Jim Silye

[Canada-United States Tax Convention Act, 1984, October 18th, 1995]

No, it is just that the details were brought out in the Senate. The negotiations were done by representatives of both countries. They were not done by senators from both countries, but that is where it was approved.

My point is that it is frustrating that we now have to dig in and get all the details of a done deal. Nevertheless, I will make my best

stab at it and if there are some areas where I am a bit off the mark hopefully I will not be too far off. I will say so if I am not clear.

One question we are getting from B.C. constituents is: Why do we favour reductions in the rate of withholding tax on interest and dividends? I covered that in my opening remarks. This works both ways and will attract investment in Canada as well as investment in the United States. It is seen as another step in the reduction of barriers as we shift to a global marketplace. All OECD member countries, including Canada, the 25 member states have agreed to try to get their tax rates in line with one another to facilitate this.

It may so happen at this time because of the immediate nature of the deal being put into effect that the flow of capital into Canada may be reduced. That could be a temporary measure. In the years to come we could get it back on bigger and better deals we make with the United States.

The second question was: How can we endorse a bill that gives individuals with children in U.S. schools the ability to write off a portion of their expenses? While there are those who argue that we should not be subsidizing those who are well enough off to go to schools in the U.S., this benefit works both ways. Americans are allowed to make donations to Canadian universities as well. It is not only the privileged Americans or Canadians who are crossing the borders in pursuit of an education.

As members know, with legislation like this the good must be weighed with the bad. The potential benefits from freer flowing commerce between Canada and the U.S. far exceed the potential cost of a few individuals who send their children to American schools.

This is a reciprocity treaty and you win some and you lose some. If the principle of encouraging donations both ways was brought up in the House today as a separate measure from the principle of making a deal with the United States and encouraging a two-way deal, I would suggest that the principle of encouraging donations both ways would probably be supported in the House by the majority of members.

The third question which arose thanks to the member for Kamloops was: Are American contributions to Canadian charities given the same treatment? Yes, this is a treaty that ensures that Canadians and Americans are treated the same. It is a reciprocity treaty.

The fourth question was: What about the estate tax provision? Is that not just a tax break for the rich? No, it is not a tax break just for the rich. It tries to rectify an inequity in the current system.

In Canada we do not have an estate tax. The United States did and Americans did not have to pay any estate taxes unless there was an amount over $600,000. Canadians had to pay on amounts over $60,000. This reintroduces some equity into the system and now if a Canadian with property in the United States died and left an estate, it would only be taxed if the value is in excess of $600,000. The bill levels the playing field on this issue. It signifies the intent of the bill as trying to make sure Canadians are treated the same in Canada as they are in the United States.

If owning property in the United States is only the purview of the rich, then so be it. However, I do not believe that everyone who owns property in the States all along the eastern seaboard happens to be rich. I happen to know the NDP made a lot of mileage on taxing the rich until suddenly everybody in Canada realized that rich meant anybody making over $40,000 and they were hit as well. That took care of the NDP philosophy of taxing the rich, because they are not rich.

Regarding this attack on the rich by the NDP, even Abraham Lincoln addressed that in his day. He said that we cannot make the poor wealthy by making the wealthy poor. If we want to protect the disadvantaged-we need to protect the disadvantaged-if we care about those people who truly need the help then we make our laws and our polices and go about doing that. At the same time there are people throughout the economic scale who make $50,000 or more who also deserve to have any inequities in the system addressed. They deserve to be looked after as well.

For instance, 62 per cent of those who made up to $25,000 generated 27 per cent of total income, while their share of the total tax paid in 1991 was 11 per cent. My source for this is the Department of Finance. There were 19 million tax filers in 1991 and 13.7 million paid income tax and 5.3 million were not taxable.

I want to discuss the breakdown of how much tax was paid by the various groups. People who earned $25,000 to $50,000 represented 28 per cent of the tax filers and their share of both total income and total tax was 40 per cent. Ninety per cent of the tax filers in 1991 made $50,000 or less and they paid 51 per cent of the income taxes that year. People in the $50,000 to $100,000 category represented 9 per cent of the tax filers, with a share of 23 per cent of the income. They paid 31 per cent of the total tax. People who made over $100,000 were 1 per cent of tax filers, with 10 per cent of income and paying 18 per cent of the total tax. This means that 10 per cent of the tax filers in 1991 paid a total of 49 per cent of the taxes.

I point this out to the member for Kamloops so he can realize that the wealthy people in this country, the top 10 per cent, pay their darn share of the taxes. They pay darn well, they pay high, and they pay a lot, like 49 per cent of the total tax take. This business about going after the rich all the time is not going to work and it does not hold water with me, because they contribute a lot to the economy and keep the economy going. Every now and then

someone should speak out on their behalf as well. They are suddenly becoming a small and select group as well in this country.

This brings me to another issue I would like to talk about from this Bill S-9, which is directly related to the concerns of the Liberal member for Gander-Grand Falls, who very eloquently raised his objections to this bill at the Standing Committee on Finance. As I understand, having done a little more homework, this member has been watching this issue and this bill for a very long time. I found out that when in opposition he basically criticized the Conservative government for moving in this direction and moving toward this kind of a deal. In fact he questioned the government of the day on this quite a bit.

The history of Bill S-9 goes back prior to us getting it on our desks and saying we should pass the bill. The bill goes back to the Mulroney government. The member for Gander-Grand Falls had the job and unique duty to critique this item, as he did. Based on that and based on being in opposition to it at that time, he feels obligated to continue that opposition to it at this time.

I bring this point out to show there is at least one Liberal who sticks to his Liberal convictions. There is one Liberal who keeps his promise. There is one Liberal who does not break the promises in the red book.

[Canada-United States Tax Convention Act, 1984, October 18th, 1995]

Mr. Speaker, in two years in the House I have never seen a bill that all three parties support take so long to get through. Here we are debating the bill when all parties agree to it.

There are a couple of things I would like to say at third reading which I believe are worth clearing up. As everyone in the House has been informed, and for those taxpayers who have been watching the debate and seeing how a Senate bill gets through the House of Commons, there are some items in here that have caused some confusion.

The NDP member for Kamloops and the Liberal member for Gander-Grand Falls have raised some issues on specific items in the bill that have now confused the Canadian public. Now we have to participate in explaining why we support the bill or why some members are against it. There are only one or two people who are against it and it seems a shame that we have to talk about it.

The bill was done through negotiators on behalf of both countries. It was signed on August 31, 1994, so it is already a done deal. What we are doing is giving birth to it, endorsing it or whatever through the House of Commons.

As the Parliamentary Secretary to the Minister of Finance indicated, it eliminates double taxation, creates a level playing field, reduces the withholding taxes on interest and dividends, royalties and technologies, et cetera. It keeps up with the global need to remain and to become competitive. It is for those sound fiscal and economic reasons that the Reform Party supports the bill.

The bill has a lot of upside to it and will generate a lot of investment opportunities for Canadians in the United States and vice versa with the amount of investment Americans make in Canada. It is a reciprocity agreement. Whatever we have negotiated is a two-way street; what happens in the United States can also happen up here. I remind everyone that in a reciprocity agreement sometimes we have to give to get and sometimes we get to give. It works both ways.

I would like to try to clear up some of the confusion on behalf of the member for Kamloops. My office received a lot of phone calls about the bill based on the tirade over the treatment of universities in the United States and Canadians being allowed to make charitable donations to American universities. If they send their children to those schools, it is an allowable deduction. In typical NDP fashion it is a tax for the so-called rich and the rich should not be able to do anything except look after those people who the NDP deem need to be looked after, rather than having a system that is fair for all at both ends of the scale.

Based on the fact that the member for Kamloops has raised the issue and is getting a bit of play out of it in B.C., I would like to answer some of the questions people have been calling our offices about. I will also address the specifics of the bill. Maybe some of the confusion can be cleared up.

I must admit I am a bit frustrated personally that we in the House of Commons have to enter into a debate over something we were not a part of because. It was in the Senate where all the specifics, details and all the justifications-

[Points Of Order, October 18th, 1995]

Mr. Speaker, I remind you the Chair has the right to request that certain pins or items not be worn. On the night we voted on MP pensions certain members of the Reform Party were asked to remove them.

[Petitions, October 18th, 1995]

Mr. Speaker, I am pleased to rise and present a petition of 28 names on behalf of Nola Newitt, who, along with residents of Rockyford, Strathmore, and Chilliwack, call upon the government to amend the Income Tax Act to provide a child care expense deduction that is available to all families, regardless of the income level of the parents, the amount of the child care expenses incurred or the form of child care chosen.

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, the hon. member is quite right that the corporate tax is complicated in Canada with all the provincial and federal taxes. However, I believe that in a reform of the taxation system, businesses and individuals should be taxed at the same rate, that the income generated by individuals or businesses should only be taxed once and that the rate would be based on federal expenditures. However, we have to move expenditures under direct spending, not under tax expenditures, so we will know exactly what these programs are costing us.

When it comes to business directly, there are deductions which we can explore when looking at tax reform. Decisions have to be made. Currently we treat active and investment income the same way. The Hall-Rabushka model for a flat tax makes interest payments that are received by individuals non-taxable and non-deductible and all of the capital gains and dividends are paid at the corporate level. The corporations actually end up paying more taxes in that model.

When we explored that we found that the pure flat tax system for corporations would allow wages, benefits and salaries to be deducted, as well as input costs and the cost of sales. If they were allowed a 100 per cent write off in the year of acquisition for taxation purposes, for balance sheets purposes, they could still amortize it out or depreciate it. However, no interest deductibility on the cost of borrowing money would lower interest rates. Effectively there could be a rate of 20 per cent which would be revenue neutral.

We could probably get rid of the GST with another 4.5 per cent on that. With a rate of 24 per cent or 25 per cent it would be gone. There is a whole department gone and a half billion dollars in collection costs gone. There would then be $5 billion to $6 billion more in revenue from the corporate sector than there is now.

The trade off is that there will be CFIBs, but all businesses will be treated the same, whether they are manufacturing or high tech. Manufacturing could be 21 per cent, instead of the 38 he is talking about.

The small tax on business is a concern. The member for Broadview-Greenwood found a lot of lobby groups came to him and complained that we would lose that 12 per cent tax on the first $200,000. If we had this kind of a tax reform, where we put it out there to everyone and said: "We are looking for equity and everybody has to share in this equity", we could then have a system that is simple enough so more people could understand it. The rate could be low enough that people would work in the surface economy instead of the underground economy. It could high enough that it would generate close to the revenues that we want and need now. I do not accept the conclusions of economists who say that we have to be revenue neutral right now. I argue that if I am a little bit short the money will come through the effect of the growth in the economy. If it is combined with more spending cuts, if we spend the money on behalf of businesses, if we give people the money to start a business, we are-

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, I thank the member opposite for his remarks. I accept his offer. I openly say in the House I will work with any member toward a simplification of the tax system, to share any of the points of view I have and to also get input from any other member as to what direction they think we should go in. The current system is not good and needs some fixing.

I know the biggest concern of Department of Finance is that in the name of simplicity we will give up fairness. The test is any new system has to be as fair as the current system.

I had discussed a single tax, a flat tax, quite a bit with the member for Broadview-Greenwood. It was reading his book four years ago that got me interested in this subject. I believe many of the problems he pointed out were true. They were true then and they are more true now.

I am not waiting for the Standing Committee on Finance. I use my opportunity to speak in the House freely to challenge the finance minister to get every committee we can on board. Even the Department of Industry should be looking at this. IT controls business. The minister knows what businesses are concerned about. What can we do to attract more businesses? It is not higher taxation levels but lower taxation levels.

We are presenting various alternatives to tax proposals. The member for Capilano-Howe Sound is presenting one on October 31 at the Fraser Institute symposium in Toronto. The member for Broadview-Greenwood will be there presenting his as well. I believe there will be officials from the government there although they will be listening and not presenting anything. I believe the Conservative Party is also looking at a proposal for a flat tax. It is important that we get this movement and momentum going. In the end, in the final analysis, if we can simplify the taxation system all Canadians will benefit, which is the important target here.

In terms of my conversion, I ask the hon. member not to hold out too much hope because I am not being converted. I am just getting tired of hearing everything about cuts, cuts, cuts. If the member does not believe cuts are important why has his government made $7 billion in cuts already?

When we campaigned on cuts our point was that when we make them we should make them wisely, judiciously and quickly because they will hurt. Whether we cut $1 billion, $7 billion or $10 billion, we will end up with a lot of special interest groups riled up and upset and we will hear all the barrage just like what is happening in Ontario now in response to the 22 per cent cutback in welfare payments. All it sufficed to do was reduce the welfare payments in Ontario to the same level as everywhere else in the country. Look at some of the extremists voicing their concerns.

Cutting is important. We feel the Liberal government has not cut enough. There is still too much fat in areas where there is subsidizing failure. Those are the areas the government is not looking at. The other program cuts it has done are excellent.

The government is cutting and then spending money on infrastructure programs, building hockey rinks on direct subsidies to regional development grants to businesses. Not all but many are wasted. That money does not need to be spent by government. Cut that out. Give the equivalent tax cut to the businesses and individuals and I will guarantee that they will do more with those billions of dollars than the government will. That is the point which I am trying to make. Therefore, we need both spending cuts and a review of the taxation system. We can have tax relief at the same time. That is my argument.

If we really want to solve the deficit, we can. Just lower spending, raise the tax rate and the deficit is gone. However, we cannot do that. We have to ignore the deficit. It is not the 3 per cent of GDP that matters. We have to look at a way to stimulate the economy and have a pro-growth taxation system so we can apply those extra revenues to the debt. That is what is important.

I thank the member for his kind intervention.

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, I want to make a few comments on Bill C-90 as it emanates from the Department of Finance and the finance minister. I will review for a few minutes what he said when he was in opposition during the last budget he criticized.

I have direct quotes from Hansard dated April 27, 1993: ``Canadians are demanding an end to the volleys of taxation that issue from the nation's capital every spring. They are demanding that governments cease their political fiddling while our prosperity burns''.

Bill C-90 is nothing more than a tax grab. It raises taxes through excise taxes. It raises taxes on gasoline. It raises taxes on air transportation from $50 to $55. It raises taxes on cigarettes. Pure and simple, it is hitting Canadians in their pockets, at the pumps and in the air.

This flies in the face of what he said. As critic to the finance department he said Canadians are demanding an end to the volleys of taxation that issue every spring. He has been in charge for the last two springs and we have sprung taxes higher, albeit he never touched our personal pocketbooks which is why we can thank him a little, but he is taxing everywhere else. Revenue Canada is even squeezing businesses and individuals on audits in every way, shape and form it can.

I have a second quote: "Canadians are demanding nothing less than an end to the political economy of governments that can neither follow the wishes of their citizens today nor bring before them the questions that must be decided tomorrow". Does the minister think Canadians want gasoline taxes to increase at the pumps? Does he think Canadians want to pay more taxes on products and goods and services? Does he think Canadians want to pay more taxes at the airport? They do not want to do that.

Does the minister think the people of Canada want the government to add to the problem of the debt? He has committed the country to bankruptcy by committing it to a 3 per cent of GDP. That is all he will reduce the deficit to? He will keep digging the hole deeper, slower than the Conservatives, but he will keep digging the hole. Is that the kind of Canada he thought Canadians were demanding, to keep adding to the problem?

Here is his chance as the finance minister to correct and follow his points of view to the letter. He has an opportunity to be in control and do the things that are required to stimulate and help the economy. He says it is through jobs. Governments do not create jobs. The private sector creates the majority of jobs, 85 per cent. Nobody disputes that. It takes consumer and investor confidence to create those jobs.

When the government keeps increasing taxes through excise taxes, personal taxes, corporation taxes, payroll taxes or property taxes, it is hurting and impeding confidence. By just talking about it, like the finance minister does, he is using smoke and mirrors to fool the Canadian public. He is doing a great disservice by making Canadians believe he is solving the problem when in fact he is adding to the problem.

I have already shown two examples of where the finance minister can do something about the very things he criticized, but he has done nothing. He keeps doing it the same way. He is defending the status quo. It is as if the Department of Finance regardless of who becomes finance minister will do it its way or no way and it is the only way. That should change.

I have a third quote from the finance minister: "Irregular taxation among jurisdictions has produced economic distortions, inefficient and wasteful collection costs and a perverse sense that the tax system is irrational and unfair. Canadians are prepared to pay their fair share of taxes. What they object to is when they see discrimination against them in favour of others. What they object to is when they see that the services that they have come to expect cut back and their taxes going up. There is a deep feeling that the system is warped against Canadians".

If that opinion was really believed then by the finance minister, I would like to refresh his memory. If he still believes it today what that really means is that we need to review the entire taxation system, the way we collect taxes, why we collect taxes, what those taxes are for, what the program costs are in the government.

We need to diffuse and separate tax expenditures from direct spending. Very few MPs know the total we spend on child care through the four or five various programs that exist. We do not know because we use the Income Tax Act to do it.

If we would simply use income tax as a method of raising taxes other than a personal exemption and nothing else, then decided we wanted to subsidize or support various groups, people who cannot work, who cannot help themselves, whether we want to help education or health care, all the programs we want to fund, that would be fine. We should put that under direct spending.

Then we can set the rate to raise the money we need to pay for those programs. Simplification will lower compliance costs. Simplification will satisfy the concerns he had in opposition about the tax system, the very one he is defending now, to which in his two years of tenure as finance minister he has added over 1,000 pages of clarifications, rulings and justifications so that people can understand it better.

He said it was irrational and unfair. In two years he has done nothing about it except tinker around by raising an excise tax here, trying to do that over there. He has not addressed the problem the way he could and should.

I would like to see him match his rhetoric, his belief, his ideas and deep felt conviction that the current system is unfair and allow the Standing Committee on Finance to explore fundamental tax reform for Canadians.

The time has come for that. If he really believed in what he said I challenge him to allow that kind of debate, to allow that kind of exploration to begin so that it is outside the realm of bureaucracy, so that it is outside the realm of deputy ministers who want to have it their way and only their way.

Put it back into the purview of members of Parliament who can come to the finance committee and represent their constituents' wishes and their constituents' point of view.

I am sure if he lets that happen he will find there are a lot of Canadians who would like to see tax reform. They would like to see some form of system they can understand, a system in which everybody can do their own return, in which fairness is reintroduced whereby everybody pays their proportionate share of taxes after a certain level of exemption. If I make 10 times more money than another, I pay 10 times more taxes.

Eliminate all those tax shelters and incentives that distort the economy and allow the government to manipulate and direct our social and economic lives. We have to separate the income tax system away from social and economic engineering.

I look at the comments the finance minister made in opposition because I am on the finance committee and a critic of finance. Therefore I have to go back to find out what this gentleman believed in, what he fought for, his values, where his goals and objectives lie. Now that he is finance minister he is not following his own beliefs. I do not understand that.

Year after year MPs say one thing to get elected and when they get elected they do another thing. I am very disappointed the Liberals have already broken about 15 promises in their read book. They said one thing to get elected and did exactly the opposite.

We commend and compliment them for some of the promises they have broken, because we know they are heading in the right direction. We know spending has to be cut and social programs have to be looked at because they represents 67 per cent of the budget. We understand that. We were hoping the government would listen to us and make those kinds of tough decisions.

However, there is room for more spending cuts. The spending cuts that could really help are those direct subsidies for business and individuals, the billions we do not need to spend.

The compliance cost of the taxation system is $12 billion in a country of 27 million people. This includes accountants hired, the audits that must be done and the cost of departments such as National Revenue and taxation: customs is at $2.2 billion; the GST group, $500 million; all the tax lawyers and services. Twelve billion dollars changing hands just to collect this money, to interpret our tax rules.

Members of the House should spend three months on tax simplification, trying to improve the system to make it more simple, more equitable and fulfil the concerns the finance minister had when he was in opposition that the tax system is irrational and unfair.

If we want to bring reason and fairness back into the system, why does he not empower the Standing Committee on Finance to do something about it? Why does he not empower all the members of the House to do something about it? It could be fixed so fast to the benefit of all Canadians. It would make so much more sense than some of the weak-kneed insignificant bills we are debating and issues we are discussing in the House right now.

I know why that is being done and why the government feels it has to do that, so I will not dwell on it. Instead of debating employment equity and legislating in the board rooms of businesses, in the offices of the private sector who must be hired and policing them to ensure it happens, a waste of time, why not introduce a system in which more people would gain confidence? More people would have a hope for the future of the country and feel the leaders, the politicians, are looking after their interests for the long term, not the short term.

We have a deficit and a debt problem but the solution is not just spending cuts and cuts and cuts. If all we ever look at is the solution we will never solve the problem.

In the name of deficit reduction too many governments are afraid to look at other means of helping businesses and creating jobs. The government cannot keep spending and stimulating the economy through direct subsidies. That has to stop. We must look at a system and a method whereby the government will get out of the business of looking after a lot of people, companies and the creation of job stimulations and helping the development of hockey rinks. Leave more money in the hands of business. I know that is a sensitive spot, Mr. Speaker. I did not mean that as a personal remark. I believe in hockey players. I enjoy watching the game.

Let us look at a way of empowering the people who know how to create jobs. Let those people and those institutions do what they do best. I think the private sector can create jobs better than the government.

It has taken about 15 years for everybody to learn this. I believe everybody in the House is beginning to recognize there is some merit in that. I am asking the finance minister to look at what he said when he was in opposition two years ago and the last budget he criticized. I am criticizing his budget and Bill C-90. I know almost everything has already been implemented. I am criticizing his role as finance minister the same way he criticized Mr. Wilson and Mr. Mazankowski.

The finance minister has an opportunity to do something about it but he is not doing anything about it. He is letting the status quo live. He is letting the Income Tax Act survive. The Income Tax Act should be explored and reviewed. We need fundamental tax reforms with the idea of lowering those marginal rates. I do not care how we make it fair, I do not care whether it is a flat tax or not. We need tax reform in a way that we can then give instant tax relief to Canadian individuals and Canadian businesses.

This is where we get stimulative effect on the economy. This is where we create optimism. This is where people get security. When they go to work in the morning they now know they will have a job at the end of next month. Right now that is what is lacking.

I do not care how much money the government throws at job creation, it will not work. It drives up the spending. It will actually put more pressure on increasing taxes. It works in the exact opposite way the government and the finance minister believe.

Bill C-90 is a tax grab. It is the very thing the finance minister in opposition spoke against. He wants fairness. Fairness is lowering taxes. Fairness is lowering spending. Fairness is smaller government and less intrusion. Fairness is making it more equitable for all walks and classes of life and giving hope to people, not false hope saying "come hell or high water", as he said, "we will reach our goals and objectives of 3 per cent of GDP". That is like highjumping six inches. That is not a very difficult target to reach from the high levels of spending the government has.

Another disadvantage of high taxation and spending is we are not competitive globally. We are already worse off than the States. Look at the hockey players there compared with what the hockey players get here. They all want to get paid in U.S. dollars. Why? Their tax rates are lower than ours and they even want to lower them to 17 per cent. The Americans are competitive and their free market system has worked better than ours. We have too much government involvement in our economy and we need less government intrusion, less direct government involvement and that way we would eliminate this high tax burden. The uncompetitive tax systems lead to choices by consumers which adversely affect government revenues.

I challenge the finance minister to fulfil those three promises, the concerns he had when he was opposition critic to the Department of Finance. There are three items he said he would fight for and that he believed. He felt they should be looked at. I wish the finance minister would practice what he preached.

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, I would like to address some of the comments made by the member for Durham, specifically his attack on a flat tax. Based on the way he was making his comments I do not believe he understands what the flat tax is. The flat tax is a simple equitable system for all taxpayers. It will greatly increase the incentives to work, invest and save.

He talks about the problem in this country. The problem is the debt and the high taxation levels. It is not the deficit. We can change the deficit: just raise taxes, lower spending and it is gone any time we want to. This government is saying that the deficit is the problem and it is going to reduce the deficit to 3 per cent of GDP. The government is adding to the problem. It is digging the hole deeper by adding to the debt.

We need to look at our spending. We need to look at a way of stimulating the economy, developing a taxation system that is pro growth, something that will get the government off our backs, out of our pockets and leave us alone with more disposable income.

In the name of deficit reduction, I am getting sick and tired of government after government not addressing change in the taxation system. We need fundamental tax reform. Every other country is looking at their high rates of taxation. Every other country is doing something about it and this gentleman from Durham on the government side says it is a simplistic solution.

In the months and the year ahead, he will see that it is not a simplistic solution; it is a very complicated solution. The simple flat tax is harder than it looks. The simple flat tax is not as easy to implement as he claims the Reform Party suggests. There are a lot of items in this area that need discussion and debate. We cannot argue with the fact that if there is a broad tax base and the tax base is redistributed we could have a lower rate. A flat tax would get rid of all the tax loopholes, incentives and shelters the hon. member was talking about.

It is not income from the forestry business or the oil and gas business or wealthy people, middle income people, lower income people. A dollar is a dollar. We want to tax that dollar as little as possible. We want to broaden the base as wide as possible, so we can have the lowest maximum rate. That is what equity is. That is what fairness is.

A flat tax, whatever form it is, whether it is a pure flat tax, a proportional flat tax, a Mills flat tax, a Hall-Rabushka flat tax, whatever kind of flat tax it is, the key is that we want to protect the lower income people, people who are making minimum wage or close to minimum wage. We do not want them paying taxes. That will reduce the pressure and the strain on the social programs. Middle income earners will not be affected. They will remain relatively the same. However they are going to be happy knowing that when the tax loopholes and incentives and shelters are taken away from the wealthier people they will pay more in tax dollars even though their rate is low. That is what makes it interesting to look at a flat tax and why we should be doing so. It may sound like a simple solution but it is not.

A flat tax is not as simple as it looks. It is very complicated. In fact, it is harder to bring in something simple than it is to bring in something complicated.

The Minister of Justice brought in the gun control bill. It was a very complicated bill. It was a very elaborate bill, but he got it through, no problem. Is that not right, Mr. Speaker?

The flat tax is going to be a very difficult tax reform to get people to look into and to look at. I would like, in my section of comments, to point out that it is not simple. I am not saying on behalf of the Reform Party that a flat tax is simple. It is just simplifying the system. That is where the merit lies. Simplification

of the taxation system will save us billions of dollars in compliance costs.

Does the member want to know what else it does, Mr. Speaker? It would also get the government out of the business of trying to micromanage the economy. It would reward initiative by leaving 75 to 80 per cent of every dollar earned in the pockets of the earner which is a better place than in the pockets of the government.

[Canada-United States Tax Convention Act, 1984, October 17th, 1995]

It won't bring it down.

[Canada-United States Tax Convention Act, 1984, October 17th, 1995]

You are voting for it.