Mr. Speaker, it is very clear that what we have here is a problem of overtaxation. If the government were being run like a regulatory agency or a public utility, when it brings in too much revenue to exceed its expenses it would be forced in law to actually pay that money back.
Here is the problem that the government has never zeroed in on and I would ask the finance minister if he would take a look at this. Is the finance minister not aware that there are actually two levels of taxation at all times which will bring in the same amount of revenue to the government? It should be the government's job to pick the lower of the two. Let me explain very quickly.
It is called the Laffer curve. I do not think he has ever heard of it, but it is a very basic principle that would yield proper results for taxpayers and the government. If the government taxed people 100%, there would be no revenues. That is one point of taxation. If the government taxed 0%, there would be no revenues either. There are two levels that yield the same amount of revenue.
If we start to move down the curve and the government starts to tax at 90%, a bit of revenue will come in. If the government starts to tax at 10%, there will still be a bit of revenue. What is the difference? At the high point, taxation is a disincentive. It drives incentive out of the country. We still get some revenue in but it is a disincentive. It is a disincentive to work hard or to work overtime because people say that they do not want to work overtime as they get pushed into a higher tax bracket. It is a disincentive to become more educated because people say that if they go to school for a further 4 years or 10 years they will get a higher salary and be taxed more.
On this so-called Laffer curve, the government needs to ratchet down the rate it is at now which is bringing in this huge surplus. If it were to start taxing at a lower rate it would bring in the same revenue but it would give young people the incentive to stay in the country and not go to the United States or some other jurisdiction. It also would keep investment in the country.
It has worked. After the first world war, taxes in the United States and Canada that were paying the war effort were left high. However, when taxes were lowered in the United States in 1920 or 1921 by President Harding, what happened? Taxes were lowered and revenue increased. The exact same thing happened in Germany in 1948. When Ludwig Erhard lowered the tax rate, what happened? Revenues came in but more people were working and there was more investment.
The same thing happened with the JFK tax cuts. The same thing happened in Alberta in 1998 when there was a commodity crisis. Taxes were lowered and more revenues came in. The burden was lifted from people's backs.
Why will the Minister of Finance not apply that application, lower the taxes, create more incentive for people to work, to become educated, to become skilled, to invest and it would bring in the same amount of revenue for government but it would set the people free? Why will the government not do that?