House of Commons Hansard #140 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was animal.

Topics

Seniors
Petitions
Routine Proceedings

3:15 p.m.

NDP

Chris Charlton Hamilton Mountain, ON

Mr. Speaker, I am pleased to table three petitions today that arise out of my national campaign to fight for fairness for ordinary Canadians, in particular for seniors who were shortchanged by their government as a result of an error in calculating the rate of inflation.

The government has acknowledged the mistake made by Statistics Canada, but is refusing to take any remedial action.

The petitioners call upon Parliament to take full responsibility for this error, which negatively impacted their incomes from 2001 to 2006, and take the required steps to repay every Canadian who has been shortchanged by a government program because of the miscalculation of the CPI.

The petitions are signed by hundreds of people in Nova Scotia and Quebec. The petitioners are people who have worked hard all their lives, played by the rules and now find it harder and harder to make ends meet. All the petitioners are asking for is a little fairness.

It is a privilege to table this petition on their behalf.

Canada Post
Petitions
Routine Proceedings

3:15 p.m.

Liberal

Gurbax Malhi Bramalea—Gore—Malton, ON

Mr. Speaker, pursuant to Standing Order 36 I have the honour to present the following petition from my constituents of Bramalea—Gore—Malton.

The petitioners call upon the Minister of Transport, Infrastructure and Communities to review Canada Post's recent decision to locate community mailboxes along formerly designated rural roads and to restore home to home mail delivery and thus avoid threats to personal safety.

Species at Risk
Petitions
Routine Proceedings

3:20 p.m.

Liberal

Lloyd St. Amand Brant, ON

Mr. Speaker, I have the honour of presenting a petition signed by several hundred informed constituents in my riding who are sensitive about the environment and the habitat of the northern spotted owl in British Columbia.

The petitioners call upon Parliament to ensure the survival of the species, the northern spotted owl, and the protection of its habitat from logging or any kind of further development under the Species at Risk Act.

Questions on the Order Paper
Routine Proceedings

April 25th, 2007 / 3:20 p.m.

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, I ask that all questions be allowed to stand.

Questions on the Order Paper
Routine Proceedings

3:20 p.m.

Liberal

The Speaker Peter Milliken

Is that agreed?

Questions on the Order Paper
Routine Proceedings

3:20 p.m.

Some hon. members

Agreed.

Motions for Papers
Routine Proceedings

3:20 p.m.

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.

Motions for Papers
Routine Proceedings

3:20 p.m.

Liberal

The Speaker Peter Milliken

Is that agreed?

Motions for Papers
Routine Proceedings

3:20 p.m.

Some hon. members

Agreed.

Sales Tax Amendments Act, 2006
Government Orders

3:20 p.m.

Liberal

The Speaker Peter Milliken

There being no motions at report stage, the House will now proceed without debate to the putting of the question of the motion to concur in the bill at the report stage.

Sales Tax Amendments Act, 2006
Government Orders

3:20 p.m.

Conservative

Peter Van Loan York—Simcoe, ON

moved that the bill be concurred in.

(Motion agreed to)

Sales Tax Amendments Act, 2006
Government Orders

3:20 p.m.

Conservative

Peter Van Loan York—Simcoe, ON

moved that the bill be read the third time and passed.

Sales Tax Amendments Act, 2006
Government Orders

3:20 p.m.

Calgary—Nose Hill
Alberta

Conservative

Diane Ablonczy Parliamentary Secretary to the Minister of Finance

Mr. Speaker, I am pleased to introduce Bill C-40 at third reading. This bill contains a number of amendments to Canada's sales tax system.

Although largely technical in nature, the bill reflects the goal of Canada's new government to improve fairness in our tax system and ensure it functions smoothly for individuals and businesses alike.

With that goal in mind, last November, along with the economic and fiscal update, we announced advantage Canada, an economic plan to give Canada and Canadians the key advantages needed to compete today and succeed for years to come.

Before getting to the specifics of Bill C-40, I think it prudent to remind the hon. members of the key elements of our plan, a plan put into action in budget 2007. The plan focuses on creating five key advantages, one of them being a tax advantage.

The government wants to create new opportunities and choices for people. Lowering taxes, creating a tax advantage for Canadians, will help do that. It will also help to keep our best and brightest here at home, while attracting the people our country will need to build a strong economy in the 21st century. It all starts with a lower tax burden.

Before coming to office, and practically every day since, we have said that Canadians simply pay too much tax compared to other countries we compete with for talent, skilled workers and foreign investment and so we did something about it.

In our first budget last May and the months that have followed, Canada's new government began to reduce taxes. We reduced the GST rate. We increased the amount Canadians can earn without paying federal income tax by permanently reducing the bottom rate. We introduced the Canada employment credit and brought in a host of targeted tax relief measures.

The tax fairness plan we announced on October 31 went even further for Canada's seniors. We increased the age credit amount by $1,000 and introduced pension income splitting for pensions to increase the rewards from retirement saving.

Budget 2006 and our tax fairness plan took significant steps to get this country back on track and to begin to create a tax advantage for Canada.

We need to go further, and we did that in budget 2007. To create a greater tax advantage for Canada and Canadians over the coming years, we reduced taxes even further. In budget 2007, Canadians come out ahead through real tax relief that benefits working families.

Bill C-40 would help create a Canadian tax advantage. It would improve fairness and efficiency in the sales tax system and ease compliance and administration for businesses and government.

The bill consists of three parts, the first of which pertains to the goods and services tax and the harmonized sales tax. The second part of the bill relates to the application of taxation of wine, spirits and tobacco. Part three concerns the application of the air travellers security charge.

First, the GST-HST measures. These measures are principally aimed at improving the operation and fairness of the GST-HST in specific sectors of the economy.

It is important to point out that in some cases adjustments have been made over the course of time to the legislation as originally proposed in response to representations from tax and business communities. We listened.

The principal GST-HST measures encompass important areas for Canadians. One such area is health care. Canadians know that our health system is one of the best in the world but we need to work to keep it so it continues to meet the needs of Canadians.

Bill C-40 contains a number of measures that would improve our health system. For example, the bill would cement in place the continued GST-HST exemption for speech-language pathology services. The bill also proposes to add the services of social workers to the list of health care services that are exempt from the GST-HST.

These amendments are consistent with the government's policy criteria for inclusion of a particular health care service on the list of those that are GST-HST exempt in all provinces.

The criteria is as follows. First, if a service is covered by the health care plan in a given province, it is exempt in that province. Second, if a service is covered by the health care plan of two or more provinces, it is exempt in all provinces. Finally, if a profession is regulated as a health profession by at least five provinces, the services of that profession are exempt in all provinces.

Canada's new government is also very aware of the challenges faced by individuals with disabilities. Budget 2006 fully implemented and went beyond the policy recommendations put forward by the technical advisory committee on tax measures for persons with disabilities.

In the spirit of that action, Bill C-40 broadens the specially equipped vehicle GST-HST rebate for individuals with disabilities. This measure will help those individuals to participate as fully as possible in Canadian society. Moreover, this measure reflects the government's continuing commitment to ensure that all Canadians are treated in a fair and equitable manner.

Also, on the health front, the bill proposes to make the sale and importation of a blood substitute, known as plasma expander, free from sales tax. It would also restore the tax free status of a group of drugs commonly used to treat a variety of conditions, such as seizure control, anxiety and alcohol withdrawal.

The measures in the bill illustrate the government's commitment to ensuring that Canadians continue to have access to timely and quality health care.

As I said at the outset, we have made it abundantly clear that Canada's new government is committed to reducing taxes for individual Canadians as well as for Canadian businesses.

High taxes not only discourage investment in Canada, they also impede businesses from prospering. However, there is more to it than that. Businesses do not need more government meddling. They need government to get out of the way and to free them to do what they do best: invest, expand and create jobs.

Budget 2007 proposes to reduce the federal paper burden on small businesses by 20% by November 2008. The budget also proposes to reduce the tax compliance burden on small business by decreasing the frequency of their tax remittance and filing requirements.

The measures in Bill C-40 reflect the intent of this action. These measures are technical in nature. I will not go into detail now but I will say that the measures contained in the bill would ease compliance for a wide range of businesses and other organizations by removing technical impediments and simplifying compliance with the GST-HST legislation. The bill also clarifies and confirms the government's policy intent.

The second part of Bill C-40 concerns excise measures; that is to say, measures related to tobacco and alcohol products. The measures in this part of the bill would amend the Excise Act, 2001 to implement minor refinements that would improve the operation of the act and more accurately reflect current industry and administrative practices.

The bill would also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.

The principal measures included in this bill, those related to the Excise Act, 2001 are as follows: First, with respect to tobacco, Bill C-40 would extend the requirement to identify the origin of tobacco products to all products, including those for sale at duty free shops or for export. This amendment is consistent with the Framework Convention on Tobacco Control, an international treaty on tobacco control.

The bill would also clarify which tobacco products may be supplied to the export market or the domestic duty free market. For example, cigarettes, tobacco sticks, fine cut tobacco or cigars may be supplied to those markets but not packaged raw leaf tobacco.

As the House may know, a spirits licence is required to produce alcoholic products using a still. There are some cases, however, where private laboratories, provincial liquor boards and vintners use a still to produce spirits for the purpose of analysing substances containing ethyl alcohol. Bill C-40 would authorize these entities to possess a still or similar equipment for testing purposes without holding a spirits licence.

To limit the possession of non-duty paid spirits, the bill would also require these parties to immediately destroy or dispose of those spirits once the analysis is complete.

Another proposed amendment to the act would defer payment of duty by certain small vintners selling wine on consignment in retail stores until the wine is sold.

The bill also contains a number of administration measures. One such measure has to do with the exchange of information between Canada and foreign governments. Specifically, the bill would permit the Minister of National Revenue to exchange excise duty information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters.

One other measure relating to the exchange of information adds a discretionary power under the act for the chief statistician of Canada to provide statistical information concerning business activities to the provinces. This is similar to an existing provision in the Income Tax Act.

The third and final part of Bill C-40 relates to the air traveller security charge, or ATSC. One of the principal ATSC measures included in the motion relieves the charge in respect of air travel donated by an air carrier to a registered charity that arranges free flights for individuals as part of its charitable purposes. This means that certain charities that arrange free air transportation services for persons who otherwise cannot afford the cost of flights for medical care would not have to pay the air traveller security charge. This includes “flights of a lifetime”, such as those provided by the Children's Wish Foundation of Canada and other similar charitable organizations that organize dream trips for physically, mentally and socially challenged children.

I said at the outset that tax legislation must be applied consistently. This proposed ATSC relief for charitable flights reflects that objective by being consistent with relief from other federal levies provided to registered charities. These measures are also consistent with other ATSC relief measures, such as that provided in respect of air ambulance services.

Summing up, Canada's new government understands that good government and good tax policy go hand in hand. Well-focused tax policies, such as those reflected in the bill, are a sign of a government with vision, which is what the government is all about.

We are looking ahead and planning the steps we need to take to build a stronger economy and a more confident Canada. In doing so, together we can make Canada a world leader with a long term, focused economic plan not just for today but for tomorrow.

Sales Tax Amendments Act, 2006
Government Orders

3:35 p.m.

Liberal

Jim Peterson Willowdale, ON

Mr. Speaker, it is an honour to speak once again in this great House of debate and innovative thought.

Our party is supporting Bill C-40. This bill is the natural evolution of a fiscal policy, the goods and services tax harmonized in certain parts of the country. It is a natural evolution as we gain experience with it. We find that it does not always cover every little contingency the way we would think is best.

I commend the government on coming forth with a number of amendments which harmonize and streamline, and deal with exigencies which could never have been envisaged from the very start. We must continue to always adopt this type of attitude to changes in the tax law because we can always learn from our experience as we move along, so that the tax code becomes a living organism, a living body of law.

There are some areas where I believe that the government could have gone farther in making changes to our goods and services tax. One is with respect to the exemption for housing. The original exemption was $250,000, but we have seen how prices have skyrocketed in some cities across the country such as Vancouver, Edmonton, Calgary and Toronto.

The idea was that we would help new homebuyers overcome the difficulties of purchasing a home by exempting them on GST up to a certain level, and that level has never been changed. We should be adjusting it, not according to the ordinary inflation rules, which are around 2% a year or slightly higher, but according to the inflation rates for actual housing in particular markets across the country. I am sure the government will want to consider this type of change in the days and months ahead.

The hon. parliamentary secretary talked about a number of other tax measures. I have no hesitation in moving from Bill C-40 to the general fiscal policy of this government.

Let me just mention a few particular issues. The first is the government's treatment of the GST in general. The government has reduced the GST from 7% to 6%, costing about $5 billion. That money could have been used to pay down the debt, to invest in new productivity measures in Canada, or to help those most in need in our country. What is worse, the government did so by increasing personal income tax by .5%.

There is not one economist in the country, let alone the world, who would say that the tax cuts given on the GST sales tax consumption level are preferable to overall tax cuts to the personal and corporate income tax rates, cuts which would make us more globally competitive.

We are in a global competition for capital. Capital knows no borders. It flows seamlessly around the world. We have to be able to be competitive unless we are prepared to introduce capital controls and barriers. No sane economist would advocate that as well. Therefore, in order to remain competitive, why did the government give up this great chance to lower personal income taxes as well as reducing our corporate income tax rates so that we could attract that capital?

Under the previousfinance minister and previous Prime Minister Jean Chrétien, the Liberal government took a very important step. Even when we were dealing with the whole issue of the deficit, we were looking at what we had to do to attract new capital investment and the best jobs to this country. One of those was to reduce the corporate income tax, and we did it.

We were headed on a course down to 30% combined with the provinces. That would have compared with 35% in New York State, 41% in Michigan and 41% in California.

That was a responsible way to attract jobs to this country. We have seen how under our leadership the unemployment rate in this country fell to a 35 year low. This is great because we all remember back in 1990-91 when unemployment hit 11.4%. The toughest thing as an MP was to meet with constituents who had lost their job, who had used up all of their savings, had used up all their RRSPs, had lost their home, their car, their self-respect, and often their families.

We must never be content with a system which allows that level of high unemployment and this is why we must on an annual basis check our global competitiveness. The cut to the GST did not do that. It was stupid. It was obviously done for short term political gain, but Canadians are not stupid. They know when they are being had. The Canadian electorate is very smart and they recognize that the best politics is always the best policy.

Let me go on to a second area where I am very dismayed with the government in terms of its fiscal policy, income trusts. It is not just the broken promise where the Prime Minister said he would never touch income trusts, it is the fact that the measures taken were totally without tax foundation. They were totally without study. Did the government know it was going to cause a $30 billion meltdown in capital of investors who had put their money in savings, a lot of them seniors, a lot of them retired, as a result of the measures that it took?

If the Conservatives knew that, then they have to be condemned. If they did not do the studies as to what the impact on the capital markets was going to be, then they must be condemned. Why can they not admit a mistake? We had numerous witnesses before the finance committee who showed that the tax leakage figures suggested by the government were totally exaggerated, totally out of sight. They did not have to go from a zero tax to a 31.5% tax on income trusts in order to kill them.

We listened to those witnesses. Some of them said the government was even making more money by having in place income trusts where the distributions were taxed usually at high personal rates rather than the same amount of money coming out of a corporation being taxed at about 6.2%. As members know, personal rates go up as high as about 45% in Canada and that is why the tax leakage was not there. It might have been there with respect to some non-residents, but if we take a 6.2% tax equivalent at the trust corporation and compare that with the withholding tax on dividends going to foreigners, often we would find there was no loss.

Then take the money going into the tax exempt such as the pension funds here in Canada. Granted that dividend going into the pension fund was not taxed at that time, or the trust distribution, but those pension funds were very quickly distributed to individuals in this country because retirement depended on them and were again taxed at the full corporate rate.

Our Liberal government looked at this after having talked to the experts and we were convinced there was a better way. We said leave the cap on no new income trusts being created for the moment. Put a 10% distribution tax on funds going to non-residents and it will more than make up for any tax leakage that there might have been, if there was any in fact.

Meanwhile, the issue should be studied. Do we really want to blow away investment instruments such as income trusts, which were providing a decent rate of return to our retired citizens? If they are investing in bank instruments or government bonds, what rate do we think they are getting, 4%? That is only 2% above inflation. How can retired people live on that and how can they live on it when the government caused a meltdown of some $30 billion to the value of their savings?

Do the right thing. We are prepared to study it further. Why is the government afraid to study it further? My God, is it a sin to be wrong? We all make mistakes. The sin is in failing to admit that one is wrong and doing something about it. Everybody knows the government is wrong on this thing. Everybody knows that the emperor is wearing no clothes. Why does it not just admit what everybody knows and be prepared to look at this thing and give it a second thought?

Another area where I have great concern with what the government is doing in terms of fiscal policy is this issue of interest deductibility. It has said that if a Canadian investor or company borrows money to buy a company abroad in order to expand its global operations, in order to be globally competitive, it cannot deduct the interest on the money it borrows to acquire the shares in that foreign entity.

This last budget was not the first time that we in Canada have seen that particular measure. It was a measure brought in following the Carter commission many years ago, brought in by a Liberal government, where we said if the dividends coming back into Canada are not taxable, why should there be a deduction for the interest to acquire those tax free dividends? We established that measure and found out how stupid it was. We very quickly reversed that measure.

Why is it stupid to do this so-called type of non-interest deductibility? It is stupid because our foreign competitors can deduct the interest they pay on money borrowed to buy up our companies and foreign entitles, to grow, to become powerful, to become Canadian and global champions in terms of the competition that we face. This measure was not thought out in terms of the practical realities of this world.

Again, why would the government want to handicap Canadian companies? Why would it want to handicap our competitiveness? Why would it want to divert jobs out of Canada? I can say from experience what will happen. This is what a government in Canada tried before and the result was that Canadian multinational corporations were not going to continue to exist. They would simply move their global operations and headquarters out of Canada.

This is what we need in order to have the high level, high paying, good jobs here in this country. We want Canadian head offices here. We want the global champions to be based in Canada because that is where the best jobs are.

If anyone needs an example of what has happened, let us take Hong Kong. In the early nineties it was going downhill because of the fear of what would happen when it would revert back to China. The cover of Fortune magazine said, “Hong Kong is dead”. At that time Hong Kong had an 80% manufacturing economy. Anything that anyone picked up had “Made in Hong Kong” on it.

Today Hong Kong is no longer manufacturing. It is an economy that is about 90% service, with all of its manufacturing operations in foreign affiliates in the Pearl River Delta in China. Hong Kong, by being the headquarters for the multinational corporations, is producing the great jobs and the great wealth. It is booming.

We cannot be afraid to change. We have to be open to change in this global economy or we are going to lose the best jobs here.

This is another blatant mistake in fiscal policy by the government. Again I say, my God, we are all human and we all make mistakes, but the government must admit it and do something about it. We will work with the government to do something about it. We will make it possible to for us to have a strong, competitive economy here in Canada, producing the best jobs, with Canadian champions that are reaching out around the world.

Are we not proud of our Canadian banks and insurance companies that have offices in almost every other country in the world? They are showing the Canadian flag and the Canadian name. They are helping Canadians invest there, acquire things there and do business there.

We want more of these Canadian champions. The measures that the government has brought in are simply going to drive those Canadian champions out of this country.

I saw that back in the days of Carter, when we wanted to tax all dividends from foreign affiliates. For foreign entities, a buck earned in a low tax jurisdiction such as Singapore would be taxed at the same rate as a buck earned in an affiliate in a high tax jurisdiction such as France, the United States or even Canada. That may be great economics if one is an economist, but if one is a business person, one has to compete with other entities where they say that the rate of tax one pays globally is the rate set by the country in which one earns the income.

It is the host country where the activities are carried on that sets the tax rate. If a big corporation from the United States could do business in Hong Kong, for example, and pay a 12% tax rate, and a Canadian company had to pay a 50% tax rate, who was going to win? Who was going to get the jobs? It was going to be the American competitor of the Canadian company.

Therefore, that tax policy brought in by a government many years ago had to be reversed. It meant that we stemmed the flow of Canadian-based multinationals leaving this country. I beg of the government, which knows it is wrong, to just admit it. We will work with the government to fix this.

In closing, let me say that the tax fairness bill brought in by the government was not a tax fairness bill. It was a wealth-stealing bill. I am very pleased that our finance critic, the member for Markham—Unionville, has taken such a vigorous stand in taking the tax fairness bill to task right across this country. We will continue to do so until we get justice for all those people who lost their savings because of the idiocy of the government.