As I was saying, Madam Speaker, while Conservative opposition MPs occasionally act as if they do not believe in taxation at all, under both Liberal and Conservative governments there have been major transfers to provinces, including for infrastructure; major transfers to persons, including for seniors and children's benefits; and significant spending on our civil service. As Oliver Wendell Holmes long ago noted, taxes are the price we pay for a civilized society. We should be able to have a thoughtful discussion in this House about how taxes can be fairest and most efficient.
Not all taxes are created equal. For example, as far as revenue generation is concerned, consumption taxes are most efficient. Laval professor and economist Stephen Gordon has written that “taxes on consumption are generally found to be less harmful to economic growth than taxes on income.” A thoughtful deliberation on taxes might actually see us move toward higher GST levels matched by broad-based personal income tax cuts. To address the potential regressive nature of the GST, we already have a system of GST tax credits to offset costs for low-income individuals, and those credits could be increased as needed.
Other taxes are not designed for revenue generation at all but instead are to internalize in the cost of a good or service the negative externality the product or activity imposes on society. In The Tragedy of the Commons, Garrett Hardin described how the rational pursuit of self-interest by individual actors can negatively impact the long-term sustainability of shared resources. The classic example, in his case, is unregulated grazing on common land. As a rational being, each herdsman seeks to maximize his gain. What is the utility to me of adding one more animal to my herd? As a positive component, I would receive all the profits. The negative component, the function of the additional overgrazing created by one more animal, would be shared by all, so I would bear a fraction of the cost. In Hardin's words, “each and every rational herdsman.... is locked into a system that compels him to increase his herd without limit in a world that is limited.” He then aptly applies that same argument to our environment and pollution.
The same market failure exists with respect to climate change. While private property is usually a good solution to this market failure, Hardin acknowledged that the air and water surrounding us cannot readily be fenced, and thus different means are required. To tackle climate change, those different means are carbon pricing and regulation. As the Ecofiscal Commission concluded, however, carbon pricing is the simplest and most cost-effective way to lower greenhouse gas emissions, so it should do most of the heavy lifting in reducing our emissions. The commission has also rightly highlighted the importance of stringency. We need to continue to steadily increase our carbon price beyond 2022, and well past $50 per tonne.
In keeping with this evidence, budget 2018 states:
Central to Canada’s plan to fight climate change and grow the economy is the understanding that pollution has a real, tangible cost.... [T]he Government of Canada is committed to putting a price on carbon pollution.
Further, our government has committed to revenue neutrality. Budget 2018 states:
The direct revenue from the carbon price on pollution under the federal system will be returned to the province or territory of origin.
With this in mind, carbon pricing cannot sensibly be described as a tax grab. Rather, it is a corrective tax for a major market failure to address the negative externalities imposed on our planet by GHG emissions. I hope that we are all willing to engage in these tax debates more thoughtfully going forward.
On this and on many other issues, it is not possible to find consensus in this House. It is more common to find disagreement, and if one is optimistic, one simply hopes for reasonable disagreement. Where we do find agreement across party lines on certain issues, we should prioritize them, particularly if we can improve Canadians' lives in a fundamental way. To this end, I believe that we can build consensus in this House to improve basic income supports for Canadians in need. A key example of this in budget 2018 is our introduction of the new Canada workers benefit, a more generous and accessible basic income support for the working poor.
Specifically, the new Canada workers benefit would increase the similar older benefit by $500 million per year, starting in 2019, which would come on the heels of a $250-million annual increase previously. Together, this would amount to more than a 60% increase in funding for the benefit overall. Importantly, the new benefit would also expand eligibility criteria so that more people would be able to access the support. Last, the benefit would now be automatic. All Canadians who were eligible and who had filed their taxes would receive the basic income support by default.
This is an example of smart government. Behavioural economics has taught us the power of defaults. The change to the Canada workers benefit would embrace the lesson of Richard Thaler and Cass Sunstein that small nudges, changes to choice architecture, can alter people's behaviour to their benefit, without restricting their freedom or changing their incentives.
Tens of thousands of Canadians would now receive a benefit they should have already been receiving, an estimated $200 million in annual benefits. Finance estimates that 300,000 more Canadians would receive the new Canada workers benefit than its older version because of the expanded eligibility criteria and automatic enrolment. Finance further estimates that 70,000 people would be lifted out of poverty.
This builds on the success of other basic income support programs that our government has strengthened, making an important impact on poverty reduction and helping to build a more humane and compassionate society.
According to a Library of Parliament analysis conducted at the request of my office, in 2017, largely as a result of changes introduced by the government in 2016 to children's benefits and the Guaranteed Income Supplement for seniors, it is estimated that 695,000 individuals will be lifted out of low income. This number will continue to climb with the indexation of the CCB and the new Canada workers benefit.
In addition to building on the success of other basic income support programs, the new Canada workers benefit builds on what came before it, the working income tax benefit. The WITB was first introduced in a federal budget by then Liberal finance minister and now public safety minister, the member for Regina—Wascana. However, it became a reality in 2007, through the work of then Conservative finance minister, Jim Flaherty. If we fast-forward to last year's NDP leadership race, the member for Timmins—James Bay was calling for a significant increase and expansion of the WITB. In short, we see support for the program across the political spectrum, and a real potential for consensus. If we want to work across party lines and together make a major impact on the lives of Canadians in need, we should keep calling for an increase to basic income support programs, and especially the Canada workers benefit.
Together, we spend over $50 billion every year on benefits for the elderly through OAS and GIS. We spend approximately $23 billion every year on the Canada child benefit, and the GST tax credit is almost $4 billion annually. However, after improvements to the Canada workers benefit, it will still be just over $2 billion per year. There is room to make a bigger impact by continuing to expand this benefit in future years, and I hope there is room to build consensus in the House toward that goal. After all, there is little that is more fundamental to a person's life than economic security, and we have a very high proportion of Canadians living in poverty who are working. Basic income support programs like the CCB, the Canada workers benefit, and the guaranteed income supplement have proven to be efficient and effective.
Dostoevsky wrote, “Money is coined liberty”. No doubt there is an emancipatory value to these basic income programs. Freedom from the stress of income insecurity, freedom from worrying about having the basic necessities of shelter, food, and clothing, also means the freedom to pursue one's happiness and the freedom to refuse harmful employment and other exploitative relationships.
We know that direct transfers to persons based on income tax filings are low-cost and efficient. We know that low-income Canadians spend their benefits on necessities, and that such spending can play a role in economic growth. We know there are serious costs to poverty for our society and for individuals. While there are important pilot projects going on around the world, and here in Ontario, we know from our own federal experience with the GIS, the CCB, and now the Canada workers benefit that basic income support programs work.
We know there is an opportunity for consensus across the aisle on this issue, to fundamentally improve the lives of Canadians in need in a way that is both smart and fair. We should all demand more of such smart and fair governance. Our government has made incredibly important progress on this file, but there is much more work for us to do.