill slide. We see omnibus bills like this which continue to shove Canadians farther down in that sinkhole of despair.

I would like to present an amendment at this time. I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following therefor:

this House declines to give second reading to Bill C-72, an act to amend the Income Tax Act, to implement measures that are consequential on changes to the Canada-U.S. Tax Convention (1980) and to amend the Income Tax Conventions Interpretation Act, the Old Age Security Act, the War Veterans Allowance Act and certain acts related to the Income Tax Act since the principle of the bill fails to address the federal tax system to end discrimination against single income families with children.

Income Tax Amendments Act, 1998Government Orders

10:50 a.m.

The Acting Speaker (Ms. Thibeault)

In my opinion the amendment is receivable.

Income Tax Amendments Act, 1998Government Orders

10:50 a.m.


Leon Benoit Reform Lakeland, AB

Madam Speaker, I am very pleased today to speak to this bill, a budget implementation bill. Many comments have been made on this bill and I am sure there will be many more.

I will speak in a very general way about what the implementation of the parts of the budget that this involves will do and the impact it will or will not have on families across the country.

In the last couple of months, since the discussion and the anticipation of the finance minister's budget really started to heat up, and even over the five years that I have been a member of parliament, I have heard more and more from people who say they feel guilty as parents or as small business people who want to pass their business on to their children because they are not saving the amount of money they should be saving in order to pass the business on or to allow them to help their children as they raise their families or as they go on to pursue further education. I have heard people express the guilt they feel because they are just not doing what they should be doing to help their children and to help pass the business on. That has really been a concern for me. The guilt should not be felt by most of the people that I have heard from because, clearly, the money is just not there for them to save.

We have heard a lot of talk recently, talk backed up by chief bank economists and by the government's own pollsters, which indicates that productivity in Canada has been dropping steadily. If we ask most Canadians they probably will not understand in detail what productivity means. However, what they do understand is that their standard of living is getting lower and lower all the time. It is a key thing to remember that over the past 10 years and more, each year Canadians have had less to live on. Their standard of living has been dropping.

When I hear these people say they feel guilty because they are not saving what they should be saving to help their children with their education or to help pass their farms on to the next generation, I think it is important for me to tell them now that it really, in most cases, is not their fault.

I think it is important to note whose fault it is. It is clearly the fault of the government, for what it has done and has not done over the past five years. It is the fault of the Conservative Party, which was in office for nine years and which kept jacking up taxes. I cannot even remember how many tax increases there were, but dozens and dozens of times the Conservative Party raised taxes in various ways. It is the fault of the Conservative Party and it is the fault of previous Liberal governments, many members of which are still in the House today. They raised taxes and went on their spending sprees, and we are seeing that develop again. By doing that they have denied Canadian families; parents of children who have decided they want to further their education and farmers who want to pass the farm on to the next generation. It is very difficult. It is the fault of government which has denied these people through high taxation and low growth.

It is the fault of governments and I want people to know that. I want the people who have been talking to me and saying that they feel guilt to know that they should not feel guilty, because I know that most of the people who have talked to me about this have done everything they possibly could to save money. They are cautious in their businesses. They spend very little and live on very little in many cases, yet they just do not have money to save.

I hear members opposite hollering that that is not fair and not right. Look at the statistics. The fact is that the savings of Canadian families have been dropping on a regular basis. That happened again this year. It is happening right now. Savings this year will be lower than they were last year. This is a trend that has been taking place for some time. It is a real serious concern that has not been dealt with by the budget. It certainly has not been dealt with by the parts of the budget that we are talking about implementing here. For that reason I cannot possibly support this piece of legislation.

When I have people come to me and say they feel guilt because they are just not saving what they should be saving for all of these things that are so important to them, I have not thought of telling them that it is not their fault and that they should look at what has happened and the reality of how every year more and more of what they earn is not left with them, is not left in their pockets for them to spend as they see fit. Instead, it has been taken away by governments more and more and spent by governments on things that they somehow feel are more important than the issues that the families themselves have determined are most important.

That attitude bothers me. I think it bothers most Canadians when a government and a finance minister feel that they somehow know better than the general Canadian population, than parents, how they should spend their money and how they want to spend their money and what is important to them.

Perhaps we could change that attitude and convince the finance minister and the Prime Minister that Canadians themselves, mothers and fathers who are desperately trying to put money together to pay for university or technical school education for their children or for something that will help them get good jobs, know best how they want to spend their money. Perhaps we could convince governments to leave more money in the pockets of the people who earn it.

I want to make clear that I am not against taxation. I am not proposing that we eliminate income tax completely. I am not proposing that we eliminate all the other taxes, although I certainly believe we should eliminate some of them. I believe the level of tax now is completely out of line. When we see about half of what we earn being taken away from us by government, we know taxes are too high.

Instead of 50% it would be far more reasonable to move the total tax package down to between 20% and 30%. I think issues like health care are important to people. People do not object to the money being spent on health care if it is spent wisely. That is part of the problem with health care. Even the money that is being spent is not being spent wisely.

Another part of the problem is that the government has cut back on transfers to the provinces by almost $7 billion a year. These transfers are to pay for health care and advanced education and the funding has been reduced dramatically.

The member across the floor is saying that in the budget a small part of that was given back. That is so true. They have given a small part back and have said “Aren't we grand?” They have cut somewhere near $20 billion—I forget the cumulative amount—over the past five years and now they are to put back a billion or two over the next couple of years. That is not good enough. That is nothing to brag about. Part of the problem is that they cut back on the amount transferred to the provinces for health care, making it extremely difficult for the provinces to deal with the health care issue.

Another part of the problem is that in many cases, partly due to unreasonable restrictions on the part of the federal government, the provinces are not allowed to do what they have to do to make the system work well.

We have seen that attitude problem in this government, in the Conservative government before it and in the Liberal government before that. It has to change. If we could change that attitude we could make some real progress. We could start leaving more dollars in the pockets of the people who earn it. If there could be a quick tax reduction right now, maybe five years from now I would hear some people saying that they are finally starting to be able to save a little more. Because they are saving a little more they will be able to help the children a little with their education.

I am from a farming community so I mention farming because it is extremely important to me. I might hear people say they can save a little more because they are not paying so much out in taxes. Over half the cost of fuel is tax, which is completely out of line. Farmers also pay a lot of income tax, although it will not be much this year. They did not earn much because there is a real mess in the industry. However over the years they have paid a lot of income tax and a lot of other taxes. They are overtaxed, no doubt.

On top of that and because of that we are seeing farm families that in many cases will not be able to help the next generation to purchase the farm business and to develop it. This is a direct result of overtaxation and the complete lack of willingness on the part of the government to do something about it.

We laid out a plan before the finance minister presented his budget which would have given Canadians $25 billion a year in tax relief. It was not an unreasonable plan. It was verified as being very viable by some of the best economists in the country. We know from the work we have done that it is a very viable plan. In our plan we would make payments on the debt every year and increase to some extent funding to health care and to other key areas. That is a very reasonable expectation.

The finance minister had his chance. I do not know his motives, but if he would have had his way maybe he would have gone further toward our plan. Probably he was not allowed to do so by others in cabinet. Do I fault the finance minister for that? Yes, I do. I absolutely fault him for that because he has to be strong enough and show enough leadership to make that happen. He has to make that happen and he did not. He failed miserably.

I do not want to impute motive. I do not know the motive of the finance minister, but this was pretty much a do-nothing budget in reality. The government is talking about next year's budget already. It is trying to forget this one. We have noticed that in question period. It is talking about next year's budget and has just gone beyond this year's budget. It is unbelievable. Clearly it knows this year's budget was a failure on the part of the finance minister and a failure on the part of the government.

I just have to ask why. Was it because the finance minister did not want to do something? It may have been. The Prime Minister will be stepping down within the next year or two. I think all Canadians expect that. The finance minister will pretty much be put in as leader of the Liberal Party. Because that leadership race will be a little over a year from now, we have to think that the finance minister will want to have a knockout budget next year.

Maybe some people would say next year is good enough. There are a couple of things wrong with that. First, Canadians who are desperately trying to save to put their kids through college, technical schools and whatever, or who are desperately trying to save so they can somehow transfer their small businesses and farms to others, just cannot do it. They need that relief now. There are families struggling just to make ends meet. I am talking about food and basic clothing. There are many families in that position. They see virtually no help until next year.

What will happen next year? We have seen how cabinet has influenced the finance minister already. He may have the best of intentions to come out next year with a budget much like what we proposed. Will cabinet allow that? All the heritage minister thinks about is spend, spend, spend, and maybe put through some dumb legislation like the split-run magazine legislation. That is another issue and I will not get into it.

There are several other ministers like her. They want to spend. They think elections are bought and won. They do not really care, I guess. I should not really say that because I do not know. I know they care about the country. They would not be here if they did not. They clearly do not understand that what is necessary is to limit spending and give Canadians money or leave it in their pockets. It should not be taken from them and given back. It should be left in their pockets as much as possible. They did not do that this year. If they do not understand that and if they are not willing to let the finance minister do that, they probably will not let him go quite as far as he would want next year.

We might get a budget next year of maybe $15 billion in tax reduction. That is not good enough. Families need a reasonable amount that leaves room in their budgets to deal with a downturn in the economy and that type of thing. Our plan does that. The room is there. We will not start building up deficits again under any circumstances, yet we can offer in our package $25 billion in tax relief.

If the finance minister is willing to give $15 billion in relief over the same period, it just is not good enough. He may think it will help him win the leadership race. I think he will do that anyway, but will he win the next election based on that? I think not. It just will not happen with that kind of budget.

Canadians are starting to understand what is going on. Canadians have always known they are overtaxed, but they are starting to see exactly what the possibilities are. Finally they know too much is being taken from them, that their standard of living has dropped on a regular basis, that it is difficult to make ends meet, and that they cannot save for things that are really important to them. Now they are starting to see why. This is key to what is happening right now. Canadians are looking in more depth into the issue. They understand more and more. The government could do a lot more but it has done very little with the budget. Bill C-72 implements a budget that just does not do what it should have done. That is of real concern to me.

I say to the people who have felt guilty because they cannot save that the guilt should not be on their shoulders. The guilt should be on the shoulders of government members for not acting. They are the ones who had the opportunity to act very quickly on this issue. They could have offered $2,500 in tax relief, for example, to a family earning $30,000. That would have meant $2,500 more in the pockets of taxpayers.

Then some families might be able to put a bit into a registered retirement savings plan to further reduce their taxes. More families would be able to save a bit more so that their children could go on to a technical school, a college or a university after secondary school.

That is what that would mean. It would also mean the health care system could be improved so that waiting lines do not get longer and longer as they have been for many years now. The number of people waiting for health services in extremely serious areas is becoming larger and larger on a regular basis due to wrong actions taken by the government and lack of action by the government.

I am very pleased that Canadians in a much broader or much more in depth way have recognized that the government has failed miserably. I can safely say that if people from the Lakeland constituency or many others across the country were standing in my spot in the House when the vote is taken, they would be saying some of the things I am saying and would vote against the bill. The bill implements parts of a budget that is totally inadequate. It is a failure and I believe I am saying what they would say.

Income Tax Amendments Act, 1998Government Orders

11:10 a.m.


Odina Desrochers Bloc Lotbinière, QC

Madam Speaker, I am pleased today to speak to Bill C-72, an act to amend the Income Tax Act and that implements certain other measures announced in the 1998 budget.

I would mention right off that it is very difficult for the Bloc Quebecois to support Bill C-72, because we realize once again that the government's priorities are not in the right place.

There are certain aspects of it worth keeping, but the bill does not resolve the situation of Quebeckers entirely.

Although I have been here only since June 1997, I realize that the same thing happens all the time on the other side, regardless whether the year is 1997, 1998 or 1999.

Yesterday, I was invited to comment on the 1999 budget. Often the agenda of the government across is hard to follow. They are trying to bring us back to 1998 provisions, when the fact of the matter is that, whether it be 1997, 1998 or 1999, it is always the same thing.

This government used the money in the employment insurance fund, cut transfers to the provinces and, through all sorts of little indirect taxes, managed to bring its deficit down to zero.

However, if this government had wanted use the surpluses at its disposal in a more logical way, not just now but also in the 1998 budget, we would find much more interesting measures for Quebeckers and Canadians.

For example, last year, in 1998, the budget did not provide anything for the unemployed, the students and the sick. These people thought that this year, in 1999, the Minister of Finance would announce measures that would be much more fair and just, measures that would allow them to breathe a little more easily.

Last year, the unemployed, the sick, the young, the students and the poor realized that, perhaps, one more effort was necessary to enable this government to achieve a zero deficit.

Incidentally, it is difficult to understand how this government plans its budgets. I do not know of any Quebec or Canadian business that would remain in operation with such forecasts. It is easy to predict a zero deficit in 1998, 1999, and again in the year 2000. But then, what does the Minister of Finance do with his officials? He fiddles with the figures. To fiddle with the figures means to manipulate them on all fronts. First, the government claims there is hardly any surplus in the employment insurance fund. But this year, in 1999, surpluses will reach $26 billion.

Last year, they were also very high and I am almost certain that, in the document tabled this morning by the Minister of Human Resources Development on the current status of the employment insurance program, we will find things that need to be corrected.

Since it came to power, this government has been trying to create two classes in Canadian society: the rich and the poor. The worst of it is that the money of the least well off is being used to benefit the most well off. For several years now, whenever there have been tax breaks, the Bloc Quebecois has asked that they be targeted so as to help those who have paid down the deficit recover some of their money. But this is not what has be happening. It is not what happened in 1997 and 1998 and it is certainly not what happened in 1999.

The EI fund belongs to unemployed workers and employers. This government has not put one red cent into it. What is it doing with the money in the EI fund? It is siphoning it into the consolidated revenue fund, not just to be able to hand it over to the richest members of society but also to use in its forays into areas of provincial jurisdiction.

The examples are numerous. Well we remember the September 1997 throne speech where it was already apparent that this propagandist government was prepared to interfere in provincial affairs.

The Minister of Intergovernmental Affairs told the House that our constitution was one of the most decentralized in the world. They are working daily to take this increasingly unitary Canada and use the constitution to centralize the government. Why? Because they are going to negotiate internationally. International law will play a role.

The people on the other side of the floor, and those in English Canada, do not understand the globalization issue. But we know very well that if they turn up at negotiations without having remedied that lack of understanding, they may be told “Put your own constitution in order; put your own affairs in order; respect your partners and then we will start negotiating”.

Every day this government is involved in meddling into areas of provincial jurisdiction, so that it can show internationally that it is now a central government with a constitution that allows it to do so.

This is how all of its actions are carried out, and this is why, within the framework of a bill such as Bill C-72, we find only minor measures, mere crumbs thrown at those who need help.

Getting back to employment insurance, is there anything more distressing in life than losing one's job? With the restructuring and readjustments that are going on in many companies, people are losing their jobs and need retraining. They need a chance to catch their breath. But when they turn up at the Human Resources Development offices, they are not sure whether they will get any EI benefits. The concerns of our unemployed are increasing. We know that only 40% of workers who pay into the plan are entitled to benefits. This is a matter of concern.

What is even more disgusting is that the little people are making sacrifices, the least well off, the unemployed, the single mothers, the students, and now they are seeing the money going instead into the Canadian government's consolidated fund, from there the Minister of Finance can distribute it anywhere and everywhere.

Bill C-72 is silent on the millennium scholarships. Yet, that program was announced in the 1998 budget. We know it will soon be implemented. What does that mean for students in Quebec and in the rest of Canada?

In Quebec, we have a very good loans and scholarships program, one of the best in North America. Now, the federal government will get involved, through this scheme, in a provincial jurisdiction. A student who will apply to the foundation will have to make a report to be eligible to the loans and scholarships program. Some young people may be penalized by this administrative ambiguity, particularly since the Quebec government already has an infrastructure, through its loans and scholarships program, that provides very good services.

Who, at the federal level, will administer the foundation? It is a private body headed by the president of Bell Canada. This is worrisome. We do not know how much it will cost. We do not know how it will work, but we do know that it will deprive Quebec students from hundreds of millions of dollars.

Members will understand that, when the government came up with its social union, when it negotiated with the other provinces, the Premier of Quebec, Lucien Bouchard, could not sign that agreement. We saw what happened with the last budget.

We can also see how this government is putting itself into the position of being able to distribute gifts in all provinces and especially to meddle in areas of provincial jurisdiction.

A business facing financial difficulties usually looks first within the organization to see if it can cut expenses in order to increase revenues.

I have sat on the public accounts committee, and I realized on many occasions that the departments had not yet made the effort. They did make the effort when it came to cutting personnel and services to the public. However, when it came to big salaries, managers and money that could benefit those who make significant contributions to the Liberal Party of Canada, the government has a very hard time housekeeping.

What is the government doing to eliminate its deficit? It pumps off the surpluses in employment insurance. It made draconian cuts to transfer payments in health care, education and social programs. In addition, this government has became expert at adding little taxes to public services, such as passports, national parks and so on.

Today the government has stopped providing services free of charge. However, in a society such as ours, the government has its share. We are having to keep paying for services paid for by taxes that come out of the pockets of taxpayers and, moreover, we are overtaxed.

I will not get back to Bill C-72. Another ploy the federal government used to get more money into its coffers was to harmonize the GST. In New Brunswick, it was smooth sailing, but not in Quebec. Figures and statistics were trotted out.

The current Minister of Finance is a creative bookkeeping artist. He is tops in his class. For the 1998 budget, the difference between forecasts and the actual figures varied from 40% to 50%. How can we believe such a Minister of Finance? An entire country does not know what to think.

The most important minister after the Prime Minister is the Minister of Finance. However, his actions and the fact that his forecasts are not more rigorous undermine the credibility of the entire government. We have denounced this situation countless times in the House, before the Standing Committee on Finance, and wherever we got the chance. People are clearly having trouble understanding what is going on and they are having particular difficulty figuring out what this government is really trying to do.

In September 1997 we saw that it was getting ready to interfere in provincial affairs, strengthen its Constitution and try to show the rest of Canada that the country was a unitary state, but fortunately Quebeckers saw through this. In fact, the Globe and Mail recently published the results of a poll showing that, if a referendum were held, 49.2% of the population would vote in favour. This poll was taken before Bernard Landry, Quebec's Minister of Finance, brought down his budget.

This same government sent its ministers, senators, secretaries of state and private members to fan out through Quebec during the break and still they dropped 4% in Quebec. The Bloc Quebecois now has 46% of voting intentions in Quebec.

This proves that, even if the government is trying to pull the wool over the eyes of the other provinces, Quebeckers can still see clearly and understand that, if they want Quebec to take its rightful place in the world market, there is but one solution: Quebec sovereignty. It is the way we will be able to continue to put forward the ideas of the great Quebeckers who have, since the quiet revolution, seen things clearly and have seen that Quebec no longer had a place within the present federal system.

The Bloc Quebecois cannot, therefore, give full support today to these small amendments to the Income Tax Act, in the form of Bill C-72. Possibly we would like to see other provisions in the 1999 budget that would meet the needs of the least well off. There could be targeted tax reductions, not the general ones that were the result of taking money contributed by the unemployed and their employers from the employment insurance fund. There would have to be a general redistribution to everyone, starting with the poorest members of society, who have paid for the richest.

My fears about this government, particularly with all that is coming up to do with globalization, is that, despite all of the economic upheavals there are going to be in the years to come, this government is already taking steps to create two classes in Canada, the rich and the poor.

We in the Bloc Quebecois, a party more open to the middle class, hope that people, whether rich or poor, can be treated fairly and equitably. This is not going to happen with what the federal Liberal government is introducing this morning.

Income Tax Amendments Act, 1998Government Orders

11:30 a.m.


Libby Davies NDP Vancouver East, BC

Madam Speaker, I am very pleased to have this opportunity to speak to Bill C-72, the income tax amendments act, 1998. I will be sharing my time with my colleague, the member for Kamloops, Thompson and Highland Valleys.

I begin by drawing attention to the fact that the bill we are debating today is as a result of the 1998 budget. Thinking of that budget, what it contained and the amendments now before us as a result of changes to the Income Tax Act, we remember this budget as something that came from the government side of the House being characterized as the education budget, the youth budget.

As the spokesperson for the NDP on post-secondary education I went through that budget and talked with students and student organizations. It was to take stock of whether this so-called education budget, and now the income tax amendments that flow from it, contained measures that would really assist students in Canada. Throughout 1998 as the impact of the budget began to unfold it became very clear that although this was characterized and held up by the Liberal government as the great education budget, the reality was that very little had changed in daily lives of students.

As someone who defends the interests of students, along with other members of the House who have concerns about students in Canada, I think there was one really despicable thing in that budget. While we were told it was an education budget, secretly, through the back door, there was something that was not announced in the finance minister's speech. It was changes to the Bankruptcy Act which impacted on students, changing the laws affecting bankruptcy so that students could no longer declare bankruptcy after having exhausted all other means. They could not declare bankruptcy after two years but had to wait ten years.

A couple of weeks ago I attended a press conference held by the Canadian Federation of Students where a test case was being brought forward to challenge the bankruptcy changes made by the Liberal government in 1998.

Ms. Annik Chenier is a young woman who attends Saint Paul University here in Ottawa. She had a student debt of $63,000. After some very modest interest relief and debt remission, Ms. Chenier was still left with a debt of over $50,000. She had left school and was now working and would be paying close to $700 a month on her student loans. Ms. Chenier had tried to obtain a reduction and a different type of payment plan but had reached the end of the line. Because she had no other options available to her she wanted to declare bankruptcy. She could not do so because of the changes in last year's budget. I bring this up because this really portrays what students are facing.

In this bill before us today there are some minor changes, a kind of tinkering, that provide some relief to students. I will go through them. The basic inequality and crisis being created as a result of the retreat of public funding, the massive increase in tuition fees, the increase in student debt, remains.

We have students like Ms. Chenier and other students across Canada still facing very desperate circumstances and still facing collection agencies that harass students. I have had phone calls from students crying because they have been harassed by collection agencies at work or school. Canada student loans have been privatized, turned over to banks which get a premium on student loans and if students go into default, through no fault of their own, they are turned over to collection agencies.

I think it is very important to point out that with some provisions in this bill, some debt reduction, Canada education savings grants, the 17% federal tax credit, while they do provide some minor relief, unfortunately the reality is they do not fundamentally or substantially change the situation for students.

One good measure was included, assistance for students with dependants. This, which was actually a Liberal red book promise, provides grants of $3,000 a year. That was a good measure and something I am glad to see the government acted on.

I was very disappointed, as I know students across the country and Canadians in general were, that the relief promised in the budget in terms of what was actually provided fell far short of people's expectations.

One of the changes in this bill involves personal income tax. If we look at the example of a one income family of four earning $20,000, under these provisions that family would get a tax cut of $165. It is certainly better than nothing but I have to compare that to a letter I received a few days ago from a woman in British Columbia.

She described her situation to me. She works in a fast food outlet, making minimum wage. She is raising two children and pays more than 50% of her income toward rent. She was writing to me about housing because I have raised the issues of housing and homelessness. With the measures we are debating today, would that woman and her kids be better off?

Would she have more money substantially to pay for her rent? Would she have more money to put food on the table? Would she have any money to put into savings for RRSPs for her kids' education which is one of the provisions in this bill today? She is struggling even to pay the rent, so any hope for her to put money into an education plan is something way down on the agenda.

I came to the conclusion, as my colleagues in the NDP have, that again this budget has failed in these amendments to the Income Tax Act before us today. It has failed in terms of dealing with the growing inequalities that face us in society. I hear some of the debate from the members of the Bloc who are pointing out the same kind of situation in terms of the constituents they represent as well and their perspective on this matter.

I think we have a really serious problem in this country. We have now had a succession of budgets. We had the education budget. We had the budget this year that was a so-called health budget. There is talk about the children's budget next year. None of these budgets or the income tax amendments that flow from them serve to substantially alter or change our tax system to make it fairer and progressive and to make sure that for low income Canadians, poor Canadians who have borne the brunt of massive cutbacks and of inequalities in our tax system, it will improve life in a meaningful way for those Canadians.

I think that is a real sad day for Canada. That is why my colleagues and I in the NDP voted against the budget last year. It failed to address those issues. Certainly in terms of the income tax amendments before today us when we look at the criteria of who this budget really helps, does it really help the people who are most in need, we come up with the same answer, that this budget and the legislation before us today have failed.

I guess we cannot escape the glaring facts that after tax inequalities are increasing and that low income Canadians and students are falling further and further behind.

Income Tax Amendments Act, 1998Government Orders

11:40 a.m.


Nelson Riis NDP Kamloops, BC

Madam Speaker, I listened to my hon. colleague's comments with interest. It would be nice if all the debates in the House of Commons were as thoughtful, well researched and reflective as the one we just heard. Unfortunately that is not the case. Too many people read from prepared texts and so on that someone else has written.

Today we are talking about income tax. I suspect that when people hear that term they get crinkly feelings up and down their spine. There are probably hundreds of thousands, maybe millions, of Canadians sitting in their offices, their homes, their factories or plants just dreading the time when they have to go home and get out all those little pieces of paper, T-4 slips and so on and start filling out that bloody form.

The Constitution says we are not allowed to impose cruel and unusual treatment on people. I suspect asking people to fill out their tax returns is a form of cruel and unusual treatment. It is a painful experience.

The other day I ran into some young people who are self-employed. They are in the consulting business. They were absolutely livid because they fill out their tax returns, work very hard for all their money and have to send off cheques and cheques, all this cash to the federal government. They felt depressed. They were so frustrated. It is almost a form of self-mutilation.

People sit down at a desk, with papers piled all over, trying to figure out what the hell that form says. They read through the explanations and that is complicated, step by step. There are computer programs now. The laugh of the century was this elderly woman came to my office in Kamloops the other day and said “I just filled out my tax return and I do not understand parts of it. I wonder if you could get me a copy of the tax act”. She was thinking this was a little book, something like a little handout.

One would need a pickup truck to take home the tax act and all the explanatory booklets that go with it. Madam Speaker, I know how bright you are and some of my friends across the way, but I can guarantee that no one could understand it. Nobody can understand it. I will bet there is not a person in the world who understands this pickup truck full of tax law.

Let us test the crowd. We have some very intelligent people here. Let me pick up one of the little copies and I will randomly choose an item. I must admit I have not looked at this but I am going to read this and ask my friends, particularly my Liberal friends across the way, to follow carefully, then there will be a test afterward.

It goes like this. The minister may grant exemption from this application of the provisions from this act, other than the provisions set out in sections 14 to 19, or to any investment company, if the minister is satisfied that (a) the business of investment carried on by the company or a significant portion thereof is of short duration and incidental to the principle carried out by it, or (b) the company, although incorporated after January 1, 1972, primarily for the purpose of carrying on the business of investment and it intends to remain a company described in subparagraph 2(3), or subsequently from 5(2) to 5(17), or (c) it is not necessarily in the public interest that this act apply to the company, having regard to the purpose of the act and to any one or more of the following factors: (1) the persons to whom the company is indebted in respect of money borrowed by it, or (2) the amount of the indebtedness by the company in respect to the money borrowed by it, or (3) the nature of any security given by the company in respect of money borrowed by it, and (4) the extent of the integration of the company's activities with the activities of its subsidiaries, if any, and with the activities of any corporation of which it is a subsidiary and any other subsidiaries of that corporation.

Then we go to subsection 2. Here the minister, if he decides, may revoke an exemption granted under subsection 4. If subsection 4 does not follow subsection 2(b) and the minister ceases to be satisfied that any of the criteria referred to in that subsection are met, then when exemption from this application is granted under subsection 2 or subsection 15, following 2(b), then the corporation, after January 1, 1972 that is, if it is primarily for the purpose of carrying on the business of investment, then this exemption shall not be revoked.

Income Tax Amendments Act, 1998Government Orders

11:45 a.m.


Ken Epp Reform Elk Island, AB

Makes sense to me.

Income Tax Amendments Act, 1998Government Orders

11:45 a.m.


Nelson Riis NDP Kamloops, BC

It is perfectly clear. It is simple. It cannot be revoked after all of that.

A person would have to have 50 law degrees to figure out what on earth that says. Let it be perfectly clear, this is what this is all about. There is more gobbledegook in this piece of legislation. There is more muffle buffle jumble bumble than we can imagine. If one has a well paid tax lawyer or a very experienced tax adviser, one can buffalo almost anybody into saying this should be deducted, that should be deducted, and so on. It is like I am reading from some sort of tragicomedy.

I could read tens of thousands of other pages, but I would challenge every one of the bright MPs in this building to say that they understand even one page of the tax act. I know nobody here is able to. The ones who are not here today, maybe they are the intelligent ones.

Those who have to deal with this tax act will be unanimous in saying that no one knows what the hell it says.

Income Tax Amendments Act, 1998Government Orders

11:45 a.m.

An hon. member

Hire a tax lawyer.

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11:45 a.m.


Mac Harb Liberal Ottawa Centre, ON

Come on, it is simple stuff.

Income Tax Amendments Act, 1998Government Orders

11:45 a.m.


Nelson Riis NDP Kamloops, BC

Mr. Speaker, my Liberal friend says this is simple stuff. Maybe to a certain kind of mind this is simple stuff. But to an intelligent mind, it is gobbledegook. Look at it. I know I cannot hold up a prop, but this really is not a prop. Look at all of its pages. They are all grey. There is no white, because if it is grey, it is open to interpretation.

Imagine those guys who work in Revenue Canada and have to deal with this book day in and day out. It takes a special kind of personality to handle that kind of stuff. Thank God they have it because I know I do not have it.

There are no white pages, they are all grey. Everything is grey. If one has a good tax lawyer, a good tax accountant or a good tax adviser, one can probably get out of paying the kind of taxes one ought to be paying. That is what it is all about.

There are hits. Walk into any major bookstore today, and the best-sellers are right at the front. What are they? Ways to avoid paying taxes. Jacks tax adviser, Mary Jane's and so on, everybody has a favourite tax book and it is updated every year because these things change every year. That is what we are doing today. They are mainly designed to show how to avoid paying taxes. They are today's best-sellers. I am sure my Conservative friend would agree.

Serious players probably have them for their night time reading. People can go to seminars on how to avoid taxes altogether. It is called a tax haven, the Cayman Islands, the Bahamas or the Isle of Man, all sorts of things. For a nice fee, these seminars will lay it all out, how to avoid paying any income tax at all.

This is a depressing debate today. These provisions by and large are probably fairly decent. There is a tidbit here to help this group, a minor change to help that group, but nothing will change. It is just more gobbledegook, more complexity and more fuzziness in the tax system and people will be happy for the little bone the Minister of Finance has tossed them in this little change.

Canadians are demanding real tax reform. They want to change the system. They want to toss out the pickup truck full of books and start all over again. They want a real tax system, a progressive tax system. They want to stop the use of the tax system to achieve all these minute changes in today's society.

The Parliamentary Secretary to the Minister of Finance is here. I value his judgment. I hope he asks me a question.

Is it not time that we sat down as a finance committee or as a committee of the whole parliament and went through our tax act? Let us identify the major exemptions in our tax act and apply a cost benefit analysis to every single one. What is the cost of this tax loophole, or tax exemption, and what do we get from it? If it is not clear that we get more than it costs, then we should toss it out the window.

Income Tax Amendments Act, 1998Government Orders

11:50 a.m.

An hon. member

Are you asking him a question?

Income Tax Amendments Act, 1998Government Orders

11:50 a.m.


Nelson Riis NDP Kamloops, BC

I am asking him a question. I ask the Parliamentary Secretary to the Minister of Finance, why not go through our tax act, do a cost benefit analysis on every single major tax exemption and if it does not make financial sense, toss it out?

Income Tax Amendments Act, 1998Government Orders

11:50 a.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, it is always a pleasure—

Income Tax Amendments Act, 1998Government Orders

11:50 a.m.

An hon. member

And a challenge.

Income Tax Amendments Act, 1998Government Orders

11:50 a.m.


Tony Valeri Liberal Stoney Creek, ON

And sometimes a challenge, I would agree, to listen to the hon. member across the way.

I do have a lot of respect for the member. He is a member of the finance committee and does contribute substantially, I might add, to the debate in the finance committee.

With respect to his suggestion about looking at the tax system, the hon. member knows that the finance committee is the master of its own destiny. If the finance committee would like to look at the tax system, who am I to stand in the way?

We are all here to help ensure that Canadians receive the best possible government services. I would engage in any sort of debate that would provide more value for tax dollars for Canadians. That is certainly why I am here.

It is sometimes ironic to hear a member from the New Democratic Party, although I sometimes feel that the member does not quite fit that mould but nonetheless he is a member of the New Democratic Party, talk about taxes and the need for tax reform and the need to ensure that Canadians' tax paying burden is alleviated. We certainly have begun to do that on this side of the House beginning with the 1998 budget and continuing in the 1999 budget.

Albeit it is a beginning and I do not think anyone here on this side of the House thinks that this is the end of the work on the tax file, but the hon. member should stand up and at least say that he can support the measures in this bill. There is the increase in the basic exemption, the elimination of the surtax, the tax credit interest on student loans, the registered education savings plan, the ability to withdraw money from registered retired savings plans to finance part time education, the child care expense deduction, the caregiver tax credit, and the increase in the emergency volunteer tax credit.

There are a number of issues. The hon. member is correct when he says there needs to be additional work with respect to the tax system. I grant him that. The member should acknowledge that the work this government has started to do on that file is work he should be able to support and continue to support as before.

Income Tax Amendments Act, 1998Government Orders

11:55 a.m.


Nelson Riis NDP Kamloops, BC

Mr. Speaker, I had a vision as my friend was speaking. It was a vision from Hindu philosophy of a multi-armed goddess. She has about 15 arms. I imagined these arms going into every back pocket and every front pocket, picking our pockets.

What my friend did not mention was the new tax collection agency, a monster tax collection agency that not only will have federal hands going into people's pockets but will also have provincial hands tied in.

Somebody said it is like a drunken sailor taking taxes. It is not like a drunken sailor spending money, because drunken sailors spend their own money. These guys spend other people's money.

Again, to say that none of this is worthwhile would be folly. Of course many of the provisions will be helpful. It is like the situation of a young boy begging on a city street, obviously living in a horrible situation. The boy stands there with a cup and asks for a dime. Someone gives him a dime and thinks the kid should be thankful, he should be happy with that. That is what we are getting here, little dimes in the beggars' cups and we are being asked to say is this not wonderful, thank you very much, Mr. Minister of Finance. These changes are a mere a pittance.

My friend from Vancouver talked about the student debt load, the horrible situation young people face trying to afford an education. We are supposed to be up here leaping for glee because they are now going to possibly deduct some interest from $26,000 to $50,000 student loans. It is sad.

There are minute improvements to our tax system. But when we have to back up a pickup truck for the piles and piles of this stuff, this is not the way to approach real tax reform.

I welcome my hon. friend's suggestion that we raise this at the finance committee. Perhaps one day we can initiate a real process of tax reform coming out of this House of Commons.

Income Tax Amendments Act, 1998Government Orders

11:55 a.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, it is always with great pleasure that I listen to my hon. colleague from the New Democratic Party, the member for Kamloops, Thompson and Highland Valleys. We never know quite what we will hear about.

The last time the member spoke on the budget, he was talking about sex with bears. Today he was talking about multi-armed Hindu goddesses. He is certainly a Renaissance member of parliament who can describe things in ways which certainly can connect not just with other members of parliament but with Canadians, and probably with bears.

The hon. member described the government as a multi-armed Hindu goddess. There is another kind of Hindu goddess, a multi-breasted Hindu goddess. Sometimes the multi-armed Hindu goddess looks at the taxpayer as a multi-breasted Hindu goddess. She seeks with those arms to attach her hands to the collective teat of the Canadian taxpayer. Her grip is so fervent and so ferocious that ultimately the taxpayer and Canadians suffer.

It is important to keep abreast of tax issues both in the House of Commons and with all Canadians. Tax issues are fundamentally important.

Bill C-72, which implements some of the budget's proposed changes to the tax act further complicates an already far too complicated tax code. I think all members of the House agree that the tax code is too complicated.

My colleague from the New Democratic Party was speaking of the complicated tax code. One of the Liberal members suggested that he hire a tax lawyer. It should not be necessary for a Canadian to hire a tax lawyer to deal with his or her own government, to effectively represent themselves.

Over the past 20 years the tax code has become increasingly complicated, increasingly Byzantine, to the extent now that in every budget Canadians can expect the tax code to become further complicated, more difficult to understand and to increase the need for Canadians to hire tax accountants just to read some of the books the hon. member from the New Democratic Party described. There are also clinics for people to learn how to, not evade taxes because that is illegal, but to avoid taxes or pay less taxes. Canadians, in some cases, are investing abroad in places like the Cayman Islands or looking for tax shelters in other jurisdictions.

All Canadians would benefit not just from reduced levels of taxation and more broadly based tax reduction but from a simplified tax code. This is an area that I would argue is tied in directly with productivity. One of the barriers to success, to entry for entrepreneurs and to entry to the free market is a complicated tax code. Currently the tax code is a barrier.

We need to ensure, relative to other jurisdictions, that Canadians are not paying disproportionately more because they are Canadians. Currently they are. The Mintz report on taxation, which was presented to the House of Commons finance committee I believe in early June, gave some very concrete examples of the discrepancies between Canadian business taxes and the U.S. business tax system, both in terms that we are paying more and in terms of some fundamental differences in the tax code that should be addressed so as not to disadvantage Canadian businesses and therefore Canadians.

The government speaks of the fundamentals of the Canadian economy and says the fundamentals are strong. I remind members and Canadians of what those fundamentals are. We have seen personal disposable income drop 9% in recent years. In the same period we have seen U.S. personal disposable income increase by 11%. We have the lowest productivity growth of any G-7 country. We have record high rates of personal bankruptcy.

We have a negative savings rate. Canadians are in fact going behind a bit every year. They are not saving but falling behind. They are digging into their pockets and into their savings in order to make ends meet and stay ahead of the game.

There have been some enhancements which are laudable to RESP flexibility for people to transfer funds to RESPs. Those types of changes do not benefit Canadians if they cannot afford to contribute to an RRSP in the first place. It is a difficult challenge to invest in RRSPs. I know mutual fund sales are off conservatively this year. I expect when the numbers are tabled we will see that RRSP contributions are also down this year.

The unused portions of RRSPs is mammoth in Canada. Canadians have not been able to exercise their RRSP contributions to the full extent. Why? They are paying too much taxes.

In 1993 the total federal tax take of the government was, I believe, $112 billion. This had risen to $150 billion by last year. This growth of approximately 25% in federal taxes has come directly from the pockets of Canadians at a time when they have seen federal spending on health care decline dramatically by $16 billion in round figures, although some say it is as high as $18 billion. They also see that the provinces have received less in transfers from the federal government.

There is one taxpayer and that taxpayer has borne the brunt of deficit reduction over the last several years. They deserve, at this time, an opportunity to reap some of the rewards for those sacrifices they have made.

It is no good for the government to be in the black if individual taxpayers are in the red. That is currently the case. We have the highest rate ever of personal bankruptcies. We have the highest rates of personal debt ever. This is a frightening statistic if we consider the impact for instance of global deflation trends which some say are threatening.

Wealth is a relative concept. It is not really a singular criterion. One's wealth or a country's wealth is a comparative figure. We compare the wealth of a country and the wealth of individuals in that country to the wealth of individuals in other countries. We are at a time when we are telling Canadians they have to invest more to save for their retirement, they have to protect their own retirement funds because the CPP is rather dubious in terms of its ability to provide the kinds of retirement incomes Canadians will need in the future.

We are telling Canadians to invest more and to take greater responsibility for their own retirements. At the same time we are forcing Canadians to invest 80% of their RRSP investments within Canada. This is perverse. The Dow Jones, which recently cracked the 10,000 mark, has performed extraordinarily well in recent years. Since 1993, when this government was elected, the Dow Jones has increased by 172%. The Standard and Poor's, S & P, is up by 180%, both U.S. markets of course.

The TSE is up only 60% since 1993. That may seem like a lot but in a relative sense it is not. Our domestic equities markets are grossly underperforming equities markets in the U.S. and elsewhere. Canadians in a relative sense have become poorer. This perverse policy of forcing Canadians to invest in one jurisdiction or another and denying them the opportunity to achieve geographic diversification is wrong.

At the same time we have seen the Canadian dollar decline by 16% relative to the U.S. dollar. Not only are the government's policies of reduced productivity, high taxes and disincentives for success denying Canadians growth in their own economy but its policy on RRSPs is actually denying Canadians growth for their retirement incomes anywhere. This is perversely wrong. If the government cannot get its act straight in terms of running this economy to benefit Canadians, it should not force Canadians to invest where they will not be able to maximize their returns where there are opportunities and where there are governments elsewhere that are doing a better job of creating opportunities.

The recent KPMG study commissioned by the government to study the cost of doing business in Canada has been lauded by the government and used as a tool to demonstrate its somehow good economic management of the country. The KPMG study effectively said that Canada is a cheap place to do business, that we have low real estate costs, that our labour costs in a relative sense are less. It said that basically doing business in Canada would cost less than doing business in some other jurisdictions.

If our economy were clicking on all cylinders, as the Minister of Finance has asserted in the House in recent weeks, the price of doing business in Canada would be quite a bit higher. With economic growth come economic cost increases and upward pressures. The reason the cost factors are not growing significantly in Canada is that we have not had the sustained economic growth that has been enjoyed by other jurisdictions.

The KPMG study points to a fundamental flaw of this government's policies and to the fact that we are not achieving that level of economic growth Canadians would be capable of achieving if the government were to make a significant step toward providing broad based tax relief to Canadians and toward providing Canadians with an opportunity to succeed in their own country.

The reason why young Canadians seeking greater opportunities are leaving Canada and going to the U.S. is that while they may recognize there may be greater costs, there are greater opportunities. They are willing to make that choice. Perhaps members opposite should stand along the borders, waving the KPMG report in the faces of Canadians as they leave and say please do not go, it is cheaper here.

This is like the Kmart or Zellers or Wal-Mart approach to economic development. We cannot get better in this country by devaluing our way to prosperity. During the summer when our dollar was hitting record lows the Prime Minister said it was good for tourism. The logical corollary of his argument was that if we reduced our dollar to zero we could give away all our goods and become the greatest exporting nation in the world. This is insane. We cannot devalue our way to prosperity. We need to significantly invest in Canadian productivity initiatives to ensure that Canadians have an opportunity to participate in the economic growth and are not inhibited by government policies that hold them back.

The government did not address some of those fundamental issues I described. It is looking at different fundamentals than the ones I see. When the government says fundamentals of the economy are strong it reminds me of what expatriate Canadian economist John Kenneth Galbraith said, to beware of governments that say the fundamentals are strong. Galbraith had a point. Usually when governments say the fundamentals are strong they are trying to hide something.

It is like a government where the industry minister says the productivity is very bad in Canada and we have to do something about it. In the same speech the industry minister says Canadians are paying 20% higher taxes than in the U.S. Then the finance minister says that is not so bad. Productivity is not bad. Canadians are not concerned about their standard of living. Perhaps this is an intentional effort by the government to create confusion, to try to distract Canadians from the real issues.

Canadians are concerned. Canadians are increasingly concerned about productivity. Canadians are increasingly concerned about their standard of living. That the dollar hit record lows this summer is directly correlated to the fact that our productivity growth has continued to underperform that of our trading partners. The dollar is linked very closely to productivity. There has be a secular decline in the dollar over the past 30 years. We need to do something now to avert further currency crises in this country. The best way to approach that is through productivity. The best way to approach productivity is through addressing some of the impediments to productivity, the structural impediments we have in the Canadian economy. Those include the highest income taxes of the G-7 countries.

There are structural impediments like interprovincial trade barriers which deny Canadians the ability to gain a competitive or comparative advantage within their country, a regulatory burden like a toll highway which is an interprovincial barrier in New Brunswick. The hon. member for Cumberland—Colchester has raised this point in the House. His interventions have taken a toll on this government.

There are issues of regulation. We have suggested as part of our prebudget submission that the government have a regulatory budget whereby regulations are costed. We take into account several costs, not just the cost to the government of introducing and enforcing a regulation but the cost to society, the cost to Canadians for complying with those regulations. Then those costs are compared, particularly the cost of compliance which is egregiously high for Canadians, to the actual dollar value of the benefit of that regulation.

Having a regulatory budget and choosing some departments each year to be scrutinized in this way would force governments to make the same types of decisions with Canadians' money that they make with their own in a fiscal budget. That would be one step in addressing the regulatory burden we have which by all accounts is excessive and does inhibit productivity and growth.

The government has no core industrial strategy. It has no agenda on an area as important as industrial strategy at a time when we are entering the 21st century. It is at a time when change is occurring at an ever increasingly rapid pace. It is at a time when we need government to take significant action on a number of fronts and provide meaningful visionary leadership on a number of issues, including tax reform. This government is on cruise control. It is a caretaker government.

I said in the House before that we had a budget surplus and a leadership deficit. I think in fact that is the case. It is a perilous time for Canada to suffer from this leadership deficit.

At this time we need governments to make strong decisions. We need the types of policies the previous government engaged in, for instance, policies like free trade, policies like the elimination of the manufacturers sales tax, and policies like deregulation of financial services, transportation and industry. Those were the types of visionary policies that were necessary then and were brought into being by a legislatively active government, not a government that would even consider proroguing halfway through its term because it did not have anything to do.

In fact since that time the challenges have become greater for Canadians. Since that time it has become even more important that we have governments taking strong steps and doing the right sorts of things.

The Economist magazine in its January edition last year indicated that the elimination of the deficit in Canada was largely due to structural changes made to the Canadian economy by the previous government. Those were the types of visionary changes I just described, whether it is free trade or elimination of the manufacturers sales tax. Unfortunately these types of policies are not forthcoming.

The government has seen fit to continue its huge tax grab on the EI fund, taking $19 billion from workers and employers. At the same time it is slashing benefits and punishing seasonal employment. The government does not consider the law of unintended consequences when it implements policies. It looked at seasonal workers and said that it would cut benefits to them. Many seasonal workers are not working at all now and are living on provincial social assistance.

It took people who were contributing, who were working, and denied them any opportunity to participate at all. Farms in the Annapolis Valley in Nova Scotia cannot find seasonal workers now because if they do seasonal work they will lose their benefits. Direct disincentives have been created for people to do what they want to do, to go out and work. The government did not replace it with a co-ordination effort to provide Canadians who were employed in seasonal work with an opportunity to work in various industry sectors.

There are serious issues. There are serious problems. A further complicated tax code is not the answer. I have not had one constituent ask me to complicate the tax code. Broad based tax relief is part of the answer as well as an industrial strategy which will make Canada a richer country, not a poorer country, in the 21st century.

Income Tax Amendments Act, 1998Government Orders

12:15 p.m.


Mac Harb Liberal Ottawa Centre, ON

Mr. Speaker, I am a bit disappointed in my colleague's comments when he talked about leadership. If anything, the government has provided the kind of leadership that is required to move us into the next century.

We inherited a government with a very huge deficit and debt, high interest rates and a high unemployment rate. We turned it around in a matter of six years into one of the finest countries in the world. We are leading the G-7 in terms of growth and we have balanced the books.

My colleague talked about productivity. That is a very important subject, but it can also be very subjective when one gives his or her views on the question of productivity. If productivity means the net worth of a society is a positive then we are very productive. If a country is productive and the net growth is more jobs being created than being lost then we are productive. If we look at leading sectors of the economy such as high technology, transportation and others to see what we are doing on the international scene and in the regional market then we are a productive society.

Certainly looking at productivity in a very subjective way, like looking at a flock of birds going after one worm, is not productivity. There is not enough food to feed every one of those birds. I would caution my colleague not to point a finger and use labels that will create more confusion than understanding.

I am sure my colleague will agree that overall the government has provided Canadians with the necessary leadership. The government has given us a stable environment for business and for the economy to grow. Government does not create jobs. Government creates the proper environment for job creation. The private sector creates jobs. All government has to do is get out of the way of the private sector so that it can create jobs.

This gentleman, from a party that has given us the worst ever deficit in the history of the country, gives us a lecture in terms of what is good for Canadians. He should stand and reverse his speech to tell the public how good the government has been, not only to his party or what is left of it but to people as a whole.

Income Tax Amendments Act, 1998Government Orders

12:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I thank the hon. member for his insightful and erudite intervention.

The fact is that the previous government, the Progressive Conservative government, reduced the deficit as a percentage of GDP from 9% when it took office to a little over 5% when it left office. The PC government of Brian Mulroney inherited a $38 billion deficit in 1984. The Liberals know a lot about deficit and debt because they built debts and deficits from the late sixties and the seventies.

The types of visionary policies that were implemented by the previous government resulted in this government's ability to reduce the deficit. Many members opposite are the same members who railed against the GST and against free trade. They then embraced those policies because they recognized that those policies would make a difference and that those were policies Canada needed at a very important time. Once they were elected they recognized those were the right policies.

Back in 1974 Trudeau threatened and scare mongered Canadians by saying that wage and price controls would be a bad thing. After the election he implemented Bob Stanfield's idea of wage and price controls. Oil was 18 cents a gallon.

Some parties are talking about corporate reimaging and new names. The Liberal Party of Canada should be called the flip-flop party of Canada because that party will stand for anything to get elected and, once elected, stand on any Canadian to implement its agenda of high taxes and cuts to areas that are important to Canadians like health care.

Income Tax Amendments Act, 1998Government Orders

12:20 p.m.


Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I want to address a couple of points raised by the member. He talked about disposable income in Canada going down by 9%, but he did not explain to Canadians why disposable income apparently went down. He did not talk about the fact that disposable income means net paycheque and how that has changed.

Let us look at the impact of contributions to RRSPs, reduced taxable income which reduces the tax burden but also shows a lower net pay. The former child exemption was taken out of the tax act and became the child tax benefit and the national child benefit program. Taxes went up but the benefit came from outside. It was similar with the GST rebate and health spending.

If we want to compare ourselves with the U.S. we have to understand that Canadians do not pay for health care. We have a not for profit system whereas in the U.S. it is for profit. U.S. incomes have gone up simply because their cost of health care is going up astronomically relative to what it is in Canada.

The member has made a serious error. He should acknowledge it and explain to the House that he was in error. He said that in 1993 the personal income tax revenue to the federal government was $112 billion. He then went on to refer to more recent numbers, I believe it was 1998, and say that the projection was $150 billion. He also said that was 25% more out of the pockets of Canadians. He did not say that in 1993 the unemployment rate in Canada was 11.2%. Now it is 7.8%. There are 1.5 million more Canadians working and paying taxes. The increase that he attributes to Canadians is not the same Canadians paying more tax; it is more Canadians paying tax.

The member should correct the error or the impression he has left with the House. It is very important to know that personal income tax revenue has increased primarily and exclusively because more Canadians are working.

Income Tax Amendments Act, 1998Government Orders

12:25 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I made some notes during the hon. member's question. I am glad he asked me to explain why personal disposable income has dropped in Canada. Despite his assertions to the contrary, Canadians pay more taxes now than they did in 1993. They pay a higher percentage individually of their paycheques to taxes. Due to the fact that the government has not even addressed the issue of bracket creep, two million low income Canadians are paying taxes now that would not have been paying taxes otherwise.

I am glad the member mentioned the unemployment rate. He is quite right that recently the unemployment rate has decreased. Anyone who knows anything about economics recognizes that it takes approximately five years at a minimum for economic policies to have the impact of reducing unemployment. He is quite right in acknowledging that the policies of the previous government were successful after having been implemented and with the passage of time in achieving a declining unemployment rate. Policies like free trade are largely responsible for the type of economic growth enjoyed by Canada at this juncture.

I do not want to remind the hon. member again where his party stood on issues like free trade and the GST, but they stood against the types of policies that have resulted in the growth they are now boasting about.