Debates of March 4th, 1999

Supply

[The Deputy Speaker]

I am happy to look into the matter. I heard the expression. I did not immediately leap to the conclusion that it was unparliamentary. But at the request of the hon. member I will certainly have a look at the precedents to see if in fact such an expression has been ruled unparliamentary. It is borderline, but my inclination was to allow it. However, I will look into the matter.

[Jason Kenney, Reform, Calgary Southeast, AB]

What a jerk.

[The Deputy Speaker]

Resuming debate, the hon. member for Calgary Centre.

[Jason Kenney, Reform, Calgary Southeast, AB]

You guys are just a bunch of assholes.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Mr. Speaker, today we are debating an important motion that has been a long time in coming to the floor of the House. In fact, too long, I would suggest.

The motion is that in the opinion of this House the federal income—

[The Deputy Speaker]

Order, please. The hon. member for Markham on a point of order.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, I would like to have the hon. member for Calgary Southeast retract the statements he just made.

[The Deputy Speaker]

Perhaps the hon. member could clarify which statements it is he is referring to. If it is the one I have taken under advisement, I am sure he will wait until I have had an opportunity to advise the House of the position of the Chair. But if there is something else that was said, I am not sure what it is he is referring to and I wish he would clarify the matter.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, I cannot repeat what he said. It is unparliamentary.

[The Deputy Speaker]

We are on a point of order at the moment. The Chair has indicated that he will look at certain words to see if in fact they are unparliamentary. I did not hear other unparliamentary words.

If the hon. member for Markham feels there was something unparliamentary said, I will hear him out.

If he does not want to say the words I would suggest he approach the Chair and we will have a discussion about it; but I am not prepared to order someone to withdraw something I did not hear that was unparliamentary.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, he called us a bunch of assholes.

[The Deputy Speaker]

That clearly would be out of order, but the Chair did not hear such an expression. Did the hon. member for Calgary Southeast use that kind of language? If he did, I am sure he will want to withdraw it at once.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I did not articulate that word. I will withdraw any comments that I made that are unparliamentary and apologize to any members if they feel I may have uttered unparliamentary remarks, unequivocally.

[The Deputy Speaker]

I think that resolves the matter. The hon. member for Madawaska—Restigouche on a point of order.

[Jean Dubé, Progressive Conservative, Madawaska—Restigouche, NB]

Mr. Speaker, I heard you say my name quite clearly and I also heard the comments of the member from the Reform Party calling us a bunch of assholes, and that is unparliamentary.

[The Deputy Speaker]

The hon. member has said that he withdrew the remark, and that is the end of it.

[An hon. member]

He didn't withdraw.

[The Deputy Speaker]

He did withdraw, and that is the end of it.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Mr. Speaker, it seems what we thought might be a fairly calm debate could be a lively one.

We are debating an important motion which has been a long time coming to the floor of the House. The motion reads:

That, in the opinion of this House, the federal tax system should be reformed to end discrimination against single income families with children.

Single income families have long known that they are disadvantaged by the Liberal tax policies and it keeps getting worse. For example, a single income family earning $60,000 will pay $9,589 in taxes, but a two income family making the same $60,000 pays only $5,790 in tax.

The single income family pays 65% more taxes in this tax bracket. It is the same scenario at $50,000. The result there though is actually worse with 91% more in tax paid by the single income family. The lower we go, the worse it gets. At $45,000 the single income family pays 136% more, and so it continues.

In addition, the dual income earning family can deduct child care expenses if children are cared for in institutional day care programs which would serve to further reduce the tax paid by the dual income families compared to single income families.

Even after a decade of petitions and lobbying the Liberal government each year adds to the discrepancy between the tax paid by single income families and dual income families.

Single income families pay more in tax on the same income. They also miss out on the $7,000 allowable child care expense deduction if children are put in institutional day care programs. To add insult to injury, a parent who is at home is treated as somewhat less of a person in that he or she receives a basic spousal deduction of almost $1,100 lower than what every other working Canadian receives as their basic personal exemption.

A number of other voices are joining with Canadian families in the call for more equitable tax treatment. The Canadian Council on Social Development and the Vanier Institute in 1998 noted that average Canadian family after tax incomes have substantially fallen in recent years.

The C. D. Howe Institute, the National Foundation for Family Research and Education, and the Fraser Forum have all now reported that there currently exists unjustifiable inequities in the current tax treatment of families. For example, the C. D. Howe Institute, when referring to the child care exemption deduction, said:

—it is difficult to find a rationale for the CCED in the desire to achieve greater equity in the treatment of dual earner versus single earner couples, since families that care for their own children have lost all tax recognition for their children.

Reformers have long been aware of the need for fair family taxation in Canada, specifically in past budgets and again in this year's budget. Reform proposed an alternative budget. We detailed a fully costed out proposal that provides substantial tax relief to all families. In addition, we detailed a fully refundable tax credit for all parents regardless of how they choose to care for their children. It is not a tax deduction but a credit that would be equal in benefit to all parents whether or not they had taxable income.

We say let us leave the money and the child care choices with parents where they belong. Reform has long called for the basic spousal exemption to be equal to the basic exemption. Today the exemption for a stay at home parent is $1,100 less than for a working parent.

The financial considerations are important but also important are the social messages current tax policies send. Let us examine some of that social messaging. We know that family situations are dynamic and changing in Canada today. Parents are doing the best they can. Sometimes parents provide child care at home. Sometimes an extended family member helps with the children. Others share their responsibilities with friends or with local community groups. These and a dynamic variety of other arrangements occur.

Why does the Liberal government give a $7,000 tax expense deduction to institutional day care but there is no recognition of any other type of care? It sends the message that parental or extended family care has no value. This is wrong. A refundable child tax credit to all parents leaves the money and the child care choices with parents where they belong.

What about the message to stay at home parents when the basic spousal exemption is $1,100 less than everyone else's basic exemption? For many the message according to the Liberal tax code is that they are less than complete people, that they are second class people. This is a wrong message.

Often these same parents have chosen to devote the majority of their time to the nurturing of their children, Canada's next generation. Do members not think that is valuable work? Then why does the Liberal government continue the message to them through the tax code that what they are doing is less valuable than the work done by every other Canadian?

Reformers say that the basic exemption should be the same for all including parents at home. A recently formed national coalition called the Canadian family tax coalition called on the government to allow income splitting by families. This would allow both parents to pool their incomes and divide it equitably between spouses to reduce total taxes paid.

It would also increase the equity of dual income families. This is not a foreign or unique concept. This kind of thing has been done in many other countries including France, Germany and the United States. Reform supports the examination of joint filing or income splitting, perhaps through a parliamentary committee and some public input, to assess the impacts and to advance us toward more equitable tax treatment of single income families in line with today's motion.

The C. D. Howe Institute stated in a very recent review of the family taxation system that the take portion of Canada's tax system, the revenue raising part, assesses taxes on an individual basis but the give portion, the many spending programs, calculates benefits on a family basis. It asked the question whether this inconsistency was defensible. I suggest it is designed to raise the maximum amount of revenue and pay the minimum amount of benefit.

In the same report the C. D. Howe Institute stated that the Canadian Income Tax Act was no longer about tax policy and that social policy had become an increasingly integral part. The institute continued by indicating that, whatever the merits of that side of the act, social policy considerations had crowded out legitimate tax policy objectives.

That is our point today. We are calling on every member to use this opportunity to address the anti-family discriminatory social policies inherent in the current structure of the tax code.

With that in mind, I would like to move an amendment to strengthen the current motion on the floor:

That the motion be amended by inserting before the word “end” the word “permanently”.

[The Deputy Speaker]

The Chair finds the motion to be in order. Accordingly the question is on the amendment.

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I have two questions for the member.

As the member knows, as a result of the tax changes in the last two or even three budgets a typical one earner family with two children and an income of $30,000 or less now pays no net federal tax. He also knows that families with incomes of $45,000 or less will have their taxes reduced as a result of changes in recent budgets by a minimum of 10% and, in some cases, by considerably more.

Also, in the 1998 budget 400,000 lower income Canadians were completely taken off the tax rolls. In the most recent budget, another 200,000 were taken off. Therefore 600,000 Canadians are off the tax rolls altogether.

First, did the member vote for those changes and support help for lower income families in that case?

Second, with respect to the child tax benefit, which I know the member opposed, does he support the policy implemented by the Government of Ontario, with which his party is trying to develop some sort of united alternative, to deduct from single income families, the families he is apparently speaking in favour of, and families on social assistance, an amount equal to the amount of the child tax credit the federal government has provided in previous budgets and has added to in this budget?

Does the member support the fact that these poor families which were expecting an increase through the child tax benefit had that increase taken away from them by the Government of Ontario, a government that his party is in bed with?

[Eric C. Lowther, Reform, Calgary Centre, AB]

Mr. Speaker, there are a number of questions and I will go fairly quickly. Yes, we did vote against some of the initiatives which this member just raised. Our proposal detailed how a million low income Canadians would come off the tax roll. We are asking why those low income Canadians were ever on there in the first place.

The member has talked about the various budgets they brought forward to help low income Canadians. As far as dealing with the motion today, the inequity or the differential between single and dual income families has only been accentuated by the government opposite.

In its previous budget of 1998 it actually increased the amount of money that can be claimed for child care expenses in an institutional day care. Again it totally ignored the other arrangements of parents in the best interest of their families. It only increased the differential.

As far as the child tax benefit is concerned, one of the tragic points about it is that it is more of a bureaucracy benefit. The government takes money away from the same families it then pays the tax benefit to. They give $1 to the bureaucracy and the bureaucracy burns up 40 cents of the dollar and gives 60 cents back to Canadians. Why does it not just leave the money with families in the first place?

A lot of improvements are needed over there. It is a fundamental rework of the way they approach the whole tax structure.

[Rick Laliberte, NDP, Churchill River, SK]

Mr. Speaker, I was looking at the level of incomes. I believe my riding has one of the lowest levels of average income at $31,000. I have an interest in a statement the hon. member made in terms of 136% more being paid on an income salary of $45,000.

Could the member give us the real numbers of what the comparisons were between single and double income figures? One hundred and thirty-six per cent more would mean quite a bit more. I was trying to understand what the actual numbers were in comparison.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Mr. Speaker, the member is exactly right. It is quite a bit more. It is more than double. In fact those numbers that I quoted in my speech and which I do not have committed to memory came from this Liberal government's budget book that was released to all of us in the House. Those tables chart out what single income and dual income families pay. If we compare the tax paid at the bracket the member talked about, $45,000, it gets worse when the income is lower, as the hon. member has mentioned for his riding, and the differential between the two types of families gets even greater.

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

Mr. Speaker, I am very pleased to take this opportunity to respond to today's motion and reject the suggestion that the tax system is consciously and perversely unfair to one earner families with children. I recognize that the member for Calgary Southwest who moved this motion has sincere intentions but I submit that his logic does not stand up.

Simple comparisons like these do not tell the whole story or the true story. What causes the tax differentials between one earner and two earner couples is the application of two basic principles of our tax system: progressivity on the one hand and taxation that is consistently based on the income of the individual. Let us look at how the principles work.

Progressivity means that as individuals move up the income scale, they pay a larger share of their income in taxes. Is the Reform Party suggesting that we should tax someone who is earning $50,000 at the same rate as someone earning just $25,000? Should someone who is earning $1 million be taxed at the same rate as someone who is earning $10,000? That is patently unfair.

Individual taxation means that someone who goes to work outside the home pays taxes based solely on their individual earnings, not on the income of their spouse. That is only fair. It also means that individuals do not face increases or tax reductions when they choose to marry. That too is only fair.

If the Reform Party wants to eliminate the tax differentials between one earner and two earner couples, it has to be prepared to do away with these basic principles of our tax system.

Today's motion is not an appeal for equity. I submit it is a Trojan horse hiding its real agenda under the guise of family values. Does the opposition party object to progressive taxation, to the idea that more affluence must be accompanied by more obligations or by certain obligations? Why does the Reform Party not tell us up front that it wants the tax burden on lower income Canadians to be the same as the tax burden on higher income Canadians? That is what this motion leads to.

Do members of the Reform Party want a family based tax system? Then why do they not make it clear that what they want is for many women to be taxed at the higher tax rates of their husbands or vice versa? That is what this motion really does.

Does the Reform Party really believe that a husband and wife earning $20,000 and $30,000 respectively should together pay the same amount of tax as someone who earns $50,000? If this is what the Reform Party wants, it is essentially saying that every dollar that a spouse earns should be taxed at the 26% marginal rate.

On the other hand, Reform Party members stand up and pound on the table and say to cut taxes in half for everyone but not once do they mention that they would gut pensions, gut equalization or health care in order to achieve that sole objective of cutting taxes in half. How would the Reform Party party do it? The hon. member opposite talked about proposing an alternate budget, an alternate way of running the country and doing the finances of the country. The member fails to mention that the Reform Party in its proposal is also predicting surpluses in the $30 billion to $35 billion range.

The Reform Party bases its optimistic growth rates at 5.5% over the next three years. It is almost two times what the private sector consensus is for growth in nominal GDP, which is the underlying tax base.

When we talk about these types of motions, in the end the bottom line is that someone needs to pay for them. In order to do that we have to be able to plan effectively and ensure that our finances are in place in order to move forward on an effective and realistic plan.

The Reform members also assume in their plan that they want to reduce almost $9 billion in expenditures to existing programs to provide resources for new initiatives. Perhaps that is how they are going to cut the tax rates in half, by gutting programs to the tune of $9 billion or more.

Given the unrealistic surplus projection that they have put in their program, $30 billion to $35 billion over the next number of years, basing their revenue growth forecast on an average of 5.5% for the next three years, almost two times what the private sector consensus is, by gutting these other programs, cutting almost $9 billion, or more, we see what this motion is all about. It is all about gutting the programs that we have in place and jumping on this hobby horse under the guise of family values.

At the same time, I have no trouble whatsoever making it clear where this government stands and where I stand, not just as a member of parliament, but as a husband and a father and as a citizen of this country. I appreciate and I commend the hard work and dedication of Canadians who choose to stay home to raise their children. I commend them. And while I do that, I also support the underlying principles which form the basis of the tax system.

I am not standing here talking about my political ambitions, like members of the party opposite who under the guise of family values pound on the table. But they have another agenda which I think is way below what this House really wants to get into.

We stand for a tax system that is progressive. It is only fair that individuals should pay a bigger share of their income in taxes as their income rises. I think that is an underlying principle. I think that if the Reform Party is putting forward this motion, then essentially it is saying that it does not believe in that principle. Reform Party members do not believe in the progressivity of the tax system.

We stand for a system based on individual taxation. I do not believe that anyone in this House wants to penalize women who decide to enter the workforce.

The opposition may choose to see someone earning $50,000 as no different from a couple earning $20,000 and $30,000 a piece. But if we look at the situation fairly, rather than through this moral myopia, the fact is that the economic situations of these two families can often be very different. We have to recognize that. Recognizing that these differences exist is only fair and it is only what a responsible government should do and must do.

That takes me to the real bottom line for a responsible responsive government. It is finding genuine, effective and equitable ways to help those families and children in real jeopardy and need. The answer does not lie in the so-called discrimination against one earner families vis-à-vis dual income families. It actually does more to obscure the broader debate about tax fairness than it does to advance it.

The fact remains that some one earner families are better off than some two earner families and vice versa. This means that focusing on one earner versus two earner issues misses the point completely. It certainly does not make for a productive debate on options for making the tax system fairer and reducing the burden on low income Canadians. That is why as the fiscal situation improved we have taken concrete and increasingly broad action to help reduce the tax burden for all Canadians. But we have also made it a priority to target what we can do, the largest share of that relief, to those with low incomes.

The child tax benefit, which the party opposite voted against and does not think is of any value, has been increased by $2 billion in three successive budgets to provide increased financial assistance to families with children. Of the $2 billion, $1.7 billion was targeted to low income Canadians through the national child benefit supplement.

Our approach to taxation and to families is fair. It makes some sense. It is delivering relief to families that need it most, namely low income Canadians, especially those with children. The opposition may try to reduce difficult social issues to simplistic arguments of either/or, us against them, but I believe that the majority of Canadians see more clearly and more openly.

Some parents choose to both work; others have no choice. Some parents choose to have one spouse stay at home; again, others have no choice. Each have their special challenges and concerns. There is no tax system in the world that can give each and everyone of these individuals their own special treatment and privileges.

What a responsible government must do is identify basic fundamental principles and apply them universally, equitably and reasonably. That is what our national tax system tries to do. It applies the principles of progressivity and taxation of the individual. That is the fair way. It is the open way. I submit that it is the proper way.

It is in support of those values and in the sustaining of interests of all families and children that I have no hesitation whatsoever in urging the House to reject today's motion.