Paul Szabo

[Excise Act, February 22nd, 1994]

Mr. Speaker, it is fair to say a reduction in the excise tax alone, disregarding anything else in lowering the price of a commodity would obviously make it more attractive to the marketplace. The hon. member's premise, however, is that having reduced the excise taxes it is hurting business. I do not imagine he considered that the contraband smuggling taking place had no impact on small business.

The idea of the government's initiative is to deal with contraband smuggling because every Canadian and every business in Canada is losing as a result of it.

[Excise Act, February 22nd, 1994]

Mr. Speaker, I am pleased to rise on the debate on Bill C-11. I rise wearing many hats.

As a chartered accountant, I believe I have the ability to understand the financial implications of Bill C-11. As a former member of the Mississauga hospital board for nine years and serving as its vice-chairman, the health impacts certainly were of significant importance to the health care institution. As a member of Parliament representing my constituents and listening, as have many members, I have received numerous interventions from them asking questions and making suggestions on how we might further improve the legislation with regard to the health impacts and indeed with regard to smuggling.

I also speak as a father of three. I have three children aged 12 through 19. I am concerned of course about the implications to my children and whether or not they will make the right decisions for them. There is a choice for Canadians.

I have been somewhat concerned about the confusion that may arise for the Canadian people as they listen to the debate from the context of an excise tax reduction alone. I want to clarify this. I think it is going to be very important for Canadians to understand that we have here a complex problem that is being addressed.

In my experience, for every complex problem there is a simple solution and it is wrong. I would like to outline, as we have already heard from the Minister of National Revenue, from the Solicitor General and from the Minister of Health, that this is clearly not a regional problem. It is a national problem.

Therefore the government on February 8 came forward with a four point program to deal with this complex problem. It understands that the cheap contraband tobacco has undermined Canada's health objective to reduce smoking, especially among young people. The issue is no longer how to keep prices high so that young people do not smoke. That is not the issue. The issue is how to keep contraband cigarettes out of the hands of young people.

I would like to make sure that all members understand clearly the dimensions of the problem. The problem is very severe. To give an idea to all members in the House, between 1990 and 1993 the number of seizures by the RCMP increased from 303 to 5,044 over a four year period. With regard to the value of those seizures, the increase went from $4.1 million in 1990 up to $53.5 million in 1993.

What about exports? We all have heard that the major source of the contraband smuggling has been exports to the United States, 90 per cent of which are coming back into Canada. Exports in 1990 were 11.3 million cartons. Yet in 1993 the exports were 62.8 million cartons. Clearly the dimensions of this problem are immense and growing very rapidly.

Finally, with regard to the number of charges that have been laid by the authorities with regard to smuggling, in 1990 there were only 414 charges laid whereas in 1993 there were 3,389.

I am sure all members would agree we are not dealing with ordinary circumstances. We are dealing with a major problem. That must give members an idea of the magnitude of the disrespect that has been shown for the laws of Canada.

As has been pointed out by many members, but it bears repeating, illegal tobacco now accounts for 40 per cent of the Canadian tobacco market. Organized crime controls up to 95 per cent of contraband tobacco entering Canada.

Furthermore, more than two million Canadians are buying this contraband. More than $1 billion of federal revenue and an additional $1 billion in provincial revenues has been lost as a result of this smuggling activity.

Hon. members must ask themselves this. If we are losing to our one taxpayer $2 billion of revenue that could go to health care, social programs and employment initiatives, how can we ignore the problem?

On February 8, the government did come down with a four-point plan: the enforcement crackdown, a reduction of consumer taxes, a special action on tobacco manufacturers and also an initiative of the largest anti-smoking campaign in Canadian history. That was the initiative of the Prime Minister.

He spoke in the House eloquently, outlining to Canadians that having had full consultation with the provinces, having fully assessed the input from all sectors with regard to this complex problem, it was necessary for us to have a well rounded, comprehensive solution to deal with all aspects and not simply the health impacts as hon. members from the Reform Party seem to have been suggesting.

Bill C-11 was introduced by the Minister of National Revenue and the Minister of Health, both of whom spoke today very well on the amendments that are being proposed to support this February 8 initiative. Those amendments to the Excise Act, the Customs Act and the Tobacco Sales to Young Persons Act are all important complements to that initiative announced by the Prime Minister on February 8.

The amendments will provide Canada's law enforcement agencies with additional legal powers to end smuggling. It protects the health of young Canadians by banning the production of cigarette packages of less than 20 cigarettes, which we have referred to as kiddie packs, and the sale of tobacco products to persons under the age of 18. In addition, this legislation will require that each individual cigarette must bear a distinctive marking indicating that the duty has been paid.

Smuggling is a criminal activity that hurts all law-abiding Canadians. As all members know, law and order in our society is a very important issue. We were told throughout the election campaign and we continue to be told that Canadians want our laws to be enforced. They remind our government that we have a duty and a responsibility to enforce law and order in Canada.

That is why we need these amendments. It is to provide our police forces with the additional tools and flexibility that they are going to need to crack down on smuggling.

Since the initiative of the Prime Minister on February 8 and as a result of all the dialogues that have gone on since that time, there have been a number of feedbacks from the community. I have a couple here of notable news to share with hon. members.

The Canadian Association of Chiefs of Police has welcomed the government's action plan. It says that by taking the profit out of sale, organized crime will quickly lose interest. We also note in the Montreal Gazette that it compliments the Prime Minister on his plan saying that the high tax, high price policy had been effective for a while in reducing smoking but it was no longer working. It was being gutted by something far uglier than legal, cheap tobacco, that is cheap tobacco from a large and violent criminal network.

There are some key messages that we have received from the Canadian public since the introduction of these plans. First, criminal law applies to every person in Canada and enforcement officers must and have been cracking down on smuggling wherever it occurs. Second, the new legislation will strengthen the ability of our police to enforce the law. Finally, the concerted federal-provincial action is the best way to crack down on smuggling.

As a member of the Standing Committee on Health I would be remiss not to address the health issue. There is no question. This morning one Reform Party member in representing his party's interest said that they agree with the legislation of Bill C-11, except for the reduction in the excise taxes. I liken that to a table with each leg representing one of the four points of the Prime Minister's plan. The hon. member suggests that taking away one of those legs would still make the table a stable foundation for the activity to occur on it.

The hon. member will agree that by not having the excise tax reduction in combination with the export tax which is being applied, we would not have eliminated the profit motive for smuggling. It was absolutely essential to make this gesture so that from a financial perspective we could break the back of smuggling and get a handle on this situation. Hopefully through that, as the Minister of Health has indicated, we can return to a process of making sure young people do not have the incentive to smoke simply because of the accessibility of cigarettes.

I should acknowledge that the Canadian Medical Association wrote to all members. It complimented the government on three parts of the program but had concerns regarding the reduction of the excise tax. It is supportive and I know it is in consultation with the government and the Minister of Health. I know it supports the government in spirit.

We must deal with this major problem so that Canada can enforce its laws. Then we can get back to the creation of jobs and economic growth in Canada.

[Supply, February 21st, 1994]

Mr. Speaker, I heard what the Reform members have been saying. I have been sitting here for hours listening to the debate. However when I look at the Order Paper I have to ask why these particular examples are there.

The first is with respect to serial killer cards. We know they have been discussed and that there have been petitions and members' statements. Members of the Reform Party must understand that the Minister of Justice stood in the House and said that they are working on it now. They are looking at the charter provisions to make sure that legislation can come through and be effective. That is being handled as a result of the petitioning process. We do not have to debate it any more. It is a very bad example.

The second is with respect to young offenders. This government was elected and one of its main planks was to reform the Young Offenders Act. Many people brought in petitions in that regard. Is it necessary to debate in the House what the government is already committed to doing?

[Supply, February 21st, 1994]

Mr. Speaker, let me be brief.

The question has come up whether a petition with a million signatures on it should be debated in the House. Maybe we should consider something like that. What if a petition came before the House with a million signatures saying that official bilingualism should be discontinued in Canada.

I believe there are questions the government could deal with without having to debate them. It is a matter of policy. Possibly the member could comment on this issue. If a petition comes forward for debate, if we follow what the Reform Party is suggesting, how would other members get prepared to debate that petition without themselves going back and somehow doing some sort of work to determine the position of their constituents? It is totally impractical. Maybe the member for Burin-St. George's could comment.

[Supply, February 21st, 1994]

Mr. Speaker, I congratulate the member on a very fine intervention in this debate on the opposition motion. His constituents would be very proud of the way he spoke. His speech was presented in a very informed and logical fashion. That is part of what Canadians are looking for in their members. It has to do with appearance and optics.

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One of the last points the member raised really goes to the heart of the issue. The hon. member said that members of Parliament should be representing the interests of Canadians. The member said Canadians. He did not say members of his own constituency. This is a very important point because we come here as members of Parliament to reflect the best interests of our constituents but in the context of Canada as a whole and of all Canadians. Some very important regional and local differences must be balances.

Thinking of the election campaign, there were 30,000 homes in my riding to be visited. I could not possibly get to all of them. There were over 67,000 voters. How could I possibly presume I would get to know them all and get to know exactly what they were thinking on every issue and be able to come here and represent that interest? I have no mechanism other than using my best efforts and presenting and availing myself to use my best judgment. That is what the Prime Minister has been saying.

I thank the member for raising the issue that we are here to represent Canadians. It is an important distinction which the opposition motion has not taken into account.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I congratulate the member on his intervention in this debate on Bill C-9. I want to add some clarification.

If I understood the member's statement correctly the GST revenue was somewhat less than $15 billion and after expenses it really contributed none.

In fact in terms of gross collections by the government the GST contributed some $29.5 billion. However, that was reduced by the $10.7 billion which the government paid in rebates, particularly to exporters because the input credits exceeded the taxes collected on their sales to non exports. That was further reduced by the rebates paid to schools, municipalities, et cetera which generally get about a 50 per cent refund of GST paid. Finally, there was a deduction of some $2.5 billion which was paid to low and middle income Canadians as a GST credit. Therefore, on a net basis after all those expenses the GST revenue to the government was $14.9 billion for the year ended March 31, 1993.

Having said all that we certainly do know the federal sales tax collected some $18 billion net. The GST has been a less efficient tax in terms of generating revenues for the government. Right now the finance committee has been working diligently looking into alternatives for replacing the GST to make sure there is efficiency and equity within our taxation system.

I raise those points for the member to ensure there is no misconception by Canadians on the present state of affairs.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I would like to ask the member to reconsider his position with regard to the capital gains exemption. As the member knows the $100,000 lifetime exemption did come in under a previous government two Parliaments ago.

There were two very serious flaws in regard to that exemption. First, it did not establish a V-day value for investments. Therefore anyone who had a holding gain prior to the introduction of that exemption got an automatic windfall. Second, it did not restrict the types of eligible investments under that exemption. Therefore investments in matters such as Florida vacation properties were eligible for an exemption. I have to ask the member whether he believes that kind of investment really benefits Canada.

One has to consider whether or not there is a logical stopping point. There is no question that some have benefited from this exemption and there is no question that others would like to. Where do we stop the process? There is no logical ending point.

The question therefore is if today we had no exemption would the hon. member consider introducing it as a measure which would benefit Canadians today? I think the answer is simply no.

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, the $100,000 lifetime capital gain exemption was introduced two Parliaments ago by the previous government. It was sold to Canadians on the basis that it was going to stimulate investment and job creation in Canada. I think that Canadians embraced those principles as being honourable.

However, the government in its implementation made two fundamental errors in that exemption. First of all, it did not establish a V-day value for investments and so allowed investments which were already made and had holding capital gains on them which were eligible for that exemption. It forewent the opportunity to direct this exemption to new investment.

Second, the government did not specify or restrict the nature of investments that could be made under this program. As such, investments even such as Florida vacation properties became eligible for that exemption. Under the circumstances I think the hon. member would agree that this particular exemption, although honourable in its roots, was very poorly implemented. The optics are very bad to the Canadian taxpayers and the dollars that the government is foregoing by permitting that exemption would be much better spent by investing in job creation initiatives.

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, I want to thank the hon. member for Yukon for her kind words of congratulations.

I do not think I can do justice to her question in the brief moments that we have here but let me comment with regard to at least the concept of no new taxes vis-à-vis corporations, offshore companies and family trusts.

The concepts of fairness and equity would say that government has to revisit all of the provisions. There are no more sacred cows. To the extent that businesses are indeed draining capital or sheltering business income through offshore instruments, this government, if it is to be true to its value system of fairness and equity in our tax system, must investigate, analyse and work toward reasonable solutions to ensure that the income derived from Canadian soil is invested to the greatest amount in Canadian opportunities.

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, on the occasion of my first speech to the House of Commons in the 35th Parliament of Canada let me first express my sincere gratitude to the residents of my riding of Mississauga South. I am honoured to represent their interests in Ottawa and to serve their needs.

I also wish to thank my wife Linda, and my children Aaron, Reagan and Whitney. All members of Parliament know the great personal sacrifice that our families have made so that we can pursue our goals. In this, the International Year of the Family, we say to you: "We miss you, we love you and we thank you".

We also thank the Prime Minister for his vote of confidence and the historic decision to allow all members to speak freely and openly on important issues such as this pre-budget debate.

Canadians are well aware of the complex and troubling problems we face today such as chronic deficits, high unemployment, poor economic performance and the lack of credibility of government.

In 20 years of corporate life and as a chartered accountant I learned quickly that for every complex problem there is a simple solution, and it is wrong. To focus solely on deficit reduction is too simplistic. We need a balanced approach to fiscal and monetary policy to promote economic growth and job creation. This, coupled with expenditure rationalization, will lead to deficit reduction.

Financial performance can be improved in two ways: increasing revenues or decreasing expenses. On the revenue side, tax increases are not an option in this budget. Canadians are already over-taxed. Alternatively, we need to broaden the tax base by expanding the economy.

On the expense side, cutting and slashing to lower the deficit would be destructive. Moreover it does not take into account the value of an integrated expenditure plan which can create synergies and opportunities in support of economic growth.

Government must redefine its philosophy on expenditures, viewing them not as spending but rather as investing in people, programs and assets. We are investment managers of the taxpayers' funds, and when we invest, not only must we set returns and performance requirements but we must also become accountable to the people of Canada. When these returns and performance requirements are not being achieved government has a duty to take corrective action.

Annually the Auditor General has reported on countless examples of waste and mismanagement. We must respond to these reports and demonstrate that we have learned from our mistakes.

Our social programs were initially designed to provide a social safety net for those in most need. Although the system served Canada well in the past, we must overhaul and renew these programs to fit the realities of the 1990s and into the 21st century.

We must simplify our tax system and restore equity and fairness both in the personal and the corporate sectors. We must streamline government operations at all levels to improve productivity and efficiency. We must provide incentives for new investments, particularly in small and medium sized businesses to create lasting jobs for Canadians.

For every one dollar investment in Canada the multiplier effect is five times in terms of the contribution to our economy. This creates new jobs and a broader tax base which is essential to the meaningful reduction of the deficit.

At this point I would like to make a few specific suggestions for budget consideration. We must aggressively deal with the underground economy to ensure that more are paying their share so that all are paying less. With an estimated 20 per cent of our economy underground the government has a duty to conduct more network audits and to introduce more comprehensive

forensic auditing techniques to address this most serious problem.

In regard to RRSPs, contribution limits should be set at levels that will allow all Canadians who are not members of pension plans to adequately provide for their retirement income. These levels should be comparable to those afforded to members of registered pension plans.

With regard to the $100,000 lifetime capital gains exemption, it has not met its objectives of stimulating investment in Canada. The exemption should be discontinued and the savings be reinvested in job creation initiatives.

Old age security for our seniors should not be affected by this budget. The present tax law already claws back a portion of the benefit where the taxpayer has other income. The Prime Minister told seniors during the election campaign that old age security was a dividend, recognizing their lifetime of contribution as taxpayers and we should honour that position.

The rising level of foreign-owned debt is draining capital out of Canada. As such, consideration should be given to incentives for Canadians to invest in our country, such as tax exempt bonds.

On unemployment insurance, benefits should be paid only to those Canadians who are unemployed and looking for work.

The current practice of paying benefits where there is only a disruption of earnings should be reviewed and a threshold of earnings should be considered as a basis for increasing the rate of clawback on these social benefits.

On immigration, the federal government must enforce its immigration sponsorship agreements where the sponsor is able to meet their obligation. In 1993 the region of Peel alone had some 11,000 welfare claims from immigrants who were already covered by a sponsorship agreement. Thirty-eight per cent of those agreements broke down in the first year, rising to 62 per cent before the end of the second year of the 10-year sponsorship. In addition, 59 per cent of those sponsors were children sponsoring their families. In a large number of cases they did not have the financial ability to do so.

The rise in defaults has been dramatic and the burden is falling squarely on the shoulders of the Canadian taxpayer. Fiscal responsibility requires that we must address this situation.

On health care, the federal government contributes 24 per cent of the cost through transfer payments to the provinces and, as such, should ensure that the funds are being appropriately spent. However, Ontario has over two million unauthorized health cards in circulation, costing that province as much as $900 million per year in fraudulent claims.

Although this is under provincial jurisdiction, there is only one taxpayer and this type of savings opportunity cannot be ignored.

With regard to economic growth, new partnerships must be built with the business sector which will be responsible for the creation of 85 per cent of all new jobs. That means that the government must provide meaningful incentives, such as job creation tax credits, training subsidies, UIC premium exemptions and wage subsidies as its partnership contribution.

We must also provide a supportive environment by streamlining government services and creating one stop shopping for those services, especially as it relates to small and medium sized businesses and to export opportunities.

In conclusion, the pursuit of economic growth coupled with sound financial management and wise investing will allow us to deal effectively with the challenges before us. To quote from the government red book, a strong economy is the essence of a strong society and therefore jobs and economic growth must be our top objectives.

Political credibility requires fiscal responsibility. The people of Canada have given this government the mandate to make the tough decisions necessary to restore our economic strength and to create opportunity, hope and jobs for all.

Canadians also understand that all who are able will be called upon to contribute their fair share. We need a tough but fair budget. We need it now for the long term benefit of all Canadians.