House of Commons Hansard #228 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Presence In Gallery
Oral Question Period

3:05 p.m.

The Speaker

Colleagues, I have received notices of points of order. I will take them in the order in which I received them.

Points Of Order
Oral Question Period

3:05 p.m.

Liberal

Warren Allmand Notre-Dame-De-Grâce, QC

Mr. Speaker, during question period the member for Calgary West referred to a letter which I had sent to one of my constituents who had asked me questions about the referendum. As a matter of fact, that letter was one of several letters exchanged with this same constituent.

Since the hon. member for Calgary West only referred to part of a point I was making to the constituent, I would like the entire point to be on the record and I quote from the letter:

I might say in closing that the results of the referendum will not be binding and have no legal consequences. It is simply a plebiscite in which the people of Quebec will be expressing their preferences. As such, even with the best result, the PQ government could only use it to negotiate a constitutional amendment and even then the federal government has no obligation to respond.

I would ask the hon. member for Calgary West that since the letter he sent over to me is incomplete, would he table the complete letter in the House so that all members can read it.

Points Of Order
Oral Question Period

3:05 p.m.

The Speaker

We have a request by the hon. member. If there is unanimous consent for the tabling of this letter then the Chair would be prepared to receive it.

It there unanimous consent?

Points Of Order
Oral Question Period

3:05 p.m.

Some hon. members

Agreed.

Points Of Order
Oral Question Period

3:05 p.m.

Lethbridge
Alberta

Reform

Ray Speaker Lethbridge

Mr. Speaker, in my point of order I am referring to section 409(3) of Beachesne's with regard to the question that was raised by my hon. colleague from Calgary West. The question was whether it was hypothetical or not.

I would like to make a request to the Chair that the question be reviewed. I listened to the question and I believe that according to citation 409.3 questions can be asked for information with regard to policy. I believe the question would qualify under that. I would appreciate the Speaker's review of the matter.

Points Of Order
Oral Question Period

3:05 p.m.

The Speaker

I will take the Reform Party House leader's request to heart.

It seemed to me at the time the preamble that set up the question set it up to be a hypothetical question. I will look at it and if I find there is reason to come back to the House I will.

Business Of The House
Oral Question Period

3:05 p.m.

Bloc

Michel Gauthier Roberval, QC

Mr. Speaker, as usual, I will ask my hon. colleague, the government House leader, to tell us what is on the agenda for the next little while.

Business Of The House
Oral Question Period

3:05 p.m.

Windsor West
Ontario

Liberal

Herb Gray Leader of the Government in the House of Commons and Solicitor General of Canada

Mr. Speaker, I am pleased to provide the weekly business statement.

Commencing today and continuing through next Tuesday we will be calling business in the following order: Bill C-102, amending the customs tariff, Bill C-90 regarding the Excise Tax Act, then Bill C-94 on fuel additives. Following that Bill C-103 respecting magazines, Bill C-98 regarding oceans, Bill C-93 regarding cultural property, Bill C-62 with respect to administra-

tive agreements for regulatory purposes and Bill C-84 regarding the regulatory process.

Next Wednesday we propose to call third reading of Bill C-45 which tightens up the corrections and parole process.

When this is completed I would like to proceed with second reading of Bill C-78, the witness protection legislation.

This is our weekly business statement.

Business Of The House
Oral Question Period

3:10 p.m.

Lethbridge
Alberta

Reform

Ray Speaker Lethbridge

Mr. Speaker, one of the things which occurred in the spring session was the heavy agenda. Many of the important legislative items came in in the latter part of the session, in the last three to four weeks. We were then faced with time allocation. We forced through a number of readings of bills under, I would say, duress, as members of the House of Commons.

I would ask the government House leader if there are pieces of legislation which are planned and will those pieces of legislation be made available to us, or at least will the House be advised that they are coming within the next 10-day period?

Business Of The House
Oral Question Period

3:10 p.m.

Liberal

Herb Gray Windsor West, ON

Mr. Speaker, obviously there is other legislation which we intend to debate in addition to the legislation which has already been mentioned on the Order Paper. I will see what further information I can provide my hon. friend. I cannot say that everything we intend to introduce before the Christmas adjournment can be made available in the next 10-day period. There are things which we are working on within the government. Some measures have not had the drafting process completed.

I would think there are measures which will be introduced before the Christmas adjournment regarding which we cannot inform our hon. friend within the next 10-day period. However, I will endeavour to be helpful in responding to his question.

Points Of Order
Oral Question Period

3:10 p.m.

The Speaker

Colleagues, yesterday the hon. parliamentary secretary to the government House leader pursued the point of order raised by the hon. member for Roberval on Tuesday, September 19, 1995 relating to a question of the hon. member for Vaudreuil.

At that time, the hon. member for Roberval asked me to review the question the hon. member for Vaudreuil had put to the President of the Queen's Privy Council for Canada and Minister of Intergovernmental Affairs. The hon. member for Roberval was wondering about the nature of this question and how it related to the responsibilities of the federal government.

Yesterday, the hon. parliamentary secretary to the government House leader expressed the opinion that the question was in order, as the minister is in fact responsible for intergovernmental issues.

I did review Hansard and I have come to the conclusion that, as formulated, the question asked by the hon. member for Vaudreuil does not strictly speaking meet the guidelines on oral questions. It was seeking an opinion from the minister instead of information on a matter coming within his administrative capacity.

The Chair should at least have cut in and asked that the question be restated in terms that related more closely to the government's administrative responsibilities. As a matter of fact, yesterday, the hon. member for Brome-Missisquoi asked a similar question in a way that meets the requirements of our rules.

All hon. members will no doubt sympathize with the Chair that in the cut and thrust of question period sometimes certain questions escape your Speaker. I take this opportunity to ask for all hon. members to co-operate with the Chair and formulate the questions so that they are strictly relevant to the administrative responsibilities of the government, that they are not based on hypotheses, and respect the dignity of this Chamber in the choice of vocabulary.

Customs Act
Government Orders

September 21st, 1995 / 3:10 p.m.

Regina—Wascana
Saskatchewan

Liberal

Ralph Goodale for the Minister of Finance

moved that Bill C-102, an act to amend the Customs Act and the Customs Tariff and to make related and consequential amendments to other acts, be read the second time and referred to a committee.

Customs Act
Government Orders

3:15 p.m.

Winnipeg North Centre
Manitoba

Liberal

David Walker Parliamentary Secretary to Minister of Finance

Mr. Speaker, I appreciate the opportunity to begin debate on second reading of Bill C-102, an act to amend the Customs Act and Customs Tariff.

I will begin by going through the major points the bill touches on. It provides for the enhancement to Canada's duty deferral program, including duty drawback, inward processing and bonding warehousing to improve the competitive position of Canadian industry.

It provides for tariff reductions on a wide range of manufacturing inputs and certain other goods requested by Canadian manufacturers to improve competitiveness.

It provides for increases in travellers' exemptions on what is called basket tariff items to facilitate the processing of travellers.

It provides for amendments to the Access to Information Act to ensure confidential business information provided to Revenue Canada and finance is protected from disclosure to third parties.

The conversion of the Canadian retailers duty remission order 1993 is changed for statutory provisions to improve the transparency of these tariff relief provisions.

Certain regulatory tariff reductions will be introduced directly into the customs tariff to improve the transparency of these tariff relief provisions.

It provides for seasonal and non-seasonal tariff provisions for dry shallots to ensure they are duty free when unavailable from Canadian growers.

There are amendments to allow for possible future improvements to preferential tariff treatments for the world's poorest developing countries to improve their export opportunities.

It provides for the withdrawal of the duty free British preferential tariff rate on certain rubber footwear to protect Canadian production and jobs.

It provides for a clarification of various provisions in current customs and tariff legislation.

It provides a number of other technical and housekeeping changes to the customs tariff.

A number of these provisions, including the tariff reductions, increases in travellers' exemption and withdrawal of the BPT, the British preferential tariff on rubber footwear, came into effect on the tabling of the notice of ways and means motion by the Minister of Finance on June 13, 1995. The remaining provisions, including the duty deferral amendments, are to come into force by order in council after royal assent.

This bill contributes largely to the good government theme that we have provided to Canadians since the election two years ago. A number of the measures provided for in Bill C-102 build on the government's review of Canada's tariff regime announced in the 1994 budget and are designed to ensure Canada remains a favourable location for producing goods and for investment and also that Canadian businesses, including small businesses, are placed in a better position to profit from Canada's free trade agreements.

Certain amendments, for example the enhancements to duty deferral programs and tariff reductions on manufacturing inputs, are designed to lower business' input costs and maintain and enhance the competitiveness of Canadian businesses in Canadian and world markets.

Bill C-102 also provides for a number of technical changes to simplify and clarify and modernize the customs tariff and its administration and make it easier and less costly for business to access tariff relief programs. The amendments to facilitate the processing of travellers at the border will allow Revenue Canada, through its customs section, to focus on other important border issues such as the smuggling and processing of growing commercial imports.

Several of the amendments in Bill C-102 result from broad consultations with the private sector and are at its request to respond to competitiveness problems faced by Canadian businesses.

The bill seeks to implement three major tariff amendments that will deliver significant long term benefits to Canadian businesses and individuals.

I will outline these. The first two will improve the competitive position of Canadian industry by lowering input costs, thereby creating employment opportunities for Canadians and lowering prices for consumers. The two amendments to which I am referring are the enhancement to Canada's duty deferral programs and the reduction of tariffs on a wide range of manufacturing imports.

A third amendment, increasing travellers' exemptions, will facilitate the processing of travellers. In addition to benefiting consumers this will help our customs officers focus on real priorities by processing our growing commercial imports and combating the crime of smuggling. The legislation also contains a number of technical changes that will help modernize the customs tariff and its administration.

We believe the proposed changes will affect billions of dollars worth of trade. Their impact then will be both beneficial and significant in scope.

Because of the significance of these changes the government has consulted on them, responding directly to problems Canadians, whether in their businesses or as individuals, have identified. We can say therefore with confidence the measures I am about to describe will be welcomed by the great majority of Canadians affected by them. I urge my hon. colleagues to bear this in mind when they are asked to give their support to the bill.

Let me outline each of the three major amendments. I will first talk about the enhancements to Canada's duty deferral programs. I know duty deferral is not the stuff of everyday conversation and so I will take a moment to provide some background.

Duty deferral programs defer or relieve certain customs duties and taxes on imported goods which are re-exported. Canada presently has three duty deferral programs, duty drawback, inward processing and bonded warehousing. Over the years Canadian business has asked for improvements to these programs to make them more competitive with similar programs of our major trading partners.

The changes contained in the bill before us respond to that need. They will enhance, streamline and consolidate these three programs. They will provide as much up front relief as possible to ease cash flow pressures and to reduce input costs on Canada's exports.

The proposed changes will also make the program more easily accessible for small and medium size businesses by reducing the administrative restrictions currently in place. Other changes will enable regions to market Canada's duty deferral programs more effectively in competition with free trade zones around the world. This will help attract and keep investment in Canada. The changes I have described enjoy broad industry and regional support.

Mr. Speaker, for other members of Parliament in your area of St. Catharines there will be a great deal of improvements through the changes in these programs. The government is very proud of its ability to help out areas such as the Niagara Peninsula in dealing with the American market. In Winnipeg there are many proposals being brought forward as a result of the changes we are proposing.

It is a key priority of the government to ensure Canadian business has every opportunity to compete fairly and effectively and profit fully from Canada's expanding access to international markets.

Related to the enhancement of duty deferral is a change to the Access to Information Act. This change will protect the confidentiality of taxpayer information provided by the importing community under the Customs Act, Customs Tariff and the Special Import Measures Act.

Let me turn now to the second major amendment to Bill C-102, the reduction in tariffs on a wide range of manufacturing inputs. This amendment is also directed toward the relief of duties on Canadian manufacturing inputs so that our producers compete more effectively. This amendment will enhance the competitiveness of Canadian producers both internationally and within Canada.

In essence we will be removing a competitive disadvantage that currently burdens Canadian manufacturers vis-à-vis with their American counterparts. We will do this by reducing tariffs on some 1,500 imported manufacturing inputs dutiable at rates higher than those of the United States. I remind my hon. colleagues this measure was announced in the 1994 budget. It is being implemented now following extensive consultations. The measure enjoys strong industry support.

To appreciate the significance of this measure hon. members should be aware that one third of Canada's imports are manufacturing imports. Since American tariff rates are on average about 3.2 percentage points below ours, 5.4 per cent versus 8.5 per cent, U.S. producers enjoy a significant advantage.

Right now this discrepancy negatively affects Canadian manufacturers, principally in the domestic markets. That is because exporters are entitled to receive reimbursement of their input duties through what is commonly known as duty drawback or inward processing.

However, as of January 1, 1996 under the NAFTA drawback will be subject to certain restrictions. Therefore to ensure Canadian exporters enjoy the full benefit of Canada's free trade agreement we must bring our most favoured nation status tariffs on input in line with those of the United States. The 1,500 inputs covered by this amendment account for over $2.5 billion in trade.

The third amendment is the increase of duty exemptions for Canadians travelling abroad. Traveller exemptions are adjusted periodically. However, our exemptions have not been increased since 1983. As a result they are currently out of line with the exemptions provided for by our major trading partners. Our current limits are $20 after a 24 hour absence, $100 after 48 hours and $300 after seven days, but only once a year.

U.S. limits in a striking contrast are $400 once a month with a general exemption of $200. Residents of the European Union can bring in about $300 Canadian in dutiable goods after any absence.

The status quo is hard on consumers and customs officials alike. It also runs counter to Canada's and the United States' commitment under the accord of our shared border to permit travellers and goods to move easily across the Canada-U.S. border. For these reasons the bill will raise the levels of exemptions to as follows: to $50 from $20 after a 24 hour absence; to $200 from $100 after 48 hours and to $500 from $300 after seven days, with the once a year limit being dropped. Naturally Canadian travellers will welcome this change. It also benefits customs administration because it will ease border congestion.

As I said earlier, this will enable Canadian customs authorities to concentrate more effectively on real priorities like cracking down on smugglers and processing commercial imports. These have increased by 43 per cent since 1992.

I am aware some of my hon. colleagues may be concerned about the possible impact on retailers in border areas. I too care about

these retailers but I am convinced this legislation will not have a negative impact on their operations.

In short, this should be regarded as a simple updating measure with minimal economic or revenue loss and a potentially positive impact on trade, business and tourism. It is already operating without disruption.

In addition to the three principle amendments, the bill contains a number of other changes of a largely technical or housekeeping nature. Most will serve to clarify the intent of existing custom and tariff provisions.

Also included in the legislation is a measure that will, like the increase in traveller exemptions, work to streamline Canada's customs clearance procedures under what is known as a basket tariff item basis.

Under this travellers measure the government is proposing to replace the thousands of existing categories of goods with as few as 12 categories. This will speed up collection of duties from travellers at the border by more than 50 per cent.

The bill also provides for tariff reductions on certain finished goods. These reductions have been made at the request of Canadian manufacturers on grounds of competitiveness.

There is only one tariff rate increase in the package. The British preferential tariff is being withdraw from certain rubber footwear, thereby restoring the 20 per cent most favoured nation tariff rate.

This change is consistent with the permanent removal last year of a general preferential tariff on rubber footwear from developing countries. It will prevent countries from circumventing the general preferential tariff withdrawal action and thereby jeopardizing production and jobs in the Canadian shoe industry.

Former British preferential trade tariff exports will still have access to the Canadian market. They will simply have to compete on the same basis as other foreign suppliers.

At the same time the bill allows for possible future improvements to preferential tariff treatment for the world's poorest developing nations. I am confident that Canadians support the goal of enabling these countries to improve their export opportunities. Such changes could also result in lower import costs that will benefit Canadian consumers.

Some of my hon. colleagues may ask about the revenue implications of all these changes as I am outlining them today. As I have already said, the decision to increase travellers' exemptions has minimal implications for government revenues. As for the revenue impact and other measures, we are confident that any cost will be more than outweighed by the long term economic benefits of the proposals: improved competitiveness, increased exports and enhanced employment prospects for Canadians.

In short, the legislation is about providing a meaningful, long term boost to the Canadian economy. It will help ensure that Canada maximizes its benefit under the free trade agreement we have entered. It enjoys the support of business and consumers alike.

Last year alone, Canada's merchandise trade surplus with the U.S. was over $28 million, our largest ever. The benefits to Canadians of such a healthy export sector are beyond doubt, and the government is committed to ensuring that they continue and expand. I urge all my hon. colleagues to join me in sustaining that commitment by supporting the legislation.

Customs Act
Government Orders

3:30 p.m.

Bloc

Pierre Brien Témiscamingue, QC

Mr. Speaker, Bill C-102 is rather complex but can be summarized easily by explaining that it seeks to lower custom duties, in compliance with NAFTA's most-favoured-nation tariff.

This bill includes some 100 pages of tariff items which I will not list, for obvious reasons. We will support this legislation because it is consistent with the opening up of our borders, something which the Bloc Quebecois has always promoted and which reflects the situation that has always prevailed in Quebec, particularly since 1988, when free trade was a major issue in the federal elections. At the time, Quebecers massively supported a party which was promoting free trade. The 1988 election was essentially a vote on free trade and the Conservative party won.

Quebecers showed their strong desire to be part of the major economic blocs. They felt confident that they could do well in the context of a global market.

Bill C-102, an act to amend the Customs Act and the Customs Tariff and to make related and consequential amendments to other acts, is essentially in line with the recent North American Free Trade Agreement.

Some provisions of this bill seek to amend amounts and increase exemptions, depending on the length of the stay abroad, when goods are brought back to Canada.

These amounts vary depending on certain factors, including the length of stay. In fact, these provisions have been in effect for several months, since a ways and means notice was passed before the end of the last session.

This is all part of promoting trade with our economic partners in the United States and now Mexico, and increasingly, there are plans to extend this free trade zone to other countries, Chile, for instance, and then we would have a vast economic zone covering North America and gradually extending towards South America. This is now the policy of a government that, since it came to power, has been won over by the arguments of certain ministers, including

the Minister of International Trade who was pro free trade, although his leader was far less enthusiastic, at least during the last election campaign.

But once they came to power, common sense seems to have prevailed. We now see on the government benches a party that is very pro free trade and very open to international trade, which corresponds with the interests of the Canada they represent and the interests of the Quebec we represent.

You can see what I am driving at. Of course I am going to draw a parallel with what is going to happen. I just want to say I am surprised at what people say outside the House or even in the House when they talk about the political situation in Quebec. As we know, in Quebec there will be a referendum in which Quebecers will be asked to speak out on sovereignty, and also on an offer of economic and political partnership which, to use the terms of this bill, is aimed at maintaining the free circulation of goods, persons, capital, a customs union, a monetary policy, manpower mobility, and so forth. All measures we are trying to take now.

Canada today, especially with respect to the free circulation of goods and services, capital and individuals-admittedly not as free in the case of individuals, but consider the other three-especially with the Americans and the Mexicans and soon with the Chileans, and there is also a whole strategy of trade development, which is more important for provinces like British Columbia or the other western provinces where they are looking at the Asian market for business opportunities.

However, behind all these rules for trading with these countries, we have to look at the figures and the nitty-gritty. Today, trade between Quebec and Ontario is very substantial. Trade in goods and services between the two is around 40 to 45 billion. I would like to say to those who are listening to us that when I see a government, the present federal government, adopting a measure such as this which is aimed at facilitating trade with the United States, I have trouble understanding why the same thing would not be done with a partner just on the other side of its border, that is Quebec, instead of saying "Between us and you trade will be restricted".

I was listening to the parliamentary secretary's interesting statement, in which he said that it would make it possible to reduce input costs. That when you reduce input costs, it makes it possible to create employment opportunities and stimulate exports. That is absolutely true.

The input referred to is the material used to produce a finished product. For example, the wood used to make a piece of furniture is an input. So, the items used as an input in production, that is where customs tariffs are reduced progressively on inputs, tending toward their eventual elimination in order to create employment. This is the same logic which gave rise to the goods and services tax. That system of taxation resulted in no tax on inputs used in manufacturing. That is what the previous government did.

The members of this government vigorously criticized this tax, which they labelled as new but which replaced an old one. It did not necessarily replace it because they are very much aware that this tax is totally in line with the principles they are defending in this act, that is to encourage our exports. Yet the GST is not perfect. There will be a chance to discuss it when taxation is discussed a little later this afternoon. We are still waiting for the amendments the government intends to propose and implement in order to make good on its election promises. It does not have much time left. I doubt it can do so but we will have an opportunity to discuss this later.

Saying that we must promote our exports and ensure that the materials used in our exports are as cheap as possible is quite consistent with the trade logic of 1995 and the next decade.

Political decisions matter little. However, if Quebecers decided to take control of their political future while maintaining economic links with Canada, why would an entrepreneur from Ontario, for instance, who buys materials from Quebec because they are cheaper there say, "In the future I will buy more expensive materials; I want to be less competitive because the Prime Minister of Canada tells me we should not do business with Quebec"?

Do you think this kind of logic will prevail? No way. What will prevail is the same capitalist business logic in effect today. These people will look for the cheapest materials and products available. They will continue to buy and to sell to all those willing to buy their products. No one will refuse to sell goods and services to those who want to buy them. This is not the way our economy works.

I do not know any entrepreneur in Quebec or Canada who would refuse to sell their products to anyone because of their political affiliation or the political system in which they live. Even Canadian business people invest in South Africa despite its very controversial political system. Although that country does not have the most stable political system, people still invest there because they see business opportunities in mining and gold among other sectors.

The people who will invest here know that it will be more profitable for them. It will be the same thing the day after the referendum. They invest here because they see the best market opportunities.

That is why I am quite puzzled by the Prime Minister's political stand. His Minister of Labour, who is responsible for the referen-

dum in Quebec, seems out of step with the bill before us, which is aimed at promoting Canada's foreign trade.

It seems to me that this government is committed to promoting trade so Canadian businesses can export as much as possible. I would be very surprised if, after October 30, the government decided to put a brake on this direction for all kinds of political reasons because its stated priority, although it is still hard to believe, is job creation. If job creation is a priority, would it be in the government's interest to act in a way that will hinder job creation? I think not.

The people of Quebec and Canada can clearly see the economic conditions we are in. In Ville-Marie, where I live, if I look across the lake as I wake up in the morning, I can see Ontario. All that separates us is a lake just a few miles long. So, on not too foggy days, we can see the other side of the lake. On week-ends, people often go across to buy goods and services in Ontario; out of habit for some, but also because a certain type of service-based economy has developed over there. The same thing goes for the other end of my riding, in the City of Témiscamingue, where 200 Ontarians come in to work every morning at a very successful pulp and paper operation we have there. These people will want to keep on working in Quebec, I am sure. They will also want Quebec customers who buy their products in their shopping centres and businesses to keep doing so. Coincidentally, Témiscamingue is also located in the riding represented by the Premier of Ontario, who just got himself elected on the promise of major tax reductions.

I am convinced that he will want to look after the interests of his constituents, protect their jobs and business opportunities for the local business community. There will be discussions, negotiations and agreements. Everybody will keep working according to the spirit of the legislation before us today and which we support. It is intended to foster foreign trade. The days of closed, self-centred economies are over. Around the world, all markets are becoming increasingly open, forming into major trading blocs, be it in Europe, here in North America, in South America or Asia.

Last year, a parliamentary delegation travelled to Australia. It became clear that this country wished to integrate the Asian economic bloc. Everyone is trying to join a bloc without necessarily losing their own political identity in the process. Australians remain Australians, even though they are trying to join the Asian economic market place.

The same choice is being put to the people of Quebec, who will have to decide. What I want to do is to reassure them by showing them that, when we see people act like the government today, we realize that when the time comes to take concrete action, the economic reality prevails over the strategic political line designed to sow fear, confusion and doubt in the people's minds. I often say that economics are one thing and politics another. I was involved with economics before getting into politics, and I may revert back some say, who knows, but it is quite clear to me that trends-

Customs Act
Government Orders

3:40 p.m.

Reform

Jim Silye Calgary Centre, AB

Six weeks from now.