Mr. Speaker, the motion brought before us by the member for Kamloops, Thompson and Highland Valleys proposes that the first $30,000 per year earned by artists, writers and performers be tax exempt. The government recognizes and applauds the intent behind the motion. The motion underscores the importance of Canadian culture.
Because of the way it shapes our lives, culture tells us who we were in the past and who we are in the present. Inevitably it also influences who we are likely to become in the future. Culture is a force that drives our unique development as individuals and as a nation. The government remains committed to providing continued support to individuals engaged in our cultural industries.
Since the 1950s the involvement of the federal government has gradually evolved to include a variety of roles in response to the expansion of cultural activity and its growing social and economic impact. Cultural development in Canada is a partnership among the private sector, individuals, corporations and all orders of government.
By looking back, one can see the emergence of distinctive Canadian approaches to supporting culture. In recent years it has been identified as the Canadian model of cultural affirmation. It emphasizes partnerships with other governments, organizations and the private sector. Most important it is an approach to government that uses a mix of the most effective measures available to it, recognizing that circumstances and situations are constantly shifting.
Ensuring a thriving economy in which individuals and businesses earn more income and keep more of the income they earn is perhaps the most important way to support our cultural industries. Not only does such an environment provide better economic circumstances for artists, writers and performers directly, it also gives individuals and businesses more opportunities to support these professions by increasing their ability to acquire their products. Just as important, it recognizes the partnership we share with other governments, organizations and the private sector in supporting those cultural industries.
The broad based tax relief provided in the 1998, 1999 and 2000 budgets will help support economic growth and ensure that all Canadians keep more of the income they earn. With the books balanced in 1997-98, the 1998 and 1999 federal budgets introduced broad based tax relief.
This tax relief was proportionately larger for low and modest income Canadians. It included an increase of $675 in the amount that can be earned tax free for all Canadians, elimination of the 3% general surtax and a $2 billion increase in the Canada child tax benefit, for a total benefit of $7 billion annually. The actions taken in the 1998 and 1999 federal budgets have removed 600,000 low income Canadians from the federal tax rolls.
As a result of these actions, taxpayers including artists, writers and performers will have their federal income taxes reduced on average by about 10%. Total personal income tax relief provided in the 1997, 1998 and 1999 budgets amounted to $7.5 billion annually or 10% of the $76.9 billion paid in personal income taxes in the years 1999-2000.
The government has continued to build on these important tax reduction efforts. In the fall of 1999 the government promised Canadians in the Speech from the Throne and the economic and fiscal update that it would set out a multi-year plan to further reduce taxes. The 2000 budget set out such a plan, including the most important structural changes to the federal tax system in more than a decade.
The plan will immediately restore full indexation of the personal income tax system to protect taxpayers against automatic tax increases caused by inflation. This will benefit every Canadian. It also reduces the middle income tax rate to 23% from 26%, starting with a two point reduction to 24% in July 2000. This will cut taxes for nine million Canadians.
Additional key personal income tax measures of the plan will increase the amount that Canadians can earn tax free to at least $8,000, and the amount at which the middle and top tax rates apply to at least $35,000 and $70,000 respectively. It will also enrich the Canada child tax benefit by $2.5 billion a year by 2004 to more than $9 billion annually. Maximum benefits will reach $2,400 for the first child and $2,200 for the second child.
This plan will also eliminate as of July 1, 2000, the 5% deficit surtax on middle income Canadians with incomes up to about $85,000 and completely eliminate it by the year 2004. It will also raise to 25% for the year 2000 and to 30% for the year 2001 the permissible foreign content of investment, registered retirement pension plans and registered retirement savings plans.
The plan will mean more money in the pockets of Canadians. Taxes will be reduced by a cumulative amount of at least $58 billion over five years. Personal income taxes will be reduced by an average of 15% annually by 2004-05. Low and middle income Canadians will see their personal income taxes reduced by an average of 18%.
In addition to these broad based measures that assist our unique partnership approach to supporting cultural industries, the tax system also features several specific measures intended to target support to that cultural sector.
First, to enhance the exposure given to works by Canadian artists, Canadian art objects purchased by businesses for display purposes are eligible for a generous depreciation allowance notwithstanding that such art objects may retain their value over time or even appreciate.
Second, the designation of the national art service organization provides not for profit arts groups with a tax treatment equivalent to that of charities.
Third, to reduce liquidity and valuation difficulties, artists may deduct the cost of creating work in the year incurred even though the work may not be sold until a later date.
Fourth, to ensure that the artists are not deterred from donating their works to charities, museums and other public institutions, artists may value charitable gifts from their inventory at an amount up to their fair market value.
In addition, employed artists and musicians may deduct certain expenses against income from employment notwithstanding that most employment expenses are not deductible. Specifically, employed artists may deduct expenses related to artistic endeavours up to an annual—