Yvan Loubier

[Canada Social Transfer, May 3rd, 1995]

No, indeed. It is not very reassuring.

[Supply, May 2nd, 1995]

He said that instead of creating economic uncertainty by talking about sovereignty, we should join them. First of all, he is the one creating uncertainty by not proposing budget measures. Moody's realized that in February. Moody's understood that when it downgraded Canada's rating. We truly regret that, but the agency recognized that the Minister of Finance had demonstrated his incompetence over the past year. The minister took no appropriate action for a medium-term control of Canada's deficit and debt. He is the one creating uncertainty. He is the one who is confusing the economic situation and leading the country on the road to ruin.

So, we urge him to stop talking about uncertainty, to look in his own backyard and to ask himself what he has done in the past year as finance minister to regain control of public finances, what he has done other than to offload his deficit problems onto the provinces and plan an eventual transfer of the federal government's rating cut. These are the real questions he should have asked this morning.

Coming back to Bill C-76, the legislation maintains the national standards in the health sector, and introduces new national standards in the areas of social assistance and post-secondary education. If the provinces do not respect these standards, the federal will cut their funding as it did to the unemployed and welfare recipients, and as it is about to do to our seniors. These measures would limit the provinces' autonomy in their own jurisdiction and would apply to a sector as vital as education for Quebec's cultural identity.

The Minister of Finance proved us right this morning when he came up haphazardly, in an almost unprecedented fashion in this House, with a series of amendments which he intends to eventually table. We do not know when for the minister was so flustered that he did not tell us. But he proved us right. He told us that we were right to fear federal interference in areas which come under Quebec's exclusive jurisdiction, such as education and social assistance.

The Minister of Finance intends to eventually table amendments. We will wait for these amendments. So far, nothing is official, but the minister felt cornered. He knew that the official opposition was right, and is always right, because we are dealing with a bill. So, the minister hurriedly came up with these things in an off-hand, almost arcane manner.

Try to imagine-we are referring to Bill C-76-what it means to have Canada's English speaking majority impose education standards on Quebec. Do you have any idea of the implications? Try to imagine what it means to Quebecers, given our particular historical background.

Canada-wide standards in education would mean that Ontario, Newfoundland and Canada's English speaking majority would define, to some extent, Quebec's education system, a system which perpetuates our identity and our culture from generation to generation.

Can you imagine for a moment Clyde Wells, in Newfoundland, and his elected friends in Ottawa, his associates and accomplices, defining the content of Quebec's education system through the direct use of Canada-wide standards? Does this mean that, for post-secondary education, we would only have 25 per cent control over decisions, while being constantly blackmailed by the federal government regarding the level of transfers?

Through this bill, the finance minister and his government are pursuing two aims: first, to crush the legitimate claims of the Quebec government in its own jurisdiction, a fight that has been going on for at least 30 years; and second, to hide from people of Quebec and Canada the real situation with regard to the cuts in the transfer payments to provinces and the impact of these cuts for next year in particular but especially two years from now.

The government is seeking to hide the real situation about the budget transfers as a whole by talking about cash transfers, not tax point transfers. The Minister of Finance is confusing the population when he says that transfers will not decrease over the next few years, because he is talking about tax points and cash transfers whereas only cash transfers should be considered. That is what the federal government has under its control. That is what the federal government can use to blackmail provinces, not tax points. Even the government agrees that tax points are there to stay. They are provincial entitlements. So he mixes everything up, tax points and cash transfers, resulting in a distorted picture of reality.

Here is the reality. The financial transfers as a whole, meaning the federal cash transfers paid to the Quebec government, will decrease by 32 per cent-and this is not peanuts-from 1994-95 to 1997-98 because of the cuts in transfer payments to provinces. It is important to understand that these transfer payments are not a gift from the federal government but are taken from the $30 billion paid by Quebec taxpayers to the federal government.

I have to point out that these taxes have increased to such an extent since 1982 that it is incredible that the finance minister, who has been in charge for 16 months now, has not thought about considering the situation with regard to taxation. Since 1982, taxes paid by Quebec taxpayers to the federal government have increased by 143 per cent, whereas federal transfer payments to Quebec, cut year after year, and even more since he became finance minister, have increased by only 50 per cent.

On the one hand, taxes paid by Quebec taxpayers have increased by 143 per cent, to $30 billion at present, and on the other hand, transfer payments have increased by approximately 50 per cent over a 10 year period. That is the situation. It is tangible evidence that this system is not working. When taxes are raised so steadily while the rate of growth of transfers is being reduced, surely there is a problem somewhere, there are inefficiencies of some kind and some chronic malfunction in the system.

In the coming year alone, cuts announced in the last budget of the Minister of Finance will result in losses in revenues of $1 billion for Quebec. The direct impact of transfer cuts amounts to $650 million and the indirect impact, to $450 million. In 1997, the shortfall resulting from the federal budget will stand at $2.4 billion.

When we see such things, when we realize the federal government wants to quell legitimate aspirations of the Quebec government and that, at the same time, it is trying to hurt the Quebec fiscal situation and make it even more difficult for the Quebec government to prepare its next budget, we see the Minister of Finance for what he really is. His lack of responsibility becomes obvious. We see his centralist views, that are encouraged by his Prime Minister who took part in all struggles against Quebec during his whole political life. We now see the truth.

Through the motion moved by the Leader of the Opposition and the Bloc Quebecois, we want to restore some order so that the government will not get away as easily as it would have liked to with the shameful measures it took and the almost unprecedented attacks it launched, without warning, against Quebec and its jurisdiction.

[Supply, May 2nd, 1995]

Mr. Speaker, I had prepared a speech but, given what I have heard here this morning, particularly from the Minister of Finance, I will start by replying to the Minister of Finance. I was flabbergasted to hear the Minister of Finance say what I heard him say this morning, when he talked about employment, compassion for the poor, people on welfare, the 808,000 Quebecers who are currently on the welfare rolls. He said, his hand to his heart, that he had done all he could to help these people and that it was our turn.

He is the one responsible in the first place for the hardship experienced by these people in Quebec as well as in the rest of Canada. It is his doing. He is the one who, out of compassion for the unemployed, cut $7 billion from the UI fund. He is the one who pushed some of the unemployed and more to come, with their families, onto welfare because of tighter requirements brought about by his cuts.

Now he has the gall to tell us to call upon our head office, in Quebec, to establish real policies to fight poverty when he himself, as the Minister of Finance, his government, and his Prime Minister in particular, are seriously interfering not only with economic recovery but also with improving the lot of the most unfortunate families in Quebec and Canada.

That is dreadful. I will tell the Minister of Finance right away that he better stop taking his instructions from the Power Corporation head office or that of the Bronfmans and the rest and start working for and serving the people who elected him instead of his friends, the large corporations, who benefit from a tax system of an unprecedented generosity because there are so many loopholes in it that it looks like Swiss cheese. The Bronfmans, the Desmarais and the rest take advantage of such loopholes.

I have a hard time containing myself sometimes when I see how few measures he takes and consider his personal situation, but I will not dwell on that because we, Bloc members, are too polite to engage in this kind of thing. But I find it despicable that such a man can say that he is compassionate, given that he is the one responsible for the hardship of these people.

[Supply, May 2nd, 1995]

That is the truth.

[Income Tax Act, April 25th, 1995]

Mr. Speaker, I listened carefully to the hon. member for Broadview-Greenwood and I must say that I was quite surprised because he made a very sensible and thoughtful speech. The problem is that he stated exactly what we have been saying to the finance minister and the government for the past 15 months. As we said before, we need to review the whole Canadian tax system, because it is full of holes and is preventing us from reaching our goals and ensuring social equity throughout Canada, in the East as well as in the West, and a fair balance between what individual taxpayers and private corporations pay.

So, I want to ask my colleague from Broadview-Greenwood why the members of his own government do not understand his message, which I find quite sensible? Why can he not convince his colleague, the Minister of Finance, of the need, indeed the urgency to remedy the obvious deficiencies in the Canadian tax system, which allow high income earners as well as big corporations to benefit from loopholes such as the tax conventions signed with some tax havens?

Why can we not abolish these loopholes? Could it be because his colleague, the Minister of Finance, is both judge and judged? It is a well known fact that he has a fleet of vessels flying the Panamanian flag, a flag of convenience, and may not have the same interests as his colleague from Broadview-Greenwood.

[Income Tax Act, April 24th, 1995]

-yes, incredible, the member takes the words right out of my mouth. I find it incredible that they would have the nerve to present Bill C-70 as a major tax reform, like the secretary of state did a few moments ago. All they are doing is adding a few minor positive elements and a few negative ones, again to make taxation even more complex.

I will tell you that it is a lot easier for this government to make cuts in social programs and to make outrageous cuts in the unemployment insurance fund. The federal government is no longer contributing to the unemployment insurance fund, but it will still take about $7 billion from it over the next three years.

Over the same period, that is from 1994-95 to 1997-98, it will also take from the provinces the money it cannot obtain by closing loopholes in the federal tax system because it wants to protect wealthy party cronys or the large corporations which also happen to be important contributors to the Liberal Party fund. It will cut transfers to the provinces by $12.3 billion. It is offloading onto the provinces the problems created by its mismanagement of federal public finances.

It is passing on to the provinces a possible lowering of our credit rating by the large bonds rating firms because, as Moody's has shown us, the federal government, even though it is represented by many stand-up comics, does not escape a serious analysis of our fiscal situation, of its unwillingness to correct this situation and our tax system in particular and to review all public expenditures item by item, including tax expenditures, as we have been asking since we arrived here.

Moody's has understood that, although this document is some 225 pages long, it is not with these insignificant reforms which make our tax system even more complex that we will regain control over our finances, over our tax system and over the government's present and future revenues.

Moody's has understood one thing, and we can quote that agency. It has understood that this budget contained a lot of weak measures. There were measures that were supposed to allow the Minister of Finance to meet his objective of a deficit representing 3 percent of GDP for 1997-98, or $25 billion, but

after that, there is nothing, just a big blank. We do not know where we are going. Moody's understood that.

Moody's understood that in spite of all the cuts made at the expense of the unemployed, the seniors, the students, and the provinces, there is no way we can turn the situation around with this system. As Moody's put it, they could not see how in the medium term, we could control the deficit, much less the federal government's accumulated debt.

I have a feeling that Moody's can make calculations spread over more than a few months or one year. Moody's estimated, probably just as we did, that in spite of all the sacrifices and in spite of the last budget and the one before, from which Bill C-70 stems, which are purported to be important and major steps on the way to recovery, to a reduction of the impact of the debt on the Canadian economy, in five years, the accumulated federal debt will exceed $750 billion and be closer to $800 billion. Moody's understood that.

People at Moody's have a good appreciation of our situation, and they know how to interpret figures. They know there is no hope in the medium term, and even less in the long term, that this government, with its timid reforms of the Canadian tax system, will ever regain control of our financial situation, restore fairness to the tax system, and make it work smoothly. Moody's made a proper assessment of the Canadian situation despite what the intergovernmental affairs minister said after Moody's report was made public, and despite the answers the Prime Minister gave during question period this afternoon to the effect that Canada would have the highest gross domestic product growth in industrialized countries. Despite all of that, Moody's understood many of the problems in the Canadian economy.

First of all, if Canada has the best economic growth performance of all industrialized countries this year, it is because it was so far behind. Canada was the first to go into a recession that was the direct result of the monetary policy deliberately implemented by the Bank of Canada, a policy that brought us the worst recession in the whole Canadian history. Moody's understood all of that. When a country goes into recession before other countries, a stronger economic recovery is normal, especially the technical recovery that we are supposed to have had for three years. Moody's has understood that such a surge of economic growth is only temporary.

We are glad that the more substantial recovery we have waited for so long has finally begun. We hope that this year, the economic recovery will truly lead to the creation of quality jobs for all Quebecers and Canadians. On the other hand, Moody's praises as we do the economic growth which is unrelated to this government's policies, even if the government claims the contrary at every opportunity.

Economic growth is part of a normal economic cycle where the slowing down and the trough have lasted longer than usual because, I submit to you, of structural adjustment, globalization and of the new international situation, but in fact, this is quite normal considering that we were in the basement and that we are trying to stay on the ground floor over the next year.

Moody's adds, and we agree with this analysis, that as soon as the Canadian economy slows down-not in ten years, but at the end of 1996-partly because of the slowdown of the American economy as early as next year, the effects will be very severe. This is why Moody's indicates that the deficit problem is not under control, much less the debt.

Why? Because if, in one year and a half, Canada falls back into a recession cycle, tax revenues are going to decrease, which means that investor confidence is going to diminish because the federal government's deficit problems could, as soon as 1997-98, be greater and require even more draconian cuts than the ones which have been imposed on us by the Minister of Finance these last two years and which did not solve anything.

This means that foreign investors in particular, and Moody's was speaking to them, will start asking some serious questions about the future of the Canadian federation, the future of this government, if we are still stuck with it in Quebec. They will have serious reservations. Foreign investors will start wondering whether Canadian securities are a safe investment, because when the next recession comes around, with a debt which by 1997 will probably be close to $650 billion, it is really going to hurt, because we will need an increasing amount of money to service the debt. Since Canadian savings are not enough, foreign markets become an indispensable source of financing for the Canadian government, and the interest rates we will have to pay then, as a result of Moody's downgrading our bond rating-I can tell you Quebecers and Canadians are going to feel it.

And what caused all this? The Minister of Finance, instead of indulging in theatrics and looking only at the short term, should have looked beyond the next federal election and beyond the referendum campaign in Quebec. He should have acted responsibly and done more than this superficial patching. He should have proceeded, as we requested, with a genuine review of public spending and the tax system, the tax loopholes he has yet to close after almost two years of Liberal government. That is what caused all this trouble.

It is not a question of what will happen in the short term. The financial community looked at the short term. Everything is fine, but that will not be the case next year and in two years, it will be even worse. Moody's takes a much longer view. I respect

this firm because it had the guts to do this, although it was under political pressure, because as you know, bond rating firms are regularly approached by lobbyists. Lobbyists are not just on Parliament Hill. There are lobbyists on Parliament Hill who go to see these people or the firms go directly to the Minister of Finance. They realize what is going on.

Those who today blithely say that Moody's downgrade will have no short term effect are also irresponsible because of the message they are sending to the government. I am talking about large financial institutions in Quebec and elsewhere in Canada; some are arm-in-arm with the Liberal Party while others have a certain integrity we can respect. However they behave in an irresponsible manner when they say that all is well, that the financial sector anticipated Moody's downgrade and that the federal government was forewarned on February 11 of the impending downgrade but was reassured that the economic growth was there to offset it.

In my opinion, all partisanship and opinions on the constitutional debate aside, saying such things is irresponsible. Some people are irresponsible enough to say that all is well. They are applauding the government even though it has failed to make the structural reforms, the deep structural changes that such a disaster calls for. Two years from now, these same people-I have them on record-these very people will be saying: "Two years ago the federal government should have taken more effective measures, stricter measures to get the public finances in order. It should have reformed the tax system two years ago. We could have avoided this utter tax mess. We would also not be stuck with a recession made twice as bad as a normal recession because investors holding Canadian securities have lost confidence in our system and in the government's ability to manage the public purse". These people in two years are going to say exactly the opposite to what they said last week or even last weekend about the impact of Moody's reduced rating.

I would ask them, if they still have a sense of responsibility, to remind the federal government that it should not take short term holidays. It should set in motion what we have been asking it to set in motion since it took office. It must review everything it does here while awaiting Quebec's decision to leave the system. It is a system we consider to have no future, one that has shown itself to be, in the absence of tax reform alone in the past two years, immovable and, in terms of the constitution, irreformable and inflexible.

Even with respect to tax reform, it is immovable. Perhaps because of the size of the machine and of the task, but it is immovable primarily because the government is defending interests other than those of Canadians and Quebeckers, I believe. The lack of a clear stand in favour of fairness in the tax system, in favour of a complete review of taxation and in favour of the establishment of a parliamentary committee to review the whole matter tells us it is time to "get the heck out", as the current expression has it, and I am talking to Quebeckers here, it is time to get out before choices are made for us.

You only have to look at the history of Argentina or Mexico. People say that countries in Latin America cannot be used for comparison purposes. But it is not true. In the early seventies, Argentina was thought to have a brilliant future, a country rich in resources, just like Brazil. Remember, until the early eighties, we were talking about the Brazilian miracle. Opportunities were endless.

The same went for Mexico. When Pemex was created, enthusiasm ran high. Wealth was assured. The debt problem was not nearly as serious as the one we now face in Canada. And yet, these countries collapsed and the International Monetary Fund imposed on them measures that they should have imposed on themselves, but in a more humane and gradual way, to cause as little hardship as possible to individuals as well as businesses. Radical cuts were imposed on them.

I remember in 1984, before joining GATT, which is now known as the World Trade Organization, Mexico was told to cut its education expenditures by half. All at one, expenditures had to be cut by 50 per cent in education, 30 per cent in health and 45 per cent in rural development-and in Mexico, the rural sector is extremely important, much more so than in Canada. Yet, this is the kind of measures that were imposed on Mexico.

If, according to Moody's in particular, but also many others who, before the budget was tabled, shared Moody's views and those of the Official Opposition, the federal system is presently in shambles, with $548 billion in accumulated debt, just imagine what it is going to be like five years from now, when the debt will reach and possibly exceed $800 billion. This growth, from $548 billion to $800 billion in five years, not counting inflation, will cause a serious problem.

All this to say that we are ashamed of the only reform measure before us and not a very substantial one at that, changing a few minor aspects of the Canadian tax system and a few minor regulations, when what is needed is a comprehensive reform, if Canadians agree to keep this system. But when these changes are said to be urgently required by the Canadian tax system, that is too much.

I will therefore suggest that my colleagues from the Official Opposition vote against Bill C-70 because, in our opinion, in terms of tax loopholes, redressing inequities in the Canadian tax system and the sacrifices big businesses that shirk their fiscal duty as well as some extremely wealthy Canadian families are asked to make, it does not go far enough. We have been calling for much more than that in the past 15 months. We want real reform, we want the red book promises regarding tax reform to

be carried out and true tax justice to be felt in this country before Quebecers leave it.

[Income Tax Act, April 24th, 1995]

Mr. Speaker, I thank the government for giving us this opportunity, through Bill C-70, to speak not only on particular provisions of the bill, which enacts certain measures put forward in last year's

budget by the finance minister, but also to raise the whole issue of reviewing Canada's tax system.

I can tell you right off the bat that the official opposition will not support Bill C-70 at second reading stage, not because of any specific measure, but because of the lack of significant action on the part of the government regarding tax loopholes and the review of the tax system the Bloc Quebecois has been requesting since the Liberals came to power, nearly 15 months ago.

A little while ago, I listened to the secretary of state talk about an in-depth review of the tax system, of the openness of this government regarding the inequity and unfairness of the Canadian tax policy. Pretending to be concerned with equity and social justice, this government has done nothing to plug tax loopholes since it came to power.

All this is contrary to what the red book said. The government no longer refers to the red book, which was waved at us month after month, because it is ashamed. It can no longer establish any parallel between its election promises and its action in the area of taxation. In fact, the red book contained many Liberal policy statements on tax fairness, pointing out to the fact that in this great country which prides itself on being fair from coast to coast, as the Prime Minister likes to say, there are totally unfair situations.

As a matter of fact, the red book mentioned a few. It said that some corporations had not paid a cent in income tax for years because of the previous government's laxness and the fact that it supposedly had many friends among big business, which was not the case of the Liberal Party. The Liberal Party, too, had criticized the fact that, since 1984, personal income tax had increased much more rapidly than corporate income tax. If I remember rightly, according to what the Prime Minister said at that time, it wanted to correct all the unfairness and injustice in the tax system in the first two years of its mandate.

Since they have been in office, the Liberals have not fulfilled their undertakings. They have not fulfilled the promises they made during the campaign in order to get elected.

Let me give you some examples of unfairness in the tax system. Let us take, for instance, the family trusts. It is not for nothing that, for the past 15 months, since our arrival here, we have been saying, over and over again, that the tax rules for family trusts are unfair to all the taxpayers in Quebec and Canada. It is no coincidence if we have been pestering the government about every second day since 1993 about family trusts. It is because this tax system is truly unfair to Canadians, from whom the government asks more and more sacrifices because its finances are in a sorry mess, while at the same time the richest Canadian families are allowed to accumulate capital gains year after year without paying any income tax for up to 80 years.

Even the tax experts are divided on that issue. Some work for the very rich Canadian families, others take a view more compatible with the interest of the general public. Some of these, for the last two to three years and even since the review, four and a half years ago, of family trusts and the 21-year rule, have sharply criticized the perpetuation of such a measure and the possibility to defer income tax on capital gains for up to 80 years.

As the official opposition, we have made this issue one of our favourite themes, especially since we obtained sketchy information from the private sector and some Canadian universities that lead us to believe that hundreds of millions and even billions of dollars could be recovered by abolishing certain privileges linked to family trusts. We know that those trusts have become a major means of tax planning for the wealthiest Canadian families, individuals and companies.

We are not talking here about the principle of family trusts, which can be a good thing. We are not talking about the principle of family trusts, which may apply, for instance, to families with a handicapped child who will need to be taken care of in the future, even once his parents are dead. We are not against the whole idea, nor the administration of these trusts, but what we have been questioning since we arrived here, and even before, during the election campaign, is the fact that a millionaire can use this system to defer indefinitely taxes on his or her capital gains. We cannot accept that.

What did the Minister of Finance give us in his last budget? He wanted to look good. He said: Since I cannot stand the official opposition complaining about such a blatant case of unfairness and injustice in the tax system, I will mention the words family trust in the budget speech to shut them up in the future. But he forgot that we have ears to listen, eyes to read and brains to analyze.

When he brought forth his measure, saying that he would eliminate fiscal benefits for family trusts in 1999, he took us for something that we were not. He also took Quebecers and Canadians for something that they were not, because he knew very well that, by putting off to 1999 the necessary change only for family trusts, he was warning rich Canadian families four years in advance so that they could get ready and take out the hundreds of millions of dollars, even billions of dollars that they had put into these trusts and transfer them to other financial vehicles, other powerful tools of tax planning. We have not dealt in any way with all the tax loopholes that these rich families and all the big Canadian corporations can benefit from.

Is that how the government sees social justice, and fairness in the tax system from coast to coast? Is this how the government shows its concern? This government has only one concern: to look good. It does not matter what the substance is; the impor-

tant thing is to look good. The last budget, like the previous budget and Bill C-70 before us, shows us this government's propensity for cosmetic changes, for phoney tax reforms that do not change anything.

One should also look at the tax agreements signed with countries considered to be tax havens. We in the opposition refuse to let the government get away with this. We have been hounding the government since the last election campaign so that, ever since the 1994-95 budget, the Minister of Finance tried to silence us, to stop us from denouncing the inequities and tax loopholes in these tax agreements by putting up a smokescreen.

At that time, the Globe and Mail called the Minister of Finance, with good reason, the stand-up comic of Canadian tax policy. The minister presented things very dramatically but with such a lack of substance that, a few minutes after he delivered his speech, it was easy to see that nothing had changed with respect to tax agreements. Even the Auditor General of Canada said soon after the budget was tabled that, with the exception of some administrative adjustments allowing businesses to take advantage of tax agreements with countries considered to be tax havens, nothing had changed in the tax system in this regard.

What does this mean, that nothing has changed? It means that, again this year, next year, and in two, three or 10 years from now, the Canadian tax system will still provide for this kind of agreement, which is not a bad thing per se but which makes a big difference when such agreements are signed with countries used to shelter billions in Canadian and U.S. dollars, and tens of billions of dollars in European and Japanese currencies.

You know that such tax treaties enable certain Canadian businesses to open dummy subsidiaries offshore, carry out no business activities offshore, pay no tax or very little abroad, yet claim in Canada losses they did not even incur abroad, just for the sake of reducing their operating results in Canada and avoid paying their fair share to the Canadian tax authorities.

We are not talking about small and medium size businesses, the vast majority of which do their corporate duty and pay their fair share of taxes, but large corporations which can take advantage of loopholes in the Canadian tax system that were plugged neither in last year's budget nor in the finance minister's latest budget and are allowed to remain, although the Liberal government claims to be concerned about fairness in the tax system.

These tax treaties signed with 16 countries considered as tax havens are key to or at least instrumental in the federal government's improved performance in managing the Canadian tax system. Yet, the Minister of Finance continues to maintain that these are good tax treaties, that there is nothing wrong with these treaties and that, in this age of globalization and internationalization of trade, it is natural to sign tax treaties with other countries.

We have always maintained that it is natural to have tax treaties and that, when businesses open subsidiaries offshore and pay taxes abroad roughly equal to what they would have paid in Canada, such treaties should be signed to prevent double taxation and ensure that the production system in which Canadian businesses operate is fiscally equitable, promotes job creation and so on.

However, we are utterly opposed to signing with tax havens treaties which, in the opinion of the Auditor General himself, make no sense whatsoever. The internationalization and globalization arguments do not hold up when, by raising very little if any tax revenue from large corporations taking advantage of such tax loopholes, the fiscal position of Canada is not only threatened but made worse.

The Department of Finance stopped releasing figures because they are too shameful. In 1991, the last year for which such statistics were available-as statisticians would say-the last year before the previous and the current government felt to ashamed of these results, no less than 77,000 Canadian businesses did not pay a cent in tax. But then again, we were told it had to do with the businesses' production cycle. That is understandable.

We can understand that a business may need to develop its products or services over a period of one, two or maybe three years before turning a profit, gaining a share of the market, or preserving a share of the market for a specific product. However, there is a problem when the production cycle lasts for a period of five, seven, ten or twelve years, during which the business does not pay any taxes but registers a profit every year, such as the banks which made profits of $4.8 billion last year while paying hardly any taxes.

When I see that CN makes profits, pays its president a salary of $350,000 per year and grants him an interest-free loan of $400,000 to buy a house in Westmount, while at the same time acting in an inhuman if not barbaric fashion in the rail dispute, I wonder about this government's intentions and its election commitments regarding equity, social justice, the respect of rights, as well as fairness in general. Something is wrong somewhere. Incidentally, CN did not pay taxes either.

There is a problem with taxation and these few measures-although we feel some are valid-are so minor given the scope of the flaws in the Canadian tax system, which has not been reviewed in 35 years, that we simply cannot support and praise the government for such minor initiatives.

Among others, Mr. Séguin, a former Quebec revenue minister, says that, for 30 years now, the only changes to the federal tax system-I am not quoting him directly- were the inclusion of new elements or some minor reforms to that system, and that all this was essentially a top-loading exercise, in the sense that

new measures were added to existing ones, thus turning the Canadian tax system into a monster.

As a new member in the House, particularly as the finance critic, you do your very best to have a thorough grasp of all issues. And in order to do so, during the first months, in order to learn every aspect of the issues, you request a lot of documentation. I challenge you, Mr. Speaker, to try to read all the documents on Canadian fiscal policy. It is quite an ordeal when you consider all the explanatory notes, all the bills, all the related regulations, all the sub-regulations that have been added on. I challenge you to read all that within a ten-year period, and I will congratulate you if you succeed.

In the United States, under Mr. Reagan, they had the same problem. We all remember that one of Mr. Reagan's constant refrains was a reformed and simplified income tax system, even if he was more favourable to businesses than to individuals, but the intention was there. He reformed the American tax system and simplified it at the same time. You can always question the fairness of this process, the propensity to favour corporations and high income earners instead of low and medium income taxpayers, but in the end the tax system was simplified. People can see exactly what the taxation levels are. They can see where the system is unfair.

Here, we have to rely on experts or the members of the official opposition to scrutinize the tax system and tell the Canadian population what it really looks like. To point out to the Canadian people, for example, that 50 years ago, 50 per cent of all tax revenues were paid by individual taxpayers and 50 per cent by corporations. However, corporations nowadays account for around 17 per cent of all tax revenues and individual taxpayers make up the rest. We have to tell the people, because they will not hear about this from government members who tend to hide these things, just like the Liberal Party did during its first mandate.

I remember that it was then that the gap between individual taxpayers and corporations began to come to light.

Friends of the Liberal Party had already been taken care of during the earlier mandate of the Liberal Party of Canada, and it is still going on. Anyone can compare the list of large donors to the chest of the Liberal Party of Canada and the list of tax policies that have not been reformed because they are just what big corporations want.

When we see that the Royal Bank, for example, pours over $45,000 each year into the chest of the Liberal Party of Canada, we understand why in the last budget Canadian banks had nothing but a small income tax increase of $150 million over two years even though they made profits of almost $5 billion. We also understand why they are the main beneficiaries of the computer development programs provided by the federal government. When we see that the large corporations managing family trusts give between $35,000 and $67,000 to the Liberal Party's chest, we understand why they have until 1999 to adjust to the new family trust provisions. I find it-

[Canada's Credit Rating, April 24th, 1995]

Does the Prime Minister realize that if the government's credit rating is cut in spite of the sustained economic recovery, it is because Moody's was not fooled by the wait-and-see policy of its government, which is content to rely on short-term economic recovery, which passes its deficit on to the provinces, and which lets the $550 billion debt grow by the minute, instead of tackling the real problems? This is the real situation.

[Canada's Credit Rating, April 24th, 1995]

Mr. Speaker, the Prime Minister is joking about the serious and even catastrophic situation of Canada's public finances.

[Canada's Credit Rating, April 24th, 1995]

Mr. Speaker, after putting Canada's credit rating under review 11 days before the budget, the rating agency Moody's decided, on April 12, to cut the Canadian government's credit rating. Moody's decision is based on a hard look at the inadequate spending and deficit cutting measures, in the middle-term, which are contained in the budget.

My question is for the Prime Minister. Does he agree that the cut announced by Moody's confirms the official opposition's contention that the government made bad decisions, did not cut

deeply enough in the federal administration, and did not review its fiscal policy in spite of the terrible state of public finances, preferring instead to transfer its deficit to the provinces?