This bill is from the 39th Parliament, 1st session, which ended in October 2007.
Jim Flaherty Conservative
This bill has received Royal Assent and is now law.
This is from the published bill.
Part 1 of this enactment mainly implements proposed measures relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST). Part 2 contains measures relating to the Excise Act, 2001 and other Acts with respect to the taxation of tobacco, spirits and wine. Finally, Part 3 contains measures relating to the Air Travellers Security Charge.
The GST/HST measures, contained in Part 1 of this enactment, are principally aimed at improving the operation and fairness of the GST/HST in the affected areas and ensuring that the legislation accords with the policy intent. In some cases, adjustments have been made to the legislation as originally proposed in response to representations from the tax and business communities.
The principal GST/HST measures are as follows:
(1) Health: confirms the GST/HST exemption for speech-language pathology services; exempts health-related services rendered in the practise of the profession of social work; zero-rates sales and importations of a blood substitute known as plasma expander; restores the zero-rated status of a group of drugs, collectively known as Benzodiazepines; broadens the specially equipped vehicle GST/HST rebate so that this rebate applies to motor vehicles that have been used subsequent to being specially equipped for use by individuals with disabilities.
(2) Charities: ensures that the exemption of supplies by charities of real property under short-term leases and licences extends to any goods supplied together with such real property.
(3) Business Arrangements: provides transitional GST/HST relief on the initial asset transfer by a foreign bank that restructures its Canadian subsidiary into a Canadian branch; removes technical impediments that hinder the use of existing group relief provisions under the GST/HST; simplifies compliance by excluding beverage container deposits that are refundable to the consumer from the GST/HST base; permits an agent to claim a GST/HST deduction for bad debts, and to claim adjustments or refunds of tax, in respect of sales made on behalf of a principal where the agent collects and reports tax; extends the existing agent rules under the GST/HST legislation to persons acting only as billing agents for vendors; better accommodates special import arrangements between businesses in certain situations where goods are supplied outside Canada to a Canadian customer; ensures that GST/HST group relief rules cannot be used to exempt from GST/HST otherwise taxable clearing services that are provided by a group member to a closely related financial institution who will then re-supply those services on an exempt basis to a third-party purchaser outside the group; clarifies the treatment of the right to use certain types of amusement or entertainment devices, such as the playing of a game, when it is provided through the operation of a mechanical coin-operated device that can accept only a single coin of twenty-five cents or less as the total consideration for the supply; confirms the policy intent and Canada Revenue Agency’s existing practice that no GST/HST or provincial sales taxes on a passenger vehicle are included in calculating the maximum allowable value for input tax credit purposes.
(4) Governments: ensures that a small supplier division of a municipality is treated in the same manner as a municipality that is a small supplier; exempts a supply of a right to file or retrieve a document or information stored in an electronic official registry.
(5) HST-related Rules: as announced by the Government of Nova Scotia, limits the availability of the current Nova Scotia HST New Housing Rebate to first-time homebuyers and reduces the maximum rebate available to $1,500; includes in the Act the draft Specified Motor Vehicle (GST/HST) Regulations, which prescribe the value of a specified motor vehicle for the purposes of calculating the 8% provincial component of the HST in circumstances where the vehicle is brought into a participating province and prescribe the manner in which that tax is required to be paid.
(6) Administration: adds a discretionary power for the Minister of National Revenue to accept late-filed applications for the GST New Housing Rebate and the Nova Scotia HST New Housing Rebate for owner-built homes, where exceptional circumstances have prevented an applicant from meeting the normal filing deadline; adds a discretionary power for the Minister of National Revenue to accept late-filed elections between closely related financial institutions for adjustments that they are required to make for the provincial component of the HST; permits the Minister of National Revenue to exchange GST/HST information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters; adds a discretionary power under the Act for the Chief Statistician of Canada to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act.
The measures contained in Part 2 of this enactment amend the Excise Act, 2001 to implement minor refinements that will improve the operation of the Act and more accurately reflect current industry and administrative practices. They also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.
The principal measures related to the Excise Act, 2001 are as follows:
(1) Tobacco: extends the requirement to identify the origin of tobacco products to all products, including those for sale at duty-free shops or for export, consistent with the Framework Convention on Tobacco Control, an international treaty on tobacco control; clarifies that cigarettes, tobacco sticks, fine-cut tobacco or cigars, but not packaged raw leaf tobacco, may be supplied to the export market or the domestic duty-free market.
(2) Alcohol: authorizes private laboratories, provincial liquor boards and vintners to possess a still or similar equipment and produce spirits for the purpose of analysing substances containing ethyl alcohol without holding a spirits licence; defers the payment of duty by small vintners selling wine on consignment in retail stores operated by an association of vintners until the wine is sold.
(3) Administration: permits the Minister of National Revenue to exchange excise duty information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters; adds a discretionary power under the Act for the Chief Statistician of Canada to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act.
The measures pertaining to the Air Travellers Security Charge (ATSC), contained in Part 3 of this enactment, include previously announced relief provisions, as well as technical changes to the Air Travellers Security Charge Act.
The principal measures related to the ATSC are as follows:
(1) Relief: relieves, in particular circumstances, the ATSC in respect of air travel sold by resellers or donated by air carriers.
(2) Administration: provides authority for the Governor in Council to add, delete or vary by regulation the schedule of listed airports.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from Parliament. You can also read the full text of the bill.
Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-40s:
Carol Skelton Conservative Saskatoon—Rosetown—Biggar, SK
moved that Bill C-40, An Act to amend the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act and to make related amendments to other Acts, be read the second time and referred to a committee.
James Bezan Conservative Selkirk—Interlake, MB
Mr. Speaker, I welcome this opportunity to begin the debate at second reading of Bill C-40. This bill contains a number of amendments to update the operation of our tax system, some of which have been previously made public either by news release or by way of a notice of ways and means motion.
Before I outline the measures contained in the bill, I would first point out that the consultative process that led up to the introduction of the bill is an excellent example of successful cooperation between government and the tax and business communities toward achieving our common aim of improving our tax system. Adjustments have been made to the legislation as it was originally proposed in response to representations from both tax and business communities.
On behalf of Canada's new government, I take this opportunity to thank those interested parties who brought forward their views on the many issues addressed in the legislation. Bill C-40 reaffirms this government's commitment to making our tax system simpler and fairer not only for individual Canadians but for Canadian businesses as well.
I would like to take a moment to comment more broadly on how the legislation proposed in Bill C-40 links to this government's goal to ensure that Canada has a fair and competitive tax system.
Canada has long been recognized internationally as a country that treats its citizens fairly, which is one of the reasons that many people from all over the world come here to fulfill a dream of a better life for themselves and their families. Canada's new government believes in helping those dreams come true by creating new opportunities for Canadians wherever they live. That is why in our first budget we took action to help families and individuals as well as businesses by lowering taxes, rewarding effort and making Canada a better place in which to live and work.
One of our core priorities was to reduce taxes. We did that first by reducing the GST. We also provided other significant personal and corporate tax relief on the investments that will create jobs and boost Canada's economy by improving incentives to work, save and invest, and we are doing more.
The Minister of Finance recently announced a tax fairness plan for all Canadians. This plan will help restore balance and fairness in Canada's tax system to ensure our economy continues to grow and prosper and to bring Canada in line with our trading partners.
Families and businesses still pay too much tax in this country and our government will continue to reduce taxes for all Canadians. This new government firmly believes that a fair, efficient and competitive tax system plays a key role in creating a stronger, more productive economy. The measures contained in this bill reflect that belief. I will outline the initiatives contained in the legislation and in doing so illustrate how they support this government's goal of ensuring that we have a fair tax system.
The bill is divided into three parts. Part one mainly implements proposed measures relating to the goods and services tax and the harmonized sales tax. These measures are aimed at improving the operation of the GST-HST in the affected areas and ensuring that the legislation accords with the policy intent. Part two contains measures relating to the taxation of wine, spirits and tobacco. Part three of the bill is related to the air travel security charge.
Starting with part one, the GST-HST measures, a number of these initiatives have been previously announced by way of press release or by notice of ways and means motions. The proposed GST-HST measures in the bill fall into a number of main areas. The first is health.
An important priority for Canadians and Canada's new government is our health care system. The Government of Canada is committed to providing support to provinces and territories to help ensure that all Canadians have access to timely, quality health care. To make sure that happens, transfers from the federal government to the provinces and territories in support of health are at their highest levels ever, approximately $21.3 billion for the Canada health transfer and wait times reduction transfer.
This will ensure stable, predictable and increasing support for Canada's health care system. In addition to transfers, the Government of Canada provides some $6 billion annually in its own areas of responsibility, including first nations and veterans health, health protection, disease prevention, health related research, and medical and caregiver tax credits. The legislation contained in the bill complements these investments by helping to ensure that Canadians receive the health services they need.
For example, Bill C-40 proposes to continue indefinitely the GST-HST exemption for speech language pathology services. It also exempts health related services rendered in the practise of the profession of social work. These amendments are consistent with the government's policy criteria for inclusion of a particular health care service on the list for those that are GST-HST exempt. That is to say, if a service is rendered in the practise of a profession that is regulated as a health care profession by the governments of at least five provinces, the service is exempt in all provinces.
In addition, the bill proposes a tax free status to the sales and importations of blood substitutes known as plasma expander.
Under the current GST-HST legislation, the supply of blood and blood derivatives is tax free, whereas synthetic blood products, such as plasma expander, are not tax free as they are not of organic origin. To maintain consistency in our tax system, the proposed amendments will also ensure that blood products, such as plasma expander, receive the same GST-HST treatment as that of blood derivatives.
The bill would also restore the tax free status of a group of drugs that are commonly used to treat a variety of conditions such as seizure control, anxiety and alcohol withdrawal.
Once again, the proposed amendment in Bill C-40 would ensure consistency with the government's policy criteria of ensuring that no sales tax applies throughout the production-distribution chain in a case of federally regulated drugs that can only be sold to a consumer under a prescription.
Another GST-HST area dealt with in the bill is agriculture. The Government of Canada recognizes the vital role that farmers play in our economy. To help those hard-working Canadians, the government has established a number of tax measures and other programs that support our farmers. For example, farmers do not need to pay the GST on a list of selected major items used exclusively by farmers. This includes pesticides, feed, all fertilizer and certain farm machinery and equipment. This so-called zero related list is intended to relieve farmers of possible cash flow problems that might arise between the terms of payment of tax on high price items and the receipt of an input tax credit.
The amendments in Bill C-40 would help ensure consistency between the GST-HST treatment of different farm products that can be purchased, imported and sold by farmers on a tax free basis.
Bill C-40 also deals with GST-HST as it relates to business arrangements. Canada's new government recognizes the important role played by small businesses in our economy. After all, they are the main job creators in Canada. Accordingly, we are committed to ensuring a favourable environment that allows these businesses to prosper and expand.
I mentioned at the outset that measures in the bill result from consultations with the tax and business community.
Time does not permit me to go into all the details but suffice it to say that Bill C-40 contains a number of provisions mostly intended to simplify or clarify the GST-HST administrative requirements for businesses in Canada.
Ensuring the efficient operation of our sales tax system is important to the government. To that end, Bill C-40 contains miscellaneous housekeeping changes to sales tax legislation that update provisions, correct ambiguities or ensure consistency. As well, the bill contains GST-HST administrative amendments concerning the discretionary power under the act for the Minister of National Revenue.
Finally, three Atlantic provinces have harmonized their sales tax system with that of the federal system. Bill C-40 contains rules related to the operation of the harmonized sales tax. One such example proposes to modify the existing new housing rebate for the provincial portion of the HST in the province of Nova Scotia. As announced by the Government of Nova Scotia, this rebate will be targeted to first time homebuyers and capped at a maximum of $1,500.
As I mentioned at the outset, Bill C-40 is comprised of three parts. I will now outline the details of the second part. This section contains measures relating to the taxation of wines, spirits and tobacco.
By way of first providing some background, a comprehensive review of the federal framework for the taxation of alcohol and tobacco products culminated in new excise tax legislation. This new framework modernizes the legislative provisions governing the taxation of spirits, wine and tobacco products and introduced an updated administrative and enforcement framework that reflects current industry practices.
The proposals contained in Bill C-40 implement a number of technical amendments to the excise framework. The amendments constitute refinements that would improve operation of the legislation and more accurately reflect industry and administrative practices.
The excise legislation has also been amended to implement a minor change to bring it into compliance with the specifications of the Framework Convention on Tobacco Control, an international treaty on tobacco control sponsored by the World Health Organization.
This brings me to part three of Bill C-40 which deals with proposed amendments to the air travellers security charge.
While time does not permit me to outline all of the proposed amendments, it is important to point out that the majority of these amendments come as a result of the consultation process with interested parties. I would, however, like to describe in more detail one of the proposed amendments. This is the one that deals with an exception for the air travellers security charge for charitable flights.
Immediately after the security charge was introduced, it was brought to the attention of the previous government that certain charities arrange free air transportation services for persons who otherwise cannot afford the cost of flights for medical care, as well as “flights of a lifetime” for physically, mentally or socially challenged children.
Canada's new government has responded to these concerns with this proposed legislation. Specifically, Bill C-40 proposes that the air travellers security charge will not be payable for air travel that is donated by an air carrier at no cost to a registered charity as long as the charity donates the air travel to an individual, also at no cost, in pursuit of the charitable purpose. This measure would help charities, like the Children's Wish Foundation of Canada which is dedicated to fulfilling a favourite wish for children afflicted with a high risk, life-threatening illness.
The measures contained in Bill C-40 that I have outlined today propose to refine, streamline and clarify the application of our sales tax system. At the same time, the bill reflects this new government's commitment to ensure that our tax system is efficient and, above all, fair.
I, therefore, urge hon. members to support the bill.
Larry Bagnell Liberal Yukon, YT
Mr. Speaker, I will speak in favour of two elements in the bill, the first one being the last element mentioned, which is helping poor children to go on trips of a lifetime. Who could argue against that?
The second element is the excise tax changes, particularly on breweries. We have an excellent brewery in Yukon that makes Yukon Gold, Chilkoot Amber and so on. We have been lobbying for this change for a long time and I will be strongly supporting that particular change.
James Bezan Conservative Selkirk—Interlake, MB
Mr. Speaker, I, like the hon. member, am also pleased that we are moving forward in removing the excise taxes, the GST and HST that surround things like breweries and the alcohol provisions and making things a little more streamlined.
In particular, dealing with the whole issue of charitable donations of flights, the Children's Wish Foundation is a foundation that I have worked with. It does a great service for families who have children who are very sick. The foundation ensures those kids get to live out their dream by taking them to their places of fancy and fantasy and to have that enjoyment as an entire family, not just for the single kid but the entire family.
With the fundraising activities that we do in my riding we have sent many families around the world. I look forward to working with those foundations and being able to ensure the security charge is removed.
Robert Carrier Bloc Alfred-Pellan, QC
Mr. Speaker, I would like to thank my government colleague for his presentation on Bill C-40. Given my interest in transportation, and since I am a member of the Standing Committee on Transport, I would like him to clarify for me the air travellers security charge. How will this bill truly guarantee adequate security for air transportation? Will it actually improve security or simply provide tax breaks?
James Bezan Conservative Selkirk—Interlake, MB
Mr. Speaker, there is no doubt that in the past there was a need to enhance security at airports which is why the security charge was introduced that all travellers pay. That definitely goes to assisting in offsetting the cost related to the increased screening that we must do at airports. The service is provided today by over 4,000 professionals who ensure that we have safe travel across the country.
The bill deals with removing that charge on the tickets that are charitably given to families who are participating in programs like the Children's Wish Foundation and living out their dreams. For that reason, it was only practical that we remove that charge to ensure that the entire cost for these kids to fulfil their fantasies is removed and that they are truly charitable from one end of the system to the other, not just from the airlines but also that it is charitable on behalf of the government.
Alan Tonks Liberal York South—Weston, ON
Mr. Speaker, I am pleased to speak today to Bill C-40, An Act to amend the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act and to make related amendments to other Acts. As the title suggests, this probably is not the most exciting or gripping topics that we have discussed in this place but it is, nonetheless, an extremely important one, as my colleague on the other side of the House has already indicated.
Much of the bill has to do with bringing previous legislation in line with the original policy intent of the government. Much of the bill has to do with implementing previously proposed legislation that, as has been indicated, required further study. This has been done in consultation with affected individuals and industries which, as I understand, was the procedure followed in this instance and most appropriately.
Bill C-40 has three main components which I will deal with separately. The first includes new measures related to the goods and services tax and the harmonized sales tax. The second part contains amendments to the Excise Act, 2001 and other acts with respect to the taxation of tobacco, spirits and wine, a subject matter that will be of interest to more than just those in the House. Finally, the bill contains measures that affect the Air Travellers Security Charge Act.
I will begin with the first part. The bill would confirm the GST-HST exemption for speech language pathology services. Speech language pathologists can include occupational therapists, physical therapists, therapist assistants, public health nurses, child psychologists and others. Typically, they provide services to young children with communication disorders and adults in rehabilitation centres.
We on this side are glad to see that this has been done. We are also glad that the Liberals' draft GST exemption for these services will be implemented. Clearly, speech language pathology services should fall under the act of GST-HST exempt health care services.
The bill also says that the sale and importation of a blood substitute, known as plasma expander, will be zero rated for GST purposes. As my colleague from the other side has pointed out, plasma expander is a blood substitute product that is used primarily to maintain circulatory blood volume during surgical procedures or trauma care. As we all know, Canadians are very generous when it comes to our health care system and donating their blood but there is also always a pressing need for more, and that is why the Liberals proposed this change in a previous budget and began consulting with affected industries.
Bill C-40 would also broaden the specially equipped vehicle GST-HST rebate so that the rebate applies to motor vehicles that have been used subsequent to being specifically equipped for use by individuals with disabilities. This would broaden the previous government's initiative which ensured that individuals and organizations, such as municipalities, non-profit or charitable organizations and school authorities, would qualify for the rebate on purchases when payment becomes due after today or when the vehicle is imported.
The bill also affects the harmonized sales tax in Nova Scotia where the government has called for the provincial tax portion of the home buyer's rebate to be limited to $1,500. It is good to see that this bill that the government has brought forward finally acknowledges the fact that a GST-HST rebate on new housing does in fact exist.
Last spring, when the Prime Minister was touring the country lauding the savings that a 1% GST reduction would provide for a new homeowner, he conveniently happened to forget that the existence of this value program already was there. As a result, I think he somewhat inflated the amount of savings a new homeowner could expect.
In Newfoundland, I believe the Prime Minister pulled out of his hat a savings figure of $2,000 on a $200,000 home. In reality, of course, the savings are some $650 less due to the GST rebate on new housing, but facts and correct figures tend to be lost on the government when it wants people to think it is lowering their income taxes when in reality it is doing just the opposite.
It would be our position that adjustment to income taxes is perhaps a more progressive way that would remove the inequities, in particular for the working poor and those on fixed incomes, other than treating the GST this way, but we also support the reductions to the GST that have been suggested.
The final Liberal budget in 2005 announced new funding over five years to enhance federal tax compliance and enforcement in the tobacco industry. We set aside new money for enhanced markings of tobacco. I am glad to see that this bill extends requirements to identify the origin of tobacco products to all products, including those for sale at duty-free shops or for export.
I can tell members that, from comments made by those who have discussed this issue with me, tobacco contraband needs to be addressed in a serious fashion. That is why we allocated $8 million to fight tobacco contraband two years ago. I certainly hope that the current government will take up that very cause.
The final part of the bill also focuses on an initiative announced by the previous Liberal government and confirmed in this bill. It will ensure that certain air travel donated to charities through air carriers is not subject to the air travellers security charge. I think it is worthwhile to repeat what has been said previously in explanation of this by my colleague.
In the months following 9/11, the previous Liberal government jumped into action with a series of measures to improve public safety, secure our borders and ensure that the lives of Canadians and Canadian businesses could go on with as little disruption to daily life as possible. As a result, the government of that day strengthened Canada's borders dramatically. We increased security at Canadian airports with as little disruption to passengers as possible.
The air travellers security charge was levied to help pay for these upgrades. While no one particularly enjoys a new tax, I think most Canadians would agree that in February 2002 we did the right thing by instituting the air travellers security charge in order to protect Canadians.
As a side note, the current government, which at the time was comprised mostly of the Canadian Alliance Party, voted against the security charge and in fact against the creation of the Canadian Air Transport Security Authority. Liberals, however, did believe that Canadians would be willing to pay a little more to ensure that air travel in Canada was as safe as possible. As a result, I am proud to say that Canadians are in fact safer.
Furthermore, as new technology was installed at airports across Canada and new security procedures created, the cost of the program diminished as time went on. Accordingly, the Liberals used their last three budgets to lower the air travellers security charge three times so that Canadians would need to pay only what was necessary to ensure their safety on flights.
As was mentioned, this was another initiative that was started by the previous government. Lowering barriers such as the travellers security charge on donated seats, then, is an excellent way to ensure that businesses such as airlines can help charities carry out their excellent work. In Canada, there are currently over 80,000 registered charities, the vast majority of which are honest and hard-working organizations that provide valuable services for Canadians.
I am sure that Canadians were dismayed this fall when the current government chose to eliminate the charities advisory committee. The committee was comprised of members of the charitable community as well as Canada Revenue Agency employees. Together they worked to ensure that charities were aware of their obligations under the Income Tax Act. They worked to ensure that Canadians could be confident that when they donate their hard-earned money to a charitable cause, the bulk of that donation actually goes toward the cause.
Furthermore, the charities advisory committee proposed new and interesting changes to Canada's tax laws, such as eliminating the air travellers security charge when an airline donates a seat to a registered charity. I cannot recall if this proposal came from that committee, but I do know that committee members had many proposals such as this one before them and made recommendations to that effect. I do not believe that the saving of a few thousand dollars by the government in eliminating the committee is in the best interests of our charitable sector or Canadians at large.
As I said at the beginning of my remarks, this may not be the most exciting or glamorous fare that the House has had to discuss, but as we can see from what has been said thus far, these measures are all very vital and important. The vast majority of these initiatives are either a result of the consultation process set up by the previous government or a direct result of funding provided by us.
Accordingly, I am happy to support the bill, as my party will be, at second reading and further study it when it arrives at the finance committee.
Larry Bagnell Liberal Yukon, YT
Mr. Speaker, I have one comment on the excellent speech by my colleague. I understood from his speech that the government was in favour of reducing housing costs for Canadians, which is very admirable, but of course that is what the EnerGuide program did. The Conservatives cancelled that program and then brought it back with a smaller amount of money, so that does not help Canadians. More important, the government brought it back without the special provision and program for low income people. I would like to ask my colleague if he believes that makes any sense.
Alan Tonks Liberal York South—Weston, ON
Mr. Speaker, one of the areas that I also wanted to mention but had not was the provision with respect to HST-related rules. The government of Nova Scotia limits the availability of the current Nova Scotia first time buyers' rebate. I know that my colleague was not referring to this, but this is an incentive within the bill that will be targeted at low income wage earners.
To get to the point of the question, it is a question of equity. It is a question of what will be an incentive to those who need it most. The EnerGuide program was one that under the previous Liberal regime in fact was targeted. In its implementation, it was taken up by thousands of Canadians who fell within those income brackets. This was an incentive for them to purchase green products and to renovate and upgrade the standards of equipment in their homes, from furnaces through to laundry machines and so on.
The member is right in the inference that he draws. There still is a lot of work to be done with respect to the EnerGuide type of approach and trying to focus it on wage earners in this country who most need the incentives.
Brian Murphy Liberal Moncton—Riverview—Dieppe, NB
Mr. Speaker, while the hon. member may be correct in saying that this is not the most exciting or glamorous topic to come to the chamber of recent date, his elocution and delivery bordered on glamorous. I want to compliment him for that delivery.
However, I felt that because of time and because of the many details of this bill, he glossed over something. He started to talk about it but did not elaborate upon it. It is simply the idea that this is a very detailed bill on housekeeping, on matters of direct taxation, non-progressive taxation, which we know as the sales tax in general, and yet we on this side, along with the previous government, would certainly have preferred to concentrate on cuts to income taxes.
Could the member elaborate upon the point he started to make, which was essentially that it is much fairer to Canadians to concentrate on cutting income tax, which is levied on increased income, rather than on the HST, GST and other matters, notwithstanding his positive comments about this bill?
Alan Tonks Liberal York South—Weston, ON
Mr. Speaker, the whole notion of ad valorem taxes as they compare with progressive improvements to be made to an income tax regime have been with us as long as I can remember. One is caught in a trap if one starts to argue the qualities of one over the other, when in fact I think Canadians generally would accept the assumption that a tax that is progressive to the extent that it is aimed at and works for those wage earners and salary brackets in the lower income percentages is one that works for them.
While I did not have time to go on with respect to the comparison of the GST ad valorem approach as opposed to income tax, I think my colleague can certainly draw the inference that I particularly, and I think our party, support the fairness with respect to using the income tax as the basis for equity for and fairness to Canadians. That is not to say that the GST or ad valorem taxes do not have their place, but we should remember that the very people for whom we propose to use the funds that come from that source are the ones who will be harmed by it in the end. They are the ones who are least able to afford the luxury goods and the big ticket items that, for example, the GST as a tax is aimed at. It is counterproductive.
However, that is not to say, and it is certainly not to detract from this, that all governments should not be attempting to reduce the burden. I personally and our party, I know, favour using the income tax as the most fair and equitable way to achieve that end.
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, given that this is my first opportunity to address the House since the holidays, I would like to start by wishing you a happy 2007.
I would also like to wish my honourable colleagues and the citizens of my riding a happy and profitable new year.
I would now like to give an overview of Bill C-40, which is now before this House. I will first summarize the main reasons why the Bloc Québécois supports Bill C-40.
This bill addresses shortcomings associated with the GST and the excise tax. Bill C-40 removes taxes from certain medical services, which facilitates access to these services. The bill reduces the burden of taxation on charities. It also contains measures that help small wine producers. It tightens legislative provisions surrounding the sale and production of tobacco in an effort to counter smuggling. Bill C-40 reduces the air travellers security charge and will reflect the Quebec situation. That was required. For all these reasons, we will support this bill.
To briefly put things into context, this bill is divided into three large parts. It is aimed, first, at instituting corrective steps to improve and specify certain measures having to do with the collection of the GST. It also amends the act in order to zero-rate particular products and services. It turns then to the excise tax, laying out certain measures related to the taxation of wine, beer and spirits. Finally, it amends the rules on the air travellers security charge.
In the first part or the GST-HST-related measures, we find five categories or broadly distinct measures. The bill amends the rules on health, charities, business arrangements, and governments and contains certain provisions changing the way in which the GST is applied.
The first of these measures has to due with health-related rules. The bill amends the act so that speech-language pathology services are henceforth effectively zero-rated. This change confirms the tax-exempt status of these services. It will make it easier for young people with language problems to access such services.
This change will also help older people who have suffered strokes to access services that enable them to continue living in dignity.
In this same measure, the government also exempts health-related services provided in the practice of the profession of social work. This too will make it easier to access private social work services and permit people who have the means or have insurance not to pay taxes any more when they purchase the services of social workers.
Then the government zero-rates sales and importations of a product that can be used to some extent as a blood-substitute. Plasma expander makes it possible, for example, to inject a blood substitute during treatment for severe hemorrhaging, very serious burns or open fractures. Although it does not contain any red blood cells or the anticoagulants found in bagged blood, it provides an alternative during crucial treatments for seriously injured patients.
The government is also going to restore the zero-rated status of a group of drugs collectively known as benzodiazepines. These include medications such as Valium, Ativan and other similar drugs. They are used primarily to treat anxiety, for alcohol withdrawal or as a preanaesthetic medication.
Lastly, the government will offer a GST rebate on motor vehicles that have been used after being specially equipped for use by individuals with disabilities.
The second principal measure, which forms part of the same group, concerns charities. Some amendments will ensure that the exemption of supplies by charities of real property under short-term leases and licences extends to any goods supplied with such real property. This will mean less financial pressure on charities as they carry out their social mission.
The third measure concerns business arrangements. The amendment to the GST legislation provides transitional GST/HST relief on the initial asset transfer by a foreign bank that restructures its Canadian subsidiary into a Canadian branch. This measure will act as an incentive to foreign banks in Canada to restructure their subsidiaries as Canadian branches, which will promote more competition in the Canadian banking sector.
The bill removes technical impediments that hinder the use of existing group relief provisions under the GST/HST. This amendment simply clarifies the rules of application of the legislation that are already in effect. In addition, the bill simplifies compliance by excluding beverage container deposits that are refundable to the consumer from the GST/HST base. This will make it easier for businesses to manage collection and will lighten the regulatory burden associated with deposits, with a view to promoting more recycling and environmental protection.
This is not a very impressive measure from the current government, but it is a step in the right direction for the environment. We hope that this government will go a bit further and take a more serious approach to the environment. On the whole, this seems promising.
On a more technical level, the bill permits an agent to claim a GST/HST deduction for bad debts, and to claim adjustments or refunds of tax, in respect of sales made on behalf of a principal where the agent collects and reports tax.
Another measure extends the existing agent rules under the GST/HST legislation to persons acting only as billing agents for vendors.
Another measure will better accommodate special import arrangements between businesses in certain situations where goods are supplied outside Canada to a Canadian customer. We will also ensure that GST/HST group relief rules cannot be used to exempt from GST/HST otherwise taxable clearing services that are provided by a group member to a closely related financial institution who will then re-supply those services on an exempt basis to a third-party purchaser outside the group.
The measure also clarifies the treatment of the right to use certain types of amusement or entertainment devices, such as the playing of a game, when it is provided through the operation of a mechanical coin-operated device that can accept only a single coin of twenty-five cents or less as the total consideration for the supply. Finally, it confirms the policy intent and Canada Revenue Agency’s existing practice that no GST/HST or provincial sales taxes on a passenger vehicle are included in calculating the maximum allowable value for input tax credit purposes.
The fourth measure relates to governments. First, it will exempt a supply of a right to file or retrieve a document or information stored in an electronic official registry. That will thus allow municipalities and government agencies to supply information to citizens at a better cost, which in turn will increase access to information.
The new legislation will also ensure that a small supplier division of a municipality is treated in the same manner as a municipality that is a small supplier. Thus, the fairness of treatment will be respected.
The fifth measure, always in the same group, deals with the change in the implementation processes of the legislation. First, the bill will provide the Minister of National Revenue with the discretionary power to accept late-filed applications for the GST new housing rebate and the Nova Scotia HST new housing rebate for owner-built homes, where exceptional circumstances have prevented an application from meeting the normal filing deadline. Second, the Minister of National Revenue will have the discretionary power to accept late-filed elections between closely related financial institutions for adjustments that they are required to make for the provincial component of the HST.
As for the exchange of information, the bill authorizes the Minister of National Revenue to exchange GST-HST information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters. Thus, the government will be better able to fight tax evasion.
Finally, the bill gives the Chief Statistician of Canada the discretionary power to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act. This new power will give provinces a better access to income statistics, which will allow them to better focus their public policies. This is the first group, which is quite technical, as is the bill as a whole.
Part two of the bill contains a series of measures dealing with excise taxes. Those measures amend the Excise Act 2001 to implement minor refinements that will improve the operation of the act and more accurately reflect current industry and administrative practices. They also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.
Since it is very technical and we do not have a lot of time, I will not go into detail. The first of the principal measures deals with tobacco and seeks to give greater precision to certain provisions contained in the Excise Tax Act in order to better defend against the smuggling of tobacco products and facilitate collection of taxes on tobacco. The bill includes measures to extend the requirement to identify the origin of tobacco products to all products, including those sold at duty-free shops or for export, consistent with the Framework Convention on Tobacco Control, an international agreement. It also specifies that cigarettes, tobacco sticks, fine-cut tobacco or cigars, but not packaged raw leaf tobacco, may be supplied to the export market or the domestic duty-free market.
The second measure concerns alcohol. The bill has two main objectives. First, it authorizes provincial liquor boards and vintners to possess a still or similar equipment, for the purpose of analyzing substances containing ethyl alcohol without holding a spirits licence. This measure aims to avoid the administrative burden and cost of requiring provincial liquor boards and vintners to obtain a permit. In addition, to encourage the growth of the wine industry in Canada, the government will defer payment of duty by small vintners who sell wine on consignment in retail stores operated by an association of vintners until the wine is sold. As a result, when small producers offer their products in a store operated by a producers’ association, they will not have to pay GST until the product is sold. This measure encourages our home-grown industry and the Bloc Québécois is very happy about that.
I would like to make a small aside concerning the wine industry in Quebec. That industry is represented by the Association des Vignerons du Québec. In 2006, the association was made up of 42 wine growers operating in the regions of Québec, de Lanaudière, the Eastern Townships, Montérégie and the Basses-Laurentides.
Unfortunately, as you can well imagine, no Quebec wine is produced in Montreal, in the region where I live and where my riding is located. To make up for it, we enjoy these Quebec wines that keep on getting better year after year. In any event, I try to do my part.
More than 100 hectares of vines are harvested annually. Nearly 300,000 bottles of wine are produced every year. The main products are white wine, ice wine and fortified wine.
As far as the application of the bill is concerned, as in the previous section, the new legislation permits the Minister of National Revenue to exchange excise tax information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters. The bill also adds a discretionary power for the Chief Statistician of Canada to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act.
Finally, the third part includes measures on the air travellers security charge. These were implemented a few years ago after the unfortunate events of September 11. These measures have to do with the air travellers security charge and are in part 3 of the bill. They include the announced relief measures and minor changes to the Air Travellers Security Charge Act.
There are two main measures. The first is tax relief. The bill relieves, in particular circumstances, the air travellers security charge in respect of air travel sold by resellers or donated by air carriers. From an administrative point of view, the bill provides authority for the Governor in Council to add, delete or vary by regulation the schedule of listed airports. Thus, the bill will change the status of three of Quebec's airports in order to ensure that standards meet market demand.
So the bill is going to remove La Grande-3 and La Grande-4, in Northern Quebec, from the list of airports subject to the surtax arising from the Air Travellers Security Charge Act. This measure reflects the very special nature of these airports. However, the amazing increase in air traffic at the Mont-Tremblant airport has meant that the minister has decided to include it in the list of airports now subject to the Air Travellers Security Charge.
This is a very technical bill and the Bloc Québécois supports its principles because of the various measures it contains. We are also glad that some measures concerning the GST act have not been included. These are some of the measures announced by the government concerning its intention to abolish GST refunds for foreign visitors. I have to say that we are very pleased that this is not included in this bill because we think that it is a bad measure and that it would punish the tourism industry in Quebec unduly. We hope that the government will have the wisdom to forget this measure entirely and that we never have to debate it in this House. It would be a huge problem.
I would like to end simply by saying that we are going to support this bill because it is designed to correct the technical shortcomings and differences pertaining to other laws, including the GST act and the one on Excise Tax. The tax is going to be removed from certain medial services so as to facilitate access to them and lighten the tax burden for charitable organizations.
There will be measures to support small wine producers; to tighten up legislation on the sale of tobacco products with a view to counteracting smuggling; and to adjust the Air Travellers Security Charge to the situation in Quebec.
Robert Carrier Bloc Alfred-Pellan, QC
Mr. Speaker, I would like to congratulate my college from Jeanne-Le Ber on his excellent speech. We can see the great experience that he has gained as deputy critic for finance.
It seems obvious to me that this is an interesting bill that responds to many demands. However, concerning the provision dealing with vintners, which simply defers a goods and services tax until the wine is sold, when products are on consignment in stores operated by an association, does he not think that the bill could go further in order to encourage our local wine producers, who bring so much to our country 8and who also create jobs?
Would it be possible to look at a GST exemption for the production of these wines?
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Mr. Speaker, I would like to thank the hon. member for his excellent question.
It is clear that we could do more to support the small wine producers in Quebec. Nonetheless, this is a measure that goes in the right direction.
For the small producer, the stock that is sometimes divided among several outlets can be a major burden. Not having to pay the tax in advance on the products in stock is certainly an advantage, but the situation could be further improved.
In another bill, the government answered a longstanding demand from the Bloc by changing the excise tax regime for microbreweries and wine producers. We think that measure will help microbreweries and wine producers in Quebec.
Of course, the Bloc Quebecois will continue to put propositions forward and we hope that the government will continue to implement them for the benefit of Quebeckers.
Larry Bagnell Liberal Yukon, YT
Mr. Speaker, the member is the critic for finance and is doing an excellent job. Does he believe the government should reinstate the rebate of GST for travellers from overseas who come to Canada to attend conferences?
My riding may perhaps be the only one in the country where the biggest private sector employer is tourism. Getting rid of the exemption for the GST has certainly hurt the tourism industry across Canada. An extensive study has been done on that. At the same time, the government cut marketing for tourism and money for museums, which is very important for tourism.
Does the member agree with those cuts and should they have perhaps been reinstated in this bill?