An Act to amend the Excise Tax Act

This bill was last introduced in the 37th Parliament, 3rd Session, which ended in May 2004.

This bill was previously introduced in the 37th Parliament, 2nd Session.

Sponsor

Caroline St-Hilaire  Bloc

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active, as of Oct. 9, 2003
(This bill did not become law.)

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Excise Tax ActPrivate Members' Business

May 12th, 2004 / 7 p.m.
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Liberal

Alan Tonks Liberal York South—Weston, ON

Mr. Speaker, as has been said, Bill C-456 is a proposal to amend the Excise Tax Act to exempt cloth and disposable diapers for children from the goods and services tax.

I would like to preface my remarks by saying that I think all members in the House would agree that the role of families, and in particular the role of mothers, in nurturing their families is an extremely important part of what makes Canada the kind of place it is. A society that believes in nurturing its young and attempts to find those ways through the taxation regime to help and assist in that nurturing is the kind of civil society that we all believe in.

I would suggest that while there are the kinds of problems with the tax regime that exists, and which this motion tries to come to grips with, the government has done a great deal through the tax regime to help families, particularly low income families with children.

Before I address the specifics of this bill, I would like, as has been done already, to allude to some of those initiatives that the government has taken in order to come to grips with those challenges facing Canada's low income families with children.

As we know, cumulative tax relief of $100 billion was announced in 2000 under the five year tax reduction plan. The plan has reduced federal personal income taxes by 21% on average, and for families with children that figure is in fact 27%. We have been attempting over the last five years to take the $100 billion and in fact apply it strategically to families in the low income category to lower, reduce and soften the impact of the tax system.

I also would draw the House's attention to the fact that personal income tax reductions account for three-quarters of those tax reductions and are providing significant relief, particularly for low income and modest income families with children.

I would like to remind the House that families with children have also benefited from these particular improvements: the reductions in tax rates for all income levels; the elimination of the deficit reduction surtax; the increases in the amount they can earn tax free and the amounts at which higher tax rates apply; and finally, the restoration of full indexation of the personal income tax system, which protected families against automatic tax increases and the erosion of benefits caused by inflation.

However, the government has not stopped there. As I mentioned earlier, in terms of broad-based help for families with children, the 2003 budget built on the five year reduction plan by providing additional support for low income families and taking further steps to encourage investment, job creation and economic growth.

For example, the national child benefit supplement was increased by $150 per year in July 2003 and will be increased by $185 in July 2005 and by another $185 in July 2006.

In addition to that, a new child disability benefit was established as a supplement to the Canada child tax benefit for low income and modest income families with a child with a disability. It provides annual support of up to $1,600 a year.

Most recently, the 2004 budget builds on previous commitments by increasing support for early learning and child care.

Ensuring that all children get the best possible start in life and equal opportunities throughout their early lives is a fundamental part of the legacy Canadians leave to future generations. This has been a longstanding priority of the government.

Previous speakers have alluded to the $500 Canada learning bond available to children born after 2003 in families entitled to the national child benefit supplement.

The budget also makes changes to the successful Canada education savings grant to further help children in low income and middle income families. The enhanced CESG will be available to the families of more than 4.5 million children and is expected to cost $80 million annually.

Early learning and child care also play an important role in promoting the development of young children, which is why the 2004 budget proposes to accelerate implementation of the multilateral framework on early learning and child care with an additional $75 million in both the 2004-05 budget and the 2005-06 budget.

Over the next two years, the total federal commitment to early learning and child care will be $375 million and will result in up to 70,000 fully subsidized spaces for children from low income families.

I believe that the government puts forward these kinds of improvements to illustrate that the commitment by the government is to help lower income Canadians, particularly those with families, and this is the approach to do it.

The bill before us today asks that the GST be removed from disposable and cloth diapers. While I certainly appreciate that the bill is presented with the intent of helping low income families, and I congratulate the member for putting the bill forward, this government believes that personal income tax benefits can be better targeted to low income and middle income families rather than providing GST relief on specific items such as diapers.

Removing the GST from certain items risks eroding the tax base and restricting the government's ability to keep the GST at a relatively low rate. Furthermore, I trust that hon. members can appreciate that high income individuals as well as low income families may purchase such items.

Earlier I mentioned the tax reduction initiatives taken by the government to assist low income and middle income families. In addition, hon. members are no doubt aware that GST relief is provided for individuals and families through the GST credit, which has proven to be effective in targeting and delivering tax relief, particularly to low income families. Last year, for example, the government provided over $3 billion in tax relief to lower income families and individuals.

This is the fairest and most efficient means of providing targeted tax relief to those who need it most.

In view of these remarks, although we agree with the intent of the bill, the government would have to ask hon. members not to support the bill in its present form.

Excise Tax ActPrivate Members' Business

May 12th, 2004 / 6:55 p.m.
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NDP

Wendy Lill NDP Dartmouth, NS

Mr. Speaker, it is an honour to speak tonight to Bill C-456, an act to amend the Excise Tax Act to exempt cloth and disposable diapers from the GST. I appreciate the bill put forward by the member for LongueuiI. I also appreciated her comments at the beginning of the debate. I hope that her two boys are watching their mom on CPAC, or whatever the equivalent is in Quebec. I hope they are watching their mother speak out on an issue which is very important to families.

I think, if anything, this bill speaks to the reason why we need a lot more women in the House of Commons. We see issues that are very down to earth and essential to our families. They need to be discussed here in order to bring forward practical solutions. This is as good an example as any why we need a lot more women in the House of Commons.

I support this bill and I believe that New Democrats support this bill. We are trying to come up with ways of eliminating more of the hardships facing Canadian families all over this country and helping people deal with the rising costs of raising children. It will make a difference. It will bring relief on a dollar per dollar basis of the amount that goes out every week on essentials, such as diapers. That is a really positive benefit of this bill.

The member for Longueuil mentioned that Quebec is more progressive when it comes to measures to assist families. I have always looked to Quebec and the kind of day care assistance it gives to families. I have wished very much that we could offer the same kind of assistance for all families in Nova Scotia, where I live and where I represent people.

I think that Quebec has also been working to assist families deal with escalating costs of raising children in other ways. I read that effective March 31, the Quebec sales tax is no longer applicable to the following items, and these are again important items involved in child raising: children's diapers and training pants, breast and bottle feeding equipment, waterproof pants worn over washable diapers, absorbent liners, and biodegradable paper used with children's diapers.

The goods and services tax continues to be applied to these items, but the Quebec sales tax, QST, has been removed. This is an important progressive step. The NDP believes in this kind of step to remove these consumer taxes on items that are essentials in daily life.

In February, my colleague, the member for Winnipeg North Centre, introduced a private member's bill to eliminate the goods and services tax on feminine hygiene products. That is another important elimination of a consumption tax on essentials. At that time, she said that charging the GST on feminine hygiene products clearly affects women only. It unfairly disadvantages women financially, solely because of our reproductive role.

If a proper gender based analysis had been done when the GST was introduced, this discriminatory aspect of the tax would never have been implemented. I agree with the member for Winnipeg North Centre.

I would say that applying the GST to diapers unfairly disadvantages people who have children. I would hope that this is certainly not the intent of the government. It certainly is not the intent of anyone in the New Democratic Party. The NDP finds this kind of consumption tax on essentials unacceptable.

The NDP has been at the forefront in speaking out on child poverty in this country. A decade ago the House of Commons gave unanimous support to an NDP motion made by our leader at the time, Ed Broadbent. It was a resolution to eliminate child poverty by the year 2000. At the present time, one in five children still lives in poverty.

There is a direct relationship between child poverty and poverty facing parents in this country. Last week I had the opportunity to speak with people from Campaign 2000, a group speaking out about child poverty. I heard some astounding statistics. More than 60% of single mothers living in poverty earn less than $10 an hour.

Canada is a very low wage country among industrialized countries in terms of our wage scale. We are second only to the United States. One in four wages in this country is under $10 an hour. Into that mix are added on some very expensive consumer taxes to essential products such as diapers and feminine hygiene products. It is unacceptable that we have such low wages and unacceptable that so many people are living in poverty. It is also unacceptable that we further penalize people by putting on these kinds of consumption taxes.

I appreciate and support the bill put forward by my colleague from Longueuil. I hope that the bill will have the support of everyone else in the House.

Excise Tax ActPrivate Members' Business

May 12th, 2004 / 6:45 p.m.
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Canadian Alliance

Monte Solberg Canadian Alliance Medicine Hat, AB

Mr. Speaker, it is a pleasure to rise to address the bill, Bill C-456, an act to amend the Excise Tax Act.

Before I get into that, I just want to say to the speaker who just spoke that we wish her all the best in her career after politics. She is one of many members who will be leaving this place. Although we are on different sides in this case, I think there is a real collegiality in this place at the end of the day and people do want to see the people, who were even their political adversaries, go on to prosper in their careers after they leave Parliament. Certainly that is my wish.

I want to begin by commending the member for bring forward Bill C-456. I really commend the motives behind this. It is a bill that would see the GST on diapers exempted so there would be no GST them. It is motivated by a good thing. The member makes it clear she wants to help people who, in many cases, cannot afford diapers.

I am someone who knows a little about diapers. At one point I was a struggling young man with a family who had to try to pay for diapers, formula, clothing, playpens, all the things required to raise children. I have a tremendous amount of sympathy with people who are struggling with that. It is a very hard situation.

We did not have much money when we first had our children. It is a difficult thing. I changed many diapers. I remember my youngest son was very ill when he was first born and we went through a lot of diapers. Therefore, I have tremendous appreciation for the intent behind the bill. It is difficult to afford all those things, whether it is clothes, formula, some of the accessories and certainly diapers.

Let me address the specifics. The argument the member has made is that although this would not necessarily amount to a lot of money, to someone who is poor, it is substantial. I agree with that. I also think that there are maybe some better ways to address it.

It is pretty clear that if we exempt diapers, then other people would argue for further exemptions, whether it is on clothes or other things. Those things are commendable, but I think a lot of people would argue that a better approach is to lower taxes in general for people on the low end. I think we should have lower taxes for people on the low end.

My leader spoke not long ago in Truro about the need to ensure that families with children received special attention in the future and that there be substantial tax relief for them, irrespective, by the way, of how they looked after their children. A lot of the tax breaks and benefits in Canada today have been based on how we look after our children. We do not think that is the appropriate way to deal with it. The important thing is that we get some tax relief if we have children. We want to honour the fact that people have made the decision to have children and who want to support them.

We want to provide some kind of acknowledgement of that through lower taxes for families with children, whatever their special challenge. If it is a case like mine where we had a very sick child and went through a lot of diapers, then we could use those lower taxes to help with that. If it is a situation that is different, maybe they need extra medication, whatever it is, they would be in a position as the recipient of lower taxes to keep more of that money. They then could decide on their priorities.

I really do appreciate the point of this, and we are very sympathetic to it, but we would take a little different approach.

Generally speaking, taxes in Canada are far too high, I would argue, for everyone. I was looking at the numbers the other day. In Canada today, all three levels of government spend about 42% of GDP.

Excise Tax ActPrivate Members' Business

May 12th, 2004 / 6:35 p.m.
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Liberal

Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, I am pleased to speak to private member's Bill C-456, which asks Parliament to amend the Excise Tax Act to exempt cloth and disposable diapers for children from the goods and service tax, the GST.

The government recognizes that my colleague's intent of the bill is to assist low income families with young children. I am pleased to hear that she has two young children now. I remember when she was expecting her first child. I am sure she is very busy.

Canadian society is one of caring and compassion and it is up to the government to reflect that attitude in its legislation. In that regard, the federal government has introduced many measures in recent budgets to help Canadians who need it the most, in particular families with children.

I trust my colleagues would agree that while tax reduction must ultimately benefit all Canadians, it must primarily benefit those who need it the most, middle and low income earners, especially families with children. The best way to help these families is to provide targeted tax relief. That has been a priority of this government ever since we achieved a balanced budget in 1998.

Personal income tax cuts can be better targeted to low and middle income families rather than providing GST relief on specific items, such as diapers, that may be purchased by both low and high income individuals.

Let me explain. As a general principle, it is better to tax a broad base of goods and services rather than to exclude a certain GST base. The broad base of the GST allows the tax rate to be set at a relatively low rate, while still ensuring an adequate level of revenue. Moreover, value added taxes such as the GST are more efficient when applied to a wide range of goods and services consumed in Canada.

It is also important to mention here that removing certain items from the GST base could, over time, erode the tax base, hampering the government's ability to keep the GST at a relatively low rate.

To return to the issue of targeted tax relief, for individuals and families, GST relief is provided through the GST credit. The government provides approximately $3 billion a year through the GST credit to help low income families and individuals with the sales tax they paid during the year. The credit has proven to be an effective means of targeting and delivering tax relief, particularly to low income families. This is the fairest and the most efficient means of providing targeted relief from the GST.

As well as the GST, targeted tax relief is provided by way of the $100 billion five year tax reduction plan. This plan was introduced in 2000, and it continues to provide tax relief to low and middle income Canadians. The plan has reduced federal personal income taxes by 21% on average and for families with children, that figure is 27%.

This year's budget builds on prior actions for families with children by helping them accumulate savings for their children's post-secondary education.

Our economy must be powered by ideas, imagination and innovation. Knowledge is the key not only to individual opportunity but also to economic success.

In previous budgets we improved assistance to students, created the Canada study grants, supported lifelong learning, enhanced the education tax credit and added the Canada education savings grant, CESG, to registered education savings plans.

The 2004 budget announced a broad package of measures aimed at promoting learning at every stage of life, including the very young. This budget commits additional resources to the multilateral framework on early learning and child care so more children will be better prepared to learn at school and succeed in life.

The government will also provide increased resources to understanding the early years, a pilot project which will identify children with learning disabilities. The program will be extended to 100 more communities.

Family saving is very hard for low income families who struggle just to make ends meet. To help these families, the government currently provides support through the Canada child tax benefit, in particular the national child benefit supplement. All in all, the annual federal investment in Canadian children and youth through the Canada child tax benefit is about $10 billion, making it one of the nation's most important social programs after medicare.

Too many Canadians from low and middle income families cannot have a college education because the cost is too high. To further assist those families to save for their children's education, the 2004 budget announced three important new measures.

First, beginning this year the government will introduce a learning bond in the amount of $500 which will be available to every child born after 2003 to families earning less than $35,000. Each year thereafter, for 15 years, the Government of Canada will contribute an additional $100 bond for children in low income families. This will provide up to $2,000 for post-secondary education. Even with no additional contributions by parents or others, when placed in an RESP, these funds could grow to nearly $3,000 by the time the child reaches 18, providing a foundation for higher education and a better future. The learning bond will benefit for than 120,000 newborn children this year alone.

Second, for families earning less than $35,000, we will double the Canada education savings grant from 20% to 40% on the first $500 of contributions each year. The means that for every $5 that a low income family contributes to an RESP, the Government of Canada will add $2. As a result, families receiving the learning bond and contributing as little as $5 a week to an RESP could have close to $12,000 by the time their children ready for a college education.

Third, we will provide some 20,000 students from low income families with new grants worth up to $3,000 to cover a portion of the first year of tuition.

Furthermore, for families earning between $35,000 and $70,000, the CESG will increase from 20% to 30% on the $500 of contributions each year. This could benefit more than two million children in middle income families.

Each year the Canada student loan program provides financial support for almost half of the full time students in post-secondary education. Students across Canada will have told the government--

Excise Tax ActPrivate Members' Business

May 12th, 2004 / 6:20 p.m.
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Bloc

Caroline St-Hilaire Bloc Longueuil, QC

moved that BillC-456, An Act to amend the Excise Tax Act, be read the second time and referred to a committee.

Mr. Speaker, today we are debating Bill C-456, an act to amend the Excise Tax Act, which is intended to exempt cloth and disposable diapers for children from the goods and services tax.

First, I will tell you that I am very honoured to speak in this House, especially since Quebec is celebrating family week until May 16. I invite the people of Longueuil and Quebec to take part in the many events that are being held everywhere in Quebec. Let us say that the time is quite appropriate to debate a bill on families. It could not be more timely.

As you know, the GST is aimed at a wide variety of goods and services, and it applies to products that are considered essential to families. However, there are several exceptions based on social, economic or administrative grounds. Supplies are thus said to be tax-free or exempted. The purpose of my bill is precisely to change one of these exceptions in Schedule V to the act by adding supplies relating to child care.

In terms of the mechanics, there is no problem, and GST exemptions have already been granted on a number of essential, not to say indispensable, goods and services, as should be the case for children's diapers. For example, there is no GST on adult diapers, while there is GST on diapers for children. Someone will have to explain the logic of that to me.

As for the Bloc Quebecois's interest in this, we have always been concerned about the interests of families and about improving the living conditions of families. In order to do so, we must introduce progressive measures that will encourage and enable young couples to start and raise a family in dignity and respect for family values. This is a very simple step and only a small one, but we all know that long journeys are begun with small steps.

Thus, in proposing to abolish the GST on diapers, I want to give families with young children a way to decrease the cost of certain purchases, such as diapers for their children. At present, GST applies to all these products, even though they are essential to the care and upbringing of a child.

Since I am now the mother of two beautiful boys—probably the most beautiful and the sweetest—Étienne and Louis-Félix, I can testify to the essential nature of these items. Believe me, it ends up costing a lot.

We cannot talk about families without talking about challenges. One of these challenges is to ensure that Quebec families have a better income, using fiscal and other measures. Another major challenge requiring attention is the decline in population growth. Obviously, the mere fact of exempting diapers from GST will not entirely improve a family's financial situation, or the demographic problem. Still, I am convinced that with a number of measures, we can make a difference and encourage couples to have larger families and more children.

Some will say that the amount families will save will be very small. In truth, it is not a large sum for a middle-class family. On the other hand, it would make a difference for a family living below the poverty line. Unfortunately, many families in Quebec, and in Canada, are raising their children in sometimes extremely difficult conditions. This amount, however tiny, can make a huge difference for many people.

The federal tax system is partially responsible and is among the most voracious and regressive in the industrialized world, and young families and women are its first victims.

The Minister of Finance must recognize these inequities, which oblige a couple with two children and a single income to pay federal income tax starting on an income of $13,719, while in Quebec, that same family starts paying income tax only when its income reaches $30,316. The federal tax threshold is completely unacceptable. The $13,719 is below the poverty line established in Quebec in 2003, which is $22,000 for a couple with two children.

Quebec, however, is among the most progressive governments in North America. Yet, it does not have the same manoeuvring room as the federal government since, unlike Ottawa, its expenses increase more quickly than its revenue. Obviously, not everyone has the same priorities, and the reality for families seems to escape the federal government.

If the Minister of Finance wants to show openness to families, then he should promise right now to change federal taxation, as the Bloc Quebecois has been asking since 1994.

The federal government must resolve once and for all the many injustices impoverishing Quebec and Canadian families, and thereby perhaps improve the birth rate.

To me the demographic problems are particularly worrisome. According to Statistics Canada, Canada's birth rate declined again in 2002 and dropped to 10.5 births for every 1,000 people. Over the past 10 years alone the rate dropped by 25.4%, which is an unprecedented dip.

In Quebec, there were 72,477 births in 2002, or 1.7% fewer births than in the previous year. At the beginning of the 20th century, the birth rate was close to 40 births for every 1,000 people in Quebec. The fertility rate is currently 1.5 children per woman, while a rate of 2.1 children per woman is needed and this does not take into account the contribution of immigration to stabilizing the population.

In light of these revealing data, I feel it is our duty as parliamentarians to introduce measures to promote demographic growth. If we do not, there will be heavy consequences in the next few decades. It is imperative to get our priorities straight.

Of course, the implementation of a real family policy is the responsibility of the governments of Quebec and the other provinces, but the federal government also has a major duty in this respect, namely to give Quebec and the provinces the means to carry it out. The federal government, which is awash in surpluses and able to find money for its friends, should be able to find some for families at least.

The federal government can afford to act on my bill, Bill C-456, and exempt baby diapers from the GST. GST revenues are forecasted to be $31 billion in 2004-05, while my proposal would cost slightly over $2 million a year.

According to Statistics Canada, in 2001, the federal government took in around $2.3 million in revenues from the GST on disposable diapers. It is fair to assume that, if it eliminated the GST, its revenues would decrease by the same amount every year. This goes to show that the measure means very little to the federal government, but it would certainly make a huge difference for some families.

As a matter of fact, while on the topic of the GST, I would like to remind the House that on, May 6, the National Assembly unanimously passed a resolution supporting the government's efforts to ask Ottawa to transfer the GST revenues to the province to rectify the fiscal imbalance and to fund, among other things, health care or other measures to help families.

I must deplore therefore the attitude of the Prime Minister of Canada, who clearly stated he had no intention of transferring any GST revenues. In Quebec alone, the GST collected on behalf of Canada amounts to $7 billion. Imagine what we could do in Quebec if we had an extra $7 billion.

The federal government has many other sources of revenue. Allow me to remind you of a few savings it made on the backs of Quebec families.

For instance, ever since the introduction of the $5 daycare program in 1998, the federal government has saved $1 billion on the backs of Quebec parents, without counting the parental leave program, which deprives Quebec families of a much more generous plan than the federal one, and which the Quebec government is postponing implementing for lack of money. What the federal government owes for this program is now estimated at around $630 million.

These are but a few examples. I do not have the time to give you the whole picture of the shortfall in Quebec and the surplus in Ottawa, commonly known as the fiscal imbalance, which deprives Quebec of $50 million every week.

We in Quebec would know just where to invest that money, in a society where Quebec takes care of its young people, its families and its senior citizens. We would invest in a healthy, well-educated society, keen to bring the stork back to Quebec.

In closing, I would like to thank Lisa Dion from my riding, who shared with me her indignation that there is tax on diapers. I share that indignation. This is one more example of the role and the power of the public.

Finally, on the occasion of family week in Quebec and in light of the importance of this measure, I seek the support of all my colleagues in the House of Commons.

Excise Tax ActRoutine Proceedings

October 9th, 2003 / 10:10 a.m.
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Bloc

Caroline St-Hilaire Bloc Longueuil, QC

moved to introduce Bill C-456, an act to amend the Excise Tax Act.

Mr. Speaker, I am very pleased today to introduce a bill whose purpose is to amend the Excise Tax Act so that disposable and fabric diapers are exempted from the GST. I think that it is totally unacceptable that children's diapers should be taxed, as this is an essential need for families, children and also for parents.

I believe that this measure can help families in a concrete way. I invite all my colleagues to support this bill.

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