Bill C-62 (Historical)

Provincial Choice Tax Framework Act

An Act to amend the Excise Tax Act

This enactment amends the Excise Tax Act (the “Act”) to implement, effective July 1, 2010, the new fully harmonized value-added tax framework in Ontario and British Columbia. It also facilitates the new framework to accommodate any province’s decision to have the provincial component of the harmonized value-added tax under the Act apply in that province by achieving a common understanding with Canada in respect of such a new framework, including the provision of rules and mechanisms to ensure
(a) the proper imposition of the provincial component of the harmonized value-added tax in respect of that province;
(b) the proper application of any element of provincial tax policy flexibility contemplated under the common understanding, including rate flexibility for the provincial component of the harmonized value-added tax, rebate flexibility in respect of the provincial component of the harmonized value-added tax and the temporary recapture of certain input tax credits in respect of the provincial component of the harmonized value-added tax;
(c) the proper functioning and application of the Act in all respects, including provisions flowing from the provincial tax policy flexibility contemplated under the common understanding and the addition of every province that chooses to join the new framework; and
(d) the proper administration and enforcement of, and compliance with, the Act.

Provincial Choice Tax Framework Act

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

You do not know what you are talking about. You have no clue, none, zero, zip, nada.

[The Acting Speaker, NDP, Denise Savoie]

Order, please. The hon. member can conclude.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, the only reason they are quacking is their wings are covered with the gunk from those vast ponds of tar that are left for future generations to clean up. They really wish they could fly, but they cannot. When it sounds like a duck and it quacks like a duck and it looks like a duck, it is a duck.

Those guys are zeroes when it comes to managing the economy. They have killed the diverse Canadian economy.

[Dennis Bevington, NDP, Western Arctic, NT]

Madam Speaker, I would like to stand up and speak because I live on the river system directly north of the tar sands.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

They are called oil sands.

[Dennis Bevington, NDP, Western Arctic, NT]

I grew up in that area. We called them tar sands long ago and I will continue to call them tar sands.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

They're not tar sands. It's not tar; it's oil.

[The Acting Speaker, NDP, Denise Savoie]

I would like to call the member for Fort McMurray—Athabasca to order and to wait for questions and comments until he is recognized.

[Dennis Bevington, NDP, Western Arctic, NT]

Madam Speaker, the study that came out yesterday, for which we had waited quite awhile, examined the impacts on the environment of the air emissions that fell onto the ground from the tar sands, fell into the snow pack. The estimation is that the air emissions from the tar sands plants are the equivalent of a major oil spill every year in the region. The polycyclic aromatic compounds that are released into the atmosphere and then fall onto the snow and the ground end up in the water stream and end up in my constituency. I have a great deal of concern about it, and I am glad the hon. member has spoken up on this issue.

On the issue of the responsibility of the federal government towards Aboriginal people in our country, how does the fact that we are ramming this legislation through in such a hurry speak to the fiduciary responsibility of the Government of Canada to first nations in B.C. and Ontario?

[Thomas Mulcair, NDP, Outremont, QC]

As we had occasion to point out during our intervention, Madam Speaker, the fact that there has been no consultation means, among other things, that first nations, which will now be hit with a point of sale tax that was not applicable to them and should not be and will not be once it gets to the Supreme Court, will have to go through years, again, of fights before the courts to have their rights recognized.

To the extent that the Supreme Court has already repeated the obligation to consult, to be holding this session right now with the procedural guillotine of the Conservatives by imposing closure, there will be no consultation. Witnesses will not be heard. Nothing will happen that would allow the first nations to come before us and to say, “This is not on. You cannot do this”.

However, that is what the Liberals want. Those are the same Liberals, it should be borne in mind, who love to remind people that after 13 years in office, they had a plan for first nations. They were calling it Kelowna, and they said it would really be good. The problem was that during 13 years, they had done absolutely nothing. That is why the Liberals have no trouble supporting the Conservatives to remove the rights of first nations. We find it scandalous.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I am very pleased the member recognized that this is not a majority government. It is a minority government. In fact, the Liberals are responsible for driving this train and this rush to judgment on the HST bill.

For example, the Liberal caucus member, the Liberal finance critic, was quoted a while ago, when he talked about the HST. He said, “It is absolutely what the doctor ordered for the economy”. He was 100% in support. Whereas the former premier of B.C., now a Liberal MP, said, “It is absolutely horrendous and it is criminal on the part of the Conservative government to be pushing this policy in a time of deep economic recession”.

Clearly the Liberals are all over the map, as usual, on this issue. Would the member like to make further comments on this situation.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, the actions of the Conservative government, with the help of its Liberal henchmen, have been devastating for the Canadian economy. We had already bled off hundreds of thousands of jobs prior to the current recession setting in. The addition of this $6 billion tax on the backs of those who can least afford it will simply exacerbate the situation.

People are on fixed income. A lot of people have lost their jobs. A lot of people are on social assistance. People cannot find 8% more for their heating oil. Yet that is exactly what the Conservatives have decided to do, to use the very weakness they created by their choices and their policies, where they killed manufacturing and forestry, to go in now for the kill on the Liberal governments in Ontario and B.C., their willing co-conspirators.

It is commonplace that for a scam to work, it requires two dishonest people. It requires the person conceiving the scam, and the Conservatives have said from the beginning what their plan is with regard to this tax, and it requires the henchmen in the Liberal Party, both here and in the provinces. It requires two dishonest people and that is what they have.

[Jean-Pierre Blackburn, Conservative, Minister of National Revenue and Minister of State (Agriculture)]

Madam Speaker, since we are talking about economic statistics, I would like to remind my hon. colleague that, according to the numbers for the month of November, the unemployment rate dropped by one tenth of a percentage point from 8.6% to 8.5%. Experts predicted that 15,000 jobs would be created in November, but in fact, 80,000 jobs were created, which means that, in fact, our economic action plan is producing results for the country. I think that if the member wants to talk about the government's record, he should take that into account.

[Thomas Mulcair, NDP, Outremont, QC]

Madam Speaker, in their document, the Conservatives made a prediction for December 2009. There are exactly 250,000 fewer jobs than they predicted. They have killed Quebec's economy. They have killed the manufacturing sector. They have killed the forestry sector. This is no time for them to start lecturing others. The Conservatives and the Liberals are guilty of imposing a regressive tax on the most vulnerable members of society. That is the reality.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, it is an honour to rise and talk about this issue while we can in the House of Commons.

I agree with my colleague that it is also important to mention the tar sands. My community of Windsor, Ontario is going to be significantly affected by the tar sands, because the refining of that gunk is going to be done across the border in Detroit. Windsor is downwind of the refining facilities that are being expanded, so we are getting the consequences of it on both ends. That is a real issue. Progressive environmental groups from all political parties, both on the Canadian and American sides, have been trying to work together to prevent some of this from happening. It is critical because it affects not only our economy but also our health, as we are the people who are going to breathe this in.

On this bill, I think it is important to talk a bit about the process in the House of Commons and the “harpocrisy” of the Conservative government. It is really outstanding because on this issue, the government is ramming the bill through the House really quickly, whereas on other issues where the government could actually get support from all political parties and affect the economy, it could get a lot of benefit from but does not.

I would point to the process that the government is going through with infrastructure funding. The Conservative government is not using the gas tax, for example, as a model to get some of these projects out the door.

What we are getting here is not only a procedural ramming through of legislation in this session of Parliament, abetted by the Liberals and the Bloc, but we are also missing out on the important work that takes place in this place to ensure that when legislation goes through, it is done properly. The government is behaving similarly to the American-style Republican Party, adding riders to money bills to change legislation as opposed to actually doing the good work that usually happens at committees and providing the due diligence necessary to investigate the impact of legislation on various groups.

Specifically, we would have a debate here in the House of Commons and then we would move the bill to committee if there were interest. Then at committee there would be witnesses who would be called from all corners of Canada to provide testimony on the impacts of a policy.

The impact of the HST is certainly going to be significant for Ontario and British Columbia. It does involve other provinces, as was noted in the House before. There is actually a history of Conservative governments trying to ram such legislation down the throats of residents, aided and abetted by some of their provincial support mechanisms. This time it is the Liberal Party in the provinces of Ontario and British Columbia.

However, in the past, I can think of the Grant Devine government of Saskatchewan, for example. That corrupt government was eventually thrown out of power and the HST was repealed by the Roy Romanow NDP government. That government then brought in great legislation, balanced the books, cleaned up corruption and set a significant mark for that province. Everyone remembers the corrupt Grant Devine Conservative government. That is important because it is tied to the HST.

We also see what has taken place with the Darrell Dexter NDP government in Nova Scotia. That government has rebated the home heating portion of the HST right away, as it starts to delist items from the HST.

Meanwhile, what we have here in Ontario and also in British Columbia is the new tax that is to be introduced. These provinces are not even considering removing a percentile point off the tax or delisting items that are important to consumers. We are not talking about luxury items, like jewellery or home entertainment devices or whatever; we are talking about haircuts or things that kids need to do, like going to camps or hockey practices. All of these things will now be subject to another level of tax.

Ironically, the supposed fiscal wizards on that side of the House are actually going to be borrowing money from Canadian taxpayers at a time when Canada is running a deficit, and that money will be taxed back from Canadians. Canadians are waking up to this. It is a sensitive issue and it is also an issue where they understand the economics.

Right now, the government has a large deficit and it is going to increase that deficit through some of its policies. One of its policies was large corporate tax cuts, and I will talk about the effects of those in a few minutes.

It is important to note that I had the parliamentary research bureau do some research for me. The bureau is available to every member. I submitted some information to the bureau and asked it to look at the costs of borrowing the funds from the public purse.

The bureau ran a model, and I am going to cite the results of this independent report from the economists at the Parliamentary research service. They said that the average annual interest rate on the market debt of the federal government from 1998-99 to 2007-08 was 5.3%. Should the federal government borrow $5.9 billion in order to finance the proposed transfer to British Columbia and Ontario, and should it repay that amount in exactly 10 years, and assuming an average interest rate of 5.3%, the total nominal cost to the federal government would be about $9.9 billion.

That is important. We do not know if we will, but the report assumes that we are actually going to be recovering and getting out of recession.

The minister mentioned a few minutes ago that the jobless rate was going down, but one of the reasons it is actually falling in a place like Windsor West is that people are running out of benefits.

There has been high employment for years. We have been warning the government and the previous government of a lack of sectoral strategy for the manufacturing sector. The member for Outremont was quite right in talking about how the petrodollar has raised the Canadian dollar so high and so quickly that we have been shedding tens of thousands of jobs in the manufacturing sector over the last number of years.

Therefore, in communities like Windsor, we now have people who are exiting the benefit system that was available to them.

It is important to recognize what we are going to borrow and what we are going to get in terms of a return. I have seen some of the documents and read through the argument on why do this for the manufacturing sector? The HST will eliminate some taxation that is happening on multiple levels. There is no doubt about that, because it does happen, and that is a fair argument to make.

However, then we have to believe that those savings will get passed on to the consumer. I do not believe that is going to happen. Those savings would have to be passed on to the consumer and then the theory is that people can buy more and can stimulate the economy.

I mentioned in earlier exchanges in the House that it was the argument put forth when we had no conditions put on the reduction of the GST on gasoline prices. What we saw was the GST reduced on gasoline. So the coffers of the nation lost that revenue coming in, but we have not seen that passed on to consumers. I have yet to see a study that shows that those savings have been passed on to consumers.

I would suspect many Canadians justly question gasoline prices, especially because the government killed the only program capable of monitoring that, a monitoring agency, a watchdog program, that would have been fairly and independently out there. We have the industry that is policing itself, which is ludicrous.

One of the reasons I talk about the important process when the legislation passes is that we do figure out ways to ameliorate problems when we have legislation in front of us. Earlier this past week, we had the Minister of State for Small Business and Tourism before us at committee, who admitted there had been no study done on the effects on tourism of this particular HST grab.

That is critical, because there was a study done by the Tourism Industry Association of Ontario and another done in British Columbia by Butchart Gardens, which show that tourism is going to be affected significantly by this HST grab, because hotels, restaurants, theme attractions, travel, and all of those things are going to have a big whack tax put right on top of them right now.

The tourism industry is the fourth largest sector in the Canadian economy, when all of its components are put together. It has been facing a perfect storm as well. Not only was there the introduction of the U.S. passport requirement, which is a real challenge, because only about 35% of Americans carry passports; but we have also had the petro dollar affecting the tourism industry, all the way from the Niagara region across Ontario, and even in my region, where the high dollar, especially its rapid acceleration, has resulted in a shift. It used to be an advantage for Americans to come over and take advantage of that.

Then the government whacked the tourism industry again when it cut out the GST rebate. This is the party of our good friend Brian Mulroney, who brought in the GST, and there were severe economic repercussions for the tourism industry from that.

In fact when he introduced the GST in 1991, the food service industry in Canada suffered a 10.6% decline in real sales, 7.3% of which was attributed to the GST. Once again, it was our Conservative friends who introduced that tax on Canadians.

We have a situation now where we have had a couple of hearings and some witnesses yesterday at the tourism committee. As we happened to be studying another sector of the economy in committee, we were able to get some testimony from them on the HST. They see this as a significant challenge. We had some good testimony, and that is important because they are calling for some rebates and a series of things to be delisted, but we cannot really get to that full evidence and analysis because there is no actual study at committee on this bill.

It is shameful for the Conservatives, and the Liberals in particular, not even to allow public debate to take place, not even to allow that evidence from witnesses who are important in our sectoral economies to come forward and to show what challenges would take place. There is complete ignorance on that. They prevented some really good evidence being heard on how this will affect the tourism industry.

People have to be wondering about their representation, when they are in southern Ontario and look at the Niagara region and elsewhere, where we have to compete so hard for dollars. What is interesting is that our tourism deficit has ballooned under this government, and I will get into that later. We have seen U.S. visits to Canada, which account for three-quarters of all tourist visits here, decline significantly. On top of that, we have actually seen that deficit expand quite significantly, and so we have been suffering job losses in those industries.

A number of different independent studies have been done by the Tourism Industry Association of Ontario. It looked at a number of different scenarios as examples of what the HST is going to increase and what the industry is going to face. Keep in mind that Canada is already one of the most expensive places in the world to visit. I believe we rank fourth in the world in terms of the overall expense of a visit, and now on top of that, we are going to have another level of taxation that will further add to that component. That is a real problem, especially given the fact, as I mentioned earlier, that the dollar is high and U.S. visits are down and we have a struggling economy.

Therefore, borrowing from our own taxpayers and from these businesses to throw another tax on top of them is going to affect a number of different scenarios.

One scenario is the weekend getaway, which has a base cost of $1,603. Currently we have an 8.3% tax on that, but when we actually add the HST and future taxes and incremental taxation, taxes on these visitors are going to increase by 43.6%. When we look at the incremental taxation related to activities in that type of vacation and take all the different components of that vacation and visit, we see that taxes are going up significantly.

Another scenario is a one week camping holiday. The government cannot even leave camping alone. This is one of the ironic things about this in Ontario. This is another Dalton McGuinty tax day on Canada Day; he cannot help himself, apparently. Maybe we need to have a motion in the House of Commons to have Dalton leave our Canada Day alone, because he brought in his health care tax a number of years ago after not telling the public about that, and then once again went through an election and did not tell the public about that. Now the Ontario government is introducing a new tax on camping.

My son is a Beaver and his Beaver group will be an example of the new taxation. We have to do fundraising for them as it is. We live in the inner city, where some of the kids cannot afford some of these events. In fact his troop, because there are kids in it that cannot afford the different events, was recently subsidized by the other troops for a fun day that we had in Windsor. I thank all the volunteers for that at the Cleary International Centre. It was a terrific family event day.

Now when they go camping they are going to get taxed. When they go camping now, the estimated base cost is $2,173 with current taxes of $188 at a rate of 7.9%. That will go up and there may be future taxation on the other things that are added on. So the association is estimating there will about a 33.2% tax increase overall when all of the activities of a camping trip are put together.

We could not even exempt camping in Canada. We could not even have a discussion or a debate about that; we just have to accept this is going to happen.

We also looked at a shopping weekend in Toronto where good friends of the Conservatives, the Liberals, are right now in the Toronto area. A shopping weekend of $4,856 is the average shopping weekend in Toronto according to the study and there is going to be a 14.2% increase on that when we add in the hotels and all the different things that people would have. So that is going to make it more challenging for Toronto as a destination.

We have already had a number of challenges such as SARS for example. In my riding people from the Detroit area refused to come to Windsor or Toronto explicitly because of the SARS issue and we had to debunk all that. It has taken years to recover from that issue.

There have been challenges and tourism destinations are very important for the country, not just for Toronto. Tourism is our fourth largest industry and once again we have not been able to study this issue or to have any meaningful input on it other than these outside measures others have been doing. They are from credible companies. HLT is the advisory group for this one.

A family ski holiday of $4,363 ends up with the incremental taxation resulting in a 25.3% increase. That is the estimation because things like lift tickets and a whole series of other things that did not have any tax now are subjected to this new tax grab.

In terms of the impact on the overall economy, it was good to have the Canadian Tourism Commission at our committee. It does a very good job. Madame McKenzie runs it. It has many challenges. It has a small budget, small department. Interestingly enough, the Liberals moved it toward the Olympics and that is a big event and destination that hopefully does take place. We hope that will turn some things around. The CTC said, “Canadian outbound travel spending continued to rise in light of a strong Canadian dollar to reach a record level of $26.9 billion in 2008, an increase of 15.5% over 2007. As a result Canada's international travel deficit, the difference between what Canadian residents spend abroad and what international travellers spend in Canada, rose to a record of $12.6 billion in 2008”.

That is devastating. When there is a significant deficit like that in one of our largest industries, it is critical to turn that around. We are not just talking about Americans or other destination marketers coming in that are going to have to pay the HST. When the government scrapped the GST rebate, they were very upset about that and many people said that was one of the reasons they would not come back.

With the HST imposed in Ontario and British Columbia there could be more incentives for more Canadians to spend their tourism dollars outside of Canada. Part of the CTC's mandate is to have Canadians spend money in their own communities or to travel around Canada. But now we are adding another level of cost when we are competing for tourism dollars at a time when we have the significant challenges of a crumbling economy.

This is just absolute utter nonsense that we would not get into a responsible evaluation about the impacts of this, whether we agree or disagree with the ideology of the bill, but we should be concerned about getting some empirical data to analyze and propose some solutions that would look at this and show some leadership. To simply say we are washing our hands of it is unacceptable.

It is important that Canadians realize this is the agenda. When the Conservatives brought in the GST supported by the Liberals, I remember the big scrap that was supposed to happen. It never took place and there have been successive attempts to bring in provinces. This is exactly what the Minister of Finance said on May 2 in budget 2006:

The Government invites all provinces that have not yet done so to engage in discussions on the harmonization of their provincial retail sales taxes with the federal GST.

That is what the minister said. That is the reality. Nothing happens without this. We need to have a proper study before we tear this at Canadians.