House of Commons Hansard #37 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was americas.


Income Tax Amendments Act, 2000
Government Orders

3:10 p.m.


Yvan Loubier Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I am very pleased to be able to go on with my speech.

As I was saying before you so politely interrupted me for question period, despite the expected downturn in the U.S. economy during the current year, the federal government has accumulated surpluses that will increase federal tax revenues over the next five years.

Even using conservative estimates of federal tax revenues due to a possible economic downturn in Canada during the current year, we could get surpluses over the next five years totalling some $135 billion, and this is based on pessimistic estimates of economic growth rate.

As I was saying before question period, it is easy for a finance minister to accumulate surpluses when he does not need to make any special efforts. He only has to squeeze annual surpluses of $5 billion to $6 billion out of unemployed Canadians to create a budget surplus.

He was also able to save money by cutting provincial transfers for social and education programs. He has generated revenues since 1993 through hidden personal income tax increases, by refusing to index tax tables before last year.

This just goes to show that the Minister of Finance has incredible opportunities to make the right choices and promote social justice.

The minister knows full well, since he is the one who has been emptying the pockets of middle income families, that a large part of the tax reductions he brought in does not go to middle income families or to those families who made sacrifices by paying high taxes or by being subjected to EI cuts. They are not getting the share of surpluses to which they would be entitled if the government wanted to reward those who have been most responsible for putting our fiscal house in order.

The Minister of Finance could have taken exactly the same amount he intends to spend on tax reductions over the next five years, which is about $73 billion, to reduce taxes for low and middle income families.

According to our own calculations, if the Minister of Finance redid his homework, he could bring in measures that would ensure that, as early as this year, families with an income of $35,000 or less, particularly single parent families, would not pay a cent in federal income tax.

They pay taxes now and they are not the ones who will benefit the most from tax reductions this year. Those who will benefit from significant tax reductions are those who make $250,000 and more. They will save at least $9,000 to $11,000 in taxes this year. For a single parent family with dependent children, we are talking about savings of some $250 this year. They are laughing in people's faces.

It is also tantamount to laughing in the faces of nine out of ten taxpayers who have significantly helped to get Canada's public finances back in order and helped the finance minister amass huge surpluses, but are still unable to benefit from our financial house being put back in order.

The poor will still have to wait for social housing, since the Minister of Finance has announced no new measures in the last budget or in last fall's mini-budget to help thousands of families who are hurting because they have to spend too much money on shelter, compared to what they spend on basic needs like food, clothing and heating.

When the Minister of Finance took over the department in 1993, about 500,000 households in Canada were spending more than 50% of their income on shelter. Nowadays, we have over 850,000 households spending more than 50% of their income on shelter. What it means is that these people have to feed and clothe their children and heat their house with only half of their income.

People spending more than 30% of their income on shelter are considered as the less fortunate since they have to cut spending on other basic needs in order to pay the rent.

In light of these devastating figures, with estimated surpluses of some $135 billion over the next five years even with the expected downturn, why has the finance minister not thought about reinvesting in that area?

Tabling Of Documents
Routine Proceedings

3:15 p.m.



Don Boudria Leader of the Government in the House of Commons

Mr. Speaker, I am pleased to table, in both official languages, the documents concerning the sale of the Auberge Grand-Mère shares, which were requested earlier today by the member opposite.

The House resumed consideration of the motion that Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act, be read the second time and referred to a committee.

Income Tax Amendments Act, 2000
Government Orders

March 27th, 2001 / 3:15 p.m.


Yvan Loubier Saint-Hyacinthe—Bagot, QC

Mr. Speaker, there are days when no amount of effort moves things forward. This is only the third time I have tried to finish my speech. I hope that no other prerogatives of the House will prevent me from making it all the way to the end. I hope, Mr. Speaker, that you will show some understanding.

Before I was interrupted I was saying that when one puts 30% of one's income into accommodation one is viewed as needing assistance.

In view of such outrageous figures, which reveal that an additional almost 60% of homes in Canada spend over 50% of their income on accommodation, how is it the Minister of Finance did not give a moment's thought to spending a cent on social housing? It would have been easy to allocate $2 billion or $3 billion of the $135 billion expected surplus over the next five years. Why did he not think of that?

Why, on the other hand, did he think to turn to the millionaires, people who are not having a hard time, people who do not need $9,000 or $11,000 in savings this year? However, people earning less than $15,000 a year would certainly like to have had better housing for their family. No, this is not one of the Minister of Finance's priorities, not at all.

With the billions he has, how did he end up taking money out of the pockets of the unemployed, the disadvantaged and the sick, those who cannot benefit from proper transfers corresponding to the needs of the people in the health care sector? How did he end up picking the pockets of students, too, who could have used some of the manna going into the government coffers? Why did the Minister of Finance not think of putting money into these sectors? Why did he not give a moment's thought either to increasing Canada's contribution to international aid, which has shrunk since this heartless minister has been Minister of Finance?

How can this man continue to believe that the best way to fight poverty and unemployment is to continue to make off with the surplus in the employment insurance fund every year? How can he not have given a minute's thought to doing something for the 57% of people who are excluded, the people out of work who are not eligible for employment insurance? It is because he needs the dough, because he needs to make use of the surplus to offer tax cuts to those with annual incomes of $250,000 and up.

How can this man not have thought that it would be a good idea to raise the old age pension, particularly for older women living alone?

Barely 16 months ago, a National Council on Welfare report informed us that the situation of seniors who are on their own, particularly the women, is getting worse, and that additional funding was needed to help them and keep us from returning to the vicious circle we were in prior to 1960s. Back then, there was no safety net for these people. How can this man still want to make women and children the first ones that have to pay?

The Minister of Finance's reaction to that, when I said it the other day, was to laugh. I would love it if, at some point, the camera would catch his smile when we confront him with such evidence, when we tell him that women and children are paying for his negligence, when we tell him that his grabbing billions of dollars from the employment insurance surpluses, $38 billion since 1994, directly hits women and children first, and further marginalizes young people. He is still smiling. I would love it if the camera would catch him.

He also smiles when we tell him about elderly women living alone. There is nothing funny about the plight of elderly women living alone and getting increasingly poor.

Why did this man think of reducing taxes for millionaires before using money to help the poor and the homeless?

Recently, an alderman from Hull, whom I salute and congratulate for his work, told us that in the Outaouais region there are not only more and more homeless people who lose their jobs, who lose everything, but that entire families are also homeless. There are no shelters for these people.

Why did the Minister of Finance, who must know the Outaouais since he has been living here for several years, not to mention the fact that he is a member from Quebec, not think about using part of the billions that he is taking from the poor to build facilities to house these homeless families?

One sometimes wonders if the minister and his government have a heart. Mr. Speaker, you know what a heart is. You do. I am sure that you have one, but I sometimes have doubts about whether the Minister of Finance and the Prime Minister do.

When we see how priorities are set with regard to budget allocation and when we see the savage cuts in social programs, particularly income support programs, over the last few years, we cannot help but wonder if he has a heart. If he has one, he must have one since he appears to be alive and well, it is not in the right place, as my grandfather would have said.

If his heart were in the right place, with the means available to him today to really meet the needs of those in difficulty, of middle income families that have been bled white by taxes for almost two decades, he could have made the right decisions.

I urge him to go back to the drawing board and to make sure that these billions of dollars that will be coming are allocated in a way that will benefit the right people, low and middle income people, particularly families, as well as the unemployed. These people would benefit from a true reform of the EI plan, which now excludes 57% of the clientele it is supposed to serve. These funds should also be put toward full indexing of federal transfers for health, education and income security.

In the area of social housing, there are crying needs. Will our shouts be loud enough to make the finance minister understand that there are people in the street who are cold and hungry? Will we have to shout louder and louder to express the pain of those helpless people who cannot speak for themselves here, who cannot speak directly to this heartless government? How loud will we have to shout to express their pain?

There comes a time when we do not know anymore what data we should bring here, because we have the impression that the people opposite do not care. We can mention facts that speak for themselves, talk about the 25% increase in child poverty since they took office, the 60% increase in people who must spend more than 50% of their income for housing, we can tell them that 57% of the unemployed, mostly women, are excluded from EI benefits, the people across the way just do not care. What will it take to make them understand?

It should not be so difficult for the Minister of Finance to re-examine his forecasts. Incidentally, he will be making an economic statement in May. I hope he will have the decency to stop taking us for morons and come up with concrete numbers. Even if these numbers are a bit pessimistic due to the U.S. economic downturn, I hope he will not have the outrageous idea to try to pull the wool over our eyes once again. I hope he will not take us for what we are not and take Canadians for fools. At one point, one has to stop laughing at people.

Last week, he said that it was a good thing he made conservative forecasts in spite of the fact that the opposition blamed him for being cautious. However there is a difference between being cautious and hiding the facts. There is a difference between being cautious and accurately stating the facts. There is a difference between being cautious and being cynical when people say they need information.

The Minister of Finance has shown cynicism these past few years by forecasting surpluses that were half the real surpluses. I even remember one time when, within a six month period, the finance minister, who claims to be competent, open and transparent, was off by 130% in his surplus forecast for a four or four and a half month period. Who was he trying to kid? He said he was happy he erred on the side of caution. What caution? He was not the least bit cautious.

He has spent the surplus he has creamed off the EI fund, to the tune of $38 billion since 1994. He has put it towards debt reduction. He has used it to lower taxes to millionaires. Where is this so-called caution? Where is the EI cushion?

Suppose there is a downturn in the economy resulting in an increase in the number of unemployed, then we will need more money to help them. Where is the cushion to do that? It is gone. Where is the finance minister's caution? It has gone by the wayside.

I will give you the real numbers. Before the downturn in the U.S. economy, we were expecting a surplus of roughly $148 billion over the next five years. For once we were in agreement with the finance minister, and we will not start arguing about a few comas or decimal points. With this year's downturn, and we have also taken into account next year's downturn and a normal real growth of the GDP, the gross domestic product, we came up with a projected surplus of $136 billion at worst. This would mean a shortfall of about $12 billion over five years. A little over two billion a year is not that bad.

If the finance minister would only stop lowering the taxes for the rich and use the bulk of the surplus to lower the taxes for middle and low income earners, invest in social housing, correct the inequities and injustices of the employment insurance system, and index the health, education and income security transfers, there would be no problem. Every year he could even pay back some of the federal accumulated debt. He would be able to do that. He better not come up with numbers lower than this projected surplus.

If he does, we will travel across Quebec, and Canada if necessary, to let everybody know that the finance minister is taking everybody for a ride. People are not stupid. He should take his responsibilities.

Consequently, we will be voting against Bill C-22 because it does not serve the interests of the majority of taxpayers. When they talk about tax reductions, we must know to whom they are addressed. They are for the finance minister's friends. It is not you and me, it is not middle income families, it is not low income families. They will get almost nothing this year. It is the people who earn $250,000 and more who are benefiting from these cuts.

With regard to his tax reduction plan, the finance minister should go back, take a good look in the mirror and ask himself if he is proud of what he did. I am sure the mirror would tell him that he is not proud of himself. He will have a second thing to do: sit down at his desk, do his homework again and rethink the tax cuts, give them to low and middle income people and consider the unemployed. For once, he should have the heart to look at what he has done since the beginning of his mandate.

It would be a good idea if he started having more feelings, if he behaved a little more like a human being, if he developed a little of what is called social partnership. I do not know if he is aware of this concept. He talks about compassion, a more liberal and bourgeois value. However social partnership means partnering with people who live in poverty to try to bring them some relief. He is in a major position and he could bring some relief to these people.

I simply ask him to reconsider his past decisions, to do his homework over and to reflect on what I have told him: to help people, to bring them some relief, to demonstrate some social partnership and to show some heart. It seems to me that this is easy, that one does not need magic to do it.

Income Tax Amendments Act, 2000
Government Orders

3:30 p.m.


Lorne Nystrom Regina—Qu'Appelle, SK

Mr. Speaker, I wish to say a few words about the budget implementation bill. Like my colleague from the Bloc Quebecois, I wish to indicate that the NDP will also be opposing the bill at second reading because it speaks to the general economic direction and position of the Government of Canada. The bill tells us what the government and House of Commons priorities should be in terms of the direction of our economy for the next three to five years.

The Minister of Finance believes that the most important priority is to have a massive tax cut of around $100 billion over the next four years. That is not in sync with what Canadians are saying.

Based on public opinion polls and from speaking with people on the street the most important priority is not a tax cut primarily directed at the wealthy, unless they are members of the Canadian Alliance. That is their big priority.

The Alliance has convinced the government that the number one priority is to cut taxes massively. That is being applauded enthusiastically by one member of the Canadian Alliance from Manitoba. What I am saying must therefore be accurate. However, the Canadian Alliance priority, and now the government's priority, is not in sync with what Canadians want.

We have seen in all the polls where approximately 7% or 8% of the people say that the most important priority is to cut taxes.

People want to invest in people. They want to invest in health care, in education and in the environment. They want to invest in our farmers who are in the biggest crisis since the 1930s. Those are their priorities and those are the areas they want us to spend the important part of the money.

In terms of tax cuts, Canadians want a more progressive and fair tax system. They do not want the flat tax system that has been advocated by the Canadian Alliance. The minister himself is going in the direction of having a flat tax. He is doing this by changing the taxation regime in terms of capital gains.

Until recently, 75% of capital gains was included in taxable income. If someone made $10,000, $100,000 or $1 million on the stock market or anywhere else, 75% of that was included in the taxable income and taxed at the marginal tax rate. Now the minister would reduce that to two-thirds of capital gains, instead of 75%.

If that was not good enough, in the mini statement last fall he reduced it from two-thirds to 50% of capital gains. If someone happens to be a very wealthy dishwasher in a restaurant and happens to make $1 million in capital gains, only half of that would be included. That is what the minister thinks.

There are very few ordinary people who would be able take advantage of this tax change. It would help the wealthy. They would get the biggest bang for their buck in terms of having their taxes reduced, and reduced drastically. The major measure in the bill would be a tax cut for the wealthy, for people who make a lot of money in capital gains, for the bankers, for the large corporations and for the privileged. This is happening under a Liberal government.

Mr. Speaker, I know you have been a member for a while and you would probably agree with me that what we have across the way is probably the most conservative Liberal government in the history of the country. It is much more conservative than the governments of Pierre Trudeau, Lester Pearson or Liberal governments that went before. It is more conservative because of the agenda of the Reform Party and the Alliance that are driving it to the right. That is what is happening and that is why the issue has to be debated.

I agree with the hon. member who spoke before me, that the priorities of the government are wrong. Canadians do not want to spend almost all the fiscal resources that we have, two-thirds or three-quarters, maybe 80% or 90%, depending on how strong the economy is with the recession or near recession we are entering into, in terms of a massive tax cut. The want the money to be spent on health care.

If we go back to 1995, the government across the way, again on the advice of the Reform Party, massively cut expenditures to health in terms of transfers to the provinces. Canadians want those transfers to the provinces increased. They want the best first class health care system anywhere in the world to be restored.

I turn to another big issue that the government is ignoring because of the tremendous priority placed on massive tax cuts, and that is aid to the farmers. A little while ago the government announced some $500 million to farmers. Our farmers, particularly the grain and oilseed farmers, are going through the biggest crisis that they have gone through since the 1930s. As a result of that crisis, many farmers have now left the land.

Between the fall 1999 and the fall 2000, over 20,000 farmers in Saskatchewan, Manitoba and Alberta have been forced off the land, largely because of federal government policy that is not supporting our farmers like it should be.

A few days ago there was an article in the Globe and Mail which stated that the American government supports its farmers or subsidizes the grain farmers to the tune of eight times more than we do. That is why American farmers are better off. The European farmers are better off yet in terms of money that they get from Brussels. The government across the way is staring a big farm crisis in the face and instead of providing more money for the farmers, $1 billion or $1.5 billion instead of $500 million, it is giving $100 billion in tax cuts, many to the wealthy and the big corporations. That is wrong and that is why we should be changing the economic and fiscal direction of the Government of Canada.

That is what the bill is all about. We are implementing the fiscal moves and the taxation cuts of the Minister of Finance. What he is doing is wrong in terms of the direction of Canada. We only have so much money. We only have a pie of a certain size.

If $100 billion goes into cutting taxes, how much will be left for farmers and for health care? How much will be left to fight poverty and to fight the problems of the environment which are worsening day in and day out? We do not have a very proud record in terms of the environment.

If $100 billion goes into cutting taxes and padding the pockets of big bankers and the wealthy, how much will be left for the first nations and the Metis? How much will be left for social housing, students, tuition fees and the education system? How much will be left for science and technology in terms of research and development? How much will be left for the infrastructure needs in the towns, cities and municipalities? How much will be left for fishermen on the east and west coasts, for the lumbering industry in British Columbia and elsewhere, or for the mining industry?

If we spend $100 billion out of $100 billion, depending upon the slowdown in the economy, or $100 billion out of $130 billion if the economy does not slow down as much as feared by many people, how much will be left for the real priorities of Canadians?

When we have the government party and the official opposition party applauding a massive tax cut—in fact the opposition wants an even larger tax cut than provided by the Minister of Finance—it shows how out of touch those parties are with the priorities and needs of ordinary Canadians.

Canadians want to have money invested in people. They want a people's agenda. In 1995, when the present Minister of Finance brought down his budget, it was the people of the country who suffered through the most massive cutbacks we have ever had by a federal government in Canada.

Some of those cutbacks had to occur because of the tremendous problem of the debt and the deficit, but instead of just cutting back in a more moderate and selective way we had the slash and burn policy by the minister across the way.

My Liberal friend from Winnipeg was horrified by the big cuts to the health care system. He knows the health care system very well. My Liberal friend from Peterborough was horrified by the cutbacks in transfers in terms of education. He knows post-secondary education very well, being an old professor from Trent University in Peterborough. When I say old, I mean a man with a lot of seniority.

We have a parliamentary system where government members have to sit on their hands, be mute and say “Aye, aye, good soldier” when they vote in the House of Commons on particular bills. It is up to us to try to persuade the Minister of Finance of the error of his ways.

In the last decade, the decade of the nineties we saw the gap between the rich and the poor widening once again. Throughout the sixties, seventies and into the eighties the gap between the wealthy and the poor was narrowing. In the sixties and into the seventies we had the advent of proper old age pensions and the Canada pension plan. Between 1972 and 1974 we had a minority parliament with the Liberals and NDP working in combination. We had the indexing of social programs like the old age pension and an increase of transfers to the provinces for health care.

As a result of the real emphasis on social policy and on social justice we saw the gap between the rich and the poor narrow throughout the sixties, seventies and into the eighties. What happened in the nineties, particularly after 1995? There has been a widening of the gap between the rich and the poor, where the wealthiest 20% of the people are making more and more of the national income and the poorest 20% of the people are making less and less.

One only has to look at two studies, one by Statistics Canada and one by the Vanier Institute of the Family. Both had the same conclusion. The gap between the rich and the poor was widening and not narrowing throughout the nineties.

When we talk about the budget, taxation and monetary and fiscal policy, we should be looking at how we can narrow the gap between the rich and the poor. We should look at how we give more opportunities to each and every single Canadian. We should look at how we can create more of a common good in terms of our policies, in terms of greater equality of condition and sharing and opportunities for every Canadian.

Instead we are going the other way. We are creating more and more poor and disadvantaged people. All one has to do is go to the inner cities of Regina, Vancouver, Toronto, Montreal or Winnipeg to see that there are more homeless people.

Walking from my hotel this morning, I saw a couple of homeless people sitting on the street begging for money. It was around 7.30 a.m or 8.00 a.m. That is a common scene in Ottawa and it is only two or three blocks away from Parliament Hill. Yet we have the Canadian Alliance and the government saying we need more money for big tax cuts for the wealthy.

The member for Abitibi—Baie-James—Nunavik comes from a relatively poor riding. When the Minister of Finance decided to cut taxes for the rich and large corporations in Canada, the member for Abitibi—Baie-James—Nunavik stayed in his seat and did not say a single word about the fiscal policy of the Canadian government.

It is time for a member such as him, who represents a region where there is much poverty, to stand up and tell the finance minister that his fiscal policy is all wrong, that it is unfair for the country, that it is inequitable for Canadians. We do not see that happening in the House.

I mentioned the widening gap between the rich and the poor. I mentioned the cutbacks in education and health. I mentioned the cutbacks to our farmers. We had millions of dollars cut from farm programs in the last number of years. I believe the time has come to reverse the direction of the Government of Canada and to once again start investing in programs that help ordinary people.

Instead of having a $100 billion tax cut, let us spend most of that money on health care and education, on opportunities for low income people and on giving opportunities to the first nations and the Metis people, who in many cases live in situations that are very similar to countries in the Third World. We are not doing.

There are still parts of the country where the unemployment rate is much too high. There are more and more soup kitchens. There are more people living on the streets. There are more shelters for homeless people and more food banks. These are opening all the time. At the same time we see the closures of bank branches, we see the opening of food banks. All this is happening in a country that is extremely wealthy and in a country with tremendous advantages, education and resources.

What we need now is the public policy to make the proper decisions. We need to invest in our people. We need to invest in our farmers to make sure they have the equality of condition with the American and European farmers, which would put them on a level playing field. If we do that, the farmer will produce. Farmers will be selling their products and creating jobs in urban Canada. This will benefit the whole economy.

We need to invest in health care and education. We need to invest in the people to create in the future the most highly skilled workforce in the world second to none. If we do that, we will be a stronger, more viable country.

Income Tax Amendments Act, 2000
Government Orders

3:45 p.m.


Peter Adams Peterborough, ON

Mr. Speaker, I listened with great interest to what the member opposite had to say. I appreciated his mentioning me even though it was in a slightly disparaging way. He talked about tax cuts, tax changes and things of this type. I would like to ask him a few questions.

First, what are his thoughts about the extension of parental leave to 12 months? That is a measure which involves an expenditure by the government and, by the way, by others. There was an increase in the disabled tax credit, which I was very pleased about. That is a tax cut and a tax measure. The caregivers tax credit, which is still a fairly new thing, will increase. He also mentioned if I interest in higher education. We have increased the student tax credit. All these are tax cuts by the government. Not that he is old, but I know of his enormous experience in the House of Commons. I think he was here before anyone who is present here at the moment.

I noticed the Speech from the Throne mentioned the lifelong learning account. The idea, as I understood it, is that each of us should have something like an RESP where we could put money aside in the same way as we do with an RRSP, so that our children could use the tax free funds for their education. This money would be tax free as long as it was used for furthering our educational opportunities.

What does the hon. member think about that proposed tax measure?

Income Tax Amendments Act, 2000
Government Orders

3:50 p.m.


Lorne Nystrom Regina—Qu'Appelle, SK

Mr. Speaker, there are many things in the Speech from the Throne and the budget that one agrees with. Anything that tries to redistribute income and wealth to make this a more fair and egalitarian society, I agree with. Some of those measures are very positive like reinvesting in the social fabric of our country and in the people's agenda. However, a lot of these things were cut back in the budget of 1995, as the member across the way knows.

Now that we have a fiscal surplus of well over $100 billion projected for the next five years, most of the money, maybe 75% or 80% of the it, should be invested be invested in people. These are good examples of where some of the money is going.

My quarrel with the government is that instead of putting 75% or 80% of the money into social programs, infrastructure, farm programs, programs to help students, education, science and technology, research and development, health care and so on to rebuild the social infrastructure and human deficit, the government has gone the other way by putting 75% or 80% into tax cuts.

I believe in having some changes in tax fairness and a more progressive tax system. Rolling back the GST is a good example of that. We should create more marginal tax rates. Instead of having three we should have five. This would be a more progressive tax system. We should make sure we have tax fairness.

However, my quarrel with the government is its priority. It has not done that. Most of the money is going to cut taxes, a lot of which is for the wealthy people. It is not going to the ordinary farmer in Prince Edward Island who is having problems with the trade war on potatoes with the Americans. It is not going to the ordinary farmer. In many cases the money is going to people who do not need it.

First, wealthy people do not need big tax cuts. They invest it often in offshore stock markets or projects. Second, with respect to stimulating the economy, the middle class the household debts are now at the highest level I think they have ever been. Their tax cuts will go to pay down some of the household debts and this does not stimulate the economy.

For low income people, of course the tax cut is a stimulative measure but they get little of that tax cut. At a time when the economy needs to be stimulated, when it needs a shot in the arm, these overall across the board tax cuts of the Minister of Finance are not the way to go. The way to go is to put the money into people to build up our human infrastructure.

Income Tax Amendments Act, 2000
Government Orders

3:50 p.m.

Progressive Conservative

Scott Brison Kings—Hants, NS

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-22.

These amendments to the Income Tax Act represent a collection of baby steps, some of which are in the right direction. Some represent a significant further complication of an already far too complicated tax code. Most represent politics and the triumph of politics over public policy.

If we look at the general direction of these tax measures, we will find that there is no general direction to the these measures. In fact, they resulted from a flimsily put together pre-election document, sometimes referred to as a mini budget. It is referred to as a mini budget but I suggest it reflects the government's mini vision of Canada.

The fact is these baby steps, these tinkerings, these policies do not reflect what Canadians need and are particularly not what the tax code needs. We need a significant level of tax reform in Canada. Tax reform can be used as a vehicle for economic growth. Instead of making tax tinkering part of its pre-election policy, Canadians would be better served if the government was to utilize tax reform as a vehicle for long term economic growth. That would benefit all Canadians and improve our competitiveness globally. These tax measures do not do much to provide for greater long term competitiveness for the Canadian economy.

If we look at the government's record since the election in 1993 relative to international confidence in Canada's economy, the most damning reflection or gauge by which to judge the government is our falling dollar and the fact that under this government our dollar has lost over 11 cents of value. That is the dollar reflects the share value of Canada Inc. Under this government we have seen an 11 cent decline in our country's dollar.

Every time there is a loss in the value of the Canadian dollar in comparison to the U.S. that leads to a pay cut for every Canadian. We depend greatly on the goods and services we consume from our neighbours to the south. A loss in the dollar represents a direct loss in our standard of living and ultimately in our quality of life in Canada.

The tax policy and fiscal policy provide a very important key to providing long term strengthening of the dollar. The government refuses to discuss the falling Canadian dollar under the guise of deferring to the Governor of the Bank of Canada and his responsibility over monitoring policy. Fiscal policy levers in the long term are as important as monetary policy levers in providing long term strength to the Canadian dollar. The importance of fiscal policy, that is tax and debt policies and strategic spending policies to the long term strengthening of the Canadian economy, is where the government's record has been a less than impressive one.

Some of the types of tax reform measures that we would like to see and that would make a great deal of sense are those that address some of the most pernicious and uncompetitive natures of our Canadian tax burden. One is our capital gains tax.

Even after there was some tinkering in this economic statement and some reduction of capital gains taxes, we still have a higher tax burden in capital gains than the U.S. For the government to eliminate personal capital gains tax would cost the federal treasury about $4 billion a year. This would put us ahead of the U.S. in a very important area of taxation, particularly in areas of new economy, biotechnology and in some of these other areas that are emerging.

In terms of encouraging new economy venture investments, particularly during a time when market conditions are so turbulent and we need to try to provide whatever incentives we can to maintain early investors' interest in these areas, the elimination of personal capital gains tax would provide a great incentive for Canadians to invest and help continue to grow the economy.

It would be even more important now than it was a few months ago as we see the economic downturn that we are experiencing in Canada, in the U.S. and indeed globally at this point. It becomes even more important in some areas. I have referred in a specific sense to capital gains taxation. It is even more important now that we try, for once, to be ahead of the U.S. as opposed to constantly trying to keep up and in fact always being a couple of steps behind. That is one area where we would have liked to have seen a more dramatic and visionary step as opposed to the tinkering the government has done.

The fact is that most of these tax measures occur over a five year period. If hon. members look at the degree to which these tax reductions will impact Canadians in the short term, it is actually much less than what the government would like Canadians to believe, particularly when combined with the payroll tax hikes that became effective recently with the CPP payroll tax hikes. It is clear that the net tax benefit or the net benefit to Canadians in a take home pay context is minimal or in fact none if members again take into account payroll taxes.

Whatever way the government would like Canadians to view these measures, it will become painfully obvious to Canadian taxpayers when they are receiving their cheques and with their tax deductions that these measures have been half measures and have not really addressed the fundamental issues of high taxes in Canada. Canadians have the highest income taxes in the G-7 and the second highest corporate taxes in the OECD. Even after full implementation of these tax measures over a five year period, we would still end up having about the third highest corporate taxes in the OECD. That is assuming that none of the other countries reduce their tax burdens, and we already are aware that at least seven of them are entertaining and moving toward lower taxes.

Even as we see a slight narrowing of the gap between Canada and the U.S. in terms of tax burden in the short term, we see the U.S. now introducing the largest tax cut in its history. The tax cut is being negotiated currently and is making progress through congress. We are still behind. The mini budget introduced prior to the last election did not do much to get us caught up to the U.S. economy in the current context and yet we are now going to see, under President Bush, a leapfrogging further ahead. Again, Canada will be further behind.

A recent report from the Fraser Institute drew, in a convincing way, a direct linkage between Canada's low dollar and Canada's systemically high levels of taxation on all fronts. We have yet to see a firm commitment from the government, not just on tax reform as a vehicle for long term strengthening of the Canadian economy, but also for debt reduction. Debt reduction, when we have approximately four times the per capita debt of the U.S., should be a much higher priority than the government has made it.

In fact, many of these tax reduction measures are simply spending measures in the form of targeted tax cuts. Rewarding a particular kind of behaviour is nothing more than spending. It is another way to encourage people to do something that they may not do otherwise. People end up making decisions based on tax policy as opposed to what makes sense from a business policy, from an investment policy or from a personal perspective.

The fact is, this mini budget, this pre-election document, was far from what Canadians needed in the most turbulent February we have seen in the last seven years. In the last seven years there has not been a worse February for the government to avoid having a budget in than this last February, when the government ducked the issue and decided arbitrarily not to have a budget.

The fact is, Canadians, particularly with the difference in the economic conditions between the time when the mini budget was introduced and today, need a budget more than ever. Whether it is the decline in the global capital markets or the dramatic declines in the TSE, the NASDAQ and the New York stock exchange, Canadian investors and individual Canadians have seen their retirement savings diminish sharply in recent weeks. At the same time, they are seeing their standard of living decline because of a weakening dollar. There is a significant and reasonable concern among Canadians which should be addressed, not through an economic statement in the spring and not through a state of the union address which the finance minister has talked about providing, but through a full budget.

It is also offensive from a democratic accountability perspective, because this parliament, with its new members in some cases, has not actually been asked to approve a budget introduced after the last election. There are a number of new members of parliament in the House and government spending and government estimates ultimately should be accountable to this place, to parliament. For the government to determine that it is not important to engage parliamentarians in the approval of government spending and tax policy through the support of a ratification of a budget in the House is really and truly offensive.

There are a number of reasons why we have concerns with the government's policies, with its tax policies and general fiscal policies. However, these concerns are not just our concerns. These are concerns shared by many Canadians, particularly by some of Canada's top economists. We are seeing a unified front from Canada's economists relative to the lackadaisical approach of the government on specific tax policies. In the words of Terence Corcoran, a journalist, “If weak currency created growth, Canada would be a world leader”.

The Prime Minister once said that a weak dollar is actually good for tourism. I think this indicates his economic naiveté but also his genuine belief that a country can devalue its way to prosperity. The fact is, a weak dollar is no way to guarantee long term growth and an increase in the standard of living of a people. In fact, it is quite the contrary. If the Prime Minister's argument is correct, that somehow reducing the dollar can improve tourism, let us think about this. The logical corollary of his argument is that if we would reduce the dollar to zero ultimately we could become the largest exporting nation and the most successful exporting nation in the world. Of course we would be giving away our products.

The finance minister said in 1990, I believe at the time when he was running for the Liberal leadership the first time, that he would, if given the opportunity, manage the dollar's decline down to its natural level of about 78 cents to 80 cents. He has done so well that he has managed the dollar's decline down to the 63 cent range.

Canadians are asking a legitimate question. They want to know why the finance minister is not doing more to strengthen the intrinsic value of the Canadian dollar as opposed to accepting its decline. Is it that the Liberal government has accepted that currencies such as Canada's will in the long term be marginalized and that the best way to get rid of the independent Canadian dollar is to simply euthanize it, to let it wither on the vine and let it decline to such a level that Canadians will say, as they have already started to say, they would be better off with a common North American currency?

I do not believe we would be better off with a common North American currency. To give up our monetary policy levers would be a mistake. If we give up our floating currency with the U.S., there needs to be another operative mechanism to reflect things. For instance, the commodity crisis that occurred about two years ago in Asia would have manifested itself not in a reduced Canadian dollar at that point, but in higher levels of unemployment. Without the floating Canadian dollar, I would argue that the operative mechanism that would reflect differing levels of productivity or commodity price valuations would be unemployment rates. I am concerned about the notion of losing that very important tenet of economic sovereignty that is the independent monetary policy and the Canadian dollar.

Why would the government watch over the decline of the Canadian dollar and not defend it? If we in this place do not take steps to strengthen the Canadian dollar in the long term through more aggressive and innovative tax and debt reduction policies and more innovative tax reform packages, and if we do not deal with this in a more forward thinking and visionary way, we and certainly the government will have to accept the blame for the Canadian dollar withering on the vine.

At some point, and I am not sure when it will be, if we continue to see the cyclical decline of the Canadian dollar, Canadians are going to ask why we have an independent currency. I do not want to see us get to that stage and I am concerned that we are precariously close to that position right now.

With a government that has seen the Canadian dollar drop by over 11 cents under its seven year term, it is important to remind the government that under the previous Mulroney government the dollar lost only one cent during the same period of time. If the value of a country's currency reflects global investor confidence in that country, I would suggest that investors do not have a great deal of long term confidence in the government.

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4:10 p.m.

Etobicoke North


Roy Cullen Parliamentary Secretary to Minister of Finance

Mr. Speaker, I find it strangely ironic that parties on the right, if we want to call it that, always talk about the Canadian dollar. Of course there is a concern about the Canadian dollar, but on the one hand those members talk about the markets and how we should worship at the altar of the markets, but in the same breath they talk about how the government should be doing something about the Canadian dollar.

Although the member is not indicating this to the House, he knows that recently the Canadian dollar has actually been doing better than other currencies. I am talking about the European currencies, the euro, and the Australian dollar and the New Zealand currency. That is nothing to take a lot of relief from, but we do know the story, and that is that people are flocking to the U.S. dollar as a safe haven, which is strangely ironic in the context of the marketplace because markets in the U.S. are taking a beating and some of the economic fundamentals are not terrifically strong.

Nonetheless, there we have it. It is a migration to the U.S. dollar. The member for Kings—Hants talked about income taxes. This bill implements the $100 billion tax reduction package so that average Canadians will see their personal income taxes reduced by 21% and Canadians with families will see theirs reduced by 27%. No matter how we cut it, that is a very large cut in personal income taxes.

I have five small questions, if I may. The member talked about taxes. I wonder if he forgot that large businesses in Canada on average pay 5% less income tax than those in the U.S. I wonder if he neglected to mention that for small businesses earning up to $75,000 a year corporate taxes in Canada and the U.S. are similar but that for small businesses above $75,000 corporate rates in Canada are significantly lower.

I wonder if he forgot to mention that capital gains in Canada are two percentage points lower than the average top tax rate. I wonder if he forgot to mention the more generous treatment for employee stock options here in Canada.

I wonder if he neglected, just as an oversight, to mention the permanent 20% research and development tax credit for all R and D expenditures in Canada, a country with one of the most progressive and advantageous R and D regimes in the world. I wonder if he forgot that.

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4:15 p.m.

Progressive Conservative

Scott Brison Kings—Hants, NS

Mr. Speaker, I thank the parliamentary secretary for his question. He is quite right. The Canadian dollar is doing very well compared to the ruble. That being the case, I suggest to the hon. member that there are other measures we should use. One might be the U.S. dollar, given the degree to which our trade relationship with the U.S. exceeds our trade relationship with Russia.

For our dollar to be strong relative to the ruble, as my grandfather used to say, is like peeing oneself in a dark suit. It gives one a nice, warm feeling, but nobody knows. It does not make any difference. That is not why, I am sure, the hon. member is wearing a dark suit.

He also said I had neglected to mention a few points. The reason I neglected to mention that taxes are lower in Canada than in the U.S. was because they are not. There is a reason we neglect to mention things we know are absolutely, completely and utterly false. Because I understand the differences between tax levels in Canada and those in the U.S., I neglected to mention some of the mistruths he introduced in the House today. I am certain those mistruths were unintentional.

Our capital gains taxes, regardless of income level, are still considerably higher than those in the U.S. Our corporate tax burden is still the third highest of the 31 OECD countries, and after five years of tax reduction it will still be about the third highest.

We still have some of the highest marginal tax rates for successful Canadians. If we look at basic levels of income, Canada's cutoff point for taxing low income earners is about $3,000 lower than in the U.S. In Canadian dollars the difference is closer to $4,000. The hon. member would like to think, I am certain, that we are a kinder and gentler nation, but Canada taxes low income earners far more harshly than does the U.S.

While he crows about the baby steps his government has taken in the right direction, I suggest he should remember that a tortoise moving in the right direction on the autobahn is still roadkill.

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4:20 p.m.


Ovid Jackson Bruce—Grey—Owen Sound, ON

Mr. Speaker, there are two methods by which the dollar could go up immediately. We could raise interest rates or we could cash in the 63 cent dollar right now, join the United States and allow Washington to make decisions for us. I wonder if that is a method the member thinks we should use to get our dollar up.

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4:20 p.m.

Progressive Conservative

Scott Brison Kings—Hants, NS

Mr. Speaker, I thank the hon. member for his question. No, I certainly do not support a single North American currency.

We are not looking for a short term, band-aid solution for the dollar but a long term strengthening of our currency through fiscal policy levers. I would certainly not present fiscal policy as an immediate overnight solution to strengthening the dollar, but in the long term it can have a significant impact.

There are only two levers we can use to strengthen our dollar in the long or short term: monetary policy, which is in the hands of the Bank of Canada, or fiscal policy whether in tax and debt reduction policies or spending policies.

Those are the policies that in the long term will require vision and commitment. If we are to strengthen Canada in a comparative sense, particularly with regard to tax policy, we must cut not only taxes which are politically unpalatable but those which have the most deleterious impact on long term growth.

Also, reducing our debt over the long term, not simply as a percentage of GDP but in real terms, would have a significant impact on strengthening the Canadian dollar.

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4:20 p.m.


Guy St-Julien Abitibi—Baie-James—Nunavik, QC

Mr. Speaker, I would not want to pass up this opportunity to speak to Bill C-22, the Income Tax Amendments Act, 2000, which was recently tabled.

We have examples from families in resource regions. I have here letters written in September and addressed to the Minister of Finance of Canada. Other letters were addressed to the Minister of Finance of Quebec.

I do not want to pit provinces against provinces, but as a result of the changes made by the Quebec government to its family policy in 1998, the amount of the Canada child tax benefit has been lowered.

Today I received a letter from Clémence Côté. Her husband, Louis Germain, works in the mining industry in Val-d'Or. She said “Today, my children are being penalized”. One must understand what it means when someone writes that her children are being penalized. She wrote “Today, my children are being penalized by the Canadian tax system. I have a large family; I have 10 children. Dear Minister, I would like to ask you for an exemption so that I may receive the full amount of the Canada child tax benefit regardless of our family income”.

The Canadian tax system does not make allowances for families with 10 children or some have 11 or 12.

Her husband, who makes a good living working in the mines, earns in excess of $60,000, $62,000 or $63,000, and does overtime in order to help finance his children's education. With 10 children, a mother has a lot of work at home.

This mine worker, Mr. Germain, does a lot of overtime because several of his children are in school and have been allowed to take up only one sport either at school or at the community level. Even if a child wanted to take up two or three sports, his parents could not afford to pay for it. The same is true of transportation for children who go to school in Val-d'Or. She pays the school board for their transportation and she still has to pay back her benefits.

What I found bizarre in all this is that several years ago, as a result of a 1999 letter from the Minister of National Revenue, they asked why the Canada child tax benefit had been changed in Quebec.

Provincial governments may enter into agreements with the Government of Canada to change the amount of the Canada child tax benefit that their residents will receive depending on the number or the age of children, or both.

Before July 1998, the method used to calculate the benefit was different for Alberta and Quebec compared to the other provinces and territories. These two provinces had chosen a calculation method based on the age of the child and his or her rank in the family.

This means that, before July 1998, Quebec residents were entitled to a base benefit of $869 for the first child, $1,000 for the second child, and $1,597 for the third child and each subsequent child. After making changes to its family policy, the government of Quebec advised the Minister of Finance of Canada that, starting in July 1998, the benefit paid to Quebec residents would no longer be based on the rank and age of the child.

Now the Canada child tax benefit is calculated the same way for Quebec residents as for residents of other provinces and territories, except Alberta. The base benefit is now $1,020 per child, regardless of his or her rank in the family, since the amount of the Canada child tax benefit to which a family is entitled has been reduced following a decision made by the government of Quebec.

Regardless of the two jurisdictions, we must realize that several families in Quebec have seven, eight, nine, ten, eleven, twelve or thirteen children. They have to repay the tax benefits when the husband's income is too high, because of overtime work especially.

That is the message I want to send. We have to find a way to help large families. Nowadays, families with five or six children are considered large families. For families with ten children, the Government of Canada should find way, through some kind of exemption, to help them out, especially in resource regions, but also in urban areas.

We all know how much it costs to look after children's education or to enrol them in a sport program. That is the message I want to send. We should take into account the number of children in all Canadian families. We count one, two, three, and then it seems that senior officials tell their ministers “We stop at three. Passed the third or fourth kid, it does not make any difference”.

On the contrary, it is important, which is why I want to send a message to the finance minister. We need to find a way to help out these large families.

I do not think members will find it surprising that I want to address another issue here today. A poll published on March 9, 2001, and I mention the year because some people might think it was carried out a number of years ago, show that four out of five Quebecers are in favour of a salary being paid to the stay at home parent. At least 82% of those surveyed said they strongly or somewhat agreed that a salary should be paid to the parent who stays at home to take care of the kids.

Why? There is another way about it. I have made several speeches on this issue in the House. I have tabled motions and petitions to have a salary paid to the parent, mother or father, who stays at home to raise children. This would actually help reduce poverty.

I saw an article written by a woman who lives in Montreal, which said “The important thing is to be at home with the children during their first three years of life”. Parents are given a one year parental leave. What should we pay a person who stays at home? Maybe we could, like Germany or other countries, provide a supplement of $250 a week in order to help the family or the person who stays at home with the children.

I would like to raise one final point. It is the issue of pensions, those paid to seniors living below the poverty line. Steps should be taken to increase their income upon reaching retirement age, especially after retiring. Members will recall that a few years ago, we had interest rates of 16%, 17% and 20%, and things were going pretty well. Today, retired seniors are relying on assets deposited in banks or invested mutual funds with a 2% or 3% rate of return.

This is why a majority of Canadians are in favour of pension reform.

The important thing is to raise pensions, to reform the pension system so that people, and particularly seniors, have a decent income. Some single seniors always receive the same amount. Sometimes, their cheque is increased by $1.04 for a three month period, as a cost of living adjustment. The pension system should be reformed and people should have a decent income.

That is why I mentioned these three cases. We often hear about them in my community. Long term solutions must be found.

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4:30 p.m.

Canadian Alliance

Ken Epp Elk Island, AB

Mr. Speaker, I listened with interest to the hon. member's speech via the courtesy of the interpreters, since unfortunately I am unilingual.

I would like to ask the member a question with respect to what he was saying. He was talking about the problem of mothers and fathers who want to stay home with their children after the one year is up. Under the Liberal scheme, the only way that could be arranged is to have a child every year. The limit is a year. If a person has not worked in between, then they would probably be ineligible. After the first year, the second and third child that may come would not be eligible for those benefits.

Does the member have any solution to that quite clear dilemma in the Liberal plan?

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4:30 p.m.


Guy St-Julien Abitibi—Baie-James—Nunavik, QC

Mr. Speaker, nobody can replace the mother during the first three years in the life of children.

The hon. member raises a good question. Regardless of the government in office, the important thing is to work together with the opposition parties in order to find real long term solutions. Now is the time to do it.

He mentioned the first year, but I can tell members that all Canadians think it is important that a mother stay at home during the first three years of her children's life.