Mr. Speaker, like other speakers, I recognize and honour the intention of the member in bringing forward her bill. I too have five children and I have seen the business end of too many diapers as far as I am concerned.
Unfortunately, we cannot support the bill.
Let me start by saying that we appreciate the positive parts of this bill. Helping with the day to day expenses of a young family is very important. I trust that the hon. member and hon. members generally would agree that one of the responsibilities of the federal government is to help those families, in particular those who need it most.
However, it is my job as a parliamentary secretary to raise the questions that need to be raised about any private member's bill that comes before the House.
Rather than excluding certain items from the GST base, as this bill is asking us to do, the government takes another view. The hon. member raised the issue of feminine hygiene products. Another member raised the issue of strollers and cribs and various other things for raising a young family, and of course young families are probably the most financially vulnerable. We could develop quite easily a list of genuine and worthy exemptions from the GST base.
However, the government takes the view that there are better ways to deliver and target tax relief, particularly to low income and middle income families. That is one of the points that I did want to raise. When we approach this as the hon. member does with this particular bill, it does not particularly distinguish between those families that have a genuine need for relief and those families that do not have as much need for relief.
One of the key features of the GST is that it applies to a broad base of goods and services. This broad base allows the tax to be set at a relatively low rate while still ensuring the adequate level of revenue needed for the government. I suppose we could arrive at some sort of basket of exemptions, but in arriving at the basket of exemptions we then would make the tax somewhat more complicated and also, in order to generate a similar amount of revenue, we probably would end up raising the rates. I dare say that not many Canadians wish to have the GST rate raised.
While the intent of the bill is certainly positive, I trust that hon. members can appreciate that removing the GST base over time risks eroding the tax base and hampering the government's ability to maintain the low rate.
Furthermore, creating new GST exemptions would complicate tax compliance and administration and costs for both business and government. It is interesting to note that we went through this yesterday with respect to another item on the excise tax, namely, jewellery. There it attracts an excise tax of something in the order of 10%, starting at a threshold of $3. I think it is pretty hard to fathom how many Canadians would understand a luxury tax that would cut in at a base of $3.
However, when we started to talk about how to adjust that, it quite quickly became clear that we had to bear in mind the administrative costs of both the government and the businesses that have to remit the tax. We did not want to respond in a haphazard fashion that actually would create more work and difficulties for both the government collecting and the businesses remitting.
That is why the government has chosen other means to provide tax relief and target it to those who need it most.
To begin with, for individuals and families, GST relief is provided through the GST credit. The government provides approximately $3 billion a year through the GST credit to help offset sales tax paid by lower income families and individuals.
To give an example, for a typical family of four in the year 2004, the GST credit is about $684. This, we believe, is the fairest and most efficient means of providing targeted tax relief from the GST. I want to emphasize fair. It is fair because it is set at an income threshold and it is efficient because it is efficient both on the part of the collector and on the part of the remitter. This is a means that is an efficient means, which is important to everyone concerned.
The GST credit is only part of the tax relief initiatives offered by the government to help families.
As other members have mentioned, the $100 billion five year tax reduction plan was introduced in the year 2000, which was quite a revolutionary budget, and continues to provide tax relief to low and middle income Canadians. The plan has reduced personal income taxes by 21% on average and, for families with children, that figure is in the order of 27%.
The actions taken since 2000 have removed about one million Canadians from the tax rolls. Just to give members a feel for the significance of this, if they refer to the budget documents they will see that a typical single parent with one child and an income of $25,000 receives an additional $1,139 in annual federal benefits in terms of the difference between the year 2000 and this taxation year. A typical one-earner family of four earning $40,000 pays $2,003 less in annual net federal income tax, a saving of about 60%. A typical two-earner family of four earning $60,000 pays $1,984 less in annual net federal income tax, a saving of about 35%.
There is a significant savings and it is probably a better way to get money into the hands of Canadians who are in the lower end of the income scale.
An important component of the five year tax reduction plan, another budget initiative since 2000, has been enhanced through targeted support to families with children through the Canada child tax benefit; probably one of the, if not the most, significant initiatives on the part of the government in terms of its relationship with families. Approximately 3.2 million families with children benefit from the Canada child tax benefit.
The 2003 budget increased the national child benefit supplement by an annual amount of $150 per child in July 2003. It also legislated increases of $185 in 2005 and $185 in July 2006. This means a $965 million a year increase in the NCB supplement to the Canada child tax benefit. That is just under $1 billion.
With those changes, the maximum amount of the Canada child tax benefit for the first child in July 2004 will be $2,719. It is projected to reach $3,243 in 2007, more than double the 1996 benefit. In total, the program is projected to reach $10 billion in the year 2007.
I am sure everyone will agree that this is a means of addressing issues, such as the one the hon. member's bill raises, and the ones raised by the members from Halifax and Dartmouth concerning feminine hygiene products, and various other bills that have come through the House on this point and related points. I am sure members will agree that the Canada child tax benefit is a better way in which to help disadvantaged families and, similarly, I am sure they will realize that this is a much more even-handed treatment.
In addition to these tax cuts, I would like to take a moment to remind the House what the government has done in recent years with respect to helping parents provide for their children so that they become healthy and productive adults who will contribute to tomorrow's society.
Let me start with the changes to the employment insurance program that were put in place four years ago to benefit parents. These changes have increased the number of weeks for parental leave from 10 weeks to 35 weeks. That is a pretty significant increase. That is more than just a threefold increase. I think by anyone's standard, 35 weeks would be considered to be fairly significant.
In the Speech from the Throne the government pledged action on a number of fronts relating to children. For example, the government pledged to accelerate, with the help of the provinces and territories, initiatives under the multilateral framework for early learning and child care.