January 19, 1984

GOVERNMENT ORDERS

BUSINESS OF SUPPLY

PC

Henry Perrin Beatty

Progressive Conservative

Hon. Perrin Beatty (Wellington-Dufferin-Simcoe) moved:

That this House condemns the Government for its contempt for the taxpayers of Canada, which it demonstrates by the creation of a taxation system in the form of the Income Tax Act that is increasingly incomprehensible for individual taxpayers and, by its failure to end capricious and unfair practices of the Department of National Revenue.

He said: Mr. Speaker, as we begin this extraordinary day in which Members of Parliament from all sides of the House will have the opportunity to debate the issue of the Government's handling of the Department of National Revenue, 1 want to start with a quotation which 1 think perhaps should set the tone for the debate today. It explains fully what our responsibilities are in a democratic and free society when authority is abused by the state and its ordinary citizens and its Members of Parliament find that abuses have taken place. The quotation is this:

It follows that when authority in any form bullies a man unfairly, all other men are guilty; for it is their tacit assent that allows authority to commit the abuse. If they withdrew their consent, authority would collapse.

That quotation is from a book published by the Toronto Oxford University Press in 1970 called "Approaches to Politics". Its author is Mr. Pierre Elliott Trudeau, the present Prime Minister of Canada. In that quotation the Prime Minister succintly outlined the approach that should be taken by all Members of Parliament when they find abuses of authority have taken place.

In the course of the past several days we have found that there is an agency in Canada which has extraordinary powers that no other agency has. This agency has the power to seize people's personal records, to invade their privacy, to damage their reputations in the community, to empty their bank account and to confiscate their pay cheques.

What is this agency, Mr. Speaker? It is not the police. It is not the new civilian security agency. It is the Department of National Revenue. This one Department has been given sweeping powers under the law which no other agency, no

other individual in society has, and which impact upon the civil liberties of every single Canadian.

First, the powers granted to this agency are far too broad at the outset. Second, what we have found, in documented case after documented case, is that the Department has taken authority unto itself and has abused the grant of authority given to it by Parliament. It has abused it to invade the privacy of ordinary Canadians. It has abused it to affect a person's ability to earn a living. It has abused it to take away basic civil liberty. We found as well, as a result of a succession of cases which have been made public both in the press and on the floor of the House of Commons, that we have a Minister of the Crown responsible for this Department who is neither aware of what has been done by his officials nor does he care about

In our system of government, our system of parliamentary responsible government, we have Ministers of the Crown who are accountable in the House of Commons precisely to ensure that Departments are held to account and that the authority granted to the Crown is properly used and not abused; that the civil rights of ordinary Canadians are respected by the state and that the rights of ordinary people, the unemployed, farmers, small business people, employees, senior citizens, are not abused; that people are treated with decency, with respect, with dignity and with compassion. Yet what we have found, Mr. Speaker, is that in instance after instance this Minister has allowed or encouraged his Department to treat ordinary Canadians in a way that is simply intolerable in a free society.

What Members on this side of the House have been attempting to do over the course of the last several months, and what the point of this debate is today, is either to force the Minister to accept his responsibility to the people of Canada or to force the Prime Minister of Canada to find a new Minister who is prepared to do the job.

There is an essential question here. Is the Minister of National Revenue (Mr. Bussieres) the Department's spokesman to the public, their apologist when things go wrong? Or is he the public's representative to the Department, the ombudsman when injustices take place, the guardian of the rights of ordinary Canadians? We believe that is the role the Minister should be playing. Instead, we have found that the Minister has simply been a defender of the Department at all costs, often giving false information, information that he subsequently learned was wrong and had to correct. In all innocence he would give this information because he simply did not have the facts.

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[DOT] (mo)

That in itself is an indictment of the Minister's management of the Department. He is simply uninformed about what has been happening in his Department. More serious than that in the course of Question Period in recent days, is the Minister's abject refusal to get the truth and make it available to the Canadian people and the Parliament of Canada.

Over the course of several weeks, the Hon. Member for Cambridge (Mr. Speyer) and other colleagues on this side of the House have raised the issue of quotas that have been put in place in several district tax offices across the country, where tax assessors are being driven to maximize their take and to squeeze every last cent out of ordinary taxpayers irrespective of whether the money is in fact owed.

What happened when this was raised in the House of Commons? The first thing that happened was that every chartered accountancy firm in the City of Cambridge wrote to my colleague from Cambridge and said that they believed there was a quota system in place in the Kitchener district tax office. The Hon. Member for Cambridge quite properly raised that on the floor of the House of Commons and asked the Minister to reply.

What did the Minister say? He said that there were no such quotas. What did we learn later after the Minister had been informed that in fact quotas existed, a fact which the Minister now concedes? Then the Minister said it was only in Kitchener, that it was an isolated incident, that it did not take place anywhere else in the country, and that it was simply the one office in Kitchener where the officials got carried away. He said he had put a stop to this. Further, he said that to end these non-existent quotas which were not in place anywhere else in the country, he was sending out a directive to all district tax offices telling them that the practice was not to be permitted.

What did we learn after the Minister made the statement that it was only in Kitchener? We then learned that there were quotas in place in Toronto, a fact which has been conceded by the director of the district tax office, a fact which has been proven by documentary evidence, a fact which the Minister himself still refuses to concede to the House of Commons notwithstanding the documentary evidence presented to him. The Director General of Taxation has pointed out that in fact quotas have been in place in a number of offices. We have documentary evidence proving that in the case of the Calgary district tax office quotas have been in place there. Occasion after occasion we have had a continuing cover-up on the part of the Minister and of the Department attempting to withhold from Canadians the truth, and a willingness on the part of the Minister to leave information which he knows to be false on the record. Canadians deserve better than that.

I think it is a fair question to ask the Minister why he issued a directive to all district tax offices saying that there were to be no quotas, that they were wrong and that under no circumstances were district tax offices to have quotas. Why has he repeatedly said, both to the press and in the House of Commons, that he is opposed to quotas and will do everything he

can to ensure that they are stopped? If quotas are innocuous, if they have not damaged the rights of Canadians and if they have not damaged the position of the assessors themselves and treated them unfairly, why would the Minister be this concerned and take this extraordinary action to put a stop to them and insist to the House that no quotas would be permitted under his administration?

The answer is that the Minister accepts that in fact quotas are dangerous, that they take away people's rights, that they are unjust both to the assessors who are forced to wring money out of people whether or not it is owed, and that they are unjust as well to ordinary Canadians who find that they are unfairly reassessed as a result of quotas being in place. It is unjust for an assessor to be told that if he wants to get ahead, get promoted, get a merit increase or even hang on to his job, he has to meet some arbitrary quotas set by the officials over him. The Minister believes that is wrong, and we agree.

A second question arises: If the Minister feels that people's civil rights are invaded by the imposition of quotas, why does he not agree that Canadians who have had their rights affected by these quotas and have been unfairly reassessed as a result of them have the right to know whether or not quotas have been in place in their local district tax offices? Why the cover-up. Why is the Minister not prepared to table in the House of Commons a list of all offices in which quotas have been in place? Indeed, why would the Minister not accept his responsibilities as a Minister and actively and vigorously find out for himself in which offices quotas have been in place to make sure that those whose rights have been affected could seek redress? Any Minister of the Crown who was doing his job and knew that injustices had taken place under his administration would have a responsibility to set the record straight, to tell the truth and do whatever he could to ensure that people's rights were respected and the abuses stopped. Yet this Minister still refuses.

[DOT] (ins)

Under this Minister, we have seen cases of extraordinary actions being taken by the Department. For example, an attempt was made by the Department to ask for the whole of a computerized data base belonging to a municipality. Here again the Minister said he was unaware of this, that it was simply a matter of a local district office overstepping itself, that he could not be expected to know and that he would put a stop to it.

What does this Minister know? What has he been doing? What is the Minister's responsibility to make sure that local offices follow policy and respect the rights of Canadians, including the right to privacy? What has he done to discharge his responsibilities to Parliament and the people of Canada? On the record, he has done nothing. What we have had is abuses of which the Minister was unaware and of which he remains unconcerned.

What about his Liberal colleagues? Members on this side of the House have been deluged for the past year with complaints from our constituents, from pensioners, ordinary people with

January 19, 1984

handicaps who find that the Department of National Revenue literally does not want them to be able to stand on their own two feet. If they can, they lose the disability deduction. Small businesses have been forced to close as a result of arbitrary reassessment. Tax collectors have used bully-boy techniques which have denied the rights of ordinary Canadians.

Members on this side could list literally dozens of cases where ordinary Canadians have had their rights abused. What about Members on the other side? Have they not been hearing from their constituents? Do people approach only members in the Opposition because they feel there is no point talking to members of the Government, that Liberal Members will not fight for them? Is it a matter that Liberal Members are indeed aware of this, that their constituents are affected in exactly the same way as ours but they have been incapable of getting the Minister to accept his responsibility to protect the rights of their constituents?

Two members on the Liberal side have spoken out. The Hon. Member for Kitchener (Mr. Lang), who is the Parliamentary Secretary to the President of the Treasury Board, spoke out to say that the Department was wrong, that it was an abuse and that the Minister had to step in to correct the abuse. We give him credit for doing that.

Second, the Hon. Member for Sudbury (Mr. Frith) was in Calgary last week. He was quoted in the Calgary Herald as follows:

Frith said he will ask Revenue Minister Pierre Bussieres to act and will raise the whole issue of government control of tax officials at the next meeting of the Liberal caucus.

That was yesterday.

I think we have to assert the political will on top of the Revenue Canada Department and just say "Back Off', he said.

Was this raised in the Liberal caucus yesterday? Did Liberal Members of Parliament speak up on behalf of their constituents? If so, what action is the Minister of National Revenue prepared to take in response to his colleagues who have been receiving the same complaints we have about abuses of the basic civil rights of Canadians? None? Is he too prideful to admit that he has been wrong, that people's rights have been abused, or is he prepared to correct the situation? That is the issue that is before the House today.

What can we do? What could this Minister do if he were serious about trying to protect the right of Canadians? First, he could strike an independent task force on the powers of Revenue Canada to look at those powers as they affect civil liberties in Canada, and to make recommendations for amendments to the Act under which the Department operates to constrain those powers to ways that respect the rights of Canadians.

Second, he could take a fresh look at the Act which currently states that if you, Mr. Speaker, have your income tax return reassessed, you have a responsibility to pay all the money being demanded by the Department, whether you owe it or not. If you do not do that, the Government has given the Department the right to step in and seize your bank account, or your pay cheque, or to issue third party demands to anyone

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who owes you any money. On those third party demands you will find your social insurance number printed and you will find the amount of money that you are alleged by the Department to owe, without any element of due process. Try repairing your reputation in the community after that.

I had a case that came to my attention over Christmas of a doctor who had third party demands issued on 40 of his patients demanding that they pay directly to the Department money that they owed the doctor. He asks how he can rebuild the doctor-patient relationship and the basis of trust that he needs with his patients. The Department is telling 40 of his patients that he is a crook. All that he is asking for is justice, a chance for his day in court. We are attempting to fight the Government in court but every time we have gone to court the Department has asked for delay. He is at least entitled to his day in court and not have his reputation impugned in this way and his professional relationship with his patients destroyed. The Department got less than $1,000 from these 40 third party demands. Yet the doctor's reputation has been besmirched and his relationship with his patients has been permanently damaged. All he seeks is a chance for his day in court. If it is found that he owes the money, he will pay the money; but he wants a chance for due process of law and the right to be presumed innocent until proven guilty. Surely nothing is more central to our system of justice than that.

There is another thing the Minister could do, Mr. Speaker. He could issue directives to his officials and issue a publication that would go to every taxpayer in Canada, in essence a plain language statement of the rights of the taxpayers of Canada. These are the right to fair treatment; the right to sit down and negotiate with the Department a fair schedule of repayment if the taxpayer has made a mistake; the right to the presumption of innocence until proven guilty; and the right to privacy.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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?

Some Hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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PC

Henry Perrin Beatty

Progressive Conservative

Mr. Beatty:

We need a taxpayers' bill of rights in this country that taxpayers could have in their hands that says that the Minister of National Revenue is on their side and that they have a right to be treated fairly. But we cannot even get that from the Minister, Mr. Speaker.

We have a case of abdication of ministerial responsibility on a scale never before seen in this House. We have a Department run amok with extraordinary powers that no other agency or individual within our society has. Those powers are being used and abused to the detriment of ordinary Canadians.

This debate today, Mr. Speaker, is about the need for this Parliament to reassert control over this rogue elephant, the Department of National Revenue, the need for simple fair play and justice, respect for ordinary Canadians, and the need for the Minister to do his job. If this Minister is unwilling to his job, or incapable of doing it, it is time for a new Minister of National Revenue.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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?

Some Hon. Members:

Hear, hear!

January 19, 1984

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Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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PC

Henry Perrin Beatty

Progressive Conservative

Mr. Beatty:

I would like to conclude my remarks, Mr. Speaker, with the central point which has to be kept in mind. The vast majority of Canadians are law abiding, honest and conscientious. They pay their taxes willingly and on time. They make an effort to obey the laws to the best of their ability. From the Government they are asking for respect since they are honest people. They are asking for presumption of innocence until proven guilty. They are asking for decency and fair treatment. Surely that is not too much for ordinary Canadians to ask of their Government. Surely in a civilized society, in a democracy such as we have in Canada, any Government which gives anything less to its people deserves to be put out of office.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Nelson A. Riis (Kamloops-Shuswap):

Mr. Speaker, once again I rise to discuss an issue that is before all Canadians, and that is the whole matter of our tax system. I am pleased to see that the Progressive Conservatives have rallied to the concerns that people have brought to our attention regarding the abuses being perpetrated by Department of National Revenue officials in various parts of Canada. The inequities and injustices of the tax system are now being articulated by the Progressive Conservative Party. We have heard a great deal about this in the last number of years and we in the New Democratic Party have been attempting to point out the difficulties that arise.

If there is a theme that we have developed year after year after year, it is the fact that the tax system in this country, whether on an individual basis or on a business basis, is one that is unjust, one that is unfair, one that treats different Canadians differently and one that is biased in favour of the upper income earners, the wealthy and powerful in this country. It is a theme we have brought forward consistently over the last number of years and today we do so again. I am glad to see members of the Progressive Conservative Party rise in their places and say that there are problems with the Canadian tax system.

We are approaching the time of year when Canadians become preoccupied with filling out income tax returns. Once again perhaps as many as 16 million Canadians will file a tax return on a voluntary basis, declaring their incomes and the tax payable. It becomes a preoccupation with more and more Canadians to find ways of avoiding taxes, not because they are attempting to remove themselves from their responsibilities in the country and not because they are dishonourable in terms of not wanting to pay their fair share, but they know in their hearts that by all accounts the system of taxation in the country is grossly biased and unfair. It is an unjust system.

To confirm this we have only to go back to the early sixties when the Royal Commission on Taxation, the Carter Commission, backed up by more than 150 tax experts, found that the tax system in Canada was grossly unfair. It declared that ordinary Canadians were being asked to pay more than their fair share of taxes, that those in the top income brackets were paying too little tax and consequently those in the lower income brackets were being asked to pay more than their

share. From that Royal Commission came the phrase "a buck is a buck and should be taxed accordingly".

Well before Christmas in the House we passed a piece of legislation that will, once again, give an unfair advantage to those Canadians who derive their incomes from investments as opposed to those whose incomes are devired from salaries or wages. Again, this protects a very select group of Canadians from the ravages of inflation. Inflation is something the average Canadian has to accept. The continual decrease of the purchasing power of his dollar is a fact of life. The legislation passed in early December will protect those Canadians who derive their income from investments and is just one more example of the unfairness of our tax system.

I do not think these points can be overemphasized, Mr. Speaker. There are Canadians who are able to take advantage of the loopholes in the tax system that the Government has provided and which will enable them to get out of paying the taxes that most Canadians have to pay. This makes the system more and more unjust as the years go by.

1 believe it was in 1979 that the Government identified 200 loopholes in the system and attached a particular cost to them. Each loophole was identified with the amount of money which it cost the federal treasury so that it could say this amount of dollars, be it $300 million or $2 billion, a certain group of Canadians is going to retain in this particular year and, therefore, it has to be made up elsewhere or the deficit begins to grow out of hand.

It identified 200 loopholes, Mr. Speaker, and what is the effect? The tax returns for 1981 made it clear that there were a number of Canadians who did quite well in terms of income for that year, but were not required to pay any federal income tax at all. As a matter of fact, back in 1981 there were 297 individuals in our country whose incomes were well in excess of $2,500,000, there were many individuals who earned half a million dollars, and many who earned in excess of $1 million, who by utilizing the existing loopholes in the tax system were not required to pay a single penny of federal income tax.

To bring it down to, perhaps, a more common level, Mr. Speaker, in 1981 there were many Canadians who made in excess of $50,000, and of all of those who had that amount of income there were 8,000 individuals who required a special status. There were 8,000 individuals in 1981 with incomes in excess of $50,000 who paid not a single penny in federal income tax. As a result of the increase in loopholes, Mr. Speaker, that number was up 64 per cent from 1980, which makes it clear what is happening to our tax system. We are allowing more and more Canadians to get out of paying their fair share of income tax in our country.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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?

An Hon. Member:

That is Liberal progress.

Topic:   GOVERNMENT ORDERS
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Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

It is a version of Liberal progress, I suppose, with the idea that if you allow certain Canadians, particularly those in the upper income brackets, to avoid paying any income tax, they will take that money and invest it and, therefore, the rest

January 19, 1984

of the citizens of Canada can benefit. I suspect that same argument can be made for everyone in the country. Giving an average working man in Canada an opportunity to retain some of those tax moneys to invest as he or she sees fit would also result in more economic activity in the country. However, although we do this for one select group, those in the upper income bracket, we certainly do not do anything of a similar nature for the ordinary working Canadians.

The corporations, Mr. Speaker, in 1981 and 1982 were very profitable and, again because of the existing tax system and the loopholes therein, they were able to use the system through their tax accountants and tax lawyers so that they paid no income tax whatsoever. Just a few days ago there were reports made public in our country which pointed out that the tax rates for small businesses in Canada were significantly higher than the tax rates paid by the large corporations. It is a very biased system, Mr. Speaker, which is exemplified most obviously by the Bank of Montreal, which in 1982 made a few hundreds of millions of dollars in profits, yet paid not a single penny in income tax. It had $22 million deferred to the 1983 taxation year as well.

One could go on and on, Mr. Speaker, speaking of the most obvious abuses of the tax system. However, today we are focusing in on the unfairness of it all. We have heard from Hon. Members from the Progressive Conservative Party with respect to the fact that National Revenue is coming down hard on individuals. We have all had countless letters and briefs presented to us from our constituents because Revenue Canada, in a desperate grab for revenue, is bringing undue and unfair pressure on many Canadians. Later today my colleague will talk about the problems which are faced by those in the artistic and cultural communities.

I would like to identify one particular problem area, that is, the food producing business. In parts of Canada we have seen the heavy hand of National Revenue come down on those farmers and ranchers who have struggled, in many cases for generations, to establish a viable operation. One particular family comes to mind. I know of a young rancher and his wife who have three children. They have worked in the ranching business for their entire lives and recently were operating a 200-head cattle ranch in central British Columbia. That family, I think it fair to say, worked from dawn to dusk, seven days a week, for years and years and because of the falling cattle prices and increasing costs of all aspects of the ranching operation, were finding it more and more difficult to make their necessary payments. The husband was required to go out and seek alternate employment for a few days a week driving a gravel truck. As a result of the income obtained from that particular venture, the officials of the Department of National Revenue decided this individual was no longer a cattle rancher, although his wife worked every single day of the week; as well as all three children before and after school, and that individual, other than those few hours a day when he was driving the gravel truck, worked to keep that ranch viable.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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?

An Hon. Member:

It was a hobby ranch.

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Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

They did not go quite so far as to call it a "hobby ranch" but they did call it a part-time operation. It is with that kind of uncaring approach, Mr. Speaker, that officials with no understanding of what ranch life involves make a decision based on some immediate cash flow receipts which is absolutely incorrect. I must add that when the matter was brought to my attention and I intervened with the Department of National Revenue, there was a reassessment. The whole matter was re-examined and I believe justice was brought to bear in this situation and they were again classified as a full-time food producer, which they truly were.

There are many examples of this kind of situation. The point is that it is well known that the Liberal Government, as a result of economic mismanagement, has had to go out and make a very desperate bid to obtain taxes from Canadians. Part of the problem is of its own making because over the years it devised a tax system which has permitted so many Canadians to pay no income tax and to really abuse the system by using the legal loopholes which the Liberal Government has so generously provided. Government must now go to the average Canadian, Mr. Speaker, and punish those individuals, trying to squeeze a few more dollars in order to balance its books.

I would like to say something on behalf of my Progressive Conservative colleagues. I also read in the newspaper, the Ottawa Citizen this morning, that the Canadian Press reports that more than half the Hon. Members of the federal Progressive Conservative caucus have had disputes with the Revenue Department over their personal taxes. Some people have gone so far as to say that this is one of the reasons that the Progressive Conservatives have risen up and spoken so vociferously against the Department. I know that my colleagues in the Progressive Conservative Party are honourable men and that certainly there would be no truth to the fact that because half of the Progressive Conservative caucus are having difficulties with Revenue Canada, this would motivate them to raise this subject day after day in Parliament, coming down hard on the Minister of National Revenue (Mr. Bussieres). I know that would not be the case with those Hon. Members. I wanted to clarify that for the record because of some perhaps inappropriate statements raised in today's press.

The question which we must address today, Mr. Speaker, is this. Is the system of taxation in place in the country today a fair one? I do not believe there is the possibility any longer of the Government being able to fake it in front of the people of Canada. We find small businesses in this country pay taxes at a higher rate than large businesses. There are countless examples of individuals paying absolutely no income tax at all. Report after report outlines the injustice of the present system, including the Government's own report entitled "Analysis of Federal Tax Expenditures for Individuals", which was released in November, 1981. It concluded that in 1979 the average taxpayer with an income between $10,000 and $15,000 saved $771 on his income tax through tax deductions. However, in that same year citizens with incomes greater than $100,000 managed to save $46,000 on their taxes. What is even more

January 19, 1984

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striking, said the report, is that there were hundreds of individuals with incomes in excess of $100,000 who had arranged their affairs so that they paid no federal income tax at all. These reports have taken the time to examine the tax system of this country and have outlined very clearly the unfairness of this particular system.

Back in 1979 a study done by Allan Maslov, an economist at Carleton University School of Public Administration, found that exemptions provided roughly 100 times greater benefit to those in the upper income brackets than to those at the bottom end of the scale. A hundred times greater benefit to the upper income earners of Canada, Mr. Speaker!

1 do not think it would benefit the House for one to go on and on describing how unjust and how unfair the present tax system is. Canadians know it and as a result people are becoming more and more reluctant to pay what the Government says is their fair share of the taxes of Canada. However, I think the 1983 tax year points out most effectively where the bias in our system is, Mr. Speaker. Canadians are now filing their tax returns for the 1983 tax year and 1 want to use as a precise example three individual taxpayers. Taxpayer A had an income in 1983 of $200,000 from dividends. Taxpayer B is a similar individual with an income of $200,000 as well, but based simply on employment income through salary. Typical taxpayer C has an income of $25,000 based on wages.

When you take advantage of the traditional loopholes available-I do not mean investing in Canadian films and Canadian drilling funds and all of those options available to people with a considerable amount of capital at their disposal at the end of the taxable year, but just taking advantage of the traditional, typical kind of tax loopholes in today's system and on today's forms-you find that taxpayer C, the average Canadian wage earner, is paying taxes at about 14.4 per cent. Interestingly enough, the taxpayer with $200,000 salaried income pays taxes at 43.8 per cent. That is what you would expect to find in a progressive tax system. He is paying more taxes at a higher tax rate than an individual raising a family on $25,000. However, when you consider that individual with an income of $200,000 based on investment income, income received from dividends, he pays at a tax rate of 18.5 per cent, virtually the same rate as the individual making $25,000 a year. There, Mr. Speaker, as clearly as can be presented using the 1983 tax forms, you find that a taxpayer with $200,000 income based on dividends is paying taxes at virtually the same rate as an individual with an income of $25,000 based on wages.

The system is unjust, Mr. Speaker. It is unfair. One can make a case for it being virtually corrupt. Yet the system is perpetuated and perpetuated. The most recent piece of legislation introduced by the Government was again to provide further protection for those individuals whose income is from investments, to protect them from the problems of inflation.

I want to close, Mr. Speaker, by identifying changes in the burden of those providing Canada's taxation. Back in 1960

individuals paid about 57 per cent of federal taxes and corpor-tions paid about 42 per cent. By 1980 that had changed to 70 per cent from individuals and 30 per cent from corporations- quite a dramatic shift over a 20-year period in the shouldering of the tax burden of Canada.

I would like to present an amendment to the motion that the Official Opposition has before the House today. I move:

That the motion be amended after the words "individual taxpayers" by inserting the following:

"and which favours big business and upper income earners at the expense of

small business and average working Canadians,"

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-TAXATION
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LIB

John Leslie Evans (Parliamentary Secretary to the President of the Privy Council)

Liberal

Mr. Evans:

Mr. Speaker, I was just curious about a comment the Hon. Member made. He indicated there had been a dramatic change in the distribution of taxes paid by corporations and individuals. Is the Hon. Member aware that during the 1970s the increase in personal income in real terms after inflation was something over 100 per cent, whereas the increase in corporate profits has actually been negative in real terms? It declined by something in the range of 10 per cent to 14 per cent. Since real incomes of individuals have gone up, you would expect that the taxes paid by individuals have gone up, you would expect that the taxes paid by individuals would have gone up accordingly, whereas since profits in real terms have dropped off in that same period, the proportion of taxes paid by corporations would have declined.

I understand what the Hon. Member is saying. He is trying to imply that there has been some conscious shift of the burden of taxation. However, I would like to ask the Hon. Member to consider that when you understand that the amount of income available to individuals has grown dramatically while the amount of income after expenses to corporations has actually declined, would that not give rise to the kind of redistribution he mentions in his speech?

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Subtopic:   BUSINESS OF SUPPLY
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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

Mr. Speaker, I appreciate the intervention of the Hon. Member. I believe when you look at the figures we have available you will find when talking about profits and individual income that we are talking in many respects about two different things. I do not think that-

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LIB

John Leslie Evans (Parliamentary Secretary to the President of the Privy Council)

Liberal

Mr. Evans:

That was good bafflegab.

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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

It is not an attempt at bafflegab whatsoever. I am trying to say that I think what the Hon. Member is saying is that we ought to be comparing two different things. We are talking about earned income and the taxes paid thereon. When you talk about taxation of corporations, you are talking about the income of corporations after the appropriate deductions available and so on. When you factor both of those in and look at 1960, it is very clear that the taxes coming into the coffers of the federal Government from individual Canadians and Canadian corporations have witnessed a dramatic shift over the past 20 years. That is the point I am attempting to make. There has been a tremendous shift in that tax burden. As we see less and less, on a percentage basis, from the corporate sector, we must look elsewhere to find those funds. More and more the money is coming from Canadian individuals. I

January 19, 1984

believe that knowledge is one of the problems that Canadians are facing today.

I know the Hon. Member is aware of the example of two well known corporations in this country, Shell Canada and the Bank of Montreal, which pay no federal income tax at all. Everyone is aware of the profits that each of these major corporations has made and I believe it is very clear that average Canadians become disturbed and wish to find ways and means of avoiding the taxation system, not because they are dishonest or dishonourable people but they know they are being asked to pay an unfair burden of today's federal taxes.

As a result of all of this we are driving a great deal of the Canadian economy underground. Some estimate that there is an underground economy of approximately $15 billion as a result of Canadians doing whatever is necessary to avoid the prying eyes of National Revenue. This type of approach to our economy is unhealthy, not in our best interests and is being perpetuated by National Revenue in its present policies.

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PC

Henry Perrin Beatty

Progressive Conservative

Mr. Beatty:

Mr. Speaker, I have a simple question for the Hon. Member. At the outset of his remarks he stated that there has been a deep concern on the part of his New Democratic Party colleagues with respect to abuses by the Department of National Revenue. He will know that in the past two months no issue has been more prominent and no question has been asked more often in Question Period than those related to National Revenue. Literally scores of questions have been asked. Why has the NDP not asked any of those questions?

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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

Mr. Speaker, the point I was trying to make, obviously not very successfully with the Hon. Member, is that we in the NDP have been standing in our places for years pointing out very carefully the injustices in our tax system. When points have been raised about Canadian corporations and individuals not paying a single penny in income tax, has there been one Progressive Conservative rise in his or her place to make that same point? Never! When we in this particular Party stood in our places in an attempt to point out time and time again the injustices of the taxation system as it applies to the Canadian banking system, did a single Progressive Conservative Member ever stand in his or her place to raise that issue? Never.

To answer the Member's question directly, when it came to the matter of National Revenue coming down on many of our constituents-in my own case I can recall in excess of 45 or 50 cases-I and my colleagues have intervened on their behalf with the Department of National Revenue. I am pleased to say that on many of those occasions when a re-examination inevitably took place, the matter was rectified. Based on my own experience of intervening on behalf of many of my constituents, I can say that this has been the case.

We felt that the matter had received public airing both by members of the Opposition, by the national media and other individuals in the country, that the point had been made amply

Supply

clear and that not rising in our places was not saying that members of the NDP had not been fighting on their own for individual Canadians across the country on this particular issue. I am pleased to say that, because of our interventions on behalf of our constituents, we have been successful in most cases.

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LIB

Douglas Glenn Fisher (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Fisher:

Mr. Speaker, I listened with some interest to the Hon. Member's comments. I congratulate him on how he expressed his views. We have heard them before, and if some of the Tories have not perhaps they should come into the House more often.

My question to the Hon. Member concerns the example he gave about ranchers who got into difficulty. I hope he will ask his colleague who will discuss artists to deal with this problem as well. When we set up the cash system for farmers and ranchers, we set up a very attractive tax system for people to take advantage of. That exception draws in people. In turn that requires Revenue Canada to use extraordinary methods to determine whether people are following the system properly or abusing it, since it is so attractive. We have heard from farm groups who say that it is attractive and ask that we be careful that it is not abused since they want it to continue in the future. We have had that advice.

With respect to the example of the rancher who had to derive outside income, what advice would the Hon. Member give the Government in order to avoid precisely that difficulty which the rancher experienced? I ask this question seriously because I believe that farmers right across Canada have had real trouble with declining income and high interest rates and have had to go off their farms to make extra income. We need guidance from sincere members like himself who have experience in this area and who might have a few ideas. We do not want to abuse the system but we must make sure that some unhappy taxpayers do not abuse it as well. I look for some advice from the member.

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NDP

Nelson Andrew Riis

New Democratic Party

Mr. Riis:

Very briefly, I want to agree with one of the points raised by the Hon. Member. That is the difficulty placed on the legitimate food producer today by those individuals who are using the provisions of the tax system to their advantage at the expense of the legitimate rancher. It is disturbing to me to drive through certain valleys in my constituency and meet legitimate cattle ranchers who are struggling to raise beef while next door there is a hobby rancher who is raising the same kind of cattle and essentially attempting to lose money. It is that kind of difficulty which I appreciate.

I believe that if one looks carefully at the books of a legitimate cattle producer and has some sensitivity as to what is involved in that particular endeavour, there is no question at all who is legitimate and who is illegitimate when it comes to a particular business and using the tax system to the appropriate end. All I am saying-and I have heard this from members of the Official Opposition as well-is that the tax system should be more sensitive.

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Subtopic:   BUSINESS OF SUPPLY
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January 19, 1984