Mr. Speaker, I am pleased to speak today to the motion tabled by the member for Calgary Centre.
Much of this motion contains material with which the Liberal Party can agree. We agree with the nice pleasantries about the importance of free trade agreements. It also speaks to the need to diversify our markets, and we agree with that. I would go further to say that one of the markets into which we have the greatest need for diversification and growth is China. We would be a whole lot further ahead today had the government not taken every opportunity to poke China in the eye.
The problem is the part about the corporate tax cuts, calling for corporate tax cuts at a time of deep deficit. If the motion had read “lower corporate tax rates once Canada could afford them”, then I would be happen to vote for it, but that is not what it says.
Similarly, I could have supported this motion a few years ago when Canada was running surpluses and paying down its debt. In fact, a few years ago the Liberal Party was urging the Conservatives to cut the corporate tax rate.
However, as it stands today, the Conservatives are running one of the largest deficits in our country's history. When a situation changes that dramatically, going from surplus to the largest deficit in Canadian history, it is incumbent upon any legislator to re-evaluate what the federal government can afford to do.
Today, unlike four years ago, the Government of Canada will have to borrow more and more money in order to proceed with these corporate tax cuts. In that sense, the motion itself is a little bit contradictory. It calls for maintaining a stable economy while simultaneously calling for more and more government debt. As we have seen in Europe, governments that cannot get a handle on their debt quickly discover that the effects of that debt on the economy are quite real.
The smart move today would be to make the tough choices, balance the budget and then cut the corporate tax rate. That is how the Liberals have done it in the past. In the mid-1990s, as Jean Chrétien's Liberals were reducing the previous Conservative deficit, pressure began to mount for the government to cut taxes before the books were balanced. In fact, at that time the Reform Party was urging tax cuts first and balanced books later. It did not understand how important it was to balance the budget.
Liberals believed that priority number one was getting Canada's fiscal house in order. Once the books were balanced and some of the debt had been paid down, Liberals began cutting the general corporate income tax rate. In fact, between 2000 and 2005 we took the general corporate income tax rate from 28% down to 21%. More important, the Liberal government also provided Canadian taxpayers with the largest personal income tax cut in history, and we did it all without adding a penny to Canada's national debt. Indeed, as I just said, we were paying down that debt over that period of tax cuts.
While the Liberal road to balanced budgets followed by tax cuts has proved successful in Canada, there have been other paths tried in other parts of the world. The idea that tax cuts should come first, that has been tried elsewhere and yet most of these attempts have been tremendously unsuccessful.
I will give an example. Ronald Reagan, a hero on the Conservative side no doubt, used to tell Americans that he would eliminate the deficit by cutting taxes. Cut taxes, he did, but when his eight years in office came to a close, America's national debt was three times bigger than the day he took office.
Former U.S. treasury secretary, Paul O'Neill, is said to have recounted how he tried to warn the George W. Bush administration of the dangers of rising debt levels in 2002. The response, he is reported to have gotten from Dick Cheney was “You know, Paul, Reagan proved deficits don't matter”.
That is the exact same economic mentality that now runs rampant in the Conservative Party of Canada. To a Conservative, deficits do not matter. That is why, just like Ronald Reagan, they want to cut the corporate tax rate while, at the same time, running the biggest deficit in our country's history.
It may just be arrogance. The Conservatives may feel that their base is so dedicated to the party that they can run never-ending deficits and not lose any support. It may be delusional. They might really believe, as Dick Cheney and Ronald Reagan did, that deficits do not matter. Maybe they do not see the effects of the sovereign debt crisis rippling through Europe today. Maybe they are just wilfully blind to it.
The rationale as to why Conservative MPs do not mind running up Canada's debt does not really matter that much for the purpose of this debate. What matters most is that their indifference to sovereign debt is dangerous and, if left unchecked for several years, will pose an economic threat to Canadian prosperity.
That indifference is why we did not hear a single Conservative member of Parliament raise his or her voice in concern about their government increasing the size of the federal government by 13% during its first years in office. It is because they were not worried about deficits.
That is why, in the third year of Conservative government, Canada's record string of uninterrupted balanced budgets came to an end, even well before the recession started. That is why it is currently running its third straight deficit and have no discernible plan to get out of it. That is why the Conservatives are insisting on borrowing even more money today to pay for corporate tax cuts.
Do members know who will have to pay back those billions of dollars in interest that will accumulate on the new debt? It will be Canadian families. Personal income taxes and the GST will account for 75% of all government tax revenues by 2014 and hard-working, middle-class Canadians will contribute the lion's share to that. They are the ones who will be called upon to pay back this new debt.
If only the government would balance the books first, it could cut those corporate taxes without having to ask Canadian families to give up more of their money down the road to pay servicing fees on this new debt. However, he Conservatives seem eager to foist these costs on to the middle-class.
There is another strange aspect to these tax cuts. The Conservatives only want to cut the corporate income tax rate for our largest companies. Small businesses, which are the backbone of our economy, will not get any tax break at all under the Conservative plan.
What small companies do get from the Conservatives is a tax hike in the form of higher employment insurance premiums. A small company of about 10 employees will have to pay over $9,000 more in tax over the next few years just for the privilege of keeping those people on its payroll. Business organizations are saying that this will kill more than 200,000 jobs across Canada. These job-killing Conservative EI premium hikes will kill more than 200,000 jobs.
Finally, I would like to touch on Canada's competitiveness in the world when it comes to taxation. Taxes are a moving target in almost every jurisdiction. We certainly never want to be caught up on the high end of the tax spectre. Let us look at some facts regarding Canada's tax competitiveness.
A few weeks ago, KPMG released a report showing that Canada had the lowest tax costs for business of all G7 countries and, out of all the countries studied by KPMG, only Mexico had a lower tax cost to operate a business.
My point is that, given we are already the most favourable tax environment, there is no need to go further into debt through a further cut in corporate taxes at a time when this country cannot afford it.
It is not as though we are in danger of becoming highly uncompetitive by delaying these tax cuts. Some of our competitor countries, such as Germany, have already come to the conclusion that they cannot cut their corporate tax rates at this time because of their high deficit.
In summary, I cannot support this motion because it calls for Canada to take on more debt to cut corporate taxes. I cannot ignore the results of this kind of recklessness achieved elsewhere, places like the United States where Ronald Reagan's premature tax cuts helped to triple the national debt in eight short years. This is not a good recipe for Canada.