House of Commons Hansard #47 of the 40th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

12:55 p.m.

Bloc

Guy André Berthier—Maskinongé, QC

Mr. Speaker, my colleague is completely off topic. He should read about the impact that bill will have on minimum sentences. We are against minimum sentences, for very good reason. In the United States, minimum sentences have little impact on crime. Of course we are against trafficking in women. Our positions are much clearer. The bill mentions conditional release. We are against the excessive use of conditional release.

I would like the member to stick to the subject at hand. He is going off topic because he does not know what to say about harmonizing the sales tax. He no longer knows how to respond. He is going off topic to make gratuitous political propaganda. When a Conservative member from Quebec does not know what to say, he goes off topic. They are going to campaign and vote three or four times against the will of the National Assembly of Quebec. They are going to play petty politics like they did—

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1 p.m.

Conservative

The Acting Speaker Barry Devolin

Order. The hon. member for Trois-Rivières.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1 p.m.

Bloc

Paule Brunelle Trois-Rivières, QC

Mr. Speaker, I am pleased to rise in this House to speak to the motion on this Bloc Québécois opposition day. This motion says that the government should negotiate in good faith with the Government of Quebec to resolve the dispute dating back more than a decade—it is not a new problem—regarding the harmonization of the QST and the GST. This harmonization was carried out by the Government of Quebec in the 1990s. And the federal government should agree to grant Quebec $2.6 billion in compensation.

Why is this motion being brought forward? Why today? This is important because, for me, it is a matter of justice. We expect a government to manage this federation the way a good parent would manage a family. There should be fairness for each of our children. The government is being completely unfair when it comes to harmonizing sales taxes.

On April 1, 1997, the provinces of Newfoundland, New Brunswick and Nova Scotia received their initial $250 million payment to harmonize their sales taxes. Ontario will receive $4.3 billion to harmonize its sales tax. Quebec did not get a cent when it harmonized its tax in the early 1990s. This is the injustice and unfairness to the people of Quebec that our motion today aims to repair.

It seems to us that when Quebec demands its rights, the door gets slammed in its face. Many examples from recent history show just this.

In 1980, Pierre Elliott Trudeau said during his election campaign that the Liberals would put their seats at stake to get Quebec to sign the Constitution. What did we get? Unilateral patriation. We were deceived at a time when we were demanding our rights.

In 1984, Brian Mulroney said that Quebec should return to the constitutional fold “with honour and enthusiasm”. Those were his words at the time. So what happened? The Meech debacle. Over and over again, Quebec demands its rights but ultimately just gets the door slammed in its face.

In 1995, Jean Chrétien promised change. What did we get? The Clarity Act and the sponsorship scandal.

In 2005, the Conservative government promised us open federalism. But they are still not respecting provincial jurisdictions. How many times have I had to rise in the House and condemn the fact that the federal government was constantly spending money in Quebec’s jurisdictions? If we need reminding, it spends $57 billion a year in areas that are not its jurisdiction.

In our view, the fiscal imbalance has only been partially resolved. We think it can only really be resolved through the transfer of tax room.

The open federalism promised to us does not exist.

Quebec companies have been devastated by the economic inaction of the federal government. Since the Conservatives came to power, 64,000 manufacturing jobs have been lost in Quebec.

The refusal to implement the Kyoto protocol has hurt Quebec companies that made the effort to reduce or severely cut their greenhouse gas emissions. The failure to implement the Kyoto protocol with absolute targets and 1990 as the base year is preventing us from getting our much desired carbon exchange, which would reward the efforts our companies have made.

The federal government has also made some major military purchases without any concern for the effects on Quebec’s aerospace industry. It has simply abandoned Quebec.

It is the same in forestry. There is a double standard at work.

What is open federalism? For us, it does not exist. These few recent examples show that Quebec never gets its fair share and that Quebec and Canada are two very different nations. Our goals, objectives and methods are so different that it is difficult to get along. The open federalism that was promised by the Conservative government was nothing but a sham.

Yet, Quebec's finance minister did demonstrate some openness. She sent a letter to the federal Minister of Finance on April 1, 2009 to settle this difficult issue of sales tax harmonization. She wrote the following:

However, the main difference between the QST and the GST involves corporate input tax refunds for certain goods, a measure that would cost Quebec around $500 million annually, which is a little less than 5% of QST revenues.

I hereby wish to inform you that the Government of Quebec would agree to modify the QST to address your concern of a more complete harmonization, in exchange for a just and equitable compensation of $2.6 billion.

Specifically, Quebec would agree to allow all QST corporate input tax refunds for a period of up to eight years, which is what the federal government agreed to for Ontario.

The will is there. We were told that the roadblock to true harmonization was corporate inputs. We now have good reason to wonder what the federal government is waiting for to treat Quebec the same as the other provinces.

It is a matter of justice and fairness, not of political partisanship. We simply think that Quebec should receive $2.6 billion in compensation to harmonize its taxes and that the federal government can move forward quickly on this.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:05 p.m.

Liberal

Joyce Murray Vancouver Quadra, BC

Mr. Speaker, I want to thank the Bloc Québécois member for her enlightening comments.

Although the Liberal Party supports tax harmonization and good-faith negotiations between the provinces and the federal government, I would like to know why the Bloc Québécois feels that this measure should be a priority during this time of economic crisis.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:05 p.m.

Bloc

Paule Brunelle Trois-Rivières, QC

Mr. Speaker, I think this measure should be a priority precisely because of the economic crisis. Quebec has made the necessary efforts. We see that the government seriously neglected Quebec in its recent economic statement, so we need this money even more now, to help our citizens and our workers. Agreeing to this harmonization presents a perfect opportunity for the government to get the economy going. This compensation would certainly help our citizens a great deal.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:05 p.m.

Bloc

Nicolas Dufour Repentigny, QC

Mr. Speaker, I have a very simple question for my hon. colleague from Trois-Rivières after the brilliant and eloquent speech she gave. How does she feel when she hears the Conservatives tell us that the House of Commons is not the place to negotiate this, even though the Bloc Québécois is the only party to have made any proposals concerning tax harmonization? We are the only ones who are addressing this, and at least we are defending a unanimous request by the Quebec National Assembly. Conservative members from Quebec do not even have the courage to support their own nation and start talking about tax harmonization.

I would like to know how my colleague feels about Conservative members from Quebec who have absolutely no idea how to address this issue or how to help their nation, Quebec.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:10 p.m.

Bloc

Paule Brunelle Trois-Rivières, QC

Mr. Speaker, I thank my colleague for his question.

Obviously, the argument that that must not be negotiated in Parliament is laughable since we are talking about the harmonization of a provincial tax and a federal tax. So, I do not see where that could be discussed if not here.

The role of a federal member of Parliament from Quebec is to defend Quebec's interests in all areas, as the Bloc is doing. We judge issues according to those interests. There is no partisanship because that has been a request of the Liberal government of Quebec and a request of the National Assembly, who put it in a motion.

It is quite simply our duty as members of Parliament to advocate for Quebec on major issues. I invite the Conservative members to evaluate things the same way. The Quebec Conservatives should use the same lenses as us when they look at issues.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:10 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, I am pleased to participate in this opposition day motion by the Bloc Québécois. I have had an opportunity to listen to the debate and representations from all the parties. We have covered a lot of ground. We have had some interesting discussions about ideology and a range of matters that probably stretch way beyond the specifics of the motion.

While I understand that having latitude in debate is a good thing, I was looking at Marleau and Montpetit to see that the issue of relevance was basically framed in the context that there is very little time in the House to waste. We have important work to do and it is important that all hon. members try to stay focused on the matter before us, which includes debate on amendments. Even if there is an amendment, the subsequent debate should be on the specifics of the amendment rather than the whole motion. It is an important principle and I hope that members will take an opportunity to consult our Standing Orders and Marleau and Montpetit about how to get down to the issues before the House.

It is extremely important for members to have an opportunity to hear the substantive reasons for and against a certain motion before the House simply because very few members get an opportunity to speak to this or ask a question. Members are at committees or busy at meetings. This morning I met with the Canadian Real Estate Association and with the International Association of Fire Fighters for a few minutes each on issues important to them, but I wanted to follow the debate. I was really surprised at some of the arguments. I think that creative people could argue this one almost either way with a straight face and conviction.

First I will remind members of the motion to which we are speaking. It is a Bloc Québécois opposition day motion that reads:

That, in the opinion of the House, the government should negotiate in good faith with the Government of Quebec to resolve the dispute dating back over ten years regarding the harmonization of the QST with the GST in the early 1990s and agree to provide $2.6 billion in compensation to Quebec for this harmonization, and that Quebec continue to administer these harmonized taxes.

One really must look at the motion to understand that there are several elements at play here. The first element is the reference to good faith. I do not think anybody would disagree that fairness and good faith are mandatory elements if the federal government and the provinces are to make important agreements between them. If there should be any indication whatsoever that there is not good faith, the results can probably be predicted.

I must admit that I was a little concerned that the Conservative Minister of Public Works and Government Services seemed to spend a little bit of time attacking the other parties rather than addressing the issue. I know the minister is on the record saying that the government will not support this motion. It will not support the motion because it does not believe that the elements of the harmonization have been met by Quebec. Things will need to change or there is no compensation. We can know from the government that it is pretty black and white.

Having said that, I think it is fair to say that the other two opposition parties will be supporting the motion before the House right now for a fairly simple reason. It is an important objective to achieving the benefits of harmonization of a sales tax. It is in the best interests of businesses, of consumers and of the provinces because it provides administrative simplicity as well as the opportunity to have a more efficient situation with regard to the cost of doing business in Quebec or in any other province. A harmonized base in a tax credit system makes things a little cheaper for the consumer, notwithstanding that there may be a few other items added in when one harmonizes the basis on which a harmonized tax is applied.

There are some disputed items here that go back over 10 years. Quebec was one of the first provinces to come into a quasi-harmonization agreement back in the 1990s. However, because this was back in the 1990s, members will probably need to look back at a little bit of the history. If I have some time, I might even refer to some of the history.

The other item is to provide this $2.6 billion of compensation. Members will probably need to be assured that they understand the terms and conditions under which compensation is payable, whether those terms and conditions have been met and, if not, whether they are substantive enough that discussions on compensation cannot still move forward to some extent and maybe even fully if the items were considered not to be material in terms of achieving the objectives of harmonizing the tax.

Finally, the motion deals with who collects the tax. The motion calls for the Province of Quebec to continue to administer the harmonized taxes. There is precedence in Quebec now for the collection of tax. Quebec collects its own income taxes, whereas for the Province of Ontario and, I think, all the other provinces, the federal government does collect both the provincial and the federal taxes. Therefore, there is some precedence with regard to the collection.

However, who collects the taxes, I would argue, really does not matter as long as the appropriate amount of taxes are collected and the amounts are distributed to the jurisdictions to which they belong in an efficient fashion. I do not see that as a major item.

I read over the motion because what is in the motion defines the boundaries of our discussion. To deal with ideology at this point probably is not as respectful to the House as maybe we should be.

As I indicated, the Liberals will be supporting the motion. There are, however, some points to be made that I need to put into context.

Sales tax harmonization, conceptually, is something that we support. There is very good evidence for a harmonized tax. Obviously there are efficiencies having one system versus two. By having a common tax base, it means that people who are responsible for these things do not need to determine how much to tax this one and that one. There are so many interesting examples of the exceptions to the rule that it makes it very complicated and businesses do not have a lot of time to administer their business. They should be encouraged to do things that are promoting the growth of their business, to improve sales, to be profitable and to create jobs. Those are the things we want to encourage.

Although the issue that has been brought before the House today is worthy of moving forward, there is no question in my mind that we need to deal with the current situation in Canada, the economic crisis, by ensuring the economic stimulus that Parliament approved in the last budget gets out in a timely manner. The implications of failing to do that in terms of a stimulative strategy to the economy would be very tragic for the country in terms of the depth of the recession, the accumulation of debt and the depth of a deficit and the loss of jobs. I think of the young people who are leaving the education phase of their lives and going out to find jobs only to find that they are now competing for entry level jobs with people who have five to ten years' experience. It is a real problem which is why we need to be successful on the stimulative side.

Although this matter is important, it is too bad it has to come before Parliament and take up Parliament's time. It should happen automatically. A dialogue should be opened up between the Province of Quebec and the Government of Canada to resolve the issues that are outstanding and to discuss the $2.6 billion compensation.

I was looking back at some of the recent statements by the Minister of Finance to try to understand a little more about why we had not had a resolution of this. On March 30, not too long ago, the finance minister told Canwest News:

Quebec chose to operate its own sales tax system and not to adopt a harmonized system with the Government of Canada. That was a decision made by Quebec and that is their choice....You can't say I'm not going to harmonize my sales tax, I'm not going to adopt federal law but I want transition funding for something I'm not doing.

The minister was pretty clear in his statements. It sounds to me, to the extent that there are differences in the deal the Ontario and the Atlantic provinces have in terms of harmonizing the taxes, that the finance minister has closed the door and said that there will be no discussions, that these are the rules of the game and that is the way it will be.

That is pretty clear, and the Conservatives have indicated they will oppose the motion.

On the same day, the Minister of Public Works said in the House:

Mr. Speaker, at a given point, unlike Ontario, Quebec did not pass the federal harmonized sales tax legislation. That is the point. We need to stop clouding the issue. Quebec also did not sign a comprehensive integrated tax coordination agreement. That is a fact.

Quebec's sales tax and the GST are still separate, and Quebec has chosen to administer them. That is why there are compensation payments. The member should stop deliberately muddying the waters to create division.

At that point I was pretty convinced this would not happen. When I saw the motion come before us, I was not sure whether this was a serious attempt to maybe make a resolution here.

The finance critic for the Liberal Party addressed the House earlier. He gave some very encouraging words about not why this should not happen, but why it should. I subscribe to the philosophy of “Please don't tell me why I can't; tell me how I can”, taking into account some of the historic and precedent conditions that already exist between the Government of Canada and the province of Quebec.

The finance minister appears to have changed his tune a bit, and that was very encouraging. On April 21, in the House, he said:

The plain fact, Mr. Speaker, is the Government of Quebec is collecting the GST for the Government of Canada and is being paid $130 million a year to do that job.

This is about economic growth in Canada. That is why New Brunswick, Nova Scotia, Newfoundland and Labrador and now the province of Ontario have all negotiated with the federal government and arrived at a harmonized tax system.

This is in the best interest of people who work in Quebec. That is why I look forward to continuing discussions with the Government of Quebec.

In a matter of three weeks, the finance minister went from “no way” to “we need discussions”. Therefore, we have already achieved something in terms of raising the issue and pointing out that there are some arguments.

As I indicated, the current economic challenge that we face is our priority, but this is a point that can be dealt with and should be dealt with, as the lead speaker said, equity and tax justice. That is what we are talking about.

The second point I want to make is we are pleased that the Government of Quebec has indicated it will consider eliminating the remaining obstacles to full harmonization, including not levying the QST on top of the GST.

This matter has been evolving. There have been some discussions. It appears there is some openness on behalf of the Minister of Finance, which I think is encouraging, and there has been some openness to resolve those obstacles with regard to the province of Quebec. This tells me there is an opportunity here for discussions, consultations and resolution of the outstanding items.

Members might want to muse about the obstacles and where they stand.

The whole situation of harmonization has to do with putting two taxes into one. Today we still have two taxes, the Quebec sales tax and the GST. Literally there is no harmonization.

One Bloc member indicated that Canada could have two taxes and still achieve harmonization. An argument could be made that having two taxes would not really be a major difference as long as the reconciliation items between the two taxes would not be onerous or maybe mitigate the benefits that could flow from harmonizing the taxes.

The second item has to do with applying the difference on the basis of which taxes are applied. This could cause some problems. It could cause businesses some grief. I have a feeling that some reconciliation could happen. The province of Ontario has made some exemptions to accommodate the difference between the GST and the PST.

The tax credit is an interesting aspect to the extent that there is a GST tax credit. Tax credits available through the Quebec government do not merit. There are some benefits that would accrue not only to businesses, because of the flow-through nature of the GST tax credit, but to consumers as well.

The next item deals with who would collect the tax. I argued earlier that whether it is the Government of Quebec or the Government of Canada that collects the harmonized tax should not matter all that much. It is not a fatal flaw in the harmonization scheme as long as the mechanism provides that the moneys owing on the taxes are properly remitted to a jurisdiction and that the distribution or division of those funds is in accordance with the agreement.

Finally, is the issue of a tax on a tax, where the QST is applied against GST paid goods. We can deal with this problem. Depending on the compensation, and I do not know the full details of the mechanics or the scope or the latitude, that is also resolvable.

If these are the items to be reconciled, then I do not see them as major. These are relatively minor points that could be resolved through discussions between the province of Quebec and the Government of Canada.

I am encouraged by the shifting in position of the Minister of Finance on this matter. The finance minister made some assertions that harmonization was a very good economic policy and that it represented a massive tax cut that would promote job creation and investment in the province of Ontario. It should also do the same for the province of Quebec.

The motion is worthy of discussion. I am sorry the Conservatives have decided not to support it. When there are disagreements in interprovincial relations, we have the tools and the will to discuss those disagreements and resolve them. I consider this matter to be somewhat of a test case. Where is the good faith? Where is the equity? Where is the tax justice?

I want to reiterate that the Liberal Party is concerned about the challenges we face with respect to dealing with the economic crisis. We want to eliminate those obstacles. We will support the motion. We want discussions to be held to eliminate those obstacles and to ensure we get the greatest possible benefits out of the harmonization of both the Quebec and federal sales taxes.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:30 p.m.

Bloc

Roger Pomerleau Drummond, QC

Mr. Speaker, my honourable colleague has on several occasions used the expression “good faith”, and it is also in the Bloc Québécois motion. He used it at the beginning of his speech, and also at the end. He spoke a great deal about the need to support good faith, regardless of its cost. Many people both within this House and elsewhere are thinking and saying that good faith is as assumption. I am not one of those; I feel that good faith has to be earned, and it is far harder to achieve than people think.

Like many people here in this House, I have a background in the Scouting movement, and the first law of Scouting is that a scout swears on his honour to be trustworthy. How does he do that? By showing people that if he gives his word, he keeps it. Yet all parties that have been in power here for the past 20 years have never kept their word or respected any major commitments they have made. To give one random example: Jean Chrétien and abolition of the GST. That was never done, yet it was a promise.

I would like to ask my colleague who wishes to earn that good faith at this time, with an election call looming, and his party with a strong possibility of defeating the government over there, just what he is prepared to do to earn good faith through specific commitments. What criteria will Quebec have to comply with in order to get the $2.6 billion in compensation? When we have that answer, we will know exactly what we are voting on.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:30 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the member covered a lot of ground, but let me see if I can focus in on a couple of points.

First, I am a member of the opposition as are the hon. member and members of the NDP. We cannot do anything in terms of negotiating with the province of Quebec other than to show our support, which is going to happen. We give our best argument here in debate and the government can choose to accept it or ignore it. It has to make the ultimate decision.

The member's point about earning good faith, in this place there is a presumption of honesty, the presumption that all members are telling the truth, that there is credibility here. With regard to the member's comment on abolishing the GST, he may want to check the platform of that election, which was to replace the GST with a revenue neutral tax. That has happened. The HST replaces the GST in the provinces that have accepted it. That includes Quebec and the Atlantic provinces to date.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:35 p.m.

Conservative

Bruce Stanton Simcoe North, ON

Mr. Speaker, I listened intently to the commentary of the hon. member for Mississauga South on this and on his party's support for the motion. Most of what he has said would seem to be entirely reasonable and, in fact, is consistent with what the government wants to do in terms of working forward to harmonization in provinces, including the province of Quebec.

What surprises me, though, is the motion very clearly requires an automatic $2.6 billion payment to the province, something that would not be part of the fiscal framework at this time and would necessitate an extra burden on the fiscal requirements of the government. Is this the sort of thing the member's party is suggesting it might have to raise taxes for?

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:35 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the member seems to argue that the government does not have the money so it will not do the right thing. I respect the member's opinion, but I do not agree with it. This has been going on for 10 years. There are points of dispute, but the $2.6 billion, as I understand, represents a calculation of the compensation that would be otherwise available under a harmonization agreement.

However, the last comment, the last shot, another dig by the Conservative Party members where they attack others, is to take information out of context and say “when you're going to raise taxes”. All I can say about that comment is it is very comforting to know the member has already given up and decided that after the next election the Liberal Party will be the government of Canada.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:35 p.m.

Bloc

Robert Vincent Shefford, QC

Mr. Speaker, I would like to ask a question of my colleague.

He tells us today that he supports our motion. Is there at this time sufficient content to the file on harmonization of the QST and the GST for him to tell us that, should the Liberal Party come into power, the $2.6 billion would be given to Quebec and with no conditions?

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:35 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the last word is the problem. There are always conditions. The $2.6 billion is with regard to harmonization of the tax and achieving the benefits. It does not have to be precisely the same as Ontario as long as it can be delivered and show that the benefits to the consumer, business and to the revenue stream of the provinces are met.

I know that even in the motion it states that the province of Quebec will continue to administer both taxes. That is different from Ontario. Do I consider it to be a stopper? No. I think we can still get the $2.6 billion and still have Quebec collecting it.

The only other item that I think may cause some difficulty would be with regard to either the basis on which the tax is applied or the fact that there are two taxes and the administrative burden is not alleviated to the extent that the $2.6 billion of compensation would contemplate.

Opposition Motion—Harmonization of QST with GST
Business of Supply
Government Orders

1:35 p.m.

Liberal

Joyce Murray Vancouver Quadra, BC

Mr. Speaker, I want to thank my colleague for his consistency in this debate and being here for so many of the speakers, the questions that he has asked and his own sage commentary.

Having not seen major points to be resolved, clearly benefits to businesses and consumers have been identified, is there a possibility that since some of the finance minister's former provincial caucus colleagues assert that harmonization is potentially a tax hike, a massive tax increase, and due to the vulnerability of the government on the issue of tax hikes thanks to its taxing of income trusts, might there be a connection between that sensitivity to the provincial Conservative Party's controversy around this and the vigorous negativity toward the motion?