Mr. Speaker, I am pleased to rise in debate on the budget released this week.
The budget was a historic achievement. I was born in 1968, two years before we began to run deficits for the rest of my life. I have known virtually nothing but deficits for my entire conscious life. Therefore, it was with great expectation that I ran in the recent election and took my seat in this place, anticipating this budget, knowing that it would be the first balanced budget in Canada in three decades.
I must say that as a former Liberal I have great personal regard for the hon. Minister of Finance. I expected him to seize the moment, to seize the great opportunity of the first surplus in 30 years, to chart a new course for Canada, a course of greater opportunity, hope, growth and employment, particularly for younger Canadians, a future which would unshackle us from the terrible destructive burden of the $600 billion debt and the 47% tax burden carried by Canadian families. That is what I anticipated.
I also anticipated that this would be an enormous achievement and would strike out in all the right directions. However, I found that the budget just struck out. It struck out on every count. It struck out three times. It struck out in terms of controlling spending because we see federal spending going up yet once more in the budget. It struck out in terms of debt reduction because we see in the budget plan zero commitment to specific debt reduction. Most of all, it struck out in terms of providing hope, growth, opportunity and employment through meaningful substantive tax relief.
In fact the budget increases spending, increases taxes and keeps the debt at its current level of $583 billion. With all due respect, I cannot imagine under the current economic and fiscal conditions how the government could have framed a less constructive future oriented budget than it did. I am truly and sincerely amazed that the minister missed the mark to the extent he did.
When one looks at the means by which the budget has been balanced it is not altogether surprising. After all, 69% of the deficit reduction that we have seen since fiscal year 1993 has been achieved through increases in government revenues and only 31% has been achieved through spending cuts.
My friends opposite will say that revenue increases will go from $116.5 billion to $160 billion in the upcoming fiscal year and that those enormous revenue increases of nearly $50 billion were achieved through growth in the economy and more employment. In part, that is true, but they are not telling Canadians that the absolute tax burden, no matter how it is calculated, has gone up at the same time.
If we look at the straight revenue growth of nearly $50 billion clearly it has gone up. However, if we look at taxes as a percentage of gross domestic product it has gone up. If we look at personal income taxes as a percentage of GDP it has gone up. If we look at taxes as a percentage of family household income it has gone up. If we look at taxes as compared to other family household expenditures like food, shelter and clothing it has gone up. If we look at inflation the tax haul has gone up faster than inflation.
I do not need to make this argument with reference to the statistics. The ultimate proof of whether or not we have a higher absolute tax burden today is in the paystubs people get when they open their paycheques from work and what they see on the bottom line today is a higher tax burden than what they were paying in 1993.
Most shocking, in three years when they open up that paystub, having heard all of this marvellous rhetoric about tax relief, they will find that their after tax disposable income will have gone down yet again. Yes, this is a tax increase budget. It is a budget which increases net taxes on most Canadians.
People will ask me how that is possible since the government has listed specific measures on the 3% surtax and a $500 increase in the basic exemption for some Canadians. They will ask how they could then see an increase. It is for two reasons.
First, the government managed in January to impose, as we all know, the largest tax increase in Canadian history, the $10 billion CPP payroll tax grab which will do nothing in the long run to salvage that Ponzi scheme for my generation.
It will in the immediate three years take $10 billion a year out of the pockets of taxpayers in a destructive job killing payroll tax. That is only part of the story because when we factor in the insidious effect of tax deindexation and the bracket creep imposed in 1986, we find that more and more Canadians will be pushed up on to the tax rolls than ever before. Because more Canadians will be earning more than the basic exemptions they will be pushed up into higher marginal rates.
The recent study by KPMG, which is not the Reform Party's research but private sector research, indicates that by the year 2001 an average taxpayer will have paid $5,300 more than they do today in income taxes because of bracket creep, that they will pay $913 billion next year alone because of bracket creep. It is an enormous, insidious tax grab.
Do not trust me on that, Mr. Speaker. I want to quote the leader of the opposition, a very credible source, who said with respect to the budget “The Minister of Finance told us there were no tax increases in this budget. That statement is false because taxes are going up in this country because of the deindexation of deductions which this government has done in its past budgets”. He went on to say “These taxes are hidden. They are sneaky. You don't notice them until you get the bill. They are practically invisible, but the sneakiest tax increase of all was the deindexation of personal income tax which will cost Canadians billions of dollars more annually. The minister kept quiet about it. Here again low and middle income Canadians will carry the heaviest burden”.
That was the leader of the opposition in 1987. That was the Right Hon. John Turner, leader of the Liberal Party of Canada who at the time talked about this secret insidious tax grab on low and modest income Canadians, which has forced the lowest income Canadians on to the tax rolls. People who earn $7,000, $8,000 or $9,000 a year, alone among the industrialized countries of the world, have to pay taxes in Canada.
The minister provided in his budget a distributional impact of the so-called tax relief that he has afforded, but when we add in the effect of the CPP payroll grab and bracket creep we find that a $20,000 earner single taxpayer, the Minister of Finance says, will get a $63 tax break. Whoopee, $1.10 a month. We can buy a cup of coffee once a month while these Liberals probably spend about $3 on latte at Starbucks. Add in the CPP and bracket creep and it is an $86 net tax hike for that same person.
Look at a $50,000 single income earner for a family of four. The finance minister says they will save $238. When you add bracket creep and the CPP they will pay $68 more. This does nothing in terms of tax relief. We do not have to make this argument because people's paycheques will make it very evident when this budget is implemented.
Not only does it not raise taxes, it does nothing in terms of concrete commitment to debt reduction. This I find the most shocking thing of all. In poll after poll, the vast plurality of Canadians say their top priority is to pay down the debt. They know we are siphoning $45 billion a year off the productive sector of this economy to flush it down the destructive sinkhole of government debt financing. They know the average family now spends $6,000 a year in interest on the debt.
What did the finance minister say in his budget document? He says on page 52 that the net public debt this year is $583.2 billion. The net public debt next year will be $583.2 billion. The net public the year after that will be $583.2 billion. The net public debt the year after that will be $583.2 billion, with $45 billion in interest payments.
The minister may call this a debt reduction budget. It does nothing in terms of the debt. He said that if we are lucky, he might allocate the $3 billion contingency fund to debt reduction. Three billion dollars times three years is $9 billion. A $9 billion reduction on a $580 billion debt, my goodness, it's remarkable. It will only take him 200 years to pay down the debt of my generation.
What is going to happen to the interest payments, $45 billion this year to $45 billion in the year 1999? This has nothing to do with debt reduction. If he does to the contingency fund in future years what he did in the current fiscal year, there will not be a contingency. There will not be a surplus to dedicate toward the debt because he has spent it this year.
That is why we need more than rhetoric when it comes to fiscal discipline. We need a statutory and, I would argue, constitutional mandate to force the government, regardless of who is in power and regardless of the political circumstances of the day, to pay down debt.
Alberta has done it. It has cut its net debt in half in four years because of a law that requires that every single dollar in surplus be directed to debt reduction. That is what we need here. The minister says “Trust me. I will direct the contingency fund. If the minister of heritage doesn't get her hands on it, if my other tax and spend colleagues don't spend the surplus before it gets to the debt, I will use it to pay down the debt”.
I just realized I should wrap this up because I am splitting my time with my colleague. Is it too late? Can I yield to the hon. member for Esquimalt—Juan de Fuca?
