Mr. Speaker, it is a pleasure to speak here today. I have a prepared speech, but listening to the debate we have had here in the House has made me think about how many people who sit in this House would actually benefit from this income splitting proposal from the Conservatives. I would argue it would be a lot of us.
I think about my own financial situation, and I would benefit from this. However, as a member of the House of Commons, my salary of $160,000 is ample. My wife's salary is a little less than that. It is also on public record. I am against this proposal because I think I am adequately compensated for the work I do.
Everyone here in the House is really within the top 1% or 2% of Canadians in terms of earnings. Therefore, how could I in good conscience vote for something that would put an extra $5,000 in my pocket? I cannot. This is what is really disturbing me about this debate. Parliamentarians, we in the House of Commons, are here to be responsible with public money. We are not here to line our own pockets. That is what this income splitting would essentially do. I would estimate that probably half the members in the House of Commons would directly benefit from this tax proposal. That is really alarming.
Sometimes this is what is wrong with this place. We have really lost touch with what is going on in the general public. We have a high unemployment rate. Our economy is not scheduled to grow at the same rate as other economies around the world. I will talk about it in a minute, but we have this kind of massive inequality starting to grow between the people who are the top earners, like us in the House of Commons, and folks outside the House of Commons. Therefore, I think these types of measures are a mistake. We should be looking at ways to bring Canadians, who are not as fortunate as us to earn this kind of money, the help they need to move into the middle class or stay in the middle class.
Again, I think this is really abhorrent and any Canadians watching this debate would be quite upset. They would be saying, “There they go again giving themselves a big chunk of money”. That is what is most disturbing.
I would like to thank the shadow finance minister, the member for Skeena—Bulkley Valley, for his work on this issue. He is doing yeoman's work for us as a shadow finance minister.
Although we are talking about income splitting, at the core of this issue is income inequality in Canada. The Conference Board of Canada has said that income inequality is really looking at how income is distributed within a country. Inequality means that it is being distributed unevenly. Really, this is a principle of equity we are looking at. If there is a large income inequality within a country, as we see elsewhere around the world and increasingly in Canada, there will be problems. In some extreme cases there could be instability, which of course none of us wants.
A common way of assessing inequality, used by most economists, is the Gini coefficient, which is a way of measuring this dispersal of income. A zero on the Gini index would indicate exact equality. That means everyone makes exactly the same amount. A score of 1 would mean that one person has all the money and everyone else has none. We have this scale between 1 and 0. Without taxation and social transfers like our health care systems, welfare systems, and EI systems, Canada's Gini score would be .44, which is classified as very unequal. However, with tax transfers the score drops to .32, putting us in a situation where we are unequal, but not as bad as some places.
To put this in perspective, in South Africa, the Gini score is .63, which is the worst among most countries. Sweden is the best at .22. Canada is not as bad as South Africa, where we see extreme inequality, but of course we are not nearly as good as the Nordic countries in terms of redistributing wealth.
According to the Conference Board of Canada, again, not an NDP publication but one we like to refer to when it gets it right, Canada gets a C. We rank 12th out of 17 peer countries. In fact, the real problem is that inequality in Canada has increased over the years.
Whatever we are hearing from the other side, it is really an undeniable fact that the richest group of Canadians has increased its share of total national income, while the poorest and middle income groups have lost share. Really, over this period of both Liberal and Conservative governments, our Gini coefficient has grown from .28 to .32. Again, it does not sound like a lot, but when we think about how many thousands of Canadians are affected, we see it is actually a very troubling trend.
One question is, what fanciful tax measures can we put in place? However, the real question is, what problems should we be addressing?
We do see some GDP growth, but it has slowed over the years. We have an economy that is sluggish but growing. However, our real problem is how we reduce this inequality. The Conservative idea of income splitting will do nothing to lessen the gap in inequality. In fact, it would increase inequality, which is a big problem.
To put it plainly, the income splitting plan amounts to a tax break for the most wealthy, which will cost the federal government about $3 billion without providing any benefit to 86% of Canadian families. We have to remember that it is not just 14% of random families that would benefit, but 14% of the richest families would benefit from this, which troubles economists.
I had the great privilege teaching at Simon Fraser's School of Public Policy. The professor who had an office beside mine was Rhys Kesselman, a Canada Research Chair in Public Finance. It was a great department. I am a raging lefty with the NDP, but we had a lot more centre-right colleagues to bounce ideas off. This was one of the ideas, along with the HST, carbon taxes or whatever else we would discuss. The great thing about academia is that one can throw ideas around.
Professor Kesselman is largely credited for inventing the Conservatives' tax-free savings account policy. This is a man whose work they are not unfamiliar with on the other side. In fact, he supported greatly the HST within British Columbia, which did not go down so well. He is a very thoughtful man and the author of a C.D. Howe Institute report on income splitting. His report entitled, “Income Splitting for Two-Parent Families: Who Gains, Who Doesn't, and at What Cost?”, finds, similar to other reports, that 85% of households would gain nothing from this and a further 6% would gain less than $500.
We are not just talking about 86% who would not be gaining. We are getting closer to 91% of Canadians who would not benefit from it. Therefore, it would be a very small segment of the population that would benefit. The richest 9% of Canada, like us in the House of Commons, would benefit from income splitting.
Professor Kesselman says that:
The splitting proposal would significantly raise marginal effective tax rates for most lower-earning spouses, thus imposing barriers for working or returning to work; this would make married women more vulnerable by reducing their work experience...And if the objective is to provide support to families in raising children, it would distribute most benefits where they are least likely to be needed.
In economic speak, I would call that a raging failure of a policy.
I will be splitting my time, Mr. Speaker, with the member for Churchill.
People who make under $44,000 would have no benefit. People who make above $44,000 a year but who are in the same tax bracket would have no benefit. Single people, couples with no kids and couples with kids who are grown would not benefit. Parents who are divorced would have no benefit.
Income splitting is not a good idea but, again, if those in the House of Commons want to give themselves a big fat cheque, this would be exactly how to do it, by income splitting.
I am a bit puzzled by those at the end of the chamber. The Liberal leader has called income splitting a decent idea, and it seems the Green Party also supports it.
I find this disturbing. Canada's big challenge is income inequality. It is a growing challenge and one that is not being addressed. It has been heightened by Paul Martin and other Liberal finance ministers and it is getting worse and worse under the Conservative government.
These measures, which are so boldly meant to benefit the richest people in Canada, will not fix things. Until we are honest about this, there are a lot of people in Canada who will suffer.