Doug Peters

[Banks, March 20th, 1996]

Mr. Speaker, the government's position is quite clear. In the recent budget the finance minister said that the present restrictions on the banks networking insurance will be maintained.

The Canadian Imperial Bank of Commerce or any other bank cannot sell insurance to the customers in their branches. That is what the restriction means. They can and do own insurance companies who can sell insurance in other ways, in other places.

[Supply, March 19th, 1996]

Mr. Speaker, I join my hon. colleagues on the government side in condemning this tiresome and trivial supply motion today.

Perhaps we and the technical committee on business taxation can take some small comfort in the words of the great philosopher Immanuel Kant: "Slanders are not long lived; truth is the child of time". It has not taken much time at all to reveal the absurd and unwarranted attack on this committee advanced by the hon. member of the Bloc.

I find it hard to believe. As a graduate economist has little excuse for not appreciating the impeccable stature of the academics on this committee. As an economist and former business executive I do know many of these people personally or by reputation. The government is lucky they have agreed to serve their country in reviewing the business tax system. Their work will certainly be first rate and undertaken without fear or favour or bias. I worked with one of the heads of the committee on a task force some years back on taxation.

Let me remind the hon. member of the clear and public mandate the committee has been given. Its job is to consider ways of improving the tax system to promote job creation and economic growth, simplifying the taxation of business to facilitate compliance and administration, and enhancing fairness to ensure that all businesses share the cost of providing government services.

Where is the hon. member's beef? Where's the beef? Why does he feel these committee members are unable to fulfil this mandate honestly and expertly? Is it because they are not knowledgeable, experienced, because they represent all regions of Canada? Is it because they are successful people? Those are attributes the hon. member and his party may worry that they do not possess in great abundance but that is no excuse for attempting to impugn the committee and to blockade this important review.

I do not think there is much more that can be said directly about this motion at hand. There are some thoughts I would like to offer relating to the motion that might add some value to this afternoon's proceedings.

Let me address the broader topic of business taxation in Canada. It sometimes concerns individual taxpayers because they hear certain groups claim that business is getting an easy ride at a time when all of us feel somewhat overtaxed.

Fueling this concern is the fact that corporate income taxes today do provide a much smaller share of federal revenues than they did some decades ago. There is no conspiracy, no favouritism at work. Let me explain why.

Corporate income taxes are tied to income and so corporate tax revenues have been lower in recent years mainly because corporate profits have been hit sharply by the recessions first in the early eighties and more recently in the 1990s.

That situation is turning around. Since profits began to rebound in 1992 corporate income tax revenues as a share of federal revenues have been increasing steadily.

Let us also understand, which the proposer of this motion may not, that the increase is not a lock step process. Even if some sectors are recording significant renewed profitability, that does not immediately translate into equal revenues gains for government. The reason is the tax system recognizes the fairest approach to business taxation is to view earnings over a period of time. That is why firms can apply loss carry forwards which reduce potential taxation even when profits begin to grow again. The logic is proper and fair.

If a company loses money over a number of years and then records a profit, is it equitable to tax it as a fully healthy operation? This could jeopardize its ability to repay loans it has incurred to keep going, its capability to invest and to further strengthen the firm. The point is taxation applied without consideration of the broader success of a firm is no boon to anybody. If the company cannot achieve appropriate profitability it cannot preserve jobs, let alone create new jobs. The people who ultimately suffer are the employees and their families.

This does not mean the government must bend over backwards on corporate taxation, and it has not. The evidence is clear. All three of our budgets have included concrete measures to make the corporate tax system fairer, to guarantee to Canadians that businesses are an active part of our fiscal discipline.

We have introduced higher rates for the large corporation tax, which applies to all corporations with Canadian capital in excess of $10 million. There is a special capital tax designed to act as a minimum tax on financial institutions. In the 1995 budget we imposed a special levy on deposit taking institutions which will generate an additional $100 million in revenue. Earlier this month in the 1996 budget we extended the levy for another year.

The bottom line is clear. Corporations do pay substantial taxes. In 1993 they paid almost $51 billion in taxes to all levels of government. The banks are not excluded from this discipline. Over the last three years the largest banks have paid close to $1 billion annually in income and taxes to the federal government alone.

Let me underscore that federal taxation represents only a portion of the taxes businesses pay. When all taxes are taken into account, income taxes, capital taxes, payroll taxes and property taxes, corporations paid about two-thirds of their before tax profit in taxes in the last year we have numbers for, 1993.

Let me confess that this government has some biases when it comes to business taxation, as have previous governments. It is a bias in favour of research and development and a bias in favour of small business. These are vital sectors for Canada's long term economic growth which will create new jobs.

That is why the Canadian tax system provides special advantages to certain activities and certain sectors. For example, Canada's federal tax system for medium and small enterprise is among the most attractive in the world. Special deductions and other tax provisions deliver about $3 billion in federal tax assistance to small and medium size enterprises. It is likely no coincidence that this is the sector which has been the major job creator over the last decade.

Do the hon. member and his party object that the small business deduction cuts the basic corporate tax rate from 28 per cent to 12 per cent on the first $200,000 of business income? By contrast, the

similar deduction in the United States applies only to the first $50,000 U.S.

This is the type of bias of which Canadians should be proud. It aims at using the tax system to deliver the jobs and the growth we need and which our children deserve.

That is not to say the system is working as well as it should or that there may not be better ways which can contribute to achieving our economic goals. That is why we have established the technical committee. It is the first step in a substantial process of review of business taxation. By doing so the government is honouring its obligation to Canadians to obtain the best and fairest tax system possible.

[Taxation, March 13th, 1996]

Mr. Speaker, this is of interest to a large number of Canadians. It is an issue that has been brought to the attention of the Minister of Finance.

The background is that we updated our treaty with the U.S. specifically to get rid of double taxation and also to let us recover OAS going to high income seniors just as we do in Canada.

We have these taxation provisions in place with other countries such as Germany, France and Austria. The large number of Canadians receiving U.S. benefits makes this a very special case. This is a concern to us and we have raised the issue with Canadian and U.S. officials.

After this communication the Minister of Finance will be speaking this week to his counterpart in the U.S., Mr. Rubin. I anticipate that either I or the minister will keep the House informed of the progress on this important issue.

[Employment, March 13th, 1996]

Mr. Speaker, it is very interesting that the Reform Party is suggesting tax cuts. That would only raise the deficit. In the last two years all I have heard from the Reform Party is that the deficit should be reduced. Now it is suggesting tax cuts which would raise the deficit.

We have instituted a policy of rolling two-years targets and the second part of that policy is meeting those targets. We have been successful in doing so. We have three budgets down and we will continue to meet those targets. That is the best way to create jobs.

[Employment, March 13th, 1996]

Mr. Speaker, the hon. member should look at the statistics again.

Since the government came to power over 500,000 new jobs have been created. They are permanent jobs and they are in the private sector.

There was a problem last year. The world economy did slow and there was less job creation than we wanted. However, as I mentioned earlier to the leader of the Reform Party, in the last three months we have seen a strong growth in job creation, and the budget will ensure that continues.

[Employment, March 13th, 1996]

Mr. Speaker, the policies of this Liberal government are the best hope for Canadians. We have set and met the targets on the deficit. We have gotten the deficit down and it is still falling to the point where the books will eventually be balanced. The policies of the Liberal government are the best hope that Canadians have for job creation and improvement in their lives.

[Employment, March 13th, 1996]

Mr. Speaker, I would have been disappointed if I had not been asked about the GST today. The hon. member is trying to make question period the most boring 45 minutes in the House.

Let me deal with the question of the GST and the supposed questions that he raises. I would like to suggest to the hon. member that our commitment is clearly to harmonize. I realize harmony is not something that the Reform Party has.

I suggest that he read his own party's addendum to the finance committee report on the GST, in which the Reform Party said: "We commend the government on its attempt to harmonize the tax with the provinces. As the Reform Party concurs with the majority of those who said that a substantial simplification would result from a wide ranging broadening of the tax base, we support the lowest possible rate on the broadest possible base until major tax reform takes place".

That was the Reform Party's position.

[Employment, March 13th, 1996]

Mr. Speaker, the hon. member should look at the most recent statistics. They indicate that in the last three months over 140,000 jobs have been created. Those are in the private sector almost entirely and almost entirely full time jobs.

The hon. member would do well to look at the numbers before he asks his question.

[Goods And Services Tax, March 12th, 1996]

Mr. Speaker, we are not blaming others, but the fact is it does take two sides to make an agreement.

Again, business groups and consumer groups have said that a harmonized tax system is best. That is what we promised in the red book. That is what I promised when I went door to door in my constituency. I said we would harmonize it and that is what we will do.

[Goods And Services Tax, March 12th, 1996]

Mr. Speaker, not only did we say we would replace the GST and not scrap it, we asked the Standing Committee on Finance to examine the various options for reform. The committee consulted with Canadians and with tax experts and recommended a national harmonized tax, which I might add the Reform Party members on that committee endorsed.

I repeat that business, consumer advocates and consumer groups have all said a harmonized system would be best. Is the Reform Party now going to say we are better off with the system we have?

We want a harmonized system. We will work toward that and we will get it.