Mr. Speaker, there are so many areas in which to criticize the government in terms of general fiscal direction at this time. I do not have to remind anyone in the House of the decline of the Canadian dollar by 20% under the government's stewardship as a result of its failure to adapt and develop policies in Canada that reflect the needs of the 21st century, particularly in terms of what has happened in other countries. As other countries have focused on productivity and on the type of tax and regulatory reform to vault their economies proudly forward, the government has dilly-dallied, dithered and focused on short term focus group economics and on next week's polls as opposed to the challenges and opportunities in the next century.
I will not focus on the lack of vision. Canadians are aware of that. Canadians are aware that the government has done nothing for nine years except basically live off the proceeds of the previous government's policies, including free trade, the GST and deregulation of financial services, transportation and energy, which were all the very policies that party opposed in opposition and then swallowed themselves whole in government to accept, to embrace and to live off the proceeds of.
However, I will not be pithy and partisan today in the House of Commons. Instead, I will focus on some of the specific shortcomings of the current piece of legislation at hand.
First, the government has imposed a $2.2 billion tax. It is not just a fee, as even the Minister of Finance in the House of Commons is referring to it. It is a tax on Canada's most vulnerable industry, the airline industry, during a period of time when we see the great and tremendous need for competition in Canadian airspace, which is so sadly lacking. It is a tax aimed disproportionately at discount and short haul carriers, the very type of competition we need across Canada, particularly in regions like Atlantic Canada and British Columbia at a time when those regions depend on affordable access for air travellers.
There has been absolutely no impact analysis by the government, either by the Department of Finance or by the Department of Transport, on what the impact of this new $2.2 billion tax will be on competition in Canadian airspace, on the regions of Canada and on the struggling airports. In and of itself it is dismaying that the government would not do any type of study of what the impact of such a major policy would be.
Further, we have learned this week that the Department of Finance actually based the $2.2 billion tax figure, the $12 per flight or $24 per round trip, on specious data. The bureaucrats in the finance minister's department actually developed their estimate of what that fee ought to be on information that was categorically wrong, on estimates that actually reduced what the realistic number of air travellers would be, in an effort to inflate revenue over the next several years. The government has now created, through this new air security tax, a $1 billion surplus for itself which will go into general revenue.
The Minister of Finance is saying “we will revisit this”. The government is saying “we will revisit this in the future and if it is too high, we will cut it back”. Why should we believe the government when it is the same party that promised to scrap the GST when in opposition and then after forming the government embraced the GST? Now the Prime Minister brags about the GST and takes credit for it during foreign travels.
It is offensive that the government is trying to profit on the back of Canada's most vulnerable industry, the airline industry, and in fact in many ways is exploiting the genuine sympathies of Canadians in a post-September 11 environment to actually create another cash cow for Liberal spending in other areas. That is obviously wrong.
I was disappointed that the government did not move more aggressively on one specific area of policy, one further area: to eliminate the capital gains tax on gifts of listed securities. In the legislation, the government does make permanent the 1997 reduction of capital gains tax on gifts of listed securities to 50%. That is a baby step in the right direction, but the fact is, in the U.S. or the U.K., universities, hospital foundations and general charities all benefit from government policy whereby there is absolutely no capital gains tax on gifts of listed securities. This means that our Canadian universities, our Canadian hospital foundations and our charities, ranging from the big charities like the United Way in Toronto to the smaller charities across our country, operate at a competitive disadvantage with charitable foundations, organizations and philanthropic interests in the U.S. and the U.K.
Clearly this is bad public policy. At a time when the government has so dramatically cut social spending and transfers to the provinces we need to engage our volunteer and philanthropic sectors more fully. At the finance committee we asked representatives of these sectors what we ought to do to increase levels of donation and participation to meet the needs of Canadian communities. Every one of the witnesses before the committee said we should eliminate the capital gains tax from gifts of listed securities.
The government has failed to do this. The previous reduction of the capital gains tax on gifts of listed securities has resulted in over a billion dollars going from private hands to charities in Canada over the last four years. Completely eliminating the capital gains tax on gifts of listed securities would have an amazing impact on the growth of charitable contributions in Canada at a time when social needs across the country have expanded and governments are playing smaller and smaller roles. We need to do everything we can to ensure the volunteer sector has every possible advantage and tool at its disposal to succeed.
The cost to the government today of completely eliminating the capital gains tax on gifts of listed securities would be about the same as the tax revenue loss in 1997 when the government reduced the capital gains tax by 50% on gifts of listed securities. However the impact would be far greater. The United Way of Greater Toronto has received gifts of shares exceeding $10 million since 1997. In every province across Canada, from universities in Nova Scotia to hospital foundations in Toronto and British Columbia, there are examples of charities and community based foundations that have benefited as a result of the policy.
This would have been a simple way for the government to demonstrate that it cares for community based organizations which are trying to meet the needs governments have become less able to meet in recent years. The government has failed to move more aggressively. There were members of the Liberal government on the finance committee who supported a PC/DR motion to amend Bill C-49 to completely eliminate the capital gains tax on gifts of listed securities. The motion exists in the group today because we were successful at the finance committee. The government must now reintroduce a motion to reinstate the previous policy.
We will be voting in favour of making permanent the 50% reduction in capital gains tax. We support it as a baby step in the right direction. However we are profoundly disappointed that the government did not take advantage of an important opportunity to eliminate the capital gains tax from gifts of listed securities. The government ought to move to a broad based policy of eliminating the capital gains tax permanently in any case.
We did not have a capital gains tax in Canada until 1971. No tax has a more pernicious and negative impact on the growth of capital, investment, productivity and jobs across Canada than the capital gains tax. It acts in many ways as a cancer on the types of investment that would lead to the productivity and growth the Canadian economy so sorely needs. Our low Canadian dollar reflects the very opposite of such growth. One of the reasons we have a low dollar is that productivity rates have lagged since 1993 relative to our trading partners, particularly the U.S.
There are many areas of weakness in the government's general fiscal direction. The lack of enough vision to see the need for broad based tax reform focused on productivity, growth and opportunity is probably the biggest leadership deficit Canadians face. The government may be in surplus but there is a leadership deficit across the way.
Canadians are paying a big price for the government's failure to grasp opportunities and challenges. Our low dollar is probably the price tag we have paid for a government that has been on cruise control for eight years. I am afraid this great country of ours will cruise control into a ditch unless the government starts seizing opportunities as opposed to dodging the challenges facing the country at this critical time.