Mr. Speaker, since the very beginning of time it has been a practice for citizens to pay tax to support the services they receive.
The Book of Genesis tells us that both Abraham and Jacob paid a tax of 10% on what they owned and this tax was called a tithe. Later the Council of Vienne which sat from 1311 to 1312 approved giving the money from the tithe collected over a six year period to the King of France to finance the crusades. The concept of a simple tax on revenue has been with us for a very long time, as has been the concept of directing tax money to fund the costs of a war.
It came as no great surprise when the federal government in 1917 introduced the Income War Tax Act as a temporary measure. The act was 10 pages long and used relatively simple language. The basic obligation to pay income tax was clearly stated in subsection 4(1) where it said:
There shall be assessed, levied and paid, upon the income during the preceding year of every person residing or ordinarily resident in Canada...the following taxes:
(a) four per centum upon all income exceeding fifteen hundred dollars in the case of unmarried persons and widows or widowers without dependent children, and exceeding three thousand dollars in the case of all other persons.
At that time university educations were a rarity and one certainly did not need a degree to figure out whether or not one owed taxes and, if so, exactly how much.
Today the tax act is a case study in bafflegab. It stands in violation of one of the most basic rights of Canadians: the right to know and understand the laws that affect them.
Canada, like most other Commonwealth countries, has specific legislation requiring the publication of our laws. The Publication of Statutes Act requires that our laws be printed and distributed to the public so that the public may know the law.
Just as our legal system has long held that ignorance of the law cannot be a defence, it requires that citizens be able to access the laws and therefore know exactly what they are. This includes the Income Tax Act.
When we think about it, every citizen should know their rights and obligations. That is a basic tenet of a proper running democracy. The Canadian Charter of Rights and Freedoms meets this standard.
On the Department of Justice website the charter prints on to seven neat pages and can be downloaded in seconds. It has clear, concise wording. For example, subsection 6(1) says:
Every citizen of Canada has the right to enter, remain in and leave Canada.
Canadians who have completed a grade three education will understand this sentence and, more important, will understand their rights and obligations.
By stark contrast the Income Tax Act is there as well. The Income Tax Act is also on the Department of Justice website. A warning lets would-be downloading taxpayers know that the act is a whopping 5.3 megabytes in size, relative to the seconds it takes to download the charter. One can only assume that this warning is so users can make room on their hard drive and/or prepare themselves for a lengthy wait by reading War and Peace or building a ship in a bottle.
When one finally receives the completed file one is also in for a very nasty surprise. Actually one is in for two surprises. The first surprise is that the act is not really written in either of our official languages. Turning to subsection 2(2), I will read the first paragraph which is written in both English and French:
In English it reads as follows: “The taxable income of a taxpayer for a taxation year is the taxpayer's income for the year plus the additions and minus the deductions permitted by Division C”.
I have chosen one of the more straightforward paragraphs. In order for taxpayers to answer the basic question “How much do I owe” or “combien dois-je au gouvernement”, Canadians who own mutual funds or who have invested in an RRSP need not only a profound knowledge of arcane English but a mind which is sufficiently powerful to follow the logistical gymnastics of the basic calculations. It is amazing how far we have regressed since 1917.
The version of the Income Tax Act which is on the Department of Justice website was last updated on August 31, 2000. That means that the web version does not reflect the changes to the act made by the October 18 pre-election mini budget. Even after wading through thousands of pages of linguistic fog, the taxpayer would still not have a clear answer to the question “How much do I owe?”
Fortunately the private sector is willing to help. The problem is that the tax act is so complicated that the books which try to explain it are nearly as thick as the act itself. Arthur Andersen's Preparing Your Tax Return is 1,264 pages with a 40 page index. Let us think about that. The index to the guide is four times the length of the original temporary Income War Tax Act. It is, however, the authoritative guide, the one that the Canada Customs and Revenue Agency uses to understand the act that it must administer.
The authors of this book accurately summarize the problems with the Income Tax Act in the book's foreword. They write:
Because of the complex nature of the Canadian Income Tax Act, the fact that relatively few of its provisions have been interpreted by the tax courts, and that some of its provisions have not even been interpreted by the CCRA, it has not been possible to provide answers to all of the questions which may arise.
The complexity of the tax act is such that an entire industry now exists to help Canadians navigate the minefield the act has become. Accountants, tax guides and online tax filing services multiply like yeast in a warm oven in an effort to help the average person answer that simple five word question: “How much do I owe?”
With the complexities of the tax code that Bill C-22 adds, just imagine if other government obligations were crafted with the same complications. For example, how many traffic deaths would result if the rules of the road were as complicated as the tax act?
How many Canadians would never travel abroad if a passport application form were nearly as difficult as a tax return? How many Canadians would watch Peter Mansbridge if he used taxspeak in his newscasts? How many Canadians would drink water from a public drinking fountain if the state could not affirm the cleanliness of that water in fewer than 120,000 words?
On top of the lunacy and the complexity of our tax code, I suspect that the fog the Canadians face in understanding their tax code is deliberate on the part of the Government of Canada. I think there is an agenda here, a hidden agenda.
The fact is the relief that average Canadians feel upon successfully filing their jungle gym tax returns probably acts to dull the rage taxpayers feel working eight weeks longer than their American friends to pay their federal taxes. Let us not forget that even as the finance minister postures and smiles in the House, American workers pay their tax bill on May 3 while it takes Canadians until June 30. Perhaps it is the relief of actually working for themselves on July 1 that puts so much of the glee into Canada Day celebrations.
The result of those taxes has driven the Canadian dollar into a downward spiral. It is now hovering between 63 cents and 64 cents. The tax cuts that President Bush is considering in the United States will both affect the value of our dollar and further widen the income gap between working class Canadians and their neighbours south of the border.
Government members continue to posture and smile around their mini budget's tax relief but it hardly gives them bragging rights. It is like the Trabant claiming to be the best built east German sedan. It may be true, but it is of little comfort in a world where other countries are doing much better.
It is of even less comfort when we realize that we are paying far more federal taxes today proportionately than our grandparents paid in 1917. In 1917, a family of two with a single income of $3,000 paid $120 in taxes. In today's money that is roughly $1,349 in taxes on income of $33,373.
In 1917 Canadians started paying taxes when they earned in today's dollars almost $16,800. Today individuals under the Liberal government start paying taxes when they earn less than $8,000. In other words the tax code has become more regressive: more Liberals, more regressive.
This year a Canadian family of two earning that same $33,000 will pay $3,422 in personal income tax after the finance minister's biggest tax cut in history. That means for every $3 in taxes in 1917 today's taxpayer will pay $7.61.
If we think back, in 1917 Canada was deeply involved in the great war. Hundreds of thousands of Canadian men were fighting in Europe. Canadians supported and subsidized 100% of their patriotic effort. Their existence was 100% subsidized through tax dollars. The government introduced the Income War Tax Act to finance the war and help those brave Canadians.
Today in times of unprecedented peace and stability the government needs more than twice as much tax revenue from the average person just to run the status quo, and it does not even run that very well or outside debt.
That is a scary thought and really demonstrates the need for genuine tax relief. Other countries have figured it out. The government has not but other countries have. Places such as Ireland have learned that cutting taxes means job growth, increased competitiveness and a higher standard of living. The Celtic tiger has outpaced Canada in both standard of living and competitiveness since 1989.
The government needs to do two things to convince my generation to stay in Canada and to lure other workers here. It needs to simplify the tax system and it needs to cut taxes overall.
Simplifying our tax system is needed because it lets people know directly how much they owe and because it focuses the debate not on the language of the act but on the amount paid in tax. In other words, how big is the government and how much do we have to ante up for it? That is a healthy debate for the country.
Once people get a clear avenue of calculating their real tax burden they will demand tax cuts with the same zeal they now demand for balanced budgets. When that day comes the government will have no choice but to limit its voracious appetite for tax dollars and offer meaningful tax relief. On the same day Canada's standard of living will rise and our international competitiveness will be boosted if the government shows this kind of leadership.
As a member of the most overtaxed and debt saddled generation in Canadian history, I will celebrate that day when it comes. In the meantime I will continue voting against and speaking against Liberal halfsteps and increased tax code complications such as we see embedded in the bill we are debating today.