Mr. Benjamin:

I want to raise another matter concerning tax reform and deregulation in the free trade deal which has been festering for months now. Much has been made in the discussions and debate in this House and in the country about privatization, deregulation, free trade, and having a level playing field. It is nice to have a level playing field but what is happening now, before this Bill is passed, before deregulation is fully in place, before the trade deal is in effect, is that we have a level playing field and the other guy has the ball on our 10-yard line. In this case I want to refer to what is happening in transportation, particularly the trucking industry and the railroads.

With the passage of the National Transportation Act, the Motor Vehicle Transportation Act and with the passage of this tax legislation, we will have a situation where Canadian trucking companies will establish profit centres, or whatever they call them in the U.S. This is happening already.

CP Transport has already bought three American companies and closed its biggest Canadian general freight companies. Several Canadian trucking companies are leasing their tractors and trailers in the United States. This is partly because of the Motor Vehicle Transportation Act. We were assured that the purpose of that Act was to get a uniform code of regulations in the 10 provinces and the two Territories at the national level. There is now more chaos than ever before. All you need do is ask the Canadian Trucking Association or any individual trucking company, large or small, anywhere in Canada.

Why is that happening, Mr. Speaker? Let us refer back to the level playing field. Under the so-called tax reform of the Government, a Canadian trucker would be crazy to keep his operation headquartered in Canada. The Conference Board reports that the difference between fuel taxes in the States of New York and Illinois as compared to Ontario, where most of the big trucking operations are located, is the main culprit. The Government proposes to move to a sales tax regime. The Conference Board points out that the difference between the sales taxes and the difference between the corporation taxes means that the Canadian trucking industry is at a severe

Income Tax Act and Related Acts

disadvantage under both this tax Bill and the Motor Vehicle Transportation Act-deregulation.

In the United States a trucking company's tractor is considered three-year property and they can write it off in three years. The trailer is five-year property and they write it off in five years. A Canadian trucker, under Canadian tax law and under this tax reform Bill, has to take seven, eight, or 10 years to write off his equipment.

When you add the differences in the fuel taxes to the depreciation provisions of the tax laws, both state and national in the United States and provincial and federal in Canada, you would be crazy to keep your business headquartered in Canada. People in the trucking industry tell me that many of them have already moved, are in the process of moving, or are negotiating to merge with, buy up, or establish what they call a profit centre, and it will be south of the 49th parallel.

Not only is the playing field not level, the ball is on our 10-yard line and the other guy has it. That is not tax reform, that is not fair taxation. Unless the Government is prepared to amend our tax laws-and I don't give a darn how it does that, whether through rebates on fuel taxes for cross-border traffic or provisions for faster depreciation write-offs-the playing field remains unlevel and our smaller truckers go out of business and the bigger ones go across the border.

The case is similar in the railroads. United States railroads have fast tax write-offs on rolling stock. They have lower fuel taxes, as do the trucking companies there, and they do not allow competitive line rates. However, under our deregulation and tax law, that is allowed in Canada. American railroads can come into Canada and even use Canadian railroad tracks on competitive line rates. However, a Canadian railroad cannot go to the United States because neither the national American Government nor any of their 50 states allow competitive line rates. What are the Tories giving us? They are giving us a crock and it's full of you-know-what.

Not only is this totally unfair to major sectors of our transportation industry, it is driving them out of business in Canada or driving them out of Canada. That has to be the height of economic and social stupidity. Only the organizational genius of a Tory Government could arrange to do that. The Government handed $23 million over to the provinces which are still running in 10 different directions. We are nowhere near a uniform code of safety, performance, and maintenance anywhere in Canada. That is what was promised by the Government.

My hon. friend sitting down the way to my right from the mountains of B.C. sat in the committee too and heard that. I invite him to call up the Canadian Truckers Association and ask about that. I dare him to do so.

Mr. Belsher:

I have.

July 21, 1988

Income Tax Act and Related Acts

Mr. Benjamin:

Then he got an earful. I expect him to make a speech in support of this amendment and we will all be happier with at least one Tory Member in this place.

Ms. Marion Dewar (Hamilton Mountain):

Mr. Speaker, I am pleased to participate in this debate tonight. It was one year ago yesterday that I was elected to this House. I spent a lot of time before that on the doorsteps of the people in Hamilton Mountain. That was just at the time that the White Paper had come out and people were talking about it. The first day that the White Paper hit the news media and people heard about it they rejoiced because they read all the jingo about the progressive tax system and how good things were going to be. It did not take more than 48 hours before they started to read between the lines and the people of Hamilton Mountain were not very happy with the so-called tax reform.

Hamilton Mountain is not a community with a lot of great riches, although we do not have a lot of deep poverty. We work hard and many people have been able to purchase their homes. The people there are not greedy. If they can live with a decent standard of living after having worked hard, they think that is fair and just.

The people have recognized that tax exemptions are not a progressive approach. They started to examine what was happening with tax exemptions. A tax exemption which is very useful to ordinary working people and to retired working people is the $1,000 interest exemption. That was wiped out. The immediate response to that was that they may have been getting an unfair advantage, so perhaps it is fair.

They began reading between the lines to see that there were huge tax shelters and tax expenditures that would not be phased out until after 1992. People with a lot of disposable income were still able to shelter that income while people in my community cannot do so. It has really hurt them.

When we compare what is happening to people with different levels of income, we see that those earning $15,000 or less will have a savings of $90 in 1988, according to the Government's figures and its White Paper. While that is not a lot, someone earning $15,000 a year would be grateful for it.

However, when they learn that someone earning over $100,000 a year gets a saving of $1,615, families and retired people in Hamilton Mountain say that is unfair. They do not mind giving up the shelter if it helps other people, but not when this so-called tax reform only helps the rich.

In percentage terms, it is .8 per cent of savings for the poor and 1 per cent of savings for people earning over $100,000 a year. That is certainly not fair. Those figures do not take into account the various taxes that are involved, so even those numbers are false as far as the Government's information to the people is concerned. The Government does not have the courage to discuss the real situation.

Canadians have talked about tax reform since 1968. Yet we are digging ourselves deeper into a chaotic and messy tax

system. The way an efficient and accountable government would approach tax reform is to make it a system that people understand. The Government has done the opposite. It has increased taxes consistently since it was elected, only to introduce the rebate this year. It held on to that rebate until July so that it would look larger than it actually is. It is manipulating people who are working hard to make ends meet within their personal budgets.

The Government is not being honest about its own expenditures. It is hiding taxes within the sales tax at the federal level. One cannot see that tax when paying for an item at the cash register. People of Hamilton Mountain are most annoyed that the Government continues to think it can manipulate them. They are insulted and outraged. They resent this so-called tax reform.

My constituents began looking at the implications of this tax reform on their own lives. They are even more insulted by the fact that tax shelters have been extended so that those who can well afford to pay more taxes not only have a reduced tax rate, their tax shelters are allowed to continue. There has been a constant history of lobbies to continue the tax shelters that are extremely beneficial to the rich. They do not do anything for the economy, and studies have shown that tax shelters do not work as a social tool, especially when there is no accountability to the House of Commons.

The Auditor General has been asking for action for years. The Government has refused to take action. The former Government refused to take action. There is no way of measuring the implication of tax shelters.

It is outrageous that the Government even dares to call this tax reform. It is time the Conservative Government told Canadians that it is really trying to skewer the tax system more than ever to make sure the rich get even bigger breaks than they have had while ordinary working Canadian families have to carry the burden for people to buy their nuclear submarines. It is a disgrace. The sooner we get rid of the Conservative Government the better.

Mr. Simon de Jong (Regina East):

Mr. Speaker, the Government's proposal is not tax reform, it is a sham.

This Bill has been dressed up in the rhetoric of genuine reform. When he introduced this package, the Minister of Finance (Mr. Wilson) stated: "We all know the tax system allows many profitable corporations to avoid paying their fair share of tax year after year. We all know that it allows some people with very high incomes to pay less tax than the average Canadian wage earner year after year".

After hearing this rhetoric, one would assume that the Minister would follow through with measures to prevent the wealthy individuals from paying less tax than low income people year after year. One would have thought that he would introduce measures to prevent large and profitable corporations from not paying any tax year after year.

July 21, 1988

When everything is said and done, he has not done that. Right now, an individual will begin paying tax when earning $6,220 a year. Someone living in Ottawa, for example, earning $518 a month will pay at least $250 a month for shelter. That leaves $268 for food, clothing, transportation, telephone and medical bills. The Government is expecting that individual to pay tax as well.

Senior citizens with an income of $6,220 per year are expected to pay tax while there are still many wealthy individuals with incomes well over $75,000 or $100,000 a year who will not pay one cent of tax. There are about 60,000 profitable corporations that do not pay a cent of tax.

In 1986, PWA, with income totalling $39 million, did not pay one cent of tax. In 1986, Union Carbide of Canada with income totalling $28 million did not pay a cent of tax. Somehow those large corporations can make hundreds of millions of dollars and yet pay not one cent of tax while the senior citizen with a bare income of $6,220 per year, $518 per month, is expected to pay tax. Is there no shame? Is there no sense of justice? What we hear is rhetoric from the Minister. We all know that it allows some people with very high incomes to pay less tax than the average Canadian wage-earner year after year. We all know it allows those who are able to use special tax breaks to shift the burden to those less able to carry it.

He is right on. Why in heaven's name did he not introduce a tax package that would correct those inequities, that would ensure that profitable corporations paid their fair share, that would ensure that those who have high incomes, who benefit the most from the wealth of this country, pay their fair share? That would be far better than making those low-income individuals with incomes of some $500 per month carry the burden.

When I see members of the Government standing up in the House trying to perpetuate the myth that this income tax measure is indeed going to reduce the tax burden on the poor and middle-income earners, I am surprised. Speaker after speaker, they stand up in this House and repeat these mis-truths. It is as though we are living in George Orwell's 1984, where the philosophy was if you repeat an untruth often enough, people will begin to believe it.

It is true, as government Members claim, that compared to 1987 there will be a reduction in the income tax that people will have to pay, but compared to 1984, when the Tories were first elected, the vast majority of Canadians will be paying at least $1,000 per year more in taxes, even considering tax reform. The only group which will be paying less taxes are the very rich, those earning $100,000 or more per year. They will pay less taxes in 1988 than they paid in 1984. They are the true winners in the smoke and mirrors that is called tax reform which was introduced by this Government.

Income Tax Act and Related Acts

It should not be surprising that this is the type of legislation the Government has introduced. This Government basically believes in the old trickle down theory which is that if the guys at the top are doing all right, eventually the benefits will trickle down. It is something like the notion that if you feed the horse a lot of oats, eventually the sparrow will get some. With this legislation, the horse will get a lot of oats. Some of the very wealthy in this country will see a tax savings of over $4,000 a year. But the benefits will not trickle down. It will not increase employment. It will not ensure that there will be an increase in productivity and that the wealth will be shared.

Mr. Forrestall:

Why not?

Mr. de Jong:

If the Hon. Member would care to read even basic text, he would find that a lot of the excess wealth is used for corporate takeovers. With this legislation, companies gobbling up other companies will still be able to deduct those expenses as a business cost, can you imagine, Mr. Speaker. Another reason why the trickle down theory does not work is that the $4,000, or whatever extra dollars these rich individuals save on their income tax, will most probably be spent in Mexico, Italy or Morocco.

The third reason the trickle down theory does not work is that people can only spend so much, and their excess wealth is invested in places outside this country. We have seen this. We have seen the outflow of investment from Canada increase in the years the Tories have been in power, creating no jobs, causing no increase in productivity in Canada.

The theory of Ronald Reagan, Margaret Thatcher and our home grown Tories that assumes that if the guys at the top are doing quite all right eventually the people below will begin to benefit is a theory that has not worked. It is a theory that has resulted in armies of homeless people across the United States and in Great Britain. It has resulted in soup kitchens and food banks in this country. The wealthiest countries in the history of the human race have poverty in every major city. That is the result of these bad economic theories and I am afraid we cannot support the main motion. We will be supporting the amendment.

[ Translation]

Mr. Jacques Guilbault (Saint-Jacques):

Mr. Speaker, as the debate on Bill C-139 is nearing completion I too would like to make my contribution. The amendment we are debating at the present time, moved by my colleague the Member for Laval-des-Rapides (Mr. Garneau) is quite harsh because we on this side of the House feel that tax reform will be extremely harmful to Canadian taxpayers. The amendment moved by my colleague goes straight to the point and enumerates the main flaws of the Income Tax Act reform that was introduced here in Parliament by the Conservative Government. Under this reform, the new tax system will not be sufficiently progressive. After tax reform, once it is passed, there will only be three statutory tax rates.

July 21, 1988

Income Tax Act and Related Acts

What is unfortunate is that the spread between the second and the third bracket is too narrow-there is only a three point spread- while it is too wide between the first and the second brackets, which means that middle-income taxpayers, who make up the majority of those who pay taxes in Canada, will tend to pay more tax and to move closer to the tax rates of high income earners than they should. This unprogressive tax rate scale means that tax reform lays an unfair burden on Canadian families. This so-called reform will mean that we will have to grapple with an income tax system that will be even more complex than what we had before, and that was complex enough.

Certain promises were made by the Minister of Finance, Mr. Speaker, and I would like to remind you of certain things, one of them being that in October 1986 the Minister of Finance stated in his document Guidelines for Tax Reform in Canada that one of the basic principles was the following, and 1 quote:

... making the tax system simpler so that it is more readily understood by

more Canadians.

Well, what has happened is quite the opposite. Canadians who found filling out their tax returns difficult before will now find themselves in an even more complex labyrinth. Let me quote the conclusions of the House Standing Committee on Finance and Economic Affairs, which had this to say on the complexity of the new tax system. And I quote: It is disappointing for the Committee to draw the inevitable conclusion that the proposed tax reform has not successfully adressed the problem of simplifying the tax system. On the contrary, it has become a tax system that only tax specialists and tax lawyers will be able to understand completely. Furthermore, even after the introduction of a minimum tax, some 5,200 taxpayers with income of more than $50,000 did not pay one cent of income tax in 1986, and probably none in 1987 either-those statistics are not available yet-and what is even more unfortunate is that they will probably not pay any in 1988 nor in subsequent years since tax reform does not touch those people; only the minimum tax introduced earlier applies, and it still lets some people slip through the tax collector's net.

The Minister of Finance (Mr. Wilson) claims that his tax reform will strike some 850,000 names from the taxpayers' list;

850.000 people will no longer pay tax. That is true! What the Minister forgets to say is that he himself had added approximately one million low-income Canadians to the tax roster and forced these people who did not pay income tax previously to join taxpayers' ranks with his successive income tax hikes in 1984, 1985, 1986, and 1987. So the fact that he is allowing

850.000 people to get off the hook shortly before the election is not a bad thing, but I hope these people realize that they are being handed a wooden nickel. The fact is that they were taxed before, and taxed abusively.

What is too easily forgotten, and it will be my pleasure to refresh everyone's memory, Mr. Speaker, is that this Minister of Finance and this Government levied more tax over a period of three and a half to four years than any government since Confederation. Allow me to remind you, Mr. Speaker, that

when you yourself were elected to this House, in September 1984, we had a 9 per cent federal sales tax. It increased by 1 per cent in October 1984, bringing $1 billion a year into the Finance Minister's coffers. For my friends across the aisle, a billion dollars is a thousand million. That's big bucks!

In January 1986, the sales tax jumped again, from 10 to 11 per cent, bringing another $1 billion a year into the Government's coffers. Did it end there? Of course not! In April 1986, a mere three months after the increase I just described, the sales tax went up from 11 to 12 per cent, bringing in another billion. I think that the Hon. Member for Duvernay (Mr. Della Noce), who is showing me a graph representing the exponential rise of the sales tax in Canada, thus supports what I have said.

Never has a Government increased taxes as the Conservative Government has. In July 1985, taxes increased on candy, soft drinks, drugs, dental instruments, toothpaste, and so on, raising government revenues by $400 million a year.

I will skip the small increases of $60 million or $40 million. I am coming to the most important, the increases in gasoline excise tax. In September 1985, it went up two cents a litre, bringing the Government $900 million. In January 1987, another cent a litre increase, for my friend from Duvernay who knows gasoline well; this brought the Government $450 million. On February 19, 1987, as if people were not paying enough for their gasoline, there was another cent a litre tax, bringing $450 million more into the Finance Minister's pockets. And in April 1988, not so long ago .. . even as we speak, another . ..

Mr. Malepart:

Another one!

Mr. Guilbault (Saint-Jacques):

Yes, my colleague from Montreal-Sainte-Marie (Mr. Malepart) can't believe his ears. I am refreshing his memory. Another cent a litre on gasoline brought in another $450 million for the Minister of Finance. I don't understand where he finds pockets that are big enough to hold all that money!

And that's not all. Excise taxes on alcohol and tobacco went up to punish people with bad habits. In May 1985, an increase of these taxes raised government revenues by $340 million. In February 1986, they went after another $150 million. In that same month, February 1986, there were two increases, Mr. Speaker, that brought in a total of $70 million. In January 1988, more recently, another increase of $175 million hit smokers and drinkers.

But that's not all. There are people who need to make long distance calls to talk to their family at the other end of the country. They were hit with a 10 per cent tax on long distance calls. That does not seem like much, but it amounts to a lot of money. This tax was just imposed in January 1988 and, believe it or not, it brings the Minister of Finance a tidy $945 million a year. 1 am starting to understand where the Government found so much money to be able to spend $164 million to buy the election in Lac-Saint-Jean.

July 21, 1988

Only by looking at the public accounts did I realize where it was able to get all that money. So when somebody tells me that this tax reform is fair, equitable and equal for all Canadians, I say: No, it is unjust, inequitable and, because of the indirect taxes that I have just listed, it is regressive since it places a heavier burden on low-income wage earners. That is why my colleague from Laval-des-Rapides (Mr. Garneau) has moved an amendment I will support, and that is why we cannot support the government's Bill.

Mr. Grise:

On a point of order, Mr. Speaker.

Mr. Deputy Speaker:

The Hon. Parliamentary Secretary for the Deputy Prime Ministre (Mr. Grise) on a point of order.

Mr. Grise:

Mr. Speaker, the Hon. Member from Saint-Jacques (Mr. Guilbault) just mentioned at the outset of his remarks that we had reached a point where closure would be invoked in this debate on Bill C-139. Therefore, I think you will find there is unanimous consent of the House to put this amendment and defer the vote until 6 p.m. on Monday, July 25 1988, and to vote on the main motion immediately after that deferred division on the amendment without debate.

Mr. Deputy Speaker:

The House has heard the proposal made by the Hon. Parliamentary Secretary for the Deputy Prime Minister. Is there unanimous consent?

Income Tax Act and Related Acts

Agreed.

Mr. Deputy Speaker:

Therefore the question is on the amendment standing in the name of the Hon. Member for Laval-des-Rapides. Is it the pleasure of the House to adopt the amendment?

Agreed.

No.

Mr. Deputy Speaker:

All those in favour of the amendment will please say yea.

Yea.