Mr. Speaker, I appreciate the opportunity to speak to Bill C-25 which is intended by the Minister of Finance to implement some of the changes in the most recent budget that have been spoken of in the House and reported in the press.
This most recent budget by the finance minister has received all kinds of accolades, pumped from the finance minister's office primarily. We have heard rhetoric about this budget and the changes that are going to be implemented giving Canadian taxpayers a break of about $58.4 billion.
We want to do a reality check on that. As is so often the case Canadians are presented with certain optics from the Liberal government that sound right but when we start to analyze them and break them down to what they really mean, they do not not affect the daily lives of Canadians who so desperately desire some relief from the burden of taxes the federal government continues to put on their backs. Let us break down this $58.4 billion claim of tax relief.
About $7.5 billion in the most recent budget is really a new social spending program. It is not tax relief at all. It is albeit increasing some of the child tax benefit but it does not impact the paycheque of a parent who has children at home. It is a spending program. It is not a tax relief program.
In addition there is a $29.5 billion increase over the next five years, almost $30 billion which will be taken out of the pockets of Canadians to increase the CPP premiums over the next five years. They are payroll taxes. Take that off the claim of $58.4 billion.
Even more grievous and in a sense more deceiving to the Canadian public is that $13.5 billion in scheduled tax hikes that have now been cancelled are included in the claims of tax relief. That is unbelievable. Is cancelling $13.5 billion in scheduled tax hikes really a tax cut? The government says that it will tax us and then it tells us it will not and calls it a tax cut. That is nothing but a tax cut for suckers. Canadians are not going to fall for it.
When we net all this out, it leaves us with about $7.9 billion in net tax relief spread over five years, which is about $1.5 billion a year. What does that mean for us and families across this nation? For a taxpayer, that works out to about $107 a year, $8.97 a month or $2 a week. That is the great lauded tax relief the finance minister delivered to Canadians in the last budget, which he wants us to implement with Bill C-25.
If $2 a week is not a fake tax break, I do not know what is. Canadians are not being fooled by that. It is not the first time we have seen this kind of approach to tax relief. We have seen a litany of it year after year from the Liberal government and it is affecting Canada's international competitiveness.
More and more voices are saying that we are getting deeper and deeper into trouble and that it will be very difficult to catch up. This is not just my opinion. This is the opinion of financial experts working in the finance industry in Canada and abroad. CIBC Wood Gundy produced a report which said “From a tax competitiveness standpoint, Canada ranks dead last in the G-7. While virtually every other G-7 economy lowered its personal tax burden over the last 15 years, Canada's rose sharply, both as a percentage of GDP and household income”.
We are moving in the wrong direction. The Liberal government does not seem to get that through to the finance minister and the cabinet. It is so reluctant to let go of the tax dollars that it has grabbed onto over the last number of years since it was elected that we are having to pry the dollars loose through constant public pressure.
It is not just our party, the Canadian Alliance, although we have been leaders in this since we came into the House. The reason Canadians put us here was to voice their concerns and frustrations over the weight of a central government that is a tax and spend fanatic, a taxaholic.
Listen to the voice of one of the CEO's of a leading company right here in Ottawa, Nortel, which employs 12,000 employees. Its chief executive officer is Mr. John Roth. He had some interesting things to say about the Liberal government's approach. He said that the Liberal government was moving “way too slow” when it came to promises of lower taxes. He said that Canada still trails far behind the U.S. in providing an environment where companies can recruit and retain highly sought after talent, which is the most important aspect of companies in the Internet age. This man heads up a company that employs 12,000 people and he has said that the government is moving way too slow. We agree with him.
I hear some of the members opposite saying “Well, what about the lower and middle income Canadians who are under the tax burden of the government?”. The differential between the Canadian marginal tax rate and the tax rate in the United States and in other countries is really highest at those low and middle income brackets.
This is what the CIBC study says, “Contrary to what most Canadians believe, the largest difference in tax burden in the two countries, Canada and the United States, is not at the top end of the income spectrum but in the middle band where most of the country's tax burden is carried. It is not that the rich do not pay enough, it is that the low and particularly the middle income earners pay far too much”.
I have a chart in my hand that was prepared by this company. It clearly illustrates that if people are in an income bracket between $30,000 and $60,000 in Canada, they will pay a marginal rate of 40%. In the U.S. it is 26%. That is a difference of 14%. If they are in a higher income bracket in the United States, as opposed to Canada, the marginal difference is actually smaller. The Liberal government is hammering lower and middle income families with a high marginal tax rate. If Canadians are in a $7,000 to $30,000 income, the marginal tax rate is 25%. It is only 17% south of the line. This is an 8% difference. Poor Canadian families pay more in Canada.
I am afraid that some of the members opposite have not really heard about what would bring about the revival we need in the corporate sector and the relief that low income and the working poor need from the high tax burden the government imposes on them. I will share with them the overall tax relief proposals that the Canadian Alliance has brought forward which has been endorsed by people right across the country.
What we are getting from the Liberal government is tinkering, tokenism, empty promises, window dressing and photo-ops of false, fake tax breaks that are making us nauseous on this side and frustrating Canadians. When are we going to stop and realize that taxing ourselves into oblivion and borrowing to a point where a third of every tax dollar goes to pay interest on the debt cannot continue? It has to stop. We have to turn it around. Alberta and Ontario have realized this. The two brightest lights on the economic stage in Canada right now are moving in a totally opposite direction to this Liberal government and it is working.
Prying those dollars from the hands of the tax and spendaholics across the way is a persistent challenge and one that the Canadian Alliance, and Reform Party before it, has championed on behalf of Canadians and will continue to do so.
I have some concerns with the amendments to Bill C-25 that the finance minister wants to put into the Income Tax Act. One of my frustrations is how complex the whole Income Tax Act, and all the things that go with it, is becoming. That is why we put forward a simplified tax plan that gives real tax relief.
The current federal tax code has grown from a simple 47 page document, at the end of World War II, to thousands of pages of special instructions, schedules and interpretations. The Canadian Income Tax Act fills more than 1,400 pages with another 700 pages of rules and regulations. The bureaucracy to collect taxes has grown to the point where almost 45,000 people are now employed by the Canada Customs and Revenue Agency, formerly Revenue Canada. It is the only federal department that continues to add people to its staff. The whole armed forces, the navy, the air force and the army, only has 60,000 people. We literally have an army of tax collectors and bureaucrats in the country just to administer the taxes. It is getting way to big.
The C.D. Howe did a study on this and said:
Canada's Income Tax Act is no longer only about tax policy. Social policy has become an increasing integral part. Whatever the merits of that side of the Act, social policy considerations have crowded out legitimate tax policy objectives.
It costs a lot of money to collect the taxes in this country. Today we are talking about Bill C-25 which will add more tinkering and tokenism and new layers of complexity to an act that is already too complex. That is why we have come forward with a simple, fair, single rate taxation solution.
It is time to significantly lower taxes for all Canadians and to reduce the cost of collecting those taxes. Our solution 17, as it has come to be known, has been endorsed by experts in the field. Some experts have said that it is a very good plan and that it is an approach to taxation that is easy to understand, fair and costs less to administer. Would that not be a breath of fresh air in a country that is so laden with tax complexity that more and more people have to take their taxes to a tax accountant and pay money to do that? I once read that it costs upwards of $12 billion in overall human cost just to prepare the taxes. If we were to put a dollar figure on all the hours that Canadians put into filing their income tax and paying chartered accountants and others to do the work, it becomes very expensive to complete our taxes in this country.
Let me quote from the WEFA Inc. Group, which does economic forecasting. The finance minister even consulted with this group and prior to his budget. In talking about the tax reduction proposals that the Canadian Alliance put forward, the WEFA group says “They are well focused on the needs of Canadians today. They expand the economy and, most powerfully, personal disposable income, consumption and our standards of living”. It also says that our tax proposals create jobs by lowering the marginal tax rates that are particularly effective in stimulating work effort and stemming the brain drain and other productivity enhancing features by powerfully reducing the level of personal income tax, particularly for Canadians of average and above average income, and are well directed at providing a more competitive tax environment in Canada relative to the U.S.
If I go back, that sounds a lot like what Mr. Roth, the chief of Nortel, said. He said that these are the kinds of changes we need, not at a snail's pace and not for photo-ops, but before we are so far behind that we cannot catch up.
The other aspect of solution 17, our simple and fair proposal that has been endorsed by the WEFA group and others, is that it addresses the need to take the working poor off the tax rolls. Why are we taking money away from working poor families in the form of taxes and then having them apply for some government program and go through whatever hoops are put in place and hopefully, some day after the kids have had to go through whatever stress the family has had, there might be a cheque that will trickle down from the big mother Liberal government to the family? That is the wrong way to go. The working poor should not be required to pay taxes. The federal government currently takes $6 billion in taxes from people who make less than $20,000 a year. It is shameful. It is picking the pockets of the poor.
Why do we tax people with low incomes? The government should not be taking the limited resources of the working poor. Some of the key aspects of our package are that we would increase the basic deduction from what it is now, which is around $6,000 or $7,000, up to a clear $10,000 basic deduction. People would not pay any tax on the first $10,000 earned. That seems abundantly reasonable.
In addition, instead of saying to the stay at home spouse or the spouse who is not working in the workforce that they are somehow of less value when they contribute by caring for the family, we would give them an equal deduction, the same deduction as someone who is employed in the workforce. That is a $10,000 deduction for the spouse. In addition, many working poor families have children. They are contributing greatly to the long term health of our nation by rearing the next generation, imparting character and caring for them.
That is why the Canadian Alliance has approved a plan that gives a straight basic $3,000 deduction for every child in a family. They do not have to keep receipts. We do not care how they choose to rear them, whether they use a relative, a friend, an institutional day care, or whatever their need may be. Because they are rearing children we recognize that they are making a social contribution and therefore a basic $3,000 universal deduction for every child would be extended to the parents.
We suggest a simple 17% marginal federal tax rate. The lowest rate that is available today would be available to all. In that way we would increase the deductions and exemptions so that lower income families and individuals are moved from the tax rolls. Some 1.9 million Canadians who are currently paying taxes would no longer have to pay tax. When they do pay tax they would pay at the lowest possible rate.
It is simple, straightforward and beneficial to families, yet the Liberal government cannot see it. According to the C.D. Howe Institute, current Canadian tax policy affords no universal recognition of children. In effect, it treats children in middle income or high income families like consumer spending, as if parents have no legal or moral obligation to spend money on their care. Those are not my words. Those are the words of the C.D. Howe Institute.
There is much that is grievous about the budget. In closing I point out that Canadians are willing to pay a certain portion of their taxes. They understand that they have to contribute to government for the benefit of our country. I do not think they mind doing it, but when taxes get so high that they can hardly breathe from the weight of it they get concerned.
Another concern is that in the budget the finance minister is proposing to give another $1.9 billion for grants and contributions administered by HRDC. Billions of dollars will go to HRDC, the same department which an audit has shown that for 15% of the grant applications there was nothing on file. There was no description of the activities. There were no results described as to the outcome. There is a lot of waste in that department. It is a tragedy.