Madam Speaker, I am pleased and honoured to enter the debate on the income tax amendments. It may interest those watching in the wonderful world of CPAC to know what it is we are actually debating here this afternoon.
I was talking to a lady at a trade fair a couple of weeks ago. We have these trade fairs out west. I stood all day and listened to people about their concerns. Among their concerns definitely with tax day looming was the whole situation of taxes. This one lady said she always watched CPAC. I asked her if she had any other problems. She was a very delightful lady.
I want to bring to the attention of everyone in the House, as well as to those who are watching via the electronic medium, that we are debating Bill C-25. We have a tendency here, and the parliamentary secretary will agree, to bring all these things together. Even in his questions he was talking about budget 2000 which the Minister of Finance brought down several months ago. However, this bill is one which is now over a year old. I think people should know that. We are finally getting around to implementing measures that were introduced in budget 1999 some 13 or 14 months ago. It is really quite ridiculous.
Furthermore, this bill also covers two ministries. There are several amendments to acts which are under the co-ordination of the Minister of National Revenue and then others for the Minister of Finance. This is an act to amend the Income Tax Act, the Excise Tax Act and the Budget Implementation Act, 1999. We are really doing catch up here and I do not mean that in the sense of something we put on our fries.
I would like to also point out some of the individual topics that are covered and make little comments about them. One of the measures in the bill is that the tax credits for individuals, the basic amounts and spousal amounts, are to be increased and the amounts are specified. This is a lame halfway measure the government introduced last year to begin to index the tax system.
Bracket creep has been a real problem. The government just loves to crow now about the fact that it has ended bracket creep. We have been calling for that for six years. For six years we have been saying to index all of the provisions of the Income Tax Act, particularly the basic exemptions so that people do not have a hidden increase in taxes every year. Finally last year the government started to do something about it and it took further measures this year.
After my little lecture speaking about last year's budget I will mention about this year's budget. Now the government has said it will restore full indexation. While I would like to put my hands together to applaud that, the government missed because in the last six years it has used bracket creep to ratchet up the amount Canadian taxpayers pay, to the tune of around $40 billion a year more tax revenue since the Liberals took office. That is since 1993. The Liberals have ratcheted up the income tax revenue over that time and now they say, “Are we not wonderful? We are now going to keep it there”. We were at a lower level; the government allowed it to go up and now says it will no longer increase it.
By the way, since I was a teacher and an instructor for 31 years I have the habit of showing graphs from the point of view of the people watching me. When I raise my hand I presume that people will see a blackboard on which I am drawing a graph and they are looking at it and I am sort of behind it. It is a skill I wish I could use here. I would love to have graphics, charts, overhead projectors and animated graphs using a computer. We would be able to communicate so much better.
The point I am making is a very important one. By lack of indexation over the last six years since the government took office, it has moved the basic rates up. Now it says it will increase the rates no further. As my colleague from Medicine Hat mentioned in his very fine speech, it is now claiming as taxes have been going up due to bracket creep, had the government not ended it in this year's budget it would keep on going.
The government is saying that based on what those rates would be in the next five years, it would be collecting a whole bunch of dollars but now it will not collect them and therefore the government will call that a tax cut and that will make everyone feel good. The fact is it has been a huge tax increase from the 1993 level to the 1999 level when the government started reducing the increase. Now it claims the level is flat. Let us hope the government keeps it that way.
There is the elimination of an individual surtax. We promoted and proposed that both the 3% and the 5% surtaxes be eliminated.
In the 1999 budget the Liberals undertook to eliminate the 3% last year, and I say great. I guess we should give them credit when credit is due. An income splitting tax is included in this legislation. It is rather interesting. While they talk about cutting taxes, here is one where they arrange to tax mostly young people. A tax is added to the earnings of a person living in a home with his or her parents. Those earnings are added to the income of the parent claiming an exemption. They introduced a tax on passive income. It is a tax increase no matter which way we slice it.
One could argue that it is only fair. Why should one person be able to earn an income and have to pay tax on it and the other one not? There is an element of fairness, but the fact of the matter is that they drew into the tax rolls individuals who were not there before.
The bill addresses a number of other issues. One I found particularly interesting was the one on communal organizations. There are a number of such organizations. We certainly have them in the west. I have several of them in my riding as a matter of fact. Instead of individuals owning farms there are communes. They are very successful farmers but do not own the land as individuals. Instead they all live on it. Actually they are delightful.
If any of my colleagues end up in western Canada and have an opportunity to visit one of the Hutterian Brethren communes it will be quite an experience. All the young people are taught to work. They all participate in the task of putting bread and butter on the table. They have animals. They are also excellent grain farmers and so on.
The particular measure provides that in order to compute the taxable income of communes they can apply the basic exemptions of all individuals who are part of the communes. This seems fair. I do not think there is anything patently wrong with it. I am not going to criticize it because I think it is fair.
Let us say that 50 people are making their living from a farm. If they all owned little pieces of land they could all claim their basic exemptions. None of them can claim personal incomes. They do not operate that way. They all live together. They share their food. They share their accommodations and so on. The costs are paid by the commune. To apply the collective exemptions of all of them to their income is a fair situation.
However it makes me think of a shortcoming that I often think about, particularly with respect parents who choose to have one of them stay at home and look after the children. That is also a form of commune. Only one parent is earning an income and the other parent and the children are dependants. Yet the government has never seen fit to apply a basic exemption for those members of the family who are not making an income. They always have a reduced exemption.
In our solution 17 we have proposed this in various income tax projections over the last number of years. We have been quite consistent in this regard. Both parents should enjoy the same basic exemption. There should not be a differential. Our solution 17 does the same thing. Whether it is a one income or a two income family it matters not. Each adult in the family would be eligible for a $10,000 basic exemption.
If they recognize the principle for communes of 50, I invite them to recognize and apply the principle to a commune of two: a mom and a dad looking after their children. Let us have a fair tax system so that we stop bleeding families dry and making it so difficult for them to make ends meet.
There are a number of other issues in the bill. I will skip right to the last one and make a comment on the bill before I say some general things. The last one has to do with income taxes related to the hepatitis C trust. We will remember that the Liberals were hammered for the fact that they wee very selective in whom they chose to give compensation. In the rules that were set up, if a trust is set up and it earns interest that interest should be taxable. They are talking about taxable income as a result of interest from these trusts.
Two days ago young Joey Haché was here again. He is one of the young fellows who has been highlighting the whole hepatitis C issue. So far we find that the bulk of the money paid out under that program has been to lawyers. The victims of the hepatitis C scandal at this stage are still mostly struggling to get compensation to reach them.
I would like to say a few things in general about taxes. It is interesting that the decisions we make in life are based on our perception of facts. They are also usually based on certain assumptions. Assumptions are sometimes a little different from facts because what we are doing is saying if we do this, then this is likely to happen. Perhaps it is not 100% predictable. It is a non-repeatable experiment in many cases.
For example, if I throw a glass of water out of a 12 storey building, chances are pretty good that when it hits the ground the glass will break. If it actually breaks I cannot repeat the experiment of throwing it to see whether it will break a second time. It is a non-repeatable experiment.
That is the case with some economic assumptions. We often hear from the government in its budgetary policy that it is creating jobs. It keeps talking about this, but no one ever admits on the other side that for every job it creates it is probably killing 1.1 jobs. Another way of putting that would be to say that for every 10 jobs it creates, it is killing 11. The reason is very simple. Canadian families are taxed to death. With all three levels of government most Canadians will end up having half of their income confiscated from them.
I thought of something last week during the Easter recess. I noticed that my garage roof was leaking. That is unfortunate because the water falls on to the car and because it is a tar roof it marks the car. I thought of the money I pay in taxes to help create jobs building a fountain in Shawinigan. If I could have my taxes reduced I would have enough money to phone the roofer and ask him to come and fix my roof. He would have a job for a day. We know how much mismanagement and mishandling there has been of government funds. The boondoggle has become quite a large issue in the country.
The fact of the matter is that I have had this idea for many years. When we take money away from people who have earned it, we are not creating new jobs. We are moving the jobs. That is what we are doing. If we take the overhead costs of that process, the cost of collecting the taxes and the whole bureaucracy of distributing the money, we recognize that maybe my ratio of 11 to 10 is wrong. It is a number I have pulled out of the sky. Maybe it is 15. Perhaps for every 10 jobs the government claims it creates through grants and contributions, the government is killing 15 jobs in the economy. I do not know what the number is. Perhaps studies have been done that give us that information, but I have an idea that is a safe assumption.
I would much rather leave more money in the hands of the people who earned it and have them create the jobs by having the roof fixed or by making a new business investment which would directly hire people. To me the marketplace is a much better creator of jobs than the temporary jobs created by a handout government, especially at election time when we see these handouts peaking.
We are in May 2000 debating the budget brought down on February 16, 1999, well over a year ago. Most of these things have actually already been collected. That is quite an issue.
We have an increasing lack of respect for the taxation collection agencies in the country. More and more people are beginning to question the legality of paying taxes and all these things. I do believe in law and order and all that, and I really do not think the so-called anti-tax people who claim that it is unconstitutional to collect taxes are right. Even if they were, I would still like to have a tax regime that works. I want to maintain the structure of solid government, such as we have in this country, but not with excessive taxes. When we behave this way we build a stronger case for them to reject our tax system.
There are a number of items for which the people have already filled in their forms. They have filed their taxes on this basis. Strictly speaking, we have not yet passed the orders into law. Those people who claim that this is not constitutional or not legal could probably win in the supreme court. I hate to say that, but they probably could because the court would have to rule that it would be illegal for the government to collect the tax or in some cases to make an exemption which had not yet been passed into law. I think that is regrettable.
The government should make sure when it has a budget that it deals forthwith in implementing the provisions of the new budget so that people can have confidence that what they are being asked to do is legal. I regret that my time is up because I could speak for hours on the whole issue of taxation.