Mr. Speaker, I am pleased to speak to private member's Bill C-456, which asks Parliament to amend the Excise Tax Act to exempt cloth and disposable diapers for children from the goods and service tax, the GST.
The government recognizes that my colleague's intent of the bill is to assist low income families with young children. I am pleased to hear that she has two young children now. I remember when she was expecting her first child. I am sure she is very busy.
Canadian society is one of caring and compassion and it is up to the government to reflect that attitude in its legislation. In that regard, the federal government has introduced many measures in recent budgets to help Canadians who need it the most, in particular families with children.
I trust my colleagues would agree that while tax reduction must ultimately benefit all Canadians, it must primarily benefit those who need it the most, middle and low income earners, especially families with children. The best way to help these families is to provide targeted tax relief. That has been a priority of this government ever since we achieved a balanced budget in 1998.
Personal income tax cuts can be better targeted to low and middle income families rather than providing GST relief on specific items, such as diapers, that may be purchased by both low and high income individuals.
Let me explain. As a general principle, it is better to tax a broad base of goods and services rather than to exclude a certain GST base. The broad base of the GST allows the tax rate to be set at a relatively low rate, while still ensuring an adequate level of revenue. Moreover, value added taxes such as the GST are more efficient when applied to a wide range of goods and services consumed in Canada.
It is also important to mention here that removing certain items from the GST base could, over time, erode the tax base, hampering the government's ability to keep the GST at a relatively low rate.
To return to the issue of targeted tax relief, for individuals and families, GST relief is provided through the GST credit. The government provides approximately $3 billion a year through the GST credit to help low income families and individuals with the sales tax they paid during the year. The credit has proven to be an effective means of targeting and delivering tax relief, particularly to low income families. This is the fairest and the most efficient means of providing targeted relief from the GST.
As well as the GST, targeted tax relief is provided by way of the $100 billion five year tax reduction plan. This plan was introduced in 2000, and it continues to provide tax relief to low and middle income Canadians. The plan has reduced federal personal income taxes by 21% on average and for families with children, that figure is 27%.
This year's budget builds on prior actions for families with children by helping them accumulate savings for their children's post-secondary education.
Our economy must be powered by ideas, imagination and innovation. Knowledge is the key not only to individual opportunity but also to economic success.
In previous budgets we improved assistance to students, created the Canada study grants, supported lifelong learning, enhanced the education tax credit and added the Canada education savings grant, CESG, to registered education savings plans.
The 2004 budget announced a broad package of measures aimed at promoting learning at every stage of life, including the very young. This budget commits additional resources to the multilateral framework on early learning and child care so more children will be better prepared to learn at school and succeed in life.
The government will also provide increased resources to understanding the early years, a pilot project which will identify children with learning disabilities. The program will be extended to 100 more communities.
Family saving is very hard for low income families who struggle just to make ends meet. To help these families, the government currently provides support through the Canada child tax benefit, in particular the national child benefit supplement. All in all, the annual federal investment in Canadian children and youth through the Canada child tax benefit is about $10 billion, making it one of the nation's most important social programs after medicare.
Too many Canadians from low and middle income families cannot have a college education because the cost is too high. To further assist those families to save for their children's education, the 2004 budget announced three important new measures.
First, beginning this year the government will introduce a learning bond in the amount of $500 which will be available to every child born after 2003 to families earning less than $35,000. Each year thereafter, for 15 years, the Government of Canada will contribute an additional $100 bond for children in low income families. This will provide up to $2,000 for post-secondary education. Even with no additional contributions by parents or others, when placed in an RESP, these funds could grow to nearly $3,000 by the time the child reaches 18, providing a foundation for higher education and a better future. The learning bond will benefit for than 120,000 newborn children this year alone.
Second, for families earning less than $35,000, we will double the Canada education savings grant from 20% to 40% on the first $500 of contributions each year. The means that for every $5 that a low income family contributes to an RESP, the Government of Canada will add $2. As a result, families receiving the learning bond and contributing as little as $5 a week to an RESP could have close to $12,000 by the time their children ready for a college education.
Third, we will provide some 20,000 students from low income families with new grants worth up to $3,000 to cover a portion of the first year of tuition.
Furthermore, for families earning between $35,000 and $70,000, the CESG will increase from 20% to 30% on the $500 of contributions each year. This could benefit more than two million children in middle income families.
Each year the Canada student loan program provides financial support for almost half of the full time students in post-secondary education. Students across Canada will have told the government--