Madam Speaker, the GST was arguably the straw that broke the government's back. I am not sure of the camel to which the member referred, but the government seemed to be ignominiously humped from office at that point.
The difficulty the government faced at that time in selling the GST, which replaced the manufacturers sales tax that pummelled and punished Canadian export industries, was that only 18% of Canadians were aware that there was a manufacturers sales tax. It was not a good news story. People were not aware by and large that there was a manufacturers sales tax. This new tax was a very difficult sell.
A couple of weeks ago I participated in the Canadian Tax Foundation annual meeting on a weekend. That is what I do with my weekends; I go to tax foundation meetings. I am a pretty exciting guy. At that meeting over and over again tax experts suggested that the baby step movement in Canada with the GST to a consumption base was very important for Canadian competitiveness.
They argued that we need to move further toward a consumption base and away from income based taxation and taxes on capital and income on capital. Those types of taxes, whether they are on capital, income from capital or personal or corporate income, make Canadian industry and Canadian individuals less competitive. They hurt our productivity, reduce the potential for Canadians and companies to grow jobs, and hurt our potential to keep Canada's best and brightest young people in Canada.
A consumption tax, and there are ways to effect progressivity within a consumption base, would provide a more broadly based system which should not and would not increase the degree of the underground economy.
The numbers used by people in terms of the degree to which we have an underground economy in Canada vary significantly. It is much harder to get around paying GST than it is for people to use high priced tax accountants and get away with paying less income tax. As the member indicated earlier in his speech, there is an inherent regressivity in the tax system. People at the higher income levels can afford to hire tax experts and pay less income taxes, corporate taxes or whatever. With a consumption base it is much harder to get around that. I would argue that it would ultimately reduce in the long run the degree to which there is an underground economy if we are serious.
Another issue that exists is that it is much easier today to have significant tax reform than it would have been in 1993 because we are in a post deficit or surplus environment. We need not improve the tax situation for one individual by reducing or hurting another individual with the tax system. It is not a zero sum game any more. We can combine tax reform with tax reduction. I would argue that to maximize the potential of either we need to implement both.