Madam Speaker, I am pleased to speak to Motion No. 357 which was placed on the floor of the House by the hon. member for Vancouver Island North. It reads:
That, in the opinion of this House, the government should create a personal retirement account whereby Canadians may be given an after-tax option for pension savings.
I do not support the motion because it would be a way for Canadians with middle to high incomes to escape paying taxes. Let us face it, the motion is calling for a situation whereby people who had money to put into private investment accounts would not need to pay taxes on those accounts. The motion would create a government sponsored personalized tax haven for every Canadian who could afford it.
That is a bad idea. Unlike RRSPs and pension plans which are tax holidays these accounts would be tax exemptions, pure and simple. Most people I know who play the stock market are not the ones in society who need tax breaks.
Besides the general unfairness of creating another tax loophole for people with money to play the stock market while the government still forces single mothers on welfare to pay the GST, the motion would create an overall policy problem by depriving the government of revenue. The sad consequence of people being allowed to escape paying their fair share of taxes is the continued deterioration of public services like medicare or the pension system. I would prefer the House to look at ways of increasing public support for institutions like our pension system, public education system and health care system.
Let us look at the values of Canadians in this regard. Canadians do not mind paying taxes as long as they know the taxes will be used for the benefit of the community. They do not mind paying if the result will be more public transit, better public housing, support for their neighbours with disabilities and generous support for seniors.
My constituents get angry when they pay unfair levels of taxes. They get angry when they pay 40% or 50% marginal tax rates on modest incomes while the wealthiest families are able to shuffle billions of dollars out of the country in family trusts without paying tax and with the permission of the government.
My constituents lose confidence in the system when they pay 40% tax rates but see their health care system underfunded; transfers cut to the provinces for education; people paying into the employment insurance scheme who are unable to collect; and families of our Canadian forces who have to visit food banks to make it through the month. Canadians lose confidence when at the same time corporations get huge tax cuts, private companies make huge profits doing the work of recently privatized public services, and companies that should be contributing to local communities are instead lining up to the government with lists of social and economic demands in the name of globalization.
If hon. members do not believe we can rebuild our public services with higher taxes they should check this week's budget in Great Britain. The British government raised taxes and ran a temporary deficit so it could pay for a 41% increase in funding for the national health service and substantial increases in essential public services like education and transportation. That is the kind of economic direction I can wholeheartedly support.
The system proposed by Motion No. 357 would fundamentally undermine that. A personal retirement account that is never taxed would ultimately undermine the Canada Pension Plan and our RRSP system.
Under the present system people can put a portion of their income into an RRSP. The amount put into the RRSP does not count as income for the tax year in which the contribution is made. Upon retirement when people's incomes are usually lower and their tax rates are less they can take money from their RRSP accounts and the withdrawals are taxed at the lower rate. RRSPs are a tax holiday but the government gets the revenue eventually. Under Motion No. 357 there would be no tax deferral or holiday but a total loss of income for the government.
I am wondering if the member actually believes that we do not need revenue to pay for our social programs, such as pensions. Does he not see that the consequences of gutting income for government is the gutting of programs which help people?
I believe it is morally backward that wealthy families should receive retirement benefits in the form of a tax exempt retirement allowance at the cost of the existence of public pension plans for the poor. It is wrongheaded to say the least.
In conclusion I hope the member for Vancouver Island North will abandon this notion of tax exemptions for families who can afford large savings and work with New Democrats to develop policies that will put a fair tax system in place which will support reliable and sustainable public services like pensions and health care.