Mr. Cassidy:

The Hon. Member is speaking out of both sides of his mouth. He is for higher corporate taxes and lower corporate taxes.

Mr. Kilgour:

His training at the London School of Economics was grossly deficient. Even perestroika, glasnost and the East Bloc recognize that incentives are needed. If cement is poured on an economy, which can be done with higher taxes, then nothing is created but fewer jobs, less productive employment and less of a future for everybody in society.

Mr. Cassidy:

So 60,000 profitable companies should go tax-free?

Mr. Kilgour:

I have written against that. Those companies should pay taxes. I am in favour of corporations paying taxes.

Income Tax Act and Related Acts

Mr. Cassidy:

So you are in favour of a minimum tax? Are you with us or against us?

Mr. Kilgour:

I am against what the Party of the Hon. Member will do to the business climate of the country. I am saying that they will do exactly to the business climate of Canada what was done to the business climate in British Columbia, Manitoba, Saskatchewan. Thank goodness there is no electorate in Canada today which wants to put up with the type of things that the Party will do to the business climate in Canada.

Mr. Cassidy:

The Yukon has an NDP Government, and it is doing a damn fine job.

Mr. Kilgour:

The only point my hon. friend forgets is that right now in the Yukon there are 23,000 people, men, women and children and they have all kinds of special problems. I accept that and agree with them fully. What works in the Yukon will not work in Ontario. I can think of nothing that would create unemployment faster, especially for the riding of the Hon. Member, than the tax policies that some of his more radical colleagues-and I will not name them for him-would impose. I can think of nothing that would do it faster. I can think of nothing that would create more havoc in this country.

Mr. Keeper:

Why is unemployment so low in Manitoba with an NDP Government?

Mr. Kilgour:

The Member asks why unemployment is lower in Manitoba. I am sure he is perfectly aware that it is because it has a more diversified economy than any other province in western Canada.

Mr. Cassidy:

Who created that diversified economy? It was the good management of the NDP Government.

Mr. Kilgour:

The Member is arguing that the New Democratic Party Government has created a diversified economy in Manitoba. He knows that is totally false. There are many factors involved going back to the turn of the century and the entrepreneurial spirit of Manitobans, the multicultural nature of the population, and many other things. Surely the Member would not be so foolish as to tell the House that it has anything to do with the past NDP Governments of that province. The economy of that province did well in spite of the governments in office, not because of them. Obviously approximately 80 per cent of Manitobans agreed with that view a fewer months ago.

Mr. Keeper:

Do you acknowledge that the unemployment was low in Manitoba, not high, as you predicted?

Mr. Kilgour:

Of course it was low. I explained to the Member that it was lower because there were less Manitobans working in the-

Mr. Cassidy:

That is after 15 or 18 years of NDP government, almost two decades of good government with the NDP.

July 21, 1988

Income Tax Act and Related Acts

Mr. Kilgour:

I believe I am being heckled, Mr. Speaker.

In Manitoba there were less people working in the resource sector, and more people working in the garment industry, in services, insurance, and all of the other sectors which were more stable during times when resource prices were very bad. Please let us put an end to the canard that the NDP policies in Manitoba had anything to do with the diversity in that province.

Perhaps the Hon. Member for Regina West can explain why, when the Blakeney or Douglas government was in office, a community like Lloydminster, which is on the Saskatchewan side and on the Alberta side, looked like a balloon. As the Member knows, most development was on the Alberta side of Lloydminster. Anyone who could would live on the Alberta side, and anybody who could not do otherwise would have to live on the Saskatchewan side. The Member is smiling, but I hope he will rise and explain why Lloydminster, Alberta, did well, grew, had good infrastructure, and a growing population, and Lloydminster, Saskatchewan, was like a dwarf beside a giant.

Obviously, a great deal had to do with taxation policies and business climate. Since my time is up, I simply wish to make the point that I agree that each and every tech corporation should pay a proper and fair tax based on the ability to pay. But to let this bunch ever get their hands on the levers of the economy of Canada would do to Canada what they have done to the three western provinces.

Mr. Deputy Speaker:

The motion moved by Mr. Murphy and seconded by Mr. Benjamin, the Chair finds to be in order.

On debate the Hon. Member for Windsor West (Mr. Gray).

Hon. Herb Gray (Windsor West):

Mr. Speaker, the more Canadians understand the tax reform legislation of the Government, the more they will realize they have been the victims of a gigantic Conservative scam. The Conservatives are attempting to convince Canadians that they will benefit from this legislation through lower taxes. The facts are quite to the contrary. Starting July 1 of this year Canadians, on the surface, are having less federal taxes withheld from their paycheques. However, what they are getting by way of tax reductions amounts to a small fraction of the billions of dollars that have been taken from middle and lower-income Canadians since the Conservatives took office in September, 1984.

The Minister of Finance (Mr. Wilson) claims that his tax reform will exempt approximately 850,000 lower income persons from paying tax. The Minister omits the fact that his own measures were responsible for taxing an additional one million Canadians. This situation is mainly the result of the partial deindexation of the tax system, and the elimination of the federal tax reduction. Most people who are exempted under this legislation were put on the tax rolls in the first place by the Conservative Government. If we compare the total amount of tax that will be paid by taxpayers in 1988, after tax reform, with that paid in 1984 when the Conservatives took power, we realize that only families with incomes more than

$117,000 a year will pay less tax in 1988 than in 1984. Those families account for the top 1 per cent of all Canadian families. Some tax reform! The Conservative tax reform is aimed at helping the top 1 per cent of Canadian families, not the millions of middle and lower-income families who were promised relief by the Conservatives but who will get just the opposite.

In The Windsor Star on Monday, June 27, 1988, Brian Bannon, the Star's Business Reporter noted:

Three dollars.

That's what "the most significant tax reform in Canadian history" will add to the average Windsor resident's next paycheque.

After July 1, the long-awaited tax cuts promised by Finance Minister Michael Wilson start showing up on payrolls across Canada. But before you celebrate, check your take-home pay.

If you are married with two children under age 19, earn $35,000 a year in wages and your spouse earns nothing, your weekly paycheque will rise from $512 to about $515.

That's better than nothing-an extra $156 a year-but accountants like Windsor's Christopher Renaud question whether it really lives up to all the rhetoric from Ottawa.

"With all the hoopla", he said, "you would expect more".

Here is the truth about the so-called Tory tax reform for the type of people whom I represent in Windsor, Ontario. One can see why I describe the Tory tax reform legislation we are debating today as nothing more than a gigantic Conservative scam, an attempt to fool millions of middle and lower-income Canadians and to try and convince them that they are actually paying lower taxes because of Conservative initiatives. The facts are quite the opposite.

When one takes into account all the increases in personal income tax, federal sales tax, and excise tax, the reduction of $156 a year, $3 a week, for that family with two children under age 19 earning $35,000, would appear to be wiped out, and that family would still be far behind where it was in 1984 before the Conservatives took office because of all the other increases in taxes.

Let us look at some examples: sales tax was increased from 9 to 10 per cent on October 1, 1984, and another $1 billion was taken out of the pockets of middle and lower-income Canadians by the Conservative Government; there was an increase from 10 to 11 per cent on January 1, 1986, and another $1 billion was ripped from the pockets of middle and lower-income Canadians by the Conservative Government.

There was an increase from 11 to 12 per cent in sales taxes on April 1, 1986, another 1 billion ripped from the pockets of middle and lower-income Canadians by the Conservative Government. On July 1, 1985, and on July 1, 1987, there was an extension of the sales tax to candy, soft drinks, health goods, dental instruments, even snack foods, another $460 million taken from the pockets, not just of middle and lower-income Canadians, but even children who want a little snack on their way home from school.

July 21, 1988

What about the increased excise tax on gasoline, totalling some five cents a litre, between the September 3, 1985, to the April 1, 1988? Elere we have an increase of over $2 billion. In a country like Canada, obviously for most Canadians it is essential to drive a car. They cannot write it off as some kind of business expense, like many of the top 1 per cent, who, the statistics show, will be the only ones really benefiting from this Tory tax reform.

What a contrast the way individual Canadians, middle and lower-income Canadians, are treated by this Conservative Government through this tax reform legislation with the way the larger corporations are going to be treated. Even after tax reform, some 60,000 profitable corporations will still pay no tax. Yes, the number will be reduced from 100,000 to 60,000, but 60,000 will still pay no tax.

Even after the implementation of a minimum tax, 5,220 taxpayers who earned over $50,000 did not pay one cent of tax in 1986. There is nothing in this Conservative tax reform legislation that cures that serious defect in the Conservative approach to so-called fairer taxation in this country. There is no doubt about the Conservative approach to tax reform. What a contradiction in terms to call this legislation tax reform. There is no doubt that it is to the detriment of middle-income taxpayers and small businesses.

I think it is clear from what I have just said and from the facts that 1 have put on the record why, when the next election comes-and I believe it should be very soon-the bulk of people in this country, middle and lower-income Canadians, will say no when asked whether they approve of the Conservative Government, especially in its approach to fair taxation. What the Conservative Government is trying to do through this legislation for middle and lower-income Canadians is definitely not fair for them.

Look at what the Institute for Research on Public Policy said in a recent study, as reported by Brian Bannon in The Windsor Star for Monday, June 27:

In fact, middle-income individuals who see their take-home pay increase

after July 1 are really no better off when compared with 1984.

The Institute for Research on Public Policy, an Ottawa-based think tank,

says that tax increases imposed since the Conservative federal government

took over in 1984, took away more than tax reform gives back.

This is a confirmation of the point I made at the beginning of my remarks. On behalf of middle and lower-income Canadians, I say that this is not tax reform. This legislation is a gigantic tax scam at the expense of millions of middle and lower-income Canadians who deserve better from this Government, and they are not getting it.

Mr. Les Benjamin (Regina West):

Mr. Speaker, I hope I get a chance to speak on this Bill three or four times. I have a couple of hours' worth of material which will have to be put into 10-minute speeches, which will not be easy.

I want to say that all this Parliament has to do-starting tonight-is blow the dust off the Carter Royal Commission on taxation of 1966. For the ensuing two or three years, when the

Income Tax Act and Related Acts

Government of that day refused to act, Mr. Carter, like Mr. Justice Emmett Hall, finally got angry and went public. The tragedy is that he died of cancer before his intervention in the public domain. He was unable to have the time to force the Government of that day to implement real tax reform, that a buck is a buck and no matter how you earn it, it is taxable.

He called for-and many others have called for, including members in all the political Parties-some fundamental changes to the tax system in this country.

I listened to the Hon. Member from Edmonton a few minutes ago who dredged up mythology, falsehoods and inaccuracies from 30, 40 and 50 years ago which I thought had been so thoroughly discredited that nobody, not even a Conservative, would have the gall to even raise them again. He talked about depopulation in Saskatchewan, under the CCF. Under Conservative and Liberal Governments in that province from 1923 to 1944, we lost 400,000 people. In the equivalent period, under Tommy Douglas and the CCF, we regained more than half of that number. Then, under 11 years of A1 Blakeney, our population got back up to the million mark.

No matter what the numbers are, the point is that we have always had a different social regime in our province. Even Liberals and Tories did not dare abolish programs that we have started. They have nickelled away at them, they have undermined them, they have reduced their effectiveness, they have increased the cost to consumers, but they have not dared to do away with them. It would be political suicide for them to do so, and they know it.

The costs of services that the people of Canada need and want have to be shared equitably by every taxpayer, no matter who they are or what their station in life is. Those below the poverty line must be totally exempt from the tax system. The only way that you get them to the position of paying some of their share of taxation-which they would like to do if you could get them to an income level where they would be willing and able to-is to put them to work and provide them with the services that every Canadian needs, rich or poor.

Every one of those services paid for through our tax system is shared by everyone. It is what we like to call a co-operative commonwealth. Taxes paid for services like drugs and senior citizens, housing and chronic care beds and air ambulances and telephones and power and automobile insurance and a host of other things, are essential public services. They are not businesses; they are services. I include the Post Office in that. It is not a business; it is a public service.

There are no taxpayers in this country, no citizens that I have ever heard of other than someone from the Chamber of Commerce, or from the Tories, who complain about the deficit in the Post Office. The deficit is shared by all taxpayers in the country. Their first priority is service. It should not only be priority post, it should be priority service.

July 21, 1988

Income Tax Act and Related Acts

I want to mention something since the Hon. Member for Hamilton East (Ms. Copps) was being so vitriolic about us. Under a Liberal regime toward the middle or the end of the Korean War, we had something called corporate tax deferrals. As of this day there are between S35 billion and $40 billion of unpaid corporation taxes on the books of this country. That is a debt. If you look at the annual reports of corporations whether Canadian Pacific Investments, Canadian Pacific Limited, Inco, Bell Telephone, Air Canada, CNR, you name it, it does not matter whether it is a private or a public corporation, they have hundreds of millions of dollars of deferred corporate taxes on their books carried as liabilities. But the little corner grocery store owner, the farmer and the fisherman cannot defer their taxes. Neither can we. We have to pay them. If we are late, we are charged interest.

Canadian Pacific Limited, one of my favourite friends, owes something in the order of between $1.5 billion and $2 billion in deferred corporation taxes which will never be paid. International Nickel and Bell Telephone owe that much or more. The Government of Canada has something near $40 billion in taxes receivable which will never be paid.

If the Government were to charge those corporations just the straight bank rate of interest, the Government would pick up between $3 billion and $4 billion in extra tax revenues. That is a cheap loan, at the moment it is is an interest free loan. The theory was if you let corporations defer their taxes they would invest the money in new equipment, new plants and would create more jobs. That was the theory. They did. International Nickel, Canadian Pacific and Bell got investments like you would not believe in Mexico, Chile, Indonesia and anywhere else in the world you want to go. When 3,000 men were laid off in the Sudbury area, International Nickel opened a new mine in Chile. That is where deferred taxes went. Nobody should be allowed to defer tax until they can prove that the money was invested in this country and nowhere else.

Mr. Forrestall:

I agree.