Madam Speaker, today the House is debating the implementation of the 1998 budget; not the budget that was just delivered by the finance minister, but matters relating to the budget of the prior year.
The parliamentary secretary has reviewed very well the many important initiatives that were included in that budget. I will spend my time replying to some of the comments made by hon. members in this debate because I believe there is some clarification necessary.
The member from the Conservative Party talked about personal income tax revenue to the federal government. He pointed out that in 1993, when the government took office, personal income tax revenue amounted to some $112 billion. He also said that in 1998 the amount of personal income tax revenue collected by the federal government was some $150 billion. It is a $38 billion increase in personal income tax revenue.
He went on to suggest that this represents a 25% increase in the personal income tax burden of Canadians. To leave it like that is not correct. It is an error to leave the impression that somehow the personal income tax burden of Canadians actually increased some 25%.
The truth is that in 1993 the unemployment rate in Canada was 11.2%. In 1998 the unemployment rate dropped to 8%. If the unemployment rate goes down that must mean more people are working in Canada, and indeed 1.6 million more Canadians are working and they are paying their fair share of income taxes. It adds to the personal tax revenue of the Government of Canada.
The increase does not have to do with rising rates of income taxation or some sort of penalty by eliminating deductions that were otherwise available to Canadians back in 1993. It has exclusively to do with the fact that there are more Canadians working.
I point that out because Canadians should understand that in this place sometimes there is the tendency to provide a little information but not all of it and it would tend to lead to one conclusion when in fact the full story would lead to quite another. That is part of the caution that anybody watching the debates in the House of Commons should take. It comes to an issue of credibility.
If in this place members debate and present information principally by providing selective information rather than full information, they put the credibility of themselves as well as the credibility of this place on the line when they do not tell the whole story.
The principal spokesman for the Reform Party, the member for Lakeland, spoke for some 40 minutes and talked about income taxes again. I wrote some notes from his comments about the level of taxation. Certainly there is a lot of interest in Canada to have lower income tax levels so that we can have more disposable income. There is a ripple effect in terms of jobs creation, et cetera.
The principal spokesman, the lead spokesman for the Reform Party of Canada, spoke for 40 minutes. He was not subject to questions and comments. He provided certain information to the House which again was grossly in error and totally incomplete as far as what the true facts are.
I have to put on the record what in fact the issue is with regard to the taxation rates of Canadians. I sat down and in a very general way and calculated the income tax burden of someone who is making $60,000 a year in Canada. I used no general deductions such as RRSPs or any other. It was simply done as an employee who makes $60,000. We know they get a basic non-refundable tax credit of $6,542.
There are also tax credits for any amount they paid for EI premiums and CPP premiums. When they deduct that approximate $7,000 they get an amount of income of some $53,000. On $53,000 the taxpayer would pay 17% on the first $30,000, which is $5,100. They would pay 26% on the remaining $23,000, which is $5,980. The approximate federal tax burden is $11,000. Provinces have different rates. For discussion purposes, if we assume a provincial income tax rate of 50% of the federal taxes payable that means that the total federal-provincial tax bill to a Canadian making $60,000 a year is $16,600. As a per cent of the gross income of $60,000 that is 27.7%. A single person making $60,000 pays an income tax rate of 27.7%.
I went further and looked at what the tax burden was for someone who was making $35,000 a year. Similarly they get the basic non-refundable tax credit and a couple of notional tax credits for CPP and EI premiums paid. When we take that roughly $7,000 off the $35,000, it means that the first amount of $30,000 at a rate of 17% is $5,100 and the balance of the $5,000 is taxed at 26%. If we do a quick calculation, including the gross up for the provincial tax payable, we will find that the effective tax rate for someone making about $30,000 is a little over 20%.
I went even further. I looked at somebody making $20,000 a year. With the notional reductions, et cetera, their tax rate is less than that still. We go from 27% to 20%.
When I looked at these things I understood the actual burden of taxes. I have seen articles in newspapers where parliamentary journalists who have been here a long time continue to talk about Canadians paying a 50% tax rate, which is the highest marginal rate they would pay on taxable income over $59,180. Ninety per cent of all Canadians pay a rate of taxation somewhere between 20% and 30%.
Here is the point. The principal spokesman for the Reform Party on this said we need tax relief in Canada. What we need to do is bring down the income tax burden on Canadians to between 20% and 30%. If we look at what I just laid out in terms of the tax burden on Canadians, it ranges from 20% to 30% for those who are making $60,000 or less. The only conclusion I can reach is that the Reform Party is calling for lowering the income tax burden for Canadians who are making more than $60,000 a year. That represents about 10% of all income tax payers. It is effectively a call based on the true reported results of Revenue Canada on who pays how much taxes and at what rates. It is actually a dedicated policy of the Reform Party to reduce taxes for the highest 10% income earners.
This shows precisely why Canadians have to look very carefully when people make representations such as the Reform Party and the Conservative Party have made. They have provided very little factual information. It has been more rhetoric than accuracy.
I hope all members will take to heart that in our income tax system only 10% of Canadians make more than $60,000 a year. Across the board tax increases, particularly those that affect those at the highest marginal bracket, are not in the best interests of all Canadians. That is why this government has provided tax relief targeted directly and more specifically at low and middle income Canadians.