The House resumed consideration of the motion that Bill C-25, an act to amend the Income Tax Act, the Excise Tax Act and the Budget Implementation Act, 1999, be read the second time and referred to a committee.

Income Tax Amendments Act, 1999Government Orders

12:20 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I want to summarize. Bill C-25 before the House today is an income tax bill. When we talk about collecting income tax in this country, we should also talk about the public policy priorities that go along with the role of collecting taxes. Once we collect taxes, on what do we spend the money?

I summarize by saying that the number one priority in this country is health care. It is preserving the medical care system.

Mr. Speaker, you may have noticed the daffodils on various members' desks. There is one on my desk, one on the desk of a member of the united alternative and one across the way on the desk of a Liberal member. Those daffodils symbolize a campaign by young people called Young People for Medicare. This morning they had a press conference in Room 130-S of this building, the Charles Lynch theatre. I was honoured to be at that press conference with them. They argued as young people that they are concerned about preserving our system of medicare in the country.

That is very significant. Young people as a rule do not use the health care system very much. It is encouraging to see a group of young people come here, organize a campaign and use the Internet to speak out in favour of preserving our national medicare plan.

When we debate a tax bill in the House and when we collect taxes from the Canadian people, we should make sure that the number one priority of those taxes will be social programs and, in particular, health care which is so important to each and every single Canadian from coast to coast.

Another point I wish to mention is that the farm crisis in Saskatchewan and Manitoba is still there despite a bit more aid from the federal government, a bit more help from the Saskatchewan government and a bit more help from Manitoba. The crisis is still there. We are in the midst of the worst farm crisis since the 1930s.

Almost every single small town in Saskatchewan and Manitoba is losing people because of the drop in farm income. Suicides are up, reaching a record high. Farm stress, with all its attendant problems, is now very serious. We should be addressing more of the money collected in taxes to alleviate the problem for farm families in rural communities across the country.

The last point I mention is the system of education. I think that is one system where we should spend more money. In terms of investing in research and development, training skills, education and post-secondary education, the country should train a workforce that is second to none. When we do that, we will build a strong country we can all be proud of as we move on into the 21st century.

Income Tax Amendments Act, 1999Government Orders

12:20 p.m.

Reform

Eric C. Lowther Reform Calgary Centre, AB

Mr. Speaker, I could not help but notice the hon. member's comments about the farm crisis in Saskatchewan. I know that is his home province and he is very familiar with so many painful stories that have come out of the crisis in Saskatchewan.

I am also reminded that the minister of agriculture has informed the House that moneys will be made available to assist farmers in the crisis situation they are in.

Although it has been stated in the House that millions of dollars are available for financial aid, like so many federal programs, the process to apply and all the various levels of red tape and criteria, et cetera, exclude people who need access to that assistance. It provides, like many federal programs, good optics for the federal government to announce a big program. How much of this money is flowing back to the people that need it? As I understand it, of the farm assistance that has been offered so far only a small fraction, I think at most a third, has been put into the hands of farmers that need it. I would ask the hon. member to speak about the problem of getting through the red tape and actually getting access to the assistance that is so often lifted up by government members opposite.

Income Tax Amendments Act, 1999Government Orders

12:25 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I certainly agree with the member from Calgary Centre that one of the problems we have is the bureaucracy and the red tape in terms of getting money out to the farmers who need the cash. Somehow we have to figure out a way that is more efficient and speedy in terms of getting money out to people who actually need it.

It seems to me very strange in the modern age of technology with the Internet and computers that we cannot be more efficient in terms of speed and more expeditious in terms of getting money out to the farmers in this country who need it.

The other thing I wanted to say to the member for Calgary Centre is that we should at this time as well be looking at a long term farm policy, making sure that there is some program that guarantees the farmer a return that somehow reflects on the farmer's costs of production. That is not the case today. If the farmer got back the costs of production in the long run, then there would be some way that that farmer, he or she, could plan their lives.

Workers, for example, have trade unions and collective agreements, so there is some kind of a guarantee. Doctors, dentists and lawyers have fees that are negotiated and set so there is some kind of a guarantee of a fee level.

The farmers are at the whim of the international marketplace and the weather. Therefore, they have no guarantees or very few, except for crop insurance and some of those programs.

We should be addressing our minds to devising some kind of a long term program that is based on the costs of production for grain farmers in particular, but also for livestock farmers so that there will be some guarantees what the farmer receives in the fall from a crop or from the livestock produced.

Income Tax Amendments Act, 1999Government Orders

12:25 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Mr. Speaker, I ask my colleague to expand a bit on something I know he has already mentioned. That is the issue that one Canadian Alliance leadership candidate is suggesting, that the provinces should be collecting all the taxes. I am just wondering if my colleague can expand on that and comment on laying his trust in the Mike Harrises and Ralph Kleins of the world.

Income Tax Amendments Act, 1999Government Orders

12:25 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, we have here a leadership candidate for the Canadian Alliance who has a vision of what I call holding company federalism where the federal government is a sort of holding company for the provinces.

He said this in Montreal in a speech and I gather he has written a letter to some papers like Le Droit and others, saying that the federal government should no longer collect any taxes, that all of the taxes in this country should be collected by the provincial governments above the local level and that the provinces every year should send a cheque to the federal government.

I find that a very strange way to run a country, a very strange way to run a federal government and a very strange vision of what kind of a country we should have where the only tax collector would be the provincial governments that would send a cheque once a year to the federal government.

That might be acceptable in the case of the Senate. If the funds were insufficient, we could get rid of the place. However, in terms of all the other important programs like health care, education and the farm crisis, I know in the heart of the member from Calgary Centre he certainly cannot support Stockwell Day and the kind of vision that he has for our country where the federal government has no role and no say whatsoever on the most fundamental policy in this country, which is the right to tax.

I know he must be pretty disturbed by Mr. Day's new vision, a vision that was rejected by the founders of the United States in the independence state in Philadelphia in 1776 when they rejected the idea that all taxes should be collected at the state level and then a cheque every once in a while would go to the federal government.

I look forward to my friends in the Canadian Alliance Reform Party getting up in this house and putting some distance between themselves and Mr. Day. Let us shed some light on this topic that Mr. Day has raised. I see my friend from Calgary is champing at the bit to get up and make a statement that sets him apart from Mr. Day.

Income Tax Amendments Act, 1999Government Orders

12:30 p.m.

Independent

André Harvey Independent Chicoutimi, QC

Mr. Speaker, I am very pleased to be here on this day, April 7, and to have taken part in the speedy passage, with all the parties in the House, of a bill to change the names of two ridings in my region.

The riding of Lac-Saint-Jean, currently represented by a member with whom I have had the opportunity to work, will now be called Lac-Saint-Jean—Saguenay. As for my own riding, Chicoutimi, it will now be called Chicoutimi—Le Fjord, a name that will better reflect the reality of the whole riding.

A process in under way to bring together all the municipalities in that region. I think everyone will be happy to be represented in the House under a name that accurately describes the geographic reality of the riding. I am very happy to have taken part in the speedy passage of this bill to change the names of certain ridings, including mine and that of my neighbour from Lac-Saint-Jean.

I am now pleased to speak to Bill C-25, which amends the Income Tax Act, and to the whole issue of our tax system.

I am pleased but, at the same time, I am also very disappointed. When the people in our ridings are waiting for a budget, they are very anxious and, sometimes, they have great expectations. The measures contained in these budgets are always spread out over several years. They are almost like Soviet plans, spread out over three, four or five years.

The problem in all this is that the measures that would normally be the most beneficial to our fellow citizens are always postponed by three, four or five years. Try to go and tell people who live from hand to mouth, have trouble surviving and barely manage to provide for their family that, in three, four or five years, the picture will look rosier.

After the budget, I often hear the same comments at home, in the Saguenay-Lac-Saint-Jean region. It is always the same after the tabling of the budget by the current Minister of Finance and the Prime Minister, since, as we know, budgets are dictated by the Prime Minister. The Minister of Finance is involved in the drafting of the budget, and the Prime Minister tells him “Look, you are going to do this and that”. That is the way it is done usually. The comments I hear most often from my fellow citizens go something like this “Are they ever going to give us a budget for just one year with a real impact over the current year?”

Let them stop giving us Soviet-like budgets that keep on telling us that in five years things will start looking up. We want change this year. Canadians should be able to benefit this year from the measures taken by the previous PC government.

I have often said that the current government does not have an agenda of its own, that it is benefiting from measures passed by the Progressive Conservatives and that took years to be passed.

When we ask a question here in the House, day in and day out the answer is “Ah, the Progressive Conservatives”. In one sweep, this brings us all the way back to the beginning of Confederation. I can say this however. This year the GST, which got the Liberals elected after promising to scrap it, will bring in $24 billion for the Minister of Finance and the Prime Minister.

What they do not know is that when the GST was adopted in the 1990s—it goes without saying that the measure was unpopular at the time—its purpose was to bring about real tax reform, to scrap taxes.

This government pockets money daily from the measures adopted by the Progressive Conservatives, which unfortunately did not have the time to implement real reform, to scrap taxes. In 1993 I thought this government would at least be honest enough to say “The measures passed by the Progressive Conservatives make good sense but one element is missing. Our mission as the new government is to continue with real reform”.

What did the Liberals do? They increased taxes 50 times. Not many people know that.

They take in an annual surplus of $6 billion, $7 billion, $8 billion in the employment insurance fund, instead of lowering contributions to $2 per $100, as they promised to do in the last election campaign. Consider how much they benefit from free trade. They campaigned against us and now they go around the world praising free trade.

Here again, they failed in their mission, which was to complement what we did. We said that once free trade was passed certain compensation measures would be required because it would involve all of the people affected by the globalizaton of trade. The government did absolutely nothing.

Do members know what that led to? A 50% increase in poverty, particularly among young children.

I have often asked the government why, given that it abdicated its responsibilities after the 1993 election, after the passage of the GST and free trade, it did not pass measures to lower taxes. It did not pass compensatory measures to offset the poverty arising from globalization.

I often have to say “Focus, quick”. There are 40 or so programs to help families in need but they accomplish nothing”. I say why not follow the lead of the European Economic Community? Why not follow the example of Portugal? Why not follow the example of the Government of Quebec which is going to put the issue of a guaranteed minimum income on the agenda in May?

Why will the federal government not be progressive for once in seven years and say “Yes, we will look into the question of a guaranteed minimum income?” This is something that has been called for by Quebec academics and those involved in social affairs, such as Michel Chartrand. They have taken the trouble to write a book about it.

Each time a question arises, the answer they give is this: “You Conservatives left a deficit behind you”. Yes, we left a deficit of $40 billion. That is the same level as in 1984. We inherited a debt of $200 billion, which had been multiplied eleven-fold by Pierre Elliott Trudeau in ten years. The Mulroney government only doubled it; in the meantime, however, it adopted measures which have now made it possible for the government to have wiped out the deficit.

This is why I say this government has no economic or social agenda. What does it do? It passes a bill like C-20 on clarity. It is unbelievable how many people on the street are now talking to us about the importance of passing a bill on referendum clarity. I have never met anyone at home who told me “Sir, you did a good thing in the House of Commons. You passed legislation on referendum clarity”.

It is only too clear that the sole purpose of this bill was to annoy Quebecers, to score points in the rest of the country and to try to divide the other parties. That is the government's game plan.

Worse yet, we were given to understand that there would be an electoral reform. The government passed electoral legislation to muzzle third parties, which are hard up for funds and cannot even field any candidates in the next election because they will not even have enough money to meet the requirements of the new electoral legislation.

I would like one example of something that will improve the lot of Canadians. We are debating Bill C-25 to amend the Income Tax Act. This still just skims the surface. We have the impression that this government does not want to govern. Unfortunately, we sometimes wonder whether that is not what people want: a government that is not there. We on our side continue to say that a government is important to a country.

We often read in the media that people do not want a government. However a government is necessary because the present government manages the money for taxpayers. People tell me “André, we are working and every last cent of our pay cheque is spoken for”.

People no longer have anything to show for their efforts. The Minister of Finance and the Prime Minister are going too far. It is a bit much. And we think this is a democracy. The government says “We are at 45% or 50% in the polls. This means that people are happy”.

People are not happy. I want them to realize that this government is pocketing their money, that its measures do not meet the needs of their children and families, and that they do not help the development of outlying regions, which are slowly dying.

Let us take a look at what is going on in all the regions of the country, whether the Gaspe Peninsula or in my riding. Thousands of jobs have been lost because the government is only interesting in reaping the benefits of the measures taken by the former Progressive Conservative government and its Prime Minister, Mr. Mulroney. When the Liberals were campaigning against us on the GST and free trade, they did not mince their words.

I am proud to be here to defend the former government's track record. I said so during my last speech and I am saying it again: I am prepared to defend our record before anyone from the current government and to show that the structural measures that we implemented at the time needed to be followed up with other measures. This government abdicated its responsibility to continue the work that had been started.

This government has no economic agenda and did not continue the reform undertaken. Sometimes, as members of parliament, we make speeches and we criticize the credibility of all politicians. I deplore this, because the vast majority of my colleagues are doing an excellent job. I am thinking, among others, of the hon. member for South Shore who works very hard for his area and for the whole country. Let me quote a line that is not from a member of this House.

Mr. Asper, the executive chairman of CanWest Global Communications and chairman of the board of Global Television Network, said to the minister, about the Canadian tax system, that it is a nightmare because of its complexity. That comment was not made 50 years ago. It was made on Wednesday, during a meeting of CEOs of the Business Council on National Issues. He said it this week.

This is not the member for Chicoutimi speaking, but Mr. Asper, who said that the Canadian tax system is a nightmare because of its complexity, that it is an ocean of uncertainty. He added that this system has an adverse effect on the business world, the private sector, entrepreneurship, and so on.

This means that the government is absolutely not carrying out its mandate. Instead of presenting these Soviet-style budgets over a five year period, the government should bring down one year budgets. Moreover, instead of meeting the needs of the provinces, the government spends its time quarrelling with them. We know the Prime Minister has been in politics for 30 or 35 years. Canadian federalism has been in trouble for 30 years now. We know why.

Mr. Speaker, you are a well informed man. You have followed politics over the last 30 years. Why did the sovereignist vote in Quebec go from 15% to 49.4%? Is it the Progressive Conservative government's fault?

I cannot name all Canadians, because not all Canadians are responsible for the mess the Canadian federation is in, but I can name three, four, five or six members of the Liberal Party of Canada. If the country is in trouble, and I think the bad times are far from being over, it is because of the demagogic attitude of some politicians.

Instead of working toward reconciliation, they continue to play on concepts that will always be divisive.

They play on concepts like roots and founding nations of this country and they enjoy making political hay at the expense of 7 million French Canadians, particularly Quebecers, by passing divisive legislation. This will be at the back of the minds of French Canadians and of all Quebecers in the next referendum.

I have a few small things to ask this government. Instead of continuing to be divisive by alienating western Canada, and sometimes Quebec, and to govern with 37% or 38% of the votes, I am asking the government to give money back to the provinces so people can have surgery when they need it.

Is it too much to ask for the government to give back what provinces were getting in 1993 so that members of our families can get an operation elsewhere than in the United States? I think we can agree on that. Health is what is urgent. Let us give the funding back to provinces. Let us stop creating new programs.

Just think for a moment about home care: as far as running home care is concerned, my riding is far from Ottawa. If we want to work toward national reconciliation, can we give back to the various Canadian provinces the capacity to carry out the responsibilities they have under the constitution?

Let us talk about the millennium scholarship fund. A new program has been created, whereas, as we know perfectly well, that is not what was needed. The federal government does have to collect money, but it has to understand that people are sick and tired of paying.

People have accepted the GST and free trade. What irritates and disgusts them is that none of the money is coming back to them. On Friday night, the working father and mother want to see their work reflected on their pay check. They want to be able to support their family and to work for themselves, not for the Minister of Finance and the Prime Minister. That is where the problem lies in Canada.

We should not be surprised if there are grumblings of discontent out west and in Quebec. Provincial premiers keep meeting, not to demand foolish things, but essential things for the future of each province in Canada.

What will make the Canadian federation perfect is the perfection and good performance of each provincial government. It is perfection of the sum of all the parts.

In pursuing its campaigns of provocation and harassment against the provinces, the current government, the Liberal Party of Canada, wants to continue to stay in power with 37% or 38% of the vote, or about a third of the vote. It is very important for this government to understand that on taxation people want to see and touch what belongs to them. They want the fruits of their labour to be given back to them.

People understand very well that our exports have been multiplied by 2.5 on the American market and that we are in a globalization period. They want the fruits of their labour back home in their families. They do not want the Minister of Finance and the Prime Minister to manage surpluses for them.

I hear this every day from people in Saguenay—Lac-Saint-Jean. Not one of my colleagues from the other provinces told me that Bill C-20 on clarity in a potential referendum was very important. However, what I hear is “Sir, is there a way to have money on our pay cheques? Is there a way for my parents not to have to wait four, six or eight months for surgery?”

What is happening in hospitals in the country makes no sense. We will have to wait months for the provinces to have the maximum budget to effectively manage health care. In the meantime, the federal government is creating new programs and squabbling. It occupies the premiers by letting them convene meetings, where they almost always end up asking the same thing “Will you give us the money that is rightfully ours?”

I am sorry but maybe what this country really needs is a true confederation, with people from the west, from Quebec, from the maritimes and from Ontario coming together. Certainly, through a redefinition of our respective roles, we would.

Members opposite do not stick to their role. They keep intruding into provincial jurisdictions. We should clearly redefine the roles. The federal government should stop piling up money at the expense of the provinces, of the citizens in Quebec and in the whole country.

I hope things will change in the next election. I know the members opposite are quite nervous. Support of 38% is a bit shaky. The 101 members from Ontario are concerned about their fate, and I can understand that.

Income Tax Amendments Act, 1999Government Orders

12:50 p.m.

Vancouver Centre B.C.

Liberal

Hedy Fry LiberalSecretary of State (Multiculturalism)(Status of Women)

Mr. Speaker, my question for the member is on the point he made about the need for the provinces to have control over much of the programs. In effect what I hear him saying is that the federal government should be nothing more than a cash cow for transfers money with absolutely no standards and no national requirements at all.

This country is a federation. The hon. member talked about confederation. While we all agree that the provinces have specific jurisdictions, it is important that we as a federal government remember that we believe Canadians have a right to the same quality and level of and same access to services wherever they may live in the country. Therefore we would like to see a strong federation with strong provinces, not a country that is really not a country at all but 10 nation-states doing their own thing whenever they feel like it. How does the hon. member see that unfolding?

Income Tax Amendments Act, 1999Government Orders

12:50 p.m.

Independent

André Harvey Independent Chicoutimi, QC

Mr. Speaker, I thank my colleague for her question. Right now, there is no strength in the federation because the taxation system benefits the federal government. Instead of giving the provinces the tax resources they need through the transfer of tax points or otherwise, and instead of giving them the opportunity to carry out their responsibilities properly, it cuts left and right and intrudes everywhere.

The federal health act exists to protect universality. The government has to stop treating the provinces like big municipalities. This government treats the provinces and their premiers like children. It wants to see the provinces beg.

In my opinion, forcing the provinces to beg is not the best way to build a strong federation. The provinces do not have the budgets to carry out their responsibilities. The federal government grabs all the money and then haggles with the provinces on education, health services and the infrastructure programs. The federal government wants to do everything for the provinces and its spending power is out of control.

I believe that the only way to find a solution would be to hold negotiations according to the respective mandates of the provincial and federal governments. But I will not hold my breath. This has been going on for 30 years.

We all know what former Prime Minister Trudeau used to do with government members from Quebec. For 16 years, he won the elections by thumbing his nose at Quebecers. He was always speaking from both sides of his mouth. I think that the future of the Canadian federation should not be based on provocation or on the fact that the federal government sees itself as the father of all provinces, that it sees them as big municipalities. It is contemptuous.

I would not bet on the future of the Canadian federation if we go on with a government like this one, which does not respect provincial jurisdictions and forces the provinces to come begging to the Prime Minister of Canada.

Income Tax Amendments Act, 1999Government Orders

12:50 p.m.

Bloc

Gilles-A. Perron Bloc Saint-Eustache—Sainte-Thérèse, QC

Mr. Speaker, I congratulate my colleague from Chicoutimi on his vision and I have a question for him.

Does he not think that a way to put an end to the abuse by the government opposite would be for the provinces themselves to be responsible for collecting both federal and provincial taxes?

Income Tax Amendments Act, 1999Government Orders

12:55 p.m.

Independent

André Harvey Independent Chicoutimi, QC

Mr. Speaker, I think the main problem lies in the attitude of the federal government.

I have an example of co-operative decentralized federalism. I recall, at the time of former Prime Minister Mulroney, that in the negotiations on regional development plans the provinces were held in the highest respect. At the time, it was a real partnership in both democratic and constitutional terms.

We will recall the Meech Lake accord. Was it scrapped by western Canadians? It took five or six Liberals, no more. Back in 1990, 92% of Canadians were in favour of reconciliation, control over federal spending and respect for the regions, particularly Quebec's cultural identity. It was a historic setback to the development of the country.

Both economically and constitutionally, I think it is through negotiation and mutual respect that people will arrive at a federation that could function effectively.

I repeat that the disaster of the failed Meech Lake accord, which was a landmark event, was due to four or five Liberals, not to all Canadians, and not even to Albertans or British Columbians. It took four or five Liberals, goaded on by a former prime minister and by the man who is now Prime Minister, to scrap the Meech Lake accord, which would have given us constitutional peace and would have freed us up to work on other more constructive things. If it had been signed at least it would not have been necessary to pass Bill C-20, which I think will remain in the back of the minds of all French Canadians and Quebecers.

I think that this will be a major weapon, should there one day be another referendum, to remind Quebecers that the federal government wanted to force them to stay in the Canadian federation. Force is not the way to keep someone in a family let alone seven million people in a country.

Income Tax Amendments Act, 1999Government Orders

12:55 p.m.

Reform

Eric C. Lowther Reform Calgary Centre, AB

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.

Income Tax Amendments Act, 1999Government Orders

1:15 p.m.

Reform

Deepak Obhrai Reform Calgary East, AB

Mr. Speaker, my colleague was in the middle of explaining some important points and I would like him to finish them.

Income Tax Amendments Act, 1999Government Orders

April 7th, 2000 / 1:15 p.m.

Reform

Eric C. Lowther Reform Calgary Centre, AB

Mr. Speaker, I appreciate the interest of the hon. member for Calgary East. He is a very honourable member. I want to drive home a point that I did not quite finish.

How in the world can we be giving another $1 billion and more to the HRDC department that has been clearly shown by an audit funded by public money is totally out of control? For example, McGill University submitted a proposal for $60,000 to HRDC. It received $160,000. When the the audit examined the claims it should have received only $30,000.

A litany of these kinds of stories have been exposed by the audits. Did that stop the Minister of Finance from giving more money to that department? No, it did not. Yes, I will pay my taxes, but please do not send them to Ottawa to flush it away in a vote buying program.