Mr. Speaker, because I know many hon. Members want to speak in this debate and that time is circumscribed, I wish only to speak to some of the highlights. If I may now deal with the figures in the green book, there are roughly 3,300,000 Canadian taxpayers whose income is $5,000 or less, representing not quite three quarters of all taxpayers in Canada. There are 20,700, odd, income tax payers in Canada whose taxable income is over $25,000, and their savings, of course, will be much larger. They can possibly contribute to the development of the economy, and I realize that the Minister prayed the other night that their savings would be directed toward that end. But these people who have incomes of $20,000, $25,000, or $30,000 and over have already bought their refrigerators and washing machines. They are going to use this money for investment or, probably more to the point-and I do not blame them one bit-they will use it for a trip to Spain, or be able to spend two more weeks in Spain than they otherwise would have spent had these tax deductions not been made. So, as I say, the argument that these tax cuts will increase consumption does not, I think, bear analysis.
As a matter of fact, as far as these tax cuts are concerned this budget gives the least relief to those who need it the most. It gives the most to those who need it the least, and any contribution to an expanding economy is absolutely and completely infinitesimal. I think that is a fair summary, in general. I do not expect the Minister to agree with that wholeheartedly, but I do not think he can help but admit that generally that is the situation with respect to these tax cuts.
There is one specific matter, Mr. Speaker, to which I want to make reference and which was not included in the budget speech. I dealt with it briefly the other night and I want to emphasize it again this afternoon. I am referring to the failure of the Minister to deal in any way whatever with the sales tax on machinery and equipment entering
The Budget-Mr. Nowlan into production. Virtually everybody in this country agrees-I am sure some of the Minister's colleagues must have had some heated arguments with him about this, and certainly the financial press editors have urged this in every way possible-that it is necessary to reduce our costs and maintain efficiency. In fact, the report of the Economic Council says just that.
[DOT] (3:40 p.m.)
This statement has been made by every financial writer in Canada. In spite of this fact, Mr. Speaker, the Minister of Finance has failed completely to deal with this matter in any way, shape or form, and one cannot help being driven to the opinion, the judgment or conclusion that he has taken this position because he is sensitive about this matter as a result of the many changes and retreats he has had to make in respect of budgets brought down in the past. He has now taken a firm position and has maintained the sales tax on equipment and machinery for production.
I am not now dealing with the sales tax on building materials, although I intend to say something about that at a later stage. Certainly it is the prerogative of the Minister to adopt the position he has taken in this regard and I would not be too critical of him, although I think he may have been in error. However, in spite of his prerogative regarding the sales tax on building materials and his decision not to remove that tax, irrespective of the substantial number of representations made, there is no reasonable excuse for the Minister's failure to remove the sales tax on equipment and machinery for production.
As I have said, one could quote from many documents and articles in this regard, because numerous arguments have been advanced by many competent authorities in Canada, as well as by some incompetent ones I suspect, which have urged the Minister to make this tax cut. I should like to quote from one of these many articles, and I have in my hand a pamphlet published by the Canadian Manufacturers' Association under the heading "Industry". This is the April publication of this pamphlet.
While I realize that the Minister may not agree with this article and will say, as perhaps will many others, that the Canadian Manufacturers' Association is prejudiced and biased and looking after its own interests, if it is read in conjunction with the many other similar articles that have been published,
DEBATES April 28, 1985
it will be appreciated that the secondary industry-the manufacturing industry must be developed and increased. We have been exporting primary products for a great many years, and we will continue to do so I hope at an accelerated rate; but the Canadian economy and those young people who sit in our galleries from time to time and look down upon us wondering what we are going to do with respect to their future depend to a great extent on the expansion of manufactured goods. For those reasons I make no apology whatever in reading from this pamphlet produced by the Canadian Manufacturers' Association under the heading "Industry".
This pamphlet is the April, 1965 issue and I should like to read two paragraphs as follows:
New manufacturing investment in the Canadian economy in 1965 is forecast to exceed $2.2 billion, a sum never before equalled in a single year. It is 23 per cent greater than the $1.8 billion invested last year and two-thirds as much again as the $1.3 billion of 1963.
That is an expectation, or a forecast, and it is followed later in the article by a qualifying paragraph which reads as follows:
Rightly or wrongly, it is industry's expectation that Mr. Gordon in his forthcoming budget will cut both corporate and personal tax rates, and scrap altogether the absurd, cost-inflating sales tax on production machinery and equipment. Should these expectations not be realized, there could very well be a distinct scaling down in capital investment intentions to the detriment of the economy and government revenues alike.
I am sure most hon. Members have read statements by the President of the Canadian Manufacturers' Association, dealing with this budget, which appeared in several newspapers today. We recognize the fact that Mr. Cumming is speaking from a manufacturer's point of view and no doubt is swayed because of that fact. The Minister can deprecate these statements to any extent he sees fit, but the fact remains that Canadian manufacturers represent one of the keystones of the Canadian economy. Manufacturing in Canada is one of the great foundation stones upon which our economy must be based, and it must be encouraged to grow and grow.
The President of that Association is reported in today's issue of the business and finance section of the Montreal Gazette as having said:
From the manufacturing industry's point of view, it's a damp squib budget-
He also is reported as having said:
The producer, the mainspring of the national economy, remains overtaxed.
April 28, 1985 COMMONS
The article then states:
Mr. Cumming also attacked Mr. Gordon's failure to remove the 11 per cent tax on machinery and equipment.
This failure is "a major let-down and a serious error in judgment"-
The article then refers to corporate tax rates to which I will make a passing reference in a moment.
On the evening before last when I was dealing with this matter I referred to a statement made by the President of Chemcell to its annual meeting on April 20, 1965. The import of that statement was that this tax on production machinery and equipment should be removed. In part it reads as follows:
This tax is a serious brake on national progress. Industry is temporarily encouraged through various tax incentives to embark on capital expenditure programs, while at the same time it is burdened with an 11 per cent tax on production machinery and equipment which cuts down on its ability to compete with foreign producers. These two situations are to say the least not compatible. Only the general level of Canadian prosperity has concealed the innate viciousness of this tax, and when the economy weakens, we in Canada may well have lost our ability to compete.
The next sentence is the one I quoted the evening before last, Mr. Speaker, and is:
Chemcell will pay in 1965 over one million dollars as a surcharge on capital if this tax is not removed.
The tax has not been removed and I suggest -and I will deal with this aspect a little more fully before I conclude-that it would be better for the Minister to deal with a tax such as this than to deal with a general tax reduction across the board. One tax is related to personal income tax while the other is related to industrial and economical development.
In round figures the Minister has suggested that as a result of this general across-the-board tax reduction $170 million will be left in the hands of Canadian consumers. This will happen as a result of the saving to individual taxpayers. The amount will vary depending upon income and I would not want to suggest how much you will save, Mr. Speaker.
Topic: THE BUDGET
Subtopic: ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE