Mr. Speaker, thank you for the opportunity to participate in the debate on the motion. It is an important motion and reflects a lot of thinking on the part of my colleague from Dartmouth. It reflects in some great measure his concern and abilities with respect to the post-education file.
I would like to make my observation with respect to the fiscal fairy dust that passes for economics in this particular government. The critic from the NDP will appreciate that this is fiscal fairy dust. The government simply spreads a little fairy dust around and says that up is up, up is down, down is up, 15% is actually bigger than 16%, 16% is actually less than 15%, and a base personal exemption of something like $400, an increase in the base personal exemption is actually tax relief.
I am sure my colleague will join me in trying to root ourselves in reality. She will know, as do the rest of us, that in November 2005 the Liberal government actually reduced the base personal rate, the lowest rate at which Canadians pay taxes, from 16% to 15%.
I know, Mr. Speaker, that you are an educated man and that you will appreciate that 16% is actually higher than 15% and 15% is actually lower than 16%. I see you nodding in the affirmative. That makes me question how you can continue to belong to that government.
The reduction was by way of a ways and means motion and was effective for the 2005 taxation year. In fact, Mr. Speaker, I know you have been a good Canadian citizen and have paid your taxes this year. You will recollect that on your income tax return there was a section with respect to the basic personal exemption and with respect to the 16% being reduced to 15%. In fact, it was highlighted in red. In the normal course of events that would have been enshrined in legislation. However, as we well know, the Liberal government was defeated and a new budget was introduced. In this wonderful little world of neoconville, where up is down and down is up, and lower is higher and higher is lower, Bill C-13 actually raised the rates that were set out in the ways and means motion.
I appreciate that 15.5% is actually somewhat more than 15% and somewhat less than 16%, but we are splitting hairs here. This is in fact a budget which raised the basic personal exemption and raised the base rate from 15% to 15.5%. It is a kind of nasty little surprise for Canadians. The surprises will just continue, but only in Conservative fiscal economics, this fairy dust I was referring to. Only grade 3 dropouts actually believe that 16% is less than 15%.
Canadians are in for another little nasty surprise and that is with respect to the basic personal exemption or base personal allowance, as it is known, the BPA. Scheduled into the ways and means motion was a further reduction or in fact a rise of $200 in the base personal allowance which was scheduled for 2006.
However, Canadians will find that on July 1 their pay packets will actually shrink. The base personal allowance will actually be wound back by about $400 in order to fund the 1% in the GST cut. Will that not be a bit of a surprise? I cannot recollect in the election if the Conservatives actually campaigned on that point, that they would actually raise personal income taxes in order to be able to fund the GST cut, but maybe, Mr. Speaker, you have access to fiscal reality which maybe none of the rest of us have.
I want to set this out in a very clear and cogent statement by Dale Orr from Global Economics. You will know, Mr. Speaker, as does the NDP critic, that Dale Orr is no friend of the Liberal Party. I will quote him:
Budget 2006 claimed “about 665,000 low-income Canadians will be removed from the tax rolls altogether”. About 350,000 of those 665,000 were estimated to be removed because of the “tax relief” on the Basic Personal Amount provided by Budget 2006.
Budget 2006 didn't really provide tax relief on the BPA. Budget 2006 actually caused the BPA to be only $8,839 for 2006 when it otherwise would have been $9,039.
That is a difference of a couple of hundred dollars.
Rather than the change in the BPA of Budget 2006 and removing about 350,000 Canadians from the tax rolls altogether, the change in BPA of Budget 2006 will actually cause about 200,000 Canadians, who thought they wouldn't be on the tax rolls in 2006...to be pushed back onto the tax rolls. What the Finance Minister did not say in presenting Budget 2006 was, “Mr. Speaker, with this reduction in the tax free amount from current levels, I have today pushed about 200,000 of the lowest income Canadians back onto the tax rolls”.
That would not have been very nice. I agree with Mr. Orr in his analysis. It does not really have a nice ring to it and I did not see it in the budget speech. It was not one of those items in the speech or in the campaigning that led up to the speech, or indeed in the election campaign, that actually said that the government was going to shove 200,000 people back onto the tax rolls, people who had every reason to expect they would be removed from the tax rolls based upon the November update.
I always try to be fair, so the counter argument is the work related credit. Employees are going to get a credit come July 1. People who are employed will get the credit, but if people are not employed, if they are seniors, are self-employed, are about to be employed or about to be unemployed, the credit will be absolutely useless. We will see that rates go up and the base personal allowance will come down.
Welcome to the fiscal la-la land of the Conservative Party. The choice is whether people want to have $150 in their pockets in absolute terms from the November update, or whether they want to spend another $150 or better on acquiring more goods and services in order to get back the 1% that has been promised. It is a strange set of economics. Personally, if it were up to me and I guess it is not, I would prefer to have $150 in my pocket and forget the GST.
Why is this fiscal fraud important? I want go back to the motion, which states in part:
--in the opinion of the House, future Canadian economic growth and broad-based prosperity demand--in addition to a competitive tax regime (especially in relation to income tax rates and brackets) and the strategic positioning of Canada at the centre of global commerce and networks--focused and immediate investments by the government--
Without a competitive economy, wealth and jobs, all the rest is simply academic; it is entirely hot air. If we do not have a prosperous economy based upon knowledge and the hard work of Canadians, none of this stuff will be possible.
When one wastes scarce resources, one cannot do the necessary things one wants to do for planning. If the government is not prudent with the tax dollars which it is given by hard-working Canadians, then it will not be able to do anything, such as fund research institutions. The government argues that the private sector will magically pick up the slack. If that is true, then why was Canada dead last under the previous Conservative government and through the hard work of the Liberal government we became number one in the G-7 in research and development?
Researchers have options. Their research can be done anywhere in the world. One does not need a degree in economics to know that if wealth is not generated on the basis of brain power, there will be no wealth at all, because the emerging economies of China, India and Brazil will pick up the slack. One can ship a piece of lumber to China and have it come back as a piece of furniture cheaper, just because of the differential in labour cost.
The government has resisted the opportunity to have a universal day care system. Having a universal medical system in this country is worth, in the manufacture of a car, about the equivalent of the steel that is in the car. It is a huge competitive advantage. Having universal day care is also a huge competitive advantage and we have given up the opportunity to have that huge competitive advantage.