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View Guy Caron Profile
NDP (QC)
Madam Speaker, I am very pleased to rise in the House to speak to this motion.
I can say that we will be voting in favour of this motion even though we disagree with the wording, especially in the preamble and the amended preamble. I think we can have a discussion to determine whether this is a high level of taxation or not. We think it is not that high in comparison to what we see in other OECD countries.
As far as the last part of the motion is concerned, we agree that health and dental plans should not be taxed—at least not before the government presents a real context for the comprehensive analysis of the tax system that it is supposedly conducting.
It is very important to look at the tax system as a whole. I will quote from John Ivison of the National Post, who, after learning that the government was contemplating taxing health and dental benefits, wrote on December 2, “Dan Lauzon, a spokesman for [the] Finance Minister...said no decisions have been taken and that any moves would not be made in isolation.” However, what he wrote next was actually more interesting. It states, “The employee-sponsored health care tax exemption is being scrutinized as part of a sweeping review of 150 tax credits worth about $100 billion a year in foregone federal revenue.”
The government has said the tax system does not work. We agree. It has said that the tax system needs to be reviewed. We agree. However, reviewing tax expenditures, tax exemptions, tax deductions, and tax credits is not a review of the tax system. What the government is doing is once again raising the expectations of the population that it will address the real problem, the problem of fairness and equity in the tax system. People do not feel that it is a fair system. They do not feel that everyone is treated equally. By examining the whole range of tax credits and tax deductions, the government is saying that it has done its part and that we have a brand new tax system in this country. This is not the first time a government has taken us in that direction.
The Carter commission conducted the last real review of the existing tax system in the 1960s. I will not get into the details of that commission because many people have already done so. The review was very comprehensive and took a good five years.
The report was one of the most well-received reports in the entire world. Serious work was done to determine how the tax system could be adapted to the reality of the day. It is important to remember that income tax has been around since 1917. In 1960 or 1965, we still had a system that was designed during the Second World War. This was serious work. It was commissioned by John Diefenbaker, the Progressive Conservative prime minister at the time, and continued by Liberal minister Lester B. Pearson.
Prime minister Trudeau was the one who got it across the finish line. He took all of the work that was done and condensed it into a handful of recommendations, which were accepted. The very essence of the report, which was that every dollar of income should be taxed the same, got swept under the rug. In the end, a few changes were made, but we ended up with a system that falls somewhat short of the objectives originally set out for this exhaustive study.
I am reminding members of this little bit of history because we are now witnessing a similar attempt to pull the wool over the eyes of Canadians. The government is telling Canadians that it understands them and that it will do what it takes to make the system fairer.
However, the proposal to tax private health and dental benefits is a trial balloon. It is not meant to make the system fairer. Rather, it is a way for the government to take money out of one pocket while trying to convince taxpayers that it is putting money in the other.
It is a very important question because it is going to be a defining question for the following years not only for this government but for any government in this country.
The last comprehensive review of the tax system took place back in the 1960s. There have not been any significant changes since, except maybe some brought by the finance minister back in the 1980s, Michael Wilson, who made some changes that did not, in our view, bring any more equity or fairness.
In terms of a comprehensive tax review, right now there are 3,000 pages of complex, unintelligible legal text, which even tax experts, who spend their lives studying this, cannot understand. We are facing a situation, a system, that is actually counterproductive for our economy. It is counterproductive for our level of economic growth. It is counterproductive for our productivity.
I am not the only one saying this. Mainstream economists are saying that the complexity of our tax system gives anyone, any tax expert, the ability to actually build an industry based on finding loopholes, which makes the system less and less equitable, less and less fair, and it is actually a drain on our economy. One of the top priorities of any government at this time should be really simplifying the tax system.
Simplifying the tax system does not mean just bringing forth some gimmicks, like a single-tax rate, or a flat tax, as it is called. We should not just be saying that we will be revising those tax credits and will try to find some savings, savings meaning expenditures lost to the pockets of the taxpayer, the citizen. That is not it. That is smoke and mirrors.
In terms of the commitments made during the last election, the Liberals are showing that they are masters of the smoke-and-mirror strategy.
We saw this yesterday, in the much-discussed announcement about electoral reform, a lofty promise. They went after NDP and Liberal voters by promising electoral reform that would make every vote count. Today, a year and a half later, voters know that they were duped by this government.
Let us take a look at the Liberals' promises, especially those concerning first nations. This government said that it would cease the previous government's legal actions appealing rulings in favour of indigenous children and various first nations communities. These rulings force the government to honour its traditional commitments towards first nations.
My colleagues from Abitibi—Baie-James—Nunavik—Eeyou, Timmins—James Bay, and my colleague from northern Saskatchewan, whose riding has a very long name, are doing an absolutely incredible job of ensuring that this government honours its promises made to first nations, which they believed.
All the broken promises and unfulfilled commitments are beginning to pile up. Bill C-51 is another example. The government was going to change it, abolish it, or transform it, but nothing is being done.
Nothing is being done. Time and time again, the Liberal government campaigned on real change, but compared to the previous Conservative government, its real change involves keeping the decisions and attitude of the previous government.
The Liberals are saying that they are doing it in a progressive fashion. They are keeping the Conservative target for climate change, but those are progressive targets now. They are keeping the agreement with the European Union, but now it is a progressive agreement. Everything the Conservatives did, they are keeping, and they call it progressive. That is what real change means for the current government.
Now we are facing a situation where the Liberals have promised to simplify the tax system and make it fairer. They were right to make that promise and we are making it also.
Why? It is because the system is actually leaking like a sieve, because the system is actually so complex that, as I said, there is a whole industry built on creating tax loopholes and trying to take advantage of any poor writing in one of the 3,000 pages of the Income Tax Act.
We also know that the system is so complex that the compliance costs for businesses and for citizens are becoming higher and higher. They are increasing. It is becoming more and more costly just to face the obligation as citizens, as people of this country, to actually contribute to the well-being of this country. We have to do it, and it is a good thing that we do it, but we are asking people to actually pay more and more, because the system is more and more difficult to understand.
Even worse is that the complexity of the system is actually increasing. One of the main problems we have for our revenue situation is the problem of tax havens and tax evasion. Because of that industry that actually tries to find loopholes, some of them cross the line, where a loophole is no longer a legal loophole but becomes a mechanism, a strategy, for tax evasion.
It is extremely difficult for the Canada Revenue Agency, which actually I have been very hard on, and I will continue to be very demanding. They do not have the proper resources to actually ensure compliance with the very complex legislation.
Those are all problems that we are now aware of. They are problems that we need to deal with and which require a structured response from the government. It was proposed to the Standing Committee on Finance that it carry out an in-depth study of the tax system. That is what the motion says. It does not provide any details or direction. It does not give the Standing Committee on Finance a mandate. Work will begin next Wednesday. What are we going to do? We will listen to various witnesses, including accountants, as well as representatives, I am sure, of the Canadian Federation of Independent Business and other organizations. I already know what they will say. They will say that the system is too complex, that it has to be changed and simplified.
We will spend three, four, five, or six meetings getting all those witnesses, who will be saying the same things. How do I know they will be saying the same things? It is because I have heard them in the past saying those things. We would be wasting our time in the finance committee, which might be the intention of the motion, actually. We know that the finance department, and we know that from the Minister of Finance's spokesperson, is actually working right now on the same study. However, what they are claiming is a comprehensive tax review is nothing but a review of tax expenditures.
How many pages do tax expenditures take in the whole Income Tax Act? It is maybe a few dozen out of 3,000 pages. We have a system right now that is so complex, as I said, that nobody can really claim to master it all.
I think if the government really had guts and really had the intention of making sure that its commitment to simplify the tax system would be right, it would actually go many steps further. It might actually go, maybe not toward a royal commission, like the Carter commission, back in the sixties, but perhaps toward a blue ribbon commission that hired experts from various fields, including labour, business, and academia, and gave them the task of reviewing the system, because I have very limited faith in the finance department doing it.
I have very limited faith, not because I do not like the people who are part of it but because of the complexity of the task ahead of us, that the finance committee can actually do this work, because we do not have time to do it. We do not have the resources to do it, and we do not have the expertise to do it.
If the government was really serious, and it was not smoke and mirrors and was not just an empty promise that the Liberals will do little about, but claim they have respected, or simply break, because that is what we have witnessed since the government took power, they would look at the possibility of creating that blue ribbon commission, with members who are respected.
They might be divergent, in terms of belief or in terms of political leanings, but they will actually have the same objective, the same view, the same vision, which is to actually adapt an antiquated system, a system that was built in the mid-20th century, before computers, before the mobility of capital, and before globalization, and do what Carter did back in the sixties and adapt it for our times.
I dare the government to actually take that step. I dare the government to actually make us believe that it was not, once again, an empty promise to make Canadians feel comfortable about it but that it understands that we know the system is not fair.
Canadians have a decreasing trust toward the Canadian tax system. They do not believe it is fair anymore. They do not believe everyone is paying their fair share. Nobody likes paying taxes. We can all agree on this. It is always something difficult to accept. People will accept it if they know that their tax dollars are actually well spent, that they are spent for the common good, and that they are spent for the common projects we have in this country.
People will also accept it if they know that everybody is paying their fair share. When we talk to Canadians, one of the first things they say is that they feel they are being had, that there are two systems: one for the rich and one for them. The system for the rich, for the most affluent, is for those who can afford to pay some firms to tell them how to invest their money in the Bahamas, in Switzerland, in Luxembourg or in the Isle of Man, as we have seen, while they are required to pay.
Here is another example to illustrate how unfair the system is. Those people who hide their money away on the Isle of Man, in the Bahamas or elsewhere, knowing full well that they are hiding income from the taxman—if they get caught, they are told that it is no big deal, that they can simply return the money to Canada and pay the taxes that are owed and all will be forgiven. However, if a taxpayer who does not have the means to do that gets caught or even makes a technical mistake, it is a sure bet that the Canada Revenue Agency will not stop until that taxpayer has paid what he or she owes, in addition to interest and penalties.
We can therefore forgive taxpayers and Canadian citizens for thinking that there is a system for one class of people and another system for them.
The thing is that we tried to actually bring up this topic in the finance committee. We, the NDP. We did it in the past too with other NDP members of the committee. We are the ones who actually bring, constantly, motions to study the tax system and tax havens. The last was on the scheme involving KPMG and the Isle of Man.
The first meetings went fairly well, and I will say that all members were really into it. By the fourth meeting, basically all questions, except maybe from this side, were mainly softballs. That does not really help to increase the faith of Canadians in the system and the ability of this House to tackle this very important topic.
In brief, we need to remember that the issue currently being debated is one that the government itself brought forward, that is, the prospect of taxing benefits, such as health insurance and dental insurance, provided by employers. The justification for this was the need to conduct a systematic and thorough review of the tax system. When the pressure became too much, the Liberals rejected the idea. It was a trial balloon.
However, a systematic review of the tax system remains extremely important. It was promised by the government. What I am trying to say is that I am very afraid that this is just another promise like the one about electoral reform and all the others meant to persuade Canadians that the Liberal Party listens to their wants and needs. In the end, these promises were only meant to get people to vote for them so they could change sides and then manage expectations.
That is why I am hoping for real action from the government, either on the Standing Committee on Finance or through the department.
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