Mr. Speaker, I cannot help but think back to an argument which I have made frequently since my days on the finance committee and a statement which I hear so often from the NDP members, one that I think I need to challenge. That is, when they use the phrase “tax cuts”, are they talking about the reduction of the tax rates or are they talking about the amount of money in absolute value that is collected?
In economics there is a thing called the Laffer curve, which I have read about, named after the Professor Laffer who discovered it. That is, there is a relationship, and I wish we could use graphs and props here, such that if one's tax rate is zero, one's income will be zero. If one's tax rate is 100%, one's income will be zero, because everybody is either going to do nothing or go to some other country to do it. Somewhere in between, there is a place where one can maximize the income.
In regard to a reduction of corporate taxes, the fact of the matter is, and I am convinced of it, that if we reduce the rate of taxation, if we add in all of the economic activity that it generates, the total amount of revenue gained by the government actually increases at a certain stage. The question is, of course, where is that particular point?
I believe that our tax rates in Canada are eminently fair for the most part, but in the case of tax cuts, when we talk about reducing the rates for businesses in this country, I think that we actually gain at the present level. In regard to reducing them from 21% to 19% to 17%, in that range a reduction of tax rates actually increases the total amount of revenue, which would of course give the government more money to spend on government programs and social programs, which I think the NDP and I would agree with. They are necessary things to do.
I would like the member's comment on what I have just said.