Werner Schmidt

[Canadian War Museum, May 16th, 2001]

Mr. Speaker, the hon. Minister of Canadian Heritage fails to recognize that we all support the construction of a new national war museum. That is exactly the point. It is the process that is at debate here. We have a Prime Minister who suggests that whatever he says goes. His backbenchers also have to do whatever he tells them to do. Now we have an advisory committee that the minister goes ahead and ignores—

[Canadian War Museum, May 16th, 2001]

Mr. Speaker, in reply to a question from my colleague, the hon. Minister of Canadian Heritage suggested that it was perfectly all right and that veterans were certainly supportive of the new location.

I would like to challenge the hon. Minister of Canadian Heritage and ask her, what is the point of the government setting up an advisory committee and then turning around and ignoring it completely before making a move like this? I think it is an insult to the veterans who were asked to provide advice to the hon. minister.

[Canada National Marine Conservation Areas Act, May 14th, 2001]

Mr. Speaker, I thought that was a most enlightening dissertation and exposition of legislation now before the House. I wish to thank my hon. colleague for being so specific and thoughtful in his analysis and for the thoroughness with which he approached the problem with and the difficulties in the legislation.

There was one part of the legislation he hinted at that I think we should explore further. It seems to me that the legislation seems to be taking out of parliament the very essence of what parliament was created to do for the people of Canada. The difficulty centres around the possibility of an agency other than even a government agency actually creating a marine conservation area.

I know that this is particularly dangerous. It is bad enough if parliament gives this kind of power to an individual minister or to the cabinet. However, when the clauses contained in this legislation actually make it possible for a special interest group to force and to cause to be created a conservation area which then does not allow certain kinds of development to take place, then not only have we really usurped what the people of Canada elected us to do here but we have insulted every single, solitary person in the House, including members on the government side.

I would ask the hon. member whether he could explain a little more clearly whether that in fact could happen under this legislation. If that one provision is there, the bill should be scrapped, if for no other reason than that one, because it denies the House.

[Income Tax Amendments Act, 2000, May 14th, 2001]

Mr. Speaker, I am very well aware of that. I would like to remind the hon. member that within the RRSP no tax is paid on the interest that is borne or on dividends either.

[Income Tax Amendments Act, 2000, May 14th, 2001]

Capital gains is very personal. There are over 100 pages of capital gains in there and that is very personal. The hon. member had better do his arithmetic a little better.

Coming back to capital gains, the issue of dividends may or may not be related to capital gains. It could be but I doubt that very much, particularly when it comes to the area of innovations and people who want to establish a brand new company, such as the angels, for example, who work with small businesses and put a lot of venture capital on the table. Generally these companies do not pay dividends at all. They are risking the total amount of the capital they put on the table.

In order to encourage that kind of innovation, we want to make sure that money is there and these people can get their rewards from their investment. That is really what I am talking about. We do want to encourage that.

In Canada there have been some tremendous innovative ideas, but we have discouraged much of the risk capital and many of the venture capitalists from investing here simply because of the high burden of capital gains.

[Income Tax Amendments Act, 2000, May 14th, 2001]

Mr. Speaker, the hon. member was a chartered accountant in a previous life and should understand what he was saying and should also understand what the act says. He probably has a pretty good understanding of capital gains. There are a number of different ways in which we can talk about capital gains. I have to also refer back to his idea that there are only about 10 pages on income tax in there. That is amazing. We should then throw this thing away.

[Income Tax Amendments Act, 2000, May 14th, 2001]

Mr. Speaker, you are not only a fairminded person but you have demonstrated a tremendous sense of humour. I respect and appreciate both qualities very much.

For the hon. member's benefit, I have marked the section in the act dealing with capital gains. It begins on page 263 and ends approximately at page 372. The section deals specifically with capital gains. Later on, when the act refers to taxes on inheritance, capital gains come up again. The capital gains section of the act is over 100 pages long and there is additional reference to capital gains later in the act. That is the Income Tax Act as we know it currently. Another 514 pages of amendments to the act have now been brought to our attention.

I refer to the parliamentary secretary's statement that there have been tremendous tax reductions over the last while. The Minister of Finance has indicated several times how significant and large the cuts have been. He says that they amount to around $100 billion.

However, when he makes that statement he does not tell us how many increases there were. We need to look at that, particularly in terms of payroll taxes. There has been a tremendous increase in the amount paid to CPP. That must be considered an increase in taxes. The $100 billion the minister refers to is not really the total amount. The net cut is considerably less than that.

The child benefit program is administered through tax benefits but it is really a spending program so it cannot be considered a tax cut. It is important that we recognize exactly what is going on.

I will make another point regarding the proposed statement the Minister of Finance will deliver on Thursday of this week, if the reports we have heard are correct. It will be very significant. The mini budget last fall indicated some of the things we have talked about here this morning. It looks like the new projection will tell us what to expect in terms of expenditures, revenues and the general state of the economy in Canada. The projection, at least at the moment, is that it will be for two years.

I refer the House to a statement made last week by the chief economist of the Toronto Dominion Bank, supported by a number of other economists, which suggested that two years is a misleading time period. Why? It is pretty clear to everyone that within the next two years we will still have a surplus and revenues will exceed expenditures. However, in the third year, because of programs that have been promised and programs that have begun, demands on the budget will create a deficit.

I would encourage the Minister of Finance not to fall into the trap of dealing only with the next two years, but rather that he give us a balanced position and say to Canadians that for the next two years we will have a surplus but in the third year, because of the things he plans to do, there will be a deficit. That would be an honest statement to make and I would encourage him to do that.

I will now come back to some of the specific provisions within the amendments of Bill C-22. I want to refer primarily to one section regarding capital gains tax, which I have referred to already. I will read one paragraph for the benefit of listeners. It is an amendment to the existing provisions for capital gains. I would like people to listen very carefully and see if they understand the paragraph. It reads:

(o) where an amount is designated under subsection 104(21) of the Act in respect of a beneficiary by a trust in respect of the net taxable capital gains of the trust for a taxation year of the trust and the trust does not elect under paragraph 104(21.4)(d) of the Act, as enacted by subsection 78(23), for the year, the deemed gains of the beneficiary referred to in subsection 104(21.4) of the Act, as enacted by subsection 78(23), are deemed to have been realized in each period in the year in a proportion that is equal to the same proportion that the net capital gains of the trust realized by the trust in that period is of all the net capital gains realized by the trust in the year,

(p) where in the course of administering the estate of a deceased taxpayer, a capital loss from a disposition of property by the legal representative of a deceased taxpayer is deemed under paragraph 164(6)(c) of the Act to be a capital loss of the deceased taxpayer from the disposition of property by the taxpayer in the taxpayer's last taxation year and not to be a capital loss of the estate, the capital loss is deemed to be from the disposition of a property by the taxpayer immediately before the taxpayer's death—

I would challenge all of our listeners to understand exactly what has happened here. It is very significant that we understand it.

Regarding the whole issue of capital gains, I would like to refer again to the Income Tax Act that exists at present. There is complex set of formulae in the act, not only the formula I have just read but a whole host of other ones.

Much of the amendment I just referred to in Bill C-22 has to do with the reduction of the capital gains tax from two-thirds to 50%. I do not think that is great. I think we should reduce capital gains tax considerably. I would like to see it reduced considerably below the present one, and the ideal, from my point of view, would be to eliminate capital gains tax entirely.

Why do I think that? First, it is critical that we have risk capital involved when providing capital for the establishment of enterprises to develop innovations, to apply new technology, new science and new understandings. People who risk their capital ought to be able to benefit from the profits that arise. In many instances these highly innovative projects, while they have the potential for tremendous gain, also have the potential for loss of a major part or all of the capital. We need to reward people who are prepared to risk their assets, their talents and their abilities so that they can be rewarded when they apply them.

[Income Tax Amendments Act, 2000, May 14th, 2001]

Mr. Speaker, we need to make a couple of points on the legislation to amend the Income Tax Act.

Before I get into the more detailed parts of the bill, I need to register some things, particularly for the benefit of the listeners. In looking at the situation I asked myself what exactly was happening here in terms of physical terms. A copy of the Income Tax Act was delivered to my office this morning. The Income Tax Act has about 1,000 pages. It is a very significant act. The paper is very fine; it is almost rice paper. It is a substantial volume. It illustrates how complicated the Income Tax Act—

[Bankruptcy And Insolvency Act, May 14th, 2001]

Mr. Speaker, I would like to thank the hon. member from the New Democratic Party for bringing this private member's bill to our attention. He ought to be congratulated for taking the side of the workers. His bill seeks to increase the amount of money payable to employees as a result of a bankruptcy.

I would like to register two additional important points. First, whenever a bankruptcy occurs everybody loses. I am sure the hon. member recognizes that only too well. A bankruptcy situation is not something anybody looks forward to or wishes to pursue, but it is something that happens. Nobody likes it and everybody gets hurt. It is a question of distributing the hurt that takes place among the people involved.

The order that exists in the Bankruptcy Act puts the employee at the bottom of the list. The assumption on the part of the hon. member who presented the bill seems to be that by having employees last on the list this somehow puts them in a position of suffering more than all the others. I do not think that is necessarily the case. When an honest trustee brings a situation like this to a head, the hurt experienced by various creditors, suppliers and other people is distributed among them.

I was directly involved in some cases where the trustee decided to make a settlement of 50% of the debt that was owed. The assets were divided and the employees were paid. Roughly everybody suffered at the same rate. That is a reasonable point to make.

The second point I would like to register is that we want to encourage entrepreneurship. When we encourage entrepreneurship, we also encourage risk taking. People employed by new innovative industries know they are in a risk situation. People lending money to these industries also know that. The person putting the capital forward is also in a risk situation. My hon. colleague opposite says the employees build up the business. Of course they do. However it is also true that a risk is borne by everyone from the employees to the person who provided the capital.

Let us keep this issue in perspective and balance it out. I am sure the hon. member from Winnipeg knows very well that is really what he had in mind.

[Federal-Provincial Fiscal Arrangements Act, May 3rd, 2001]

That is not what I said. My hon. colleague said that members who did not show up did not vote against it. That is true. However they may as well have because they were not here. The only votes that count are those who are here. Integrity is in question in either case. First, members should have been here to vote because that was what they were elected to do. Second, the government did not do what it had promised to do in the red book.

Is the government actually going to evaluate and re-examine the equalization formula? Is it in fact going to be fair or is it going to operate in such a way that it can be manipulated and can change the way in which moneys are distributed? These are very serious questions, which I think need to be addressed and need to be dealt with very quickly and efficiently.

I am going to stop my remarks at this particular point and emphasize that we support equalization payments, that the formula for equalization has to be re-examined and that to lift the ceiling at this time is probably not the right thing to do.

Therefore, we are going to oppose this particular bill but not for the reason that we do not like equalization payments. We like equalization payments. We want them, we need them and Canada needs to support them.