Jim Abbott

[Supply, February 14th, 1995]

Who do we compete with? The U.S. is 29 per cent.

[Supply, February 14th, 1995]

Mr. Speaker, I was listening with great interest to the member's speech. He was talking about the goals the government has set. I would like to talk about those goals.

I wonder if the hon. member would agree with me that if we aim low we just might be able to succeed sometimes, if to aim low so we can succeed is not necessarily where the government is coming from. I wonder why the Liberals do not realize that you cannot get over a wide chasm in two jumps.

The situation is that with our constant overspending and our constant deficit building we are taking the future from our great-grandchildren who we do not know and we have not seen yet. This is an intergenerational transfer of taxation. With the spending we as Canadians under this Liberal government are presently doing, we are handcuffing our descendants countless years into the future with taxation. It is for money we are spending today.

Specifically the government talks frequently about this 3 per cent thing. The people of Canada should know that since the government took over, the federal debt, not the deficit which is the overspending but the federal debt, has increased $60 billion. That is just since this government has taken over.

The government's target is to get to 25 per cent of gross domestic product within four years. People like ourselves figure four years times $25 billion is $100 billion. It will be significantly more than $100 billion. Even if we stayed with $100 billion additional debt, the interest charge on that additional $100 billion that we are having our great, great, great-grandchildren responsible for with their taxation, is $9 billion a year.

The federal transfers for post-secondary education are $2.6 billion. The federal transfers for health are $6.5 billion. In other words for just health and post-secondary education, it is $9.1 billion. And this government with $100 billion more debt is going to be encumbering our great, great-grandchildren with $9 billion more.

It is going to be a lot more than $100 billion, but let us take that number. If the government in all of its wisdom is prepared to go $100 billion more into debt, the interest charges will be at least $9 billion. That then wipes out our ability to fund post-secondary education or to make federal transfers to the provinces in support of health care. Where in the world does the hon. member expect to get that from, except the bogey man which Canadians are concerned about because it is more of a tax grab, more of this government in Canadians' wallets?

[Supply, February 14th, 1995]

Madam Speaker, it is interesting the secretary of state, being as it were second in command just under the finance minister, delivered the speech that he did this morning. I do not think he or perhaps the government or perhaps the Liberal side understands that Canadians are concerned about a further tax grab, about further tax increases.

While I respect the fact that the secretary of state gave us a nicely balanced speech about economic objectives, fostering economic growth and all these other things that are essential, nonetheless I would point out to him that what is concerning Canadians at this time, and I would suggest what is concerning foreign investment or people who are buying marketable securities offshore or outside the country, is that his government just does not seem to understand. It is an overexpenditure problem; it is not a taxation problem.

I am fully aware that my comment and my follow-up question are not going to be directly on what he just spoke about, but I suggest with the greatest respect that his speech did not have anything to do with the topic that has been brought forward by the opposition, the Reform Party in this instance.

I am sure that coming from the banking background and as an economist he would be aware of the fact that while corporate profits have dropped 10 per cent in the last 10 years corporate taxes at all levels, including compliance costs, have increased by 69 per cent. I therefore find it somewhat strange that he and his government would be talking about a further confiscation of the wealth or the ability of corporations to be able to fund themselves.

I was listening to the chair of the finance committee talking about the fact that there are corporations that because of fast write-offs or other procedures involved in the current tax system should be taxed. That is why the government is talking about a wealth or a capital tax on larger corporations. This is exactly what the Liberals are talking about.

Would the secretary of state be able to inform us whether he, the finance minister and their colleagues are perhaps talking about a cash flow tax? In other words we understand that we have a wealth tax.

Because a corporation is able to carry forward losses and other legitimate things in the tax system it has a sufficient amount of flow. The government will say: "My goodness, here is a couple of million dollars flowing along. Why don't we put our ladle, our pail or our big scoop into this tax?"

Does the Liberal government not understand that individuals and corporations are saying no tax increase?

[Supply, February 14th, 1995]

Taxing a dream.

[Supply, February 14th, 1995]

Provide tax room.

[Supply, February 14th, 1995]

Madam Speaker, before I became involved in politics which was only 15 months

ago, I was wondering what was meant by the term code words in politics. I suggest code words are being used by the Liberals.

With due respect to the chairman of the finance committee, when he uses the word "fair" and the phrase "contribute their fair share" what he is really talking about is a further tax increase. Taxes are simply the confiscation of wealth.

It is absolutely outrageous that this government would be compounding the problems created by the Conservatives, particularly with the corporations, that when the corporations have a loss, a no profit year, the government would turn around and confiscate some of their working capital by virtue of the fact that it says they did not make a profit this year, therefore it is going to tax them. It is a simply confiscation of their ability to be able to fund their enterprise. It is absolutely outrageous.

The top 10 per cent of people earning over the $51,000 figure pay 50 per cent of the income taxes. How much fairer can we possibly get? The top 1 per cent who earn over $100,000 pay 15 per cent. How much fairer can we get? Is this not progressive enough?

The reality is that according to well documented and fully accepted statistics, the average tax take on Canadians at all levels of government at this point is 46 cents out of every dollar. How much fairer can we get? Is there any more room in taxation?

Considering that, let us get away from the $51,000 and the $100,000 ranges and talk about the average family income, a joint family income of $46,488. Consider that family spends $17,000 on food, clothing and shelter. However, with all levels of government as a result of past activity of the federal government down loading the taxation to other levels of government, that family with an after tax income of $46,488, $17,000 of which is spent on food, clothing and shelter, has a tax bill of $21,000, which is $4,000 more than it costs to cover food, clothing and shelter.

Does the chairman not believe that there is no more room, no net tax increase, that this is the only position this government can take?

[Supply, February 14th, 1995]

Mr. Speaker, I was wondering if the member has difficulty with his hearing. I was in Toronto last week on Wednesday night. There were well over 2,000 people jammed into the Sheraton Centre who gave a very clear message, and I am delivering it to the House: No tax increase.

I wonder if he could help us understand how it is Liberals do not understand that message when there are rally after rally,

grassroots organizations after grassroots organizations, buttons, petitions and everything else. The Liberals are not listening. Why?

[Income Tax Act, February 7th, 1995]

Mr. Speaker, before I begin my comments on Bill C-282, I would like to preface my remarks by putting this in its proper context.

It was interesting when the member for St. Boniface was making comments in regular House business, he was saying that Reform members think they have haloes. No, we do not think we have haloes, not at all.

We do look at some of the actions of the government. We do look at some of the things it is doing, particularly when we look at the plight of seniors in our nation and how they will be potentially impacted positively, I might say, by Bill C-282. All of these things have to be put into context.

I draw to the attention of the House the Ottawa Citizen of yesterday which states: Treasury Board president had met bitter caucus resistance to serious pension reforms'', that is from the Liberals,in December. He said he could only promise the government will fulfil vows made during the 1993 election campaign''.

The issue in Bill C-282 is particularly near and dear to the people. They see the Liberals incapable of coming to a consensus on something very simple and straightforward. Return MPs' pensions to normal industry standards. What is complex about that? I do not find anything complex about it. I realize I should not imply or impugn values, so I would not use the word hypocrisy in that context.

I am also interested in some of the actions of the government. The Calgary Sun on the weekend noted that in the past year Ottawa has announced a $50 million anti-smoking campaign while at the same time giving away $400 million of taxes because it was unwilling to enforce the laws of the land as they stood. It established a new $30 million anti-racism committee and will spend $1 million to celebrate the 30th anniversary of the Canadian flag.

I have had the good fortune of being able to travel offshore as a tourist from time to time. I am very proud of the Canadian flag, wear it on my apparel, have it on my suitcase. It stands for the great nation that we are. But to be putting out $1 million at this time for a 30th anniversary when we are talking about the enactment of Bill C-282 being a potential cost of $3 million to the treasury, the numbers just do not add up.

While I do not see in any way the concept of Reform members feeling that they have haloes, on the other side of the coin I can see why Canadians might say to themselves: "I do not understand a party where there are such willy-nilly things all over the place that just do not seem to make any sense".

Before I begin my comments on this bill I would also like to say that I really applaud and salute the member for Burin-St. George's for his initiative on this. His intent is very laudable.

I rise today to speak to Bill C-282, an act to amend the Income Tax Act on medical expenses for disabled senior citizens. As has already been recited, the purpose of this bill is to lower the threshold for deductibles of seniors for the medical expenses tax credit. It lowers the threshold by altering the formula for determining the medical tax credit for disabled seniors by means of rewording item (c) of subsection 118.2(1) of the Income Tax Act.

Under the current law the first $1,614 dollars, or 3 per cent of net income, is required to be spent before it can be taken into account for income tax purposes. The bill would make it possible for all eligible medical expenses from the very first dollar to, in effect, be income deductible for senior citizens.

The reason for targeting disabled seniors for redress is because their higher medical expenses and lower incomes leave them with a disproportionately high relative cost from the limited deductibility. It is estimated that the average deductible medical expense for disabled seniors is twice as high as that for all other tax filers.

The proposed amendment to the Income Tax Act could result in a potential revenue loss of approximately $3 million. Certainly not a huge amount in light of the numbers we were just talking about; a $400 million giveaway for taxes on cigarettes no longer collected. Actually I understand from other sources that it will be $800 million and $50 million for an anti-smoking campaign to counteract that. It seems to me we are getting close to a billion dollars when we add on the $30 million plus the $1 million I was talking about. Therefore, $3 million certainly is not a huge amount.

On the face of it, the bill seems fair and equitable. By altering part of a formula for the purpose of allowing disabled seniors

more deductions for medical expenses is part of horizontal equity. In my judgement the current rumours very rampant around the country that the government is going to be taxing medical and dental benefits would all be part of this whole thing.

I see the bill as an attempt to square a circle, the circle being the targeting of disadvantaged seniors inadvertently targeted by an aberration in the Income Tax Act. Therefore, the bill itself is not disturbing. As a matter of fact, I would probably as revenue critic for my party recommend that we seriously consider supporting it if it was votable.

What is disturbing is discovered by attempting to determine the effects of the bill. The bill amends subsection 118.2(1) of the Income Tax Act. In that subsection is a formula for the medical expense credit. Let us look at just this little snapshot of some of the complications in the Income Tax Act.

I have to read this. The formula is a(b) minus c (minus d) where a is the appropriate percentage for the year; b is the total medical expenses of the individual; c is presently the lesser of $1,614 and 3 per cent of the individual's income for the year; d concerns the income of dependants and spouses as claimed by the person filing for the medical expense tax credit. Part c of the formula is altered by this bill by adding (a) an amount under section 118.3. Section 118.3 deals with a tax credit for mental or physical impairment and (b) an amount under subsection 118(2), in which case C is equal to zero.

That is really terrific. Therefore we have before us in this simple one-page bill which touches the medical expense credit, the tax credit for medical or physical impairment and the age credit, a bit of an idea why Canada's Income Tax Act is over 2,000 pages long. One can see how it got to be that big. That is a matter of philosophy. Let me describe the philosophy that leads to an ever-growing act and a constantly increasing tax burden on Canadians.

There is perceived a need or deficiency encountered by certain individuals such as, for example, mental or physical impairment. I really admire the work of the member from Newfoundland but he believes that the government is to be used as an instrument of action that enacts or changes legislation to address this need.

I certainly accept that this was done with the best of intentions by well-meaning individuals, as was the case with this bill. What happens when the government acts to address the needs of only one group of people? Other groups and individuals seek to address their problems through government action. That is how we ended up with age credits, medical expense credits, GST credits, charitable donation credits, political donation credits. The list goes on endlessly.

The Income Tax Act quickly changes from being straightforward legislation which sets rates of taxation and strictly defines taxable income into an amalgamation of credits, write-offs, grants seeking to redress or placate every group in Canadian society. This is the snowball effect where the small snowball starts at the top of the hill and picks up speed on the way down the hill.

What the Liberals fail to ignore or to understand is that the fiscal crisis we are currently in is not a result of a few years of unbalanced books. It is a result of a conscious decision in the 1960s and the 1970s of the government to involve itself in the lives of its citizens to an unprecedented degree. The involvement of the government into the lives of citizens, once begun, is very hard to slow down, to stop and even harder to reverse. What we see in this band-aid legislative proposal is that a band-aid would not stop the Titanic from sinking.

It further complicates an overwhelmingly loaded, confusing and complex collection system. Combined with the Liberal's blind homage to the outdated concept of big brother knows best, Canadians lack real hope of reform.

As I mentioned, if this was a votable bill, I would be recommending to my caucus that we support it for all the good reasons that will be expounded. But the real reason in my judgment for this bill to even have to be in place is the complexity of the Income Tax Act that the government refuses to do anything about.

[Government Organization Act (Federal Agencies), February 7th, 1995]

I will let you know if we hear some.

[Immigration Act, February 7th, 1995]

Madam Speaker, continuing with the parliamentary secretary in this debate I believe the issue is for the people, particularly of the Toronto area, who presently under the current socialist government in Ontario have seen their taxes increase very significantly. As revenue critic we are frequently bringing up the issue that probably this federal government is going to be increasing taxes. They see their municipal taxes increasing and then at the same time they see that another jurisdiction, the Quebec jurisdiction as opposed to the Ontario jurisdiction, is given approximately twice as much money for the immigration settlement.

I wonder if the parliamentary secretary might not agree that if we are attempting to create an environment in which people are not going to be hostile toward legitimate immigrants coming in-I agree with him, building Canada but I cannot help but wonder when there is this imbalance that the Liberal members from Ontario and particularly Toronto are not raising this particular issue. Would he not agree that with this imbalance, where Quebec has taken its affairs into its own hands and has said that it can afford to assimilate 40,000 people, whereas the federal government seems to be imposing much larger numbers on Ontario, particularly on the Toronto area, and the practical fact that people are seeing their dollars going further and further awry, that this is part of the reason for the hostility, some of it founded, some of it unfounded, nonetheless this does contribute to the problem.