Pierre Brien

[Cigarette Smuggling, February 7th, 1994]

Mr. Speaker, does the revenue minister not agree that the refusal by the Ontario government to lower its taxes on cigarettes would make his anti-smuggling plan totally ineffective, particularly in Ontario and perhaps even in Western Canada?

[Cigarette Smuggling, February 7th, 1994]

Mr. Speaker, my question is for the Minister of National Revenue.

It is obvious that the Ontario government does not agree with the federal government's proposal to lower taxes on cigarettes to curb smuggling. The Premier of Ontario has stated that, in his opinion, smuggling could easily be thwarted if the federal government imposed a special export tax on cigarettes manufactured in Canada.

Does the revenue minister share the Ontario premier's opinion regarding the imposition of an export tax on Canadian cigarettes?

[Taxation, February 4th, 1994]

Mr. Speaker, I almost found myself having to answer a question, when it should be the opposite. So, I will ask my question again and suggest some alternatives.

Would the Minister of Finance not agree that instead of increasing taxes, we should implement the tax measures Jean-Robert Sansfaçon is suggesting in today's Le Devoir , namely a decrease from 80 per cent to 50 per cent of the deduction rate for meal and entertainment expenses and the same tax treatment for gambling and lottery winnings as for capital gains?

Would the Minister of Finance not agree that there are other measures besides tax increases that can be considered? Those measures are the kind the Bloc could support.

[Taxation, February 4th, 1994]

Mr. Speaker, my question is for the Minister of Finance. During the election campaign, on October 1st, 1993, to be more precise, in an interview he gave to Le Téléjournal , the Prime Minister was asked if he would commit himself not to increase taxes for the next two years. The Prime Minister replied, and I quote: ``So, I want to be quite clear on this. There will be no tax increases''.

Can the Minister of Finance reaffirm the commitment made by the Prime Minister not to increase taxes for the next two years?

[Department Of National Revenue Act, February 4th, 1994]

A new and improved version, as the hon. member says. I will conclude by saying that we will approve the principle that each clause of this bill will be examined in detail by the finance committee, that we have concerns regarding what customs officers themselves have said, as well as some groups supporting them. The minister met with customs officers, and he may have reassured them. We must not overlook the role of customs in this integration. There are important issues, and we need not elaborate on the smuggling problem. Effectiveness can be improved, but interdepartmental co-operation will also have to improve. More importantly, the government will have to introduce other measures if it wants the public to be pleased with its performance after the first 100 days. Indeed, Canadians are still waiting for concrete solutions to problems which directly affect them, particularly the unfairness and the injustice of the tax system.

[Department Of National Revenue Act, February 4th, 1994]

Mr. Speaker, we are finally at the stage where we start examining bills. After one hundred days in office-I read this week that it was a hundred days since the election-this is the first bill before Parliament, Bill C-2, an act to amend the Department of National Revenue Act and to amend certain other acts in consequence thereof. The purpose of this bill is simply to change certain terms in order to reflect a situation that has already existed for over a year.

As far as the principle is concerned, and the minister referred to it in his speech, we certainly agree with the objective of streamlining operations, and not just because it is in their red book but because everyone wants us to do this. Everyone expects this to happen, and it is a social principle our voters want to see implemented.

However, we will have to conduct a more specific and thorough analysis, and we will have an opportunity to do so in committee. There seems to be no problem about the principle. However, there are fears which may be justified in some respects, and I would like to point these out to the minister. I know that some have already been communicated to the minister, and I would like to refresh his memory.

Before proceeding with this general analysis, there is one point I would like to make. As I said at the beginning of my speech, this government has been in office for over 100 days. People often expect a new Parliament to start off with tough measures, to make the kind of improvements we need in a society that in some respects, and I am thinking of the economy in particular, is headed for disaster unless something is done.

I think it is symbolic that, as our first bill, we should have something which in many respects seems rather minor and somewhat disappointing. Of course we will have to wait for the budget. After the election they told us to wait for the opening of the session, and at the opening of the session they told us to wait for the budget, and now I am afraid that when the budget is brought down, they will tell us to wait for the next budget because they ran out of time. We expected some tax measures that would be an incentive for people to become honest citizens and show a little more understanding for the system, and that would give them a little more confidence in a fairer system.

In fact, there are few references in the red book to the tax system. Last night I was reading this book again to try to find something interesting. I was disappointed. I scanned the book carefully for a reference to tax revenues, and I could not find a

single one. I saw the nice tables we see in all government publications, but not much in the way of analysis and recommendations.

So I wondered, since there is not much in the red book about tax equity, if we would get anywhere at all in this respect during this Parliament, since the government keeps referring to the principles in the red book. Maybe they should consider publishing a new and revised version. This is just a suggestion. I remember at school we had first and second editions, so I suggest they do a second edition of the red book that would mention tax equity.

The Minister of National Revenue was expected to bring in some tough measures. I remember raising the question with the Minister of Finance, who said that the Minister of National Revenue would, at the appropriate time, make an announcement on cigarette smuggling, through the excise Tax Act and the customs Act. He is very involved in this particular area as well, but we are still waiting. Meanwhile, what is happening in Quebec, Ontario and the maritimes? And some day British Columbia as well. There is already a little of this going on, but not to the same extent.

Meanwhile, we are not getting much in the way of announcements. When I go back to my riding on the weekend, I will tell my constituents that we worked on Bill C-2, which provides for abolishing a deputy minister's position which, for all practical purposes, has already been abolished. I think people will be pleased to see some jobs being cut here, but they will also be very disappointed.

On the revenue side, there is a lot of dissatisfaction among the public which feels there is no fairness in our tax system. A lot of this disenchantment with politicians and with all members in this Parliament, arises from a sense of injustice.

I expected the government to work a little harder on this. There is still time. Parliament will continue to sit, and I hope that eventually, the government will have some proposals for us.

Consider the principle of this bill. Let us not get involved in detailed analyses but look at the principle. The principle is, that now there will be only one deputy minister for Taxation and customs and excise, where previously there were two. This principle was put into a piece of legislation. This seems proper and reasonable, and I agree with the minister that streamlining is necessary and that informatics and data processing systems can be consolidated. However, perhaps there are a few questions we should ask. There is some apprehension in this respect, and there have been a number of changes back and forth. In recent years, there were repeated proposals to switch Customs to another department. It seems as though that the government cannot decide where it should belong.

The main role of customs posts is to control our borders. These people have a security role. They must watch everything that crosses our borders, whether persons or merchandise. I heard the minister refer earlier to drugs. There is a lot of talk about cigarette smuggling lately, but people tend to overlook the smuggling of illegal drugs which is big business and generates tremendous problems because of the enormous amounts crossing our borders.

That is the approach at customs. For historical reasons and reasons based on economic principles, over the years countries have imposed various customs tariffs to protect their economies, because they thought that was the answer and was also a way to make businesses more prosperous.

Now, the trend is toward free trade and lower customs tariffs. The customs sector is being asked to fulfil a dual role, namely providing security and collecting tariffs.

This role is likely to diminish considerably in the coming years, as free trade takes on greater importance. Soon, we will be considering phasing in amendments to customs tariffs in conjunction with NAFTA and the GATT negotiations. We have many reasons to believe that in the long term, the role of customs will become marginal.

Customs employees are concerned about being attached to a sector where the prime focus is revenue, whereas their primary role is security and control. As long as we have customs tariffs-and I realize that the Department of Revenue must be responsible for this area-I believe that the minister has to address these concerns during the upcoming transition. I know that he met and had some productive discussions with representatives of the customs and excise union. They voiced some concerns which cannot be ignored. They also have some practical concerns about their personal future and I will get back to this in my detailed analysis later on.

We must look at the role of the customs sector in the public service somewhat philosophically. This may not be the best solution, but of course we will learn to live with it. However, some caution must be exercised prior to the consolidation so as not to confuse the role of the two sectors and neglect security by decreasing border controls.

Recently initiatives aimed at increasing border controls were announced in Windsor. While this is very commendable, these initiatives will have to do more than simply appease those who fear for their jobs. They will have to be taken with a eye to controlling what goes on at our borders. Tighter controls and improved procedures are needed.

These are the fears people have, and they appear to be justified.

CEUDA, the union representing sector workers, reports that internal Revenue Canada studies on consolidation recommended as one option that customs remain a separate and distinct sector. However, since no one in this House and very few other people have seen these studies, it is impossible to know whether this option is viable. Perhaps the minister is aware of these studies.

If internal studies were in fact conducted, what conclusions were drawn? Were these genuine conclusions? If not, the minister should make these studies public. Given the difference between the customs function and the tax function, this study should have concluded that it would be best to keep the two separate.

Therefore, many concerns have been voiced and the people involved have received a lot of support. They have received support from the municipalities and the communities concerned, from people who are afraid that the revenue side will take precedence over security matters. Special attention will have to be paid to this aspect of the issue and considerable vigilance will be required in the years to come to ensure that security remains an important consideration.

Let us now look at the bill. There is nothing extraordinary about it as such and it can easily be read in five minutes. It is only two or three pages long, but several sections warrant closer attention. This bill will, of course, be referred to the finance committee and we will certainly have a number of questions to ask then. However, I would just like to draw the minister's attention at this time to a few simple matters. For instance, it is mentioned in the bill that the deputy minister holds office during pleasure. One can ask why this should be the case? Was this not the case in the past? This is only a minor detail, but every word is important, apparently, in a legal text.

Further on, there is a provision which concerns me a little and I hope that eventually the minister will clarify his intentions. Under References, the bill calls for section 6 of the Act to be repealed. The section in question which is to be repealed reads as follows and I quote: "The Minister shall cause to be laid before each House of Parliament, not later than the fifth sitting day of the House after January 31 next following the end of each fiscal year, a report showing the operations of the Department for that fiscal year".

This section would disappear. Would the report to Parliament disappear? If so, why? I recall hearing our friend from the Department of Finance during the election campaign and many times since the beginning of the session say that openness was important, that people must understand what is being done with their taxes and that we need simple indicators. These principles are often mentioned here. Perhaps I am mistaken. Perhaps the report will be made at some other time in some other way, but I would like it to be required by law.

I am not at all pleased with that clause, but maybe he has a good reason; the minister can explain it to us in due course or in committee when we consider the bill clause by clause, but it worries me. It is far from the principles of the red book, if I understood it correctly, anyway.

But the key clause, which is at the heart of this bill and which is hard to understand-the minister referred to it just now in his speech, says this: "Nothing in this Act shall be construed to affect the status of an employee who, immediately before the coming into force of this Act, occupied a position under the authority of the Deputy Minister of National Revenue for Taxation or the Deputy Minister of National Revenue for customs and excise except that each of those persons shall, on the coming into force of this Act, occupy their position under the authority of the Deputy Minister of National Revenue".

Basically, what they seem to be saying is that this bill in no way changes the status of public servants.

At the same time, the minister says in a letter that "we can already see specific advantages", since this practice is already in effect and operational; there is now only one deputy minister who does double duty; with this bill, there will be only one deputy minister doing the job. So the minister says, "We can already see specific advantages, in particular since the administrative consolidation-". People often like to talk about consolidation when the time comes to downsize; they use softer, less offensive words. "In particular, since the administrative consolidation has already saved $30 million".

There is something that I do not understand. We are told that the status of the public servants did not change and then we are told that $30 million was saved. I cannot believe that a single deputy minister cost $30 million. At least, I hope so, and I doubt that is the case.

I understand his principles when he says that they will share computer systems and administrative services. That is true, but it changes the status of public servants. How come the bill said in the transitional provisions that it changed nothing? You must understand that it is a transitional provision in the bill. How long does the transitional period last? We will see when we analyze the bill clause by clause. We will ask the minister or his representatives to explain what it means.

The rest is clauses replacing references to two ministers in other laws with a single minister now. There is no longer a taxation division and a customs and excise division.

It is very well done. The lawyers are competent; they do good research and can find all the references in all the laws. They did a thorough job of research.

We cannot oppose the principle of streamlining-it is good and desirable, but we can always wonder if it is really the right place. The people at customs have concerns and feel that the department is moving ahead quickly with this reform. On the other hand, perhaps the public will defend the minister and say that he is not going fast enough. But I would like us to be a little more open about something, namely this. Was there really this internal study and what did it conclude? Are they being joined with the right department in the right way?

You know, it is tempting for a department to reach out in as many directions as possible and to control many things. I must say that this minister has quite a budget. The Department of Revenue has an operating budget of $2.5 billion. That is a lot. He has been given this responsibility; surely he can explain it. I do not doubt his abilities, but we must be careful not to expand a department which is already very big or to give it a role that may be broader. I share those concerns with the customs officials. We still support the principle but we will have questions to ask before the finance committee, of which I am a member, and I will be there when this bill will be studied.

I would like to go back to a point I mentioned earlier, namely the first bill tabled in the 35th Parliament. Bill C-2, other than being the first bill tabled, will not make history by a long shot. But if we look at past Parliaments, I do not imagine that we would find many first bills similar to this one; they would have been mere administrative measures, as a rule.

There is more to this bill. What will happen in the medium term? What kind of structure will there be? How far do we want to go with integration? That is another concern that people have. Will we have regional offices poorly adapted to the reality of customs and taxation? The minister seems to be denying it, and I hope so. We have to watch out for this. Again, we must be careful not to cause inefficiencies as we have done in the past. Regional offices have not always been closer to reality, and I am in a good position to confirm it, Mr. Speaker. It may not be of great concern to us here in this House, but in my riding, the office of the Quebec agriculture ministry is located in an urban center and not in either of the two agricultural areas. This is very frustrating for farmers and I sympathize with them.

We must do the same thing so that customs officers do not have problems with regional offices-they are not very close to the border-as long as they have very direct and close relations.

The Auditor General and others talked about closer relations between customs personnel, the Solicitor General and other authorities, in order to improve control mechanisms. I am confident that the minister is taking this into account and that, during this Parliament, he will try to work more closely with others to improve operations.

We on this side of the House often talk about administrative overlap but we know that interdepartmental co-operation is often very difficult, not necessarily because of individuals but because it is not a simple thing. This is something we must look into.

The Auditor General often says in his reports that we must improve interdepartmental efficiency and I hope that the minister will work on this during this mandate because his department has an important role to play in this respect. It is his department that collects money from the taxpayers. It does not do much for one's popularity to collect money from taxpayers' pockets, not these days, Mr. Speaker. Especially as I feel they are not getting good value for their money.

That is what they tell us every day. I will be travelling back to my riding in a little while and I am sure that I will hear the same thing again this weekend as usual. I will be embarrassed to say that we, in this House, are now working on a bill that will cut a deputy minister's position to save $30 million. The bill says there will be no public service cuts but the minister's comments clearly suggest that there will be cuts, retirements or early retirements. Something has got to give. This $30 million must come from somewhere. We cannot pull numbers out of thin air like this. We must explain how this $30 million has been saved.

It is funny; every time we must make cuts or whatever, we deny being opposed to cuts but we cut $30 million and say we have become more efficient. Too bad it is taking us so long to realize such things.

I am not convinced that this government will be better than its predecessors in this regard. We often react poorly, but if one looks behind the measures taken, one always finds the same old speeches. Governments come and go but the arguments stay the same. We have cut back, therefore we have become more efficient, and we acted in the best interests of individuals. Well, I hope so.

One day the minister is going to tell us how he saved this $30 million and state more clearly where we are going in the future with a closer integration of customs and taxation duties. I know he is still concerned with improving service to clients. He said so this week and I congratulate him. Individual tax returns may come a week earlier this year and there will be simplified forms for seniors, which is a good thing. We are glad, people will like it.

People are more worried about the amount they pay and the unfairness they see in the system than when they receive their tax refunds, if they get one. There is still a long way to go. I hope that the House will soon have an opportunity to consider such measures.

I would prefer that the Finance committee first examine the issue, since the minister directed us to work on the GST reform or, if you prefer, on changing that tax. In any case, some changes will have to be made, at least regarding the system as a value added tax program. However, I would like us also to examine tax expenditures, including the impact of tax incentives on job creation, as well as the objectives of such measures and their cost.

This week, the government announced a reform of social programs. However, in this particular case, we are not being told about a tax reform, or even the possibility of such an initiative, which Canadians would be much more happier about. Indeed, taxpayers would like to know that we are at least looking at improving the taxation system. But the government is silent on this issue; it does not even work on it because this is not yet part of its agenda. I guess we will have to add an annex to the red book. As I said earlier, new initiatives will have to be included; some improvements will have to be made. Surely, there are people who have worked on the draft of this legislation; the message was heard, the staff was increased and the government will undoubtedly be able to come up with a much improved version.

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, I listened to the hon. member very carefully and I must say that, on several points, he seems to agree with what I said in the speech I delivered in this House earlier today. First of all, he said that we are faced with a revenue problem, and I wholeheartedly agree with him. He used the words fairness and equity, which are key words in our taxation system. And I also agree with him on that.

He talked about the need to reform our tax system, not by targeting the middle class which is the driving force behind the economic recovery and which directly supports the economic cycle, but by increasing the tax base to reach those who do not pay their fair share of taxes. I would like the hon. member to comment a little further on this.

There is another issue I want to raise. In his speech, the hon. member did not mention spending cuts. Does that mean that he thinks the present level of federal spending cannot be reduced and that a revenue-based approach is the only way to put public finances back in order?

[Pre-Budget Consultations, February 1st, 1994]

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

I would like to mention, first of all, that he said he agreed with me on the smuggling issue; I hope he agrees with me on the other points of my speech, particularly as regards tax breaks.

The member said we should consider another very special measure, that is to keep a record of overpayments or overcontributions to RRSPs. As you know, it is for such reasons we have, for a long time, requested the creation of parliamentary committees who would study public expenditures, including tax expenditures. It would be a pleasure to hear such comments through these committees and to participate in the proceedings.

The last point in the member's question dealt with GST. Naturally, we will be happy to proceed diligently, provided, and I want to stress this point, provided we work towards replacing this tax with one that will be more efficient, that will respect this and that will not be, contrary to what we heard during the campaign, a hidden tax which could be much higher.

I ask the member, in that context, to convince his prime minister not to implement a hidden tax, but a visible one so that people can trust our tax system; if that is the case, the opposition will be happy to co-operate.

[Pre-Budget Consultations, February 1st, 1994]

First of all, Mr. Speaker, let me say that the subject we are debating today is one of great concern to me. The present state of Canadian public finances threatens certain established social programs and affects individuals as well as businesses.

One of the main reasons for this debate is the urgent need for action in that area. New policy directions must to be laid on the table. I would like to say that the decisions we will be making in the next couple of years will determine our future, especially for the people of my generation. In spite of the fact that, in some regards, we have enjoyed many services and a relatively comfortable life, what we have inherited has all the appearances of a heavy burden that does not make the future look very bright for us.

When you combine this cumbersome debt with a tight job market for young people, you can easily understand part of the reason for their despair.

I want the members of this House to know that it is through the eyes of the young generation that I will judge the actions of this government over the next few years. Its decisions will have to reflect a real concern for the long term.

Pre-budget consultations have often given Ministers of Finance an opportunity to put forward, concerning their forthcoming Budget, ideas about which they had already made up their minds. Take the idea of eliminating the $100,000 capital gains tax shelter. Several people were able to take advantage of this shelter and have already reached the limit. So, they will not be the ones affected in the future, but rather it will be the young generation. Either this shelter will not be available to them or they will not be able to take advantage of it in the future.

I simply want to make it clear who will in fact be affected by the proposed measures. We will be called upon to contribute significantly to solving the public finance problem in the future and we are prepared to do our share starting now, but there is a need to identify-and rightly so-who will be affected by the measures put forward.

Moving to the main thrust of my remarks, three approaches can be contemplated to solve the public finance problem: expenditure reduction, higher revenues or lower refinancing of the debt. Of course, the best course of action would be a combination of these approaches. I will only deal with revenues.

The Liberals, in their famous red book, and the Conservatives before them, based their deficit reduction estimates on the expectation that the economy would grow in the years to come. The Prime Minister referred to this during question period today.

We are all looking forward to a recovery in the not too distant future, but it is far from certain that governments will be able to raise as much money as they expected during this growth period. Let me explain.

In the past, a 1 per cent growth in the economy used to produce a 1.5 per cent increase in government revenues. Today, a 1 per cent growth in the economy or its leading indicator, the Gross Domestic Product, produces a mere .5 per cent increase in revenues.

We can clearly see a big problem looming on the horizon. Let us take the current year. The Minister of Finance estimates that the current year deficit will be $12.4 billion higher than was forecast in the March 1993 Budget. It must be noted that 72 per cent of this deficit is due to an unexpected shortfall in revenue. An analysis of the first seven months of the year provides valuable insight. During this period, government revenues fell 5.7 per cent, as compared to the same period last year. And there is cause for concern due to the fact that this drop occurred as the Canadian economy was recording a slight growth.

Also, the 1993 Budget forecast that the growth in revenues was going to keep pace with the increase in the Gross Domestic Product over the following five years. I guess I do not need to tell you that much will have to be done to readjust these forecasts.

How can such a situation be explained?

Obviously, the first explanation that comes to mind is the extent of the underground economy. The Minister of National Revenue himself said soon after the election that he estimated this underground economy at $56 billion, a conservative estimate according to some analysts. The underground economy accounts for close to 15 per cent of economic activity and comes a lot closer to $100 billion.

To illustrate how dramatic this is, last November Gallup asked Quebecers and Canadians whether they had participated in the underground economy in the last 12 months. In response, 33 per cent of Canadians and 42 per cent of Quebecers admitted having paid cash to avoid paying taxes. Two words explain this reaction: fairness and equity. People feel that the way the government collects revenues is unfair and inequitable.

Let us look at personal income tax: this year's receipts from personal income taxes are $1.1 to $1.5 billion lower than forecast in the 1993 Budget. People feel overtaxed. In the last few years, we have gone beyond tax effectiveness, especially for the middle class.

The GST was the last straw. It is clear that government revenues can only increase through higher income tax levels for the middle class, directly or indirectly.

The dissatisfaction of the middle class is understandable when we look at a few figures. In 1991, 368,000 people reported revenues of $60 billion, for an average personal income of $163,000, on which they only paid 18 per cent federal tax while the basic taxation level in this category is 29 per cent. On this point, the Bloc intends to press the government to eliminate tax shelters benefiting high-income taxpayers.

Let us move on to the taxes on corporate profits. Revenues from corporate taxes are very sensitive to economic activity since corporate profits are less stable than personal incomes. This year's corporate tax revenues are about $850 million lower than forecast in the 1993 Budget. The Finance Minister told us during today's question period that the next few years will not be easy in this regard, since many businesses will be allowed to carry forward the losses incurred in the last few years.

Individuals often complain that many companies in Quebec and Canada do not pay taxes on their profits. Let us look at 1987, a year of strong economic growth, when 90,000 Canadian and Quebec businesses made $27 billion in profits without paying a single cent in tax. That is one reason why Canadians are unhappy.

To prevent such unfairness in the future, the government should impose a minimum tax on corporations. It would then be able to collect a minimum level of taxes from profitable businesses even if they try to avoid paying taxes through tax shelter strategies. A global solution to the debt problem calls for involving businesses in this collective effort.

A few words on auditing. Auditing is one element of revenue collection that should be improved. A significant part of the economy avoids taxes because of fraud or of errors made by taxpayers in their tax returns. In fact, in a 1990 study the Department of National Revenue estimates at $1.2 billion the potential supplementary contributions. Additional audit measures taken in the past produced promising results. We should think about doing more in this respect in the future. We must not only reinforce auditing but also simplify taxation, which has become so complex that its effectiveness is affected.

In conclusion, Mr. Speaker, to help the government avoid losing significant revenues due to incorrect or fraudulent returns, the Bloc Quebecois thinks that the Department of National Revenue should have better resources available to audit returns, as the Auditor General has been proposing in his reports for the last few years.

I would like to say a few words on the infamous GST. The revenues from this source will be almost $1 billion lower than forecast in the 1993 Budget. Moreover, this tax is so complex that arrears will amount to between $800 and $900 million in 1994 according to the data in the Auditor General's last report.

The GST replaced another tax. Its advantage is that it is a value added tax. From an economic standpoint, this type of tax is more efficient as it does not affect the relative costs of resources to the same extent. Nevertheless, administering it is very complex, both for the government and for businesses, especially small ones. The fact that 576,000 registered GST collectors have not produced all their returns illustrates this point well.

The Prime Minister promised to replace it with another tax by 1996, but that target date is too far off. We must start to work now to replace it much sooner. People are expecting results on it quickly and we will have to act much more speedily. People are expecting results soon and the whole administrative aspect of this goods and services tax will have to be improved. We definitely intend to press the government to keep its election commitments and to keep them sooner.

One final point on sources of revenue, namely excise taxes other than energy taxes. Of course, this means taxes on tobacco, alcoholic beverages and jewels. Everyone now knows the extent of smuggling. Although taxes on products which affect health are justified, cigarettes taxes and the whole tax system have contributed to creating a monster in our society today.

A fast way to end smuggling must be put forward and this solution must involve lower taxes. Control must also be tightened and the same standard of justice must apply to all. Nothing prevents the government from pursuing a plan to fight tobacco consumption and to discourage tobacco use especially among young people and even including this plan in its strategy. We must realize that the smuggling problem is very serious and does much to undermine the confidence people have in our institutions.

In conclusion, the recovery will not do as much as believed to improve the government's finances. The reason is simple: the underground economy and people's lack of confidence in the whole system, the whole Canadian tax system. This underground economy is growing out of this lack of confidence and especially because of two words that I mentioned previously: justice and equity, on which a lot of work needs to be done in the future.

The balance between individual and corporate taxation and between the middle and wealthier classes must be restored by abolishing unfair tax shelters which are often unproductive. Audit controls must be increased and tax returns simplified. The administrative difficulties with the GST must also be resolved quickly. Finally, the problem of cigarette smuggling must be ended once and for all.

Our future and our social contract are at stake in the way the government collects revenue. Much of the mistrust of institutions, parliamentarians and people in authority and power is due to the unjust, unfair tax system. It is time to move and the government must improve efficiency in the management of public funds.

[Dams, February 1st, 1994]

Mr. Speaker, we learned recently that several property owners along Témiscamingue Lake were allowed to bring the first collective action against the federal government for damages caused by a dam which was built in 1908. Because of that dam and the high water levels, these lakeside residents have been facing numerous problems such as landslides, inaccessible beaches, tree uprooting and land erosion.

Besides asking for financial compensation, lakeside residents want the Minister of Public Works to ask for a reduction of about half a meter in the water levels of Témiscamingue Lake. According to a recent report from the firm AGEOS Science, and contrary to what other studies say, that half-a-meter reduction would not lead to floods in the Montreal area.

As the member for the Témiscamingue riding, I am very familiar with the problems of the lakeside residents of Témiscamingue Lake and I want to give all my support to the complainants in their action against the federal government on this issue.