Madam Speaker, ordinary members rise in the House to describe how proud or pleased they are to speak to a particular bill. However, today I can only say that I am disappointed with the thrust of Bill C-72. Actually, it is more of a short stab in the dark.
The parliamentary secretary talked in glowing terms of long term tax relief. The bottom line is long term. Will anybody live long enough to actually see tax relief?
My disappointment arises from what is not in this bill, as much as what is. We do not oppose certain measures such as the reinstatement of the $5,000 credit for investments in labour sponsored venture capital funds. That simply brings it back up to where it was before the government tinkered with it.
We understand the finance minister cut that amount in 1998 because certain funds were not doing what they were supposed to do. Fair enough. But in some regions of the country these funds are performing a valuable service.
We realize that we cannot simply open the floodgates on investments and accept accountability and viable opportunities for every dollar that is offered. That is why the Reform Party has long advocated increased competition in the financial services sector and a removal of foreign asset restrictions on RRSP accounts. This country needs a diverse pool of investment money and the widest possible range of opportunities for that investment.
The truth of the matter is there are clauses in this bill that can be commended in principle. The life learning plan allows Canadian residents to take money out of their RRSPs to pay for full time training for themselves or their spouses which is basically a good idea. I do not know if everyone in that situation can afford full time training—and that is the loophole, the catch—as opposed to something a little more flexible, but it is a noble effort.
We are aware that RRSP contributions have fallen off in the last two years. People just do not have the cash to buy those RRSPs. There is something like $126 billion in unused contribution room outstanding. As I said, it is a noble effort and let us hope there are a few Canadians out there who can actually afford to get retrained and plan on using that training here in Canada rather than being forced to go to other lower tax jurisdictions.
That same analysis applies to another program concerning part time education. Eligible part time students can use education tax credits and child care expense deductions to go back to school. I presume that helps young single mothers in particular. There is a lot of merit in doing that.
We can characterize this as a housekeeping bill. We are a few days late in getting the parliamentary rules in place. Revenue Canada's cutoff was about a week ago, but we still have not made into law the restrictions and so on that are actually in place for last year's Revenue Canada forms. It is a cart before the horse scenario.
Why not fill out the skeletal legislative agenda with bills that show vision, imagination and courage rather than something that is last year's business? I guess we would be treading on the Liberal's electoral secrets for success: say little, do less, keep your head down. This is a major disappointment for Canadians who are poised to grab their share of the future and find themselves regulated to death by their government.
What we do not see in Bill C-72 is any admission by the finance minister, his bureaucrats or any of the Liberal members of the finance committee that their tax system is out of control. We see a clause that reduces the individual surtax by a couple of bucks. Who on the government side would dare stand up and defend putting taxes on taxes in the first place? This goes on year after year and Canadians still wait for the government to wake up and straighten out the mess in the complex tax code it has made.
The 5% surcharge which remains untouched falls on incomes as low as $60,000, not a lot of money in today's economy. There are thousands of workers in high tech industries or specialized manufacturing who easily make that much, and what do they do? They take their skills and their incomes and they maximize them south of the border.
The Liberals maintain their punitive tax structures while Canadian artists, entrepreneurs, doctors and scientists head for friendlier climates. Worst of all, they table bills like this one to announce all over again what Canadians already heard about and paid for in last year's budget. They are so hungry for any positive PR spin that they keep talking about all the good things that really do not add up to any dollars at all.
We have heard the finance minister claim that the country can only afford this style of nickel and dime tax adjustment, that it costs the government to give people their own money back. What a ludicrous premise. We know what it costs because year after year the finance minister announces that his programs will cost the treasury so many billions of dollars, and he goes ahead and subtracts that amount from the nation's books or the taxpayers' pockets, whichever is handier.
There is another reason for my disappointment. This government bill takes the opportunity to fiddle with the tax act, but instead of simplifying it or even simplifying the language, it merely piles more complexity on to the impenetrable pile it started decades ago. Members have risen in this House and read out passages from this bill, or have referred to this and other bills as being as thick as phone books. I have said that if the tax code was piled up it would be taller than any individual. I can also say that the tax code when piled on the back of a taxpayer can drive him to his knees.
Does Bill C-72 address the complexity or incomprehensibility of the tax code? No it does not. It merely carries on the age-old tradition of defining the taxpayers' responsibility to the government and not the government's duty to lighten the burden of taxes and to reveal clearly why they are needed and how they will be spent. Accountability, quite a concept.
In the revised explanatory notes that accompanied this bill and which were published in March, there are several pages of anti-avoidance rules that chase taxpayers into their home offices to make sure they are rendering unto Caesar what Caesar decides is his.
Ironically, they also include exceptions which allow clever tax lawyers to again avoid the taxes that are being chased in the first place. We know from the auditor general's report that billions of dollars in potential taxes continue to elude governments. We are aware that despite promises there are still loopholes for the well to do to cart off family trusts to lower tax regimes around the world. So much for our complex tax codes.
The Liberals have made it clear that they believe the myth that high taxes result in high revenues and that excessive spending leads to better service. We would not have to dig too deep to expose how this logic breaks down in the real world. It is human nature to resist when being pushed where we do not want to go. When the price of a good or service rises, we look for a bargain or reduce our consumption of that article. If taxes become too much of a burden, we seek relief any way we can either by avoidance or by going where a more enlightened tax regime offers a better deal for our tax dollar.
Lower taxes are not the only thing that influences people but it starts a cycle of prosperity that solves many other issues. Increasingly higher taxes reduce economic activity until there is less and less to tax. Governments see decreasing returns and cannot afford the services they claim to uphold. We have seen those cuts to the bone in health care. This is the opposite of what some in the House will say. They are convinced that high taxes alone provide a foundation for services. They follow this logic to its faulty conclusion, a complex tax code, taxes on taxes.
On the other hand lower taxes do not lead to a lack of services for the following reasons. Given a limitless amount of money to spend, it is also human nature to continue to demand limitless services to go along with it. It is human nature for bureaucrats to continuously try to satisfy those demands. What we have seen in the last three decades or so is the explosion of government spending in an effort to micromanage every aspect of our economic and social lives.
Government is everywhere trying to be all things to all people and failing at most. It tries to be charitable but ends up subsidizing self-defeating behaviour. It tries to stimulate a business on one side of the street while putting another one out of business through higher taxation and artificial competition.
The government creates monopolies and then finds itself in an endless process of paying inflated sums to keep the market under control. The old adage is if it moves tax it. If it moves again tax it some more. If it stops moving the government subsidizes it so it can tax it when it starts to move again. That seems to fit in very well with this logic.
In the 1999 budget we saw an increase in the child tax benefit and an admission by the finance minister that the clawback provisions are a disincentive for parents to earn more money. According to the C.D. Howe Institute, even with the tinkering, single earner families with two children with earnings in the $20,000 to $30,000 range, which is right around that poverty line that has been arbitrarily set, would keep less than $35 from an additional $100 earnings. This is true of the worst provinces. I define those as the ones where there are so many overlapping federal and provincial programs that Canadians have no choice but to sit and wait for the government to tell them what their income is going to be.
In Bill C-72 we see the same tinkering at work. The child care expense deduction has been increased to $7,000 but it only applies to parents who hire people to take care of their kids. This has become a fairly common situation in Canadian households. Many people are of the opinion that one of the strongest reasons for this is that the government takes too much money.
Canadian couples should have the decision as to how they are going to raise their children. It has been snatched from their hands and placed in the cold dead grip of a disinterested bureaucracy with its own social agenda.
Taxpayers' money not only goes to finance programs to relieve a situation that governments create, but it also goes to finance lobby groups to perpetuate the myth that Canadian families would be in stress without the government rather than because of it. Even so, tens of thousands of brave parents make the courageous decision to re-order their lifestyle to fit what is best for their young children.
Bill C-72 fails to address another situation that is obvious to everyone except the Prime Minister. On May 3 the Prime Minister got up and said the government wiped out bracket creep by increasing the personal exemption by a whopping $50 a month. He failed to mention several facts of which the government should rightly be embarrassed.
Not only should the basic personal exemption be in excess of $8,000 a year, but the Liberals are only going to phase in their tinkering over the next two years. It will only go to a maximum of $7,131, not nearly enough in today's economy.
They like to brag on the other side that somewhere between 400,000 and 600,000 Canadians have been pushed off the tax rolls with their generosity. They fail to mention that 1.4 million people have been added back on through the back door to these tax rolls because the Liberals have not got around to adjusting the tax brackets for inflation. We call that bracket creep. That is according to the OECD study.
A KPMG study, and we know how much the finance minister likes those when they are in his favour, has shown that the low to middle tax bracket of $29,590 should be almost $37,000, an increase of over $8,000. If anybody in the finance department had bothered to keep up with the times, the higher tax bracket of $59,180 should be over $73,000 just to keep up with inflation. That might convince many of our valuable scientists, engineers and skilled workers to stay here and add that value to our country and our economy.
The Liberals would tell us that they cannot afford real tax cuts, only the nickel and dime stuff they have been feeding Canadians. In Bill C-72 there is another instalment of surtax reduction, although we always hear that it is $500 a year when in fact it was $250 last year and $250 this year. Again, the numbers are better when we add them altogether. I wonder if many Canadians will actually notice that change in April 2000.
There is a tax credit for interest paid on student loans which is a good thing, but it only applies to the federal government student loans, not to the bank student loans. There is a real disparity. The students who are still going to school can write off the federal government part but not the bank loans. As the federal government withdraws from programs such as that, these same students find themselves caught on the horns of a dilemma.
I wonder how much better off we would all be if the finance minister had not wasted time with the millennium scholarship fund and simply had gone to the source. That was really the taxpayers' hard earned surplus in 1998. If he had turned the money back to students who really need it, I think we would have got a lot more bang for our buck.
Eliminating bracket creep for instance would have put a $900 million ding into the finance minister's slush fund but would have put hundreds of dollars back into the hands of low and middle income Canadians, right where they need it.
We also see provisions for people to use their RRSPs for something other than a hedge against government incompetence in mismanagement of the CPP fund. People can withdraw money for education, which is good. But since it is their money anyway, it is a bit of a shell game as to what they should be able to do with it.
I come back to the question of why the government cannot do anything more substantial or imaginative than this tinkering we see in Bill C-72. This government will try to use two excuses. It will say that it will not cut taxes and it will not tax us back into a deficit the same way it taxed us into the high spending it did in the first place. It will also say that it wants to be fair to the poor or maintain services that Canadians are so proud of, part of our Canadian mosaic, or that it apparently represents what we are as a people.
We have seen government spending go up the last three years and projections that it will continue to do so. This is hardly a prudent way to manage the future. Our fundamentals are supposedly right, but in our minds they are not.
We have also seen the insatiable desire of this government to hold control of every aspect of health care and social spending in its grip, even in the face of the Liberals' proven incompetence.
As I said before, we have the cart before the horse with this legislation. We are working with provisions in this bill that were actually implemented last year. The funding was set aside last year.
The parliamentary secretary in his address earlier this morning talked in glowing terms about people below $20,000 being in a tax free zone. I ask what is the big deal? That is still well below the poverty line that is arbitrarily set in Canada, so that is really not a whole lot to crow about.
People in Canada are looking for real tax relief. The industry minister, with supporting statistics from his own department, Industry Canada, has acknowledged the realities of a high tax system in Canada and what it is doing to our economy here, our productivity, as it were.
Again the parliamentary secretary talked about the RESPs. As I said before, if we are talking to finance people, a trust fund is far more manageable in the RRSP portion of it. It gives us lots more flexibility. Students can do different things with that. They do not have to go to the same type of college or facility that the RESPs would direct them to. It is much more easy and much more flexible to put that money into a trust fund.
The caregiver tax credit of $400 that he so eloquently spoke of appears at $11,000 worth of income. It is nickels and dimes again. It does not go anywhere. As a caregiver, $400 a year does not begin to cover a week's cost when one is caring for an invalid or a handicapped person. It is an insult to these people.
The parliamentary secretary talked in glowing terms and his words were that the winds of tax relief were blowing across the country. I would say that the reality is it is not even a gentle breeze.