Mr. Speaker, I am delighted to have the opportunity to join in the debate on this most important topic.
For the benefit of the House we should take the opportunity to review the famous GST and where it came from. As most members are well aware it is derived from the former manufacturers' sales tax. The previous administration decided that it would have a GST at 7 per cent across the country. Of course the proposal was that the government would use it to reduce the deficit.
We know the legacy that the Tories left us in paying the deficit, that each and every goal and projection that was set went in the opposition direction. For some reason instead of the deficit going down, it continued to go up until this government assumed office and assumed a $42 billion deficit at that time.
What happened to that $14 billion to $15 billion that was projected as new revenue from the GST? It went into the general revenue fund. The manufacturers' sales tax had disappeared. The new GST was here. Contrary to what others have said, and I admit I can only speak for myself, I know what the policy was of my party when I was campaigning. People did ask me what I thought would happen to the GST. Of course they loved it so much they wanted it left completely alone.
I said it would be changed to a fairer and more equitable tax system both for the small business people in our communities as well as for the consumers. I pointed out very clearly and in many cases said it twice: "Hear me, it has to be replaced in order to provide approximately the same amount of revenue".
Originally we were told that the GST would provide enormous additional dollars in revenue that would expedite paying down the deficit and we would reach a balanced budget much faster in the early 1990s.
It was projected that the $14 billion or $15 billion that came from the manufacturers' tax which was replaced by the GST actually came to approximately $28 billion. When the rebates and the additional administration costs were taken off so we were back to the the $14 billion or $15 billion figure which was the level of income from the previous manufacturers' tax.
When the government looked at possible ways of replacing that revenue, the finance committee travelled across the country from one end to the other, including my home province of New Brunswick of which I am very proud.
In New Brunswick I listened to presenter after presenter. Some were from the business sector, some from the industry sector, some from agriculture, some from the education sector and some from the consumer sector. They said we had to have a simpler system. We had to come up with a harmonized system that would reflect the total of the taxes they are paying. I agree it has to be very up front and very forward.
Following all of the presentations and hearings across the country after some two and half years, the finance committee came forward with its recommendation to harmonize the two taxes, the provincial sales tax and the GST into a new harmonized sales tax.
The first three provinces that came on board, in addition to the province of Quebec that had the harmonized sales tax, were the provinces of Newfoundland, Nova Scotia and New Brunswick. Some have criticized and complained about the formula that was arrived at, not for those three provinces, but for every province in Canada to use. It is a formula that would be fair and equitable to all provinces and treat each and every one in the same fashion.
What does harmonization do for the business sector and the retail sector? I have talked to many business people. First of all it means that they have to keep one set of books instead of the previous two. It means that they have to issue one cheque instead of the previous two. It means that one tax auditor will come in and review their books instead of two. It is a much simpler system for every business person throughout the communities that are involved in the retail sector.
What does it do for the consumer? Report after report and survey after survey have indicated that the consumer does not want any more surprises when he or she arrives at the cash register and wants to know exactly what amount must be paid.
There is no intent to hide the total amount of taxation that would be paid on any product that is taxable at the cash register. As a matter of fact the proposal stated very clearly that consumers want it shown on the cash register tape the price of the product, the tax that is included and the total. On the shelf the consumer will see the price that is being paid which includes the taxes.
It is not a hidden tax. It is a tax that is very up front. Right on the cash register tape is everything that is purchased. Let me look at some of the key elements.
It says: "Consumer in participating provinces will benefit from the removal of the provincial retail sales tax from business inputs. This advantage, combined with the benefit of a lower rate and lower compliance costs for businesses, will lead to lower consumer prices on many goods. Tax inclusive pricing rules will ensure that consumers know the full price of the good or service before paying for it while keeping the amount of the rate of sales tax payable visible on the receipts".
As I mentioned, it is simpler for the business community, simpler for the consumer and it provides the revenue toward decreasing the deficit that we know the government assumed at $42 billion plus. We know that Canadians want the government to put its financial house in order. That is exactly what is being done.
We are not the first government ever to set goals. There have been others. However, I suspect we are the first government in recent time to have been able to achieve those goals, to meet or exceed them in each and every instance and we will continue to do so.