Mr. Speaker, it is with pleasure that I rise today to speak to this motion regarding tax harmonization.
Many members seem to fail to understand what tax harmonization means. The Minister of Finance wrote a letter that was published in the newspapers. In it, he says that Quebec's harmonization model was one to follow. It seems the Conservatives have forgotten it, even though the letter is fairly recent. I think we will hear this often during debate this afternoon.
We have heard some very peculiar things. The parliamentary secretary said that he wanted to deal with legitimately elected people. It just so happens that we too are legitimately elected, even if it is not up to us, but to the provincial government, to negotiate in this case. The Bloc Québécois cannot solve this problem, but if it were not for us, the matter would probably never have been raised in this place. It is thanks to the Bloc Québécois members, and not the Conservative members from Quebec, that this debate is being held today. I wanted to underscore this because I think it is very important.
As my colleague said earlier, does open federalism mean refusing to give Quebec what it is entitled to? Every time an issue has to do with Quebec, we come up against a brick wall with the Conservative government, and every time, we raise the issue again. We have to fight, insist and repeat that all we want is justice within this Canadian confederation. As my colleague said, we must not forget that our taxes are paying for this compensation. Quebec is paying a little more than $1 billion of the $4.3 billion in compensation for Ontario. That money is coming from all over. If we are paying some of it, then we would like to have the right to the same treatment as the other provinces, like Ontario.
Currently, there is no major obstacle to compensating Quebec. There is no more obstacle to compensating Quebec than there was to compensating Ontario. The government wasted no time in giving Ontario $4.3 billion. Now, it is trying to tell us that there are major obstacles, because we are trying to gain political advantage. That is only reason the government is refusing to treat Quebec in the same way as Ontario.
Certainly, Ontario had further to go in harmonizing its taxes. Quebec can do so easily by making the few adjustments that have been requested.
But what does harmonizing taxes mean?
Harmonizing provincial sales tax means adopting the same taxation mechanism as the GST. We all agree on that. In other words, a harmonized tax system is a system where the federal and provincial components of the tax apply in the same way to the same goods. Quebec already does that. Harmonizing Ontario's tax with the GST will mean that there will be no tax on goods used by companies, but hydro bills, for example, will be taxed. It is simple. The idea is not to have absolutely the same taxes, as several people have said. The idea is for the taxes to be identical.
Why should we move to a harmonized system?
Non-harmonized taxes apply to commodities that companies use to make manufactured goods. This type of tax adds to companies' production costs. By moving to a harmonized system where there is no tax on commodities companies use, we reduce production costs and improve productivity.
In other words, we are going from a tax system that imposes a tax on every stage of production to a system that only taxes the finished product. Adopting a single tax mechanism reduces the administrative costs of the tax system for business and government.
I will speak to another point, that of harmonizing the sales tax in Ontario. Earlier, it was mentioned that things were done. In its 2009 budget, the Ontario government announced that it would receive compensation. To our surprise, the federal government was going to provide $4.3 billion over two years in compensation to cover the cost of the transition to this harmonized system. That is exactly what Quebec did. It paid and therefore is entitled to expect compensation.
In what way is the QST not perfectly harmonized with the GST? That is an excellent question. There is a minute difference in the refund of QST on inputs for large businesses. That is why, in order to completely harmonize the QST and GST, Ms. Jérôme-Forget, Quebec's finance minister up until a few days ago, announced on March 31, 2009 that she would establish a QST credit for large businesses, as Ottawa is doing. Given that we are prepared to do that, there should be no further disputes or misunderstandings on the part of the Conservative government.
When did the province of Quebec harmonize its sales tax? In July 1992, or 17 years ago. Quebec did not receive any financial compensation from the federal government. For that reason, we now want compensation. Quebec has requested that it be responsible for PST administration on behalf of the federal government. Thus, the GST will be administered by Revenu Québec, which will forward the monies to the federal government. In exchange for this service, the Government of Quebec wants financial compensation. This type of compensation is not unique.
In response to a question, earlier, a claim was made to the effect that the government has been giving Quebec money for years and that the total amount paid in compensation could be as high as $7.5 or $7.6 billion. That is not putting it quite right. The money is not simply given, it is payment for a service. That is different. Such compensation is not unique. The provinces for which the federal government administers income tax also have to compensate the government for its services, and there is no confusion about what that compensation is all about. They are simply paying for a service.
Which provinces received federal assistance for the tax harmonization process? On April 1, 1997, the provinces of Newfoundland, New Brunswick and Nova Scotia received a first $250 million installment for harmonizing their sales taxes. Ontario will receive $4.3 billion from the federal government to harmonize its sales tax. Quebec, however, received no compensation. In other words, Quebec is the only province that has not received any compensation for harmonizing its sales tax.
On what rules was the federal government's refusal to compensate Quebec based? The federal government allowed quite a while ago the Atlantic provinces to benefit from $1 billion over four years in compensation for harmonizing their sales taxes, all the while arguing that Quebec, as well as Ontario and British Columbia, would not be entitled to compensation because having harmonized taxes would not make their sales tax revenue drop by more than 5%.
Time is flying. I wish I had time to get into the differences between the various provinces. At any rate, Quebec will have to pay one quarter of the $2.6 billion in compensation. After all, part of the money will be coming from our own taxes.
It would only be fair and reasonable, if every other province received compensation, that Quebec also receive compensation for having harmonized its sales tax.
I hope that all members from Quebec, Conservative or not, will vote in favour of this motion.