Mr. Speaker, thank you for the opportunity to speak to this motion and about the astonishing level of incompetence in the government, mixed with equal measures of deceit and dishonesty.
We should have known better when the Conservatives introduced the GST decision. There is hardly an economist on the planet who thinks this was a good idea except the third rate economist who sits over there in the Prime Minister's chair. How in heaven's name was it a good, sound, economic, and competent public policy to raise income taxes and lower consumption taxes?
I have in my hand last year's income tax return and this year's income tax return. I was amused by how the members opposite started howling when we actually read on the T-1 that the base rate in 2005 was 15%. When we go to this year, T-1 for 2006 is up to 15.25%. Raise the income tax, lower the consumption tax, but surely that is exactly reflective of the economic incompetence of this particular government.
It gets worse, though. After that we had the income trust decision. After campaigning and saying, “We will not touch income trusts”, the Conservatives did a complete about-face and taxed income trusts.
This is really quite extraordinary because we have a dishonest decision. On its face and in its facts it is a fundamentally dishonest decision to campaign on one thing and do the opposite when one is in government. The Conservatives say that they had to do it because there was tax leakage. We asked to be shown the tax leakage and what do we get? Eighteen pages of blacked out documents. That is really very helpful. We can do an analysis on 18 pages of blacked out documents.
Then they get into the idiotic notion that they have put out 18 pages of blacked out documents and they ask Mr. Gordon Tait, a respected economist with BMO, if they could have their 18 pages back. How hilarious. Four months after they put the documents out, they want them back, but of course by that time, they are on billboards across the nation. In fact, the document is posted on Bank Street right at Wellington in the bus shelter. Talk about a hilarious keystone cops type of comedy over this income trust fiasco. If it was not so tragic and if it was not so costly to so many people, it would be hilarious.
Then we have the budget bill. Popped into the budget bill is this thing about interest deductibility. It says the Conservatives are against tax havens and for tax fairness, and they want to make sure that everybody pays their fair share, et cetera.
I just came from the finance committee. My hon. colleague was there with me. We had five witnesses, some of the most respected economists and tax experts in the country. They said that the last time the Income Tax was amended, it took 14 years of consultation by the various affected parties to amend the Income Tax Act, because there are all kinds of competing interests.
The Conservatives said we have 81 bilateral tax treaties with other nations. We do not just drop a nuclear bomb in the middle of all of those negotiations and of that act without expecting consequences to occur. Of course, consequences have occurred.
We see income trusts leaving the country in droves, and how much tax revenue will we get from them? I do not expect we will see too much if those income trusts are now sited in other jurisdictions. We lost all that tax revenue. So much for tax leakage. This is not tax leakage, it is a tax hemorrhage.
Now we have basically open season on Canadian companies, which now have to compete in the marketplace. They cannot deduct their interest, but everybody else can. That just simply raised the cost of acquisition to Canadian companies. For the love of Pete, does that make any sense at all? Could we possibly think of anything more incompetent?
It only gets worse. We have the idiocy of the GST thing. We have the incompetence and the dishonesty of the income trusts. We have the deceit and incompetence of the interest deductibility decision.
I just want to read for members what people have said about this last decision. Allan Lanthier, retired senior partner at Ernst & Young, and past president of the Canadian Tax Foundation, called the government's decision on interest deductibility “the single most misguided policy I've seen out of Ottawa in 35 years”.
Claude Lamoureux, chief executive officer of the Ontario Teachers' Pension Plan, incredulously said:
This is unbelievable. I don't know who in [the Department of] Finance looked at this. I can't believe any sensible person would do this.
These folks are not friends of the Liberal Party of Canada. These folks are speaking because they know something. As all of the expert witnesses were saying, where is the consultation? If in fact there is consultation, we can address whatever issues are thought to be important.
Why would the Conservatives disadvantage Canadian companies? Why would they kneecap them in the marketplace? What is going on here? Why would they encourage companies to just go south or go anywhere other than Canada?
Any time the government starts talking about tax fairness, Canadians immediately have an instinctive reaction to reach for their wallets, because they know something bad is about to happen.
Like many people in this chamber, I believe in the marketplace. I am not a big fan of over-regulation, but I really think it is crazy and idiotic to go and tilt the marketplace in favour of foreigners.
Why in heaven's name would the government take away the opportunity from Canadian companies to deduct interest but not be able to take the same deductibility issue away from foreign companies? Why would the Conservatives put a huge for sale sign on the income trust sector? Why would they pass a withholding tax that benefits foreign people acquiring Canadian companies? Why would they pass that and then combine them all together so that they hugely disadvantage Canadian companies competing in the marketplace?
This is incompetent, this is deceitful, and it is dishonest.
I will quote the CEO of Manulife, who said at a shareholders' meeting, “I sometimes worry that we may wake up one day and find that, as a nation, we have lost control of our affairs”.
Let me close with this. After a review of the useful qualifications of the cabinet and the Prime Minister, Diane Francis wrote in the National Post, the in-house organ of the Conservative Party, an article entitled “Canada Inc. needs better governance...”. She stated:
I dread to imagine what the discussion around the federal cabinet table was last fall concerning measures such as income trusts or interest deductibility restrictions. Did anyone bring up the potential, unintended consequences?
Was a huge menu and range of varied options the topic of lively, heated and lengthy discussion?
Not in this caucus. Not in this government. This is a one-man show. The article continued:
Were the nuances of capital market reactions, or taxation matters, debated?
What is $35 billion among friends, right? So they wiped out a whole bunch of peoples' savings plans. So what if Canadian companies cannot acquire abroad? Does that really matter? The article continued:
Was the obvious alternative of cutting taxes on dividends instead of trashing income trust promises a subject of great discussion?
I suspect not. The article continued:
Were the studies, commissioned by the previous government, and its many other solutions, reviewed carefully over days and nights by all cabinet members so they could deliberate in an authoritative fashion?
Or was talk just about how to finesse the treachery to seniors and Alberta about a promise broken?
Or did it zero in on how this would affect voting results in Quebec?
I could not have said it better. And that is what the government's friends are saying.