CONTENTS
Tuesday, December 3, 1996
Mr. Bernier (Mégantic-Compton-Stanstead) 6998
Bill C-72. Motions for introduction and first readingdeemed adopted 7000
Bill C-358. Motions for introduction and first readingdeemed adopted 7000
Motion for concurrence 48th in report 7000
Mr. White (Fraser Valley West) 7001
Bill C-70. Motion for second reading 7001
Mr. Hill (Prince George-Peace River) 7017
Mr. Speaker (Lethbridge) 7030
Mr. Harper (Churchill) 7031
Mr. Martin (Esquimalt-Juan de Fuca) 7032
Mr. Bernier (Mégantic-Compton-Stanstead) 7032
Mr. Lavigne (Verdun-Saint-Paul) 7032
Mrs. Stewart (Brant) 7033
Mrs. Stewart (Brant) 7034
Mr. Martin (LaSalle-Émard) 7034
Mr. Martin (LaSalle-Émard) 7034
Mr. Martin (LaSalle-Émard) 7034
Mr. Martin (LaSalle-Émard) 7035
Mr. Hill (Prince George-Peace River) 7036
Mr. Martin (LaSalle-Émard) 7038
Mr. Martin (LaSalle-Émard) 7038
Mr. Martin (LaSalle-Émard) 7039
Mr. Martin (LaSalle-Émard) 7040
Mr. Hill (Prince George-Peace River) 7040
Mr. Martin (LaSalle-Émard) 7041
Bill C-70. Consideration resumed of motion for secondreading and amendment 7043
Mr. Hill (Prince George-Peace River) 7060
Bill C-321. Motion for second reading 7065
6997
HOUSE OF COMMONS
Tuesday, December 3, 1996
The House met at 10 a.m.
_______________
Prayers
_______________
ROUTINE PROCEEDINGS
[
English]
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker,
pursuant to Standing Order 36(8), I have the honour to table in both
official languages the government's response to two petitions.
* * *
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, the measure of a society is
based on how it includes all of its members in an active manner and
how it allows them to participate as fully as possible in life.
Government, communities and individuals must recognize the
important role they have to play in addressing the needs of
Canadians with disabilities. The issues facing them are not theirs
alone.
The Government of Canada has traditionally taken a leadership
role in addressing the interests of persons with disabilities. My
department offers an array of programs and services geared to
providing the support necessary to allow persons with disabilities
to live and work with dignity and as independently as possible.
We all have a shared responsibility, all levels of government, all
political parties and all Canadians, for providing positive
assistance to enable persons with disabilities to participate in the
mainstream of society as full and equal citizens.
[Translation]
The contribution of persons with disabilities is a valuable one
and as a government it is inherent upon us to do our utmost so that
they are never excluded from our society. The loss to Canada would
be too great.
Together, the federal, provincial and territorial governments, as
well as communities, must look at how best to develop and deliver
the programs and services that ensure voices of people with
disabilities will always be heard.
Last Wednesday, I took part in the federal-provincial-territorial
council on social policy renewal. It was a great day for all
Canadians. For we witnessed a new spirit of collaboration between
levels of government.
In that room, ministers and representatives from across our
country identified Canadians with disabilities as one of our key
priorities.
[English]
I assure members the ministerial council is seeking practical and
concrete ways to meet their needs. Through this environment of
trust, openness and mutual respect, we will be able to work in
partnership to develop measures that will improve programs and
services for persons with disabilities.
My federal, provincial and territorial colleagues are committed
to working together to harmonize our approaches to better serve the
needs of Canadians with disabilities. Federal, provincial and
territorial working groups are looking at various options that we
can bring back to first ministers in the coming months.
The task force on disability issues, chaired by the member for
Fredericton-York-Sunbury, is another valuable contribution on
which we can build. It provides the Government of Canada with
some valuable information and direction for its activities as well as
those it undertakes in partnership with other levels of government.
I am looking forward to developing some substantial measures
in collaboration with my federal, provincial and territorial
colleagues in response to the issues identified in the task force
report.
I am continuing to discuss with my cabinet colleagues actions
we can take in collaboration with provinces and the disability
community to meet the needs of Canadians with disabilities.
Progress is being made on a continuous basis.
[Translation]
Canada can play a leading role in the international community to
ensure that the needs and aspirations of people with disabilities
6998
will be met. We have made great strides in the past few years, but
we all recognize that much more must be done.
(1010)
Mr. Maurice Bernier (Mégantic-Compton-Stanstead,
BQ): Mr. Speaker, I would like to take this opportunity, on this
International Day of Disabled Persons and in what is known as the
Week of Disabled Persons in Quebec, proclaimed for the first time
this year, to pay tribute to disabled persons across the country who,
faced daily with their disabilities, need tremendous courage not
only to overcome these disabilities but also to overcome the
barriers facing them in their personal and professional lives and in
their social activities.
I also wish to pay tribute to the families who are responsible for
their care. Families take on these responsibilities in sometimes
difficult circumstances and in many cases have to face the same
restrictions as the individuals for whose care they are responsible,
which may be an emotionally draining experience.
Finally, I would also like to pay tribute to the volunteers who are
active in all kinds of organizations to support and promote the
rights of disabled persons so that our society will become more
open in this respect, and who also provide better services at a time
when most, if not all governments are reducing their involvement
in this area.
When I heard the Minister of Human Resources Development
make a speech which basically only paid lip service to a number of
principles, I was disappointed, but I also consider this further proof
of this government's contempt for the disabled.
Mr. Pettigrew: Oh, come on!
Mr. Bernier (Mégantic-Compton-Stanstead): I suggest
that the minister take a deep breath and listen to what I have to say.
I have worked with disabled persons for many years, and I do not
need any advice from a political upstart who does not do his
homework and does not know what he is talking about.
To prove this, I have two documents that I suggest he read
carefully. The first one is the report of the human rights committee,
tabled in this House in 1995. The report was unanimous, in other
words, it had the support of the members of this government and
the members of the official opposition.
Mr. Speaker, I see the minister-
Mr. Bernier (Gaspé): Mr. Speaker, on a point of order.
I am sorry to interrupt my hon. colleague, but everyone here in
this House saw the Minister of Human Resources Development
give the finger to the member who was speaking. This kind of
behaviour is entirely unacceptable, especially since the subject he
is discussing, persons with disabilities, deserves all due respect.
I hope the minister will apologize and there will be no more
incidents like this one when we are discussing such a serious topic.
Mr. Bernier (Mégantic-Compton-Stanstead): Mr. Speaker,
I think the minister's gesture only discredits the minister and
underscores the lack of substance in his message and his failure to
act in this area.
I shall, if I may, get back to the subject of my speech. I said the
minister should read the 1995 report of the human rights committee
tabled in this House a year ago in December. This unanimous
report was endorsed by the members of his party, the government
party, by the members of the opposition and the members of the
Reform Party. It provided a concrete response to the demands of
persons with disabilities.
(1015)
Almost a year later, his predecessor decided to use taxpayers'
money to set up a partisan committee, which fortunately was joined
by representatives of groups of people with disabilities from all
across Canada. This committee tabled its report in October. Here is
what the Liberal group, the minister's group, said in the first few
pages of its report, which the minister has not read-as his
comments clearly show. The report says: ``While their arguments
have been listened to at the political level and by governments,
there has been a growing gap between saying and doing''.
A little further along, the report states: ``At the federal level'',
this is the Liberals talking, ``responses to the report tabled by the
human rights committee in 1995 have been equivocal and in some
cases non-existent''. The response to the framework document, the
latest report of the Standing Committee on Human Rights and the
Status of Persons with Disabilities intimated that the status quo was
good enough. This is the government's response.
And what do they have to say? All puffed up today, the day of
persons with disabilities, the minister offers us six or seven pages
worth of his desire for governments, various provinces and various
departments to co-operate. People with disabilities do not want
co-operation, they want action, they want constructive action.
No one is expecting the minister to introduce measures during
the election campaign or in version two of the red book; they want
action now. However-and I will close on this-the minister's
response appears on the first page. You have to read between the
lines. On the first page, the minister says: ``The measure of a
society is based on how it includes all of its members in an active
manner-''. Fine lip service. The paragraph concludes: ``The
issues facing them'', people with disabilities, ``are not theirs
alone''. That is the government's response. In other words, line up
and, when your turn comes along, maybe we will attend to you, if
6999
we have the time. This is not how the official opposition sees things
and this is not what we are going to defend in the weeks to come.
[English]
Mrs. Sharon Hayes (Port Moody-Coquitlam, Ref.): Mr.
Speaker, it is a privilege to speak today on behalf of my party, the
Reform Party, on this international day to recognize persons with
disabilities, particularly in Canada.
Many Canadians with disabilities face many unique challenges
each day of their lives. Even in Canada where many external
changes have been made to facilitate life for persons with
disabilities it takes a level of courage for persons with disabilities
to accomplish many of the tasks that other Canadians too often take
for granted.
Today I pause as I talk about a faceless mask called persons with
disabilities because, as is the case with all Canadians, each of these
people with disabilities is unique, and each one has their own
disability with its own individual challenges.
When developing public policy we typically talk only about a
group of people called persons with disabilities. In that it is too
easy to develop one program or one system which is supposed to
help that faceless group which has been classified as disabled
rather than recognizing the uniqueness of each person's
circumstance.
Unfortunately this appears to be the way Ottawa has treated
persons with disabilities for decades. It is hardly surprising that a
recent report released by the federal task force on disability issues
discovered a high level of frustration and some anger among
persons with disabilities in Canada.
Lately we have heard the needs of the disabled are being
addressed as a priority in the deliberations of the
federal-provincial-territorial council on social policy renewal. I
believe the needs of disabled persons are far more likely to be met
by provinces or levels closer to those individuals that can tailor
those services more specifically to the needs of those citizens.
The direction for the solutions for the disabled should be in the
hands of provinces or levels even lower than that. The control of
and the decisions on these important issues should be made as close
to the people as possible to avoid the duplication of bureaucratic
costs, needless costs which we too often see in this place.
(1020)
We need to empower communities. We need to empower
families in order that they may address the uniqueness of the
disability and of the individual.
Not so long ago in this House we voted on a private member's
motion, Motion No. 30. That motion stated that the government
should consider amending the Income Tax Act to provide a
caregiver tax credit for those who provide care in the home for
preschool children and the disabled. That motion looked to the
specific needs of the disabled in order to empower the family
looking after the disabled person, which in turn would empower
that individual. Unfortunately, the front benches of the government
rejected that motion outright. The government said that was not in
its plans.
This government refuses to leave money in the hands of the
people who can use it with the greatest wisdom. The government
continues to believe that it has the solutions for the problems in the
homes of this country and for the challenges which disabled people
face. I disagree with the government, which feels that all solutions
in this nation must come from Ottawa and all solutions must be
determined by bureaucracy.
Typically, Ottawa is the source of well intentioned programs, in
most cases, but it has the mindset that it is only the federal
government which can solve problems. Typically the programs are
pulled in a myriad of directions and at the end of the day most
programs that are developed lack a substantive review to actually
determine if they work. The purpose is too often fuzzy to start with,
too influenced by short term demand, perhaps an election call, or
perhaps it is a program which reflects the flavour of the month for
social programs.
We saw that in the development of the Canada pension plan,
which was originally designed to give security to Canadians. That
plan has led to untold frustration for the disabled people who must
apply for it. It has placed an expense on a public system, which was
not originally intended. Again it is an example of a program that
has not worked as originally intended. Perhaps governments did
not think through the plan and address their real intention.
Government does not solve the problems. Individual Canadians
must be allowed to address these problems with a level of support
which is closest to their needs.
The report that was mentioned earlier was called ``A Will to
Act''. My hon. colleague in the official opposition mentioned his
frustration. I would like to mention my frustration that too often
Ottawa acts without achieving the desired results. It is too willing
to act without proper evaluation and the end result does not reflect
the original intention.
What we need for all Canadians is the will to succeed. We must
find the solutions. I believe those solutions are best found not in
this place but in the decisions which are made by individual
Canadians.
* * *
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, I
have the honour to present, in both official languages, the 48th
report of the Standing Committee on Procedure and House Affairs
7000
regarding the associate membership of the Standing Committee on
Health.
If the House gives its consent, I intend to move concurrence in
the 48th report later this day.
Mr. Jim Jordan (Leeds-Grenville, Lib.): Mr. Speaker, I have
the honour to present, in both official languages, the fourth report
of the Standing Committee on Transport with respect to Bill C-43,
better known as the Railway Safety Act.
(1025 )
This fourth report on the bill represents a lengthy process of
debate and hearings by members of the all-party Standing
Committee on Transport which is chaired by my colleague from
Winnipeg South.
It is rewarding to see this important bill take another step
forward toward becoming law.
* * *
Hon. Ralph E. Goodale (Minister of Agriculture and
Agri-Food, Lib.) moved for leave to introduce Bill C-72, an act to
amend the Canadian Wheat Board Act and to make consequential
amendments to other acts.
He said: Mr. Speaker, I simply wish to inform the House that in
accordance with Standing Order 73(1), it is the intention of the
government that this bill be referred to a committee before second
reading.
(Motions deemed adopted, bill read the first time and printed.)
* * *
Mr. Chuck Strahl (Fraser Valley East, Ref.) moved for leave
to introduce Bill C-358, an act to amend the Statistics Act.
He said: Mr. Speaker, the national census requires Canadians to
include their personal names and addresses on census documents in
part so that if they make a wrong or an incomplete statement on the
census form they can be prosecuted by the government.
I believe this requirement carries with it an unwarranted distrust
of Canadians. Also, since census documents are not anonymous,
many respondents are not completely forthcoming with all the
information. They feel that if their name is attached to it someone
is going to know their history, their income and everything about
them that the census takes in as information.
I believe that the information gathered may not be as reliable as
it would be in a non-traceable document. I believe there is no good
reason for the government to have such detailed personal
information about each individual Canadian. Therefore this private
member's bill would amend the Statistics Act to ensure that
Canadians would be able to participate anonymously in the
national census. This would lead to both a less intrusive
government and a more accurate census.
(Motions deemed adopted, bill read the first time and printed.)
* * *
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, I
move that the 48th report of the Standing Committee on Procedure
and House Affairs, presented to the House earlier this day, be
concurred in.
(Motion agreed to.)
* * *
Mr. John Bryden (Hamilton-Wentworth, Lib.): Mr.
Speaker, I wish to present a petition from constituents in my riding,
calling on the government to reconsider the Young Offenders Act
and make such changes that will make sure young offenders are
prosecuted according to the nature of the crime and to help deter
the type of violent offences that occurred in my riding four months
ago when a variety store clerk was shot during an attempted
robbery and remains paralyzed from the waist down.
I have before me several petitions involving 22,000 names of
people from my riding, ordinary Canadians, who are very
concerned that something must be done to change the Young
Offenders Act to make young people more accountable for their
actions.
[Translation]
Mr. Bernard Deshaies (Abitibi, BQ): Mr. Speaker, pursuant to
Standing Order 36, I have the honour to present a petition signed by
473 people in the riding of Abitibi.
(1030)
The petitioners draw the attention of the House to the fact that
the Senate consists of unelected members who are not accountable
for their actions, that its annual operating budget is $43 million,
and that it refuses to account for its expenditures to committees of
the House of Commons. Moreover, the Senate does not fulfil its
mandate to represent the regions and duplicates the work done by
members of the House of Commons.
Therefore, the petitioners ask that Parliament take the necessary
steps to abolish the Senate.
7001
[English]
Mr. Randy White (Fraser Valley West, Ref.): Mr. Speaker, yet
again I have two more large petitions from Nova Scotia from
people who want to be in charge of their own destiny as far as the
gas pipeline is concerned. The petitions read: ``That in June 1996
the Prime Minister of Canada announced he would work toward
diverting the Sable Island gas pipeline to Quebec City; that it is
unacceptable for the Prime Minister to decide the destination of
Nova Scotia natural gas without consulting Nova Scotians; that
Nova Scotians assert their right to control the destination of Sable
Island gas and demand that the federal government cease
tampering in this issue''.
* * *
Mr. Paul Zed (Parliamentary Secretary to Leader of the
Government in the House of Commons, Lib.): Mr. Speaker, I ask
that all questions be allowed to stand.
The Deputy Speaker: Is that agreed?
Some hon. members: Agreed.
The Deputy Speaker: I should inform the House that because of
the ministerial statement and replies, Government Orders will be
extended by 19 minutes.
_____________________________________________
7001
GOVERNMENT ORDERS
[
English]
Hon. Lawrence MacAulay (for Minister of Finance, Lib.)
moved that Bill C-70, an act to amend the Excise Tax Act, the
Federal-Provincial Fiscal Arrangements Act, the Income Tax Act,
the Debt Servicing and Reduction Account Act and related acts, be
read the second time and referred to a committee.
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Mr. Speaker, I am pleased to lead off second
reading of important and historic legislation, the introduction of a
new harmonized sales tax, or HST, throughout most of Atlantic
Canada. With the inauguration of the HST we have begun a process
for replacing the GST and providing all Canadians with a better
sales tax system.
Today's legislation will enable the federal government and the
provinces of Nova Scotia, New Brunswick, and Newfoundland and
Labrador to introduce a new harmonized tax effective April 1,
1997. But as the benefits of the HST become clear and concrete,
benefits for consumers, for businesses and for the economy as a
whole, I am confident that other provinces will put the interests of
consumers first and sign on to the HST.
This is extensive legislation covering as it must changes to the
Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act
and the Income Tax Act and related acts. In my remarks today I
want to highlight the key elements of the HST and to remind this
House why these are important and positive steps forward.
When the current government came to power we said: ``A
Liberal government will replace the GST with a system that
generates equivalent revenues, is fairer to consumers and to small
business, minimizes disruption to small business, and promotes
federal-provincial co-operation and harmonization''. These then
were the principles that guided us as we examined all the options
for replacing the GST: fairness; equivalent revenues;
federal-provincial co-operation and harmonization; and
simplification.
[Translation]
The new government followed through with its election promise.
As members might recall, the process to replace the GST was
initiated immediately following the election.
In fact, it is at that time that we asked the House Standing
Committee on Finance to look into every possible alternative to
replace the GST and to consult Canadians on the various options.
The committee heard close to 500 witnesses, namely tax experts,
business people and consumers from across Canada, and received
over 700 briefs.
(1035)
After reviewing 20 different options, committee members came
to the conclusion that a large majority favoured harmonization, that
is replacing the current mosaic of federal and provincial sales taxes
with a single value added tax.
The Standing Committee on Finance made four key
recommendations. First, it came down in favour of a value added
tax. Second, it recommended harmonizing the federal GST and
provincial retail sales taxes without delay. Third, it recommended
streamlining the tax. And last, it recognized the importance of
including the tax in the price, so that the price consumers see on the
shelf is what they pay at the cash.
The Standing Committee on Finance looked closely into the
economic impact of the proposals it received as well as their
acceptability to businesses and consumers across Canada. What is
more, the committee's recommendations were entirely in keeping
with the government's red book commitments.
That is why we are actively promoting the implementation of a
new tax based on harmonization with the provinces as the best
alternative to the GST.
7002
[English]
To help smooth the way for harmonization and make the
harmonized tax as simple and fair as possible, we put together a
major package of streamlining initiatives. These initiatives will
help to fulfil the recommendation of the finance committee and the
commitment of the red book to a simpler sales tax system.
The streamlining package includes over 100 measures. Many of
them are technical and sector specific. Quite a few have been
recognized as major positive changes for the many sectors they will
affect. The proposed changes include new and simpler rules for
many areas of the GST, for example for charities and non-profit
organizations, for employee benefits, health care and used goods.
Since the streamlining package was announced last April, the
federal government also announced on October 23 a 100 per cent
rebate for the GST or the federal portion of the HST on books
purchased by a broad range of educational institutions and public
sector bodies across Canada. This reflects this government's firm
commitment to supporting literacy in as cost effective and fiscally
responsible manner as possible.
In short the streamlining changes will help to make the
harmonized tax a better tax and improve the operation of the GST
in the non-participating provinces.
At the same time that we announced this package, we also
announced that a memorandum of understanding on a harmonized
sales tax had been reached with the three participating provinces.
Taken together this signalled the inauguration of a process for
harmonization, one under which provinces can come on board with
the HST as they are ready. Subsequently on October 23, the
governments of Canada, Nova Scotia, New Brunswick and
Newfoundland and Labrador announced detailed agreements to
replace the GST and the provincial retail sales taxes in the three
Atlantic provinces with a harmonized sales tax.
The new HST will apply at a single rate of 15 per cent on the
same base of goods and services as the current GST. The rules
governing the operation of the HST will be set out in the Excise Tax
Act and will generally be those rules on which the GST currently
operates subject to the streamlining changes I have already
mentioned.
Under the terms of the agreements which are before us now in
legislative form, the HST will be administered initially by Revenue
Canada and eventually by the proposed border and revenue agency.
Businesses that are registered for the GST will automatically be
registered for the HST and will continue to use the current GST
return. There are no changes there.
The HST base will be the same as the GST base. Vendors will be
required to price on a tax included basis to ensure that consumers
are aware of the final price before they reach the cash register.
(1040 )
At the same time, because the HST is in large measure about
federal-provincial co-operation, the specific situations and the
specific priorities of participating provinces are fully reflected in
the agreements. The participating provinces will for example
provide point of sale rebates for book sales in those provinces. The
rules governing rebates for housing and public sector bodies will
reflect the particular circumstances of each province.
A further important reflection of the spirit of federal-provincial
co-operation that gave rise to these agreements is the transitional
assistance that the federal government will provide to help offset
revenue shortfalls in participating provinces. Hon. members know
that this government has never shied away from important
structural change. It has always recognized the importance of
providing transitional assistance to make such changes possible, be
it with regard to removing subsidies from the agricultural sector or
promoting important sales tax harmonization.
In adopting the HST, the Atlantic provinces have replaced a
system that is cumbersome, costly and complicated with one that is
simpler, cheaper and a lot more efficient. For consumers,
businesses and taxpayers in the participating provinces, the result
will be one sales tax not two, one tax base not two, one tax rate not
two, one sales tax administration not two, and one price not two.
These changes will add up to a simpler, fairer system and a stronger
economy.
Consumers in participating provinces will benefit in a number of
important ways. First among those will be the lower rate of tax. For
Nova Scotia and New Brunswick the combined rate of 15 per cent
will represent a decrease of nearly four percentage points in the
effective sales tax rate. In Newfoundland and Labrador the rate
decrease will be close to 5 per cent. Consumers will also benefit
from the removal of provincial retail sales tax from business inputs
and from lower compliance costs for businesses.
The overall impact of the tax from the perspective of consumers
is that prices on most goods will be lower as will the overall sales
tax burden.
[Translation]
Including the HST in the prices displayed gives consumers
another important advantage. It puts an end to the surprise they get
at the cash register, which is one of the most annoying features of
the current system. However, the consumers will still know the
amount of tax they are paying since the exact amount, or the tax
rate, will be printed on receipts and bills.
This approach will reduce unfair competition between
businesses that are located in participating provinces and those that
are not. Furthermore, businesses will be able to continue using the
cash
7003
registers they have now and still comply with the requirement that
the tax be included in the price.
[English]
Businesses, like consumers, will benefit from the lower
combined tax rate. In addition they will now have to deal with only
one set of tax forms, one set of operating rules and one tax
administration. By thus reducing the paper burden and
administrative hassle associated with a two tier system, the HST
will reduce compliance costs for businesses.
The Canadian Institute of Chartered Accountants has estimated
that if all non-harmonized provinces were to join in a national sales
tax system, Canadian businesses would save between $400 million
and $700 million in administrative costs alone. The benefits of
lower compliance costs will be particularly advantageous for small
businesses which bear disproportionately the costs of dealing with
the current two systems.
A further benefit to businesses in the participating provinces will
be the recovery of HST payable on their inputs. In fact,
harmonization will eliminate over $700 million in hidden sales
taxes on business inputs, taxes which have been passed on in the
past to consumers. Harmonization will eliminate $280 million in
hidden sales taxes in Nova Scotia, $265 million in New Brunswick
and $180 million in Newfoundland and Labrador. The elimination
of this hidden tax drag will promote the competitiveness of
businesses in Atlantic Canada. It will also promote fairness
between different kinds of businesses since the tax will not impact
differently on businesses just because they are structured
differently. The broadening of the tax base will also help ensure a
level playing field between businesses that sell different kinds of
products.
(1045)
The proposed legislation also includes rules to ensure a level
playing field for all businesses selling in participating provinces.
Under the proposed approach, businesses across Canada that are
registered for the GST will be required to collect and remit the HST
on goods and services sold into a participating province or shipped
to a consumer in that province.
[Translation]
I want to stress the fact that this is not a new tax on goods and
services sold in the participating provinces. Interprovincial sales
have always been subject to the sales tax. The new approach simply
makes collecting and paying the tax easier.
Not only will the HST benefit consumers and be simpler and
more equitable for businesses, it will also generate some overall
economic advantages, especially because the provincial retail sales
taxes will be abolished on all the business inputs I have just
mentioned.
The elimination of provincial retail sales taxes on those business
inputs is a benefit not only for the businesses directly affected. It is
important to realize that this measure will reduce the overall cost of
exports from participating provinces and eliminate the competitive
advantage that is now unintentionally extended to imports.
Furthermore, because it will ensure fair competition among
various types of products and business structures, the elimination
of the tax on inputs will simplify the context for investment
decision making.
[English]
All of this translates into more economic activity for Atlantic
Canada and more jobs. Government administrative costs will also
be reduced through the elimination of overlap and duplication in
the administration of federal and provincial sales taxes.
As I said earlier, these changes will add up to a simpler, fairer
system and a stronger economy. They clearly meet the criteria set
out in the red book and in the recommendations of the finance
committee for replacing the GST. Equally important, they
represent the significant first stage in a process by which I am
confident other provinces will come on board. They will do that
sooner or later because harmonization offers significant benefits.
The more provinces that join in, the greater those benefits because
most existing provincial sales tax systems are inefficient and
distorting and the provinces know that.
In provinces across Canada, existing retail sales taxes are killing
businesses and jobs. Personally I believe the provincial
governments recognize this just as they recognize that taxes on
business inputs are taxes that are hidden and are currently being
passed on to consumers.
The legislation before us improves the operation of the GST
across Canada. For the participating Atlantic provinces it provides
an even better system, a system that will benefit consumers with
lower tax rates and on many goods, lower prices. They will also
know the full price of goods before they get to the cash register.
It is a system that will benefit businesses because they will deal
with only one tax, one rate, one base, one set of forms, one
administration. That system will benefit the economy of Atlantic
Canada by making its exports more competitive. It is a system and
a bill that deserves the unqualified support of every member of the
House.
[Translation]
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr.
Speaker, contrary to my habit, I am not pleased to speak to this bill,
since the government has acquired the unfortunate habit of
``tossing''-I think this is the exact term-a bill of over 350 pages
on the table about 16 hours before the debate in this House.
7004
(1050)
On an issue as important as this one, it was inappropriate for the
government to table this document yesterday afternoon, as we were
forced to work in the evening and all night to do our job as official
opposition and find in what ways the government is misleading the
people.
Although this is inappropriate, the government has acquired this
habit in the last few weeks. I hope this is simply an administrative
problem, which I seriously doubt, given the nature of the subject.
You know the GST is a sensitive issue. In the minds of
Quebecers and Canadians, the GST is the current Liberal
government's worst failure, in that it really betrayed its promise to
abolish the GST.
I think this is a rather hypocritical way of ensuring that the
debate is quick, succinct and also lends itself to quick analysis and
implementation. This is not the way things work in a democracy. I
thought that, in a democracy, the government ought to have the
courage of its convictions, of the measures announced to the people
and give the official opposition time to analyze, criticize and also
propose ways to improve bills, because it is our role to make
constructive recommendations. I see this is not the case and it is the
first thing for which I blame the government.
Bill C-70 is aimed at harmonizing the GST with sales taxes in
the three maritime provinces and at providing a federal tax
exemption for books that are bought by literacy centres, schools,
colleges and so on, without eliminating the GST on books bought
by the general public.
This bill is the embodiment of untruthfulness, of the show the
Liberals have been putting on for us since the last election. I
remind you of the solemn promise the Liberals made with one hand
on their heart while looking at the Canadian flag: ``That damn GST,
we will abolish it when we come to office''.
Very interesting quotations were made by Liberals in the last
three or four years, including the Deputy Prime Minister and
member for Hamilton East who said on March 11, 1996:
[English]
``I have already said personally and very directly that if the GST
is not abolished I will resign''. She resigned, but only for a few
weeks. She resigned, but for show, and this show cost Canadians
more than half a million dollars for her re-election.
[Translation]
The Deputy Prime Minister had said she would resign if the GST
was not abolished. Normally, people who have convictions and are
loyal to their beliefs and to the public as well do not resign for show
as the Deputy Prime Minister did. They resign and go home,
because it looks like the public was deceived.
The Deputy Prime Minister was away for a few weeks and came
back with a smile, saying: ``The people of Canada have forgiven
me; the people of Hamilton East have forgiven me''. The Canadian
electorate will not forgive the government for breaking such an
important promise, one the Liberals used to score political points
while in opposition, during the election campaign and, in a
different way, with Bill C-70. It is not right to keep deliberately
deceiving the public in that way.
I will refer our listeners and our constituents to an article
published in Le Soleil on Wednesday, June 19. I would say this
editorial by Gilbert Lavoie summarizes quite well what the Deputy
Prime Minister has put us through by first resigning and then
coming back for show.
(1055)
Let me read you some excerpts from this excellent editorial
written by Gilbert Lavoie. The original text has been slightly
modified to avoid using the name of the Deputy Prime Minister. It
says the following: ``Her victory in the Hamilton East by-election
on Monday did not prove a thing, except perhaps the cynicism and
arrogance of a certain political class. She had promised to resign if
the government did not abolish the GST as promised. She did
resign, but only to get immediately re-elected in a by-election,
standing for the same party, the same government, the same GST.
The cost of this operation, amounting to $500,000, was borne by
Canadian taxpayers''. Half a million dollars so she could pretend to
try to clear her name and that of her government.
I read on, because this is too interesting an editorial not to take
full advantage of it: ``In politics, anyone who resigns on a question
of principle is expected to leave the party to go and sit as an
independent member or to found a new party as Lucien Bouchard
did. It is, however, difficult to understand how the Deputy Prime
Minister, who explained when she resigned that she could no
longer look voters in the eye, can now feel comfortable about
resuming her functions within the Liberal government. During the
by-election campaign, the member for Hamilton East explained her
attitude as follows: `The GST ranks eighth among public concerns,
far behind jobs and the preservation of social services. Its
importance should therefore not-and I am still quoting the Deputy
Prime Minister-be overestimated'''.
I will stop quoting the article for a moment to point out that the
importance of the GST issue is due to the Liberals themselves, who
overreacted at the time, under the Tory government. For a few
weeks, they put up a bitter fight over the GST, tearing at their
shirts, shouting themselves hoarse, and demanding the GST be
scrapped, the hated GST as they then referred to it. You certainly
remember that time, Mr. Speaker.
7005
They are now saying that the importance of the GST must not
be exaggerated, but they were elected partly under false pretences,
saying they would abolish the GST. They are now telling us not
to exaggerate the importance of the GST. This is incredible. No
wonder politicians are at the very bottom of the credibility list.
When people are deceived in this way by a certain cynical and
arrogant political class, it is perfectly normal to find that class at
the bottom of the list.
Let me quote Gilbert Lavoie's article again, as it is very
interesting and informative: ``But her fake resignation from
government-from the Liberal Party-is nonetheless sad
buffoonery from someone whose presence in politics has always
been based on public morality. She has in turn contributed to
Canadians' increasingly cynical view of their politicians''.
As a Montrealer, Émile Boudreau summed it up very well in a
letter to the editor of Le Devoir, which reflects public opinion:
``You resign, you shed a tear before the cameras, and the very same
day you run as a candidate and you are re-elected. You resurface
clean, clean, clean. The Liberal Party goes up one notch in the
public's opinion, and life could not better be''.
Mr. Lavoie's article and Mr. Boudreau's letter reflect a profound
public discontent toward politicians. They also reflect the reason
politicians feel increasingly criticized by the public, and
deservedly so.
When you see an attitude such as the one displayed regarding the
GST issue, when you see the Deputy Prime Minister's attitude,
when you see the secretary of state introduce a measure like this
one as if it included incredible improvements, you realize why
people are fed up and why my constituents in the riding of
Saint-Hyacinthe-Bagot are also fed up with the federal
government and the ``frame-up'' that is really starting to get on
their nerves.
(1100)
The Deputy Prime Minister was not the only one, with her
spectacular resignation, to reflect the whole GST issue. The current
Prime Minister had also said, before, during and even after the
election campaign, that the GST had to be abolished.
However, there is no mention of abolishing the GST in this bill.
This measure is a result of a political agreement signed with three
maritime provinces, an agreement which will cost Canadians $1
billion in political compensation, just to give the impression that
the government has done something about the GST.
The Liberals did not promise, during the campaign, to sign an
agreement with the maritime provinces and then waste $1 billion to
buy the maritimes' approval regarding the GST. They promised to
abolish the GST. The Prime Minister said it over and over again.
During the 1993 election campaign, he said: ``We will scrap the
GST''. To ``scrap'' means to tear up, to throw out, to get rid of the
current GST system and to replace it.
On May 2, 1994, after his election, the Prime Minister said, and I
quote: ``We hate the GST and we will kill it''. But the GST is still
there. The only change is that the tax is included in the price. It is
now a hidden tax. In the maritimes, people do not realize that the
federal government is charging them a 15 per cent tax on goods and
services.
I listened to the secretary of state who said the government had
extensive consultations with tax experts and the public, in an
attempt to justify the government's lack or action on the GST. The
Liberals also consulted tax experts and other people before
introducing their election platform and telling the public they
would abolish the GST, either that or they were saying just about
anything during the election campaign.
If they say just about anything during the campaign and could
not care less about people, when the next election comes, the
people of Quebec and Canada should remember that every time a
member of the Liberal Party opens his or her mouth it is to say
things that will not withstand close scrutiny, to make promises they
will not keep and say any old thing to lie to people.
I think people are beginning to understand what is going on with
this government and also that members of the Liberal Party:
Liberal MPs and the Liberal candidates in the next election are
people who show considerable cynicism and unequalled arrogance.
When the next election comes, their cynicism and their arrogance
will cost them dearly.
Talking about the government's arrogance, cynicism and total
disregard for the public, we must remember there was also a time
when the Liberals were the official opposition. There was a time
when the Liberals were sitting on these benches. At that time, also,
the Liberals were saying just about anything. They made promises
they are not keeping today. I would like to recall what the Liberal
majority wrote in the finance committee report in 1994: ``It would
just not be appropriate to hide the GST in the sales price''. Yet, the
agreement signed with the three maritime provinces includes a
provision that will in fact hide the GST in the sales price.
When they were in opposition, the Liberals, in 1989, stated in the
dissenting report they tabled that, if the GST were hidden in the
sales price, it would make it that much easier for the government to
raise it later on. They were condemning the fact that the
government wanted to hide the goods and services tax in the sales
price. Now, there is no problem. In 1989, they were adamantly
against hiding the GST in the sales price, stating that it was a ploy
used by the government to be able to raise the tax rate later on
without the taxpayer noticing it. And, now, in Bill C-70, in the
agreement between the federal government and the maritimes, they
are saying there is no problem. It has been hidden in the price. The
Liberals tore their hair out, played holier than thou for months and
even
7006
years under the Conservative government, but now there is no
problem.
(1105)
How can we trust this government? Every time eminent
members of the government party rise in this House and say: ``We
are going to do this and that'', how can we believe them, when they
keep saying just about anything that comes to mind, as they have
done with the GST, reneging on their promises and forgetting all
about their commitments? The people have to realize that the
government could not care less about them.
Let us talk about patronage. The agreement reached with the
three maritime provinces is akin to patronage. Given the pressure
exerted by Canadians, who wanted the government to keep its
promise to get rid of the GST, the finance minister thought it would
be better to do something, to pretend once again that he was solving
the problem. And that is when he signed the deal with the three
maritime provinces.
This agreement came with a price, a compensation of around $1
billion handed out to the three maritime provinces. The finance
minister bought the three provinces with $1 billion in
compensation. He told the maritimes: ``I need you to grandstand, to
act as if the Canadian government is doing something about the
GST, is trying to harmonize it''. First, the tax was supposed to be
abolished, now it was going to be harmonized.
The maritimes replied: ``Minister, if you want to, we will go
along with you, but there will be a price to pay''. And the finance
minister, known for his generosity and his wise management of the
public funds, agreed to put $1 billion on the table. Is it enough?
This is $1 billion the finance minister took out of his pocket,
meaning out of our pockets. This is the money that Revenue
Canada takes out of taxpayers' pockets year after year.
Given his generosity and his tendency to waste our money, the
finance minister has taken out $1 billion to give it to the maritime
provinces. This is $1 billion that Quebecers and Canadians outside
the maritime provinces will have to pay. They will have to pay for
this generous gift by the finance minister.
The provinces and especially Quebec are angry about this, but
not the three maritime provinces, which will receive $1 billion. No,
those provinces are not upset. But, outside the maritime provinces,
people are very angry, particularly in Quebec. Quebec will have to
take $250 million out of its own pocket to pay the three maritime
provinces, to pay for the finance minister's patronage.
Quebecers are even more upset, since Quebec has already
harmonized its provincial sales tax with the GST. I have been
saying and repeating it for a long time because, if there is an
example of true harmonization as well as true harmony between
the federal government and Quebec, it is the GST.
The Quebec government has acted in good faith. We harmonized
the tax. We even agreed to administer it on behalf of the federal
government. We are nice in Quebec, but we did not get one penny
for all our efforts. The federal government did not compensate us
despite giving $1 billion to the maritime provinces.
The Quebec government is entitled to some kind of
compensation, since it has harmonized its tax. To give $1 billion to
the maritime provinces is unfair to Quebec and to the other
provinces, which could come on board with the HST but oppose
any preferential treatment. If the maritime provinces get to keep
the $1 billion, they want to be compensated as well.
(1110)
On behalf of the Government of Quebec, the Deputy Premier and
finance minister of Quebec, Bernard Landry, repeatedly asked the
federal government and the federal finance minister to provide him
with the formula used to work out this famous $1 billion
compensation for the maritimes. We have asked for it day after day,
we have asked the minister to make the formula used to come up
with this $1 billion public.
By stubbornly refusing to reveal the formula, the government
showed that this agreement was a political one, that the agreement
providing for the payment of $1 billion to the maritimes was
concluded for the sole purpose of buying the maritimes off. And we
can assume that, in the discussions with the finance minister, the
maritimes set a very high price for accepting the political
``frame-up'' that this minister offered them.
The people will also remember this waste of public funds. It is
all very well for the finance minister to say to everyone that he is
responsible for today's economic situation, but we know he only
coasted along with the growth in the economy, he only took
advantage of an overall economic climate that was favourable to
him, and he only took advantage of extremely low interest rates.
Do you know why interest rates are extremely low? There are
three main reasons. First, it is because of the state of the U.S.
economy. Second, it is because of the domestic economic climate,
that is the chronic lack of jobs for 800,000 Canadians. Eight
hundred thousand unemployed means that there are also 800,000
fewer consumers. If there are fewer consumers, prices are lower, so
inflation is less likely to increase. And when inflation is low, and
even too low-that is close to 1 per cent as it is now-interest rates
also go down.
The finance minister is only taking advantage of this situation. If
he had been here in 1990 and 1984, the finance minister would
have received quite a beating. I will remind you of certain facts that
make you smile. You will remember that during those two periods
it was not easy to be the Canadian Minister of Finance because
7007
economic conditions were very unfavourable for a flamboyant
character in that office.
But the present minister takes advantage of the situation.
However, people will remember that he is wasting public funds. He
has no right to waste $1 billion as he is doing right now on the GST
to hide the inertia of his government and its inability to fulfil its
promises.
One billion dollars will be paid out, and the Minister of Finance
tells us that this is only the beginning. Quebecers and Canadians
will have to pay this $1 billion in political compensation to the
maritimes for many years to come. Do you know why? I will give
you a technical but very short and, I hope, not too tedious
explanation.
The finance minister offered to replace the provincial sales taxes
in the maritimes and the GST with a single 15 per cent sales tax. In
the maritime provinces, the total of both the PST and the GST
averages 19 per cent. The finance minister said: ``I will replace
those taxes totalling 19 per cent with a unique 15 per cent sales
tax''. Therefore, the sales tax dropped by 4 per cent in the
maritimes. But who is going to pay for that? Who will compensate
for lost revenues in the maritime provinces? We, the people from
the other provinces, will. And do you know why? Because of
something called the equalization formula.
Few people, even on the government benches, understand this
formula, but it can be understood if one takes the time to study it
carefully. This formula is used when a province, for example one of
Canada's poorest provinces, needs help because it is difficult for
that province to collect enough taxes from its population to provide
public services equivalent to what is provided elsewhere across
Canada. That is where this formula comes in.
(1115)
When a province's tax base-that is its ability to collect
taxes-is reduced, the federal government uses the equalization
formula to compensate.
In the case of the maritimes, once again, the finance minister,
generous as he is with taxpayers' money, told the Atlantic
provinces that he would reduce the general sales tax and that the
federal government would compensate them for the missing 4 per
cent, year after year, until the end of time.
The equalization formula is used automatically when the tax
base is reduced. The Minister of Finance has reduced the tax base.
Therefore, we, as Quebecers and Canadians, will always be paying
for that. As a Quebecer, I am not so sure of that because, one day,
we will get out of that system. However, starting next year,
Quebecers and Canadians will be paying for the loss of revenues
from provincial sales taxes in the maritimes.
So on top of the $1 billion that the finance minister is wasting
shamelessly for purely political reasons, which is already too
much, Quebecers and Canadians will have to pay hundreds of
millions more each year to the maritime provinces to compensate
for this political decision. This is getting to be very expensive for
mere window dressing.
Half a million dollars for the Deputy Prime Minister's election, a
billion in political compensation to the maritimes and now the
equalization formula that will be there forever, or until the day the
decision is made to do away with it within the federal system, or
until the day, coming soon, when we decide to withdraw totally
from this system, which has nothing going for it. So that is bill
C-70, concerning the agreement with the maritimes.
There are two other points I would like to speak to, in order to
clarify things for the public. The first concerns the famous national
revenue commission. The Minister of Finance has presented us
with this agreement with the maritime provinces as a model of
harmonization, a blueprint for the rest of Canada.
First of all, if it is a model, it is a very poor one, a very costly
one. Second, if it is an augur for the future in the rest of Canada,
that is extremely worrisome. It is a deliberate attack on provincial
autonomy in collecting taxes. The Minister of Finance has
established a national revenue commission which will replace all
of the government bodies in the maritime provinces which used to
collect taxes on goods and services.
This commission was announced in the government's throne
speech, and the government is holding stubbornly on to it. Its
intent, using the GST and the maritimes as an example, is to have
the federal government one day become the only body within the
Canadian federation to collect income tax, and other taxes, from
Quebecers and Canadians. Quite a neat trick, especially where
Quebec is concerned.
I am very familiar with Quebec taxation history, even what went
on in meetings in the time of Messrs. Pearson and Lesage. They
started off discussing the exchange of tax points at a time when the
idea was to restore the provinces' taxation autonomy, of which they
had been deprived during the first world war. Income tax, and other
things, were borrowed.
Given this background, the numerous constitutional
conferences, the meetings of finance ministers over thirty or so
years, I am convinced that, if this is what the federal government
has in mind, it will run into a brick wall in Quebec, where they are
fed up with the federal government's designs on its taxation
autonomy.
(1120)
Quebecers wanted to have their own taxation system and
autonomous institutions in areas like education and others. They
would see it as an attack on their own history and their identity if
the federal government considered the possibility of introducing a
bill allowing a Canada revenue commission to replace Revenu
Québec.
7008
I cannot understand the political logic behind such a measure,
unless the federal government is looking for a fight with Quebec. I
believe this is what we are heading for. Let us harmonize, no
problem. Quebec will receive no compensation while the maritime
provinces received a billion dollars. And now this government
wants to create a Canada revenue commission. What is it looking
for? Sometimes I have a feeling that the federal government is
looking for trouble.
Once it has created problems, it pulls out and puts the blame on
the separatists of Quebec, on sovereignists who are allegedly
against any agreement with the federal government. This is, to a
certain extent, the game the Liberals have been playing since they
came to power three years ago.
Quebec has some news for the Liberal government if it thinks it
will be able to create a national revenue commission and sideline
Quebec. We will be ready for them and we will have the official
opposition on our side.
I wish to end on a more positive note about the bill. We always
keep dessert for the end. There is one small positive aspect to Bill
C-70 which is due to the official opposition and it has to do with the
partial removal of the tax on books.
In the bill, the government suggests that books purchased by
literacy and educational organizations not be taxed. Not just in the
maritimes, but throughout Canada. This is good news, but it is not
enough.
Most of the books bought in Quebec and in Canada are not
bought by educational and literacy organizations. If the
government wanted to do something, it should remove the tax on
all books sold, because it is just taxing ignorance. We have all
heard the slogans about GST on books chanted by those concerned
with literacy and the transmission of culture.
I would like to take this opportunity to point out two things. The
first is that there is no provincial sales tax on books in Quebec.
Zero PST. Culture is important.
The second thing is that, even before the Bloc Quebecois became
an official party, back when there were only seven members, with
Lucien Bouchard as their leader, those seven members took every
opportunity that came their way to rise in their places and criticize
GST on books.
They fought against it outside the House too, because back then
their time in the House was limited. Those whose decision it was to
limit the time available to the Bloc Quebecois must be regretting it
bitterly today. They must remember it. We certainly do.
The seven Bloc Quebecois members, including the eminent
members for Rosemont and Richelieu whom I can see today,
worked very hard to keep the GST off books. When I see a timid
little measure, which is a step in the right direction, but not big
enough, I cannot help but praise the seven founding members of the
Bloc Quebecois for their determined efforts.
Politics is a drawn out process sometimes, but eventually one
gets results. And in this case, the result is a watered down one, but
it is still a result. I would now like to urge the government, and I
think I speak for all my colleagues in the Bloc Quebecois, to
remove the tax on all books sold in Quebec and in Canada.
(1125)
The two founding nations have a duty to promote cultural
awareness. They have a duty to see that people read Quebec and
Canadian authors. The government has a duty to make sure that our
authors can sell their works at competitive prices. The Minister of
Finance says public finances are quite healthy, so perhaps he
should do something to help culture, to ensure its survival.
That concludes my remarks on Bill C-70. I would like to table an
amendment. I move, seconded by my colleague, the member for
Trois-Rivières:
That the motion be amended by deleting all the words after the word ``That'' and
substituting the following:
``Bill C-70, An Act to amend the Excise Tax Act, the Federal-Provincial Fiscal
Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account
Act and related Acts, be not now read a second time but that it be read a second time
this day six months hence.''
The Deputy Speaker: The motion moved by the member for
Saint-Hyacinthe-Bagot is in order.
[English]
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, it is a
pleasure to speak to Bill C-70, an act to amend the Excise Tax Act,
the Federal-Provincial Fiscal Arrangements Act, the Income Tax
Act, the Debt Servicing and Reduction Account Act and related
acts. Really what this has to do with is the harmonization of the
GST in Atlantic Canada.
Before I speak specifically about Atlantic Canada it is important
to go back and discuss the chronology of events which led us to this
point.
It is accurate to say that this legislation was born of very dubious
parentage. We had a promise born of a loose lipped government
member and we had a father who could only be called political
opportunism. How sad that this young harmonized GST had to be
raised in such a dysfunctional home, or should I say house?
Since 1990 it has become very clear that the government was
being very opportunistic in discussing the GST and in suggesting to
Canadians that when it came to power somehow the GST would
magically disappear.
Just to remind hon. members across the way what exactly their
record is on this, let me refer to some quotes that came from
government members over the last several years with respect to the
GST to remind them how far they have gone astray from their
original promise.
7009
Let us go back to government members when they were in
opposition, in the wake of the GST coming into place under the
Conservative government. Let me start by quoting some members
who now hold prominent positions in the cabinet of the Liberal
government.
First, let us go to a quote which came from the current Liberal
House leader back in the days following the GST coming into place
under the Conservative government.
(1130 )
The current Liberal House leader said: ``Not only do the Liberals
oppose the GST now, that opposition will continue even if the bill
is passed. We are not interested in tinkering with the GST. We do
not want it at all''.
Meanwhile, the current finance minister said: ``I would abolish
the GST''. The Prime Minister said: ``I want the tax dead''. One of
the quotes that came from the Toronto Star back then was: ``The
Liberals will scrap the goods and services tax if they win the next
general election, the leader of the party said. He said: `I am
opposed to the GST. I have always been opposed to it and I will be
opposed to it always'''.
We saw the climax of the quotes that came from all the various
members in October 1993 on the eve of the election when the
current Deputy Prime Minister, on national television-that image
will be frozen forever in my mind and probably in the minds of
Canadians everywhere-said: ``If the GST is not abolished under a
Liberal government I will resign''.
We all know that Liberal MPs campaigned in many ridings on
the promise to abolish the GST. I know members will say that the
red book stated it would be replaced. However, I need to point out
that the government did not find the courage to bring the red book
out until about a month before the election. They only produced
about 70,000 copies. They did not talk about their promise with
respect to the GST. Instead, they allowed people to think that they
were going to still do what they said they would do early on which
is to get rid of the GST altogether, scrap, axe and abolish the GST.
However, that is not what they did.
All of this, of course, led up to the event last spring when the
government was under great pressure to fulfil the promise made by
the Deputy Prime Minister on national television. First the finance
minister said that perhaps they had made a mistake. However, a lot
of Canadians felt that he was pressured into that position and it was
not coming from his heart.
Ultimately the Deputy Prime Minister was forced to resign. She
went to great lengths to make it look like she was doing the
honourable thing, but we know she polled her constituents first to
find out whether she still had enough credibility to win the election
in Hamilton East. Then of course she announced that she had been
at the bank machine and could not look anybody in the eye and felt
she had to resign. Well, $500,000 later she was back in the House
of Commons.
The whole incident was a black mark on the history of
parliamentary promises. There have been a lot of broken promises
over the years but none more blatant than that broken GST promise
of this Liberal government. I do not think that the government has
yet paid the full price for it.
I want to set those incidents aside for a moment and talk about
some of the aspects of the bill, the harmonized GST. First I would
argue that the harmonized GST is extremely divisive the way the
government has brought it in.
Members will recall that the government, to get Newfoundland,
New Brunswick and Nova Scotia on side, had to go to them with an
offer of $1 billion if they would come on board. It had to try and
save face with $1 billion because although there was always the
opportunity for any province to come on board and say that they
were very interested in the new harmonized GST, there were no
takers. The government was under great pressure at that point.
Therefore, the only thing the government could think to do to bring
governments on board was to offer up a billion dollars. It went to
the Atlantic premiers and said if they came on board it had a cool
$1 billion in hush money for them. That is insulting and causes
great divisions in the country. It encourages dependency. It
encourages the provinces to be under the thumb of the federal
government. That is not acceptable as we approach the 21st
century.
(1135)
Some provinces are becoming very responsible. They have
certainly shown more responsibility in dealing with their finances
than the federal government has. They have taken leadership roles
in all kinds of other areas. For the government to say it is going to
pay $1 billion for those provinces to come on board if they are kind
of quiet about things and just go along with it is insulting.
I want to talk about how divisive that is. I and my friends in the
Reform Party, and Liberals if they are honest about it, probably
have had constituents come to them and ask why are they are
paying more taxes so the government can come up with $1 billion
to give to three Atlantic premiers? It is very divisive.
I received a fax not too long ago from Lorne Taylor, the MLA for
Medicine Hat-Cyprus in Alberta. He pointed out that the Alberta
treasury had produced a document that said the effect of giving $1
billion to Atlantic Canada, except for P.E.I., was to lower the GST
in those provinces to 5.5 per cent for the first two years of the deal.
In speaking up for his constituents, which is the right thing to do,
he asked why Alberta did not get that deal.
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Ontario asked why in the world did it not get the same kind of
deal. If Ontario were to harmonize, it would cost about $3 billion.
The finance minister in Ontario, speaking for the people of his
province, said $3 billion is what Ontario would require of this
so-called adjustment money if Ontario was to come on board.
If I remember correctly, Manitoba and Saskatchewan came up
with figures too. They were asking for money as well. I do not
blame them. They were simply asking for what the premiers in
Atlantic Canada got.
What did the government do? The government said no way, they
are not getting any money, it is for those three provinces alone. It is
divisive when one or three provinces are treated in a special way
and the others are not treated the same way.
This has always been the way of the Liberal Party. It has made a
career out of creating these types of divisions. Obviously it has
served them well but it has not served the interests of Canadians as
a whole. That is one very important reason why Reform is speaking
against Bill C-70.
Another concern I have with this legislation is that it raises taxes.
I know the government will say that all it is doing is broadening the
base in Atlantic Canada and it will be a wash. It just is not so. It is
not true.
This is a huge bill with many different aspects to it. It addresses
all kinds of different things. One of the most pernicious aspects of
the bill is the removal of the notional input tax credit. That was
done back in April. I remember when it was announced. A lot of
people did not know what it meant. An accounting firm in
Winnipeg picked up on it right away. It said that it could amount to
as much as $1 billion a year tax grab for the government.
The government had removed the input credit on used goods
thereby ensuring that every time a used good changed hands the tax
would cascade. In other words, if that good was bought after
someone else had owned it and someone before that had owned it
and someone before that had owned it, pretty soon there would be
tax on tax on tax paid. There is no input credit going to the person
who sold it. Pretty soon the value of that item would be inflated
way out of proportion because of tax on tax on tax.
(1140 )
The result is that the government will reap all kinds of new
revenue. Of course, a lot of the higher costs would be passed on to
consumers. Potentially the government reaps a billion dollars more
a year in new revenue.
It is a hidden tax grab, one that was never really debated. We
raised it many times in the House. We received responses from RV
and car dealers who were concerned and upset about it. To this date,
the government has not given an adequate answer on how it can go
ahead with it. People need to be made aware of it and that is why I
am raising it right now.
That is not the only way the bill raises taxes. On April 1, when
the bill comes into law, as undoubtedly it will, capital taxes will go
up in New Brunswick and Nova Scotia. That is one provision of the
bill. It allows the provinces to implement capital taxes. That is
precisely what two provinces are going to do. The provinces will be
given a new lever to raise taxes.
The Nova Scotia finance minister and the Halifax Chamber of
Commerce have pointed out that one of the consequences of this
bill will be that property taxes in Nova Scotia are going to go up.
That is another aspect of the bill that leads to higher taxes.
I want to move on to a related area. This bill will not only raise
taxes it will entrench higher taxes. Something which has not been
discussed enough is the fact that changes to the provincial portion
of the tax are going to be quite complicated, in fact, almost
impossible, if governments want to lower the tax, but much easier
if they want to raise the tax.
I do not know if members realize that it will require unanimity of
all the provinces, should sales taxes be harmonized across the
country, to lower the provincial portion of the tax. The provinces
are being asked to do what they have probably almost never done
before, and that is for the 10 of them agree on one thing at one time,
to lower taxes. But they only need a simple majority if they want to
raise taxes.
Obviously this gives the governments of the provinces a
powerful new tool to go about raising taxes if the government gets
its wish and the GST is harmonized across the country.
There is an ongoing debate in the country about taxes and tax
increases. However, the debate is not about how high they should
be raised, it is about how low they should go. The government has
put in a provision to raises taxes, not to lower them. That is
ridiculous. Reform cannot support that. Canadians will be outraged
when they discover that one aspect of Bill C-70, the act to
implement the harmonized GST in Atlantic Canada.
It is important to point out that it is not only the Reform Party
that has raised this concern. Back in 1990 when the current finance
minister was running for the leadership, and a lot of people would
argue that he has never quit running for it, he pointed out that he
thought he would scrap the GST. Not only that, he made special
reference to the fact that once a harmonized GST is in place across
the country, it could not be removed. Taxes could not be lowered.
If he felt so strongly about it then, what happened between 1990
and now? When did the conversion of Paul on the road to
Damascus take place? What precisely influenced him to think that
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now all of a sudden the provinces are going to fall into line, all 10
at once, and agree to decrease the provincial portion of the GST? It
simply will not happen. It is simply not going to happen; 10
provinces agreeing to cut the tax. The finance minister was right in
1990 when he said that it is not going to happen. I think it is right
today that it simply will not happen. At a time when we are having
a debate about taxes in this country we should be finding ways to
lower taxes, not to increase them.
(1145)
I want to say another word about entrenched taxes and about why
harmonization is a bad idea. One of the great benefits of not
harmonizing is that it encourages a competition between different
jurisdictions to keep taxes low.
We all know about competition in the marketplace but I think
competition in government is just as important. That is why for
instance in my native province of Alberta, where we have no sales
tax, we have low income taxes, we have the great Alberta
advantage and people in our province have paid a price to have that
advantage. We have had to cut back on our spending so that we
could afford to keep those taxes nice and low. Now that we have got
to that point, we want to benefit from that advantage. We want to
attract business from all over the world. In fact, we are.
The very fact that Alberta has those low tax rates is, believe it or
not, a great benefit to the rest of the country not only because the
rest of the country gets spin-off benefits from what happens in
Alberta and Alberta sends a lot of money into equalization
payments, but because it puts a pressure on the province next to it,
and the province next to it, and the province next to it to get their
taxes into line.
I know many people in the business community have spoken in
favour of a harmonized GST. They have made the argument that it
would be simpler. The paper work would not be as onerous and all
that kind of thing. But that is a minor benefit compared to the
benefit of having competition between different jurisdictions to
keep taxes low.
I do not understand how that was missed by so many groups
when they talked about harmonizing the GST. To me it just does not
make any sense.
I would encourage people to look at some of the examples not
only in Canada where we have Alberta with the low tax rates but in
North America and around the world. When we have low tax rates,
when we have competition between jurisdictions ultimately it leads
to lower taxes across the board which means that people have more
money in their pockets. It means that they have more opportunity
and they can create their own prosperity for themselves. They are
not dependent on a government.
If there is one thing we have to get rid of in this country it is this
dependency mentality that governments tend to breed. They tend to
breed it and ultimately it is to the detriment of the entire country
and to all of society. We have seen it over and over again, and not
just limited to Liberal governments. Tory governments have done it
over and over again as well. They should be ashamed especially
now that they can see the fruits of their actions of the past where we
have entire economies becoming dependent on government
programs.
This is a very important aspect that the legislation does not
address and ignores, the fact that we need some competition
between different jurisdictions.
The fifth point I want to make is that this bill will mean, at least
in the short run, and I think members have to acknowledge this
across the way, higher costs for business in Nova Scotia, New
Brunswick and Newfoundland.
I am not going to ask members to take my word for it. I am going
to ask them to listen to the words of the Retail Council of Canada.
The Retail Council of Canada is in favour of harmonization. It is in
favour of it but what it is against is the government's bringing
harmonization into three provinces and leaving the rest of the
country unharmonized. They are saying to themselves: ``Why are
we pushing ahead with tax in pricing in particular when the
government knows full well that it is going to hurt business in
Atlantic Canada and if it hurts business it is going to hurt the
Atlantic Canada economy?'' Of course there is no economy in the
country that needs help more than Atlantic Canada.
Why out of a sort of perverse need to try to fulfil a wonky
election promise is the government pushing ahead with this when it
knows it is going to hurt Atlantic Canada?
(1150 )
I am not going to ask members to accept my word for it. I am
going to quote from a letter written on November 29 by the Retail
Council of Canada which was sent to the current finance minister.
This letter is rather lengthy so I ask for members' indulgence
because the points raised are very important: ``Retail council
provided you with early estimates of the cost attached to tax in
pricing in July of this year. At about the same time, seven national
retailers also prepared a paper which explained how tax in pricing
harmed their operations and provided estimates of the costs they
faced.
``Since then, retail council members have worked to get a clearer
understanding of the cost impacts. Ten members accounting for
roughly 30 per cent of Canadian retail sales have given us in
confidence their detailed estimates of the impacts for their firms.
``As the attached chart shows, these companies alone will incur
annual ongoing costs of almost $34 million. This is only slightly
7012
offset by input tax credit and other savings of $6 million, leaving
these firms with a continuing annual net cost of $28 million''.
This is for firms that represent only 30 per cent of the retail
sector in the three provinces which have recently agreed to
harmonization. It continues:
``Other RCC members have indicated that they will provide
similar information on their costs to you directly. Nor are these
costs incurred only by national firms. The expert distribution,
warehousing and logistics costs incurred by the suppliers to
independent and small chain retailers will almost certainly be
passed on given the relatively weak negotiating position of smaller
firms.
``Second, many of their suppliers are located in provinces that
are not harmonizing so they will not benefit from any
ITCs''-input tax credits-``in respect to provincial taxes.
``Third, small firms that receive prepriced merchandise will
incur the same reticketing costs as larger regional and national
retailers. Retailers operating only in the harmonized provinces will
face one time costs to reprogram their computer systems but will
not face the same continuing system integration costs that come
with operating in harmonized and non-harmonized provinces.
``As part of the harmonization agreement, the federal
government facilitated the imposition of capital and payroll taxes.
Nova Scotia and New Brunswick have taken this opportunity to
introduce new corporate capital taxes as of April 1, 1997, further
increasing the costs attached to harmonization''.
The letter goes on and on but I will not read any more in the
interest of time. It is fairly clear this is a group that is arguing
harmonization is a good idea. It wants harmonization but it is
saying that the government should not go ahead in three provinces
while it leaves the rest of the country without the harmonized tax.
The group points out is will cost millions of dollars.
It will not cost the businesses millions of dollars ultimately.
They will pass the costs on. So who pays for it? Consumers.
Consumers pay through the nose for a broken Liberal government
promise.
It would be bad enough if Canadians in general paid for that
promise, but it is the people of Atlantic Canada. It is the economy
that can least afford to take a tax hit of any region in the entire
country. But the government did not care. It was so desperate to
save the Deputy Prime Minister's skin that it went ahead and
pushed through this ridiculous measure and it did not care that it
cost people in Atlantic Canada jobs. It meant more money out of
their pockets. It did not care for a moment.
The government does not care that it is divisive to the country.
At a time when we are trying to hold the country together, the
government gives Canadians one more reason to be cynical about
its desire to treat everybody equally.
I must ask a question that I am dying to know the answer to.
Where are the members from Atlantic Canada? Why are they not
standing up for their constituents? We know there is a grassroots
revolt in Atlantic Canada against the harmonized GST. Recently
Greenberg Stores Ltd. announced it was closing a number of stores
in New Brunswick. It was closing stores in different ridings. It was
closing stores in Beauséjour, Restigouche-Chaleur,
Acadie-Bathurst, Fundy-Royal, Moncton and also in Saint John.
When stores close as a result of government action and 79 people in
Atlantic Canada are thrown out of work, the MPs from those
ridings should be on their feet. Where is the defence minister? He
should be standing up for his constituents. Where is the junior
minister of agriculture? Why is that minister not standing up for his
constituents? What about the Conservative member for Saint John?
We know that they are lock, stock and tomahawk in favour of
harmonization and they are not standing up for their constituents.
(1155)
That lays out how important it is for us to reform this place so
that MPs have the power to stand up for their constituents. My
goodness, if that had happened in my province, I would like to
think that my colleagues would have jumped to their feet and said:
``This is unacceptable. I do not care if it is my leader who is
bringing it in. My constituents say it is wrong and I am going to
stand up for them and vote against it''.
Where are they? Where are the Liberal members from Atlantic
Canada? There are 16,000 names on a petition against this. Where
are the MPs from Atlantic Canada? Where are those Liberal MPs?
Why are they not standing up for their people?
Their silence speaks eloquently of the need to reform this place.
It speaks eloquently of the government's insensitivity to Atlantic
Canada. It speaks volumes about its approach to treating provinces
differently, as opposed to treating them equally, something the
Reform Party truly stands for.
I am going to conclude my remarks by saying that our party does
not believe in this approach. It is wrong. The government should
have fulfilled its promise. It made a promise. It said it would get rid
of the GST. Its members went door to door and promised it would
be gone if they were elected. They were elected in spades; 177 seats
and still the GST sits there as a permanent reminder that
governments cannot be trusted. People cannot be trusted to come
through with their promises when they make them on the doorsteps
during an election campaign. The government should have
followed through and gotten rid of the GST. That was its
commitment to voters. The Deputy Prime Minister said so on
national television. It was said over and over again.
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I do not think the government has listened closely enough and,
frankly, I do not think a lot of people have listened closely enough
to the argument that there has to be competition between
jurisdictions. If we do not, we are entrenching higher taxes. The
finance minister said it in 1990. That is a very compelling reason
to vote against a harmonized GST. We have to have competition.
If we do we can all enjoy lower taxes in this country. However,
under the current formula, which requires unanimity to lower the
provincial portion of the GST, that will never happen, as hon.
members know.
Canadians want lower taxes, not different taxes. We are having a
massive debate in the House about how we are going to change
taxes. When I go around to doorsteps, when I have my town hall
meetings in Manyberries, Alberta or in Taber, Brooks or Medicine
Hat, Suffield or Empress, or wherever, people do not say: ``Boy, I
wish the taxes were different''. They do say: ``I wish the taxes were
lower. I wish I could keep more money in my pocket. The
government gets its share''. It gets 46 per cent of the average
person's income. ``Then I have to go out and provide my food,
shelter and clothing for me and my family. There is not much left''.
There is hardly anything left, which is why we have record high
levels of personal debt in this country. It is why we have record
bankruptcies in this country.
(1200 )
Instead of debating how we are going to change taxes, why not
have a debate in here about how we can lower taxes? I think
Canadians have had it with the government having its own agenda
which simply does not reflect at all what the agenda of Canadians
is. This bill does nothing to address the overriding concern of
Canadians that too much of their money is being spent and wasted
in many cases by the government. They want that money left in
their pockets.
In conclusion, I urge hon. members not only to listen to my
arguments, I ask them to listen to the arguments of people in the
provinces where this tax is being harmonized. Opposition parties
are raising Cain in the various provincial legislatures saying they
are against it. The Retail Council of Canada, the Canadian Real
Estate Association, the Halifax Chamber of Commerce and many
others are pointing out that the way this tax is being introduced is
going to kill jobs in Atlantic Canada. I cannot believe a government
that ran on the promise of jobs, jobs, jobs is going to push through
with this even though it is going to kill jobs in Atlantic Canada.
This is contrary to common sense.
If Liberal MPs in Atlantic Canada will not listen, I ask all
members to listen to this. Why will they not listen to the people
who have made it clear that they do not want this tax? There were
16,000 names on one petition alone. There may be other petitions
out there but I am only aware of one. There are 16,000 people who
are opposed to the harmonized GST in Atlantic Canada.
If the Liberals will not listen to me and my colleagues in the
Reform Party, then I urge them, especially the Atlantic Canadian
MPs, to at least listen to their own constituents and vote against this
bill and to forever forget the idea of introducing a harmonized GST
across the country.
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I will be
sharing my time with the hon. member for St. Boniface.
Bill C-70 is really about re-engineering the Canadian economy.
We live in very changing times economically. Surely as if we had
lived back in the 1800s when the horse was replaced by the iron
horse, today our society is changing dramatically before our very
eyes.
When we talk about Atlantic Canada, for instance in the
province of Nova Scotia more people today are engaged in
education than in the fishery and forestry combined. It tells us that
the nature of our society is changing. We have to change our
internal and external trade mechanisms because this is becoming a
very competitive world.
The harmonization of the GST is just part and parcel of a general
program to make our economy much more efficient by stopping the
duplication of various taxes and the overlap it causes and make our
economies efficient and competitive as we move toward the 21st
century.
We have talked about the WTO. It was the Atlantic provinces
when they first came into Confederation back in 1867 that were the
engines of growth at that time, the creators of wealth and the
builders of ships. It is to their credit that those provinces have
realized the importance of a harmonized GST system and of doing
away with duplication and overlap to create more efficient
economies for their people which will create jobs in the future.
We need a more homogeneous Canadian market, a Canadian
trading system. This is just part of the parcel to do that.
Let me first address the whole concept of provincial sales taxes.
Each one of our provinces at various times has implemented
provincial sales taxes. They have come along and changed them,
applied them to some things in one province and others in another
province.
When I served on the finance committee I travelled to Atlantic
Canada. I talked to the people about the kinds of administrations
that existed in the provincial sales tax system. We get the same
thing in my province of Ontario. It likes to protect children's
clothing so it is exempted from the PST. Prince Edward Island is
very concerned about home heating fuel so it is exempted. In other
words, there is a patchwork of provincial sales taxes and rates
which go from 12 per cent to 7 per cent and to 0 per cent in Alberta.
7014
(1205)
There is a hodge-podge of provincial sales taxes across the
country. In and of itself what has that created? I am surprised that
members of the Reform Party who talk about making this a better
economy cannot see the importance of changing this outmoded
system of individual provincial sales tax regimes.
When I was in the province of Newfoundland I was surprised
and shocked to find that businesses were complaining about mail
order businesses which operated out of Ontario and shipped
products to Newfoundland because the retail sales tax in Ontario
was less than that in Newfoundland. In other words, somebody
would not buy something in their own neighbourhood because they
could buy it cheaper through a mail order business in Ontario
because of the difference in the provincial sales taxes.
These are some of the very basic problems a harmonized system
is attempting to address. It is long overdue. It is not a matter of
change for the sake of change. I hear some people say that the
Liberals just want to change the GST and harmonize the sales tax
so that they can meet their election commitments. Nothing could be
further from the truth. This concept of integrating the two taxes is
very important for our future as a country and for our economic
well-being.
It is very important to have a similar system across the country
from coast to coast to coast. That is my ideal. Some members of the
Reform Party will say that we did it in only three provinces. Those
three provinces are three more than we had a year ago. At this rate
we will have harmonization across the country in a few years.
I would like to talk about the difference between a multistage tax
and a single stage tax which basically is what the provincial sales
tax is. The value added tax is a more efficient tax, if the people
listening believe that there is such a thing as an efficient tax. It is an
efficient tax in that it taxes at all stages of consumption. The
provincial sales tax is not efficient for a number of reasons. One
very real reason is that the provincial sales taxes invariably become
embedded in manufactured goods. What do I mean by that?
I mentioned initially the importance of re-engineering our
economy, creating a more robust economy in Canada. Another
aspect is our export sector which has been the engine of growth and
the engine of employment. Many people come to the industry
committee week after week and say that to start a small or medium
size business in Canada they have to start with the assumption that
70 per cent of their sales will go outside the country. What does that
have to do with taxes?
The bottom line is that with the provincial sales tax system, we
incorporate and compound the taxes on our export sales because
there is no mechanism to relieve our exports of the provincial sales
tax. The whole concept of the GST or a value added tax is that
when we export something, we do not include those taxes in the
export selling price. In other words, it makes our products much
more competitive in the world environment. I will give an
example.
In my riding even though we do not have a General Motors plant,
General Motors is a big player in the economy. General Motors
currently would pay provincial sales tax in its operations. Everyone
knows there is no such thing as a business tax per se. We hear the
province of Ontario argue back and forth that it does not want to
shift the taxes from businesses to individuals. I would like to
suggest that there is no such thing as business taxes. The only taxes
are on individuals. We are all paying the tax on a personal basis
whether it is in that car or the products that we buy daily, our
telephones, refrigerators and so on. We are all paying the tax.
Sometimes we see it, sometimes we do not. That is the essence of
the problem of provincial sales tax.
(1210)
It is amazing that members of the Bloc have not noticed that
their own system is a very efficient one. It is completely
harmonized with the existing GST system. The automotive sector
is one of the growing engines of our economy. It is one of the things
that has kept people employed and has allowed our economy to go
forward in the last few years. A car produced in Oshawa when sold
in the United States has PST, provincial sales tax, embedded in the
selling price but a similar car produced in Ste-Thérèse, Quebec
does not. All things being equal, the car produced in Ste-Thérèse,
Quebec and shipped into the American market is cheaper than the
one produced in Ontario.
Everyone can understand why I believe that Ontario and most
other provinces will eventually harmonize. It is just good business,
just good sense and just good for the economy.
The interesting aspect about this is that moving toward a truly
harmonized system means that we have a common base, a common
rate and a single administration. One of the most important things
is a single administration so that we end the duplication and
overlap which exists in the system.
I would like to mention a person I contacted just this morning,
Fred Shaw from St. Anthony, Newfoundland. Fred is an
accountant. In his own practice, because of the harmonization
process he is actually going to end up charging more on his
invoices but he said that his customers are going to be a lot better
off under a harmonized system. The province of Newfoundland is
going to be better off by millions of dollars by harmonizing its
administration system.
Mr. Shaw talked about buying a load of gravel. Before, he would
have had to pay the PST and the GST on a load of gravel but if the
same truck had spread it over his front lawn he would not have had
7015
to pay the PST. This is the sort of ridiculous argument we are all
doing away with under this system.
In conclusion the object of a harmonized system is to create a
more robust engine within Canada and to create a more dynamic
economy as Canada competes in the 21st century against many
other competitors that are doing the same thing.
[Translation]
Mr. Ronald J. Duhamel (St. Boniface, Lib.): Madam Speaker,
the purpose of our debate today is to take a serious look at this bill,
to stay away from the political partisanship that arises from time to
time when discussing these issues and to make a thorough analysis
based on the following: does this bill provide more benefits for
business, yes or no?
I think our comments should aim to improve instead of simply to
attack, criticize, denigrate and crush this bill.
[English]
I do not want to take up valuable time with further justification
of a restructured harmonized federal-provincial sales tax. The facts
have been clearly and convincingly addressed by my colleagues.
[Translation]
The facts are there. What we have to do now is improve this bill
if we can.
(1215)
[English]
As we all know, the harmonized sales tax will eliminate hidden
taxes that inflate prices and hurt exports. It is simpler, more
transparent for consumers and for business, and an integrated
approach makes possible a lower overall sales tax rate. We know
that, those are realities. If people do not agree with the facts they
should attack them and show us why.
[Translation]
We know perfectly well this is a better, more straightforward and
less costly approach that will help meet the needs of people in a far
more flexible way.
[English]
Today I want to focus on an aspect of this legislation that has too
often been attacked by those who place partisan politics and narrow
regionalism ahead of clear objective thought.
The issue of course is a decision by the government to provide a
formula for short term adjustment assistance to provinces when
they face significant structural cost to participate in the new
integrated system. That is the prime issue I want to address today.
[Translation]
There will be assistance when assistance is necessary. There will
be a formula that will indicate clearly, fairly and objectively the
type and amount of assistance the government will provide.
[English]
Under this legislation adjustment assistance becomes available
to provinces which experience a revenue shortfall in excess of 5 per
cent of their current retail sales tax receipts because they moved to
a single harmonized sales tax system.
For qualifying provinces, in this case Newfoundland, New
Brunswick and Nova Scotia, the formula means that the federal
government will provide, and this is very important, first of all, full
compensation for the revenue shortfall, that is the shortfall over 5
per cent of the current retail sales tax in year one; that same full
compensation for the shortfalls in year two; half the amount of the
shortfall in year three; 25 per cent of the provincial revenue
shortfall in year four.
[Translation]
Now we have measures that are concrete, specific and fair.
[English]
This assistance is a necessary investment in making Canada
stronger through helping disadvantaged regions move to a modern
tax to meet modern challenges. It is a 21st century type of
investment reflecting the fact that government must change how it
involves itself in economic development.
[Translation]
We see profound changes taking place aross the country.
[English]
Businesses have made it clear that the best role for government
is to give firms and workers the environment to compete and that is
what it is doing with sales tax harmonization, and that is what
responsible government and leadership means.
The assistance formula developed applies equally to all. There is
no discrimination, no favouritism, no bribery. It is clear, concrete
and objective. It applies equally to all. Any province that faces a
transitional revenue loss exceeding 5 per cent because of
harmonization qualifies for assistance over that amount on a 50-50
basis. After four years those provinces are on their own.
That means that B.C., Alberta and Ontario would not meet the
threshold. They will not lose money on harmonization, just as
Quebec did not when it harmonized. In fact, I am told that Quebec
7016
made money through its staged harmonization approach, that it was
clever in doing so and it should be commended for that.
Not every province has the economic size and scale to become
instant winners under harmonization. For the three Atlantic
provinces, with their less developed economies and such problems
as the fish stocks, harmonization does carry a painful near term
cost. That is why this government has developed a compensation
formula and why those governments will receive about $960
million in assistance.
Under the same formula Saskatchewan and Manitoba will also
deserve assistance. They would be entitled to over $550 million for
the four year period when they decide to harmonize, a fact that is
not propagated loudly or widely by either of those governments. I
want to mention that under the same formula Saskatchewan and
Manitoba would also deserve assistance. They would be entitled to
over $550 million for the four year period when they decide to
harmonize.
It is surprising and to some frustrating that this government's
approach has been turned into a political football. There is a tragic
cynicism at work, the type of cynicism that knows the price of
everything and the value of nothing. ``Let's do what we can in order
to enhance our popularity which is plummeting, and let's do
whatever in order to noticed''.
(1220)
Who can argue the value of helping provinces provide the
environment to industry that would help them fly? It is not just one
or two sectors but all businesses in a region. This is particularly
true for the Atlantic region which is why it has moved to accept the
harmonized approach.
By what illogical leap can it be suggested that because the
Atlantic provinces or Manitoba or Saskatchewan qualify for
assistance, equal financial benefits should be provided by
provinces that do not suffer major losses?
[Translation]
How can anyone rationalize such an approach? What kind of
approach do they want when they say we should not distribute
wealth according to the needs of a province or a region?
[English]
That is not a prescription for fairness. If we do not share in a way
that responds to needs and loss it is a premise for selfishness.
Statistical uniformity in no way builds economic futures or
preserves a vibrant Canadian society. One size does not fit all in a
nation as diverse as Canada. It never has and I do not think any
provincial politician in their heart of hearts believes any different.
For example, Quebec and Ontario are the major beneficiaries of
our federal tax regime for research and development, the most
beneficial in the G-7. Do those governments want these credits to
be proportioned on the basis of geography rather than economic
reality? I think not.
[Translation]
No, certainly not. So why, when we are looking at another
program, do they want the same? Is this not a contradiction? Is it
not unfair and insensitive? I think so.
[English]
That is the heart of the issue and the key to fairness. Government
assistance should be determined by the principles of need and
performance. That is the way to be effective. That is the way to be
cost efficient and that is the way to build a 21st century economy.
Let me repeat this is not a political issue, or it need not be. It is
not an accounting debate. Rather, it is a question of Canada's
economy today and into the next century. Sales tax harmonization
is a solution that gives Canada's affected provinces an effective,
more fair and competitive tax.
Our challenges are too pressing, our opportunities too real to
squander on petty partisan politics. Let us get on with looking at the
issues clearly rather than applying emotional blinkers or dog in the
manger logic or simply saying something in order to help the
party's flagging popularity.
Yes, our approach and assistance will make the maritimes more
competitive. Any province can seize a clear and concrete solution
to the problem by getting onboard themselves. The solution does
not involve a dramatic fiscal cost. They will benefit quickly and
surely through greater competitiveness and real cost savings to
their businesses. That should be carrot enough and reward in full.
There are provinces like those in the Atlantic region. They want
to make the transformation but face a tough short term downside.
That is a barrier they cannot overcome by themselves so we have
developed a cost shared short term solution to help them over the
hump. That is the essence of partnership and of real national
leadership.
Different players bring to the table different problems and
different resources. By working together, drawing on our strengths
and compensating for our weaknesses we all emerge stronger. The
strength of a value added sales tax regime is that it is a better tax for
today's economy.
For Canada's place in that economy we face the problem that its
advantages have not been fully harmonized with provincial-federal
taxes. If we work together through the format and approach our
government has set up, the result will be a tax system that makes us
stronger, that helps deliver more jobs and that is fairer to us all.
7017
[Translation]
This is the end of my remarks, but I could have gone on for
hours, because at last we have an approach that makes sense.
(1225)
[English]
Mr. Monte Solberg (Medicine Hat, Ref.): Madam Speaker,
given the opposition of the Retail Council of Canada and many
independent retailers to this deal, precisely because it is being
brought into only one region, and they point out that it will mean
higher costs for them and ultimately for consumers, and knowing
the impact on Atlantic Canada will be especially difficult to deal
with given the state of its economy, how can the member justify
pushing for this deal when he knows it will hurt consumers in
Atlantic Canada?
Mr. Duhamel: Madam Speaker, I thank my colleague for his
question. I know that he takes these questions seriously.
I thought I had shown quite clearly in my address that this was as
fair an approach as could be found. I have not heard one political
party, not one politician, come forward with something that is more
sensitive or sensible which responds to the needs that have been
articulated. I am befuddled.
I suspect he probably has another question. Surely he listened to
what I said. I said let there be no doubt that all systems are
imperfect. Let there be no doubt that this has imperfections, but let
me see something that is better, let me see something that will
respond more significantly to the needs of Atlantic and other
Canadians.
The major point here is that it treats Canadians fairly. The
opportunities that were given to the Atlantic provinces are also
available to Manitoba and Saskatchewan. There is a formula. It is
not discrimination. It is not biased.
Of course, when one talks about taxes in general we are not
going to find a whole lot of people who are going to agree with any
level of taxation or any adjustments to the taxation system. Clearly
what we have now is not efficient. Clearly what is being proposed
here is much better. It is much more sensitive. It is much more
workable.
Surely if my colleague has another option, he or his party will
put it forward and then we will let people look at it and decide
which of the two options is better.
Mr. Jay Hill (Prince George-Peace River, Ref.): Madam
Speaker, it is necessary to make the point right now to the hon.
member that the Reform Party, as much as it should be, is not the
Government of Canada. Therefore it is not up to us to put forward
options for this particular tax. Certainly during the election
campaign we will be putting forward options on a whole range of
issues so that Canadians can choose between the various parties
and their platforms.
In this particular case, given that the hon. member and his party
campaigned during the 1993 election campaign on scrapping,
abolishing, doing away with the GST, how can he reconcile that
with the present plan to harmonize it? How can he reconcile
harmonization with the promises that were made by him and his
party during the 1993 election campaign?
He states what is fair. What is fair to the Canadian people is for
the government to live up to its election promises.
Mr. Duhamel: Indeed, Madam Speaker. My colleague has no
doubt seen an accounting by the Prime Minister of Canada with
respect to the promises made on the electoral platform. The
majority of those promises have been honoured.
My hon. colleague who asked the question knows full well that
setting aside the GST was one of a number of options.
Harmonization was in the electoral platform. My colleague knows
that. My colleague is intentionally trying to make it an issue when
it is not. Why would my colleague not read the relevant sections
into the record? Harmonization was clearly an option.
Harmonization was mentioned on a number of occasions. My
colleague knows that.
The other thing that I find extremely strange is, as I understand
it, every party in the House of Commons is in favour of
harmonization. Every single party. If I am wrong, let them stand up
and say so. As I understand it, businesses are in favour of
harmonization. Yes, there is additional work that needs to be done.
Yes, the systems need to be fine tuned. However, let them stand up
and be counted. Let us have no more rhetoric. Let us look at this
initiative as it is intended to be, to make the system fairer, simpler
and less costly. Let us look at it from that perspective.
(1230)
[Translation]
Mr. Richard Bélisle (La Prairie, BQ): Madam Speaker, I
listened with interest to the remarks of my colleague opposite, and
I would like to say that the bill is nothing more, in the opinion of
the Bloc, than a collection of amendments to the GST.
In addition to several dozen small technical changes on
exemptions from payment of the GST, there are a series of
amendments providing for the harmonization of the GST with the
sales taxes of the three maritime provinces. In Bill C-70, the GST
becomes a harmonized sales tax, as the Minister of Finance
describes it.
The bill also provides an exemption from federal sales tax, and
this applies right across the country, for books bought by public
libraries, schools, colleges, universities and other organizations
involved in literacy programs.
7018
We received this bill at the last minute and we in the official
opposition deplore the way the Minister of Finance tabled these
documents. The official opposition had less than 24 hours to
examine the text of a bill of over 300 pages, which came without
any explanatory notes. In this way, the government is trying to
avoid debate and to keep the real issues hidden from the people
of Canada.
The Liberals do not keep their promises, to say the least. The
Deputy Prime Minister should resign again. The GST is with us for
the duration, as Bill C-70 pointedly indicates. The Prime Minister
promised transparency in the last election campaign. The Liberals
are doing now what they criticized the Conservatives for doing in
the past. The new GST is a hidden tax, because it is buried in the
selling price of goods and services.
The 1994 Liberal majority report stated that it would simply be
wrong to keep Canadians in the dark as to what they were paying in
taxes to their governments, and a hidden tax would make it difficult
for them to force the government to account for the way taxes are
collected and, to a lesser extent, for the way public funds are spent.
The Minister of Finance is today presenting us with the hidden
tax he criticized at the time. Furthermore, in 1989, the dissenting
report of the minority Liberal opposition stated: ``In addition, if the
GST is hidden in the selling price, it will be much easier for the
government to increase it later on''.
The old Liberal federal sales tax was hidden in the price. The
Conservatives made it visible by creating the GST as we know it.
With the proposed agreement with the maritimes before us today,
the Liberals are again hiding this much hated tax. There is always
this double talk: They say one thing when in opposition and another
when in office.
In 1989, the Liberals tore out their hair over this issue, but now
that they are in office, they are hiding the GST as if nothing had
happened, as if this tax had never existed.
This is a disgrace. This shows selective memory. The Liberals
boast about listening to businesses. But when the Canadian
Chamber of Commerce surveyed its members in 1994, it concluded
that 70 per cent of Canadian businesses were against hiding this
tax. In February 1996, the same organization surveyed its members
again, only to find again that 76 per cent of them were against
hiding this tax. For a government that boasts about listening to
business, it does not seem to be listening very well.
(1235)
Let us take a look at the compensation formula, which is in fact a
$1 billion political present. But the real cost is that of harmonizing
with the maritime provinces.
In a shameless exercise in window dressing, the Minister of
Finance has paid off the maritimes so that they would help him
honour an election promise that had not been acted on. One billion
dollars is what Quebecers and Canadians from the other provinces
will have to pay for an election promise that was not kept by the
Minister of Finance and the Prime Minister. One billion dollars is
what this measure is really costing us.
There is no mention of the compensation formula in Bill C-70.
The MOUs provided for some $961 million in compensation. We
are still waiting for the Minister of Finance to unveil the criteria for
his compensation package and to clearly show that Quebec is not
entitled to such compensation.
In spite of Quebec's repeated requests to that effect, the federal
government has turned a deaf ear. The objective is always the
same: to penalize Quebec and particularly Quebecers, who elected
a sovereignist government. This compensation may be a political
gift to make the Liberal UI reform, which adversely affects
seasonal workers in the maritimes, more palatable to the
population of these provinces. Otherwise, why would Ontario,
Quebec and the other provinces not be entitled to such
compensation for harmonizing their sales tax with the federal one?
This cost of $1 billion over the next four years will be largely
exceeded. The result of reducing the tax base at the consumer's
level from 19 per cent down to 15 per cent will be that, in future,
Quebecers and Canadians from the other provinces will have to pay
more equalization to the maritimes.
These additional equalization costs will be paid by all taxpayers
in Canada and Quebec. The commitment made by the finance
minister to the governments of the maritime provinces is not
acceptable, when you compare the cushy deal reached with the
maritime provinces on harmonization with what happened in
Quebec in recent years.
The agreement reached by the federal government and the three
maritime provinces will eventually be expanded to include all
Canadian provinces. At the present time, the majority of Canadians
are against the minister's plan, against the introduction of a single
15 per cent tax, to be collected by the Canadian revenue
commission the government wants to set up.
The tax burden would thus increase in Quebec, in Ontario, and in
several other Canadian provinces. Bill C-70 will have a number of
consequences for Quebec. For many years now, the Government of
Quebec has made a genuine effort to harmonize federal and
provincial tax bases. Quebec collects and administers for the
federal government the GST such as we now know it in Quebec.
We have therefore worked very hard in Quebec to bring about this
harmonization at no cost to other Canadians.
This bill is unfair to Quebec on more than one count. Quebec's
fiscal autonomy would be undermined by the Canadian revenue
commission, which would be responsible for administering the
new 15 per cent GST. The present harmonization worked out
7019
between Quebec and Ottawa is therefore a far cry from the minister
of finance's bill, whatever the Liberals might say.
Quebec will never agree to take part in such a fiscal regime. This
new attempt by the federal government to interfere in provincial
jurisdiction must be denounced.
Far from harmonizing federal and provincial sales taxes, this bill
stands a good chance of jeopardizing several years of efforts by
Quebec to achieve harmonization with federal taxation. The
existing harmonization in Quebec was accomplished with the
consent of both parties, and in all good will.
Today, the Minister of Finance is scrapping all the agreements
signed with Quebec and trying to replace them with a bill that is
nothing more than a pre-election ploy.
(1240)
The government has made only partial use of a measure
proposed by the Bloc Quebecois, so the public ends up with a
half-victory. In our opinion, however, even with this GST credit on
books, the government is not going far enough.
Ever since Quebec introduced the QST, all books have been
exempt from the provincial sales tax, and not just those purchased
by literacy institutions, schools, public libraries and so on. All
books are QST exempt, including those purchased by consumers in
bookstores, which represent the bulk of GST revenues on book
sales.
The measure announced by the Minister of Finance is, therefore,
a cosmetic one, designed merely to enable the Liberals to boast that
they have eliminated the GST on books, when in fact they have not
done anything of the sort. Taxing books means taxing knowledge,
making it even less accessible to certain members of society.
This does, however, represent a half-victory for the Bloc
Quebecois and for the public, in that we have been battling from
the very beginning, even as far back as when the Conservatives
were in power, to eliminate the tax on books. For this to become a
total victory, however, all books would have to be exempted from
this GST disguised as a harmonized sales tax, not just books bought
by literacy and educational organizations.
What the Liberals are aiming at with Bill C-70 is, in fact, nothing
more than a whitewash, a diversionary tactic, at which they are
experts, and which is what has kept them in power for so many
years. The moment of truth is at hand. They will have to answer to
the Canadian public in the next election. Then their poor track
record will speak for itself.
Rather than passing this bill, the Bloc Quebecois proposes a
concrete revision of the corporate taxation system. According to
our analysis, the federal government could recover up to $3 billion
annually by revising or abolishing certain outmoded, inefficient
and unfair tax expenditures, using the money instead to encourage
businesses to create jobs.
In today's struggling labour market, the purpose of corporate
taxation ought to be to encourage the creation of good, lasting jobs,
while ensuring that the funding of public services is equitably
divided between corporations and individuals, and among the
corporations themselves.
A number of analysts see a problem in the way taxes are
collected in Canada: While the tax rate on profits is lower than
elsewhere in the world, capital and payroll taxes are higher. This
discourages job creation. Instead of remedying this situation, the
Liberal government is attempting to hide yet another broken
election promise. What a poor record the Liberals have to show for
themselves after three years in power.
[English]
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Madam Speaker, I listened with interest to the
comments of the hon. member opposite and, as usual, there was the
litany of complaints. But he did allude to the fact that of course
Quebec has a harmonized tax. I would like him to tell this House
whether that is an improvement over the situation which prevailed
previously when there was a separate Quebec sales tax and a
federal GST.
Is the hon. member supportive of harmonization as it has been
working in Quebec and, if so, why would he deny the same
opportunity to other regions of the country?
[Translation]
Mr. Bélisle: Madam Speaker, I can inform the parliamentary
secretary that yes, I strongly support harmonization as
implemented in Quebec. What I want to say today, before this
House, is that Quebec received no compensation for its efforts to
put together a harmonized federal and provincial sales tax.
Why has the federal government committed nearly $1 billion in
compensation for the three maritime provinces, the plan we are
discussing today, while Quebec is not entitled to any
compensation? I deplore this double standard.
(1245)
It is the same old story. In the end, the federal government is
trying to make amends for its new employment insurance policy.
In the three maritime provinces, there are many seasonal
workers who will be penalized. The government is providing a
disguised subsidy of nearly $1 billion just before a federal election
is called, in an attempt to make its employment insurance policy
more palatable to the maritimes and make seasonal workers in
these three provinces forget they have been penalized. They want to
7020
make them forget about that before the next federal election. That
is what I find intolerable.
[English]
Mr. Campbell: Madam Speaker, Quebec did not receive
compensation at the time that it harmonized. It would not qualify
for compensation under the formula that was announced, debated
and passed by this House several months ago.
That formula requires a province to incur a net loss of tax
revenues of over 5 per cent in order to qualify for assistance on any
measure. Quebec would not be in a position to benefit from that
formula, nor might I add would Ontario were it to harmonize now
or British Columbia. Other provinces would qualify. The maritimes
do quality and that is the simple answer.
Not only did the province of Quebec not lose revenue on
harmonizing in the manner in which it did several years ago, but in
fact gained revenue by operating two systems simultaneously for a
period of time. I wonder if the hon. member is aware of that.
[Translation]
Mr. Bélisle: Madam Speaker, I can inform the parliamentary
secretary that I know all that. They say that according to the
formula that was approved, Quebec and Ontario are not entitled to
compensation, but what is particularly galling is that 25 per cent or
about $250 million of the $961 million in compensation being
granted today to the three maritime provinces will be paid for by
taxpayers in Quebec. I think this is something we and Quebec
taxpayers cannot accept.
In addition, the equalization formula will be modified, which
will also affect the three maritime provinces that will get this
compensation. In the end, these three provinces will not be getting
$1 billion and Quebec taxpayers will not be paying $250 million. It
will be a much larger amount. That is what the people of Quebec
refuse to go along with and that is the point I wanted to make today.
[English]
Mr. Peter Adams (Peterborough, Lib.): Madam Speaker, it is a
great pleasure for me to join this debate on Bill C-70. It is the act
that will harmonize the GST and the sales taxes in the Atlantic
provinces.
As members are aware, one of the government's objectives is to
have a fully harmonized sales tax system across Canada. Bill C-70,
dealing with Atlantic provinces only, takes us significantly closer
to that goal.
Harmonization is a first step toward replacing the GST with a
truly national sales tax system. The bill provides for a single
harmonized or combined value added tax called the harmonized
sales tax, or HST, to replace the current retail sales taxes in Nova
Scotia, New Brunswick, Newfoundland and Labrador and the
federal GST in those provinces on April 1, 1997. On that date the
three Atlantic provinces will have a simpler, less costly and more
efficient sales tax system.
I should mention that this bill by no means diminishes the
government's commitment to working with the remaining
provinces to make this a single harmonized sales tax system for
Canada. I urge the people of Ontario to follow this debate very
closely because harmonization in the Atlantic provinces will give
those provinces a clear competitive advantage over Ontario which
is not at the present time moving toward harmonization.
(1250 )
In addition to replacing the current system, the harmonized sales
tax will reduce the current combined sales tax rates to 15 per cent
in the Atlantic provinces, will establish a single administration of
both federal and provincial sales taxes, introduce tax inclusive
pricing so that consumers will know exactly what they are paying
in advance and ensure a level playing field for businesses in the
participating provinces.
The new combined sales tax and GST rate of 15 per cent, for
example, in the province of Newfoundland is a reduction of
somewhere between 4 per cent and 5 per cent of the current total
taxes paid by the people in that province.
Businesses in the three provinces should be particularly pleased
with having to deal with only one tax, one set of forms, one
administration, one rate and one base instead of two of everything
as is the case now. This is particularly important for very small
businesses which simply lack the staff to deal with multiple levels
of taxation.
Under the current provincial retail tax system all businesses pay
tax on the goods and services they purchase to operate their
businesses. These taxes are hidden in the final price of all goods
and services sold in the provinces so prices are inflated by several
layers of provincial sales tax. The new harmonized sales tax will
eliminate these hidden taxes by allowing businesses to claim an
input tax credit for sales taxes paid on goods and services
purchased to make their products and run their operations.
Businesses in the three Atlantic provinces now pay over $700
million in hidden sales taxes to their provincial governments.
Eliminating these hidden taxes will mean that the cost of
manufacturing, wholesaling and retailing will come down, making
prices in those provinces more competitive.
Exports from those provinces should strengthen because goods
produced in Nova Scotia, New Brunswick and Newfoundland and
Labrador will no longer have hidden taxes embedded in their prices
when they are shipped abroad. This could also be true in the
province of Ontario if the Queen's Park government would move
toward harmonizing the GST and the provincial sales tax.
7021
This change is not an abstract, accountant based benefit. Canada
is a trading nation with about one-third of its economy currently
dependent on exports. Just as important, it is the export sector that
has been creating the new jobs over the past few years. Therefore,
it is vital that our exports be as competitive as possible.
It is not only exports that will gain under the new harmonized
sales tax. Removing the currently buried taxes will mean that
goods produced in the Atlantic provinces will be more competitive
than goods imported into those provinces. Lower prices will be a
greater incentive to buy items made at home by workers in the
participating three provinces.
I would also like to mention that the system of input tax credits
will also help to combat the underground economy. With input tax
credits available at the 15 per cent harmonized tax rate, instead of
covering only the current 7 per cent GST, there will be a
substantially increased incentive for businesses to operate within
the sales tax system rather than outside it.
I mentioned before that businesses in the participating provinces
will deal with a single tax administration under the new
harmonized sales tax. At the moment businesses are faced with two
separate sales tax systems, two sets of forms and two sets of
auditors. Businesses, and in particular small businesses which now
deal with two or more separate sales tax systems on a daily basis,
will save because of the reduced compliance burden. This could
also be true in Ontario if it moved to harmonize the GST and sales
tax.
One sales tax system means less time and money spent on
paperwork. Small businesses, the micro businesses, with less than
$30,000 in taxable sales, will not even have to register for either the
federal or the provincial sales tax in the maritimes.
(1255)
Also helpful will be the fact that businesses currently registered
for the GST will automatically be registered for the new tax.
Registrants will continue to use the current GST return to calculate
net tax remittances.
When reporting tax collected and remitted and input tax credits
claimed, there will be no need to separately identify the federal and
provincial components of the harmonized sales tax at the 15 per
cent rate or tax collected or payable at the 7 per cent rate. It will be
much less complicated.
There is clear evidence also that businesses will pass on savings
in the form of lower prices in the competitive marketplace. Past
studies in Canada and in other countries show that when sales taxes
are replaced with value added taxes, savings are passed on to
consumers. This helps to refute some critics of the harmonized
sales tax who claim that harmonization will hurt low income
earners more than high income earners because of increased taxes
on basic necessities like home heating fuel and clothing.
The cost of goods should actually decrease because of the lower
combined tax rate and the removal of the hidden provincial retail
sales tax already included in the price of those goods.
One issue of concern to retailers under the new harmonized sales
tax is tax inclusive pricing, which is the answer to consumers
wanting to know the total tax included price in advance of their
purchases. This is a matter of including taxes in the price listed in
the supermarket or wherever. The government's objective in this
respect is to ensure transparency. The tax will be clearly shown on
receipts.
Retailers have expressed concern that tax inclusive pricing will
cost them money, make them less competitive and result in higher
prices. The rules are flexible enough to minimize competitive
inequities since businesses will have the option of displaying tax
excluded prices alongside tax included pricing.
On April 1, 1997 the three Atlantic provinces will have a
simpler, less costly and more efficient sales tax system. I hope that
the other provinces, including Ontario, will soon follow suit. I urge
all my colleagues in the House to support Bill C-70.
Mr. John Cummins (Delta, Ref.): Madam Speaker, the member
opposite suggests that making it easier to pay taxes somehow
makes it more attractive, something like turning vinegar into wine.
Why should retailers or anyone else feel better about paying this
tax?
Mr. Adams: Madam Speaker, one thing about the harmonization
process we are going through, which has already taken place in the
province of Quebec, is that it simplifies and cheapens tax
collection. Like the member, I do not like paying taxes, but I
certainly do not like paying taxes unnecessarily to have my taxes
collected, which is the situation now.
Where there is a sales tax and a GST there are two sets of tax
collectors, two sets of forms, different dates for submission of the
taxes. All of that costs money. As a result, the amount of tax being
paid is greater. I believe that a simpler, harmonized tax system that
lowers the tax we pay is better than the current complicated and
expensive tax system.
(1300 )
Mrs. Brenda Chamberlain (Guelph-Wellington, Lib.):
Madam Speaker, I am pleased to speak to Bill C-70 which amends
a number of acts but, most important, provides for the
implementation of agreements between the federal government and
the governments of Nova Scotia, New Brunswick and
Newfoundland and Labrador to harmonize the federal and
provincial sales taxes effective April 1, 1997.
7022
This legislation is an important step in our election promise
regarding the GST. Let me remind the House, especially members
of the Reform Party, of our promise. The red book states: ``A
Liberal government will replace the GST with a system that
generates equivalent revenues, is fair to consumers and to small
business, minimizes disruption to small business and promotes
federal-provincial co-operation and harmonization''.
This is the promise that I made to the people of
Guelph-Wellington in the fall of 1993 and it is a promise that I
look forward to seeing to its completion right across Canada.
We promised to replace the GST with a system that generates
equivalent revenues. At a time when the people of
Guelph-Wellington are demanding fiscal responsibility and
restraint from their federal government it is important not to
overlook the $18 billion that is currently raised by the GST. Any
realistic Canadian knows that we cannot continue to provide social
programs, reduce the deficit and care for our people without
revenue.
It is also important to note that all net revenue from the GST is
deposited into the debt servicing and reduction account. This
means that all moneys generated by the GST go to fight the deficit.
We have had a clear picture from Canadians of what they want us to
do with the deficit.
We promised to replace the GST with a system that is fair to
consumers and to small business. The cry for tax fairness is loud
and clear in Guelph-Wellington. My constituents do not mind
paying their fair share, but they want a tax system which distributes
the burden.
We know that the Standing Committee on Finance worked long
and hard to find alternatives to the GST. I congratulate my
colleagues on the committee for their work. As a relative
newcomer to the committee, I appreciate the long hours that
members faced in looking for an alternative to the GST. The result
of this work was the national VAT, and its recommendations are
seen in the agreements signed between the federal government and
the governments of the three Atlantic provinces.
The recommendations of the committee received an important
endorsement, one which I would like to remind the House of: ``It is
simply unacceptable that Canada remains the only country in the
world with ten different sales tax regimes''. This person went on to
say: ``We commend the government on its attempt to harmonize
the tax with the provinces''. That endorsement came from the
Reform Party in June of 1994. I look forward to its support of this
legislation.
We promised an alternative to the GST which would minimize
disruption to small business. I polled small business in
Guelph-Wellington in November of 1994 on this issue. Sixty-four
per cent of respondents said they believed that a harmonized VAT
would be simpler and more fair.
I asked business people in my riding because they are directly
affected by changes to the GST. They know that a harmonized sales
tax is good for business. Businesses must currently pay two
separate taxes and deal with two separate bureaucracies.
The Canadian Institute of Chartered Accountants estimates that
harmonization will save businesses between $400 million and $700
million annually.
The idea of harmonization received another important
endorsement in June of 1994. Let me remind the House of what this
person had to say: ``I want something that works. And I'll tell you
this, that if we had one VAT, one base, one bureaucracy to collect it,
the manufacturers and the businesses of Ontario would save over a
billion dollars by being able to deduct those costs that you cannot
deduct today on the sales tax''. This person went on to say: ``It has
been one of the areas of major competitive disadvantages that
Ontario manufacturers have had and Ontario businesses have had,
and I say stop the rhetoric, stop the politics, stop the finger
pointing. Get on with harmonization and simplification of the GST,
or whatever the new initials are, and the PST''.
(1305)
That endorsement comes from Mike Harris, then the leader of
the third party in Ontario and now premier of the province. I look
forward to his support for a harmonized sales tax in Ontario.
We promised an alternative to the GST that promotes
federal-provincial co-operation and harmonization. I have said in
this House before that my constituents are tired of governments
that blame other levels of government. They want us to work
together with all our partners for their betterment and to secure a
better future for Canada.
They are proud of our Team Canada approach to international
trade and they want to see that approach in solving all our
problems. Bill C-70 is an important step in a Team Canada type
effort in sales tax harmonization.
The efforts that have resulted in this legislation were not easy. It
is important to remember that the Standing Committee on Finance
reviewed suggestions and comments from over 1,200 individuals
and representatives from various associations. They rejected many
suggestions because they did not generate the revenue they needed
or because they were simply unworkable.
I believe that the proposals that we are debating today go a long
way in fulfilling our promise. Our country continues to face serious
problems. It is simply irresponsible for this government to abandon
its deficit reduction efforts by ignoring the revenues generated by
the GST. Nor did we promise to do so.
7023
Deficit reduction and our future remain our priority. In doing
so, we are fulfilling another important promise, to generate and
create opportunity and in doing so creating hope and growth for
our country.
We made a promise to replace the GST. Reformers, on the other
hand, promised to keep it as it is until the deficit was eliminated.
We know that their deficit reduction target seems not to matter to
them any more. Irresponsible tax cuts and more spending are
election promises that Canadians will be hearing from Reformers.
Deficit reduction, promise keeping and sound administration is
what Canadians are seeing from this Liberal government.
This is important legislation. When it passes, Canadians living in
New Brunswick, Nova Scotia, Newfoundland and Labrador will
save time and energy for their businesses. They will have a tax that
is better for consumers and they will have promoted federal and
provincial co-operation.
The premier of Ontario, Mike Harris, said in opposition: ``Stop
the rhetoric, stop the politics, stop the finger pointing. Get on with
harmonization and simplification''.
We have taken his advice in Atlantic Canada at least. This
legislation deserves our support.
Mr. Myron Thompson (Wild Rose, Ref.): Madam Speaker, I
appreciate hearing the member speak on this issue. I have to smile
a little when she talks about the keeping of promises. That is
getting to be a joke to the people across Canada in terms of what
the Liberals have done.
I would like the member to comment on a statement that was
made in 1994 by the then revenue minister from Vancouver, now
the transport minister, who predicted that voters will punish any
provincial government that fails to merge its sales tax with a
revamped goods and services tax. If that would be the case I
wonder if this member can tell me why the results in P.E.I. recently.
Mrs. Chamberlain: Madam Speaker, first, I am very glad I
made the member smile. As we know, newspapers say that
Reformers do not smile very often. So I am very happy to have
helped him along today.
I also would like to say that I think the reality of this initiative is
something like our health care initiative. The reality is that
particular initiative across Canada had to start in two or three
provinces. The GST is being implemented in the same way in two
or three provinces. As we move across Canada we will eventually
have a GST in place that will help the retailers an awful lot.
(1310)
The reality of this is reflected in a poll I conducted in early 1994.
My retailers told me very loudly and clearly that it was very
important to have a tax at the end of the sale that is not visible. The
retailers originally asked the Conservative government 10 years
ago to make the tax visible. They have since come forward to the
finance committee and admitted they made a very serious error,
that it has really hurt the growth, the competitiveness and the
buying patterns of all Canadians. That is what we are hoping to
achieve with this change.
Mr. Thompson: Madam Speaker, there is one nice thing about
asking a question in Government Orders as opposed to question
period. In question period we do not get a second chance. I did not
hear the member make any comments with regard to the voters
punishing the government that will not go along with this. The
voters in P.E.I. sent a very loud message that they are not
interested. Could the member comment on the results of the P.E.I.
election?
Mrs. Chamberlain: Madam Speaker, in reality, as I said in my
speech, if the member was listening, we have to look toward the
provinces co-operating. We also need a solution that is proper for
each province. At this time P.E.I. has decided to have a second
look, which is fine. We have to work together in harmony although
I know the Reform Party has difficulty with that. But we will take
our time, we will go slowly and we will do it right.
Mr. Herb Grubel (Capilano-Howe Sound, Ref.): Madam
Speaker, the Minister of Finance has asked this House to approve
the blended tax deal he has made with the Atlantic provinces. The
Reform Party opposes this legislation on several grounds.
First, it does not fulfil the election promise to kill the GST. The
red book fine print may have hedged on this issue but the
impression left with the public was quite clear. The Liberal Party
had been in a historic fight with the Conservative government's
Brian Mulroney against the GST. With such a fight under its belt, it
would use the opportunity of being in office to scrap the hated tax.
The resignation of the Deputy Prime Minister and the
parliamentary protest actions of the members for York
South-Weston and Broadview-Greenwood support this view.
Second, the blended tax deal comes with too high a price tag for
the rest of Canada. Why should taxpayers outside the Atlantic
provinces pay nearly $1 billion to the governments of those
provinces which have voluntarily agreed to go along with the
federal government's plan? They have no moral right to be
compensated for an action which was essentially voluntary. It is
quite clear that the transfer was a political bribe by the federal
government so that it could pretend that it had begun to deliver on
its election promise to scrap the tax.
Third, the blended tax does nothing to get rid of the fundamental
flaws of the GST system as enacted by the Mulroney government.
As an economist, I was a strong supporter of the policy that
would replace the manufacturer's excise tax by a value added tax.
The latter promised to eliminate the cascading of taxes, distortions
between industry's prices, be good for exports and leave a paper
trail that discourages tax evasion. However, the value added tax
7024
which eventually emerged from the Conservative's deliberations as
the GST fell far short of the ideal found in academic studies of such
a tax.
The most serious problem stems from the failure to apply the tax
to the broadest base possible. Once the political decision to exclude
food had been reached, a Pandora's box of other exemptions and
so-called zero rating became subject to successful political
lobbying.
(1315)
The result is a special treatment of the so-called MUSH sector
covering municipalities, universities, schools and hospitals which
are exempted from the tax. Doctors and professionals are zero rated
which means that they do not charge the GST, but they do not get a
rebate on the GST they paid on the materials they bought while
providing their services.
Hearings by the finance committee produced many stories about
the nightmarish complexity and administrative costs of the GST in
general. These stories went from the inequity of having five
doughnuts taxed because they are assumed to embody food service
delivery, while six doughnuts are not taxed since they are pure
food, to the false incentives implicit in the taxation of garbage
collection services delivered by a private firm and non-taxation of
municipal garbage collection services. Imagine what that does to
the privatization of the often much more costly municipal garbage
collection services.
From evidence produced by the witnesses, it is clear that the
GST did not discourage but encouraged tax evasion. Firms in
construction, in home, shoe and automobile repairs and a variety of
other service industries that pay the GST face serious competition
from many that do not. In addition, participants in the scam to
defraud the GST are alleged also to be avoiding paying income tax.
One of the most dramatic presentations was by a witness who
owned a business selling used goods. The GST has virtually
bankrupted him primarily because of competition from used goods
dealers that do not charge the GST. Similar stories were told by
legitimate dealers in used cars. The notional GST return on used
goods did not prevent the erosion of the nationally important
legitimate trade in used goods and automobiles.
The paperwork involved in paying the tax and claiming rebates
is very significant. For larger firms the day to day operations have
reached a reasonable level of cost as a result of the intensive use of
computers. For small businesses the cost remains high in spite of
the government's willingness to accommodate the special needs of
such firms.
In sum, all of these costs and false incentives of the Canadian
GST system still affect the blended tax. In some ways they have
become worse because of the need to integrate the provincial sales
tax with the GST. The rates are higher, the incentives to evade are
larger and so on.
Fourth therefore are the inequities resulting from the
harmonization of the sales tax of individual provinces with each
other and the GST. This harmonization produced a number of
inequities.
Historically, provincial governments have used the sales tax to
engage in social and economic engineering according to the
demands of their electorates. This explains why some provinces
exempt food, children's clothing, reading materials, some services
and medical supplies from sales taxes while others tax such items,
some at different rates from those charged in other provinces.
On top of this there were differences in the rates of taxation
depending on how much money provincial governments had to
raise by this method. Some taxed people and companies at different
rates; some spent more than others; all of which determined the
average provincial sales tax rate in the individual province.
The GST has a much broader base of taxation than the provincial
sales taxes. Blending them therefore meant that provincial taxes
had to be put on to many items of consumption that were
previously untaxed. However this broadening of the tax base meant
that provinces could raise the same amount of money at lower tax
rates. This fact underlies the Liberal assertion that provincial tax
rates are lower in favour of consumers. This of course is a shell
game. By definition the average consumer pays the same with the
blended sales tax as she did with the GST plus the provincial sales
tax. Otherwise it would have been a tax grab and we would have
heard the screams all across the country.
(1320)
Averages hide a lot of variations in gains and losses to
individuals under different circumstances. People who buy a lot of
reading material may or may not make up the extra taxes they pay
through reductions in the rates paid on other consumer purchases.
People who find their tax obligations have increased are justified in
complaining to the Liberals since they voted for the elimination of
the GST, not a change which costs them personally.
A fifth reason Reform opposes the blended tax legislation is that
the Liberals have claimed that the administration of the blended tax
will result in substantial savings in administrative costs to
governments and taxpayers. Returns have to be filed and audits
only have to deal with one bureaucracy rather than two. Such
savings are real. However the question arises as to how large these
savings will be in
7025
relation to the extra costs involved in switching to the new system
and in the day to day operations.
As it turns out, one provision in the legislation has resulted in a
significant increase in costs. I will discuss this briefly by
describing the problem that it attempted to address. It is the
so-called tax-in provision of the legislation.
This provision requires merchants to display all prices including
the taxes paid and not show the taxes separately. This mandated tax
inclusive pricing works very well in Europe. It removes many of
the annoyances consumers experience when under the present
system they are faced with a bill for their goods and services, often
inflated unexpectedly much by the GST and provincial sales taxes
whenever they reach the check-out counter. European shoppers
became quickly used to tax-in pricing and merchants adjusted their
operations quickly.
Many in Europe and in Canada had opposed the inclusion of
tax-in pricing requirements in the GST legislation because of the
fear that it would permit governments to raise GST rates of taxation
surreptitiously without explicit consultation and the kind of
openness and resistance which is brought when people are required
to file their personal income taxes. According to the experience in
Europe, it turns out that this fear was not well placed.
When the Government of Germany recently tried to raise the
GST tax by one percentage point, it ran into a storm of opposition.
In the end it was forced to drop the plan for this increased tax. I
believe the same would occur in Canada.
It is for all these reasons that show an advantage of tax-in pricing
that the Reform Party in its minority report to the study on the GST
endorsed the tax-in pricing provision for a national sales tax.
However, the problem is that we do not have a national sales tax.
We have what has been called a blended sales tax in order to
distinguish it from the national sales tax. In fact it applies only to
four of the Atlantic provinces.
As it turns out, I have no doubt that there may be savings for
individual retailers from having only one sales tax, the blended
sales tax. I have not seen how big these savings are. Therefore I am
not able to relate them to the kinds of costs the tax-in pricing
provision has imposed on these retailers and which costs they are
required to pass on to the consumers in the provinces which are
subjected to this legislation.
(1325)
What are these costs? There is the once and for all cost required
of individual firms to switch their system of calculating the price
charged at the till. This requires not only reprogramming
computers, but it is very important that it also requires the
retraining of the individuals serving the consumers. These once and
for all costs may be justifiable in light of the savings on the other
side by not having to deal with two authorities.
It turns out that there are also very large costs associated with
day to day operations which will go on for as long as there is a
blended sales tax in that region and the GST and provincial sales
taxes in the other provinces. What are these costs?
According to an independent study by Ernst and Young, prices
that have been attached to labels on goods manufactured, let us say
in the United States or Ontario, to be marketed throughout Canada
will have to be changed. Tags will have to be removed by hand and
replaced on the goods that are being sold in that area. In some cases
the price is printed on the good, such as on greeting cards the price
is printed on the back at the bottom. Stores will have to relabel all
of those cards.
Major retailers base many of their marketing campaigns on the
use of flyers and house to house distribution of material. Right now
the copy is prepared only once with the prices and conditions
applying to all of Canada. In that particular region, special copies
will have to be written and separate copies will have to be printed.
It is a very serious increase in costs.
We should also note that warehousing and cost of distribution are
expensive parts of retailing. Those of us who have never been in
that business do not realize what it takes to keep the shelves filled
with goods of the required size, quality, quantity and variety that
consumers want. One problem is that the varieties, quantities and
qualities are not predictable.
Retailers now have as an option that if in one region their sales
have exceeded those expected and they require more goods from
another region, they can go to the warehouse in another region and
ship the goods to the area with the shortage. There will now be an
invisible barrier at the edge of the blended tax zone which means
they cannot get something from the other warehouses. The studies
said that truckers who deliver goods in regions on either side of the
invisible barrier may now have to shift the goods around in their
trucks to get at those goods which have the appropriate label for the
area. This is not a fantasy. This is not something made up. Some
estimates are that these costs may be as high as $100 million for
this region.
(1330)
Let us say that half of it involves continuous costs every year.
Who is going to pay those costs? The consumers in that region.
Eaton's and other big national retailers cannot pass them on to the
rest of the country because there is too much competition, forcing
them to keep prices down, not allowing them to raise prices.
We believe that the very least the government can do in order to
help the consumers of the Atlantic provinces is to postpone the
7026
required tax in pricing approach until a blended sales tax or a
national sales tax exists throughout the country.
In the meantime, however, there are so many flaws in this bill
and in this approach to replace the GST that I believe Reform is
acting in a socially responsible manner by opposing it.
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Madam Speaker, I would like to thank the hon.
member opposite for his comments. Unfortunately, one gets used
to a lot of the rhetoric coming from the other side, so the hon.
member's candour and honesty is very refreshing.
He endorses harmonization. I would not expect otherwise, in the
light of the Reform Party's position after the GST review. He
endorses tax included pricing. He is widely recognized as a
prominent economist. I would be surprised if he said otherwise. He
accepts, in all fairness, that there will be one time costs, but in the
light of ongoing savings they may well be offset in the long run. All
of that is refreshing and welcome. I would be surprised if the hon.
member had said otherwise. He also has some doubts and some
concerns. That is also fair.
I want to make one observation and ask him one quick question.
The observation is on tax included pricing. Is he aware of the
accommodations that the government has made in consultation
with businesses in responding to the very concerns he raised about
implementing a harmonized system in one region and not others?
For instance, accommodations are being made which will allow
catalogue publishers and retailers that produce catalogues to
overcome the concerns they have. They need not print the prices in
the harmonized provinces, as long as they indicate in the catalogue
that their prices do not include taxes.
Is he aware that discussions are ongoing and regulations will
reflect that the government and retailers have agreed to allow bin
pricing for those items that are labelled, which would otherwise
have to be relabelled individually? That would be a tremendous
imposition on business so the government has accepted the
principle of allowing small items that are prelabelled to be placed
in bins, with the prices indicated on the bin. In modern retailing
that is often the way things are done. We only have to think of our
neighbourhood stores.
Is he also aware that the opportunity still exists for retailers to
indicate sale prices that are exclusive of taxes as long as the tax
included price is also indicated?
Is he aware that there are ongoing discussions toward improving
the system more as regulations are drafted? He may not have been
aware of those things. I am sure he will welcome all of those
comments.
The question is to him as an economist, because he stood and
spoke as an economist and less so as a politician. We welcome that
in debates on critical issues such as this.
He did not speak, at least not at length, about the inefficiencies in
provincial sales taxes, particularly where hidden taxes are
concerned, which is a cascading of taxes, tax on tax. The ultimate
consumer pays for all those hidden taxes.
(1335 )
I wonder if he would comment on whether a harmonized system
where input credits are available now, not just for those taxes paid
under the GST system, but for the component of provincial taxes
would also be available, is a much more efficient system. I ask him
what a rational retailer business person would do in light of those
savings.
Mr. Grubel: Madam Speaker, I appreciate the kind words of the
member opposite.
The steps now being taken in order to deal with the shortcomings
of the tax in pricing provision are a typical Liberal approach:
``There is no sense in admitting that we made a mistake and drop
the whole thing but let us patch it up''.
The member and I sat together in finance committee hearings
about the GST. The length of the horror stories about the different
provisions and difficulties that business has was caused by a
previous government's unwillingness to do the right thing and say:
``We made a mistake. Let's drop it. Let us go, say, for a broad based
tax. Instead of 7 per cent, let us have it on everything but only 4 per
cent''. That is what we heard all the time.
I predict that if the member is going to sit in the finance
committee two years from now he will hear horror stories about the
administrative costs, the difficulties of going from bin pricing to all
kinds of other provisions that he has mentioned. The government is
going in the right direction but why does it not swallow its pride
and say: ``We'll suspend the tax in pricing provision for this
legislation in order to get the other advantages''.
I agree with him. This is why with all intellectual honesty we
came to Ottawa and said that when the government does something
right, proposes something that is good for Canada, we will support
it. We will not play pure politics. That is why we said in our
minority report that we believe harmonization of provincial sales
taxes and the GST is a good idea. We still think so.
However, we did not endorse and we cannot honestly endorse the
imposition of such a tax in a particular region only and having the
rest of the country pay substantial sums for this to be acceptable to
those regions.
7027
I feel that the thrust of what I said remains unchallenged by the
points made by the member opposite. This is not a good piece of
legislation. At the very least Canadians should expect that the tax
in pricing provision be removed.
Mr. Campbell: Madam Speaker, I thank the hon. member for
his responses. He did not comment on the second part of the
question and I want to give him an opportunity to do so. I asked
him about the credits on inputs and how that will work in a
harmonized system. Does it make good economic sense and what
will happen to those savings?
Mr. Grubel: Madam Speaker, I thought that I indirectly
admitted the correctness of this position. This is exactly why
Reform supported the idea that we should have a national sales tax.
Though I must say to the hon. member that after the very lengthy
study of the GST as it is in operation I have really changed my
mind about the merit of such a value added tax unless we could
start from scratch and do what the New Zealand government did:
put it broadly on everything.
The administrative nightmare, the distortions that I have
mentioned in my speech that are caused by exemptions, zero rating
and various other twists that are too complicated to explain here
have made the tax into a nightmare. I do not believe it can be fixed.
To come forward and say that we need a valued added tax on
everything, including food, simply will not go in this political
system, however good it would be.
(1340)
For this reason I believe the country needs fundamental tax
reform which would lead to flatter rates: flatter personal income
tax rates, the elimination of double taxation on income from
property and lower rates or maybe even the elimination of capital
gains taxes. Economists agree that all those measures would do
wonders for the efficiency and the growth of an economy.
In the process of having such tax reform I believe that it would
be appropriate to eliminate the GST and impose the revenue loss on
the other forms of taxation. We have done some very preliminary
calculations which involve a flat tax. This is not Reform Party
policy but we are doing our homework which is expected of us as
elected members of Parliament. We are expected to do our
homework, to investigate the costs and benefits of different types
of taxation.
When we ran simulations of different tax rates on the computer,
we discovered that the average flat tax rate would have to increase
by only about three percentage points to afford to get rid of the GST
with all the nightmares associated with it, including the need to
send monthly cheques to individuals in Canada with lower
incomes. Members know how much it costs to write, print and keep
track of cheques, yet the GST and the blended sales tax require the
government to send out those kinds of cheques to people with low
incomes. They can be helped some other way.
[Translation]
Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Speaker, it is
with considerable pleasure that I rise to take my turn in the debate
on Bill C-70, which concerns various amendments to legislation
pertaining to the goods and services tax in Canada, commonly
known as the GST.
This bill is the recognition in fact of action taken by the current
federal government to harmonize the GST with the provincial sales
tax in three maritime provinces, with the combined tax becoming
the HST or harmonized sales tax. The HST does not apply to the
purchase of books anywhere in Canada by public corporations,
such as public libraries, schools, colleges and universities. All
organizations involved in literacy programs are also now exempt
under this bill from paying the GST on books.
We have many reservations about this bill. About its form, to
start with. This is, by the way, a very technical bill of some 300
pages in length. It was delivered to the official opposition late
yesterday afternoon. Opposition members therefore had little time
to properly prepare criticism, which we had hoped would be more
articulate and thorough, because of the lack of time and the size of
the document.
It is at once intriguing and distressing, because it must be
remembered that the government's position on this is not clear. The
history of the debate on the GST is not a high point in the history of
the Liberal Party of Canada.
(1345)
While very important promises to kill the GST were made by the
Liberal Party in its red book, this does not even come close. This is
about harmonization, with the maritimes in this case.
In an area where the government party does not keep its
promises, we would have expected them to at least have an open
and truly honourable debate on this issue, after giving the
opposition parties more time so we could have been better prepared
than we are now.
The government had made a clear, simple and specific
commitment, but so far it has not kept its promises, quite the
contrary. On an individual level, this has been illustrated by the
behaviour of the Deputy Prime Minister and member for Hamilton
East, and the promises she made, hopefully in good faith. Unless
they were made in good faith and with intellectual honesty, this
will confirm every preconceived idea the people of this country
have about politicians not weighing their words.
That is what the Liberal candidate for Hamilton East did at the
time, when stating that she would resign if the GST was not
abolished. When the GST was not abolished, she had to resign,
7028
which she did, not out of intellectual honesty, but under pressure
she could not resist. She resigned for form's sake. The very next
day, the Prime Minister called a by-election in her riding and she
was re-elected with, fortunately, a clear warning from the people
that she must not play that little game again.
During a difficult time of fiscal restraint, this little game has cost
Canadian taxpayers $500,000, just because one person did not keep
her word, but pretended to, in order to save face at public expense.
Let me quote the hon. member. Not too long ago, on March 11,
1996, the Globe and Mail reported something she had said as a
candidate:
[English]
``I have already said personally and very directly that if the GST
is not abolished, I will resign''.
[Translation]
She did resign, but it was for appearances' sake, a symbolic
resignation. She did not resign as a matter of principle, saying:
``Since the government to which I belong did not do this, I would
be ashamed to be a part of it''. No, she resigned for appearaances'
sake, because she could not withstand the pressure brought to bear
on her. Then, taxpayers had to pay for the intellectual
irresponsibility displayed regarding this issue.
You will agree that the Prime Minister does not fare much better.
The Prime Minister said, with typical clarity and transparency,
using carefully chosen words: ``We will scrap the GST''. As you
know, to scrap means to get rid of something. The yard is now full
of scrap. The Prime Minister, in his great wisdom, and also with
indignation and all the sincerity that he could display, said time and
again, in reference to the Liberals' red book: ``We will scrap the
GST''.
What is the situation now? The Prime Minister cannot claim he
is unable to take action. After all, he is in office, he is the Prime
Minister. We are not quoting some backbencher, we are quoting the
Prime Minister, the leader of the Liberal Party of Canada, who
came into office on October 25, 1993, following an election
campaign that included written and oral commitments, including
this one, which could not be any clearer: ``We will scrap the GST''.
This promise is not worth much more than this other slogan of the
time: ``jobs, jobs, jobs''. What happened to that other
commitment? ``We will scrap the GST'' and ``jobs, jobs, jobs'' are
pretty well on a par. People say just about anything they want,
including the Liberal candidates who ran in the ridings of Hamilton
East and Saint-Maurice.
(1350)
They say anything that comes to mind, that they will resign or
that they will scrap the GST. The Prime Minister said as clearly as
could be that he disagreed with this tax, when he said: ``We hate the
GST and we will kill it''. This is an unequivocal statement. It does
not leave much room for interpretation. The Prime Minister did not
make many clear and specific commitments during his career, but
he did promise to get rid of the GST.
Today, we can see what is happening on this issue. The
government no longer mentions it, except to try to harmonize that
tax. We saw what the Liberals accomplished in three maritime
provinces. A harmonization process did take place. It was
explained that, before this harmonization, provincial and federal
taxes amounted to 19 per cent of the consumer price. An agreement
was reached to lower this 19 per cent to 15 per cent.
The shortfall was made up in two ways. First, there was the
immediate payment of approximately one billion dollars to these
three maritime provinces, using money from the taxes paid by the
other seven provinces. This money did not just drop out of the sky.
It came from the other provinces. And the way the accounts are
figured out in Canada, almost $250 million of this came from
Quebec taxpayers.
That is harmonization for you. That is Canada's idea of
distributing the wealth fairly. We are used to this game, but we will
not put up with it, and it is one of many reasons why Quebecers are
giving more and more thought to whether they want to remain in
this country and why they came within a hair of deciding to leave
on October 30, 1995. It must be remembered, and there is no reason
not to say it, that on that day 60 per cent of francophones made a
decision to leave Canada, and we will keep pointing this out.
Here we have a wonderful example of what it means to belong to
Canada and what it costs. As we see it, staying with federalism is
costing the Quebec economy. Every year, we come up short, unless
you factor in, as the federal government does, what we receive in
unemployment insurance and social assistance. Unless we boast
that Quebec is poorer than the other provinces. And this is the
diabolical logic the federalists are stuck with when they try to sell
federalism in Quebec.
It therefore looks like the people, the governments of the three
maritime provinces in question were, to put it bluntly, bought,
given one billion dollars in exchange for agreeing to harmonize the
tax, as it were.
The second way of making up the shortfall of 4 per cent
mentioned earlier, the 19 per cent that turned into 15 per cent in
return for one billion up front, is that they said that from now on,
transfer payments would be the way to ensure that these three
maritime provinces were not penalized. In other words, year after
year, almost automatically, the maritime provinces, through
equalization payments, will be compensated for this loss of 4 per
cent, a practice we condemn.
This is one of the aspects that we feel shows a great lack of
regard for other Canadians and other provinces. Another aspect,
which is more likely to affect consumers, is the decision that was
made as part of this harmonization with the maritime provinces to
put taxes which are now visible under wraps once more, taxes that
7029
consumers could see so they could figure, when they paid for a
meal or for an item of clothing, how much they were paying in
federal taxes. At the time that was something new, but now it seems
that harmonization will again put this tax under wraps.
This is probably typical of the way the government runs the
country, because when it is not actually hiding something, it is at
least trying to.
(1355)
This is a partial harmonization because it also harmonizes a lack
of transparency. The public will be even less aware of how much it
pays for services it receives from the federal government. This
does not augur well.
At a time when there is so much talk about proper management
of public moneys, when all consumers are being asked to do more
and more in this respect, I think it is rather insulting that the
government should go ahead and hide the GST, although the
Liberals, and this was part of the abolition scenario, had made a
clear commitment to keep a visible GST.
A typical example is what happened to the report of the finance
committee where, in 1994, the Liberal majority said it would be
improper to hide from Canadians the taxes they were paying to
their governments and that creating a hidden tax would make it
difficult for them to make the government accountable for the way
these taxes were collected and, to a lesser extent, how public
moneys were spent.
In fact, in a dissenting report by the Liberal minority in 1989,
under the Conservatives, the Liberals said that if the GST was
hidden in the sales price, it would be much easier for the
government to increase it later on.
When the Liberal government decides to hide the GST, it knows
very well what it is doing. It cannot plead ignorance, and it is
reversing the positions it formerly held on the issue and doing so
publicly.
In concluding, I still think we have reason to be pleased that
some representations made by the Bloc Quebecois were partially
included, as regards the GST on books. As was pointed out earlier,
from now on all public institutions involved in education and
literacy training-in culture as well, when we include public
libraries, schools, universities, and community colleges-will all
be able to buy books without paying the GST. We are pleased
because otherwise, it would mean putting a tax on knowledge,
research and intellectual curiosity.
We are pleased but we deplore the fact that this exemption on
books is not extended to all taxpayers who buy books in this
country but reserved only for public institutions.
The Speaker: I may inform the hon. member that we will
continue after Oral Question Period. Since it is almost 2 p.m., we
will proceed to Statements by Members.
_____________________________________________
7029
STATEMENTS BY MEMBERS
[
English]
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker,
thanks to the leadership of Toronto City Councillor Kay Gardner
and the Toronto Board of Health, the Drink Smart Canada
campaign promoting the responsible use of alcohol has been
endorsed by over 120 Canadian cities. Their concern about alcohol
abuse, particularly during pregnancy, was one of the main reasons
for their supporting health warning labels on the containers of
alcoholic beverages.
[Translation]
On October 16, the Minister of Health and the president of the
Canadian Paediatric Society made known their position on foetal
alcohol syndrome. They made it clear that the wisest course for
women to take was to refrain from alcohol consumption during
pregnancy.
We hope that the minister can now specify what initiatives its
department intends to take to support this recommendation.
* * *
[
English]
Mr. Bill Blaikie (Winnipeg Transcona, NDP): Mr. Speaker, the
NDP urges the Liberal government to be more critical in its
approach to the idea of NATO expansion and more supportive of
strengthening the role of the Organization for Security and
Co-operation in Europe as a basis on which to build the new
security architecture for Europe.
This new security architecture should be based on a form of
common security rather than a collective security based on the
expansion of a military alliance that has not renounced the first use
of nuclear weapons and whose expansion can only strengthen the
hand of those in Russia who, for whatever reasons, wish a return to
a world divided between east and west.
(1400)
NATO should be building for the day when it is replaced by
common security measures and common security structures that
include rather than potentially threaten Russia and that involve the
abolition of all nuclear weapons.
7030
Mr. Ray Speaker (Lethbridge, Ref.): Mr. Speaker, you may
have noticed that many of my colleagues are wearing red ribbons
on their lapels this week. I would like to take this opportunity to tell
Canadians about the significance of these ribbons.
This past Saturday MADD Canada launched its annual red
ribbon campaign. MADD is asking people to place these ribbons on
the antennae of their vehicles as a reminder to practise safe and
sober driving at all times, but especially during the holiday season.
The holiday season is supposed to be a time of joy and
happiness, of friends and of family, but too often party functions
and social gatherings associated with the holiday season end in
tragedy. The women and men of MADD Canada, many of whom
have suffered their own personal tragedies, want to make sure that
for others the holiday season will continue to be a time of joy and
happiness rather than of mourning and regret.
On behalf of all the members of this House, I wish to express my
gratitude and support for MADD Canada and wish them the best of
luck in their red ribbon campaign.
* * *
[
Translation]
Mr. Philippe Paré (Louis-Hébert, BQ): Mr. Speaker, in his
report tabled last week, the auditor general devoted a chapter to the
follow-up on his 1993 comments and recommendations regarding
CIDA. After three years of restructuring, CIDA has yet to prove its
capacity for renewal, as a number of grey areas still exist,
according to the auditor general.
We are concerned to note that it continues to have difficulty
explaining the contributions its projects make to the government's
prime objectives as defined in Canada in the World. We deplore the
agency's lack of transparency with its partners and the Canadian
public and its delay in setting up a more effective accounting and
management system.
In the opinion of the Bloc Quebecois, the progress is too slow.
We think CIDA should have its own enabling legislation, which
would provide it with a clear mandate and require it to be more
transparent.
* * *
[
English]
Mrs. Anna Terrana (Vancouver East, Lib.): Mr. Speaker,
serious concern is being expressed for the welfare of children. In
Vancouver East and in many areas of Canada there are a large
number of families that live under the poverty line. These are
families with children who, like their parents, live in poverty.
The current discussion between federal and provincial
governments is very encouraging. However, even though money is
a concern, early prevention is just as much of a concern. We keep
looking for the perfect program to assist this category of people.
This program exists and is successful. It is the Community Action
Plan for Children, CAPC.
[Translation]
The program started up in 1992. In 1994, the grant was cut in
half, and next year other significant cuts will be made, preventing
the program from continuing.
The organizations responsible for the program work with
families and children. I would ask the Minister of Health to
continue and expand the program because, as one native participant
put it: ``Children have better parents thanks to the Community
Action Plan for Children''.
* * *
[
English]
Ms. Judy Bethel (Edmonton East, Lib.): Mr. Speaker,
Canada's children are our future. Every Canadian child regardless
of their parents' income or their province's wealth deserves the
basic necessities of life.
In a prosperous country like ours there is no reason we cannot
nurture all our children; nurture their little bodies, their bright
minds, their strong spirit and their diverse personalities.
In Alberta 20 per cent of our children live below the poverty line.
This means that one in five is at risk. One in five faces a life
without hope for a healthy, happy childhood and without hope of
contributing to and sharing in Canada's bright future.
There is an urgent need and an inescapable responsibility to
harmonize federal-provincial programs for children at risk. The
Liberal members of Parliament from across northern and western
Canada are encouraged by the progress made by our Minister of
Human Resources Development and the provincial ministers this
week. We are heartened by their promise to have concrete
recommendations for the Prime Minister and provincial premiers
by January.
Renewing Canada's social safety net-
The Speaker: The hon. member for Saskatoon-Dundurn.
7031
Mr. Morris Bodnar (Saskatoon-Dundurn, Lib.): Mr.
Speaker, the people of Saskatchewan have a proud tradition of
working together to help those in need. Children living in poverty
are a high priority for us. A national child benefit targets resources
to those in need. It helps families in need. It is good family policy.
(1405)
This is the kind of action poor children need, not the false hope
offered by the third party. Its talk about helping families is little
more than a smokescreen for a program of tax cuts that will benefit
wealthy taxpayers more than poor families. It brags about taking a
million people off the tax rolls, many of whom now get a refund
from the government because of the child benefit or GST rebate.
What it does not tell Canadians is that its fresh start will mean
over $3,000 in tax savings for a high income family of over
$100,000 and less than $500 for families living on $15,000.
Whatever happened to the lofty statements from the third party
about targeting resources to those in need?
The children of Saskatchewan can be thankful that the Liberal
government is in charge of finding a way to respond to child
poverty.
* * *
Mr. Paul Forseth (New Westminster-Burnaby, Ref.): Mr.
Speaker, Canadian Airlines is desperately trying to restructure. The
ripple effect for the economy is great, especially in western
Canada. I must speak up for the workers in my area of B.C. who
have given so much to keep Canadian airborne.
The company has considered all options to reorganize and part of
the rearrangement is employee cost. Five of six unions have agreed
to save jobs and, like always, Buzz Hargrove is the loner
preventing any deal.
Yesterday the hon. member for Burnaby-Kingsway asked the
government to reintroduce trade barriers and to give money. The
NDP member has no clue about economics. He, like union leader
Buzz Hargrove, does not believe in markets or the democratic
process.
The NDP says it is standing up for jobs when in actual fact it is
standing up for union control while keeping their members
dependent.
Canadian Airlines workers are in jeopardy of losing their jobs
because the socialists are unwilling to demonstrate accountability
by letting union members decide at the ballot box.
Mr. Elijah Harper (Churchill, Lib.): Mr. Speaker, last month
the Royal Commission on Aboriginal Peoples reminded us once
more of the growing problem of aboriginal child poverty.
Incomes are lower in aboriginal communities and housing is
crowded, but birth rates in these communities are higher than
average.
Through programs like ``Head Start'' and ``Brighter Futures''
much has been accomplished by the government and by caring
people in our communities, but there is still much more to do.
I call on members of the House and all Canadians to work with
governments and First Nations to address the root causes of
aboriginal child poverty.
* * *
Mrs. Georgette Sheridan (Saskatoon-Humboldt, Lib.): Mr.
Speaker, I rise today on behalf of the many Canadians suffering
from lupus. Lupus is an auto-immune disease which attacks the
body's healthy cells. All parts of the body, including major organs,
can be involved. While lupus knows no age or gender barriers, it is
more prevalent among women in their child bearing years.
An insidious chronic ailment, lupus is characterized by
unpredictable flare-ups of acute disease activity causing pain,
inflammation of body tissues and organs.
Its erratic nature brings with it emotional turmoil and economic
loss.
To date there is no cure for lupus. Though medication provides
some measure of control, its efficacy varies in each case and is not
without long range debilitating side effects.
Given the physical and economic consequences of lupus,
persons severely afflicted by this disease who have a prolonged
functional impairment and who have been assessed as disabled by
qualified physicians call on this government to allow eligibility for
disability tax credits without further investigation by Revenue
Canada.
* * *
[
Translation]
Mr. Bernard Patry (Pierrefonds-Dollard, Lib.): Mr.
Speaker, on this opening day of the Quebec UPA convention, I have
very good news for Quebec farm producers: the NAFTA arbitration
panel has just dismissed the U.S. complaint in the matter of poultry
and dairy products.
7032
We will recall that, under pressure from the poultry and dairy
producers lobby, the American government tried on two occasions
in recent years to have the Canadian supply management system
invalidated.
The dispute settlement panel ruled that, under both World Trade
Agreement and NAFTA rules, Canada has every right to protect its
products.
Producers from Quebec and the other Canadian provinces will be
pleased to hear this. That is what I call another great Canadian
victory.
* * *
Mr. Keith Martin (Esquimalt-Juan de Fuca, Ref.): Mr.
Speaker, recent events show that pro-sovereignty parties lack
leadership and are in trouble. These parties are therefore no longer
an option for Quebecers. The Liberal government's approach,
which is to maintain the status quo, is no better for Quebecers.
(1410)
The people of Quebec are looking for a viable option and that is
what the Reform Party is offering, through political and economic
reforms.
I just got back from the PQ convention, where it was clear that
the concerns and wishes of Quebecers are similar to those of the
people in the rest of Canada.
I ask Quebecers to have the courage to take a close look at
Reform policies so that we can work together to build a better
future.
* * *
Mr. Maurice Bernier (Mégantic-Compton-Stanstead,
BQ): Mr. Speaker, this week, and until December 8, all Quebecers
are invited to mark the Quebec week of disabled persons. This
year's theme relates to the integration of disabled people into the
workplace.
Under the theme ``My right to work'', this awareness week will
allow disabled people to reaffirm their basic right to work as
full-fledged citizens. At a time when searching for a job is
becoming increasingly difficult, the task is even harder for a
disabled person, because several physical obstacles and social
barriers remain.
The Quebec week of disabled persons provides all of us with an
excellent opportunity to better understand the plight of disabled
persons. It is essential to take all necessary measures to ensure that,
some day, every person with a disability will be able to say ``my
right to work has now become a reality''.
Mr. Raymond Lavigne (Verdun-Saint-Paul, Lib.): Mr.
Speaker, this week we are celebrating, in Quebec and in my
beautiful riding of Verdun-Saint-Paul, the disabled persons week.
In Quebec alone, there are over 900,000 people suffering from a
physical handicap. Beyond the physical limits they have to live
with every day, disabled people primarily need support to
overcome social barriers and obstacles to employment.
The majority of disabled people would like to enjoy greater
autonomy and, above all, to be able to play an active role in our
society.
The disabled persons week is an opportunity to reflect on the
need for solidarity. Our government is very aware of that need, and
this is why we are intensifying our efforts and our actions in this
sector.
* * *
[
English]
Mr. Ken Epp (Elk Island, Ref.): Mr. Speaker, to our third
grandchild, Noah Daniel Epp, born just 10 days ago, welcome to
our world, little Noah. You have been born into a loving family and
our country, Canada, is the greatest country on earth.
Sorry, but there is something else I need to tell you. We ran up a
few bills before you came and we will be expecting you to pay for
them. Your share of the debt is about $20,000. I am sorry, Noah, but
I just did not know how to stop politicians from spending your
money. No matter who I voted for, they were all the same. They all
wanted to borrow money so they could promise electors things we
could not afford. They would do just about anything to get
re-elected so they could collect their rich MP pension.
I am sorry that Reform came on the scene so late. I am sorry that
we permitted 30 years of high borrowing, high spending Liberal
and Conservative governments.
Welcome to our world, Noah. I promise that your grandfather
with his Reform friends will do everything possible to stop this out
of control spending and to stop the wasteful ways your future
earnings are being squandered.
* * *
Ms. Beth Phinney (Hamilton Mountain, Lib.): Mr. Speaker, I
rise today to mark the International Day of Disabled Persons.
Today is an opportunity to salute the contributions of Canadians
with disabilities to our society. Most Canadians with disabilities
are fully productive members of our society. Persons with
disabilities are asking for nothing more than equal access, yet every
day
7033
they still encounter unnecessary obstacles in housing, education,
employment, transportation, communication and recreation.
This government is committed to eliminating barriers to the
disabled and ensuring that they have an opportunity to participate
fully in Canadian society.
The recently released federal task force on disability issues
discusses the federal government's role in ensuring equality of
opportunity for all Canadians and makes valuable
recommendations for government action.
As we mark this important day, I call on the government to
continue its efforts to eliminate barriers to this very valuable
community.
* * *
(1415)
[Translation]
Mrs. Maud Debien (Laval East, BQ): Mr. Speaker, the auditor
general's report made a number of recommendations concerning
export promotion activities. It asked the government to keep
Parliament better informed about $375 million spent with respect
to results, revenue and costing, in the obvious interest of
transparency and in order to prevent needless overlap.
The auditor general also revealed the lack of follow-up on the
efforts made to reach the objective of increasing the number of
small and medium sized exporters.
Some of these recommendations are not new; they were there in
the 1986 report. Furthermore, in June 1996, the report of the
Standing Committee on Foreign Affairs and International Trade ran
very much along the same lines.
Will the Liberal government finally listen to these
recommendations and stop spending the money of Quebec and
Canadian taxpayers without knowing whether the desired results
are being obtained?
* * *
[
English]
The Speaker: I draw to the attention of members the presence in
the gallery of a parliamentary delegation from the National
Assembly of Vietnam led by Mrs. Nguyen Thi Than, Chairwoman,
Committee on Social Affairs.
Some hon. members: Hear, hear.
7033
ORAL QUESTION PERIOD
[
Translation]
The Speaker: I recognize the hon. Leader of the Official
Opposition.
Some hon. members: Hear, hear.
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, you will understand that I am not used to such kind
attention from the government, from everyone here. Thank you.
Unfortunately, I have nothing kind to say about the Minister of
Finance. The government is most certainly not going to get top
marks on its report card for taxation. In fact, it took three years of
efforts by the official opposition, plus one report by the auditor
general, before the Minister of Finance finally decided to make a
little move on the tax evasion matter, and even then what he did do
was rather hesitant and incomplete.
My question is for the Minister of Finance. How can the Minister
of Finance explain his claim of asking the public accounts
committee to cast all possible light on the family trust scandal,
when we have just learned that a 200-page document, a 200-page
opinion prepared by Revenue officials, addressing some very
pertinent aspects of this problem, was not provided to that
committee by the government?
[English]
Hon. Jane Stewart (Minister of National Revenue, Lib.): Mr.
Speaker, the hon. Leader of the Opposition is referring to the
documentation that was reviewed by the auditor general when he
considered its aspects that were part of the 1991 decision made by
the former Tory government.
Those pieces of information were available and were reviewed
by the committees which reviewed the issues that were brought to
our attention by the auditor general and they made their reports.
I would just point out that the auditor general, in response to
questions at the public accounts committee, said:
[Translation]
``I consider the matter closed, and we shall be addressing other
matters in the coming months''.
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, pardon me, but the minister is not doing a good job of
defending herself. What we are talking about here is a 200-page
opinion on this matter, an unfavourable opinion from Revenue
staff, a document that was not given to the public accounts
7034
committee, which, according to the Minister of Finance, was to
thoroughly investigate the family trust scandal.
(1420)
How can the government justify, other than by referring to the
other government, that the committee in question, which was to
investigate this scandal, was not aware of this 200-page opinion
prepared by the departmental staff of the minister of revenue?
[English]
Hon. Jane Stewart (Minister of National Revenue, Lib.): Mr.
Speaker, as usual when it comes to questions under the Access to
Information Act, the department responds directly and
considerably. We reviewed all the documentation. We wanted to
provide to the requester the amount of information that we could.
We felt that the appropriate thing was to provide the 200 pages. The
review has been made. I would point out as well that we provided
all the information to the public accounts committee that it
requested.
[Translation]
Mr. Michel Gauthier (Leader of the Opposition, BQ): Mr.
Speaker, an article that appeared in a Canadian tax publication
three weeks after the tabling of the Minister of Finance's motion,
supposedly intended to close the tax loopholes, proposed no fewer
than eight ways of getting around these new restrictions on
transferring assets out of the country.
Will the Minister of Finance admit that his ways and means
motion still allows the rich to avoid paying their fair share of taxes
and therefore leaves us back at square one?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
we closed the loophole with the ways and means motion. That is
very clear.
Now, if the hon. Leader of the Opposition thinks the tax experts
in the private sector are going to give up trying, he has another
think coming. We know very well that they will keep trying it on
for size, that is how our system operates. But, I tell you, the
loophole has been plugged. They will keep on trying, and we will
keep on plugging the holes. That is how our system operates.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr.
Speaker, of course the experts will keep trying, but with the
government as an accessory? That is what is happening.
On October 2, the Minister of Finance tabled a motion that was
supposed to plug a tax loophole that allowed the transfer of a trust
fund outside the country, like the $2 billion that was transferred to
the United States tax free. In this motion, the Minister of Finance
asks holders of Canadian trust funds to provide a guarantee equal to
the amount of income tax they would normally have to pay
Revenue Canada at the time of transferring the trust fund outside
the country.
Unlike the rules applying to ordinary citizens or other rules
applying to guarantees for tax deferral by a trust fund, would the
minister agree that no interest is collected on the amount deferred
and there is no limit on the deferral period? No interest is charged.
Hon. Paul Martin (Minister of Finance, Lib.): On deferred
taxes? Is that it?
Mr. Speaker, the hon. member knows perfectly well, and if he
does not, he can ask any accountant in his party, that deferred taxes
are not taxes due. Taxes are due in cases where companies make a
profit. If they make a profit, they will pay taxes immediately.
Unfortunately, the hon. member is wrong once again.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr.
Speaker, the Minister of Finance is misleading us. That is the
difference.
What he is saying with his ways and means motion is that a rich
taxpayer with a family trust that owes $1 million to Revenue
Canada can defer this amount indefinitely without paying a cent in
income tax. Try and do that as an average citizen, Mr. Speaker.
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the Bloc Quebecois critic is wrong.
As soon as taxes are due they have to be paid. If they are not
paid, interest will be charged. In the situation described by the hon.
member, if a tax is not due, no payment is required. Payment is
only required when taxes are due.
* * *
[
English]
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, HIV tainted blood will kill over 3,000 Canadians from
AIDS. Another 12,000 Canadians are infected with hepatitis C
through infected blood.
(1425 )
Legislation was drafted in 1984, draft amendments to the Food
and Drugs Act and draft regulations under that act that might have
prevented or at least lessened this tragedy. However somewhere in
the federal government, probably somewhere fairly high up,
somebody or some group of people decided that the legislation and
regulations were not worth proceeding with. Justice Krever wants
to know who those people were and why they failed to act.
Will the government provide Krever with all the documents that
explain why legislation that might have protected the blood supply
was shelved by Liberal and Tory administrations in 1984?
7035
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, I am not sure upon what
claim the member is making his comments. I will repeat what I
said yesterday.
In the interests of everyone in getting to the bottom of all the
circumstances surrounding this very tragic situation, it would
possibly be advisable for Mr. Justice Krever to call the people who
were there at the time to testify before the commission. Certainly in
the case of Monique Bégin, I know she has already indicated in
writing that she is prepared to appear.
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, none of these excuses hold water. The Deputy Prime
Minister said yesterday that the former minister of health offered to
testify to the Krever commission and the commission declined to
call her. However, in a letter from Mr. Rennie, counsel to the
former minister Monique Bégin, to the Krever commission on
August 16, the minister indicated she did not wish to testify or offer
any evidence but rather would respond only by way of written
submission.
Mr. Justice Krever has had trouble right from the start trying to
ascertain why in 1984 the Liberal government of the day did not
proceed with legislation and regulations that might have prevented
the tainted blood scandal.
Why does the government not simply provide Justice Krever
with all the information that he is requesting to get to the bottom of
this tragedy?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, the statement that I made
yesterday holds again today. In fact it was the legal representative
for Mr. Justice Krever who made the statement last year that she
did not intend to call any of the previous ministers as witnesses.
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, if we cannot persuade the government that it has a legal
obligation to act in this matter, can we persuade the government
that it has a moral obligation to act in this matter?
Justice Krever thinks these documents hold the key to why the
blood supply failed 3,000 AIDS victims and 12,000 victims of
hepatitis C. It is the Liberals who constantly portray themselves in
this House as the guardians of Canadian health care. Let them
demonstrate it in a practical way.
I appeal again to the Deputy Prime Minister to give Krever what
he wants, give him the truth. Will the government release all the
documents pertaining to the draft legislation and regulations of
1984 to Justice Krever?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, I want to underscore for
the people of Canada that this government has no intention of
protecting previous governments, particularly in light of the fact
that the previous government about which the member has heard
was the government of Mr. Brian Mulroney.
That being said, I do want to underscore that if Mr. Justice
Krever really wants to get to the bottom of the issues surrounding
the Conservatives' decision allegedly not to proceed with
regulations that had been proposed by the Liberals, he should call
the Conservative and Liberal ministers to the commission.
* * *
[
Translation]
Mr. Paul Crête (Kamouraska-Rivière-du-Loup, BQ): Mr.
Speaker, my question is for the Minister of Finance.
Yesterday, the Minister of Finance confessed in this House that
he did not know the cost to taxpayers of the fuel tax rebate to
Canadian Airlines, how the rebate would be applied or how long it
would be in effect. He also confirmed once more that the Minister
of Transport acted hastily, on the sly and without planning in
approving the tax rebate.
(1430)
Would the Minister of Finance confirm that the commitment
made by the Minister of Transport to Canadian could cost the
federal government and the provinces some $150 million annually?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
that is not what I said yesterday. I said that the offer to be made by
the Minister of Transport is based on a precedent dating from the
early 1990s and that the government has the key elements of the
offer. In due course, when the Minister of Transport is ready, the
government will announce the details.
Mr. Paul Crête (Kamouraska-Rivière-du-Loup, BQ): Mr.
Speaker, people are entitled to know how much it will cost them to
save Canadian.
Since the minister does not seem to want to answer, I offer him a
selection of responses. How much will the temporary survival of
Canadian cost: (a) $30 million; (b) $150 million; (c) $500 million;
(d) he does not know; or (e) he does not want to respond?
[English]
Hon. David Anderson (Minister of Transport, Lib.): Mr.
Speaker, as indicated by my colleague the Minister of Finance, we
will be giving the House and the public all information about the
fuel tax rebate scheme when we have crunched the numbers and
when we have come up with fully accurate information. I am sure
the member does not want to have information which is not as
precise as we can make it.
7036
I should point out that the program is available for all Canadian
carriers that might be in a similar situation and is not specific to
Canadian Airlines International.
* * *
Mr. Grant Hill (Macleod, Ref.): Mr. Speaker, the feeble
Liberal excuses for not releasing the documents to Krever are not
working. Excuse number one, they had to have the permission of
former Prime Ministers; excuse number two, the Canada Evidence
Act had tied their little hands and they could not act; and now
excuse number three, Judge Krever just has to subpoena some more
witnesses. But who do we think Judge Krever subpoenaed the
documents from? From this Liberal cabinet. Since the feeble
excuses are not working, why do the Liberals not just release the
documents now?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, my answers today are no
different from my answers yesterday.
Mr. Jay Hill (Prince George-Peace River, Ref.): More feeble
excuses, Mr. Speaker.
Why do we care about these documents? A patient of mine, Judy
B., went to her dentist, had a tooth pulled out and had to have a
transfusion because she bled and was infected with hepatitis C in
1985. She is waiting for Krever's report. She needs Krever's report.
It is because of Judy B. that we need these documents.
Will the cabinet release the documents to Judge Krever, not for
my sake but for the sake of Judy B.?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, I think the hearts of all
the people in the whole country go out to Judy B. in the situation
that she was exposed to.
If Mr. Krever would like to examine circumstances surrounding
the facts in 1985, he would best achieve that by inviting the
minister who was responsible at that time to come and testify
before the commission.
* * *
[
Translation]
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, my
question is for the Minister of Human Resources Development.
The least we can say is that the minister is not very sensitive to
the very costly impact of the Employment Insurance Act on many
unemployed people. Last Thursday, the minister said in this House,
and I quote: ``We will shortly be making some very minor
administrative changes to the regulations''. However, the measures
that will most significantly affect the unemployed will take effect
on January 5.
So I am making another attempt. Can the minister tell us when
the regulations will be ready, and can he assure us that they will
include transitional measures to soften the brutal consequences of
the bill that will come into effect on January 5?
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, the transitional period started
last January. It is time the hon. member for Mercier realized that
the reason why some provisions of the act were implemented on
July 1 while others will take effect January 1 is precisely to give
people time to adjust to the reform.
(1435)
Last week, I provided the hon. member with an answer
concerning regulations. She asked whether there would be
additional regulations. I am telling her again that the additional
regulations will be minor and have a minor impact, particularly on
relations with clients. These regulations will be made public in the
coming weeks, but they are not very significant.
Mrs. Francine Lalonde (Mercier, BQ): Mr. Speaker, I have to
stand by my initial comment. The minister is definitely not
sensitive. I will phrase the question differently, since he may not
have understood it.
So that women and young people without 26 35-hour weeks of
work are not excluded from EI benefits, is the minister prepared to
say that, for 1997 and 1998, those who will work between 15 and
35 hours will be considered as having worked 35 hours, so they can
collect benefits?
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, we are moving toward a new
employment insurance program precisely to break some old
patterns that kept people in a state of dependency.
We chose to base the system on the number of hours worked, so
that people can be protected, starting with their very first hour of
work. People will no longer have to put up with employers who, in
the past, would not provide more than 13 or 14 hours of work per
week, because they did not want to pay premiums. I say to these
workers that, as of January 1, this system will no longer exist and
they will be covered from their first hour of work.
* * *
[
English]
Mr. Jim Gouk (Kootenay West-Revelstoke, Ref.): Mr.
Speaker, the Canadian Auto Workers are not refusing to vote on the
Canadian restructuring plan, quite the contrary. A significant
number of the membership have now written to me directly asking
for the right to vote, or have sent me copies of petitions to Buzz
Hargrove telling him to allow the vote. Industry sources indicate
that Hargrove would rather face decertification than face another
7037
wage rollback. One man is not a union, but the government nor the
NDP seem able to see this.
My question is for the Minister of Transport. How much longer
is the government going to allow one man to block the democratic
rights of union employees?
Hon. David Anderson (Minister of Transport, Lib.): Mr.
Speaker, the hon. member is quite correct to point out the
importance of having the CAW onside not just with company
management but with five other unions, with American Airlines
and with the governments: the federal government, the government
of the province of British Columbia and the government of the
province of Alberta. It is important for them to be onside.
The purpose of that is so we can present a common front when
the company is dealing with its creditors. When it is dealing with
its creditors, it is important to have the clear expression of will.
That is why we urge the CAW leadership to come on board with the
restructuring program.
To engage in a long debate with respect to the change of
legislation or something in the future is not productive at this
particular time. What we want at this time is to have a common
front of all the unions, the three governments concerned and the
two companies so that we can negotiate successfully with the
creditors.
Mr. Jim Gouk (Kootenay West-Revelstoke, Ref.): Mr.
Speaker, if air travellers lose confidence in Canadian Airlines and
book with another company perhaps from the U.S., that means lost
revenue for Canadian Airlines.
This is not about big corporations. It is about the men and
women whose financial security is at stake, people like the single
mother of two who wrote: ``Mr. Gouk, you must keep trying to help
us. I love my job and I need it. Every day that this issue remains
unsettled does irreparable damage to my company''. To ``my
company''; that is how Canadian employees feel.
My question is for the Minister of Transport: When is the Liberal
Party going to join with Reform in a non-partisan manner and tell
that single mother that we are listening, that we care, and that we
will act? How much longer can one person be allowed to cause this
anguish and threaten the financial security of her airline?
(1440 )
Hon. David Anderson (Minister of Transport, Lib.): Mr.
Speaker, I share with all members of the House the concern over
the situation that the individual quoted earlier is in. It is a serious
problem for the employees of Canadian, of whom there are 16,400
who have their employment threatened if the company is put in
further jeopardy.
I am pleased, however, to announce that American Airlines has
now agreed to take part in restructuring and to accept Canadian
Airlines' proposal for a reduction of its fees as requested by
Canadian. This will be the fees on such services as yield
management, accounting functions, operations planning and
support. This is a very positive step because it is the first time a
creditor has indicated its firm support for the restructuring
proposals put forward by the president of Canadian Airlines.
* * *
[
Translation]
Mr. Claude Bachand (Saint-Jean, BQ): Mr. Speaker, my
question is for the Minister of Human Resources Development.
Yesterday, the minister said, and I quote: ``Had we reached an
agreement based on humanitarian grounds, we might have been
forced to reopen 2,000 other cases affecting an additional 70,000
people''.
Are we to understand from the minister's remarks that the
government has thus done an injustice to tens of thousands of
retired people, and that it is now refusing to take responsibility for
its actions?
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, you know, we showed a great
deal of compassion for Singer's retired employees. This is an
extremely complex situation, and the case has been brought to my
attention in recent weeks. It has been examined from every angle.
What I obviously said was that, had we reached an out of court
settlement, as Singer's lawyers were requesting, any such
settlement could have had an impact on other cases before the
government, because it would not necessarily have reflected the
very complex reality with respect to the rights, which are justified
in this case.
Mr. Claude Bachand (Saint-Jean, BQ): Mr. Speaker, the
minister is droning on again about compassion. We know how he
defines it. When there is no cost involved, he is compassionate. But
when he has to pay, his compassion is all gone.
The battle by Singer's retired employees against the federal
government can be compared to the fight between David and
Goliath. Everyone knows that all these retired workers abandoned
by the federal government do not have the means to defend
themselves before the courts, while the federal government can
afford to.
The minister should admit that his decision is heartless and
unfair for Singer's retired employees, and for the tens of thousands
of other retired workers that he has abandoned.
Hon. Pierre S. Pettigrew (Minister of Human Resources
Development, Lib.): Mr. Speaker, I would like to reassure the
House that, if the former Singer employees take their case to court,
our department will proceed with all due speed. I have asked my
7038
colleague, the Minister of Justice, to act accordingly, in order to
facilitate matters.
As minister, I must ensure that the Canada Pension Plan is
administered in accordance with the act and for the benefit of all
citizens. Although we also find this situation regrettable for
citizens, we cannot do better in this case at this time.
* * *
[
English]
Mr. Lyle Vanclief (Prince Edward-Hastings, Lib.): Mr.
Speaker, my question is for the Minister of Agriculture and
Agri-Food.
Yesterday the NAFTA panel presented a very favourable ruling
with regard to the supply management sector in agriculture, the
dairy and poultry industries.
I wonder if the minister would outline the results of that panel
with particular reference to the continuation of tariff levels on
imported ice cream and yogurt.
Hon. Ralph E. Goodale (Minister of Agriculture and
Agri-Food, Lib.): Mr. Speaker, I was in Geneva in December 1993
in the final hours of the Uruguay round. I know of the dramatic
impact on our supply managed farmers of relinquishing old article
11 under the old GATT in return for comprehensive tariffication
under the new World Trade Organization.
We negotiated a solid economic environment for supply
management under the WTO and we promised to defend that. We
kept our promise. We succeeded in a very strong NAFTA panel
ruling yesterday. That ruling says our tariff equivalents are
consistent both with the WTO and the NAFTA and that it applies to
ice cream and yogurt.
* * *
(1445 )
Mrs. Sharon Hayes (Port Moody-Coquitlam, Ref.): Mr.
Speaker, yesterday in response to a question about the need to
reduce taxes for the working poor, the Minister of Human
Resources Development said: ``Very often low income families do
not pay taxes which is the reason we are looking for a more
sophisticated system''.
A single income family of four earning less than $23,000 now
pays over $1,700 in federal taxes. Why will the minister not do
something to help these families and lower their taxes?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker, if
the hon. member will look at the vast range of measures which the
government has brought in-the working income supplement, help
for poor families, help for caregivers-she will see that we have
done exactly that.
If she will also look at her own numbers, she will find that those
low income families for whom she is now saying she would
provide relief will receive a minuscule amount of relief compared
to the amount of relief the Reform Party is prepared to offer upper
income Canadians.
By cutting health care and by cutting equalization she is
probably taking money away from low income Canadians to give it
to their rich friends. That is simply not on.
Mrs. Sharon Hayes (Port Moody-Coquitlam, Ref.): Mr.
Speaker, the government has done nothing for these families.
Under Reform's plan these families would pay no federal taxes and
would instead receive a refund of $690.
Contrary to the minister's statement yesterday, 6.1 million low
income Canadians now pay taxes. We do not need a new,
sophisticated system or a new government program, as the minister
suggests. Anyone can see that these Canadians are being crushed
under the burden of taxation. Will the minister just lower their
taxes?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the Reform Party owes it to Canadians to put the true facts forward
on what its plan is.
If those low income Canadians lived in one of the seven
provinces receiving equalization, they would not get the same level
of public services to which they are entitled now as a result of what
Reform has said. If somebody in a family happened to get sick and
the province in which they lived had to absorb a $4 billion cut to
the Canadian health and social transfer that the Reform Party has
advocated, they would be in deep difficulty.
If that family required the Canadian pension plan or help in old
age it would not get it because what the Reform Party has put in
front of the Canadian people is a pension plan for upper income
Canadians and would deprive lower income Canadians.
It is time Reform laid the facts on the table about what it is
suggesting.
* * *
[
Translation]
Mr. Pierre de Savoye (Portneuf, BQ): Mr. Speaker, my
question is for the Minister of Industry.
The average difference between the rate of interest on bank
credit cards and the Bank of Canada rate is 13.25 per cent. The rate
of interest on retailers' cards borders on the indecent at 28 per cent,
where it has remained essentially since 1981. In 1991, the federal
7039
Liberals, who were then in opposition, were tearing their hair out
over a difference of 10 to 12 per cent.
Given that each 1 per cent reduction in the interest rate on credit
cards enables Canadian and Quebec consumers to save at least $10
million a month, why is the minister not acting to put a stop to
these indecent rates?
[English]
Hon. Douglas Peters (Secretary of State (International
Financial Institutions), Lib.): Mr. Speaker, Canadians are faced
with several hundred credit card choices. Many of those credit
cards have very low interest rates below 10 per cent, some as low as
9.25 per cent. Canadians have that choice.
There is also a wide variety of items on credit cards: discounts
on goods, airline points and all of these various things. It is not that
Canadians do not want those choices. Canadians do want those
choices. The cost of credit cards is a very small proportion of
consumer debt. I believe that something like 3 per cent of the total
consumer debt is on interest bearing credit cards so it is really a
very small proportion of that.
(1450)
[Translation]
Mr. Pierre de Savoye (Portneuf, BQ): Mr. Speaker, since 1994,
three members have tabled bills in this House to cap credit card
interest rates: myself, the member for Simcoe North and the
member for Davenport, a few weeks ago. Furthermore, there are
more than 140 members of this House from all parties demanding
that the banks and major stores lower their interest rates on credit
cards.
If this effort does not pan out within a few weeks, is the minister
prepared to support Bill C-351 tabled in this House by the member
for Davenport on November 21?
[English]
Hon. Douglas Peters (Secretary of State (International
Financial Institutions), Lib.): Mr. Speaker, the problem with
capping credit rates is that it reduces their availability to
consumers. Hundreds of thousands of consumers would not have
credit cards available to them.
Canadian consumers are smart enough to chose the right cards.
When they go out to do their Christmas shopping they are going to
get the best deal for their families. When they go out looking for
credit cards they will also make the best deal for their families.
* * *
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, just a
little correction for the minister. I am sure he somehow missed this
but the Reform plan would take one million low income people off
the tax rolls. That $4 billion would be put back into health care. If
this plan did help wealthy Canadians then the millionaire finance
minister would be in favour of it.
Some hon. members: Oh, oh.
The Speaker: I ask the hon. member to be very judicious in his
choice of words. He is repeating the words he used yesterday.
Please be judicious.
Mr. Solberg: Mr. Speaker, if people want to know how much
importance the Liberals place on parenting, they should check out
the government's family tax policy. It is a tax policy that forces the
single income earner with a $60,000 income to pay $7,000 more in
tax than the same family where both parents are working outside
the home. In other words, the government policy on parenting is to
tax parents $7,000 more, a parenting tax.
When will the minister recognize the gross injustice of this
inequity in the tax system and quit punishing families who choose
to raise their children at home?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the one million families referred to by the hon. member would end
up paying for that tax reduction in lowered services if they lived in
one of the equalization receiving provinces. When a party cuts
equalization, it is saying that Canadians who live in those
provinces are not entitled to the same level of public services.
The hon. member says that his party will put $4 billion into
health care which is simply not the truth. The fact is it would take
$4 billion out of health care at the very beginning. Then it would
ask Canadians to trust that it would put it back, but Canadians will
not do that.
On the issue of millionaires, I would like to thank you, Mr.
Speaker, for defending the member for Calgary Centre against the
attacks from one of his own.
The Speaker: It goes both ways so please be very judicious in
your choice of words.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, 70 per
cent of women are in the workforce today. Only 30 per cent want to
be there.
Some hon. members: Oh, oh.
Mr. Solberg: The reason they cannot is because of this
government's tax policy, and I remind hon. members across the
way to check out the latest Angus Reid and Decima polls.
(1455 )
The average Canadian family pays 36 per cent of its income to
provide food, shelter and clothing. The tax burden takes up another
7040
whopping 46 per cent. That leaves Canadians with 18 per cent of
their income to purchase all those luxuries out there, things like a
car to go to work, a telephone and a bed to sleep in.
When will the government realize that this tax burden is
crushing Canadians and eliminating their options to live a decent
life? When will the government cut taxes?
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the Canada pension plan, which the Reform Party would seek to
destroy, is depended on by more women than men. It is an essential
part of their retirement. The Reform Party would take it away.
Health care, which the Reform Party will cut, is important to
Canadian women. Why is the Reform Party threatening to take it
away? Equalization payments in Atlantic Canada, Manitoba and
Saskatchewan are important for the public services that they supply
to women.
The Reform Party has the nerve to stand up here and say that
they would defend the basic public services on which women
depend. The facts speak for themselves. This party is a 14th
century party raising headlines in the 8th century. That is what we
are dealing with.
* * *
Ms. Marlene Catterall (Ottawa West, Lib.): Mr. Speaker, my
question is for the Minister of Canadian Heritage.
Earlier this year, for the first time, a minister allowed the
lowering to half mast of the flag on the Peace Tower to honour
police officers killed in the line of duty.
Is the minister prepared to allow the lowering of the Peace Tower
flag for other events of mourning such as the national day of
mourning for workers killed and injured on the job or, more
imminently, this Friday for the national day of remembrance and
action on violence against women?
Hon. Sheila Copps (Deputy Prime Minister and Minister of
Canadian Heritage, Lib.): Mr. Speaker, the member who has
involved herself very much in this issue will know that in 1966
cabinet adopted specific protocol rules for flags.
However, as a result of the intervention of the member and
others when the day of mourning for police across the country was
brought to our attention we were able to revisit the protocol.
Indeed, we are developing a new system where the flag can be
flown at half mast to share the nation's sense of collective grief
around issues like the deaths of workers. On the national day of
remembrance and action on violence against women the flag will
be flying at half mast this Friday.
[Translation]
Mrs. Pierrette Venne (Saint-Hubert, BQ): Mr. Speaker, my
question is for the Minister of Industry.
Last Friday, the Minister of Industry blindly defended the space
agency's chairman, although the information commissioner had
clearly reprimanded him for allowing documents to be destroyed
by a secretary.
How can the minister explain the fact that the space agency's
chairman authorized the destruction of documents after they had
been specifically requested?
Hon. John Manley (Minister of Industry, Minister for the
Atlantic Canada Opportunities Agency, Minister of Western
Economic Diversification and Minister responsible for the
Federal Office of Regional Development-Quebec, Lib.): Mr.
Speaker, this is simply not true. A letter did refer to the fact that a
secretary had destroyed some documents. Do these documents no
longer exist? No, these are handwritten notes she had taken down
and later typed and filed. They still exist. It is only a typewritten
draft that was destroyed.
I should also point out to the hon. member that these false
accusations fly in the face of the outstanding job the space agency's
chairman did for the Government of Canada with the agency, which
is located in the hon. member's riding.
* * *
[
English]
Mr. Jay Hill (Prince George-Peace River, Ref.): Mr.
Speaker, rural Canadians dependent on propane to heat their homes
and dry their grain have seen prices double since August. In the red
book the Liberals promised lower input costs for farmers. Clearly
this promise is another broken promise.
Many seniors on fixed incomes also rely on propane to heat their
homes. Now those seniors are facing a long cold winter, unable to
absorb massive increases in their heating bill.
(1500)
My question is for the Minister of Industry. Given the doubling
of propane prices in the last few months, has the minister asked his
industry competition bureau to investigate this matter to assure
Canadians that there is no price fixing?
Hon. John Manley (Minister of Industry, Minister for the
Atlantic Canada Opportunities Agency, Minister of Western
Economic Diversification and Minister responsible for the
Federal Office of Regional Development-Quebec, Lib.): Mr.
Speaker, I want to share the hon. member's concern for the effect of
these high prices of propane on many consumers.
7041
He will know that the provisions of the Competition Act give the
director power to investigate situations of alleged price fixing. I
remind him that citizens themselves can request that the director
investigate a situation by simply providing the director with the
information required by the statute.
* * *
Mr. Nelson Riis (Kamloops, NDP): Mr. Speaker, most
members of Parliament will have been approached by the men and
women who are still working for Canada Post delivering ad mail
who will lose their jobs six days after Christmas.
My question if for the Deputy Prime Minister. Since this was the
only recommendation that the government decided to move on of
the many recommendations coming out of changes to Canada Post,
and considering that 10,000 families will suffer because people
will lose their jobs as a result of this decision, will the Deputy
Prime Minister explain to the House why the government is
moving on such a cruel and tasteless act that will wreak havoc with
10,000 families across this country six days after Christmas. Will
she reconsider this decision?
Hon. Diane Marleau (Minister of Public Works and
Government Services, Lib.): Mr. Speaker, there are a number of
provisions that we have asked Canada Post to implement from the
Radwanski report; among others, the moratorium on the closure of
rural post offices. We have said that we would not privatize Canada
Post as long as it served a public purpose.
Perhaps in return for his question, I am just wondering if the hon.
member of Parliament would know where these part time jobs were
six or seven years ago before Canada Post got into this business.
* * *
Hon. Jean J. Charest (Sherbrooke, PC): Mr. Speaker, my
question is for the Minister of Finance and it is a very simple
question. It is a question that I asked him last week, a question the
minister did not answer. Instead, I got some warmed over rhetoric.
I would like to ask the Minister of Finance whether he and his
Liberal government believe that the employment insurance account
should be used, yes or no, for the purpose of reducing the deficit.
Hon. Paul Martin (Minister of Finance, Lib.): Mr. Speaker,
the unemployment insurance account is being treated by this
government exactly as it was under the previous government. In
fact, the innovations brought in by the previous government were
the recommendations of the auditor general.
As the hon. member knows, since we have taken office we have
in each and every year brought unemployment insurance premiums
down. In fact, in the last two years we have brought them down by
$1.8 billion. Also, as the hon. member knows, the fact is that when
the Conservative government was in power each and every year
that it took office it increased those premiums.
The real question that the whole country wants to know is how is
the Progressive Conservative Party going to pay for the massive tax
cut it has recommended. Is the Conservative Party going to do as
Reform and cut health care? Is it going to do as Reform and cut
equalization payments?
What social programs is the Conservative Party going to cut in
order to pay for its tax reduction? The leader of the Conservative
Party owes the Canadian people an answer. When is he going to
have the courage to provide it?
(1505)
The Speaker: Colleagues, we had a question of privilege a few
days ago and one of the members mentioned in it was not in the
House.
I have been approached by the hon. member for Delta, as it was
his question of privilege. We will hear a very brief statement from
the hon. member for Delta and then we will go to the other member
to hear what he has to say.
* * *
Mr. John Cummins (Delta, Ref.): Mr. Speaker, last week I did
rise on a question of privilege protesting a directive of the Minister
of Fisheries and Oceans to department staff members ordering
them to track all calls from MPs.
It is my contention that the directive to track calls from MPs will
have a chilling effect on communication between MPs and public
servants. This will cause particular hardship for members' staff
members who contact public servants on a regular basis to seek
help as they respond to calls from constituents.
As an example, last Friday DFO staff members in Vancouver
were reminding my staff that they would have to record the fact
that they had spoken to my staff member.
To resolve the matter, I would propose that the minister
voluntarily withdraw the directive.
The Speaker: Colleagues, that was where the matter stood, if I
might use that term, when we broke the last time. At that time I said
to the House that I would return to the question of privilege, which
I am now, and that I wanted perhaps to clarify the record or at least
to put on the record his side of the story, the hon. Minister of
Fisheries and Oceans, who is with us now.
Hon. Fred Mifflin (Minister of Fisheries and Oceans, Lib.):
Mr. Speaker, quite frankly I am surprise by the question of
privilege that has been raised by the hon. member for Delta. Very
7042
little surprises me after a few years in this House but I am really at
a loss to understand why this is considered to be a loss of privilege.
I think there is a suggestion made that there was an attempt to
deny information to members of Parliament. I am not sure whether
that is what he is implying. In fact, if that is the implication I think
it is totally absurd.
I want to state clearly, unequivocally and emphatically that there
is no attempt by me, my staff or my department to deny answers or
inquiries from any hon. member.
I have a great respect for this institution, for Parliament, and in
particular for my colleagues in the House of Commons on all sides
of the House. Anyone who knows me would attest to that. It is in
that spirit that I have directed my department to respond quickly
and rapidly to members of Parliament on all sides of the House.
Some hon. members: Oh, oh.
Mr. Mifflin: Mr. Speaker, could I ask the hon. members to
listen? They have had their say and I would like to have mine.
Could I have the courtesy that I accorded to them?
On a technicality, I want to make sure you are very clear on this,
Mr. Speaker. Actually I did not write the directive. The directive to
which the hon. member for Delta refers was not a directive issued
from my office but a memo from one of my regional senior
officials in response to a question of my office. There is no
question it did come from my office at my request, but I just want
to make sure the technicalities were clear.
The intent of the request was to ensure that members of
Parliament, and Senators of course who are also members of
Parliament, receive the information that they need in a timely
manner. I also wanted to ensure that the departmental officials with
whom they are dealing are the most qualified and the most
appropriate people to answer their questions.
(1510 )
Sometimes these questions are very difficult. Sometimes the
questions are complex and deal with complex issues. I wanted to
ensure, with respect to the supervision of my staff, that the most
appropriate officials at a senior enough level would direct attention
to these questions from hon. members.
Far from discouraging public servants from speaking to
members of Parliament, the request was to ensure that members of
Parliament receive the best possible advice.
As the hon. member is well aware, through his many dealings
with my department, his access to departmental information I
believe is generous. It is generous, indeed, as it should be. His
future access to information should in no way be stifled or
diminished. There is absolutely no intent to do that. As I said
earlier, it is quite the reverse.
I am not, as the member implies, in the business of doing things
that are not in the interests of this House, whether it is in the House
during question period, whether it is in discussions or whether it is
at meetings with hon. members on all sides of the House to answer
questions they may have. I make myself available and I do not
think there is a member here who could say otherwise.
The hon. member strikes at the heart of the democratic process,
in my mind, and the business of governance. For a minister to do
his or her job properly that minister has a responsibility to be aware
of what people communicate to anybody associated with the
portfolio. I have a responsibility to the hon. member, to this House
and to all our constituents to make sure that my department
responds to these questions in a proper fashion. How would I know
that has been happening unless I know what is happening with
respect to the number of queries that have been posed by hon.
members of this House?
I have a reputation for openness. I have no reason to hide
anything. I have an open department. It has a very close interface
with the public. It is a very operational department. The request
from my office, I say in all sincerity and in all seriousness, was
indeed to ensure that members are accommodated; it was not to
inhibit them.
I am committed and I will continue to be committed to providing
the best possible service to my colleagues, the elected officials of
this House.
By way of wrapping up the thoughts that I have put forward in
the last few minutes, the intention when issuing this request to my
senior officials was to ensure that members of Parliament are the
recipients of the best, most knowledgeable and most timely
information when they take the trouble to contact my department. I
assure all hon. members that their requests will continue to be
handled in a timely, expert and professional fashion.
I can only promise the House that I will continue to keep an open
ear to all the voices communicating with me or my department,
including the hon. member and each and every one of his
colleagues.
The Speaker: We are not dealing with a point of order but a
point of privilege. This is the situation, as I understand it.
We have a letter that was issued which the hon. member, I
believe, has tabled in this House. The hon. member for Delta has
read the letter and he has interpreted it in one way.
We have now the source, if you will, of the letter; if not the letter
itself, where the idea came from, the Minister of Fisheries and
Oceans who, today in the House in front of all of us has told us
what the intent of the letter was and why the letter was sent.
7043
Now we have an interpretation on one side and an explanation
on the other.
Colleagues, I do not want to be trite, but is the glass half full or
half empty?
This, surely, is a matter of looking at things differently, but in my
view it is not a point of privilege. For this particular matter, with
this letter at this time, for the hon. member for Delta and for the
Minister of Fisheries and Oceans, so that they will know and this
House will know, I find that this is not a matter of privilege.
_____________________________________________
7043
GOVERNMENT ORDERS
[
English]
The House resumed consideration of the motion that Bill C-70,
an act to amend the Excise Tax Act, the Federal-Provincial Fiscal
Arrangements Act, the Income Tax Act, the Debt Servicing and
Reduction Account Act and related acts, be read the second time
and referred to a committee; and of the amendment.
(1515 )
Hon. John Manley (Minister of Industry, Minister for the
Atlantic Canada Opportunities Agency, Minister of Western
Economic Diversification and Minister responsible for the
Federal Office of Regional Development-Quebec, Lib.): Mr.
Speaker, I am very pleased to engage in this debate today on behalf
of the government, speaking in support of Bill C-70, the
harmonized sales tax. This legislation represents a very important
first step for the replacement of the goods and services tax with an
integrated federal-provincial sales tax which is going to be a better
sales tax system for Canada.
On April 1, 1997, Nova Scotia, New Brunswick and the province
of Newfoundland and Labrador will break new ground when the
retail sales taxes and the GST in those provinces are replaced with
the new harmonized sales tax. The governments of these three
provinces are to be commended for their foresight in proceeding
with the HST. Rather than waiting for the remaining provinces,
they have put aside the political grandstanding and joined in what
is a positive initiative for their taxpayers and the consumers in their
provinces.
Next April the three participating provinces will have a simpler,
less costly and more efficient sales tax system. The bill before us
today is a distinct improvement over the GST and will represent for
those three provinces a comparative advantage over the other seven
provinces.
Sales tax under the new system will be charged at a single rate of
15 per cent on the same tax base as the GST. HST will not apply to
goods currently not subject to GST, things like basic groceries,
prescription drugs and medical services. The benefits to
consumers are very important.
For Nova Scotia and New Brunswick sales tax will drop from a
combined rate of 18.77 per cent to 15 per cent. In Newfoundland
and Labrador that rate will decrease from 19.84 per cent to 15 per
cent.
At present the sales tax system in Nova Scotia, New Brunswick
and Newfoundland and Labrador is cumbersome, costly and
complicated. The current system inflates prices. Businesses are
now taxed by the provinces on the items that they buy to run their
companies. Businesses pay a tax on these inputs. However,
consumers pay for it in the end because the tax is embedded in the
final price. Most consumers do not even know about these hidden
taxes. The sales slip, for example, may say that 11 per cent or 12
per cent of the purchase price was provincial sales tax. However, a
significantly higher rate may have been paid because of the taxes
buried in the final price. About 34 per cent of sales taxes collected
by the provincial governments are hidden in the price of the goods.
That is over $700 million worth of hidden taxes. I find that
unacceptable.
Consumers are also paying in reduced jobs and incomes because
hidden sales taxes drive up the prices of provincial exports, thereby
making those products less competitive on Canadian and foreign
markets. All of this changes under integrated value added tax.
Harmonization will eliminate the $700 million in hidden
provincial sales taxes because businesses will be able to claim an
input tax credit for tax paid on the goods and services bought to
make their products and run their operation. In other words,
businesses will no longer pay provincial sales tax during the
production and distribution process. That means consumers will no
longer pay provincial sales tax on the provincial sales tax already
included in the price of goods that they are buying from businesses.
Instead, tax will apply once and only once on the final sale price of
a good or service.
Consumers will benefit from lower tax rates on most goods,
lower prices on many goods and knowing the full price before they
get to the cash register.
Consumers will pay tax on a broader range of goods and services
but the broader base will make it possible to keep the HST at a
lower level. Including services in the tax base will spread the tax
burden more evenly across all sectors of the economy.
Governments must ensure that revenues keep apace with changes
in the economy.
(1520)
Service industries are the fastest growing component of
expenditures in Canada. Some critics maintain that expanding the
tax base will mean higher prices but consumers will benefit
substantially from lower tax rates in each province.
7044
For Nova Scotia and New Brunswick the new rate will
effectively be almost four points lower than the current combined
rate. For Newfoundland and Labrador the new rate will effectively
be almost five points lower than the current combined rate.
[Translation]
As I just said, abolishing the provincial retail sales tax on
business inputs will enable businesses to recoup the HST paid on
business purchases, and as a result, these costs will no longer be
hidden in retail prices.
The price of certain goods and services that were not taxed
before might go up, but this increase will generally represent an
amount lower than the provincial portion of the HST. Again, this
will have been made possible by eliminating hidden taxes.
The HST will also ensure greater tax fairness for individual
consumers and families buying various combinations of goods and
services.
[English]
Evidence indicates that businesses will pass on tax savings in the
form of lower prices. Past studies done in Canada and other
countries show that when sales taxes are replaced with value added
taxes, savings are passed on to consumers.
After the introduction of the GST in 1991, prices were monitored
by the GST consumer information office. Its analysis of changes in
the consumer price index showed that after adjustments, the
increase in the CPI attributable to the GST was around 1.1 per cent.
The results also showed that overall the old federal sales tax was
removed from prices and savings for the removal of that tax were
passed on to consumers. The 1.1 per cent increase attributable to
the GST was below the estimates the office had made prior to its
introduction when the estimate was 1.4 per cent increase in overall
prices, assuming that the savings resulting from the removal of the
FST were fully passed on to consumers. The increase attributable
to the GST was 1.5 per cent over the first three-quarters of 1991.
These figures included adjustments for inflation and other tax
changes. After adjustments, prices in 20 out of 46 categories of
goods and services surveyed had actually gone down when these
prices were compared with pre-GST prices.
Business pass through of tax savings is a direct function of
competitive markets. Any business that fails to take advantage of
harmonization to improve its price competitiveness will soon find
itself priced out of the marketplace. Competition among businesses
is intense in today's marketplace. If one business can attract more
customers by reducing prices, other businesses will be forced to
follow suit in order to stay in business.
Studies of the Canadian experience under the GST and those of
other countries that have adopted a value added tax model indicate
that market forces ensure that business savings are fully reflected
in consumer prices within a very short period of time.
Members should know that 18 other countries have value added
taxes so Canada is not venturing into new territory. The longest
running value added tax can be found in Australia where it was
introduced in 1930. Denmark has had a value added tax since 1967,
France and Germany since 1968 and the U.K. since 1973. One
might ask: ``Then what is wrong with the GST?'' The answer is
very simple. Not one of those countries has two contradictory
co-existing levels of retail sales tax.
In introducing the GST, the previous government gave Canada
one unique characteristic among countries of the world: two retail
level sales taxes applied on different bases to different goods and
services, all paid by the consumer on the basis that they have to go
to the cash register to figure out whether the good is taxable under
the GST and under the PST, under the GST but not the PST, or
perhaps not the GST and the PST. Then they must calculate the
appropriate rate doing the two different calculations to see whether
it is 7 per cent GST and 8 per cent PST, or perhaps it is 9 per cent
depending on the province, or if you are fortunate enough to live in
Alberta, zero per cent PST.
(1525 )
You can see that this is slightly different from a totally
harmonized sales tax where the consumer picks up the good at the
counter, goes to the desk and pays the price marked on the good.
That is progress.
With businesses now having to apply, collect and remit HST
when they sell into a participating province, these goods will not be
free of provincial sales tax. This means that consumers buying
locally will not pay any more tax than consumers ordering goods
from out of province firms.
As I say, a key benefit of the HST to consumers will be tax
inclusive pricing. Consumers across the country have clearly
indicated their preference to know the full price of an item before
they actually make a purchase.
The days of consumers in Nova Scotia, New Brunswick,
Newfoundland and Labrador calculating taxes mentally, on the
back of an envelope or having to carry a calculator with them
before they go to the cash register, will soon be over because the
sales tax will be included in the price which is what consumers
across Canada want to have. At the same time, the amount or rate
of sales tax payable will be visible on receipts and invoices so that
consumers will still know how much and what tax they are paying.
[Translation]
The flexibility incorporated in the tax inclusive pricing rules will
reduce unfair competition, since businesses will be able to continue
posting the before tax price next to the tax inclusive price.
7045
Similarly, participating businesses will not be at a disadvantage
vis-à-vis the competition from everywhere else.
In addition, the federal and provincial governments will work
together to ensure that consumers are informed of how the tax will
be included in prices. Participating governments want this process
to be transparent. Under the tax inclusive pricing scheme, the
amount paid in tax will be clearly visible on receipts. Consumers
will know right off how much the goods and services they buy will
cost because the tax will be visible.
[English]
Next April consumers in Nova Scotia, New Brunswick and
Newfoundland and Labrador will have substantially lower sales tax
rates, a simpler sales tax system and lower prices on most goods.
Would that it be true as well in Ontario. They will also know the
full price of an item before they get to the cash register. They will
pay only one tax and they will know how much tax they are paying.
They will know that their federal and provincial governments are
working more efficiently by eliminating needless and costly
duplication.
Bill C-70 represents a significant step toward the goal of a fully
harmonized sales tax system in Canada. I would like to add that the
federal government and the governments of the three participating
provinces will not generate any more revenue under the HST than
they do now under the existing taxes.
Harmonization has many supporters. When the announcement
was first made last April, Nova Scotia's finance minister explained
this by saying: ``On balance we believe consumers will come out
ahead. It may cost you $1 more to fill up your tank, but on a $500
car repair bill you will save more than $20 in tax. You may pay $1
more for a haircut but you will save a buck when you buy shampoo,
soap and toothpaste''.
An excerpt last April from a press release issued by the Certified
General Accountants Association said: ``There is no question that
today's announcement with Newfoundland, Nova Scotia and New
Brunswick will be a tremendous shot in the arm for consumers in
those provinces''.
Rosalie Daly Todd, Consumers Association executive director
had this to say: ``Consumers will no longer have to guess at the
total cost of their purchase, a situation which has been the source of
frustration for many people. At the same time, listing the amount of
tax on the bill or receipt keeps the tax visible and the tax makers
accountable to consumers''.
Newfoundland's finance minister is quoted as saying last April:
``Taxpayers would have $105 million more to spend, save or invest
and there would be significantly lower after tax prices on a wide
range of goods and services, and significantly less tax paid by the
people of the province''.
(1530 )
In October, Elizabeth Beale, Atlantic Provinces Economic
Council president, was quoted as saying: ``The HST will be an
improvement on a number of fronts. Consumers should see relief in
the total level of taxation dropping on a whole range of products''.
APEC recently issued a report that was highly supportive of
sales tax harmonization. It identified significant economic and
administrative efficiency benefits to the harmonizing provinces.
That is the reason the premiers of the three Atlantic provinces have
bought advertising space in newspapers displaying the Atlantic
advantage: no sales tax in Nova Scotia, New Brunswick and
Newfoundland and Labrador.
It is time that the other provinces also got on board with the
harmonized sales tax. This is the tax of the future. This is a fairer
tax. This is an easier tax for business to administer. It is a more
understandable tax for consumers. I do not understand why a
government of a province in Canada would be unwilling to move
forward with a measure that is so much in the interests of its
taxpayers.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I would
like to congratulate the Minister of Industry on his fine defence of
the harmonized sales tax. I will make a few comments and ask a
few questions along the way.
I seem to recall that when I served on the Standing Committee on
Finance three years ago and we were looking at the GST
replacement, I reviewed what the Liberals said when in opposition.
I found that the minister was a member of the Standing Committee
on Finance at that time, or at least a member of a group that
submitted a minority report to the government of the day
suggesting a solution to the manufacturers sales tax which was not
a goods and services tax. It was not the GST. He opposed the GST. I
seem to recall that he supported something completely different
which was more along the lines of the single tax that the member
for Broadview-Greenwood was proposing.
Mr. Manley: No way.
Mr. Silye: Okay, I need clarification on that but I know there
was something different. I do not want to put words in his mouth
but I would like to know what it is he recommended at that time. I
do know that he was against the GST.
In his speech the minister indicated that this was an
improvement over the GST. How is it an improvement when the
GST has not changed? All the inherent problems are still there. In
fact that party during the election campaign promised to scrap, to
kill, to abolish the GST and then tried to weasel its way out of that.
But let us say to even replace the GST with something which is
revenue neutral, the Liberals have failed on both counts.
7046
On the first count, the Liberals did not scrap or replace the GST.
In fact they have entrenched the GST into our lives forever
because now they have harmonized it with a provincial sales tax
and there will be no future provincial government that will ever
want to give up that source of revenue, especially at the high rate
of 15 per cent. All the inherent problems of the GST will still
exist. Exempt or not exempt, zero rated, all these different rules
will still be there and will still cause problems.
Second, during his speech the minister said that the new
harmonized tax will not increase revenues for the government. We
all know it decreases revenues for the provincial governments
because of the drop in their PST. In their red book the Liberals
promised they would replace the GST with something that was
revenue neutral.
If what he said in his speech is true, that this is revenue neutral,
no more revenue to the government, which means no less revenue
to the federal government, it is going to cost the federal
government $961 million as a payment to the three participating
Atlantic provinces. It means that this new tax is not revenue
neutral, it is revenue deficient and therefore it is going to cost the
taxpayers money.
Finally, I find this to be somewhat like the minister of myth. The
finance minister likes to brag about the ads on the Atlantic
advantage. How can the provincial premiers say there is no sales
tax when there is a GST which represents the goods and services
tax of 15 per cent?
Mr. Manley: Mr. Speaker, I thank the hon. member for his
questions. Other than confusing my interest in a system of tax
which he later supported, he asked good questions. Let me begin at
the end of his comments.
(1535)
In order to understand the impact of a retail sales tax such as the
provincial retail sales tax on the consumer, one must understand
why the Atlantic premiers claim there is no sales tax. What
happens with the existing retail sales tax is that not only is it
applied to the price of the goods that are purchased, but it is
embedded in the cost of every item produced and every service
generated by a business in a province with that kind of tax.
Take the classic case of the barber shop which everyone likes to
talk about. People say there is no tax on haircuts. Who do they
think pays the tax that the barber paid when he bought his barber
chairs? Who pays the tax that the barber paid when he bought all
his hairdressing equipment? Who pays the tax that the barber paid
when he bought all of the other services that are necessary for him
to render his hair cutting service? It is embedded in the price of the
haircut.
If we take the case of another business that is producing a good,
then again the provincial sales tax systems as they exist in
Canadian provinces cause a cascading of the tax. Every time in
every stage of production tax is paid by the business on inputs, it is
embedded in the price of the good that the business sells. Tax is
applied to that, which includes tax on the tax previously paid, and
so on down the chain.
Under the harmonized sales tax, all of that is eliminated. When a
business sells a good to a consumer, the only sales tax is the sales
tax that is applied at the retail level. There is no sales tax embedded
in the original price of the good. That is why the Atlantic premiers
can say with pride that there is no sales tax, because they have
managed a system that is clean when the good is finally sold to the
consumer. The consumer knows that the sales tax component he
pays on that good is 15 per cent. It is demonstrated on the bill.
There is no hidden sales tax. There is no hidden tax on a good in the
Atlantic provinces.
Once again the member suggests, and the Reform Party has tried
to make something out of this for several months, that somehow
the red book did not represent this party's election promises in
1993. That of course is something the Reform Party did not try to
proclaim at the time. Reformers were given the red book as were
other opposition parties. Our promises were plainly made and they
have been fulfilled.
If the hon. member wonders why we opposed the GST in 1989
and 1990, then I commend to him the report that we wrote.
Circumstances have to be dealt with as they are found at the time.
We recommended against implementing this tax for some of the
same reasons that we are trying to fix it now.
As I spoke of earlier, with two sales taxes at the retail level, it is
the only jurisdiction in the western world that has tried to do that. It
was not a good idea. It was confusing. It was predictable that we
would have the tax chaos which resulted. But there was no turning
back the clock and saying we wished it had never happened and let
us go back to the old sales tax and begin with that. Time had moved
on.
When the Liberals campaigned in 1993 we made it very clear
what we would do. Given the reality that the government of the day
had already imposed the GST and that the introduction of the tax
had been absorbed in the economy, we said that we would have the
finance committee study it in the first year of government and
prepare a report on how we might move forward to produce a better
tax that would be harmonized with provincial sales taxes.
It is disingenuous of the hon. member to suggest that he can take
things out of a 1990 debate in the House of Commons before the
law was enacted, before the tax was imposed, before the retail
community had to make the adjustments in order to apply the tax,
before the manufacturers sales tax had been withdrawn and use
them in debate in 1996 when we are trying to make the mess we
found liveable for retailers and consumers. It might be good
political rhetoric but it is not precisely what the hon. member
7047
would like to be identified with in putting real and substantial
choices before the Canadian public as we move on from here.
(1540)
Mr. Myron Thompson (Wild Rose, Ref.): Mr. Speaker, in 1993
in Wild Rose the campaign was hot and heavy. ``We will scrap, we
will kill, we will abolish the GST'', were the words I heard.
I am pleased to see a front line minister speaking to this issue. I
also noticed that another front line minister, the former minister of
revenue who is now the Minister of Transport, made a prediction in
a Victoria newspaper where he said that voters will punish any
provincial government that fails to merge its sales tax with a
revamped goods and services tax. If that be the case, then why in
Prince Edward Island, where the Liberals were pushing for this
merger of taxes, were they so soundly defeated?
Mr. Manley: Mr. Speaker, I found it a little hard to follow the
question since Prince Edward Island is not one of the provinces that
adopted the harmonized sales tax. One might argue that had they
done so, they would have been re-elected.
I would like to take the opportunity to refer to the comments that
were made by hon. members opposite with respect to compensation
paid to the Atlantic provinces in order to make this transfer. Any
time a transition is made on a very substantive policy issue,
transition payments are often considered.
I point out to hon. members opposite that when the government
moved to eliminate the transportation subsidy under the Western
Grain Transportation Act, popularly known as the Crow rate, a full
$1.6 billion was made available to western farmers in order to
compensate them for this important transition. It was painful, there
is no doubt about it. In the long term it is the correct policy, the best
policy for the economy of Canada. It is the best policy for western
Canada and the best policy for the western Canadian farmers who
are making the adjustment. Never once did that party get up and
criticize compensation being paid to western Canada.
How is it when another important change is made which is good
for the economy of Canada and good for the economy of Atlantic
Canada and has short term cost implications for the provinces
involved that a one time transition payment is so offensive to that
party? It sounds to me like the petty politics of regional envy.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I rise today
to address or undress this government on its proposed legislation
for a harmonized sales tax and to streamline the GST under Bill
C-70.
First, I have a little humour that might put this in perspective. A
good friend of mine in Calgary, Martin Struthers, is a travelling
salesman in the clothing line. He told me that he ran into a lot of
Liberals over the summertime on the golf course. They were
playing with a particularly cute golf ball that had the logo of the
current Deputy Prime Minister on it. When he asked the Liberals
why they were using this golf ball they said: ``Well if we use this
golf ball, we are free to change our lie any time''.
On November 29, 1996 the government boldly issued a press
release announcing that three Atlantic provinces, Nova Scotia,
New Brunswick and Newfoundland and Labrador, had agreed to
harmonize the GST and provincial sales tax effective April 1, 1997.
The effective date is important. It is next year, not this year. I will
come back to that later on in my speech.
The finance minister is quoted as saying: ``This proposed
legislation represents another step toward an integrated national
sales tax system for Canada''. I stand before this House to state
unequivocally that this comment by the finance minister is
misleading, that the steps he has taken to harmonize the GST are
hypocritical and that this whole exercise is nothing more than
politically self-serving by Liberals at its worst. These are the three
arguments I wish to address and I will do so under those titles:
misleading, hypocritical and politically self-serving.
Under misleading, it is misleading that the rest of the country
will not participate in the harmonized sales tax system even though
the finance minister says that this is leading toward it. P.E.I.
dropped out. Ontario has said to take a hike. Alberta wants the net
effective rate that the Atlantic provinces get, which is 5.5 per cent.
His whole claim that he is moving forward contradicts the facts.
(1545)
Take Ontario. Why would Ontario comply when it has already
indicated that it would cost Ontario consumers another $2 billion in
goods and services with a combined rate? Why would Mike Harris
want to punish Ontarians just to play politics with the 99 Liberals
who are doing very little for Ontario, other than downloading their
problems in health care, education and welfare, increasing taxes
through the elimination of certain loopholes and tinkering with the
corporate rate structure?
On top of that, the government's share of the billion dollar bribe
to entice the three provinces to participate is going to cost $400
million over three to four years.
It is misleading for it to claim it is making progress when only
three provinces out of ten are participating.
The finance minister has failed to get the other provinces to
participate. Why? It is a tax increase on consumers. Even the
department of finance of Nova Scotia, one of the participants, in its
analysis of May 1996 revealed that the net effect of the harmonized
sales tax burden on consumers would increase by $80 million.
7048
Retailers, especially national retailers in the region, claim that
their extra costs to retain a dual system of taxation for those stores
within the three provinces and for those outside will cost them $27
million.
The government claims, in defence, that businesses will pass on
any portion of their savings achieved through harmonization.
Excuse me, based on what prior evidence? There will be a $107
million increase to consumers in Atlantic Canada. That is what will
happen through a reflection of price increases. A billion dollars has
been taken from the federal coffers, from the rest of Canada, to
transfer the system.
It is misleading to state that the Reform Party supports
harmonization. In the Standing Committee on Finance, of which I
was a member and one of the co-authors of the report, when the
government was looking for a GST replacement we indicated quite
strongly that if the government was going to harmonize it had to
harmonize on a national basis, with all the provinces, at the same
time, and make it revenue neutral, with the widest possible base,
providing the lowest rate. That has not been achieved. Other
provinces will not participate. We clearly stated in our executive
summary that harmonization cannot be fully endorsed. Talk about
being misquoted and taken out of context.
Therefore we oppose the harmonized sales tax in its present
form. If the government would bring us something which is for all
of Canada we would consider it.
It is misleading to claim that this will save money when it will
cost the rest of the provinces close to $1 billion, $961 million to be
exact. We call it a bribe to compensate the provinces for the lost
revenue of the lower PST and to entice them to participate.
That is very misleading. Who is going to compensate the other
provinces, entice them or bribe them? Where is the money going to
come from to provide the lost revenue for the other provinces, such
as Saskatchewan, as the member previously mentioned?
This move is also hypocritical. I will touch on this point briefly.
When in opposition the finance minister said: ``I would abolish the
GST because the manufacturers sales tax is a bad tax, but there is
no excuse to repeal one bad thing by bringing in another''. That
appeared in the April 4, 1990 edition of the Montreal Gazette.
On March 17, 1990 in an interview with the Calgary Herald the
finance minister said that the GST is a tax which discriminates
against the regions and that he would get rid of it if possible.
However, he said it would be difficult to do that if the federal tax
becomes integrated with provincial taxes: ``If it becomes
integrated'', which the government is now bragging about, ``with
provincial taxes'', which it has just done, ``we will never get rid of
the GST. We will never replace the GST''.
He further said that another alternative would be to look at
alternative consumption taxes that are not regressive and do not
penalize the regions of the country.
We are talking about the hypocrisy of the finance minister's
statements. The hypocrisy lies in the fact that he has acted exactly
opposite to what he said in opposition and opposite to what his
personal beliefs are. He has entrenched the GST instead of getting
rid of it. He has also introduced a taxation system which penalizes
the non-participating provinces to the tune of $961 million. He is
making seven provinces pay for lower tax rates in three provinces
and basically penalizing the rest of the country just to integrate a
bad tax, which he said he would never do. His deal is with three
provinces that have Liberal premiers, three provinces that may
soon have three Conservative premiers once this ripples through
the economy of those three provinces.
(1550)
We do not need to remind everybody what happened in P.E.I. My
colleague from Wild Rose has already pointed that out. That
Liberal premier lost his job thanks in great part to the federal
Liberal government and its action in this regard.
I believe it is also hypocritical to argue that the Liberals have a
pan-Canadian view of Canada because they are taking from the
richer provinces and giving to the poor. Is this a new definition now
of equalization payments where seven provinces are paying for ten,
a complete reversal of the current equalization system where three
provinces pay for seven?
It seems to me there is hope for Reform's fresh start platform.
We suggest that we should review the equalization payment system
and have maybe the top five provinces paying the bottom five and
have a little competition in there which would be a better approach
to a new vision for a better Canada.
Finally, I also feel that the harmonized sales tax is politically
self-serving. We all know the promises from the Deputy Prime
Minister, the Prime Minister to the finance minister and a whole
bunch of other MPs during the campaign about what they said at
the door and also what is in the red book. They have not even kept
their red book promise because this is a partial and it is not even
revenue neutral and any way you cut it they have broken their
promise.
We all know about the member for York South-Weston who has
quit over this because of principle. We all know about the member
for Broadview-Greenwood. What these people campaigned on
and what they delivered are two different things.
In order to limit the damage and in order to continue the myth
that they are solving and keeping their red book promises they have
introduced this GST harmonization at a huge cost to the country, at
a great disservice to the premiers of those three provinces who
7049
were hoodwinked, bribed and misled and where the Atlantic
residents will see their cost of living go higher.
The finance minister has admitted that he failed to deliver on his
promise to scrap the GST. The Deputy Prime Minister admitted
they have not delivered on their promise and quit subsequently. She
never promised that she would run again but she did and she got
re-elected.
The only person who fails to admit that they failed to deliver on
their election promise is the Prime Minister who is off around the
countryside taking credit for all the global deals, thanks to
businessmen who have been working hard for five years and thanks
to the previous government that fought hard and implemented free
trade and the North American Free Trade Agreement.
This harmonized sales tax is politically self-serving because they
have told the Atlantic MPs to keep quiet. Why are they not
speaking out on this and telling us how wonderful it is and how
great it is? Why do they not go on the record and tell Atlantic
Canadians that this is the best thing since sliced bread and there is
no sales tax in the Atlantic provinces? It has disappeared. The ads
are there. Defend that. I would like to see them defend that. I would
enjoy listening to them defend that there is now no sales tax in
these three provinces.
There will be businesses going under in the Minister of National
Defence's riding. They have already shut their doors. These
Atlantic MPs have been told to stay quiet. Where are they? How
can all of them say this is a good deal in light of all the people who
have come forward and said this is not a good deal, especially
MMG Management Group which runs discount chains under
names like Greenberg, Red Apple, MetMart and Metropolitan in
New Brunswick where 79 jobs have already been lost due to this
harmonization and a 50-50 chance of another 71 jobs being lost
according to their own calculations?
The worst example of all that I have of political self-serving is
contained in the Public Accounts, volume 1, pages 1.24 to pages
1.26. It talks about the whole financial aspect of accounting and
also the auditor general's comments: ``Responsibility for the
integrity and objectivity of the financial statements rests with the
government. The financial statements are prepared under the joint
direction of the President of the Treasury Board, the Minister of
Finance and the Receiver General for Canada in compliance with
governing legislation''.
The auditor general then gives his comments. Here are some of
his startling concerns that he felt should be brought to the House
and parliamentarians made aware of: ``The inclusion of transitional
assistance'', which is the same debt word as bribe, ``of $961
million in the 1996 deficit and accumulated deficit represents a
departure from both sound accounting practice and the
government's own accounting rules. In my opinion the transitional
assistance of $961 million should be included in the deficit
subsequent to the 1995-96 fiscal year. Failure to comply with
generally accepted principles resulted in an overstatement by the
annual deficit and accumulated deficit of $961 million''.
(1555 )
Mr. Campbell: Mr. Speaker, on a point of order. The hon.
member purports to be quoting from the auditor general's report
and he made reference to the word bribe. I would like to know if
that is part of what he is quoting from the auditor general. If not,
would he excise that and read the quote again without that word in
it.
The Acting Speaker (Mr. Milliken): I think the hon. member is
raising a question to the member for Calgary Centre. However, if
he wishes to clarify the matter, I am sure he would be pleased to do
so.
Mr. Silye: Mr. Speaker, I will clarify. I thank the hon. member
for the correction. I did kind of ad lib. The word bribe is not in the
report.
Here are his startling concerns: ``The inclusion of transitional
assistance of $961 million in the 1996 deficit and accumulated
deficit represents a departure from both sound accounting practice
and the government's own accounting rules. In my opinion the
transitional assistance of $961 million should be included in the
deficit subsequent to the 1995-96 fiscal year. Failure to comply
with generally accepted practices resulted in an overstatement of
the annual deficit and accumulated deficit of $961 million''.
The transitional assistance of $961 million has been recorded as
a liability at March 31, 1996 and as an expenditure, a resultant
increase in the deficit for the 1995-96 fiscal year.
As I said at the outset of my intervention this afternoon, this
agreement does not come into effect until April 1, 1997, two fiscal
years later, the year ending 1997-98.
Is this bribe or transitional assistance, as the government prefers
to refer to it, a liability as of March 31, 1996? Clearly this is not the
case because according to generally accepted accounting principles
and the government's own rules: ``Financial obligations are
recorded as liabilities if the underlying event occurred prior to or at
year end''. It did not occur prior to March 31, 1996 and it did not
occur at year end March 31, 1996. In fact, it is occurring now.
Agreements are being signed now and they will take effect April 1,
1997, which is the next fiscal year, not even in this one ending in
1997.
Also: ``Transfer payments are recorded as expenditures when
paid and when the recipient has fulfilled the terms of a contractual
transfer agreement''. Clearly this is not the case. They have not
fulfilled the terms of the contractual agreement. The auditor
general agrees with me because he states in the Public Accounts:
7050
``Eligibility criteria had not been met by the three provinces by
March 31, 1996 and, accordingly, the $961 million of
compensation should not have been recorded in the accounts at that
time. Although the government is committed to compensating the
provinces once agreements are signed, the $961 million is not
payable until the agreements are signed''.
The government and its officials hung their hats on
memorandums of understanding. Mr. Speaker, I know you were an
outstanding lawyer when you where practising and know the terms
of law very well. You and I both know that letters of agreement,
memorandums of understanding have a certain way of sometimes
changing. That is why the auditor general is right. That is why
generally accepted accounting principles cannot be departed from.
Shame.
The integrity of government financial statements is at stake. This
action on harmonization impairs the integrity of the process.
Shame. Shame on the finance minister, the deputy finance minister,
the President of the Treasury Board, the secretary of the Treasury
Board and the receiver general and the deputy receiver general,
who have all compromised some integrity, walking a fine line on
interpreting generally accepted accounting principles and prior
government practices, setting a new precedent just to help the
Liberals fulfil a self-serving political promise and to help the
finance minister bury the high cost of harmonization in a prior year
ending in 1996 just because the government had bettered its deficit
target and done better than it had projected in that year. Therefore
this was a good time to bury it, hide it and then forget about it and
we will not have to record this transition cost, this bribe, this
enticement, whatever anybody wants to refer to it as. This is
nothing more than political self-serving and I say shame.
(1600)
I have given examples and testimony to prove conclusively that
this feeble, partial, half-hearted effort of replacing the GST with
something that is revenue neutral is not. I quote from the red book.
I am trying to interpret legitimately, accurately what the Liberals
now say they promised door to door.
Knock, knock. Hi, I am the member for
Broadview-Greenwood. I will replace the GST with a tax that is
revenue neutral, that will take as much money out of pockets as it
does now and then we never worry about the GST again. That is
what the Liberals said they promised. I believe with the examples I
have given I have pointed out how misleading, hypocritical and
self-serving have been their remarks for a period of four years.
This is an important issue. The GST is a bad tax. In and of itself
it can be good in terms of consumption taxes. But when it was
introduced the Liberals in opposition argued against it, as they
should have. Now that they are the government they promised to
get rid of it. They have not. They have entrenched it.
Most everyone acknowledges that the GST has been the biggest
cause of the growth in the underground economy. How is it then
that by entrenching a 15 per cent tax is going to eliminate the
growth in that economy and eliminate the activity within that
economy?
The Liberals brag about how this is a step in the right direction,
how this will replace the GST and be revenue neutral. We will still
have the high cost of administration of the GST type of tax that we
had. Reformers feel that the government should get out of this
domain altogether, leave it to the provinces. The $15 billion net
revenue required should be put into a simplified tax system
featuring a dual rate. That is how to raise that revenue. That is
simplifying it. That is eliminating the GST. That is making it
revenue neutral. That is solving the problem.
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Mr. Speaker, I will use the same themes that the
hon. member opposite used: misleading, hypocritical and
self-serving but I will throw them back at him.
The hon. member is misleading the Canadian people. The
auditor general did not qualify the financial statements of the
Government of Canada. He made an observation. We disagree
about that observation. That is entirely permissible and within what
is appropriate under generally accepted accounting standards. The
hon. member knows that.
The hon. member also said the tax is not revenue neutral. I ask
him to prove that. That is untrue, it is revenue neutral.
It is interesting under hypocritical. I had the privilege to work
with the hon. member. He worked diligently with other members of
his party on the committee that went across the country looking
into replacements for the GST. I will tell who is hypocritical. The
hon. member supports harmonization. He neglected to tell us that.
Under self-serving, it is interesting. The hon. member attacks the
transitional assistance but I have never heard him attack the $1.6
billion paid to western grain farmers when the Crow rate subsidy
was removed. Not a word. Here we have a member from one region
of the country criticizing transitional assistance going to another
area of the country and telling them what is good for them but
never rising to criticize similar transitional assistance in his own
backyard.
This is a quiz show if you will, Mr. Speaker. I ask the hon.
member one further question. Who said the following? ``I want
something that works. If we had one value added tax, one base, one
bureaucracy to collect it, the manufacturers and businesses in
Ontario would save over $1 billion by being able to deduct those
costs that cannot be deducted today on the sales tax. It has been one
of the areas of a major competitive disadvantage that Ontario
manufacturers have had and Ontario businesses have had. I say
stop the rhetoric, stop the politics, stop the finger pointing. Get on
with harmonization and simplification of the GST or whatever the
new initials are, along with the PST''. Who said that? I will give the
7051
hon. member a hint. He is now the premier of the province of
Ontario.
Mr. Silye: Mr. Speaker, I thank the hon. member for his
intervention. I will try to answer his comments about my
misleading the public and that the auditor general did not qualify
his observations in his signing off on the financial statements.
(1605 )
I agree with the hon. member. He did not make a reservation on
it because he said: ``Substantially the changes and effect that would
occur that year might happen but the significance would happen
and those looking at the Government of Canada from afar would be
able to recognize that that is the intent of the government''.
However, he did make it clear and spent a lot of effort in pointing it
out to us, notwithstanding that he did not make a reservation on it
and signed off.
The point is that if we start allowing politicians to do things with
financial statements that go to the edge of generally accepted
accounting principles, integrity is at stake. When you go against
the history of 126 years in Parliament, which has never been done
before, of taking something that has not been consummated, that
may lead to a deal down the road and charge it off to prior years-
Ms. Clancy: Gobbledegook.
Mr. Silye: No, that is not poppycock. That is exactly what has
happened and that is what the auditor general is making us aware
of. We should be aware of it so that this kind of stuff will not be
allowed to happen.
I am not misleading. I acknowledge that there was not a
reservation. I just did not put it in my speech. Am I misleading by
saying it is not revenue neutral? I accept the claim that it will
generate the same amount of money as is currently being generated
by the GST but there is a cost to setting up this new system.
When the Liberal red book stated that they would replace the
GST with something revenue neutral, they did not say at a cost of
$1 billion or $2 billion or $100 million. There was no cost to it. I
assumed and I think most Canadians assumed that they would
replace it with something that does the same. If it was supposed to
save money in administration and in efficiency and if it saved
money for businesses and governments, it should not cost us a
billion dollars. We know why it cost us a billion dollars. It was
either a bribe, an enticement or a transitionary cost. Any one of
those three can be picked. I know the government will take the
transitionary cost.
We have never supported harmonization. He and I were on the
committee. The minority report of the Reform Party on replacing
the GST clearly stated in its executive summary, right from the
beginning to the end, that: ``Harmonization cannot be fully
endorsed. While harmonization does simplify the tax system, it
makes no sense to do it in a piecemeal, ad hoc fashion because it
simply increases the confusion, the cost and the resentment across
the country''. That is what the government is doing.
The purpose is to eliminate dual tax regimes but this version
retains it for national firms. The Reform Party opposes tax
inclusive pricing. This practice violates the principle of open
taxation which is essential to efficient functioning of open
democracies. The disclosure of taxes paid on cash register receipts
preserves an element of openness in taxation but as the experience
in Europe has shown, it eventually results in strongly diminished
public awareness of the tax.
The Reform Party sees the GST as an unnecessary temporary tax
which does not belong in the federal domain, but inasmuch as the
tax will exist temporarily, then the Reform Party encourages the
government to streamline taxation, remove as many of the
significant problems that exist until such time as a much wider tax
reform that provides both tax relief and tax simplification can be
implemented.
If the government presented a national integrated sales tax with
the lowest possible rate on the broadest possible base, the Reform
Party would seriously consider looking at such a proposal.
However, the government is not doing that. This is a piecemeal, ad
hoc presentation. This would be only conditional consideration
because the Reform Party's final solution to the GST, as I
mentioned earlier, would be to eliminate the GST after the budget
is balanced, incorporate the net revenue required into a simplified
tax system featuring a dual rate.
I think I have addressed the issues of the hon. member of being
misleading and hypocritical. I welcome that. If I challenge them for
being misleading and hypocritical they have the right to accuse me
of the same. I have, unlike the government, addressed each of those
items and have given my answers. I would now like the hon.
member, if there is a minute left, to tell me if I am still misleading
and hypocritical in light of my answers.
Mr. Barry Campbell (Parliamentary Secretary to Minister of
Finance, Lib.): Mr. Speaker, I was pleased to hear the hon.
member say that in the minority report they did endorse
harmonization, although not without some qualifications. At least
we have that much on the record because he neglected to say that
they support the principle of harmonization. I thank him for that
clarification.
(1610)
Mr. Silye: Mr. Speaker, I would like to further add, so that the
member does truly understand, we would eliminate the GST unlike
his government. Given, however, that the GST is going to be
around for another three years or so, if it is possible to improve the
7052
tax regime and eliminate and simplify and reduce taxes, then we
would support the government in measures like that.
But as an overall philosophy this party does not and will not
support the harmonized sales tax in the present form that this
government has put forward.
Mr. John Murphy (Annapolis Valley-Hants, Lib.): Mr.
Speaker, I will be sharing my time with the member for Halifax.
I am pleased to have the opportunity to speak on Bill C-70
respecting the harmonized sales tax agreement. I have listened
closely to the debate today and some of the criticisms that members
from parties opposite have raised.
Let me take a moment and read a number of quotes from national
organizations regarding the need to move on to a harmonized tax
system. In June 1994 the president of the Retail Council of Canada
stated in an interview: ``Harmonization is abundantly desirable.
The provinces cannot ignore forever the pressures that are on us as
a nation to get our House in order and getting the sales tax right is
an important element of that''.
In the same month the president of the Canadian Chamber of
Commerce said: ``They,'' meaning businesses ``could create more
jobs if the PST and the GST were integrated by doing more
business more efficiently and more effectively''.
Even the members of the third party, and we heard that from
debate here, supported harmonization in the minority report on
replacement of the GST. In that report they said: ``It is simply
unacceptable that Canada remains the only country in the world
with 10 different sales tax regimes. We commend the government
on its attempt to harmonize the tax with the provinces''. That is
exactly what the government is working toward.
As the House is aware, on October 23 three provinces, Nova
Scotia, New Brunswick and Newfoundland and Labrador, signed a
harmonization deal with the federal government, In doing so, these
provinces have taken a bold step forward. It is a step that will help
the three Atlantic provinces to become more competitive, more
self-sufficient and more attractive for businesses.
In signing this deal, the province of Nova Scotia and its two
partners are leading the way to what I believe will be an eventual
agreement among the provinces and territories. Let us look at the
facts. Over its lifetime the GST has taken an additional $3 billion
out of the Atlantic region, a bigger increase in federal sales tax
payments than in any other part of Canada. In signing this
agreement these three provinces will receive adjustment assistance
close to $1 billion over four years.
I have heard the criticisms from members opposite on this
element of the deal. I would like to remind my colleagues,
however, that this decision is consistent with Canada's long
standing principle of providing adjustment assistance to provinces
and individuals when they need help adjusting to major policy
changes initiated by the federal government.
I want to emphasize quite clearly what the agreement will mean
to Nova Scotia. In Nova Scotia the harmonized sales tax agreement
will improve its economy and its competitive position vis-à-vis
other provinces. The agreement will ensure that $100 million more
will be left in the pockets of Nova Scotians. This extra money in
the economy will mean a permanent increase in Nova Scotia's
gross domestic product of .8 per cent. Over the next few years that
will translate into approximately 3,000 new jobs.
A central component of the sales tax reform is that the new
system must be both fair and simple to use. The HST meets both of
these criteria. Consumers and business people will operate in a
marketplace where the rules are clear and where there is less
paperwork.
(1615)
For consumers, all Nova Scotians will benefit from a tax rate
that is almost four points lower than the current combined rate. The
new system will mean lower prices on most goods, not only
because the combined rate will be lower, but also because hidden
provincial sales taxes will be eliminated.
As well, businesses in Nova Scotia will experience many
competitive advantages under this new system. With full input tax
credits, operating costs on everything from phone bills to
computers will come down. Many other business expenses will
also be lower, including hotel and meeting costs. This will provide
an opportunity for local businesses to expand and to grow, and that
is what this is all about. It also gives businesses an excellent reason
to locate in my province of Nova Scotia.
For businesses the HST will mean they will only have to
administer one tax instead of two; one collector, one auditor.
Businesses have campaigned for a simpler administration system
for many years. As of April 1 next year, we will be able to deliver.
I would like to turn for a moment to a number of specific sectors.
Let us look at the issue of tax rebates on books. During the
summer months I heard from many businesses and individuals in
my constituency of Annapolis Valley-Hants. They were calling
for an exemption on the taxation of books. The message I heard
was that the continued taxation on books was in effect an
impediment to promoting and improving literacy in Canada. This is
a view that I brought forward to the Minister of Finance in early
August on numerous occasions. I was pleased therefore when the
minister responded positively to these concerns.
Under the HST there will be 100 per cent GST rebate on all
books purchased by public libraries, schools, universities, colleges,
municipalities and qualifying charities and non-profit orga-
7053
nizations. That clearly is the way to go. This rebate will support the
important role played by these front line organizations in helping
individuals acquire the tools they need to learn to read or to
improve their reading ability.
During this time of limited resources the best way to ensure the
biggest impact for every dollar spent is to target assistance which
will have the most impact on literacy. This decision will have a
positive impact in supporting literacy in Nova Scotia.
I also want to speak for a moment about how this agreement will
positively affect the housing industry. After all, a strong
component in any economy is a strong housing industry. While
provincial sales tax does not apply directly to the sales or rental of
residential property, a substantial amount of provincial retail tax is
still embedded in housing prices. Consumers are paying for
unrecoverable tax on materials such as lumber, paint and
appliances. As well, contractors pay provincial sales tax on
building equipment and other capital goods.
Under the HST, builders will be entitled to input tax credits on
inputs used in the building of a home. That is important. In addition
to that, in Nova Scotia under the HST there will be a housing rebate
for all buyers of new homes to a maximum of $2,250. Coupled with
decreased building material costs this will ensure that new homes
cost the same or less once the new agreement is in place.
Let us turn to the tourism industry for a moment. In Nova Scotia,
as I am sure everyone is well aware, tourism is a billion dollar a
year industry. In my riding of Annapolis Valley-Hants, tourism is
a growing area and one in which jobs can and will be created.
Under this agreement visitors from outside Canada will get their
tax back on hotels, conventions, bed and breakfasts and on the gifts
they take home to their families. Even visitors from other
provinces will face a lower tax rate for meals and for
accommodations. Clearly this agreement will make our tourism
sector even more competitive and more successful.
(1620)
As any government whether federal, provincial or municipal can
say, tax reform is never an easy process. Any attempt to change and
improve the tax system will inevitably lead to criticism and calls to
leave things as they are. But I believe the agreement our
government has reached with the three Atlantic provinces will
improve the economy of Nova Scotia and will free up more money
for Nova Scotian families and businesses.
This package will help create jobs and it will help the economy
grow over the long term. For those provinces that have taken the
lead and signed on to this agreement, they will become more
competitive both nationally and globally.
Mr. Myron Thompson (Wild Rose, Ref.): Mr. Speaker, some
information has been supplied to me regarding some comments
about this whole idea.
The Retail Council of Canada has said that by forcing stores to
bury the new tax in prices, the harmonized tax regime will cost
retailers at least $100 million a year. A study by Ernst and Young,
the government's own accounting firm, estimated that a midsized
national chain with 50 stores in the Atlantic provinces would pay
up to $3 million in a one-time start up and $1.1 million a year to
comply with this new system.
The Halifax Chamber of Commerce has predicted that the
harmonized sales tax will push up new house prices by 5.5 per cent
and will force municipalities to raise the property taxes. The
Canadian Real Estate Association says that harmonization will
increase the cost of a new house by $4,000 in Nova Scotia and
Newfoundland and by $3,374 in New Brunswick.
GST harmonization is responsible for the closure of five
Greenberg stores and the loss of jobs. I thought the issue of jobs
was really important to this government. The management of this
store has said that there is a 50-50 chance of further store closures
and the loss of more jobs.
I am really surprised that the backbenchers from the Atlantic
provinces are not in an outrage over losing jobs and raising more
taxes. There must be a lot more here than what they are mentioning
to the people of Canada including the taxpayers across the Atlantic
provinces.
Consumers will pay more for funeral services, children's
clothing, books, auto repairs, electricity, gasoline, home fuel
heating, haircuts and a whole bunch of things. They will be paying
more for these things and many of these families can barely get by
now.
I am really confused that members from the Atlantic provinces
are willing to accept this job killing situation. That is what is
happening. It is killing jobs. Those who are making these
statements are high-fluential people.
Ms. Clancy: High-fluential, high-fluential, whoa.
Mr. Thompson: They have some knowledge about what is
going on. They are on real estate boards and councils.
Ms. Clancy: High-fluential.
Mr. Thompson: The best thing the member for Halifax can do is
yap off at the mouth. She is sitting there heckling somebody else
and she does not know what she is talking about. I will direct my
questions to the other member who spoke eloquently, and I thank
him for that.
These are highly influential people who are making these
comments. I am not the one who is making them but people who
have the knowledge of what is going on are. I would like the
member to respond.
7054
Mr. Murphy: Mr. Speaker, the technology for the changeover
is already in place. There will be some changes but the technology
is in place and it is not the same as introducing a whole new
system.
The member talks about the prices of houses going up. I just
indicated in my speech that housing prices will go down because
the input costs will go back into the industry and they will bring the
prices down.
The member mentioned that jobs are being lost. One of the major
features of this tax is that over the long term, over the next few
years, jobs will be created. There will be all kinds of input taxes
being returned to the different companies in Atlantic Canada and in
Nova Scotia in particular. They will have more money to work
with. Consequently, they will be able to put that money back into
improving and expanding their businesses and obviously creating
jobs.
(1625)
About 73 per cent of Nova Scotians who were surveyed prior to
this system coming into place wanted a system which provided one
price which included the tax in it. Businesses asked for it. That is
why we made these agreements with the Atlantic provinces, with
the exception of P.E.I. We wanted to create a better situation for the
consumers, namely that they would be able to go to the cash
register with a $15.95 price tag and pay $15.95.
I am sorry that the member opposite has been misled.
Unfortunately, his comments the way he put them are incorrect.
The Acting Speaker (Mr. Milliken): The hon. member for
Halifax on debate.
Ms. Mary Clancy (Halifax, Lib.): Mr. Speaker, before I begin
my remarks in this debate, may I say that I am delighted to be
speaking here today, the first time since you took up your new
duties as assistant deputy chairman. May I congratulate you on that
appointment, a most worthy appointment. I am delighted to be here
but having said that, I am afraid that I am less delighted about
several things.
First, I would like to extend my compliments to the hon. member
for Wild Rose. I would let him know that the name of Canada's
10th province is Newfoundland, like ``understand''. If you are
going to understand a province, you should also know how it is
pronounced.
The hon. member for Calgary Centre spoke quite eloquently, if
somewhat off the point, a little earlier. I would like to say a few
things to him too. I have great respect for that hon. member. I know
that his belief in public service and in doing things for Canadians is
very strong and I take no exception to that.
However, I will say as a Nova Scotian to the hon. member who
comes from Alberta that I do not think Nova Scotia members
lectured Albertans or westerners when the grain farmers took a
$1.6 billion subsidy from the federal government. They did not say
that it was not good for them. On behalf of the members of the
three Atlantic provinces who are accepting this deal and who think
this is a good deal, I would just say: Keep your lectures at home.
We think we know a little bit better what is good for Nova Scotia,
what is good for Newfoundland and what is good for New
Brunswick.
Does the hon. member really think that premiers such as Brian
Tobin, John Savage and Frank McKenna get together and say: ``Let
us do something bad for our provinces''? With the greatest of
respect to the hon. member, does he really think that people who
have barely gotten their feet wet in the salt water of the Atlantic
Ocean know better than these people who have led their provinces
in good times and in bad? Does the member really think that he
knows better what to do for Nova Scotians, New Brunswickers and
Newfoundlanders than Frank McKenna, John Savage and Brian
Tobin? I do not think so.
With the greatest of respect to members of the third party and
possibly others in the official opposition who might oppose this
excellent plan for Atlantic Canadians, may I say that in that region
they are not even on the radar screen politically and there is a
reason for that. They do not comprehend what is good for Nova
Scotians. Not even being able to pronounce the name of one of the
provinces is a good reason they are not on the radar screen.
Having dealt with that, let me now deal with why the harmonized
sales tax is a good thing for the people of Nova Scotia and her sister
provinces.
(1630 )
Let me quote a premier I was talking about just a few minutes
ago, the hon. Frank McKenna, one of the most successful premiers
in Canadian history, I might add. Frank McKenna said on Sunday:
``This is a chance for Atlantic Canada to enjoy the single biggest
advantage we have ever had in the last 50 years against the rest of
the country. We are now the most competitive area in all of North
America for doing business''. That comes from Premier McKenna
and from the Atlantic Provinces Economic Council, a most
respected organization in our region.
The GST has sucked an additional $3 billion out of our region, a
bigger increase in federal sales tax payments than in any other part
of Canada, so it is no wonder the three provinces opted for the new
tax to replace it, along with the $1 billion in transition funding. It is
only appropriate that the region that took it, Atlantic Canada, was
the one that was losing the most with the GST.
What is going to happen with this transitional funding? The
transitional funding will be used in part by the provinces accepting
this to assist those small numbers of consumers who are going to be
hurt somewhat by the broader base of the tax, those few things that
7055
will go up in price. Will some things go up in price? Yes, some will.
The transitional funding will in part be used to assist those people.
I might also add there is no loss in the low income rebate of the
GST that was instituted when the GST came in. It will continue to
be paid to those people who qualify in the three Atlantic provinces.
The three Atlantic provinces as of April 1997 will have a
simpler, less costly and more effective sales tax system, and that is
the bottom line. Clearly members from Alberta have so little
knowledge about what is important in Atlantic Canada that his has
not managed to penetrate. I am not sure what does manage to
penetrate, but then that is another story.
The BST will be the crowning in touch in turning Atlantic
Canada into the most attractive business location in all of North
America. From the days of wooden ships and iron persons until
today this is something that has been long overdue in Nova Scotia,
in New Brunswick and in Newfoundland.
I really do think that when members opposite think they can
lecture us on what is good for the Atlantic region they should at
least be able to say they know something about the region that they
are attempting to lecture. We do not take kindly to lectures down
there. We know what is good for us and the harmonized sales tax is
very good for us.
Consumers will know what the price is before they go to the cash
register. How many times has every one of us in this House and the
people we represent seen an item that we wanted to buy, taken it to
the cash register and by the time it was all added up, whammo, we
were paying considerably more than we thought we were going to?
Those days are over in Nova Scotia. That will be finished come
April 1.
Consumers will have lower tax rates and on many goods will pay
lower prices. This message has to be repeated and repeated because
when it comes to misleading, and I know the hon. member opposite
does not really wish to mislead, or at least I assume he does not
wish to mislead, over and over again scare tactics have been used
with regard to this plan on the consumers of my province and the
two neighbouring provinces, trying to suggest that people will be
paying considerably more when the truth is they will be paying
less.
Mr. Thompson: You don't know what the truth is.
Ms. Clancy: That snappy comeback from the member for Wild
Rose has just made me want to sit down and burst into tears but I
will try to control myself.
Businesses will have to deal with only one tax. From the first day
that the GST was mentioned in this House, when you and I, Mr.
Speaker, were rookie MPs in opposition, I have heard from small
business people in Nova Scotia how they needed the simplification
of the tax system and, again, this is what this is doing.
(1635)
I will tell a little story about someone I deal with a lot in Halifax.
His name is Bob Richards, a cab driver. He is probably the best cab
driver in Nova Scotia. This is not to take away from other cab
drivers there, but Bob has been driving me to and from the airport
since I was elected. Through storm or sleet or dark of night, if I can
steal a line from the American post office, he is there. He has a
number of clients who know how good and reliable he is and
consequently he has a good limousine business in Halifax.
Bob has complained bitterly about the kind of red tape and the
bureaucratic detail he as a businessman has been hamstrung by in
this tax. This tax is going to be a lot less cumbersome to business
people like Bob Richards in the three Atlantic provinces that have
taken this deal. That is a good thing. This is something Nova
Scotians care about. Am I out of time, Mr. Speaker?
Mr. Thompson: I hope so.
Ms. Clancy: I have one minute. The member for Wild Rose
hopes I am out of time. I can only tell the hon. member that I will
be here making my point long after he too has joined the pantheon
of Reformers leaving this House.
In closing let me say something about books because I have to
correct what the hon. member for Wild Rose said. Books will not
be more expensive in the province of Nova Scotia. Indeed some
books purchased by public libraries, schools, universities, public
colleges, municipalities, qualifying charities and non-profit
organizations, most particularly those dealing with the literacy
problem, will receive a 100 per cent GST rebate. That comes about
because the Minister of Finance listened to the Liberal backbench
that went to him and told him how important it was to have this
movement and this rebate on the GST on books.
We in the backbench of the Liberal Party are proud of what we
did. We are proud of the HST. It is good for Nova Scotia, New
Brunswick and Newfoundland. I am delighted to have had the
opportunity to say so.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I would
like to thank the member for Halifax for her intervention on this
issue. I am glad to hear somebody from Nova Scotia get up and talk
about it and defend it, defend it to the degree and with the passion
that she has.
Let me clarify a few things she said in her comments. In no way
during my speech was I trying to lecture to Nova Scotians and to
tell them what was right for them or what was better for them. In no
way was I giving a lecture. I was criticizing the method with which
this government is implementing a harmonized sales tax. I was
criticizing the government in its implementation.
7056
It is not a question of knowing better. I am not saying I know
any better. I am here to give some suggestions and some ideas
and that is all I have been trying to do. Doing what is right is
important. In the Standing Committee on Finance when we looked
at replacements for the GST there were a lot of alternatives looked
at. The Liberal government had a lot of options and a lot of
choices. It hung its hat on replacing the GST with a harmonized
sales tax but it did it piecemeal. It is doing it ad hoc. It is doing
it at a high cost.
Let me point out to the hon. member where the high cost is. First
of all, to reduce the combined current rate in those three provinces
of 19 per cent down to 15 per cent. Obviously it is a loss of revenue
to them. Call it a transfer payment. Let us not get into partisan
politics for a minute. Let us call it a transition cost from one regime
to another of $1 billion. That is $1 billion of expense that need not
happen if they would have taken the full report and looked at the
Reform recommendations in the minority report.
Reform said it would not solve the problems because this is just
entrenching the GST. The Liberal Party wants to replace the GST.
In other words, get a system of taxation that is revenue neutral that
is not this confusing, complicated, bureaucratic, red tape system of
taxation.
Reform said if it were going to do it and look at it, look at an
integrated system with those provinces that have provincial sales
tax. Given that it wanted to look at it, here are some
recommendations Reform has. Make it integrated. Make it the
broadest possible base, the widest base. Let us tax everything,
groceries, prescription drugs. Tax everything. That way there
would be the lowest rate and we would not have this billion dollar
cost to make up for lost revenues in certain provinces.
(1640)
Second, for those low income people who are affected, we
currently have a system of rebate and this national integrated sales
tax could then adjust to the fact that certain people who are the
lower income level would get a bigger rebate than they currently
get and we have taken care of those in society we have an
obligation to take care of.
These were legitimate recommendations. The reason I am so
vehemently opposed to the current botched up mess the
government has is that it is not doing it right. It is being done
wrong. It is not getting all the provinces to agree. The Liberals
quote Mike Harris of Ontario. Mike Harris would love to
co-operate if everybody else across the country were coming into
the deal at the same time, on a level playing field. Okay, so we
would have to compensate, but the finance minister did not do that.
I just want to clarify for the member for Halifax and give her
enough time to respond that it was never my intention to lecture. It
was never my intention to stand here and say that I know better. If
the Liberals would just read that full minority report, we did make
some recommendations which the government has not listened to.
It is being done piecemeal and that is not right. Let us do it right.
Ms. Clancy: Mr. Speaker, I accept the hon. member's comments
that he was not lecturing. However, I do not accept some of the
things he said. Let me just make a few points in the very short time
I have.
First, hanging our hat on a specific program is what government
is about. In government we do not have the luxury to gadfly around
a pick one policy one day and another policy the next. We pick a
policy that we feel is good for our constituents and we go with it.
That is what has happened here.
Again, the premiers of New Brunswick, Nova Scotia and
Newfoundland realized this was a good policy and they decided to
go with. If other provinces have not picked up on it, I can only say
that they do not understand the situation as fully as they should.
With regard to what the hon. member said about increasing the
GST rebate to the individuals, I think that betrays to some extent
two things. First, that the hon. member does not quite understand
what the transitional funding is. But more particularly, it betrays
the fact that there are chasmic differences between the Reform
Party and the Liberal Party because in the Liberal Party we do not
necessarily think that the best way to deal with funding to assist a
province is to put it directly in the hands of the consumer in all
ways. There may be moneys that are better administered through
the provincial government. In this case, this is what we have done
and what we support.
[Translation]
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, I have just
listened to two members from across the way who have told us
about all sorts of things that do not, or will not, exist with respect to
this bill.
I will naturally take a moment to try to place the effects of Bill
C-70 in perspective. Everything we have heard during the last two
speeches has been nonsense. Things must therefore be put in
perspective.
First of all, Bill C-70 is a collection of amendments that are
going to complicate even further what Canadians had to contend
with in the previous legislation. Just now, they were trying to tell us
that this would make it easier for businesses to collect the GST, but
this is not so.
Bill C-70, introduced by the Minister of Finance, is a striking
example of what this government can do to make a mockery of
democracy.
(1645)
First, there is the manner in which this voluminous bill was
tabled, without allowing time for the official opposition to examine
7057
its contents. The official opposition had less than 24 hours to read
and examine the complete bill. That is a mockery of democracy.
The Minister of Finance would do well to change his ways, for
the benefit of Canadians. A bill as technical as this, with so many
amendments, deserves to be examined in greater detail.
This is not the first example of the contempt in which democracy
is held by members across the way, nor, I am sure, is it the last we
shall see before the coming election. They will be trying to pull
some fast ones on Canadians.
This bill is proof of the failure to keep the election promises
made in the famous red book by the Prime Minister himself, by the
Minister of Finance, by the Liberal government, which has
forgotten, without a shadow of a doubt, that it is governing on
behalf of the public.
How many times did they promise during the 1993 election
campaign to scrap the GST outright? The present Prime Minister
said that he was going to scrap it. In 1994, he also said that the
Liberals, i.e. his own government, detested this tax and that they
were going to get rid of it.
Today, with the tabling of this bill, we have come to the moment
of truth. The worst part of all this, however, is that the Liberals
used the taxpayers' money, yes the taxpayers' money, to pay for a
byelection on this matter. The Deputy Prime Minister treated us to
an appalling demonstration of how not to keep one's promise. Yet
making the GST disappear was an election promise.
The only disappearance in this bill is that the GST has been made
to disappear from view, has been camouflaged. It will be
camouflaged, it will be hidden from view. The government ought
to know that the people are not fools. The public knows very well
that this government does not keep its promises.
In Quebec we have a motto, one which the people of Quebec will
put into application when the time is ripe. That motto is ``Je me
souviens'', and yes, we will remember. I shall speak shortly on
what Quebec has done to harmonize its sales tax.
This brings us to Bill C-70, where the Liberals end up doing
exactly what they themselves have criticized. The new GST is a
hypocritical tax, and that makes a lot of people's hair stand on end.
It is a hypocritical tax, that is true. From now on, it will be hidden
within the cost of goods and services.
(1650)
However, in a report of the Standing Committee on Finance
which dates back, not to 1990 but to 1994, the Liberal majority,
these people sitting in front of us, took a position that was clear and
to the point on what the GST should be. They said in the report that
it would be improper to hide from Canadians the amounts they paid
in taxes to their governments and that making it a hidden tax
undermined their ability to make the government accountable for
the way these taxes were collected and, to a lesser extent, for the
way moneys were spent. This is straight from the report of the
Standing Committee on Finance. I repeat, the date is very
important. This was in 1994.
What happened since that time? Today, we are hearing a very
different message. I think the Liberals, the members of this
government, are suffering from amnesia. What does this mean? It
means saying one thing today and saying the opposite tomorrow.
Personally, this is an attitude I could not tolerate. We cannot
change our minds overnight, just like that, especially when
everything we buy nowadays costs Canadians an awful lot of
money. Has power made members opposite deaf? Being in power
means being hard of hearing, speechless and asleep. That is what is
happening now.
Here is another example of the amnesia of members opposite. In
1989, they were in opposition. The position of the Liberals on
hiding the GST in the sales price was that if the GST was hidden in
the sales price, it would be much easier for the government to
increase it later on. That is what they were saying in 1989. Today,
they dismiss this out of hand. They have reversed their position. So
they say one thing when they are in opposition and something else
entirely when they are in power.
Is that what Bill C-70 is all about? Is the Liberal government
proposing to hide the tax to make it easier to increase later on?
Later on meaning a few months from now, after the election, for
instance? Considering the selective memory of members of the
current government, we have every right to ask these questions.
And there is one I would like to ask especially: What can the public
expect now? The Liberals, the people opposite, talked about doing
away with the GST, but now they want to hide it. Can we expect
any increases in the GST in the months to come?
We also know that 76 per cent of Canadian businesses are against
hiding the GST in the price of goods and services, although the
opposite was implied just now. Personally, when I pay my bills, I
want to know where my money is going. I want to know the price
of the product or service. I also want to know how much I will be
sending the government and what it will do with it. I want the
government to be accountable. I am sure that my constituents agree
with me. Some members would do well to return to their riding and
talk to those who elected them to see whether they approve of this
bill.
(1655)
Rest assured of one thing. I am going back to my riding to talk to
the people. Every time I have the opportunity, I tell them that the
government reneges on its promises, that the GST will be hidden
7058
and that this government can do what it likes with it. It can do with
it what it likes.
I would also like to look at another aspect of this bill, the most
undemocratic element and one that, yet again, tramples the rights
of Quebecers. We heard endlessly during the referendum
campaign, and even afterward, that all Canadians were equal. This
bill provides a fine lesson in equality. Just a fine lesson.
Quebecers are denied the compensation paid the maritime
provinces. Is this the government's idea of equality among
Canadians? Is this what it is? One law for the maritimes, one for
Quebec. The Minister of Finance's election promise costs $1
billion. On top of it, they are calling this harmonization. I find this
very confusing.
Naturally, someone is going to have to come up with this $1
billion. Although Quebec harmonized the sales tax with the federal
government, it is going to have to pay $250 million. All the other
Canadians are going to have to make up the difference. Is it in the
public's interest to have double standards in government policies? I
think not.
When will the Minister of Finance inform us of the criteria
applying to his compensation package? This is very important.
When will the Minister of Finance show us that Quebec is not
entitled to this compensation? There must be a debate on this
question. Quebecers are entitled to this debate, because they will be
footing the bill.
I am telling you nothing new when I say that Quebec harmonized
its tax with that of the federal government. Quebec administers the
tax. Quebec acted very responsibly. Why then are Quebecers not
entitled to the compensation the federal government is giving to the
maritime provinces? I am wondering. The people opposite are
hiding behind power.
(1700)
Some day, the government will need to come up with an answer,
in terms of equality and not of campaign promises. We have proof
that this government's campaign promises are not being kept. They
did not keep their promise with this bill, where harmonization of
taxes was concerned, just as they did not keep their main promise
regarding job creation.
It is all very fine to pitch all sorts of figures at us, but when
everything is weighed out, it can be seen that job creation in this
country is stalled.
If the maritime provinces have additional costs to pay in
harmonizing their sales tax with the federal one, so does Quebec. If
the maritimes are entitled to compensation, to the tune of $1
billion, then Quebec too is entitled to compensation. Once again,
the Minister of Finance must show some fairness. Good for the
maritimes and their co-operation with the federal government, but
what about the other provinces?
The maritimes represent 15 per cent of the Canadian population.
We cannot, therefore, say that harmonization is in place from sea to
sea. The Minister of Finance is proposing a single tax to be
administered by a national revenue commission. This commission
would, for want of a better word, simply squeeze out the provinces.
Once again, and every time a bill is tabled here, provincial rights
are getting it in the neck. Here again, provincial autonomy is at
stake. As we well know, the people on the other side do not give a
hoot about provincial autonomy.
Since I have only a minute left, I would like to talk about the
famous tax on books. People will remember the Bloc Quebecois
debate here on the book tax. In Quebec, there is no provincial tax
on books, whether they are bought by students, self-employed
workers or anyone else. The sales tax does not apply to books in
Quebec, but here, with this bill, sales tax will apply. There are,
however, exceptions for certain institutions.
It is not true that the tax is 100 per cent abolished. Only clearly
designated institutions, such as municipalities and libraries, will be
entitled to deduct this tax. Canadians must not be taken for people
who will swallow just anything. They will not. This bill does not
eliminate the sales tax on books; only certain institutions will be
exempted. In my opinion, the mere fact of taxing books promotes
ignorance.
[English]
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, I am
pleased to participate in the debate on Bill C-70. I will be sharing
my time. I will speak for about 10 minutes. I will begin with a brief
summary of the new harmonized sales tax proposal.
(1705 )
Detailed agreements have been reached with three Atlantic
provinces to implement the new tax, effective April 1, 1997. The
agreements will include the replacement of the current federal GST
and the provincial sales tax systems with a single, combined value
added tax called the harmonized sales tax. There will be a
substantial reduction in the current combined rates in these
provinces, which are presently at 17 per cent, 18 per cent and 19
per cent. The rate will decrease to 15 per cent in the three
provinces. There will be a single administration of both federal and
provincial sales taxes. The national treatment of interprovincial
sales will ensure a level playing field for participating provinces.
This is good news for consumers and businesses in these
provinces. The new tax system will be simpler, more efficient and
7059
more equitable. It is a practical example of how the federal and
provincial governments can work together.
There will also be major benefits for consumers. With tax
inclusive pricing the consumer will know the full price of their
purchases before they get to the cash register. At the same time,
they will know from their receipt how much tax they are paying. Of
course the new sales tax rate will be substantially lower than the
current rate in those provinces.
The harmonized sales tax will be simple and straightforward for
business as well. Business will have to deal with only one tax, not
two; one set of forms, not two; and one tax administration, not two.
The previous speaker spent a lot of time talking about some
issues. I want to deal with those issues. I was hoping to talk more
about the simplicity of the system, but if there is one system, versus
two, the efficiencies are evident.
The member spoke at some length about a cover-up and a hidden
tax. Today I had the opportunity to tape a cable show for my
constituency and I spoke to one of the people at Rogers cable about
Bill C-70. I asked her how she felt about it. The young lady said to
me: ``What I really do not like is when I see the price on the
product and I go to the cash register and I have to pay a different
price''. That is very indicative of the big problem with the current
GST system. The price on the shelf is not the price consumers pay
at the cash register. Consumers are having difficulty making their
purchase decisions because they have to do some mathematics.
By way of history, members should be reminded that the GST
was not a brand new tax which somehow created these enormous
revenues for the Government of Canada to pay for services and
programs. It was a replacement tax for the former manufacturers
sales tax, which was a hidden tax. It was never seen at the
consumer level. It was applied at the manufacturing and production
level. It was included at a rate of some 12.5 per cent or 13 per cent.
It changed many times. I believe it started at 9 per cent and actually
got up to about 13.5 per cent.
That price was carried through. It was a very unfair tax. It did not
share the burden equitably and it was very unfair to the
manufacturing and processing sector. That tax generated some $18
billion.
We know that the former government, the Mulroney
government, brought in the GST to replace the FST. The current
GST, when it was brought it, was actually generating less revenue
for the government than the former FST. We have to think about
that for a moment. If the GST was generating less revenue for the
government than the former FST, that means, effectively, that
consumers under the GST are paying less tax than they formerly
were. However, they never saw it because the FST was a hidden
tax.
I had an opportunity to participate in the finance hearings. We
heard from 500 witnesses. We received over 700 reports and
submissions. We listened carefully to the numerous alternatives
people were coming forward with.
The finance committee reported to this place. It reported to the
finance minister about some of the options. When the members of
the committee came back with it they said: ``We cannot find a
better alternative and it is better not to change it just for the sake of
change, so let us work with this the best we can''.
(1710)
I remember writing a little piece for my constituents in which I
stated that on balance the proposed harmonized sales tax was not
ideal but it was the best possible under the circumstances. The
Mulroney government was unable to harmonize the federal and
provincial sales taxes and opted for a complex GST applied to a
base with numerous exceptions. It created a nightmare for
business, angered consumers and generated less revenue than its
predecessor tax.
I think most Canadians are clear why the GST has the problems
it does. It was in fact in your face taxation. I do not think Canadians
are opposed to paying taxes to ensure that Canadian programs that
we are provided with are properly funded such as health care,
seniors care and a whole host of things.
However, to assist the ordinary Canadian, one of the
recommendations that came back from all these cross-Canada
consultations was that the price on the shelf should be the price that
one pays at the cash register so that the purchase decision was not
fogged up by what taxes were going to be added. We knew exactly
what we were going to pay. We also said that we do not want to hide
the tax from the consumers, unlike what the prior speaker said, that
we are hiding the tax. No, it is tax included pricing but it clearly
states on the invoice that the consumer will see the amount of taxes
included therein.
I believe it is very important that the consumer have the
information and it is also necessary for accounting purposes. I
think the member was a little intellectually dishonest in presenting
a so-called cover-up.
The previous speaker also talked about poor Quebec. He also
admitted that in 1991 Quebec did harmonize its federal and
provincial sales taxes. However, he did not explain why. The
reason Quebec did this is that harmonization leads to a better
situation for Quebec businesses. I praise Quebec for having the
wisdom to harmonize the tax. Now there is an input tax credit on
the provincial component included in the combined tax. It means
there is a lower selling price that has been passed on to the
consumers. On top of that, it means it has a competitive advantage
over Ontario which has not harmonized. It also has a competitive
advantage in the export marketplace.
7060
The member well knows that although Canada as a whole has
had wonderful performance in terms of the export markets, the
critical issue is that Quebec has had better than average
performance in Canada simply because of the harmonization of
the tax. On that basis alone, Quebec should say ``we don't want
you to know about this because it is such an important adjunct
to the economy of Quebec''. It is helping Quebec businesses not
only in interprovincial trade but in the export business.
The question came up about this cost to the three maritime
provinces. I had to think about this one a bit. The previous speaker
somehow brought up a billion dollars. I considered that there were
no other provinces in this country that have a provincial sales tax
rate as high as they have in the three maritime provinces. We are
talking about a 12 per cent provincial sales tax. In my province of
Ontario it is only 8 per cent.
What do the members think that does to the ability of the
consumers to purchase? Their purchasing power has been totally
crushed by the burden of the provincial taxes.
The members will also know that the harmonization of the tax at
a consistent rate facilitates interprovincial trade and makes the
whole situation a good foundation to work with Quebec and
Alberta, which has not sales tax, and I am sure Ontario.
I have no hesitation in supporting Bill C-70. This is a move in
the right direction to make our tax system simpler, easier to
administer and fairer for consumers and businesses.
(1715 )
The Acting Speaker (Mr. Milliken): Order, please. Before I
proceed with questions and comments, it is my duty, pursuant to
Standing Order 38, to inform the House that the question to be
raised tonight at the time of adjournment is as follows: the hon.
member for Moncton-Forestry.
[Translation]
Mr. Philippe Paré (Louis-Hébert, BQ): Mr. Speaker, I have
listened carefully to the remarks of our colleague across the way. I
understood what he was trying to do. Unable to explain the
difference between what the red book said and the government's
record on the GST, he went into a defence of simplification and
harmonization.
There is not a member in the House who has questioned the
importance of harmonizing and simplifying taxes to make things
easier for business. Our colleague across the way is not
contributing to our understanding, because this is not what the
debate is about. The Liberals are dragging it in that direction to
avoid the real questions that should be asked, which the member
for Chicoutimi brought out earlier.
In the red book, they said: ``We hate this tax and we will scrap
it''. Now, instead of scrapping it, they are harmonizing it. This
way, things are so much nicer, it is less painful, and it brings in
more money. They also said: ``It should not be hidden''. Now they
are saying: ``Magicians that we are, we have pulled it out of thin
air, we have made it vanish, and now we are going to make it
invisible''.
But if simplification and harmonization are as wonderful as all
that, why did the Atlantic provinces need to be paid $1 billion to go
for the deal? The aim was to hide the tax in the price of food,
medicine and books for educational purposes.
[English]
Mr. Szabo: Mr. Speaker, it is very important for the member and
for Canadians watching to hear again from page 22 of the red book.
Notwithstanding what the member has said, this is what the red
book did say and what I ran on in the last election. It said:
In the first session of a new Parliament, a Liberal government will give the
all-party Finance Committee of the House of Commons a 12-month mandate to
consult fully with Canadians and provincial governments and to report on ways to
achieve tax fairness, simplicity, and harmonization. In particular the committee will
be mandated to report on all options for alternatives to the current GST. A Liberal
government will replace the GST with a system that generates equivalent revenues,
is fairer to consumers and to small business, minimizes disruption to small business,
and promotes federal-provincial fiscal co-operation and harmonization.
That is what was promised and that is exactly what has been
delivered.
Mr. Jay Hill (Prince George-Peace River, Ref.): Mr.
Speaker, everyone is well aware of what it says in the red book. As
I understood it, the question that was put to the hon. member was
not what the red book said on page whatever it is, but what the
Liberal candidates were saying during the last election.
That is far different than what it says in the red book. They can
deny that until they are blue in the face. Reality has caught up with
them. They know quite well what was said by a number of them,
what was said by their leader about the GST and they certainly
were not talking about harmonizing. They were talking, as the hon.
member from the Bloc has said, about getting rid of it. They were
talking about abolishing it. They were talking about killing the
GST. That is what they talked about during the election campaign
and Canadians know that. They will remind these candidates of it I
am sure in the next election.
What I found particularly interesting about the hon. member's
intervention was his stating that somehow he feels Canadians want
a hidden tax. When Canadians go to the supermarket or to the
department store and are looking at a price tag on some item, they
want that to be the total price. That is what I understand he said in
his remarks.
I have not found those Canadians. I have found that Canadians
are so incensed with the GST, they want to know how much GST
they are paying. When they go to the till they want to know that the
item costs X and there is so much PST and GST attached to it. They
7061
want to know how much they are contributing to the provincial or
the federal government.
(1720)
I would like the hon. member to reiterate, if possible, if he
honestly believes that the majority of Canadians want a hidden tax.
That is not my understanding.
I have spoken to a lot of Canadians about this issue. They want to
know how much tax they are contributing to the two levels of
government.
Mr. Szabo: Mr. Speaker, one of the things that should be noted is
that the Reform and the Bloc parties have not said what they would
do. The role of the opposition is to deliver blows that would
tenderize a turtle.
They continue to hurl things like scrap and abolish. But they
know very well that $18 billion of revenue to the government
cannot be thrown away. It goes straight to the deficit. That would
totally destroy jobs.
Focus groups were conducted and Canadians have expressed a
strong preference to know the full price of goods and services in
advance of their purchase. That is what is proposed in the
legislation and that is what will happen. However, they will know
what tax is included in their purchases. It will be stated clearly on
the bill of sale they receive at the cash register. That is exactly how
it will happen.
Mr. George S. Baker (Gander-Grand Falls, Lib.): Mr.
Speaker, I have just a few words on this. After the excellent speech
by my hon. colleague, I want to add a few words to what my hon.
colleague said.
When he quoted from the red book from which the Bloc and the
Reform parties keep quoting, the hon. member quoted exactly
correct. But he forgot one thing in the middle of his quote. In the
middle of the paragraph in the red book it says the committee will
be mandated to report on all options for alternatives to the current
GST. That committee met and a member of the committee from the
Reform Party spoke in the House this afternoon.
It is interesting what the spokesperson for the Reform Party
pointed out. He pointed out that the Tories and the Reform
members of the committee wanted in their recommendations to tax
food. The Reform Party of Canada, according to their
spokesperson, according to their report, wanted to tax prescription
drugs.
Mr. Thompson: The truth now.
Mr. Baker: Yes, I heard that here in the House this afternoon
from the spokesperson for the Reform Party. Of course the Liberal
government said: ``Absolutely not. We are not going to do that''.
So they carried through with the second portion of what was said in
the red book.
Well, members of the Reform Party and the Bloc stand here
today, talking about being honest with the Canadian people. It is
interesting that Thursday last week, my hon friend from Don Valley
North stood in the Chamber and introduced a bill to put some
restrictions on the banks. What did the Bloc say? ``Oh, no, we
cannot do that. Oh, no, we cannot interfere with the banks''. That is
the Bloc for you. Then the Reform Party say: ``Oh no, you can't do
that. You can't interfere with the profits of the banks''.
(1725)
Mr. Bodnar: They are not making enough.
Mr. Baker: They are not making enough. Incredible isn't it
when each one of the banks are reporting profits over $1 billion.
The CEOs are going to get $1 million in performance bonuses. The
Reform Party and the Bloc stand in this Chamber as the two
opposition parties and what do they say? ``Oh no, we can't agree
with members of the backbench'' even though they are performing
a function for the people of Canada.
Do you know what they are doing, Mr. Speaker? They are
making the government accountable for the ordinary citizens of
Canada, something that the official opposition should be doing.
What does the Reform Party want to do with the payroll taxes of
Canada? Would everyone like me to read it out?
Mr. Ramsay: Read it.
Mr. Baker: I will read it out. Here is the Reform Party of Canada
on payroll taxes. What a dandy one this is. On page 45, for all the
employers and employees in Canada, the Reform Party's budget.
Mr. Thompson: Now the truth.
Mr. Baker: The hon. member said ``the truth''. Here is the
taxpayers' budget.
The Acting Speaker (Mr. Milliken): Order. I know the House
appreciates the enthusiasm of the hon. member for Gander-Grand
Falls but he knows also the rules that he must not use
documentation as a prop. He is certainly entitled to quote from the
material but he should be careful not to wave it around too much. It
upsets some members. I appreciate that the hon. member will
follow the rule.
Mr. Baker: Absolutely, Mr. Speaker. In other words, I will make
sure I quote from it but I certainly will not show it so that anybody
will know what I am quoting from.
Here is what the Reform wants to do with payroll taxes. Apart
from on page 45 ``having a benefit structure requiring two weeks of
work for one week of benefits'' here is what the Reform says. It
says that it wants to ``ensure that savings from reform of UI
translate into deficit elimination''. The Reform Party recommends
``the establishment of a permanent reserve fund for UI until the
budget is balanced. Funds from this reserve would be applied
against the deficit. After the budget was balanced this fund would
7062
remain to balance revenue and expenditure fluctuations under UI
throughout the economic cycle''.
It goes on to say: ``Any additional savings from the restructuring
of UI after the deficit has been satisfied'' after this huge fund has
built up, then Reform says: ``savings will be passed on to
employees and employers in the form of a reduction''.
Imagine using unemployment insurance premiums not only to
completely retire the deficit, not only to satisfy the debt of this
country but then to build up an additional fund and somewhere
down the road they are going to pass along a saving to an employer
or an employee.
A tax is a tax. A tax is a tax is a tax. If it is on the employer, if it
is on the employee, a tax is a tax is a tax. Basically what we have
here are the opposition parties in this Chamber who do not like the
record of this Liberal administration. No-
The Acting Speaker (Mr. Milliken): Order. The hon. member
for Prince George-Peace River on a point of order.
Mr. Hill (Prince George-Peace River): Mr. Speaker, I would
respectfully request that if the hon. member for Gander-Grand
Falls is going to quote from Reform members that he do it
accurately.
The Acting Speaker (Mr. Milliken): The hon. member knows
that is not a point of order.
Mr. Baker: Mr. Speaker, I was going to go on to something else
but the hon. member wants me to quote some more. Let me go back
to the situation where they want to drive up the payroll taxes in
Canada, where they want to tax food, where they want to tax
prescription drugs. We will leave that for a moment and we will go
to where they are suggesting they want to save money.
(1730)
Now there is undoubtedly a way of reducing taxes if you save
money. How do they propose to save money? The Reform Party of
Canada matches the Tory Party of Canada. In their policy
statements, both parties tell the Canadian people how they are
going to raise some revenues, not just by taxing food and
prescription drugs but also in all of their policy statements they are
going to attack medicare.
For the record, they are going to say as they do here that
medicare is not only intolerably expensive, it is undesirable.
An hon. member: That's garbage.
Mr. Baker: Garbage. I am not supposed to show the taxpayers
budget. There it is.
Notice that in their conventions the Tories joined Reformers in
saying that the Canada pension plan should be privatized so that
people can put money in the bank and then draw their own interest
from it. They could have their own plans, as the Government of
Canada could afford neither the Canada pension plan nor medicare.
With a record like that, of increasing payroll taxes, of demanding
a tax on food and prescription drugs, of doing away with medicare
and the Canada pension plan, is it any wonder that the Tories were
wiped out and the Reform Party is headed toward a disaster in this
next election along with the Bloc?
[Translation]
Mr. Gérard Asselin (Charlevoix, BQ): Mr. Speaker, first of all,
I will try to comment and ask a few questions, but perhaps not with
the same enthusiasm as the hon. member who just spoke.
This reminds me that the same member was just as eager when
the Conservatives adopted the GST here in the House of Commons,
but he was eager to vote against the GST. He devoted the same
energy to preparing the Liberal government's red book which was
supposed to abolish the GST.
The hon. member accuses the Bloc Quebecois of being less than
honest. On the contrary, we only want to ask the Liberal Party to
abide by its promises, to be transparent about what was said in the
red book. You know as well as I do that the Liberals did a lot of
wailing and hand wringing here in this House. They voted against
the GST, which was proposed by the Conservatives and passed by
the House under the Conservative government.
Those same Liberals formed a committee, the finance
committee, on which I sat for one year. The finance committee is
chaired by a Liberal member, the hon. member for Willowdale. For
a number of months, I would say for almost a year, the Liberal
government led Canadian citizens from Quebec to Vancouver to
believe that there was a possibility the government would abolish
the GST.
Of course the government wanted to abolish the GST to bring
back the old tax, the hidden tax on goods and services. Today's
notion of putting a tax on drugs, health care, food and books-the
Minister of Finance will legislate a tax on books-did not come
from the Reform Party. It came directly from the Liberal Party.
I sat on the finance committee for one year, and the chairman
asked witnesses whether they would accept a tax that was hidden in
the price of a product. It is a vicious circle. It is not very honest to
give witnesses the impression it would cost less. The aim was to
7063
hide the tax in the price of food, medicine and books for
educational purposes.
(1735)
Naturally, the idea does not originate with the Reform Party or
the Bloc Quebecois. I have to say before this House that the idea
comes from the Liberal Party. Of course, in view of its
unpopularity, the Liberal Party backed off. The proof that the
Liberal Party failed to meet its obligations, that it was not
transparent in what it said in the red book is that the Deputy Prime
Minister was forced to resign, because she had made a commitment
to abolish the GST within the first year of her mandate. She then
spent government money getting re-elected.
Today, the member's knickers are in a twist and he wants us to
believe that the Liberal Party is the great defender of the GST,
when it never had the option of withdrawing.
The Acting Speaker (Mr. Milliken): Order, please. The period
for questions and comments lasts five minutes. As there is only one
minute left, the hon. member for Gander-Grand Falls can
respond.
[English]
Mr. Baker: Mr. Speaker, Bloc members in this Chamber are on
the record of being in favour of the banks' never being restricted.
As members of the finance committee they fell over backwards,
tripped over themselves, bent over backwards and said come on
with some more tax cuts for the wealthiest people in this country as
proposed by the Senate. The hon. member was at the finance
committee. On the bifurcation of trademarks, imagine a 50 per cent
reduction to American companies doing business in Canada. Why
did Bloc members put forward that position? I will refresh their
memories. They said ``you know, we have a great many people who
are interested and we are in favour of anything that involves tax
reductions for the biggest corporations in this country as long as
they are from the United States''.
There were three separate tax measures in Bill S-9 and this hon.
member stood up in this Chamber and said ``come on, let's have
some more tax breaks for the biggest corporations in this country''.
[Translation]
The Acting Speaker (Mr. Milliken): The period for questions
and comments having expired, we now resume debate.
Mr. Asselin: Mr. Speaker, I rise on a point of order.
It is entirely dishonest on the part of the member, who knew he
would be the last to speak, to invent and say just anything in this
House.
The Acting Speaker (Mr. Milliken): The hon. member knows
he is simply prolonging the debate, which is not permitted as a
point of order. Resuming debate.
[English]
Mr. Myron Thompson (Wild Rose, Ref.): Mr. Speaker, I
understand I have about 10 minutes.
I would like to make sure that everybody understands that the
member from Gander-Grand Falls twice earlier today said he was
not speaking. About 15 minutes ago he also told me he was not
going to speak to this issue, but he did. I guess that goes to show
how much we can trust what he says. He does not tell a lot of the
truth and he certainly missed out on a lot of it in his speech.
I would also like to point out that on some of the points that were
brought forth earlier today by me, there were some questions as to
how come I would be making such statements. I note that some of
these comments that were made earlier are based on the Retail
Council of Canada, a study from Ernst & Young which I understand
was put to work by this government. It estimated that a mid-size
national chain with 50 stores in the Atlantic provinces would pay
up to $3 million in one time cost starts and $1 million a year to
comply with this tax that we are talking about.
This information also comes from the Halifax Chamber of
Commerce, the Canadian Real Estate Association, the Greenberg
Stores management and company. All of these that are objecting
strongly to this particular legislation I think are very reputable.
(1740 )
During the 1993 campaign in the riding of Wild Rose, the words
scrap, kill, get rid of the GST were stated loud and clear by the
Liberals. I think that was true all across the land. There might have
been a couple of ridings that were missed but it was pretty broad.
Of course, since the election we have all been asked to memorize
page 22 from the dead book which is supposed to represent what
the Liberals meant and not what they said. We have heard all kinds
of comments regarding their campaign, for example, ``sometimes I
shoot from the lip'' and ``gee, we made a mistake''. However, that
does not overlook how the campaign went.
Let us look at page 22. One paragraph states:
The GST has lengthened and deepened the recession. It is costly for small
business to administer and very expensive for the government to collect. And the
GST has fallen far short of its promised revenue potential-
I think they have corrected that revenue potential. The amount of
extra taxes they are going to grab after this change will make up for
that loss.
-partly because it has stimulated the underground cash economy-.
7064
I really wonder if any Liberal member on that side of the House
could stand up today and say Bill C-70 is really going to address
the underground cash economy. It will not touch it. In fact, it will
probably get far worse.
The red book goes on to state:
A Liberal government will replace the GST with a system that generates
equivalent revenues-
It will not be equivalent. It will be quite a bit more.
-is fairer to consumers-
Consumers are not agreeing with that. I understand there is a
petition with 16,000 names attached to it from consumers in the
Atlantic provinces who are opposed to this whole idea.
-minimizes disruption to small business, and promotes federal-provincial fiscal
co-operation and harmonization.
Let us take a look at one statement regarding small business in
this Liberal dead book: ``It is costly for small business to
administer and very expensive to collect''. Will this harmonization
answer this statement? What do businesses say? First, it says this
new idea will be a nightmare to administer. Three major retailers in
Atlantic Canada have stated that their net annual retail deficit will
total $27 million once harmonization is implemented.
One private retailer in the Atlantic region was contemplating
opening two new stores in 1997 but has decided against it as a
result of the increased costs associated with this harmonization.
The Halifax Chamber of Commerce predicts that the
harmonization will push up new house prices by 5.5 per cent. As
well, it is going to force municipalities to raise the property taxes.
The GST is responsible for the closure of five Greenberg stores
and the loss of many jobs in five major cities in the Atlantic region.
They say that if this harmonization comes in they are
contemplating that there is a 50-50 chance that it is going to close a
lot more stores because of that. This is what the businesses are
saying, not what Reform members are saying.
When businesses are saying this and we have 16,000 names on a
petition, I wonder why there is not outrage by these Liberal
backbenchers from the Atlantic provinces, or does that mean they
are approving the loss of jobs? I find that strange because there is a
bit of an integrity problem here. I remember when the Liberals ran
on the promise of jobs, jobs, jobs. Harmonizing the GST in New
Brunswick, Newfoundland and Labrador and Nova Scotia will kill
jobs, jobs, jobs. That is what a lot of businesses are claiming. In
fact, the stores that are closing, those that are contemplating
closing and the ones that would not open up are killing jobs.
If the Liberals want to maintain their integrity which east coast
MP is going to resign and run in a byelection? Which east coast MP
will defend their failure to honour their promise by taking it back
to the people at a cost of $500,000? Which MP has the integrity?
Our guess is none.
(1745)
The Fraser Institute states that tax burdens on the Canadian
economy remain the single most significant barrier to economic
acceleration and job growth, the single most significant barrier.
The harmonization of the GST will increase the tax burden on the
people of three Atlantic provinces.
In the first nine months of 1996 Statistics Canada stated that
retail sales increased only 1.4 per cent. Every economist states that
in order to create jobs domestic retail sales must increase, yet this
legislation will reduce retail sales in the Atlantic provinces which
sign the agreement.
Statistics Canada shows that retail sales in Newfoundland
dropped 3.8 per cent. In Nova Scotia they dropped 3.2 per cent and
in New Brunswick they dropped 1.4 per cent, yet the Liberal
government wants to further harm retail sales at a time when retail
sales, according to economists, could create jobs.
The one Atlantic province which refused to harmonize, Prince
Edward Island, is showing an increase in retail sales and a 7.5 per
cent drop in employment insurance payments. Newfoundland had a
13.2 per cent increase in employment insurance payments and will
be hard hit by the increased tax grab. Is the economic growth in
P.E.I. not telling the Liberals anything about harmonization? Did
the recent provincial election not tell them anything? Their Liberal
counterparts, most of whom were anxious to come on board on
harmonization, went bye-bye. When the election was over, those
who opposed harmonization were victorious.
A Fraser Institute study shows that Canada has the worst tax
record of any G-7 country. Taxes are a real problem for this country
and the Liberals are a major problem behind the taxes.
How many families must starve, must feel the anguish of
break-up and disintegration? The Liberals know that economic
destruction of the family unit causes the greatest injury to families,
yet they carry on with a policy which will harm families. Even
families that through good fortune, not Liberal logic, can keep jobs
will suffer under this legislation.
The price of children's clothing will increase during the coldest
months of the year. The price of electricity and home heating fuel
will increase. The cost of transportation for workers to get to work
will increase because the price of gas will increase. Can the
Liberals not give the taxpayers a break?
Property owners in the Atlantic provinces signing on to the
harmonization plan have all stated that renters will have to pay
7065
higher rents. Does the Liberal government enjoy putting mothers,
fathers and children into the snow because of a broken promise?
Increased costs mean that private sector investment in the
Atlantic provinces signing on to harmonization will be curtailed.
Why would someone invest when they know that their direct costs
will increase, when consumers will restrict purchases and when
there will be less in retail sales?
Ernst & Young, the government's accounting firm, stated that
national chain stores of 50 branches will pay $3 million in set-up
costs and $1.1 million per year more than stores in provinces
without harmonization. If you were going to set up a business,
where would you go?
I wish all the people of the Atlantic provinces a Merry Christmas
this year. Because of harmonization, next year they may have no
job or no money to enjoy the season.
I would like to put out a Pinocchio alert to all Canadians: be
careful when a Liberal opens his mouth.
The Acting Speaker (Mr. Milliken): When Bill C-70 is
considered again the hon. member will have eight minutes
remaining in his time.
It being 5.49 p.m., the House will now proceed to the
consideration of Private Members' Business, as listed on today's
Order Paper.
_____________________________________________
7065
PRIVATE MEMBERS' BUSINESS
(1750)
[English]
Ms. Albina Guarnieri (Mississauga East, Lib.) moved that
Bill C-321, an act to amend the Criminal Code and the Corrections
and Conditional Release Act (cumulative sentences), be read the
second time and referred to a committee.
She said: Mr. Speaker, I will be sharing my time with the
member for Ontario.
For the second time this year I present a bill which offers
Parliament the opportunity to correct one of our justice system's
most jagged obscenities. This bill, now called Bill C-321, asks that
Canada stop giving volume discounts to its rapists and murders
through concurrent sentencing. My bill is about reasonable and
required change that every major victims group in the country is
demanding with the support of most Canadians.
Bill C-321 has as its purpose three objectives: to reduce our
inhumanity to the families of victims, to restore some truth in
sentencing, and to stop gambling away lives on the chance that a
multiple murderer or serial predator will not attack again.
This debate is about competing interests. It is about the interests
of the families of victims who need the peace only time can offer
to salvage the remnants of their shattered lives. It is about the
interests of victims who have every reason to fear the release of a
predator and who can never escape the endless parole process that
annually threatens to unleash the chained savagery of their
assailants. These interests compete with the far more lucrative
interests of the predator protection industry which regards each
predator as a perpetual revenue generating opportunity.
Since I reintroduced this bill I have sadly been visited by too
many victims of crime who have now come to realize that they are
also victims of Parliament. Some had lost children, some had lost
parents, some had lost spouses, but all had lost faith in the courts,
lost faith in parole boards and, most of all, lost faith in Parliament.
They all went through trials where the focus of the defence was to
weaken their resolve, to humiliate them, to wear them down in an
effort to reduce the number of charges or perhaps provoke a plea
bargain. Every survivor endured months, even years at the hands of
our courts only to find that the predator convicted of the murder of
their child, spouse or parent would serve not a single day in jail for
that crime. Concurrent sentencing always applies. Judges have no
flexibility. The lowest price is the law every day.
Victims come to court with a naive sense that they will find
justice there but leave with the reality that their family's tragedy is
of virtually no consequence in the sentencing equation. They carry
on their lives in helpless outrage, left to pick up the pieces of their
dismembered future. But their suffering is far from over. Every
parole hearing, every 745 hearing will confiscate any peace of
mind they may have regained. Some victims cannot cope, they
cannot work, they cannot sleep. The strain tears apart what is left of
their families.
Seventy four per cent of parents of murdered children separate;
100 per cent of these families have been sentenced to life
imprisoned by injustice, revictimized by the inhumanity inflicted
by a justice system driven by billable hours.
But some victims do muster courage and draw purpose from
their personal horror by trying to change the system which treated
them with such cruelty and disregard. They journey to Ottawa
thinking that MPs in Parliament will listen and spare future victims
from the barbed face of Canadian justice. However, they soon
realize that victims are widely regarded here as a meddlesome
nuisance to the lucrative business of justice and watch how their
every effort and initiative is stifled by process or hidden
opposition.
7066
(1755)
Victims know that some members of this House mock them as
the walking wounded or try to trivialize their efforts by branding
them as a victims industry. They endure the contempt of those in
this place who think themselves far too sophisticated, far too
educated to be swayed by any tragedy caused by their own
resistance to change.
The casualties of our inaction continue to mount. Earlier this
summer not one but two multiple murderers were free on parole in
Mississauga. Concurrent sentencing had given these repeat killers
volume discounts for their crimes.
For John Lyman Kehoe, the second child he murdered did not
affect his sentence so he was free in time to create yet a third
victim. On July 2, just five months ago, Kehoe and another paroled
multiple murderer ambushed a real estate agent, Wendy Carroll,
slashed her throat and left her for dead. She survived, but no thanks
to the justice system or the parole board which opened the cages of
her assailants.
Wendy Carroll's life was nearly erased because our sentencing
system erases victims. Had John Kehoe served a consecutive term
of parole ineligibility for the second child he murdered, as Bill
C-321 prescribes, he would not have been free to prey on Wendy
Carroll or anyone else.
Wendy Carroll writes: ``Both of these two animals murdered
twice before yet only served one 12 year sentence each. This is
justice? Where is the justice for the two dead children, the two dead
adults and me? I would like someone to explain to me how
rehabilitated they both are. I have many scars and permanent
injuries to show otherwise''.
The only answer we have for Wendy Carroll is that she was part
of the annual sacrifice of victims that is necessary to sustain our
parole system and all the fees it generates. On average a person a
month is murdered by a paroled criminal-a person a month. If a
children's toy had that record it would be banned.
The National Parole Board considers its record, its annual
slaughter, to be a success story. I did not have to do any research to
find a case where a multiple murderer was paroled early and
attacked another victim. The place where it happened was a five
minute drive from my house and it happened just two weeks after I
resubmitted this bill.
The victim cannot understand how two predators who have been
convicted of killing four people between them could have been set
free to attack again. Their cages were flung open by volume
discounts applied to their sentences which disregarded all but the
first victim and left them eligible for parole in half the time. Their
parole was not denied for long by the National Parole Board.
Why did each of these savages deserve to have his second victim
reduced to a mention not worthy of an additional sentence? Why
were these predators considered safe to be placed in our
communities?
I see your signal, Mr. Speaker. I am going past ten minutes. I am
taking the remaining time.
We do not bother with investigations anymore. It is simply a
matter of routine for dangerous criminals to be released and for
new victims to be savaged. Bill C-321 does not ask the parole board
to be any less irresponsible. It does not increase the penalty for any
crime. What it asks for is penalties that currently apply to each
murder or rape conviction to be served and not be written off as
part of the bulk rate for carnage.
(1800)
A little truth in sentencing, a small measure of public safety, is
all that is asked. Perhaps it may also gently reverse the cheapening
of life that continues in our courts.
It is the height of irony this week that we will commemorate the
slaughter of 14 women by Marc Lépine seven years ago. The irony
is that if Marc Lépine had not killed himself he would have been
eligible for parole in perhaps as few as three years from now.
Denis Lortie was released in just 11 years for machine-gunning
three people to death. How much longer would Lépine have served
and why is it that some MPs who rail against such tragedy also
support volume discounts for the cause?
Wendy Carroll wrote: ``For some reason our politicians have
decided to grant rights to violent criminals who have taken every
right away from their victims. What are they thinking? How many
people must endure the horrific and extremely painful experience I
did in fighting criminals like these for my life? How many more
innocent people must die before Parliament decides to make some
changes?''
Perhaps the subcommittee on Private Members' Business holds
that wisdom or perhaps can issue Wendy Carroll with a medal, with
a clasp for surviving Parliament's negligence.
I suspect no fact can illustrate the need for Bill C-321 better than
the tragic murders of Arnold and Donna Edwards. They were
murdered when George Lovie was released immediately after
assaulting their daughter. Today the family can look forward to
parole and 745 hearings to start in just 10 years. After that time
they will have to be constantly on guard in case Lovie is released
and hunts down the rest of their family. They are in that situation
for one reason. Lovie got a volume discount, sentenced as if he had
killed only once and committed no other crimes. Had Bill C-321
been in place at that time, he would have received at least 50 years
of parole ineligibility, giving the surviving members of the
Edwards family the freedom to rebuild their lives without parole
hearings, without fear.
After the trial and the sentence the Edwards family were naive
enough to think that Parliament would change the system just
because of a few more casualties. Don Edwards, the son of the
victims, wrote in a published article: ``Letters by family and
friends demanding change to the justice system have been sent to
three Prime Ministers, cabinet ministers, MPs, MPPs, police, the
Ontario Complaints Commissioner. Some have responded and
7067
others have not. In follow up letters some MPs could not even spell
my parents' name correctly. Sad,'' Edwards said.
He continues: ``Family and friends now realize politicians and
their aides have mastered the games of pass the responsibility,
don't look to me for change, let's talk around the issue and who
cares, convicted murders I'll protect''.
Edwards' effort spawned a 100,000 name petition supporting a
private member's bill, Bill C-330, presented by the member for
Hamilton West. Edwards was in the visitor's gallery as one MP
denied unanimous consent to have that bill made votable. History
repeats as the tragedies mount. Today another MP is here waiting to
deny unanimous consent. It is part of the system, part of the
strategy to forever frustrate every effort for change.
Debbie Mahaffy spoke for all victims when she wrote to all of
us: ``Shame on you all for adding to our pain and for your lack of
humanity, your lack of will to act appropriately and your lack of
wisdom to make a difference''. Debbie Mahaffy is here in the
gallery today with other victims to see for themselves which MP
will defend obscenity and uphold volume discounts for the next
Clifford Olson or Paul Bernardo. They have come in the faint hope
that the contempt victims now expect from their MPs will not rise
again to protect the predators who destroyed their lives.
(1805)
I ask again for the unanimous consent to declare Bill C-321 a
votable item.
The Acting Speaker (Mr. Milliken): Is there consent?
Some hon. members: No.
The Acting Speaker (Mr. Milliken): There is not consent.
Mr. Dan McTeague (Ontario, Lib.): Mr. Speaker, I want to
share my frustration with the hon. member that several members,
including the member from Erie, did not see fit to make this a
unanimous issue.
Politics aside, at the end of the day we must begin to try to assess
the impact that the judicial system and the parliamentary system
seems to be working toward. It is one of forgetting those who have
suffered at the hands of those who do harm to many others. The
process only allows me some four and a half minutes to speak is
one that I would reserve for a later time to comment on.
I begin by saying how important it is that the House hear this
message of not giving volume discounts to serial murderers. I can
assure the House that as long as I am a member I will continue to
work with the hon. member for Mississauga East to make sure that
whether this is a votable item or not, the House will have to
consider this matter sooner or later.
Many of us on the government side do not believe in capital
punishment. I am one that certainly believes in that. I do not
believe in capital punishment for a number of reasons and I
campaigned on such. Everything else must be considered in the
name and the sake of the victim if we are to give any consideration
to the pain which he or she has suffered. The pain which their
relatives, friends and loved ones will continue to have to endure for
the rest of their lives is everything compared to the punishment of
putting these people in a correctional facility where they belong,
where the punishment for the crimes they have committed are
actually served in a way that is consonant with the seriousness and
the gravity of those crimes.
In the short time that is given to me and to those Canadians who
are tonight watching this debate, I say to them very solemnly that
this Parliament will not end this evening mistreating this issue. As
members of Parliament from right across the country we believe
that the victim is important in the system. What the hon. member
for Mississauga East has said before and said again this evening,
notwithstanding the fact that the committee has not made this a
votable item, is something that I think squares with even the most
decent of Canadians who does not believe in capital punishment.
Let us not categorize this as a right or left issue. Let us
categorize this as a matter of fundamental justice, of justice that
deals with the equity, the weight of someone's crime, and the need
to ensure that crime is met with sufficient retribution.
When I say retribution, it is not meant in a sense of saying
forever and ever and that the person who is in jail should not count.
But it is laughable when 10 people can be murdered and that
individual only serves one life sentence. If I were to go to a grocery
store to purchase 12 items I would have to pay for 12 items, not one
item. What the hon. member has spoken to very eloquently is the
need to honour the victims of violence, not those who have hate in
their heart and would manifest that by the outward destruction of
another life. We must ensure that there is effective punishment.
Yes, we can talk about theories of deterrence. We can talk about
theories of recidivism or retribution, but I do not want to get
confounded in some ideological argument. I want to deal with the
crisis that exists in the country today. It is a crisis based on the
recognition that those who commit serious crimes in far too many
instances get away with proverbial murder.
I want to acknowledge the presence today in our gallery of
Debbie Mahaffy, only one example. This House has an obligation
to respect those who carry the burden of their loved ones.
7068
(1810 )
The hon. member's attempt to have Bill C-321 passed today may
not have succeeded. However, as a young member of Parliament
and one who believes he has a good chance of coming back after
the next election, God willing, although I see some members
shaking their heads over there, let me assure the House that the
issue will come back again and again. Why? Because Canadians
want it and because we should honour the memory of the victims of
senseless crimes.
Bravo to the member for Mississauga East.
[Translation]
Mr. Michel Bellehumeur (Berthier-Montcalm, BQ): Mr.
Speaker, I too will begin by congratulating the member for
Mississauga East on this bill. It is evidence of her concern.
However, I think that we must not ignore existing jurisprudence
and legislation. There is no doubt that this sort of discourse sells
extremely well. When particularly notorious cases are cited and we
hear someone say: ``I, as a member of Parliament, am going to try
to amend the act, so that an individual serves a longer sentence'',
this goes over very well, particularly when the examples given
have been in the headlines for weeks, if not months or years.
While I have a great deal of compassion, I think it is necessary to
at least look at what actually exists, both in the Criminal Code, and
in case law. We must not pass a bill because it sells well politically,
in order to score political points. We must do more than that,
particularly when it comes to parole.
I do not mean to say that the parole system is fully meeting the
general public's expectations right now. What I am saying is that
there should perhaps be a very serious examination of the parole
system. Should this be done by a royal commission, or in
committee? I really do not know, but there should certainly not be a
piecemeal reform of the parole system.
Although the member's intentions are good, I think that her bill
is a piecemeal approach to reforming a system that needs a
complete overhaul, a very close examination.
It is a bill that is very brief, and very easy to understand. Clause
1 of Bill C-321 states that a sentence imposed for sexual
assault-which comes under section 271 of the Criminal
Code-shall be served consecutively to any punishment imposed
for an offence committed at the same time, and consecutively to
any other sentence already being served by the person at the time of
sentencing.
This clause may seem rather simple at first sight. It may seem
rather simple when first read, but its interpretation might modify
the objectives set by the hon. member. For example, a judge
already has powers and can, at his discretion, impose consecutive
or concurrent sentences. Sentencing judges already have the power
the hon. member would like to include in the Criminal Code.
There is discretion. Certainly, it is not very attractive to defend a
murderer, but we must not go overboard here, either. Another
member said: ``If I go to the store and buy ten items, I have to pay
for all ten items'', and went on to compare that situation to that of a
person committing ten murders and being sentenced for just one.
That argument is spurious. It is a gratuitous statement which does
nothing to help the cause of the hon. member for Mississauga East,
because it deflects the real debate, it exaggerates, and it is
inappropriate in a debate of this kind.
Let us say that someone has committed 10 murders. The judge
has a head on his shoulders and, in sentencing a multiple murderer,
he will take everything into account.
Mr. Speaker, I am sure that you will agree with me that making
such statements in this House only deflects the real debate and
undermines any credibility they may have. At the present time,
judges have the discretion to impose consecutive or concurrent
sentences.
(1815)
Between you and me, even if a prisoner is sentenced to 255 years
in prison, it will not make much difference in the end, because he
will not live any longer just because he is in prison.
Similarly, I wonder what impact this bill would have on the
Young Offenders Act. Will the same system be used? I think Bill
C-321 would not be applicable under the Young Offenders Act.
And I think that may indirectly be what the hon. member wanted to
achieve.
Regarding clause 2, the hon. member is well intentioned, and I
understand her position. However, her own government has
adopted legislation along similar lines that sets similar conditions
and is intended to extend the period of eligibility for parole. This is
a recent bill. The official opposition even applauded the advantages
of this bill, although we did think it was a little too much to the
right, that it tended to respond more to demands made by the
Reform Party than to public demand.
As the official opposition, we nevertheless supported major
elements of this bill. We wanted to introduce amendments,
amendments were made, and in the end the bill was passed. But I
do not think the government should adopt further legislation in this
respect.
Sure, anyone can see there are problems with the parole system.
There are problems. Some day, the official opposition will demand
that the government appoint a royal commission of inquiry on the
entire parole system, especially since the Auditor General of
Canada has raised serious doubts about public security. I think we
could conclude that the parole system should be investigated by a
7069
royal commission of inquiry, because the public's security is at
stake.
I hope that the members who support the hon. member's bill will
try to convince the government when the official opposition makes
its formal request. I hope the hon. member will rise in caucus to say
that the Bloc Quebecois is right to ask for a royal commission of
inquiry on the subject. A long term solution should be considered.
We must try and find a solution today, but not in a piecemeal
fashion, not just to respond to lobbying by people who had a very
traumatic experience.
I do not want to give the impression I have no compassion for
these people. I do. I understand it must be very painful for them.
However, we cannot base a bill on particular cases, put faces to
victims and names to criminals. This legislation does not stand up
in this case. There is more heart than head in it. Lawmakers must
speak with their heads, even though I sometimes wonder where
certain laws come from. In essence, this is the way they should be
made.
Yes, I understand the member's desire to have a bill passed. It is
a cause she believes in, and I congratulate her on it. However, as
legislation and jurisprudence currently stand, it would mean
duplication.
This sort of thing also raises a lot of questions, affects other
laws, including, among others, the Young Offenders Act. What are
the consequences for young people? We are currently looking in
the Standing Committee on Justice and Legal Affairs at the
approach to take on the whole matter of young offenders. Where
would Bill C-321 fit if it were passed?
Sincerely, I understand the member, and I can understand
wanting to make a little political hay-we are in politics-but the
subject matter is not appropriate to making political hay. We should
look instead at reforming the entire parole system to some extent.
We must not forget that there are also cases where parents have
been closely affected by this, where someone on parole for two or
three days comes and kills their child.
There is the case of the Bolduc girl in Quebec. Her father is not
advocating putting them in prison for 250 years or whatever. Quite
the opposite. The public has to get involved. It has to come from
the community. People do not just criticize, they want to make
significant changes to the parole system.
(1820)
Since the government whip seems very interested, I will
conclude by expressing my hope that, when the Bloc Quebecois
calls on the government to appoint a royal commission on the
parole system to settle the whole issue, it will look into this very
seriously. I also hope the government will support the Bloc's
request.
[English]
Mr. Jack Ramsay (Crowfoot, Ref.): Mr. Speaker, I am
honoured today to support the private member's bill by the hon.
member for Mississauga East. This is a good bill. It is therefore
regrettable that it has not been deemed votable.
The member who moved this bill has given one of the most
eloquent speeches I have ever heard made in this House. It so
clearly described the control that the bleeding heart mentality has
had upon the justice system for the past 25 years.
The Liberals campaigned on a promise to give backbenchers
more weight in this government through added private members'
bills. By the admission of the member for Mississauga East, one of
the Liberal's own backbenchers, this promise has been broken. The
government backbencher accused the Liberal dominated four
member committee that determines which private members' bills
will be votable of short circuiting controversial bills such as this
bill.
The Mississauga East MP said: ``We supposedly have open
government but we have secret committees and I would guarantee
that no member of that committee would oppose the bill openly.
They were just encouraged in secret. I am not suggesting it is a
kangaroo court. It is more like a cockroach court. You cannot see
them at work and they run''.
The hon. member was also quoted in the Hill Times a couple of
months ago as saying: ``If I had a bill on lawn care, I bet I would
have success in getting it through the committee. If I had a bill that
offered better treatment for criminals it would race through the
place in a week. But if you have a bill that wants to side with the
victims or correct an obscene injustice in our system you can
expect resistance and many years of effort and debate''.
I could not agree with a member more. The member made these
comments in reference to her private member's bill on consecutive
sentencing, Bill C-321, which was rejected by her colleagues.
Harsher comments appeared in the Hill Times yesterday in
reference to Private Members' Business. These words, which I
would like to reiterate, are from Debbie Mahaffy, the mother of
murder victim Leslie Mahaffy:
I am disgusted but not surprised by the heartless comments on the issue of
consecutive sentencing that came out of the flapping mouths of government Liberal
members as recorded in your paper on November 11, ``MPs Slag Private Members'
Business''.
-the Secretary of State for the Status of Women says she was not familiar with this
serious issue for victims' families because she had not attended caucus that week and
as a result had nothing to say. Could it be that the issue of consecutive sentencing has
been at more caucus meetings than she? Or perhaps she simply doesn't read
newspapers about serious issues of crime.
7070
Another cruel remark dealing with sentencing of serial predators made by another
bright light Liberal-
She named the Liberal which I am not allowed to do, but that
Liberal happens to be the chair of the women's caucus.
-chair of the women's caucus is equally inane. Her diatribe that she might
support consecutive sentencing if (the member for Mississauga East) brings the
issue to the forefront again is mindless and absurd to say the least. The fact that
she made this comment after consulting with the justice minister and the Liberal
(member for Mississauga West) adds to the obscenity. With this calibre of
consultants, I suggest it is time for (the member for Etobicoke-Lakeshore) to
seek better advisers.
I have omitted a small portion of Mrs. Mahaffy's letter to the
Hill Times but I would like to read her last paragraph which has
been quoted already in this House but deserves being quoted again.
She said: ``Shame on all of you for adding to our pain and for your
lack of humanity and the lack of wisdom to make a difference''.
(1825)
I will also read from an article which appeared on November 27
in a B.C. newspaper regarding the justice committee's national
forum on youth justice. For the record, I did not support the
expenditure of $60,000 to host this meeting because I felt we would
be going over old ground by hearing from a number of witnesses
who had already appeared before the committee. My opposition to
this wasteful use of taxpayers' money caused me to endure a
berating and to have obscenities thrown at me by the chair of the
committee.
Nevertheless I quote from that article:
Ottawa was a bust for Chuck Cadman. Cadman, whose teenage son Jesse was
stabbed to death by another teen four years ago, was invited to speak before the
federal standing committee on justice affairs last weekend in Canada's capital city.
But the Guildford dad who founded the victims rights group Crime, Responsibility
and Youth (CRY) after his son was murdered, says the trip was a waste of time. ``I
spoke maybe five minutes total'', he said. ``It was a joke. I shouldn't have even
bothered going. The meeting was poorly chaired'', he charged.
Of 33 participants, Cadman said, only himself and a representative of Canadians
Against Violence Everywhere Advocating its Termination (CAVEAT), another
victims' rights group, spoke from the victims' perspective. The other participants
were lawyers, criminologists and members of groups like the John Howard society, a
group advocating convicts' rights. Everything else was geared to the rights of
offenders Cadman said. ``I was the only person in the whole bunch who took the
victims' side to anything'', he said, ``and someone from CAVEAT''. He said he
appreciated being asked to attend, but added, ``it was so obviously one-sided''.
It certainly is not the first time a witness or an observer has
called the committee a bust or a sham. The mayor of Cornwall
walked out on the committee calling it a complete waste of time
and accusing the committee of being predisposed. I am a member
of that committee and sometimes I cannot disagree with the
observations of Mr. Cadman and the mayor of Cornwall.
So far in this Parliament, 16 private members' bills have been
introduced to reform Canada's criminal justice system. What has
happened to the vast majority of these bills? Absolutely nothing.
This includes Bill C-234 of the member for York
South-Weston. This very necessary bill has not become law. It did
not even come back to the floor of the House of Commons because
the Liberal members of the justice committee killed it. They did
this despite the fact that Bill C-234 has the overwhelming support
of the Canadian Police Association, Victims of Violence, and tens
of thousands of Canadians who have written letters and signed
petitions.
Bill C-234 most certainly has the support of the Reform Party
because this private member's bill would repeal section 745 of the
Criminal Code. It would extinguish a killer's glimmer of hope for
being released before serving his full life sentence. It is an injustice
that members of this House who gave life to Bill C-234 were
denied the opportunity to dispense with or pass this most important
private member's bill.
It is also an injustice that the bill of the member for Mississauga
East has not been deemed votable. This bill should become law.
Bill C-321 provides for truth in sentencing, a true Reform
principle. Bill C-321 provides for the imposition of consecutive
sentences on a person who commits sexual assault and another
offence arising out of the same event or where the person is already
serving another sentence at the time.
Bill C-321 should be expanded to include all offences. No one
should get a free crime ride but that is precisely what we do in this
country. We permit sexual offenders and other offenders to commit
two, three or more offences and serve only one sentence as the
other sentences are served concurrently. This is absolutely absurd.
It is also absurd that we permit multiple murderers such as
Clifford Olson who killed 11 children to serve only one life
sentence when he should be serving 11 sentences. Each of the
innocent lives he stole should be validated. Each life is worth at the
very least a life sentence. Likewise a person who commits multiple
crimes should be given an appropriate sentence for each and every
crime. Bill C-321 would end this absurdity. It would put an end to
freebie crimes in this country. Therefore I support the member and
her bill. I support truth in sentencing.
(1830)
At this time I would ask for unanimous consent one more time
from this House that this motion become a votable motion.
7071
The Acting Speaker (Mr. Milliken): Is there unanimous
consent for the proposition of the hon. member for Crowfoot?
An hon. member: No.
The Acting Speaker (Mr. Milliken): There is not unanimous
consent.
Mr. John Maloney (Erie, Lib.): Mr. Speaker, I am pleased to
have the opportunity tonight to take part in this debate on Bill
C-321, an act to amend the Criminal Code and the Corrections and
Conditional Release Act, cumulative sentences.
I congratulate the hon. member for Mississauga East for
initiative and persistence in bringing this important question to the
attention of the House once again.
The previous bill, Bill C-274, was debated in this Chamber on
June 4 of this year. The subject bill has two clauses. The first would
require judges to impose a consecutive sentence on a person
convicted of sexual assault and another offence arising out of the
same event or series of events or where the person is already
serving another sentence at the time.
The second clause would amend section 120 of the Corrections
and Conditional Release Act by requiring offenders sentenced for
first and second degree murder to serve their full parole
ineligibility period on that sentence plus one-third or a maximum
of seven years, whichever is less, for an offence arising out of the
same event or series of events.
For an offender already serving a sentence, when a sentence for
murder is imposed he or she would serve one-third or seven years
of that sentence. Offenders would be required to serve
consecutively all of the parole ineligibility periods for sentences
for multiple first and second degree murder convictions not arising
out of the same series of events.
The area of concurrent and consecutive sentences can be a
confusing one. The power to impose a consecutive sentence must
be found in some federal enactment. Section 718.3(4) of the
Criminal Code discusses the circumstances where judge may direct
that terms of imprisonment be served one after the other, that is
consecutively.
The code generally states that this may be done in the following
circumstances: where a person already serving a sentence is
convicted for a new offence and receives a sentence of
imprisonment; where both a fine and imprisonment are imposed,
any default time for non-payment may be consecutive; where a
person is convicted of more than one offence in the same court at
the same sitting and terms of imprisonment for more than one fine
are specified, terms of imprisonment for the respective offences are
imposed, or a combination of imprisonment and fines for separate
offences.
Over the years jurisprudence has developed in this area and some
principles have become clear. Where there is no relationship
between the separate commissions of criminal offences the court
should, bearing in mind the total term, impose consecutive
sentences. A second crime while in flight from a first crime should
be punished with a consecutive sentence. Where there are a number
of different offences committed within a short period of time, the
offences should be grouped in categories and concurrent sentences
imposed in respect of each offence in the same category, but
consecutive to those imposed in respect of the other categories,
again bearing in mind that the total term should not be excessive.
Section 149.1 of the code provides that sentences for escape
from custody shall be served concurrently with time being served
or, if the court so orders, consecutively. Consecutive sentences are
usually imposed as a deterrent, special and general to escape.
Perhaps the distinction between concurrent and consecutive
sentences is best summarized in the words of the 1987 report of the
Canadian Sentencing Commission: ``Concurrent sentences
imposed for multiple offences serve two principal functions. First,
they permit the court to give proportionate sentences for related
offences without disturbing the overall length of the total sentences
imposed. Thus they counter any need to reduce sentencing
dispositions for individual offences in order to achieve an overall
just result. Second, concurrent sentences all serve a denunciatory
function since their use denounces criminal conduct without
increasing the overall sentence''.
Generally concurrent sentences are imposed for multiple
offences which arise out of one continuous criminal act or single
transgression. These specific examples respecting the use of
concurrent sentences cited by the commission are as follows:
where an accused is convicted both of conspiracy to commit an
offence and the substantive offence, concurrent sentences should
be given; where goods from one theft are found in the accused's
possession at different times, only one transaction is really
involved and concurrent sentences should be imposed; while a
sentence consecutive to a life term cannot be imposed because it is
an absurdity, there is no prohibition against imposing several
concurrent life sentences or other sentences concurrent to life.
The sentencing commission also pointed out that the use of
consecutive sentences has been justified on the basis of a number
of sentencing principles. One such principle is deterrence; that is,
consecutive sentences should be used to discourage criminal
activity in certain circumstances, for example, for an offender who
commits an offence while out on bail. Consecutive sentences have
also been justified on the basis of their denunciatory effect and
their contribution to the overall protection of the public.
7072
(1835)
As a general rule, consecutive sentences are imposed for
multiple offences which arise out of separate criminal transactions.
They thus would be imposed for a string of offence, situations
where, again in the words of the Canadian Sentencing Commission,
several offences arising out of separate transactions are disposed of
before the same court at the same time. For example, the court may
decide to impose consecutive sentences where the offender is being
sentenced at one time for breaking and entering a dwelling house,
robbery and assault, all of which were committed on different days.
Parliament has recently dealt with the issue of consecutive
sentences in chapter 22 of the Statutes of Canada, formerly Bill
C-41, which came into force on September 3 of this year. Section
718.3(4)(a) confirms that a consecutive sentence may be imposed
where the accused is convicted while under sentence for another
offence. This deals with the second part of the first clause of Bill
C-321.
Section 718.3(4)(c)(ii) allows a court to impose a consecutive
sentence where an accused is convicted of more than one offence
by that court. This would deal with the situation contemplated in
the first part of clause 1 of the bill.
I realize that the exercise of this power is discretionary and not
mandatory, as would be the case were this bill to be approved. The
approach in Canada to date is not to fetter that discretion but to
allow judges to balance all the factors before them.
I would also draw the attention of the House to section 7l8.2(c)
of the Criminal Code which confirms the totality principle
developed in the case law that where consecutive sentences are
imposed, the combined sentences should not be unduly long or
harsh.
With respect to clause 2 of the bill, I am informed that the case
law is clear that a fixed sentence cannot be made consecutive to a
sentence of life imprisonment and that any sentence imposed after
a sentence of life imprisonment has been imposed can only be
concurrent to it. The authority for that is the Crown v. Sinclair for a
1972 report on Canadian criminal cases.
A life sentence is just that, a life sentence. The convicted person
may get parole but will continue to be subject to the life sentence
literally for the rest of his life and may be reincarcerated after
having been released on parole if the person does not comply with
the conditions of release.
Accordingly, having consecutive life sentences is, to some
extent, a contradiction in terms. However, the fact that numerous
life sentences have been imposed on someone is taken into account
in the decision to grant parole or not; a very important
consideration.
Let me conclude my remarks by mentioning some non-legal
considerations of interest. Few Canadians realize that we
incarcerate offenders in this country at a rate far higher than most
countries in the western world.
According to international statistics compiled by the Council of
Europe, Canada's incarceration rate of 130 inmates per 100,000
total population is fourth in the democratic world after the United
States, Russia and South Africa. We are well ahead of our European
and Australian trading partners. Let me give the House a few
examples. The United Kingdom rate is 92 per 100,000; Australia,
85; Germany, 81; Norway, 60; Holland, 51.
When federal, provincial and territorial ministers met in Victoria
in January 1995 an item for discussion was the rapid and relentless
growth of correctional workloads, particularly prison populations,
that all jurisdictions are experiencing.
From 1989 to 1994-95 the federal penitentiary population grew
by 22 per cent and provincial prison populations grew by 12 per
cent on average.
Notwithstanding a decline in the reported crime rate over the
past three years, there are indications that federally there have been
fewer conditional releases granted and more revocations of
conditional release resulting in more time being served by more
offenders. In addition, there has been significant growth in the
proportion of offenders serving sentences for violent offences,
including homicide.
At the provincial and territorial levels of the system more
custodial sentences are being given and for longer periods of time.
There has been significant growth in charges for sexual and other
assaults.
Among the reasons for the increased offender population are
more challenging offenders, such as sex offenders and violent
offenders, growing accumulation of lifers in the inmate population,
growing use of Corrections and Conditional Release Act detention
provisions, fewer offenders on conditional release, new and harsher
measures for more serious offences such as the four year minimum
sentences for use of firearms.
Correctional Services Canada now double bunks approximately
25 per cent of inmates, and concern about the high rate of
incarceration and double bunking has been expressed by the
correctional investigator, the auditor general and other interested
parties.
Both the Solicitor General of Canada and the Minister of Justice
have spoken publicly about the need to continue to work with the
provinces and territories to develop strategies to contain the rate of
growth of the inmate population. We must do this but we must also
balance this with the protection of the public.
I do have concerns that Bill C-321 would contribute further to
this correctional overpopulation. I question whether we wish to
follow the American example of building more prisons, often at the
cost of underfunding health, education and social programs. This is
7073
a sincere concern. The record shows that all levels of government
are cutting back where the need is most: health, education and
social programs.
(1840)
The American experience suggests that a more punitive
approach to criminal behaviour does not, of itself, increase public
protection or reduce levels of crime. Between 1984 and 1989 the
American crime rate rose by 14 per cent but the prison population
increased by 58 per cent. Today more than 1.5 million Americans
are incarcerated. In fact, there are more Americans under criminal
justice system supervision than there are U.S. college students.
With respect, I do not think we have much that is useful to learn
from criminal justice policy in the United States and, in particular,
from its use of consecutive life sentences.
Mrs. Brenda Chamberlain (Guelph-Wellington, Lib.): Mr.
Speaker, I am pleased to have this opportunity to speak to Bill
C-321. I congratulate my colleague, the hon. member for
Mississauga East, for introducing this legislation.
I support the legislation. I know the people of
Guelph-Wellington do as well.
On April 9 of this year I wrote to the Prime Minister and the
Minister of Justice and asked that they consider allowing
consecutive sentencing for violent crimes. I believe that
consecutive sentencing is an important step in our efforts to give a
strong message that we as a government and we as a society will
not tolerate violent crimes.
In my letter I said that we owe a service to the victims of violent
crime and their families in considering amendments to the
Criminal Code and the Corrections and Conditional Release Act
which will change concurrent sentences to consecutive.
While nothing we can do as a government, as individuals or as a
society as a whole can change or alleviate the pain and suffering
caused by violent crime, legislation like Bill C-321 can offer some
support.
Victims are often, if not always, targeted because of nothing
more than who they are. A victim may be attacked because she is a
woman. A victim may be a young person. They may be a senior or
a store clerk. Victims do not have the choice of whether or not to be
targeted. They are chosen and they and their families must live with
the results of the violent act for the rest of their lives.
For this reason I recently introduced Bill C-344, which would
mean no early parole for those who murder a peace officer. Like the
hon. member for Mississauga East, I am concerned about the use of
section 745. I would prefer its repeal. However, in the absence of
repealing section 745, I believe that bills such as mine and this one
are important and necessary.
Discussion on legislation such as this is also a good time to look
around our community, communities like mine of
Guelph-Wellington, and find ways that we can help eliminate or
reduce some of the causes of crime. These causes are not someone
else's responsibility. We each owe ourselves, our families and our
neighbours the opportunity to effect change.
The people of Guelph-Wellington are asking their federal
government to do what it can to effect that change. I believe that
passing Bill C-321 is one way to respond to their request.
Some have argued that consecutive sentencing does not make
sense. They argue that giving someone a prison sentence of three
life sentences or 400 years does not help to address the problems of
crime and punishment. I disagree. I disagree for the sake of the
victims and their families.
Currently people like Sharon Rosenfeldt and her husband, whose
16-year old son Daryn was killed in 1981 by Clifford Olson, must
face the fact that he is eligible to apply for early parole under
section 745. Victims and their families find some comfort in the
knowledge that the offender will be serving 25 years before he or
she is eligible for parole. We can only imagine their suffering and
pain when they realize that 25 years means 15 years. For Sharon
and her family, it means they are faced with reliving the pain, the
sense of loss, the anger and all the other emotions because they
were unaware that the offender could seek early parole.
Thankfully, people like Sharon have turned that dreadful event
of her son's murder to some good. While Daryn's death can never
be understood she and her husband have founded Victims of
Violence, which continues to raise awareness on issues like section
745, and to help other families cope with the death of a loved one.
(1845)
All across Canada people cope with the effects of crime.
Whether a house or an apartment has been vandalized by thieves,
the family car stolen from the parking lot, or a young woman has
been sexually assaulted, we know that crime must be punished.
There are individuals convicted of crimes that are rehabilitated.
Many make a return to society and contribute to making Canada
great. I welcome the opportunity to give these people a second
chance. But there are certain crimes that we cannot tolerate, certain
actions which must be punished to the full extent of the law and
certain individuals who cannot return to live freely in our society.
We can never allow crimes like murder, sexual assault and
7074
attempted murder to be dismissed. It is because of them that Bill
C-321 is necessary.
Every day in Guelph-Wellington heroes go about their work.
These heroes include in a special way our police officers, but they
also include those who answer the phone at a sexual assault hotline,
volunteers at the Guelph Distress Centre, teachers, factory workers,
executives and children who take the time to make a difference.
These heroes make that difference by caring. They know that no
matter what the government does, crime will still occur. They are
not asking for the impossible but they need our help to continue
their important work.
How can we help? We can help them by passing legislation that
gives one clear message: "We do not accept what you have done
and you will spend a very long time, possibly the rest of your life,
in prison''.
Bill C-321 reminds all of us of our responsibility to fight crime.
Whether it be as simple as making sure our neighbour does not
walk alone to church or joining Block Parents, volunteering to
coach baseball, helping someone who is illiterate, or watching out
for a neighbour's house while that neighbour is away on vacation,
we can and we must work together to help reduce crime in our
communities.
We each have a responsibility to one another as citizens of the
greatest country on earth to make our communities safer.
Government continues to have an obligation to its citizens, to offer
them a justice system that says no to crime and serves notice that
those who commit crimes will be adequately and in some cases,
yes, severely punished.
This is why Bill C-321 deserves the support of this House.
Mr. Szabo: Mr. Speaker, a point of order. The House has a
procedure whereby bills are deemed to be votable by committee
and I respect that process. I will not make a motion to that effect.
However, I understand there is a precedent that the subject
matter of a bill could be referred to committee with the unanimous
consent of the House. In view of the interest of the House on the
issue of concurrent versus consecutive sentencing, that this would
be a worthy item.
Therefore, I would move that the subject matter of this bill be
referred to committee.
The Acting Speaker (Mr. Milliken): The House has heard the
terms of the motion proposed by the hon. member for Mississauga
South. Does the hon. member have the unanimous consent of the
House to move the motion?
Some hon. members: Agreed.
An hon. member: No.
The Acting Speaker (Mr. Milliken): There is not unanimous
consent.
The time provided for the consideration of Private Members'
Business has now expired and the order is dropped from the Order
Paper.
_____________________________________________
7074
ADJOURNMENT PROCEEDINGS
[
English]
A motion to adjourn the House under Standing Order 38 deemed
to have been moved.
Mr. George S. Rideout (Moncton, Lib.): Mr. Speaker, I rise to
speak for a moment or two about a question which I asked the
Minister of Natural Resources on November 6. It concerns forestry
practices and the issue of forest certification.
(1850)
At first blush, I am sure members would think this is not that
important an issue. However, as we look at our history and our
country we realize that Canada is a forest nation. We possess over
10 per cent of the world's forests, forests which provide habitat for
a wide variety of wildlife, forests that are places for citizens of
Canada to visit in their leisure time and forests that are important
parts of our social and cultural history. For many people, forests are
synonymous with Canada.
On the economic side, the Canadian forest industry is one of
Canada's largest and, accordingly, most important industries. It
provides for one in fifteen jobs. It produces exports which are by
far the single largest contributor to Canada's positive trade balance.
Forests and forest industries are found in every province and are
critically important to every Canadian. Sometimes we do not stop
to think about it but even as we look around the Chamber, the
contribution that the forestry industry makes to the beauty and
enhancement of this Chamber becomes evident.
As a trading nation, we need access to foreign markets. In the
world we live in we also need to demonstrate to our customers that
we are good custodians of our forests.
The question of sustainable forest management is paramount to
Canadian interests. Our ability to manage our forests in a
sustainable manner for all of their benefits is important for every
Canadian. I know that provinces are continually reviewing and
upgrading their forest policies to achieve sustainable forestry and it
is ultimately their responsibility under the British North America
Act to manage the forests because they are a provincial
responsibil-
7075
ity. I also know that Canadian industry has made great strides in
improving the standards of forest management in Canada.
I would like to ask the minister, through the parliamentary
secretary, why it is that Canada continues to be criticized for its
forest management practices. I understand that the Canadian forest
industry has been active in developing a standard for certification
of Canadian forest practices. What will the impact of forest
certification be on the sustainable forest management in Canada?
Will certification move Canada toward achieving sustainable
forestry and will it help the Canadian forest industry to be more
competitive in world markets?
Mrs. Marlene Cowling (Parliamentary Secretary to Minister
of Natural Resources, Lib.): Mr. Speaker, the question of
sustainable forest management is one of the most important
challenges facing Canadians.
It is fair to say that people from around the world are asking that
the global forest be managed in such a way that the whole array of
social, economic and environmental values associated with forests
are protected. In Canada this is a major priority for governments,
industry and our citizens.
At a recent meeting of the Canadian Council of Forest Ministers,
we confirmed again our commitment to sustainable forest
management. Ministers agreed to adopt a Canadian criteria and
indicators as a means to monitor sustainable forestry. We agreed
that the national forest strategy be renewed.
At the international level, we have been working hard to ensure
that the principles of sustainable forestry are promoted in the
discussions on global forests. Recognizing the need to manage
forests on a sustainable basis, the Canadian forestry industry has
also been promoting sustainable forest management through the
development by the Canadian Standards Association of a
sustainable forest management standard. This standard has been
approved by the Standards Council of Canada. It is now available
to Canadian companies that wish to seek certification that they
have a process to ensure sustainable forest management.
They have taken the initiative outside of government to promote
sustainable forest management. Forest certification provides a
transparent, scientifically based and inclusive approach for
industry to demonstrate its commitment to and practice of
sustainable forestry.
The Canadian industry is a world leader in this regard. It has led
an international industrial group in approaching the International
Standards Organization, seeking access for companies who wish to
be certified under the environmental management standard
provision of the ISO. This is an additional step toward a better
standard of forestry in Canada, increasing the confidence that
Canadians have in the industry's ability to manage the forests and
help to ensure access for Canadian forest products in world
markets, products which are made from wood from sustainably
managed Canadian forests.
[Translation]
The Acting Speaker (Mr. Milliken): The motion to adjourn the
House is now deemed to have been adopted.
Accordingly, this House stands adjourned until 2 p.m. tomorrow,
pursuant to Standing Order 24(1).
(The House adjourned at 6.54 p.m.)