House of Commons Hansard #127 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was taxes.

Topics

Excise Tax Act
Government Orders

1:30 p.m.

Liberal

Alex Shepherd Durham, ON

Mr. Speaker, I listened with interest to the member for Calgary Centre. There is just one aspect of the harmonized GST that the hon. member possibly did not touch on and that is the whole concept of the ability to remove provincial sales tax from export sales.

Members will know that Canada is a major exporting country. Indeed, a big section of our job growth has been related to the export sector. Much of the financial recovery that we are going through right now is related to exports. The maritime provinces, in particular, need to rebuild their economy so that they move into the 21st century. Exporting will be a big feature of that.

For example, in my riding General Motors manufactures cars and sells them on the U.S. market. Every car that is shipped into the United States from plants in Oshawa will have a certain degree of provincial sales tax embedded in the selling price. That makes our exports less competitive with some of the other competitors that are involved, such as OECD countries and southeast Asia. One of the main aspects of the GST was its ability to remove taxes from export sales.

We have provided these three provinces in particular-and the province of Quebec already has a harmonized GST-with a tool to rebuild their economy and a tool to enter into the 21st century with a more dynamic economy zeroed in on export sales.

Why would the member and his party try to frustrate the whole concept of building a new and better economy for the people of the maritimes to create jobs in the future?

Excise Tax Act
Government Orders

1:35 p.m.

Reform

Jim Silye Calgary Centre, AB

Mr. Speaker, I welcome the question from the hon. member. I agree that a goods and services tax, that a consumption tax along the lines of the GST does eliminate tax cascading and does allow us to produce and manufacture products, and export goods at a lower cost.

That still does not justify what the government is doing with this partial harmonization in three provinces. That is a tax theory, a tax question, and I agree with the member's point of view on it.

How long will it take the savings from this Oshawa plant to recover a billion dollars of taxpayers' money to help three provinces to recover the $100 million minimum that some of these businesses have said it will cost them to conform to this new bill? Yes, it is good for business. Yes, products can be sold cheaper. However, in the end the very philosophy of a GST is that the consumer pays the tax. The hon. member knows that.

What we have done here is make it more fair for business. There is no question about that. However, we have now increased taxes. Harmonization helps. Instead of having two taxes, federal and provincial we have one. All those arguments make sense.

When the consumers find out how much more it will cost them, I predict there will be a lot more complaints and a lot more people crying about it than there is now. Everybody will be affected. At first they support the theory and the concept. Then, as they find out more about it, it becomes like the tax inclusive pricing which is causing a nightmare. That is what is really creating a cost for businesses.

The government would have them on side if it just dumped it. I do not know why the geniuses in cabinet do not go for it. They are stubborn. They will force it. The MPs will have to explain it. That is fine. Handle it. That is their job. They brought this in.

In the end, wait until the consumers get a hold of it. Wait until they see how it affects them. That is when it will be really of concern to members of Parliament, especially the Atlantic provinces. They will hear about it in their constituency offices. I predict that.

Excise Tax Act
Government Orders

1:35 p.m.

Liberal

John Maloney Erie, ON

Mr. Speaker, it is a privilege for me to rise today to speak on Bill C-70, the harmonized sales tax bill.

A great deal has been said in this debate about harmonization, what it will mean for Nova Scotia, New Brunswick, Newfoundland and Labrador. For the benefit of this House I want to take a moment to review some of these benefits. I would remind hon. members that the HST and its ensuing benefits will impact positively on the three participating provinces.

Clearly there could be additional benefits for the other provinces as well. I hope people are listening carefully to this debate today, especially in my home province of Ontario. It has been repeated several times in this debate that Bill C-70 represents a significant step toward a fully harmonized sales tax system, one of the government's goals.

The end result for the three participating provinces will be a system that is fair to consumers and small businesses residing and operating there. The new system will also promote fiscal co-operation and harmonization among the federal government and those three provinces. Hon. members know why harmonization will result in a simpler, fairer and more economically efficient sales tax system.

First, consumers in those three provinces will benefit. Removing the provincial retail sales tax from the business inputs, together with a lower 15 per cent rate and reduced compliance costs for businesses will mean lower consumer prices on many goods. Consumers will also know the full price of what they are buying before they get to the cash register because of tax inclusive pricing. At the same time, the rate of sales tax payable will be visible on their receipts.

Second, under the HST, businesses will be dealing with only one set of sales tax forms and operating rules. There will be one tax administration instead of the two sets of everything they do now. Not only will they have reduced compliance costs, but the competitiveness of businesses will be promoted. That is because the HST payable on business inputs will be recoverable, especially for businesses located in the participating provinces.

There will also be lower administrative costs under the HST because overlap and duplication will be eliminated. Of course, the single lower rate of 15 per cent is significantly lower than the rates currently in place in the three participating provinces.

It is important to note that the harmonization in the participating Atlantic provinces will mean a drop in their combined sales tax rates from just under 20 per cent to 15 per cent in Newfoundland and Labrador and from just under 19 per cent to 15 per cent in both Nova Scotia and New Brunswick.

To ensure a smooth transition, the HST base will be the same as the GST base. The rules governing the new system will generally be the same as those for the GST.

Economic benefits will also flow from the removal of tax on business inputs. In addition to eliminating the tax cascading that is inherent in existing provincial retail sales tax systems, the harmonization of sales taxes will minimize distortions in investment decisions.

I refer to businesses being able to recover the tax on business inputs in the new system. Keep in mind that the current provincial retail sales taxes are applied on the price of purchase, including the GST. Since the existing provincial retail sales taxes do not have a mechanism for removing taxes paid on purchases by businesses in the course of producing the goods and services that they sell, these taxes become embedded in the prices that businesses charge for the goods and services they produce.

A key advantage of the HST will be removal of the embedded taxes. This will make the tax payable on goods and services more transparent to consumers. In addition, companies and the participating provinces will be able to price their goods more competitively. This will be particularly advantageous for exported goods which will be completely relieved of tax. Along with promoting the international competitiveness of businesses in the participating provinces by removing tax from exports, steps will be taken to ensure that they and their competitors and non-participating provinces are treated equitably.

The design of the tax will ensure that goods and services sold into a harmonized province from outside the province for consumption or use in the participating province are subject to the same level of tax as goods or services sold within the province.

Registrants across Canada will be required to collect HST on goods or services sold in a participating province or shipped to that province. At the same time they will be eligible for input tax credits for HST paid on inputs into their commercial activities. Under current provincial sales tax rules in both participating and non-participating provinces, consumers are required to pay tax on any taxable purchase consumed in their home province.

If a purchase is made from a business in another province, consumers are required to self-assess the applicable provincial sales tax. The requirement to collect tax on interprovincial sales will ensure the application of a provincial tax is continued under harmonization in an administratively efficient manner.

In order to ensure a consistent and simple approach for businesses required to collect HST on interprovincial sales, a single set of rules will be provided in the Excise Tax Act. The federal government will apply this approach on behalf of any province that adopts a similar system.

As hon. members know, the registrants will be able to recover tax payable at the HST rate of 15 per cent on goods and services to the extent that they are acquired for consumption use or supply in a commercial activity. This will eliminate the tax cascading inherent in existing retail sales taxes in participating provinces.

We know too that the removal of tax on business inputs will enhance the competitive position of businesses operating in those provinces. Similarly, special rebate mechanisms will apply where property or services are acquired in participating provinces and the property is removed, or the services are for use outside these provinces by people who are unable to claim input tax credits.

Let me emphasize that registrants regardless of where they are located will be able to claim input tax credits in respect of tax paid or payable either at the 7 per cent GST rate or 15 per cent HST rate on property and services they acquire or import into Canada as inputs into their commercial activities.

By allowing registrants located in participating or non-participating provinces to claim input tax credits for tax paid or payable regardless of whether it was charged at the 7 per cent GST rate or at the 15 per cent HST rate, the dual objectives of eliminating tax cascading and maintaining competitive equity can be achieved in a way that is both simple and effective.

Businesses engaged in commercial activities anywhere in Canada that purchase goods and services in participating provinces that are taxed at the harmonized rate will be entitled to recover tax payable at the HST rate. Another result is that when reporting tax collected or claiming input tax credits, registrants will not have to separately identify the federal and provincial components of the HST at the 15 per cent rate or tax collected or payable at the 7 per cent GST rate.

Furthermore, most registrants will continue to use the current GST return to calculate net tax remittances. This aspect of harmonization will make a difference between the participating provinces and the remaining non-harmonized provinces.

Let me reiterate that at present in all provinces except Alberta, consumers pay provincial sales tax on all taxable purchases consumed in their home province. If they buy something outside the province they are required to self-assess the provincial tax applicable. Businesses generally apply only the GST on sales to other provinces but they are still required to indicate where PST does not apply, for example by destination. The PST does not apply out side the province.

Under the HST there will be no hidden taxes because of the input tax credits that businesses can claim to recover the tax on goods bought to run their operation and make products. Equity and competitiveness for Atlantic businesses dictate that all goods and services consumed in participating provinces should be subject to the same level of sales tax. This includes goods supplied by businesses in non-participating provinces for final consumption in Atlantic Canada.

Introducing a national measure for collecting tax on interprovincial sales will establish a stable, fair and predictable set of rules for businesses selling into the harmonized provinces. As we know, businesses in the non-participating provinces will have to apply the 15 per cent HST on all sales into a harmonized province.

I should point out here that frequent changes will not be required as other provinces harmonize. This is not a new sales tax on goods and services sold in the participating provinces. Sales tax on interprovincial sales has always been applicable. Many national businesses involved in interprovincial transactions already collect

and remit provincial taxes on a province of destination basis. This new approach merely ensures that sales tax is collected and remitted more efficiently and effectively.

As long as collection of tax on interprovincial sales is based on a single set of rules, collecting the 15 per cent HST will not involve a significant change for these businesses.

Some consumers shop to purchase items free of provincial sales tax in other provinces. While consumers are required to self-assess the applicable provincial sales tax on these purchases, as I mentioned before, this is not the most effective way to ensure that the tax is paid.

With businesses now having to collect and remit the HST when they sell into a participating province, consumers will no longer be able to purchase these goods free of provincial sales tax. Consequently, the same tax savings incentive to buy out of province will no longer exist. This approach is more equitable for businesses and consumers alike. Retailers in participating provinces will no longer be at a disadvantage compared out of province vendors. Both will be required to charge the full rate of tax on their sales.

Collection of tax on interprovincial sales requires two basic elements, a common base and referencing of federal legislation. The national approach to interprovincial sales establishes an efficient and effective system for collection of tax on interprovincial sales which can benefit all provinces by facilitating the collection of the provincial sales tax on all sales into the province.

We already know the HST treatment of interprovincial sales benefiting participating provinces. For example, through additional sales tax revenues and by providing a level playing field for all businesses selling in or into participating provinces.

We know too that there will be no incentive for businesses in any province to avoid paying tax on their inputs as they can claim input tax credits for the full amount of tax paid.

As I said at the beginning, this bill puts into law the first step toward replacing the GST with a truly national sales tax system. Perhaps, when the non-participating provinces see the benefits of harmonization, they too will join in and reap the benefits. After all, the consumers and businesses in those provinces deserve the same breaks as residents in Nova Scotia, New Brunswick and Newfoundland and Labrador.

No doubt the HST will be a better sales tax system when it is a national system. But this is a start, an important, valuable start that will truly benefit the economies of the Atlantic provinces. That is why I urge all hon. members to support this bill.

Excise Tax Act
Government Orders

1:45 p.m.

Bloc

Jean-Marc Jacob Charlesbourg, QC

Mr. Speaker, I am pleased to participate in this debate on Bill C-70 for various reasons. Several of my colleagues and members of the Reform Party have pointed out that, through this bill, the Liberal Party has completely reneged on an election promise.

I was listening to the hon. member for St. Boniface, who mentioned the added bonuses of the so-called harmonization of the GST. All the hon. members will remember the statements made by the Prime Minister, the Deputy Prime Minister and even the Minister of Finance to the effect that the GST was an unfair, regressive tax which hurt the economy and, in some respects, encouraged work for cash when the tax is applied to services.

We have realized that, after undertaking to abolish this unfair and intolerable tax, the government is now diverting attention by saying that it has been successfully harmonized and that the Prime Minister's promise to eliminate the tax had been misunderstood.

It will be remembered that, in the late 1970s, the Liberal Party guru, former Prime Minister Trudeau, had taken very similar action regarding the gasoline tax. At the time, when former Prime Minister Joe Clark was briefly in office, Mr. Trudeau described the gasoline tax introduced by the Conservatives as an unacceptable, intolerable and unfair tax that would be abolished as soon as the Liberals were in office.

And we all know that Mr. Trudeau became Prime Minister of Canada and that the gas tax was not abolished. Quite the contrary, it was increased. This bears a strange resemblance to the promises made by Mr. Trudeau's disciple, the current Prime Minister, who said he would abolish the GST because it was unfair, regressive and bad for the economy. Again, the promises made were not fulfilled and the government has now found a roundabout means, the so-called harmonization, which it touts as an outstanding solution.

We will never stress often enough what I would call the inconsistent, farfetched promises made over a period of decades by the Liberal Party, a party that makes all kinds of promises but never fulfils them. Such was the case with the gas tax and such is now the case with the GST.

The government talks about harmonizing the GST but, to my knowledge, the GST is still at 7 per cent, under the agreement reached with the maritime provinces. What was harmonized is the provincial tax, which was lowered in Newfoundland, New Brunswick and Nova Scotia. In other words, the provincial tax was harmonized, thus reducing the total tax, a loss the federal government will quickly compensate through equalization payments.

But the government also gave these three provinces $961 million in compensation, to help them integrate the GST and implement the so-called harmonization. Strangely enough, Quebec was a harmonization pioneer, as mentioned earlier by a Liberal member, who said that having an harmonized tax was good for trade and exports. Again, one wonders what principles of justice and fairness are used by a government that subsidizes and compensates the

three maritime provinces that agreed to "harmonize" their taxes, while Quebec did the same at its own expense.

I was in the private sector when that process took place and I remember that all the costs, such as the acquisition of software to integrate the GST with the provincial sales tax, were supported by small and medium size businesses in Quebec. As for the provincial government, it trained some of its employees and integrated its computer system so as to achieve harmonization with the GST.

Did Quebec get any compensation? Let me use the words of the Minister of Human Resources Development in reference to culture: "Not a bloody cent". We did not get any compensation from the federal government. Now Quebec is asking to be compensated for having harmonized its tax with the federal GST, but this government is turning a deaf ear so that the province might not get anything.

Meanwhile, the maritimes, where, as the government says, the tax has been harmonized, are being subsidized or compensated to the tune of $961 million.

With such compensation, New Brunswick can now be competitive and attract some Quebec and Ontario businesses, by stressing the fact that taxes will be lower in that province, given the kind of subsidy granted by the federal government, through the compensation paid to maritime provinces.

This is a rather curious system when you look at it: the federal government provides a kind of competitive tool to three provinces by harmonizing its tax, to the point that it becomes unfair, since these provinces will benefit from such a substantial subsidy or compensation. How then can we believe that the Canadian federation, with bills such as this one-

Excise Tax Act
Government Orders

1:55 p.m.

The Speaker

I am sorry to interrupt the hon. member. I know you are in the middle of your speech, but you will have 14 minutes left. You will have the floor again after question period.

It being almost 2 p. m., we now move to members' statements.

Chinese New Year
Statements By Members

1:55 p.m.

Liberal

Anna Terrana Vancouver East, BC

Mr. Speaker, last week the Chinese community celebrated Chinese New Year. In fact, the celebration was enjoyed by all communities under the leadership of those Canadians who emigrated from the countries where Chinese New Year is observed.

In my riding of Vancouver East the Chinese Cultural Centre, the Chinatown Merchants' Association, the Chinese Benevolent Association and S.U.C.C.E.S.S. organized several events in which a large number of people participated. It was a real celebration with a very successful parade with lions and dragons, drums and fireworks in a glory of colours and folklore. All devils were scared away.

One of the groups in my community we are very proud of is the Strathcona Chinese Dance Company. It was invited to Ottawa by the National Capital Commission to inaugurate Winterlude. Thirteen young people came under the leadership of Annabel Ho, while in Vancouver the remaining 70 young dancers performed under the leadership of Mimie Ho.

I would like to congratulate the whole Chinese Canadian community for its contribution to Canada and for sharing its traditions with all other Canadians.

Kung hei fat choy. Happy New Year of the Ox.

Justice
Statements By Members

1:55 p.m.

Reform

Bill Gilmour Comox—Alberni, BC

Mr. Speaker, Canadians expect a fair and responsive justice system. Yet for the past three years the apparent lack of justice in the Patrick Kelly case brings to light serious problems within our justice system.

Kelly, a former RCMP officer, was convicted of murder when his wife fell to her death from their 17th floor balcony. The police investigation into the Patrick Kelly case is being conducted by the same police force and the same homicide squad that has been accused of wrongdoing in the original investigation.

How can Mr. Kelly have an independent review when Ed Stewart, the primary officer in the original investigation, is staff officer with the police department reinvestigating the case? Ed Stewart apparently lost the tape recording that would verify or refute many of the allegations made by the key witness who later recanted her statements. This brings into question any impartiality in the investigation.

In the name of justice, the Minister of Justice must arrange for an independent body to conduct the Kelly investigation.

Small Business
Statements By Members

1:55 p.m.

Independent

Gilles Bernier Beauce, QC

Mr. Speaker, SMBs are the biggest employers in almost all communities in Canada, accounting for over half of all this country's jobs in the private sector.

When it comes to job creation, SMBs are responsible for 80 per cent of all net new employment. In addition, SMBs generate over one quarter of all sales, one third of all profits, one fifth of all goods, and approximately 40 per cent of the GDP.

Unfortunately, SMBs are spending too much time, money and energy complying with government requirements. The smaller a business, the higher its basic costs.

With the largest concentration of SMBs in Canada, the Beauce region is in a position to comment. I urge the government to do something to reduce the paper burden so that our SMBs can spend more time doing what they were intended to do, which is to produce goods and service effectively and not to waste time on often pointless paperwork.

One Hundredth Birthday Of Sister Sainte-Hermine
Statements By Members

February 11th, 1997 / 1:55 p.m.

Bloc

Suzanne Tremblay Rimouski—Témiscouata, QC

Mr. Speaker, today the Communauté des filles de Jésus in Rimouski is celebrating the 100th birthday of Sister Marie-Anne Chenel, also known to many as Sister Sainte-Hermine. I would like to add my congratulations to those of her religious family and her relatives.

Over the years, Sister Chenel has followed her chosen path with conviction. She lovingly took up duties as the teacher of young children and, through her presence and involvement, built up lasting ties within her community.

I wish Sister Sainte-Hermine serenity on her journey. May she continue to be, for a good many of us, an example of perseverance and hope.

Organ Donations
Statements By Members

2 p.m.

Liberal

Stan Dromisky Thunder Bay—Atikokan, ON

Mr. Speaker, I rise today to inform the House of the fantastic work being conducted at the Thunder Bay Regional Hospital's McKellar site.

A Thunder Bay medical specialist, Dr. William McCready, indicated that McKellar is the top hospital in Canada for organ donation. In 1996 nine multi-organ donors were brought to McKellar. Transplant teams have retrieved healthy hearts, kidneys, livers and lungs for use in patients throughout Canada whose diseased organs put them in a life or death situation.

The transplant process is facilitated when Canadians sign a donor card and when their relatives or next of kin have given permission for organs to be removed for transplanting. I urge all Canadians to complete donor cards. This humanitarian act has the potential to give the precious gift of life to someone in need.

Pensions
Statements By Members

2 p.m.

Liberal

Ted McWhinney Vancouver Quadra, BC

Mr. Speaker, the domestic law and administration of Great Britain have created a serious disadvantage for 130,000 Canadian citizens of British origin now living in Canada who are entitled to vested pensions from the British government. These British-Canadians do not enjoy the same benefits as British immigrants to the United States and other countries whose British pensions are indexed against inflation.

We ask the Canadian government to continue its diplomatic efforts to persuade the Government of Great Britain to bring its treatment of British-Canadian pensioners in line with similar pensioners in the United States and other countries.

Crime Prevention
Statements By Members

2 p.m.

Liberal

Jean Augustine Etobicoke—Lakeshore, ON

Mr. Speaker, I am encouraged as I speak to constituents in my riding that crime prevention and our commitment to a partnership with law enforcement, community groups and citizens for safe homes and safe streets is working.

In 1994 our government established the National Crime Prevention Council. Active community involvement is growing.

Last month Mr. Fred Roberts, one of my constituents, witnessed a robbery and assault of a senior by a group of teenagers. Mr. Roberts did not think twice about rushing to aid his neighbour. Later he apprehended a perpetrator and persuaded him to turn himself in to the police.

The Etobicoke Crime Prevention Association is also central in working with Youth Service Canada and the Department of Justice to create prevention programs.

All this proves that citizens, communities and governments can work together to prevent crimes and to produce safer streets.

World Championships
Statements By Members

2 p.m.

Bloc

Roger Pomerleau Anjou—Rivière-Des-Prairies, QC

Mr. Speaker, last Saturday in Nagano, Japan, Jean-Luc Brassard took the world moguls title in freestyle skiing. The silver medal went to Stéphane Rochon. A few hours later, Nicolas Fontaine won the gold in aerials.

The names of Jean-Luc Brassard, Stéphane Rochon and Nicolas Fontaine will now stand alongside those of Gaétan Boucher, Josée Chouinard, Isabelle Brasseur, Sylvie Bernier, Myriam Bédard, Sylvie Fréchette, Annie Pelletier, Gilles and Jacques Villeneuve, Bruni Surin and many others, who are eloquent testimony to the fact that Quebecers can compete with anyone in the world and win.

Bravo Jean-Luc. Bravo Stéphane. Bravo Nicolas.

Grain Transportation
Statements By Members

2 p.m.

Reform

Lee Morrison Swift Current—Maple Creek—Assiniboia, SK

Mr. Speaker, prairie elevators are bulging with grain. Meanwhile dozens of ships are waiting to load in Vancouver and massive demurrage charges to western farmers are accumulating.

The two major railways have chosen this inopportune time to suspend service for at least three weeks on hundreds of kilometres of lines in western Canada. Outstanding car allocations have been cancelled and producers have been hung out to dry.

As usual, the interests of western grain farmers are being ignored. However with a transport minister from Victoria and a minister of agriculture apparently from some other planet, this is hardly surprising.

Tobacco Legislation
Statements By Members

2:05 p.m.

NDP

Svend Robinson Burnaby—Kingsway, BC

Mr. Speaker, the Liberal government is under tremendous pressure from tobacco manufacturers to weaken and delay Bill C-71, the tobacco legislation. New Democrats urge the government to move ahead with the bill, which already represents a compromise, with no more concessions and no more delays.

It is ironic that the tobacco industry is seeking to make deals around sponsorship such as allowing international events. At the same time other governments, including the U.S., Belgium and France, are moving to a total ban on all tobacco sponsorship of arts and sports.

The government should ensure that the funds lost to cultural and sports groups are restored and strengthened from other government revenues. The government must not be bullied by the high pressure propaganda from the tobacco companies, companies that have already a very cosy relationship with the Liberal Party.

Canadians can have both a rich and varied cultural and sporting life and protect the health of our children and our own health from the destructive impact of tobacco.

No more concessions and no more delays. Move ahead with Bill C-71.