Finance Committee on Dec. 8th, 2009

[Chief Angus Toulouse]

They do have the right and obligation to consult and accommodate our interests. I think that's what we've been saying. Both levels of government have that obligation. As I stated, that's from the Haida and Mikisew cases clearly establishing that whenever our rights are going to be impacted, there is an obligation by government to sit down, consult, and, hopefully, accommodate our interests.

[Mike Wallace, Conservative, Burlington, ON]

I appreciate that.

I have a question for Canadian Manufacturers & Exporters—and I see I have two minutes, Mr. Chair, thank you.

Who are we kidding around the table? We're getting a lot of feedback. This past weekend I was at the annual meeting of my provincial member of Parliament, who happens to be a Conservative. There were some questions about the HST at that meeting.

Would you comment, if you could, about what actually happened 12 years ago in the Atlantic provinces in terms of manufacturing? The speaker had a glowing review of Newfoundland and how it's doing so well. I pointed out to the audience that Newfoundland has an HST. It's one of the tax issues there.

If you're able, could you comment—and maybe the chamber can comment also—on how those provinces have done under the harmonized regime that the provinces have chosen to undertake?

[Jean-Michel Laurin]

Thank you, Mr. Wallace. I think it's a very good question.

In terms of the experience in the Atlantic provinces, we expect the same thing would happen in Ontario and British Columbia if the HST goes forward. You're putting in a tax system that makes it much more competitive for companies that make something and companies that export something into other markets to be located in those provinces.

If you're producing this microphone, for example, currently on all the inputs that are purchased, assuming they are purchased here in Canada—let's say $100 of inputs go into a product—you have to pay provincial sales taxes in Ontario and British Columbia. Under the new system, companies would get these taxes reimbursed, because HST is a value-added tax, just as the GST is, and you have to charge it to your consumers, but not if you're exporting the products.

In other words, companies that are paying all these taxes on their inputs right now, which we estimate to be $6.9 billion in Canada, would get these taxes reimbursed and could pass on those savings to their clients, but they could also make additional investments in creating jobs, putting in new machinery and equipment, investing in the skills of their employees, and so on.

There are a number of studies. I know Professor Michael Smart of the University of Toronto has done some work on estimating the impact of harmonization in the Atlantic provinces. I think there is some evidence that consumer prices actually fell.

I've seen 12% in one study. I think that was over a year or two years following sales tax harmonization. I could find that study and forward it to the clerk of the committee for circulation, but our experience in the Atlantic provinces is that it has built a much more competitive tax regime in those provinces for companies that are operating out of these provinces and adding value to the economy.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Wallace.

Monsieur Mulcair, s'il vous plaît.

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Chairman, I would like to begin by making a few brief comments that are addressed to the Canadian Manufacturers and Exporters. I invite them to take note of the fact that the Canadian Federation of Independent Business, which has 105,000 dues-paying members, made the following observation, in English and French, with respect to what is proposed for Ontario and British Columbia. I would like to read you an excerpt: “[…] the lack of an overall rate reduction partly explains the concern our members have with the harmonization initiatives in Ontario and British Columbia.”

They're very worried at the Canadian Federation of Independent Business with regard to a reduction in the rate.

Furthermore, an important point has to be made with regard to New Brunswick and Newfoundland. There was no increase in activity in those two provinces, other than in the oil and gas sector, and those increases would have taken place irrespective of any harmonization of the HST.

But the most important question to deal with today is with regard to the first nations, and I apologize on behalf of all of us that you were only called in today, but at least you were, because the NDP insisted that you be consulted. My colleagues Jean Crowder and Dennis Bevington in particular insisted that we do everything we could to get hold of you and get you in here today.

Now I listened with a great deal of sympathy, Grand Chief Phillips, as you explained how you're being sent from pillar to post, you're being told that it's not a provincial matter, it's a federal matter, and when you get here you're told, actually, it's a provincial matter, as Mr. Wells tried to do before. One of the more interesting aspects of the Liberal presentation is that Mr. McCallum has a new twist on that. He says how unfair this is for you and yet he tells you at the same time that he wants to vote for it without amendment.

So what I'm going to do...somebody has refused to allow you to table this because it's in English only; I'm going to read the English--it's only three lines--and I apologize for that because I would have preferred for you to be able to do it in your own language, but the only two languages accepted here are English and French. I think out of openness we should have accepted this, but to the extent that it's only three lines, I'll read the English so that the interpreters can provide the French version for those who were objecting:

To ensure conformity with the laws of Canada and further to section 8.3(1) of the Federal-Provincial Fiscal Arrangements Act, any provincial value added taxes (PVAT) that have been exempted by a participating province shall be exempt under the Excise Tax Act.

Now in your presentations, Chief Matthew, Chief Toulouse, Grand Chief Phillips, you explained that this engages the obligation of the crown as expressed several times by the Supreme Court of Canada. Do you want all parties here, including the Liberal Party, to stop fooling around with your rights and to finally vote the amendment that you have proposed so you will continue to benefit based on the notion of honour of the crown that you correctly put on the table? Do you want the Liberal Party to do the right thing for once and vote for your amendment, or do you accept Mr. McCallum's weaselly attempt to explain why he's going to vote for the bill without amendment?

[Grand Chief Randy Phillips]

Thank you, Mr. Mulcair. Certainly we appreciate any efforts made by any party, particularly the NDP, to get standing at this committee.

What I'd like to see is that all parties of the House understand and recognize and respect aboriginal treaty rights, and this, I think, is a minimalist approach with respect to that. So yes, I'd like to see all parties of the House support this amendment. As I've said earlier, with respect to this particular tax, it's going to impact on the majority of the citizens of Ontario. Since the majority of the citizens of Ontario refuse to stand up and protect their rights, it's up to us to make sure that both the provincial and the federal governments honour their obligations and protect us. So at a minimum, that's exactly what we'd like to see. In my view, this doesn't hurt the implementation of an HST in any way, shape, or form, but it does protect our rights and makes sure the federal government and the provincial government honour themselves.

[Thomas Mulcair, NDP, Outremont, QC]

The essence of your presentation, if I'm not betraying your thoughts, is that the point-of-sale exemption that exists now must be read as being a right granted to the first nations over the years as an extension of other treaty rights that had been recognized and that exist. Based on past experience, has anyone in the federal government been able to give you an argument why they're not consulting you, why they're not carrying out what is required, an adequate and meaningful consultation, because all they're doing is setting themselves up for a fall? It's patently obvious to anyone who knows Canadian law that you have a right to meaningful and real consultation and it's being denied you.

So has anyone in Indian and Northern Affairs, has anyone in Minister Flaherty's office been able to provide you with at least the beginning of a rationale, “No, we don't have to consult you because”...?

[Chief Angus Toulouse]

If I may, no, we haven't had that kind of a dialogue. As political leaders we've tried to get a meeting with Minister Flaherty where we could at least have had some discussion or at least have heard from Minister Flaherty on the government's intention. And again, thank you for reading those two or three lines of the amendment we're seeking. Again, just to be clear, what we're seeking is to add a schedule, which would be schedule 11, entitled “First Nations and Harmonized Sales Tax Agreement with the Provincial Value-Added Tax Exemptions”. That's the schedule we're asking for that would lead...in terms of that sentence that you read, Mr. Mulcair.

So again, to be clear, that's what we're asking this committee to consider.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Thomas Mulcair, NDP, Outremont, QC]

What are your intentions if the Liberals back them and provide the Conservatives with the majority that Canadians voters didn't give them? Are you going to court to fight this?

[Grand Chief Randy Phillips]

It's certainly one of our options. We're looking at all options right now. What we have said here as leaders is that this is the last diplomatic ploy we have to make sure that our rights are protected. Certainly other than that, we'll use whatever means exist within Canadian law and international law to get that recognized. I think the UN Declaration on the Rights of Indigenous Peoples is certainly a good place to start.

[Thomas Mulcair, NDP, Outremont, QC]

Again, thank you, Mr. Chair.

My first conversation was with Mr. Menzies, and he immediately accepted the NDP proposal that you be invited in today, so I want to put that on the record.

Thank you.

[Grand Chief Randy Phillips]

Thank you, sir.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Mulcair.

We'll go to Mr. Pacetti, please.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair, and thank you to the witnesses.

I have a couple of things to clear up. Maybe I'm hearing conflicting versions, but on reserves—let's focus on sales taxes—do you charge the provincial sales tax or any type of sales tax?

[Grand Chief Randy Phillips]

There is no taxation whatsoever within our reserves, our communities—we talk about reserves.

I want to try to make one point here, and it has been raised a few times. The Supreme Court of Canada has already made the decision with respect to first nations government that they have to protect the rights of their citizens regardless of their residency. This is not an on-off issue. This is an issue with respect to the aboriginal treaty rights of those people.

The reserve boundary doesn't stop their rights from existing simply because they cross it. That's the part of the problem we've been having for a long time.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Matthew—sorry, I'm interrupting just because we have limited time—how about in B.C.? Is there any sales tax collected on reserves, whether it be provincial or even a first nation type of sales tax?

[Chief Keith Matthew]

Yes, some of our communities engage in that currently in British Columbia, as I described earlier.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The reason I'm asking that is because it would obviously be a lot easier if the taxes were collected but then redistributed in another fashion. So I wonder, do you benefit from any of the money that is collected from either the provincial or the federal government?

[Chief Angus Toulouse]

On the first point that it's easier, no. It's far from easier for first nations communities. As I stated in my comments, we're already talking about individuals who are below the poverty line. We're talking about individuals who are, at this point in time, dependent on social assistance. We're talking about $249 a month, in a lot of cases, for our citizens. That's what they have to live on.

Are you going to tax that even more? They can't make do with what they have right now as it is. So, no, it is a non-starter.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What would happen if the system were that you would get a GST rebate or refund or a credit on your tax return on a quarterly basis and in Quebec you'd get the QST rebate as well? Wouldn't you just maybe ask for something in return on the other side, so perhaps ask for your members to get more money through the tax system because they are under the poverty line? Wouldn't that be an alternative?

[Chief Angus Toulouse]

No. Again, it's not a fair alternative at all. A lot of our people haven't filed income tax returns because of their situation living on reserve for many years. So, no, they are not getting the GST rebate in a lot of cases. That system doesn't work for many of our first nations citizens.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What about in your case, Mr. Matthew?

[Chief Keith Matthew]

I'm not particularly certain about that, but I would agree with the position taken by the Union of Ontario Indians and Regional Chief Toulouse's point of view.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay, thank you.

Ms. George, our research staff here at the Library of Parliament says that the Ontario government is going to lose about $952 million in provincial revenues. In your presentation, you said that the companies will be saving a lot of money. Is this basically going to be savings by companies? Are the companies going to be the ones that are going to benefit from the $952 million in lost revenue?