Mr. Donald J. Johnston (Westmount):
Mr. Speaker, it gives me pleasure to continue the debate on Bill C-29, from where we left off yesterday, at which time I was addressing certain remarks on the value, merit, or demerit if you like, of mortgage interest deductibility schemes and schemes to provide deduction for real estate taxes in terms of stimulating the housing industry in this country.
I had pointed out that a number of us, a bipartisan parliamentary group, had conducted a fairly in-depth analysis of the experience of our neighbours in the United States in this particular area. I should like very briefly to reiterate that no positive decision to introduce mortgage interest deductibility or real estate tax deductibility as a policy matter has ever been adopted in the United States. It is part, if you like, of the basic structure of the U.S. revenue system, having existed since 1913 and extending not only to real estate taxes but to other local taxes, and extending not only to mortgage interest but to all interest. Therefore, I think it is important for us to recognize, when comparing our situation in Canada to that of our U.S. neighbours, that no option has ever existed in recent years for the United States to introduce such a scheme. The only option has been, of course, to withdraw such a scheme.
We were advised by all observers in the United States that the elimination of this particular provision of the law would be impossible, for a number of reasons which are quite obvious. First of all, many people who have purchased homes are, of course, dependent upon mortgage financing and upon the deductibility of interest associated with those mortgages. Basically they are in the position where the withdrawal of that benefit at this point could have severe personal economic consequences, not to speak, of course, of the very serious political difficulties of withdrawing a plan which is supported by a large number of home owners in the United States.
It was our experience, and I believe this was mentioned by the hon. member for Ottawa-Carleton (Mrs. Pigott) in the course of a number of her comments both inside and outside the House, that privately many individuals whom she had encountered supported mortgage interest deductibility because they personally found it beneficial. I can assure the House that the same would be true in this country. I can think of nothing more attractive for many Canadian home owners, myself included, than to have the benefit of being able to deduct the interest which we pay on our mortgages and the real estate taxes we pay to our municipalities. That would be the personal preference, I am sure, of a wide cross-section of Canadians, and maybe of many members of this House.
When it comes to an issue of this importance, I suggest that the public interest must be placed ahead of our own personal interests here as individuals and as parliamentarians. We must look at this kind of plan in terms of what it can provide to Canadians in meeting certain fiscal, social and economic objectives.
What are those objectives? I analyse the objectives of any scheme of this kind as falling essentially into three categories. One, of course, is the social objective which has been put forward, namely, that of stimulating home ownership. As I indicated in the course of my remarks last night, we could probably find unanimity on that objective as being a desirable one for Canadians. It would also be a social objective to assist people to improve their housing accommodation and perhaps obtain some relief from the care and costs of housing accom-
March 2, 1979
modation. Those 1 would put in the area of social objectives which I believe are really germane to this debate on Bill C-29.
The fiscal objectives of any plan should be to provide a more efficient, effective and, above all, equitable tax structure. When I think of equity in terms of the tax structure-and 1 am sure that members of the opposition will agree with me-1 think of creating as much neutrality in the tax system as possible. That is, people in the same financial circumstances should bear the same amount of tax.
Finally, there is an over-all economic objective which has been put forward in support of this kind of scheme, namely that it would provide some stimulus to the economy by increasing home construction, home purchasing and concomitant consumer spending on furnishings, home improvements and so on. Those seem to be the principal objectives of any scheme of this kind.
Surely, we must look at this question of mortgage interest deductibility and real estate tax deductibility in terms of how well it achieves those objectives, on the assumption that we accept those objectives, as opposed to other techniques designed to achieve the same purposes.
One of the most significant objectives, in my opinion, of Bill C-29 is the providing of more and better housing accommodation and more ownership for Canadians. It is apparent that mortgage interest deductibility and real estate deductibility favour home owners. I am not arguing at this stage whether that is good or bad; I am simply saying that that is the result of this kind of program. By its very nature it provides more discretionary disposable income to those Canadians who find themselves in the higher income tax brackets. When we look at home ownership we find that more homes are owned by people in higher income tax brackets than people in lower income tax brackets. Obviously, it does much less to encourage the acquisition of homes by those persons who find themselves at the lower end of the income scale-
Topic: GOVERNMENT ORDERS
Subtopic: NATIONAL HOUSING ACT