Alex Shepherd

[Broadcasting Act, March 27th, 1996]

Mr. Speaker, it is a great pleasure to enter into the debate on Bill C-216 introduced by my colleague from the riding of Sarnia-Lambton. I applaud his initiative in this matter.

Generally I recognize the importance of maintaining the cultural industries within our country. I believe it is part of the mandate of the CRTC to ensure that there is a cultural identity that goes from sea to sea to sea. I also believe this is part of its mandate that the CRTC attempts to do reasonably well.

Having said that, I also realize that the concept of dividing up our country into areas where cable providers can function is a method of granting monopolies. From someone who believes in free competitive forces in the marketplace, I have initial reservations about that process.

I have also realized that there is a significant advantage to Canadians rationalizing their marketplace to provide enough revenue for some of these businesses to do research and development. We are talking about convergence in the communications businesses throughout Canada. Canada has been able to compete internationally and allow the penetration in telecommunications because we have taken these initiatives.

When creating a monopoly it must be done with a certain degree of caution. We do not want people to use their market areas in such a way that they disadvantage their customers. This is the essence of the bill. It attempts to address a practice which for some reason has become acceptable to the cablevision industry but clearly is not acceptable to everyday Canadians. Why do I say that?

Most of my riding is serviced by the Rogers cablevision network system, on which I do a program once every two weeks. When this process of negative option billing was introduced, there was an immediate outrage among my constituents. It would appear that governments had allowed the monopolistic part of the CRTC regulatory environment to gouge them. It was not really any different from a neighbourhood theatre sending a bill to someone for a movie they have never seen or ever desire to see. This is what we did to average Canadians.

It was not that Canadians were upset about the concept of Canadian content. Maybe if somebody took the time to explain to them the need for Canadian content, they would pay more themselves directly or they would agree to support it through their governmental system, as we do with the CBC, or possibly through public broadcasting arrangements. The bottom line is that they were not given the choice and that is what upset them.

I talked to my local cablevision company to see what was the fallout to this, what actually happened after the smoke cleared. Rogers said it was sorry and so on but the bottom line is that most people, after having been given the option to send in a little card to say they want out of the system, did not do that. In reality, the negative option billing system was successful for Rogers and that industry.

Why do we need negative option billing in the first place? It is interesting to note a comment from Mr. Watson who was a director at the time. He said: "Outlawing the negative option sales tactic"-I underline the word tactic-"would decrease subscribers' acceptance rates, cut cablevision services expected revenue and choke new channel source of cable fees and advertising". What he is saying is that this tactic was designed for the express purpose of making people pay for things they would not normally have. He is saying that if they were given this choice, they probably would not do it.

We have set up a governmental process that is unacceptable to the average Canadian. It is clear that the essence of this bill is to address that wrong. For that reason, it is highly appropriate.

A number of other things were going on in the cablevision industry at that time. There was a concept of consolidation. In my area it used to be Maclean's. Maclean's became Rogers and Rogers became a huge organization. Part of that consolidation cost a lot of money. People got some money out of this. They were paid off and so forth. How will that be financed for rationalization? It will be done through a fee structure. That is exactly what this is all about. The CRTC acquiesced in that situation. Possibly it saw the rationalization of the cablevision market to be a long term goal for Canada. Maybe it is. I have not really taken the time to study all that.

However, the bottom line was that Rogers, in particular, gave a new definition to the word over-extended. Indeed, by subsequently reducing its rates, I suspect it is having financial problems.

Nobody took the average Canadian into consideration. Some of my colleagues have noted that at least two provinces already have legislation in place that prohibits negative option billing. In addition, the industry is attempting to develop the technology to give recipients of cablevision the choice.

At the time, a Regina company had the facilities to give certain numbers, approximately 9,000 of its 50,000 subscribers the option to say no. If they did not want certain channels coming into their houses they did not have to pay for it.

The industry realizes the importance of individual choice. As I understand it, the industry is now working on the technology to provide that very service. In four or five years from now people will have the choice of channels. They recognize the importance of consumer choice. It appears that the menace of negative option billing is still within the system today. The purpose of this bill is to eliminate it.

In conclusion, I believe this has told us that we must have another way to sell Canadian content. Maybe we need to allow free access to home environments for a period of time so that people can become adjusted to new programming and learn to accept or reject it. People cannot be charged for services they did not ask for. It is just not fair within the existing marketing system.

[Flat Tax, March 20th, 1996]

Mr. Speaker, the Reform Party embraces a flat tax. This is at a time when multimillionaire Steven Forbes has been rejected even by the far right of the United States in his attempts to convince the American people the logic of this tax.

A tax which would lower taxes to those earning more than $200,000 while increasing the taxes of already overtaxed middle class people earning between $35,000 and $65,000 is the agenda of the Reform Party. Robin Hoodism in reverse. Taking from the less wealthy and giving to the wealthiest is the agenda of the so-called Reformers.

What else would a flat tax do? It would not tax interest. The banks will be very supportive. It will eliminate lower rates of income taxes for small and medium size businesses. So much for the Reform Party's job creation programs which will reduce small business employment while lining the coffers of financial institutions.

Reform thinking on flat tax is the same as those who thousands of years ago believed in a flat earth, the neanderthals of tax reform.

[Supply, March 19th, 1996]

Mr. Speaker, the $6.6 billion is not all related to corporate income tax. Surprisingly enough, I believe almost$1 billion of that relates to single mothers whose child support payments are delinquent and therefore not enough cash flows into those households. It was the government that changed the income tax system to make that a non-taxable transaction.

The member is suggesting that we should go out and put the squeeze on these single parent families which has nothing to do with corporate taxation.

[Supply, March 19th, 1996]

Mr. Speaker, I thank the member for his question.

Once again something is missing in relation to this committee. It is not an end in itself. People with expertise in the area of business taxation are being asked to provide their comments. Legislation is still the venue of this House and debate will occur here. You are attacking the whole concept of governments seeking outside expertise. You could use this argument with any area of government legislation.

The member's discussion concerning the Japanese and Canadians is quite apropos. In 1951 Japan and Canada had the same gross domestic product. That is quite interesting because by the year 2000 Japan's gross domestic product will exceed that of the United States. Japan is a country with half the U.S. population and almost none of its natural resources. We have to get on with the reality of making this country a more effective and dynamic economic institution.

I note some of the complaints the Bloc has about creating a national securities market. Capital has no boundaries. We have to create more dynamic markets to get our business community up and competitive in a global environment-

[Supply, March 19th, 1996]

Mr. Speaker, I am happy to share my time with the member for Ottawa Centre.

I rise in debate today on the Bloc motion which is basically concerned about the government's hiring a technical advisory group to advise on the issue of business taxation.

It is an odd thing. From time to time we discuss business taxation here in some very strange formats. The reality is corporations are fictitious creatures of the legal system. There is no such thing as a corporation. We cannot touch it. We cannot feel it. The reality is when we tax corporations they simply use that taxation to turn around and treat it as a cost of production and allocate it to consumers. The only true taxation is taxation of individuals.

The underpinning of this motion is a concern that people who are experts in the field of taxation somehow should not be advising the government. Of course, nothing could be further from the truth. As I look over the roster of the people who are in this technical advisory group, I see Mr. Brown, chief executive officer of Price Waterhouse, and Nancy Olewiler, a professor and chair of economics at Simon Fraser University. These are people who are eminently involved with economics and business taxation from across Canada.

This is not the end of the process. These people are basically advising the government in the areas of business taxation.

The concern of a lot of people is with two things, tax simplicity and fairness. There is a great feeling that our system is not fair. There is a great feeling also that it is far from being simple.

We have to continue to keep our corporate structure attractive for Canada to be a place to do business in. Clearly if our corporate tax structure was such that we inhibited businesses, new businesses would not start in Canada. Consequently we would not reap the benefit of employment caused by that.

The whole issue of fairness talks about how people are taxed under the existing system. I will deal with one aspect of fairness which concerns me. It concerns me so much so that I presented a

private member's bill, Bill C-215, now before the House. I do not think people realize we have had spiralling rates of taxation in Canada. As we have had spiralling rates of taxation we have asked our collection agency, Revenue Canada, to be ever more judicious in extracting that money from the general public.

As a consequence, some of the things we ask Revenue Canada to do, for instance the seizure of bank accounts, even the sale of a spouse's residence on the demise of her husband, are really questions of whether government should have those kinds of power and whether we should temper them.

My private member's bill addresses this matter. There is a taxpayer's bill of rights in the United States. In the United Kingdom there is a taxpayer's ombudsman. Basically that is what my bill proposes to give to the people of Canada, some kind of an intermediary between taxing collection authorities and people in general.

Many members have seen in their ridings situations of seizures of bank accounts. Sometimes Revenue Canada makes a mistake. We are all human and we sometimes make mistakes. When Revenue Canada makes a mistake the credit rating of the company or individual is blemished and there is no real recourse in the system other than a very expensive litigation process.

I refer to a single woman in my riding who because of the taxation of child benefits incurred something like a $1,500 tax liability to Revenue Canada. She is paying that back over a two-year period. She dealt with two or three collection officers and the third one decided to be very aggressive and seize her bank account, getting a total of $94. The woman had been paying as agreed. Through the process she had a heart attack and lost two weeks of work. She is out $800 and there is no real prospect of getting that back from the system.

My bill tries to deal with some of those inequities. In some ways the motion of the Bloc is concerned with the fairness of the system.

There is much talk that our tax system is not simple. Well over 50 per cent of individuals who file tax returns do so on their own. They do not require professionals to give them assistance. That is good news.

One thing that unites this country, if nothing else, is that at this time of year we are all sitting down with blue forms trying to figure out our taxes. That holds true from Newfoundland to British Columbia to the Northwest Territories. I do not know if that is a good or positive thing, but it is something we all do and I am sure we all agree we dislike the process.

The system is complex. As I said before, the reason is that we asked the system to ratchet up the amount and quantum of tax it extracts from the general public. When that is done it is very much like a water pressure system where the pipes are designed to sustain approximately 50 pounds per square inch. Now we are asking to put pressure in that system of something like 1,000 pounds per square inch and we get leaks from time to time and we are required to patch the leaks. It works the same with the income tax system. When we patch the leaks the income tax gets higher and higher.

When I was in practice every week we got a two or three-inch stack of amendments to the Income Tax Act. The reason it is complex is the amount of money we want to extract from the system.

This is not new. Economics books can take us back to the time of the Romans and even before and will show that every regime that tried to increase taxes exponentially eventually ran into a wall of complexity and evasion. There is a point at which people will evade the system because of the amount of money being extracted from the system.

My hypothesis today is that the system is complex not specifically due to bureaucratic wrangling but with the amount of taxes we want to extract from the system. My argument is we could put simplicity in the income tax system but it would have to be done by reducing the quantum of taxes we pay. This is certainly an objective of the government. We realize Canada's taxation system on a personal basis is the second highest of all OECD countries, France being the first.

To get simplicity back into the system it is obvious we have to reduce income taxes to individuals. How can this be done? The government has taken on a concerted program to reduce the deficit and debt. Obviously it has to do one thing at a time, get the deficit and debt situation under control before we can look down the road to actually reducing taxes on individuals. That is part of the process. The reality is both things cannot be done at the same time.

One provincial government wants to do both things at the same time, the Government of Ontario. It thinks it can cut spending while at the same time reducing taxation. This is not impossible but quite frankly unfair. What happens in that situation is it starts cutting back the basic social services people have come to expect and appreciate from the government. When it cuts back taxation, because our system is progressive, that is to say as you make more money you pay more taxes, eventually what it is doing is transferring the reductions in social programs to the people who are the most wealthy. It is sort of a reverse Robin Hoodism, if you will, of economics.

The federal government is not committed to that kind of concept. It realizes we have to cutback and make governments smaller, but clearly it cannot turn around and give the benefits to those who are most wealthy and who do not need the protection of that.

Why are rates progressive? Most of us in this country and indeed most of the western world have realized it is very important to have a redistribution of income. That is to say, as people make more, proportionately they pay more in income tax.

I can point out countries that do not do that for a variety of reasons, some which have systems that look like they are doing that but the result is actually the reverse. I look at countries in South America, particularly Peru, which I have visited. I talked to the people about their economy. I realize what happens when you do not have a progressive system. Basically you end up with a small group of people with a lot of money and you end up with a lot of people with no money. That is the kind of system we do not want to promote.

No one is better off in that situation because even those who are wealthy can longer find a market or trade for any business goods they have because there is no market. Nobody can afford to buy their products. That is why our system is progressive.

This leads me to the discussion of some of my Reform colleagues embracing the flat tax. The Hall-Rabuska study of 1985 originally put forward the concept of a flat tax. Ironically that flat tax was based on the concept of not only a redistribution of income but also a negative income tax that purported to be able to transfer money back out to people as a social welfare system. This is not so with the right wing movement both in the United States and apparently in our country as well. The flat tax system has been turned on its head.

What is a flat tax system all about? A flat tax system is doing away with progressiveness. That means as you make more money you pay the same amount as somebody behind you. In other words, we do away with the whole object that the wealthy will pay proportionately more as opposed to those who are less wealthy. Clearly that is not saleable. Politically that does not make a lot of sense.

The way we sell the flat tax is by linking it with something we can sell, and we can sell simplicity. In a sense what we try to do is link the flat tax with basic simplicity because everyone can understand it and they like simplicity in the taxation system.

What does simplicity have to do with a flat tax? They have very little in common. The proponents of the flat tax would like us to believe they can reduce the cost of tax collection. The reality is they cannot do that.

There are very few economic studies that will indicate the evolution of a flat tax actually reduces the cost of the collection system. Most people who support a flat tax system are basically attempting to sell their product by putting a little good in with the bad.

Sixty-six per cent of the total quantum of taxes in Canada are collected from the top 30 per cent of taxpayers. It does not take very long to understand-

[The Budget, March 18th, 1996]

Mr. Speaker, I listened intently to the hon. member's speech.

I hear a lot of members talk about deficits and debts in this venue. The reality is deficits represent unpaid taxes. It is not a simple matter of saying we will reduce spending today or that we will increase taxes. The bottom line is we have not paid all of our taxes from prior years.

In reality a lot of that spending occurred within the province of Quebec. It is no different than other parts of the country. There are bills which we have not paid. That is what deficits are all about.

It is not a simple matter of comparing the reduction in spending on certain programs today; we have to look at the reality of the past.

I was interested in the hon. member's discussion of the Dumas family. She did not mention a number of issues which would have had an impact on that family: possibly child tax credits, which have been increased, and that we have increased the cash flow to that family. That we are fighting the deficit as judiciously as we are has reduced interest rates significantly.

The Dumas family, I suspect, also has a mortgage on its house. The next time it remortgages its house it will find out its monthly payments have been reduced and its cash flow has been improved.

The summer youth employment program is not only private sector employers, it is governments as well. It is the municipalities and the not for profit sectors which exist within the province. That adds a benefit to the community by employing youth and also adds a benefit to the communities in which they serve.

These are other areas in which the federal government has created a linkage with youth in giving them experience which they can put on their resume when seeking future employment.

The facts are clear that in the last two and a half years the economy has created over 600,000 new jobs, many of which are in the province of Quebec.

I wonder if the hon. member would like to address some of the real impacts the budget has had which will make the Dumas family a lot better off than it was a year ago.

[The Budget, March 18th, 1996]

Mr. Speaker, I do not think I have ever heard such a strange argument. As I understand it, the argument is that the Liberal Party has done so well, and we are accepting that the Liberal Party has done so well over the last three years in its governance, that we are somehow responsible.

All I have heard over the last three years from the party opposite is what a disaster the government has undertaken against the people of Canada. Therefore it is very interesting that today the Reform Party seems to be turning the course in recognizing that the Liberal Party has done the things it said it would do.

In the red book we stated we would bring the deficit down to 3 per cent of GDP. That was months before we even heard about the Reform Party in the House. The reality is the government is on track with that.

It may be that all of the things the member is applauding would have happened even if those seats over there were not occupied. The reality is we are on our agenda. Six hundred thousand new jobs have been created in this period of time. The debt to GDP ratio, which everybody seems to be ignoring, for the 1996-97 period will be 75 per cent. It is nothing to be proud of but in the 1997-98 fiscal period it will be 94 per cent. That is the turning of the course of this deficit which the government has basically brought all by itself, not by the urging of Reform members.

I see that Mr. Forbes in the United States has fallen out of favour on his flat tax but it seems to me Reformers are continuing on in this vein. One of the speakers mentioned his concern for small business. Would the member acknowledge that a flat tax would do away with the current low rate of tax for small and medium size business?

Would it not also tax interest of the banks, the very interest transfer payments he talked about being the money the poor taxpayer was paying for interest on the national debt where the recipient of that would not pay tax on it under the Reform Party's flat tax agenda?

[Taxation, March 13th, 1996]

Mr. Speaker, my question is for the Minister of Finance.

Due to recent changes in the Canada-U.S. tax treaty over 81,000 Canadians who receive U.S. social security have witnessed one-quarter of their benefits disappear at the hands of the IRS. Many of these are low income seniors. Americans who receive similar payments from Canada are allowed to seek a refund, but this is denied Canadians.

What is the Minister of Finance doing to redress this inequity in tax treatments of low income seniors?

[Supply, March 12th, 1996]

Mr. Speaker, I listened attentively to the hon. member's dissertation.

I heard him say scrap the UI bill. I heard him say scrap the GST. I wonder what else he wants to scrap around here. I do not here much about responsibility of the Reform Party. I do not hear it saying for $15 billion with GST revenue where that money is to come from; `poof' out of the air I suppose.

The bottom line says harmonize and make it fairer for small and medium size businesses. I travelled on the committee across the country and that is what people in Alberta, Saskatchewan and in the maritimes told us. That is what we will do as a government.

The hon. member remarkably starts talking about UI and how people are looking for jobs more and more everyday neglecting that this economy is creating jobs as we are talking here today. The reason why there are more people looking for jobs today is what is called labour force participation rate. It means as one person gets a job there is a second person who has given up looking up for a job two years ago and suddenly decides they want a job too and then joins the labour force and starts looking for a job. That is good. That is positive.

People are saying there are jobs being created and I will go out an look for one. That is positive. That is not negative.

We talk about the cost of small and medium size business. The government reduced the unemployment insurance rate from $3 per $100 to $2.95 per $100. That is good. That is positive. That reduced small and medium size business costs and is employing people. Let them increase their employment.

The hon. member talks somebody in his constituency who will end up paying more UI, and that may well be if he is hiring students. What he neglects to mention are the people working in part time employment, possibly less than 15 hours a week, who never could access the system before. He is saying it is quite all right that those people cannot access the unemployment insurance system. He thinks it is fine that because they chose part time work they have to pay benefits but have no way of receiving them. He thinks that is a fine situation.

The bottom line is this legislation attempts to make a connection between getting people back to work. It gives them an incentive to find work. It even gives them incentives to get a lower paying job if they have to do that. It provides a top-up credit to them to access new employment to get people back to work. That is not something you scrap, that is something you applaud. I wonder if the speaker could address some of these issues.

[Social Programs, March 11th, 1996]

Mr. Speaker, I was pleased that the throne speech and the budget both mentioned the necessity of underpinning security and ensuring that social programs will be in place for future generations of Canadians.

The people of Durham expressed their concern for these programs, specifically the Canada pension plan, in three town hall meetings that I held recently.

They were very clear about the general direction of change. Most understood the shortcomings of the plan and how assumptions made in 1966 now significantly depart from reality. They wanted the assurance that changes would not affect those who have already made their retirement plans, the pensioners that are now receiving or soon to receive benefits.

They also took exception to governments, whether provincial or federal, assuming they could invest any reserve balances at their discretion to refinance their own deficits. They wanted the assurance that funds would be invested wisely at market rates, and they questioned the wisdom of allowing governments to make those decisions.

Canadians will continue to need a mandatory plan but the people of Durham want it managed better.