Bill C-40 (Historical)

Sales Tax Amendments Act, 2006

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

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.

Sales Tax Amendments Act, 2006

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I would like to return to part 2 of the bill to amend the Excise Act, 2001.

Part of this bill pertains to alcohol, among other things. I am thinking especially about the measures to promote the growth of the wine industry in Canada. Does the member think that the deferral of the payment of duty for small producers selling small volumes gives them a considerable advantage?

In fact, small producers will have to pay this duty after the bottles and the products have been sold. By the way, there are 42 vineyards in Quebec. Does he think that this type of measures will give an advantage to the wine industry in Canada?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, that particular provision basically 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.

Effectively, if I understand it correctly, we are talking about the deferral of a payment which, for a small business, is very important because it helps cash flow. It matches cash inflows and cash outflows so that inventory is not being financed even though it is on a consignment basis.

I would say to the member that I do understand the benefit to small businesses, such as vintners, but if we were to take this to its logical conclusion, where all these little ways in which we can help businesses were all put into our legislation and have specific clauses with specifics for this one and that one, our legislation would explode. That is exactly what has happened to the Income Tax Act. It has so many exceptions, exemptions, et cetera that it has made it very complicated. As a matter of fact, for many it is too complicated to safely handle their own tax matters.

I guess that makes the accountants and the lawyers very well off. I suspect, if anything, they may save on the duty but it might be offset by the need to have an accountant to explain it all. In principle, I like it but with regard to the details, I think we must be extremely careful about the micro-administration of businesses through tax and excise tax acts.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I am extremely pleased to present today the results of my consideration and analysis of Bill C-40, which I have studied closely.

This bill is divided into three parts. The first part aims to institute corrective steps to improve and specify certain measures having to do with the collection of the GST. The second part amends the act in order to zero-rate particular products and services. It then turns to the excise tax, laying out certain measures related to the taxation of wine, beer and spirits. The third part amends the rules on the air travellers security charge collected at various airports.

Let us take a closer look at each of these three parts. First of all, the measures concerning the GST and the HST, which applies in some provinces, are divided into five distinct categories. Also—and I find this quite interesting—this bill modifies rules that apply to health services, charities, business arrangements, governments and the process by which the GST is administered.

With respect to health, this bill amends the act to confirm—and this is very important to me—the exemption for speech-language pathology services. This important amendment confirms the tax-exempt status of these services and makes it easier for young people struggling with language difficulties to access them. As I said, this is a personal issue for me. I spent many years working in health care, specifically, in child psychiatry. I know that this measure will be very beneficial to children struggling with this difficulty and to their parents, because they are the ones who pay for therapy. Parents of children with such difficulties really appreciate this kind of tax relief. They need support, both financial and moral.

I am sure that this tax exemption will relieve parents who have to seek this kind of care of an enormous burden. During my years in child psychiatry, I saw countless parents struggle helplessly with the cost of these services. People were torn. Sometimes, they said they did not have enough money to ensure proper treatment for their children. I think that this bill will really lend a hand. This is an important part of this bill. It will give hope to these parents who need a lot of support as they try to provide their children with the services they need to develop normally. Now they will have the resources to ensure their children's optimal development. In addition to helping children, this measure will also help seniors access these services.

With the rising incidence of heart disease and stroke, many older people need speech-language pathology services. Often, older people have limited financial resources.

I think this measure will help children struggling with language difficulties, their parents, and various seniors who have unfortunately had accidents and need these services.

The bill also exempts health-related services rendered in the practise of the profession of social work. Earlier I heard one of my colleagues ask whether we should extend this to other professions, in particular psychologists, and potentially remedial teachers. It should really be considered, because these kinds of services most often target people with severe difficulties, and the government could provide additional assistance to these people.

Such measures are important because, among other things, they facilitate access to private social work services. So the people who really need it have quick access to these services without constantly wondering if they can really afford them. This measure in the new bill is very important.

We know that when the legislation takes effect, the government will be able remove taxes from sales and imports of a product that can, in some instances, replace blood, a very important alternative for saving the live of a seriously injured patient.

This bill will also restore the zero-rated status of a group of drugs, with very scientific names, known as benzodiazepines. This is extremely important because they are medicinal derivatives used by individuals suffering from anxiety. We are talking about such drugs as Valium, Ativan and others that relieve the anxiety of those suffering from more or less serious mental illnesses. They are also used to help with drug or alcohol withdrawal. This measure will once again relieve the financial burden for those individuals who require these types of medications. Quite often, the individuals who need these services or medications find themselves in more difficult circumstances. Therefore, we must support any measure that can help reduce expenses for these individuals and that also seeks to improve access to better and more significant health care. That is what we are going to do.

Finally, still in the health care sector, the bill will provide for the reimbursement of the GST for those who use specially equipped motor vehicles. I am thinking mainly of those with severe physical handicaps. When these individuals resell or have to adapt their vehicles, they need the government's help, once again, to make it easier to access services and, at the same time, improve their quality of life. Their everyday life changes considerably when governments provide more readily accessible financial assistance.

Charities will be affected by different measures in this bill. One amendment exempting supplies by charities of real property under short-term leases and licences will be extended to any goods supplied with such property. Hence, the range of services provided by charities is expanded without the rate of taxation necessarily being too high.

This measure represents savings for such organizations, which can improve their service to a clientele that, once again, often consists of the most disadvantaged in our society. This gives them some room to manoeuvre, which is quite often required to maintain their activities. They need government support and that is provided by this bill.

As far as business arrangements are concerned, the bill amends the GST Act. It provides transitional 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 also removes technical impediments that hinder the use of existing group relief provisions under the GST/HST. This amendment simply clarifies the rules for the application of legislation 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. The importance of it all becomes more obvious to me in the light of all the debates that are held on the various measures dealing with the protection of the environment here in the House and elsewhere. I think we should support any measure that can help save the planet. This might not be an impressive measure, but it is by making small adjustments that we will succeed and achieve results.

The fourth category applies to the government. If the bill is passed, it will exempt a supply of a right to file or retrieve a document or information stored in an electronic official registry. This provision will allow municipalities and other government agencies to provide information to individuals at a lesser cost than before. With such a measure, the individual comes out a winner since access to information will be easier.

The bill also ensures that a small supplier division of a municipality is treated in the same manner as a municipality that is a small supplier. Thus, fair treatment will be respected.

Finally, it is important to note that this is a significant change that must be taken into account in the application of the legislation. The bill adds a discretionary power—which is interesting— 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 the applicant from meeting the normal filing deadline.

These are measures that support the ordinary citizen, who is often overwhelmed by all the paperwork involved in applying for an exemption or a rebate. Sometimes people are denied their right because they did not manage to fill out the entire form on time. In that situation, we are helping them in a very tangible way.

The bill 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 GST and the provincial sales tax.

As far as exchanging information is concerned, it permits the Minister of National Revenue to exchange GST and QST information in Quebec with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters. The government will thereby be in a better position to deal with tax evasion. How much money is lost through the entire tax evasion scheme? How many people do not pay taxes when they should? If, through measures that will allow for a better exchange of information, we can limit tax evasion, that is a major bonus for the government.

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 the provinces better access to income statistics, which will allow them to better focus their public policies.

I would now like to discuss some of the measures that propose an amendment to the excise tax. These measures deal with tobacco and seek 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.

It 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.

As for alcohol, the bill has two main objectives. First, it allows provincial liquor boards and vintners to possess an equipment similar to a still for the purpose of analyzing substances containing ethyl alcohol without having to hold a spirits licence. I believe that, for the security of citizens, vintners must be better able to ensure the safety of their operations and products.

This measure will help liquor boards, especially in Quebec, and vintners reduce the huge paper burden as well as major costs for these licences. Moreover, to promote the growth of the wine industry, the government, by passing this bill, will allow for the deferring of the payment of duty by small vintners selling wine on consignment in retail stores operated by an association of vintners.

There are also measures to help vintners. My colleague talked about Quebec wine producers earlier. In 2006, there were 42 vineyards in many regions of Quebec, including Lanaudière, the Eastern Townships, Montérégie and the Lower Laurentians. Every year, over 100 hectares of vines are cultivated in Quebec, and the sector has experienced steady growth over the past few years. This measure will help wine producers and will diversify and increase wine production in Quebec. The main products are excellent: white wine, ice wine and fortified wine. This measure will promote the development of this industry, improve marketing of products made in Quebec and support the province's agro-tourism opportunities, which are becoming more and more popular. I am thinking of Quebec's Wine Route and its network of small producers who will appreciate this support for the development of their industry.

The third and final part of the bill includes previously announced relief provisions with respect to the air travellers security charge. It also addresses the Air Travellers Security Charge Act. Basically, the bill relieves, in particular circumstances, the air travellers security charge in respect of air travel sold by resellers or donated by air carriers.

The bill provides authority for the Governor in Council to add, delete or vary by regulation the schedule of listed airports. For example, the bill will immediately change the status of three Quebec airports to ensure that standards are appropriate for the market and market demands.

The bill removes La Grande-3 and La Grande-4 from the list of airports subject to the surcharge under the Air Travellers Security Charge Act. This measure reflects the special nature of these airports where security is not as big an issue as it is in larger airports that have different goals. This corrects a situation that these airports found challenging.

However, the amazing increase in air traffic at the Mont-Tremblant airport, which is somewhat the opposite, 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 good thing because there is a lot of international traffic at this airport.

Consequently, it is clear that all these measures, changes and improvements mean that Bill C-40 is evidently in the best interest of Quebeckers. We are convinced that the people as a whole will support us. The Bloc Quebecois will then vote in favour of this bill.

I would like to end by saying that Bill C-40 is designed to correct the technical shortcomings I mentioned earlier pertaining to the GST and the excise tax. The tax would be removed from certain medical services so as to facilitate access to them and lighten the tax burden for charitable organizations. The bill contains measures that will benefit small wine producers. It tightens the rules governing the production and sale of tobacco products in order to fight smuggling and it adapts the air travellers security charge to the present situation in Quebec.

The Bloc Quebecois is in favour of this bill and will support it.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I thank my colleague for his remarks on Bill C-40.

My question and comment will focus on the health-related measures in the bill we are debating today, and the collection of the GST on health services. As my colleague said many times, he has a background and has worked in child psychiatry. He is in a good position to confirm that services currently provided are costly and put a heavy burden on families. In connection with this bill, he gave the example of speech-language pathology services, which will now be zero rated. These services provided to children with language difficulties and disorders will now be zero rated.

He also mentioned the exemption for social work, that is social workers who provide services. Again, under this bill, these services will be exempt, and therefore zero rated.

My question is the following. Based on his experience as a child psychiatrist in a former life, can the member think of other services that should be zero rated? Should other services be exempt from tax to ensure that families with children struggling with language or other difficulties can breathe a little? The fact is that these families are often faced with hefty bills. Based on his former line of work, are there other services that he would like to see included under this zero-rating measure? I can think of psychology services perhaps, but could he give us more examples?

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I thank my colleague for his question, which will allow me to clarify.

I worked for 32 years in child psychiatry in the public sector. It is very difficult for public services to provide everything people need. Absurd situations are more and more commonplace. There is so much poverty in some areas that child psychiatrists find that many young people will present with psychological disorders connected with the level of poverty and social development in their environment. Many children suffer from problems related to the psychology and overall development of their personality.

These problems can be solved using speech-language pathology, psychoeducation, psychology and psychomotility services. But public services have difficulty responding fast enough to solve problems expeditiously. Sometimes young people are put on waiting lists for such problems. When a young person is on a waiting list, his or her parents will be tempted to turn to the private sector for services.

This is where the bill can really make a difference. It will remove the tax from services that some parents will want to provide for their children to help them in their development. When parents provide these services for their children and then have to pay tax on them, it is very discouraging for these people, who need support and encouragement. It is very hard when, on top of everything else, the government has a hand in their pockets.

So in response to my colleague's question, yes, we have to consider that other professions or other—

[The Deputy Speaker, Bill Blaikie]

Order, please. The time allocated for debate has expired. We now proceed to the adjournment proceedings.

The House resumed from May 14 consideration of the motion 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 third time and passed.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, today it gives me great pleasure to speak 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.

First, I would like to say that the Bloc Québécois and I will support Bill C-40, which amends various acts and breathes a little life into a number of industrial sectors and charitable organizations and lends a hand to some of society's more vulnerable members, including children and seniors.

Bill C-40 includes three parts that amend three or four important acts. It will make a number of products and services tax exempt for some people and some industrial sectors, such as Quebec's wine industry, which is growing fast. This bill will offer some administrative and tax relief to these sectors.

The first part of Bill C-40 concerns measures relating to the GST. The second proposes amendments to legislation in order to lift the tax on certain goods and services. Third, Bill C-40 sets out various measures pertaining to the excise tax on wine, beer and other spirits. Lastly, the bill contains amendments to the air travellers security charge rules.

The measures in the first part of Bill C-40 that relate to the GST fall into five main categories, the first being the exemption of certain health services. The second category consists of exemptions of certain services for charities, which I will talk about a bit later. The third category comprises measures pertaining to business arrangements, including arrangements for banking institutions and foreign banks that want to invest to restructure their Canadian branches or subsidiaries. The fourth category includes governmental and administrative amendments. Lastly, the process of applying the GST would not change a great deal, but significant changes would be made so as to streamline the administration of our taxation system, which is often a barrier to expansion and growth of some sectors.

The first area that is affected is health. The bill proposes to lift the tax on speech-pathology services.

My colleague from Saint-Maurice—Champlain touched on this yesterday, sharing his expertise in child psychiatry with the House of Commons. He explained that some children and groups in our society are more vulnerable than others. I am thinking about children who have serious language disorders and whose parents cannot use public services. To address their child's essential needs, they must use services other than public services. Often, GST is charged on these services, but we believe that they should be tax exempt. Such services are often expensive for needy families, but they are services the parents expect to receive. Consequently, this bill will lift the tax on speech-pathology services, which are essential to children's development.

Second, services for seniors with cardiovascular disease will be tax exempt. We know that cardiovascular disease is on the rise in Quebec, contrary to what we might have expected, because consumption of products that contribute to cardiovascular disease has decreased considerably. I am referring to smoking and drug use, among other things.

Nonetheless, we feel something needs to be done to alleviate the burden on seniors who are in precarious financial situations. Removing the tax from such services is as important as what is being presented in Bill C-40.

Another exemption in Bill C-40 has to do with social work services. Currently tax is applied directly to social work services. These services are particularly essential in areas of growing poverty.

In Montreal, there are so-called high-risk neighbourhoods that need essential resources and services. Unfortunately, for people in need of direct assistance—as it was called—and social support, believe it or not, these services are still being taxed. This bill proposes an exemption for these social services.

Nonetheless, the government could have gone further. Why stop at these exemptions? Why apply tax exemption only to speech therapy services, social work services, health services for our seniors who are experiencing cardiovascular problems? Why not extend this measure to other equally essential services? I am referring to services provided by certain health practitioners such as psychologists. If a child needs to consult a psychologist, his or her parents should not have to be taxed to use such a service.

We know that in our school boards there is currently a serious shortage of professionals. I am not talking about teachers, but professionals who are essential to the development of our children in our ever changing society. We must ensure that our children and youth in our schools can get the support they need. Unfortunately, limited financial resources often prevent these children from getting these services and force parents to use external services to meet essential needs. In my opinion, these services should also be tax exempt.

Another aspect has to do with the tax free status of certain products, specifically, the sale and imports of a product that can replace blood. Lastly, certain anti-anxiety drugs such as Valium and Ativan are also being given tax free status.

Basically, this bill makes certain essential services exempt from the GST, specifically in health care. However, the government could have made an even bolder move by expanding the types of services covered by Bill C-40.

Bill C-40 also covers another aspect, namely, the GST rebate for motor vehicles that are specially equipped for use by individuals with disabilities. In my view, in our so-called just society that aims to give everyone equal opportunity—and Quebec society has already asserted this equal opportunity approach—people with disabilities must be given everything they need to fully integrate into Quebec society, into our society.

This mobility is crucial for people who are losing their functional independence and people with disabilities, so they may access public services. Some Canadians are confined to their homes—for all kinds of reasons, including disabilities—which limits their integration into our society. We therefore welcome this GST rebate for motor vehicles that are specially equipped for use by individuals with disabilities.

Bill C-40 covers another aspect, namely, another GST measure, this time concerning charitable organizations. As we all know, these organizations are in precarious financial situations and are often forced to organize fundraising initiatives to survive or just to maintain administrative services. This is a common problem. Lack of funding is clearly a problem for charitable organizations. Yet, they provide a great deal of support to groups that, once again, are often very vulnerable. We see these well-established charities at work in our ridings, as they solicit us every year for a little help. Unfortunately, we have no programs or financial means available to be able to help them.

Examining a bill like Bill C-40 is a perfect opportunity for us to say yes, we can help them when it comes to taxes. We will support a bill that will exempt goods supplied with a property under short-term leases. What does that mean? It means that if a charity decides to acquire a good supplied by a property lessor in a short-term lease, this product would be exempt from GST.

To repeat, this helps out these charities and lightens their financial load. At the end of the day, we are not only helping charities, but also the individuals and groups who benefit from the services offered by the non-profit organizations. We commend the measure in Bill C-40 which aims to make goods supplied with a property for non-profit organizations GST-exempt.

The second GST measure is the transitional GST relief for a foreign bank that decides to restructure its Canadian subsidiary into a Canadian branch. We must have a better harmonized tax system. There is currently competition, which must be harmonized, particularly in terms of existing taxation in the United States. Transitional GST reliefs for the foreign banks that decide to restructure and set up shop here, in Canada, will only strengthen our financial market, our banking system, and the economies of Quebec and Canada.

The third measure is the exclusion from the GST/HST base of beverage container deposits that are refundable to the consumer. This is an interesting measure because our society has decided that sustainable development will serve as the cornerstone for its development. Such a society must encourage recycling initiatives. This is an unequivocal fact. However, although Quebeckers and Canadians have clearly affirmed their desire to focus on and accelerate the implementation of a beverage container recycling system—particularly in Quebec—there are still tax irritants, elements that prevent us from doing more in the areas of deposit-refund systems and recycling.

We must therefore make it easier to manage recycling and to exclude beverage container deposits from GST/HST. I believe that is a step in the right direction. Naturally it is not a panacea. It not enough to ensure that there will be a Quebec or Canada-wide recycling system based on a deposit refund system. However, it does remove a tax constraint and lessens the administrative burden on the application of a deposit refund system and recycling. In this regard, it is definitely a step in the right direction. It certainly will help organizations such as Recyc-Québec, which has carried out several studies and promoted this vital debate about the importance of implementing a deposit refund system.

There are other measures pertaining to the excise tax. I am thinking of, among others, part 2 of the bill, which amends the Excise Tax Act, 2001. Two significant changes are made by Bill C-40. First, the bill seeks to improve the operation of the excise tax and then to adjust administrative practices in order to develop and promote the growth of a certain number of industries, particularly measures pertaining to alcohol and specifically wine.

The objective of Bill C-40 is to encourage the growth of the wine industry in Canada. It is not a measure that benefits only the rest of Canada; it is a measure that will also benefit Quebec. We know that there are currently 42 vineyards in Quebec. More than 1,000 hectares of vines are now under development and 300,000 bottles of wine are produced each year. That shows that there is a vibrant wine sector at work in Quebec.

The latest competitions held in Quebec and in Canada have demonstrated the strength of this sector. Last month, from April 20 to 22, an important competition known as the Coupe des Nations was held as part of the Festival de la gastronomie de Québec. Believe it or not, Quebec was one of the standouts. The Quebec vineyards really stood out. They won 34 new medals for Quebec wines. Quebec vineyards won almost 35% of the medals awarded during this festival, at which many vineyards were represented. What does that prove? It proves that there is energy at work that we must maintain and that we must strengthen in the future to ensure that these vineyards can benefit from tax breaks.

What is there in Bill C-40 that will provide major benefits to this industry? It provides for deferral of tax by small vintners selling wine on consignment. They will not have to pay the GST until the product is sold. That is significant because it means that the vintners, who are very often small businesses—not even medium-sized businesses, except in very rare cases—with very limited resources at their disposal, will be able to put off an expense until the product has been sold.

Small producers will make their tax payments once the product has been sold. This will provide much more breathing room to the small vintners. In addition, our homegrown products in all regions of Quebec will certainly benefit from such a measure.

I will close by saying that we are in favour of Bill C-40, because it gives hope to the people who are most vulnerable in our society, it ensures increased growth in some essential sectors of Quebec economic activity, and it lightens the tax burden on certain groups in our society. All of this promotes a more sustainable society that favours fairness and economic growth.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, first I would like to congratulate my colleague for his excellent speech on Bill C-40.

At the very beginning of his address, he mentioned the tax relief for speech language pathology services in order to help our young people and seniors, for example.

He drew the quite obvious connection between increasing poverty in certain areas and the use of various services, especially social services, speech language pathology services, and certain other ones. He also said that Bill C-40 would correct certain deficiencies in these regards because the poorest people often cannot pay for these services. That is what I understood him to say, and I would appreciate it if he could explain a bit more for us. What would he think of exempting even more services or professions?

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I would like to thank my colleague from Saint-Maurice—Champlain for his question and comments. This is a good example of the kind of social democracy we want to have in Quebec. We are a progressive political party. We on this side of the House do not think that essential services should be taxable. It is fine to tax luxury goods, but things as essential as speech language pathology services are currently subject to tax and this is contrary to the equal opportunity principles that the Government of Canada is supposed to stand for. This is why Bill C-40 is helping to shed light on the situation. I was surprised to learn a few years ago—and am still surprised—that diapers for babies are taxable.

Why must we tax essential goods and thereby impose an additional burden on the poorest people in society? Some industrial sectors—and I would point again to the oil, gas and hydrocarbon industry in Canada—are making fabulous profits and still get tax breaks. We pass bills here in the House to reduce the fees and taxes paid by corporations that rake in $250 million a year.

It is time to exempt essential services for our children and for everyone. If we can expand the range of exempted services, that is all to the good. We will have made progress towards equal opportunity.

[The Deputy Speaker, Bill Blaikie]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, Bill Blaikie]

The question is on the motion.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker, Bill Blaikie]

I declare the motion carried.

(Motion agreed to, bill read the third time and passed)