Madam Speaker, before I get into the topic of debate, I want to say that when we talk about taxes and tax fairness most Canadians understand it in a very simplified way. They know they are paying too much in taxes, regardless of where they live, whether they are a business person or an individual citizen. As a result, they only know that governments take more money out of their pockets for taxes than what they have been able to spend.
It is a pleasure to rise in the House this afternoon to talk about the issue of tax fairness with respect to the natural resource industry.
Today we heard how in the budget of 2000 the government announced a cut in the rates of general corporate income tax for all industries, except the resource industry, from 28% to 23%, and soon to be 21%. Cutting the tax rates now is an undertaking that I support. Canada needs lower tax rates for our industries to remain competitive.
It is important for the House to recognize that we do not live in a vacuum. Canada is a member of the international community and, in a world of increased international trade and globalization, it is important for us to position ourselves in a way where our people and our organizations can grow and bring greater prosperity to Canada.
We cannot afford to place our people and our organizations at a disadvantage by clinging on to tax rates that remain among the highest in the OECD, which is the Organisation for Economic Co-operation and Development.
We cannot afford to drive away investment and savings, which is exactly what high tax rates do. They drive away investment and savings. They punish success and encourage our entrepreneurs to move to places where tax rates are lower.
I support the cut in general corporate income tax rates from 28% to 21% but I also support the tax cut for all industries, not just selective ones. I simply do not agree that the resource industry should have been left out of the initial tax cut in the budget of 2000.
The resource industry has to compete for the same investment dollars as other industries. We know investors are looking for the highest rate of return on their dollar. It seems to me rather unfair to discriminate against the resource sector by taxing that sector higher than we were before. It is unfair to the resource based corporations and their investors. It is unfair to deny them the same opportunity to grow and expand by subjecting them to higher taxes than other corporations and investors would face. However, more important, it is unfair to workers in the resource industry, workers who indirectly rely on that investment for the industry to grow, to create jobs and to grow with the economy.
Therefore I am glad to see that Bill C-48 would address this unfairness by extending the cut in the rates of general corporate income tax to the resource industry.
Still there is more that the government can do. Canada needs a major overhaul of its tax system. Cutting corporate income tax rates is a start but to create a more competitive climate for economic growth we should also eliminate the capital gains tax.
Alan Greenspan, chairman of the U.S. federal reserve, said:
--if the capital gains tax were eliminated, that we would presumably, over time, see increased economic growth which would raise revenues for the personal and corporate taxes...its major impact is to impede entrepreneurial activity and capital formation.
The Ottawa Citizen had this to say:
The capital gains tax doesn't raise much money, isn't fair to people who've worked hard, and does more harm than good. [The right hon. member for Calgary Centre] is right. It should be scrapped.
Another way to help the economy is to reduce job killing payroll taxes such as EI premiums. With a surplus of around $45 billion, it is clear that the federal government has ignored the original purpose of the EI fund. It was set up to be an employment insurance program, but instead of simply providing Canadians with insurance coverage, it is contributing to the general government coffers by taking a large chunk out of the paycheques of ordinary Canadians.
These tax moneys would be better spent by the Canadian people and organizations. Canadians know better than the government how to determine their spending priorities and Canadian businesses have a better track record than the government does of choosing between winning and losing ventures.
Speaking of losing ventures, if the federal government could somehow learn to stay away from the spending scandals in HRDC and the public works department, considerable amounts of money could be freed up and redirected toward overhauling our tax system.
I understand that the goal of the legislation before us is to simplify and streamline the tax system for the natural resources industry. I think we all can agree that reducing the regulatory burden for industry in Canada would be good for the economy. I agree with the principle of bringing taxes in the natural resources sector in line with other sectors, so I look forward to bringing this legislation before committee.
I appreciate the opportunity to speak to this. When our critic gets back to the House he will be speaking in more detail on what he feels is the right direction for Canada with regard to tax cuts.