Mr. Speaker, I am sure people will be surprised to see me get up for the third time within two hours. This is a unique happening in the House. I would like to remind people that this is happening because the governing party is refusing to debate these issues and is refusing to defend its bills. As such, the bills are going through more rapidly because only the opposition is pointing out what is wrong with the legislation. The government is refusing to defend itself.
It is a pleasure to rise on behalf of the constituents of Calgary East to speak today to Bill C-22, an act to amend the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act and the Modernization of Benefits and Obligations Act. This bill, like many dealing with the tax code, is an omnibus bill, meaning that it deals with a number of issues at once.
As mentioned in the title of this bill, acts included are the Income Tax Act, the Canada Pension Plan and the Excise Tax Act. While each of these acts deserves attention and has important consequences for Canadians, I would like to address my thoughts to how this act impacts on Canada's competitiveness.
I have been appointed chair of the advisory committee on globalization and competitiveness by the Leader of the Opposition. The mandate of this advisory committee is to advise and to get input from business leaders, academics, non-governmental organizations and Canadians from all across the country on the possibilities and pitfalls of globalization for Canada.
There are countless ideas about how to make Canada more competitive in a more interconnected world. These ideas need a voice in parliament and the public sector. It is hoped that the Canadian Alliance will be that voice.
For years the Liberal government has ignored the reality that Canada is losing valuable ground to our neighbours to the south and to our major international competitors. We know that the new U.S. administration won a mandate based on the promise of substantial tax relief and a targeted plan of debt reduction.
We know that income taxes are not the sole indicator of the tax divide between Canada and the U.S. Canadians face other taxes that push the total tax burden higher. The total tax burden includes sales taxes, payroll taxes and other levies by all levels of government, which create a Canadian tax burden that is up to one-third higher than that of the U.S. It is clear that if Canada does not follow U.S. tax reductions, the country will fall further behind.
Mexico, our NAFTA partner, also has vigorous plans to become a major centre for North American investment. Canada will face increasingly tough competition from Mexico in our plans to attract foreign investment. Mexico enjoys a unique position as a member of NAFTA. It is the only North American country that has a free trade agreement with the European Union as well as with Mercosur, the free trade bloc with Brazil, Argentina, Uruguay and Chile.
The challenges presented by Mexico and the U.S. are just two examples of why Canada cannot afford to continue making negative public policy decisions that impact our competitiveness.
When the current foreign affairs minister was the Minister of Industry, while he was curtailed because he was representing the government, he did at times manage to raise warning signs about our country's tax bracket and competitiveness.
A survey of the world's most competitive economies by the Swiss-based International Institute for Management Development has placed Canada at number 11, a drop of one place from last year. The institute praised Canada for its infrastructure, legal framework and human resources, but gave poor marks for its record in science and technology and for uncompetitive taxes. Just before speaking on this bill, I spoke on another bill in reference to welcoming the government's initiative in helping science and technology.
For years many of Canada's most successful companies and business people have argued that high taxation impacts Canada's ability to be competitive in a more interconnected world. High taxation discourages investment and innovation and it is a major cause of the brain drain. These issues have been pointed out time after time to the government.
John Cleghorn, former chairman and CEO of the Royal Bank, said that higher taxation has diverted savings into the government sector that would earn higher productivity returns for companies and societies at large in free markets. He went on to say that higher taxation also hits living standards more immediately by cutting off what is left in our pockets at the end of the day to spend on our families and ourselves.
Canadian business leaders and academics will agree that for Canada the challenge is to build a more innovative economy that is well positioned for competitive success in the new global market. To succeed, Canadian firms must take full advantage of the opportunities created by greater economic integration and increased cross border flows of goods, services, technology, ideas and knowledge.
The responsibility for building a more innovative and competitive economy falls primarily on Canadian managers and entrepreneurs. However, government has a role to play as well. Government can reduce taxes. It can ensure that Canadian students are some of the most highly educated in the world. It can provide the conditions necessary to make Canada the final destination of foreign direct investment from all regions of the world. The government can and must do all those things, but sadly the government does not.
The government claims in the bill that it has cut taxes by $100.5 billion over five years. This is what it is saying based on its list.
However, let us look at reality. The reality is that we must subtract $3.2 billion over five years for social spending. The child benefit is a spending program delivered through the tax system and it is an increase. It is not a tax decrease, it is a spending increase. However, the government says it is a tax decrease. It does not recognize that it is a tax increase. As well, indexation is accounted for separately.
Next we must subtract $29.5 billion over the five years for increased CPP premium hikes. We all know that CPP premiums have been increased, yet the government refuses to say that is part of its tax cuts and puts it separately. In reality, when we look at the competitiveness for everything, it is a burden. The burden comes out of the government's mismanagement of the CPP. I was part of the debate on CPP premiums. What is interesting is that when CPP was first introduced the government was saying the same thing that it is now saying after 20 years of CPP premium increases. Nothing has changed over that time.
As well, indexing personal income taxes is meant to hold the tax burden constant over time, so it should not be counted as a tax reduction.
Therefore, when we take out all these things, there is only $47.1 billion in net tax reduction provided over five years. Let me repeat that: it is only $47.1 billion over five years, not the $100.5 billion that the government is claiming. We can see innovative accounting here, with the government giving the illusion to Canadians that they are facing major tax relief over the next five years when in reality that is not happening.
I received a call from one constituent who was a little puzzled because he had heard about the government reducing taxes and he could not understand why his net take home pay had suddenly decreased. I asked him to take a closer look to see if his CPP premiums had increased. Sure enough, CPP had increased. That is why he is taking home a smaller cheque.
The government's current policy does not create the competitive environment that we need to position ourselves for taking advantage of the global economy. The Canadian Alliance has proposed further reductions in taxes, which would create an environment that businesses are looking for on behalf of Canadians in order to poise themselves to take advantage of the 21st century.