Mr. Speaker, I will be splitting my time with the member for Vancouver Centre.
I have enjoyed the debate today because it does paint a picture of a government that is more interested in not governing. Since that party was elected, it has spent more time campaigning than it has in fact governing. It really is a shame because it politicizes the legislative process in a way that is not helpful to Canadians.
I want to talk about two aspects. Members have indicated very clearly the scope of the motion. There are a couple of elements that I wanted to address in my brief 10 minutes. Number one is the whole idea of access to post-secondary education.
In my work as a member I have spent a fair bit of time looking at the implications for Canada, to the health of our country and to the knowledge based economy, of an education and what it means in terms of employment levels. The last figures that I saw, and there may be more recent, but just to give an idea of the relative dimension, indicate that among high school drop outs the unemployment rate today is somewhere around 15%. For those having a high school education, that drops to about 12%.
Among those having a post-secondary degree or equivalent, or some skills training or college training, the unemployment rate actually drops to about 3% to 4%. Depending on the nature, sometimes even down to a fraction of a per cent in certain disciplines. It is pretty clear that there is a correlation between levels of education and the ability to gain good and secure employment in the future.
The other aspect of it is the starting salary for people who have jobs at different levels of education. The difference between a high school graduate and a university or college graduate is somewhere in the range of $5,000 to $7,000 at the starting level. That in fact would grow over the life of the person's working career. The bottom line that I concluded is that our young people in Canada cannot afford not to go to post-secondary institutions.
I was delighted to meet today with representatives of the Canadian Federation of Students and one of the young people was one of my constituents. I want to give him recognition. His name is Walied Khogali. This young man is a leader in the student community at the University of Toronto, Mississauga campus. He is tremendously articulate. He has visions for his future, but he is working here on Parliament Hill along with many other students who are talking to members of Parliament about the access to post-secondary education and some of the ways in which we can do this.
I was very impressed with their understanding about the implications or how the rubber hits the road, how the dollars hit the road, whether it be from the millennium scholarship fund, the Canada health and social transfer, where there is a post-secondary component, or the Canada student loans program. They have ideas.
I was very impressed. I was encouraged and I told them right off the bat that they have my full support because I honestly believe that young people cannot afford not to go to post-secondary institutions in order to be full participants in a successful economy of Canada. We need them.
I want to move to the second item and it has to do with something that I have talked a lot about in this place. It has to do with income trusts. I think that there has been a lot of rhetoric and a lot of generalization, but I thought it would be helpful to maybe say a couple of words about what happened there.
On Halloween, October 31 of last year, the finance minister announced that there would be a 31.5% tax on income trusts at the company level.
People ask what an income trust is and how that compares to corporations. In fact, we have heard people say that every company should pay its fair share of taxes but income trusts do not pay taxes so there must be something wrong.
Let me tell members something. If I am an investor in a corporation like Microsoft, it pays dividends. Microsoft pays corporate taxes. When it pays the dividends, the recipient, the shareholder, the individual, also pays taxes on the dividend income, and they get from Canada a dividend tax credit. There are some taxes collected at the corporate level and there are some taxes collected on the dividend income they receive, at a substantially lower rate than employment income. There are two sources of income.
Income trusts, which are another form of business, are set up where under certain criteria prescribed under tax law they do not pay tax at the company level. They in fact distribute all of their profits to the holders. Those holders then include that in their income as if it were equivalent to employment income. It is paid at the highest marginal rate for them. So even though the income trust company itself does not pay tax, the individuals are paying much more than they would have if those moneys were received as dividends.
Thus, we have to talk about the revenue impacts to the Government of Canada from the company level as well as the personal. We cannot just say that this company is not paying taxes so something is wrong. That is a very silly argument.
When the finance minister put the 31.5% tax on the table and said that it was going to be effective down the road, $25 billion of the market value of those investments went down. Twenty-five billion dollars in the market value of those investments was lost.
It is interesting to note that the finance minister has said in the media, and I talked to him yesterday and reaffirmed his position, that as far as he was concerned there is no loss on that investment until it is actually sold.
I have to tell members that when I do my net worth statement, if my shares are worth so much on the market, it is the market value, and I can tell members that the implication of the 31.5% tax is that the amount of income that the income trust company has to distribute to its investors is less because it pays this 31.5% tax.
I also can tell members that the people who invest in income trusts are not people who have registered pension plans and are getting pensions. Most of them are seniors. The reason they like income trusts is that income trusts pay out the money monthly and that means they have a regular cashflow to pay their bills and to do everything that they need. The cashflow is there just as if they had a pension. It emulates a pension plan. The amount they are getting is a lot less because there is less money to distribute from the income trust.
I think it is important to know that it is not just a matter of whether or not my shares or my investment went down. The finance minister seems to think that people do not have a loss until they sell. However, I can tell members about this situation. It will be the one year anniversary of this decision on Halloween. Over the last year, the value of the stock market actually has gone up substantially, perhaps by 14% or 15%, and many of those income trusts actually are back at the same level they were the prior October.
Everybody perhaps would argue that people did not lose anything, so they are right back where they were. The problem is that everything else in the marketplace also went up 15% and they have not moved. The proof of that lies in what would happen if we repealed the 31.5% tax. There is no question about it. The value of income trusts on the stock market would go up to reflect the fact that they are not going to have that burden.
I hope there is some understanding here.
The last point I would like to make is that the government also said it is going to introduce seniors' pension income splitting for 2007. I can tell members that only 30% of seniors actually have a registered pension income from a company, et cetera. When we take out the number of those seniors who do not have a partner to split with, or whose income is less than $37,000 a year and are already in the lowest bracket, that means they get no benefit.