Mr. Speaker, I believe I left off by congratulating the government on taking the Liberal initiative of reducing corporate tax rates. That initiative had been set in place by the previous government. It started with the rate at 28% and it was well on its way. We congratulate the government for continuing that rate reduction initiated by the Liberal government and then substantially encouraged by the Liberal leader a month and a half prior to the actual reduction in the economic statement.
We also support the $265 million reduction in the small business rate. We think that is good for business. We think it is good for our economy. It is a welcome relief to business entrepreneurs.
What would have been even more welcome would have been an increase in the capital cost allowance. As members well know, people in the forestry industry are struggling. People in the auto sector are struggling. Farmers are struggling. They could all do with improving their productivity.
By improving their productivity, they could then deal with foreign competition. Many are finding that with the rise in the value of the dollar they are having challenges they never have had before.
Canada cannot compete in a low wage environment. Canadians will not work at Chinese or Indian wage levels, so the only alternative is to be more productive, but in order to be more productive, shop floors have to be mechanized with the latest technology. Of course, all of this costs money. Companies need to make huge outlays in machinery, equipment and training and they need to be able to write it off as soon as possible.
Here is the tragedy: this economic statement makes no provision for accelerated capital cost allowance but it trashes $34 billion in a GST cut. We all like to get an extra penny off our coffee at Tim Hortons, but someone who has just been laid off in the forestry sector, the auto sector or the agricultural sector would probably prefer, given the choice, to keep his or her job over having a penny off a coffee. Unfortunately, that worker does not get the choice because the Conservative government has already made that choice for him or her.
The Conservative government has chosen to cut $34 billion of tax relief over farmers, over auto workers and over forestry workers. That $34 billion is a lot of money, so let us just think of what it could do for the distressed agricultural, manufacturing or forestry sectors in this country.
It could help these industries with an accelerated capital cost allowance. That would have been one choice for $34 billion or part of $34 billion. It could help to underwrite relief for the purchase of machinery or training for workers. That is something that could have been done with $34 billion or part of $34 billion.
For instance, $34 billion could have done basic infrastructure around the GTA or other municipalities, but apparently the government is not interested in helping municipalities. In fact, our intrepid finance minister just blew off the mayors of this country by telling them to stop whining and fix their own potholes. I like a penny off my coffee at Tim's just as much as the next guy, but I sure do not like blowing a tire on the numerous potholes on Lawrence Avenue just to get there. Yet this is the choice that this particular government has made.
The government has made choices and has taken well over half of the tax relief package and misspent it. The tax relief package in total is around $60 billion over five years. The government has chosen to take $34 billion, in other words, well over half of it, and misspend it on a GST cut. Instead of doing proper tax relief on personal or corporate taxes or, heaven forbid, on upgrading our nation's streets and bridges, the government has blown it on a politically motivated tax cut.
Mr. Speaker, when you are cruising the local Tim Hortons in Oshawa or Dryden or St. Catharines, you should ask the fellow sitting there having his second cup that morning because he does not have a job how he likes his coffee now. Does he really appreciate that extra penny off his cup of coffee or would he prefer to have that well-paid job he had in St. Catharines or Oshawa or Dryden?
With two cuts to the GST, as implemented by the government, the phrase double-double now takes on a new meaning. We can forget all those pointy-headed economists, all 20 out of 20 of them who said that this is a pretty dumb idea, and just ask that guy without a job whether he thinks $34 billion in GST cuts could have been spent in a better way.
My final comment: better late than never. When the Liberal government left office, the threshold personal rate was 15%, but in order to pay for the first GST cut, the Conservative government raised the threshold rate to 15.25% and then up to 15.5%. Economists will tell us that this again is one of the dumbest things we can do: raising personal income tax to fund a consumption tax decrease. It is really, really bad, but in order to cover up for their foolishness, the Conservatives made that faux argument, which was that the Liberals reduced the base threshold rate from 15.5% to 15% based upon a ways and means motion rather than legislation.
Let us look at our own personal income tax returns for the year 2005. I encourage people to go home and look at their returns. We will see that the threshold rate of the first threshold is 15% for the taxation year 2005. If we tell this to a tax filer, that the government did it by way of a ways and means motion as opposed to legislation, the tax filer is likely to scratch his head or probably say something rude. All the tax filer is interested in is knowing that the threshold rate was 15%. To fund their foolishness, the Conservatives raised the rate back up to 15.25% and 15.5% and now are bringing it back to where we were two years ago.
As members can see, I am not overly impressed by this particular economic statement or the legislation that accompanies it.
Reducing the corporate tax rate only came about because of the initial initiatives by the Liberal government when it was in office in bringing it down from 28% to 21% and, with scheduled decreases, down to 19%. That was already well in place. Then there was the further commitment on the part of the Liberal leader some weeks, if not months, prior to the actual setting out of this economic statement.
Accelerating the small rate business rate reduction is a good thing. We do not dispute that. But the government has missed a huge opportunity to cut into the accelerated cost allowances, or in other words, to move it up so that those who are facing competitive challenges such as they have never faced in their business lives can accelerate the ability they have to write off machinery, equipment, technology and all the training that goes with it.
I see that I am running out of time, but I will simply say that the GST cut is blown money, because one cent off a cup of coffee simply will not help pay the bills when people do not have jobs.
Finally, better late than never, bringing the base rate back to 15% puts us exactly where we were two years ago, which is a perfect metaphor for the government. Not only does it not get it done, but it has gone backward.