House of Commons photoWon his last election, in 1993, with 51% of the vote.
Credit Cards December 3rd, 1996
Mr. Speaker, the problem with capping credit rates is that it reduces their availability to consumers. Hundreds of thousands of consumers would not have credit cards available to them.
Canadian consumers are smart enough to chose the right cards. When they go out to do their Christmas shopping they are going to get the best deal for their families. When they go out looking for credit cards they will also make the best deal for their families.
Credit Cards December 3rd, 1996
Mr. Speaker, Canadians are faced with several hundred credit card choices. Many of those credit cards have very low interest rates below 10 per cent, some as low as 9.25 per cent. Canadians have that choice.
There is also a wide variety of items on credit cards: discounts on goods, airline points and all of these various things. It is not that Canadians do not want those choices. Canadians do want those choices. The cost of credit cards is a very small proportion of consumer debt. I believe that something like 3 per cent of the total consumer debt is on interest bearing credit cards so it is really a very small proportion of that.
Interest Rates November 27th, 1996
Mr. Speaker, I would like to mention to the hon. member that every one of the large Canadian banks has a low interest rate credit card which is available to consumers. Indeed, I might also mention that in the past few days two of the major banks have lowered their interest rates on their low interest rate cards and they are below 10 per cent.
As far as the other issue of bank profits is concerned, we make sure that the banks pay considerable taxes to the federal government. I might add that a conference board study a few years back indicated that the banks paid taxes to federal, provincial and municipal governments amounting to $6 billion annually. This year, with higher profits, they will pay more taxes to the federal government.
Banks November 25th, 1996
Mr. Speaker, it is nice to know the NDP has an inside track on bank profits because none of the banks has announced their profits yet this year.
The government is committed to ensuring that the banks do their fair share to support the economy. By that I mean paying their fair share of taxes. These are the highest taxed corporations in the country. Indeed they pay large corporate taxes. They pay a special capital tax for large institutions besides their corporate taxes. They paid a billion dollars in taxes in 1991 and 1993 and more this year.
That is one of the ways we have made sure that the banks play out their role in the community.
Supply November 21st, 1996
Madam Speaker, first I would like to tell the hon. member that these are not benefits. The child care expense deduction is not a benefit. It is an expense deduction. If the expenses are not incurred, then the deduction is not allowed. So it is not a benefit and the whole argument has been stood on its head.
Second, we have a 10 per cent unemployment rate and yes it is far too high. Yes, interest rates are low. What would the Reform Party do about this? It would raise interest rates and ask whether that would increase employment. That would increase unemployment. As usual, the Reform Party's policies are mistaken.
Supply November 21st, 1996
Madam Speaker, the hon. member has some very important and interesting questions.
The first one I am not able to answer. He asked me how many tax increases have we had in personal income taxes. I am not able to answer that question because there have not been any. There have been none, so I cannot give him an example. I cannot give him even one example over the past three years.
The hon. member asked me about deficit reduction and lower interest rates which have been brought about. When this government came into power we were faced with a $44 billion deficit, a deficit that was absolutely shocking in size. We thought it was
going to be $34 billion. The promise in our red book was to bring that deficit down to $25 billion or 3 per cent of GDP. However, bringing it down from $44 billion to $25 billion is a lot different problem from bringing it down from $55 billion to $34 billion. We faced up to that problem. We said we were going to do that and we did it.
Our program has not been a single purpose one. It has not been about setting a target. The previous government set many targets every year and did not meet any of them. Our program has not just been to set targets but to meet targets. I would suggest that the Reform Party has never met a target in its existence. We have not only set targets, we have met those targets.
The result has been a massive increase in the credibility of the Canadian government. We are now the darlings of the international financial community. We were much less than that three years ago. We have lowered interest rates in this country so that the bank's prime rate is 3.5 percentage points below the U.S. prime rate. I cannot remember in all my years, and that goes back a long time, since we have had interest rates as low as they are now.
I can tell the hon. members across the way who seem to keep chattering away while I am talking that lower interest rates are a real boon for Canadians. Lower interest rates lead to lower mortgage costs and lower credit costs for Canadians. This makes jobs. It enables industries to bring new plants into being which creates jobs for Canadians. The results are clear and they will be coming as we progress in this economic recovery with our low interest rates. We are already seeing those results in the increase in the number of jobs this country is producing now and it will be seen even more so in the future.
Supply November 21st, 1996
Madam Speaker, I am delighted to hear the member for Swift Current-Maple Creek-Assiniboia. I have lived in Swift Current, by the way. I know the real people in Canada. I know the real people in Swift Current.
Our child care expense deductions treat real people fairly and equitably, not like the Alice in Wonderland proposals the Reform Party puts forth. If the Reform Party formed a government it would be like a Mad Hatter's tea party.
Talk about knowledge of economics. I am appalled at Reformers' suggestions on economics. I am appalled that they cannot even mention a $5 billion cost here. They talk about a $5 billion cost and they do not even say where they are going to get the $5 billion from.
Higher taxes, is that what the Reform Party stands for? Goodness, Reformers are always complaining about tax levels the way they are now, yet they are going to give $5 billion more. Are they going to cut social programs? Yes, they are going to cut social programs. Yes, they are going to cut unemployment insurance. Yes, they are going to do the poor in. Yes, that is it: the Reform Party for the wealthy; the poor can go to the blazes. That seems to be the Reform Party's sense of economics.
That is not the sense which this party has. That is not the Liberal government's plan. That is not what this government will be doing. We do not have the sense that the senior executives get the tax breaks and the poor get nothing which is exactly what today's motion proposes. It is not a plan that shows the meanness and the inequities of the system; it is meanness and inequities that the Reform Party stands for. It is not fairness, it is not equitable treatment. It is simply meanness and inequity. That is the Reform Party's policy and it should have meanness and inequity written on its banner.
Supply November 21st, 1996
There is another damning downside. There is a real risk that for the less affluent families with a stay at home spouse, any improvement provided by the revised deduction could easily disappear. The reason is simple.
As I have pointed out, the $5 billion cost of the so-called Reform child care expense deduction has to come from somewhere, from higher taxes, from reduced spending on social programs or a deficit that puts new pressure on interest rates. Obviously raising taxes to pay for an effective tax cut is just going in circles so that cannot be the Reform's agenda, although going in circles seems to be what they do best.
Cutting social programs is part of the Reform agenda and their fresh start manifesto makes it clear. It is the needy and the less affluent who will feel the impact when welfare transfers, equalization and employment insurance are cut. All are contained in their fresh start. It should be called a phoney start. The needy and the less affluent will ultimately pay for Reform's child care break for the affluent executive.
Or we could let the deficit jump, although that hardly fits the Reform Party credo. If we did, it is the needy who suffer again under the pressure of higher interest rates, higher mortgage costs and a reduction in the business investment that fuels jobs and incomes.
As a parent and grandparent I share the heartfelt concern of every member here that there are children in Canada who suffer real hardship, whose future prospects are dimmed by the burden of poverty and neglect. As a taxpayer I understand the driving desire for fairness in the tax system and that we continue to eliminate inequities and absurdities.
As someone with a background in economics and as a legislator who understands the importance of the continued battle to reduce the deficit, I cannot support the Reform's motion today. These proposals are not based on need. Instead they will shift vital resources away from those who we as legislators are most obliged to help, and in order to do what? To reward families who already enjoy a superior standard of living. This would mean a meaner and a more inequitable Canada.
In conclusion, the child care expense deduction should be maintained in its current form because it plays an important role in recognizing the particular circumstances of working parents. When
both parents work outside the home, additional child care expenses are a necessary cost of earning income that is subject to tax. Because of these child care expenses, families with two working parents have a reduced ability to pay that tax compared to a single earner family with the same gross income. That is why the deduction supports a tax neutrality that makes for a fairer tax system.
The choice is clear. We can support this motion if our goal is a meaner Canada with a more inequitable tax system, or we can reject this proposal and by doing so show that we stand for a country marked by compassion and fairness.
I urge hon. members to vote no because that is what good conscience and good government demand.
Supply November 21st, 1996
This is not just a case of apples and oranges logic. This is apples and sour grapes logic. It is attempting to make night equal day. In reality, the rationale for the child care expense deduction is to prevent discrimination and unfairness. It does this by recognizing for tax purposes the child care expenses that taxpayers must incur in order to earn income or to study.
In other words, the deduction is a way for the tax system to acknowledge that when both spouses work, these taxpayers generally have less of a capacity to pay taxes than other taxpaying families with identical incomes that do not have these child care expenses. That may sound a little bureaucratic but it is not.
Of course families with a stay at home spouse has child care expenses. That is why in addition to the regular child tax benefit of $1,020 for each child, the tax system also provides a supplement to
help modest income parents who choose to remain in the home to raise preschool aged children.
The fact is when both spouses work they will have higher child care expenses than families where one spouse stays at home. Those additional expenses will include day care, work transportation for two people and other costs incurred in earning income.
This takes me back to the bottom line. Despite Reform's implication, the child care expense deduction is not anti-family social engineering. It has nothing to do with providing a benefit or acting as an incentive for people to participate in the workforce. Instead the child care expense deduction seeks to ensure that families where both partners must work or study do not suffer a disadvantage by being taxed on gross income when child care costs mean that they have reduced capacity to pay.
Incidentally, I should point out that the child care expense deduction parallels the approach applied to business. Firms do not pay taxes on expenses they incur to generate income but only on their profits. By the same logic, the child care expense deduction does not tax-up to a certain limit-the expenses incurred when both parents must work to generate income.
I have established that this motion clearly fails to recognize the real purpose and process of the child care expense deduction. That purpose is to deliver neutrality, in effect, real fairness, within the tax system.
I will address the more fatal flaws of today's proposal: fiscal irresponsibility and rewarding affluent Canadians at the expense of those in real need. The motion seeks to extend the child care expense deduction to all families of all income levels and convert it to a credit.
This raises an obvious question which the hon. member has not answered. What is the cost? Assuming we use the current structure of the deduction, which is $5,000 for children under seven years of age and $3,000 for children between seven and fourteen, the cost in lost revenue will probably be in the vicinity of $5 billion. That compares to about $400 million under the existing deduction system.
That $5 billion can only come from one of three places: adding $5 billion to the yearly deficit, not just this year, not just next year, but year after year after year; or raising other taxes by the same $5 billion; or cutting federal spending by a further $5 billion, which would be on top of the most dramatic government spending cuts in Canada's post-war history. Inevitably that would require new cuts to transfers to provinces for social assistance and health care.
Who would be the real beneficiaries? There would be some benefits to families with stay at home parents, a group which is less than 25 per cent of Canadian families. This benefit would have little to do with real need and the problem of child poverty which should be the priority issue in family policy.
Let us look at Reform's priority. The simple fact is that under this motion every professional and executive, people who earn $75,000, $100,000 or $1 million a year, those who can best afford a stay at home spouse probably with housekeeping help and a nanny to boot, would enjoy a nice fat tax break. But this motion adds nothing for the low income family where both partners must work or choose to work.
Supply November 21st, 1996
Madam Speaker, when I first heard the supply day motion, I was briefly tempted to congratulate the hon. member and the Reform Party for raising issues that were genuinely worthy of consideration.
Improving tax fairness is something the government believes in strongly. That is why it has taken concrete action in each of its three budgets to close loopholes and eliminate inequities.
Then there is the action that would benefit children in need. Who would dare deny the special responsibility the government holds to use available resources actively and aggressively to protect and sustain the most innocent and vulnerable of all our citizens. Here again we have as a government taken concrete action, especially in the 1996 budget.
These are the issues the motion may appear to address. Unfortunately it takes only a moment's reflection to see through the illusion, to recognize that there is actually little or nothing about equity and nothing about compassion here at all. What is at work, masquerading in the guise of fairness and family, is an attempt to buy electoral support. Because underneath the rhetoric the motion proposes nothing less than a $5 billion tax cut. The hidden agenda behind the motion goes beyond deception into the realm of duplicity.
Not only are we being asked to endorse a dramatic tax cut in a year when the deficit is targeted at about $24 billion, it is a tax cut that will create unfairness in two ways. First, if the motion became law it would actually create inequity in the tax treatment of child care deductions. What is more damning is the fact that the real beneficiaries of this motion would be the affluent and the wealthy and their children at the expense of poor Canadians and their families.
This not so hidden agenda will come as no surprise to anyone who has studied the philosophy and the rhetoric of the Reform Party. Theirs is the gospel of comforting the comfortable and abusing the afflicted. Perhaps that sounds a little intemperate, but the false logic and perverse pandering of today's motion deserves no respect.
Let me prove my point by addressing the first aspect of this motion, the mistaken idea that fairness as enunciated by the Reform Party requires "extending the child care expense deduction to all families of all income levels". This is in keeping with the Reform's continuing allegation that the Income Tax Act discriminates against families that provide care at home for their children. They ask why working Canadians should be able to claim a deduction for their expenses when stay at home caregivers cannot claim the expense they incur.