House of Commons Hansard #53 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was police.

Topics

Motions For Papers
Routine Proceedings

3:30 p.m.

Some hon. members

Agreed.

Motions For Papers
Routine Proceedings

3:30 p.m.

The Deputy Speaker

I wish to inform the House that because of a ministerial statement, Government Orders will be extended by five minutes, pursuant to Standing Order 33(3) (b) .

Excise Tax Act
Government Orders

April 20th, 1994 / 3:30 p.m.

Portage—Interlake
Manitoba

Liberal

Jon Gerrard for the Minister of Finance

moved that Bill C-13, an act to amend the Excise Tax Act and a related act, be read the second time and referred to a committee.

Excise Tax Act
Government Orders

3:35 p.m.

Vancouver South
B.C.

Liberal

Herb Dhaliwal Parliamentary Secretary to Minister of Fisheries and Oceans

Mr. Speaker, I welcome this opportunity today to reaffirm the government's commitment to a fair and simpler sales tax system.

Our goal is to make it fair for consumers and business, especially small business, and to have a tax structure that promotes federal-provincial co-operation and harmonization.

The House of Commons Standing Committee on Finance has already begun to explore alternatives to the current GST. The committee is focusing on the objectives of administrative ease for registrants, enhanced competitiveness for Canadian business and fairness for all taxpayers. It will also be mindful of the transitional impact on taxpayers of any proposed changes.

In addition the committee will have to be sensitive to the impact on revenue, for we need a sales tax system that can be relied upon as a stable source of revenue for the government.

The committee is consulting with Canadians. By June 1 it will report back to the House on ways in which we might achieve these goals.

The committee's report will help to set the agenda for consultations with provincial governments. We will invite the provinces to work with us to achieve a greater sales tax co-ordination. The lack of co-ordination in the tax system, particularly in the area of sales tax, increases the complexity for businesses and creates many extra costs for governments, both federal and provincial.

Through this process of consultation we will do our best to ensure that improvements to the tax system rest on a broad public and intergovernmental consensus. It will take time to build this consensus. It will take time to reform the sales tax system, to do it once and to do it properly.

It is therefore necessary for this government to take steps to make the GST easier to comply with in the interim. Bill C-13 proposes amendments that will accomplish this.

In several areas the GST legislation needs to be brought into line with what is practical on an administrative level both for the government and the GST registrants. The bill contains measures that have been developed and refined in consultation with representatives from the business community and other sectors affected by the changes. These measures will make the GST easier for businesses and other entities to comply with in their day to day operations.

Even though the GST will be replaced during the government's mandate, we will do what we can in the meantime to make the existing rules easier to understand for businesses, taxpayers and their professional advisers. The bill contains provisions that will ease the administrative burden on seasonal and part time businesses.

Bill C-13 is beneficial for charities as well. In fact it will allow some of the smaller charities to be excluded from the GST rules altogether. For charities that do remain in the system there are measures that would make the rules easier to follow.

This bill will also clarify and broaden the scope of the special treatment in the agricultural sector and certain exempt sectors.

I would now like to take a few minutes to tell my hon. friends about some of the specific measures in Bill C-13. I would like to begin with the changes we are proposing for the business community, especially small businesses, for it is in this sector that the need for change is particularly critical.

The bill contains provisions related to a simplified method for registrants to claim input tax credits, that is to recover the GST they pay on their business expenses.

This simplified method will be available to businesses with annual taxable sales of $500,000 or less. It will eliminate the need for them to identify the amount of tax payable on each and every purchase they make. Effectively this special approach will allow them to calculate input tax credits by using the same information they need for income tax purposes.

Other amendments in this bill will ensure that seasonal and part time businesses will no longer have to file GST returns during the off season.

Taken together, these small business measures will make the current sales tax system easier to comply with for many registrants in Canada.

There are other sectors of society that have special needs and practices to which the tax system must adapt. Bill C-13 contains provisions that respond to the concerns of the health, charitable and non-profit sectors.

For example, the legislation will guarantee the tax free status of adapting privately owned vehicles to the needs of the individuals who use wheelchairs. Another measure will broaden the GST exemption for homemaker services that are rendered to people who require special assistance due to age, infirmity or disability.

The bill will help charities by entitling them to rebates or input tax credits on allowances and reimbursements they pay to volunteers who have incurred expenses on the charity's behalf. It will also make it easier for them to calculate input tax credits on their meals and entertainment expenses. Another amendment will make it simpler for charities to determine whether or not they are required to register for GST purposes.

In the agricultural sector Bill C-13 guarantees the tax free treatment of rabbits produced for food.

For suppliers of exempt services particularly in the financial sector, the bill clarifies the extent to which they may claim input tax credits in respect of expenses they incur in support of both their exempt and taxable activities.

The measures contained in Bill C-13 will lessen the administrative burden of the GST. They will resolve some of its technical shortcomings until we, together with our provincial counterparts, have an opportunity to forge a solid consensus for a fundamental reform of the sales tax system.

I therefore urge the hon. members to give their full support to the bill.

Excise Tax Act
Government Orders

3:40 p.m.

Bloc

Maurice Bernier Mégantic—Compton—Stanstead, QC

Mr. Speaker, this afternoon, the House will consider three bills, including one which concerns the Department of National Revenue and, more specifically, the merger of customs and excise. The other two bills deal, respectively, with legislative provisions concerning the GST, Bill C-13 and Bill C-15 which deal with certain Income Tax amendments.

The Official Opposition will support the government on the adoption of Bill C-13. As the hon. member for Vancouver South just pointed out, this bill, whose purpose is to revise or adjust certain provisions of the GST legislation, will affect small and seasonal businesses, charities, health care services, agriculture, financial institutions and other exempt suppliers, and also sets requirements for payments and remittances of $50,000 or more.

I would like to take this opportunity to discuss why the government has to revise these bills from time to time. In the case of Bill C-13, the bill before the House today, I must admit this is an admirable attempt by the government to make our taxation system more straightforward and more equitable.

The Official Opposition certainly welcomes this initiative, especially since it also aims to correct some technical deficiencies in legislation adopted previously. However, I think this would be a good time to explain how important it is for us, as legislators, to produce legislation that is clear, concise and consistent. The trouble with most of the legislation being passed today, especially when the government is trying to move a large number of bills through Parliament, is that the implementation of all this legislation often creates problems that are even worse than those it was supposed to resolve, which are often quite simple. The result is that today, we have hundreds of laws that merely complicate the lives of most citizens.

I think we should realize, as legislators, that there is the federal government, the House of Commons, which passes bill after bill, and the provincial legislatures which also produce a considerable number of bills and regulations every year. There are also municipal governments across Canada and Quebec which adopt by-laws to be observed by all members of the community. There are also school boards, each with their own by-laws.

My point is that the well-known principle that ignorance of the law is no excuse is often difficult to maintain in the maze of legislation we find at all levels of government. Often the only people who can be sure of enjoying the benefits of these laws are the experts in the field, including lawyers, notaries and accountants, for whom I have tremendous respect; but the fact remains that more often than not, they are the real beneficiaries of this maze of legislation at all levels of government.

How do you expect ordinary people whom we are supposed to represent in this House to find their way through the incredible labyrinth of legislation in this country? A law is never perfect, but we should at least ensure it is worded as simply as possible. Legislation that is not clear will inevitably be misinterpreted or misused, sooner or later. As I said before, there are hundreds of laws in Canada that would gain by being simplified or at least clarified.

Bill C-13 fills that need to some extent, and that is why the members of the Bloc Quebecois support it. We, on this side, are able to recognize it when the government does it right and we will never hesitate to support any measure or bill such as Bill C-13 that makes it possible to simplify the Canadian legislative system. Unfortunately, such is not the case with all Canadian legislation. In some cases, it is almost ridiculous and Canadians get the impression, in fact the conviction, that the legislator does not know where he is going, that he has no vision and that all we are asking of our fellow citizens is that they trust their government and obey the many laws passed just about everywhere.

Survey after survey shows that current Canadian public opinion on the confidence of the people in their governments and elected representatives in general -and Quebecers agree with their fellow citizens in English Canada on that- is lower than the interest rates set by the Bank of Canada, although these are relatively low.

All this to say that neither increasing the number of laws nor enforcing them will improve the public's perception.

I will come back to that later, but we will also be debating Bill C-15, which is a good example of the kind of legislation that should be put before this House to make some sense of the legislative and administrative jumble created by previous legislation.

Bill C-13 clarifies the legislation that governs us. While a step in the right direction, such efforts remain very modest in the face of the masses of legislation which continues to make the lives of people and corporations miserable in this country because of their lack of clarity and transparency.

Let us not forget that each time a flawed piece of legislation is passed in this chamber, that a statutory regulation providing for the execution of a law is misinterpreted or applied incorrectly, and that this has an impact on the everyday lives of our fellow citizens. As legislators, we often acquire the annoying habit of forgetting that the various bills we pass impact on the daily lives of our fellow citizens.

Those were the main comments I wanted to make as the Official Opposition critic concerning Bill C-13. In conclusion, I would like to reiterate that the opposition will support this bill because, as I pointed out, it improves several legislative provisions on the GST. We hope that, under the GST review initiative referred to by the hon. member for Vancouver South-we know that public hearings and consultations are being held on a new

act, perhaps, or an in-depth review of the GST-the government will take the time needed to table before Parliament a bill that will make sense to Canadians, that will be equitable and that will, in the end, benefit our society.

Excise Tax Act
Government Orders

3:50 p.m.

Reform

Jim Silye Calgary Centre, AB

Mr. Speaker, I will be the only caucus member for the Reform Party addressing the bill today.

I rise today to address Bill C-13, an act to amend the Excise Tax and a related act. The bulk of the bill offers relief to small business, charities, health care users and rabbit growers in paying their GST. Yes, that is right, they now get back the money they paid in taxes on rabbit food.

The bill makes life easier for them or permits them to pay less. It makes permanent administrative practices already in place. One section, however, prevents people who owe over $50,000 GST to pay by cheque on Friday afternoon and get a weekend of extra interest credit because the cheque does not clear until Monday.

The only contentious section concerns financial institutions that have been trying to get their GST bill lowered by claiming that a section of the act is ambiguous. The ambiguity was discovered by tax lawyers, which justifies their high pay. It would take several paragraphs to explain the highly technical nature of the ambiguity. However the weak position of the banks is revealed by the fact that for four years they paid between $150 million and $300 million under protest. The new bill removes the ambiguity and the money stays with the government. This is a very good and sound decision under the current economic circumstances.

It is particularly refreshing to note that Bill C-13 offers relief to rabbit growers in the country. Now all the Minister of Finance has to do is magically pull out one of these rabbits from a hat and balance his budget.

My party supports Bill C-13 but it would like to point out that it represents yet another example of a federal government tinkering with an old idea that does not work.

Since its inception the GST has been a burden for business to collect on behalf of the government the moneys owed and also for the government to administer. With its countless exemptions and high rate, the GST has become symbolic of the country's chaotic tax system causing confusion and resentment among Canadians.

I have said this before and I will say it again. Canadians pay too much in taxes and want the current system overhauled, not just tinkered with.

The problem is that governments have been spending in ways that ignore both the need for a strong economy and the dangers of continued deficit spending. The government, like those before it, relies on the revenues generated by taxes like the GST and the new tax sources to fund their programs and make interest payments on the debt.

If the federal government were to truly attack the debt and not just nibble around the edges as is currently the case, tinkering with rabbits, interest payments to service it would be lower and leave it with more revenue to fund other programs.

This would give the federal government the ability to reduce its current tax hauls from hard working Canadians and give them back their disposable income which will then be spent more efficiently and effectively. They know how to spend their money on their needs better than the government knows how to spend it on their behalf on what it perceives to be their needs.

With more disposable income in the hands of taxpayers, people in the private sector will stimulate the economy creating jobs using at risk money that motivates and not government money which wastes.

Continued government overspending of debt capital, not equity capital, on rehashed programs from the 1960s and 1970s has further encouraged taxpayer resentment, unemployment, high deficits and debts. In today's world, real sustained growth depends on trade, investment and strong industry.

Over the past two decades, the country has lost the competitive edge that it once held in the world marketplace because of poor government policies combined with overspending and high taxation.

As Mr. David McLean from the Vancouver Board of Trade has said:

Foreign investors do not just look at the costs of the goods and services tax and provincial sales taxes, they add them all up. If the cost is too high then capital will not come to Canada.

This is why we must re-examine all taxation, stop tinkering and put in place a simple, comprehensible system that will take the country into the future, leaving the old policies behind.

Enough reruns. Let us create an entirely new program. Canada needs a proportional system of taxation. The Liberal member who spoke first to this bill today mentioned that the finance committee is looking for a replacement for the GST as promised by its leader. One alternative it should consider is a proportional system of taxation or, as is sometimes otherwise referred to, a flat tax.

The present system of taxation is too complicated, too high and too unfair. These factors in combination with consistent government overspending are stifling our economy. I recommend the implementation of a proportional tax on individual and corporate income.

A proportional tax is the only way to increase the revenue side of the budget, remove the incentives for the underground economy, restore fairness and, most important, stimulate economic growth, which is a priority of all of us here.

While we are fighting with our high annual deficits, the high debt and the interest on that debt, we could increase the disposable income both for corporations and individuals through a completely new taxation system. This would help speed up the process of reducing the deficit to zero and starting to supply some surplus funds to the debt. This is the kind of signal, the kind of message that will really inspire and encourage this country to be a haven for investment as it used to be.

This concept is not new to the House or the government. It was the member for Broadview-Greenwood who sits opposite me who initially, I understand, supported a single or flat tax. He wrote in his book The Single Tax : ``Lower marginal rates and more take home pay would be an incentive to work harder and smarter. The new incentives plus elimination of avoidance and evasion would lead to this tax taking in more revenue''.

I unequivocally agree with the member for Broadview-Greenwood. I am very impressed by his intelligence and insight on this subject.

The objective of this tax would be threefold. First, it would simplify current complicated tax forms so that all Canadians could understand them. I challenge the 295 members of the House for this taxation year to fill out their own income tax forms by themselves and with no help go through the form. Whatever they come up with then send it in to the Minister of National Revenue and have two independent people within that bureaucracy figure out their tax return. I would not be surprised if over half the returns had two different answers with a lot of mistakes which would prove that is very difficult and complicated. Nobody understands the 2,300 and some pages of the Income Tax Act.

This would also increase savings for the Department of National Revenue in the collection of taxes and the monitoring of all personal and corporate tax exemptions.

Second, it would restore equity in the tax system, eliminating the perception that one group of taxpayers is favoured over another by setting a lower fixed rate of tax over a certain threshold for individuals. Corporations would also pay a low fixed rate of taxation under this reform system.

Equity is when people who make relatively the same amount of income pay relatively the same amount of tax. By eliminating yesterday's incentives, which we refer to today as loopholes for the rich people, we can ensure that we capture 15 per cent or 20 per cent, whatever the flat rate would be of that income. That is what would increase the revenue for the government. We could give a high enough tax deduction for the first $12,000 or $15,000 of earned income so that nobody has to pay tax on that. That would also relieve a lot of the pressure on our social programs.

It would restore integrity and bring effectiveness to the system by eliminating the need for so many tax concessions and loopholes like those that the government is trying to close with Bill C-13. We waste our time on old laws and old rules that are not working.

The Liberal government must stop following the same path as its predecessors and show some initiative. Stop just talking the talk and walking the walk. Take some tough action and act instead of talking about acting by setting up 15 new committees. It will take six months before they come back with a recommendation which the House will then have to review for a further six months or a year. Let us take some action.

By maintaining the status quo with taxation and programs like infrastructure and the Katimavik II youth job program, Canadians are seeing nothing new from this government. When will this government wake up and realize that you cannot keep taking from Canadians higher and higher taxes and borrow indefinitely in the bond market. One of these days and soon somebody will not buy the bonds.

My hon. colleague for Beaver River said in the House yesterday something which I believe is worth repeating: "Old songs by new singers are still old songs".

The Liberal red book for example is now becoming an old song book which offers a two-track policy of growth which will, and I quote from the book, "make possible a monetary policy that produces lower real interest rates and keeps inflation low". The Liberals promise that their policies, measures, budget and all the necessary budgets made to date will get the deficit to 3.5 per cent of the GDP, will keep the interest rates low and we will have low inflation. Since the budget was released the Bank of Canada rate has jumped to a two-year high of 6.26 per cent, an increase of 2.16 per cent. Interest payments on our debt will now increase which will likely force businesses and consumer rates to follow as well in the marketplace.

As a former professional football player, I would like to point out that the current Liberal government playbook is not working. It is time to write a new one.

I finally have the attention of somebody from the government side. He finally put down the trivia that he was reading and is now listening to me. I got his attention.

The playbook is not working. It is time to write a new one, a dynamic one. Let us create a new system of taxation which is fair and simple for all Canadians, that will put to rest the need for band-aid bills like Bill C-13. It is our collective responsibility to develop new ideas and move the country toward a future based on prosperity and away from the old school ideas that just do not work.

I hope that in the Standing Committee on Finance where new ideas are being presented by witnesses from all across the country that the new proposals being suggested for a replacement for the GST are really and truly listened to and that the committee will not be just a job for backbenchers to keep them out of the way while cabinet occupies itself on the greater issues of the country.

There have been some worthwhile suggestions put forth in that committee. Some good solutions have been put forward in that committee. It comes from non-politicians, the intelligent people in this society. They have put forth some good ideas and we should be listening to them. If they do and it is on a non-partisan basis, I look forward to a report in the House that comes to you, Mr. Speaker, and says "the replacement for the GST is-"and that it has the unanimous consent of all members of the three parties in the House who are on that committee. I look forward to that and I hope it will be that conclusion.

In conclusion, easing the GST burden on the public is highly desirable and we should support all such legislation. I encourage the federal government to examine the benefits of a completely new system of taxation, a proportional tax which would remove the need for undesirable taxes like the GST and put money back into the pockets of hard-working Canadians.

The Reform Party will offer any assistance it can to move this country toward a proportional system of taxation and eliminate the need for debate and talk by the bureaucracy and politicians on useless bills like Bill C-13 when there are much better solutions to the problems, new solutions to new problems.

Excise Tax Act
Government Orders

4:05 p.m.

The Deputy Speaker

Is the House ready for the question?

Excise Tax Act
Government Orders

4:05 p.m.

Some hon. members

Question.

Excise Tax Act
Government Orders

4:05 p.m.

Liberal

Don Boudria Glengarry—Prescott—Russell, ON

I rise on a point of order, Mr. Speaker. I think you would find unanimous consent for the bill to be dealt with immediately at committee of the whole.

Also, you would probably find unanimous consent to have the bill immediately dealt with at third reading after the bill is completed at committee of the whole.

(Motion agreed to, bill read the second time and, by unanimous consent, the House went into committee thereon, Mr. Kilgour in the chair.)

Excise Tax Act
Government Orders

4:10 p.m.

The Chairman

Order. House in committee of the whole on Bill C-13, an act to amend the Excise Tax Act and a related act.

Shall clause 1 carry?

On clause 1:

Excise Tax Act
Government Orders

4:10 p.m.

Vancouver South
B.C.

Liberal

Herb Dhaliwal Parliamentary Secretary to Minister of Fisheries and Oceans

Mr. Speaker, there is an amendment to clause 1 that I would like to put forward.

I move:

That clause 1 of Bill C-13 be amended by striking out line 11 on page 1 and substituting the following:

"come into force on December 17, 1990 and any regulations made for the purposes of the definition estimated federal sales tax in subsection 121(1) of the Excise Tax Act as enacted by subsection (1) may have effect from that date".

Excise Tax Act
Government Orders

4:10 p.m.

The Chairman

Shall the amendment carry?

Excise Tax Act
Government Orders

4:10 p.m.

Some hon. members

Agreed.

Excise Tax Act
Government Orders

4:10 p.m.

Some hon. members

On division.

(Amendment agreed to.)

Excise Tax Act
Government Orders

4:10 p.m.

The Chairman

Shall Clause 1, as amended, carry?