Tony Valeri

[Customs Tariff, November 18th, 1997]

Mr. Speaker, I want to make a couple of comments and to ask a question.

I listened to the representative from the Bloc who stated that his party would have liked to have been better informed about Bill C-11. I wish to note that background information on the bill was supplied to all opposition parties before the examination in committee. Oral briefings were also offered to explain the bill. Some took advantage; some did not. Those who did were no doubt better informed about the bill and dealt with it in a more effective manner.

The member from the Bloc continued to say the process was flawed and that no one knew about it. The bill and the customs tariff were published in the Canada Gazette . Letters were sent to interested parties. It was placed on the Internet and on Revenue Canada's electronic bulletin board. Advertisements were placed in some leading national newspapers. I wanted to clarify that for the record.

With respect to the comments made by my colleague from the NDP, he focused on the free trade issue, on different aspects of Bill C-11, and voiced his opposition to the bill. The policy of the government is to expand trade globally. We are dependent on the United States as our largest trading partner just south of the border, but we are continuing to expand trade globally through the team Canada approach which brought back billions of dollars to Canadian companies that are continuing to excel in exporting effectively.

I am sure members of companies from the west, the east and central Canada participated in team Canada. I wonder if he could share some of that information. Perhaps he could demonstrate to the House that exports are good for Canadian companies, that exports provide Canadian jobs and that the core of our economic success has been the export market.

I would like to hear the hon. member give some indication that team Canada has worked and perhaps share the experience with some western companies.

[Customs Tariff, November 18th, 1997]

Mr. Speaker, it is my pleasure today to speak to Bill C-11, an act to simplify and update Canada's tariff system.

Members will recall that during the second reading debate, widespread support was voiced for this legislation from both sides of the House. I am pleased to report that support was also evident at committee. Indeed, I believe that most members were of the view that while Bill C-11 is and might be low profile and somewhat technical, it nevertheless represents an important contribution to making Canada a more competitive player in world trade and will in fact help to maintain jobs in Canada.

In that respect, we heard during debate and in committee that trade is the economic lifeblood of Canada. Clearly then, it is in our national interest to advance measures, such as Bill C-11, that simplify importing and enhance Canadian producers' ability to compete both at home and abroad.

Members will know that the customs tariff is a key component of Canada's import regime. In my view it represents the nuts and bolts of import transactions undertaken by thousands of Canadian importers on a daily basis.

It not only classifies all goods that may be imported into Canada but also provides for applicable tariffs and import duty relieving measures to assist Canadian businesses.

Put simply, despite going largely unnoticed by the general public, the customs tariff touches on the daily economic activities of millions of Canadians.

It is thus important that we take every effort as we are doing with Bill C-11 to ensure that the tariff is as efficient and as up to date as possible. Anything less would in fact entail an unnecessary burden to Canadian industry.

I remind the House that the Canadian industry has played an integral role in developing this legislation. Since 1994 when this initiative was launched, extensive and detailed consultations have been undertaken with interested parties regarding the proposals contained in Bill C-11.

As well, to facilitate input and to help secure consensus, the government has disseminated the proposals as broadly as possible. In fact, each of the proposals to change the existing customs tariff has been published in the Canada Gazette .

In addition, letters were sent to all known interested parties and in March 1996, when a draft of the proposed new simplified customs tariff was made public, it was placed on the Internet and on Revenue Canada's electronic bulletin board. To go further, advertisements were placed in some of Canada's leading newspapers inviting comments from both industry and individuals.

As a result, the importing and manufacturing communities strongly support the changes embodied in this bill. They particularly support the measures for greater simplicity, for transparency and predictability, all of which should help to improve the competitiveness of Canadian industries.

Moreover, industry unanimously endorses the implementation of the new simplified customs tariff on January 1, 1998.

To sum up the virtues of this bill, let me use the words of the hon. member for Calgary South rather than my own. As he eloquently put it during the second reading debate, the cumulative effect is a more predictable, simplified tariff legislation with less regulatory burden and increased competitive strength. Very eloquently put.

As I mentioned, this view was confirmed during the hearings of Bill C-11 in the House standing committee on industry. Clearly the witnesses from the manufacturing and importing associations welcomed the benefits of this bill, especially with respect to the positive effects the legislation will have on their competitiveness.

Particular mention was made of the duty reductions on a wide range of inputs used in the manufacturing processes. They also welcome the streamlining of the existing tariff system to facilitate the importation of goods into Canada and to reduce compliance and administrative costs for business.

We did hear some concerns. I first wish to address a concern that was raised on a policy issue relating to the tariff on auto parts.

Specifically, some witnesses objected to the inclusion in the tariff schedule to Bill C-11 of the provision that continues duty free status for auto parts used by non-auto pact producers as inputs in assembling motor vehicles in Canada.

The purpose behind this measure being continued in Bill C-11 is to maintain a uniform manufacturing environment for all auto assemblers in Canada. The continuation of a zero tariff on auto parts is consistent with this objective.

Bill C-11 ensures that Canada will continue to be an attractive place for automotive investment by maintaining a level playing field for auto manufacturing in Canada.

I should also point out that this bill contains a number of measures that all participants in the auto industry will benefit from. They include the unconditional duty free provisions covering all production machinery, precision instruments and apparatus, as well as all materials for manufacturing vehicles, parts and accessories. That is the one concern.

I also want to take a few minutes to address concerns that have been expressed by some in the importing community that there may not be enough time to prepare themselves fully for the scheduled January 1, 1998 implementation date.

Revenue Canada and Statistics Canada appreciate that there is a large change over in data that must be installed in importing systems in order to be ready for the new tariff. That is why since April of this year there has been an ongoing outreach campaign by the department of revenue to assist in these necessary preparations by providing the data required to update these systems. The efforts are continuing with the issuance two weeks ago of the printed departmental version of the 1998 tariff. Updated customs notices are also being issued which taken together with other initiatives are aimed at ensuring that importers will have all the necessary information in their hands prior to the January 1 implementation date.

A second concern has been expressed in that in view of the timelines for introducing the new tariff, Revenue Canada should exercise administrative tolerance for the first six months of 1998 and in fact waive any penalties for submitting incorrect statistical information.

I understand that Revenue Canada has discussed these issues with the importing community and is prepared to show flexibility provided that importers make their best efforts to apply the new tariff correctly. Furthermore, Revenue Canada is prepared to assist those who need help to identify the proper statistical information to do so before goods are imported into Canada.

The government has every confidence that the new simplified customs tariff represents a positive change for the importing community. For its part, the importing community looks forward to the benefits the bill will confer, benefits including some $90 million in duty reductions in 1998. Importers are also looking forward to having less red tape associated with their import transactions.

These are all issues that not only the importing community has made reference to, but the business community at large. This is an area where the government has taken a step forward in reducing the regulatory burden and easing the administrative burden that small businesses and businesses in general face. That goes forward on the competitive issue in allowing our Canadian companies to compete both domestically and internationally on a more level playing field.

In conclusion, while there is an effort required to adapt to the new tariff, it is certainly well worth it. We have seen support from both sides of the House during second reading debate as well as in committee. Certainly it is a widely held view in the House and in industry.

I urge the House to pass Bill C-11 quickly. The faster Parliament passes this legislation, the more confident the business community will be that its efforts to adapt to the new tariff will not be in vain.

[Income Tax Act, November 17th, 1997]

Madam Speaker, we hear heckling from the other side but I am trying to bring some context to the discussion.

At this point the bill is not affordable when we are talking about $3 billion or $6 billion of expenditure. It is not necessary from the perspective that the housing industry in this country has continued to soar over this last little while with interest rates being maintained in a certain range. We foresee the housing industry continuing to grow. In essence we feel the bill is unnecessary at this time. A bigger reason is the equity of the bill. We could not discriminate against those Canadians who because they purchased their homes prior to 1994 would be unable to deduct the interest. If we were to extend this proposal to every homeowner it would be a $6 billion expenditure at a time when we have not yet balanced the budget. Yet we are starting to see these types of proposal coming forward calling for all kinds of expenditure.

As a government we are committed to ensuring we bring forward and support the fiscal policies we have brought forward over the last number of years. We want to ensure a balanced budget. We will ensure that any expenditure of this government is done through a reallocation. We will ensure fairness and equity for all Canadians.

While I urge every member of this House to agree that the intent of the bill is quite laudable, I must ask every member of this House not to support the measure. It is not affordable, necessary or equitable.

[Income Tax Act, November 17th, 1997]

It is not too simple. It is quite difficult to defend the legislation when one neighbour is able to deduct $6,000 in interest payments and because the other neighbour's home was purchased prior to 1994 and was not a first time purchase, that neighbour would be unable to claim that deduction.

[Income Tax Act, November 17th, 1997]

Madam Speaker, Bill C-223 proposes to introduce an income tax deduction with respect to the mortgage interest paid on the first $100,000 of a mortgage loan by individuals purchasing a first home after 1994.

The intent and spirit of the bill is quite laudable, but I would like to make a couple of points with respect to the current Income Tax Act and then move on to some of the other issues this proposal brings forward.

The Income Tax Act presently does not allow for the deductibility of mortgage interest on principal residences. However, capital gains on the sale of a principal residence are not taxable to the owner either. If mortgage interest rates were deductible, capital gains should be made taxable.

The measure, if limited to first time home buyers at maturity, would cost about $3 billion per year. Limiting the interest deduction to first time home buyers may be somewhat difficult. The proposal would create some significant differences in the tax treatment of qualifying homeowners and would be quite difficult to defend. If mortgage interest deductions were then extended to all homeowners the annual revenue cost would be approximately $6 billion. Admittedly, if the principal residence were subject to capital gains, the revenue decline would be somewhat less.

A taxpayer's choice of accommodation, owning versus renting, is a personal choice. The hon. member attempted to make the distinction between renters and owners and provided an example of those who own rental units rather than those who live in rental units. He is quite correct. Those who own rental units are entitled to write off property taxes, insurance, heat, light, et cetera. It is a business activity. Those who rent units do not carry on a business.

Let us go back to the point that a choice of accommodation is normally a personal decision and the costs associated with it are personal expenses. The tax system does not allow deductions and credits for personal expenses. Accordingly principal residences are not treated as investments for tax purposes. The mortgage interest paid on a principal residence is not deductible. The capital gains on the sale of a principal residence is also non-taxable to the homeowner.

The proposed deduction would also be inequitable to taxpayers without a mortgage. Again it is unwarranted because capital gains in principal residences are non-taxable.

Let us look at the present case. First time home buyers already receive tax assistance under the home buyers plan. Under the plan, first time home buyers are allowed to borrow money from the RRSPs without having to include the amount as income.

This proposal would see the deductibility resulting in a net transfer to homeowners with mortgages from other taxpayers who would have either to pay higher taxes or would receive reduced services to finance the deductibility.

In the spirit of reallocation, to which I am sure the Reform Party is quite committed, if there is an expenditure the money has to come from somewhere. It does not come from the sky. There would be an increase in income taxes or a reallocation from income taxes or reduced services. The Reform Party often makes that point. I would just like to make sure that it understands the point.

Furthermore, benefits would not be fairly distributed between groups of taxpayers. Benefits would be earned disproportionately by higher income earners who are more likely to have larger mortgages. Less than 15% of the benefits under the proposal would accrue to families with less than $50,000 in income.

Quite clearly the proposal would create significant differences in the tax treatment of homeowners, identical in every respect except the timing of their home purchase. For example, a first time home buyer would be able to deduct up to $6,000 assuming an annual interest rate of 6% on a $100,000 mortgage annually, while the neighbour carrying an identical mortgage would be denied a deduction because either the residence was not his or her first home or the residence was purchased before the effective date.

The success of the government's work, its deficit reduction strategy which Canadians have been quite supportive, has meant lower interest rates which have reduced the costs of home ownership. One year mortgage rates have declined by more than 400 basis points since January 1995. This has provided savings greater than $3,000 in terms of lower annual mortgage payments for a $100,000 mortgage.

I have respect for the hon. member, for his intent with this bill and for the hard work he put into drafting and researching it. All members of this House are quite clearly interested in strengthening the economy, in ensuring our economy continues to grow and that our young people are able to participate. Quite frankly, the expenditure of $3 billion that is strictly targeted to first time home buyers or, as another hon. member mentioned, an expenditure of $6 billion annually across the board would result in some reallocation of services or an increase in taxes in order to maintain a balanced budget, in order to maintain the level of services Canadians expect.

Although the spirit of this bill is one that every member of this House would clearly support, the technical challenges that this bill faces and the requirement—

[Employment, November 7th, 1997]

Mr. Speaker, Statistics Canada recently reported that the jobs are here. The help wanted index is going up. It is the highest it has been in seven years.

The help wanted index is the indicator of where the employment numbers will be in the future. The numbers will improve in the future. The help wanted index is up. It is up because of the policies of the government. We will continue to follow those policies and we will ensure that Canadians who want to work will have the opportunity to work because of the policies of the government.

[Employment, November 7th, 1997]

Mr. Speaker, once again I point out that 268,000 new jobs have been created.

There is no doubt that it is true employment fell slightly in October, but this followed seven consecutive months of solid job growth.

Month to month fluctuations in employment estimates are not unusual. We have to look at the long term trend in employment over longer periods.

In fact the policies of the government have been very effective in ensuring that those employment numbers have gone up. We will continue to ensure that the employment numbers improve. The government is committed to that.

[Employment, November 7th, 1997]

Mr. Speaker, let me repeat for the hon. member that 268,000 new jobs have been created since the beginning of this year, nearly doubling the number of jobs created over the same period.

In case the hon. member did not understand me the first time, the help wanted index is an indicator of where the employment numbers will be in the future. They have hit the highest level in seven years.

The prospects look very positive for the employment numbers. We will continue as a government to pursue the policies to ensure that employment is first and foremost in the numbers.

[Employment, November 7th, 1997]

Mr. Speaker, in response to the hon. member's question, let us talk about the headlines in the paper just this morning: “Dust off those resumés, the job market is heating up”.

Let us talk about the fact that Statistics Canada recently stated that the jobs are here and that the help wanted index has hit its highest level in almost seven years. The help wanted index is an indication of where those jobs and the employment level will be in the future.

[Supply, November 6th, 1997]

Mr. Speaker, I will respond to a number of the points made. I thank the hon. member for the question and for his comment that he agrees with a number of things I have said.

On the actual forms that need to be completed with respect to the GST or harmonized sales tax, there is no question I did a fair amount of work on the small business sector in the House during the last session. Regulatory burden and compliance burden were big issues for the small business community. As a result one form was eliminated by those provinces that harmonized, which provided for some reduction in the burden of compliance.

As well, I believe it was announced recently by the revenue minister that there would be a reduction in the period of time small businesses would have to remit sales taxes to the federal government. If they are earning less than $30,000 they are exempt. Over that amount they can now go to a quarterly period rather than having to remit it on a monthly basis. Again this speaks to the reduction in the burden of compliance.

With respect to the pressures in terms of axes there is no question that as the finance committee went across the country taxes were an issue that spoke to the competitiveness of the country. The finance minister has said over and over again that when the government and the country can afford to provide substantial and sustainable tax relief to Canadians they are committed to doing it. At the initial stage a very targeted tax relief will be provided for those most in need.