Mr. Speaker, it is my pleasure to rise and address this legislation today. I want to take a little different tack than my friend just took a moment ago, but I am very sympathetic to a lot of the things he had to say.
The reason the government is proposing to raise the excise tax on cigarettes is it believes that if it raises the tax on cigarettes young people will be sensitive to that price increase and therefore will not smoke as much. The proposals are to raise the excise tax, I think $2 in Quebec, $1.60 in Ontario and $1.50 in the rest of Canada.
I would like to go from there. If the government believes that raising taxes on cigarettes will discourage a particular kind of activity, I simply point out that raising other taxes also discourages activity.
For instance, right now the government is in the process of raising CPP premiums. In other words, raising payroll taxes. What kind of activity does that discourage? It discourages the hiring of employees because when we raise a tax we create a tax wedge between the price that employers would typically pay to hire an employees and what goes beyond what they would be willing to pay. In a case like CPP, and sometimes between the CPP and EI premiums, it gets to a point where employers say that it is simply just too much tax and they will not hire particular employees.
I wanted to point that out because the government cannot have it both ways. It cannot say that higher taxes on cigarettes will discourage smoking for young people but raising CPP premiums will not discourage hiring. In fact it is the same in both cases.
This is a problem not just with CPP premiums. It goes well beyond that because although income taxes are not going up in Canada right now they are still much higher than they are in other jurisdictions. Therefore the same principle applies. If we have taxes that are higher in Canada than they are for instance in the United States, our largest trading partner, people then will say that they cannot afford to do business in Canada but can afford to do business in the United States. Even having taxes that are mildly lower for instance in some areas in Canada than they are in the United States will not do the job because business people and investors look at the total package.
The government has made much about the fact that corporate taxes are mildly lower in Canada than they are in the United States. However what it neglects to understand is that people who are casting about for a place to invest want to have access to the U.S. market. They used to come to Canada because they had pretty much assured access to the American market. That has changed now since September 11, so we have to go well beyond just having one tax mildly lower than it is in the United States. I am talking about corporate taxes. We need to have the whole basket of taxes much lower than they are in the United States, if we ever are going to fulfill our potential as a nation.
Again, the same principles apply to corporate taxes, income taxes and other taxes as apply to excise taxes. We cannot have higher taxes without discouraging particular kinds of activity, and the same thing applies on income taxes, capital gains and corporate taxes. The government has to realize that.
I cannot believe that the government has been able to stare a 62 cent dollar in the face and not have some kind of a vision or strategy to start to attract investment back from the United States and other parts of the world and to keep investment already in Canada. We know there is a huge capital outflow in Canada today. This is partly driven by high tax loads. As a country, we have to have a strategy to attract some of that investment back. Why? Is it because we just want good numbers or we want to have a bunch of money pour into the country to benefit a few people? No. It benefits the entire nation.
When investment flows into a country, it can be used to purchase equipment to make it more productive as a nation. Talented individuals can be hired to improve one's business, to produce new products, to be innovative and take initiative. When that is done, good paying jobs are soon produced and one comes up with new markets for the products. All of a sudden more people can be hired and there is a demand for good people.
If we were to keep that up, there would soon be enough activity in the economy that the unemployment problem would not exist any more. Instead of the old story of three people chasing one job, it would become three jobs chasing one person. Ultimately the entire country would benefit. We would not have a situation like the one we have in Canada today.
Although we have a relatively low unemployment rate compared to where it was a few years ago, we still have an unemployment rate that is completely unacceptable. Millions of Canadians still cannot find work. If we had a job market that was absolutely on fire, businesses would go into areas of unemployment to offer people on the job training and the skills and abilities necessary to succeed. It has happened in other jurisdictions.
In Alberta the economy is heating up again. The Alberta economy in the last number of years has been so hot we have attracted people not only from all over Canada but from all over the world.
In Brooks, Alberta where I live there is a meat packing plant and an oil industry which attract people from all over. Many people have come from Atlantic Canada because they cannot find jobs in Atlantic Canada. We have low taxes in Alberta. We have an environment that is conducive to business. Businesses start to look around for people to hire. They advertise in the newspapers across Atlantic Canada.
People come from all over the world to my little town. It is an amazing place now. What used to be a farming and ranching town made up of a couple of generations of people who came in the 1920s is now a very cosmopolitan place. There are people from all over the world. People come from Asia, Africa and eastern Europe to our little town because we have lots of jobs due to the prosperity that has been created by a climate that is conducive to business.
I simply want to point out the inconsistency between what the government is doing on excise taxes for cigarettes and its overall approach to taxation. In this case it understands that raising taxes on cigarettes may dissuade young people from buying cigarettes but it does not seem to understand, or at least we do not see it in budgets, that lowering taxes invites people to invest in the country. That is obviously a very serious problem.
As our dollar continues to plummet, more and more people are coming to the understanding that their standard of living is in peril. The industry minister a couple of years ago pointed out that Canada's standard of living had fallen below that of Mississippi and Alabama, the poorest of the poor American states. That came from the industry minister on the government side.
It is time for the government to wake up and address this serious issue which impacts every single Canadian today. If it finally does wake up and starts to address it, I can guarantee that the official opposition will support it.