1983-12-15

PENSION REFORM


Mr. Doug Frith (Sudbury):: Mr. Speaker, I rise on a point of order. After prior consultations, I understand that the House is disposed to give its unanimous consent so that the parliamentary task force on Pension Reform may table its report at this time.
[ Translation]


Mr. Nielsen:: We agree.


The Acting Speaker (Mr. Corbin):: The House has heard the proposal of the Hon. Member for Sudbury (Mr. Frith). Is it agreed?


Some Hon. Members:: Agreed.


Douglas Cockburn Frith: Mr. Speaker, I have the honour to present the first report of the parliamentary task force on Pension Reform in both official languages to which, pursuant to Standing Order 69(13), the committee requests a comprehensive response.
[Editor's note: For above report, see today's Votes and Proceedings.]



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, December 13, consideration of the motion of Mr. Lalonde that Bill C-2, an Act to amend the statute law relating to income tax and to make related amendments to the Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to a Committee of the Whole.
The Acting Speaker (Mr. Corbin):: Order. I should inform the House that when debate adjourned at the previous sitting on Bill C-2, the Parliamentary Secretary to the President of the Privy Council (Mr. Evans) had the floor. He had completed his 20-minute speech. The period is now open to questions and comments, if Hon. Members so wish. Otherwise, we will proceed to debate.


Mr. Blenkarn:: Mr. Speaker, I was wondering if the Parliamentary Secretary was of the same opinion as I am that there are no members of this House who can really say they thoroughly understand the Income Tax Act and, indeed, this Bill now before the House.


Mr. Evans:: No, Mr. Speaker.


Donald Alex Blenkarn: Mr. Speaker, is the Parliamentary Secretary saying to this House that he, as a Parliamentary Secretary, has no problem with this Bill, that he thoroughly understands all the clauses contained in it?


John Leslie Evans: Mr. Speaker, we went through this Bill in the Finance Committee. We went into great detail when asking about the provisions. We received information as to the implications of those provisions. With regard to whether individual members had the complete knowledge of the technical details of the legislation, I would say probably not. However, members have been fully apprised of the implications of each of the provisions that was of concern to members of the committee. That is our role. We are not meant to be technical tax practitioners. We are to understand what the implications are of the legislation for actual practice by our constituents, the people of Canada. That is our job, not to be technical tax practitioners.
The Hon. Member for Mississauga South (Mr. Blenkarn) and other members of the committee went into great depth in many areas with regard to the Ways and Means motions. I think there is sufficient understanding by those members and, through them, other Members of the House to make a very rational judgment on this legislation. Quite frankly, that rational judgment would be passed very quickly because, as I said before, only two submissions were received by the committee that were relevant to the legislation, even though we had advertised nationally for submissions from every Canadian.


Mr. Fisher:: Mr. Speaker, the Parliamentary Secretary has served with some considerable distinction as the Chairman of the Finance Committee. During his term as Chairman, two different Ministers of Finance asked the Committee to consider Ways and Means motions and to report back. Would the Parliamentary Secretary like to take a couple of moments to reflect on the process that his Committee went through and give us his reactions as to the value of that process for the future?

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John Leslie Evans: Mr. Speaker, I would be very happy to do that. It was a very enjoyable experience that I had as Chairman of that Committee. It was with regret that I stepped down as Chairman as a result of assuming new responsibilities. I would say that that was an excellent procedure which the Minister of Finance (Mr. Lalonde) established of sending Ways and Means motions to the Finance Committee. He asked us to advertise nationally for submissions and to have those submissions and witnesses appear before us in order to make the views and concerns of Canadians known with regard to the tax legislation, and then to put forward recommendations for change. We did that earlier on in the year with regard to the first Budget brought down by the Minister of Finance and the Ways and Means motions that had been presented to us led to a number of changes in the legislation.
The April Budget was then brought down, the Ways and Means motions were put to us in the summer and the Finance Committee undertook the same process and again reported, with very little recommendation for change in this case because the public reaction to the Ways and Means motions and the April Budget had been so good that there was no need for us to make major changes.
That is the Bill that is before us now. I think it is a good Bill and I think the process it has gone through is an excellent one.
I think that process should be continued, and in light of the good work that the Committee did when examining this legislation, I think we should move expeditiously to pass the legislation.


Donald Alex Blenkarn: Mr. Speaker, would the Parliamentary Secretary not agree that he is misleading the House in the sense that the Committee only dealt with a very small part of the legislation? The legislation before us deals, for example, with the indexed security plan which, from my calculations to date after having gone very carefully through the Bill, now covers some 20 clauses of the Bill. I was wondering if, in that respect, the Parliamentary Secretary could justify the inclusion of puts and calls as the kinds of securities that should be held behind indexed securities.


John Leslie Evans: Mr. Speaker, I have to agree with the Hon. Member that the ISIPs and certain aspects of investment tax credits were not part of the Ways and Means motions that were referred to us. However, I should add that they were widely disseminated in the community at large and widely commented upon. The inclusion of the puts and calls as a possible investment within an ISIP was in response to a request made by the investment dealers themselves to try to broaden the scope.
If the Hon. Member is asking if we should find a way of indexing the value of all types of assets to inflation and only taxing the real appreciation of all types of assets instead of just the ones that happen to fit into an ISIP. I would say yes, I agree. That is what we have to move toward, but the ISIP is a first step which has never been taken before in Canada. It is a
first step toward realizing that only the after-inflation increase in value should be taxed. I believe that it is an excellent first step and I commend the Minister for taking that forward-looking first step. However, I would agree with the Hon. Member that we should not stop there but should go on to find ways of ensuring that taxation applies only to the real increase in the value of assets as opposed to the total inflationary increase in assets.


Douglas Glenn Fisher: Mr. Speaker, I know the Hon. Member for Mississauga South (Mr. Blenkarn) has long been concerned about ISIPs. In fact, he has taken considerable time to oppose them in the House. He feels that they favour the big guy and hurt the small guy. I would like to make a further comment on that matter and point out to the Hon. Member that the cure recommended by the Tories for this problem would in fact hurt the small guy even more.
The removal of capital gains tax could in fact help the big guy at the expense of the small taxpayer who has no capital gains but only employment income. The distortion of our tax system by the removal of the capital gains tax would in fact go further than the Hon. Member claims. It would hurt the small business sector and would hurt the small taxpayer much more than the big taxpayer. I would ask the Parliamentary Secretary to comment on this and perhaps give us his views on the matter.


John Leslie Evans: Mr. Speaker I think I would have to condition my response. Given the existing tax structure, there is no doubt that we must have a capital gains tax. Under the existing structure, the non-taxation of capital gains presented a major problem which was addressed by the Carter Commission and led to the introduction of the capital gains tax. I have proposed a way of solving that problem so that there would be no need for a capital gains tax. I contend that the fundamental problems which lead to the capital gains tax can be solved, and through my proposal there would be no leakage and therefore it would not be needed. Given the existing structure, however, a capital gains tax is essential in order to stop the leakages. I suggest that if the basic structure were fixed there would be no need for a capital gains tax.


Donald Alex Blenkarn: Mr. Speaker, I thank the Parliamentary Secretary for his explanation of the way he sees changes that could simplify the Income Tax Act. To some extent I agree with many of his proposals. For example, his proposal to merge dividends with all distributions and to have one tax system that integrated corporate and personal tax makes a great deal of sense. That would certainly remove the need for a capital gains tax and would simplify the Act.
I wonder if the Parliamentary Secretary had put his mind to the concept of Part VII tax and Part VIII tax which was not dealt with by the Committee. I refer to the investment tax credits and passing those back through to proposed purchasers of shares, the research tax credit in Part VIII where the company has to pay the money in as a tax and then apply for a
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refund. This simplification process is now so complicated that I suggest he cannot understand it. I have a hard time understanding it and I am sure even the Parliamentary Secretary to the Minister of Finance (Mr. Fisher) cannot understand it. I wonder if the Parliamentary Secretary to the President of the Privy Council (Mr. Evans) could explain how the simplification of the Income Tax Act would be promoted by this step?


The Acting Speaker (Mr. Corbin):: Order. Perhaps by unanimous consent the Parliamentary Secretary might be allowed to give a brief answer.


Some Hon. Members:: Agreed.


John Leslie Evans: Mr. Speaker, as I have indicated, the existing structure of the tax system requires the kind of measures the Government wanted to take to allow more equity capital to be raised by companies in order to provide more funding for research and development, and that is basically the only way that result could be achieved. Unless we are prepared to change the structure of the tax system to a more simplified but equally effective structure from the point of view of raising revenue, the kinds of measures we need in order to stimulate research and development, to stimulate investment and to stimulate the provision of equity capital for small businesses are going to be complex.
That is why I think, and the Minister agrees, as does the Hon. Member for Mississauga South, that we must move forward with the simplification process. That is why the Minister referred that subject matter to the Standing Committee, in order to find a way to simplify it, beginning with the small business tax system. I would say that the whole structure needs to be thought out again, perhaps not in radical ways but certainly in fundamental ways.


Mr. John Gamble (York North):: Mr. Speaker, the customary remark made by the most Members when they rise to deal with legislation by way of debate is that it is a pleasure for them to have an opportunity to participate. It is certainly not a pleasure for me on this occasion. We are confronted with a monstrous piece of legislation in terms of complexity and length, and that is Bill C-2, to amend the Income Tax Act.
A number of recent occurrences have a substantial bearing on our deliberations today. Yesterday in the House the Minister of National Revenue (Mr. Bussieres), who is responsible for the administration of this Act which is sought to be amended, had occasion to comment upon a number of questions directed to him with respect to the way in which his officials have carried out their duties. He used with regularity the phrase "It is the duty of my officials to see that taxpayers pay their fair share of tax". He also with some regularity referred to the word "equity". In the event, Mr. Speaker, that the Minister has any knowledge of the way in which his Department functions, he will recognize that there is about as much fairness in the functioning of that Department as there is in an armed robbery. He will also recognize that the courts themselves have said that there is no equity in tax law.
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What we are confronted with is a statute of precise nature which will be interpreted without any regard to equity by the tax courts of this country. It is, therefore, abundantly clear to anyone who knows that very simple fact that it is incumbent upon Hon. Members of this House to be particularly careful with a statute which has built within it the right granted to a department of government to move against the property and assets of a citizen, seize them, take them away and sell them, which is indeed what this Act permits.
Accordingly, I am dismayed to find that we should have members of the Government recommending that we speedily attend to the passage of this legislation. Some reference was made a few moments ago by the Parliamentary Secretary to the President of the Privy Council (Mr. Evans) with respect to a simplification process which was begun, according to him, by a simple reference to a committee of the House for examination and study by the Minister of Finance (Mr. Lalonde). The fact of the matter is that it has been recognized for some long time that this Act has got completely out of hand. It goes beyond the comprehension and understanding not only of the average citizen, against whom its provisions apply, but some of the most competent and able tax practitioners in the country.
Our process here today is one of adding to the complexity in a fashion which does nothing to remove the fundamental problem of undue complication, an undue complication which must be faced by the citizens of the nation when they endeavour to comply with the law which this House passes. Not long ago, the Canadian Chamber of Commerce had an opportunity to make a submission to the Minister of Finance, and in the very introduction of its presentation made the following remarks:
We are pleased that a serious study is now being made of ways to simplify the Income Tax Act. We recognize that the Act must be complex in certain provisions, but the provisions now in place relating to the taxation of small corporate businesses are overwhelming in their complexity. Furthermore, the introduction of the corporate distributions tax, especially in its anti-avoidance provisions, will introduce uncertainties and complexities into the Act totally out of proportion to any useful result. For example, the anti-avoidance provision dealing with amalgamations and liquidations has the effect (unintended we hope) of imposing a penalty tax on normal purchase transactions which will arise in the future, in circumstances where it can be easily demonstrated that no advantage has been gained by the taxpayer.
The introduction to the submission concludes with the following remark:
We are also concerned that the growth of complexity will further fuel the development of the so-called "underground economy", a development which we regard as unhealthy.
And indeed, Mr. Speaker, any citizen who is aware of what is happening, that his property can be taken from him by the Government, will be alarmed when he examines the tabulation of statistics prepared by the Department of National Revenue in 1982. A few dollars short of $42 billion were taken out of the pockets of individual Canadian citizens. That is up from $33.88 billion the year before.

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This is the most serious issue facing this Elouse, Mr. Speaker. How long can it continue that 50 per cent of the total GNP of this nation is being spent by government? With this Government's share of that expenditure increasing at an alarming rate, is it not appropriate that we begin examining a process not only to simplify the provisions of this Act, which this Bill does not do, but to give back to the people who work in Canada to produce the wealth more of what they have indeed produced? That is the only way for genuine recovery.
If we examine the recent Speech from the Throne we find some rather interesting comments. We are told that:
Small scale entrepreneurs are the unsung heroes of the recovery.
According to the Speech from the Throne. It goes on to say:
Small businesses are a perpetual source of inventiveness, valuable export earnings, and vast job creation potential.
How, indeed, is a small-scale entrepreneur, the unsung hero of the recovery and the creator of vast job potential, treated in this Act, in particular in the Bill before the House? Well, he is left to languish and suffer while others take advantage of the Indexed Security Investment plan which takes up a large measure of the provisions of this Bill. Touted as an opportunity and a first step by government to index the real growth of capital gains in our country so that the tax impact will be less upon those who dispose of specific types of capital property, namely those who fall within the definition of the indexed security investment plan under this Bill, it is only those persons and not the small-scale entrepreneur who are praised in the Speech from the Throne. These are the very people who in large measure have no opportunity to use the advantages of these provisions because their stock is not listed on a recognized stock exchange, the first prerequisite under the Bill.
How are they treated, Mr. Speaker? Well, they are spoken of in other parts of the Throne Speech, perhaps not as directly but certainly by inference. Let us examine the comment which appeared early in the speech where we see:
To compete in the world economy, Canada needs to modernize capital facilities, develop new industries and rebuild plant and equipment.
We are talking about the acquisition or development of capital assets in Canada, which in large measure would, in the normal course of events, be developed or acquired by small business. Yet the last time this House had an opportunity to deal with an amendment to the Income Tax Act-i am talking about Bill C-139 in the first session of this Parliament-the Government was granted the right by regulation amendment to strike out the normal 100 per cent capital cost allowance, depending upon the category of the asset, and only one-half of what normally might be claimed as capital cost allowance was extended to those persons who went out and, in the course of carrying on their business, acquired or developed new capital assets. A detrimental step in the event that the Government ever intended that the small business sector, indeed the entire business sector, go out and acquire and rebuild plant and equipment.
We have an opportunity today to deal with this significant omission. If, indeed, the Government intends to do what it says, recognizing the need to develop new plant and industrial equipment, why are we not told that a taxpayer acquiring those capital assets can in fact claim 100 per cent of the capital cost allowance to which he is entitled, not half of it, in the first year after acquisition? It makes good sense if the Government finally intends to follow through with the promises in the Speech from the Throne to deal with this issue in a proper fashion. However, 1 have grave doubts that the Government intends to do anything other than to continue to demand more of the growth and wealth potential of this country, take it into its own pocket and use it for purposes best known to the Government alone. Of course, in the Speech from the Throne we have an opportunity to hear what some of those purposes are. Government is intent upon continuing to spend on foreign aid some .5 per cent of our GNP by 1985, and .7 per cent by the end of the decade.
We are obliged as Members of this House to examine what the limit of the taxpayers' ability to pay shall be. I drew to the attention of this House the fact that in 1982-we do not have the figures for 1983, but I doubt they are any less-some $42 billion were taken from individuals in this country, and 1 am not talking about corporate taxation, up from $33 billion the year before.
Where is it to end? It will end only when this House has the courage to examine the expenditure plan of government and determine where moneys can best be allocated with a genuine view to reducing tax rates which impose an obligation on the citizens of this nation to turn more and more of their property over to the Government of Canada. I fear that we have become too conditioned to the concept, which I reject, that all property belongs to the state. We are developing in that direction, a concept that the citizen is entitled to use only that which the government permits him to. We know that half of the entire Gross National Product of this country is now spent by government. That leaves the remaining half to be spent by the people who make it, the people who work and generate the wealth, build the homes and factories, turn out the automobiles and furniture and fixtures and make life bearable in Canada.
The Government has intruded in a fashion which we as Members of Parliament have now begun to accept. It was at one time, Mr. Speaker, believed that the intrusion of government into the pockets of the citizen was robbery. The imposition of taxation was an act of thievery. But we no longer regard it that way. We have become so conditioned to expect government to take more and more that there is no voice of alarm raised when the take from individual citizens in this country over a period of one year increases from $33 billion to $42 billion. No one complains. You hear no shouts of alarm. You do not see people at the barricades demanding that government take less and leave them with more.
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I think it is time this House recognized its responsibilities. Every time the Government spends we should say that part of that money belongs to our constituents. It is my intention to do my utmost to see that we get value for every cent of every dollar which government spends.
We must strike out on a path to accomplish two purposes. We must change the thrust of this Act so that it is understood by the people against whom it is applied, and so that less is taken from the pockets of the citizens of this country. In the Government's mad desire to fill its pockets so that it can spend money in a fashion which it determines, it tramples on the rights of individual citizens in a fashion which I, as a Member of Parliament, find reprehensible.
Before I was elected to Parliament I acted as a tax practitioner. I had an opportunity to see first hand occasions where assessments were issued against a taxpayer one day and the following day a certificate, having the force and effect of a judgment in the Federal Court, was obtained, under the provisions of this Act as they presently stand and are not amended by this Bill. On the day after the issuing of the assessment, a writ of execution is obtained and served and the property of the taxpayer was seized and taken away by the sheriff. Those were business assets, and I suppose that, given the nature of the way in which Members of Parliament might respond to business closure, it would take several of those to make one weep. Then let me tell the House of an elderly woman in Southampton, Ontario who had the misfortune of having a son who made her a gift which permitted her and her husband to acquire a modest home in that town. Part of the proceeds for the purchase of that residence were advanced by herself and her husband. In order to make it easier to raise money by way of mortgage, the son was shown as one of the owners of the residence and he undertook to pay the mortgage. The son did not pay his income tax and left Canada. His parents still reside at that property, but will for only a very brief period of time because the Department of National Revenue has dispatched the sheriff to seize and sell the home out from under a woman in her seventies. The woman herself has never been indebted to the Department of National Revenue.
I told the House, Mr. Speaker, that there is no equity in tax legislation. I can understand the lack of compassion when business assets are seized and sold. But here is a perfect circumstance however where a taxpayer, although she owes no tax on her own account, is going to be put out of her home in the middle of the winter by the assiduous activities of the Department of National Revenue. It is that kind of thing to which this House should direct its attention as it examines remedial steps which should be taken to benefit the people of this country.


The Acting Speaker (Mr. Corbin):: Are there any questions or comments? Debate.


Hon. Roy MacLaren (Minister of State (Finance)):: Mr. Speaker, I am participating in debate rather than posing a
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question. I should like to speak to this Bill which is now before us since it is an important part of the total economic package as set forth in last April's budget. The tax measures before the House today represent one important element. They are designed to provide the business sector with additional stimulus to assist in the recovery of the Canadian economy. We in Canada, as have so many industrialized countries, have passed through a period of severe economic recession. The response of the Government in the April Budget was to undertake a number of measures funded by the public sector, funded by the Government, and ultimately funded by the taxpayers of Canada, to provide immediate assistance to those most adversely affected by the recession and to finance capital projects which would not only provide employment in the short term, but also assist in providing the infrastructure necessary for further ecomomic recovery. Those measures of which 1 speak of in the public sector have, of course, had the effect of requiring more public financing, and of increasing the level of the federal deficit.
I listened with some interest to the Hon. Member for St. John's West (Mr. Crosbie) when he spoke on this Bill a day or two ago. He drew attention to the current level of the deficit, portraying a gloomy picture of the present deficit financing at the federal level in Canada. He suggested to us that he could see little reason to think that that situation would change in the future. I can understand why he had that thought in mind, because indeed he is committeed to the same policy. He has spoken in terms of support and understanding for the present fiscal policies of the Government. In an intervention in The Globe and Mail a few days ago, he said that if he were in government tomorrow he would follow the same policies now pursued by the present Minister of Finance (Mr. Lalonde). With regard to the deficit itself, he said that the Minister of Finance had little choice but to plan a deficit in the $30 billion range, adding that a big deficit this year is necessary to encourage economic recovery. I am glad, Mr. Speaker, that on the question of the size of the deficit we have that bipartisan understanding and that degree of support for the policies of the Government in providing in the shorter run, employment and economic stimuli through a degree of government spendings.
As Members have noted, and indeed as the previous speaker noted, the real motor for the creation of jobs in our economy is, of course, the private sector. It is the private sector which is provided with stimuli through the tax measures before us today to invest and expand their operations in such a way as to provide both increased employment and to ensure greater productivity in our industry. This is the ultimate answer both to inflation and to our ability to compete in international markets.
We have had some discussion during our review of this Bill about the fact that some time is being taken to bring forward the tax measures arising from the April Budget. There are, of course, several reasons for this. Much of the time of the House has been taken up during the past months by a contentious piece of legislation which involved a prolonged debate. Leaving

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aside the limitations imposed by the timetable in the House itself, we as a government have taken the occasion to give some substance to our commitment to a greater degree of consultation with business and labour about taxation measures.
Members will recall that for a number of years Finance Ministers both from my Party and from the Party of the Official Opposition have committed themselves to improving the ways in which budgets are formulated. They have committed themselves to a process of consultation with regard to tax measures that flow from budgets. That is something new on the Canadian scene. In the specific case of research and development incentives in the April Budget, for example, the government in putting forward, its thinking took the occasion to consult with a wide variety of companies, some very small, some larger, in the research and development area to obtain their views on how best to formulate the exact proposals to promote research and development in Canada.
The area is a difficult one with such a high degree of foreign investment in our country, and there is necessarily a greater degree of research and development centred outside our country since typically large multinational corporations place their research and development either at their corporate headquarters or at the centre of technical excellence in that industry, wherever it may be in the world. One result has been that Canada, with such a high degree of foreign investment, has not been a place in which substantial amounts of research and development have been undertaken. As a result, both the federal Government and in some degree provincial governments, have undertaken to provide greater stimulus to the private sector than one finds in most other industrialized countries. That stimulus embodied in the bill before us was fully explored with those most directly involved in research and development, both in the application and in the innovation area, and the benefits, I think, are reflected in the clauses of the Bill relating to research and development that are now before us.
Equally, at an early stage we as a government put forward the proposals on ISIP which were, in the first instance, developed by a private sector committee. Those proposals from the Lortie Commission were available for discussion by the public for a considerable period, and the benefits of that discussion are again evident in the Bill before us.
In a variety of ways the consultation which the Government has undertaken has enabled the Bill to be improved. We have also had the benefit of the discussions of the Standing Committee on Finance, Trade and Economic Affairs which reviewed some of the measures in this Bill. The conclusions of the committee were of help in assisting the Government in drafting the final wording of the measures now before us.
We have had some discussion today about tax simplification. There has been concern expressed by Members on both sides of the House that our tax system, both personal income tax and corporate income tax, has become increasingly complex. I do not know of anyone who would disagree with that proposition. Who, after all, can be against tax simplification? Obviously everyone is in favour of tax simplification.
The situation we have today, in Canada, and indeed the situation in many industrialized countries, is the result of a cumulative process, of an incremental process whereby at different stages in time it is seemed appropriate to a government in office to bring forth certain tax measures. These act as a stimulus to investment by individuals or by corporations. For example, Governments have brought forward measures intended to recognize the disabled among Canadians, or measures intended to meet the particular needs and problems of one-parent families or the situation of working women. Any number of other measures have been brought forward in tax legislation to take account of the needs of particular people in our society or else to provide stimuli in other areas, and we touched on one a moment ago, that of research and development, which seem to be in the broad public interest.
Not only do those measures themselves introduce complexity into the tax legislation, but additionally each measure carries the need for qualifications or restrictions so as to ensure that the measures are implemented fairly and that no unfair advantage is taken by any taxpayers.
The result of that incremental process of which I spoke is that we have a very complex tax system. The Government has recognized that a stage has been reached when we should look again at simplifying our tax system to ensure that the economic development is not hindered by a complex tax system, particularly in the small business sector, and that the opportunities for the entrepreneurs are enhanced by a simplified tax system.
To that end the Minister of Finance has spoken of his commitment to move in the area of tax simplification. The Government took the initiative to refer that broad question to the Standing Committee on Finance, Trade and Economic affairs, which I trust will continue to address in the time ahead.
We as a government also sought the advice of a variety of tax practitioners, tax experts, who can contribute to a rational tax simplification. A major conference to that end was sponsored with the Canadian Tax Foundation in Toronto this past summer. Additional work is now proceeding to determine in what ways, particularly in the small business sector, real progress can be made. I say the small business sector because obviously there is a whole range of areas, a spectrum, in which tax simplification is of concern to this Government, but that if one must place priorities on this issue, and it is inevitable that one must, then it seems to us on this side of the House that the area of small business taxation is one that should receive that priority.
I want to say a word about one or two specific areas of the Bill which require special notice. They are intended, as I said at the beginning of my remarks, to help provide stimulus to the private sector, partly in its job-creation activities. I have in mind the investment tax credit. The Bill before the House does not increase the rates of existing tax incentives but it will
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certainly make the incentives more readily usable by firms undertaking new investments. Presently the investment tax credit provides a reduction in the income tax equal to a percentage of investments in plant and equipment used in manufacturing and resource industries, and I want to include in that farming and fishing. There has been a limit on the use of that tax credit. The Bill now before us removes that limit.
We are also enhancing a taxpayer's ability to carry over unclaimed investment tax credits earned in one year so as to be able to reduce federal tax both in the period ahead and in past years. In effect, we are doing this to provide a greater cash flow to companies, a problem which has been a particular difficulty during the recent period of recession through which Canada has passed. I want to note in passing that we are also extending the investment tax credit to heavy equipment used in the construction industry as one of several stimuli to promote more activity in that vital sector of our economy.
This Bill also provides, as Elon. Members have noted so well, for a new way in which investors contemplating Canadian equity purchases can immunize themselves from the effect of inflation on that part of their earnings represented by capital gains. As I suggested earlier, ISIP was developed in conjunction with the Investment Dealers' Association and with the brokerage industry across Canada. It is a complex program but it is one which the industry is perfectly capable of managing, thanks in part to the technology available today. It can have a very real impact in times of inflation on the investment decisions of Canadians; I say "impact" in a positive sense. The program can offer Canadians a way of sheltering that part of their capital gains on Canadian common shares from the impact of inflation.
Obviously there are a number of other aspects of the Bill with which I could deal today, those parts pertaining to home ownership and the ways in which we hope to provide additional stimulus to farmers and small businessmen through the Small Business Bond which operates through a tax exemption given to lenders. A high proportion of the Small Business Bond program is in fact used by farmers. I suppose, more accurately, that part of the legislation could be called the "agricultural and small business bond".
I have also touched upon the question of stimulus for research and development. I shall not take any more of the time of the House on that point, other than to say that the cumulative effect of all the measures brought forward, which have been the subject of intense discussion across the country in recent months, is to provide additional stimulus to the private sector in its job creation and business expansion efforts.


Donald Alex Blenkarn: Mr. Speaker, would the Minister agree that one of the problems in tax simplification is perhaps the tendency to deal with members of the Canadian Tax Foundation? The Minister may not have had an opportunity, as did members of the Standing Committee on Finance, Trade and Economic Affairs, to attend the conference in Toronto of which he spoke. It struck me that it was a situation wherein perhaps the
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Minister was asking the foxes to redesign a henhouse. Has the Minister had an opportunity to read the papers emanating from that Canadian Tax Foundation seminar to determine whether, in his view, he would get very far in tax simplification using these people?


Roy MacLaren: Mr. Speaker, I was in fact at the conference at least part of the time since I was then a member of the Standing Committee on Finance, Trade and Economic Affairs.
I remember that the Hon. Member opposite and I agreed on that occasion, rather ruefully, that tax simplification seemed to bring in on its train as many complications as the existing legislation itself. I want only to reassure him that those who at the conference often made the subject seem a good deal more complicated than perhaps it needed to be do not represent the only people the Government has been consulting in tax simplification. We have had the benefit of the contributions of the Canadian Federation of Independent Business, and of the Canadian Organization for Small Business and the comments of the Canadian Chamber of Commerce. I do not doubt that the end result will be a simpler process, despite the fact that some members of the tax community have a tendency to see these matters in a complicated way.


Donald Alex Blenkarn: That being the case, would the Minister have an opportunity to talk with the President of the Privy Council (Mr. Pinard) with respect to a further reference to the Standing Committee on Finance, Trade and Economic Affairs of the tax simplification process, particularly as it relates to small business and indeed medium business?


Roy MacLaren: Yes, Mr. Speaker, I have already mentioned that to the President of the Privy Council (Mr. Pinard).
I hope such a reference can be made. The committee has before it now a number of other references which will necessarily take up some part of its time. I personally would be pleased to have the benefit of the committee's comments on tax simplification.


Donald Alex Blenkarn: The Minister spoke about the ISIP matter. Perhaps he was in the House when the Parliamentary Secretary to the President of the Privy Council (Mr. Evans) indicated that, in his view, the indexation of capital gains should certainly apply to private companies, to private investments and to small investments by people who perhaps create most of the growth and jobs in our country. What effort is the Government taking to bring that type of equity, the equity it seems prepared to give to the clients of investment brokers, to ordinary investment in the country?


Roy MacLaren: The problem as we have found it is that to make effective a system of the type of Hon. Member opposite has in mind-indeed a thought which the Parliamentary Secretary to the House Leader and I share-there has to be some sort of annual evaluation of the asset to enable such a measurement to work. Quite clearly, common stock provides such an opportunity. It is easy to measure the value of the asset if it is expressed in shares of the company. It is a good deal less easy to measure that value in terms of other assets.

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Income Tax Act
The Hon. Member opposite looks skeptical. The fact is that it is not always possible in any ready way to make that measurement. We are concerned about that problem. The Parliamentary Secretary has already made the comment that we on this side of the House would like to see some of the thinking which has gone into ISIP extended to other forms of assets. However, there is a measurement problem as well as other problems involved in attempting to measure the way in which inflation has affected the values of assets other than commonly-traded shares. I assure the Hon. Member opposite that we are giving consideration to ways in which other assets could be valued so as to attempt to provide the same immunity from inflation which ISIP provides for capital gains on commonly-traded shares.


Donald Alex Blenkarn: Mr. Speaker, as far as the valuation is concerned, the Minister will appreciate that the valuation of a farm is the value at which the property sold. That is when the capital gains tax would be payable. The same would apply to a business, factory or store. Why is the Government, prepared as it is to allow those who invest in roughly the 1,100 companies listed on the stock exchange, not prepared to say to those in small business that it will index the gains they realize when they sell in accordance with the CPI and the change in inflation rates over the period of time they held the property? What is so difficult about that?
I point out to the Minister that a 1970 dollar would only have a purchasing power of about 30 cents today. Inflation since 1970 in terms of purchasing power has been about 270 per cent. Most of the gains that are now taxed are really inflation and have nothing to do with gains. That being the case, why will the Government not do the same for small businesses, farmers, fishermen and so on as it is prepared to do for the passive investor who picks up some shares in a listed company?


Roy MacLaren: Mr. Speaker, the Hon. Member opposite is knowledgeable about the general area of taxation, knowledgeable enough to know of the difficulties in establishing bases for valuation of assets other than shares. I have no argument with him in terms of broad equity. I think there is a case to be made for exploring this area, and we are doing that. In what ways can other assets, as I said a moment ago, be effectively valued to provide that same protection? I am afraid that is all I can say at the moment about the subject. We are looking at it and we are trying to develop ways in which we can extend the thinking behind ISIP to other areas.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I would like to make a few comments on Bill C-2, an Act to amend the Income Tax Act and other related Acts. Not only income tax, but the whole tax system is intended to do two things. Even our Conservative friends have at least given lip service to the basic reason for taxation. The first reason is to collect enough revenues to pay for the services that people have come to expect from their governments. This Government has not been doing a particularly good job in the last couple of years when
we have had $30 billion deficits and a collective deficit approaching $200 billion. Therefore, it has not been doing particularly well. Today we are looking at part of the reason for this deficit and also the fairness of the tax system.
The second reason for a taxation system is to redistribute wealth in a fair and equitable manner. Over the years many governments have approached the tax system with these two basics in mind. We should consider these concerns when looking at the amendments before us today.
Changes to the tax system do not always take the form of increases. Most of the changes contained in the Bill will reduce the amount of money that government receives. It favours the corporate structure by a great deal over the personal income tax payer, particularly the lower wage earner. When looking at these changes, there are questions that must be asked. How does this change affect the low-income earner? Who benefits? Is it fair?
The April, 1983 Budget and the subsequent changes in Ways and Means motions can only be described as a financier's budget. This Bill can only be described as a financier's Bill. Let us look at this Bill and the changes being made and try to classify them as to the questions that must be asked, namely how it affects the low-income earner, who will benefit, and is it fair? When we look at this, we see it is very informative.
First, let us look at the phasing down of federal tax reductions. This is a very regressive measure. Granted, there is some reason for it. There is current concern about the process through which people go, but it is regressive. If you pay $200 in income tax, with the federal tax reduction you will end up paying no tax. If you pay $10,000 in income tax, the $200 is a drop in the bucket. Therefore, it does not affect the high-income earner, only the low-income earner. It does not affect those who pay no tax. Therefore, it can only be classed as a very regressive tax. It does not help the low-income earner and benefits the high-income earner. Is that fair? Although this change will increase the amount of money the Government will get, it is not meant to help the low-income earner.
The second point is the elimination of the standard medical and charitable donation deduction. Lower income Canadians cannot afford to make charitable donations totalling $100. They have lost this valuable deduction. We should discuss the fairness of it. If they do not make the donation, should they be allowed the deduction? They were allowed that deduction but now it is being taken away from them. If they cannot afford to make donations, they cannot afford to pay the tax. Consequently, it is a very regressive change. It does not help the low-income earner. If it benefits anybody, it is the high-income earner. Relative to the two, it is not fair.
The Hon. Member for Mississauga South (Mr. Blenkarn) asked questions about the indexed security investment plan. That is another concession to higher income Canadians who receive much of their income from investment. Many of us from rural communities are very concerned about the return on investments, as far as farms and so on are concerned, relative to capital gains. There is no consideration in this
December 15, 1983

legislation for any sector but one. Is it fair legislation? Whom does it benefit? It benefits higher income earners and not lower income earners.
I could say almost the very same thing about the special refundable investment tax credit. It does very little for the lower income earners and benefits the higher income earners. It particularly benefits corporations. Many of these corporations are already being financed by the Government through moneys received from increased taxation of middle and lower income Canadians. This particular tax can also be classified as a regressive tax. The share-purchase tax credit is only valuable to those who can afford to buy stocks. A large proportion of the people from whom we collect taxes do not purchase stocks, so it is unfair in that it is aimed only at a small sector of the population.
The Canadian ownership special charge which was brought in under the National Energy Program is also a tax which is unfair. If a person's occupation requires that he use his car, he will pay much more than the fellow who does not need to use his car. A middle or lower income earner will have to spend a larger proportion of his income on that tax because he does not earn as much. So again it is a regressive tax. It affects the lower income earners much more than it affects the high income earners. It helps the corporations and does not help the individual lower income earner. In fact, I think we could look at this whole series of amendments and come to the conclusion that this legislation caters to corporate Canada at the expense of average income earners.
I would like to mention the special recovery tax, a tax which is not contained in this Bill but is contained within a Ways and Means motion of several months ago. That tax increases sales tax by 1 per cent, liquor and tobacco tax by 1 per cent and construction tax by 1 per cent. Again, where does this money really come from? It comes from the consumer rather than from the corporate structure. If I had the time I could go through the entire Bill and show how each of the proposed changes is almost entirely regressive.
We all understand that the word "regressive", when referring to the tax system, means that a tax will benefit the high-income earner and will be detrimental to the low-income earner. In other words, all of these changes have a tendency to make the rich richer and do nothing for the poor or the middle class. This legislation fails to do anything about the redistribution of wealth.
It is obvious from this Bill that the Government has changed its philosophy. The Government has gone from demand side economics to supply side economics. It is taking the Reaganite approach to distribution of wealth. The logic of this theory of economics escapes me. If there are a number of corporations that are overproducing, not producing fully or are unable to sell their full production and are therefore producing at 70 per cent of capacity, should we give them more money or more tax breaks so that they can increase the production of goods which
Income Tax Act
they will be unable to sell? That is the underlying theory of supply side economics.
The Reagan theory of supply side economics is based upon the rather dubious proposition that if we give enough to the rich, some of it will trickle down and perhaps benefit the poor. This has not been seen to happen. In fact, my predecessor as Member of Parliament for Prince Albert used to tell a very pungent story about this. He suggested that another description of the trickle-down theory would be that if one were to feed a horse enough oats, the sparrows would also eat well. That is the supply side theory of economics and it just does not work.
As well, Mr. Speaker, there are a number of other things about this Bill which are illogical, and if I had the time I would like to go into them. However, members of the Official Opposition have dealt very strongly with the complexities of the Bill and I must agree with them. Unfortunately, they are not dealing with those factors in this Bill which perhaps are more important than others.
A great deal of this Bill gives tax breaks to people who are already doing well and we have no guarantee that those tax breaks will increase investment. In fact, we can be fairly sure that they will not increase investment. The massive transfer of revenue to the corporate community has not effectively increased investment in the past. In fact, the chartered accounting firm of Ernst and Whinney, in its submission to the Economic Council of Canada, suggested that most government incentive programs have only a marginal impact on the decision whether or not to invest. Therefore, this can only be recognized as a very marginal subsidy which will affect the economy particularly when most of the plants in the country are operating 30 per cent or 35 per cent below capacity.
There are a number of amendments in this Bill that have not been dealt with which perhaps should have been dealt with. For intance, over the last year or so we have seen a real rash of complaints coming from the farming community. In these days of hardship for the farming community, many farmers who are responsible and good workers have had to take other jobs, or many of them who have had other jobs have attempted to return to farming. In the process, the Department of National Revenue has reclassified those farmers as hobby farmers.
In my constituency, farmers who farm 15 quarters of land are classified as hobby farmers. The economic situation for farmers in the past few years has been so bad that the amount of money they have made from farming those 15 quarters and carrying stock has not been sufficient and the return from their jobs is greater than the return from their farming operations. They may be turning over $100,000 a year on the farming operation and only getting back $15,000 a year and because of that difference are classified as hobby farmers. The other day, I heard from a farmer who has documented that he spends 134 hours on the farm for every 40 hours that he spends working at his job. He works all weekend and works eight or ten hours a day on the farm after his regular working hours. The Bill does not deal with that but it is a major problem. A few years ago it might have been realistic to

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Income Tax Act
consider five years long enough to develop a farm and to get out of debt, but today a farmer needs 20 or 25 years to get out of debt. In that case, why should he not be able to take an outside job while he gets the farm going?
I am concerned about something else that the Bill does not deal with and I have written to the Minister about it. He has replied that the matter is being considered but so far nothing has been done. Everyone recognizes that the Old Age Security is not enough for senior citizens to live on and many of them derive part of their income from renting their farms or from investments. They are unable to set money aside because they need it all, but in these cases the Department of National Revenue requires them to pay tax on their income, which sometimes is under $15,000, on an incremental basis every three months. If the farm is rented on a share crop basis, which is quite often the case, the senior citizen has no idea whether he will receive any rent at all but, as he paid taxes in past years, he will be required to pay incremental taxes this year. If he has sold the farm, the money may not be forthcoming until the tax year has gone by, but there is nothing in the Act to deal with that situation.
While we are considering the complexity of the Act we should consider establishing some flexibility which would allow a taxpayer to present his case to the Department. In many cases, computers can pick up mistakes. In the case of the child tax credit, if a mistake is made the constituent is never told about it and unless he comes into a Member's office to inquire he will never find out about it.
In light of all these things that are wrong with the Income Tax Act, it is very important that we eliminate the regressive nature of the income tax system and make it less complex so that a taxpayer can know why he is paying tax and for what.


The Acting Speaker (Mr. Corbin):: Questions, comments? Debate.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, like the Hon. Member on this side who spoke earlier, I am not particularly happy to take part in this debate, but changes are required to the Income Tax Act if we are to be fair to the taxpayers of the country, as the Minister said yesterday. I think the word "fairness" should appear in large letters because it is essential that the system be fair to the taxpayer. Too often the taxpayer's rights are forgotten; he is just one individual who sometimes cannot even get a proper hearing when he has a complaint. Today I should like to deal with some real cases, not fictional or hypothetical ones.
Yesterday in the House I put a question to the Minister of National Revenue (Mr. Bussieres) about a particular case. His memory is not too good because, while we have exchanged scores of letters on the subject, he said he could not recall it. I accept that he could not recall it but point out that it has been discussed with him two or three times in the House and also with the President of the Treasury Board (Mr. Gray).
This case has been going on since 1975 and once again I will outline the rudiments of it because the situation is so unfair. The individual in question is a new Canadian, a man not versed in the law, who is being penalized to the extent of $1,000. I wonder if members of the Government will be able to see anything fair in this case when I outline it today. According to the Charter of Rights the individual's rights are supposed to be protected. That makes nice reading but I am concerned about what really takes place in the lives of our people. Nobody should be pushed around and made to pay a bill twice, as in this case.
In 1975 this man, a Canadian citizen, through the Mercantile Bank of Canada, mailed a $1,000 cheque to Revenue Canada as an instalment payment on his taxes. The cheque was stamped and cashed by Revenue Canada and the cancelled cheque came back to him. Revenue Canada credited it to his account as an instalment payment. Then, for some reason or other, someone in the Department decided the money was in the wrong account and took it out. When my constituent found out about this he and his accountant went to the Revenue Canada office in Calgary every week, and every week they were told this was just a computer error which would be corrected in no time. Then all the books were moved from Calgary to Winnipeg. They contacted the Winnipeg office and after some time were told that the records had been destroyed and that the case was closed. Is that not a fine way to do business, Mr. Speaker?
Before the files were destroyed, my constituent was in the Mercantile Bank one day and the manager told him that Revenue Canada took $1,000 out of his bank account. He had not been notified; the Department simply went in and confiscated $1,000 from his account. I want to deal with the question of the Department of National Revenue going into private bank accounts later, Mr. Speaker. Because $ 1,000 was owing, it was taken out of his account. He tried to find out where it went. The Department claimed-they did not have any letters-that it had sent it back to the Mercantile Bank in Calgary. I went to the bank but it had no record of the money having been returned.
The bank says that if the Department can show it a letter saying that the $1,000 was sent back to it, it will make it good to the customer. So I went to the Minister, and time and time again 1 have asked him to give me a letter showing that the money was sent back to the Mercantile Bank. Each time he tells me the case is closed, the file is closed. As far as I am concerned, Mr. Speaker, the file is not closed. The rights of a Canadian citizen are at stake. That Department went into his bank account and stole that money-if it does not pay it back-and I use that word advisedly. If it does not pay this money back, then it stole that $1,000.
I do not know what happened to that $1,000, whether it was misplaced, sent somewhere without proper identification, or someone stole it, but I know that this $1,000 was paid by this taxpayer and he is entitled to get it back. If we want the
December 15, 1983

Charter of Rights and Freedoms to mean anything to Canadians, Mr. Speaker, let us treat every Canadian as an individual and a decent citizen and let us not try to take money from a hard working citizen, a new Canadian at that. He came to this country expecting something better from his government. As far as I am concerned, Mr. Speaker, until that $1,000 is paid back, as long as I have a breath left in my body I am going to fight to get that $ 1,000 returned to him. It is only right and only fair.


Some Hon. Members:: Hear, hear!


Gordon Edward Taylor: This action of going into private bank accounts has happened not once but several times. I have here another case where the Department made an error. This citizen had sent two cheques, each in the amount of $1,627.51. He made the payment in January of 1983. In March of 1983 the Department of National Revenue went into his bank account and took out $3,334.51. This was brought to the attention of the Department and I believe it has not been corrected. But I am shocked at the audacity of the Department to go into someone's bank account and take money out when it was its error in the first place. Even if it is not the Department's error, surely when this House of Commons gives the authority to the Department of National Revenue to go into a private bank account and extract money for taxes, it expects the Department to use common horse-sense. Surely the man should be notified and given a warning that this is going to be done. A totalitarian government could not do worse than the actions of this Government against my constituent in Cochrane. He was not even told. To this day he has not been told by the Department. It was mentioned by his bank manager "by the way", as if $1,000 does not mean a lot of hard work to a fellow working in a service station.
I wish this Government would clean up its act in this legislation with respect to going into people's private bank accounts. We send people to jail if they break into a computer. To take money out of someone's bank account is the same thing. The Government has that authority, in my view, only if it has the decency and courtesy to warn the person that it will do that if he will not pay his taxes. He should be told: "We have warned you time and time again and now we are going into your bank account if you do not pay your taxes". That is the decent way to do it. The practice as it is now is heinous and I do not like it at all. This third party demand has its place in some cases but not to the extent it is being used now by the Department of National Revenue; and it certainly should not be done without the knowledge of the person who owns that bank account.
That brings me again to these instalment payments. The previous speaker mentioned this. I believe this Act should state that senior citizens on pensions, in particular, should not be required to make instalment payments. Someone who has plenty of money would come under a different category. Certainly senior citizens should not be required to make instalments before they even receive the money. A senior citizen came to me because he was charged a penalty by the
Income Tax Act
Department of National Revenue for not declaring revenue when he did not even receive that revenue until late in the year. Why should he make instalment payments at the end of March, the end of June and the end of September when the payment came in during November? But he still had to pay a penalty. That case alone shows the unfairness of making senior citizens make instalment payments every three months. Surely it was never intended that senior citizens should have to do that. If they pay the total amount of taxes at the end of the year, that should be good enough for the Department. It is good enough for any grocery store. You pay your bill at the end of the month and it is paid. But it is not good enough for this Government the way it is operating right now.
There is something else about these instalment payments. These penalties are added at the end of the first period, the second period and the third period. I am not talking about senior citizens now; I am talking about ordinary businessmen who have accountants. Many times their income comes in August or September, particularly with farm accounts where farmers do not have money coming in all through the year. They receive it when their wheat goes to the elevator or their cattle goes to market, but they are expected to make instalment payments four times a year, and if they underestimate they are stuck. A penalty is imposed on them. The Department does not make any check on when the revenue came into the farmers' pockets. That is absolutely unfair. I say, Mr. Speaker, after careful thought and deliberation, that if a taxpayer pays his total bill by the end of the year, there should be no penalty, instalment payments or no instalment payments.
The idea of instalment payments was so that the Government could receive the money a little earlier and have the use of the money for nine months, six months or three months ahead of time and it could earn interest during that period. But that is not good enough with this present money-hungry Government. It imposes a penalty at the end of the first period, the end of the second period and so on. Then it totals the whole thing up at the end of the year. If that is fair, then I do not know what fairness is. That is what the Hon. Member for Wellington-Dufferin-Simcoe (Mr. Beatty) was talking about yesterday, fairness. If we are going to be fair, let us be fair. But we are not being fair with these instalment payments today.
With respect to capital gains taxes, Mr. Speaker, if I had not been sitting down this morning, I would have fallen down when I heard the Hon. Member for Mississauga North (Mr. Fisher) speaking about capital gains taxes this morning. The man did not know what he was talking about when he said capital gains taxes are of no significance to the businessman or to the farmer. The man is completely wacky in that regard.
I want to give you the facts right now, Mr. Speaker. If that Hon. Member were in the same category, he would expect to have fair treatment. A farmer's nest egg, a farmer's pension, for old age is his farm. He works 10, 20, 30, 40 years, along with his wife and his kids, to build up an asset so that when he is 70 years of age he is going to have a nest egg. He pays taxes on everything he makes as he goes along. Then when he is 70,

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Income Tax Act
what does the Department do? The farmer sells his farm so he can live the rest of his life at a reasonable standard of living- not in luxury-but half of what he receives has to be shoved into income tax.
Not only that, many farms in western Canada are sold on an instalment basis. A farmer sells to his hired man or his son and he says he will sell his farm and it will be paid for over a period of 10 or 20 years. "Give me enough each year so I can live", he says. But what did the Department say in the Budget brought down by the Minister of Finance at the time, I think it was the Deputy Prime Minister (Mr. MacEachen)? They said you pay the total capital gains tax on the selling price, even if the money is not even in your pocket. So hundreds of sales were stalled and elderly people had to stay on the farms because they could not afford to go to the bank and borrow money to pay capital gains taxes.
The Hon. Member for Mississauga North should find out the truth about things before he stands up in the House and says that this is of no value to our people. It is their pension. If we say to Members of this House that their pension is of no value to them, well, you are saying the same thing to a farmer or businessman, that their farm or business is of no value.
Capital gains taxes discourage people, Mr. Speaker. A businessman will say that if he expands his business, when he sells it he is going to get stuck with capital gains taxes. Many people sell before they reach retirement age. They say they do not mind paying a reasonable tax buy they are not going to expand their business and hire another seven people. I cited that example in this House before. A businessman could have hired another seven unemployed people, the business was there, he had the land, he just needed to make the investment. But he said to me: "If you think I am going to work my fingers to the bone and then have the Government take it over, nothing doing. I will work for my wife, my family, my parents, but not to give all this capital gain to the Government". How many other businesses in Canada did not expand? Hundreds, 1 think.
The Government wonders why people are unemployed, yet here its policies are discouraging people from expanding and hiring people. We had better start taking a careful look at some of these things. In any case, capital gains should not be applied to the farm. Farm land is producing food for this nation; it is a valuable asset. In my view, capital gains should be taken off entirely in cases of farm land.
Another point I want to mention before my time is up concerns part-time employment. The Act says that part-time losses from a farming operation are deductible to a maximum of $5,000. I know a businessman in my constituency whose losses on his farm last year were $9,000 but the Government will not give him any credit for that. This Party asked the Government to increase the $5,000; it is years out of date, but nothing happened. If we are going to tax people it should be on their income, and if they had expenses in producing that
income, whether it is part time or full time, they should be able to deduct those expenses.
Another point concerns reassessment. I have a case here where a man's income tax was reassessed the same day by two different people. One officer sent him a letter saying there is no tax required, another officer checked the same file a few hours later and sent him a bill for a few thousand dollars. These reassessments are getting to be ridiculous. Does the Department not know what it is doing?


Mr. Wise:: No.


Gordon Edward Taylor: I think that is right. That is what this taxpayer says. I just wrote a letter to the Minister asking him to check into this case because surely the Minister will not stand for people doing that in any tax office, reassessing and reassessing and reassessing. No taxpayer will know where he stands.
This Act needs a lot of revision, Mr. Speaker. 1 hope many of these points will be brought out in amendments before the committee.


The Acting Speaker (Mr. Corbin):: Order. Questions or comments? Debate.


Mr. Cooper:: Mr. Speaker, is it possible to call it one o'clock?


The Acting Speaker (Mr. Corbin):: Is there unanimous consent to call it one o'clock?


Some Hon. Members:: Agreed.


The Acting Speaker (Mr. Corbin):: It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
[ Translation]

Madam Speaker:: I have the honour of laying on the Table of the House of Commons the 1983 Statutory Report of the Chief Electoral Officer of Canada.
I wish to remind Hon. Members that in accordance with the provisions of Standing Order 46(4), this report is deemed to have been referred permanently to the Standing Committee on Privileges and Elections.
December 15, 1983

I would like to draw the attention of the House to the presence of Mr. Hamel, the Chief Electoral Officer of Canada, in our gallery.



STATEMENTS PURSUANT TO S.O. 21


Mr. Jean-Guy Dubois (Parliamentary Secretary to Minister of Employment and Immigration):: Madam Speaker, perhaps I may also welcome the Chief Electoral Officer, who is from the riding of Lotbiniere.
Madam Speaker, this afternoon I would like to express to the House my sorrow and surprise at the manner in which the Premier of the Province of Quebec is representing the Province abroad.
Today I read in the newspaper La Presse, and that is why I have the paper in front of me, that the President of the Republic of Italy, Mr. Sandro Pertini, was returning his passport to the 1534-1984 celebrations, saying that he was, and I quote:
-very upset about Mr. Levesque's attempts at exploiting his words and the perversely erroneous interpretation he had given.
The article goes on to say:
In protest, Mr. Pertini's advisor gave Mr. Hardy,
-a representative of the Government of Canada, the passport, asking him to return it to Mr. Levesque, who had given it to the President.
Madam Speaker, I am rather surprised that the Premier of a Province like Quebec should think he can afford to say things abroad and then tell us afterwards that it was not as bad as all that, as he said yesterday in the National Assembly.
I think that all these attempts to promote Quebec, including what Mr. Levesque did in Italy, are actually hurting the interests of Quebecers and the Province of Quebec in general. Madam Speaker, I hope that Quebecers will remember this occurrence and remind the Premier of the Province of Quebec of his mistakes.



ADMINISTRATION OF JUSTICE


Mr. Alex Patterson (Fraser Valley East):: Madam Speaker, last Sunday night on the CTV program, W-5, we saw a prime
example of why Canadians have no trust in the criminal justice system as run by the Government. Canadians witnessed the tragic events surrounding the abduction and murder of 15 year old Corina Carlson of Thunder Bay, by a man who was convicted of sexual offences on five previous occasions and who admitted to seven others. He was turned loose into an unsuspecting community by a justice system which apparently is incapable of protecting, or unwilling to protect innocent members of society.
The murderer's lawyer made a very startling indictment of our system when he alleged that there is no way this could have been prevented. Canadians need to know from the Minister of Justice (Mr. MacGuigan) and the Solicitor General (Mr. Kaplan) whether this allegation is correct and what they intend to do to remedy the situation. Canadians are fed up with the bleeding heart Liberal approach to the administration of justice. They want some action on the protection of society. Mrs. Carlson put it very forcefully and eloquently when she said that the offender has all kinds of rights under this system, but the victims have no rights. I happen to agree with her.



EXTERNAL AFFAIRS


Mr. Bob Ogle (Saskatoon East):: Madam Speaker, several weeks ago the country of Argentina returned a democratic Government after about ten years of military rule. One of the first things that the new President, Raul Alfonsin, has done, has been to issue a decree saying that the nine generals who were in charge of Argentina during that period will be brought to trial for murder, torture, and other crimes against human rights. Argentina, at this time, is also in a very grave economic situation.
I would like to call upon this House of Commons, and all people interested in justice through law, to support the efforts of the new Government of Argentina. Otherwise the same problem could return. In two countries bordering Argentina- Chile and Uruguay-the same military type of takeover and oppression of people is continuing. It is important that the Government of Argentina know that it has the support of democratic Governments all over the world. I believe that it has taken a great deal of courage to bring to the fore immediately the problems that the generals and the military have caused their own countrymen.



WELFARE


Mr. Gilbert Parent (Welland):: Madam Speaker, I am faced with a dilemma which I thought I should share with my colleagues in the House. During the Conservative leadership

December 15, 1983
campaign a certain individual in my riding, who had been helped considerably through government grants and subsidies, got all enthusiastic about free enterprise, and wanted the country and the Province to stop all giveaway programs to the people on general welfare assistance. Ele said that this assistance robs those people of initiative.
This individual's daughter had received, during the past year, a subsidy of $3,975 to the university she was attending, along with a scholarship of $400. The man was the proud recipient of $500 to have his house insulated, and a subsidy of $800 to have the heating in his home changed from oil to gas. His wife received $683 in family allowances for their two children who are under 18, along with a Child Tax Credit this year of $450, making a total of $1,133 this year.


Some Hon. Members:: Name him.


Gilbert Parent: The children are getting high school educations at public expense. Not a penny was paid for his wife's serious operation which was followed by two days in intensive care and 12 more days in the hospital. The grandfather and grandmother, who live in a small house on his property, both receive pensions from the Canada Pension Plan and Old Age Security, and some $500 from the provincial Government to pay taxes.
My dilemma, Madam Speaker, is this: what do you do with people who like to take but do not want to give? Oh, I know, Madam Speaker, I will tell him to join the Conservative Party.


Some Hon. Members:: Oh, oh!



CANADA POST CORPORATION


Mr. Harvie Andre (Calgary Centre):: Madam Speaker, in December, 1981, a postal worker in Calgary was charged by the Calgary city police under Section 314(1) of the Criminal Code, which deals with theft from the mails. The worker was suspended from the Post Office and, seven months later, on July 15, 1982, was convicted in Alberta provincial court and sentenced to 30 days in jail, which were served on weekends because of her status as a single parent.
The Canadian Union of Postal Employees launched an appeal to have the worker reinstated, and the case went to arbitration. The arbitration hearing was held in August, 1983, and in early December the arbitrator, who was appointed by the Canadian Union of Postal Workers, reinstated the employee and, furthermore, awarded $40,000 back salary. This represented not only her regular salary but what she might have earned through overtime since July 15, 1982, the date on which she was convicted of stealing from the mails.
Madam Speaker, something is absolutely rotten when a convicted thief cannot be suspended and, in addition, receives financial compensation, including compensation for the time the thief was supposed to be in jail. Apparently crime does pay if you work for the Post Office.
[ Translation]



DISASTERS


Mr. Alain Tardif (Parliamentary Secretary to Solicitor General of Canada):: Yesterday, Madam Speaker, I went to my riding-to Richmond, more precisely-to see for myself the extreme seriousness of the situation. Again, the Saint-Franfois River has risen above flood level and is a direct threat to a good many families and to the entire business district. The threat was so real that many families had to be evacuated and most store owners had to move their inventories or put it in a safe place. The whole community of Richmond has again experienced hours of absolutely indescribable tension and fear, especially at this time of the year. A few months ago, the provincial Government announced its intention to subsidize part of the cost of a dike construction project. Although it was only last week that we received this file from the provincial Government, I think it is imperative as well as extremely important and urgent that our Government allocate the necessary funds to correct and remedy immediately this flooding problem which has so far caused several million dollars worth of damages. We would thus protect Richmond residents, the innocent victims of gross negligence on the part of the provincial Government, which could and should have given us the complete file months ago.



EMPLOYMENT


Mr. Girve Fretz (Erie):: It was with great sorrow that I listened to the parade of promises revealed in the latest Throne Speech, Madam Speaker. How any Government, let alone this bankrupt and dispirited one, could hope to carry out half of the very ambitious program before an election is held, I cannot imagine. There are new provisions for this group, and new provisions for that. Almost every interest group has been catered to, but one group has been forgotten. That is the unemployed person over 50. What retraining programs are available for him or her?
The youth ministry cannot help, neither can the pension office. The individual is caught in a lonely abyss-too young to retire, yet too old to be easily redirected into another career. This applies very specifically to executives who have forged their careers in one company, then suddenly find themselves out in the cold, replaced by someone younger.
It is high time that serious energies were directed toward making the situation for middle-aged unemployed people a little easier. Consideration should be given to extensive retraining courses through Manpower. Perhaps assistance could be
December 15, 1983

given for their return to university or to a community college. At the very least we must ensure that such people get priority in hiring for NEED projects and other such endeavours, where it has been shown time and time again that they are not given consideration. Let us have justice for the middle-aged unemployed.



EXTERNAL AFFAIRS


Mr. Ian Waddell (Vancouver-Kingsway):: Madam Speaker, last week OXFAM of Canada and other government organizations invited an all-party committee to go to Nicaragua and Honduras. 1 had the honour to go for my Party, and the Hon. Member for Notre-Dame-de-Grace-Lachine East (Mr. All-mand) went for the Liberal Party. I want to say I am very disappointed that the Conservatives did not send anyone, in spite of the fact that this is one of the world's hot spots. I say to them that if they want to govern Canada they need to do more than just follow United States policy exactly. They have to understand these different areas.
1 want to say further that we made some recommendations, and I urge them on the Government. One is to have a better listening post in Nicaragua. We talked to the Mexican ambassador. He said that for a year and a half he has not heard from the Canadian ambassador. Our ambassador cannot possibly cover Nicaragua adequately from Costa Rica.
The Prime Minister (Mr. Trudeau) is in Washington today. I hope he will bring to the attention of the American Government and the President that there are opportunities for peace in that region, that people can co-exist, with development aid and not with military aid, and that there cannot be a black and white view of the area. There must be co-existence and the right of different countries there to have their own forms of government. I think that is what we found out, and I suggest that my Conservative friends should read the report we presented.


Mr. McDermid:: Who paid for your ticket?


Mr. Crosbie:: Why did you come back?



AIRPORTS


Mr. Maurice Foster (Algoma):: Madam Speaker, I would ask the House of Commons to take note of the recent announcement by the Prime Minister (Mr. Trudeau) of the intention to rename the Toronto International Airport the Lester B. Pearson International Airport. In this way we commemorate our former Prime Minister, who served as a
Oral Questions
member of this Chamber from 1948 to 1968 as the Member of Parliament for Algoma East.
Lester Pearson is well remembered by the senior members of this House as the most talented and able diplomat that Canada has ever produced who, during the late 1940s and 1950s, served as our Secretary of State for External Affairs, and won the Nobel Peace Prize in 1957. However, many of us remember him best as the Prime Minister who, during his term of office from 1963 to 1968, gave us our distinctive Canadian flag, and many of our major social programs, such as the Canadian Pension Plan, guaranteed income supplement, the Canada Assistance Program, and medicare.
People in Algoma East remember him best as a man with the common touch who was concerned about and interested in the ordinary people of his constituency whom he represented so capably for almost 20 years. Mr. Pearson was especially interested in young people, and that is one reason why I am pleased to see this airport named after him. In this way the young of today and of the future will come to know the importance of this truly great Canadian, Lester B. Pearson.



ORAL QUESTION PERIOD


Madam Speaker:: The Hon. Member for St. John's West.


Some Hon. Members:: Hear, hear! Leader!


John Carnell Crosbie: Thank you for your adulation.


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: My question is for the Minister of Finance. The Minister will know that the bank rate has gone up today for about the eighth week in a row, to 10.06 per cent, which is an indication that the Bank of Canada and the Government want interest rates to rise.
My question is addressed to the Prime Minister-pardon me, the Minister of Finance. Coming events cast their shadow.


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: Is the Government prepared to continue to permit interest rates to rise to prevent depreciation of the Canadian dollar, presumably because of our inflation? Is the Government prepared to permit interest rates to rise and, if so, what effect does the Minister feel that will have on the present recovery?


Hon. Marc Lalonde (Minister of Finance):: Madam Speaker, the bank rate indeed has gone up. It is not expected to have

December 15, 1983
Oral Questions
any impact on the prime rate or on the rates consumers are paying for their borrowings in the private sector. The Hon. Member knows that there has been upward pressure on U.S. interest rates in the last several weeks. We have been able to resist comparatively those upward pressures coming from the U.S. In particular in the last week or two, short-term rates, for instance, for government paper, have gone at a rate lower than the current U.S. rate.
The Bank of Canada is watching the situation and is not trying to push up the rates. As a matter of fact, the evidence on the record indicates that the monetary policy pursued by the Bank of Canada is to try to have as low interest rates as possible, but obviously the market is determining what the rates are. We have floating rates, and the market is determining what those rates are.


John Carnell Crosbie: Madam Speaker, the Minister, as is so often the case, did not answer my question.


MINISTER'S POLICY
John Carnell Crosbie: Madam Speaker, the Bank of Canada rate is now the highest it has been since the end of December, 1982, and it has risen every week for the last eight weeks. If that trend continues, there is no doubt the prime bank rate will have to rise above 11 per cent. It has not so far, because of the weak demand for loans. Is it the Minister of Finance's policy to continue to permit the bank rate to rise to prevent depreciation of the Canadian dollar? If that is his policy, and if that continues, as it might because the dollar is now weak, what effect does the Minister estimate that will have on the somewhat spotty recovery? Could the Minister answer that for us, and for the Canadian people who have a vital interest in the situation? There are 1,300,000 unemployed, and they are in a difficult situation.


Marc Lalonde: Madam Speaker, the Hon. Member's question has a double-barrelled hypothesis in it-if the rise in the bank rate continues, and if this and that happen.


Mr. Mayer:: But it is happening.


Marc Lalonde: Obviously the Hon. Member knows that one should not indulge in speculation on such a basis. The only thing I can tell the Hon. Member is that the Government does not have a policy of artificially maintaining the Canadian dollar at a particular rate or value. For the last ten years we have had a floating rate policy. It has been decided over the years that the best policy for Canada was to pursue that line. This is the policy the Government is pursuing, as it has in the past, and as was the case when the Hon. Member happened to be Minister of Finance for a short time.


DEPRECIATION OF DOLLAR-STATEMENT BY BANK GOVERNOR
John Carnell Crosbie: Madam Speaker, my final supplementary question is a very important one.
Cynicism, ballyhoo or manipulation will not keep the dollar up or interest rates down.
Governor Bouey made the following statement in his speech of November 29:
-any major depreciation of the Canadian dollar at this time would be much more likely to damage than to help our economic situation in that it would be strongly inflationary-
Does the Minister agree with that statement of Governor Bouey? Is that government policy? Will the Government act on this statement of principle which the Governor of the Bank of Canada made in his major address of several weeks ago?


Marc Lalonde: Madam Speaker, I have no quarrel with the statement made by the Governor of the Bank of Canada.


TREASURY BILL RATES IN CANADA AND UNITED STATES
Donald Alex Blenkarn: Madam Speaker, in answer to the Hon. Member for St. John's West, the Minister of Finance indicated that commercial paper was lower in Canada than perhaps in the United States. Could he explain to the House how the Government of the United States was able to sell its treasury bill for at least 90 bases points less than he was able to sell his treasury bills? Was that because of the lack of respect the market has for the Canadian financial scene, or what would he say is the reason that the Government of the United States can borrow significantly cheaper than he can?


Marc Lalonde: Madam Speaker, during the last twenty years, it has been common in Canada to have rates that were relatively higher than in the United States. That was the situation that prevailed during the last decades. There is nothing surprising about that.
What I pointed out in my answer to the previous question was that short-term Treasury bills were now at lower rates than in the United States. I would invite the hon. gentleman to refer to the latest figures on the subject.


Donald Alex Blenkarn: The Minister of Finance cannot have it both ways. He knows-and he acknowledged it this afternoon-that the Government of the United States is able to borrow cheaper than he can borrow and in fact is borrowing very much cheaper than he can. Yet he tries to pretend to the House that government securities in Canada sell for a lower rate of interest than they do in the United States. What nonsense.


INTEREST RATE POLICY-MINISTER'S POSITION
Donald Alex Blenkarn: Madam Speaker, will the Minister advise the House what kind of interest rate policy he intends to project to the Canadian people? Will he allow interest rates to continue to rise, jeopardizing our recov-
December 15, 1983

ery and putting more thousands and thousands of people out of work?


Marc Lalonde: Madam Speaker, I suggest the hon. gentleman check the facts. He will realize that for certain short-term securities, rates are lower in Canada than they are in the United States. As far as some longer-term securities are concerned, rates are higher in Canada. And here again, the market sets the rates. However, the Hon. Member should realize that thanks to the monetary and fiscal policy this Government has followed for over a year, we have been able to practically close the gap between Canadian and U.S. interest rates. Today, people can get bank loans at the same prime rate as in the United States, which is 11 per cent, and consumer loans are available here at lower rates than in the United States. Today, if you want to borrow money to buy a car, and you go to a Canadian bank, you will probably be able to borrow at a lower rate than you would get at an American bank, if you were an American citizen and went to a bank over there.
I think the facts are there to show that the monetary and fiscal policy followed by the Government of Canada has substantially benefited Canadians during the past year and also substantially contributed to the fact that this year, our growth rate was higher than it was in the United States.


PENSIONS
Mr. Neil Young (Beaches):: Madam Speaker, my question is directed to the Minister of National Health and Welfare. As the Minister knows, the report of the Parliamentary Task Force on Pension Reform was tabled in the House this morning. As the Minister also knows, the majority and minority reports disagreed quite strongly on the need to provide universal adequate pensions through an expansion of the Canada and Quebec Pension Plans. Will the Minister tell the House whether she supports the expansion of the Canada and Quebec Pension Plans to provide adequate universal pensions?


Hon. Monique Begin (Minister of National Health and Welfare):: Madam Speaker, I think everyone will understand when I say that I was at a Cabinet committee meeting this morning, I obtained the report a few minutes ago, and I will want to read it. However, I had people who read it for me. From the report I received, I think my main concern would be that the report did not seem to address coverage of private pensions for all workers. That was the very mandate of the committee. However, I understand there are other good features. I will read the report, and go on from there.
Oral Questions MINISTER'S POSITION


Neil Young: Madam Speaker, my supplementary question is directed to the same Minister. The Minister has argued for the past three years that the private pension industry could not provide adequate pension income to Canada's seniors. Will the Minister tell the House whether she would support in Cabinet an expansion of the Canada and Quebec Pension Plans to provide adequate pension incomes for Canadians?


Monique Bégin: Madam Speaker, it is fair to say that this parliamentary task force report is one more piece of information or advice, given by parliamentarians this time, on a dossier which has received many contributions over past years, and that it will be the first step on the road to action.
The avenue suggested by the Member to reform the system, namely, to double the Canada Pension Plan, is one avenue of several. As the Minister of Finance and I have indicated, various provincial Governments were invited by the Prime Minister to reach a privileged position of their own. We, the federal Government, will have to do the same thing. Then we will be able to start deciding and negotiating which avenue will equip all workers with good private pension plans.


RAILWAYS
Mr. David Orlikow (Winnipeg North):: Madam Speaker, my question is directed to the Minister of Transport. It concerns a certain group of pensioners. CPR, one of Canada's largest corporations, pays its senior executive officers hundreds of thousands of dollars per year in salaries. In this Christmas season it has restricted the rights of present and retired employees to use their travel passes. The Christmas season is when many retired employees would like to travel and visit their families. This benefit was won by the employees through their collective bargaining process. Would the Minister discuss this matter with CPR and urge it to rescind its unilateral, heartless policy decision?


Hon. Lloyd Axworthy (Minister of Transport):: Madam Speaker, I have had only a very preliminary report. I have received the same representations as the Hon. Member for Winnipeg North. However, my understanding is that there is not a restriction or stoppage of the use of the passes. They have simply shortened the time period within which reservations can be made. The passes are still eligible for use. It is just that employees during the Christmas period and during the very peak summer period do not have the same luxury of a long-term engagement or reservation on the railway lines. However, I will follow up on that particular issue and report back to the Hon. Member.

December 15, 1983
Oral Questions


REQUEST FOR EXTENSION OF STANDARDS TO MORE ATHLETIC EVENTS
Mr. Irenee Pelletier (Sherbrooke):: Madam Speaker, my question is directed to the Minister of State (Fitness and Amateur Sport). Yesterday, the Minister announced a new Canadian Government policy on doping among athletes who participate in international competitions. I would like to know whether the Minister intends to go one step further and insist that action be taken in certain sports for which Canadian standards are higher than Olympic requirements, something which would deprive many Canadians of the opportunity to compete in international events.


Hon. Celine Hervieux-Payette (Minister of State (Fitness and Amateur Sport)):: First of all, Madam Speaker, I thank the Hon. Member for his question. I want to confirm that we are promoting that policy to control doping among athletes, and we hope that most countries taking part in the Olympic Games will follow a similar approach. As to the participation of our athletes and the existing Canadian standards, I must tell the Hon. Member that those standards are established in cooperation with Canadian federations. I will be pleased to discuss with them the standards for certain sports which might perhaps bar athletes who could take part in the Olympic Games under the rules of the International Olympic Committee, but who cannot compete because they are not eligible for support. Of course, those athletes are free to participate on their own, but they are not eligible for monetary assistance to compete. I will examine the question and provide a more definite answer after discussing the issue with the federations.


CANADA HEALTH ACT
Hon. Jake Epp (Provencher):: Madam Speaker, I would like to direct a question to the Minister of National Health and Welfare. The Canada Health Act has a number of provisions which would be governed by regulations. Will the Minister give us an undertaking to make available, prior to the Christmas recess, the regulations flowing from the Canada Health Act, in order that we might study those regulations and look at suggestions or, possibly, amendments? Would she be willing to do that in order that we not only strengthen medicare but meet the objective of my Leader and our Party, which is to improve medicare as well?


Monique Bégin: Madam Speaker, I am delighted to see new support from the Conservative Party for medicare.


Some Hon. Members:: Oh, oh!


Monique Bégin: I wish them well in the coming days. I take it from the second part of the Hon. Member's question that he will not use the regulations to block passage of the medicare Act. I am very pleased at that. I have requested my officials to give top priority to writing the regulations, which, of course, will be in a draft form. I intend to present them to my provincial counterparts just as soon as they are ready. That will not be before Christmas. As soon as I know the date, I will make it public.


TIMING OF PUBLICATION
Arthur Jacob (Jake) Epp: Madam Speaker, yesterday the Minister talked about the twenty-fifth anniversary of medicare. Yesterday was also the day when the P.C. Party at its national convention in Ottawa in 1956 passed a resolution for a national health care plan and, second, in co-operation with the provinces.


Some Hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: I therefore say to the Minister that we are celebrating our twenty-seventh anniversary.
The Minister was not clear about the regulations. In view of this developing situation, will she confirm two things? First, that we will have the regulations by the Christmas recess. If not, before she leaves at Christmas will she give us the dates when we can have the regulations? Second, she has been asked by the provinces to meet and discuss not only the Act but the future of medicare. Will she give a commitment to us and to the provinces that she will do that before the House reconvenes in the middle of January?


Monique Bégin: Madam Speaker, I am pleased to learn the historical fact that before the Tories went into la grande noirceur, the great darkness in 1956, they were for medicare. What about the resolution of this Party of 1919? Does that beat it?


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Monique Bégin: If the Hon. Member wants to play the game of oneupwomanship, we will have the ad very soon for all Canadians who are suffering as a result of extra charges. I thought my answer was very clear. I have given instructions to my officials to give top priority to the first draft of the regulations as soon as possible. I want to submit and discuss them with my provincial counterparts. I thought it came over the microphone that it would not be possible to do this just before Christmas. As soon as they are ready, I will advise Hon. Members.
December 15, 1983


CROWN CORPORATIONS
Hon. Ray Hnatyshyn (Saskatoon West):: Madam Speaker, my question is directed to the Acting Prime Minister who will be fully conversant with the circumstances surrounding the uranium cartel case before the Supreme Court. This morning the Supreme Court of Canada handed down a split decision which indicated there was Crown immunity available to Eldorado Nuclear and Uranium Canada. Mr. Justice Dickson, speaking in the majority, pointed out, and I quote:
The more active Government becomes in activities that had once been considered the preserve of private persons, the less easy it is to understand why the Crown need be, or ought to be, in a position different from the subject.
He pointed out that, because Parliament has spoken on this, the Supreme Court had no ability to find anything except that the prima facie Crown immunity prevailed. Under the circumstances, is the Government going to continue to hide behind this technicality of law, or will it change the law so that Crown corporations in this instance can be duly prosecuted and brought to account for their actions in the cartel?


Hon. Judy Erola (Minister of Consumer and Corporate Affairs):: Madam Speaker, the Hon. Member has brought forward a very valid question. I suggest to him that the Competition Act which will be brought forward very shortly will address this problem, and that we expect him to support it fully.


REQUEST THAT STATUTE LAW BE AMENDED
Ramon John Hnatyshyn: Madam Speaker, I am talking about the uranium cartel by which the Government used the vehicle of Crown corporations to induce private corporations to enter into cartel arrangements for which they are now being prosecuted. Is the Minister prepared in this instance, as in a general sense, to bring in a change to the Interpretation Act so that Her Majesty will be subject to the laws of this land, except where Her Majesty is specifically exempted under that statute? Is the Minister prepared to take action with respect to this matter, and in general?


Judith A. Erola: Madam Speaker, I cannot help but be slightly amused by this question because, just a couple of weeks ago, Members opposite were vehemently opposed to any kind of retroactive legislation. I would advise the Hon. Member that in this case the legislation will not be retroactive. However, I expect him to support actively the changes that he is advocating, and he can expect to see them in the new competition legislation.
Oral Questions AGRICULTURE


ANDERSON-VANDERMEULEN REPORT ON BEEF CATTLE INDUSTRY-REQUEST FOR REFERRAL TO COMMITTEE
Mr. Bert Hargrave (Medicine Hat):: Madam Speaker, I have a question for the Minister of Agriculture dealing with the subject of stabilization in Canada's beef cattle industry. It also deals with a recently re-released report for which the Minister is responsible, entitled "An Evaluation of the Cattle Beef Industry of Canada", more familiarly known as the Anderson-Vandermeulen report. It deals with stabilization and supply management in the cattle industry. Is the Minister willing to take whatever steps are necessary to have that report tabled in the House if necessary, so that it can be properly referred to the Standing Committee on Agriculture for a full and proper debate?


Hon. E. F. Whelan (Minister of Agriculture):: Madam Speaker, the provincial Ministers of Agriculture have had the report to which the Hon. Member refers, for several months. If I understand correctly, some of the press has had it as well. If it cannot be obtained, I will certainly investigate that, because I have not made any decision with regard to it not being made public. Therefore, if it is not being made public, I do not know why.


REQUEST FOR TABLING OF REPORT
Herbert Thomas (Bert) Hargrave: Madam Speaker, I am sure that the Minister is confused. The report I am asking to be tabled is the Anderson-Vandermeulen report. This report was dated March, 1982, but was re-released two weeks ago. Is the Minister afraid to table that report in the House? Can he tell us that he will properly refer that report to the committee?


Eugene Whelan: Madam Speaker, I am fully aware of the report referred to by the Hon. Member. It is a report made by two people, Anderson and Vandermeulen, who went over all of the commission reports that were made before, including the one by the Senate, the one I had made, and the one done by a province. They studied those reports, talked to people and made their own report, and that is the report that all of the provincial Ministers of Agriculture in Canada and some members of the press have. If the Hon. Member does not have it, I do not know why he does not have it. If he has asked me for it, I do not know why he did not get it. However, it is a public document and he can have it if he wants it.


FISHERIES
Mr. Ray Skelly (Comox-Powell River):: Madam Speaker, my question is directed to the Minister of Fisheries and Oceans who will be aware that, over the last three years, a

December 15, 1983
Oral Questions
desperate financial situation has arisen in the West Coast fishery industry. In addition, he will also be aware that the failure to provide adequate consultation on matters that affect the livelihood of fishermen has led to very dramatic actions, such as the blockading of the Straits of Georgia, the occupation of Fisheries offices, and recent demonstrations in Nanaimo.
It would now appear that the Minister, instead of relying on effective consultations with fishermen and their representatives, is relying on departmental advice and internal policy papers to guide restructuring in the West Coast fishery industry. Will the Minister assure the Elouse that one of his policy papers does not involve expropriation, without consultation, of the fishing vessels of fishermen on the West Coast? If he cannot give us that assurance, does he clearly understand the consequences of such an action?


Hon. Pierre De Bane (Minister of Fisheries and Oceans):: Madam Speaker, I fail to understand the exact meaning of the Hon. Member's question. I think that the consensus among fishermen is that there should be a reduction of the fishing effort. At the moment we are studying, in consultation with all of the participants in the fishery industry, how that could be implemented.


REQUEST THAT MINISTER TABLE POLICY PAPERS
Raymond John Skelly: Madam Speaker, there is ample evidence that the Minister is not following the advice given by his ministerial advisory committee, and has opted to follow the guidance of the Department of Fisheries and the internal policy papers which have been put forward. Would the Minister acknowledge that failure to provide a timely government response to the Pearse Commission is creating chaos on the West Coast? Will the Minister table in the House any departmental policy papers he is using to restructure the West Coast fishery?


Pierre De Bané: Madam Speaker, I think the Hon. Member should recount the facts exactly as they are. The Pearse report contained several suggestions relating to the licensing system and to the reduction of the fleet. The Minister's advisory council asked if it could focus on the matter itself before the Department takes any action, and I have accepted this. Now of course is the time to come to a conclusion. However, consultations will continue with all participants.


U.S. TRADE COMMISSION RULING ON CANADIAN POTATO EXPORTS-COSTS OF HORTICULTURAL COUNCIL
Mr. Mel Gass (Malpeque):: Madam Speaker, my question is directed to the Minister of Agriculture. The recent ruling made by the United States International Trade Commission regarding the anti-dumping investigation concerning Canadian
potatoes was great news for the maritime potato producers. However, this investigation took a long time and cost a lot of money. This substantial bill is being carried by the Canadian Horticultural Council. I ask the Minister what assistance the Government will be giving to the council to cover the costs incurred in this matter.


Eugene Whelan: Madam Speaker, I am sure the Hon. Member is fully aware of the fact that a lot of our officials were involved in advising those people on what action they should take, and that involved a lot of person-years. I am sure he is also aware that we were also very happy about the decision that was made by the United States commission. The ruling was three to nothing in favour of the Canadian representation.
The Canadian Horticultural Association has made the representation to me that the bill amounts to over $200,000. However, the Hon. Member is also aware that the matter has not been completed. If that bill were to be paid through the federal Government, it would be a form of subsidization to that industry. That is one of the reasons, of which the Hon. Member is fully aware, why we did not become involved in the matter in the first place. We made all of our material and information available to the Council for it to use before the commission, and we even made some of the Canadian agricultural people, as well as people from other Departments, available to it in preparing for the case, which was successful.


REQUEST THAT MINISTER ASSIST COUNCIL
Melbourne Alexander Gass: Madam Speaker, yesterday the Minister's colleague, the Minister of State for International Trade, started to pay tribute to the Horticultural Council of Canada. The Horticultural Council needs more than lip service. It needs hard dollars as well as tributes. Is the Minister of Agriculture willing to make some money available to the Horticultural Council after the matter has been concluded?


Eugene Whelan: Madam Speaker, the Hon. Member knows full well that there is a month in which to appeal this case. I have had dealings with the Canadian Horticultural Council, and 1 am sure he is aware of those dealings. I am also sure he is aware that, a year ago, the Canadian Horticultural Council moved a motion complimenting the Minister of Agriculture and this Government for making a great contribution to the horticultural production industry in Canada.


TOURISM
Maurice Brydon Foster: Madam Speaker, my question is directed to the Minister of State for Small Businesses and Tourism. I would like to ask him if he is aware of Bill No. 4074 which has been introduced in the United States House of


TAX ON CANADIAN ADVERTISING LITERATURE-PROPOSED UNITED STATES LEGISLATION HHBHH
[Stage Direction]
December 15, 1983
[Stage Direction]
Representatives, which would impose a tax on Canadian tourist advertising literature brought into the United States for use at sportsmen and travel shows. This Bill was apparently introduced in response to a 9 per cent sales tax now being imposed on U.S. literature entering Canada. In view of the obvious adverse effect that this proposed U.S. tax would have on Canadian tourist establishments if implemented, is the Minister of State for Small Businesses and Tourism prepared to recommend to the Minister of Finance that this sales tax be removed in the next budget in order to avoid having this retaliatory step taken by the United States Congress?
Hon. David Smith (Minister of State (Small Businesses and Tourism)):: Madam Speaker, as the Hon. Member suggests, it is true that this is a problem, and I have received a number of complaints about it, particularly from Americans who come here for conventions and bring along promotional material. I wish to assure the Hon. Member that I will be meeting with my appropriate cabinet colleagues to see if a solution to this problem can be found.


SUPPLY AND SERVICES
Mr. Howard Crosby (Halifax West):: Madam Speaker, my question is directed to the Minister of Supply and Services and also involves the Minister of National Defence. The Government purchased for Canadian Forces Base Gagetown in New Brunswick 17,000 tons of U.S. coal mined in Kentucky, in preference to Nova Scotia coal mined by the Government's own agency, the Cape Breton Development Corporation. Will the Minister explain why a government Department would purchase foreign coal when Canadian coal miners are unemployed, and when the Throne Speech claims that the Government intends to expand its "Buy Canadian" policy?


Hon.   J.-J. Blais@Minister of National Defence: Madam Speaker, I do not have any details relating to the inquiry of the hon. gentleman. I would be pleased to take note of his question and provide him with as much information as is available.


Howard Edward Crosby: Madam Speaker, it is unfortunate that the Minister does not have any information because the amount of money involved, $1.3 million, would employ 50 Cape Breton coal miners for one year, and the Minister does not know about it.


REQUEST FOR AMENDMENT OF POLICY
Howard Edward Crosby: Madam Speaker, if the Minister does not know about this case, will he at least undertake to the House that there will be no cases like this in the future? Will he undertake to amend government regulations and policy in order to ensure that, when the Government buys products, it will buy from its own agencies in preference to U.S. suppliers?
Oral Questions


Hon.   J.-J. Blais@Minister of National Defence: Madam Speaker, 1 would simply like to point out to the hon. gentleman that, indeed, Devco is supported in large measure by funds from the federal Government. I am sure that the allegations that he is making can be explained. When I was Minister of Supply and Services I was always intent, as in my successor, on ensuring that we create as many jobs within Canada as possible through procurement.


CROWN CORPORATIONS
Mr. Stan Schellenberger (Wetaskiwin):: Madam Speaker, my question is directed to the Minister of Transport. Will the Minister of Transport investigate the Crown corporation known as Northern Transportation Company Limited with regard to management practices, safety, accounting practices, and a conflict of interest that exists because employees and managers of NTCL are also directors of Arctic Offshore Limited, a company which competes in northern transportation?


Lloyd Axworthy: Madam Speaker, if the Hon. Member would send me the particulars or details of his concerns, I would certainly look into the matter.


MUNICIPAL AFFAIRS
Hon. Roch La Salle (Joliette):: Madam Speaker, my question is directed to the Minister of Employment and Immigration. The Minister is no doubt aware that today, in the Quebec National Assembly, closure will probably be imposed on the debate in committee on Bill 38.
1 am aware that the Minister has been in touch, and has conducted negotiations, with the Government of Quebec regarding an eventual agreement between Quebec and Ottawa to help the municipalities, while, of course, respecting provincial jurisdiction.
In view of the fact that 1,600 mayors in Quebec are very worried about this turn of events, can the Minister give the House the assurance today that he would be prepared to call an urgent meeting with his Quebec counterpart in order to reach a compromise that would be acceptable to both parties?


Hon. John Roberts (Minister of Employment and Immigration):: Madam Speaker, I am always ready. I certainly want to try to reach an agreement with the Quebec Government on this issue. However, since for all practical purposes, negotiations between the two Governments were suspended this morn-
222

December 15, 1983
Oral Questions
ing, we should first have some indication from my Quebec counterpart that he is really willing to negotiate in good faith on a reasonable basis.


POLAND-RESCHEDULING OF DEBT-CANADIAN POSITION
[Stage Direction]
I have already sent a telegram to the Minister, Mr. Leonard, to express the Government of Canada's concern, considering what transpired in negotiations with his officials. The last proposal we made provides that Quebec's jurisdiction would be fully respected, while the Government of Canada would, of course, meet its obligations.
I can only hope that the Government of Quebec will give some indication, some expression of good faith and that it will accept this as a basis for negotiations. However, in view of what seems to be happening right now in the National Assembly, I cannot be optimistic, and in this situation, everything depends on the good faith of the Government of Quebec.
Roch La Salle: Madam Speaker, I have a supplementary. I am sure that all the Members from Quebec here in the House understand the importance of my question. I am not accusing the Minister of failing to make any proposals to Quebec, and I appreciate the proposal he did make. Nor do I want to make any value judgement on the good or bad faith of the two Governments involved. I merely want to ask the Minister responsible, who is conscious of the importance of reaching some arrangement or agreement with Quebec, to invite the Quebec Government to a meeting within the next ten days, and I am asking this on behalf of 1,600 mayors in Quebec who are anxious to see such an agreement as soon as possible. If Quebec wants to bear the odium of refusing to negotiate, so be it, but I am asking the Minister here in the House to offer to meet with his Quebec counterpart next week in order to settle this issue in a fair and equitable manner.


John (Moody) Roberts: Madam Speaker, I think the position we have taken on behalf of the Government is firmly supported by the majority of mayors and municipal councils. As I said before, Madam Speaker, I am ready to make all necessary arrangements to achieve positive and concrete results, but, as they say in English-

It takes two to tango.


Roch La Salle: Are you ready?
[ Translation]


John (Moody) Roberts: The other side will have to co-operate, because we on our side have shown our good will, and we must have some indication from the other party that it is prepared to commence negotiations on the basis of the principles I have just mentioned.


Stanley J. Hovdebo: Mr. Speaker, my question is directed to the Minister for International Trade. When receiving the Nobel Peace Prize on Sunday, Lech
Walesa said:
My country is in the grips of a major economic crisis. A permanent economic crisis in Poland may also have serious repercussions for Europe. Thus, Poland ought to be helped and deserves help.
Will the Minister tell the House if Canada intends to respond to this appeal? Specifically, will he tell the House if he is prepared to enter into negotiations for the rescheduling of Poland's debts so that Canada may sell some grain to Poland?
Hon. Gerald Regan (Minister of State (International
Trade)): Madam Speaker, 1 want to say to the Hon. Member, through you, that Canada is, of course, particularly sensitive to the plight of the Polish people and their needs, particularly in relation to foodstuffs. We have constantly been prepared to sell grains and other foodstuffs to Poland, subject to satisfactory credit arrangements for payment. I gather the Hon. Member is not talking about aid, but is talking about credit terms. Obviously our agencies have to be satisfied that there is some possibility of eventual payment before those arrangements are made. Subject to that, and in view of what has been said by Mr. Walesa, I would certainly be prepared to ask our agencies to review the current situation.


SALE OF GRAIN-REQUEST FOR NEGOTIATIONS
Stanley J. Hovdebo: 
AIRPORTS
John Horton McDermid: Madam Speaker, my question is directed to the Minister of Transport. I should like the Minister to tell us when the change in policy took place in his Department to name airports in Canada after politicians and not after Canadian aviation pioneers, such as the McCall field and Stevenson field that exist today.


Lloyd Axworthy: Madam Speaker, I think it is fair to say that the Government, representing the people as it does-


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: Twenty-six per cent.


Lloyd Axworthy: -always looks for opportunities to give proper honour to distinguished Canadians who have served their country well, and who have served the world well by winning a Nobel prize. I am surprised that the Hon. Member would take umbrage at what I think has been a universally popular and accepted notion, that we should pay proper respect to Canadians who have served the public well, unlike the Hon. Member.


John Horton McDermid: Mr. Speaker, I thought the External Affairs building in Ottawa was named the Pearson Building after the distinguished gentleman who served this country so very well.


REQUEST THAT MIRABEL BE RENAMED PIERRE ELLIOTT TRUDEAU AIRPORT
John Horton McDermid: Mr. Speaker, I have a supplementary question. If the Minister is changing that policy within the ministry, then would he rename Mirabel Airport the Pierre Elliott Trudeau Airport, because both have been a disaster economically?


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: The Hon. Member is not asking a supplementary question. The Hon. Member for Durham-Northumberland.


ADMINISTRATION OF JUSTICE
Hon. Allan Lawrence (Durham-Northumberland):: Mr. Speaker, my question is directed to the Minister of Justice. It relates to the clear opinion expressed by the Alberta Court of Appeal yesterday that there is no statutory authority for any type of police surreptitious entry. In light of the abrupt, unnecessary, and now illegal change of the policy of his predecessor by the Solicitor General, in signing warrants for
Business of the House
intrusive entries, which contain no restriction whatsoever on surreptitious entry, and in light of the very clear recommendation against this type of practice by the McDonald Commission, has the Minister of Justice issued any instructions whatsoever to the Solicitor General regarding surreptitious entry in relation to the planting of intrusive devices?


Hon. Mark MacGuigan (Minister of Justice):: Mr. Speaker, according to the usual practice our law enforcement in Alberta would, of course, under this decision of the Alberta Court of Appeal, now be inhibited in the manner indicated by my hon. friend. However, the Attorney General of Alberta has indicated he is appealing the judgment to the Supreme Court of Canada. Since the hon. gentleman is quoting other sources, such as the McDonald Commission, I might mention that a unanimous report of a task force appointed by the federal Attorney General and the provincial Attorneys General last summer, came to exactly the opposite conclusion with respect to the law in Canada. In fact this is a matter on which there is considerable dispute.
I feel we will have to await a final determination by the Supreme Court of Canada, now that the Attorney General of Alberta has announced he is taking that appeal, before any such action is taken.


BUSINESS OF THE HOUSE
Mr. Pinard:: Mr. Speaker, I am rising on a point of order because we have just concluded an agreement among the House Leaders. I would like to spell it out so that you can make the agreement an order of the House. It is in relation to Bill C-2 which is now under debate.
First, we are debating second reading and on Monday, at 3 p.m., the question will be put on second reading of Bill C-2.
The second element of the agreement is that after the vote on second reading we will, of course, go into Committee of the Whole, and on Tuesday, at 6 p.m., the motion to concur in the report of the Committee of the Whole will be put.
The third element of the agreement is that on Wesnesday of next week, rather than dealing with Private Members' Business we will be dealing with the third reading stage of Bill C-2. We will have one speaker per Party. Once the three speakers have spoken on third reading, the question will be put, and if the Bill is carried we will agree to suspend the sitting while awaiting Royal Assent.
Essentially, Mr. Speaker, I have summarized the agreement which we would like you to make an order of the House. It is understood among ourselves that each Party will use the time available to it as it likes. If the Conservative Party or the New Democratic Party wishes to use two speakers in 20 minutes as opposed to one, that is fine with everyone. This is also part of the understanding.

December 15, 1983
Committee Reports


Erik Nielsen: Yes, Mr. Speaker, that is essentially the understanding. Ordinarily, where one speaker would be heard for 20 minutes, followed by a ten-minute question period, I understand the Hon. Member for Hamilton Mountain (Mr. Deans) wishes his Members, because of the number who wish to speak on the matter, be heard for ten minutes, so that two Members could speak in the place of one.
1 do not know whether there is a disposition to dispose of the question and answer period in that regard. There may be, in which case we can go along with that as well.


Mr. Deans:: The agreement as spelled out by both my colleagues is correct. If there were a disposition to dispose of the question and answer period and allow a third speech to be made, we would be delighted to have that take place in order to complete the number of New Democrats who feel this is an important Bill which should be dealt with in some detail.


Erik Nielsen: No, Mr. Speaker, on that latter point, the Members of the Opposition will retain the right to ask questions. However, in circumstances where the New Democratic Party splits its 20 minutes into two ten-minute periods, or one fifteen-minute and one five-minute period, the question period which would then follow would not be the normal ten-minute period but rather five minutes.


Mr. Deputy Speaker:: Is that generally agreed?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: Agreed and so ordered.



ROUTINE PROCEEDINGS


Mr. Thomas H. Lefebvre (Pontiac-Gatineau-Labelle):: Once again, Mr. Speaker, I have the honour to present to you and to all my colleagues a unanimous report from the Special Committee on Standing Orders.

This report is not only unanimous, it is in both of Canada's official languages, and shows the consensus reached once again by this great Committee. Thank you.


Some Hon. Members:: Hear, hear!
[Editor's Note: For above report, see today's Votes and Proceedings.]


PETITIONS
Mr. Henri Tousignant (Temiscamingue):: Mr. Speaker, I have the duty to present to the House a petition signed by 1,300 residents of my riding and launched by Monsignor Hamelin, Bishop of the Rouyn-Noranda Diocese, which reads as follows:
We have all followed the debates on the testing of the Cruise missile on Canadian soil. Six religious of Canadian Christian churches made a statement on that subject on December 14, 1982. They disapproved of the part which Canada had accepted to play and hoped that our country would act as a peace mediator on the international scheme.
By signing this petition, we want above all to state publicly that we disagree with the decision of the Government to allow Cruise missile testing on Canadian soil. That decision is a clear and open acknowledgement that we are participating in the nuclear arms race: for quite some time now, Canada has been subsidizing hundreds of Canadian companies working on the development of nuclear weapons.
It is our duty to make our peace aspirations known to a Government which has decided on our behalf to drag us as a nation in the preparation of a nuclear holocaust. Our silence could only be interpreted as complicity. We are openly stating our categorical refusal to take part in the atrocious death of millions-


Mr. Deputy Speaker:: I regret to interrupt the Hon. Member, but the petition is too long. Can he say in a few words what is the meaning of the petition of his constituents?


Henri Tousignant: Mr. Speaker, just a few more words.
-of innocent human beings and perhaps even the total destruction of our planet.
Mr. Speaker, I might add that I speak for those people as their Member of Parliament. That does not necessarily mean that I endorse the petition.


Raymond John Skelly: Mr. Speaker, I also have the honour to present a petition on behalf of the residents of the Sechelt Peninsula comprising the communities of Gibson's Landing, Sechelt Peninsula and Pender Harbour, British Columbia, to the honourable the House of Commons in Parliament assembled.
The petition deals with the proposal by the Electoral Boundaries Commission of British Columbia to include the Sechelt Peninsula within the electoral district of Capilano-Howe Sound. The petitioners urge that consideration be given by this House to retain the Sechelt Peninsula within an area of common interest to the north island constituency of North Island-Powell River. The petitioners also call attention to the fact that many people in the Province of British Columbia, including the Sechelt Peninsula, stand to be disenfranchised by the current provisions and failure of the Elections Act to provide an absentee ballot.
December 15, 1983



ELECTORAL BOUNDARIES READJUSTMENT ACT


Mr. Gaston Isabelle (Hull) moved: for leave to introduce Bill C-205, An Act to change the name of the electoral district of Hull.


Some Hon. Members:: Explain.


Joseph Gaston Isabelle: Mr. Speaker, this bill, which concerns the constituency of Hull, aims at adding the name of Aylmer to the present designation of the riding.
The new federal constituency of Hull includes the voters of only two cities, Hull and Aylmer. It would therefore be logical and justifiable for these constituents to be identified and known by a designation which represents all of them, namely Hull-Aylmer.
Mr. Speaker, this is basically what this bill is all about.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

Joseph Gaston Isabelle: for leave to introduce Bill C-206, an Act to amend the British North America Act, 1867 (national capital of Canada).


Some Hon. Members:: Explain.


Joseph Gaston Isabelle: Mr. Speaker, this bill aims at changing the boundaries of the national capital of Canada to include the city of Hull and any other area that the Canadian Parliament could designate in the future. In other words, this constitutional amendment would authorize Parliament by legislation to include in the national capital all areas located within the national capital region.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.


Joseph Gaston Isabelle: for leave to introduce Bill C-207, an Act respecting the international airport at Ottawa.


Some Hon. Members:: Explain.
Income Tax Act


Joseph Gaston Isabelle: Mr. Speaker, this bill aims at renaming the International Airport at Ottawa the airport of the national capital as it serves the region of the Canadian capital located in the provinces of Ontario and Quebec.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

[ Translation]

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
John Leslie Evans: Mr. Speaker, I suggest that all questions be allowed to stand.


Mr. Deputy Speaker:: Shall all questions stand?


Erik Nielsen: Thank you very much, Mr. Speaker; I am electrified once again by your instructions.
This is the same motion to stand all the questions that was made yesterday. With great reluctance we do so once again today in order to expedite the very important debate that is going on, but I want the Parliamentary Secretary to know that this is not going to develop into a habit. He should be looking at answering the questions which date back to April, 1980, when he decides it is time to answer those questions, which I would hope would be some time next week. We are happy to give our consent in this instance.


John Leslie Evans: I certainly appreciate the Hon. Member's gesture in allowing the questions to stand. But I would say, quite frankly, if he would rather they not stand, that we would be totally in agreement.


Erik Nielsen: You might be sorry!


Mr. Deputy Speaker:: Shall all questions stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-2, an Act to amend the statute law relating to income tax and to make related amendments to the
[Stage Direction]
December 15, 1983
Income Tax Act
Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to a Committee of the Whole.
Albert Glen Cooper: Mr. Speaker, this legislation we are dealing with today will have a significant impact on ridings right across Canada. It certainly has an impact on regions such as the one I represent. The Peace River country I represent is dependent to a very large extent on the farming part of our economy. It is also very dependent on the business sector, particularly the small business sector. All of these people are very much affected by the Income Tax Act. Essentially what we are talking about here is that all Canadians, employers and employees, are affected by the Income Tax Act of Canada. It does not matter whether they are friends, acquaintances or family; essentially everyone we represent here is dramatically affected by this particular piece of legislation.
We as Canadians, Mr. Speaker, give money to the Government to carry on its affairs, which supposedly are conducted on our behalf. However, I think we have to remember that the money Canadians give to the Government in the form of taxes is money that is no longer theirs to spend. They can no longer utilize it to purchase goods such as cars, homes or the various necessities of life. They cannot invest that money in their businesses or farms or in any way to create jobs and opportunities for their fellow Canadians.
Another way in which Canadians are affected by the Income Tax Act is through the effort required of them to determine just how much tax they owe. Up until not too long ago that was a relatively simple process. In today's climate, with today's Act and today's Government attitude, it has become a very serious problem. The average Canadian can no longer fill out his own tax return. He can no longer determine the level of tax he is required to pay. He or she very often requires the help of professionals at great expense. Almost to a man those professionals waive any responsibility for the advice they give you. I know that my accountants are no different. I recently had to sign a little form that indicated they are not responsible for the information contained in the return and that I personally must take that responsibility. They, too, are concerned about the complexity of the Act and the difficulties one faces in computing tax due because of the system now in place.
Those two simple examples of how I think we are affected by the Act really represent, in many ways, the single biggest concern of the people in Canada today. It is a very serious issue for people right across this country.
Today the Government tells us to take this legislation and push it through the House in a big hurry because it is very important. The Government has to get it through quickly. The fact of the matter is that the Budget was tabled on April 19 and now, after eight long months, we finally see the legislation introduced here in the House of Commons. That does not
demonstrate to me a sense of hurry or rush on the part of the Government.
The question is, why do they not want us, as an Opposition, to take our time and deal with this legislation with the seriousness which it deserves? They do not want us to talk about the legislation and the concerns of the people we represent. They want to slip things through. They do not want to tell the people essentially what has been happening in this country with regard to the Income Tax Act.
The truth of the matter is, Mr. Speaker, that I do not have to tell the people of the Peace country what has been happening in the whole area of income tax and the administration of that Act in this country. These people are telling me, no matter where I go in my riding. Whether they be senior citizens, farmers, artists, business people or wage earners, all of these people are very concerned about what has been happening to the Income Tax Act in Canada and the way that it has been administered in this country. The people throughout my riding are bitter about the rates that they are paying in taxes. They are bitter about the regulations they are faced with. They are bitter about the attitude of the Department. They are bitter about the threats which this Government has been using in order to collect revenues for its coffers.
The question asked by most of the people in my area is, what is happening with those revenues once the Government has got them? That, in turn, creates a great deal of anger among people in the Peace country and people right across this country. They are reminded of things such as the Maislin Trucking Company. They are reminded of what we saw recently in the Auditor General's Report; the selling of a motel for $200 by the Government which the very next day sold for $75,200. That is the kind of thing which Canadians become very angered by when they see their hard-earned money being taken away from them in the form of taxes.
The other thing which makes them angry is the fact that right now we have a deficit in the neighborhood of $132,608 million which has been accumulated by this Government because of its incompetence, mismanagement and lack of concern for the Canadian people. The taxpayers are suffering as a result of that deficit. They suffer because they then have to put up with the abuse and harassment of a department simply because the Government has accumulated this deficit. It now has to try and get some revenue so it can begin to function and meet the financial obligations that it has because of its spending habits. It is the Canadian people who bear the brunt of that kind of approach and attitude. The Government is instructing its employees to go out and raise revenue and bring the taxes into the Department. As a result of that, the Canadian people are getting harassment and abuse which they feel they have no obligation to accept from this Government.
As I indicated in my opening remarks, in my area we have a couple of things which are very important to our economy. The first one is agriculture. I would like to talk a little bit about our farmers and how they are being affected by this particular Act and the particular attitudes that the Department has taken in terms of administering the Act. I will give an example
December 15, 1983

of a farmer in my region who has, for the last several years, maintained a steady job outside of the agricultural sector. He is now preparing to retire from his job to become a full-time farmer. For the last five or six years he has been working very hard to build up a farm that would be an economically viable unit. He has done that. In the last several years his income from the farm has exceeded his income from his regular salaried job. As a result of that, he filed his income tax as a farmer. That was legitimate because his income was primarily from the farm. The Department agreed with him and accepted his filing in that manner and accepted the claims that he put forward. There was no difficulty.
Upon looking at that the farmer decided that, because other years were very much the same, he should apply to have his taxes filed in the same manner. He and his accountants got together, did their computations, and submitted amended income tax reports, hoping to have them recognized as farming taxes. The Department then changed its mind. Not only would it not accept the new filings, but it went back and refused the one which it had already agreed to. It then reassessed that farmer for a good deal of back taxes. He is now in a situation where he has a huge expense, and a huge amount of work to do to prove the fact that he filed properly and that what he did was right and proper. That is one example of a number of cases in my riding where people who are developing farms or who have started to build up some sort of establishment and are getting a viable proposition are being frustrated by this Department rather than encouraged.
The second example which I think is very important and has a lot of serious implications, not only to the Peace country but to all of Canada in terms of the agricultural sector, is that of the beginning farmer. It does not matter where the beginning farmer starts, but certainly this is true in the Peace country. The beginning farmer is faced with very heavy initial expenses. Those expenses include the purchase of equipment. Anyone who knows anything about farming will know that that is a very expensive proposition. He is going to have the expense of erecting buildings and the expense of land purchases or, as is the case in much of my riding, land development. He will be taking bush land, bringing it onstream, developing it into arable acres and bringing it to a seedbed condition. That has been a tradition in my area for a long period of time. The only alternative for those young farmers to begin a farming operation was to go off the farm and find outside income and to invest that income in the farm. Almost to a person, virtually all of the income which they have earned outside of their farm has been channelled back into the farm in the form of purchasing land, equipment or whatever, to help them develop a viable farm.
It is precisely at that point that these young farmers become involved with a catch-22 situation. In order to go out and earn that income they lose their status as a full-time farmer and become qualified as a part-time farmer. The result is a limited write-off of their expenses. In fact, the write-off in many cases amounts to nothing more than a drop in the bucket of the real
Income Tax Act
costs which these people end up incurring in the development of that farm.
The question is whether or not that encourages the development of new farms. Does it encourage the young people of Canada to farm? Does it encourage a healthy agricultural economy? I do not think so, Mr. Speaker. In fact, it does the exact opposite. It discourages young Canadians from becoming involved in a very important, valuable part of the Canadian economy. This is the result of a bureaucracy that has been put in place, of frustration and the interpretation of a particular section of the Act. The net result is that it is discouraging our young farmers. All Canadians are going to suffer as a result in the future.
I would like to give another example which, although not specifically related to the Income Tax Act, demonstrates the kind of frustration that many of our young farmers are experiencing in this country. It is an example of the kind of bureaucratic stumbling blocks which are placed in front of people who are taking risks in developing land or opportunities or providing employment, and are doing things that we as Canadians would normally want to encourage. The example I will use is of a young fellow who worked in Edmonton as a government employee. He bought a farm in my area. The farm needed an awful lot of work. He quit his job and began to develop this farm on a full-time basis. What happened not too long ago is that he got caught by the high interest squeeze which destroyed so many businesses and farms across the country. As a result he ended up by having to sell much of his land in order to reduce his debt and reduce the interest payments he was forced to make. Once he had sold off much of that land, he took the money and invested it in some dairy cows and obtained a dairy quota from the federal Government. He saw himself doing some good planning. He had invested in good cattle and he had trimmed his operation right down to the bare necessities. He now had his quota and was ready to deliver his cream. He took his cream to the dairy, only to find out that he could not sell it. He was given a quota for which there was no opportunity to deliver milk to the dairies. Here we have this young farmer who has been unable to sell his milk. He cannot use his quota. He had now taken everything and invested it in cows. His is a young family. They have worked hard and made many sacrifices. They invested all of their savings, in fact everything they had, and now because of bureaucratic bungling they are going broke.
Today this young family is soon to lose everything they had, and we are forced to go to the Minister and ask for a special waiver on the part of this individual because it is a desperation case. We are now waiting for an answer from the Department. Unless he gets it very quickly, the young farmer and his family will face bankruptcy and they will lose everything.
What we are seeing here in this case is much the same thing as we see with the Income Tax Act in Canada. It has not become a vehicle to assist Canadians, or a vehicle by which Canadians can understand and accept. It has become instead a

December 15, 1983
Income Tax Act
bureaucratic pitfall, a stumbling block put before people to prevent them from progressing and developing their opportunities and to prevent them from developing the product of their dreams toward the realization of which they have worked so hard in the last few years,
Our farmers need our help. They need our co-operation. They need a government that understands them, not one that frustrates them with all sorts of bureaucratic manoeuvring. They need bureaucratic understanding of particular sections and the bureaucratic applications of those sections that so dramatically affect our farming community.
For a few moments I want to look at the business sector. It has been said many times in this House that the small business sector in particular is the mainstream of the economy. It creates the majority of jobs in the country. Very often-and this is certainly the case in my riding-we have family situations, a husband and wife operation. These people risk their savings, their homes, everything they have, in order to establish a business in their particular community. Often the income they receive from those businesses is much less than they would have accepted or received had they maintained a salaried job for several years. In other words, I think they would do what we as a country and as Canadians have often said they should be doing, and that is, encouraging people to take a chance, to create jobs and new opportunities. That is essentially what we have been doing. I think those people should be receiving some recognition for the kinds of efforts they are putting forward. But instead, what do they get? They get a complex Income Tax Act. They get one they cannot read nor understand. They end up with taxes which they simply cannot afford to pay. If these people are behind in their taxes, they find that the Department moves in and says, "Pay", regardless of the results to that business, even if the results mean bankruptcy.
We had examples of that in the House of Commons just yesterday. A Member of this House gave a specific example of what this Department had done to a business in his riding. We find that if a company gets behind in its payments to the Department of National Revenue the Government will seize the accounts receivable. We know that in the type of economy we have today that sends creditors into a state of panic. They move into a company, and a company that may have provided employment and opportunity for Canadians is suddenly forced out of business.
The best example of that I can give is a business with which I have grown up in a lot of ways. I have known the people all my life. They own a small service station in my home town. They serviced the first vehicle I ever bought. They have created a few jobs over the years, and this business has always been a steady source of employment in the community of Grimshaw. The people got involved in the oil patch in a small way in terms of operating seismic trucks and doing some seismic work in the winter. That again created a few more jobs and opportunities for people in the area. For years, because it was a husband and wife team, the wife would do the books and they would file their own income tax. It was a fairly simple
operation. These people worked hard and made a decent living. But what has happened to that business? Taxes have become so complex that they have been forced to hire professionals to do their accounting and bookkeeping. Today, when I stop in to visit them I find they are bitter and angry. They are wondering why in the world they are putting up with the headaches and the hassles. Why in the world should they not quit and do something else? Why should they not cease to worry about the problems into which they are forced on a day by day basis?
I want to conclude by saying that we as a Government have a responsibility to provide for Canadians an act that reflects their concerns and one that challenges them to take risks, develop opportunities and create employment for Canadians throughout the land. Instead, what we have is a government coming forward with an Act that intimidates, harasses and does nothing but frustrate the Canadian entrepreneur and frustrates anything that would resemble entrepreneurial attitudes and dreams in this country.


The Acting Speaker (Mr. Blaker):: Questions, comments?
The Hon. Member for Vercheres (Mr. Loiselle). [Translation]


Mr. Bernard Loiselle (Vercheres):: Mr. Speaker, the debate in the House today is particularly important because its main purpose is to adopt the budgetary measures announced last April, measures that are aimed at strengthening the economy and encouraging investment in new capital facilities and new ideas that will help Canada forge ahead, at a time when economic growth is synonymous with technological progress.
The April budget was preceded by consultations on a scale hitherto unheard of in this country. These consultations were continued after the Budget was brought down and helped us to improve our proposals. Granted, this method has tended to slow down the process of implementing Budget legislation, but at the same time, it has helped to improve the content of the measures now before the House, a factor that is very important for speedy adoption by Parliament of the Budget's fiscal measures and for establishing a climate of trust conducive to sustained economic recovery.
As was to be expected, economic recovery is evolving at varying rates, depending on the region. In Quebec, for instance, where the recession has been more severe, there is more catching up to be done than in other parts of the country. In fact, Quebec's position is comparable to what Canada's is in relation to other industrialized countries.
I am happy to say there are encouraging signs that economic recovery in Quebec is picking up. The federal Government has made every effort to make recovery truly nationwide, and to continue to pave the way for a better economic outlook in all regions. It is interesting to note that many of these tax measures are very advantageous for small and medium-sized businesses, which, as we all know, are becoming increasingly important in Quebec's economic structure.
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I would like to point out that the Government is determined to provide a strong stimulus for small businesses through this legislation. If we include unincorporated businesses and farming and fishing operations, small businesses represent 20 per cent of the net value of the entire industrial sector. Elowever, about 30 per cent of the benefits arising from the Budget measures provided for businesses during the 1984 fiscal year will benefit small businesses. This percentage may seem disproportionate, if we consider the size of the small business sector. However, it is directly related to the Government's position on the importance of expanding this vital sector of our economy.
The Budget provided measures to strengthen the financial situation of small businesses in Canada, in order to make them better able to make productive investments and in order to help them obtain further financing through share issues. These measures have been deliberately directed towards providing a broader range of assistance and economic stimulus to small businesses. As the Members of this House are aware, the Budget was preceded by broad consultations with many groups in the private sector, and with representatives of the provincial Governments. Many of the observations and recommendations we received have been incorporated in this Bill.
A large part of the Special Recovery Program, which provides some $4.8 billion, is directly aimed at accelerating productive investment and job creation in the private sector. In this connection, substantial changes have been made to the Investment Tax Credit. These changes will not increase current tax incentives but will make them more accessible to companies making investments. At the present time, the Investment Tax Credit provides a reduction in income tax equal to a certain percentage of investments in equipment and structures used in manufacturing and processing of resources, including fishing and farming. However, the amount of tax credit that could be claimed was limited, and the Bill has now eliminated this restriction. We have expanded the possibility for taxpayers to carry back or carry forward investment tax credits unclaimed in a given year in order to reduce federal tax for preceding and following years.
The Investment Tax Credit has also been extended to heavy equipment used in the construction industry. These changes in our Income Tax Act will be permanent and will be reflected in assistance totalling some $1.3 billion for private investment.
However, the Budget recognized the fact that certain additional tax incentives were necessary to further stimulate economic recovery, since the Investment Tax Credit can only be a stimulus where businesses make profits that are taxable. However, not all Canadian businesses are in this happy circumstance. This is particularly true of small businesses throughout the country. The Government has therefore decided to establish a tax measure that will encourage these businesses, as well, to invest, even if they are not taxable for the time being,
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and to invest as soon as possible, to make for a vigorous and durable recovery.
That is why this Bill proposes that the portion of the Investment Tax Credit earned over the next three years and which cannot be used to reduce taxes in the year in which it is earned, be refunded directly to businesses. For small business corporations and for unincorporated businesses, the portion refundable in cash will be 40 per cent.
The Bill is also presenting a new temporary measure that will help these businesses to obtain the equity they need to finance new investment. This is a new, flexible mechanism that will authorize corporations to transfer tax credits earned on this investment to purchasers of new shares. Purchasers will be entitled to a tax credit to the extent of 25 per cent of the price of the shares.
Altogether, these measures will add $640 million to federal tax incentives for investment in and issuing of shares. These measures will be of particular benefit to small and mediumsized businesses, and they will be especially helpful to corporations that are experiencing substantial difficulty and feel that they will not be able to make new investments as long as they are unable to upgrade their ratio of self-financing.
The Bill also provides for two major changes to the Registered Home Ownership Savings Plan to stimulate purchases of newly-built homes and major items of furnishings. Eligible Canadians who buy newly-built houses before 1985 will be allowed to deduct from their taxable income the amount needed to reach the $10,000 overall ceiling of deductions for contributions to a RHOSP. This provision will even apply to individuals who have not yet contributed to a RHOSP, provided of course they are eligible under the plan.
As an additional economic stimulus, individuals will be permitted a tax-free withdrawal of part or all of their accumulated savings now in a RHOSP for the purchase of furniture and major appliances until the end of this year. Such withdrawals will not affect their eligibility for the plan.
The Indexed Security Investment Plan, which went into effect on October 1, 1983, will encourage Canadians to invest more of their savings in common shares of listed Canadian companies. Its effect will be to exempt from tax the inflationary portion of capital gains on common shares bought under ISIP. This innovation is a significant aspect of the Government's recovery program.
The Bill also provides another means to help companies hard pressed by the recession. New tax measures will give businesses and investors more scope to carry over losses incurred in one year to reduce taxes in other years. Small companies and incorporated businesses will be allowed to carry back their losses three years instead of one as prescribed under existing regulations. The full three-year carryback period will be effective immediately for small business corporations. The carryforward period will be seven instead of five years.

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The tax program under which farmers and small companies in financial difficulties may apply for low interest loans from financial institutions has been extended for two more years. I am referring, of course, to the agricultural and small business bond program under which lenders benefit from tax concessions. Considering that the agricultural community has made extensive use of those bonds, it would only be fair, in light of recent developments, to call it the agricultural business and small business bond program. More than half of the $500 million loaned out so far went to farmers. Such loans have considerably reduced the interest rates when they were high and, despite declining interest rates, those preferential rates are still five to six percentage points below current interest rates on commercial loans.
It should be widely acknowledged that this Bill will go a long way towards solving the financial difficulties of small Canadian businesses. We firmly believe that the thousands of small Canadian businesses will account for the lion's share of the new jobs we have to create.
I spoke at length today on certain important measures contained in the budget and aimed at sustaining a healthy economic recovery. I would be remiss if I failed to mention something which is just as important, namely the fact that we have not increased taxes in 1983. On the contrary, we have given tax relief to low income Canadians, and taxpayers as a whole have benefited from a net reduction of taxes. The Bill also includes measures to help needy Canadians. For example, we have made radical changes to the employment expense deduction of taxpayers whose income from employment is less than $16,700, and that amounts to $130 million a year. This deduction used to represent 3 per cent of employment income, to a maximum of $500, but it will now be equivalent to 20 per cent of employment income, subject to the same ceiling. Four million Canadian taxpayers will benefit from this new measure.
The child care deduction goes from $1,000 to $2,000, to a maximum $8,000 for a family. This will lighten the financial burden of families in which both parents work, as well as that of single parent families for whom this deduction is important.
The Special Recovery Program will be financed through higher taxes beginning at the end of 1984, when the recovery will be well under way.
The economic recovery in Canada has been sturdy. Actually, Canada has shown the highest growth rate of major industrialized nations since the beginning of this recovery. We have had the strongest employment growth, we succeeded in having the sharpest drop in the inflation rate of all major industrialized nations in 1983. The strength of our Canadian recovery was recently emphasized by the British magazine Euromoney, which listed 93 nations under the various headings of economic growth, inflation rate, currency strength, exports and balance of payments during the past year. Canada's combined performance has been the most outstanding in the free world.
Data recently published by Statistics Canada indicate that this recovery was sustained during the third quarter. Industrial production has increased by 4.4 percent during that quarter, which included a gain of some 2 percent in September. Real economic growth for the first three quarters of the year has increased at an annual rate of well above 7 percent, better still than the American rate for the same period. Economic growth in Canada is expected to be one of the best in the industrialized world in 1983 and 1984.
Let me add that consumer confidence is holding on at an 18-year high, while general confidence in the economy as recently measured by a Gallup Poll, has reached a 6-year high.
Confidence is the key to business. Deseasonalized retail sales data have increased by 4.2 percent in October, the highest monthly increase in five years and a 9 percent increase over October 1982. It can be expected that the sales growth rate will be maintained during the yuletide rush. Mortgage rates are down to a 4-year low, and this is good news for the housing industry. Consumer loan rates are more or less at their lowest level in 25 years, and are below American rates. The economic recovery should benefit all Canadians and bring a sustained improvement in economic performance throughout Canada.
This legislation is the final step in a long process of detailed consultation with the private sector on a wide range of positive fiscal measures which were put forward in the budget. When the budget was tabled, economic recovery signs were still hesitant. Now that the recovery is well underway, it is both desirable and important to inject certainty and stability by putting into legislative form the budget fiscal measures on which the investments and expenditure plans of the private sector are predicated.
The Government of Canada, through fiscal measures and a wide array of policies designed to maintain recovery and economic growth, brings incentives to all regions of Canada. People in all regions are contributing to the national economic recovery with a greater degree of confidence and optimism. It is my view that this new spirit is well justified, based on the good results obtained up to now. We should all co-operate in ensuring that the hopes and promises of better times to come are fulfilled during the coming months and years. I would therefor conclude by urging all Hon. Members to support the fiscal measures contained in this legislation, in order to give to Canadians the means to achieve together the economic successes that are now within our reach, throughout our Canadian nation.


Donald Alex Blenkarn: Mr. Speaker, I was wondering if the Hon. Member could explain how he saw a tax reduction in the Bill. I point out to him that the federal tax credit, which is now
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$200 a year, is reduced automatically commencing in the 1984 tax year so that it is wiped out by the end of 1986. That is a significant increase in taxes. Perhaps he would like to look at Clause 63 of the Bill. He might look at the clause with respect to the freezing of the allowance of children. At the present time, children can be charged as a deduction at the rate of $710. We are sure that inflation will carry on with the economic pattern of this Government, yet that $710 is frozen. It is no longer indexed.
At the same time perhaps he could explain how we help the less advantaged. As he knows, while the child tax credit is increased to $343, it is dependent on an indexing factor. While the credit is indexed, the amount of money that allowed a person to claim that credit is not indexed. It is frozen at $26,350. The net result is a very significant increase in taxes. Perhaps the Hon. Member would like to correct his speech or remarks accordingly.
[Translation)


Bernard Pierre Loiselle: No, Mr. Speaker, the Hon. Member's question gives me an opportunity simply to restate and re-emphasize what I have already said. He is somehow confused as to the dates. There actually is a tax reduction in 1983, and it is a fact that there will be tax increases by the end of 1984. But as far as 1983 is concerned, there is indeed a tax decrease, as the Hon. Member is aware. And this is besides certain specific provisions, either on employment expenses or child care, the end result of which being that a number of Canadians will not pay higher income taxes, and some will pay even less. The Hon. Member certainly will recognize that.


Donald Alex Blenkarn: Mr. Speaker, I was quite intrigued with the way some Canadians are going to be getting significant deductions. As the Hon. Member knows, those who are able to purchase through the market special recovery shares with the investment tax credit will get a benefit. Those who buy R and D shares for scientific research will get a 50 per cent tax credit. That will help them considerably. How will it help the businesses that do the investing? He pointed out that when a small business makes an investment, there is the possibility of a 40 per cent recovery of investment tax credits. However, if the business issues shares to cover that investment tax credit, the fat cat down the street who buys the shares will get 100 per cent of the tax credit in his hands. How does the Hon. Member feel that that is fair and the way we should be going?


Bernard Pierre Loiselle: Mr. Speaker, 1 am afraid the Hon. Member has decided to ignore almost all of the data obtained from specialized agencies such as OECD, which said just recently that the problem that will be facing Canada as early as the end of 1984, probably will be one of equity, when private sector investments will start picking up. Therefore, because of these fiscal measures allowing in the final analysis people with savings, such as the Hon. Member who, I know, is a taxpayer
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who often has dealings on the stock market, there has to be incentives in order to attract to the equity market the savings of Canadians who enjoy more or less the highest rate of all industrialized nations. When the Hon. Member asks how this can help a corporation as such-he seems to be concerned with the fact that we are helping the shareholder rather than the corporation as such-if we want to help the corporation, help it get all the equity needed, the venture capital it needs, there must be incentives for people with savings to become shareholders.


Douglas Glenn Fisher: Mr. Speaker, with regard to the comments of the Hon. Member for Mississauga South (Mr. Blenkarn), there are two points worth noting which he deliberately overlooked. First, as we generate business health, we generate jobs and employment. I see the Hon. Member laughing. Clearly the theme of jobs and employment is a joke for him. However, as pointed out by my colleague, the need for equity is clear among businesses in Canada. We need to get businesses away from debt and into equity so that they are paying out dividends instead of non-productive interest payments.
Second, I think the Hon. Member should be admitting and noting that the package of tax relief in this budget has been extremely well received by the very businesses that he says are not being helped. The small business, the growing business, the business in need of relief from its losses, have all clearly told the Government to keep on doing what we are doing.
As a supplementary comment to the Hon. Member's comment about favouring certain people, I would say that it might be helpful to keep some of this in balance. I would appreciate hearing some comments on this matter from my colleague on this side of the House if he wishes to add any more.


Donald Alex Blenkarn: Mr. Speaker, it is amazing that it is good for a business to be entitled to have 40 per cent of its tax credit paid to it. That is okay, but we are going to allow an investor to have 100 per cent of that tax credit in his pocket. Somehow the business is only entitled to 40 per cent of its earned tax credit but the investor is, all of a sudden, able to grab the whole tax credit, and that somehow helps business. It certainly helps the big investor and the passive investor. It certainly helps the friends of the Government.
I would like to move on to another matter which was of some interest to me and I would like to get a commitment from the Hon. Member. The Registered Home Ownership Savings Plan provides that money can be withdrawn from such an account in order to buy furniture but it must be withdrawn by December 31 of this year. If that money is not withdrawn and spent by December 31, the provision of the Act is no longer applicable. In view of the fact that the Act is only now before the House and that we hope to be able to pass the Act through the House by Wednesday of next week, that does not leave us very much time. Would the Hon. Member support an amendment which would enable the purchase of furniture with

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funds from Registered Home Ownership Savings Plans until perhaps June 30 of next year?


Bernard Pierre Loiselle: Mr. Speaker, I think that in keeping with the holiday spirit the Hon. Member opposite wants to be very generous and present everyone with a gift. I remind him that this budget proposal helped many furniture manufacturers in Canada and that he himself agrees that this was an excellent initiative. If the Hon. Member wants to make this proposal on behalf of the Official Opposition and say that he does not really care about the possible increase in the total deficit such generosity would mean for the Government next year, we could certainly discuss it. We would not close the door on such a proposal; we would be willing to discuss it. Finally, I would like to refer to the concern expressed by the Hon. Member with regard to the greater benefits reaped by those so-called friends or passive investors rather than by the companies themselves. I would remind the Hon. Member that this budget was preceded and followed by more consultations with the business sector than ever before and that these initiatives are in direct response to the recommendations of business interests because the problem which we had in Canada resulted from the ratio of debt to equity. Moreover, the most important thing in this country is to have incentives so that Canadians will invest in equity capital of businesses. In my opinion, failure to do so has been one of the main causes for the great number of bankruptcies we have witnessed, especially in Quebec.
I therefore believe that the Hon. Member, who suddenly wants to become a corporate defender, should realize that, for a company to come through unfavourable economic cycles, it must have access to equity capital, and without coming back to certain bills which were withdrawn recently, I hope that the Hon. Member will be willing to examine during the coming year the whole issue of how savings are used in Canada, which are very often invested in pension funds under the control of private companies or Crown corporations, and I also hope that we shall be able to have a non-partisan debate to fully examine the problems which Canada will have to face.


Mr. Dan McKenzie (Winnipeg-Assiniboine):: Mr. Speaker, Bill C-2 provides the necessary legislation for the income tax measures proposed in the April, 1983, Budget for Indexed Security Investment Plans, for a few technical matters left over from Bill C-139, and for the extension of small business bonds to December, 1985. It is interesting to listen to the comments made by members of the Liberal Government who have said how wonderful these tax changes are and what they will do for Canadians. The feelings of those members are not in concert with the feelings of the Minister of State for Economic and Regional Development (Mr. Johnston) who, in a recent speech, pointed out the following:
I believed then and believe now that the income tax system is in many ways inequitable, unduly complex, and not making the contribution it should.
-I know of one aspect of the tax system which is not contributing to productivity, and that is the matter of tax complexity. For every lawyer and auditor in Japan, there are 100 engineers. In Canada however, the proportion is roughly equal. I would hope that the future will see more of our brain power in the laboratories of this nation, and less preoccupied by the Income Tax Act.
I have discussed the Income Tax Act with lawyers in Winnipeg and many of them are almost frightened to make a decision on behalf of a client about how to finalize their client's tax returns or about anything to do with the very, very complicated tax system we have in Canada. I doubt if Bill C-2 will untangle any of this mess. In all probability, it will only make everything more complicated.
The Minister of State for Economic and Regional Development went on to say the following:
As a tax practitioner, I preferred and still prefer tax expenditures and incentives over grants.
Why? First, they are available to all comers who meet the criteria of the law. There can be no possibility of discriminatory treatment among recipients. Second, they favour winners, not losers. Third, they can be administered without an army of bureaucrats. Fourth, they encourage market forces and are not points of attack in terms of our international trade relations.
The Minister went on to say:
The tax system must become a living, responsive agent of economic development.
We have had many problems with the tax department these days regarding harassment of individuals and businesses. My colleague, the Hon. Member for Wellington-Dufferin-Simcoe (Mr. Beatty), has recently highlighted the harassment tactics of the Liberal gestapo toward business in Canada.
I would like to make a few comments about the Indexed Security Investment Plan. A stockbroker, investment house, bank, or possibly a trust company or credit union sets up a registered fund for a client. The client purchases Canadian securities that are traded on a recognized Canadian stock exchange and places these securities in his ISIP fund. Dividends that might be received from securities are paid directly out to the client and the client treats them as ordinary dividends in the ordinary course of events in accordance with the Income Tax Act. Income from securities is not affected.
What is wrong with this scheme, Mr. Speaker? Number one, the scheme relies on inflation to be the principal motivation behind entering into the plan, but accountants indicate that long-term investors are better off, despite inflation, to stay out of such a scheme because they must pay capital gains tax as they go along on their investment holdings. If a person held a stock for, say, ten years, he would not pay the capital gains tax until he sold the stock at the end of the ten-year period, but if there were regular gains over a ten-year period, he would pay the tax as he went along. Capital gains tax is only paid when capital is sold. Under an ISIP, 25 per cent annually of capital gains is paid on a pay-as-you go scheme. While in theory you pay no more total dollars in tax, the fact is you pay your tax sooner, and consequently the real cost of the tax to the investor is greater.
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To the community at large, the scheme is flawed in the sense that this particular kind of investor is entitled to write off all his losses against other income without limitation. Other persons making capital losses can write off losses at the rate of only $2,000 a year. So, for example, if you sell your farm at a $100,000 loss, you can write off the $100,000 loss at the rate of only $2,000 a year against other earned income. Unless you are so fortunate as to have a whopping capital gain, your capital loss becomes a loss that can never be recovered because you do not live long enough. Money borrowed to go into an ISIP is not deductible. If you, on the other hand, borrow money from your bank to buy Bell Telephone stock, you can deduct the interest on the bank loan from your ordinary income.
The most damning thing about an ISIP is the fact that you can only marketable securities put into the plan. These must be securities traded on a recognized Canadian stock exchange. Shares in private companies are not allowed. The majority of business investment in Canada is excluded from the ISIP, and most business investors who invest in their own thing or in their small town businesses cannot use this system.
For the brokers, it is super good because it treats as capital gains activities that would normally be in the nature of a trading activity as opposed to an investment activity. For example, under Clause 18, on page 24 of the Bill, line 5, a put or call option in respect of the share described in subclause (A) that is traded on the stock exchange is included, and under subclause (G), page 20, line 25, a right, warrant, or call option that, if exercised, would allow the taxpayer to acquire securities or, as set out in subclause (H):
-a put option in respect of shares not owned under the Plan, other than any such shares that would be required to be acquired under the Plan on the exercise of a put option written under the Plan that together with the option is recognized as a spread position by a prescribed stock exchange in Canada-
This is included in qualified securities. The effect then is that those who would trade in stocks or even trade in options to buy or sell stock, as long as the trade is in listed securities on a recognized Canadian exchange, can have their trading activity done behind an ISIP and all of the gains treated as a capital gain, indeed an indexed capital gain, and all the losses written off. Nowhere in the history of income tax legislation has anyone at any time ever treated a person who trades in stock options, either options to buy or options to sell, as anything but a trader. If there ever was an activity that is an adventure in the nature of trade, this is it. Yet the Finance Minister's scheme allows people who wheel and deal in the market, to hide under the ISIP scheme.
The Conservative Party has some recommendations regarding the ISIP. If the Government is going to allow indexing of capital gains for those who deal in the stock market, then it should allow indexing of the capital gains of farmers, fishermen, and small businessmen. Why should one group of investors who happen to deal in listed securities have the benefit of indexation when the other vast group of investors have no such benefits?
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A great number of the people who wheel and deal in the stock market are really not true investors, albeit they buy shares in existing corporations, but they are not long-term investors. They buy existing shares on an existing market. The person who buys a farm, the person who builds an office building, the person who starts his own small company putting his life savings into that company, is a true investor. He actually builds something, buys something, invests in something with no thought of an immediate rollover.
This scheme works best for those who are in the business of having immediate rollovers. It is designed for those who buy the existing shares in listed companies. Surely, in the scheme of things, there are the very people who should have no call on government largesse. This scheme is a tax break for the wealthy, the portfolio trader. Where is the equity? Our natural constituency is small business, farmers, fishermen, small land owners-the little people. If we work the ISIP over, the Minister's reputation as Minister of Finance will suffer badly.
The best explanation of the ISIP is a statement by Lyman Maclnnes, senior partner of Touche, Ross and Company, who calls the ISIP a lot of bureaucratic machinery giving benefit to investors who least need help. I fail to see how the ISIP is going to give us great economic recovery. The truth is, Mr. Speaker, that as long as this Government is in power there will be no economic recovery. We just have to read the statements made by Americans and other investors who are waiting for a change in government before returning to Canada in a big way, according to a New York investment analyst. In an article in the Ottawa Citizen on November 3, this analyst is quoted as saying that he feels that if the Progressive Conservatives take power there will be an immediate change in investor attitude.
The problem is that since 1980 some $14 billion in investment has left the country, mainly for the United States. If it is not coming in but is all going out, it does not matter how the tax scheme is juggled or twisted, it is not going to create any more jobs or bring about economic recovery. If the Government were interested in economic recovery or in doing something for the 1.5 or 2 million unemployed in the country, it would resign immediately.


The Acting Speaker (Mr. Patterson):: Questions or comments? Debate. The Hon. Member for Broadview-Greenwood (Ms. McDonald).


Ms. Lynn McDonald (Broadview-Greenwood):: Mr.Speaker, I am very pleased to have the opportunity to take part in the debate on such an important subject as income tax. Canadians want decent services from the Government and the services they want cost money. I think, except for some freeloaders, about whom I will say more later, by and large Canadians are happy to pay taxes if they are fair. Canadians want decent systems of education, unemployment insurance, medicare and a decent safety net. Most people realize that they have to be fair. The problem is that the current system of income tax is

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extremely unfair and the proposals put before us by the Government would make it even more unfair.
The basic principle of a decent system of taxation has to be ability to pay, and especially since the Provinces and the municipalities have regressive systems of taxation it is more important that the federal Government have a progressive system. Income taxes can be the fairest way to collect taxes. In potential, this is so, but with the system of loopholes that we have, unfortunately that is not the case. We have government by loophole, tax incentives, tax expenditures and tax giveaways. These tax giveaways are unprincipled and are a bad thing at any time, but these days they are especially cruel. Average wages and salaries have not kept up with the cost of living. People are spending more money on rent, on paying their mortgages, on food, on extra billing for medical care, and then taxes are going up as well. People on the old age security pension are capped by the six and five program and, by and large, private pensions do not have cost of living indexing. This is certainly the wrong time to increase tax giveways to corporations and shift more of the burden on to the ordinary people who have additional bills to pay.
Income in Canada is distributed in a very uneven way. The tendency is for these inequalities to increase. The top one-fifth of Canadian people in terms of income, manage to get 40 per cent of the national income while the bottom one-fifth get only 4 per cent of it. Most people would accept that some inequalities are functional for the system, but when the bottom one-fifth of the population in terms of income gets only 4 per cent of it, I think we have to ask questions. We know this means real poverty for large numbers of people-the elderly, elderly women, heads of households, single parent heads of households who are mainly women and their children, a lot of native people, and recent immigrants who are working at the minimum wage. It is not just a question of inequalities, it is a question of real hurt. Yet we have a tax system which continues to collect money from even poor members of our society and there are enormous loopholes for those who are better off.
In 1981, at least 239 people earning $250,000 or more did not pay a cent of income tax, and about 8,000 people earning incomes of over $50,000 did not pay a cent, while 134 taxpayers who declared incomes of $1,000 or less had to make payments to Revenue Canada.
The Government is harassing people who have received unemployment insurance over-payments. Women who are single parents go to jail for theft and welfare fraud. These women are forced into this by necessity, because their benefits are not adequate. This is a disgrace for a country as rich as ours! I think the issue of justice is very important. Even if the number of people involved were not very high-but it is- these loopholes in the tax system have tremendous consequences.
The first statement on the shortfall of Government revenue due to tax reductions was made in 1979. This statement revealed that the shortfall was $30 billion, due to a total of 200 loopholes.
Individuals and private corporations have taken advantage of these loopholes to avoid paying $30 billion in taxes. The following year, in 1980, the shortfall increased to $35 billion. What has happened since? The Government has refused to publish statistics. That is one way of solving the problem. [English]
Tax giveaways have been justified as necessary to stimulate investment and to create jobs. If that were so, we would have to feel at least somewhat favourable toward them. But what is the evidence? It is considered by experts that tax incentives by governments have only a marginal impact on the decision to invest. Right now, plants are not being used to capacity in any case. Therefore, this incentive with a failure of demand is not going to do very much good. Tax incentives cannot be a substitute for lack of demand. Yet the measures in the Budget of capping pensions and family allowances and by increasing the sales tax, will not stimulate demand but indeed will decrease it further.
These tax giveaways are made regardless of the impact they will have in terms of job creation. They may go to corporations which may not create very many jobs or which may actually close down jobs. They go disproportionately to large firms. They do not go to the small firms which provide the largest number of jobs.
If tax giveaways really had the effect of stimulating investment and of creating jobs, we would be in a very good situation right now because the tax giveaways are enormous and have been increasing. However, unemployment has been increasing also, which suggests that tax giveaways are no simple solution to the problem of our failure to create enough jobs.
We must consider also whether it is a good way to manage our money-and I suggest that it is not-to have government giveaways instead of direct grants, with clear conditions in return. In 1979, the Government spent some $50 billion on direct expenditures, while it spent some $30 billion on tax expenditures, or a sum 60 per cent as high. In housing and urban renewal, the Government spends eight times as much by tax expenditures as by direct spending. I say that this is a bad way to manage our affairs. We need a tax system which is simple, where people know where they stand, where government grants are very clear, and where conditions are attached so that there is a system of evaluation where people can see that we get value for our money. Tax giveaways do not seem like a giveaway but, rather like something people should receive and continue to receive.
One of the most unfair and least understood aspects of our current system is the relative burden shouldered by individuals and corporations. There has been a gradual shift of taxes from corporations to individuals. Although it is corporations which complain they are being unduly burdened, this is false. The
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statistics show otherwise. In 1950, individuals paid 51 per cent of federal and provincial income taxes. Corporations paid 49 per cent. The sharing was roughly fifty-fifty. By 1980, individuals were paying 77 per cent and corporations only 23 per cent. This is a shift which has happened over the years, mainly while the Liberals have been in government, but it has continued under Conservative Governments as well.
Even among corporations there are inequities. The average tax rate for large firms is 24 per cent, but for small firms it is 36 per cent. These are 1979 figures. Oil companies pay taxes at a rate below 18 per cent and banks are generally under 20 per cent. Individuals, therefore, who think they are paying more in taxes are right, they are, because corporations are paying less. Among corporations it is especially small businesses which are hurt, and they are the ones who are our best employers.
Some corporations are not paying any taxes at all. The Bank of Montreal last year paid nothing in federal income taxes. One method by which corporations have been able to avoid taxes is by tax deferrals. It has been estimated that there are $25 billion deferred taxes over the years, and some of that will never be collected.
[ Translation]
What should be done? The New Democratic Party is proposing fundamental changes to our tax system, based on fair and equitable principles. Ability to pay should be the basic criterion. Benefits should be shared equitably. The emphasis on tax deductions should be shifted to a system of tax credits, because deductions are more or less advantageous depending on a person's income. Credits can be given across the board or can increase in inverse ratio to the income, as is the case under the present child tax credit system.

To conclude, Mr. Speaker, I wish to say there are enormous inequities in the current system which the present Bill does not address, and this situation is going to drag us further and further into inequality and loopholes. The New Democratic Party is firmly opposed to this. We will continue to fight for fairness in the tax system, which has to be a basic issue. It is one which Canadians expect and deserve.


The Acting Speaker (Mr. Blaker):: May I remind the House that, as I understand it, Hon. Members in the New Democratic Party wish to have two speakers in the 20-minute period. It is difficult for the Chair sometimes to catch the eye of the Hon. Member who is speaking. In the present case, the Hon. Member for Broadview-Greenwood (Ms. McDonald) took 12 minutes. When I recognize the next Hon. Member of the New Democratic Party, obviously I will have to limit the time of that Hon. Member to eight minutes. In the interim, as I understand the House agreement, there will be an opportunity, but not an obligation, for a five-minute question and answer period at this point. Questions, comments? Debate.


Mr. Terry Sargeant (Selkirk-Interlake):: Mr. Speaker, I am happy to have a few minutes to put on the record some
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thoughts on the Government's latest plans for income tax changes.


The Acting Speaker (Mr. Blaker):: Order, please. My apologies to the Hon. Member, and I will still give him his full time. However, I do have to deal with the matter of the adjournment motion this evening.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Blaker):: It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Bow River (Mr. Taylor)-National Revenue-Repayment of money to resident of Cochrane, Alta; the Hon. Member for Saskatoon West (Mr. Hnatyshyn)- Mines and Mining-Uranium City, Saskatchewan-Compensation sought for property owners; the Hon. Member for Western Arctic (Mr. Nickerson)-National Revenue-Northern benefits-Classification of taxpayers.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Lalonde that Bill C-2, an Act to amend the statute law relating to income tax and to make related amendments to the Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the second time and referred to Committee of the Whole.
Terence James (Terry) Sargeant: Mr. Speaker, I would like to begin by saying that small business people and farmers in this country are complaining that the income tax system is already too complicated, and they are absolutely right. They have every right to complain about the red tape and the many forms which go along with their income tax returns. The system is complicated. About that there is no doubt. The changes which the Government has in mind today will not make it any less complicated.
I suppose most Canadians could accept the complexity of our income tax system if it could be shown that there was no other way in which it could be done; if it could be shown that despite its complexity we had an income tax system which

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efficiently and effectively fulfils the goal of raising revenue for the federal Government, and redistributing wealth. But that is not the case. Over the years our tax system has become needlessly complicated and regressive as the Government meddled with the system to give more help to its friends in corporate boardrooms.
Liberal and Tory Members of this House will howl over that, Mr. Speaker. They will accuse me and my Party of being shortsighted, not understanding the need to give handouts to big business in order to get the economy moving. But let me say this: They are wrong. They do not have simply to take my word for it. Let them consider the comments of the chartered accounting firm of Ernst & Whinney which, in its submission to the Economic Council of Canada, said that most government incentive programs have only a marginal impact on the decision whether or not to invest.
The federal Government hands over about $8 billion in incentives and tax dodges to corporations operating in Canada, but it does not really have much impact on whether or not they will decide to invest more or less in the Canadian economy. In fact, for that $8 billion the Government gets in return only that same $8 billion in corporate taxes. I cannot help but think that with a return like that we would be better off without those giveaways. Consider for a moment that this year Canadian corporations owe the federal Government $25 billion in deferred taxes. Most tax analysts are convinced this money will never be collected. It is a giveaway that Canadians are not being told about. You can bet the companies benefiting from this multibillion dollar tax giveaway are not small businesses. They are not farmers either. The average tax rate for small businesses in 1979 was 36 per cent, and for larger corporations it was 24 per cent. That is 11 per cent less than for the thousands of Canadians struggling to make a go of it in their own business.
What has the upshot of this multibillion dollar giveaway been? In spite of the claims of big business, it has not encouraged greater investment in our economy. Incentives offered by government do not have a great impact on the decision whether or not to invest. In spite of the billions leaking from the Consolidated Revenue Fund to big business, we still have 30 per cent to 35 per cent of our existing plant capacity standing idle. What does the Government do? Does it move to block the loopholes which allow this leak to continue or to restore the balance between personal and corporate income tax? Not a chance. In 1950 the Government got almost half its tax revenue from corporations. By 1980 it was less than a quarter from those same sources. Guess who picked up the slack? Individual Canadians who pay personal income tax.
The changes the Government has in mind this time include $120 million in handouts through the special recovery investment tax credit, plus a $17 million giveaway through the share purchase tax credit, another $1.2 billion in changes to the investment tax credit and $700 million in handouts through changes to the loss carryforward provisions. Taken together, this will mean a windfall to big business and its investors of more than $2 billion over the next four years. Would it not
make a good deal more sense to collect that tax rather than old age security or squeeze funding for medical care and postsecondary education?
It is not ideology that prompts me to make those comments, Mr. Speaker. The inequity in the tax system is so glaring that you do not have to be out to grind an ideological axe to notice them and believe there has to be a more sensible way of doing things. Yesterday I read that Canadian banks were having their best year on record. Bank profits for 1983 soared by more than 25 per cent to $1.8 billion. It seems only fair that banking institutions, as powerful and rich as they are, should at the very least be called upon to pay their fair share of tax. But that is not how things are done, and I am sure that if the Government tried to make Canadian banks pay their fair share of taxes, the CBA would cry long and hard about the unfair assault on their industry.
Things will no doubt carry on as they are and the Bank of Montreal, which paid absolutely no income tax at all last year, will still enjoy the tax holiday, which keeps it one of the most powerful financial institutions in the country. Individual Canadians will continue to pick up the slack left by the corporate ransom extracted through deferred corporate income tax and the myriad corporate tax giveaways.
The package of changes in Bill C-2 attempts to reduce the tax burden on the large corporations operating in this country and on the most wealthy Canadians who are able to derive the bulk of their wealth from investment income. As a byproduct we will see an increase in the proportionate tax burden on low and middle income Canadians. Why is this happening? It is because the Government has been so beguiled by the conservative fad of supply side economics. Rather than stimulate domestic consumption to get the economy rolling again, the Minister is trying to stimulate investment by making investment opportunities for wealthy Canadians. History will prove this fad to be foolish.
Some 17 years ago the Carter Commission recommended tax reform based on the simple principle that a buck is a buck is a buck. That makes sense. It should not matter whether you make your living by earning a salary or by investing in some sort of profit-making venture; you should be taxed in the same way. But that is not how it is done in Canada. Seventeen years ago the Government was told how to make the tax system simpler and more fair, but still things have not improved. In fact, you could make a strong case that the tax system has become more complex and less fair than it was in 1966.
On Tuesday, my friend from Kamloops-Shuswap gave a good example to illustrate what I am talking about. If we take three taxpayers, one making $25,000 a year, another $200,000 a year in salary, and a third $200,000 in investment income, the first one is taxed at a rate of 14.4 per cent, the second at 43.8 per cent, and the third at only 18.5 per cent.
In closing, Mr. Speaker, I would like to remind the House that because of the plethora of tax loopholes available in this country, there are 239 Canadians making more than $250,000 a year who pay absolutely no income tax at all, and there are
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another 8,031 making more than $50,000 a year who pay no income tax at all. The only word for that, Mr. Speaker, is ludicrous. The changes the Minister of Finance (Mr. Lalonde) has in mind with this Bill will only make it more ludicrous.


The Acting Speaker (Mr. Blaker):: Questions, comments, answers? Before I recognize the next Hon. Member in debate, may I indicate that there have been consultations with the Chair and my understanding is that there is a House agreement that the Chair will next recognize the Hon. Member for Western Arctic (Mr. Nickerson). Following that, rather than looking to my right, 1 would see another Hon. Member for the NDP, again either for the 20 minute period or any subdivision thereof. Following that, I would again look to my left to the Hon. Member for Portage-Marquette (Mr. Mayer), or in any event to my left. After that we will revert back to the usual left and right procedure.


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, again we have the opportunity to speak on income tax matters. The second Bill before us in this session of Parliament deals with taxation and proposes a change to the law which would, over the next four-year period, result in income tax increases of some $6 billion to Canadians. However, the first point I want to make deals not with the magnitude of the grab contemplated in this Bill, but rather with the timing of the introduction of this Bill.
Most of what we have in here is a result of the April 19, 1983 Budget brought down by the then new Minister of Finance (Mr. Lalonde). He was forced into bringing down a new budget because of the senseless inequities in the budget issued some time earlier by his predecessor, a budget that was so poorly received by Canadians. It was April 19 when the Budget was brought down. This Bill was not made public, was not given first reading, until December 8. Second reading debate did not start on this Bill until December 13. Mr. Speaker, why was there a period of seven months between the Budget and the Bill? Admittedly, the Ways and Means motions were made available to us earlier, but the law that will come into effect in the next taxation year has not been made available until two or three weeks before that law will come into effect, assuming the passage of this Bill. That is grossly unfair to Canadian taxpayers. It is also grossly unfair to parliamentarians. Two days ago the Minister of Finance stood up in this House and told us that this Bill has to be passed within a few days because of the fact that taxpayers will want to know what the law is. The Government had seven months in which to bring in important changes in tax legislation. It chose not to bring in this Bill in the previous session of Parliament but to wait until just a few days before the law is supposed to come into effect. It uses this as blackmail against the Opposition and indeed against their own backbenchers, parliamentarians who feel that they have a proper responsibility to debate income tax matters. We had a similar attempt at blackmail last year. The Government, through the Departments of National Revenue, Finance and Supply and Services, deliberately chose not to mail to Canadians their income tax
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refunds. It has no problem collecting taxes in anticipation of an Act that will go through in order to legalize taxes presently collected, taxes which were not legal. For some reason the Government said it was unable to give out refunds under the same set of circumstances. It deliberately tried to blackmail the Opposition into swift passage of previous tax legislation, using the excuse that it could not make available to Canadian taxpayers refunds on their 1982 income tax. What a dastardly plan that was, Mr. Speaker. Everybody knows that the real reason the Government did not refund the overpayments on income tax was the fact that it had no money in the coffers. It was deliberately using taxpayers' money which it had in its possession, almost illegally. This was money which should have been given back. It was using that as a float because it had so poorly managed its financial affairs that there was no float in the kitty as there should have been.
In my brief presentation I want to look at some of the principles contained in this Bill. The first principle that becomes evident is that the Government wants to increase the complexity of tax legislation. We have only to look at the Bill, Mr. Speaker. There are some 210 pages of text in this Bill. It weighs about two pounds and it is almost incomprehensible. The Minister of Finance had the gall last Monday to stand up and say that the goal is to make the Income Tax Act simpler. This is just not borne out by the facts. Every time since the last election, and before that, that an income tax Bill has been presented to this Parliament it has done precisely the opposite. It has increased the complexity of income tax legislation. If we look at the consolidation of the Income Tax Act as it existed in 1968, when this Government first came into office, we will see that it was complex at that time, but it was a reasonable book. It was an inch or so thick and was fairly small. Look what has happened in the period that those Members opposite have been in office. Look at the consolidation of the Income Tax Act today. It weighs 10 to 15 pounds and it is 1,446 pages long, including the index. Again, it is almost incomprehensible. It is a bunch of Liberal gobbledegook, Mr. Speaker.
How many other examples could we cite where the Government has said one thing and done precisely the opposite? The matter of the national deficit is the same. Every time the Minister of Finance gets up on the occasion of the budget, he says that it is the goal of the Government to reduce this deficit but that we are going to start this next year. "This year it is going to go up a little bit," he says, "And we will start to reduce it next year."
It is the same thing with the complexity of the Income Tax Act. It is analagous to a drunkard or somebody on dope. Tomorrow they are going to quit and start to reform. Tomorrow comes and they do not drink half a bottle, they drink three-quarters of a bottle, but they are going to quit the next day. The next day comes and it is not three-quarters of a bottle, it is a whole bottle that they are going to drink, and they are going to quit the day after that. Of course, they never do. This is precisely what has happened to this Government. We can no longer trust the Minister of Finance when he stands

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up in this House and tells us he is going to simplify the income tax system, he is going to reduce the deficit, or he is going to keep the price of gasoline low. He is not going to reduce the tax on gasoline by 18 cents. He would not do that at all. Since he has been in office, the tax on gasoline has gone up more like S2.18 rather than down 18 cents.
There seems to be a preoccupation in the Liberal ranks with technical madness. If there is a simple way of doing something in the field of taxation, or anything else for that matter, and if there is a difficult way, they will invariably choose the difficult way. Let us look at the provisions of this Bill which deal with ISIPs. The goal, in general, is a laudable one. We want to encourage the investment in Canadian common stock and we want to shield taxpayers from a lump sum payment of capital gains. I suspect that the real reason they want to bring in the IS1P provision is not that they are overly concerned with the welfare of the taxpayer but that they want to tax some of the capital gains on an annual basis and not have to wait ten years before it is realizeable in the hands of the Government. The simple way of attaining those objectives would be fairly easy. All you would have to do, Mr. Speaker, would be to increase the capital gains deduction for common stock in the existing income tax form. Right now it is something like $2,000. You increase it to $2,500, or whatever you want. It is simple. You have to change one word in the Income Tax Act. People are used to having that line on their income tax form. It is a fairly simple thing to do. Of course, they cannot do that. They have to come in with this new very complex and complicated system. One of the reasons might be that if within the Department of Finance they have a system that is so complex and complicated that only very highly paid bureaucrats will understand what it is all about, then they will have to hire more. Maybe that is the idea behind it. If somebody wants to take advantage of an ISIP, he cannot do the administration himself. He will have to pay a minimum, we are told, of $100 a year to have a brokerage firm keep track of his account. I know that that $100 minimum is going to last only about five minutes if it is anything like RRSPs or similar schemes. It will help the computer industry because we are going to need banks and banks of computers in order to keep track of the myriad transactions that are going to occur. The ISIPs are going to be of very little help to the small investor. This was pointed out by the Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) who went into the matter of ISIPs in some detail. He told the House why the provisions would not act to the benefit of the small investor, but rather would benefit the professional trader. That is the person who will really be able to take some advantage of the ISIP provisions, not the little guy, but the professional trader.
The Conservative view is diametrically opposed to that of the people opposite and their friends to our left. We will, on coming into office after the next election, make a real effort to reduce the complexity of the Canadian tax system. Maybe our good friend, Peter Pocklington, went a bit overboard in some of his ideas, maybe he was a little naive, but there is certainly
something to be said for his approach to life. Each budget we would bring in, each income tax amendment or other tax legislation, would have a progressive simplification of the system; of that there is no doubt whatever.
The second point in the Bill before us, and I have cited this already, is that what it amounts to is a massive tax grab on the part of the Liberal Government. This again is in keeping with what the Liberal Government has been doing ever since it came back into power in 1980 and even before. Every tax change the Liberals have presented to this House has had the net effect of tax increases. Maybe there are some little provisions that might produce tax one way or the other but then that would be nullified by a tax grab of a great magnitude, so the net effect of every tax Bill the Liberals have brought before the Parliament of Canada while they have been in office has been a net increase.
The Liberals give taxpayers little breaks. They use them for sales purposes. They can read out long lists of tiny breaks. But on the other side of the ledger the Liberals come in with a big increase. Let us look at the Government's own figures for their forecasts of total budgetary revenue. I do not have the total revenue figures here, but I have the budgetary revenue figures. In fiscal 1982-1983, these are estimated at $55 billion. Let us look at what the Liberals are going to do to us over the next years if they have their way. Four years hence, in the 19861987 fiscal year those same total government budgetary revenues are estimated at $80 billion, that is up $25 billion in four years. That is a 50 per cent increase in revenue which will be taken out of the pockets of Canadians in four years.
Let us look at the Bill we have before us in terms of how it affects the personal income tax payable by Canadians. The Hon. Member from Quebec, I forget his riding, who spoke before said they were going to give us a few little breaks. Obviously he did not read the Bill in any detail. But what will happen over that same period, 1982-1983 to 1986-1987, is that there will be a $1.90 million additional take out of the pockets of Canadian taxpayers. If that is not a tax increase, I do not know what is. This is what the Bill is all about. It is taking more money from Canadians' pockets, and that is why we in the Conservative Party will vote against this Bill.


Some Hon. Members:: Hear, hear!


Dave Nickerson: That is their objective, to take more money from Canadians.
Let us look at the sneaky back-door Liberal ways in which they will do this. Let me give you an example, Mr. Speaker, of a little bit of the salesmanship the Liberals are going to try to use. They talk about the child tax credit. They say, "The child tax credit was $326. Look at what we are going to do. We are going to increase it to $343. Aren't we nice guys?" In that four-year period, that will be a reduction in the amount of government revenue in the amount of $95 million. "Aren't we nice guys," they say. But if you look on the other side of the ledger again and see what they are going to do, you find they are going to maintain the 1981-1982 family income threshold. That is what they are going to do with respect to the child tax
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credit. What they are going to do in that same four-year period by way of the second provision, which they do not talk about, is that they will take $335 million extra. That is how much they will get through that provision. Put the two together and what do you get? You get an additional $240 million in taxes payable. That is a sneaky way the Liberals are doing it, and you should know, Mr. Speaker. I feel obliged to point that out to you, Sir.


John Carnell Crosbie: It is time somebody pointed it out to him.


Dave Nickerson: Let us look at another thing the Liberals have been up to. Let us take a look at the voluntary sector in Canada. We all know how important the voluntary sector is to Canadians in society. The voluntary sector came to the Government and said, "We have a proposal for you to look at. It is called the give and take proposal. When people give money for charitable purposes we want to be able to take some back in the form of an additional tax advantage". The Minister of Finance says, "That sounds like a really good idea. I will meet you halfway. You give and I will take". That is what he said.


Some Hon. Members:: Oh, oh!


Dave Nickerson: What will the effect be of this provision with respect to charitable deductions? It will mean the elimination of the $100 standard deduction. What will the effect be?


John Leslie Evans: Nothing.


Dave Nickerson: The Hon. Member for Ottawa Centre (Mr. Evans) called in from the back and said the effect will be nothing. He has not read his own figures, the figures presented in this House by the Minister of Finance on April 18, because that is where I am getting my figures from. What is this going to take from Canadian charities? It will be $85 million. That is what the Minister of Finance said himself. It will be $85 million in additional revenues. That is what he will take out of the pockets of Canadian charities.


An Hon. Member:: Not from the charities.


Dave Nickerson: Now we know. It is all coming out, Mr. Speaker. It cannot be hidden.
What other thing are the Liberals going to do? They are going to utilize inflation. They always make this song and dance about inflation and how they are going to wrestle it to the ground, how they are going to keep it under control and how they are going to get it down to 6 per cent, to 5 per cent, and to 4 per cent. But really, Sir, they have a vested interest in continuing inflation. We should not forget that. What will they do with the freezing of the deduction, the exemption for dependants under the age of 18? It will be frozen at $710. That will have an effect over the four-year period of $125 million extra.


Mr. Deputy Speaker:: I am obliged to point out to the Hon. Member that his time is expired.


Some Hon. Members:: More!
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Mr. Deputy Speaker:: He may continue with the unanimous consent of the House. Is there unanimous consent?


Some Hon. Members:: Agreed.


Dave Nickerson: Mr. Speaker, I will not indulge in overlong recitals of all the wrongdoings of the Liberal Party. That will take me a lot longer. I will go over a few brief notes remaining on this one page of mine. This is a bad enough indictment of the Liberal Government as it is. Look at the biggest chunk that the Liberals will take from Canadian taxpayers. It mortifies the soul. It is a modification to the federal tax deduction. The Liberals are going to hit the small guy because the federal tax deduction helps the small- and medium-income Canadian. It relieves some of the burden from him. But the Liberals are going to reduce that from $200 to $50. What they will do in the four-year period about which I was talking is to raise through this vicious device the sum of $2,655 million. That is an indisputable figure because it was given to this House by the Minister of Finance himself. When we look at the Income Tax Act we see on the taxpayers' side little changes, for public relations purposes, about which Liberal members can speak when they return home. They are so complex or difficult to understand hardly anyone, except some of their friends, can take advantage of them. On the other side, as I said before, there is a massive and vicious Liberal tax grab.
In conclusion, this Bill amounts to a public relations job, designed to conceal the Liberal hand dipping deeper and deeper into the pockets of Canadians. That is what it is all about.


Douglas Glenn Fisher: Mr. Speaker, I would like to make just a brief comment. The Hon. Member made a big deal out of the delay in the introduction of this piece of legislation into the House. This is something which the Hon. Member for St. John's West raised when he made his introductory speech. I would appreciate some advice from the Hon. Member for Western Arctic about what he would cut out.
As he pointed out, the Ways and Means material was available very early in the day. Canadians knew what we were talking about from the time of the Budget. Then the professional and business community, as well as taxpayers generally, had a chance to assess those statements. In September, the Standing Committee on Finance, Trade and Economic Affairs looked at the tax measures in the Budget. Again we asked Canadians to come before us to provide their reactions and input. Draft legislation was available in October. In November, just before our recess, the Minister of Finance asked for permission to introduce formally the legislation for first reading in the House. That was refused by the Hon. Member for Yukon who, the last time I looked, is a Progressive Conservative. Finally, after the Speech from the Throne, the legislation was reintroduced formally ir the House.
In addition, there were two consultation papers. One was called "Research and Development Tax Policies" and was dated April 1983. Some of the legislation arising out of it is in

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this Bill. The other was the "Indexed Security Investment Plan", a Ways and Means motion dated April 1983. The legislation for that is also in this Bill.
If the Hon. Member does not like this process, perhaps he could tell us what he would like to cut out. I do not understand why he is attacking the very process whereby the Government goes openly to Canadians to obtain their advice and to ask what they think about its idea and whereby the Government goes openly to the Standing Committee on Finance, Trade and Economic Affairs and asks it to canvass opinions and to report on the reactions. How much of that does he want to cut out? Would he rather see hasty legislation introduced the day after the budget, which then becomes a real mess? I do not think so. This is a chance for ordinary people to speak and to make submissions. If the Hon. Member does not like that process, perhaps he could tell us what he thinks would be a better procedure.


Dave Nickerson: Mr. Speaker, with respect to the comments concerning the Hon. Member for Yukon (Mr. Nielsen), it was my understanding that that hon. gentleman was more than co-operative.


John Leslie Evans: No, he refused unanimous consent.


Dave Nickerson: The Hon. Member for Yukon was more than co-operative with the Government. In fact, he did not insist that a Bill be made available. He thanked the Government for what it had done in the Ways and Means motion. He was very complimentary, especially toward the Hon. Member for Mississauga North (Mr. Fisher) and the Hon. Member for Ottawa Centre. He behaved like a proper gentleman, as he usually does.
With respect to the procedure used in this particular instance, I would have liked to have seen a draft Bill as well as the ongoing public consultative process. It might not have been the final Bill; it might have been subject to several changes. It could have been presented as soon as possible after the Ways and Means motion had been made available. It would have been a useful adjunct.
At the same time as the public consultative process was going on, the talking with firms of chartered accountants, tax lawyers and such people, there should have been input from Members of Parliament. These issues could be brought forth from time to time for debate in the House instead of being left until the last minute when there is little chance for parliamentary impact, as is the case with the Bill that we now have presented to us. It is a good idea to go outside the House to consult with professionals in the field of taxation. However, at the same time the Government should not try to circumvent Members of Parliament, especially those in the Opposition. It should not try to blackmail members of the Opposition by bringing forward a Bill with only a few days remaining in the present taxation year before the law is supposed to come into effect and then, as it were, trying to ram the Bill down the throat of Parliament by saying that we will be responsible for
holding up a proper operation of the tax system in Canada. That is not the proper way to go about such things.


Douglas Glenn Fisher: Mr. Speaker, in the previous exchange I think the Hon. Member and I both had some fun with politics. It is important to point out to him that perhaps we should not attack this process quite so vigorously. The very things he has requested are being provided in the process. For example, in September any Member of the House of Commons could have visited the Finance Committee and participated in the debate. Any Member of the House of Commons could have made a contribution to the tax measures through the budget debate following the April 19 presentation of the Budget. Any Member of the House of Commons was quite welcome to introduce ideas following the tabling of the consultation papers. Indeed, any Member of the House of Commons could have had an opportunity to comment upon some of these ideas on the various Opposition days that were devoted to this topic.
1 think my hon. friend should be a bit careful when he says that the process is too complicated, especially when the Hon. Member for St. John's West rose the other day and laid in pretty heavily. I am sorry he has left the Chamber. Perhaps he was having fun rather than being too serious. He knows the process is open at this point. It is quite a serious matter. We will add to the problems of taxpayers by trying to speed it up too much.
Our officials are seeking open public debate about these tax measures before they arrive in the House so that what we will have here will be a refined product stemming from public debate among taxpayers, professionals and Members of the House of Commons. It is important to note that we have had a very open pre and post budget consultative process, of which both sides of the House can be proud.


Mr. Deputy Speaker:: The Chair reminds the Hon. Member for Western Arctic (Mr. Nickerson) that the ten-minute question and answer period has almost expired.


Dave Nickerson: Mr. Speaker, what we are being shown is a rather funny concept of proper parliamentary operations on the other side. What the Parliamentary Secretary to the Minister of Finance said just now is very similar to what the Minister of National Health and Welfare (Miss Begin) said this afternoon in reply to a question by the Hon. Member for Provencher (Mr. Epp). She said: "Oh yes, we will take the regulations for the Canada Health Act and we will discuss them with our provincial counterparts and with the ten medical associations and all the people who might be involved in some way, all the special interest groups. We will do that as a Government and as government Departments and then we will come back to Parliament with what is essentially a fait accompli.'''
That is what is happening with the regulations under the Canada Health Act and with income tax legislation. As a member of Her Majesty's Loyal Opposition, I do not think that is the way to go about this. There is nothing wrong with
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consultation with special interest groups who may have an interest in a piece of legislation, but concurrently parliamentarians should be intimately involved in the development of regulations of this type.


Mr. Doug Anguish (The Battlefords-Meadow Lake):: Mr. Speaker, I would like to put a few words on the record today at second reading of Bill C-2, amendments to the Income Tax Act. This is a very unfair piece of legislation. I am opposed to many items in the Bill because of the unfairness that is prevalent in the amendments. I have always viewed Canada as having a progressive form of income tax. On the surface it may well seem that way, but we do not have a progressive form of income tax. Under such a system, those who have more would pay more general revenue to the Government of Canada.
In my remarks today, I will attempt to point out that we do not have a progressive form of income tax. We are becoming increasingly regressive in terms of the income tax system that we have developed over the years. The previous speaker mentioned the large volume that contains the Income Tax Act. We will have an even more unfair Income Tax Act with the passage of Bill C-2.
In terms of individuals, small businesses, farmers and so on, that is where the unfairness comes into play. They are being asked to pay increasing amounts of the general revenue. It really is the debt load of Canada. The corporations are being helped by big government as a result of this very unfair taxation system.
Bill C-2 will implement many of the tax changes outlined in the 1983 budget. In an over-all view, most Canadians would agree that the Government doled out billions of dollars in tax concessions to big corporations and at the same time put in place measures that will result in lower and middle-income earners paying more than their fair share over the next four years. That is what we are dealing with in terms of some of this legislation. Some provisions deal with a four-year period.
It is important to see the tax measures in the 1983 budget as signalling an important shift in the Government's economic philosophy. The Government has shifted its focus from the demand side of the economy, the so-called Keynesian economics, to the production or supply side of economics. In practical terms, this means that the Government puts a higher priority on stimulating production rather than consumption. That is a basic flaw in the Government's thrust. What we need is not more production. If the consumer demand is there, the production will follow.
I wish to give a couple of examples to emphasize my point. First, the accounting firm of Ernst and Whinney, in a submission to the Economic Council of Canada, observed this:
Most government incentive programs have only a marginal impact on the decision whether or not to invest.
Second, we have an excess capacity whereby one-third of our existing plant capacity is sitting idle. Do we really need more incentives on the supply side? The supply can be there if the consumer demand is there.
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This Government should have its main emphasis on the redistribution of wealth in this country. If money is put into the pockets of the consumer, plant capacity will be operating at 100 per cent rather than two-thirds. There is a bit of faulty thrust on the part of the Government.
There is also a dual standard which comes about when you look at the Throne Speech which the Governor General recently delivered in the Senate. There were many people programs, social programs that affect people. Very few Canadians could disagree with the goals of the Throne Speech in terms of peace and prosperity, the two overriding goals. The dual standard comes in terms of the taxation system we have in Canada. The highlights in Bill C-2 point toward a kind of Reaganomics north, the policies of the United States Government moving more into Canada in terms of our taxation system. On the other hand, the Government does say what it is going to do with social programs, and what affects people in the delivery of programs from the Government is quite attractive. There is a dual standard. I see that as a conflict as to how the Government is going to dovetail that dual standard to make it believable for Canadians.
In the time remaining I want to talk about what I consider to be the highlights of the Bill, which may be low points for many Canadians. The first is the phasing down of the federal tax reduction. This is expected to be a major source of revenue.
The second point that affects personal taxes is the elimination of the standard medical and charitable donation deduction, which we have had the pleasure of dealing with in the past. This personal tax allowed the taxpayer an automatic $100 deduction for charitable donations and medical expenses without the need for receipts. This is being eliminated and taxpayers will now have to supply receipts. Lower-income Canadians who cannot afford to make large donations will lose this valuable deduction. It is expected that this provision will raise about $380 million for the federal Government over the next four years.
The third area in terms of personal tax changes is the indexed security investment plan. This will allow an individual investor to escape paying taxes on that portion of capital gains registered as common stock that is due to inflation. This will result in a significant reduction in the amount of federal Government collections in capital gains tax. It is estimated that this will cost the Treasury some $400 million over the next four years. That is another concession to higher-income Canadians who receive much of their income from investments rather that blood, sweat, labour and toil.
The fourth area in terms of personal tax changes is the special recovery refundable tax credit. Over the next four years, the cost of that program to the federal Treasury is expected to be some $120 million. Again, this is a tax that gives a break to the big corporations which the federal Government is financing through increased taxes on middle and low-income Canadians.

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The fifth thing that I would like to point out that really affects personal taxes is what is called the share purchase tax credit. This tax credit would allow those corporations that are not required to pay taxes to be able to pass on to equity investors the tax credits that they might not be able to claim had those corporations been in a taxable position. Those who buy shares in Canadian corporations will be allowed a 25 per cent tax credit on the value of the shares themselves. I think that a real problem arises here in that many of the provincial Governments have similar kinds of programs and this creates what is known as stacking.
If people are going to buy shares and trade on the stock exchange, I would encourage them to buy shares in Canadian companies, but those people may well be in a position in which the costs for those shares are almost entirely covered by incentives from the Government. I think that we should note that these tax credits are financed, by and large, by the average Canadian wage earners, the majority of whom do not really invest directly in the stock market. This program itself is expected to yield some $70 million to upper income Canadians, and I find that to be a little bit unfair.
I would like to turn to some changes this Bill makes to corporate taxation. There are two major changes on which I would like to spend a few moments. The first is the change to the investment tax credits. The 7 per cent tax which big business was able to claim for investing in new facilities will now be altered by this legislation, which will extend that 7 per cent ceiling possibly as much as 50 per cent, depending on the type of investment and its location.
The second big break for big corporations provided by big government is the extension of the loss carry-over provisions. Prior to the April Budget, corporations could spread losses over a number of years to help reduce the over-all taxable income in each year. Prior to April 19, corporations could carry back losses one year and carry them ahead for five years, making a total of six years. This legislation would extend that period of time by making it possible to spread the loss over three years back and seven years forward, making a total of ten years. This is expected to cost us about $700 million more over the next four years. Again, there is some unfairness there in terms of the taxation of individuals, small businessmen and farmers as compared to big corporations which are helped out by this big Government.
There are a few more things, Mr. Speaker, which I would like to mention briefly. One is the special recovery tax. Beginning October 1, 1984, the federal Government will raise the 9 per cent sales tax to 10 per cent, will increase the federal levy on liquor and tobacco from 12 per cent to 13 per cent, and increase the 5 per cent construction materials tax to 6 per cent. These new rates will remain in effect until the end of 1988 and will raise some $3.5 billion in revenue for the federal Government.
Another change under Bill C-2, Mr. Speaker, is to the Canadian ownership special charge. This year, that tax will raise about $400 million. Next year, that amount will increase
to some $965 million and by 1986, it will be more than $1 billion. This is a regressive tax and it comes down heaviest on the middle and low-income Canadians.
I think there are some things which we must keep in mind, Mr. Speaker. First of all, as many other speakers have echoed, we must simplify the taxation system in Canada, especially as it applies to those people with middle and low incomes who cannot afford to hire accountants to go through the expensive exercise of preparing a taxation form at the end of the year. I put to you, Mr. Speaker, that in fact we should not be charging any income tax to Canadians who live on or below the poverty level. Those people are wage earners and are on some kind of a subsidy program. Perhaps some of them are on unemployment insurance or public assistance. Those people should not pay one cent of income tax.
The Government's tax proposals contained within this piece of legislation are based upon a trickle down theory. If we give enough tax breaks to the wealthy, eventually the benefits will trickle down to those at the bottom of our economic ladder. As the taxation system presently stands, investment is taxed at roughly one-half the rate of salary income. The latest Revenue Canada statistics indicate that of those with incomes in excess of $60,000, more than half their income, on average, is derived from investments. Thus, tax breaks for investors always benefit the wealthy at the expense of the average Canadian who ends up paying for those tax breaks. That is unfair.
Wealthy Canadians are more than able to avoid paying tax by taking advantage of the numerous tax deductions permitted. For example, in 1981, the federal Finance Department pointed out that the average taxpayer with an income which, in 1979, was between $10,000 and $15,000, saved an average of $771 on his interest through deductions, while in the same year, a taxpayer with an income greater than $100,000 saved an average of $46,000 through deductions, almost half of his entire income. The lower income Canadian saved less than 1 per cent of his income through tax deductions. Again, Mr. Speaker, that is very unfair.
This year, big Canadian corporations owe the big federal Government about $25 billion in deferred taxes. If those deferred taxes were collected, it would almost wipe out the Government's annual deficit. I think the Government should look at collecting those deferred taxes. I believe that that is also unfair to the people of Canada.
As well, there is an increasing imbalance regarding who pays the general revenue in Canada. Looking at 1950, the year in which 1 was born, individual contributions to the general revenue of Canada amounted to some 50 per cent or 51 per cent, and contributions by corporations amounted to some 49 per cent to 50 per cent. There was a fair balance between the big corporate contributions to the general revenue and the individual taxpayer's contribution. If we look at the last Budget brought down by the Minister of Finance (Mr. Lalonde), we find that only 13 cents of every dollar in general revenue has been paid by the large corporations in the country. There is an increasing inequity there and I think that we must start addressing that question.
December 15, 1983

Although it does not come under the provisions of this Bill, one of the things that we must do is to address the plight of farmers right across Canada, because it certainly does deal with the matter of taxation in the country. The Department of National Revenue has the right to place value judgments on farming operations and classify the farmers, through an arbitrary kind of decision, as either part-time or hobby farmers rather than full-time farmers. This is grossly unfair. These farmers are reclassified because many of them have had to seek work off the farm due to the depressed state of agriculture in the country in order to earn enough money to keep their operations going. Revenue Canada has not taken this into consideration but has come down very hard on them. We must address the situation where farmers are reclassified even though they are full-time farmers, have always been full-time farmers and, in most instances, would not be working off the farm if they could make enough money on it to keep it going as a viable operation.


Mr. Deputy Speaker:: 1 hesitate to interrupt the Hon. Member but his time has expired. Is there unanimous consent for the Hon. Member to continue?


Some Hon. Members:: Agreed.


An Hon. Member:: No.


Mr. Deputy Speaker:: There does not appear to be unanimous consent. The procedure will now provide for a question and answer period, as I understand the order that was adopted. Are Hon. Members rising to ask questions?


Mr. Beatty:: Mr. Speaker, the Hon. Member was in full flight on a point that I thought was important. I wonder if I could ask him to elaborate briefly on it.


Douglas Keith Anguish: Mr. Speaker, 1 should like to thank the Hon. Member for Wellington-Dufferin-Simcoe (Mr. Beatty) for the question. I appreciate the opportunity to elaborate on the topic of Revenue Canada being able to make arbitrary, independent value judgments against farms right across Canada.
A person who has been a full-time, bona fide farmer for a number of years can run into very pressing cash flow problems because of escalating costs, the high interest rate period farmers have gone through and which some are still locked into. This has made it necessary for them to work off the farm in order to earn extra income so that they can keep the farm and produce the foodstuffs that are needed in the country as well as for the export sales that are so important to our economy. When this happens, Revenue Canada reclassifies the farmer as part-time or hobby farmer. It does not allow him to claim the loss deductions at the end of the taxation year that he should normally be able to declare. In some cases this is an astronomical cost to the farmer. Unless the Minister of Agriculture (Mr. Whelan), the Minister of National Revenue (Mr. Bussieres) and the Minister of Finance get together to come to grips with this problem, in the future farms will disappear, in western Canada certainly and probably all across the country.
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Another problem area is with young farmers trying to buy up land to go into farming or taking over the family farm. They cannot afford to make the payments and maintain themselves at a decent standard of living. In many cases, at least in my section of the country, they go out and work on the oil rigs or some other place for extra income, in the wintertime. In the spring they do the seeding, work the farm in the summertime and do the harvest in the fall. It is only in the wintertime that they work off the farm. They work very hard to make the farms viable, but Revenue Canada is threatening their existence. Without the extra income, unless the price of agricultural products increases enormously, not many young people will go into farming. The large corporate farms might function efficiently, but I do not think that is the answer in this country. We must preserve the system of agriculture that we have. The Government, and Revenue Canada specifically, is putting that in serious jeopardy.


Douglas Glenn Fisher: Mr. Speaker, I should like to follow up on a important point raised by the Hon. Member about people who leave the farm to earn extra income.
I take it that his point focuses on two or three important problems. The first is that farmers are currently facing unusual or extraordinary losses because of lower prices and higher costs related to the recession, and particularly high interest rates. Second, they are doing this because they want to stay on the farm for some length of time and they expect the farm to become profitable in the future.
I should like to get the Hon. Member's advice on some points. The losses he has described are, I presume, short-term losses for one or two years, and then they expect to earn a profit. The budget provided that farmers could carry their losses forward for 10 years and each year reduce their profit by the previous year's loss. A loss that might have occurred this year or last year could be amortized over 10 years and used to reduce profits over the next 10 years, in order to reduce tax. I should like the Hon. Member's recommendation on that. I ask this seriously because I presume the losses we have heard about are one-time losses over the recessionary period and that people are looking forward to profits in the future. I have a follow-up question on another matter altogether for the Hon. Member.


Douglas Keith Anguish: Mr. Speaker, the Hon. Member has outlined the plight of the farmers quite well. This is a short time thing because costs to the farmer have gone up much more rapidly than the prices they are receiving for their products, but unless something happens to turn that around, the problem will persist for several years.
I like the provision to carry over losses for 10 years but, unless things improve, that does not solve the problem. The price the farmer receives has to take into consideration the cost of production plus a profit. I am sure any farmer would like to have the same provision as that extended to the railways in Bill C-155 where they were guaranteed an annual rate of 20 per cent return on investment. Farmers would be very happy with

December 15, 1983
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that. I am pleased with the provision for carrying the losses over 10 years; it is part of the answer but it is not all of it.


Douglas Glenn Fisher: The comparison to the railroads is a separate matter, Mr. Speaker. I take it that as far as the tax system is concerned, if we are dealing with a loss for one or two years with profits in the future, then this is not a bad measure in the Hon. Member's opinion.
We have a problem in the tax system, and I would appreciate the Hon. Member's advice on this. A farmer is allowed to use the cash system, which means he can write off his expenses in the same year as they are incurred; he does not have to use the accrual system where an expense is only written off if the item is sold or declared valueless. Businesses must use the accrual system but farmers do not have to. In the Hon. Member's part of the country where the major industry is farming and there are not a lot of speculators or hobby farmers, this tax problem does not arise. In my area of Mississauga, however, there are lots of farmers, but they are all living on somebody else's land. There is crazy real estate speculation and lots of people would love to have access to the cash system in order to have a loophole for their businesses. In other words, we have apples and oranges in the tax system and that is a real problem.
I am sure the Hon. Member would agree with the representation made to me by the Canadian Cattlemen's Association that the cash system should not be thrown out. But they could not come up with an alternative for this problem. I would like to know how the Hon. Member sees this and I would like to know what his advice is for an alternative, because it is a really tough problem, especially in farming areas surrounding cities where people will claim to be farmers and who are using the farm tax system for purposes other than honest activity. I would like to hear the Hon. Member's advice on this very tough problem.


Mr. Deputy Speaker:: The problem the Chair has is that the 10-minute question and answer period has expired. Is there unanimous consent to extend the time?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: There is. The Hon. Member for The Battlefords-Meadow Lake.


Douglas Keith Anguish: Mr. Speaker, I would like to see the cash system stay in my area as it is. I believe that is preferable to many of the people that I know in farming, my father-in-law, my brother-in-law, and to many other people to whom I am very close and who are involved in farming.
As far as what is happening at the present time is concerned, I believe you have to look at the precedent which has been set by people involved in farming. Certainly, in my area of Canada we do not have very many people whom we consider to be hobby farmers. I know the Government is in a difficult situation. However, I believe one really has to look at what the full-time occupation is of the person in question. For example,
if the person is a lawyer with a law practice in a town and has done that for a number of years, and all of a sudden he buys a half-section of farmland, he should not be qualified as a full-time farmer. To me, he is a part-time farmer. On the other hand, someone who grew up on a farm and is in the process of buying a half-section or two sections of land from his father or mother, who has to borrow the money from the Farm Credit Corporation, the bank or the credit union to go into that farm, and that person, in order to make his payments, must go out and work in the wintertime, that person, to me, is a bona fide, full-time farmer. He wants to farm. I do not believe you can project what is to happen in the future. I believe you have to look at what that individual has been doing in the past. If that individual has been farming full-time, then he should be a full-time farmer.
The problem now with Revenue Canada, Mr. Speaker, is that it does not look at the situation in a very understanding way. I do not believe it really understands. It looks at the bottom line and sees that in this year this young fellow, this farmer, has gone off the farm and earned more income than he earned from farming and all of a sudden he is not a full-time farmer anymore. That is grossly unfair.


Charles James Mayer: Mr. Speaker, it truly is a joyous season of the year, Christmas, to talk about income tax. I cannot think of anything much more contradictory to the season than that. It is not that Canadians do not want to pay income tax. I believe we all realize that governments must spend money and, by and large, governments, do things for us which cost money and which we appreciate. However, there are certainly some problems associated with the Income Tax Act.
I would like to refer just briefly, Mr. Speaker, to the interchange between the Parliamentary Secretary and the Hon. Member for The Battlefords-Meadow Lake (Mr. Anguish). I suppose the problem I have is that the questions posed by the Parliamentary Secretary indicate a kind of mindset according to which the Government has a right to everything we produce and everything we have as individuals in this country. If we are allowed to keep anything, we are only allowed to keep it by the grace of government. I believe that is the problem indicated in the questions of the Parliamentary Secretary.


Douglas Glenn Fisher: I did not say anything like that.


Charles James Mayer: I know you did not. What I am saying is that it seems to me that the premise behind some of the questions of the Parliamentary Secretary comes from that kind of mindset.
I will give you an example, Mr. Speaker. The Parliamentary Secretary talked about whether farmers should report on a cash basis or on an accrual basis. In many areas of this country, that is an absolutely ludicrous question. It simply is not possible.


Douglas Glenn Fisher: Do you want us to set up tax zones?
December 15, 1983


Charles James Mayer: I am not suggesting that you set up tax zones. I am suggesting that we back away from the tax system and try to take a look at it in terms of an incentive to help people produce. What we have now is a system where people back away from production because they are afraid that if they produce too much, they will become too taxable and will have to give the money to the government. We run into this all the time when we try to hire someone. They do not want to work, because if they work too much they will be paying too much in tax. There is no incentive for them to work because they can collect unemployment insurance. That is the kind of mindset to which I referred.
When the Parliamentary Secretary asked whether we should go on an accrual basis as far as farming is concerned, he should know that you would literally need an army of accountants to verify these things. Everyone who pays taxes as a farmer would have to have an audited financial statement at the end of his tax year. That, in many ways, would be simply counter-productive. Frankly, I do not know how one could possibly make it work on any kind of realistic or fair basis. That is the first thing I have to say, Mr. Speaker, about the difference between a cash system, as far as reporting farm income is concerned, and the accrual system, without getting into the meaning of a cash system and an accrual system.
I listened with interest to a comment made by my colleague, the Hon. Member for Medicine Hat (Mr. Hargrave) who pointed out-and perhaps the Parliamentary Secretary would listen to this-that the Alberta Government is addressing the problem associated with farmland being bought up around cities. The most prevalent two cities are Edmonton and Calgary, obviously. The land is being bought up for future industrial development or zoning as far as housing is concerned. The Government of Alberta is apparently addressing this problem and coming up with something which apparently is worth looking at. I suggest that if the Parliamentary Secretary is not already aware of this, he should either talk to the Hon. Member for Medicine Hat or someone from the Government of Alberta to see what kind of steps it is taking to alleviate some of the problems in that area.
There are some problems. I do not doubt that. However, it seems to me problems are almost implicit when you get into an amendment which is not quite as thick as a two by four, but at least as thick as an inch board. I do not know how anyone could possibly understand the Income Tax Act. The basis of our whole taxation system is that it be voluntary and that people want to comply with it. Most people in this country still have a sense of fair play and realize they have to pay taxes, although they do so grudgingly. In most cases they pay their full share. However, when the tax system is so complicated that they are not sure whether they are taking full advantage of all the different sections in the Act, then it becomes very easy for people to rationalize that they should perhaps try to cut some corners or try to get by with paying less tax than they would normally pay.
A lot of people I talk to feel that this Government has a conspiracy, a planned conspiracy, to regulate everything, to
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take everything over. I do not see any evidence of that, Mr. Speaker. I believe one can accomplish the same results or leave the same impression by being ignorant, very stupid and very greedy. I think that is the indictment we can lay at the feet of this Government. It is not an indictment of complicity or of any great or grand insidious scheme. It is simply that this Government is overly ignorant, excessively stupid and, above all, greedy in what it wants to take out of the pockets of Canadians at tax time.
We heard an exchange here between the Parliamentary Secretary and my colleague, the Hon. Member for Western Arctic (Mr. Nickerson) about how the Government should have proceeded in terms of getting these amendments through at the proper time so we are not forced to pass them in haste before the end of the year, with people's refunds being held up.
I point out that the Budget was brought down back in April. Surely to goodness the Government could have organized its time in such a fashion that we could have had this Bill before us long before the Christmas adjournment. I find that-


Douglas Glenn Fisher: We had the Ways and Means motion. You had it virtually verbatim.


Charles James Mayer: But why did we have to wait so long to get the Bill itself?


Douglas Glenn Fisher: Because it is only the final product of consultation with the public. You had it virtually verbatim.


Charles James Mayer: I realize all that, but the point is still a valid point in the sense that we in the Opposition do not want to hold up the Bill unduly. We want to see that the people who have tax refunds coming to them in 1984, as a result of tax they paid in 1983, receive that refund as quickly as possible. Why could we not have had this Bill a couple of months ago? I do not understand that. In fact, I had a letter today from someone who does not yet have his 1982 tax refund. That does not make any sense. But let me talk a little bit about some of the things that could have been in the budget, Mr. Speaker.


Douglas Glenn Fisher: Filibuster.


Charles James Mayer: He talks about filibuster. Any time the Government does not get its own way, it says "filibuster". I find that unfortunate.


Douglas Glenn Fisher: It is true.


Charles James Mayer: If the Hon. Member wants to be fair about it, I think he would have to say that a lot of us on this side have attempted to make very useful suggestions to the Government, but the Government chooses to ignore them. In any event, "filibuster" is not a proper term because it is an American term which applies more aptly to their rules than it does to the rules in this House.
I will ask a rhetorical question, Mr. Speaker, in the sense that I do not expect to get an answer, but nevertheless a real question which I am asked by the people who sent me here to

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represent them. These figures are now about two weeks old, but if I walk in to a bank with money to invest in a certificate for three to five years, I am paid 8.5 per cent. That is not much compared to what it was a couple of years ago when interest rates were up close to 20 per cent, but it is quite a bit more than when I first started to farm and interest rates were 4 per cent or 5 per cent. But when I go to borrow money from the bank or from the Farm Credit Corporation, it is in the neighbourhood of 13 per cent. In fact, the FCC loan rate came down to 13 per cent, 1 believe, just two weeks ago. There is a 4.5 per cent spread. If the Government were really serious about long-term financing in agriculture, I do not see why it could not have addressed some of these areas in the Budget. It is a simple, straightforward question. You put money in the bank at 8.5 per cent, and the FCC has to lend money to you at 13 per cent. That seems to be an excessively large spread. Why? I do not have an answer, but I am sure that if we had sat down with some of the best brains in this country-and we do have some very capable people not only in industry but on the academic and government side-we could have come up with a program which would have allowed a limited amount of long-term financing for farmers at a reduced rate.
I am not advocating that all farm financing should be at a preferential rate, because we would get into all kinds of problems. We do not want to give advantages to people and have them simply turn around and recapitalize that advantage back into the value of the land or the assets they are buying. That is basically counterproductive. But I am sure there must be a way that we could get a certain amount of money for new farmers starting up at a lower rate than 13 per cent.
There is another area which does not make any sense and which I think the Government could have addressed in the Ways and Means motions, in last year's Budget, and finally in the Bill we have in front of us today. Excuse me if I am parochial about the Province of Manitoba, but we pay an excise tax on farm fuel of 7 cents a gallon. It is collected, and then you submit your bills and get your money back. That fuel is not allowed to be used in any vehicle other than a farm vehicle. It is coloured differently than the gas you get at the gasoline pump. The Government collects the money and then refunds it under certain circumstances. The tax paid on farm fuel is less than the tax on gasoline used for any other purpose. Now, it would make more sense to me, to anyone who understands what I am saying, if the tax were not collected in the first place. It would save all of the paper work that goes into collecting, remitting and refunding the tax. It would save I do not know how many people in the Revenue Department in Winnipeg from having to audit all these bills. It would also save a lot of hard feelings that people have when they have to pay the tax and submit bills for audit in order to get the refund. In fact, I know of a lot of cases where people get so upset that they do not think it is even worth bothering to get the refund. Here is a case where simply addressing that problem would make people feel better about the tax system, would convince them it was fair and would save the Government money.
I see the Minister of Agriculture (Mr. Whelan) and I hope he is listening. In Manitoba it would at least alleviate a bit of the cash flow problem. Admittedly, seven cents a gallon is not much but it is better than nothing. The money would not come out of the farmer's pocket and he would not have to wait six or seven months to get it back.
I have raised this matter in committee. I do not understand why this situation could not have been in the Bill we are debating here today. It goes back to the way people look at government. If they felt a little bit better about it, there would not be the inclination which is developing in the country to do whatever you can to minimize your tax, even if in some cases you end up bending the rules a little bit. I strongly suggest to the Parliamentary Secretary, if he is serious about addressing some of the inequities in the Act, that that is one area at which he should look, and as quickly as he possibly can.
The Hon. Member for The Battlefords-Meadow Lake talked about Section 31 of the Income Tax Act. That section is causing severe problems for people in the sense that they do not know how to budget. They do not know whether to work very hard at two jobs, or in some cases three jobs over a period of time, and whether in fact that is going to give them any kind of advantage as far as ever owning a piece of land is concerned. I think that is very sad. There was a recent case in Ontario where a hog farmer won a case against the Department of National Revenue with specific reference to Section 31 of the Act. I suspect he was a very meticulous fellow and kept very good records and very good track of the hours he spent on his hog operation. You have to feed hogs every day. Some of us who have done so know that you have to "slop" hogs a couple of times a day. We do not do it like that any more because there are all kinds of modern equipment for feeding the hogs, but it has to be done every day. In this case the farmer could prove that he spent more hours on his farming job than he spent on his regular job. But there are other cases. The Hon. Member for The Battlefords-Meadow Lake made a very good point that the tax people are not at all knowledgeable about farming operations. Even if they are, they are not at all sensitive to what goes on. I am referring to the so-called Graham case in Ontario. But a farmer could be very much involved in farming and spend very few hours at certain times of the year on the farm. If you are a grain farmer, you have a very busy time in the spring and in the fall. If you are a beef farmer, you have a very busy time when your cows are calving and in the winter when you have to feed them every day. But there are times of the year when you do not necessarily have to spend a lot of time on your farm. The problem I have is that I am not so sure that this Graham case will be used as a proper test case, as I think it should be, in the sense that a hog or poultry operation requires attention every day of the year. I would like to see it pointed out to the Department of National Revenue that there are other cases where a farmer can be every bit as much involved in farming as in the hog or poultry operation and still not spend nearly the number of hours on a continuing basis as in this one case.
December 15, 1983

I see my time is running out, Mr. Speaker. May I call it six o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 45 deemed to have been moved.

Gordon Edward Taylor: Mr. Speaker, yesterday I asked the Minister of Revenue (Mr. Bussieres) the following question:
When will the Government return the $1,000 that the Department of Revenue misplaced, lost, or stole from the new Canadian living in Cochrane, Alberta?
The Minister replied:
-unfortunately, I do not remember this particular case.
In this adjournment debate I once again outline the bare facts of this case which has now been done on the floor of this House a number of times, to say nothing of the pages and pages of correspondence.
In 1975 a Canadian citizen living in Cochrane, Alberta who was operating a service station sent a $1,000 cheque to Revenue Canada as his installment payment through the Mercantile Bank. The cheque was cashed and stamped by Revenue Canada. The $1,000 was credited to my constituent's account. The cancelled cheque was then returned. After the money was credited to the account of my constituent someone in the Department decided, for some reason, that the $1,000 should not have been credited to this account, and transferred it. Where? I do not know.
As soon as they found out about this the Canadian citizen and his accountant advised the Department of the mistake. The officials in Calgary advised the accountant and the constituent, who made weekly calls to the Department, that it was simply a computer mistake and that it would be corrected shortly. The matter dragged on, however. My constituent inadvertently found out that Revenue Canada, because there was about $1,000 owing on his account after the $1,000 was removed in error by the clerk, had gone into his bank account and taken out $1,000. The Department of Revenue did not notify my constituent about this confiscation of $1,000 then or later. He found out inadvertently through the bank manager. Again the accountant went to Revenue Canada and was simply told that there was a computer mistake and it would be corrected shortly.
About this time the records of Revenue Canada were moved from Calgary to Winnipeg. The citizen continued to make
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representations to have this matter cleared up but was advised that the file had been closed and the files destroyed.
In May of 1981 this matter was brought to my attention. We asked the Minister of the Department of National Revenue to check the file and correct the error. In a letter dated August 7, 1981 the Minister advised me that the letter of February 18, 1981 from the Winnipeg taxation office advising that the records had been destroyed had been sent in error. So the files were not destroyed after all.
To complicate the matter even more, on September 25, 1981, the Director of Winnipeg Taxation sent a letter to my constituent stating that the cheque in the amount of $1,000 dated October 14, 1975, had never been received. What do you know? After months of negotiation the Director suddenly decided that they did not even get the cheque.
The Mercantile Bank wrote to Revenue Canada on October 28, stating that it would appear that the $1,000 payment was included in a $2,121.69 cheque of October 20, 1975, which was cashed by the Receiver General on October 22, 1979. On or about June 15, 1982, I was advised that a total remittance of some $2,000 was returned to the Mercantile Bank in Calgary as it did not carry any identification. The Minister assumed that this was the $ 1,000 about which we were speaking. The Mercantile Bank, however, states that they have no record of the $2,000 being returned to them. They want a copy of the letter that was sent to them from the Department. This, the Department claims, it cannot provide. The Mercantile Bank then said that there was nothing it could do about the matter as their records had been destroyed.
On November 1, 1982 the Sectional Head of the Revenue Accounting Department in Calgary wrote to the manager of the Mercantile Bank and stated in part:
The trail appears to lead to the return, by the Ottawa Taxation Centre, of $2,000 to your office on November 6, 1975, due to missing vouchers. Our Head Office advises that all records from 1975 have been destroyed-
Now they are destroyed again.
-and we are therefore unable to provide a copy of the settlement. Our investigation of this matter has ended and there is, therefore, little to add in response to your query of September 15,1982.
You will notice that National Revenue is saying the files are destroyed.
Further representation was made to the Minister. Again, on November 19, 1982 the Mercantile Bank manager wrote to my constituent. He said in part:
As we have checked all our records-
They are destroyed but he still checks them.
-for the period involved and could not find a trace of the receipt of the settlement in question, we are unfortunately unable to pursue this matter until it can be proved to us that we received the funds. As is usual, in matters of payment, the onus of proof is on the remitter and we have absolved ourselves by presenting our cheque with the endorsement of the Receiver General.
On April 25, 1983, the Minister of National Revenue wrote to me in a letter:

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Since this matter was not brought to my department's attention until after the four-year limitation, this matter must now be considered closed.
The Department requires seven years if it is checking an individual's account. Now it is closing its files on the taxpayer in four years.
The Calgary office repeatedly told my constituent or his accountant that it was a computer mistake which would be corrected. Revenue Canada, Winnipeg claims the records are destroyed. The Minister says they are not. Both the department and the bank claim they have checked and rechecked their records, the ones that were supposed to be destroyed. How could they do this if the records were destroyed? The truth is the records of the Department of Revenue appear to be in a disgraceful mess.
In summary, I ask again where is this $1,000? The taxpayer sent it through the bank to the Department of National Revenue. The Department of National Revenue cashed it. What the Revenue Department has done with it is the responsibility of that Department and certainly not the responsibility of my constituent. There is a definite responsibility now on the part of the Government to pay back this $1,000 to this Canadian citizen. If this is not done, this is another case of the Government ignoring the Charter of Rights, ignoring any sense of fairness and trampling over an innocent individual. I hope this $ 1,000 can be returned very shortly; it should be returned to my constituent.


Mr. Garnet M. Bloomfield (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, if there is one aspect of the Income Tax Act that one would expect all Members of this House to be aware of and to respect, it is the provision concerning the strict rules that apply to the confidentiality of the affairs of a taxpayer in so far as they have become known to the Department. Therefore, I am constrained from giving any details of the case the Hon. Member has raised and I am sure he understands that as well as I do.


Gordon Edward Taylor: Mr. Speaker, I have a point of order. The department has the authority of the taxpayer to do it.


Garnet McCallum Bloomfield: I can only say that the Hon. Member, with the very best intentions 1 am sure, has continued to pursue this matter with more than one Minister of National Revenue in quite a number of letters. A number of replies have been sent to him stating and reiterating the Department's position. It is obvious that he is not yet satisfied, but his persistence does not change either the applicable law or the facts of the case. One would always like to be more obliging but it is not possible in the circumstances for this to be done.


MINES AND MINING-URANIUM CITY, SASK - COMPENSATION SOUGHT FOR PROPERTY OWNERS
Ramon John Hnatyshyn: Mr. Speaker, two years ago Eldorado Nuclear Limited announced its intention of terminating its operation in Uranium City, Saskatchewan. As I pointed out the other day, in doing so Eldorado Nuclear in effect signed the death warrant for the whole community,
an important and thriving community in northern Saskatchewan, a province that I am proud to represent. One labour union local said it was stunned when it first heard the devastating news on the radio, and by word of mouth, and was given no time to prepare for this unnatural disaster.
A work force of 830 miners and ancillary workers were put on notice on November 3 that as of the following June, a seven-month period, the mine was closing and their jobs would disappear. The work force of 830 was actively encouraged to leave. I ask you, Mr. Speaker, who would not leave under those circumstances? Payments were made to the employees according to law. Certain severance benefits were paid. Unemployment insurance benefits where applicable were brought into effect.
Shortly after the announcement of the closure a task force was established to determine what should happen with respect to Uranium City. It was known as the "steering committee" of the Uranium City Task Force, which had participation at federal and provincial levels. It has now been some year and a half since the report of that task force was brought down. I am sorry to report that no action has been taken with respect to one of its key recommendations concerning compensation to be paid by way of indemnification to people who had property or an interest in Uranium City and were forced to leave that community as a result of the decision by Eldorado Nuclear Limited. They lost their entire life savings and investment in the community.
At the time I asked my question I was saddened that once again the Minister of National Revenue (Mr. Bussieres) resorted to the old political device of talking about another circumstance, the Iron Ore Company situation in Schefferville, Quebec. I point out to the Minister through his Parliamentary Secretary that if the Government of Canada had operated in the same rational manner as the Iron Ore Company with respect to Schefferville, I would not be asking these questions on behalf of the people of Uranium City who have lost their life savings. They would not still be calling me and asking me to speak out on their behalf to the Government of Canada.
The decision taken with respect to Schefferville was applauded by the unions involved, by the provincial Government of Quebec, and with unbridled enthusiasm the Minister of Consumer and Corporate Affairs (Mrs. Erola) wrote a letter on behalf of the Government of Canada simply indicating how proud it was about the way in which that unfortunate situation in Schefferville was handled. When the Minister of National Revenue resorts to making reference to that situation, he does himself a disservice because he is making the wrong analogy with respect to what happened in Uranium City.
In Uranium City there are people who are now running out of unemployment insurance benefits. They are unable to find employment. They do not have any money because they invested in homes in that city worth $20,000 to $45,000 homes which have been lost to them. The plant in Uranium City is

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now being flattened by Eldorado Nuclear Limited. This morning the Solicitor General (Mr. Kaplan) told me that they had given some thought to opening up a penal colony in Uranium City. That was one of the options for a city which at one time was thriving and vibrant.
If I speak with some emotion about the treatment which has been afforded and about the lack of attention given the people of Uranium City who are proud, hard-working, contributing members of society, you will pardon me, Mr. Speaker. I think it is fair to ask for a better response than the one 1 received, the no response of the Government which indicated that somehow someone in the Senate had some responsibility for the matter. They were not prepared to give an undertaking for immediate action to reopen this file or to give some fair and equitable treatment to people who, by virtue of a heartless and deceptive decision by Eldorado Nuclear Limited, have suffered a very serious wrench in their lives and have lost their life savings.
In conclusion, the people of Uranium City had been led to believe that they were employees of that Crown corporation and that the mine would flourish for a period of possibly 10, 15, or 25 years. A matter of a few months before the announcement was made, approximately two years ago, I spoke with the former mayor of Uranium City. She indicated that she had been assured by the officials of Eldorado Nuclear Limited that the mine in fact had a long potential and would be carrying on in that community for 15 or 20 years. She now resides in the City of Saskatoon with her husband. It is indicative of the situation with which many people in Uranium City are faced. I simply ask the Parliamentary Secretary to give me the assurance tonight that some action will be taken on the part of the federal Government to pay some reasonable compensation as was requested and recommended by the task force.


Garnet McCallum Bloomfield: Mr. Speaker, in reply to the Hon. Member for Saskatoon West (Mr. Hnatyshyn), I would like to outline for the House some of the aid which has been provided to the people of Uranium City. First I would like to point out that he is wrong in his suggestion that the 1981 announcement of the Beaverlodge mine closing was heartless and deceptive. Eldorado Nuclear Limited, a federal Crown corporation, announced in December, 1981 that it would close the mine in June, 1982, giving a full seven months' notice to its employees and to the community, I suggest that few employees or officials of any town received that much notice of an industrial or mine closing.
I reject the suggestion of the Hon. Member that the federal Government shut down Uranium City. The town was formed by the Province of Saskatchewan in 1953 as the service centre for 12 mines operating in the area. The town is still in existence and is within the jurisdiction of the provincial government. The federal Government has not, nor could it, shut down Uranium City.
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Let me deal for a few moments with the assistance that has been provided to the people of Uranium City. I should note that the Hon. Member makes a distinction between the people of the town and the employees of Eldorado. However, the Eldorado workers and their families made up approximately 80 per cent of the town's population.
The assistance that has been provided includes the following: Eldorado paid its workers some $6 million in early retirement benefits and severance pay, which included four weeks for the first full year of service and two weeks' pay for each additional year. Workers and their families received more than $2 million in relocation assistance from Eldorado and the federal Government. The federal Government initiated its job-search program. Eldorado continued to pay 87 per cent of the town's total municipal taxes for a year after the closing. The company wrote off $700,000 in Uranium City debentures. Eldorado provided a grant of $500,000 to assist non-Eldorado residents of Uranium City to re-establish themselves in other communities. This program, which was administered by an independent committee in the town, aided 102 families.
The assistance provided to the people of Uranium City goes far beyond what was legally required. Faced with the inevitable decision that the mine was no longer economical and had to close, every effort was made by the company and the Government to ensure that the decision was carried out in a fair and equitable manner.


NATIONAL REVENUE-NORTHERN BENEFITS-CLASSIFICATION OF TAXPAYERS
Dave Nickerson: Mr. Speaker, my presentation tonight deals with the subject of northern taxation. It is a subject that we on this side consider to be very important. We certainly do not treat it in the light and flippant manner that gentlemen opposite do.
To set the stage, I will briefly review the problem. Costs of living in the north can be anywhere between 30 per cent and 130 per cent higher than in southern Canada. The dollar in effect is worth 70 cents, 50 cents and in certain locations even less. Therefore, compensation by way of wages, salaries and other benefits has to be greater than in the south if northerners are to have the same standard of living. Unfortunately, because of the progressive nature of the Canadian income tax system, this results in northerners paying a higher rate of income tax than do southern Canadians.
Over a period of years, a system was developed in the north that gave people certain benefits, particularly housing allowances and vacation travel allowances. Until 1978, these were generally not taxed, although, according to the strict interpretation of the Income Tax Act, they should have been. It was in that year that the Liberal Government of the day first tried to nail northerners on these so-called benefits that really only helped to make their standard of living roughly similar to that of southern Canadians. A public outrage resulted in the 1980 remission order. I think that is the year the first remission order was passed by the Governor in Council. There certainly

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Adjournment Debate
was a public outrage. I remember that the Minister of Indian Affairs and Northern Development (Mr. Munro) was met at the airport and every place he went at that time by people carrying pickets when he tried to go back on the election promises that had been made earlier that year.
Earlier this year, the Minister of Finance (Mr. Lalonde) came up with a plan to phase out this remission order over a period of four years. That would have resulted in an additional tax of about $2,500 per annum to someone with a reasonable salary, a miner or somebody working for territorial or municipal government. If that were to be made up to the employee by the employer at a marginal tax rate of 50 per cent, that would put a tax burden on the employer of $5,000 per year. That is certainly not the way to create jobs in the north or anywhere else, Mr. Speaker.
Again there was a public outcry. Employers, employees, unions and members of political Parties, particularly the Progressive Conservative Party, spoke out forcefully. As a result of this, the Minister of Finance was obliged to back down, and on December 9 he issued a communique extending the present remission order. Unfortunately, Sir, it only amounts to a stay of execution but I suppose we must be thankful for small mercies.
This move is really just an election ploy. I only have to read the communique to discover that. This is presumably a government press release and not a Party press release but in it, the Minister expressed special thanks to his colleague, the Minister of Indian Affairs and Northern Development, for his contribution, and he, Sir, did nothing. He expressed thanks to certain of his Liberal parliamentary colleagues such as the Hon. Member for Nunatsiaq (Mr. Ittinuar) who did even less, the Hon. Member for Manicouagan (Mr. Maltais) who did do a little bit and the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Rompkey) who was, when he was Minister of National Revenue, in a position to do something but did not.
Yesterday, the Hon. Member for Yukon (Mr. Nielsen) asked the Minister whether or not this order was extended only until the time of the next election. There was no reaction from that Minister but the Minister of Finance sat in his seat smiling. He knows full well that they have no intention of carrying this order past the time of the next election.
I asked two questions yesterday. First, I asked why the Department is nailing employees of small companies. Certain plans that have been established by smaller employers do not correspond to the strict technical details of the remission order. People from the Department of National Revenue have been looking into this and if they can find one "i" that is not dotted or one "t" that is not crossed, they have been nailing the employees of those small corporations instead of giving them the benefit of the doubt and interpreting the remission order in the spirit in which I would like to see it interpreted. They have gone by the strict technicalities and reassessed people sometimes two or three years back and sent them bills for considerable amounts of taxes that they consider to be owing. That is not a fair way to deal with this issue.
My second question dealt with the formation under yesterday's announcement of classes of taxpayers, such as those who had plans in effect before November 13, 1981; those who have plans that were brought into effect after that date, and those with no plans at all. I received no answer to my question. The Minister of National Revenue (Mr. Bussieres) did not even try to answer that question. I think it is wrong, unfair and inequitable to create certain different classes of taxpayers in this way.
I should point out that when I received this press release, I phoned the contact person who was listed at the back and asked if I could have a copy of the remission order or a new remission order to see how this would be enforced. That person knew practically nothing about it. I suspect that this is something that was done by the Minister for political reasons without any consultation with his departmental officials.
I continue to call for a permanent solution to the problem of northern taxation. We must amend the Income Tax Act; we should not have year to year remission orders that can disappear at any time. I should like to see the Oberle report and the Bird report of the Government of the Northwest Territories implemented.
I was very pleased when just a week ago in Whitehorse the new Leader of the Opposition (Mr. Mulroney) stated that it was the intention of the Progressive Conservative Party to fully address this issue during its first budget in its first term of office.


Garnet McCallum Bloomfield: Mr. Speaker, it might be helpful to remind Hon. Members that the Income Tax Act requires that the value of non-salary benefits defined in a very general sense be added to taxable income just as if they were salary. To quote in part, it says one has to include in income the value of "board, lodging and other benefits of any kind whatever", and then goes on to make certain specific exceptions to this very sweeping rule, none of which are germane to the issue at hand.
Many employers throughout the country provide non-salary benefits of a wide variety, some trifling in amount, some very significant. Among the most significant non-salary benefits are those paid by certain employers to their employees located in the more remote regions of Canada. Though these benefits are clearly taxable under the law, it was found by Revenue Canada that they were often not being reported by employers and that, therefore, the legally required tax was often not being paid.
However, the Government has recognized that it would create some difficulty for employees in the North who have
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been enjoying these benefits if they were suddenly subject to tax. The Government did not see it as appropriate to change the general provisions requiring the taxation of benefits, but at the same time would allow some time for study as to possible alternatives.
Adjournment Debate


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until eleven o'clock tomorrow morning.
At 6.27 p.m. the House adjourned, without question put, pursuant to Standing Order.

Friday, December 16, 1983