Jim Jones

[Supply, November 6th, 1997]

Madam Speaker, I do not know if I am to respond to that.

The GST has been politicized too much. When it initially started out it was to replace the federal sales tax on manufactured goods which was 14%. Maybe there are some items that should not be included.

We should look at the benefits the GST has accumulated to this country over the last few year. Companies are now more competitive because the hidden manufacturers' tax is no longer there. The tax is not included in goods that go out of the country. We have, from a free trade standpoint, benefited. We have enjoyed a $16.7 billion surplus in tax revenues coming from free trade. The GST has not been all that bad for us.

[Supply, November 6th, 1997]

Madam Speaker, I did not hear all of the question because I did not have my ear piece on for the translation.

I believe that my party supports the setting up of a panel to review this and will accept the decisions of the panel.

[Supply, November 6th, 1997]

Madam Speaker, we support harmonization with the provinces provided they are all treated equitably.

Because the Government of Quebec benefited from harmonization at the time, there was no discussion about compensation. Now that the eastern provinces have followed the same path of harmonization at a loss of more than 5% of their revenue, the provincial Liberals negotiated with the federal Liberals for a compensation of $1 billion total.

In retrospect Quebec thinks it should be compensated. However it is not the only province that will not receive compensation upon harmonization. Ontario will not, Alberta will not and also B.C. will not. These provinces pay substantially to those provinces that are being compensated.

In 1993 the Liberal government verbally promised to eliminate, scrap and abolish the GST. The Liberal red book itself was much more vague however. It only promised to replace the GST with another tax, a vague system that was supposed to generate revenue, claimed to be fairer to consumers and small businesses, promised to minimize disruption to small businesses and promised to promote federal-provincial fiscal co-operation and harmonization.

The Liberal red book pledged “Give the all-party finance committee of the House of Commons a 12-month mandate to consult fully with Canadians and provincial governments and to report on ways to achieve tax fairness, simplicity and harmonization. In particular, the committee will be mandated to report on all options and alternatives to the current GST”.

The Liberals led voters to believe that they would scrap the GST, not hide it in the price in three provinces which they have tried to do.

The Liberals used to think the GST was not visible enough. As the former member of Acadie—Bathurst and Liberal finance critic once said “The whole idea of visibility was seen by many Canadians as being a deterrent to free spending governments which would just raise the tax, get the money it needs at election time for promises, spend it foolishly and then all of a sudden be in extremely difficult times”. Even the Liberal MP for Kenora—Rainy River said “To keep the GST hidden from Canadians is despicable”.

The Liberals said that harmonization is a step toward replacing the GST. The Minister of Finance said “There is some possibility that when we take power in 1992 the provinces will entrench the GST in their sales tax regimes—It would be extremely difficult to undo in that instance, but I would consider removing it nonetheless, and in all other scenarios I am committed to scrapping the GST and replacing it with an alternative”. The minister also called the GST a regressive and unfair tax on living.

The Minister of Finance promised to do away with the tax and replace it with an alternative method of collecting moneys. Why has he not done so? Why has he not honoured these promises? Because the GST is, in fact, a fair and equitable method of collecting tax for this country. It was a well thought out plan on the part of the Tory government.

In April 1996 the federal government along with Nova Scotia, New Brunswick and Newfoundland agreed to harmonize their sales taxes and to bury them in the price. It was no surprise that all governments involved were Liberals. To entice the three provinces to participate, the Liberal government paid almost $1 billion in compensation according to negotiations struck. This allowed the participating provinces to reduce their sales tax for a combined federal-provincial rate of 15%.

However, they failed to realize, or maybe they did, that far more goods and services would now be taxed. Those living in the three Atlantic provinces have been hardest hit. The HST attacks low and low middle income Canadians the most. Instead of paying only the GST, now they must pay the GST and HST, an increase of 8%, on electricity, fuel, oil, food, children's clothing, gasoline, telephone, haircuts and school books. Those items that saw a decline in tax applied were those items high income Canadians can more often afford to purchase. Examples would be cars, stereos, home appliances and boats.

As Senator Robertson so eloquently put it “What is more equitable about a tax that makes it cheaper to buy a fur coat and more expensive to buy a jacket for a child, or more expensive to pay for electricity and less expensive to purchase a new car?”

Canadian taxpayers are footing the bill for this agreement. One billion dollars went from the pockets of taxpayers to the three maritime provinces to compensate them for lost revenues. Those provinces are receiving more than twice the money of their anticipated shortfall. In total the three provinces would have a revenue shortfall of $395 million but in fact they are receiving total compensation of $971 million.

Why was it necessary to overpay these provinces by more than $570 million? Was this a good business decision or just an incentive to get the provinces to sign for a bad deal?

All this money was paid up front. However, the provinces may end up raising other taxes to make up the shortfall in future years.

We have heard from the provinces. It is clear that citizens are not pleased that the three provinces are being compensated through tax dollars. The government has gone so far as to offer those provinces that did not collect enough revenue, namely, P.E.I., Saskatchewan and Manitoba, their share of compensation if they decide to harmonize.

Although the agreement was not announced until the 1996-97 fiscal year, and even though the payments are meant to cover a four-year period, Ottawa booked the entire amount to the 1995-96 fiscal year. That lets Ottawa play a shell game with its deficit numbers. The finance minister said he can do this because he said before the end of the 1995-96 fiscal year that he would seek such an agreement. The auditor general has slammed this accounting trick.

The Liberal government has broken its promises over and over again. The manner in which it harmonized the sales tax in the Atlantic provinces is evidence of this. Canadians have been deceived over and over by the Liberal government. First it opposed the proposed GST and now it takes credit for it. Example, the Prime Minister in London just a couple weeks ago.

The harmonized sales tax does not even come close to matching the red book's fine print. The GST is still here. It is the three provinces which are replacing their sales tax, not Ottawa.

The red book promised a tax system that minimizes disruption to small businesses. Retailers make it quite clear that tax included pricing would have caused major disruptions. Businesses selling in these three provinces from elsewhere in Canada will be required to collect and remit both taxes. No such burden will be faced by merchants in the three harmonized provinces when they sell to the rest of the country. This is both another cost to business and yet another barrier to interprovincial trade.

We applaud our PC senators who were successful in amending the harmonized bill. They were able to postpone tax included pricing until a time that provinces representing a majority of the population agreed. Tax included pricing in only three provinces would have driven up the cost of doing business. As a result there would have been added costs for everything from national advertising to the cost of reticketing items that are normally shipped from elsewhere with the price already included.

In closing, allow me to quote the hon. member for Saint-Hyacinthe—Bagot “The Liberals have done a patch-up job. In the three Atlantic provinces the existing GST and the provincial sales tax are being replaced with a single tax, called HST. But the fact of the matter is that it is the same tax. It is the same GST with a different name, with approximately $1 billion in bonuses for the maritimes. They have done a patch-up job to meet their election objectives. They have made a partisan patch-up job at public expense and at the taxpayers expense with the taxes paid to the federal government every year.”

[Customs Tariff, October 24th, 1997]

Madam Speaker, I will be sharing my time with the hon. member for Richmond—Arthabaska.

The PC Party of Canada supports making legislation that simplifies our lives and the lives of business owners. However there are matters that need to be addressed in the legislation.

I thank the hon. member from Manitoba for acknowledging it was the Progressive Conservative Party that introduced and brought forward the free trade legislation.

We are happy to see the Liberal government has realized our initiatives on free trade in the late 1980s are so important, a lead that it continues to follow. Our initiated agreement made trade between countries competitive, boosted economic success and began to tear down the walls that hindered successful open trade transactions between countries.

At that time the Liberals did everything in their power to oppose the initiative. Today we witnessed something else. What was so profusely objected to almost 10 years ago is today the largest bill on our shelves and the biggest factor in the contributing of tax revenues to the recovery of our economy.

While we are flattered the government of the day continues to carry out our initiatives and our tariff agreements that we put in place when we were in government, there are several important factors to be considered.

Just a few weeks ago the government was reprimanded for the untimeliness of the year 2000 project. How can we expect modern innovation from the Liberals when the bill is distributed in paper form instead of CD-ROM? The documents are composed of about a foot and a half of paper. In the last couple of days we have heard about the importance of the environment. This is truly an unfriendly environmental document.

Let us look at the size of the bill. Instead of setting an example and proving that we are moving into the 21st century, our offices are cluttered with these volumes.

Perhaps my most important message today is that this is the beginning, not the end. We cannot stop now with the progress that we have made because the bill has been simplified. Work still needs to be done.

I ask the government to commit to continuing with the work in progress, to continue developing trade agreements with our partners, to look ahead to the global marketplace and to achieve a standard of excellence with our trading partners. This means the government must continue to promote trade and encourage business development in Canada. It is imperative that taxes in all areas be competitive.

While we know that industry generally supports the bill, we also know it has qualms about it. First and foremost is the sense of urgency being placed on the bill. The Canadian Importers Association is concerned with its speedy passage as it says importers will not have enough time for what will be a very time consuming and costly exercise. The Alliance of Manufacturers & Exporters also shares this concern. It states that it is a scary exercise and there is very little time to do the programming it needs.

Unlike the government that has known about the year 2000 problem for the last five years, perhaps we should give businesses a month or two leeway to implement the bill.

These are the affected parties. We demand that the government listen to their concerns and continue with the theme of simplification. If we are to simplify the process we need to continue with their agreement and simplify the lives of business owners. We will hold the government accountable and demand that it listen to the suggestions that have been received.

The recurring message we are hearing from the business community with respect to the uneasiness it faces is related to the delivery and the implementation of the tariff simplification initiative. While it supports the elimination of regulation and business procedures, it is deeply affected by the timing of the bill. It feels quite rushed and that it has not been granted enough time to prepare for the upcoming changes and enormous challenges it must face.

This is the most complex tariff system in the world. We know it and our trading partners know it. I urge the government to consider the huge tasks that lie ahead for importers in Canada and demand they be given time to adopt to the enormous changes ahead.

Since the Liberal government obviously agrees with us on the importance of free trade, why do its members not agree with us on simplifying the lives of businessmen, simplifying the lives of Canadians, decreasing red tape, lessening government interference, simplifying Bill C-11 and agreeing with changes to the complexity and short term allowances given to these important businesses?

The PC Party stands for less red tape, less government interference, less government involvement in people's lives, more power to businesses and more power to the people.

[Taxation, October 24th, 1997]

Mr. Speaker, a huge injustice is being committed as we sit here today. The Liberal government is killing off the early stage software development industry by axing tax incentives. The government crushed industrial creativity when it abruptly decided on August 6 this year to remove investment incentives to high risk “angel” investors of small to mid-size development companies. The Minister of Finance is going through with this removal of important forms of finance for early stage software developers without any consultation with the industry: no orange light, no warning, no review, even after he has been asked for a review and even offered co-operative help from the industry.

The killing off of a valuable fast paced growing industry is absolutely despicable and unacceptable. On October 31 an entire part of the technology industry will die. If the government is going to brag about helping the innovative technology industry, then it should either treat the industry as partners or stop using the partnership rhetoric.

[Canada Pension Plan Investment Board Act, October 6th, 1997]

Mr. Speaker, the Canada pension plan is a payroll tax and so is the EI premium. What we are saying is that for a tax reduction, taking the $5 billion surplus of the EI and offsetting it against the deficit should stop now. As we get into the balanced budget benefit that is supposed to be forthcoming, that should be done on its own. To create jobs maybe we should reduce the premium on the EI and offset it against the Canada pension fund which workers and organizations will have to pay. Both are payroll taxes.

[Canada Pension Plan Investment Board Act, October 6th, 1997]

Mr. Speaker, I know that we will help reduce the premiums for EI payments. The HST which is the harmonized sales tax and the GST are performing a function which replaces the manufacturing tax. I would like to see as we get to a balanced budget the revenues from the HST used to reduce the debt. That is what I thought it was initially set up for. In the long run by reducing the debt and the debt servicing costs we can reduce taxes for all Canadians. That is what we must strive for.

[Canada Pension Plan Investment Board Act, October 6th, 1997]

Mr. Speaker, the amendments proposed in Bill C-2 are simply not acceptable to the party to which I belong. However, I agree that we have to decide on a course of action quickly. We should not prolong or delay the deliberation of this bill.

I am also sure that many Canadians will agree that the proposed changes will harm their retirement years. I would like to address three main points which arise from the legislation.

CPP premiums will rise at a faster rate than originally planned. Taxpayer disposable income will be negatively affected as their budgets will need to be altered once again. Changes in the way benefits are calculated will slightly reduce the pensions of future beneficiaries, reduce health benefits and make it harder to qualify for disabled benefits. This means that present contributors will be forced to pay more while being told they will receive less.

Bill C-2 sends out messages to three groups. First and perhaps most relevant are the working Canadians who over the next 20 years will pay out more in CPP premiums and in the end receive less in benefits. Even if current forecasts are incorrect, the previous pay as you go system which had today's workers paying for today's pensioners will be overhauled to become a fuller funding system, where today's workers will pay for today's and tomorrow's pensioners and will have nothing for themselves. It used to be a privilege for Canadian citizens to receive the CPP. Now it has become a burden for working Canadians as they must pay more and more as premiums increase.

Second, the proposed changes in the legislation will force working Canadians to rely more heavily on workplace pensions and RRSPs. Higher CPP premiums imposed on Canadians leave less disposable income for individuals to manage their own private retirement portfolios.

The fact that benefits received will be based on the average of the past five years' earnings instead of three means that for most recipients pensions will be 3.7 percent lower than in the present system. Therefore the need for private pension plans is even more relevant.

Third, I am concerned for the self-employed worker who will consequently be hit hardest by the changes proposed in Bill C-2.

We know that small businesses in Canada are stressed with payroll deductions, but now they must face yet another hike in expenses.

Those who are self-employed will be excessively strained for cash as they must contribute 100 percent of the proposed increases. The self-employed individual must contribute both his or her portion plus the employer's contribution, who in this case is one and the same. This means that by the year 2003 an additional $3,270 must come out of the pockets of small business owners based on the proposed figures.

What financial incentives do we offer Canadians who are self-employed or who are considering self-employment? I would argue none. This is a time when the self-employed are driving the economy, creating jobs and growing rapidly. Self-employed individuals should be offered greater tax assistance on what normally would be the employer's share of the CPP contribution.

Changes to CPP benefits should not only impact on future generations but also on individuals currently collecting the Canada pension plan as well as those nearing pension eligibility.

Working Canadians and future generations will be hard hit by both reduced benefits and increased contribution rates. It is imperative that the government strive for fairness with the pension system. This means that changes must be applied fairly to all Canadians. Higher contributions mean less disposable income, disposable income that could be used to save smartly for retirement.

Women will be hit hard by the proposed amendments. It is a fact that not only do more men than women have workplace pensions, they also have more in those pensions. Most women have very little disposable income to invest in RRSPs. Economists have found that a small percentage of men and women will be financially secure upon retirement.

Canadians are in need of legislation that secures future needs but will not rob them of their independence to manage their present and future plans. Premium increases place greater burden on the working poor than on wealthy Canadians. This is not a fair deal for Canadians as current recipients will not be affected but future benefits will be lower for Canadians taking into consideration inflation.

Our youth are another group that will be affected by the proposed legislation put forth by the government. As I have alluded to, the cost of this fund will not be shared equally among the generations. The burden of this tax grab will fall most heavily on young Canadians just entering the job market. Taking into account inflation and any possible changes in policies, today's young Canadians are faced with small or even negative real returns on their retirement investment under the Canada pension plan.

One must consider the following points with respect to the proposed amendments. Canada pension plan premiums will rise at a faster rate than originally planned. Changes in the way benefits are calculated will slightly reduce the pensions of future beneficiaries, reduce the death benefit and make it harder to qualify for disabled benefits. The plan no longer will lend funds to the provinces at preferred rates. Those proposed changes offer nothing to make the Canada pension plan self-financing. They do nothing to offer CPP premiums with tax cuts and do not encourage greater RRSP savings.

Canadians realize that it is imperative for them to begin planning for retirement in advance. More and more we see that Canadians are striving to ensure stronger financial security in retirement via retirement savings plans. However, it is becoming extremely difficult due to the rules governing RRSPs which are preventing Canadians from getting maximum potential returns on investment.

Restrictions on foreign content hinder diversification in a host of investment opportunities required to minimize financial risk. Our current government has twice reduced the annual contribution limits and is moving even closer to taxing RRSP savings. This is unacceptable to Canadians.

The current foreign content limit of 20 percent reduces Canadian pension earnings by about $700 million per year. If this rule is removed the market value of CPP could potentially increase by 20 percent to 25 percent. The side effect of a foreign content rule reduces the competitiveness of Canadian companies as they have less incentive to be efficient.

The proposed amendments to Bill C-2 raise questions as to the amount of money the current government can pull from the pockets of the middle class when at the same time it is cutting future retirement benefits. The Liberals have no overall plan for the retirement of Canadians. Honest working Canadians pay more today, receive less later and have less disposable income to do responsible planning for their retirement years.

We must not rush into a plan without clearly knowing what the long term repercussions are. The Canada pension plan must be fair and equitable to all Canadians.

[Supply, September 30th, 1997]

Madam Speaker, congratulations on your appointment. I also congratulate the hon. member for St. Paul's on her initial speech to the House.

We are the highest taxed nation in the world, especially among the G-7 countries. Eighty per cent of our trade is going to the U.S. We are especially very heavily taxed in comparison with the U.S.

Canadian families have been struggling to balance their household budgets over the last several years. Canada is expected to balance the budget shortly.

Who does the hon. member think can spend the taxpayers' money most wisely, the taxpayer or the government?

[Speech From The Throne, September 29th, 1997]

Mr. Speaker, what I was alluding to here is that the public has made a lot of sacrifices as we have balanced the budget, or we are close to balancing the budget. There has been a benefit of $17 billion in taxes from free trade.

Many people have had to cut costs. Corporations have had to cut costs. If I said the government has made sacrifices, I am really saying that the public has made sacrifices within the last four to five years to help the government balance its budget. I am not so sure that the government has made the same type of sacrifices that private enterprises made. There are two things that we can do.

We can try to grow revenue, and that is what this government is relying on, growing revenue. The other side of the coin is that we have to continue to reduce costs and find better ways of doing the job. I am not so sure that the government has done that.

I am saying that the public has made the sacrifices, that the public will continue to make the sacrifices and it is the government that has to make the sacrifices on its spending habits.