House of Commons Hansard #99 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was income.

Topics

Procedure and House Affairs
Committees of the House
Routine Proceedings

3:50 p.m.

Conservative

The Acting Speaker Royal Galipeau

Does the hon. member have the unanimous consent of the House to move the motion?

Procedure and House Affairs
Committees of the House
Routine Proceedings

3:50 p.m.

Some hon. members

Agreed.

Procedure and House Affairs
Committees of the House
Routine Proceedings

3:50 p.m.

Conservative

The Acting Speaker Royal Galipeau

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Procedure and House Affairs
Committees of the House
Routine Proceedings

3:50 p.m.

Some hon. members

Agreed.

Procedure and House Affairs
Committees of the House
Routine Proceedings

3:50 p.m.

Conservative

The Acting Speaker Royal Galipeau

(Motion agreed to)

The House resumed consideration of the motion that Bill C-40, An Act to amend the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act and to make related amendments to other Acts, be read the second time and referred to a committee.

Sales Tax Amendments Act, 2006
Government Orders

3:50 p.m.

NDP

Peter Julian Burnaby—New Westminster, BC

Mr. Speaker, I listened with great interest to the presentation by the hon. member for Joliette on Bill C-40. He talked about the GST relief for foreign banks. There is another very important element: the situation currently experienced by school boards.

In my riding of Burnaby—New Westminster, the school boards in Burnaby and New Westminster have spoken out about the need to get the same GST exemption as municipalities and governments. It is fair and wise to give these school boards the opportunity to reduce their costs and devote more resources to students. In fact, what is at stake here is our children's education, hence the importance of this issue. GST relief should be provided to school boards, thereby freeing up more resources for the students.

My question to the member is very simple. Does he support this idea that school boards should be exempt from GST so that they can devote more resources to the students, our children?

Sales Tax Amendments Act, 2006
Government Orders

3:50 p.m.

Bloc

Pierre Paquette Joliette, QC

Mr. Speaker, I thank my colleague from the NDP for his question and also for having listened to my speech. I was somewhat under the impression that only some of my colleagues from the Bloc were listening. So, I am glad to know that at least one other person was also listening.

The Bloc Québécois and I totally support the demand made by school boards, including by Quebec school boards, to be treated like municipalities with regard to the GST. In fact, that is included in the recommendations that the Standing Committee on Finance made to the Minister of Finance. There was a consensus. I would not say that all parties voted in favour of the measure, but the majority of them did.

I take this opportunity to underline a pending problem. The Federal Court made a decision on the application of the GST to school transportation. Many municipalities in Quebec and Ontario won their case at that time. Unless I am mistaken, about $12 million was to be paid back to municipalities. As far as we know, it is the only court decision that has been overruled by legislation. The former government had decided to tax the school boards retroactively.

I introduced a motion in the Standing Committee on Finance asking it to recommend to the Conservative government that it not impose the GST on school transportation since the Federal Court had ruled in favour of Ontario and Quebec school boards. It is not all school boards that are affected, but some of them. We also hope that the Minister of Finance will make a positive decision in his budget.

As the hon. member said, it is money that comes from the taxpayers' pockets and that should be used for education. There is something illogical about paying taxes to school boards if they must send that money to the federal government.

Sales Tax Amendments Act, 2006
Government Orders

3:55 p.m.

Bloc

Christian Ouellet Brome—Missisquoi, QC

Mr. Speaker, I too want to congratulate my colleague from Joliette on succeeding in making such a brilliant presentation on such a technical bill, as he mentioned earlier.

I want to go back to a point he raised at the very beginning of his speech when he talked about the tax rebate to foreigners who visit our country.

In my riding, some tourists get their tax rebate just before crossing the border.They always spend the money right then and there, often buying regional and even local products. So there is a multiplying effect. Our riding benefits a lot more economically than if that money was not reimbursed.

I want to ask my colleague if this multiplying effect is real and if he believes that the same phenomenon could happen in places other than at the border, for example in airports or in hotels—I do not really know. Could this happen elsewhere?

Sales Tax Amendments Act, 2006
Government Orders

3:55 p.m.

Bloc

Pierre Paquette Joliette, QC

Mr. Speaker, I thank the hon. member for his question. I think he is absolutely right. In fact, the Standing Committee on Finance heard witnesses regarding the government's intention to abolish the GST visitor rebate program. This is what we were told, not only at the border, where there are often private counters that give refunds. Indeed, one third of the program is administered by private firms that collect a certain percentage for their services. These facilities are often located in shopping malls, so that tourists who find themselves with cash in their pockets will use it to buy products in the surrounding stores.

This does have a snowball effect, not only for shops located at the borders—such as duty free shops for example—but also in all the shopping malls that have such counters. Let us not forget that we are talking about $80 million here. I should point out that the federal government has revenues totalling close to $2.350 billion. I think there is a disproportion here, and it costs about $8 million to administer the program. We are told that it is not being used enough. Then, let us integrate it into a strategy to promote tourism.

As I mentioned, it is unacceptable that this measure would come at a time when the value of the Canadian dollar has increased significantly in recent years, and at a time when authorities want Canadians who travel by land to the United States, and people who come into Canada from the United States, to carry a passport. It seems to me that the Conservative government should act responsibly and not add yet another hurdle for our industry, not to mention the cuts affecting Canada's tourism strategy. For all these reasons, common sense should again make the government reconsider its decision, or else propose a more effective plan to consolidate the tourism industry, which really needs it.

Sales Tax Amendments Act, 2006
Government Orders

4 p.m.

Bloc

Robert Bouchard Chicoutimi—Le Fjord, QC

Mr. Speaker, I too would like to congratulate the member for Joliette for his explanation and presentation on Bill C-40. I will not speak directly to the bill, but rather will deal with the GST.

The Bloc Québécois has intervened on this subject in the House on many occasions. When the Conservative government was in opposition, it was in agreement with us that the GST related to school transportation should be refunded to school boards.

In Quebec, this matter concerns 26 school boards, and in my region the Lac-Saint-Jean school board would be able to look forward to receiving about $300,000 if the GST were refunded.

I would like to know what is the justification and motive behind the government’s position in refusing to apply a judgment rendered by the court that orders the government to refund GST to school boards in Quebec and in Ontario.

Sales Tax Amendments Act, 2006
Government Orders

4 p.m.

Bloc

Pierre Paquette Joliette, QC

I thank the member for his question. As I had mentioned, this is a battle that we began with the previous government, with the support of the Conservatives. They were not officially involved. I know that school boards in Quebec and Ontario brought pressure on the Minister of Finance and the Conservative party to get to the bottom of this matter and settle it once and for all by not seeking to re-collect the GST that the federal tribunal finally ruled belonged to the school boards.

Since there has been no movement, I tabled a motion on behalf of the Bloc Québécois with the Standing Committee on Finance, asking that this matter be reconsidered and that an official recommendation be made to the government. I hope that will be done quickly so that the Minister of Finance can include it in his next budget. As the member has said, we are talking about millions of dollars that should remain in the hands of the school boards.

In conclusion, I would remind members that the Standing Committee on Finance also requested that the full amount of GST paid by school boards and educational institutions should be refunded on the same basis as for municipalities.

Sales Tax Amendments Act, 2006
Government Orders

4 p.m.

Bloc

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I congratulate my colleague from Joliette for his excellent speech.

I am pleased to speak to Bill C-40, first of all to tell you that the Bloc Québécois has given its support to this legislative change to the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and other acts. Following my colleague's speech, members will have understood that there are two major parts in the act, even though we say that it was divided in four parts. There are two major parts: the GST rebate, that is the cancellation of the GST on certain goods, and changes in the application of the Excise Tax Act to other goods.

I will not repeat what my colleague has said about all the services on which the GST will no longer apply. First I will talk about what is not in Bill C-40 as it pertains to the GST rebate. My colleagues have talked about this. First, the GST rebate for visitors has been abolished. This rebate used to be there. Theoretically, in Bill C-40, we should not have seen a new paragraph, we should simply have seen: “The existing act continues to apply”. However, the Conservative government has decided to go back and to abolish this GST rebate for visitors. This is directly affecting tourism, especially in Quebec.

When Europeans discovered America, Quebec was where they first settled. It is no coincidence that this is where we find the most beautiful cities, the oldest cities, in North America. It is a very hospitable land. When you arrive in the Gulf of St. Lawrence, you have the Gaspé, the North Shore, the Magdalen Islands, all of the beautiful ancestral sites that are worth visiting and that play host to many tourists. This industry is continuing to develop. Continuing up the St. Lawrence River, you come to Quebec City, which will celebrate its 400th anniversary in 2008 and is therefore the oldest city in North America. There you see everything it has to offer, including the beauty of the history it has bequeathed to future generations. This is the reason why so many visitors come to see Quebec City every year, and the city benefited from their spending and the GST rebate given to foreign visitors. Obviously, this affects all of the regions, because when people come to Quebec City they go on to visit the Saguenay and Lac-Saint-Jean. These are beautiful regions, with lakes and mountains; they are home to hospitality businesses where conventions and business meetings from around the world can be held.

Next you come to the Mauricie region and Trois-Rivières, and on the other shore, the Centre-du-Québec region. Of course, there is history in Trois-Rivières, the second oldest city in North America, and its representative, who is fortunate to sit in the House of Commons, is one of our colleagues. The Bloc Québécois represents all of these ridings along the river. And then you come to Montreal, with all its attractions, which is now internationally recognized. You should not forget to stop and see the Beauce and Appalaches regions. Next come the Eastern Townships, where you can see Lake Memphremagog and part of Lake Champlain. There are also the Laurentians, Mont-Tremblant and part of the Outaouais, where a portion of my riding is. I have one foot in the Laurentians and the other in the Outaouais, where you find the Château Montebello and everything you see here on the other side of the river.

Once again, Quebec has more to lose than other regions of Canada from this elimination of the GST rebate. For members of the public listening to us—Quebeckers and Canadians—it will be clear that before the Conservatives came to power, foreign visitors could get a refund of the GST they paid on tourist products. This was to assist in the development of that industry. The Conservatives have cut the GST to 6% from 7%, but still they have eliminated the refund. Foreign visitors have therefore had to pay 6% more since the Conservatives came to power. This is the Conservatives' gift to foreign visitors. Obviously, the damage, the harm, to the Quebec economy from this is enormous. I do not want to go on and on about this, but Quebec is increasingly seeing an industry that it wanted to prosper being affected by climate. The weather is also playing nasty tricks on the industry.

We see the winter we have with global warming. It is a phenomenon that the Conservatives do not want to recognize. We are not meeting our Kyoto commitment. We saw how the Liberals wasted time before getting behind Kyoto. That is the harsh reality. The result is that now we have this kind of weather that affects the tourism industry.

The tourism industry, in winter, spring, summer or fall, depends heavily on foreign visitors and the 6% refund they received, which they often spent in our region. That was the reality. I believe my colleagues referred to that previously. Before leaving, visitors obtained a refund of the GST that they had paid on their purchases or on what they used as tourism products. They got that money back and they often invested it in the local economy. That money they left behind represented significant investments in the local economy.

The Conservatives have said that the system was too expensive to administer. Obviously, we know that there has been a succession of Conservative and Liberal governments since Canada became a country. Indeed, there have been no other governments than Conservatives or Liberals, with the result that the machinery of government has grown so large that it is now expensive. In fact, they can not even give refunds to the public. That is the reality of successive Liberal and Conservative governments.

Now, the Conservatives have decided to eliminate this refund. The residents of Quebec who operate tourism businesses are badly in need of this revenue at present. Considering that they have been sorely affected by the Canadian dollar and by the fluctuations of climate change, we must support the industry in some way. One way would be to maintain the refunding of GST. The Conservatives have decided instead to increase the bill for foreign tourists by 6%. That is a choice they have made and they will have to live with it.

It is fortunate that members of the Bloc Québécois are here to try to make the Conservatives understand that what they think are good ideas are often very costly for industry. That is certainly the case for the tourism industry.

My colleagues have previously highlighted what we do not find in Bill C-40. My colleague from Chicoutimi—Le Fjord presented a strong argument concerning the GST paid by school boards. Personally, I find that outrageous. I come from the municipal sector. There are many refunds to municipalities, including a full refund of GST. They do not have to pay it. Recently, the Government of Quebec did the same thing. To help overcome their problems, municipalities no longer have to pay the Quebec sales tax.

Municipalities are faced with infrastructure problems and outdated equipment. Cuts in federal funding for the provinces have led to cuts to municipalities, which now must do more with less. The governments have finally understood this and have not bled them dry. They have refunded the GST and the QST to the municipalities. But they have not given rebates to the school boards.

Quebec has given a QST rebate, but the federal government has not given a GST rebate. The government thinks that when it cut provincial funding and the provinces cut municipal funding, they also cut education transfers. That is the hard reality. At that point, the municipalities are not on an equal footing with the school boards. It is time the Conservative woke up. As for the Liberals, they were always asleep when it came to this issue and never woke up. They will never wake up to this issue. But the fact remains that the education sector needs this 6% it pays on purchases of goods and services. As hon. members are aware, the GST is a tax on goods and services. It does not apply just to purchases of goods, but also to purchases of services, including maintenance contracts and any contracts that are awarded.

There was a court decision. My colleague from Chicoutimi—Le Fjord was right to mention it. The court ruled in favour of the school boards. Yet the Liberal governments, and the Conservatives after them, do not want to comply with that judgment. The government is still not repaying the school boards the phenomenal amounts of money they need to keep up their buildings and provide their students with a few more school supplies. The boards need this money. Once again, the federal government is turning a deaf ear.

That was the part of Bill C-40 that applies to sales tax and is not included in this bill. Obviously, there were many rebates. I will not repeat what my colleague from Joliette said about sales tax breaks under Bill C-40. I will perhaps talk a bit about what my colleague did not mention and what he said briefly about excise tax.

There are several measures in Bill C-40 that apply to excise tax. I will go over them. They are in Part II of the bill.

They implement minor refinements that improve the operation of the act and more accurately reflect current industry and administrative practices. They also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act. I will summarize the content and what will be changed.

Let us talk first about tobacco. Tobacco measures are aimed at clarifying certain provisions pertaining to the Excise Act, which will make it easier to fight tobacco product smuggling, while facilitating tobacco tax collection. To this end, the bill extends the requirement to identify the origin of tobacco products to all products, including those for sale at duty-free shops or for export, consistent with the Framework Convention on Tobacco Control, an international treaty, and it clarifies that cigarettes, tobacco sticks, fine-cut tobacco or cigars, but not packaged raw leaf tobacco, may be supplied to the export market or the domestic duty-free market.

This helps to clarify the situation. Tobacco smuggling is a plague that must be countered. I know this because, in my riding, there are many itinerant sellers of tobacco—if I may say so. People who use highway 344 will know that several individuals have opened shops. We often laugh about this, but it is very hard for the businesses. Within 500 feet, there are 18 or 20 smoke shacks selling tobacco, which directly affects businesses and corner stores. People who used to making a living selling tobacco products in my riding have been severally affected. Consequently, everything that will attempt to restrict and hinder the smuggling of tobacco products will be well received in the riding of Argenteuil—Papineau—Mirabel, especially around Oka and the districts of Deux-Montagnes.

As for alcohol, the bill has two objectives. First, it authorizes provincial liquor boards and vintners to possess a still or similar equipment for the purpose of analyzing substances containing ethyl alcohol without holding a spirits licence. That will relieve the provincial liquor boards and vintners of all the red tape and the costs related to that licence.

Of course, you know that there are more and more vintners in Quebec and that they are developing more and more wine products. Climate change, which is often mentioned, has a negative impact for many and for the tourist industry, but it seems that more and more regions are seeing new wine producers. Thanks to milder temperatures, the grapes grow better.

The measure will allow vintners to save on costs. Moreover, to stimulate the growth of the wine industry in Canada, the government will allow the deferring of the payment of duty by small vintners selling wine on consignment in retail stores operated by an association of vintners until the wine is sold.

Thus, when vintners supply their products to a store operated by their association, they will not have to pay the GST until the product is sold. That will be beneficial to the marketing of local products.

In a growing number of regions—and this is the case for the vintners of Saint-Benoit, Saint-Joseph-du-Lac, Saint-Placide, Oka, Pointe-Calumet and Mirabel, in my riding—we are seeing wine producers sell their products on the farm or in small shops or with the support of a regional association.

They form an association and sell their goods through various middlemen. Rather than being obliged to charge GST when the product leaves their farm, or their winery, the GST is paid once the wine has been sold in the shop. These shops are now often part of the tourism infrastructure.

With regard to agri-tourism, increasing numbers of citizens from the greater Montreal area, or elsewhere in Quebec, tour the stands that sell fruits, vegetables and local products in the fall, summer and even spring. These shops are often supported by regional associations. I repeat, this will enable producers to sell their goods without paying the GST and Quebec sales tax as soon as their goods leave the farm.

To provide some background for our colleagues from other Canadian provinces, Quebec wine producers have formed the Quebec vintners' association. In 2006, this included 42 vineyards located in the regions of Quebec City, Lanaudière, the Eastern Townships, Montérégie and the Lower Laurentians. More than 100 hectares are cultivated producing almost 300,000 bottles of wine every year. The main products are white wine, ice wine and fortified wines sold by Quebec producers as part of the agri-tourism trade . The wine industry is a growing industry and the government is supporting it in this case.

There is also the matter of law enforcement. As in the previous section—my colleague from Joliette mentioned it—the new legislation will authorize the Minister of National Revenue to exchange information on excise tax with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters. This must be done, of course. In the matter of tobacco and smuggling, we must be able to exchange information with other countries. That is as it should be.

We are able to better monitor production. Recently, some large quantities of loose leaf tobacco were seized in Quebec ports, among others. Authorities seized huge quantities of tobacco bales that were intended for smuggling. They were able to make these seizures because the GST had not been paid on the products. The individuals involved were not properly registered.

So, these are measures that allow us to counter smuggling at the source. In this case, the tobacco came from various countries around the world, including Bangladesh and other countries that we might not even think of. This means that we must be able to counter smuggling activities that originate from all parts of the world. The purpose of these tax measures is to provide customs officers and all those who monitor these imports with a new tool, a tax tool. It allows them to see that the taxes were not paid, and they can then seize the whole shipment, because they know it does not belong to bona fide merchants, since the individuals involved are not registered. This automatically means that they are not allowed to have this product. This is in addition to the fact that they did not pay tax on it. This is a hard blow to smugglers. We cannot stop our efforts in this regard, if we want our merchants, who pay their taxes and part of our salaries, to continue to make profits. One way to help them is to fight smuggling. Hon. members can count on Bloc Québécois members to do that.

Next, there are measures concerning the air travellers security charge. As the Bloc Québécois transport critic, I would like to summarize what this is about. The measures concerning the air travellers security charge are in part 3 of the bill. They include previously announced tax relief measures and minor amendments to the Air Travellers Security Charge Act.

In a nutshell, the government is proposing tax relief. The bill would relieve, in particular circumstances, the air travellers security charge in respect of air travel sold by resellers or donated by air carriers. Obviously, a lot of trips and gifts are given to tour operators. Tax relief would be granted so that these parties, which advertise to encourage people to travel, do not have to pay GST on donated products and services. I think this makes sense. The industry appreciates this relief. To encourage Quebeckers and Canadians to travel by air, companies often have to offer package deals, some of which are given away by lottery. This measure will encourage them to keep doing this by not making them pay the GST on these products and services.

The bill also states that the Governor in Council may, by regulation, amend the schedule by adding, deleting or varying the reference to an airport. The bill removed the La Grande-3 and La Grande-4 airports from the list of airports that must collect the ATSC. As you may know, some airports that were required to charge the ATSC will no longer have to, nor will they have to charge GST. Once again, this will promote development in our beautiful regions. La Grande is in northern Quebec, and we would be delighted to help that vast region's economy.

I hope I have made it clear that although the Bloc Québécois supports these amendments, we think there are some major flaws, such as cancelling the GST visitor rebate, a decision we deplore immensely.

Sales Tax Amendments Act, 2006
Government Orders

4:20 p.m.

Conservative

The Acting Speaker Royal Galipeau

It is my duty, pursuant to Standing Order 38, to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Sault Ste. Marie, Homelessness.

Sales Tax Amendments Act, 2006
Government Orders

4:20 p.m.

Liberal

Larry Bagnell Yukon, YT

Mr. Speaker, before I ask my question, I want to congratulate the Midnight Sun Rotary Club for becoming the third Rotary Club in Whitehorse, Yukon.