Finance committee  Clearly, Ontario and the other Canadian provinces that have yet to do so would gain from harmonizing their retail sales taxes and turning them into value-added sales taxes. From a Quebecker's point of view, I wonder whether Ontario and the other provinces should be compensated, as was the case for the Maritime provinces.

Finance committee  We could not sustain two parallel systems where, on the one hand, some companies were exempt from tax because they chose to operate as a trust, and on the other, businesses had to pay taxes. Had the integration system worked properly, there would have been no problem, but that was not the case.

Finance committee  I cannot answer that, but perhaps my colleagues can. We will be well positioned in 2012, although some businesses will have closed their doors by then.

Finance committee  I think that an analysis of the numbers shows that last year, which ended on March 31, 2008, was the last year of large surpluses. I have not undertaken a comprehensive analysis, but the simple fact that $3 billion was taken out of the reserve shows that surpluses will be much more modest, at least over the next two years.

Finance committee  That is a really difficult question to answer. What I can readily say is that if we cannot use it, the $10.2 billion amount will go to pay down the debt, which is not a bad thing to do. As well, action has been taken so that in 2012 our investment tax rates will be among the lowest of all G7 countries.

Finance committee  That's possible. The rate cuts on investments, especially those reducing taxes on profits, are geared towards profitable businesses. Take away the profits and the plan holds little interest. Companies may well get battered between now and then, given that economic growth will be rather weak over the next two years, particularly in Quebec and Ontario, two provinces with industrial problems.

Finance committee  First of all, the good news is that the problem has been identified and governments have tried to not make matters worse over the past few years. The federal government has implemented working income assistance. Quebec did the same thing two years earlier, with its working bonus.

Finance committee  Indirectly. The cost of goods was reduced, whether they were produced here or abroad.

Finance committee  That is certainly a good plan but it is spread out until 2012. Currently the industrial sector is not making a profit. A lower corporate tax rate is therefore not particularly helpful right now, and the same applies to the new accelerated capital cost allowance. If businesses are operating at a loss, providing greater capital cost allowances or a lower tax rate will achieve nothing in the short term.

Finance committee  We're talking about two different things. A GST reduction could have been used, as my colleagues pointed out, for the purposes of harmonization with provincial taxes, but it shouldn't be forgotten that four provinces have already harmonized their taxes. Quebec in particular has done this with no assistance and at its own cost.

Finance committee  When you reduce the GST, you reduce the cost of a consumer product, whether that product comes from Canada or abroad. When you reduce income tax, you reduce the cost of labour. When you reduce income tax, you give people an incentive to work in Canada rather than abroad. Reducing income tax has a greater effect on Canadian economic growth, whereas reducing consumption taxes has an effect on Canadian economic growth but also on production abroad.

Finance committee  Are you asking me whether the GST is a positive or negative measure?

Finance committee  There are two phenomena involved. Alberta did not suffer many job losses in the manufacturing sector and it receives assistance on a pro rata basis, when it accounts for 10% of the Canadian population.

Finance committee  It would have been preferable to use a method other than distribution based on population on a pro rata basis.

Finance committee  I want to thank the Standing Committee on Finance for its invitation to discuss Canadian taxation and international comparisons. I will raise some of the topics outlined in the committee's news release, as well as those found in the notice of motion tabled by Mr. Dysktra. Obviously, in a span of 10 minutes, we will not have time to make all of the comparisons possible; I will make a few observations about the Canadian tax system and its current state.