CONTENTS
Tuesday, March 19, 1996
Ms. Brown (Oakville-Milton) 883
Mr. Chrétien (Frontenac) 907
Mr. Chrétien (Frontenac) 910
Mr. Leblanc (Longueuil) 915
Mr. Harper (Calgary West) 916
Mr. Martin (Esquimalt-Juan de Fuca) 919
Mr. Chrétien (Saint-Maurice) 919
Mr. Chrétien (Saint-Maurice) 919
Mr. Chrétien (Saint-Maurice) 919
Mr. Chrétien (Saint-Maurice) 920
Mr. Chrétien (Saint-Maurice) 921
Mr. Chrétien (Saint-Maurice) 921
Mr. Martin (LaSalle-Émard) 922
Mr. Martin (LaSalle-Émard) 922
Mr. Leroux (Richmond-Wolfe) 923
Mr. Leroux (Richmond-Wolfe) 923
Mr. Bernier (Mégantic-Compton-Stanstead) 924
Mr. Bernier (Mégantic-Compton-Stanstead) 924
Consideration of resumed of motion 927
Mr. Leblanc (Longueuil) 932
Mr. Leblanc (Longueuil) 936
Mr. Leblanc (Longueuil) 944
Division on motion deferred 945
Bill C-201. Motion for second reading 946
883
HOUSE OF COMMONS
Tuesday, March 19, 1996
The House met at 10 a.m.
_______________
Prayers
_______________
ROUTINE PROCEEDINGS
[
English]
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker,
pursuant to Standing Order 36(8), I have the honour to table, in
both official languages, the government's response to two petitions
presented during the first session.
* * *
Ms. Bonnie Brown (Oakville-Milton, Lib.): Mr. Speaker, it is
my honour to present a petition which has been duly certified by
the clerk of petitions and signed by 126 residents of my
constituency of Oakville-Milton.
The petitioners call on the government to promote an
international ban on the use, production, stockpiling, transfer,
export or sale of anti-personnel land mines; to legislate an end to
Canadian mine production, use and export; to increase existing
de-mining programs; and to support land mine victims with
financial and medical care.
This petition was initiated by members of St. John's United
Church in Oakville. I commend their efforts and support them in
their cause.
Mr. Tom Wappel (Scarborough West, Lib.): Mr. Speaker, I
have three petitions today.
The first petition recalls the brutal murder of a constituent of
mine, Louie Ambas of Scarborough. It brings to the attention of the
House that Canadians from coast to coast are calling for changes to
the Young Offenders Act and for heavier penalties for all those
convicted of violent crime.
(1010 )
The petitioners therefore pray that Parliament amend the Young
Offenders Act to provide that young offenders charged with murder
be automatically tried in adult court and that if convicted, they be
sentenced as adults and that their identities should not be hidden
from the public.
Mr. Tom Wappel (Scarborough West, Lib.): Mr. Speaker, the
second petition is signed by hundreds of Canadians of Hungarian
descent. They raise various concerns and ask the government to
raise their concerns through diplomatic channels.
The petitioners are concerned about the preservation of basic
human rights of the indigenous Hungarian minorities living outside
the borders of present day Hungary, which include 2.5 million in
Romania, 800,000 in Slovakia, 350,000 in Serbia and 160,000 in
the Ukraine. They outline various human rights abuses that have
occurred to the Hungarian minorities in those countries.
The petitioners pray that Parliament voice their concerns and
protest toward those named governments and remind them of their
duty to respect democratic principles and basic human rights as
guaranteed by the United Nations charter of rights, and as
signatories of the Helsinki accords respecting minority rights.
Mr. Speaker, I also have petitions signed by people in Calgary
and other areas in Alberta. They call upon Parliament not to amend
the Canadian Human Rights Act or the charter of rights and
freedoms in any way which would tend to indicate societal
approval of same sex relationships or of homosexuality, including
amending the Canadian Human Rights Act to include in the
prohibited grounds of discrimination the undefined phrase of
sexual orientation.
* * *
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, I ask
that all questions be allowed to stand.
The Acting Speaker (Mr. Kilger): Is that agreed?
Some hon. members: Agreed.
>
884
884
GOVERNMENT ORDERS
[
Translation]
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ) moved:
That this House deplores the fact that the technical committee set up by the
Minister of Finance to analyse business taxation is comprised of members who
are both judge and judged with regard to business tax reform; and that, this
being so, the Minister of Finance should set up a joint committee of experts and
parliamentarians to examine business taxation in an impartial manner according
to an open and transparent process.
He said: Mr. Speaker, I am pleased to open this official
opposition day on the vital matter of reforming the taxation system,
business taxation in particular.
Tax reform is necessary for several reasons. The entire taxation
system must be re-examined, but I shall restrict my address to four
reasons directly connected to the Bloc Quebecois' three years of
reflection on this matter.
The first reason is that there has been no thorough review of the
Canadian taxation system for close to 30 years. The last
commission to seriously address in depth tax reform was the Carter
commission, in 1967. Since then, however, some measures have
been added, others deleted and still others modified. In short, since
that time we have had no clear idea of what is going on.
The second reason is that the Canadian tax system is extremely
complex-and we in the official opposition are not the only ones
saying this, everyone is, including representatives of other
countries. It is unwieldy to administer, and in some ways
encourages two major problems: first, the underground economy,
and the lack of control over it-and complexity equals absence of
control-and second, it can even encourage, through taxation
agreements with certain countries considered to be tax havens, tax
evasion and capital being drained out of the country.
The third reason to reform the Canadian tax system is its
numerous loopholes, which are to the advantage of those with the
highest incomes, the major Canadian corporations in particular.
They can afford to hire acknowledged tax specialists in order to
take advantage of such loopholes and to avoid paying what they
should to Revenue Canada.
Every time corporations or high income individuals do not pay
what they should to Revenue Canada, the ones who do end up
paying in the end are all the individual taxpayers in Quebec and in
Canada.
(1015)
And now for the fourth reason. Taxpayers throughout Quebec
and Canada are asking us to reform taxation. They cannot abide the
fact that the Minister of Finance is forever eliminating essential
tools and that he is leaving out a whole chunk of the reality of
Canadian public finances. Of only for that reason, if only because
Quebecers and Canadians are asking the government for
reform-the bosses are calling for tax reform-I think it should be
done.
There is perhaps a fifth reason as well. We see that the
Americans, as we look about to see what is happening elsewhere in
the world, have been working at modernizing their tax system since
the early 1980s. They went at it, because they could see the
American system was becoming increasingly complex, more easily
defrauded and more loopholed. They started the job by imposing a
minimum tax on corporate revenues. Now they are analyzing the
flat tax.
I am not saying this is the solution, but at least they are looking
at viable alternatives. The Americans are doing it, but not the
Canadians. The French are doing it too. The day before yesterday, I
listened to Mr. Chirac set a five year deadline for a reform of
individual and corporate taxes, because he can see that tools
previously used within a given country only and protected by its
borders, when tax competition was only an idea, needed changing
as well to keep up with today's globalization.
Now, tax competition is less and less an idea. Taxation has to
become competitive, properly harmonized and simplified to ensure
control. This is taking place throughout the world.
Five criteria guide major tax reform: simplification,
performance, control, justice and fairness. This is the message we
have been trying to get through to this government for two and a
half years. How did the government answer? I will confess
honestly-not naively, as that would be too much-that we were
very happy when the Minister of Finance told us, when he brought
down his last budget, that he had set up a technical committee to
review the tax system. We were really very happy about that.
I even told the Minister of Finance that the representations of the
Bloc Quebecois, of the official opposition, had not been in vain.
You finally understood that tax reform was essential, unavoidable,
if there was any real desire to put some order in public finances and
to have a fair tax system in Canada. I was reading the press release
announcing the setting up of the committee-
Could we, Mr. Speaker, get the attention of the government side?
Sometimes, when they make an effort to listen to and understand
suggestions which are made to them, things in Canada seem to get
better and better.
885
[English]
The Acting Speaker (Mr. Kilger): As we open this debate, the
hon. member is asking for the co-operation of all members of the
House so that he might be heard clearly with a minimum of
interruption. I encourage members, if they wish to have
discussions, to take them behind the curtains to other rooms.
[Translation]
Mr. Loubier: As I was saying, we were happy of that
development, and I said so to the Minister of Finance. At last, you
understand that pressing requests from Quebecers and Canadians
for a reform of taxation cannot be ignored, but if you really wish to
get public finances in order, the whole system must also be
re-examined.
The news release that accompanied the committee's creation was
wonderful in it first two paragraphs. It said, and I quote:
``Canadians want a tax system that is both as fair and as simple as
possible, Mr. Martin said. They also want a system that encourages
economic growth and job creation. Given the complexity of these
objectives, a comprehensive review of taxes related to investment
and business activity is warranted. The Technical Committee will
consider ways of improving the tax system to promote job creation
and economic growth, simplifying the taxation of businesses to
facilitate compliance and administration, and enhancing fairness to
ensure that all businesses share the cost of providing government
services''.
(1020)
When we heard that, we almost gave three cheers. When we
looked at the back of the news release, things started to deteriorate,
because the objectives stated there are the same we, in the Bloc
Quebecois, have been steadfastly fighting for. These are goals we
wanted and still want to reach with regard to tax reform.
But when we look at the process and the make up of the
committee, we are compelled to conclude that this is a fraud. Why?
For three reasons. First, some committee members represent
businesses whose main mandate is to advise big earners and major
corporations on how not to pay taxes to Revenue Canada, a fact we
have often criticized.
These businesses have branches in countries such as the
Bahamas, the Caiman Islands, just about everywhere in the world,
countries considered as tax havens through which hundreds of
millions of dollars are rerouted instead of being paid to Revenue
Canada. Not only are these individuals advising corporations on
how not to pays taxes, but they themselves are party to tax evasion
through tax conventions signed with countries considered as tax
havens.
Under such circumstances, how could committee members not
be biased in favour of maintaining certain exemptions, commonly
known as tax expenditures, which benefit major corporations, their
own businesses and themselves? What kind of report do you think
these committee members are going to produce as a result of their
work through the year?
How can you expect a process taking place behind closed
doors-which is what the finance minister is suggesting-to
produce a true business tax reform, a complete overhaul of the
system, including what is commonly known as tax expenditures? It
is not in their interest to have things changed. It is in their interest
to maintain the complexity of the tax system, since individuals
representing firms such as Price Waterhouse and Ernst & Young
make a living out of it.
If the tax system was simpler, if it was easier to monitor, if it was
not possible to take advantage of tax loopholes to avoid paying
federal taxes, these individuals would be out of a job. Try to find
someone, anywhere in the world, who would be willing to shoot
himself in the foot, not only one but thrice. Enough is enough. We
learned this week that these same people contribute as much as
$80,000 a year to the Liberal Party fund. How can they be totally
unbiased? I think this is a masquerade.
A lot of things could be done in the taxation area. People are
already up in arms. All over Canada, from coast to coast as they
say, taxpayers from Quebec and all other provinces say that we
must change the tax system, and it has nothing to do with a
constitutional option. We must implement a more equitable tax
system. We have been repeating that to the government for two
years and a half but it has done nothing, it has shown no political
will to reform the tax system; it just created a committee that is in
all likelihood, in my opinion, a phoney committee.
(1025)
How can we ever get any results? I tell you, all over Canada
people say that this committee makes no senses and that the
government should reform the tax system. Let me quote, as I did
yesterday, another part of the letter I received from a Canadian
taxpayer, Miss Jansson from Regina, Saskatchewan. In fact, she
sent me a fax because the Reform members do not have the
exclusive use of the fax, nor do they hold a monopoly, we also use
that equipment from time to time. Miss Jansson says, and I quote:
[English]
This fax is to express my appreciation to you for presenting several important
issues during your response to the finance minister Paul Martin's budget speech.
While I recognize that your party, the Bloc Quebecois-
[
Translation]
The Acting Speaker (Mr. Kilger): Excuse me for interrupting, I
know you did not do it on purpose, but I would like to remind the
House that in our speeches we are not supposed to name members
or ministers. We should rather refer to them by the name of their
riding or by their title if they are members of the Cabinet. It might
be a little more difficult when we are quoting something, but even
886
then we are supposed to change the name of the minister for his or
her title or the name of his or her riding.
The rule in the House is that we cannot do indirectly what is not
done directly. I know that you did not intend to do it, but I wanted
to remind the House of this fact.
Mr. Loubier: Mr. Speaker, I am sorry I missed that when I
prepared my speech. I will go on with my quote:
[English]
While I recognize that your party, the Bloc Quebecois, has specific
aspirations, your comments mirrored the concerns of many citizens in Canada.
[Translation]
And further:
[English]
Reform of the tax system should be a primary responsibility of a future
oriented government. Instead, our present leaders seem to have their feet
bonded firmly in the concrete of outdated, cumbersome legislation. Your
speech informed taxpayers such as myself that Ernst and Yonge, a management
firm most noted for their legitimization of patronage appointments, have been
appointed to the tax commission studying the taxation law for large
corporations. Using our tax money to pay Ernst and Yonge for these services is
similar to appointing a fox to plan a security fence for a flock of chickens. Of
course, the ordinary citizens of Canada have had our feathers plucked so often
by our elected officials that we should not be surprised when the last vestiges of
equal opportunity are removed.
[
Translation]
There is a lot of work to do. As I told you, this lady took the time
to write, to tell me that she thought this committee was a farce, that
there was no real political will to reform the fiscal system. This
lady also called for serious consideration of our tax system. There
is a lot of work to do in the area of fiscal reform.
Just in the area of tax expenditures, that is to say the area of
exemptions, tax credits and so on given to companies, it is
estimated that some of them-and there are scores the impact of
which is not known-are costing Quebec and Canadian taxpayers,
year after year, around $10 billion.
Those are the known measures, because of course there are
others that have not been evaluated for want of a review by a
serious and transparent committee, one that really wants to make
the process work. Ten billion dollars a year. These taxes that go
unpaid or these credits that are allowed look like indirect subsidies,
since, when the taxes are not collected, it as if the government were
investing in these businesses, or were giving subsidies to these
businesses.
It is all the taxpayers of Quebec and Canada who pay for those
$10 billion a year. When you pay such large amounts you hope to
get something for your money, but this is not necessarily the case.
When we look at each of the tax expenditures, each of the
exemptions, it is not true that we get something for our money.
Take for example the partial inclusion of capital gains. Under
that measure only three-quarters of corporate capital gains are
taxed. So, any company buying shares and reselling them at a
higher price makes a capital gain equal to the difference between
the buying price and the selling price. Only three quarters of the
profit between the buying price and the selling price is taxed. Why
do we not apply a normal tax rate? Why not tax 100 per cent of
these capital gains? Much has been made about this everywhere in
the country, and even the fiscal experts say that this should not be
the case, that we should tax, as in the case of all the taxpayers'
revenues, 100 per cent of the capital gains. Any investor or
company buying and reselling shares already makes a gain, a profit
on this sale. On top of that, we give them even more. We say:
``Only three quarters of this amount will be taxed''. Why not 100
per cent?
(1030)
Do you know how much this measure is costing? It is costing
$400 million each year to the taxpayers of Quebec and Canada. The
same thing applies to the investment tax credit and the scientific
research and experimental development tax credit. Essentially, this
is a very good measure. It is excellent. We have to promote
research and development in Quebec as in Canada. We should have
done this ten years ago. We should have had these credits and
grants for research and development to increase the
competitiveness of companies.
Yet, once again, there are serious deficiencies in the rules which
govern this research and development tax credit. They are so
permissive, as far as the equipment and the research projects
themselves are concerned, that there are definite abuses. I remind
the House that, last year, the Bloc Quebecois condemned the use of
the research and development tax credit by major Canadian banks
and that, had it not been for our condemnation, banks would have
continued to claim this tax credit to develop their automated teller
machine systems and their internal software. Major Canadian
banks have already taken advantage of an amount of $300 million
in investment tax credits to develop their equipment and their
internal software.
I could go on at great length, but you are indicating to me that I
have about three minutes left. I could go on at great length, because
there are dozens of exemptions such as these that would deserve to
be examined seriously, in a transparent way, that would deserve to
be explained to the people and also to be judged by them through
the work of an open and transparent parliamentary committee, not
a committee such as the one that the finance minister has set up,
which is partisan, which is likely to skew the assessment of
exemptions and of the tax system in general, and which will not
887
meet the objectives that we would hope it would meet, that is a real
tax reform benefiting the taxpayers of Quebec and Canada
generally.
I want to make an appeal, but just before I do, I would add that
committee members will not propose to eliminate benefits related
to tax conventions signed with countries that are considered as tax
havens, since they themselves take advantage of them. So, what do
we expect from this committee?
In conclusion, I would like to appeal to the Minister of Finance
on behalf of all Quebecers and Canadians. If he really wants to get
the government's fiscal house in order, if he really wants fair
taxation in Canada, if he really wants not only to make people feel
that everything is fine, but also to make some improvements to the
tax system, I urge him to set up a real parliamentary committee
supported by experts to conduct a serious, extensive, in-depth
review that will produce results in the end. Once we have such an
assurance, you can be sure that the official opposition, and
especially myself, will work on this reform in a serious and
constructive manner, with all the co-operation the Minister of
Finance could hope for.
In the meantime, allow me to table the following motion:
That this House deplores the fact that the technical committee set up by the
Minister of Finance to analyze business taxation is comprised of members who
are both judge and judged with regard to business tax reform; and that, this
being so, the Minister of Finance should set up a joint committee of experts and
parliamentarians to examine business taxation in an impartial manner according
to an open and transparent process.
I table this motion on behalf of the official opposition.
(1035)
[English]
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Mr. Speaker, the night before an opposition day we
wait with bated breath for the opposition party's motion. However,
it was with some disappointment and surprise that we received the
motion last night.
The motion reveals that the hon. member from Saint-Hyacinthe
understands appearances but is baffled by substance. He received a
press release concerning a committee and was all incensed about
the composition of the committee.
We now have a motion that deplores the composition of the
committee but misses the substance which is that we are in a very
real way responding to suggestions from members of the House
that we look at the tax system with a view to determining
impediments to job creation and growth. This has been undertaken
in the most proper way.
The member for Saint-Hyacinthe-Bagot is an expert in the
dairy industry. Let us look at the state of the dairy industry in
Quebec. If Quebec were to separate would the dairy industry of
Quebec be able to export milk to the rest of the country the way it
has in the past?
I would consult the member for Saint-Hyacinthe-Bagot on an
issue in which he had some expertise. The dairy industry in Quebec
is an area where he clearly has some expertise. I would to consult
him because he has experience. However, he also would obviously
have some bias with regard to that industry because of his
familiarity and he was paid by that industry. I would be pretty wary
of his advice and I would want it subjected to scrutiny and public
consultations that followed.
Coming back to the analogy from the letter the hon. member
quoted, if I wanted to understand why the fox wanted into the hen
house I would not just talk to the hens, I would interview the fox
also.
It has been extremely disrespectful of the member to waste the
time of the House. He has really out done himself in the way he has
attacked the process. As I said, he understands appearances but he
is clearly baffled by substance as he engages in what is really
intellectual cross-dressing. This is a triumph of dogma over good
sense. In the process he has belittled the reputation and
professionalism of some of Canada's most eminent experts on
taxation.
He has implicitly attacked the government's demonstrated
commitment to tax fairness and ignored the raft of actions we have
taken to ensure that businesses pay their share of the cost of
providing government services to Canadians.
The member has abused the purpose of supply day itself, a time
which we should spend on critical issues, with a motion that
contains some regrettable misinformation.
What is really deplorable is not the composition of the technical
committee and not the process of taxation review but to leave out
of his remarks the recognition he has that this is but a first step in a
process that will involve public consultation and consultation with
members of the House.
These facts should surprise no one who listened to the minister's
budget speech or read the news release announcing the committee.
Unfortunately that does not include the hon. member. Let me
explain things to him and to other members who are interested.
[Translation]
Why is the committee so small? What about public participation
then? This is the first step in a business taxation review. This small
group, whose members have expertise in various fields, will assess
888
the business taxation system as a whole and make useful
recommendations and propose useful options to the government.
(1040)
Public consultations will be held after the committee report has
been released. At that time, special interest groups will have every
opportunity to make themselves heard-in response to a package
of clearly set out options and proposals-before the government
makes any policy decision.
[English]
That is the way we go about things. We consult the experts and
we get, as some might say, something to shoot at. We have a set of
recommendations and people can weigh in on either side. We want
to consult experts in the fields first.
As the minister said in his budget speech, Canadians want a tax
system that is both as fair and as simple as possible. They also want
a system that encourages economic growth and job creation. Given
the complexity of these objectives, a comprehensive review of
taxes related to investment and business activity is warranted.
The last general review of business taxation was internal work
that preceded the 1987 tax reform undertaken by the previous
government a full decade ago. The time is right and the objectives
of the technical committee are clear and concrete, goals that every
Canadian from every region can embrace.
The terms of reference were spelled out plainly in the news
release that accompanied the budget.
[Translation]
``Improving the tax system to promote job creation and
economic growth in an open economy; simplifying the taxation of
business income to facilitate compliance by taxpayers and
administration by Revenue Canada; and enhancing fairness in the
tax system by ensuring that all businesses share the cost of
providing government services. In addition, the assessment will
consider the interaction between taxes paid by business-including
corporate income, capital and payroll taxes-and taxes paid by
individuals on income derived from investments''.
[English]
Promoting job creation, simplification, better compliance,
increased fairness, is there any Canadian anywhere who will not
agree that these are vital attributes that our national tax system
must display or that pursuing these goals must be a commanding
concern of the government? That is what we believe and I suspect
or at least hope the hon. member shares that vision. His motion is
something else. It fails the tests of fairness and openness, the same
values it claims are missing from the technical committee process
itself. That is regrettable.
It describes the appointed members of the committee in the
English version as both judge and judged with regard to business
tax reform. Common courtesy and natural justice demand that
these men and women deserve better and that such a meanspirited
mistaken attack is inappropriate in the House.
They are not judges who will issue binding rulings because the
government and the House cannot and will not be bound by their
findings. They are there to analyse and advise because they are
proven experts, distinguished academics, distinguished
practitioners, the sort of people who know the field and who will
help us to understand it while we remain members of the House
with our ability to think critically about the issues they will raise.
They are proven experts like Jack Mintz. They are lawyers and
accountants. I have their names and backgrounds with me here.
They represent a wide cross section of expertise including Robert
Brown, chairman and chief executive officer of Price Waterhouse;
Professor Bev Dahlby of the University of Alberta; Gerry Godsoe,
a partner with Stewart McKelvy Stirling Scales; Allan Lanthier,
senior tax partner with Ernst and Young; Wilfrid Lefebvre, senior
partner with Ogilvy Renault; Profession Nancy Olewiler, chairman
of the economics department at Simon Fraser; Norman Promislow,
a partner with Buschwald Asper Hentelef; Stephen Richardson, a
partner with Tory Tory DesLauriers & Binnington.
They are all recognized experts in their field, the sort of people
we would want to work on these issues and report to us. They are
not judges. They will not make binding commitments for the
government. They will analyse and advise.
How does the hon. member dare suggest these technical
members are also the judge? Is he suggesting they are potential
agents of the business community with vested interests that will
make their advice suspect? He knows better. He knows they have
highly regarded professional reputations. We are grateful to them
for taking on this task.
I believe they have a higher opinion of their professional
obligations and their duty to the nation and its taxpayers than the
hon. member opposite appreciates. He would well understand that
one leaves the baggage of a given client or past experience behind
when it comes to an assignment like this for the Government of
Canada, that one does bring to bear one's experience. That is why
we call on such people.
(1045)
The real bottom line measure of performance is the commitment
we have as a government to the task at hand. I am confident the
members of the technical committee will take their work seriously
and provide us with important assistance.
889
Let us remember that the report will be a public document. Its
observations and suggestions will be there for everyone to see.
Any unwarranted biases or favouritism, which the hon. member
automatically assumes would apply to everyone else but himself,
will be there for all to judge. The technical committee accepts that
discipline.
What about the suggestion in today's motion that the technical
committee should include parliamentarians? The answer lies in the
meaning of the term technical committee, which clearly escapes
the understanding of some hon. members opposite.
Modern tax systems are complicated. That is part of the
problem. We have struck a technical committee which has
expertise and proven hands on familiarity with the system. Its
members are well beyond taxation 101. In fairness to many of my
colleagues like myself, the Income Tax Act strikes us as being
extremely complicated. I want a little help when travelling through
the act to zero in on those areas that are impediments to job growth
and creation.
The committee will begin its work high up in the learning curve.
I doubt there are many members of the House with the same
expertise. We will gain time by involving a committee which is
made up of people with these qualifications. The question is: What
added value would parliamentary presence bring at this initial,
purely analytical stage?
The technical committee should be allowed to undertake its
deliberations without being afraid of stepping on political toes. It
should be truly independent of direct party affiliations and public
constituencies.
What is astounding is that implicit in the hon. member's attack
on the committee is the suggestion that he and he alone-or
perhaps his colleagues in the official opposition-knows exactly
what has to be done. Why consult anybody that has a different point
of view? That would lead to a result which might be different from
the one they have decided, for ideological and other reasons, they
want to propose.
There are dramatic inconsistencies in any event in the position of
members of the official opposition. On the one hand they attack tax
havens; on the other hand their separatist colleagues in Quebec talk
about an independent Quebec being a tax haven. I am not sure
where they stand. I want to hear from the experts first and then my
colleagues can weigh in.
The committee's deliberations will not be public at first but there
is nothing suspicious or sinister at work, despite the misleading and
mistaken implication in today's motion.
[Translation]
As is customary in committees of experts, task forces and royal
commissions of inquiry reporting to the government, the
proceedings will not be open to the public. But the report itself will
be published, of course, along with any documentation the
committee deems appropriate to support its assessment and
findings.
[English]
One of the things of which I am most proud is the progress the
government has made in bringing policy making out into the open.
As was said in the House last December regarding the prebudget
report of the finance committee, in the past, budgets were made for
the most part behind closed doors with the finance minister
consulting in private with select groups of individuals and interest
groups. The government for the third year in a row has taken the
budget making process out from behind closed doors to Canadians
across the country.
It is that openness which has contributed substantially to the
favourable public reaction the government's budgets have received
and it has no intention of jeopardizing that commitment in the
future. The government's performance is a matter of record and it
will stay that way.
I will emphasize again that any action based on suggestions of
the technical committee will come only after extensive public
consultation. The minister explicitly promised that in his budget
speech.
I feel we should all regret the time we are spending debating a
motion so lacking in merit. It is a wasted opportunity to deal with
the real substance of matters before us.
The issue of taxation, both from the perspective of fairness and
how it affects job creation, represents one of the most significant
challenges our country faces. It deserves a debate based on
substance, not political grandstanding and partisan game playing.
We are committed to meeting that challenge. The action we have
taken in three budgets proves that. It also proves that we are not
beholden to any particular interest as the motion may imply. Again,
let us look at the facts.
(1050)
In our three budgets, personal income tax rates have not been
increased at all. However we have taken real action affecting the
corporate sector, putting the lie to the implicit suggestions in the
hon. member's motion and his discussion. This action was
carefully considered with respect to the corporate sector. We fully
understand the consequences that higher corporate taxes have upon
business investment and the ability of the private sector to create
the jobs Canadians need. We have moved carefully, acting only
where we could achieve real improvements, fairness and efficacy
in the tax system.
We have acted without fear. This includes measures such as
higher rates for the large corporation tax and the corporate surtax
and reduced deductions for meals and entertainment, reducing
business subsidies. Any suggestion that we are afraid to act with
respect to the business and corporate sector where action is
890
warranted, fair, reasonable and helpful, is simply wrong. The
record shows otherwise.
There are some, and perhaps the hon. member opposite is among
them, who would prefer a truly punitive tax regime for business. It
is interesting that he only suggests that in regard to Canada. In the
province of Quebec other things are said about tax havens and
lower corporate rates to attract investment, but it is here in the
House that he says: ``No, no, that is not on''. He and his colleagues
try to play with numbers to suggest that Canadian business gets an
unfair preference in the tax system.
The fact is, and he knows it, that income taxes represent only a
portion of the total tax bill. When all taxes are taken into account,
income taxes, corporate income taxes, capital taxes, payroll taxes,
property taxes, corporations pay about two-thirds of their before
tax profits in taxes. Is that too much or is it still not enough? That is
a question which must always be examined as we look at the mix of
tax revenues along with the structure of the tax system. That is
what this government will continue to do.
The technical committee on business taxation is a part of that
process. Its findings should help spur informed intelligent debate,
what every member of the House wants to take place, the sort of
debate that today's motion does nothing but try to undermine.
I have no qualms in urging the House to dismiss the motion.
Mr. Herb Grubel (Capilano-Howe Sound, Ref.): Mr.
Speaker, I stand on behalf of the Reform Party to also oppose the
motion.
The motion suggests, I think almost insultingly, that experts who
have been asked to write a technical report are unaware of the kinds
of political concerns which dominate the thinking of professional
politicians in the House. As a former economist who has written
such reports, I can say that the political concerns are always
constraining and they influence what the expert report comes up
with. I believe it is inappropriate that members of Parliament
dictate on a day to day basis what the outcome is because they have
the opportunity to influence the public information about the
subject.
Once the report is written it is almost certain to go for hearings to
the Standing Committee on Finance of the House of Commons. At
that time members of Parliament can insist on having other experts
brought in. They can ask questions relating to the contents of the
report. They will have input for generating information that is
broadly representative and goes beyond what the technical experts
are saying, even if this is necessary.
Once the report is tabled and goes to the Department of Finance,
legislation may or may not come out of it. Clearly, once legislation
stimulated by the report is proposed, members of Parliament have
yet more input. The legislation will not only be discussed on the
floor of the House but there will be opportunities for hearings and
further experts being brought in when the legislation is considered
before the Standing Committee on Finance.
(1055 )
Therefore, it is totally inappropriate at this point to try to
introduce a more direct influence of professional politicians into
the deliberations of the technical experts.
My own party is not totally happy with the way in which the
frame of reference of this committee has been designed. We
believe in this modern age as a result of developments in
communications and globalization of financial markets it is time to
have a more thorough examination of the entire taxation system.
We should look not just at the business taxes; we should also look
at personal taxes, excise taxes and customs. It is also very
important to look at some of the Department of Finance
publications. There should also be consideration of the practices of
local governments in their taxation of individuals and corporations.
These matters are all interdependent.
All of the country's taxation laws should be examined again as a
cohesive single unit, an interdependent system, while keeping a
very close eye on how it works in relation to foreign practices. We
live in this global village which has made it very difficult for
individual countries to have policies that can be carried out simply
to maximize domestic objectives without taking into account the
way in which foreigners are influencing the effectiveness and the
workability of those domestic practices.
There are many problems with the present system of which I am
very much aware from the hearings of the finance committee but
also because I delved into the literature on the flat tax. The
proposals for a flat tax in the United States, Canada and throughout
the world are now being given a serious hearing. I believe that is
the case for exactly the reasons I have mentioned. Globalization
and all kinds of practices reduced the work before we had these
international developments; we are not likely to do so in the future.
The biggest problem almost all tax experts agree on is that in
Canada and most other industrial countries income from property
is taxed three times. First, the business which earns profits from
investment pays its business or corporate income tax. These
dividends or profits are then entered into the income of the person
who owns the business or shares in it and it is taxed again at the
personal tax level. It is taxed twice, but it is worse than that. We
also have taxation of capital gains. If someone then sells his
business or shares in the future, if there has been an accumulation
891
of wealth, an accumulation in the value of that business, there is
then the capital gains tax.
The capital gains tax is particularly pernicious. First, many of
the gains that appear are really paper gains. If I make an investment
of $100,000 and at the time I make the investment I could have
bought a residence for $100,000, then we have inflation. The value
of my business triples. It is now worth $300,000, but because it was
general inflation I can still only buy the same residence with it. I
have not become any richer as a result of the increase in the value
of my investment in a business.
(1100)
When the government steps in and says that 30 per cent or 50 per
cent of the increase in the value of the business is due to capital
gains and is taxable then it is expropriating the owner of that
business. After taxation that business will be able to buy only
one-half of a home rather than a full home. What is the justification
for this? The asset, which is being taxed like this, has already paid
income taxes, both at the business level and at the personal level.
There is fairly widespread agreement, not total agreement,
among economists that this bias against the returns on investment
and savings has depreciated the rate of capital accumulation in our
country. It is capital that is invested in the country which raises the
productivity of labour, which raises personal income, and which
determines in the end our standard of living. Therefore it is
detrimental to Canadians in the longer run to put such a heavy tax
on income which is subject to this kind of double taxation.
I want to make one quick reference to the high progressivity in
taxes. In British Columbia it is now well over 55 per cent for the
highest income earned.
Someone produced a chart for me which shows that we started
off in 1967 with a marginal tax rate of 80 per cent in Canada. It has
now reached about 50 per cent. During this period one would have
expected that the income taxes paid by the top 1 per cent of all
income earners and the top 10 per cent would have decreased
because after all the rates of taxation that they are subjected to have
decreased so dramatically.
The graph shows that the proportion of all personal income taxes
paid by the top 1 per cent of all income earners has remained
absolutely constant between 1967 and 1993. There were some
fluctuations, especially around the mid-1980s, when interest rates
were 20 per cent and all these companies went bankrupt.
Basically the same thing is true for the top 10 per cent. It
suggests that the disincentive effects which have come from these
high marginal tax rates have not really been effective in getting
more money out of the rich people and we might as well get rid of
them.
Mr. John Richardson (Parliamentary Secretary to Minister
of National Defence and Minister of Veterans Affairs, Lib.): Mr.
Speaker, I thank the hon. member for his presentation.
As with any new concept such as the one he presented and which
is also before the Americans, the hon. member may be aware that
the Germans looked at the flat tax. I ask the hon. member to enlarge
on this. The burden of proof is to see who is going be gaining on
this. That is the big question.
Even in the elections taking place in the United States where it is
getting a lot of play, the question that constantly arises and is not
answered is ``who wins and who loses?'' There is no doubt it is
simple, we all win in that way, but it does not look that it is going to
be as fair as they say it is. I wonder if the hon. member had some
adjustments to the one that Mr. Forbes is presenting in the United
States. Is that a fair comment?
It is under attack for the non-disclosure of who wins and who
loses. I ask the hon. member if he could enlighten us on his
approach.
(1105 )
Mr. Grubel: Mr. Speaker, I am now speaking about a scholarly
paper that Jim Silye and I have prepared for presentation. I am
sorry, the hon. member-
The Acting Speaker (Mr. Kilger): I certainly would not want to
enter into debate about the comments made about a colleague. That
could be a matter of another debate on another day. Certainly he is
correct that we should refer to one another by each other's ridings.
Mr. Grubel: Mr. Speaker, this was not deliberate but just a slip
of the tongue. I talk about this paper all the time. It is not in the
public domain. It will be published by the Fraser Institute. It was
subjected there to the scrutiny of scholars.
There members will see a calculation for the introduction of a
flat tax for income earners of different categories, like single
parents, seniors and so on, with all the provisions taken account of
by a technical expert in the Library of Parliament using
Government of Canada statistics.
According to his simulations, business income taxes would rise
by about $5 billion under one of our specific proposals. This would
make it possible to have practically no changes in the income taxes
payable by individuals.
On the other hand, I am distrustful of these results because they
cannot simulate the dynamic adjustments to which I referred-I
would be happy to give a copy of this graph-in terms of
simultaneously lowering the tax rate on high income earners and
taking away tax loopholes.
You must remember hearing me say regularly that one of the
troubles with the tax system is that the rich do not pay enough
892
because they have all those loopholes. If this is what you believe,
then you must agree that if those loopholes are closed, they would
pay more.
We then lower the tax rate. It is totally astounding how the
balance of the two things over the last 25 years has resulted in the
top income earners paying exactly the same share of all personal
income taxes as they did before. The simplification and the
dynamic benefits that one cannot quantify will make the flat tax a
very good thing for Canadians.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, the motion
before us is unnecessary because the technical committee was
created to give advice to the government, whose final report will be
shared with the Standing Committee on Finance where members of
Parliament will have ample opportunity to question witnesses and
give input.
Since we must debate, let me focus on the government's short
sightedness on this issue. The broader mandate should be for a
taxation review integrated with individual taxation, not just
corporate, with a view to creating hope, growth and opportunity.
Thanks to this motion, I can give my input to the committee and
government today and later when it reaches the standing
committee. I believe we should untax our way to prosperity by
considering and implementing a simplified tax system.
The basic concept would be to replace the current Income Tax
Act with a simplified system that applies a single rate of taxation to
income above a generous personal or family exemption level with
no other deductions or incentives.
By restoring the income tax system to its original purpose,
simply to raise revenues, government spending on social and
economic benefits would be converted from tax credits or
deductions into direct spending through programs, grants or
subsidies, thus revealing the true cost of those expenditures.
This increased visibility of actual government spending would
introduce a higher level of responsibility and accountability by
both bureaucrats and elected members of Parliament.
(1110 )
Simplification of the rules would make the system more
taxpayer friendly. It would allow tax experts, accountants and
Revenue Canada auditors to once again actually understand the tax
code. This in turn would reduce conflicts between Revenue Canada
officials and Canadian taxpayers which currently breed disrespect,
discontent and dislike for our tax laws.
It would allow everyone to file their own tax returns. It would
encourage increased compliance by reducing punitive rates of
taxation and by broadening the tax base, making it less rewarding
to cheat. In other words, we are solving some of the problems with
the underground economy.
The simplified tax system would enhance fairness by subjecting
everyone to the same rules. Individuals making the same income
will pay the same amount in taxes. Income would be taxed only
once instead of the double taxation that now exists in some cases. It
would be fair by taxing businesses and individuals at the same rate
which would eliminate deferral schemes.
It is very short-sighted of the government to look only at the
corporate sector while ignoring the individual sector and then later
on looking at the individual sector and not corporate. You have to
look at an integrated system. It impacts and affects lives whether
people are receiving wages or salaries or running a business.
It would enhance fairness by eliminating the opportunity for the
clever and the wealthy to avoid tax through the manipulation of
loopholes, as just mentioned by my colleague from
Capilano-Howe Sound, and fairness by forcing governments to
justify the tax dollars they spend.
The simplified tax system would also have a positive and social
economic impact. It would drastically reduce the current $12
billion compliance cost of taxation. It would remove 1.3 million
Canadians from the tax rolls, leaving more money in their hands.
The lower income people would pay no taxes. This would leave
more money in their hands, which is to me is the most direct form
of social assistance that we could give.
It would replace the current graduated system, which is a
disincentive toward increased earnings and investment, with a truly
progressive single rate system which rewards initiative while
requiring that higher income earners pay a higher share of tax.
Current progressivity is graduated. The more money you make, the
higher percentage they take. Why not have a progressive system,
with the more money you make the more you pay but at the same
time the more you keep. Persons should get to keep a greater
percentage of the incomes they earn than what they give to
governments.
It would help create stability in the economy by virtue of both
individuals and businesses paying the same rate and taxing income
only once. It would restore neutrality to the tax system with the
lower rate so that personal and business decisions are not based on
the tax implications of those decisions. This prevents government
from picking the winners and losers.
I really believe that if both business and individual decisions
were not based on tax implications but just on the investment or the
opportunity or the job we would all be better off in this country.
It would eliminate discrimination against stay at home parents,
thus making it a pro-family tax system. It would help expand the
economy by virtue of the increase in personal disposable income.
893
Finally, it would allow for the elimination and/or replacement,
and/or abolishment of the GST and its high compliance cost which
produce no increased benefits to the taxpayer.
It would also lead to immediate tax relief through lower tax
rates, lower compliance costs which are the ultimate goal. Both
areas reflect a reduction in taxation through the broadening of the
base and a wider distribution of the tax obligations.
The factors to consider by the committee would be the principles
of the foundation of a simplified system. What all do we want to
change? Any attempt at tax reform should not try to change more
than people are willing to accept or people will reject it. Abraham
Lincoln remarked: ``With public sentiment nothing can fail.
Without it, nothing can succeed''.
The definition of income must be considered. Should investment
income be treated differently from employment or pension income
or should the system be founded on the basis of the Carter
commission that a buck is a buck? The size of personal family
exemption: the larger the exemption the higher the flat rate must be
to generate the same amount of revenue for the government. The
treatment of charitable donations must also be reviewed and looked
at. Should a tax credit for charity be retained or can it be
eliminated?
(1115 )
The treatment of depreciation: should a simplified system retain
the current capital cost allowances with all the various depreciation
and amortization tables and rules for businesses or allow a 100 per
cent write-off in the year purchased as a trade-off for the whole tax
reform?
Finally, what guarantee is there the next government will not
change the rules, whatever a government puts in place based on
whatever review it does? My answer is that this Parliament and this
government should present a taxpayers protection act along the
lines of what the Reform Party of Canada has put forward in the
House before.
There are some typical objections to a simplified tax system. I
will pre-empt some of the questions that may come forward and
give some of the answers.
One is that a simplified tax system along the lines of a flat tax
will reduce taxes for the rich and increase taxes for lower income
earners. However, my colleague for Capilano-Howe Sound has
shown and proven through his graphs and charts that is not the case.
Further, the simplified tax system is intended to lower taxes for
everyone, rich and poor alike. The personal family exemption
should result in the lower income earner escaping income tax
entirely, including the GST.
Another criticism is that rich will also find a way to avoid paying
their fair share. That is possible only in a complex system. If we
simplify the system and remove the loopholes it cannot be
manipulated. The simpler the system, the less opportunity for
trickery.
Another is that a flat tax is regressive. In fact, the opposite is
true. By raising the personal deduction level immediate tax relief is
offered to lower income earners who need it most. The current
progressive system with higher tax rates on higher incomes is a
disincentive to self-improvement. True progressiveness requires a
low tax rate coupled with a general personal exemption. The rate
and exemption level we are talking about must start as close as it
can to a revenue neutral so that the criticism added to the deficit is
not and must not be a factor.
Charitable donations will decrease; not necessarily, as currently
out of $8 billion given by people to charities, $5 billion, well over
half, is either unreceipted or receipted and unclaimed. That proves
people give to a cause from the heart. They give more because they
want to give rather than because it is a tax incentive. Further, if we
lower that tax incentive it becomes even less of a factor. When the
United States lowered tax rates donations to charitable
organizations did not drop.
I wish the technical committee well. I only regret that with its
mandate it would not undertake to give advice to the government,
which really needs it because it has a poor idea on how to handle
taxes, tax reform and tax relief for Canadians. By having an
integrated review rather than a segregated and narrow review, it
will be denied the opportunity of the whole picture.
Mr. Elwin Hermanson (Kindersley-Lloydminster, Ref.):
Mr. Speaker, I have a question for the member for Calgary Centre,
who now wears a political hat but who used to wear a business hat
before being elected to the House.
We are hearing a message from the Bloc Quebecois in its
resolution today under this supply day motion that businesses need
to be taxed more severely.
From the government we are hearing a message that businesses
need to be taxed at least at existing levels and perhaps taxed higher,
and that they should be required to provide more jobs in the
Canadian economy.
I ask the member to take off his political hat and put his business
hat back on and say how he as a business person would respond to
the suggestion by the Bloc that taxes on businesses be increased. I
would also like his comments on the challenge from the
government to pay high taxes and go out and create a bunch of jobs
at the same time.
The Acting Speaker (Mr. Kilger): It has been said the hon.
member for Calgary Centre has worn many different hats.
(1120 )
Mr. Silye: Mr. Speaker, I should get my red hat back, the one I
used to wear on the football field. I could use it.
894
In answer to the question from my colleague, if I were a
businessman again and appeared before the committee as a witness
to give advice, I would say first that payroll taxes are far too high.
That also applies to unemployment insurance, especially now that
I hear there will be a $5 billion to $10 billion surplus. Why not
give me, a businessman, a tax break so I can hire more people
and my employees would be happier and the corporation would
be happier? Do not forget, corporations pay 1.4 times what the
employee earns. Why punish the payer? Why not make it the
same?
Payroll tax is one area. The high levels of taxation are another
area. Corporate and business taxes are 28.84 per cent. It is
confusing and complicated. Different kinds of businesses have
different rates and get different discounts. There is always a
continual hassle with the government, with Revenue Canada.
They send out inexperienced auditors who apply the letter of the
law, tie up your office and have to justify the number of days they
are there. They are looking for ways to squeeze money out of
honest, above board businesses. They let the ones who are dealing
in the underground go. Now they are going after them.
Why not simplify the tax system, clean up the tax mess, all these
rules? It would be another way of creating more employment.
Another way is to get rid of the minimum wage. It is a job killer. If
qualified people are hired, one could expand and train. Businesses
that hire people at a minimum wage and hourly rates are held for
ransom after those people are trained, the rate goes up and
production and performance go down. Without the minimum wage
more people would be willing to stay on the job and fewer people
would be playing the game with unemployment insurance.
Those are three reasons and I could probably think of more, but I
do not want to deny the opportunity to any member of the
government to ask a question.
[Translation]
Mr. Richard Bélisle (La Prairie, BQ): Mr. Speaker, I will take
advantage of this allotted day to show that the lack of a coherent
business taxation policy has a negative effect on the fiscal situation
in general and on the government's chronic indebtedness.
At the end of the 1996-97 fiscal year, the federal net debt will be
over $600 billion. According to the Minister of Finance's own
projections, by the end of its mandate, this government will have
added $110 billion to the country's debt. The minister keeps
shouting from the rooftops that he has the government's finances
under control and that he has finally managed to slow down debt
growth. This is definitely not the case. The minister has no precise
plan to eliminate the deficit, and he refused to commit himself to
balance the budget according to a specific timetable.
He is making cuts to program spending and transfers to the
provinces, taking over the UI fund surplus, penalizing families
with unfair individual taxes, and going after the pensions of those
who have saved all their lives to enjoy some leisure in old age,
instead of making the urgent cleanup required in business taxation,
instead of closing tax loopholes and collecting as quickly as
possible the $6.6 billion in unpaid taxes.
The government has not solved the public finance problem, even
if it would have us believe so. According to the budgetary plan
tabled on March 6, Canada's net public debt represents close to 75
per cent of the gross domestic product, while Europeans countries
insist on a maximum debt of 60 per cent of the GDP as a condition
of joining the European Economic Community.
The Prime Minister keeps saying that the government's
objective for next year is to bring the deficit down to 3 per cent of
the GDP. Let us not forget that European countries impose that
criterion as a condition of joining the community, but it includes all
levels of government. From that angle, Canada's deficit will be
much closer to 5 per cent than to 3 per cent of the GDP.
Let us now take a closer look at corporate taxation in terms of tax
avoidance and federal tax expenditures.
(1125)
In the July 1995 issue of CA Magazine, the publication for
chartered accountants, it was said that: ``Substantially all major
Canadian multinationals use firms based abroad as part of their tax
strategy''.
Tax havens provide several tax benefits. As early as 1987, the
Conservative finance minister had pledged to conduct studies on
tax havens. But these studies have yet to be done, even though the
auditor general and the revenue department have been most
insistent about them.
However, it should be recognized that in the 1994 budget,
following repeated demands from the official opposition, the
Minister of Finance finally amended the Income Tax Act
provisions relating to foreign affiliates. These amendments reflect
the recommendations made by the auditor general and by the
public accounts committee, which tabled a report on the issue in
1993.
Several experts, including Mr. Corcoran from the firm Arthur
Anderson, recognize the effectiveness of these new measures, but
they also see their limits, since they will not prevent multinationals
from continuing to use foreign affiliates to improve their tax
planning.
Other experts also point out that these major changes to the
foreign affiliates taxation system were not those announced several
years earlier. Major tax evasions are still possible in spite of the
changes made in the 1994 budget.
895
It is difficult, if not impossible, to estimate the amounts the
Canadian tax system has lost to tax havens. However, certain
indicators can give us a good idea of the extent of the moneys
lost. Instead of relying on the revenue department to measure the
extent of these tax losses, let us listen to the experts and the
representatives of the consulting firms specializing in tax havens
who are making their services available to corporations and
individuals.
International Privacy Corporation, a firm specializing in tax
havens, says it has hundreds of Canadian clients. Moreover, most
of the 16,000 corporations incorporated in the Turks and Caicos
islands are Canadian owned. Several hundreds of millions of
dollars have gone out of Canada, according to that firm.
Mr. LeBreux, another expert on tax havens, estimated that
several billion dollars are moved out of Canada every year. Mr.
Naylor, a McGill University professor and an expert on the flight of
capital at the international level, considers that the total capital
flight out of Canada amounts to tens of billions of dollars.
The recovery of these amounts would make the Canadian deficit
and debt melt away like the snow. In his book, Hot Money and the
Politics of Debt, Mr. Naylor said the situation was alarming. It can
be said that the popularity of tax havens is reaching today unheard
of proportions and that they have a disastrous impact on Canadian
tax revenues.
A few years ago, Harris and Harris, the biggest firm in the tax
haven business, represented some 30 to 40 companies abroad. This
number has now reached 400 to 500, a 13-fold increase. Numerous
reports on this growing phenomenon are published in newspapers
and magazines, but the Liberal government just sits on its hands.
Let us have a closer look at the impact these tax havens have on
the behaviour of Canadian companies. A number of countries
considered as tax havens have very low taxation rates, something
like 2 or 3 per cent for foreign countries, whereas the Canadian
taxation rate stands at 40 per cent. This spread makes for unfairness
in taxation and can cost millions of dollars to the Canadian
government. Foreign subsidiaries can also transfer their dividends
to the Canadian corporation tax free, even if the corresponding
revenues have not been taxed at a rate similar to the Canadian rate.
Companies that want to benefit as much as possible from these
two situations can implement the three following strategies: They
can transfer to the Canadian parent company the losses of foreign
subsidiaries, they can transfer abroad revenues of the Canadian
company, and finally they can convert into exempted revenues the
revenues of Canadian companies-revenues that would normally
be taxed are not, because of transfers to the foreign subsidiary.
(1130)
What is the government doing to fight tax avoidance, which has
become an alarming problem, and the measures used by the
corporations to get the most out of it? One could argue that the
government has finally become aware of the problem. But the
government says that it cannot get rid of tax avoidance made
possible through tax havens, because its tax system has two
conflicting objectives, which are to be efficient and to remain
competitive.
The government maintains that, even though several
corporations are using these tools to avoid paying taxes, given the
globalization of the economy, Canadian tax rules must remain
competitive.
In 1994, the federal government finally reduced the number of
countries where tax avoidance is possible, by withdrawing from the
designated countries list the countries which had yet to sign a tax
treaty with Canada. All this despite the reassuring statements by
the deputy minister of Finance, who said, before the public
accounts committee that I chaired during two years, that all the
countries with which Canada has a tax treaty have high corporate
taxes.
There are still 11 countries which have signed tax treaties with
Canada and which have lower tax rates than we have. Among the
major ones are Barbados, which a maximum tax rate of 2.5 p. 100;
Cyprus, Malta and Switzerland, with a maximum tax rate of 10 p.
100; and the Bahamas, with a tax rate of 0 p. 100.
Moreover, there are 11 other countries who offer tax exemptions
which help to significantly lower their tax rate. Among the major
ones are Barbados, Ireland, Malta and the Netherlands. When you
compare their tax rates with the 40 p. 100 tax rates Canadian
corporations have to deal with, you can easily understand the many
financial benefits these companies get by setting up business in
these tax havens.
How can we stop this massive outflow of exempt dividends from
foreign affiliates? The government solved part of the problem by
reviewing its list of designated countries which are given an
exemption to ensure that the listed countries had signed tax treaties
with Canada. Nevertheless, the problem remains, because some of
the designated countries have much lower tax rates than Canada.
The problem can easily resurface if the designated countries
lower their tax rates after the fact, that is, once they have signed tax
treaties with Canada, since Canada cannot constantly monitor these
countries' taxation system.
The government is using the competitiveness of Canadian
businesses as an excuse not to act. This argument does not hold.
Our main competitors in this field are our neighbours to the south,
the United States, whose reputation is firmly established when it
896
comes to opening up to businesses. They solved the problem by
establishing a system where foreign affiliates are subject to U.S.
taxation, with deductions for taxes paid in foreign countries.
Great Britain has a similar system. Thus, the competitiveness
argument is no longer valid, since our main competitor and trade
partner has rules that are less attractive than ours. This system is
already in place in Canada but only with countries that have not yet
signed tax treaties with us. The gap is thus closed in part although
significant tax revenues still evade the Canadian tax system.
The Bloc Quebecois' position on this is crystal clear: The
Canadian government must urgently revise all its tax treaties with
countries that are considered tax havens to make sure that foreign
affiliates are subject to tax rates similar to the Canadian rates.
When the tax rate in a foreign country is not similar to the one in
Canada, this country would be subject to the same rules governing
revenues on foreign affiliates' exempt dividends.
(1135)
I would now like to talk about tax expenditures, a major
component of business taxation. According to a very conservative
estimate of the Department of Finance, the cost of tax expenditures
was $9 billion in 1991 and $10 billion in 1990.
There are 59 tax expenditures associated with the tax on profits
of corporations. Seven of them, namely the low small business tax
rate-over $2 billion; the low tax rate on manufacturing and
processing profits-another $353 million; R and D tax
credits-$543 million; the partial inclusion of capital gains-$415
million; the surplus between the capital cost allowance and book
depreciation-$886 million; the Part I tax refund on investment
income of private corporations-$876 million; and non-capital loss
carry-over-nearly $1.3 billion; all these made up, in 1991, 71 per
cent of all the tax expenditures associated with taxes on corporate
profits, for a total of $6.4 billion.
The concept of tax expenditure includes all deductions,
exemptions, tax deferrals, tax credits and other such provisions
which reduce taxes payable by a corporation or an individual.
Therefore, they are a substitute for direct spending by the
government: the latter does not subsidize directly, but it decides not
to collect funds from certain taxpayers, which is the equivalent of a
subsidy.
The implicit aim of a corporate tax expenditure is to change,
with this incentive, the behaviour of certain companies in a
desirable manner for the community. Tax expenditures create,
however, two main problems: first, they diminish the government's
tax base, which puts a heavier burden on all taxpayers who cannot
afford them; second, they cause many inequities by allowing
certain taxpayers not to pay their fair share of taxes. The concept
of the ability to pay is not respected anymore, and this gives rise to
a feeling of injustice among the people.
The greater the number of tax expenditures contained in a
taxation system, the more complex the system gets, and this
requires the consultation of experts whom only the well-to-do can
afford. So the government misses out on revenues. We must also
weigh the benefits gained against the cost to the tax system, as well
as the inequity which can ensue for all taxpayers.
The Bloc Quebecois believes that, in terms of taxation, a
threshold has been attained where collective benefits-these are
very difficult to evaluate; in fact, they are only assessed by those
who benefit from them-are less important than the inequities and
the loss of earnings by the government. The various federal tax
expenditures are far from attaining the objectives for which they
were designed, and, often, their objectives are not consistent with
society's best interests.
To improve the effectiveness of our tax system, especially our
business tax system, we should consider a minimum tax on
corporate profits. This form of taxation already exists in the United
States. Its implementation may be complex depending on the tax
base used. However, to be effective, this minimum tax must go
hand in hand with a tax expenditure base that does not substantially
reduce corporate taxable income.
Instead of constantly trying to plug holes in the legislation as it is
doing now, Revenue Canada could make the business tax system
more flexible. This system is extremely complex and cannot
provide for every possible situation. Making it more flexible could
mean using section 145 of the Income Tax Act, which is a general
anti-avoidance clause. This section gives the minister the
discretionary power to take action against anyone who tries by
whatever means to avoid taxes. In fact, this section gives the
minister the power to enforce the spirit of the law. Right now, such
power is seldom used, if ever.
In closing, I would like to say that business taxation is complex.
Everybody knows that. However, while continuing to be
competitive globally, Canadian businesses have to carry their fair
share of the tax burden, even though specific sectors of our
economy need preferential treatment. All this is based on equity,
and equity depends on the political will of a government to bring
together experts and parliamentarians by setting up a parliamentary
committee which will determine what kind of business tax system
Canada needs.
(1140)
In this sense, I strongly support the motion brought forward this
morning by my colleague from Saint-Hyacinthe-Bagot. However,
the Canadian government has not shown this political will so far,
and we cannot be overly optimistic with regard to our chronic debt
and deficit problem.
897
Mr. Bernard Patry (Parliamentary Secretary to Minister of
Indian Affairs and Northern Development, Lib.): Mr. Speaker,
I want to thank the hon. member for La Prairie. Two things in his
speech struck me. First, what he said about pensions and second,
what he said about the budget estimates.
The hon. member said that the government was going after the
pensions of people who had contributed to them all their lives. The
hon. member is surely aware that life expectancy among Canadians
increased by three years over the last twenty years to reach 80 years
for women and 79 for men. He probably also knows that in the next
15 years, baby boomers will reach retirement age.
My first question is this: What alternative can he propose to
make sure that today's workers who will reach retirement age in the
next 15 years can count on a fair and equitable pension plan? Does
he suggest to raise right now the rate of contributions?
My second question is a matter of simple arithmetic. When
comparing our situation with that of the European economic union,
he said that the Minister of Finance was incorrect when he stated
that our next deficit would be at 3 per cent of GDP, but that it would
rather be at 5 per cent. Can he explain how he got that number?
Mr. Bélisle: Mr. Speaker, I thank the hon. member for his two
very pertinent questions. I will answer the second one first. How
did I arrive at the figure of 5 per cent rather than 3 per cent?
Because in the case of countries of the European Economic
Community, debt is defined as the total of a country's existing debt
and deficit, including local, regional, municipal, provincial and
federal levels. Whereas here, if we add the provincial government's
debt-the Government of Quebec in the case we are looking at, but
it could be the Government of Ontario or any other province-if we
add that to the federal government deficit, even if the federal
government reached its goal of 3 per cent next year, or in two or
three years, if we add the provincial government debts, we would
still have 4, 5 or 6 per cent.
In the European Economic Community countries, all levels of
government are included in the deficit. In other words, Canada's 3
per cent would mean 1 per cent for the federal government, 1 per
cent for the Government of Quebec and 1 per cent for regional local
governments. That would truly bring us to 3 per cent, as it is
calculated in the European Economic Community countries.
Furthermore, in Canada, if we were to add, in the case of
Quebec, the debt of municipalities, the city of Montreal or the
Montreal urban community, we would be much closer to 6 or 7 per
cent than 3 per cent.
When the Prime Minister keeps trotting out this 3 per cent, he is
referring strictly to the federal government's deficit, which is not
comparable to or which does not correspond to the same concept as
that used by the countries of the European Economic Community.
To reply to his first question, what I find most unfortunate in the
federal government's proposal with respect to pension reform is
that it is now looking at family income. Previously, the system was
based on individual income. In my view, women will be the first
ones to suffer under the family income approach.
As far as what I would suggest, I could say to the hon. member
that it would have been better to stick with individual income.
Given that we already have graduated income tax, we could taken
the approach of a tax on income and people could have continued to
be taxed directly, even if it means going with a percentage of the
tax payable and reducing or even eliminating all tax credits. I think
that the concept of basing the entire system on family income will
penalize women.
(1145)
[English]
Mr. John Richardson (Parliamentary Secretary to Minister
of National Defence and Minister of Veterans Affairs, Lib.): Mr.
Speaker, I am wondering whether the hon. member for La Prairie is
sure of his facts because of the nature of the governments in the
EU. Some of them are federal, some of them are unitary and some
of them have taxation at the municipal level. Is he sure of his facts
that they are all rolled up into one total? It seems to me from my
studies that it was not the case.
[Translation]
Mr. Bélisle: Mr. Speaker, I think that even if we do not take into
account the debt of regional and local governments, what we call
towns and municipalities in Canada, we could quite easily consider
the debt or deficit of provinces. Since data are not always
comparable between local, regional or municipal governments, it is
true that they can hardly be added to the total amount.
If you consider only provincial deficits and add them to the
federal deficit, there is no doubt that even next year or two years
from now we will still be above 3 per cent of GDP. To be very
conservative I would say that the percentage will be 5 per cent and
in the case of provinces which are more indebted, like
Newfoundland and Quebec, it could even be higher.
I concur agree with the hon. member when he says that an
increasing number of provinces are eliminating their deficit. A
majority of provinces will eliminate their deficit, in some cases this
year but even more next year, but Ontario and Quebec still have
large deficits. Therefore, if you add the deficits of the two main
provinces to the federal deficit, I do not believe it will be at 3 per
cent, but probably much closer to 5 per cent.
Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, I
would like to begin by thanking my colleague from La Prairie, and
congratulating him on his excellent address to us this morning, and
898
particularly on the quality of his research. We can tell that he has
made a special effort to seek out information that was not readily
available, particularly all the different labels for tax shelters, which
are supposedly in place to stimulate economic development-but
we may well doubt that.
I would like to hear the comments of the hon. member for La
Prairie concerning the reaction in various quarters, particularly
within the Bloc Quebecois, to the setting up of the ``expert
committee'' the Minister of Finance has seen fit to create for the
purpose of evaluating the business taxation system.
One comment made was that, because of its membership, setting
up a committee of this type is in some ways like setting the fox to
guard the henhouse. I would like to hear the comments of my
colleague for La Prairie in this connection since this appears rather
strange even for some members who are tax shelter specialists,
particularly at the international level.
Mr. Bélisle: Mr. Speaker, I thank my colleague for
Trois-Rivières for his question. I think the government has gone
half the distance. I concur with the Minister of Finance, who this
week told the member for Saint-Hyacinthe-Bagot, the official
opposition finance critic, that the government wanted tax haven
expertise in setting up this committee.
I agree with him that the members of this committee on
corporate taxation, a committee of experts, are well qualified in
matters of tax havens. But only half the distance has been covered.
In technical terms, the necessary expertise will be there. What the
committee lacks, however, is political credibility-the other half of
the distance to be covered.
For it to have political credibility in the eyes of Canadians and
Quebecers, I think it would have to include-and this is what the
member for Saint-Hyacinthe-Bagot calls for in the motion he
tabled this morning-elected representatives, members of
Parliament, to show Canadians and Quebecers that the committee
would not be just in the hands of tax haven experts.
(1150)
I would also like to point out that, in terms of credibility, the
greatest weakness, as the opposition pointed out in question period
yesterday, lies in the fact that six of the eight members of the
committee annually contribute, and contributed in 1994, $80,000 to
the Liberal Party.
I would have included parliamentarians, which is what the
Minister of Finance should have done to increase the committee's
credibility. With what we see of contributors to the Liberal Party,
they-and I showed this earlier in my speech-will save tens of
millions of dollars a year for their clients investing in tax havens.
There is no credibility because there are no parliamentarians on the
committee.
Mr. Jim Peterson (Willowdale, Lib.): Mr. Speaker, I listened
with great interest to the remarks made by the hon. member for La
Prairie, who says that the technical committee was established by
the minister to review Canada's business taxation system and to
ensure that this system is competitive world-wide. He said that the
committee would not be valid since no parliamentarians will sit on
it. But he forgets that, normally, in our system, any bill stemming
from such reviews goes before Parliament first, then to the finance
committee and then back again before Parliament. There will be
ample opportunity for us, as parliamentarians, to discuss, to assess
the bill and to question witnesses and the bill's sponsors. Our task,
as parliamentarians, consists in dealing with the findings of
reviews.
By asking some of Canada's leading experts to examine our
business taxation system, we will not only get to know our system
but also those of other countries with which we are currently
competing for investments.
We must make sure that our taxation system is competitive,
because in today's economy it is imperative to attract investments.
We must retain in Canada those investments we have at present
and, as we know, there are other countries where incentives and tax
preferences are offered to attract investment, and thereby jobs.
[English]
The official opposition is trying to give the impression that the
government has favoured the rich, has favoured corporations and
has done nothing to deal with the taxation of them. Let me spend a
few moments going over some of the measures we have taken in
the three budgets which have been brought down by our
government since taking office.
In 1994 we eliminated the $100,000 capital gains exemption. We
reduced to 50 per cent the deduction for business meals and
entertainment. We dealt with certain tax shelter schemes using
convertible debt. We required that financial institutions recognize
accrued gains. We eliminated the special 30 per cent investment tax
credit. We modified the basis on which insurance companies could
claim reserves. We tightened the rules applicable to foreign
affiliates and increased the reporting requirements. We have
tightened the rules on the forgiveness of debt. We have increased
the refundable tax on dividends received from a private
corporation. We have cleaned up some of the abuses dealing with
research and development. We have increased the tax on large
corporations by 12.5 per cent. We have increased the corporate
surtax by 33 per cent.
(1155)
We have introduced a 12 per cent capital tax surcharge on banks
and other deposit taking institutions. We have dealt with family
trusts. We have announced reporting requirements for all foreign
investments made by Canadian residents that are $100,000 or over.
899
We have announced rules getting rid of tax deferrals which use
private corporations as the vehicle. We have extended the taxation
of non-residents on their gains with respect to Canadian capital
property. We have dealt with premature recognition of tax losses.
We have dealt with some of the overly generous provisions
related to labour sponsored venture capital funds. We have
extended the temporary capital tax on deposit taking institutions.
We are clarifying and tightening the rules on the resource
allowance but we have made sure the accelerated capital cost
allowance can now go to other projects, including the tar sands. We
have also announced many new measures to deal with the
underground economy.
This is not the record of a government that is stand pat, that is in
the backpocket of any group of Canadian taxpayers or that is not
prepared at any moment to examine the tax system in terms of its
fairness and its equity.
I want to deal very briefly with some of the ideas put forward by
the official opposition in terms of what it is suggesting we should
do from a fiscal point of view.
The Bloc Quebecois said on page 90 of its dissenting report to
the prebudget report handed down by the finance committee on
January 17: ``The finance committee ought to have put forward
many more specific recommendations for fighting the deficit. The
Liberal MPs on the finance committee have chosen instead
budgetary imprudence''.
This is the opposition party which said: ``You cannot cut
payments to the provinces. You cannot cut spending on social
programs. You cannot cut spending on payments to seniors''. How
was it recommending that we exercise even greater budgetary
prudence? How was it recommending that we cut the deficit even
further?
Let me use that party's exact words. It said: ``We must eliminate
those fiscal inequities that favour large corporations and high
income taxpayers''. The official opposition wants to impose more
taxes on large corporations and high income tax payers. Well, I just
went through a list of about 25 changes we have made in the past
three budgets which affect those very groups.
What do Bloc members want in addition to those we have
suggested? Let us look at their precise words. They suggested two
ways it could be done. One, we must deal with all tax agreements
signed with countries viewed as tax havens. They are ignoring the
fact that the government has already undertaken measures dealing
with the taxation of foreign affiliates and dealing with reporting
requirements. What does the Bloc view as a tax haven? Any
jurisdiction which does not impose taxes higher than Canada.
[Translation]
The hon. member for La Prairie commented that many of the
countries we have signed tax treaties with levy much lower taxes
than Canada does. It is obvious.
(1200)
They do recognize that our rate of taxation in Canada is much
higher than in many other parts of the world, including European
countries and the United States, and not just in known tax havens,
such as Barbados, the Turks and Caicos islands, Bermuda.
[English]
They do not recognize that we already have a system which does
impose taxes on the income from these various countries.
If a Canadian invests through an offshore company in passive
investments, all the income under the foreign accrual property
income rules, FAPI, is taxed every year to the Canadian whether it
is brought back to Canada or not. Full Canadian rates apply.
Do they oppose that system? They will say no, which is good.
They want the income that comes from a tax haven even while it
accrues to be taxed at full Canadian rates. Since they do not
disagree with the rule that applies to individuals and corporations
with passive investments in these countries, they must be
suggesting the active business income earned in a tax haven must
be taxed as it is earned and not as it is remitted to Canada.
We have a system with a global aspect of multi corporations.
Some of those taxes are not paid because the income is deemed by
the rules of Canada, the United States, Europe and every other
major taxing jurisdiction as having actually arisen in that foreign
tax jurisdiction, be it Bermuda, Switzerland, the Netherlands or the
United States.
Are they saying that if the active business income earned by a
foreign affiliate, by a foreign subsidiary of a Canadian company in
the United States, is not taxed at rates up to the Canadian rate that it
should be taxed at the Canadian rate? Suppose a foreign affiliate in
Tennessee is taxed at only 30 per cent while the Canadian tax rate is
50 per cent. Are they saying the tax rate there should be brought up
to the full 50 per cent Canadian rate on all of those profits even if
they are not remitted to Canada? Obviously they are because to
them-
[Translation]
-a tax haven is a country where the rate of taxation is lower than
ours, in Canada.
[English]
Certainly they would say if it is earned in Bermuda we should be
taxing it at the full Canadian rate of 50 per cent, even if there is an
active business operation, actual employees and actual business
transactions carried on there.
900
No other country in the world imposes taxation on that basis.
They are saying that no matter what happens any Canadian
company on its profits earned anywhere in the world must pay
taxes at the full Canadian rate even if the profits are not remitted
here.
We happen to have a totally different system at work in the
world. It is a system where the host country, the country where the
work is actually carried out, where the people are employed, where
the business activities take place, is given the primary
responsibility for international taxation, and this is right. If an
American subsidiary carries on business in Canada its profits are
taxed at the full Canadian rates, not at the American rates. This is
the system we have chosen to enter into.
Why do we have tax treaties with most of these countries? There
are two reasons. The first is to eliminate double taxation. In other
words, if it is taxed abroad, in the country where the business
activity is carried out, it will not be taxed in Canada. The second is
to ensure that taxes are paid.
(1205)
A major part of these treaties is to enforce the taxes that are
justifiably owing by any of the two treaty partners. It is for the
enforcement of taxation and the exchange of information among
the taxing authorities in those two jurisdictions to see that this takes
place.
[Translation]
I have a challenge for the Bloc Quebecois. A provincial budget
should be brought down in Quebec in the next few months. Will
their provincial colleagues tax every multinational corporation
based in Canada at the Canadian rate of taxation instead of those
rates imposed by the applicable foreign countries with which
Canada does business?
[English]
Will the Parti Quebecois members in their next budget respect
their colleagues here in the House of Commons and adopt the exact
international tax provisions they are proposing to us? Will they
impose that same type of tax regime on multinational drug
companies in Quebec? Is that their intention?
Let us get real. I wish they understood the type of regime they
are dealing with rather than only partially understanding it and
saying: ``Liberals, you cannot cut any transfers to the provinces.
You cannot cut spending on any social programs but you have to be
even more fiscally prudent than you are. In other words, you have
to get the tax revenue up and you get it first of all from ending these
so-called relationships that involve corporations doing business in
other countries in the world that have a lower tax rate than Canada
imposes''.
Are they not more interested in the jobs and the investments that
come from having a tax system which is internationally
competitive because we are in a global economy?
I will bet their colleagues in the next budget in Quebec are more
concerned about jobs, international competitiveness and having a
fair tax system so that corporations pay their fair share but in a way
that is multinationally, internationally competitive.
That is what this committee of experts established by the
Minister of Finance is setting out to do. It is to look at whether
there are impediments in a corporate tax system that preclude
foreigners from establishing in Canada, creating more jobs in
Canada, or that preclude us from having our fair share of
international tax revenue. Dealing with these tax treaty systems
was the one way, the one pot of gold to be tapped by the Bloc
Quebecois members.
The second was they said there are certain corporations in
Canada which pay no taxes but we will impose some type of
minimum tax. If you have suffered tax losses in previous years you
should not be able to carry them back in order to eliminate the taxes
that might otherwise be payable by a corporation. They said:
``There must be a true minimum tax on corporate profits. This
minimum tax is not aimed at increasing the fiscal burden on
business; it is aimed solely at those profitable businesses which
manage to pay not a single cent in taxes''.
A study was done by the NDP government in Ontario, carried out
by the fair tax commission. It looked at the tax returns of
corporations in 1989. It found that 23,000 Ontario corporations
reported profits but paid no income tax. The commission tried to
look into the reasons for this. Fifty per cent of the untaxed profits
came from intercorporate dividends, i.e. one Canadian company
owned by another Canadian company. The one company may be
taxed on it but it then pays the dividends to another company. Are
those profits to be taxed again?
(1210)
Do we want double taxation of corporate profits? I put that to the
official opposition and to the Parti Quebecois for its next budget. Is
that what is intended, intercorporate profits by way of dividends
taxed twice?
Eleven per cent of these untaxed profits came from loss carry
overs. Are Bloc members suggesting that if a corporation makes a
million dollars this year but loses a million dollars next year it
should not be able to average those out?
In Canada we can carry corporation tax losses over for about 10
years. Maybe it is too generous. In the United States they can do it
for 15 years. This is one of the provisions that should be looked at
by this technical committee being established by the minister.
901
Thirteen per cent of the untaxed profits were due to capital cost
allowances. Does this mean we should not allow businesses to
write off the costs of acquiring new robots, new computers, new
equipment, new machinery and new buildings? Is this what they
are saying? Are they saying capital cost allowances are too
generous?
[Translation]
The Deputy Speaker: I am sorry, but the hon. member's time is
up.
Mr. Ghislain Lebel (Chambly, BQ): Mr. Speaker, I listened
with great interest to my hon. colleague's speech and I appreciate
it. What we mostly wanted to consider in this House today is the
motion put forward by my colleague, the hon. member for
Saint-Hyacinthe-Bagot, with regard to the famous committee set
up by the Minister of Finance, which-as the hon. member for La
Prairie pointed out-is comprised of friends of the government.
This is not a bad thing per se. This is not so terrible. These friends
of the government are there to give advice to the Minister of
Finance. They also make large contributions to the Liberal Party's
coffers.
What the hon. member for Saint-Hyacinthe-Bagot proposes is
to include in this committee parliamentarians from all political
parties represented in this House, including Reform, who will be
happy to attend and participate, as well as the Bloc Quebecois. Of
course, the party in power, not wanting to be left behind, will also
delegate some of its members.
The hon. member refers to parliamentary committees. It must be
pointed out that most parliamentary committee members come
from the party in power. It is simply human nature. If I were in their
shoes, I would probably do the same. However, they sometimes
make decisions that are contrary to common sense just to avoid
embarrassing the government. Government members on the
committee will use their majority to give priority to their own
interests. This is what is happening in the parliamentary
committees the hon. member was talking about earlier.
I would remind the hon. member that, despite all the good faith
shown by parliamentary committees in the last 30 years, we still
have to deal with a $600 billion debt. Whether the hon. member
likes it or not, this $600 billion debt was not run up by the Bloc
Quebecois. Yet there it is, bigger than ever.
The hon. member wanted to know why we wanted
parliamentarians to sit on this committee set up by the Minister of
Finance. It is precisely to explain things to those outside the party
in power who have expertise in this area. Bloc and Reform
members would simply like to show these people the auditor
general's 1994 report, which referred to some cases of abuse by
corporations with foreign subsidiaries.
(1215)
Let us take an example: suppose it costs a mining company on
Quebec's North Shore $20 to produce one tonne of iron ore. The
company sells that ore to its affiliate in Nassau, Bermuda, or
somewhere else, for $21 a tonne, thus making a profit of one dollar,
which it reports to Revenue Canada and on which it is prepared to
pay tax. However, the Bermuda affiliate did not do anything with
the ore; it did not pay anyone. It resells the ore for $75 a tonne, thus
pocketing a profit of $55 without having to pay any tax in Canada.
The hon. member says that the affiliate should not have to pay
anything, since it did not do anything in Canada. Why should we
tax some poor foreigners? The Auditor General of Canada raised
the issue in his 1994 report. This is precisely what the Bloc
Quebecois is discussing.
Obviously we have no interest, nor any right, in taxing a
company in Timbuktu that does not even know that Canada exists.
This is not the idea. We want to target Canadian affiliates that are
set up on the sly, in a tax haven, to avoid paying considerable sums
of money to Revenue Canada.
This is our goal, and I ask the hon. member who just spoke if he
realizes that there are many such cases and that something ought to
be done.
Mr. Peterson: Mr. Speaker, whenever a Canadian corporation
sells services or goods to a foreign affiliate, whether in a tax haven
or elsewhere, the sale must be done at arm's length. Under
Canadian regulations, the price cannot be artificially fixed to avoid
paying taxes. Should a company attempt to do that, we would have
grounds to go after it and we would also have the support of tax
authorities in the other jurisdiction, because of our tax convention
with that country. Indeed, we have signed such treaties precisely to
try to solve problems like that.
The hon. member said that those selected by the minister to sit
on that special technical committee are friends of the Liberal Party.
I happen to know a few of these people and some have never voted
for the Liberals. But I can also tell you that they will never vote for
the separatists either. I personally have a great deal of respect for
the professionalism, the expertise and the experience of those
selected to sit on that committee. These people can help us because
they are real experts.
We need this kind of advice to have a competitive system and to
promote job creation in Canada.
[English]
Mr. Dick Harris (Prince George-Bulkley Valley, Ref.): Mr.
Speaker, while I do not support the Bloc's motion today, I am
somewhat surprised at the Liberal opposition. I know the hon.
member for Willowdale has considerable business experience.
902
I am surprised, given the track record of Liberals and taxation,
and looking for ways to wring more money out of the Canadian
taxpayer and Canadian business, they are not writing down all the
suggestions that the Bloc is putting forward as new ways to get
taxes from Canadians and from Canadian business.
The member for Willowdale talked about the underground
economy and how the Liberals are dealing with it. That brings me
to the reason for the underground economy, the dreaded and hated
GST.
(1220 )
Does the hon. member recognize that the GST is the single
greatest contributing factor to the underground economy and does
he recognize that the underground economy is not going to be
conquered until this Liberal government lives up to its promises to
abolish the GST?
Mr. Peterson: Mr. Speaker, I thank the hon. member for Prince
George-Bulkley Valley for his question.
The GST is not the single greatest cause of the underground
economy. The GST is 7 per cent. A much higher tax is the personal
income tax which is 54 per cent in Ontario.
If people were going into the underground economy to avoid
taxes otherwise payable, they would have a 54 per incentive to do it
in the personal income tax system, which I happen to think is at the
ceiling of what can be charged and should come down as opposed
to a 7 per cent tax incentive to do it on the GST.
When this tax is harmonized with various provinces, when
compliance with the tax has been made more simple for small
business, when the tax is included in pricing so it is fairer to
consumers, it will be an even better tax. I know the member will
support those provisions because they will cut down the cost of
public administration, help small businesses and help consumers. It
will be in the interests of all of us.
The member asked if I am not interested in finding ways,
whether they come from the Bloc or not, of increasing taxes. We
are interested in finding fair ways to ensure that the tax burden is
shared. We want to get rid of the underground economy. It is not
fair to those who are paying their taxes that there are some people
who might be abusing the system and not paying their fair share.
This is one of the big areas on which we want to clamp down. The
minister mentioned ways in his budget and there will be other
measures coming forward in the future.
We want to end abuses that take place through the use of offshore
companies just as Bloc members suggest. However, they have
come up with a whole new system: offshore profits must be taxed
at full Canadian rates. We would be the only country in the world
that was doing this. What would happen to Canadian based
multinationals? What jobs would flow out? Are they going to do
this for Quebec based companies in their next budget? They would
be insane to and they will not do it. I will make that prediction.
If some companies are abusing the system, such as using unfair
transfer pricing or not having fair market value attributed to goods
and services, then we will come down on those companies, be they
Canadian or foreign owned, like a ton of bricks. That is our
promise.
[Translation]
Mr. Roger Pomerleau (Anjou-Rivière-des-Prairies, BQ):
Mr. Speaker, I am always surprised when I hear about the very
knowledgeable experts who will be advising us. We have been
listening to experts for thirty years and the debt stands at $600
billion. So perhaps we should start to look seriously at who the real
experts are in Canada.
I am speaking to the motion put by my hon. colleague, the
member for Saint-Hyacinthe-Bagot. This motion essentially says
that the technical committee to examine taxation announced by the
government is in complete conflict of interest.
I am pleased to speak today on this topic, which is of concern to
all citizens of Quebec and of Canada, but which does not seem to
be all that troubling to the government. I want to talk about
taxation, because that is what people are talking about. They are
talking about tax collection. Taxation is admittedly not a very
popular topic these days, with the state of the economy going from
bad to worse. But, in fact, we are going through some difficult
times economically. We are also witnessing the gradual
disappearance of the middle class, another topic that is not often
discussed.
The people of this country have had it up to here with taxes, with
having their pockets emptied by one government after another,
with watching each successive government hand over the deficit to
the next for 30 years now. And all the government can come up
with as a solution is cuts. It cuts certain programs and overburdens
taxpayers in an attempt to make up the shortfall. In this year's
budget, the Minister of Finance was supposed to be reassuring with
his announcement that there would be no tax increases.
(1225)
This cosmetic budget, as was shown in the speeches that
followed its reading, is just a show aimed at saving face for the
government. It does nothing more than camouflage the real cuts. It
will be recalled that the 1994 budget saw government cuts of $44.9
billion over five years. In the 1995 budget, the government again
cut $42.7 billion. This year's was perhaps intended to be reassuring
by making only another $1.9 in cuts to various programs, yet this is
the year taxpayers will bear the full brunt of the measures passed
earlier but coming into force only this year.
903
Why do cuts have to be made? Because public finances have
to be put back on their feet. The deficit must be eliminated, of
course. The government claims that it has gained the upper hand
and that it has solved Canada's financial problems. These are false
statements. According to its own projections, the present Liberal
government expects that, by the end of its mandate, this year's
mandate, it will have added close to $110 billion to this country's
debt. We are on the verge of clicking over to the $600 billion
mark-our Reformer friends would be able to tell us when, since
they are doing a countdown minute by minute.
The Minister of Finance has also announced a deficit reduction.
He is patting himself on the back for it, claiming the honours are
his. Let him if he wants to, but the only reason the deficit has
lessened is that the economic situation last year was better than in
previous years, and the Liberals had little to do with that. It is the
low interest rates, the increase in exports and the unemployment
insurance fund which have contributed to reducing the deficit.
Digging into the UI fund is almost like garnisheeing everybody's
pay cheques. Without those three things, we would be back in a
recession.
Concretely speaking, this year's budget marks the end of efforts
to restore Canada's finances. With this budget-and the same goes
for all previous ones-the Liberals have done nothing to settle the
matter of public finances. Yet we know that this is the one and only
thing the public is calling for.
The Bloc Quebecois has long been calling for the government to
get its finances in order, ever since we came to this House in fact.
Not by getting more out of the ordinary taxpayer, but by collecting
from those who do not pay their fair share into the public purse.
Regardless of what our friends opposite have to say, a lot of people
in Canada do not in fact pay their fair share. Last year, there was
over $6 billion in unpaid taxes, and the government was unable to
reduce this amount compared to the previous year. As we just said,
it preferred to draw $5 billion out of the unemployment insurance
fund, which amounts to a general confiscation of people's salaries.
We have also been calling in the past two years for major
government reform of tax treaties between Canada and certain
countries. Business taxes must be completely overhauled.
According to the Minister of Finance's most recent estimates,
approximately $10 billion in incomes go untaxed. Not only must
the tax system be overhauled, but an end must be put to tax
avoidance, also known as tax havens, because this is where we lose
the most. My colleagues in the Bloc speaking before me have
clearly shown how, in recent years, companies providing advice on
the use of tax havens have made a lot of money and are tripling,
quadrupling and sometimes quintupling their clientele.
I would like to talk about tax havens very briefly. There are real
loopholes in some of the treaties between Canada and other
countries, which allow individuals and companies to lower their
level of taxation significantly. What is not paid on one side, is
obviously passed on to others. This is how a number of foreign
countries become what are called tax havens-not for the middle
class, but for the companies using them.
The area of tax havens is a highly complex one. We cannot hide
the fact that the Canadian Income Tax Act is the most complex
piece of legislation of all, and my colleague for
Saint-Hyacinthe-Bagot, who spoke before me, pointed out that
the greater the complexity, the easier it is to find loopholes. So, the
section on foreign corporations is no doubt the most complex
section in this most complex law.
(1230)
Since Canada deals with several countries, and since each
country has its own tax system, it is difficult to get our hands on
exact figures-especially in those countries where they are
confidential-regarding the extent of the problem and the amounts
involved. But financial experts agree that nearly all major
Canadian multinationals use tax havens as part of their tax strategy.
It has become a tax strategy in itself. They are not abroad
necessarily to produce something. Corporations use tax havens as a
strategy to avoid paying taxes; they derive several advantages from
this.
The same experts also agree that the popularity of tax havens has
reached unprecedented levels. Several elements show the size of
the problem. Earlier, my colleague from La Prairie mentioned
several corporations such as International Privacy Corporation
which use and give advice on how to use tax havens. He made his
point brilliantly and I will not go over it again.
In order to fully understand this tax haven phenomenon, we have
to get back to basics. The general rule is this: any business income
and any income earned by a Canadian corporation must be taxed,
whether earned in Canada or abroad. But to every rule there is an
exception; therefore, the legislation provides that a Canadian
corporation can receive a business income from an active affiliate,
without paying any tax on it in Canada, provided that the foreign
affiliate is located in a country designated under the Income Tax
Act, that is to say one of the countries with which Canada has
entered into tax arrangements.
In the end, this means that a Canadian corporation with a branch
in a designated foreign country does not pay taxes on the branch's
income abroad. This provision was originally included in the law to
avoid double taxation, as the previous speaker from the Liberal
Party has just explained, by both Canada and the foreign country.
The Canadian government considers that the income earned abroad
904
is taxed at about the same rate as in Canada. Tax havens were
created on the basis of this false assumption.
This has had two major consequences. First of all, some
countries have very low tax rates that hover around 2 or 3 per cent,
while Canada's tax rates are in the 40 per cent range. Technically
speaking, this gap can only lead to a tax inequity that costs the
Canadian government millions of dollars.
Second, foreign subsidiaries can transfer their dividends to the
controlling Canadian corporation without paying any taxes on
them. In other words, the law allows corporations to transfer the
losses of foreign subsidiaries to the parent company, to transfer
Canadian corporate income abroad, and finally to shelter income
that is normally subject to tax by transferring capital to foreign
subsidiaries. One of my colleagues gave a very good explanation
earlier of how corporations manipulate prices by buying something
in Canada at a certain price from a foreign subsidiary and then
selling it on foreign markets in order to make a profit in a tax
haven.
The auditor general's 1992 report-which was widely quoted at
the time but which was also, like all other reports by the auditor
general, shelved and largely forgotten after being talked about for
ten days-gives some 20 examples of tax havens. I will quickly go
over four of them to at least show what the Auditor General of
Canada thinks about this.
The auditor general gives us four examples. First, a U.S.
corporation affiliated to a Canadian company has $684 million in
liquid assets and short term deposits from the Canadian company.
The investment income earned by the affiliated U.S. corporation
was used to reduce its U.S. tax losses. Interest charges on the
money invested in the U.S. corporation are deducted in Canada.
Although the Department of National Revenue, Taxation
considered that investment income was subject to a source
deduction, this manoeuvre allowed the corporation to transfer U.S.
tax losses to Canada. That is what the auditor general tells us.
(1235)
Here is another example. An American corporation affiliated
with a Canadian company holds $672 million in liquid assets and
short term deposits from the Canadian company. The investment
income earned by the American corporation has been used to
absorb its American tax losses. The interest costs on the funds
invested in the American affiliate are deductible in Canada. This
scheme has effectively transferred American tax losses to Canada.
Mr. Speaker, how lucky these people are to be able to transfer their
losses just about anywhere.
A third example quoted by the Auditor General of Canada in
1992, specifically on the use of tax benefits, tax avoidance and tax
havens, is that of a Hong Kong corporation affiliated with a
Canadian company and holding $62.4 million in liquid assets and
short term deposits from the Canadian company. The investment
income earned by the Hong Kong corporation has been used to
absorb tax losses incurred in Hong Kong. The interest costs on the
funds invested in the Hong Kong affiliate are deductible in Canada.
This scheme has effectively transferred Hong Kong tax losses to
Canada. The tax avoidance section at Revenue Canada-Taxation
has been following this case since 1990.
One last example-out of several pages of examples-is that of
the Canadian company which has an interest free advance of $1.6
billion and a $133 million investment in an affiliated corporation in
the Netherlands. This investment has generated $130 million in
income, which is not taxable as foreign accrual property income for
the foreign affiliate. In spite of the fact that this foreign affiliate's
income has not been taxed at a rate similar to the one applicable in
Canada, these $130 million can be transferred to the Canadian
company tax free. Not only is this foreign income not subject to tax
when brought into Canada, it entitles the corporation to federal and
provincial tax credits for dividends paid abroad. These companies
end up getting credits on top of it all.
I explained earlier how the Income Tax Act, the taxation
legislation, is one of the most complicated acts in Canada and I
think that the examples I have just given you are cases in point. The
Auditor General of Canada works hard at making sure that very
complicated cases can be understood by the general public.
Nevertheless, a great deal of concentration is still required to read
things like that. And these are just a few examples.
However, they illustrate how widespread the situation is. There
are other indicators of the scope of the problem. In his 1992 report,
the auditor general took a look at Revenue Canada's data bank. He
discovered that, until 1992, Canadian corporations had invested
$92 billion in non-resident companies with which they did not deal
at arm's length. In 1990, these Canadian corporations received
dividends totalling over $4.2 billion from foreign affiliates.
Of these $92 billion, $5.2 billion was invested in businesses in
Barbados, which is a tax haven. In 1990 alone, Canadian
corporations received over $400 million in dividends from
companies based in Barbados. These dividends were not taxed in
Canada.
All these figures are taken from the auditor general's report. A
total of $10.9 billion was invested in businesses in Cyprus, Ireland,
Liberia, the Netherlands and Switzerland, all considered to be tax
havens. In 1990, Canadian corporations received over $200 million
in dividends from companies run in these countries alone. These
dividends entered Canada free of tax. That was in 1990. Then there
is 1992 and other tax havens.
Recently, we have been hearing a lot about the Cayman islands,
and also the Turks and Caicos islands. These places have become
very popular, not as sunny destinations, but for wealthy Canadian
individuals and corporations. Corporations do not go there to enjoy
the sun, but to take advantage of the tax benefits. The information
returns compiled by Revenue Canada do not, of course, provide an
accurate idea of the scope of the financial dealings taking place
905
between parties in Canada and abroad. Some data is incomplete
and certain types of transaction are not listed.
But it is a known fact that people who do business in tax havens
are allowed some degree of discretion and do not have to report to
Revenue Canada all the profits made in these tax havens.
(1240)
What the auditor general said was that it could reasonably be
assumed that hundreds of millions of dollars in tax revenues had
already been lost and would continue to be at stake.
I could have added another ten pages to my speech, but I see that
my time is slowly running out. However, I would come to the
following conclusion. Faced with the Bloc's proposals to review
Canada's tax system, which we have kept reiterating ever since we
have been elected to this place, the minister now says that he will
finally set up a technical committee on taxation.
When our colleagues opposite tell us that the greatest experts in
Canada will sit on this committee, we do not dispute that fact. I am
totally convinced that the best experts in Canada will sit on this
committee. However, what we are questioning is what has become
obvious to everyone else, which is that this will be a closed
committee, a committee on which no members will be allowed to
sit but that will be made up of the very same people who advise
companies on tax havens. There is an obvious conflict of interest
here.
We are talking about the very same people who use these tax
havens and a lot has been said about these companies, such as Price
Waterhouse and Ernst & Young. These companies have affiliates in
at least five tax havens. They are right in the middle of a conflict of
interest, and all the minister has to propose is a mini-reform done
behind closed doors.
In other words, we will bring together the best experts in Canada,
the very same people who show corporations how to avoid paying
taxes, and we will ask them to carry out a study on the best way to
ensure these companies do pay taxes. This does not make any
sense. If the government, the opposition or even the Reform Party
have no representatives on this committee, it will be a phoney
committee which will not even have an agenda.
We are told that a report will come out later and that, when it is
released, the population will be able to review it. When will that
be? After the next election? After another referendum? There will
never be a tax reform and we are sorry about that. We also regret
that this committee will be both judge and judged. We regret the
committee's lack of openness and we hope that members of
Parliament will take part in the tax study this technical committee
will carry out.
Mr. Bernard Patry (Parliamentary Secretary to Minister of
Indian Affairs and Northern Development, Lib.): Mr. Speaker, I
want to thank the member for Anjou-Rivière-des-Prairies for his
speech. I would like to make a comment because I do not want
Canadians to be left with the impression, after what the member
just said, that the present government is reducing the deficit on the
back of workers and on the back of the most vulnerable people in
our society.
When we took office in October 1993, the deficit for 1993-94
represented about 5.9 per cent of the GDP. For the fiscal year
ending at the end of this month, we have brought the deficit down
to approximately $32.7 billion, with a cushion for the finance
minister. This will be about 4 per cent of the gross domestic
product. For the coming year, we had predicted in our red book that
the deficit would be down to 3 per cent of the GDP or around $24
billion and, furthermore, the finance minister has told us that, for
the 1997-98 fiscal year, the deficit will be down to $17 billion or 2
per cent of the GDP.
I want to remind the member that, when we took office,
government spending amounted to $120 billion and that it will be
down to $109 billion for the coming year and possibly to $106
billion for 1997-98, which is a reduction of $14 billion or 12 per
cent.
(1245)
The member also talked extensively about tax havens in his
speech and my question relates to that. According to the member, it
seems that thousands and thousands of Canadians do business with
other countries to avoid paying taxes here.
Can the member please tell me and tell the House how many
Canadian corporations take advantage of tax havens, according to
his research?
Mr. Pomerleau: That is a very good question to which I have no
answer. And I have no answer precisely because we are being
presented with a committee of experts on which we have no seat.
We would just like to work with this committee, which will include
Price Waterhouse, and Ernst & Young, in taking a thorough look at
taxation.
If, after that, we see that there actually are not a lot of companies
using tax havens to evade taxes, we will bow to the facts. However,
in 1992, the Auditor General of Canada spoke of billions of dollars,
from what little he could tell, that were not being taxed and
recommended a review of the tax system. What we are being
served up is a phoney review, which will be carried out behind
closed doors, without representatives of the government or the
opposition or even the third party, without any sort of
parliamentary representatives, and we are being asked to reply to
questions to which we do not wish to reply.
906
I hope that my hon. colleague will be among those who will
try to convince the government that there should be
representatives of Parliament on this committee of so-called
experts, and we will be able to give him figures at that time.
Mr. Mac Harb (Ottawa Centre, Lib.): Mr. Speaker, I will be
sharing my time with my colleague from Durham.
Today, the opposition has decided to move a motion deploring
the federal government's decision to hold consultations on the
taxation system.
I wish to congratulate the government and the Minister of
Finance for this initiative, for it is a highly significant one. I cannot
personally claim to be an expert in tax reform, nor do I believe that
any of my colleagues here in the House are experts in that area.
If they are, my colleagues will all have time to voice their
opinions, whether Liberal, Bloc or Reform. After all, every day in
this House we have a chance to make proposals, to pass on our
ideas and proposals to the government and to the Minister of
Finance, not only on tax system reform, but on any other matter
before the House of Commons.
I would respond to my colleague by saying that, since we were
elected, the federal government has taken all, or most, of the
measures required to put a dynamic economy in place, one that
satisfies the public.
One need only look at what the government has done over the
past two years in connection with the deficit, which is a matter of
concern to all Canadians. Our government has promised to control
the deficit. I am sure my opposition colleagues will be able to find
it in themselves to congratulate the government for controlling the
deficit for two years running. We hope it will continue to be
controlled in the years to come.
(1250)
The private sector has long been asking the government to
control the deficit, because, by controlling the deficit, there will be
a lot more money for social programs, old age programs, youth
programs and health programs. It will also create an atmosphere
that would encourage the private sector to create jobs in Canadian
society.
Another thing the private sector has long requested of the
government is control of the rate of inflation. At the moment in
Canada, inflation is at its lowest point in 30 years. This is quite
extraordinary, and we should be proud of what the government has
done in this area.
The other thing Canadians and the private sector have asked the
government to do is control interest rates. People in business,
people with mortgages on their home and people who need to
borrow to pay their debts will have an opportunity to borrow at a
low interest rate. Since our arrival here, the interest rates have been
low.
The third thing is economic indicators. If we look at what the
government has done up to now, we see that Canadian society and
Canada's economy are the strongest among those of all the
industrialized countries. The economic indicators are very
encouraging. This is one area where the federal government should
be congratulated, because it has done something very interesting
and of great significance for the private sector and the people of
Canada.
Furthermore, in the budget the Minister of Finance delivered in
this House, an extraordinary program was implemented. I wish my
hon. colleagues opposite would congratulate the government on
taking action. For instance, they should look at what the Minister of
Finance said in this House about improving assistance to Canadian
companies and industries involved in research and development;
they should look at what this government has done in terms of
reforming seniors programs; they should look at what it has done in
terms of reforming programs for Canadian youth, and for students
in particular, who will be out looking for work within two or three
months and in the next year; they should look at what the
government has done for exports. Finally, the Minister of Finance
told us that the government would be introducing concrete
measures to help Canadian companies export even more.
Why did he say that? Because, ultimately, Canada's economic
growth depends directly on the export rate of Canadian products.
We must realize that many of the jobs we have in Canada exist only
because one company or another is exporting to other countries. It
is therefore very important that we put in place measures to help
these companies trade in exports. I would say that our government
has taken active measures in this respect. My colleagues and
myself congratulate the Minister of Finance on his action in this
area.
There is also the fact that small and medium size businesses in
Canada have been creating and continue to create the majority of
new jobs in this country. Again, the federal government took active
measures, especially regarding banks that lend money to small and
medium size businesses. The government has invested some $50
million in helping small business.
I would expect my hon. friend from the opposition to
congratulate the federal government. I would not expect the Bloc
Quebecois to use an allotted day just to attack the Minister of
Finance's initiative. The Minister of Finance wants to involve
experts in the taxation reform. He wants to discuss this matter with
the public.
(1255)
He is looking for proposals and suggestions. This does not
prevent any of our colleagues, on either side of this chamber, from
telling us how they would go about revising the taxation system.
Mr. Speaker, I thank you for allowing me to say a few words on this
907
subject and I expect that now one of my hon. friends opposite will
jump to his feet to congratulate the government on a job well done,
right?
Mr. Patry: Yes, congratulations.
Mr. Jean-Guy Chrétien (Frontenac, BQ): Mr. Speaker, of
course, I will not go as far as to commend the Minister of Finance
for this initiative, which I think is phoney. I remember very well
that, last week, the Secretary of State for Agriculture, no less, told
me they had consulted with dairy producers before cutting their
subsidies by $8,000 a year on average.
He seemed to suggest that dairy producers had agreed to let the
Minister of Finance cut their subsidies by $8,000 a year. In fact,
dairy producers were not consulted. I simply wanted to draw an
analogy with the phoney consultation our good Minister of Finance
is in the process of setting up.
He is travelling all over the place to sell his ideas, which we are
already familiar with. Earlier, my distinguished colleague from
Anjou-Rivière-des-Prairies talked about numerous Canadian
companies that get incorporated in islands with very low tax rates,
including the Bahamas. The Minister of Finance, who is listening
to us, knows exactly what I mean, since he himself takes advantage
of some corporate tax loopholes.
The consultations they are about to hold remind me of those that
took place in the dairy industry. A few days before the
referendum-and I would like my colleague to comment on
this-Laurent Beaudoin was interviewed on Maisonneuve à
l'écoute. In response to Mr. Maisonneuve's question, the Chairman
and CEO of Bombardier revealed that they had paid no income tax
in the last three years and that he could not even remember the last
year in which they had paid taxes.
You must be uncomfortable. Your hands must be shaking when
you vote in favour of legislation cutting funds for the little people,
including UI recipients, when you let millionaires, even
billionaires avoid taxes entirely. There is no need to consult
anyone.
The Deputy Speaker: The hon. member must always address
the Chair. I believe a question was put. We will let the other hon.
member reply.
Mr. Harb: Mr. Speaker, I will simply say that the hon.
member's reaction shows that the government is on the right track.
As for the matter he raised, to the effect that some company did not
pay any tax last year or the year before, I will not go into the
specifics of the case, but one must be able to do some basic
calculation. When a company makes profits, the government is
there to tax it. However, when a company does not make profits,
the government simply cannot tax it. This is very simple and this is
what the government has done. I want to point out to the hon.
member that 500,000 jobs were created since our government took
office. These 500,000 jobs were created thanks to the tax measures
taken by our government.
(1300)
Mr. Chrétien (Frontenac): You also put 500,000 people out of
work; therefore, the end result is zero.
Mr. Harb: I can tell the hon. member that our government's
initiatives in the last two years have resulted in an increase of
500,000 jobs in the Canadian economy. Therefore, the hon.
member should rise to congratulate the Minister of Finance and the
government.
Mr. Chrétien (Frontenac): You will have to wait for a long
time.
[English]
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I am happy
to share my time with the member for Ottawa Centre.
I rise in debate today on the Bloc motion which is basically
concerned about the government's hiring a technical advisory
group to advise on the issue of business taxation.
It is an odd thing. From time to time we discuss business
taxation here in some very strange formats. The reality is
corporations are fictitious creatures of the legal system. There is no
such thing as a corporation. We cannot touch it. We cannot feel it.
The reality is when we tax corporations they simply use that
taxation to turn around and treat it as a cost of production and
allocate it to consumers. The only true taxation is taxation of
individuals.
The underpinning of this motion is a concern that people who are
experts in the field of taxation somehow should not be advising the
government. Of course, nothing could be further from the truth. As
I look over the roster of the people who are in this technical
advisory group, I see Mr. Brown, chief executive officer of Price
Waterhouse, and Nancy Olewiler, a professor and chair of
economics at Simon Fraser University. These are people who are
eminently involved with economics and business taxation from
across Canada.
This is not the end of the process. These people are basically
advising the government in the areas of business taxation.
The concern of a lot of people is with two things, tax simplicity
and fairness. There is a great feeling that our system is not fair.
There is a great feeling also that it is far from being simple.
We have to continue to keep our corporate structure attractive for
Canada to be a place to do business in. Clearly if our corporate tax
structure was such that we inhibited businesses, new businesses
would not start in Canada. Consequently we would not reap the
benefit of employment caused by that.
The whole issue of fairness talks about how people are taxed
under the existing system. I will deal with one aspect of fairness
which concerns me. It concerns me so much so that I presented a
908
private member's bill, Bill C-215, now before the House. I do not
think people realize we have had spiralling rates of taxation in
Canada. As we have had spiralling rates of taxation we have asked
our collection agency, Revenue Canada, to be ever more judicious
in extracting that money from the general public.
As a consequence, some of the things we ask Revenue Canada to
do, for instance the seizure of bank accounts, even the sale of a
spouse's residence on the demise of her husband, are really
questions of whether government should have those kinds of power
and whether we should temper them.
My private member's bill addresses this matter. There is a
taxpayer's bill of rights in the United States. In the United
Kingdom there is a taxpayer's ombudsman. Basically that is what
my bill proposes to give to the people of Canada, some kind of an
intermediary between taxing collection authorities and people in
general.
(1305 )
Many members have seen in their ridings situations of seizures
of bank accounts. Sometimes Revenue Canada makes a mistake.
We are all human and we sometimes make mistakes. When
Revenue Canada makes a mistake the credit rating of the company
or individual is blemished and there is no real recourse in the
system other than a very expensive litigation process.
I refer to a single woman in my riding who because of the
taxation of child benefits incurred something like a $1,500 tax
liability to Revenue Canada. She is paying that back over a
two-year period. She dealt with two or three collection officers and
the third one decided to be very aggressive and seize her bank
account, getting a total of $94. The woman had been paying as
agreed. Through the process she had a heart attack and lost two
weeks of work. She is out $800 and there is no real prospect of
getting that back from the system.
My bill tries to deal with some of those inequities. In some ways
the motion of the Bloc is concerned with the fairness of the system.
There is much talk that our tax system is not simple. Well over
50 per cent of individuals who file tax returns do so on their own.
They do not require professionals to give them assistance. That is
good news.
One thing that unites this country, if nothing else, is that at this
time of year we are all sitting down with blue forms trying to figure
out our taxes. That holds true from Newfoundland to British
Columbia to the Northwest Territories. I do not know if that is a
good or positive thing, but it is something we all do and I am sure
we all agree we dislike the process.
The system is complex. As I said before, the reason is that we
asked the system to ratchet up the amount and quantum of tax it
extracts from the general public. When that is done it is very much
like a water pressure system where the pipes are designed to sustain
approximately 50 pounds per square inch. Now we are asking to
put pressure in that system of something like 1,000 pounds per
square inch and we get leaks from time to time and we are required
to patch the leaks. It works the same with the income tax system.
When we patch the leaks the income tax gets higher and higher.
When I was in practice every week we got a two or three-inch
stack of amendments to the Income Tax Act. The reason it is
complex is the amount of money we want to extract from the
system.
This is not new. Economics books can take us back to the time of
the Romans and even before and will show that every regime that
tried to increase taxes exponentially eventually ran into a wall of
complexity and evasion. There is a point at which people will
evade the system because of the amount of money being extracted
from the system.
My hypothesis today is that the system is complex not
specifically due to bureaucratic wrangling but with the amount of
taxes we want to extract from the system. My argument is we could
put simplicity in the income tax system but it would have to be
done by reducing the quantum of taxes we pay. This is certainly an
objective of the government. We realize Canada's taxation system
on a personal basis is the second highest of all OECD countries,
France being the first.
To get simplicity back into the system it is obvious we have to
reduce income taxes to individuals. How can this be done? The
government has taken on a concerted program to reduce the deficit
and debt. Obviously it has to do one thing at a time, get the deficit
and debt situation under control before we can look down the road
to actually reducing taxes on individuals. That is part of the
process. The reality is both things cannot be done at the same time.
One provincial government wants to do both things at the same
time, the Government of Ontario. It thinks it can cut spending
while at the same time reducing taxation. This is not impossible but
quite frankly unfair. What happens in that situation is it starts
cutting back the basic social services people have come to expect
and appreciate from the government. When it cuts back taxation,
because our system is progressive, that is to say as you make more
money you pay more taxes, eventually what it is doing is
transferring the reductions in social programs to the people who are
the most wealthy. It is sort of a reverse Robin Hoodism, if you will,
of economics.
(1310)
The federal government is not committed to that kind of concept.
It realizes we have to cutback and make governments smaller, but
clearly it cannot turn around and give the benefits to those who are
most wealthy and who do not need the protection of that.
909
Why are rates progressive? Most of us in this country and indeed
most of the western world have realized it is very important to have
a redistribution of income. That is to say, as people make more,
proportionately they pay more in income tax.
I can point out countries that do not do that for a variety of
reasons, some which have systems that look like they are doing that
but the result is actually the reverse. I look at countries in South
America, particularly Peru, which I have visited. I talked to the
people about their economy. I realize what happens when you do
not have a progressive system. Basically you end up with a small
group of people with a lot of money and you end up with a lot of
people with no money. That is the kind of system we do not want to
promote.
No one is better off in that situation because even those who are
wealthy can longer find a market or trade for any business goods
they have because there is no market. Nobody can afford to buy
their products. That is why our system is progressive.
This leads me to the discussion of some of my Reform
colleagues embracing the flat tax. The Hall-Rabuska study of 1985
originally put forward the concept of a flat tax. Ironically that flat
tax was based on the concept of not only a redistribution of income
but also a negative income tax that purported to be able to transfer
money back out to people as a social welfare system. This is not so
with the right wing movement both in the United States and
apparently in our country as well. The flat tax system has been
turned on its head.
What is a flat tax system all about? A flat tax system is doing
away with progressiveness. That means as you make more money
you pay the same amount as somebody behind you. In other words,
we do away with the whole object that the wealthy will pay
proportionately more as opposed to those who are less wealthy.
Clearly that is not saleable. Politically that does not make a lot of
sense.
The way we sell the flat tax is by linking it with something we
can sell, and we can sell simplicity. In a sense what we try to do is
link the flat tax with basic simplicity because everyone can
understand it and they like simplicity in the taxation system.
What does simplicity have to do with a flat tax? They have very
little in common. The proponents of the flat tax would like us to
believe they can reduce the cost of tax collection. The reality is
they cannot do that.
There are very few economic studies that will indicate the
evolution of a flat tax actually reduces the cost of the collection
system. Most people who support a flat tax system are basically
attempting to sell their product by putting a little good in with the
bad.
Sixty-six per cent of the total quantum of taxes in Canada are
collected from the top 30 per cent of taxpayers. It does not take
very long to understand-
[Translation]
Mr. Ghislain Lebel (Chambly, BQ): Mr. Speaker, I listened
with a great deal of interest to the comments of the hon. member
who just spoke. Unfortunately, he does not address the issue on the
order paper today, this famous committee of experts set up by the
Minister of Finance to analyze business taxation.
This is what we have been saying for the close to three years, and
the Auditor General of Canada told the minister in his 1993-94
report that business taxation was deficient. But the minister does
not appear to understand or to hear.
(1315)
I would simply like to recount a short anecdote that the hon.
member may find helpful. One day, a Japanese minister threw out a
challenge to his Canadian counterpart, probably the finance
minister, to see which of the two groups, the Canadians or the
Japanese, would be able to row across the St. Lawrence River the
fastest. The Japanese team showed up with four rowers and a
coxswain. The Canadian minister of finance, mightily amused,
turned up with one rower, two section chiefs, one director and an
assistant deputy minister.
The race began. Half way across, the Japanese were already ten
minutes ahead of the Canadian team. No matter, not to worry. The
Canadians added another section chief, to motivate and encourage
the rower. On they went. Three quarters of the way through the
race, the Japanese had a 20 minute lead. Something had to be done.
The deputy minister himself was called in, took up his spot in the
boat and on they went. The rower must not lose motivation. Not
surprisingly, the Japanese won the race hands down, with a
30-minute lead over the Canadian team. What had happened?
There was a post mortem. Many months and many hundreds of
thousands of dollars later, a report concluded that they had fallen
down in organization, productivity had not been good, and
communications between management and employees poor. So
they abolished the position of rower.
This joke is instructive. What we have here is the same thing. A
committee will be created, that we in the Bloc Quebecois do not
necessarily want-but since it is the wish of the Minister of
Finance-a committee of experts to analyze business taxation. We
say to you: ``This committee should include members of all parties,
who could contribute their knowledge, speak directly to the friends
you have appointed, and try to get them to face the facts''.
No, you say. You have things to protect, but it will end up the
same as the joke I just told. After spending hundreds of thousands
of dollars, and probably holding hearings across Canada, the
conclusion will be that the rower was no good. In the end, it is the
economy that is no good, with all your interfering.
910
[English]
Mr. Shepherd: Mr. Speaker, I thank the member for his
question.
Once again something is missing in relation to this committee. It
is not an end in itself. People with expertise in the area of business
taxation are being asked to provide their comments. Legislation is
still the venue of this House and debate will occur here. You are
attacking the whole concept of governments seeking outside
expertise. You could use this argument with any area of
government legislation.
The member's discussion concerning the Japanese and
Canadians is quite apropos. In 1951 Japan and Canada had the
same gross domestic product. That is quite interesting because by
the year 2000 Japan's gross domestic product will exceed that of
the United States. Japan is a country with half the U.S. population
and almost none of its natural resources. We have to get on with the
reality of making this country a more effective and dynamic
economic institution.
I note some of the complaints the Bloc has about creating a
national securities market. Capital has no boundaries. We have to
create more dynamic markets to get our business community up
and competitive in a global environment-
The Deputy Speaker: I would ask all colleagues please to
address their remarks to the Chair. If they say who or you it should
be to the Chair, not to their colleagues across the aisle.
[Translation]
Mr. Jean-Guy Chrétien (Frontenac, BQ): Mr. Speaker, I
remember very well that, in the report he submitted 12 months ago,
the auditor general, Mr. Desautels, talked about $6.6 billion in
unpaid taxes. Most of this $6.6 billion in unpaid federal taxes was
owed by very wealthy people and large corporations.
(1320)
There is no need to spend $700,000 or $800,000 on friends of the
government to find ways to collect the money owed us. One of my
neighbours owed money to the government, so they seized his
assets. He was an ordinary man of modest means. They seized his
assets, sold his pick-up truck and gave him about $100 that was left
over after they collected their taxes. No review committee is
needed to go after this $6.6 billion. Only $200 million was
recovered after a year. This is no cause for celebration.
[English]
Mr. Shepherd: Mr. Speaker, the $6.6 billion is not all related to
corporate income tax. Surprisingly enough, I believe almost$1 billion of that relates to single mothers whose child support
payments are delinquent and therefore not enough cash flows into
those households. It was the government that changed the income
tax system to make that a non-taxable transaction.
The member is suggesting that we should go out and put the
squeeze on these single parent families which has nothing to do
with corporate taxation.
Mr. Dick Harris (Prince George-Bulkley Valley, Ref.): Mr.
Speaker, I am pleased to speak today to the motion put forward by
the separatist Bloc Party. This is a very peculiar motion. I wonder if
the Bloc has a hidden agenda. After all we know its purpose in this
House is not to support policies and positions that Canada may take
for the good of Canada as a whole.
As I read the Bloc's motion today, I became suspicious about
what exactly is behind it. It appears that Bloc members are asking
the House to form a joint committee of business experts and
members of Parliament, which would include the separatist Bloc
members, to come up with a plan on how to address corporate taxes
and the regulations that corporations live by in doing business
inside and outside of Canada.
However, it is almost hypocrisy that the Bloc Party would want
to have members on this committee, which would be looking for
ways to benefit the whole of Canada, when its agenda is simply to
break up Canada. This motion by the Bloc is very hypocritical and,
I suspect, has a hidden agenda.
The committee proposed by the government is a good idea. It is
going to bring together business leaders and experts to examine the
tax laws in Canada dealing with corporations. When the committee
has reports from time to time, it will turn them over to the finance
committee which is comprised of members from the government,
the separatist Bloc and the Reform Party, the unofficial opposition
party in this House. Members will discuss it openly in committee
and all will have a chance to have input into the reports. Therefore,
there is a decent amount of transparency and openness which the
Bloc says there will not be in this committee.
I cannot really see, considering that MPs will have the last say on
any report or recommendation in the committee and in the House,
how the Bloc members can say there is not enough participation by
members of Parliament in the process. I do not think there is any
reason to be concerned about the lack of input from experts in this
field should this joint committee that the Bloc is proposing not be
established.
These are only some minor points that I raise relating to the
wording of the Bloc motion.
911
(1325 )
The Bloc has really missed the target and has wasted a supply
day that would enable its members to talk about taxation in general.
It wasted that day by preferring to attack the membership of a
committee on corporate tax reform.
This was an ideal opportunity for Bloc members to tell the House
and Canadians about the unconscionable taxes that are being
charged to working men and women.
Canadians in every province are crying out for tax relief whether
they live in Newfoundland, Quebec, Ontario or any of the western
provinces. The average Canadian is overburdened with taxes.
Taxes have increased to the point where both parents working in a
household has become commonplace. Because of tax levels,
disposable income has continued to shrink while the cost of living
has gone up.
This whole spiral of taxation increases was started by the Liberal
government of Mr. Trudeau and carried on to the government we
have today.
The Bloc has failed Canadians by not putting forward a motion
that deals with taxation levels in general. As members know, since
Reformers came to this House, we have stood up over and over, day
after day, crying out for tax relief for overtaxed Canadians. The
reason why jobs are not being created by the private sector and the
corporations is because taxation levels and the cost of business are
too high.
The Canadian Business Council and every business organization
in the country have told the government about the high levels of
taxation that corporations are facing. They have said that if you
want us to create jobs, then give us some tax relief. We will create
them.
The finance minister in 1994 even talked about how many jobs a
decrease in the payroll tax would create. What have they done
about it? Nothing. Since the government has come to power it has
increased taxes from all sectors by a total of some $11 billion.
These are tax increases in all forms. Canadian business, Canadian
corporations, average working Canadians were not excluded. They
are paying the bills.
The Reform Party released a taxpayers' budget which called for
balancing the budget in three years and getting rid of the deficit.
This would lead to the tax relief that is needed and that will create
jobs.
Reformers have criticized the government for its continued use
of taxation measures to deal with the out of control deficit. We have
argued in favour of a reduction in expenditures since the
government has a spending problem and not a revenue problem.
There is enough money coming in. It is just that the government is
spending too much.
Today, on the supply day of the separatist Bloc party, not a peep
is heard from its members with respect to the taxation levels on
average Canadians. There is not one word about the taxation levels
of average Canadian working men and women inside and outside
Quebec.
They have wasted this supply day dealing with some objection to
the formation of a committee. In the whole grand scale of things,
when one considers the whole tax problem and how important it is,
how could they feel that a motion dealing with that committee is of
such magnitude that they are going to waste a supply day?
They have not come close to such a statement in this motion. It
fails miserably, which is too bad since it leaves only Reformers in
the House to stand up on behalf of Canadian taxpayers and point
out the devastating situation that Canadians find themselves in.
(1330 )
As I pointed out, since the Liberals were elected taxes have risen
by $11.4 billion. This country does not have a revenue problem, it
has a spending problem. If we assume there are 13.5 million
taxpayers, that represents an average tax hike to Canadians of
$840.
As the official opposition-and there is some question as to the
reality of that-those members should be standing up for the 13.5
million Canadians, using their position to attack the government's
taxation policies. Did they? No. They want to deal with a
committee process. I say shame on them. They have wasted a
supply day.
Bloc members have demonstrated a disdain for corporate profits.
They are prepared to bite the very hand that creates jobs in the
country, that creates jobs in Quebec. The corporations are creating
the jobs. Do they think the government will continue to try to create
jobs? What happens when the money runs out, as it does with any
government program? Yet Bloc members are standing today to say
that the nasty corporations are ripping everyone off.
Any average citizen knows who creates the jobs. The Liberals
would have us think differently. The Bloc would have us think
differently. However, the average Canadian knows it is the private
sector that creates real, long term, good paying, reliable jobs.
Would the Bloc not do better to discuss measures which would
reduce the level of taxes on Canadians and Canadian business on its
supply day? Certainly these are matters which the Bloc should
bring forward to the government on behalf of Canadian taxpayers.
But why should we expect that when clearly the Bloc does not have
the interests of all Canadians at heart?
It is the Reform Party that continues to bring these important
fiscal matters to the attention of the government on behalf of the
taxpayers. We are proud to do it.
I do not support this motion. It is a waste of a supply day.
912
[Translation]
Mr. Dan McTeague (Ontario, Lib.): Mr. Speaker, I think it is
always interesting to hear the comments of the hon. member for
Prince George-Bulkley Valley. I represent a riding in Ontario,
where the people have elected a provincial government with
policies and interests similar to those of the Reform Party.
My question for my dear colleague is very simple. Since people
in Ontario are rejecting the policies of premier Mike Harris, which
sound a great deal like my colleague's comment, does he really
think that his party can do anything more to garner support in
Ontario, since these policies hurt the economy and the people as a
whole?
[English]
Mr. Harris: Mr. Speaker, let me point out that the fiscal policies
of the Mike Harris government in Ontario were supported by a vast
majority of people living in Ontario.
If we multiplied the crowd which is causing the problems at
Queen's Park one hundred times, it would not even make a dent in
the number of people who elected the Mike Harris government
because of its fiscally conservative policies. It is because of the
policies which that government took right out of the Reform blue
book that the majority of the people of Ontario voted for it. If we
multiplied the crowd which is demonstrating outside Queen's Park
one thousand times, we would still not make a dent in the number
of people who voted for that government and its fiscal conservative
policies. Those same policies have been in our blue book for a
number of years.
(1335 )
Mr. Ian McClelland (Edmonton Southwest, Ref.): Mr.
Speaker, I was asked to speak in this debate today and it is right up
my alley. I have spent most of my life in entrepreneurial business
ventures and I will get into that.
I would like to put on the record and bring to the attention of the
House that in my mind the response to the last question typifies the
problem this country has and why it is in the mess financially and
emotionally as far as unity is concerned. The reason is that for all
of my adult life politicians have been motivated by politics and not
principle. There is a difference.
If a government is given a mandate by the electorate to achieve a
particular end, then principle and character come into play. If that
government is swayed from its pole, if it is swayed from north, if it
is swayed from what it was elected and given a mandate to do, then
it is playing politics. It is the playing of politics and the pandering
to the flavour of the day which has got our country into the mess it
is in.
If we are ever going to get our nation back on track, we are going
to do so because we put politics in its rightful place which is
somewhere distantly behind principle and behind character. It is a
sign of character that a political party would have the fortitude to
brave the weather, the storm that is taking place in Ontario right
now, to do the right things for the right reasons. Having weathered
that storm it will find itself in exactly the same place as the
Government of Alberta. It did exactly the same thing and retains a
67 per cent popularity rating, even higher than the popularity rating
of the Liberals opposite who have achieved that for no discernible
reason.
It is interesting to note that the government members opposite
are pursuing a fiscal regime which has Liberals of the past 30 years
spinning in their graves. They cannot recognize the Liberal Party
today because it bears no relationship to the Liberal Party of the
past. It is an interesting observation that members opposite would
make when they show a lack of fortitude, a lack of strength and a
lack of principle in not carrying forward the reforms that absolutely
must be achieved if we are going to pass along the country to our
grandchildren in the shape we found it.
Members of the Liberal Party opposite should get down on their
knees every night and say: ``Thank you, God, for having Reform
Party members facing us who give us the fortitude and the courage
to do what we know must be done. Without them we would not
have gotten anywhere. At least we are now taking the first few
tentative steps on the road to recovery of our country. You should
know that we are magnanimous in accepting your good graces''.
As Lincoln said, if you do not care who gets the credit, there is
no end to what you can accomplish, although at times it is very
trying as we stand here and see the Liberals getting credit for the
good works we have brought to our country. However we are happy
to do so in the name of our grandchildren.
Having said that, let me get to today's Bloc motion. Usually the
Bloc supply day motions are pretty well thought out. I have not
looked at any Bloc motions thus far, prior to this one, and wondered
what it was trying to get at. Usually it has been direct.
The Bloc motion speaks to the recent budget and it speaks to
something in our budget which I thought really made a whole lot of
sense. For the benefit of those members who have not been here for
all of the debate and for those viewers at home who are just tuning
in, the Bloc supply motion moved by the member for
Saint-Hyacinthe-Bagot states:
That this House deplores the fact that the technical committee set up by the
Minister of Finance to analyse business taxation is comprised of members who
are both judge and judged with regard to business tax reform; and that, this
being so, the Minister of Finance should set up a joint committee of experts and
parliamentarians to examine business taxation in an impartial manner according
to an open and transparent process.
913
(1340 )
I looked at that and wondered what it implied. It is implicit that
the government should not put together a group of experts strictly
because of the group's knowledge of the corporate income tax
world, that parliamentarians should be involved in it. There is also
the implication that somehow, at least in my interpretation of the
motion, corporate Canada gets up in the morning and asks how it
can screw the country, how it can rip off the country, what it can do
wrong. Corporate Canada is somehow the bad guy.
Corporate Canada is us. We are all corporate Canada whether we
are owners, shareholders, or whether we work for a business
enterprise in Canada. It is us. Corporate Canada makes the world
go around as far as business and employment are concerned. It is
not the government but corporate Canada.
It seems to me the budget makes eminent sense. I will quote
from the budget document: ``Finally an effective business tax
system should not only raise revenue, it should be designed to help
create jobs. We believe it is time for a comprehensive look at this
issue. In order to identify any obstacles to job creation currently
contained in its tax act and to suggest reform, we are announcing
today'' the implementation of a group to look at it. That group
would obviously include people from corporate Canada who are
experts in tax law.
The question then is: Will Parliament have a chance to debate it,
to get involved in it, or is it strictly a one way deal? There is cause
to be cautious. Very often we find that legislation comes to the
House as a fait accompli, or once the government has a report and
there is political baggage associated with it, the government is
loath to change it.
It is important that this information be vetted through Parliament
while it is still in a very malleable condition. There is no reason to
believe that would not be the case. Any potential legislation would
go to the various committees of the House of Commons and would
be thoroughly vetted.
The part of the Bloc motion that speaks to input of
parliamentarians and through them citizens in general to changes in
the corporate tax act is pretty bogus. Perhaps the most important
issue in the Bloc's motion is the presumption that somehow
corporate Canada is a bad guy. If I were a representative of Quebec,
I might be a little further down that road than I am since I come
from Alberta which is known as the bastion of free enterprise in
Canada.
If we were to dispassionately examine the attitude of fear, an
attitude that is represented in the Bloc motion toward corporate
Canada, and look at what has happened to Quebec in the last 20
years or so, we would find that an attitude which puts down or
somehow looks at corporate Canada as being the bad guy results in
a very negative atmosphere for business and business investment
in the jurisdiction. I would support that claim by quoting some
statistics.
This is where I believe the Bloc is doing a great disservice to the
people it wishes to serve. I do not suggest for a moment that the
Bloc in its heart of hearts is not trying to do the right thing for the
people of Quebec. However, inadvertently it is creating a disaster
for the people of Quebec and the people of Canada by suggesting
that somehow corporate Canada is a villain and should be treated
that way.
(1345 )
At the beginning of the last referendum in 1980 the business
vacancy rate in Montreal was 3.3 per cent. Today it is a 19.7 per
cent. I believe this is a direct result of the way that the separatists
treat corporate Canada as a villain.
The whole notion of separation and the climate of uncertainty
that it brings to the table has caused a flight of capital and
entrepreneurship from Quebec. A motion such as this is very
poorly considered. I would accept and welcome any questions that
anyone would have on this.
[Translation]
Mr. Ghislain Lebel (Chambly, BQ): Mr. Speaker, I have
listened to the words of the hon. member from Alberta with
considerable interest, as he described Alberta as the bastion of free
enterprise. We have been aware of just that, on several occasions, at
the time the Act to amend the Interest Act was introduced in order
to restrict the banks and financial institutions to a penalty of three
months interest when loan capital is paid back before the due date.
The Reform Party voted against this.
We also saw the Reform Party oppose an amendment to the
Bankruptcy Act, which introduced by a member from the Quebec
City region, more precisely the member for Portneuf, my colleague
to the right here. What he wanted to do was to put ordinary workers
and low income people at the top of the list for collocation of
creditors in the case of a bankruptcy, in front of banks, guaranteed
creditors and so on. Again, the Reformers voted against this.
This is not the first time the Reform Party has been against
anything that could show a little compassion, bring a little relief to
the low wage earner, the most disadvantaged of our society. Then,
to be really sure to have the upper hand over this group, the Reform
Party recently sent one of their gang over to Asia to learn about
caning and corporal punishment of offenders.
The hon. member referred to the vacancy rate in Montreal,
referring I believe to unoccupied office space. It is true,
unfortunately, that it is much more related to the tax policy of the
City of Montreal than to the political situation currently prevailing
in Quebec or in Canada.
914
I would like to ask the Alberta member who has just spoken,
whether just once, some day, or once in a while, these people could
show a glimmer of compassion? I would imagine that, even in
Alberta, the bastion of free enterprise, not everyone who lives
there, who moves about the province, who eats, sleeps and lives
in Alberta, is a millionaire. I assume there are also some people
who are less well off, and some who are poor, as there are
everywhere, and these people need some compassion.
Would it be betraying their mandate if, for once, during the 35th
Legislature, these people showed a bit of compassion for the least
well off, the poorest, the disadvantaged, those less gifted to
succeed financially? We have never yet had any evidence of this, in
two and one half years.
I would ask once again: before taking the irreparable step of
voting against the motion by the member for
Saint-Hyacinthe-Bagot, just try to understand the poor, the
disadvantaged, those members of our society whose need is
greatest.
[English]
Mr. McClelland: Mr. Speaker, beauty is definitely in the eye of
the beholder.
I am reminded that it is nice to have a soft heart or a soft head but
you had better not have a soft heart and a soft head at the same
time. It is probably wise to have a soft heart and a hard head.
The reality of the situation in which we find ourselves in life is
that if you cannot first look after yourself, how can you possibly
look after your neighbour? That does not mean we do not have to
look after our neighbours or that we do not have compassion. It
means that we have to make a basic, philosophical decision. Are we
to be personally responsible for the good and bad in our lives or are
we to say that society is primarily responsible for what happens to
us?
(1350)
How can we be interdependent if we are are not first
independent? I guess that is a basic contradiction between the
whole notion of common law and civil law. Do we put individual
rights ahead of collective rights?
This conversation typifies the debate that rages in our country
from east to west and north to south.
Mrs. Eleni Bakopanos (Saint-Denis, Lib.): Mr. Speaker, I will
be sharing my time.
[Translation]
In his budget speech, the federal Minister of Finance clearly
expressed his intention on the business tax system. He said that a
technical committee would take a comprehensive look at the
business tax system guided by three main objectives: to promote
jobs and growth, simplify the system and make the system fairer.
The technical committee examining the business tax system will
look at corporate income tax and tax paid from commercial activity
revenues and will evaluate the level and make-up of these taxes.
This measure, also found in the budget, is neither spontaneous nor
improvised. In fact the government, and this is something the
opposition often forgets, set up a process for consultation and
co-operation as part of the last two budgets. This is not the first
time, and in fact each time we consult Canadians from one end of
the country to the other.
These unprecedented public consultations have encouraged
Canadians of all walks to debate the economic and financial
problems facing the country as a whole.
On January 1, 1994, for the first time in the country, the House of
Commons as a whole met to prepare the budget. In 1995,
co-operative efforts to prepare the budget were on an even larger
scale.
On October 17, 1995, the Minister of Finance made public a
document entitled ``New Framework for Economic Policy'', which
outlined a broad job creation strategy.
As for the 1996 budget, the co-operative effort was still greater
in that the Standing Committee on Finance and the minister took
more time to listen to views and recommendations on approaches
taken to improve the financial situation. Canadians also feel that
the Liberal government listens to them in order to achieve the
economic, fiscal and financial objectives that have been set.
Although, from the time of its election, the opposition was in
agreement on the urgency of tax reform, it nevertheless made a
number of proposals. Until now, the Bloc proposals have precluded
the achievement of the two objectives essential to any tax reform,
namely: that government should be able to collect the taxes it needs
to function and that economic development should be encouraged.
[English]
Bloc members often harp on loopholes, as do other parties, and
claims of overly generous corporate tax regimes, as if these were
the only reason for the deficit. They have no conception of how to
use the tax system in a balanced and judicial way to collect
revenues and promote economic development.
Let us look at the response to the budget measure reducing the
labour sponsored venture capital corporation, the LSVCC tax
credit. The LSVCC has more than three year's worth of capital to
invest. However, the Bloc wants that credit in place, I guess to
ensure that high income Canadians do not miss the beneficial tax
break.
915
In the minority report on the finance committee's prebudget
consultations, the BQ recommended a complete review of the tax
system be undertaken. Apparently it is not satisfied even when the
government agrees with it as we have in this case. The Bloc went
on to criticize Canadian businesses that use loss carry forwards
which allow businesses to balance their tax loads over good and
bad years. The Bloc wants this eliminated and replaced with a
minimum corporate tax on small business. This would not create
jobs, just the opposite. The Bloc clearly still does not get it:
Canadians want jobs and its recommendations would not create
a single one.
(1355)
Let us not forget what the Quebec minister of finance said
recently in a speech. I do not have the exact quote but he said that
Quebec will be a tax haven after separation. I would like to have
hon. members tell me exactly what the minister of finance of
Quebec meant by a tax haven.
Later in the minority report under the heading,
Recommendations for an Effective Attack on Unemployment, Bloc
members tell the federal government to get out of regional
development and tourism altogether and transfer more tax points
which they have elsewhere claimed are worthless to the provinces.
None of these measures would create a single job either in
Quebec or elsewhere. Let us not forget it does not fit in the ultimate
scheme of Bloc members because if we create jobs, the Canadian
federation works. That is exactly what they do not want. They do
not want it to work. Their ultimate aim is the breakup of this
country, a separation.
The government, the provinces and the private sector are
working together constructively on the Canadian Tourism
Commission, an initiative that has been praised as both effective
and harmonious by all participants. Nobody on the commission
would support the Bloc's contention that the federal government
should abandon its initiative.
[Translation]
The most astonishing thing of all in the Bloc's arguments is their
claim that the government is not acting with complete
transparency. On the one hand, they criticize the fact that the
technical committee set up by the Minister of Finance is composed
of members who are taxation experts, whom they describe as judge
and judged, when the whole process is public, from the preparation
of the budget down to the discussion concerning the taxation
review, as mentioned by the Minister of Finance during question
period last Monday, and I quote:
Any discussion concerning the taxation review will certainly be public,
because the objective of that committee is really to prepare a background
document that will be used for consultation, undoubtedly by parliamentarians,
including members of the finance committee with his colleague.
Any government turns to experts when looking at more specific
questions. Contractors are then engaged from outside the
government without calls for tender.
Do not forget that the Government of Quebec also called on
experts recently during the Quebec referendum. And do not forget
the billions of dollars spent by the Quebec government for the very
purpose of consulting the experts, friendly experts of course.
[English]
I would like to finish by saying that once again-
[Translation]
The Speaker: My dear colleagues, it being 2 p.m., we will now
proceed to statements by members.
_____________________________________________
915
STATEMENTS BY MEMBERS
[
Translation]
Mr. Benoît Serré (Timiskaming-French River, Lib.): Mr.
Speaker, I am very pleased to rise in this House today to draw
attention to la Semaine de la Francophonie. This is a time to realize
the important role played by the French language and culture as a
basic element of our collective identity.
As a Franco-Ontarian myself, I have always vigorously defended
the rights of francophone minorities, because I believe it is possible
for us to develop wherever we are in Canada.
In a spirit of co-operation and solidarity, we, francophones, are
proud of our language and culture, and we would like to strengthen
our sense of belonging to the Francophonie.
I wish to salute and thank the francophone institutions and
associations which, through their achievements, have greatly
contributed to the French language being taught and used in the
education, socio-cultural and institutional sectors, both nationally
and internationally.
I wish all francophones from coast to coast-
The Speaker: I am sorry for having to interrupt the hon.
member, but he has run out of time. The hon. member for
Longueuil.
* * *
Mr. Nic Leblanc (Longueuil, BQ): Mr. Speaker, the Bloc
Quebecois promotes a sovereign Quebec. But we are being accused
of trying to destroy Canada in the process. Nothing could be further
from the truth. We have the future of Canada at heart, and both our
countries stand to benefit from Quebec's sovereignty.
916
While it did not go into all of the many aspects of sovereignty,
the recent Wood Gundy study at least had the great merit of
stressing the fact that, from an accounting point of view, Quebec
would benefit from sovereignty without Canada being hurt.
From 1995 on, the federal government will run an operating
surplus, both for Quebec and for the rest of Canada. Achieving
sovereignty in Quebec is no easy task, but now at least we know
that all involved can do well for themselves, which means that
sovereignty will benefit us all.
* * *
[
English]
Mr. Stephen Harper (Calgary West, Ref.): Mr. Speaker,
Canadians were disgusted last night to watch the goings on at
Queen's Park. As provincial governments struggle to deal with
federal Liberal budget cuts to the provinces it becomes
increasingly obvious the Ontario Liberals, NDP and other leftist
organizations hope to block the Harris agenda through an
orchestrated campaign of strikes, intimidation, violence and
general thuggery.
It is evident the Ontario left hopes to achieve through force what
it failed to achieve at the ballot box.
The common sense revolution is no longer merely about
restoring fiscal sanity and hope to Canada's heartland, it is now
also about preserving democracy and protecting the right of
taxpayers to control their government.
At this time of grave threat to democracy and the economy of
Ontario, the Ontario provincial government can count on the
support of Reformers for our common objectives.
I call on the federal PC leader to end his silence and to do
likewise.
* * *
Mr. John Solomon (Regina-Lumsden, NDP): Mr. Speaker,
the federal income securities program branch of Human Resources
Development Canada and other federal government departments in
Regina have lost 50 public service positions because of a decision
by the former minister of HRD, the current Minister of Foreign
Affairs, to take the jobs to his own riding in Winnipeg. This
decision was slipped through on the minister's last day on the job
of that department.
The chair of the economic committee of cabinet, the federal
minister of agriculture, has remained silent as these jobs are moved
from Regina.
The move makes no sense. It will cost taxpayers up to $2.6
million to pay for the move alone and it will take jobs in the
valuable public service from the residents of Regina and
Saskatchewan.
Seniors groups such as Seniors Action Now have expressed their
concern that by sending these positions to Winnipeg seniors and the
disabled in Saskatchewan will see longer delays to the processing
of their applications and inquiries.
I challenge the minister of agriculture to take action on behalf of
his constituents and his home province to reverse this politically
motivated bad decision.
* * *
Mr. Janko
Peric
(Cambridge, Lib.): Mr. Speaker, in 1966 the United Nations
declared March 21 the international day for the elimination of
racial discrimination to commemorate the sacrifices made by
peaceful demonstrators who were killed and wounded while
protesting against the government in South Africa in 1960. This
year marks the 30th anniversary of the UN declaration.
Canada is recognized around the world as one of the best
countries in which to live. Unfortunately racism and racial
discrimination are a reality in Canada. They are everyone's
problem and we all need to take responsibility for them.
I hope my colleagues in the House will take up this challenge
and will remember to honour the spirit and intention of March 21,
the international day for the elimination of racial discrimination.
* * *
Mr. Gurbax Singh Malhi (Bramalea-Gore-Malton, Lib.):
Mr. Speaker, the number of Canadians working for temporary help
agencies grew by 15 per cent in 1995, 17 per cent in 1994 and 29
per cent in 1993.
Workers at these agencies earned on average $383 a week last
year; more hours for less money. Some private employment
agencies pocket hefty premiums from both the workers and their
place of work.
We must therefore encourage government departments and the
private sector to post a far greater number of job openings in
Canada employment centres, which offer free services to all.
* * *
Mrs. Beryl Gaffney (Nepean, Lib.): Mr. Speaker, as Canadians
we cherish the values of dignity and decency. We believe in
fairness and freedom. We honour our reputation for generosity and
917
compassion. We know of the importance of respecting differences.
We realize that citizenship brings obligations as well as
opportunities. As Canadians we have achieved great things
together.
The Prime Minister said in his address to commemorate the 50th
anniversary of the United Nations:
The highest hope of the global community is to achieve what we in Canada
have achieved for ourselves. A means of living together in peace and
understanding. Not an answer to every problem, but a means to pursue those
answers together-with respect, tolerance, accommodation and compromise.
(1405 )
This is the message to be given of March 21, the international
day for the elimination of racial discrimination.
* * *
Mrs. Diane Ablonczy (Calgary North, Ref.): Mr. Speaker, last
night Liberal members from Newfoundland and Atlantic Canada
showed their true colours. They defeated a motion that condemns
the injustice of the Churchill Falls contract, toeing the Liberal
Party line instead of representing the interests of their own
constituents.
This contract sucks over $800 million every year from
Labrador's economy, relegating the province to a have not second
class status within Canada. The Liberal government looks on in
silence while Labrador suffers without a fishery, without jobs and
without basic services like roads which other Canadians take for
granted.
This fossilized government is incapable of addressing the
inequalities within Confederation. It is time for the people of
Newfoundland and Labrador to stop trying to change the system
from within. It is time for them to reform the system from the
outside by embracing real political change. It is time for
Newfoundland and Labrador to vote Reform.
* * *
[
Translation]
Mr. Philippe Paré (Louis-Hébert, BQ): Mr. Speaker, in this
Semaine de la francophonie, we are very pleased with the project
launched by the United Nations to promote Africa's development.
This special initiative will focus on education and health.
The UN secretary general, Boutros Boutros-Ghali, said in
Geneva that the UN wanted to solemnly tell Africa that it would not
be abandoned. This special initiative, which is under the financial
responsibility of the World Bank, provides for the injection of $25
billion over the next ten years, and for maximizing the efforts and
resources of the major United Nations agencies and of the
international community.
The Bloc Quebecois hopes that the Canadian International
Development Agency and the Canadian and Quebec NGO's will
take part in this courageous fight for peace, development,
democracy and the respect of human rights.
* * *
Mr. Ronald J. Duhamel (St. Boniface, Lib.): Mr. Speaker,
March 21 is the International day for the elimination of racial
discrimination. I invite Canadians, including my colleagues, of all
races, colours, ideologies and religions to take part in this event.
It is in everyone's best interests to build a country free of racism.
We must eliminate racism. We must take the responsibility for
creating for our children communities that are sound and free of
bias.
Canada has a reputation for being a tolerant and compassionate
country. We are privileged to live in an environment where various
cultures coexist. More important still is the fact that these cultures
celebrate, share, communicate and work together to promote peace.
[English]
Let us work together to eliminate racism and racial
discrimination. The various languages, peoples, cultures and
religions are what make this country so very special. Let us all
make a personal commitment to improving this superb country.
* * *
[
Translation]
Mrs. Georgette Sheridan (Saskatoon-Humboldt, Lib.): Mr.
Speaker, there are one million French speaking Canadians who are
not Quebecers, but have deep roots in the French culture and
language, of which they are very proud.
Tomorrow marks the beginning of the Semaine nationale de la
francophonie. I come from Saskatchewan. Back home, the
Franco-Saskatchewanian flag will be raised in several rural and
urban communities to recognize the contribution of
Franco-Saskatchewanians to the development of our country.
Many French speaking residents of my riding are getting ready
for the cultural activities that will take place, including a wine
tasting contest in Bellevue, as well as a wood-carving
demonstration by Robert Gareau. Many other events are also
scheduled in Saskatoon, Prud'homme, St-Denis and Vonda.
Congratulations to all!
918
[English]
Mr. Pat O'Brien (London-Middlesex, Lib.): Mr. Speaker,
100 years ago in 1896 Wilfrid Laurier became the first francophone
to be elected Prime Minister of Canada.
This great Liberal leader served Canadians as their Prime
Minister for 15 consecutive years until 1911. Sir Wilfrid Laurier is
well known to history as a man who recognized that Canada would
succeed as a nation only if our citizens are willing to be tolerant
and respectful of each other and our many differences.
His approach was to find compromise solutions to the problems
Canadians faced in his times.
(1410 )
This method proved successful for the most part in keeping
Canada united. Today in 1996 Canadians must be just as
determined to respect our differences, to compromise when
necessary and to work tirelessly, as did Laurier, to always keep
Canada one great united nation.
* * *
[
Translation]
Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, last
week, the Commissioner of the Coast Guard announced the third
change in eight weeks in the marine services rates. After each
change, Quebec comes out a loser due to pressures from both
Western Canada and the Maritimes.
Several representatives of the Saint Lawrence shipping industry
criticize the lack of vision of the Coast Guard, which seems to view
the Saint Lawrence as a mere regional terminal.
This latest decision is but one of the many irresponsible
measures taken of late by the federal government against Saint
Lawrence harbours. This reminds us of the imposition of the
Borden line, in the 1960s, which contributed to the closure of
several refineries in the eastern sector of Montreal and to the loss
of thousands of jobs in the city.
Before making any decision on this issue, which might have a
serious impact on many areas in Quebec, the fisheries minister
must order a social and economic impact study.
[English]
Mr. Bob Ringma (Nanaimo-Cowichan, Ref.): Mr. Speaker,
recently I rose in the House to report on the Liberal government's
shameless support of separatism in the election of standing
committee vice-chairs.
At that time 33 out of 34 Liberals had supported separatists over
federalists. The 19 committee elections are now over and the tally
is Bloc, 18 vice-chairs and one chair; Reform, zero. This separatist
sweep was accomplished with the support of of 91 Liberal MPs
who time after time blindly followed the direction of their whip and
voted for the Bloc.
These results are not only a slap in the face to the over 20 million
committed federalists in the country, they are an insult to all
Canadians who believed the Liberal red book promise to reform
Parliament and govern with dignity.
The actions of the government during these elections bring forth
what Tommy Douglas said more than 30 years ago. Listen up, guys:
``The Liberals talk about stable government, but we did not know
how bad the stable was going to smell''.
* * *
Mrs. Bonnie Hickey (St. John's East, Lib.): Mr. Speaker, I rise
today to congratulate the new Liberal cabinet of the Government of
Newfoundland and Labrador.
Keeping his election promises, Premier Brian Tobin has
appointed four of the six elected Liberal women MHAs to his
cabinet team, more than any previous administration .
Assisting Premier Tobin to create jobs and economic growth are
Judy Foote, Minister of Development and Rural Renewal, Julie
Bettney, Minister of Works Services and Transportation, Sandra
Kelly, Minister for Tourism, Culture and Recreation, and
Joan-Marie Alyward, Minister for Social Services.
Given their strong backgrounds in community and economic
affairs in the province, they will bring a fresh new drive to the
cabinet table and serve as great role models for all women of
Newfoundland and Labrador.
My congratulations to Premier Tobin and these four dynamic
women who are helping to lead the charge of increasing the number
of women holding public office in Newfoundland and Labrador.
919
[Translation]
Mr. Geoff Regan (Halifax West, Lib.): Mr. Speaker, in the next
few days, thousands of stakeholders, thinkers, scientists, and
researchers from across the world will be making comments and
recommendations on the health of la francophonie internationally.
The French language is one of the most beautiful there is. It is all
nuances, subtleties and finesse. It is one of the preferred vehicles
for those who have chosen to express themselves through various
art forms.
On this Semaine internationale de la Francophonie, let us say
again how proud we are to live in a country where French is one of
the official languages.
* * *
[
English]
Mr. Keith Martin (Esquimalt-Juan de Fuca, Ref.): Mr.
Speaker, the implementation force in Bosnia is saving lives and our
troops are doing an exceptional job.
However, Bosnia is unstable, its federation held together
tenuously and artificially. The war has sown the seeds of ethnic
hatred for generations to come. I warn the House of the following.
First, Bosnia will fracture into two or three pieces. We must be
attuned to this to ensure the break-up occurs at the negotiating table
and not at the end of an assault rifle.
Second, reconstruction of the economy is imperative for peace.
(1415)
Third, we have to put increased responsibility on the European
Union and its members.
If we do not do this Bosnia will descend into a cauldron of
bloody warfare and like the many civilians who died before,
thousands will die in the future. It is up to us to beware of this and
prevent this tragedy.
_____________________________________________
919
ORAL QUESTION PERIOD
[
Translation]
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, yesterday, the Minister of Human Resources
Development, in response to his Quebec counterpart, Louise Harel,
confirmed the federal government's intention to maintain a
presence in the area of manpower, thus maintaining costly and
ineffective overlap and duplication, contrary to the consensus so
often expressed in Quebec.
Does the Prime Minister confirm that his Minister of Human
Resources Development's position formally contradicts his
referendum commitment, reiterated in the throne speech, to
withdraw from job training?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, it is indeed the government's intention to withdraw from
manpower training, but managing the UI fund comes under the
responsibility of the federal government. As confirmed in the
Canadian Constitution, we intend to leave manpower training to the
provincial government and to pay for those who will receive this
training without imposing, as Mrs. Harel herself admitted
yesterday, any conditions with respect to the training itself.
The provincial government itself will decide the kind of training
to be provided. We will pay for federal clients who receive training
services, which are in fact and will clearly become the
responsibility of the provincial government.
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, I do not know if the Prime Minister realizes that his
government is imposing, once again, negotiating terms on Quebec
that can only lead to failure, since he is offering to withdraw from
manpower training provided that Quebec signs an agreement
confirming the federal government's role in the area of manpower
and job training, which is totally unacceptable to Quebec. And the
Prime Minister knows it.
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, I just made a clear statement. We want to withdraw from
manpower training and to transfer the funds needed to pay for
training services that the provincial government will provide to
unemployed people receiving UI benefits from the federal
government. That is clear.
The federal government, however, is responsible for managing
the UI fund. We pay UI benefits to unemployed Quebecers and we
want to remain in charge because, as far as employment insurance
is concerned, we are the ones who collect contributions from
employers and employees across Canada and redistribute the
money in all regions of Canada among those who are unfortunately
without jobs.
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, after so many negative experiences, how can the Prime
Minister fail to understand that it is precisely because of this
tendency to stall and delay the federal government's withdrawal
from manpower training that it cannot come to an agreement with
the Quebec government, because the federal government is never
able to make up its mind when it should?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Our mind is
more than made up. I say to the Leader of the Opposition: We want
to withdraw from manpower training. That is clear.
920
If they are talking about manpower training, we will indeed
withdraw. But they want the whole UI sector, which is the
responsibility of the federal government. We will abide by the
Constitution and continue to manage the UI fund.
(1420)
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, my
question is for the Minister of Human Resources Development.
Because of the consensus reached in the Quebec national
assembly and among all stakeholders, the Government of Quebec
is requesting the unconditional transfer of all budgets allocated to
active manpower measures.
Will the minister admit that all he has offered so far is to
formalize the transfer of programs that the Government of Quebec
is already administering, namely the institutional training program,
which is a far cry from what was requested by the consensus his
predecessor claimed to respect?
Hon. Douglas Young (Minister of Human Resources
Development, Lib.): Mr. Speaker, I hope that the letter we sent
yesterday to the Government of Quebec will serve as a basis for the
negotiations both parties will undertake in good faith. In fact, we
will hold talks with all the provinces, because this is an approach
that will be made available to all the provinces, not just Quebec.
In light of Quebec's suggestion that the basis and terms of
negotiation be laid, of the ministerial document received from the
other provinces, which also showed an open mind, and of Part II of
the employment insurance legislation currently before Parliament,
we should have enough principles, bases and parameters to be able
to find a way to transfer responsibility for manpower training to
those provinces that want it.
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, at a time
when all Quebec decision makers are meeting, the minister, in his
written response yesterday, did not seem to understand that a clear
signal was given on October 30.
I ask the minister to admit that this is a pressing matter and, as
the Liberal minister, Mr. Bourbeau, himself said, that the issue of
manpower in Quebec is a manifestation of the confusion, red tape
and inefficiency that come from having two systems. I urge the
minister not only to respect the Quebec consensus but also to abide
by it during negotiations.
Hon. Douglas Young (Minister of Human Resources
Development, Lib.): Mr. Speaker, we will certainly do our best to
respect the interests of all concerned during these negotiations. I
have no reason to believe that we will not have, between officials of
both governments, discussions that will be profitable to both levels
of government.
However, I must point out to my hon. friend that all the other
provinces of Canada also attach a great deal of importance to this
whole issue. That is why our offer to withdraw from the area of
manpower training applies to all the provinces. I hope that an
agreement can be reached as soon as possible with Quebec as with
the other provinces.
* * *
[
English]
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, one of the biggest obstacles facing mining projects in this
country is the mountain of government red tape. Regulation is
often split between two jurisdictions. Development is often delayed
and often environmental community concerns fall through the
cracks. This government has talked about the need to consult and
reduce red tape for projects such as Voisey Bay in Labrador but we
have seen very little in the way of action.
My question is for the Prime Minister. Has his government
discussed a simple one window regulatory system for Voisey Bay
with the premier of Newfoundland and Labrador? If he has, can he
tell us what progress has been made?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, we are very enthusiastic to see that the hon. member has
discovered eastern Canada lately. I speak regularly with the
premier of Newfoundland, whom we all know very well, and so far
we have always agreed.
(1425 )
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, if the Prime Minister has had these frequent and in depth
discussions, then perhaps he can answer a simple question. Have he
and the premier of Newfoundland agreed to establish a simple one
window regulatory framework for Voisey Bay?
Hon. Anne McLellan (Minister of Natural Resources, Lib.):
Mr. Speaker, it is with great pleasure that I answer the hon.
member's question. The premier of the province of Newfoundland
has been having ongoing discussions with the Government of
Canada, with the Prime Minister, with colleagues such as the
Minister of Indian Affairs and Northern Development, the Minister
of the Environment, and myself.
We are working on a process with the province of
Newfoundland, with aboriginal communities, with the industry
involved to ensure that we have an efficient and timely regulatory
approval process for Voisey Bay.
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, Ottawa's track record for facilitating big resource projects
and for reconciling conflicting interests up front is hardly
impressive. While the government dithers, the people of Labrador
will be left
921
in limbo. Preliminary development is proceeding at Voisey Bay but
so far with no real input or participation from the people of Nain or
from the Inuit.
What steps is the government taking to ensure that Labradorians
who have been shafted before on resource projects will receive
their fair share of the economic benefits, spinoffs and jobs from the
development of their natural resources?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, with the permission of the minister I would like to say to
the hon. member that indeed there has been much discussion
between the different ministers and the government to make sure
that everybody is involved and it is working very well.
There are far fewer problems among the ministers and the
Government of Newfoundland and Labrador than we see in the
Reform Party.
* * *
[
Translation]
Mr. Yvan Bernier (Gaspé, BQ): Mr. Speaker, my question is
for the Minister of Fisheries and Oceans.
For the third time in eight weeks, the Canadian Coast Guard
commissioner announced new changes to the service fees relating
to navigational aids. Benoît Massicotte, the director of the
Association des armateurs du Saint-Laurent, rightly pointed out
that each successive review costs Quebec a little more.
Will the minister recognize that the new proposal made by the
Coast Guard directly hits ports in the St. Lawrence by increasing
the fees charged to navigate in that river?
[English]
Hon. Fred Mifflin (Minister of Fisheries and Oceans, Lib.):
Mr. Speaker, of course the hon. member knows we are going
through a consultation process.
We have looked at different systems to impose these marine
service fees. There are many ways we could go about doing this.
We are now on the second iteration, some would consider the third
depending on how we go.
The hon. member would also know that we are working very
closely with the marine advisory board representatives across
Canada and with all stakeholders in the industry. We have one goal
in mind, which is to come up with a system that is the most fair and
equitable to all Canadians.
[Translation]
Mr. Yvan Bernier (Gaspé, BQ): Mr. Speaker, the minister
recommended that the commissioner set up a consultation process,
but he must know that people will not be content with minor
changes. This is the third time that the commissioner goes back to
the drawing board.
Even Mr. Thomas, the Coast Guard commissioner, admits that
new impact studies must be done. How can the minister accept that
a tariff which could have a disastrous effect be imposed without a
proper review of its economic impact on the affected regions?
[English]
Hon. Fred Mifflin (Minister of Fisheries and Oceans, Lib.):
Mr. Speaker, in response to the hon. member I would like to make
two points.
He used the term disastrous effect. We are looking at the range of
fees all across Canada in all the ports which is not more than 3 per
cent of the total fees represented in the shipping business.
I share the hon. member's concern about what impact this is
going to have after we have finished with the input and see what
effect it will have on the industry. We are in the process of doing
two impact studies. I will make them available to the member and
indeed to the House.
* * *
(1430 )
Mr. John Williams (St. Albert, Ref.): Mr. Speaker, waste,
waste and more waste. This government seems to be committed to
keeping it, not getting rid of it.
On the very day that I released my third waste report, what do I
find? I find the cabinet ministers have logged 50 per cent more
flying hours in the corporate jet than the year before and that DND
estimates the use will increase even more this year.
Can the Prime Minister please explain the lavish use of corporate
jets at taxpayers' expense?
Right Hon. Jean Chrétien (Prime Minister, Lib.): Mr.
Speaker, the member should check the extravagant level he
mentioned. It is less than 40 per cent of what it was under the
previous government.
Of course, we want to visit the country. The ministers are just
using this facility to make sure they can get the message to the
people. Since we have used it less than 40 per cent of what it was
used in previous years, this is showing the people that we are
putting these Canadian planes to good use, that we are not abusing
their use.
Mr. John Williams (St. Albert, Ref.): Mr. Speaker, that is some
message. Taxpayers pay and they waste. That is the message that is
getting out.
The Minister of Finance said in the budget: ``If there is one area
where we must never let up, it is the effort to root out waste and
inefficiency''. Will the Minister of Finance put his money where
his mouth is, tell his colleagues that actions speak louder than
words, that corporate jet travel has to go down and not up?
922
Hon. David M. Collenette (Minister of National Defence and
Minister of Veterans Affairs, Lib.): Mr. Speaker, there are very
strict guidelines for the use of the executive fleet. We changed
the regulations after some discussions and quite frankly after some
criticism by the auditor general a couple of years ago.
We have reduced the fleet from six to four planes. We are very
assiduous in determining when ministers make bona fide requests
that there are no commercial arrangements that could get them
where they are going.
The point made by the Prime Minister about the 40 per cent
reduction is something that can be examined at committee when
the estimates of the Department of National Defence come
forward.
* * *
[
Translation]
Mr. Paul Mercier (Blainville-Deux-Montagnes, BQ): Mr.
Speaker, my question is for the Minister of Transport.
The federal government supports Canadian Airlines' efforts to
be exempted from the scope of the U.S. antitrust legislation, so as
to integrate more completely with its U.S. partner, American
Airlines. However, such a decision would have a disastrous effect
on Canada's air transportation industry.
Will the minister recognize that allowing Canadian to do that
will result in that company being fully integrated with American
Airlines, thus increasing U.S. control over Canada's air
transportation industry?
Hon. David Anderson (Minister of Transport, Lib.): Mr.
Speaker, the hon. member is wrong. The government's decision to
support Canadian's request to be exempted from the application of
the U.S. antitrust legislation fully complies with the open skies
agreement on air transportation. That agreement has enabled air
carriers to maximize their benefits, according to their own
corporate strategy.
Mr. Paul Mercier (Blainville-Deux-Montagnes, BQ): Mr.
Speaker, in any case, does the minister realize that, by supporting
Canadian-because his support is necessary-he is jeopardizing
the future of civil aviation in Canada and of the whole aviation
industry? Does the minister realize that Air Canada could also end
up under American control?
Hon. David Anderson (Minister of Transport, Lib.): Mr.
Speaker, the hon. member is wrong once again. A three year
protection is afforded to Canadian air carriers, that is Air Canada
and Canadian. During those three years, there is absolutely no
chance of any such thing happening.
What we are doing is giving Canadian and Air Canada a chance
to maximize their business on the American market. Thanks to the
changes that we made, both companies are registering a remarkable
and very profitable increase in their activities.
* * *
(1435)
[English]
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, the
finance minister seems to be a fairly recent convert to the idea of
harmonizing the GST. Going back to the time he pursued the
Liberal leadership, he sang a very different song. I will quote from
the Calgary
Herald: ``Describing the GST as a tax that
discriminates against the regions''-the current finance
minister-``said he would get rid of it, if possible. However, he
said, it would be difficult to do that if the federal tax becomes
integrated with provincial taxes''. In other words, harmonization
means never having to say you are sorry for failing to scrap the
GST.
If the finance minister feels that harmonization will make it
impossible to get rid of the GST, why is he continuing to pursue
harmonization?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
Monte Solberg's flying circus rides again.
Some hon. members: Oh, oh.
Mr. Martin (LaSalle-Émard): The most recent statement,
prior to questions in this House, that I had anything to do with in
terms of the GST said, and I quote from the red book: ``A Liberal
government will replace the GST with a system that promotes
federal-provincial co-operation and harmonization''. That is the
most recent thing I have had to say on the GST.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, I guess
it depends on which day we catch him. At any rate the question is:
Does the finance minister believe that once the GST is harmonized
it will then be virtually impossible to get rid of it?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the decision any individual government chooses to take on any
individual tax is obviously up to that government at that time. It is
very clear that consumers and small and medium size businesses
want us to harmonize it.
It seems to be clear that the Reform Party thought it wanted us to
harmonize it but obviously, given the tremendous unity which
exists within the Reform Party, it is quite hard to determine what in
fact its real position is on anything.
923
[Translation]
Mr. Gaston Leroux (Richmond-Wolfe, BQ): Mr. Speaker,
the cultural community is dismayed over the recent budget. Despite
the promises made by the Liberals in the red book and the last
throne speech, the heritage department's budget for programs and
institutions will be cut by 30 per cent over four years.
My question is for the Deputy Prime Minister and Minister of
Canadian Heritage. How can the minister explain to the cultural
community that she was unable to protect the budget for culture,
which will be cut by 8 per cent more than the national defence
budget?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, when I became heritage
minister, I said from the outset that the budget decisions regarding
culture had already been taken.
I must add that, if we take, for example, the case of the NFB in
Montreal, the Juneau report points out the most effective way to
modernize the NFB. This is precisely what is now being done by
the executive committee. That said, I was also assured by the
Minister of Finance that the government will go ahead with a
culture fund that will make possible the creation of a new system of
funding for the production of Canadian cultural initiatives under
circumstances that will be announced very shortly.
Mr. Gaston Leroux (Richmond-Wolfe, BQ): Mr. Speaker, if
I understand the beginning of the minister's reply correctly, she is
not in agreement with the cuts that have been made.
I therefore ask her a supplementary question. At a time when the
Minister of Canadian Heritage is cutting millions of dollars and
thousands of jobs throughout cultural institutions and programs,
how can she justify the fact that the only budget that has increased
in her department is the administrative one, which rose 8 per cent
between 1994 and 1997?
(1440)
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, we know, for example,
that the CBC is a very important institution in our country. The
proposals contained in the Juneau report, which were rejected
outright by the Bloc Quebecois, offer the possibility of obtaining
long term funding.
Having pointed this out, I am proud to say that at least the budget
cuts imposed by this government have been much gentler than
those carried out by the PQ government in Quebec with respect to
Radio-Québec.
[English]
Mr. Sarkis Assadourian (Don Valley North, Lib.): Mr.
Speaker, my question is for the Minister of Health.
Over 40,000 Canadians die each year as a direct result of tobacco
related diseases. The recent advertising campaign by tobacco
manufacturers was obviously targeted at teenagers and school
children.
Can the Minister of Health inform the House of the
government's strategy to eliminate the threat to Canadian youth
that tobacco advertising poses?
Hon. David Dingwall (Minister of Health, Lib.): Mr. Speaker,
I want to thank the hon. member for his question. The government
is very concerned about the increasing number of young people
who are smoking.
The Supreme Court of Canada has made a decision, some of
which is very positive for the government in that it confirms some
of the government's statistical background data. However, the
government has some concerns with that decision.
We do have a blueprint which is being circulated across the
country. Consultations are taking place as we now speak. We hope
they will be completed by the end of the month.
I hope to come back to Parliament with a package which will
address not only the concerns of teenagers and young people, in
terms of their smoking habits, but the country as a whole, to put a
comprehensive package before parliamentarians.
* * *
Mr. Art Hanger (Calgary Northeast, Ref.): Mr. Speaker, my
question is for the Solicitor General of Canada.
The solicitor general's parliamentary secretary told the House
yesterday that he is not aware of any student loan funding granted
to child killer Clifford Olson. On the other hand, Clifford Olson
brags about the law courses he is taking.
Either Clifford Olson is receiving student loan funding or he is
not. Which is it, yes or no?
Hon. Herb Gray (Leader of the Government in the House of
Commons and Solicitor General of Canada, Lib.): Mr. Speaker,
I have been advised that Clifford Olson is not receiving a student
loan. If that information is incorrect, I would like to have
information to the contrary.
The latest information I have is that what the hon. member is
asserting is not correct.
924
Mr. Art Hanger (Calgary Northeast, Ref.): Mr. Speaker, how
then is Clifford Olson paying for his law courses? That is the
question. It is still on the backs of the taxpayers.
When Olson is not studying law he is making videotapes about
his crimes and his victims' families are outraged about it. How
much did the Correctional Service Canada pay to produce the 12
tapes? Who gave Olson permission to copyright the tapes? Who
decided to make the tapes in the first place?
Hon. Herb Gray (Leader of the Government in the House of
Commons and Solicitor General of Canada, Lib.): Mr. Speaker,
it has already been stated by the correctional service that the
decision to have the tapes made was taken by the then warden of
the penitentiary in question back in June 1993. I am advised the
tapes were made by correctional service officials rather than by Mr.
Olson himself.
With respect to the other points which he is raising, I will inquire
further and get back to the hon. member.
* * *
[
Translation]
Mr. Maurice Bernier (Mégantic-Compton-Stanstead,
BQ): Mr. Speaker, my question is for the Minister of Justice.
When he presented his annual report, Max Yalden, chief
commissioner of the Canadian Human Rights Commission,
severely blamed the government for going back on its promise to
amend the Canadian Human Rights Act to include
non-discrimination based on sexual orientation. The commissioner
even added that this action on the part of the government was a
setback for moral logic.
(1445)
Does the Minister of Justice recognize the government's blatant
lack of courage on the issue of discrimination against gays and
lesbians, when even the chief commissioner of the Canadian
Human Rights Commission blames the government for
acquiescing to intolerance by not respecting its election promises?
[English]
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, the hon. member should know that
for some years it has been the policy of this party and the
government that the human rights act be amended to add sexual
orientation as a ground on which discrimination is prohibited. That
is a commitment we made and a commitment we will respect.
I would also draw to the attention of the House and the hon.
member to those many passages in the annual report of the chief
commissioner where he praised the government for initiatives
taken, specifically by the way, in relation to sexual orientation
matters in Bill C-41 dealing with hate motivated crime, with those
matters of criminal procedure involving the testimony before
courts of persons with disabilities as well as initiatives in relation
to employment equity.
The government has acted on a broad range of fronts to further
human rights in this country and will continue to do so.
[Translation]
Mr. Maurice Bernier (Mégantic-Compton-Stanstead,
BQ): Mr. Speaker, there none so deaf as those who will not hear.
The commissioner was very harsh with the Minister of Justice and
the Liberal government.
The minister said he had to put back implementing his election
promises. After such a harsh reprimand, will the minister commit
himself to immediately act on the government's promise and put an
end to discrimination against gays and lesbians by amending the
Canadian Human Rights Act?
[English]
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, the chief commissioner performs a
helpful role in identifying areas where reform is needed. Perhaps
he is not best placed to decide what the priorities of government
should be.
The government has acted in a number of fronts in relation to
human rights since its election in 1993. It will continue to do so. It
will respect its commitments and that is very clear.
* * *
Ms. Val Meredith (Surrey-White Rock-South Langley,
Ref.): Mr. Speaker, on Friday the parliamentary secretary admitted
that the minister of immigration destroyed all 30,000 copies of a
booklet that her predecessor had published with taxpayers' funds.
Can the minister please advise the House what she found so
offensive in these booklets that she had $20,000 of taxpayers'
money put through the shredder?
[Translation]
Hon. Lucienne Robillard (Minister of Citizenship and
Immigration, Lib.): Mr. Speaker, as the parliamentary secretary
said last Friday, when I came to this department, I reviewed all
existing documents, all current policies. I revised the calendar and
the agendas. The document in question was deemed inappropriate
for distribution.
[English]
Ms. Val Meredith (Surrey-White Rock-South Langley,
Ref.): Mr. Speaker, it is interesting that the minister finds that it
was inappropriate. Will she admit that the real reason she had these
booklets destroyed was because she recognized something that the
current Minister of the Environment did not, that the use of
925
taxpayers' money to publish blatantly partisan material is a
violation of government regulations.
[Translation]
Hon. Lucienne Robillard (Minister of Citizenship and
Immigration, Lib.): Mr. Speaker, when taking over a new
department, it is perfectly normal for a new minister to examine all
documents, policies, draft policies and relevant agendas, and
readjust and adapt the development schedule consequently. That is
what was done. Again, I considered this document was
inappropriate for distribution.
* * *
[
English]
Mr. Charles Hubbard (Miramichi, Lib.): Mr. Speaker, I have
a question for the Minister of National Defence.
The base at Chatham was closed in the budget of 1994. For the
last two years local groups: Sky Park, the city, the premier of New
Brunswick and the province have been working to determine
optional uses for the base.
Would the minister please inform the House what has been the
results of the negotiations?
Hon. David M. Collenette (Minister of National Defence and
Minister of Veterans Affairs, Lib.): Mr. Speaker, no other
member of the House has dealt with the very devastating blow of
the closure of a military base in such a professional manner as the
hon. member for Miramichi. It has been difficult for the region and
for the province.
(1450)
I know the premier and my colleague, the Minister of Human
Resources Development as regional minister for New Brunswick,
have worked exceptionally hard with the local member to see if we
can apply those moneys that were announced to mitigate the
closure of the base in 1994 in a way that will help job creation in
that area.
The province has come up with a very novel way to apply the
money which is by taking over the base as it closes this spring. In
that way, the full responsibility for continued operations and
hopefully the attraction of jobs and economic prosperity to that
region will result.
My colleague, the Minister of Human Resources Development,
and the premier will be making a more formal announcement later
this day with the details of this agreement.
[Translation]
Mrs. Maud Debien (Laval East, BQ): Mr. Speaker, my
question is for the Minister of International Trade.
Yesterday, the Minister of International Trade and the
vice-president of the European Commission discussed ways to
convince the United States to restrict the scope of the new
Helms-Burton act.
Could the minister tell us about the content of his discussions
with the vice-president of the European Commission and the extent
of the changes to the Helms-Burton act they demand?
[English]
Hon. Arthur C. Eggleton (Minister for International Trade,
Lib.): Mr. Speaker, the vice-president of the European
Commission is quite supportive of the position that Canada has
taken. It has been well enunciated by the Prime Minister, my
colleague the Minister of Foreign Affairs, and myself in indicating
our objections to this bill and the extraterritorial measure of the
United States as it applies to our country and people who trade with
Cuba.
We believe it is fundamentally wrong. We are taking action with
respect to NAFTA. We have issued a letter to our partner, the
United States, to commence with consultations under NAFTA.
The European Union shares our concerns. In fact, we have had
very wide support from many countries right around the world. We
will be raising this matter, together with the European Union, in
various international forums such as the World Trade Organization
and the Organization of Economic Co-operation and Development
to get the kind of support needed so that the United States will
exercise the necessary discretion not to implement this bill.
[Translation]
Mrs. Maud Debien (Laval East, BQ): Mr. Speaker, the
vice-president of the European Commission and the Canadian
government examined potential solutions, including-according to
Mr. Brittan as reported by the Canadian Press-trying to persuade
the United States to restrict the scope of the act in such a way that it
would be less harmful.
Are we to understand that the government is about to negotiate
with the U.S. minor amendments to make it slightly less harsh
instead of going directly to the international courts in order to have
this act purely and simply annulled?
[English]
Hon. Arthur C. Eggleton (Minister for International Trade,
Lib.): Mr. Speaker, there is some latitude for the President of the
United States in terms of the implementation. That is what I think
Leon Brittan, the vice-president of the commission, is talking
about. We have attempted to urge the administration in the United
926
States to use the limited discretion it has to reduce the impact of
this legislation.
We will continue to pursue that in our consultations with the
United States. However, we are also quite prepared to go into other
forums for further discussion to try to bring about a more
satisfactory resolution than presently exists with this legislation.
* * *
Mr. Jack Ramsay (Crowfoot, Ref.): Mr. Speaker, the
appointment of Mr. John Desotti to the bench by the justice
minister stopped the hearing of an unresolved complaint that was
registered against him with the Law Society of Upper Canada by
the Roberts family of North Bay. This denied the Roberts family
rights granted it under Ontario law to a fair and just hearing.
My question is for the justice minister. Why did the justice
minister not wait until the law society had reached its final decision
before he appointed Mr. Desotti to the bench?
(1455 )
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, there are two factual errors in the
question as put.
The first is that there was an interruption of a hearing for the
purposes of the appointment. That is not so. The second is that the
appointment was made before there was a decision on the
complaint. That is not so.
As I mentioned to the member when he put this same matter to
me 10 days ago, there was a complaint by a former client to the law
society in relation to John Desotti from the days when he was in
practice. The law society investigated the complaint and
determined that there was no foundation to it and that the law
society would not proceed against Mr. Desotti. There was no
hearing under way and no complaint that was authorized by the law
society.
After that happened his name came forward for consideration for
appointment and I brought his name to cabinet because he is going
to be a very good judge.
The procedure of the law society enables the client to seek a
review of the initial decision before a single bencher of the law
society. It was while that review was pending that his name came
forward. I took into account the nature of the complaint and the
facts.
Mr. Cummins: Order. Order.
Mr. Rock: I am responding to the question. I brought the man's
name forward because under the circumstances it was the
appropriate thing to do in my judgment.
Mr. Jack Ramsay (Crowfoot, Ref.): Mr. Speaker, it is very
clear that the judgment rendered by the Law Society of Upper
Canada was under appeal. A date had been set for that appeal
hearing before the Law Society of Upper Canada and the Roberts
family were prepared to attend that appeal hearing and submit
further information for consideration by the law society.
The justice minister's intervention by appointing Mr. Desotti to
the bench stopped the process that had been granted under the
legislation of Ontario.
What is the justice minister prepared to do to ensure that the
Roberts family has a fair and just hearing to the complaint it
registered against Mr. Desotti before the Law Society of Upper
Canada?
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, the issue is not what I am prepared
to do for the Roberts family. The issue is what the Roberts family
wishes to do for itself.
The complaint which was made to the Law Society of Upper
Canada was fully investigated and a determination was made by the
discipline officers not to proceed.
There is nothing in the appointment of Mr. Desotti to the bench
of the general division in Ontario which deprives the Roberts
family of its civil remedies in law. I am sure the family has legal
advice to provide a full description of the rights and remedies
available and of which it is still able to take full advantage.
* * *
Mr. Bill Blaikie (Winnipeg Transcona, NDP): Mr. Speaker, my
question is for the Minister for International Trade. It concerns the
negotiations between Canada and Chile toward a new trade
agreement.
Both the Canadian labour movement and the Chilean labour
movement feel that the negotiations are an excellent opportunity to
dramatically improve the NAFTA side agreements on labour and
the environment.
Why is the minister not seizing this opportunity by insisting on
incorporating within the proposed bilateral agreement provisions
requiring both parties to respect and observe a core set of labour
rights and standards?
Will the minister show the same courage on labour rights in
defence of Canadian workers that he is showing on Cuba in defence
of Canadian investors and not be intimidated by American
congressional reluctance to see such labour and environmental
standards? Or is it Canadian reluctance? Why the refusal to make
progress on these issues within the context of these bilateral
negotiations?
Hon. Arthur C. Eggleton (Minister for International Trade,
Lib.): Mr. Speaker, until recently the parallel agreements which
exist in NAFTA with respect to the environment and labour
927
standards were not part of the Chilean discussion because it was a
blocking point for the United States. That is why the U.S. could not
get it through congress. The majority in congress did not want to
deal with those two issues.
In our bilateral arrangements with Chile we had put them on the
table because the questions of the environment and labour
standards are important and we are negotiating with them.
Mr. Bill Blaikie (Winnipeg Transcona, NDP): Mr. Speaker, is
the minister saying that he will be insisting as a condition of
arriving at a conclusion to these negotiations that there be a core set
of labour rights incorporated in the agreement pursuant to
international conventions like those established by the ILO? Is that
the position of the Canadian government? That is not what is
understood to be the position of the Canadian government by the
Canadian Labour Congress, for instance. Would he please say
whether the position of the government has changed.
(1500)
Hon. Arthur C. Eggleton (Minister for International Trade,
Lib.): Mr. Speaker, I have met with Mr. White of the Canadian
Labour Congress and his officials. I indicated that what we were
doing in the case of Chile was not only a bilateral free trade
agreement but was also an effort to bring about its accession into
NAFTA.
The NAFTA agreements and the parallel agreements with
respect to the environment and labour standards would be our guide
in dealing with these negotiations with Chile.
* * *
Mr. Murray Calder (Wellington-Grey-Dufferin-Simcoe,
Lib.): Mr. Speaker, my question is for the minister of agriculture.
Since 1993 the Canadian government has been right sizing,
harmonizing and generally saving Canadians money. Could the
minister explain what the single food inspection agency is and how
it will benefit and save Canadians money?
Hon. Ralph E. Goodale (Minister of Agriculture and
Agri-Food, Lib.): Mr. Speaker, I thank the hon. gentleman for his
question about what is really a very good news story for Canadians.
We will be consolidating and strengthening all food safety
standards setting functions within the Department of Health and we
will consolidate and strengthen all inspection and quarantine
functions within a new food inspection agency at the federal level
that will draw together activities presently spread among three
different departments.
This will maintain absolutely the Canadian reputation for food
safety. It will improve efficiency and effectiveness, saving
something in the order of $44 million annually, and it will set the
stage for a truly national Canadian food inspection system with
collaboration among all levels of government, a good example of
how Canadians work well together.
The Speaker: This brings to a close the question period.
* * *
Mr. Don Boudria (Glengarry-Prescott-Russell, Lib.): Mr.
Speaker, I am seeking unanimous consent to move the following
motion:
That, notwithstanding any standing or special order, no later than the time
when Government Orders is reached following Oral Questions on Thursday,
March 21, 1996, the motion for second reading of Bill C-10, an act to provide
borrowing authority for the fiscal year beginning on April 1, 1996, shall be
deemed to have been adopted on division and the said bill shall be referred to a
committee of the whole; and
That, no later than fifteen minutes before the expiry of the time allotted for
Government Orders on that day, the Speaker or the chair of the committee of the
whole, as the case may be, shall put every question necessary for the completion
of all remaining stages of the said bill without further debate or amendment,
provided that the motion for third reading shall be subject to a recorded division
that day.
The Deputy Speaker: Is there unanimous consent to move the
motion?
Some hon. members: Agreed.
(Motion agreed to.)
_____________________________________________
927
GOVERNMENT ORDERS
The House resumed consideration of the motion.
(1505 )
Hon. Douglas Peters (Secretary of State (International
Financial Institutions), Lib.): Mr. Speaker, I join my hon.
colleagues on the government side in condemning this tiresome
and trivial supply motion today.
Perhaps we and the technical committee on business taxation can
take some small comfort in the words of the great philosopher
Immanuel Kant: ``Slanders are not long lived; truth is the child of
time''. It has not taken much time at all to reveal the absurd and
unwarranted attack on this committee advanced by the hon.
member of the Bloc.
I find it hard to believe. As a graduate economist has little
excuse for not appreciating the impeccable stature of the academics
on this committee. As an economist and former business executive
I do know many of these people personally or by reputation. The
government is lucky they have agreed to serve their country in
reviewing the business tax system. Their work will certainly be
first rate and undertaken without fear or favour or bias. I worked
with one of the heads of the committee on a task force some years
back on taxation.
928
Let me remind the hon. member of the clear and public mandate
the committee has been given. Its job is to consider ways of
improving the tax system to promote job creation and economic
growth, simplifying the taxation of business to facilitate
compliance and administration, and enhancing fairness to ensure
that all businesses share the cost of providing government services.
Where is the hon. member's beef? Where's the beef? Why does
he feel these committee members are unable to fulfil this mandate
honestly and expertly? Is it because they are not knowledgeable,
experienced, because they represent all regions of Canada? Is it
because they are successful people? Those are attributes the hon.
member and his party may worry that they do not possess in great
abundance but that is no excuse for attempting to impugn the
committee and to blockade this important review.
I do not think there is much more that can be said directly about
this motion at hand. There are some thoughts I would like to offer
relating to the motion that might add some value to this afternoon's
proceedings.
Let me address the broader topic of business taxation in Canada.
It sometimes concerns individual taxpayers because they hear
certain groups claim that business is getting an easy ride at a time
when all of us feel somewhat overtaxed.
Fueling this concern is the fact that corporate income taxes today
do provide a much smaller share of federal revenues than they did
some decades ago. There is no conspiracy, no favouritism at work.
Let me explain why.
Corporate income taxes are tied to income and so corporate tax
revenues have been lower in recent years mainly because corporate
profits have been hit sharply by the recessions first in the early
eighties and more recently in the 1990s.
That situation is turning around. Since profits began to rebound
in 1992 corporate income tax revenues as a share of federal
revenues have been increasing steadily.
Let us also understand, which the proposer of this motion may
not, that the increase is not a lock step process. Even if some
sectors are recording significant renewed profitability, that does
not immediately translate into equal revenues gains for
government. The reason is the tax system recognizes the fairest
approach to business taxation is to view earnings over a period of
time. That is why firms can apply loss carry forwards which reduce
potential taxation even when profits begin to grow again. The logic
is proper and fair.
If a company loses money over a number of years and then
records a profit, is it equitable to tax it as a fully healthy operation?
This could jeopardize its ability to repay loans it has incurred to
keep going, its capability to invest and to further strengthen the
firm. The point is taxation applied without consideration of the
broader success of a firm is no boon to anybody. If the company
cannot achieve appropriate profitability it cannot preserve jobs, let
alone create new jobs. The people who ultimately suffer are the
employees and their families.
(1510)
This does not mean the government must bend over backwards
on corporate taxation, and it has not. The evidence is clear. All
three of our budgets have included concrete measures to make the
corporate tax system fairer, to guarantee to Canadians that
businesses are an active part of our fiscal discipline.
We have introduced higher rates for the large corporation tax,
which applies to all corporations with Canadian capital in excess of
$10 million. There is a special capital tax designed to act as a
minimum tax on financial institutions. In the 1995 budget we
imposed a special levy on deposit taking institutions which will
generate an additional $100 million in revenue. Earlier this month
in the 1996 budget we extended the levy for another year.
The bottom line is clear. Corporations do pay substantial taxes.
In 1993 they paid almost $51 billion in taxes to all levels of
government. The banks are not excluded from this discipline. Over
the last three years the largest banks have paid close to $1 billion
annually in income and taxes to the federal government alone.
Let me underscore that federal taxation represents only a portion
of the taxes businesses pay. When all taxes are taken into account,
income taxes, capital taxes, payroll taxes and property taxes,
corporations paid about two-thirds of their before tax profit in taxes
in the last year we have numbers for, 1993.
Let me confess that this government has some biases when it
comes to business taxation, as have previous governments. It is a
bias in favour of research and development and a bias in favour of
small business. These are vital sectors for Canada's long term
economic growth which will create new jobs.
That is why the Canadian tax system provides special advantages
to certain activities and certain sectors. For example, Canada's
federal tax system for medium and small enterprise is among the
most attractive in the world. Special deductions and other tax
provisions deliver about $3 billion in federal tax assistance to small
and medium size enterprises. It is likely no coincidence that this is
the sector which has been the major job creator over the last
decade.
Do the hon. member and his party object that the small business
deduction cuts the basic corporate tax rate from 28 per cent to 12
per cent on the first $200,000 of business income? By contrast, the
929
similar deduction in the United States applies only to the first
$50,000 U.S.
This is the type of bias of which Canadians should be proud. It
aims at using the tax system to deliver the jobs and the growth we
need and which our children deserve.
That is not to say the system is working as well as it should or
that there may not be better ways which can contribute to achieving
our economic goals. That is why we have established the technical
committee. It is the first step in a substantial process of review of
business taxation. By doing so the government is honouring its
obligation to Canadians to obtain the best and fairest tax system
possible.
[Translation]
Mr. René Laurin (Joliette, BQ): Mr. Speaker, on the subject of
business taxation, I would like to resume the debate where I left off
when I responded to the budget speech of the Minister of Finance.
At that time I was talking about the debt that Canadians have
accumulated over the last 20 years.
(1515)
I think it would not be a bad idea to repeat the image I was using
when I demonstrated to Canadians, and Quebecers in particular,
where we are when we talk about the national debt.
We are in a huge black hole, the vastness of which we can barely
imagine. It is not unlike the black holes astronomers are looking at
in the sky. They try to measure their size, but in order to do so they
need very sophisticated instruments, like telescopes. Yet, even with
these instruments they can barely gauge the size of these holes.
To visualize the Canadian debt, this huge black hole, to allow the
individual not familiar with large figures to grasp its size, we have
to use instruments which talk to people. We can use figures. As I
said at the end of my speech, last week, between 1993-94 and
1997-98, the debt will go from $508 billion to $619 billion, which
means an increase of $111 billion. It does not look very big, it
sounds like a small number, but when you think about it and when
you compare it with other figures you are familiar with, you realize
that it is really enormous.
I used the example of a person playing Loto-Québec and winning
a million dollars. One million dollars is enough to make you a
millionaire, to reach the dream of anyone, becoming a millionaire.
But, one billion dollars is $1,000 million. This means that, over
the last four years, if the federal government had distributed that
money to Canadians, it would have created 111,000 millionaires,
but it did exactly the opposite.
Since 1993-94, Canada has deprived itself of 111,000 new
millionaires because it increased its debt. A thousand millions is a
one followed by nine zeros. This means that any new Canadian
born this morning already has a $20,000 debt. If he had any trouble
breathing, such a knowledge would be enough to choke him. You
know, when an infant is born, a small slap on the buttocks is usually
enough to give it life, to force it to breathe for the first time. But, if
an infant could understand what is going on and if we showed him
the debt, it would refuse to breathe and say: I would rather not be
alive in this country. However, each week in this House our Prime
Minister praises the merits of this vast and beautiful country, the
best in the world with its $619 billion debt.
Last week, I said: ``If this is the best country in the world, we can
stop travelling, we will never see any better''. It is true. It is
impossible to find beauty in figures such as these. However, this is
what our Prime Minister does. He finds it beautiful. He boasts
about it and tries to have people believe that we are reaching our
goals.
(1520)
Of course success can mean different things to different people.
The Prime Minister says that the deficit was reduced from $42
billion when they formed the government to $24 billion this year. It
is true there has been a improvement in the sense that every year
people are getting a little bit less in debt than they used to do. They
still pay groceries with money they have accumulated or that they
did not have. They still buy groceries on credit, they borrow money
from abroad, from the United States, from Japan, from England, all
around the world, from Germany. They are borrowing to buy
groceries.
As my grandfather or my father would have said: ``We are living
too high off the hog''. Perhaps this is not parliamentary language,
Mr. Speaker, but it allows those who usually use colorful imagery
to better understand what we mean. It means having a lifestyle that
we cannot afford. It means that if we wanted to pay off this debt,
because we are not paying it off right now, we are only slowing its
growth. Instead of increasing by $42 million a year, it is increasing
by $24 billion a year.
But we will have to pay that debt one day, and to be able to do so,
there must come a time, somewhere in the history of Canada, when
the government takes in more than it is spending. Only then will it
be able to reimburse a part of the debt. And how can we expect this
to happen quickly? I will give you an example: with a $619 billion
debt, assuming that we managed to save $1 billion a year on that
$619 billion without increasing the debt-we would not increase
the debt each year, but on the contrary, we would put aside $1
billion a year to pay it off. Well, the way things are going now, it
would take 619 years.
930
This week, we celebrated the 109th birthday of the oldest
woman in Canada. Poor lady, she will not have lived long enough
to see the end of the debt, even if she holds a longevity record.
But let us go further than that. Let us try even harder to save, to
cut spending and let us assume that in the next few years, in four or
five years, we can manage to have a zero deficit, and even better
than that, to put aside $5 billion a year that we would use to reduce
the $619 billion accumulated debt. Well, even at $5 billion a year, it
will take us about 120 years to pay off all the federal government's
debt. Of course, this does not take into account the fact that we as
taxpayers have to pay off provincial, municipal, school board,
personal debts, etc.
There again, it would take 120 years. I could be long gone and
Canada's debt would still not be paid off, which comforts me in a
way, because it reminds me that, considering the amount, I could
not pay it off by myself no matter how long I live. This is small
comfort to me, but it is far from being one to my children.
Such is the situation in Canada now. In fact, what is being
proposed to change this situation? We heard the budget speech and
we realized that it contained nothing. It did not propose any
measure to eliminate the deficit and the debt. On the contrary, we
are just coasting along. Two years ago we adopted measures that
were supposed to be implemented one, two, or three years down the
road, others five years later. For now, taxpayers are not hurt
because these measures are not being implemented right away.
That makes them easier to swallow.
(1525)
That does not hurt taxpayers for the moment. They are told that it
will not be implemented right away, which is a little easier to take.
The only new measures that have been adopted will not be
implemented now either, but at the end of the Liberals' mandate.
They only have one or two more years to go, because the Prime
Minister is already starting to lay down the background.
So, there is no action here. We were expecting the Prime
Minister to assume his responsibilities and take strong measures,
particularly with regard to business taxation. However, what do we
see under the guise of measures about business taxation? The
finance minister has told us that there will be a review of business
taxation. That will hurt. When the government sets out to study
something, it usually means that it does not know what to do. That
is exactly what we are being told. There will be a review, not some
kind of a review, but a thorough review. That means, first, that it
will be a lengthy process, and, second, that once the review is over,
the government will be aware of all the problems because they will
have been thoroughly reviewed. So an in-depth review of business
taxation is to be conducted, not by just anybody, Mr. Speaker, but
by a technical committee with a view to three general objectives.
First, to promote job creation and economic growth; second, to
simplify the taxation system; and third, to enhance its fairness.
First of all, let us have a look at the membership of this
committee. Since this is meant to be a serious committee that will
make in-depth studies, the Minister of Finance preferred not to take
any chances. He appointed the most eminent experts. Who are the
greatest experts to advise the government on tax havens and tax
avoidance? We know the measures under consideration are legal
for the time being, but the tax loss runs into the hundreds of
millions of dollars annually.
So, the government decided to appoint responsible, experienced
and highly qualified people to this committee. Let me give an
example: someone from Price Waterhouse, a company that has
expertise in this area. Why is it so? Because it has many clients
who use tax havens that it had recommended. I will not go through
the whole list of companies that sit on this committee, because the
minister did it on budget day. There are about ten members, not
taking academics into account. A few more experts have been
appointed on the basis of their knowledge, because they are
experienced managers or advisers in companies that already use tax
havens. You can be sure no mistake will be made.
When these companies advise the government, I would be very
surprised if they recommended ways to go after their main clients.
And if they do so, they will first warn their clients that they should
beware because the government is about to strike.
This is not a very good way of examining this issue, because
these experts are in conflict of interest.
Of course, we asked the minister of Finance why he was
appointing these people who are obviously caught in the middle of
a conflict of interest? The minister told us that, in order to get good
advice, he needed to hire the best experts around. It is a bit like the
police chief who would set up a committee made up of Hell's
Angels to fight crime, because no one else knows the crime scene
better than these bikers, who deserve then to sit on the committee.
I do not want to make any comparison between these
accountants and the Hell's Angels. This is not what I want to do. I
just want to show how ridiculous the whole situation is and how
these people, in both cases, are in a conflict of interest.
(1530)
In how many months will the committee table its
recommendations? No one knows. But one of its goal is to promote
employment. I would imagine that these same people also advise
banks. We can see how deeply the banks are committed to solving
the unemployment situation and how they perceive the growth
problem.
931
This year, Canada's four or five major banks made billions of
dollars in profits, one billion and some hundreds of millions of
dollars in profits, which, of course, had some impact first and
foremost on the income of the presidents of these banks. As for
the second consequence, one would have expected that the
increase in profits-which is growth-would have translated into
the creation of new jobs but we realized that, on the contrary, the
number of jobs in these five banks either remained stable or
decreased. This is how these companies conceive employment and
growth. I certainly hope that the committee of experts will
examine at length this philosophy of the banks and that it will be
able to recommend other ways to revive the economy.
The system must be simplified. Sure, suggestions to that end
were often made to the government. Each year, at the time of the
budget speech, suggestions are made to the government on ways to
reinvent business taxation in order not only to put an end to
loopholes but also to find longer term solutions. The present policy
is only aimed at putting an end to loopholes. We put an end to
loopholes and we think that the whole system is fixed.
This way, new loopholes soon appear and experts are usually
quick to detect them and take advantage of them.
The only solution is to simplify the system so that we know once
and for all where taxation is headed. Businesses need stability. We
are told year in and year out that businesses cannot prosper without
a stable economic and political situation. They need a stable
climate.
I imagine that such a stable climate also starts with fiscal goals.
We must tell businesses what lies ahead for them. We must tell
them, we must tell the thousands of businesses that have made
profits for 15 years and do not pay one cent in taxes that, starting
tomorrow, they will have to pay a minimum tax. This is what we
must tell them and we must ensure that these measures will not
apply only for one year or until the next elections. We must tell
them that they will pay taxes as long as they will be in business. It
is a matter of distributive justice.
It is a matter of having each citizen pay, whether it is an
individual or a corporation. It is a matter of ensuring that each
Canadian, each citizen pays his fair share of tax. Therein lies
stability. When corporations know that, they make plans and they
anticipate. In any case, with the benefits they already have and they
will keep, you can be sure that corporations, even if their net profits
decrease, will use their expenses to pay less taxes. Corporations
can buy themselves many things.
Business executives include in their expenses many things that
we, as individuals, cannot. Once they have charged all that, they
can afford to have lower revenues; they do not have any more
expenses to pay; everthing else has been paid by the corporation.
Under these circumstances, leftover profits could be taxed at a
higher rate and there would still be some left.
(1535)
Lastly, the taxation system which, hopefully, will be
implemented would take into account the fact that at present, if we
look at taxation-and I will conclude with this-in 1993-94,
personal income tax represented 44 per cent of all the government's
tax revenues, while corporate tax accounted for only 8.1 per cent.
In 1997-98, and notice the change, individual taxpayers will pay a
little more, that is 47.6 per cent of all taxes in Canada, while the
corporations will pay only 12 per cent. It was the same in 1961,
corporations paid 15 per cent, and individuals 27 per cent. Look at
that increase. Who absorbed that increase since then? The
individual taxpayers, not the corporations.
The analysis that the technical committee will make will have to
focus especially on that. The problem no longer lies in the pockets
of individual taxpayers, but in the pockets of other taxpayers,
namely, of course, the big corporations.
[English]
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, as one
of the two chartered accountants in the House of Commons today, I
cannot resist responding to the member.
The member talked quite a bit about corporate taxation. At the
end of his speech he indicated that the percentage of the
government revenues contributed by the corporate sector has
continued to go down. He painted a picture that somehow there has
been some change in the laws, some change in something which
has meant corporations are paying less than they were before.
Quite the contrary, there has been no change. The corporate tax
rates are still the same. The member should know the difference is
there are some rules in the corporate income tax system which
account for the reduction or elimination of taxes otherwise payable
by corporations. I will give him a lesson later on if he wishes.
There are three ways. The first one has to do with dividend
flowthrough. It means that when one company pays a dividend to
another and the second company pays it out to its shareholders, the
company in the middle has a dividend income but pays no tax
because there is an equal and offsetting part IV tax. The income
statement shows taxable income, or income from operations or
from the business, but no tax is payable because it flowed through.
The second way in which corporations do not pay tax has to do
with loss carry forwards and loss carry backs: seven years forward,
two years back. It means in bad times corporations can incur
substantial losses. While in following years they may have
substantial high profits, the taxes payable on those profits will be
zero. The reason is that under our current tax act income taxes or
losses from
932
prior years can be carried forward seven years and back three
years. There should be a change here.
The third way relates to deferred income taxes. They are not
legally owing but they are virtually certain to be owing to the
government. It also has to do with the difference in the write offs of
capital assets, whether it is capital cost allowance or depreciation.
I am not going to go any further into the tax thing, but I do want
to defend the integrity of the CA profession. The member criticized
certain of the appointees, one of whom was Mr. Bob Brown of
Price Waterhouse. I am proud to say that I worked with Mr. Brown
when I articled at Price Waterhouse. I know of no finer professional
in Canada, particularly in relation to taxes and with regard to
personal integrity. Mr. Brown is a gentleman who has worked and
advised this government over many years. Despite the fact that his
firm has clients who do certain things, he is a man of integrity. He
is a man who will be able to assist in dealing with the questions
raised by the finance minister.
It is really presumptuous and possibly inappropriate to
personally attack someone who is in a profession that prides itself
on integrity in providing service honestly and with professionalism
to Canadians as investors, as shareholders and as people looking
for professional advice on their financial affairs. That is what is
true. I will simply say to the member, let us be careful about being
critical of those who are trained to help all Canadians.
[Translation]
Mr. Laurin: Mr. Speaker, I thank my colleague opposite for
listening to what I said. However, it is unfortunate that he did not
listen a bit more carefully because he would have understood a
whole lot better.
(1540)
I never meant to question the integrity of the advisers that were
chosen by the government. What I am saying is that you cannot
serve two masters at the same time. Would the member accept that,
for the next election campaign, the same strategic advisers work for
both the Liberal Party and the Bloc Quebecois? Can he imagine
that? Does he think that a perfectly honest person can advise both
parties at the same time on the strategy they must follow to win the
next election? If he understands that, he will certainly understand
that an accounting firm, as honest as it may be, is in a conflict of
interest position when it must advise both the government and
those who take advantage of tax havens on the means to avoid one
another. That is what it means to be in a conflict of interest
position.
I just want to add a few words concerning other tax havens.
There are things that are difficult to verify, but when you realize
that 57 of the 119 subsidiaries of our six major Canadian banks are
located in the West Indies, an area where tax havens abound, you
have to wonder. There are 28,000 businesses for a population of
30,000 in the Cayman Islands. Unemployment must surely not be a
problem in that area: 28,000 businesses for 30,000 people. If these
corporations are not there because it is a tax haven, then we must
ask ourselves some serious questions.
[English]
Mr. Rey D. Pagtakhan (Parliamentary Secretary to Prime
Minister, Lib.): Mr. Speaker, the member for Joliette made two
points: concern for the national debt and the appointment of the
technical committee. However, when we pause and reflect, the
member did not offer any solution at all.
To truly encourage investment in business in this country we
need to have the climate of certainty, real confidence and unity.
Would the hon. member not agree to work toward that?
Would the member not also agree that having reduced the level
of foreign borrowing and the deficit to GDP ratio, we are indeed the
best country in the world as declared by the United Nations and we
are only asserting our pride in the declaration? Would he not agree
those are achievements of the Government of Canada?
[Translation]
Mr. Laurin: Mr. Speaker, there is one thing on which I can agree
with the government member. We have been saying it to the
government for three years now. Even before the first budget was
brought down by the Minister of Finance, and before every budget
since, we suggested that the government create a special working
committee including not only experts chosen by the government,
but also some hon. members from every party in the House. That
would be the right way to have a problem studied not only by
experts, but also by members of Parliament who, because they have
been elected by their fellow citizens, are responsible for ensuring
openness and for making sure that the government's
recommendations will not favour a social class over the others.
That is what we want. That is what we have been recommending
for years to Parliament and to the government. But the Minister of
Finance, the Prime Minister and the Liberal Party as a whole
rejected our proposal.
Our proposal is still on the table. Tomorrow morning, if the
Minister of Finance wants to strike such a committee, he will find
us ready. We will be the first to bring a positive contribution, to
offer suggestions, and to sell them to the people affected by the
measures.
The Deputy Speaker: There are two minutes left. One for the
hon. member for Longueuil and one for the hon. member for
Joliette.
(1545)
Mr. Nic Leblanc (Longueuil, BQ): Mr. Speaker, I would first
like to thank the member for Joliette for his excellent speech.
933
I would also like to mention the excellent speech we enjoyed
yesterday by the Premier of Quebec, Lucien Bouchard, who has
really decided to slash spending and resolve Quebec's deficit
problems. Mr. Bouchard said as well that the deficit and the
accumulated debt in Quebec represented roughly 18 per cent of
Quebecers' costs. Federally, the figure will be 50 per cent next
year.
We should perhaps explain more clearly what this means. I
would ask the member for Joliette to do so in his response.
Federally, it means that only 50 per cent of the money we give to
the federal government will come back to us in services.
Mr. Laurin: Mr. Speaker, I thank my colleague for giving me
the opportunity to acknowledge the Quebec government's initiative
in economic reform.
When we talked earlier of setting up a committee to provide
help, which we would be part of, this is what we were thinking of.
What is the Government of Quebec doing at the moment? It is
turning to experts, obviously. Dozens of experts will be there,
along with union presidents and business leaders who know about
creating jobs or not creating them, about making profits and
avoiding taxes. It means bringing these people together around a
table, forming a consensus, assessing the situation and then dealing
with solutions together and this is the only way we will pay off our
debt.
[English]
Hon. Raymond Chan (Secretary of State (Asia-Pacific),
Lib.): Mr. Speaker, before discussing today's motion I would like
to take this opportunity to briefly point out to members of the
House the reaction of my constituents in Richmond to the finance
minister's 1996 budget.
The budget is further proof that the voices of my Richmond
constituents are being heard in Ottawa. In my town hall meetings,
in discussions with community groups and in my regular meetings
with the non-partisan community liaison committee in Richmond
the message has been very consistent: maintain vital social
programs but reduce the deficit with spending cuts, not tax
increases. That is the message I brought to Ottawa.
This budget delivers. After a lower than projected deficit last
year, the government is on track to meet or better its target for
1996-97, reducing the deficit from 6 per cent of gross domestic
product to 3 per cent within three years of taking office. As a
Liberal candidate I made a promise to the people of Richmond that
we would meet this target. We are on track to deliver on that
commitment, but our work does not stop there. Our ultimate goal
has to be deficit elimination and paying down the debt.
Also in the budget the government reallocated funds to new
initiatives to support youth, technology and international trade,
which are areas critical to future jobs and growth. If our future is to
be brighter and more prosperous, we have to invest in it. We have
to apply our successful Team Canada approach right here at home
to establish partnerships with the private sector that will create
opportunities for young people.
The budget also announced a system of secure, stable and
growing federal support for medicare, post-secondary education
and social assistance which will see Canada health and social
transfer payments increase within a few years.
The deficit is on a permanent downward track. The finance
minister's firm but steady approach to deficit reduction is working.
It is improving the economic environment for jobs and economic
growth. Let us look at the evidence.
Short term interest rates have declined by about three percentage
points since March 1995. Canada's cost competitiveness is the best
it has been in 45 years. Our merchandise trade surplus has reached
record levels and the current account deficit as a share of GDP is at
its lowest level in 10 years. Canadian dependence on new foreign
loans has fallen from $29 billion in 1993 to $13 billion in 1995.
Every year that dependency will decline more and more.
(1550)
At the same time we are restoring growth to provincial transfer
payments and we have guaranteed that the cash component of the
CHST will not go below $11 billion per year for the next five years.
Jobs and economic growth remain our government's priority. We
are investing in three priority areas: youth, technology and trade,
areas critical to future growth and jobs.
People I have talked with in Richmond are worried about the
sustainability of the public pension system. They want us to act
now. The new seniors benefit targets help to seniors with low and
modest incomes, ensuring the system is fair and sustainable for the
future.
I believe Canada is on the right track. The federal deficit will
continue to decrease. Our dependency on foreign lending markets
is going down. Personal income tax rates have not gone up and we
are restoring growth to provincial transfers for social programs. In
my continuing discussions with constituents, they support the
measures this budget takes to secure Canada's social and financial
future.
The budget reflects our government's commitment to put in
place the strongest possible economic framework for sustained
growth and jobs. We are also providing funding to encourage
development in key fields such as the aerospace sector and
biotechnology, important industries for Richmond and British
Columbia.
Securing our financial future is not just about cutting spending.
It is also about creating an environment where business can grow
934
and create jobs. The federal government plays an important role in
creating that environment. We have to ensure the tax system is as
fair and as simple as possible.
Canadians want a system that encourages economic growth and
job creation. To that end the finance minister announced in his
1996 budget the establishment of a technical committee to consider
ways in which Canada's business taxation system could contribute
to the creation of jobs. Given the complexity of this task the
government has decided to undertake a review of those aspects of
tax law that most affect the creation of jobs.
The technical committee will consider ways to: improve the tax
system to promote job creation and economic growth; simplify the
taxation of businesses to facilitate compliance and administration;
and enhance fairness to ensure that all businesses share the cost of
providing government services. The committee will also consider
the interaction between taxes paid by business, including corporate
income tax, capital and payroll taxes, and taxes paid by individuals
on income derived from investments.
The motion put forward by the member for
Saint-Hyacinthe-Bagot clearly questions the integrity of the
members of the technical committee on business taxation. The
finance minister has brought together a distinguished and capable
group of professionals who will meet the challenging mandate that
has been set before them. The technical committee will be
composed of a panel with legal, accounting and economic expertise
in the tax field.
It is also important to remember the technical committee will
report to the Minister of Finance later this year and that public
consultations will follow the release of this report. This
government has consulted Canadians on all three of its budgets. We
are consulting Canadians on changes to public pensions. Canadians
will also have a say on the technical committee's report.
An effective business tax system should be designed to create
jobs. It is time for a comprehensive look at these issues. The
technical committee's first objective should be to identify any
obstacles to job creation in the tax system and to suggest reforms.
All of our efforts to cut costs, reduce the deficit, redefine
government and reform the tax system have a common goal: the
creation of secure, meaningful jobs for Canadians. Every effort of
government, including the technical committee on business
taxation, should be directed toward that end.
(1555)
The Deputy Speaker: There being no opposition members
rising, the hon. Parliamentary Secretary to Prime Minister.
Mr. Rey D. Pagtakhan (Parliamentary Secretary to Prime
Minister, Lib.): Mr. Speaker, I thought there was one question
from the opposition and I would have deferred to the opposition.
I have to seize the opportunity to congratulate the member for
Richmond, the Secretary of State for Asia-Pacific. He has clearly
identified for the Canadian public the commitment of the
government to good governance along the lines of increased
efficiency, increased effectiveness, defining priorities for
Canadians and the initiatives that will result in the creation of jobs.
Again, I would like to compliment the hon. member.
The hon. member indicated there is a guarantee by the
government that there will be a level of no less than $11 billion a
year for medical programs. Perhaps the member could elaborate
further on the impact of this cash flow floor to ensure the survival
of the five principles of medicare-
The Deputy Speaker: The hon. Secretary of State for
Asia-Pacific.
Mr. Chan: Mr. Speaker, it is important to note that social
transfer payments to the provinces are composed of two
components: first is the tax points which were transferred to the
provinces in previous years and second is the cash transfer.
As we cap the total transfers to the provinces and as the tax
points which were transferred earlier continue to increase, the cash
component of the transfer will continue to decrease. According to
the experts the cash transfer would be reduced to zero in 10 or 15
years time if we did nothing about it.
It is important for the government to recognize if the cash
transfer becomes zero, then it is impossible for us to influence the
provinces to uphold the Canada Health Act. This is why it is so
important for us to establish a cash floor to be transferred to the
provinces. It will maintain our influence on the provincial
governments for the delivery of medicare.
The Deputy Speaker: It is my duty, pursuant to Standing Order
38, to inform the House that the questions to be raised tonight at the
time of adjournment are as follows: the hon. member for The
Battlefords-Meadow Lake, Employment; the hon. member for
Chicoutimi, Government buildings.
Mr. Andy Mitchell (Parry Sound-Muskoka, Lib.): Mr.
Speaker, I am pleased to have the opportunity to speak to the
motion.
I was quite surprised last night to see the motion in which the
official opposition criticized the establishment of the committee.
The committee is being established to do something I believe all
members of the House would like to see happen. It will review the
present corporate tax structure and make suggestions on how it can
be improved, made more efficient and operate to the benefit of all
Canadians far beyond what it does now.
Our corporate taxation system has to be more than just a means
of collecting revenue. An effective taxation system must be
935
designed so that it will encourage the expansion of the economy,
encourage the creation of employment and encourage economic
activity.
The committee is being charged to look at the corporate taxation
system and to ensure it is designed in a way that will not curb
employment. When the Minister of Finance announced the
establishment of this technical committee in his most recent budget
he made it very very clear that its job was to find out what the facts
were, to investigate the existing system, to change things that are
presently there, making them far more effective.
(1600)
It is high time this was done. The last time this was looked at was
nine years ago. That has been far too long. I think there is a
consensus among most Canadians and in the House that what the
government does needs to be done in the most efficient way
possible.
I will leave aside the issue of whether the appropriate level of
taxation is there or whether corporations are paying their fair share.
It is generally agreed there is a desire to make sure the
administration of tax collection in this country is efficient, that it is
done in the least expensive way possible and that the least number
of public dollars are used in operating government to do those
things.
That is what this technical committee is all about. It is all about
making sure that things are done more efficiently and that
resources are not being wasted unnecessarily on administration.
I was very surprised to see the contents of the motion that was
put forward by the official opposition. It seems to suggest that it is
inappropriate to have people look at a problem who are best able
and most knowledgeable in that area. It is common sense that if a
technical area of concern such as the corporate tax structure is
being studied, the initial investigation should be done by people
who have a good academic background, who have a good practical
background, who have a good understanding of the tax system.
It makes little sense to seek out individuals who do not
understand the system and who are not able to address some of the
problems. It makes perfect sense to seek out experts in the field. I
almost get the impression that the concern across the way is that
their experts, their people were not picked. They are complaining
about that. It is like ``if you don't play the ball game my way I am
going to take the ball and go home''. It does not work that way.
The people who have been selected to sit on this committee are
very knowledgeable. I have a list of the individuals who have been
selected. As you go down that list you will see the names of
individuals with very strong credentials. These are people who
understand the tax system. They understand how the system works
and can provide some very solid recommendations on how it can be
improved.
It should also be made clear that the individuals on this technical
committee will not provide the final word. They are not going to
create policy. They are not going to come back and tell us this is the
way it is going to be. That is not the intent.
This is the beginning of a process that I hope will lead to some
very concrete changes that will make the system cheaper to run
administratively, that will make it simple and fair. Most important,
the process will lead to making economic fundamentals right and
will lead to increased job creation.
It is important to understand this is the beginning of the process.
It is simply an opportunity to have some people who are experts in
their field take a look at the problem and come up with some
possible alternatives.
(1605 )
At that point, the government will have some sound, in depth
public input and public debate on it. That is when we, as
parliamentarians and Canadians, either as individuals or as groups,
will have an opportunity to look at the study and some of the
recommendations and come back to have a public debate.
We can and will discuss things such as whether the corporate
sector is paying its share of taxation as opposed to the personal
sector. Are there appropriate trade-offs in the tax system where
certain things are done in order to enhance investment and help job
creation? Are those appropriate?
Members will have an opportunity for public debate about those
things. Before beginning that debate, the minister is absolutely
correct in having a technical committee take a look at the present
system, study it in depth, look at some of the ways in which it can
be made fair and simple. From looking at the list of individuals the
minister has appointed to this committee, there are some very
eminent individuals with a lot of knowledge and expertise who are
going to be able to do this job in a very confident way.
The idea of having this committee and the selection of
individuals sitting on this committee is really indicative of the
approach the Minister of Finance has taken to the budget. He has
taken a balanced approach and has tried, quite successfully, not to
fixate on any one part of his responsibilities toward the budget but
has taken a widespread and comprehensive approach.
In the budget, work is being done on deficit reduction. The
deficit needs to be reduced. Work is being done on job creation. Job
creation should be encouraged. There is a desire and a need for
government to target specific areas, to help with job creation such
as with youth unemployment. The government is working toward
helping the least advantaged in society.
The minister has taken a very constructive, broad based
approach, as can be seen with the technical committee. He under-
936
stands the issue which is the reform of corporate taxation. Rather
than simply jumping into it willy-nilly, he starts at the beginning.
He starts by gathering the facts and determining the issues. That
is what this technical committee is going to do. I am pleased it has
been appointed. I have confidence in the people he has appointed. I
know they will do an excellent job. I look forward to reviewing and
debating their report.
[Translation]
Mr. Nic Leblanc (Longueuil, BQ): Mr. Speaker, I would like to
point out that what we really want is tax reform. Bloc members
have been asking for this since they were elected to the House of
Commons. We know that an in-depth tax reform is urgently
needed.
What we disagree on is how the Minister of Finance proposes to
reform the tax system, by appointing friends of the Liberal
government whose final report will probably suit the government
in place just fine.
This is not tax reform, which should be a much more open
process. This committee must include members of the opposition,
of the two and even three parties in opposition, to ensure that tax
reform is fair to everyone.
To give you a few examples, how come people making around
$6,500 still have to pay taxes? These people can barely make ends
meet on $6,500 and they must still pay taxes. It is high time that we
revised the income tax calculation tables instead of taxing those
poor people and then mailing them tax refund cheques to show that
people need us. We should have a quick look at this to make things
more equitable.
Should we raise the GST? Perhaps. Should we increase GST
refund cheques to the poor? Maybe we should do that, too. I do not
know but that is the kind of thing requiring an in-depth review.
(1610)
There are, of course, tax shelters that need to be reviewed
seriously without affecting the competitiveness of our businesses.
We must, however, ensure that our businesses pay their fair share
with respect to tax shelters. We have been demanding for years an
in-depth tax reform.
Now that they are in power, the Liberals have started setting up a
kind of private club, a private club including friends of the
government, whose report will no doubt suit the government just
fine. That is not what we want. I think the hon. member should tell
people the truth and explain his real intentions. Does he really
intend to carry out an in-depth tax reform or to set up a private club
of friends of the government, whose report will suit the
government in office?
[English]
Mr. Mitchell: Mr. Speaker, I will respond to two of the points
made by the hon. member.
If one honestly and without political rhetoric or without trying to
score political points takes a look at the membership of the
committee, one will see a group of eminent individuals who have
proven track records in the field they are being asked to review. To
suggest for a second that these individuals are lackeys of the
government is to do them a disservice. I have a lot of respect for the
individuals I see on this list. I have confidence that they are going
to do their job well and properly.
On the point that they want to reform the tax system, I do not
believe anyone in the House would not agree with that. Probably
most Canadians agree with that. However, there is a process that
needs to be followed.
When I was in the private sector and had to make important
decisions, I did not off the top of my head figure out what I was
going to do. What I did and what the government is doing is
gathering the facts, the information and getting an opinion. That is
what this committee is going to do.
The committee is the beginning of a process of gathering
information so that just as in the private sector where decisions are
made based on the information, so too can we as parliamentarians
have a good, sound and knowledgeable debate and make good
decisions because we will have gone out and gathered the facts, had
the information and had been able to do our jobs properly. That is
what this is all about. That is why I applaud the Minister of Finance
for this initiative.
[Translation]
Mr. Paul Crête (Kamouraska-Rivière-du-Loup, BQ): Mr.
Speaker, I am very pleased to rise in this House today to speak to
the opposition motion condemning the establishment of a technical
committee by the Minister of Finance to examine business
taxation. We are deploring the fact that this committee is
comprised of members who are both judge and judged with regard
to business tax reform, and we feel that the minister should set up a
joint committee of experts and parliamentarians instead.
Why put such a motion forward? We are obviously not against
tax reform. The Bloc Quebecois has been advocating reform for a
long time and we think it is essential, especially since it is being
requested from all parts. In our ridings, people ask us: ``Are
businesses paying their share of taxes at present? Could
adjustments not be made to increase their efficiency as far as job
creation is concerned?'' The problem with the government's action
in this regard is that it is putting the cart before the horse. Taxation
is a tool, not a goal in itself. In my opinion, any tax measure should
reflect political will. It is not simply a juggling game.
937
(1615)
Let me give you an example: the scientific research and
experimental development tax credit. This is an interesting
example in that it has a positive impact on productivity. But at the
same time, as it is being implemented and becoming operational, it
is becoming obvious that it can also have negative impacts in terms
of a decline in employment for unskilled workers.
Choices need to be made that are not technical but rather
political in nature, and I think that, by having only legal,
accounting and tax experts sit on this committee, the minister is
limiting the scope of the debate, thereby denying the people of
Quebec and Canada the real debate they may have wanted to have
on this issue.
Political consideration should be given to this beforehand and, to
do this, I think that two other groups of people should be
represented on this committee. I am referring to parliamentarians,
individuals who can rightly claim to represent the people, who can
convey to the committee suggestions made by citizens from all
walks of life.
Someone in my riding came up with this idea: Would it not be
possible to tax robots-advanced technology if you will-in such
way that productivity gains thus achieved could benefit the workers
who may have been displaced when advanced technology was
introduced? Parliamentarians are the ones who can raise such
arguments. It is certainly not tax experts who know about fiscal
issues, who have past experience, who are often there to defend the
way things were done, and who are often responsible for the
complexity of the current system. Above all, people want
transparency in the tax reform process.
Even if we end up with the best tax system in the world, we will
have missed the boat if people do not feel that it is a fair system. To
some extent, this is what will happen with the committee that is
being set up by the minister. Even with the best possible
recommendations, the minister will have a hard time preserving his
credibility since no parliamentarians and no experts from other
fields will sit on that committee.
Indeed, when reviewing a tax related issue, why not also have
experts from the employment sector? These people could offer a
different perspective than that provided by tax experts and
accountants. As well, we could have legal experts whose
experience is totally different. In Quebec, such an exercise is
currently taking place in the social assistance sector. This process
allows us to get different ideas, different visions on how to deal
with the issues.
The federal government's way of doing things is certainly very
different from that of the Quebec government. In Quebec, all the
stakeholders in the social and economic sectors are sitting together
to decide what should be done. Technical committees could
eventually be set up following that round table, and that would be a
good thing. But the federal government has it all backwards: it
creates a technical committee first, and then it will set up a
consultation process. This does not seem appropriate, given the
mandate that the committee gave itself.
Let us not forget that this committee is there to examine how the
tax system could help promote job creation and economic growth,
and how the system could be made simpler and more equitable.
Should the committee be made up of tax experts who helped
develop the current system? Are these people the ones most able to
look at the issues from the perspective of ordinary citizens? I feel
we could use their expertise, but after the first stage, we ought to
consult to find out what people really have in mind in connection
with these various elements.
I also think that this technical stage ought to follow on a political
debate on what the government's priorities are. What its objectives
are with respect to the employment of workers, or in other words,
what levels of unemployment the government would be prepared to
set as a target to be attained in order to decrease unemployment and
make better use of human resources. Is the government prepared to
make choices on criteria for assessing the efficacy of its
government, or of Canadian society, that are based on something
other than gross domestic product or export figures? Is the
government prepared to say that one of the criteria it will assess its
efficiency against is the use made of the work force?
Is there a vision of development which goes beyond mere market
forces to ensure that people and places are being properly utilized?
There is a direct link between this and taxation.
(1620)
If we want to see Canada develop, to see each region develop
independently, there must be taxation measures relating to this.
There must be political choices behind it. A technical committee is
not the way to go to meet that objective. In fact, it will tend to
duplicate what has been done before.
In conclusion, having taken the step of finding what Quebecers
and Canadians want through political debate, we can then make a
technical examination of how to arrange things so as to do away
with the famous problem of tax havens. Might there not be a way to
revise taxation agreements to accomplish this? As far as trusts and
foreign assets are concerned, could not the underlying principle be
adopted, promptly, that the income of Canadian citizens earned
anywhere in the world would be the figure considered for taxation
purposes, in order to be sure that taxes are paid on all earnings?
As for tax expenditure accounts, for example investment credits,
the $500,000 capital gains exemption, the preferential rate for
small business, deferred taxes, all of these must be looked at from
the employment aspect. That is what the young people of Quebec
938
have told us, pointing out that the entire taxation issue must be
looked at to ensure that it guarantees their future.
This requires us to go beyond the confines of the technical
committee. There must be a political debate. I feel that the
government needs to reverse its present position and to ensure that
those on the committee will be joined by parliamentarians, by other
experts, so that the task can get finished as expeditiously as
possible, and so that a subsequent budget may really contain tax
measures with more bite than this last insipid budget did.
Mr. Dan McTeague (Ontario, Lib.): Mr. Speaker, I listened
carefully to the remarks of the member opposite. I would simply
like to make a few comments, before asking a question. I do not
know whether the member realizes that what the government is
proposing is really the starting point for the process leading to
another budget within the next year?
Although I found some of the member's comments interesting, I
would like to find out from the hon. member whether he does not
agree with me that the place to perhaps put his words into action is
the House of Commons committee? Therefore, would he not agree
that his comments, interesting though they may be, have an option,
which is the parliamentary finance committee?
Mr. Crête: Mr. Speaker, I am surprised to hear the hon. member
say that, two and a half years into this government's mandate, this
is a start as far as taxation is concerned. Frankly, this a very late
start.
The Bloc Quebecois, the other parties, the people of Quebec and
Canada have all been asking for taxation reform for a quite some
time already. We would have expected the thinking process to be
over by now and a real tax reform to be included in this budget,
following consultations with parliamentarians, but that has not
been done. That is why setting up a technical committee at this
stage sounds like not much compared to the real effort that could
have been expected.
As for having the committee work done in here, there is no doubt
that suggestions can be made in committee but, in terms of
efficiency, would it not be better to have a joint committee, where
parliamentarians and experts can share and exchange ideas
immediately, so that it can lead somewhere?
Instead, a few months will go by before this committee makes
any recommendations; in the meantime, conflicting proposals will
be made by the parliamentary committee. All this work will have
been done for nothing by both committees. I think that a more
serious approach that could be taken by the government would be
to accept the opposition's proposal and say: ``Fine, a joint
committee it will be, a great deal of thought will be given to the
issue and we will make sure that what comes out of this reflection
is promptly brought up for discussion and included in next year's
budget choices made by the government.'' Thus, we would be
certain to act on this tax reform request that has been on the table
for the longest time, a request made by the people and which
reflects very unfairly on the federal government.
(1625)
Everywhere, the public keeps hearing: ``Is everyone really doing
his share at present?'' A technical committee like this one will not
make it possible for the public to determine if indeed everyone is
made to do his share, whether everybody helps promote job
creation. At present, do companies take into account, when making
decisions, the impact their decisions will have on employment?
Creating this kind of committee does not resolve any of these
things, and I hope that the government will take note of this fact.
Mr. Réal Ménard (Hochelaga-Maisonneuve, BQ): Mr.
Speaker, I am very happy to take part in this opposition day, which
we have set aside to consider an issue that, in my opinion, is
extremely important and should concern all parliamentarians who
still believe in social justice and reject the status quo.
May I remind you that what we are discussing is an in-depth
review of the tax system. We will not be satisfied with
half-measures in light of three basic facts.
The first basic fact-which I would like to dedicate to my good
friend, the hon. member for Longueuil-is that, as we speak, only
11.8 per cent of federal taxes, not the GDP but the government's
tax revenue, comes from businesses. On the other hand, 60 per cent
of federal tax revenue comes from individual Canadians like you
and me.
So it is fair to say that corporate Canada does not contribute to
the public purse as much as it could.
The second and probably most important fact is that-as strange
as this may seem, as this would not be tolerated at the individual
level although it is possible at the corporate level-there are now
40,000 profitable businesses that do not pay any taxes. I am not
talking about the little convenience store where you go buy a candy
bar before going to bed, but about profitable businesses. There are
40,000 companies that do not pay taxes and we know them.
If a member really wants to raise a point of order later on to ask
me to table these figures, I am prepared to do so, because it is
professor Lauzon, from the Université du Québec, in Montreal,
who examined this whole issue.
We now get to the third variable-and I sense that some
members are getting a little worked up-which is just as important.
We are discussing taxation in a context where some individuals and
some corporations make excessive profits. When we rise in this
939
House, we should never forget that some businesses are making
excessive profits. I will, of course, use the example of the major
banks.
Would you believe that, in the 1994-95 fiscal year alone, the six
major chartered banks in Canada made profits of $5.8 billion?
These unprecedented profits were made by very important
corporate citizens that are getting richer. However, that does not
stop them from laying off large numbers of employees.
These are the three premises that have convinced the opposition
that we raised a real issue by asking Parliament to look into this
matter.
Let me be clear: I do believe that it is legitimate to make profits.
I do not agree, for instance, with the philosophy of the British
Labour Party after the second world war, which wanted banks to be
nationalized.
(1630)
I admit that in our system it is desirable and legitimate for
individuals to invest and make profits. But I believe we have
reached the point of no return, where the people of Canada and
Quebec are truly convinced that something illegitimate is taking
root. There is a feeling that some people are not doing their part,
that they are not contributing their fair share to the public coffers.
I would like to throw out a challenge to the government. I am
strongly tempted to throw it to the hon. member for Outremont.
Just imagine, the member for Outremont, a lawyer, is shamelessly
courting the business community. To the member for Outremont,
who at this period in his life is discovering the business community
through the responsibilities entrusted to him by the Prime
Minister-and I take this opportunity to congratulate him-I
would throw the following challenge: Just imagine, the United
States, a rather fertile ground for business, has a law, passed by
Congress in 1977, called the Community Reinvestment Act. This
law is really quite extraordinary and should inspire us as
parliamentarians, because it lets regulatory bodies evaluate banks.
There are four bodies, which I will enumerate for the edification
of the hon. member for Outremont. There is the Board of
Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the director of the Office of Thrift
Supervision and the Comptroller of the Currency.
In the United States, there is a law under which the four
supervisory agencies I have just mentioned evaluate banks
contemplating interstate expansions or mergers. An evaluation is
made of the degree to which these banks have made credit available
in their immediate community.
I represent a relatively disadvantaged community. There are
people in my community without enough money to open a bank
account. Could we not, as parliamentarians in Canada, give some
thought to the effort that banks must make in the communities of
which they are a part?
The effort that could be required of them would be to review the
availability of credit. Not only could the availability of credit be
reviewed-I do not hear the hon. member for Outremont, but I
know he is anxious to ask me a question and I am already dying to
answer him-but partnerships could be established between the
banks and disadvantaged sectors. This is something that is within
our reach.
Occasionally, the hon. member for Outremont attends the
committee on industry, although not with his past attendance
record, and from time to time he has been known to make
contributions that are always noteworthy. The paradox lies in the
fact that, for two years in committee, we studied the connections
between banks and small business, without every questioning the
concept of profit, and without ever looking at how the six major
chartered banks in Canada could manage to take a more active role
in the communities in which they are located. By so doing, they
would contribute to a more equitable taxation system.
I truly believe that, if we want to address this seriously, there is
something very, very important that must be examined. I could
even give the hon. member for Outremont a piece of news by
saying that, if the opportunity permits, it is very tempting to
introduce a private bill, one which he might very well support in his
capacity as a member, and even as a minister.
Allow me to give you an example of what happened with the
Community Reinvestment Act in the U.S. In 1985, an agreement
was signed between the Boatmen's National Bank of St. Louis and
the Association of Community Organizations for Reform Now, in
which the bank in question agreed to provide mechanisms for
mortgages and home improvement loans.
(1635)
Mr. Speaker, that meant lower administration fees for
disadvantaged communities. When I think of taxation, this is the
type of approach that interests me. You will never see me here
attacking those who make profits, but I can always be counted on to
speak out in debate to encourage them not to forget that they are
part of a community and that it is very important for them to make
an effort to plough as much as possible back into that community.
Hon. Martin Cauchon (Secretary of State (Federal Office of
Regional Development-Quebec), Lib.): Mr. Speaker, I listened
to the comments of the hon. member. Permit me to point out a few
things with regard to the matter of the banking community. As you
know, it is currently subject to a surtax. The banking community
too must live according to the ebb and flow of the economy and not
only the national economy, but the international economy and
therefore must make the same economic shift as the G-7 countries
around the world are obliged to. It involves a shift from a banking
system that capably handles what is known as the tangible-real
940
estate and securities-to a banking system that will work much
better with the intangible.
During this time, the federal office of regional
development-Quebec, which I head, is working with financial
institutions to set up funds providing financing on a patient capital
basis to enable an SMB in high tech operations to obtain funding
quickly, during the time it will take the regular financial
institutions to make the change.
Secondly, I think the banks definitely pull their weight in
working with the federal office. Even better, I realize, after a two
week tour of Quebec, that there are agencies throughout Quebec
that look after regional economic development and that take the
time to target the priorities of the individual regions. This shows a
taste for partnership and also what a partnership can do when the
partners believe in it and really want to work together.
Allow me to conclude by mentioning an organization the hon.
member is very familiar with, the Prouesse organization, which I
recently came into contact with, which is looking after economic
development in the east end of Montreal and which has targeted
certain priority sectors, including the petro-chemical, plastics and
rubber sectors. They are building on these economic realities and
strengths, which have grown up over the years in the east end of
Montreal.
Mr. Ménard: Mr. Speaker, we would have been very surprised
had the minister not referred to the Federal Office of Regional
Development. He cannot help it. I think that the hon. member will
agree with me that members on both sides of this House will be
under enormous pressure to review the tax system and that saying
banks must also face the pressure of international competition will
not help generate support. Although this is true, they should not be
judged on that basis. The fact remains that, during the last two
recessions, two industrial sectors made what can certainly appear
as inordinate profits.
The first sector is the drug industry, to which I will get back later.
The second sector is the banking industry. It is no sin to make
profits, as many members would agree. In this day and age,
however, profitable businesses must act like good corporate
citizens, which is not so obvious. The hon. member referred to
various local partnerships like the economic development
corporations that have managed the transition to partnership. I am
tempted to remind the hon. member that we would be hard-pressed
to find examples of banks that get involved in their communities to
a really meaningful extent.
(1640)
Humanitarian involvement is still marginal. The purpose of my
speech and of the bill that I may be bold enough to table some day
is to ensure that banks, like other stakeholders such as the local
economic development corporations the hon. member likes so
much, are motivated to become partners in economic development.
[English]
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, I
possibly will be splitting my time with the member for
Bramalea-Gore-Malton, not necessarily equally.
The Speaker: You are going to have to work that out.
Mr. Szabo: Mr. Speaker, on March 6 the finance minister
delivered his budget for 1996-97. Part of that budget included a
very important aspect, one which was not incorporated in the detail
to make changes, but rather a proposal. That proposal was to
establish a technical committee on business taxation.
There has been a great deal of discussion within this House,
across the country, and particularly in the United States
presidential primaries on issues such as a flat tax on corporations
and individuals. This is a much broader technical consultation.
With regard to the terms of reference, the finance minister said
that Canadians want their tax system to generate a revenue in a fair
and simple manner and that they also wanted to encourage growth
and job creation. Given the complexity of combining these
objectives, the Government of Canada has decided to undertake a
review of those aspects of the tax law which most affect the
creation of jobs.
In dealing with the terms of reference, the finance minister
appointed a technical committee made up of I believe 10
professionals. Today we are debating a Bloc Quebecois opposition
motion that deals with this technical committee. The motion states:
That this House deplores the fact that the technical committee set up by the
Minister of Finance to analyse business taxation is comprised of members who are
both judge and judged with regard to business tax reform; and that, this being so, the
Minister of Finance should set up a joint committee of experts and parliamentarians
to examine business taxation in an impartial manner and according to an open and
transparent process.
The Bloc Quebecois motion includes a couple of elements I want
to deal with. It was very clear in the debate the first thing it wanted
to deal with was the conflict of interest or compromise with regard
to some of the participants.
One of the Bloc members who participated in the debate went so
far as to name a particular member of this committee set up by the
finance minister, Mr. Robert Brown of Price Waterhouse. First I
want to deal specifically with that because I know Mr. Brown. As
one of the two chartered accountants in this House of Commons, in
this 35th Parliament, I have to take the opportunity to defend my
profession whenever possible.
941
When I was an articling student at Price Waterhouse, I met Mr.
Brown for the first time. I worked with him over a number of years
and came to know him as one of the most outstanding and revered
professionals in the taxation field in all of Canada. Everybody
knew who Bob Brown was.
If members would only appreciate that in a large multinational
CA firm with international affiliations there are competitors even
within the firm's own client base. How is it that a CA firm could
opine on financial statements, could provide consulting advice and
represent not only one oil company but also represent another? Is
there a conflict of interest? Clearly if there were no rules of the
game, if there were no professional rules of conduct, that could not
happen. Within a CA firm there are rules. There are rules of
confidentiality and conflict of interest. Members who work on
certain files do not work on others.
(1645)
The firm as a whole has a professional responsibility to the entire
profession because it is the CA profession that has developed a set
of standards and a code of conduct. The Canadian Institute of
Chartered Accountants has a handbook which guides all
accountants on not only their conduct but also on the rules of
opining on various and sundry matters, particularly financial
statements.
Canadians and people around the world look to the chartered
accounting profession to provide a professional standard. The
standard is set so high that only 37 per cent of CA students who
wrote their final exam this past year were successful in meeting
that standard. The profession is extremely proud of its high
standards. It basically means we are there to protect the
professionalism and integrity of the profession and to ensure that
nothing that happens will bring disrepute to the profession.
Under the CA rules of professional conduct, if you are a member
of the institute, as I am, and you become aware that something may
be happening with regard to another member which may bring
disrepute or which may reflect badly on the profession, you have a
professional duty to bring it to the attention of a committee of the
Canadian Institute of Chartered Accountants and let it investigate.
If you do not and it is subsequently determined there was a problem
and that you failed to bring it forward with full knowledge you
could be equally culpable for the wrongdoing.
On the point of the integrity of the individuals and whether they
can opine or participate in a technical committee even though their
firm, an international firm, deals with clients who are taking
advantage of certain tax measures today, they still can as
professionals deal honestly, fairly and with credibility with issues
they have been asked about with regard to the taxation of
corporations by the Minister of Finance.
The second issue has to do with whether on this technical
committee we need to somehow consider this as subverting the
process and parliamentarians should be here, which is the
insinuation of the motion. It basically states we cannot second this
responsibility to these outsiders. We need to have hands on. There
is no question we do, and we will.
However, as in all things, unless there is a motion on the floor
and a focus to what is being discussed there is clear chaos. In this
case the finance minister has basically said: ``Let us have a
technical committee. I want the people best qualified to analyse
objectively the present situation. I want the expertise not only from
the professional accounting side but from the economic side and
the academic side. I want to establish that there are implications
and detriments as well as those things that act positively in terms of
job creation''.
Now we are talking about giving it some focus. I compliment the
finance minister on making the decision that we must have a
review of business taxation. I would have gone a little further and
said I want to extend it to personal taxation as well, but that will
come. This is a starting point.
All of the members of the House have had communications from
their constituents from time to time suggesting corporations are no
longer paying their fair share of taxes. Individuals are paying a
higher proportion of the total government revenue than
corporations. The proportion that corporations have been paying
has been going down. This is wrong and we have to do something.
In terms of raw data that is absolutely true. Corporations are
paying less of a proportion of government revenues in terms of
taxes than they used, but there is a reason. It is because of the
character of corporate income taxation. The tax rate a corporation
pays on its profitability has not changed.
(1650 )
A large corporation continues to pay a tax rate of about 50 per
cent on its income. A small business pays approximately 25 per
cent, under certain criteria. The rate has not changed. What has
changed is that in determining the amount of taxable income a
corporation has there are certain adjustments made.
When we look at an annual report it shows the revenue, the
expenses and the net income from the business before taxes. When
we do our tax return we take our net income before taxes, adjust it
for certain things and then calculate the taxes owing.
There are three important items which would reduce or eliminate
corporate taxes.
Number one is the existence of loss carry forwards or loss carry
backs, seven years forward, three years back. If a corporation were
in a bad situation because of an economic downturn or bad
business decisions and lost a substantial amount of money, the
taxation rules for business say it can carry the amount forward up
to seven years and apply it against future income. That means that
even though in a subsequent year a financial statement could show
the corporation made $100,000, it would show it paid zero taxes,
the reason being it had $100,000 in losses the previous year.
942
That is not to say this is right. I have recommended to the finance
minister that the generous provisions of loss carry forwards and
carry backs be scaled back. I am suggesting that if a business
makes a bad business decision, maybe the taxpayers should not be
subsidizing-
The Speaker: My colleague, perhaps you could enlighten the
Chair. Is it your intention to take the full 20 minutes? If so, that is
fine.
Mr. Szabo: Yes, Mr. Speaker.
The point with respect to the loss carry forwards has to do with
the fact that businesses can be sheltered from a prior year's losses.
A business could make a mistake which could cost it a lot of
money. It may very well turn out that it had nothing to do with an
economic downturn, it was just a bad corporate decision. The
question one should ask, which I hope the technical committee will
ask, is whether the taxpayers of Canada should underwrite or
subsidize the bad decision making of businesses.
Maybe there should be some loss carry forward provisions, but
not seven years forward and three years back. That is more than
generous. It may be more than fair. I hope the technical committee
will deal with that question.
The second point has to do with the flow through of dividends. I
will not be able to explain this very clearly. Very simply, if a
company receives a dividend from another corporation and turns
around and pays out the same amount of money in dividends to its
own shareholders, the company which received the dividend would
show an investment income profit, but it would show no taxes
payable, which is the problem our constituents have been raising.
However, it is right that no taxes should be payable. It pays taxes
on the dividend income it receives, but it also receives a part IV tax
credit on the dividends it paid out to its shareholders. The
shareholders are the ones who ultimately will pay the tax.
Therefore the liability flows in and out of that corporation. The
corporation shows income but no taxes. There is not a problem but
the optics certainly do not seem to defend that.
The third point has to do with deferred taxes. The study of
deferred taxes was one of the most difficult for me. It has to do with
concepts such as virtual certainty. Not only can we have deferred
tax credits, we can have deferred tax debits.
Deferred tax credits can arise for something very simple such as
the write-off rate for an asset. For instance, if a corporation were to
buy an automobile for use in its business, for accounting purposes
the corporation would generally write off the automobile over the
useful life of the asset on a straight line basis. Under the Income
Tax Act, however, the corporation has an opportunity to claim a
capital cost allowance, which basically allows the corporation to
write off an automobile on a faster basis. It is 30 per cent but it is on
a declining balance basis. I will not explain the technicality but it
basically is a different number for write-off for tax purposes than
there was for accounting purposes. That means the bottom line for
tax purposes is different from the bottom line for accounting
purposes.
(1655)
Therefore there is an item called deferred taxes. It is in fact a
timing difference. It means those taxes will be paid eventually. It
will catch up at the end of the time when the asset is fully written
off. At any point in time there will be either more or less written off
depending on what happens.
The reason we have all these different rates in the capital cost
allowance is that there was some engineering in terms of trying to
stimulate capital spending so that fast write-offs were available for
computers and software, for manufacturing and processing, things
that would help stimulate capital investment so that jobs would be
created. I am sure this is an area the technical committee will to get
into.
I know we all want to know more about offshore tax havens. Last
November 1995 I wrote to the finance minister about offshore
havens, among other things I asked him to consider in the budget.
It dawned on me that there were certain situations in which
corporations could transact certain financial affairs with an
offshore country and there would be no record. There was no way
to track it and there would be no tax treaty between the two
countries. The issue I raised with the finance minister was that in
certain countries where we do have tax treaties we can deal with
some of these problems associated with offshore havens.
For those countries where we do not have a tax treaty and where
those countries want to have relations with Canada I recommended
to the minister that we ought to seek to enter into accommodation
agreements so that when there are financial transactions of note the
governments would co-operate in making sure that knowledge of
those transactions would be brought up. Each of the countries
would be able to determine whether there was an activity going on
not in accordance with the intent of the legislation or whether it
was illegal. No doubt there are a number of other areas the
technical committee has to get into.
Another thing I want to raise is the integrity of the individuals
involved. There is no intent on behalf of any member in the House,
I am sure, to personally point out to anyone that there is a problem
with their personal integrity. We understand that in asking these
people to put some focus to some of these serious and complex
matters, as the finance minister has laid out, it will allow us a better
943
opportunity to do a better job in the House once we get the details
and we identify them.
Ultimately history will judge whether they did their job well
because we will have an opportunity to scrutinize their work.
[Translation]
Mr. Philippe Paré (Louis-Hébert, BQ): Mr. Speaker, it seems
to me that the hon. member opposite spent much time defending
the accounting profession. I do not think that what is at issue here,
basically, is the profession per se. Part of the problem but not all of
it rests with accounting.
The big question has more to do with figuring out why, two years
into its mandate, the government has decided all of a sudden to set
up a committee of experts to review the Canadian tax system. What
is rather despicable about this approach is the fact that this
committee is being formed after the Canadian government has
already cut $7 billion in transfers to the provinces, taken billions of
dollars away from UI recipients and drawn $5 billion on the UI
surplus.
(1700)
All of a sudden, out of the blue, it occurred to the government
that perhaps it should have a committee of experts examine
taxation, after all the chopping in social programs has been done.
I do not think that what is mainly at issue is the ethics of
accountants. I think that accountants are totally within the law;
however, and this is an important difference, something legal is not
automatically ethical. When the legislation is unjust, inequitable
and unfair to all citizens and that accountants operate within this
legislation, while not being illegal, what they do may not be very
ethical either.
I think, however, that we must agree that accountants are
specialized in advising their clients on tax avoidance. How can we
put any trust in these people to advise the government in reforming
the Canadian tax system? I think that any involvement on their part
in a process that the government might have wished to be perfectly
serious and credible would defeat the purpose. That is why I
contend that this cannot be a serious process, since some experts
will be both judge and judged.
I would say that the hon. member for Joliette made this point
very clearly today.
[English]
Mr. Szabo: Mr. Speaker, the answer is no, no and no. The
member is still saying, when referring to the motion, that the
members of the technical committee will be judge and judged.
In his intervention the hon. member said there is a conflict of
interest. He asks how can they advise their clients and at the same
time advise the government when they are on different sides of the
fence.
Maybe the member missed the part of my speech where I said
that there are professional rules of conduct. One cannot serve two
masters. These people are not making decisions for us. They are
going to assemble the information and the issues and put them in
terms that are consistent with the terms of reference laid out by the
finance minister. That does not exist anywhere.
The member also talked about tax avoidance. I want to share
with members of the House a saying that accountants always use.
Tax avoidance is necessary, tax evasion is illegal.
Tax avoidance is managing one's affairs in a way in which one
minimizes the amount of taxes paid. Businesses do that. If they do
not do it and every other business is doing it, they have a
competitive disadvantage. Tax avoidance is not a bad thing. It is a
necessary thing. These business people are going to consult with
Canadians. They are going to provide the professional expertise
just as any other consulting group would.
At the end of the day, members will have an opportunity to
participate in a full dialogue based on the input received from this
technical committee.
Mr. Paul DeVillers (Parliamentary Secretary to President of
the Queen's Privy Council for Canada and Minister of
Intergovernmental Affairs, Lib.): Mr. Speaker, earlier in debate
the hon. member for Joliette, in replying to a question posed by the
hon. member for Mississauga South, compared the conflict of
interest that he was discussing to something similar to, in the next
election, the Bloc Quebecois and the Liberal Party of Canada
having the same political advisers.
He used that to compare the potential alleged conflict of interest
that is the subject of this motion. Could the hon. member draw a
distinction for the House between political advisers and the
professionals sitting on this technical committee?
(1705 )
Mr. Szabo: Mr. Speaker, one thing I have learned about this
profession is that in debate, depending on whether one has the last
word, one can say some pretty bizarre things.
The analogy of one person being a political adviser to two
opponents is certainly preposterous. First, it would tell me more
about the two parties than it would about the consultant. Second, if
944
the consultant had integrity he would accept only one engagement.
That is the difference.
I said earlier that professional rules of conduct are very strict. If
a member within a profession is in a conflict situation and does not
disclose it and it becomes known to some other party who is also a
member of the profession, the rules of conduct require that the
member bring it to the attention of the discipline and standards
committee of the Canadian Institute of Chartered Accountants for
investigation. If it was not reported and there was a conflict of
interest, both parties would be equally culpable for the damages.
This is not to be taken lightly.
The integrity of the profession is its bread and butter. If it has no
integrity then the opining on financial statements and providing
professional advice to people on matters ranging from taxation to
investment to accounting to good business practices and insurance
measures, all goes out the door. Integrity is the most important
commodity the accounting profession provides. That is being
protected by the profession.
I can say that participation in the committee will only enhance
the integrity of the profession.
[Translation]
Mr. Nic Leblanc (Longueuil, BQ): Mr. Speaker, Bloc
Quebecois members did not accuse the club set up by the
government of being dishonest. Nor are we saying that the people
appointed by the government to conduct that review are
incompetent. We simply say that the committee is in cahoots with
the government, that it is a club which is a creature of the
government, which was appointed by the government, and which
will tell the government what it wants to hear.
The government is very aware of the whole taxation issue.
Numerous studies were done over the years. The government is
fully aware of the tax issues, and it also knows that it is its fault if
Canada has a problem. The government creates the problem; the
government is the problem. It is now asking a club made up of
friends to tell it what to do, but it knows full well the cause of the
problem. This is why we do not really believe in this exercise. We
know that the government is guilty, that it is responsible for the
problem, even though it says: ``Tell us what the cause of the
problem is''. This is why the official opposition is very sceptical
and why we say that this private club appointed by the government
is merely there to hide what the government wants to hide.
[English]
Mr. Szabo: Mr. Speaker, I understand where the member is
coming from. His allegation has been made.
When I look at the list of members there are eminent partners
from two of the top CA firms in the country, professors and
economists from two or three universities, and a couple of eminent
lawyers. The allegation is that they are in cahoots with the
government. That is an indictment of all those individuals who
have through their professions achieved great distinction. It is a
personal slight to the integrity of each and every one of those
people. It is really uncalled for in the House. It is a very cheap shot.
The member must understand that the committee will not be
making decisions on behalf of Canadians, the finance minister or
the House of Commons. It is going to be advising the government
and members of Parliament about the various situations which
exist and the options that may be available so that we may more
fully participate in a focused dialogue. It is constructive, it is the
right thing to do and that is exactly what we are going to do.
(1710)
Mr. Gurbax Singh Malhi (Bramalea-Gore-Malton, Lib.):
Mr. Speaker, it is an honour for me to address today's debate on the
opposition motion on business taxation.
Canada is consistently rated as one of the best nations in the
world in which to live. Yet the only way to maintain our position on
the world stage is to create a business tax system that not only
raises money but also creates jobs. I fully support the attempt by
the Minister of Finance to re-examine the tax act.
By establishing a technical committee of outside experts, only
through a close examination of the grant system will we be able to
encourage economic growth and job creation. Who better than the
team of experts that is in the field of taxation to tackle the
challenge?
It is my hope that such a professional review might lead to
enhanced fairness in the tax system by ensuring that all businesses
share the cost of providing government services. Otherwise we are
faced with declining trust among Canadians and will have a greater
reliance on what is known as the underground economy.
In fact, one of the biggest threats posed to Canada's financial
well-being is the infamous underground economy. The Ministry of
Finance should be commended for getting tough with tax cheaters
in this budget. By reinforcing the existing strategy to combat the
underground economy, we are sending a strong message to tax
cheaters everywhere. The underground economy is not made up of
honest people who are merely bending the rules.
The message we are sending to tax cheaters is clear; in your
quest for personal gain, you are endangering Canada's economic
future. Tough, fair enforcement programs, aimed at protecting our
tax system, will help ensure this country's economic future.
The warning in the section of the budget is likely to deter people
who might have been thinking of cheating their government out of
tax dollars. Pushing an economy underground simply causes the
945
main source to dry up. You cannot expect water tomorrow unless
you are prepared to prime the pump today.
With this budget announcement, Revenue Canada has put in
place a multi-faceted approach that enhances its existing
underground economy strategy. This strategy aims at enhancing
current levels of respect for the tax system in a handful of
especially high risk areas of the economy.
As I said back in 1994, anyone who chooses to live in Canada
must be prepared to pay for that privilege. Where there is no
honour in the honour system, perhaps the fear of getting caught will
now prove to be a sufficient deterrent.
It is essential that we maintain the integrity of our taxation
system. If the public's trust in the government's revenue generating
methods becomes completely eroded, there is no turning back.
Had we failed to get our economic house in order, we would
surely have been heading in the direction of a banana republic by
now. The life blood of any economy lies in the level of trust it holds
among its citizens. Results from this section of the budget should
be quick and significant.
Benefits will come in two forms, both in terms of traditional
revenue generated for public programs and of greater fairness to
other taxpayers who have always met their obligations. Public
trust, being as it is a two-way street, this government has repaid
honest taxpayers in the best possible way. For the first time in
recent memory a federal budget has not unveiled new taxes.
How and how much a country taxes its residents is critical in
determining its future economic success or failure.
Without a doubt, taxes in Canada are still higher than most of us
would like. This is why a fiscal turnaround is so vital. Only by
controlling the debt can we free up resources to eventually ease the
tax burden.
In its latest budget, however, the government has taken what is
clearly a step in the right direction. There are no tax rate increases,
not personal, not corporate, not excise. There have been no
personal income tax increases in any of the last three budgets.
Fairness to taxpayers who comply with their obligations
demands effective enforcement of the tax law to ensure everyone
shoulders his or her fair share of the burden.
To build on Revenue Canada's highly successful underground
economy strategy the budget has proposed to devote more energy
to Revenue Canada's audit program for unincorporated businesses
and self-employed individuals. A higher audit rate for these two
high risk groups is expected to recover about three times the cost of
bolstering the program.
Because a technical commitment in the Department of Finance
will be examining ways of simplifying the business tax system,
including corporate income, capital and payroll taxes and personal
taxes, taxpayers will be able to more easily comply with the
system.
An effective tax system should not simply raise taxes. It should
raise awareness of the importance honesty and fairness play in
securing the nation's future.
The Acting Speaker (Mr. Kilger): It being 5.15 p.m., it is my
duty to interrupt the proceedings and put forthwith every question
necessary to dispose of the business of supply.
[Translation]
Is it the pleasure of the House to adopt the motion?
Some hon. members: Agreed.
Some hon. members: No.
The Acting Speaker (Mr. Kilger): All those in favour will
please say yea.
Some hon. members: Yea.
The Acting Speaker (Mr. Kilger): All those opposed will
please say nay.
Some hon. members: Nay.
The Acting Speaker (Mr. Kilger): In my opinion the yeas have
it.
And more that five members having risen:
The Acting Speaker (Mr. Kilger): Call in the members.
And the division bells having rung:
The Acting Speaker (Mr. Kilger): Pursuant to Standing Order
45, I have been requested by the official opposition whip and the
deputy government whip to defer the division on the question now
before the House until tomorrow, March 20, at 5.15 p.m., at which
time the bells to call in the members will be sounded for not more
than 15 minutes.
[English]
Ms. Catterall: Mr. Speaker, may I correct that. I think the
deferral should be to 5.30 p.m. tomorrow.
The Acting Speaker (Mr. Kilger): The deferral is to 5.30 p.m.
tomorrow.
[Translation]
Mr. Laurin: Mr. Speaker, we thought the division was deferred
until after government orders. I think that means 5.30 p.m.
The Acting Speaker (Mr. Kilger): We agree. The deferral is
going to be until 5.30 p.m. tomorrow.
>
946
946
PRIVATE MEMBERS' BUSINESS
(1720)
[English]
Mr. Dick Harris (Prince George-Bulkley Valley, Ref.):
moved that Bill C-201, an act to amend the Criminal Code
(operation while impaired) be read the second time and referred to
a committee.
He said: Mr. Speaker, it is my pleasure to lead off debate on my
private member's Bill C-201. This bill deals with a very serious
and tragic issue, impaired driving. There are people who choose to
drink and drive and as a result kill people in this country. This is
senseless tragedy that occurs every day far too often.
The bill deals with sentencing and punishment for those who
choose to drink and drive and as a result of their choices kill. The
bill will amend section 255(3) of the Criminal Code and will
impose a seven-year minimum sentence on those convicted of
impaired driving causing death.
Bill C-201 has its origins in my home city of Prince George, B.C.
In September 1995 David Kevin Johnson chose to drink to the point
of utter intoxication and then chose to drive despite his condition.
He chose to get into his vehicle and drive. The result was that he
recklessly sped through a red light causing a devastating collision
in an intersection only blocks from my own home.
The collision killed three members of the Ciccone family,
residents of Prince George. Jim Ciccone, his son Rylan and his
daughter Emma lost their lives in September because of the
completely irresponsible actions of a man who was driving a truck
after he had made the choice to drink.
Mr. Johnson was arrested and charged with three counts of
impaired driving causing death plus one count of leaving the scene
of an accident. Mr. Johnson knew what he did. He knew the tragedy
he caused. He fled the scene of the accident.
I witnessed the aftermath of that accident. I witnessed the
tragedy and I followed the case as it went through the courts,
through the media and other sources. I waited expectantly for Mr.
Johnson's sentence with the belief that justice would be done and
with the belief that the seriousness of this crime would be reflected
in the sentence handed to David Kevin Johnson.
(1725 )
I waited, but these expectations were dashed on December 22,
1995. On that day David Kevin Johnson, who chose to drink, who
chose to get into his automobile and as a result killed three
members of a family, was given a three and a half year sentence
because the judge said he was bound by precedents which resulted
because over time cases had been heard in which defence lawyers
had continually chipped away at what was once an appropriate
sentence for this crime.
I was outraged that evening when I heard the sentence on the
news. Citizens in my community of Prince George were outraged
as well, and rightly so.
Public demonstration followed. Later that week there was a
demonstration in front of the provincial courthouse. Over 300
people turned out to express their rage, their sense of bewilderment
with the failure of the justice system to appropriately deal with this
serious crime. People were enraged that such a light sentence could
even be considered for such a devastating crime.
The citizens of Prince George were concerned and bewildered
about the state of our justice system. Specifically they were
concerned about sentencing procedures and practices. Many
wondered what could be done to prevent another lenient sentence
such as this in the future.
They came to me with their concerns and I heard them. In their
view David Kevin Johnson was sentenced to one year for every life
he took; one year. To them and to the majority of Canadians, and I
sincerely hope to the members of the House, this is simply
unacceptable punishment.
Accordingly I looked at the Criminal Code to determine exactly
what I could do to change this. What could I do to enhance
deterrence and ensure the penalty for this terrible crime would be
suitable? My efforts led to the presentation of Bill C-201.
We did a lot of research into alcohol related fatalities and the fact
was disclosed that sentencing is extremely lenient when it comes to
impaired driving causing death. It is tragically lenient. Statistics
show that the average sentence is in the one to four-year range even
though the latitude a judge has is from zero to fourteen years. At
one time sentences were in the higher range of that latitude. Now
because of the system and the way defence lawyers have chipped
away at appropriate sentencing, it sits in the very low range of that
latitude.
The precendents in law today in no way reflect the seriousness,
the tragedy of someone who chooses to drink and drive and who
kills a family member, a friend, a neighbour, a Canadian on our
highways. Surely life is more valuable.
Sentences handed down today in the courts for this crime,
sentences for taking a human life, are not adequate. Drivers are
given sentences that are equivalent to those for defamatory libel,
possessing a forged passport or dealing in counterfeit money.
Surely we must place a greater emphasis on human life. Surely we
must do whatever we can to deter people from driving while
impaired and killing people. Surely that is the least we can do. That
is the purpose of Bill C-201.
947
(1730)
I sincerely hope all members of the House share with me the
tragedy of this crime. The bill seeks to place a higher standard on
life. It places impaired drivers on notice that if they take a life
because of the choice they have made, they will be subject to
serious jail terms.
The lenient sentences that are given out today by the courts of
Canada appear to remove the responsibility from the impaired
driver who kills. It is as though being impaired allows the
individual off the hook, should he or she drive while drunk and kill
someone. I argue that this is wrong.
No one forces an individual to become impaired. No one can
successfully argue that by any circumstance they are then forced to
drive. We are talking about choices. Bill C-201 will hold impaired
drivers who kill others responsible for their actions. I remind the
House these irresponsible acts are going on all the time. They must
stop.
There are some statistics which hon. members will find
shocking. In 1994, 87,878 people were charged with the impaired
operation of a car, a boat or a plane. It is important to remember
this number represents only the people who were caught and
arrested. It is estimated that it takes between 200 and 2,000
repetitions of impaired driving to make a single arrest. That means
we have no idea of the number of people who are out there today
behind the wheel of an automobile while impaired. They can kill.
The true number of impaired drivers will always remain
unknown. If the true number were known, I believe there would be
a massive outcry, far more than what we are witnessing today, from
the people of Canada. If we knew the number of impaired drivers
that were out on the streets as we speak, there might be a cry for
prohibition, it is so massive. While prohibition is not in the cards,
deterrence certainly is.
From the time we woke up this morning until the time we go to
bed tonight, four families in Canada will be visited by police
officers to be told that a member of their family has been killed by
an impaired driver. Think about it. It happened yesterday. It is
happening today. It will happen tomorrow and every day. That is
the tragedy of impaired driving.
We never stop to think about it until it affects us, until we
witness an accident, until a family member, a friend or a neighbour
is touched by impaired driving. Who in the House has not been
touched in some way? Who in this House has not had a family
member, a neighbour, a friend or an associate touched by impaired
driving? I would hazard to say there are very few in this House
today.
(1735)
There has been a 40 per cent reduction in impaired driving
charges over the last 10 years which can be directly attributed to the
harsher way we have been dealing with impaired drivers.
Deterrence does work when it comes to impaired driving.
I have talked to many people who previously used to drink and
drive who now take taxis or ask friends who have not been drinking
to drive them home. I asked them why they changed their habits.
Their answer was not that they did not feel capable of driving home
but that they were afraid of being stopped by the police and
charged. That is clear evidence that deterrence is a factor in
reducing impaired driving and in dealing with drivers who drink.
More than ever, drivers are aware of society's contempt for
impaired driving and they are aware of how an impaired driving
conviction can ruin their chances of ever driving a car again.
Nevertheless, as I noted earlier, there remains an untold number of
people who continue to drink and drive.
Bill C-201 is targeted at those individuals. By imposing a
minimum sentence, this bill will send an extremely strong message
that the possible lethal consequences of impaired driving will not
be tolerated in this country. The best thing we can do in Canada
through this House is to make our impaired driving laws the
toughest laws in the entire world. I know it may never get done but
by God I will try.
I also put through Motion No. 78 which would see the
appropriate sections of the Criminal Code strengthened with
respect to impaired driving. This bill and the companion motion
will provide a deterrent to keep impaired drivers off our streets, off
our highways and out of our neighbourhoods.
There is no question that deterrence is needed. Impaired driving
is the most frequent offence dealt with in the courts today. When
we consider that impaired driving charges are dismissed or reduced
in 40 per cent of the cases, we know that deterrence works and must
begin to play a much larger role.
In Ontario impaired charges rose 40 per cent between December
1994 and January 1995. In 1993 in that same province, 565 of
1,315 auto fatalities were alcohol related. In 1994 a total of 1,414
people were killed as a result of impaired driving in Canada. This
number is three times higher than the number of people murdered
in the entire country in 1994 but the result is the same as murder.
Yet impaired drivers who have chosen to get into a vehicle are
simply given a slap on the wrist and the result could be that
someone is dead as a result of their actions.
I have not talked about the significant financial costs of impaired
driving. This is something we have to consider as well. The Ontario
Medical Association estimates that it costs $100 million annually
to deal with impaired driving injuries. Our courts spend the
948
majority of their time on impaired driving cases. We all know the
cost of our court system today. We can quote precise figures when
we speak of financial costs. That is easy. We have statistics.
However, there is no way of measuring the real human cost when it
comes to fatalities as a result of this action.
(1740)
Of course there is the victim but there are also the victim's
family and friends. They are left behind to wonder what they could
have done to prevent the tragedy: ``Should I have told my friend,
my daughter, my husband or my wife to come home earlier, to not
go out that night?'' Tragically, it is the human cost.
This bill has the support of many organizations including
Mothers Against Drunk Driving, Ontario Students Against Drunk
Driving, Ontario Community Council on Impaired Driving, Young
Drivers of Canada, Families and Friends Against Drunk Driving
and Margaret Rywak, chair of the Nepean Committee Against
Impaired Driving.
This is an issue which concerns all Canadians. I believe Bill
C-201 will act as a deterrent and will more properly reflect the
seriousness of the crime of impaired driving causing death. I ask all
members of the House to understand the seriousness of the tragedy
we are talking about and to support this bill.
Mr. Gordon Kirkby (Parliamentary Secretary to Minister of
Justice and Attorney General of Canada, Lib.): Mr. Speaker,
some people share the perception that Canada is soft on impaired
drivers, that our laws are weak, that our enforcement is inadequate
and that our judiciary is unwilling to impose harsh sentences.
No one will deny the tragic consequences of impaired driving.
Certainly, as the hon. member for Prince George-Bulkley Valley
indicated, there is hardly anyone who has not been touched or who
does not know of an instance of an impaired driving tragedy
striking in their community or among their family or friends.
When such a tragedy occurs we should focus on the responsible
party, on his or her actions, not necessarily on the law. The
assumption is always the same, that a tougher law with a more
severe penalty would have deterred the driver from drinking and
averted the tragedy. This is not the case.
The causes of impaired driving are complex and the solutions to
this serious social problem are not simple. One cannot merely
increase the harshness of penalties for offenders and expect this
alone will stop people from drinking and driving. Impaired drivers
are not a homogeneous group. A variety of measures are needed.
For example, while fines or jail sentences may deter some people,
alcohol dependent persons may be less susceptible to deterrents
when sanctions are severe. Treatment might be a more effective
approach in such cases.
In the course of the government's review of the problem of
impaired driving in the mid-1980s the experiences and research of
many countries were examined. All the evidence suggests that
legislative amendments must be considered in the broader context
of an overall legislative and prevention strategy to deal with the
problem of impaired driving. No single measure can provide the
answer.
Legal sanctions for example can only provide a partial solution.
Increased law enforcement which accordingly augments the
perceived risk of apprehension and punishment may have a greater
deterrent effect than increased penalties.
Research conducted since 1985 indicates that changing the
prevalent social acceptability of drinking and driving has been a
more effective preventive measure than any changes in the law or
the degree to which it has been enforced.
While there has been a significant reduction in impaired driving
since 1980, I know that impaired driving continues to be a problem
in Canada. That problem can be attributed largely to a group of
high risk drivers who believe themselves to be above the law and
immune to tragedy, disaster or detection.
(1745)
The great majority of Canadian drivers appreciate the risks to
themselves and to public safety and have embraced the message
both federal and provincial governments continue to promote, that
drinking and driving is a serious crime and a serious social
problem.
Changing the law and the severity of the penalties is not a silver
bullet. It is not the magic solution that will solve all our problems
in dealing with impaired driving.
I do not mean to suggest the law does not have an impact on
impaired drivers. Canada has in place strict laws and tough
penalties. The Criminal Code comprehensively addresses a variety
of impaired driving offences and sets out a range of punishments in
accordance with the severity of the offence.
Moreover, the impaired driving provisions provide one of the
very few examples in the Criminal Code where a minimum
sentence is provided. The following minimum punishments are
provided for the offences of impaired driving, driving over .08 and
refusal to provide a breath or blood sample. For the first offence the
fine is $300; for the second offence, imprisonment for 14 days; for
each subsequent offence, imprisonment for a minimum of 90 days.
Maximum punishments are also prescribed. Where the offence is
punishable by summary conviction the maximum punishment is
949
six months imprisonment. For indictable offences, the maximum
term of imprisonment is five years.
The minimum punishment for a second conviction is 14 days
imprisonment and a mandatory driving prohibition of 6 months. A
person convicted of a third or subsequent impaired driving offence,
driving over .08 or refusal would be subject to a minimum penalty
of 90 days imprisonment and up to six months on summary
conviction or five years on indictment and a mandatory prohibition
for driving for a minimum of one year and up to three years.
The Criminal code also provides that upon conviction for an
impaired driving offence, a mandatory prohibition from driving
will be imposed. For the first offence, a minimum of three months
is imposed. For the second offence, six months is imposed and for
subsequent offences, a minimum of one year is imposed.
Upon conviction for impaired driving causing death or bodily
harm, the prohibition from driving may be up 10 years. These
prohibitions are in addition to any provincial licence suspensions
which may be imposed in accordance with provincial highway
traffic legislation.
Impaired driving causing bodily harm is an indictable offence
and carries a maximum of 10 years in prison and a maximum
10-year prohibition from driving and an unlimited fine. The
offence of impaired driving causing death carries a 14-year
maximum term of imprisonment and a 10-year maximum
prohibition from driving and an unlimited fine.
The penalty imposed on a person in respect of an accident in
which death or serious bodily harm has occurred is based on fault.
In other words, the impaired driving must be the cause of the bodily
harm or death, and therefore the penalty should be proportional to
the seriousness of the act that caused the death or bodily harm. This
is why there is no mandatory minimum sentence for impaired
driving causing bodily harm or death.
The bill before the House today would amend subsection 253(3)
of the code to provide a minimum of seven years imprisonment and
would retain the present maximum of 14 years imprisonment.
I cannot support such an amendment. I applaud, however, the
hon. member's intention to raise awareness about the tragedies
caused by impaired driving and to further deter such criminal
behaviour. A minimum sentence will not in my view accomplish
this. It is inconsistent with the sentencing principles and the
philosophy within the Criminal Code.
Moreover, there is a great danger that the minimum sentence
proposed will become the ceiling rather than the floor and all
sentences for impaired driving causing death will hover around
seven years rather than permitting judges to properly exercise their
discretion and frame the sentence to address the severity of the
crime, with the offender's impaired driving record and countless
other factors taken into account in sentencing.
Upon proclamation of the sentencing bill, Bill C-41, passed by
the House less than a year ago, the Criminal Code will include a
statement of the purposes and principles of sentencing. As a
fundamental principle, a sentence must be proportionate to the
gravity of the offence and the degree of the responsibility of the
offender.
In addition to this fundamental principle, the Criminal Code will
set out additional principles which will apply in the sentencing of
offenders convicted of any code offence including impaired driving
offences.
(1750 )
These principles include that a sentence should be similar to
sentences imposed for similar offences committed in similar
circumstances in order to promote consistency of sentences that an
offender should not be deprived of liberty if less restrictive
sanctions may be appropriate and that all available sanctions other
than imprisonment that are reasonable in the circumstances be
considered.
The code will also set out the purpose of sentencing. The
fundamental purpose of sentencing is to contribute along with
crime prevention initiatives to respect for the law and maintenance
of a just, peaceful and safe society by imposing just sanctions that
have one or more of the following objectives: to denounce unlawful
conduct; to deter the offender and other persons from committing
offences; to separate offenders from society where necessary; to
assist in rehabilitation of offenders; to provide reparations for harm
done to the victims or to the community; to promote a sense of
responsibility in offenders and acknowledgement of the harm done
to victims and the community.
With these principles entrenched in the Criminal Code we should
not need to spell out for judges the sentences that must be imposed
in particular circumstances. We have given them the guidance to
exercise their discretion.
Moreover, we should not support piecemeal amendments to the
Criminal Code. When the government proposes code amendments
after comprehensive study and consultation, we are often criticized
for singling out certain provisions for amendment rather than
undertaking more fundamental reforms.
The amendment proposed in Bill C-201 seeks to impose a
minimum penalty on a single provision of the code, impaired
driving causing death. No similar amendments are proposed for
other offences, for example impaired driving causing bodily harm,
criminal negligence causing death or bodily harm, or dangerous
driving causing bodily harm or death. Therefore I cannot support
the proposed amendment.
950
I have a letter from Mothers Against Drunk Driving giving six
reasons why the bill ought not to be supported. I commend this
correspondence to hon. members who may feel otherwise.
[Translation]
Mrs. Pierrette Venne (Saint-Hubert, BQ): Mr. Speaker, our
highways are often the scene of slaughter. Several thousands of
people are injured in highway accidents and many of them die.
Drinking and driving is a terrible thing and I condemn those who
dare to get behind the wheel of a car in an impaired state. After all,
drunk driving is a criminal offence.
That being said, the hon. member for Prince George-Bulkley
Valley is today proposing a bill that is supposed to be a solution to
the problem of drinking and driving, to the deaths caused by drunk
drivers. Bill C-201 would amend the existing section 255 of the
Criminal Code by providing for a minimum prison term of seven
years for any person who causes the death of another person while
impaired and having an alcohol reading over the legal limit. It is
important to note that anyone convicted of impaired driving
causing death is already liable to fourteen years' imprisonment
and, in the case of criminal negligence causing death, to a life
sentence.
At first glance, it would seem like a nice idea to support such a
bill. However, when we look at the possible consequences of such
an amendment to the Criminal Code, we are forced to conclude that
this is the wrong remedy. In looking for a solution to the problem,
the hon. member for Prince George-Bulkley Valley is getting
dangerously close to repression.
The penalty he is proposing is typical of his party's mentality:
government by force. One of the favourite phrases of the Reform
Party is: ``Lock them up and throw away the key!'' To hear them,
every day brings a new crisis. The real crisis is misinformation and
it has been with us since the Reform Party was elected. Its members
peddle dubious ideas about criminality in the country, doctor
statistics and start people worrying. The individual cases they tell
us about do not reflect the reality around us. They exploit tragic
situations to score make cheap political points.
(1755)
The Reform Party grabs every opportunity to get more media
exposure. They feel that by taking up the time of this House, they
will project the image of a party that offers pragmatic solutions to
the problems of our society.
They want to restore capital punishment for adults and
teenagers. They want minimum sentences for repeat offenders,
whatever their offences. They want to lower the age of adolescence
from 12 to 10 years. They do not want 16-year olds to have the
right to vote, but they want them treated as adults should they
commit an offence. There are many preposterous examples. We
only have to look at the Order Paper to realize that the Reform
Party is getting desperate.
I expect one of them in the near future to propose that our child
care centres be turned into detention centres for prejuveniles, since
early signs of delinquent behaviour can be detected in kindergarten.
Bill C-201 is a good example of their lack of vision. By
incarcerating for a minimum of seven years those convicted of
impaired driving causing death, Reformers think that they will
eliminate the endemic problem of drunk driving. Nothing could be
further from the truth. The problem of drunk driving can only be
solved if all levels of government focus on prevention and
education.
In this regard, it is important to point out that impaired driving
offences continue to decline year after year. The number of people
charged with impaired driving has been falling every year since
1985. This annual reduction is around 6 per cent. This drop is, I
think, mostly attributable to the campaigns against drunk driving
being waged throughout Quebec and Canada. These awareness
campaigns have helped people understand that drinking and
driving is socially unacceptable. It must also be noted that road
checks do a lot to deter people from drinking and driving.
On the other hand, I seriously question the deterrent effect of
increasing the minimum sentence. I would like to point out that a
working paper prepared by the justice department on minimum
penalties in general concluded that, on the whole, the public was
not aware of which offences carry the minimum mandatory
penalty.
The same document also shows that, as a disincentive, minimum
mandatory penalties have very little impact on whether or not the
offence for which a more severe penalty is considered will be
committed. Robbery is a case in point. Worse yet, juries are said to
be less inclined to return a guilty verdict when they know that the
offence the accused is charges with carries the minimum
mandatory penalty.
This means that the bill put forward by the Reform Party
member will do the exact opposite of what it was intended to do. If
indeed juries are less inclined to return guilty verdicts in such
circumstances, they will necessarily acquit the accused, who will
then be free as a bird. Ironically, in his attempt to put more people
behind bars, the hon. member may end up facilitating their
acquittal.
On the other hand, if convictions are secured, another serious
problem will arise. Imposing a minimum mandatory penalty will
make the prison population increase substantially. The hon.
member seems to believe naively that detention centres will be able
to accommodate this larger number of inmates. He is completely
out of touch with the reality.
There is no way of knowing what impact his bill will have on the
number of convictions that could result from the application of this
provision. Let us not forget that a chain is only as strong as its
weakest link. If the hon. member intends to increase the minimum
951
penalty, he can expect the prison population to increase
dramatically and the present infrastructure to fail to accommodate
yet more inmates. Also, any increase in prison population will
involve an increase in related costs.
(1800)
Will the hon. member tell this House, in all honesty, how much
his bill will cost, if passed, given that, in 1992-93, the average
annual cost to keep an inmate in a maximum security facility was
$56,000, and $110,000 in a medium security facility.
This money should be spent wisely. If money has to be taken out
of the public purse, let it be used on eduction and prevention.
Especially since prevention and education always come at a lesser
price, in terms of both money and lives.
In conclusion, as regards the argument that judges tend to be too
lenient regarding these offences, I refer hon. members to the
decision made in March 1995 by the Quebec court of appeal in the
Houle vs. Regina case.
The individual pleaded guilty to charges of criminal negligence
causing the death of a person, criminal negligence causing bodily
harm to four people, and driving a vehicle with a blood alcohol
level higher than the authorized limit.
In order to make a proper decision, Justice Delisle reviewed 158
decisions made by various courts of appeal in Canada between
1985 and 1995 regarding similar cases. He refused to reduce the
sentence imposed, except to take into account the period of
preventive detention. Marc-André Houle received the following
concurrent sentences: five years in prison and driver's licence
suspended for eight years for criminal negligence causing death;
three years in prison and licence suspended for five years for
criminal negligence causing bodily harm; one year in prison and
licence suspended for six months for driving with a blood alcohol
level higher than the authorized limit. The fact is that courts do
apply the principles of sentencing with rigour. I continue to trust
our courts of justice. Again, demagogy has no place in criminal
law.
[English]
Mrs. Daphne Jennings (Mission-Coquitlam, Ref.): Mr.
Speaker, just before I start I would like to mention that the Liberal
member spoke about all these laws on the books and how they were
being given out as sentences and penalties. The whole reason we
are here today is because these things are not happening. There are
thousands of cases where they are not receiving penalties and not
even being incarcerated. It is a very serious matter and I really hate
hearing someone misquote the facts when so many people have
been hurt.
Regarding the Bloc member who just spoke, her disparaging
comments about the Reform were not too pleasant to listen to, but
apart from that was her charge on the cost of incarceration. What
about the cost to all of the people who are hurt by impaired drivers?
Let us get realistic here. I am really tired of the misconceptions
uttered by members in this House who should really be committed
to honesty at all times.
Bill C-201 deals with amending the Criminal Code to impose a
seven year minimum sentence for those convicted of impaired
driving causing death.
Mr. Kirkby: Mr. Speaker, I rise on a point of order. The hon.
member speaking is raising a question about the honesty of hon.
members. There have been-
The Acting Speaker (Mr. Kilger): I take the intervention from
the hon. parliamentary secretary very seriously, but respectfully he
is engaging in debate.
Mrs. Jennings: Mr. Speaker, I hope I will be allowed the time I
need to finish my speech.
At present, section 255 of the Criminal Code provides a 14-year
maximum penalty for this offence causing death. However, the
type of sentencing we have seen in Canada has been six months,
one year, two years and, in many cases, no incarceration at all.
(1805 )
Bill C-201 is placed before the House by my friend and
colleague, the hon. member for Prince George-Bulkley Valley.
The amendment proposed by the bill would impose a seven-year
minimum sentence in section 255, up to a maximum of 14 years.
Is this amendment needed? Do we have a serious problem in
Canada with impaired drivers causing death?
Perhaps at this time I should provide the House with some
shocking facts. A portion of these facts were already given to the
House by my friend from Prince George-Bulkley Valley, but they
are so serious we should hear them again. Apparently members of
the House do not believe them, do not think they are worth
listening to or do not think they are important enough for us to do
anything about them. That, to me, is really shocking.
In 1994 over 87,000 people were charged with the impaired
operation of a car, a boat or a plane. Notice that trains are not
included. We know that impaired train operators have caused death
in North America.
In 1994 over 1,000 people were killed as a result of impaired
driving. That is three times higher than the number of people who
were murdered.
Ninety per cent of impaired drivers are primarily responsible for
the fatal crashes in which they are involved.
Out of 1,315 auto fatalities in 1993 in Ontario, 565 were alcohol
related.
952
In answer to those in the legal profession who try to create
sympathy for the impaired driver by saying that he or she is a
law-abiding citizen, that in itself is a contradiction of terms. Or
they say that it is a once in a lifetime error in judgement or that
they do not usually drink.
To judges, who must pass sentences, here are the myths. Myth:
The impaired driver is a law-abiding citizen. Fact: Forty per cent to
70 per cent have had prior alcohol related offences.
Myth: The impaired offence represented an isolated error in
judgment. Fact: It takes 200 to 2,000 repetitions of impaired
driving to produce one arrest.
Myth: Impaired drivers are non-problematic social drinkers.
Fact: As high as 85 per cent of first offenders have had problems
with alcohol.
Myth: Remedial education could alter an individual's decision
making related to impaired driving. Fact: Remedial education by
itself is not an effective intervention. It depends on if the impaired
driver has a drinking problem and what form that remedial
education took. If an alcohol problem is present, then an alcohol
remedy is necessary. I would hope that any program in remedial
education would involve the AA philosophy, a well recognized
authority in successfully dealing with this illness.
Judges and members of the legal profession need education on
alcoholism.
We had a victims' rally in B.C. hosted by my fellow Reform MP
from Fraser Valley West. Over 2,000 concerned Canadians were
there.
The victim speaking from my riding was Betty Cyr. Betty and
her husband Gary lost their daughter Sherry to a drunk driver.
Others in my riding could have spoken as well in memory of their
loved ones who are now dead because of drunk drivers.
I want to share a letter with the House from one such parent,
Kate Verhulst, who lost her daughter to a drunk driver. It reads:
On August 10, 1995, my daughter Cindy Verhulst was travelling home with
two friends from seeing the fireworks in Vancouver. At the corner of Seventh
Avenue and Hurd Street, an impaired driver plowed into the car Cindy was a
passenger in. We know that the impaired driver, Geoffrey deJong, had seven
roadside suspensions prior to this crash. He was speeding, ran the light and was
in the wrong lane. My daughter didn't have a chance. On August 14, 1995,
Cindy died surrounded by her heartbroken family, especially her twin sister
Sharleen who held her to the very end.
Geoffrey deJong is still drinking and driving. He has been charged with
impaired driving causing death one count, impaired driving causing injury two
counts, dangerous driving causing death one count, dangerous driving causing
injury two counts, and driving over .08-He did not lose his driver's licence. The
preliminary hearing will be June 27, 1996, the trial will be set for late 1997 or early
1998. In the meantime he has the opportunity to kill again. We know that even if he
is found guilty on all charges, if the Prosecutor does not plea bargain-
-and plea bargaining is one of the major problems-
-he will serve in actual jail time approximately six months. At present he is
still an alleged drunk driver, yet my daughter is not allegedly dead. If he had
shot her or stabbed her, this case would be treated as a serious crime, would she
be more dead? One of the surgeons at Vancouver Hospital told me that Cindy
would have had a better chance against a gun.
I would like to know why the court process is so slow, and why the man who
killed my daughter has all the rights and freedoms he robbed her of. I would like
to know why this is the only crime that is referred to as an accident. How can a
person accidentally commit a crime? I would like to know why the courts treat
these cases so lightly. I would like to know how many people deJong will kill
before he is stopped. I would like to know why he was given seven road-side
suspensions. Isn't it obvious that he was and still is a habitual impaired driver? I
think he is a dangerous offender, in that he continues to commit the very crime
that killed my daughter.
We need tougher laws against drunk/dangerous drivers, and tougher
enforcement of these laws. There should be a minimum sentence required that
judges have to adhere to. Impaired/dangerous drivers will injure and kill more
people than all the guns, knives and other weapons put together. We have swifter
justice for parking violations. What will it take to implement the changes
needed?
Kate Verhulst.
(1810)
I agree with Cindy's mother. There should be a minimum
sentence to which judges must adhere. My hon. colleague's Bill
C-201 would do just that. I believe it is impossible for any of us
here today to know how all-consuming is the distress,
hopelessness, frustration that a victim must live through for the rest
of their lives when a loved one is taken from them, in this case at
the hands of a drunk driver.
Why should the drunk driver or the impaired driver not be held
responsible for his or her actions? Because we must all be held
accountable for what we do.
Unfortunately past governments were responsible for telling
Canadians they deserved everything and did not have to pull their
weight or help others or be responsible. The charter of rights and
freedoms is responsible for many court actions. Minority groups,
anyone who feels hard done by, can go to court claiming hardship
in one way or another against them. That charter is for people who
continually think me, me, me.
One can initiate court action if the opposite sex whistles at you,
if a prisoner slips and falls while playing racquetball in prison, if a
restaurant serves coffee that is too hot and a customer spills it, if a
citizen drinks too much and then dives into unknown waters. It is
always the fault of someone else. No one has to be responsible for
his or her actions any more in our country.
953
We used to be. There was a time in Canada when parents taught
their children to stand on their own two feet, respect others and
contribute to your country. I believe the charter must be amended
to read the charter of rights, freedoms and responsibilities.
Anyone who drinks and drives has a choice. It is a choice they
make to drink. It is a choice they make to drive. What choice did
the victim have? None. Absolutely none.
If the statistics are to be believed many who drive under the
influence of alcohol may have a drinking problem. I state here in
this House alcoholism is a disease, not an excuse. Because we are
sick does not mean we are no longer responsible for our actions. It
is time lawyers and judges, those representing the law and the
rights of Canadians, realize everyone must be held accountable for
his or her actions.
Only if we as a society insist on this response will we begin to
reverse those terrible statistics that I read earlier. First, the
impaired driver must receive a sentence that is in keeping with the
seriousness of the offence. When we kill others we do not make
excuses. We have to be held accountable. A minimum sentence of
seven years for impaired driving causing death removes the drunk
driver from our roads and if he or she has a drinking problem it
gives them ample time to make a serious decision regarding the
terrible consequences of their actions.
There are AA programs in prisons-volunteers will come in on a
regular basis-run by recovered alcoholics who volunteer their
time. These men and women are the experts. It does not cost the
taxpayer anything extra. AA has a proven track record for
alcoholics who admit they have a problem and are willing to deal
with it.
I ask the members of the House, please consider Bill C-201. Let
us know longer make excuses, blame others for our actions or kill
with no penalty.
Mr. Rex Crawford (Kent, Lib.): Mr. Speaker, it gives me great
pleasure to speak in complete support of Bill C-201, an act to
amend the Criminal Code (operation while impaired).
I was honoured to co-sponsor this bill along with several of my
Liberal colleagues. I have always been of the firm conviction that if
it is a good idea I will support it.
The fact that this bill was introduced by my colleague, the hon.
member for Prince George-Bulkley Valley of the Reform Party,
supposedly my opponent, has nothing whatsoever to do with the
fact that Bill C-201 is a good bill, worthy of approval by all
Canadians and by all political parties.
(1815 )
As members have mentioned, the issue of drunk driving causing
death is one of great concern to Canadians. By imposing a
minimum sentence of seven years for impaired driving causing
death and changing section 255(3) of the Criminal Code, this bill
will address these concerns.
Currently there is a 14 year maximum sentence available but
how often is that imposed? It is similar to our old gun laws, some of
the toughest in the world, but never enforced by a lenient justice
system.
I highlight the fact that this bill was supported not only by
members of all parties, but even more important by organizations
such as Mothers Against Drunk Driving and Students Against
Drunk Driving. I had the privilege of meeting Jane Meldrum, the
president of MADD Canada, at the news conference announcing
this bill. I can fully appreciate and sympathize with her
commitment, duty and obligation to raising public awareness on
the issue.
The current section in the Criminal Code allows a maximum
sentence of 14 years for this horrible crime but that is rarely, if
ever, imposed by the courts. Indeed, most sentences are for one or
two years even with a previous conviction. That is a joke. Bill
C-201 will change that and will better reflect the concern and
apprehension of Canadians.
I know we are all pleased that since 1993 the rate of persons
charged with the impaired operation of a motor vehicle, vessel or
aircraft per 100,000 persons 16 years and over has decreased 7 per
cent. It is the 11th straight year of a decrease. But the age of the
group with the highest rate of charges was that between 25 and 40
years. The single largest group charged was the 30 to 34 age group.
Obviously we must do a better job in educating our young people
while still in high school.
The number of drinking and driving fatalities have decreased
over the years due to the improvement of general road safety, lower
speed limits, increased enforcement and improved vehicle safety
such as airbags. However, these facts do not help the families
tragically torn apart by a drunk driver.
The hon. member for Prince George-Bulkley Valley outlined
an example in his own riding where three family members were
killed by a drunk driver with previous convictions and who was
sentenced to only three and a half years. People are justifiably
outraged at these kinds of sentences as they do not at all reflect the
views and concerns of average Canadians.
It should be noted that sections of the Criminal Code dealing
with impaired driving were amended in 1985. Basically all
punishments were increased and several new offences were
introduced. The new offences were impaired operation causing
death and impaired operation causing bodily harm. While it is rare
for me to do so, I congratulate the former Conservative government
for these reforms.
All the punishments however, including the maximum 14 year
sentence for drunk driving causing death, are only guidelines.
Judges are free to set any sentence. For example, in Prince Edward
954
Island almost all persons convicted of drunk driving are sent to jail
as opposed to Quebec where probation is the leading sentence.
The U.S. transportation research board has suggested a tough
crackdown on repeat drunk drivers which would include
impounding vehicles and police stake outs of people convicted of
DUI. The board's committee said current policies in Canada have
been effective in discouraging most people from drinking and
driving, but there remains a group of persistent drinking drivers
who do not appear to be deterred by the threat of social disapproval
or legal punishment.
(1820 )
According to the report, repeat offenders are four times more
likely than other drivers to take part in a fatal traffic accident.
Twelve per cent of drivers involved in alcohol related crashes had
at least one prior conviction.
There was an interesting and revealing study published by the
New England Journal of Medicine in August 1994 entitled: ``The
risk of dying in alcohol related automobile crashes among habitual
drunk drivers''. It speculated that persons arrested for drunk
driving may be at an increased risk for death in the future in an
alcohol related car crash and that people who drive while
intoxicated do so repeatedly. The deaths of drivers in those types of
accidents were studied over a 10 year period in North Carolina.
The scientists linked about 3,000 drivers to their driver history
files. Their conclusions are common sense but revealing
nonetheless. Their study showed that aggressive intervention in the
cases of people arrested for driving while impaired may decrease
the likelihood of a future fatal alcohol related crash.
In the United States, motor vehicle crashes are the leading cause
of death among people one to 34 years of age. Almost 50 per cent
of all traffic fatalities are related to alcohol. Furthermore, 40 per
cent of the people in the U.S. will be involved in an alcohol related
crash at some time during their lives.
The New England Journal of Medicine report suggests that
drivers who die or cause death in alcohol related crashes are more
likely than other drivers to have been arrested previously for drunk
driving. As well, they tried to determine whether the association
with death in a drunk crash increases with the number of arrests for
drunk driving.
The U.S. study proves beyond a shadow of a doubt that the
strength of association between arrests for driving while impaired
and alcohol related deaths increased dramatically as the number of
arrests increased from one to two or more.
The study had a number of strengths including the completeness
with which alcohol level information was collected and reported to
the North Carolina medical examiner system. I want to quote from
the study: ``The likelihood that an alcohol impaired driver will be
arrested is between 1 in 250 and 1 in 2,000. Therefore, strategies to
combat drunk driving must reach beyond the drivers who have
already been arrested. Our results suggest that effective
intervention when drunk drivers are arrested could reduce the
number of alcohol related deaths. Since the association between
arrests for driving while impaired and deaths increases
substantially with the number of arrests, it is important to intervene
after the first arrest. Such an arrest may thus present an important
opportunity to decrease the risk of death from a future alcohol
related crash''.
I can offer no better reason to support Bill C-201 and its stronger
sentences than the August 1994 report of the highly respected and
honoured New England Journal of Medicine with its stellar
reputation for integrity and principles.
There are similar figures available for Canada. In 1994 in this
country 87,838 people were charged with impaired operation of a
car, boat or plane, and 1,414 people were killed as a result of
impaired driving, three times higher than murder. Ninety per cent
of impaired drivers are primarily responsible for the fatal crashes
in which they are involved. Out of 1,315 auto fatalities in 1993 in
Ontario, 565 were alcohol related.
Bill C-201 is worthy of support by all members of the House. We
are here to represent our constituents and I firmly conclude that a
majority of Canadians would support this bill and the measures
within. It is a votable bill and I will certainly be voting in favour of
it because it is a good proposal and partisan politics have no place
in private members' business.
The Acting Speaker (Mr. Kilger): The time provided for the
consideration of Private Members' Business has now expired. The
order is dropped to the bottom of the order of precedence on the
Order Paper.
_____________________________________________
954
ADJOURNMENT PROCEEDINGS
(1825)
[English]
A motion to adjourn the House under Standing Order 38 deemed
to have been moved.
Mr. Len Taylor (The Battlefords-Meadow Lake, NDP): Mr.
Speaker, last week the human resources development minister
responsible for the unemployment insurance fund said some pretty
incredible things that greatly concerned me. I am concerned
because I think the spoken words underline a complete
misunderstanding of the needs of Canadians and a
misunderstanding of his own ministerial responsibilities.
955
In the House of Commons the minister responded to a question
I asked him by accusing union leaders of forcing ordinary people
into the streets of New Brunswick with ``all kinds of false and
erroneous information to exploit them''. In answer to another
question he said that union leaders should ``stop exploiting
vulnerable people in our society''. I wonder who is exploiting
whom.
The people of New Brunswick have had a lot to say about the
changes being forced upon them by this government, not the least
of which have been the changes to the unemployment insurance
fund. We all know that the fund itself is in a surplus position
because the government has cut the benefits and restricted
eligibility. Where some 70 per cent of the unemployed used to
receive benefits, now only some 40 per cent are eligible. At a time
of high unemployment, one would expect the insurance fund to be
in a deficit but this government is forcing the surplus position and
that can only be achieved by exploiting the people who need it the
most.
Perhaps the minister has not noticed but the people of New
Brunswick and the people of other parts of Canada have noticed
and they do not like what they see. Perhaps the minister has not
noticed or perhaps he does not care, but ordinary, real people do not
go out on to the streets, take up placards and demonstrate against
their government unless they are frustrated and angry.
Those are words that accurately describe the feelings of the
people who are out on the streets of New Brunswick. They are
frustrated and they are angry at the changes being forced upon
them. They are also the ones who are driving the demonstrations.
They are demanding that their leaders do something about the
issue.
Perhaps the minister has not noticed but the democratically
elected leaders and those who work for them have recognized this
frustration, this anger and this need for social programming that the
ordinary, real citizens of New Brunswick and elsewhere have
expressed.
The minister has chosen to attack his opponents instead of their
ideas possibly because he has no real response to those ideas. If
cutting the program and building a surplus in the fund to eventually
apply against the national debt is the government's goal, then it is
doing fine. However, if it is working with people through the
difficult times between jobs or working with the economy to create
the jobs needed to put people back to work, then it has failed
miserably and it must be held accountable.
When the minister is asked to be accountable, he responds by
questioning the credentials of those who express their concerns.
When the head of the Canadian Labour Congress asks to be heard
and asks for a meeting, the minister says: ``I would not speak to
Bob White if he was standing in the middle of the Sahara Desert
with a glass of cold water and I had been there riding a camel for
two weeks and was dry as a bone''. What kind of an insulting
comment is that?
Certainly the minister has a responsibility to meet with and
discuss the important issues of his department with the people who
are democratically elected to represent the people most affected by
the decisions of that department.
I remain concerned that the minister has failed to understand that
the real people of New Brunswick and other parts of Canada who
are unemployed but want to work are simply looking for work. In
the absence of work, they want to know that the insurance program
they support will be there to support them. When the large
profitable corporations are shedding jobs and the federal
government is not there to protect them, they are going to turn to
their other representatives for help.
I ask the minister to reconsider his comments and tell us that he
will work to design an employment insurance program that
benefits, not penalizes, those whose only real goal is to find and
maintain a decent job.
Mr. Robert D. Nault (Parliamentary Secretary to Minister of
Human Resources Development, Lib.): Mr. Speaker, I take great
pleasure in having the opportunity to comment today.
As a unionist myself, one of the problems I encounter on a
regular basis is which hat does Bob White really wear? Does he
wear the hat of the CLC or does he wear the hat of the NDP? That is
probably one of the reasons union movements in Canada today are
in such disrepair and have so little time for governments to listen to
them. We do not really know whether they are part of the NDP
movement or part of the real union movement, which people are
looking for.
(1830)
The issue of the union's lack of interest and solutions was
brought up again today in committee. One of the affiliates of the
CLC made a presentation of the ideas the member talks about. The
conclusion of the ideas was to scrap the bill.
From my experience when I organized anything that took place
in the union movement, the whole objective was to make sure we
had our voice heard, that we had recommendations and ideas to put
forward. From there we would want to meet with somebody.
What Mr. White has done, and I agree with the minister, is he has
not given us any ideas to this point. He is just interested in playing
politics on the backs of a lot of people who are very concerned
about the EI changes.
If the member wanted to be helpful he would say to his friend
Bob White, the executive of the NDP, that he should give us some
ideas and some recommendations, come to the committee with
them instead of what we heard this morning from one of their
affiliates to simply scrap the bill. Anybody in their right mind
knows that is not any idea or recommendation. A lot of Canadians
have had a problem with the CLC for a long time. Those of us in the
956
union movement can say we are tired and are not willing any longer
to put up with people like Bob White.
I recommend to the member and I say to the minister that he
should condone those individuals. He should not stop saying the
things he says because there are a lot of people like us out there
who believe Bob White is doing a disservice to working men and
women.
We will be having the CLC come forward in the next couple of
weeks to make recommendations. I hope they are
recommendations, not just political rhetoric, which is what we
heard so far.
If the member thought the orchestrated demonstrations by union
leaders in Atlantic Canada were being helpful and that they would
make changes based on that, he should look at what happened in
other jurisdictions as far as the union movement is concerned.
Nobody is paying any attention to labour because of comments
like that and comments by Bob White. I hope they will change that
approach and that we get back to doing business in the labour
movement with governments no matter which stripe they represent.
[Translation]
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, last
Thursday I asked a question of the Minister of Public Works and
Government Services concerning the relocation of Revenue
Canada offices from Hull to Ottawa.
In her attempt to respond, the minister cast some doubt on the
transparency of the process in admitting that every effort was being
made by her department to have an open and fair process in the call
for tenders.
The minister offers us no guarantee that would allow us to be
sure all efforts have been expended to ensure transparency and
equity in the process. Moreover, does this not make this
government appear to the public to be the one with the least
transparency?
Once again, the Liberal government has done nothing to restore
public confidence. It is now a known fact that it has not been
successful in curbing the lobbyists. Yet, when the Liberals were the
opposition, they were tearing their hair out over transparency. The
famous red book is getting a paler and paler shade of red as more
and more promises are not kept.
This is a striking example of a policy with a double standard.
How can the minister state that the processes are open and
equitable? Why do Quebec property owners have to get tied up in
government red tape, while Ontario landlords do not?
A number of questions come to mind. Could barefaced
patronage be involved? Is somebody getting paid back for a
favour?
A relocation such as this, involving 800 federal employees, is a
luxury we could easily do without at this time. Quebec business
owners have the same rights as those in Ontario. In particular, they
have the right to receive the same treatment as their neighbours in
Ontario.
If the minister says that the process put in place by her
government for awarding accommodation is open and transparent
and that it is intended to ensure equal access to all regions and to all
businesses across the country, then she should suit the action to the
word. She should go ahead.
The Bloc Quebecois is not opposed to calls for tender. The Bloc
Quebecois would like to see a straightforward and transparent
process, free of lobbyists, that leaves no discretionary authority to
the minister and that will ensure equity and equality for everyone.
The Bloc Quebecois would particularly like access to different
government contracts to be based, I repeat, on equity and equality.
[English]
Mr. John Harvard (Parliamentary Secretary to Minister of
Public Works and Government Services, Lib.): Mr. Speaker,
contrary to what the hon. member opposite might say, there is no
conspiracy against landlords on the Quebec side of the river. This
lease in question for Revenue Canada's information technology
branch is being tendered in a completely open and fair manner and
according to normal procedures.
The member said in his remarks that he wanted a guarantee of
openness and transparency. He has it.
What the hon. member must understand is that each requirement
for space is considered by the Department of Public Works and
Government Services on a case by case basis. The department then
proceeds in the most appropriate manner based on the needs and
constraints of the client department involved.
Decisions about obtaining office space are based on an number
of factors. These include the length of the lease required, the cost of
moving the client department, how much investment has been
made in the location, government downsizing, security
requirements, accessibility to the public, to name a few.
The bottom line in all cases is finding the best possible solution
at the lowest possible cost to the taxpayer in an open, fair and
transparent manner.
Let us briefly examine the facts of this instance. The lease for the
Fontaine building expires November 30, 1996 with no option for
renewal while Revenue Canada will have an ongoing five-year
requirement for about 1,200 square meters of office space.
957
We are proceeding with an invited tender based on a recent
market survey. This is one of the normal processes by which we
acquire leased space. In the case of the requirement in question
there is no reason not to proceed in this fashion. The preferred
approach is always the competitive route.
Let me make it clear that the owner of the Fontaine building has
been invited to participate and will have an equal chance. If the
Fontaine building's offer represents the best value for the crown
and the taxpayer, Revenue Canada operations will stay where they
are.
Contrary to what the member from Chicoutimi has stated, our
purpose in doing this tender call is not to relocate public service
employees currently in Quebec to Ontario. Our purpose with this
tender call is to ensure that all the property owners in the national
capital area who can meet this space requirement have a chance to
submit an offer. This is an open and fair process to ensure that we
get the best value for the government and for the taxpayers.
Furthermore, the number of employees affected, 750 in this
branch of Revenue Canada, represents less than 1 per cent of the
total federal public services employment level in the national
capital area.
What we are talking about is a process that is fair and open to
scrutiny resulting in the best deal for the government and the best
deal for the taxpayer. That is the way it should be and that is the
way it will be.
[Translation]
The Acting Speaker (Mr. Kilger): The motion to adjourn the
House is deemed to have been adopted. The House stands
adjourned until 2 p.m. tomorrow, pursuant to Standing Order 24.
(The House adjourned at 6.38 p.m.)