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

Government Response to Petitions
Routine Proceedings

10:05 a.m.

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8) I have the honour to table, in both official languages, the government's response to two petitions.

Income Tax Act
Routine Proceedings

10:05 a.m.

NDP

Denise Savoie Victoria, BC

moved for leave to introduce Bill C-371, An Act to amend the Income Tax Act (low-cost residential rental property).

Mr. Speaker, I am pleased to introduce a bill that would significantly boost the stock of affordable housing in Canada while also providing a much needed stimulus for our slumping economy.

I have worked closely with the Victoria Real Estate Board that has done an exquisite job documenting the range of locked in real estate assets in the greater Victoria area. These are long held properties whose owners are reluctant to sell and reinvest because they would pay a large amount of capital gains tax.

My bill would roll over or defer gains tax for these property owners if they reinvest their proceeds in affordable rental housing.

When targeted smartly, I believe that tax incentives can be an effective tool to achieve common good and this bill represents a creative use of tax incentives to address a social crisis that has endured for far too long in Canada.

(Motions deemed adopted, bill read the first time and printed)

Income Trusts
Petitions
Routine Proceedings

10:05 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, pursuant to Standing Order 36 and as certified by the Clerk of Petitions, I am pleased to present yet another income trust broken promise petition on behalf of Mr. Martin Harrison from Stouffville, Ontario, who remembers the Prime Minister boasting about his apparent commitment to accountability when he said that the greatest fraud was a promise not kept.

The petitioners remind the Prime Minister that he promised never to tax income trusts but that he broke that promise and he imposed a 31.5% punitive tax, which permanently wiped out over $25 billion of the hard-earned retirement savings of over two million Canadians, particularly seniors.

The petitioners, therefore, call upon the Conservative minority government to: first, admit that the decision to tax income trusts was based on flawed methodology and incorrect assumptions, as was demonstrated in the finance committee hearings; second, apologize to those who were unfairly harmed by this broken promise; and finally, repeal the punitive 31.5% tax on income trusts.

Fishing Industry
Petitions
Routine Proceedings

10:05 a.m.

Liberal

Gerry Byrne Humber—St. Barbe—Baie Verte, NL

Mr. Speaker, I have the duty and the pleasure to table in the House this morning a petition on behalf of constituents and people from Newfoundland and Labrador, especially the northeast coast of the province, who call on the government to bring forward a program for income support due to significant ice conditions along the northeast coast of Newfoundland, the northern tip of Newfoundland, as well the area of Labrador.

The petitioners ask the government to act quickly but, as well, to put in place a more permanent mechanism to help these families and these people who face such significant and serious economic consequences as a result of the inability to earn a livelihood from the fishing industry as a result of these serious ice conditions. It is through no fault of their own but through the natural environment that these circumstances occur.

The petitioners do note that the government has enacted other mechanisms to provide relief to other workers in other sectors and they call upon the government to do so in this particular case.

Several petitions have been received by my office but, unfortunately, some could not be certified by the Clerk of Petitions due to the fact that they did not meet the required form. However, I do have one here that does indeed meet the required form and I ask the government to act very quickly.

The government has already indicated that it would be bringing forward an ice compensation program. We ask the government to put in place the requirements within the context of this particular petition and that it do so very quickly.

Questions on the Order Paper
Routine Proceedings

10:05 a.m.

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

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

Questions on the Order Paper
Routine Proceedings

10:05 a.m.

Liberal

The Speaker Peter Milliken

Is that agreed?

Questions on the Order Paper
Routine Proceedings

10:05 a.m.

Some hon. members

Agreed.

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

10:10 a.m.

Bloc

Jean-Yves Laforest Saint-Maurice—Champlain, QC

moved:

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.

Mr. Speaker, I will be sharing my time with the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.

The motion I am presenting today is supported by the entire Bloc Québécois. It fits within a context of tax equity and fairness. It is important to point out that there is a whole history behind this motion. I am presenting it today on behalf of the Bloc Québécois because, given the process we have witnessed by which Ontario was compensated, the Bloc considers that Quebec is losing across the board as far as harmonization of the QST with the GST is concerned.

It is important right at the start to clarify one extremely important element concerning the Quebec nation: as a nation, Quebec possesses the legitimacy required to collect and administer sales tax within its borders. The debate must be based on that principle and that statement of fact. In the course of this day it will be noted—and I will point it out as well—that the present Conservative government's arguments deny that reality.

To give a brief background, the GST was introduced in the early 1990s, and the Government of Quebec harmonized its sales tax with the GST in 1991 and 1992. It was the first in Canada to do so, and it received no compensation. Quebec felt that harmonization of taxes was important for the province's businesses. The Liberal federal government of the day called for the various provinces to follow the Quebec example and harmonize their sales tax.

After several interventions, the Maritimes harmonized their sales taxes in 1997. The Liberal federal government then compensated the maritime provinces which had done so with close to $1 billion, given that there were costs connected to harmonization. Then the province of Quebec asked that Liberal government why it was not offering Quebec the same thing. Since Quebec had already harmonized its sales tax with the GST, why should it not be compensated?

The Liberal government refused to consider the Quebec government's request for financial compensation. It said that it would provide compensation for the transition to a harmonized tax if the province's revenues declined by more than 5%. In Quebec, revenue losses were less than 5%. Quebec agreed to that because that was the rule, and the province went along with that way of doing things. Quebec always tries to cooperate, so it accepted the situation because it had not lost more than 5% of its sales tax revenue.

However, the Conservative government has changed the rules dramatically. This spring, when the Government of Ontario introduced its budget, it announced plans to harmonize its provincial sales tax with the GST and stated that it would receive $4.3 billion in compensation from the Conservative government. Interestingly, Ontario, like Quebec, will not be losing more than 5% of its sales tax revenue.

On the contrary, by harmonizing its sales tax, the province will collect more revenue. As I said earlier, this is about tax fairness, and that is the point. It is perfectly clear that the federal government is compensating Ontario, and that smacks of favouritism.

In response, the Government of Quebec passed a unanimous resolution calling on the federal government to pay $2.6 billion in compensation, a pro-rated amount based on Ontario's compensation.

Since then, the Minister of Finance has been scrambling to come up with excuses that have absolutely no relation to the logic underlying the Government of Quebec's request. He has been stonewalling by coming up with new reasons for his refusal almost every day.

First, he said that the tax was not really harmonized. In a letter to the Minister of Finance, Quebec's former finance minister, Ms. Jérôme-Forget, said that her government would address the few remaining differences between Ontario's and Quebec's harmonized taxes. It is clear that the Conservative government must compensate Quebec if the two taxes are harmonized and on a level playing field.

Then the government came up with another excuse, and now it is forcing a completely unacceptable situation on Quebeckers.

In 2006, Quebec was said to be a nation, yet it is not recognized as such. In addition, it is being asked to give up the power to collect taxes from its citizens and raise tax revenue from the QST and the GST, something it has been doing since the beginning of this harmonization process. That is totally unacceptable on the part of the Conservative government.

During the 2006 election campaign and the years that followed, we heard the government boast about its open federalism approach. Talk is fine, but we have seen no action since. Unfortunately, what we have here is another example of adding to the pile. Disputes are piling up and, once again, Quebec is the one being denied $2.6 billion.

Great efforts were made during the 2006 election campaign to seduce the electorate. The current Prime Minister went as far as to promise that the provinces' jurisdictions would be respected, that the fiscal imbalance would be dealt with, that the international extension of Quebec's internal jurisdictions would be recognized, that Quebec would have special autonomous status through the recognition of its institutional responsibilities, and that open federalism would put an end to the constant confrontation between Quebec City and Ottawa. That is what the current Prime Minister promised, but clearly these were only words.

Now, two elections later, the great seduction has been replaced with the great disappointment, of which there are many examples. The case at hand today is unfortunately one more example showing that, regardless of the government in office at the federal level, be it Liberal or Conservative, hardly anything has changed in how Canada operates.

There has been a short honeymoon between Quebec and the Conservatives, but I can assure this House that the honeymoon is over and that the confrontation between Quebec City and Ottawa is back on with a vengeance. Moreover, this whole situation is unacceptable to all Quebeckers. We have introduced this motion because we think and we are convinced that Quebec ought to get its fair share and that this is ultimately a matter of fairness and social justice.

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

10:20 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, I thank the member for kicking off this debate. It is an important motion because there are some principles involved. At the outset, the member talked about fairness and equity. In order for Canadians to have confidence in our system of taxation, all programs need to meet those benchmarks of being fair and equitable.

The member gave us some history, but I would like him to remind the House of the commitment of the Minister of Finance to the province of Quebec with regard to harmonization and the $2.6 billion. It is the compensation issue, something that was dealt with when the Maritimes made the transition to harmonization to deal with the cost of doing the process as well as to deal with issues of lost revenue.

It is important to put the commitment of the current Minister of Finance to the province of Quebec on the record for all to understand.

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

10:20 a.m.

Bloc

Jean-Yves Laforest Saint-Maurice—Champlain, QC

Mr. Speaker, I thought I was clear on that point. What I said when I touched briefly on the historical background is important and I look forward to seeing the Liberals' position on this issue.

The Minister of Finance said he would compensate Quebec if the tax were fully harmonized. Since that time, he keeps inventing new conditions that he knows full well Quebec will never accept. Among other things, the finance minister set a requirement, and he even did it publicly. A letter published in the newspapers said that Quebec would receive compensation only if both the GST and the QST were collected by the federal government from now on. This is totally unacceptable.

There is another aspect to the commitment made by the Minister of Finance. He said that, previously, provinces were to be compensated only if they stood to lose more than 5% of their tax revenues because of harmonization. Now we know that Ontario will see its revenues increase with a harmonized tax.

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

10:20 a.m.

Macleod
Alberta

Conservative

Ted Menzies Parliamentary Secretary to the Minister of Finance

Mr. Speaker, I listened intently to my hon. colleague with whom I share the privilege of sitting on the finance committee. He has done some fine work on that committee. The member asks good questions and does his homework.

In answer to the previous question, he suggested that the finance minister of Canada has changed his position on the requirements for this proposal that is suggested in the motion today. The facts are that the finance minister has not changed his position from what has been offered to all provinces. In fact, Quebec has said that it is not willing to adopt full harmonization of the sales tax.

We have provided funding for the role it is playing in taxes, but to suggest that the Government of Quebec is willing to fully harmonize, I wish the hon. member would share with us that letter where the provincial government has said it will actually fully harmonize. I would be glad to present that to our finance minister as an olive branch, that the provincial government is willing to sit down and talk seriously.

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

10:20 a.m.

Bloc

Jean-Yves Laforest Saint-Maurice—Champlain, QC

Mr. Speaker, the member is talking about a letter that the Quebec finance minister sent to the federal finance minister on April 1, 2009. The letter clearly states that the main difference between the QST and the GST has to do with input tax credits. The minister says very clearly in this letter that the Government of Quebec would accept to make the necessary adjustments to its QST to ensure a fuller harmonization.

From the moment the Quebec finance minister sends a letter in which she confirms what the Quebec government intends to do, the situation is very clear: the Quebec government is willing to go a long way in eliminating the few remaining differences, but—

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

10:25 a.m.

Conservative

The Deputy Speaker Andrew Scheer

The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, for debate.

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

April 28th, 2009 / 10:25 a.m.

Bloc

Paul Crête Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, being the representative of a Quebec riding makes one very happy in this place on some days. Indeed, the Bloc Québécois has been elected to promote sovereignty and to defend Quebec's interests. I will read today's motion because I think it is in line with what Quebeckers want collectively:

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.

That motion illustrates clearly what it means to defend Quebec's interests because it supports a motion adopted unanimously by all parties in the National Assembly. Since Quebec regained the right to have a provincial income tax system 50 or 60 years ago, it has always tried to get as much financial autonomy as possible. In the end, total financial and legal autonomy will be necessary.

I want to read the unanimous motion of Quebec's National Assembly because I believe it sums up the position of Quebec very well:

WHEREAS Québec was the first province to harmonize with the Federal goods and services tax (GST) in the early 1990s:

This is nothing new. In the early 1990s, Quebec was the first province to do so.

WHEREAS since then, three Atlantic provinces have harmonized with the GST in 1997 and have received compensation for this from the Federal Government totalling close to 1 billion dollars;

Quebec, on the other hand, received no compensation.

WHEREAS the Government of Ontario announced that it would harmonize its sales tax with the GST beginning on 1 July 2010;

WHEREAS the Federal Government will grant a 4.3 billion dollar compensation to Ontario for this harmonization, an amount that is justified in the Canada-Ontario memorandum of understanding particularly owing to the desire to stimulate economic growth and job creation, and the Federal Government will administer this new provincial tax free of charge on behalf of Ontario;

It is the Quebec government that administers this tax in Quebec, although the federal government will do so free of charge for Ontario.

WHEREAS the Ontario sales tax will be very similar to the Québec sales tax (QST) since certain goods, such as books, will not be subject to the provincial tax and that input tax refunds in Ontario may be identical to those agreed to by Québec for an 8-year period;

So the two cases are comparable.

WHEREAS Ontario is the fourth province to receive compensation from the Federal Government as part of the harmonization of the provincial and federal sales taxes, while Québec has not received any compensation to this day even though it was the first province to harmonize its sales tax;

All parties in the Quebec National Assembly unanimously agree on this.

BE IT RESOLVED THAT the National Assembly ask the Federal Government to treat Québec justly and equitably, by granting compensation that is comparable to that offered to Ontario for the harmonization of its sales tax with the GST, which would represent an amount of 2.6 billion dollars for Québec.

So as we can see, today's Bloc Québécois motion is actually the Quebec National Assembly motion. The Government of Quebec is unanimously saying that they are the ones who have been moving forward on this, acting in good faith, reaching agreements and administering this tax for many years, without ever receiving any compensation, as we watch other provinces receive compensation year after year for various reasons.

Ottawa invents arguments to compensate the other provinces, but it does not compensate Quebec. The federal government's latest invention is very hard to swallow: it is saying that it should collect the money, even though nearly 20 years ago, the federal government said Quebec could collect it. The current government, which has said it is open to Quebec, is more regressive than previous governments in this respect. Quebec truly cannot understand or accept such an attitude.

Quebeckers have always been open-minded. For example, we took positions on free trade that we felt were important for proper trade. But the federal government has always been very jealous of the rights of the National Assembly of Quebec. I believe that there has not been one Government of Quebec in more than 75 years that has not tried to make Quebec more autonomous, and especially more financially independent. As I mentioned earlier, Maurice Duplessis was the first premier to make sure that income tax in Quebec was collected separately from federal income tax.

Later, the government of Mr. Bourassa entered into an agreement whereby Quebec would collect and administer the tax and then send the federal government its share.

So even though there was an internal debate in Quebec and even though the Parti Québécois was ahead of the Liberals on this issue, Quebec realized that this could be an important, worthwhile tax tool. When the federal government lowers its tax and Quebec takes its place, it becomes more financially independent.

It took the Liberals a year or two longer, but they included this measure in the latest budget. They are finally going to recoup the 1%. The Parti Québécois had been calling for this for many years and had suggested it in the past. It is a good measure.

Every time Quebec becomes more financially independent, Quebeckers win, because they are able to assume their responsibilities and invest all the money they need to in their own areas of jurisdiction.

We see all the cuts the federal government is making. For example, it is constantly changing the rules for equalization, forcing Quebec's finance minister to do financial gymnastics, which is unacceptable.

The more financially independent Quebec is, the less dependent it will be on such decisions, and the less it will be in a paternalistic relationship with the federal government. That is the message the Government of Quebec has sent, and it is the message the Bloc Québécois hopes to get across.

Financial independence has always been an important criterion for developing nations. Let us remember that in the United States, it was the issue of a tax on tea that, in a symbolic way, became the reason why the United States of America decided to become independent from the British Empire.

In Quebec, opinions are divided concerning independence. We have not yet achieved a solid majority but there certainly is a consensus on the fact that Quebec must have the most financial independence possible. It is that consensus that the Bloc Québécois brings before this House today, and we hope that the House will listen to it.

It is important, because the response to this motion will have a large impact on the way the people of Quebec view this Parliament. During the next year or so, there will probably be a federal election campaign. When Quebeckers are asked to decide which party will best represent them, they will certainly take a look at who has defended their interests here in this House, in particular the interests formally expressed by the Quebec National Assembly. It is the Bloc Québécois that has done so today.

Quebec has acted in good faith in this matter. In the past, federal government documents even recognized that taxes were harmonized in Quebec. Now, they have come up with this approach to collecting taxes in an effort to avoid having to compensate Quebec.

We are not here begging for money. We just want what we are entitled to. As Mr. Duplessis would have said, we want what is ours. This is money that is due to us under this system. It is not true that the rest of Canada has the right to be compensated but not Quebec.

Rest assured that on this point we represent all Quebeckers. Everyone knows that what we are talking about here is only about half the financial envelope of Canada, and that when decisions are made by the federal government in its areas of jurisdiction, such as national defence, where a great deal of money is being spent on Afghanistan, those decisions mean that money is not available for other types of spending.

Quebeckers are well aware that the more financially independent they are, the more likely it is that they will be able to develop the social model they desire. They have done that with the parental leave system, with day care centres, and they want to continue to do so. In fact, Quebec has a social model, a society, a nation that is different. Our nation has even been recognized as different by this House. Now, it is time for the Conservative federal government and the federalist parties here to make a gesture toward Quebec. a gesture of fairness, by supporting this motion put forward by the Bloc Québécois. Otherwise, Quebeckers will know what conclusions they should draw.

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

10:35 a.m.

Bloc

Robert Vincent Shefford, QC

Mr. Speaker, my colleague made an excellent speech.

The Bloc Québécois is often said to be rebellious. There are plenty of reasons for that, but it is mainly because when the Liberals were in power, the federal government did nothing when the crisis hit the textile and footwear industries. These two industries are now closed.

With regard to the manufacturing and forestry sectors, we are talking about $170 million over two years for all of Canada.

If we look at problems experienced in other provinces, for example the crisis in the auto industry in Ontario, that industry has already received $20 billion. Money has also been given to the tar sands industry.

Now, whatever issue is debated in the House, Quebec always comes last. There is blatant evidence of that. As soon as one of the provinces gives or does something, it is compensated immediately. However, when it is an issue that has to do with Quebec, the answer is no. Quebeckers can protest all they want, but nothing happens.

Well, we will not let that continue. We have rights and every province has rights. We will defend the rights of Quebec, that is a given. We will do it every time we come into the House of Commons.

Can my distinguished colleague tell me what he thinks the problem is and why the government does not want to compensate Quebec for harmonizing the QST with the GST?