House of Commons Hansard #89 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was technologies.

Topics

Ways And Means
Routine Proceedings

3:05 p.m.

LaSalle—Émard
Québec

Liberal

Paul Martin Minister of Finance

Mr. Speaker, pursuant to the provisions of Standing Order 83(1), I have the honour to lay upon the table a notice of ways and means motion to amend the Excise Tax Act as well as explanatory notes. I ask that an order of the day be designated for consideration of the motion.

Taxation
Routine Proceedings

3:05 p.m.

LaSalle—Émard
Québec

Liberal

Paul Martin Minister of Finance

Mr. Speaker, I am pleased to announce that the Government of Canada has reached detailed agreements with the Governments of Nova Scotia, New Brunswick, Newfoundland and Labrador to implement a new harmonized sales tax system as of April 1, 1997. The detailed agreements are based on the principles outlined in the memorandum of understanding that was signed earlier this year.

Any successful negotiation requires goodwill and good faith by the parties involved. I would like to take this opportunity to thank the governments of the three provinces concerned and especially my counterparts in Nova Scotia, New Brunswick, Newfoundland and Labrador for the manner in which they and their officials handled the issues involved in these negotiations.

What helped all of us to conclude these negotiations successfully was that we shared a common objective: to give consumers and businesses a sales tax system that is simpler, more efficient and more equitable. It is a practical example of how the federal and provincial governments can collaborate to make our federal system work better.

For consumers, the new harmonized system will offer several important benefits. First, thanks to tax inclusive pricing, consumers will know the full price of their purchases before they get to the cash register. This is something Canadians have consistently insisted on in consultations about GST reform. At the same time, consumers will continue to know how much tax they are paying because receipts and invoices will show either the amount of tax paid or the rate at which tax has been charged.

Consumers will also benefit because sales tax rates will be substantially lower than at present in each of the participating provinces. In Newfoundland, sales tax rates will be almost five percentage points lower. In Nova Scotia and New Brunswick they will be almost four percentage points lower.

The harmonized sales tax will be good for businesses as well. They will have to deal with only one tax, not two. They will have to complete only one set of forms, not two. And, they will have to deal with only one tax administration, not two. The new system will be straightforward and simple. For example, there will be no separate requirement for businesses to register for the harmonized sales tax. Businesses that are registered for the GST will automatically be registered for the HST. Furthermore, registered businesses will continue to use the current GST return to calculate net tax remittances. When reporting tax collected and remitted, as well as claiming input tax credits, there will be no need for registered businesses to identify separately the federal and provincial components of the HST.

During our negotiations with the three Atlantic provinces, concerns were expressed about the taxation of books and its impact on literacy. We took those concerns seriously. They came from the Atlantic ministers themselves, but they were also expressed most articulately and most forcefully by a number of members of the federal Liberal caucus.

Members may recall that in our economic and fiscal update of October 9 we said that one of the key roles of government was to

help give Canadians the tools they need to take advantage of the new economy. In that context the question that we have to answer today is at a time of limited resources how can we best support efforts to promote literacy.

Our answer is to target assistance to educational institutions and organizations which play a direct role in the area of such concern to us. That is why I am tabling today a notice of ways and means motion that provides a 100 per cent rebate on all books purchased by public libraries, schools, universities, colleges, municipalities, certain charities and non-profit organizations and other frontline literacy groups.

This rebate is not an isolated gesture. We introduced several measures designed to support learning and education in our 1996 budget, an increase in the education tax credit and increases to the limits on the transfer of tuition and education credits and contributions to registered education savings plans.

The 100 per cent rebate that I am announcing today means that there will be no GST on all books purchased by educational institutions and learning organizations across Canada. It means no GST on all books distributed freely in primary schools, in secondary schools and other educational settings. It means tax relief on books not only for structured learning in our schools and colleges but for lifelong learning through public libraries and front line literacy groups. These measures are effective immediately and on a national basis.

We have also agreed to administer a point of sale rebate in the three harmonizing provinces which will eliminate the provincial component of the tax on books. In short, there will be absolutely no increase in the taxation of books as a result of harmonization. Indeed in many cases there will be a decrease.

In closing, we do not claim that today's measure answers all the challenges we face with respect to literacy in this country. However, by targeting assistance in this way we can get greater impact for every dollar we spend at a time of limited resources.

Obviously more needs to be done. My colleague, the minister responsible for literacy, is working hard to get groups right across the country to identify and to develop the best means for working on this problem. We will continue to work closely with her to ensure that progress is made.

More often than not, real and lasting progress in government occurs in measured steps. Today's announcement on a harmonized sales tax and the rebate on books is a real, constructive and a concrete step forward in the administration of sales taxes in the promotion of literacy in our country.

Taxation
Routine Proceedings

3:15 p.m.

Bloc

Yvan Loubier Saint-Hyacinthe—Bagot, QC

Mr. Speaker, as strange as it may seem, I would like to offer the Minister of Finance my congratulations, but I will then move right on to three complaints.

I congratulate the minister on taking a step in the right direction by abolishing the GST on books purchased by educational institutions, non-profit organizations and other organizations working in the field of literacy.

This is also a victory for the Bloc Quebecois, for I would remind the finance minister that, since 1992, when there were seven members of the Bloc Quebecois in this House, we have been calling for the complete removal of the GST on all books sold, not only in the case of educational institutions and non-profit organizations, but everywhere, in all provinces, in whatever manner, for the purpose of eliminating illiteracy in Canada.

We are claiming a victory, because of the initial hard work done by our seven colleagues, and because the Bloc Quebecois, as the official opposition, carried on this fight for the complete removal of the GST on books.

Just as the Minister of Finance often slips bad news in with the good, the bad news is that this agreement with the Maritimes is going to cost Canadians almost one billion dollars. This is one billion dollars that Canadians outside the maritimes, as well as Quebecers, will have to pay for a political agreement with the Maritimes to fool the public into thinking that the government is doing something about the GST. If it had had to do anything, if it had had to keep its red book promise, it should have abolished the GST.

Now it is buying off the maritimes, and pretending to the Canadian people that it has taken action and sorted out part of the problem, when in fact nothing has been sorted out, and this political agreement has cost one billion dollars, 250 million of which will come from Quebecers, to make the Minister of Finance look good.

Second, I must protest the minister's lack of transparency, because nowhere in his statement does he mention this one billion in compensation that we will have to pay.

A second instance of lack of transparency pointed out by the auditor general: the minister doctored his figures in the last budget to include in the financial year ending on March 31 the $961 million, nearly one billion, he will pay to the maritimes. Why did the minister do that? He did it so that next year, he would have even better news for us about reducing his deficit. That is doctoring figures. That is cooking the books.

The auditor general said it as follows: "Ottawa violates its own accounting rules". To make himself look good, the Minister of

Finance included an amount in the previous financial year, before the agreement was even signed with the maritimes. Now that is carrying transparency a bit too far.

Another case of lack of transparency is the minister's refusal to release the formula and the parameters for establishing this one billion dollar compensation for the maritimes, despite the fact that the Quebec government and other provincial governments, at the last meeting of Finance ministers, asked the federal government to come clean, for once, and release the formula for establishing this billion dollar compensation.

For instance, why should Quebec not be entitled to this kind of compensation, since it harmonized the QST with the GST back in 1991 and 1992? The government says Quebec is not entitled to compensation, but it never released the formula for calculating this compensation. That is a lack of transparency.

I want to congratulate the minister on partially abolishing the GST on books, but at the same time I have serious reservations about the transparency of the process. As far as the Minister of Finance is concerned, transparency does not exist.

Taxation
Routine Proceedings

3:20 p.m.

Reform

Herb Grubel Capilano—Howe Sound, BC

Mr. Speaker, the Minister of Finance at this week's Liberal Party convention will claim that he has delivered on his red book promise and got rid of the GST. This is a false claim. Rolling the GST and PST into one in a small part of Canada does not meet the expectations raised by Liberals during the last election.

Of course, we have heard the Liberals reply to this criticism: "Read the fine print. We never promised to eliminate". In my experience neither voters nor candidates read the fine print in red books. Not even an experienced politician with a name that reminds us of the police did so. No more proof is needed.

I could raise many shortcomings of the new blended GST-PST. Let me mention just a few.

First there is the added cost for national retailers who have to print a different set of flyers, catalogues and price tags on merchandise for distribution in the Atlantic provinces and who have to change computer programs and cash registers. The Retail Council of Canada estimates this cost for all retailers to be $100 million.

The second criticism of the agreement for the new blended retail tax is that it costs the rest of Canada $1 billion. This payment is basically a bribe which the government was forced to pay because of the embarrassment caused by the red book. The Liberals obviously decided that the political cost of this payment was smaller than that of the broken red book promise, especially after their spin doctors told them to emphasize the fairness of the payment in light of adjustment costs incurred. We will see whether such payments will be made to other provinces in the future. Quebec tried to get equal treatment and failed.

We will also have to see what such equal treatment will do to the deficit. I also worry about the distribution of this adjustment assistance. Will it reach the small retailer who has to adjust his cash register and buy new computer software? How much will it cost to distribute this money to such users?

The third criticism of the deal is that it increases incentives for the underground economy. In the finance committee we heard how evasion of the GST is rampant in a number of industries; in construction, automobile repairs and many other services.

Such tax evasion is more rewarding; the larger is the gain. Since the blended tax is higher than the GST alone there will be more underground activity in untaxed income.

Fourth, the PST was a retail sales tax. In order to prevent the cascading of taxes business buyers did not have to pay the tax. As it turned out, for reasons I do not understand, many firms did pay it anyway to the tune of many millions of dollars. The blended tax falling on consumers only has to be higher in order to make up the money paid by business under the old system.

Fifth, the blended tax will not get rid of the complexity of the basic GST system. As the minister well knows, it is a nightmare. Municipalities, universities, schools and hospitals get special deals. Doctors and other professions enjoy yet another treatment. But most annoying is the special treatment given to food. "No GST on food". What a slogan. What a nightmare in practice.

Five doughnuts are not food; six are. Frozen pizza is a food. Pizza in a restaurant is not. I will not go on with the many examples of costly deviations from a value added tax on all transactions, as recommended by most economists and serving extremely well the people of New Zealand.

The trouble with today's announcement is that this complexity is now even higher. Books are no longer books free of tax. There are good books like the ones bought by libraries and universities and not so good books bought by everyone else. What a sham. What an administrative nightmare, a typical political compromise that serves no one.

Finally, I cannot help note that the minister in his statement claims that the tax will benefit consumers. I have trouble understanding this. I thought that the blended tax was revenue neutral. Are we now to understand that it lowers taxes?

If it does, what will be the effect on the provincial and federal deficits? If it is revenue neutral, how then can it benefit consumers?

In sum, the entire scheme of the blended GST-PST tax in the Atlantic provinces is one gigantic failure. It cannot be justified economically and socially. It can be justified only by someone whose judgment is clouded by the desire to extricate the Liberal Party from the serious political hole of their own making.

Taxation
Routine Proceedings

3:25 p.m.

NDP

John Solomon Regina—Lumsden, SK

Mr. Speaker, I rise on a point of order. With all due respect, I would like to have unanimous consent to say a few words in response to the minister's statement.

Taxation
Routine Proceedings

3:25 p.m.

The Speaker

Is there unanimous consent?

Taxation
Routine Proceedings

3:25 p.m.

Some hon. members

Agreed.

Taxation
Routine Proceedings

3:25 p.m.

NDP

John Solomon Regina—Lumsden, SK

Mr. Speaker, I appreciate this opportunity. I thank my colleagues for allowing me to respond on behalf of the New Democratic Party.

The Minister of Finance and many members of this House know that Canadians want a society in which the costs of maintaining a stronger community are distributed fairly with those who have gained the most from the community paying their fair share of taxes.

Instead, Canadians are getting a society in which rich and powerful individuals and corporations get away with paying less than their fair share, leaving the rest of us to pay the freight on reduced public services.

With respect to harmonization, it is the New Democratic Party's position that harmonization is not a fair way to deal with some of the tax situations in this country.

Members will recall that in the 1950s federal government revenues were shared 50 per cent by individuals and 50 per cent by corporations.

By 1996 those shares have changed from 50 per cent by corporations down to 6 per cent by corporations, with individuals paying about 94 per cent of the tax revenues in this country.

Corporate tax revenues in Canada, combined federal and provincial, right now are the lowest of all the G-7 nations. In fact, corporate taxes amount to 6 per cent of the gross domestic product in Canada, with the G-7 average being around 10 per cent.

The Liberals in opposition promised to abolish the GST. In fact, the GST is not only remaining, but they have expanded it to include harmonization.

Members will recall that when the federal sales tax was in place, corporations paid about half the federal sales tax and individuals paid for about half the federal sales tax. When the GST was incorporated, we saw with respect to the harmonization of the GST corporations paying zero GST and individuals paying 100 per cent of the federal sales tax, which is now the GST.

It amounted in very simple terms to about a $7 billion or $8 billion tax increase under the former Conservative government, which is now not only embraced by the Minister of Finance and by the Liberal government but supported and expanded to include harmonization of this tax.

We are very concerned about this effort because the harmonization, if taken across this country, would be yet a further tax increase. This is not a very fair way to deal with Canadians who are in many ways either underemployed, unemployed or facing significant personal challenges when it comes to personal financial conditions.

To expand the GST and the PST into a harmonized program really is a shortsighted effort by the government to give corporations a very significant tax cut.

In summary, I just want to say that New Democrats and many Canadians whom we have talked to across the country believe in fair tax reforms based on the two fundamental principles of fairness: fairness to those who are participating in our economy, and also on the ability to pay.

Those who can pay their fair share should be paying their fair share. We have seen 35 tax increases under the Minister of Finance. We have also seen Bill S-9 being passed which contained significant tax cuts for corporations and significant tax breaks for very wealthy Canadians which the Minister of Finance agrees is really an unfair tax but he embraces it and supports it.

What the minister is doing here is really unfair to Canadians. It is something I think his party and his government will have to account for once an election is called.

Committees Of The House
Routine Proceedings

3:30 p.m.

Fundy Royal
New Brunswick

Liberal

Paul Zed Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, I have the honour to present the 39th report of the Standing Committee on Procedure and House Affairs regarding the associate membership of some committees. If the House gives its consent, I intend to move concurrence in the 39th report later this day.

I also have the honour to present the 40th report of the Standing Committee on Procedure and House Affairs regarding its order of reference of June 19, 1996 in relation to Bill C-270, an act to amend the Financial Administration Act (session of Parliament). The committee has considered Bill C-270 and reports this bill with one amendment.

Marriage (Prohibited Degrees) Act
Routine Proceedings

October 23rd, 1996 / 3:30 p.m.

Liberal

Tom Wappel Scarborough West, ON

moved for leave to introduce Bill C-340, an act to amend the Marriage (Prohibited Degrees) Act and the Interpretation Act.

Madam Speaker, the purpose of my bill can be succinctly stated. It is to ensure that the only valid marriage in Canada is one between one man and one woman. There are a few cultures and religions in the world which allow multiple wives or husbands but that is not part of Canada's history, tradition or values. There are one or two countries or states which either permit or are thinking of permitting persons of the same sex to marry but that is not part of Canada's history, tradition or values.

Canada's history, tradition and values are being challenged right now in our courts. The United States has already passed similar legislation to defend the institution of marriage. It is time for Canada to do the same. This bill will ensure that marriage remains what Canadians have always known it to be: a legal union between a single female and a single male.

(Motions deemed adopted, bill read the first time and printed.)

Committees Of The House
Routine Proceedings

3:30 p.m.

Fundy Royal
New Brunswick

Liberal

Paul Zed Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, if the House gives its consent, I move that the 39th report of the Standing Committee on Procedure and House Affairs presented to the House earlier this day be concurred in.

(Motion agreed to.)

Committees Of The House
Routine Proceedings

3:35 p.m.

Fundy Royal
New Brunswick

Liberal

Paul Zed Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, there have been consultations among the parties in the House and I believe you will find there is unanimous consent for the following motions.

I move:

That, pursuant to its mandate in relation to the comprehensive review of the Young Offenders Act (phase II), and specifically to observe how the youth justice system operates in practice, the Standing Committee on Justice and Legal Affairs (six members: four from the Liberal Party including the chair, one from the Bloc Quebecois and one from the Reform Party), be authorized to travel to Alberta, British Columbia and Whitehorse from Sunday, October, 27 to Friday, November 1, 1996 in order to hold public hearings, visit sites (young offender facilities and programs), and meet with officials, and that the necessary staff do accompany the committee.

(Motion agreed to.)

Committees Of The House
Routine Proceedings

3:35 p.m.

Fundy Royal
New Brunswick

Liberal

Paul Zed Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, I move:

That, in relation to its study of circumpolar co-operation, seven members of the Standing Committee on Foreign Affairs and International Trade (five from the Liberal Party, one from the Bloc Quebecois and one from the Reform Party) be authorized to travel to Cambridge, England; Oslo and Tromso, Norway; Stockholm, Sweden; and Copenhagen, Denmark; and that seven members from the committee (four from the Liberal Party, two from the Bloc Quebecois and one from the Reform Party) be authorized to travel to Moscow, Murmansk and St. Petersburg, Russia; and Helsinki, Finland during the period of November 2 to 9, 1996 in order to meet with, among others, parliamentarians, government officials, and indigenous peoples, and that the necessary staff do accompany the committee.

(Motion agreed to.)

Petitions
Routine Proceedings

3:35 p.m.

Liberal

Geoff Regan Halifax West, NS

Madam Speaker, I would like to present a petition urging Parliament to table a bill to protect endangered species. This is only part of the petition, which was signed by a total of 70,000 people.

Petitions
Routine Proceedings

3:35 p.m.

Liberal

Geoff Regan Halifax West, NS

Madam Speaker, I also want to present two petitions which seek amendments to the Criminal Code to increase the penalties on those convicted of driving while impaired.