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

[Peter Van Loan, Conservative, York—Simcoe, ON]

moved that the bill be read the third time and passed.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am pleased to introduce Bill C-40 at third reading. This bill contains a number of amendments to Canada's sales tax system.

Although largely technical in nature, the bill reflects the goal of Canada's new government to improve fairness in our tax system and ensure it functions smoothly for individuals and businesses alike.

With that goal in mind, last November, along with the economic and fiscal update, we announced advantage Canada, an economic plan to give Canada and Canadians the key advantages needed to compete today and succeed for years to come.

Before getting to the specifics of Bill C-40, I think it prudent to remind the hon. members of the key elements of our plan, a plan put into action in budget 2007. The plan focuses on creating five key advantages, one of them being a tax advantage.

The government wants to create new opportunities and choices for people. Lowering taxes, creating a tax advantage for Canadians, will help do that. It will also help to keep our best and brightest here at home, while attracting the people our country will need to build a strong economy in the 21st century. It all starts with a lower tax burden.

Before coming to office, and practically every day since, we have said that Canadians simply pay too much tax compared to other countries we compete with for talent, skilled workers and foreign investment and so we did something about it.

In our first budget last May and the months that have followed, Canada's new government began to reduce taxes. We reduced the GST rate. We increased the amount Canadians can earn without paying federal income tax by permanently reducing the bottom rate. We introduced the Canada employment credit and brought in a host of targeted tax relief measures.

The tax fairness plan we announced on October 31 went even further for Canada's seniors. We increased the age credit amount by $1,000 and introduced pension income splitting for pensions to increase the rewards from retirement saving.

Budget 2006 and our tax fairness plan took significant steps to get this country back on track and to begin to create a tax advantage for Canada.

We need to go further, and we did that in budget 2007. To create a greater tax advantage for Canada and Canadians over the coming years, we reduced taxes even further. In budget 2007, Canadians come out ahead through real tax relief that benefits working families.

Bill C-40 would help create a Canadian tax advantage. It would improve fairness and efficiency in the sales tax system and ease compliance and administration for businesses and government.

The bill consists of three parts, the first of which pertains to the goods and services tax and the harmonized sales tax. The second part of the bill relates to the application of taxation of wine, spirits and tobacco. Part three concerns the application of the air travellers security charge.

First, the GST-HST measures. These measures are principally aimed at improving the operation and fairness of the GST-HST in specific sectors of the economy.

It is important to point out that in some cases adjustments have been made over the course of time to the legislation as originally proposed in response to representations from tax and business communities. We listened.

The principal GST-HST measures encompass important areas for Canadians. One such area is health care. Canadians know that our health system is one of the best in the world but we need to work to keep it so it continues to meet the needs of Canadians.

Bill C-40 contains a number of measures that would improve our health system. For example, the bill would cement in place the continued GST-HST exemption for speech-language pathology services. The bill also proposes to add the services of social workers to the list of health care services that are exempt from the GST-HST.

These amendments are consistent with the government's policy criteria for inclusion of a particular health care service on the list of those that are GST-HST exempt in all provinces.

The criteria is as follows. First, if a service is covered by the health care plan in a given province, it is exempt in that province. Second, if a service is covered by the health care plan of two or more provinces, it is exempt in all provinces. Finally, if a profession is regulated as a health profession by at least five provinces, the services of that profession are exempt in all provinces.

Canada's new government is also very aware of the challenges faced by individuals with disabilities. Budget 2006 fully implemented and went beyond the policy recommendations put forward by the technical advisory committee on tax measures for persons with disabilities.

In the spirit of that action, Bill C-40 broadens the specially equipped vehicle GST-HST rebate for individuals with disabilities. This measure will help those individuals to participate as fully as possible in Canadian society. Moreover, this measure reflects the government's continuing commitment to ensure that all Canadians are treated in a fair and equitable manner.

Also, on the health front, the bill proposes to make the sale and importation of a blood substitute, known as plasma expander, free from sales tax. It would also restore the tax free status of a group of drugs commonly used to treat a variety of conditions, such as seizure control, anxiety and alcohol withdrawal.

The measures in the bill illustrate the government's commitment to ensuring that Canadians continue to have access to timely and quality health care.

As I said at the outset, we have made it abundantly clear that Canada's new government is committed to reducing taxes for individual Canadians as well as for Canadian businesses.

High taxes not only discourage investment in Canada, they also impede businesses from prospering. However, there is more to it than that. Businesses do not need more government meddling. They need government to get out of the way and to free them to do what they do best: invest, expand and create jobs.

Budget 2007 proposes to reduce the federal paper burden on small businesses by 20% by November 2008. The budget also proposes to reduce the tax compliance burden on small business by decreasing the frequency of their tax remittance and filing requirements.

The measures in Bill C-40 reflect the intent of this action. These measures are technical in nature. I will not go into detail now but I will say that the measures contained in the bill would ease compliance for a wide range of businesses and other organizations by removing technical impediments and simplifying compliance with the GST-HST legislation. The bill also clarifies and confirms the government's policy intent.

The second part of Bill C-40 concerns excise measures; that is to say, measures related to tobacco and alcohol products. The measures in this part of the bill would amend the Excise Act, 2001 to implement minor refinements that would improve the operation of the act and more accurately reflect current industry and administrative practices.

The bill would 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 included in this bill, those related to the Excise Act, 2001 are as follows: First, with respect to tobacco, Bill C-40 would extend the requirement to identify the origin of tobacco products to all products, including those for sale at duty free shops or for export. This amendment is consistent with the Framework Convention on Tobacco Control, an international treaty on tobacco control.

The bill would also clarify which tobacco products may be supplied to the export market or the domestic duty free market. For example, cigarettes, tobacco sticks, fine cut tobacco or cigars may be supplied to those markets but not packaged raw leaf tobacco.

As the House may know, a spirits licence is required to produce alcoholic products using a still. There are some cases, however, where private laboratories, provincial liquor boards and vintners use a still to produce spirits for the purpose of analysing substances containing ethyl alcohol. Bill C-40 would authorize these entities to possess a still or similar equipment for testing purposes without holding a spirits licence.

To limit the possession of non-duty paid spirits, the bill would also require these parties to immediately destroy or dispose of those spirits once the analysis is complete.

Another proposed amendment to the act would defer payment of duty by certain small vintners selling wine on consignment in retail stores until the wine is sold.

The bill also contains a number of administration measures. One such measure has to do with the exchange of information between Canada and foreign governments. Specifically, the bill would permit 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.

One other measure relating to the exchange of information adds a discretionary power under the act for the chief statistician of Canada to provide statistical information concerning business activities to the provinces. This is similar to an existing provision in the Income Tax Act.

The third and final part of Bill C-40 relates to the air traveller security charge, or ATSC. One of the principal ATSC measures included in the motion relieves the charge in respect of air travel donated by an air carrier to a registered charity that arranges free flights for individuals as part of its charitable purposes. This means that certain charities that arrange free air transportation services for persons who otherwise cannot afford the cost of flights for medical care would not have to pay the air traveller security charge. This includes “flights of a lifetime”, such as those provided by the Children's Wish Foundation of Canada and other similar charitable organizations that organize dream trips for physically, mentally and socially challenged children.

I said at the outset that tax legislation must be applied consistently. This proposed ATSC relief for charitable flights reflects that objective by being consistent with relief from other federal levies provided to registered charities. These measures are also consistent with other ATSC relief measures, such as that provided in respect of air ambulance services.

Summing up, Canada's new government understands that good government and good tax policy go hand in hand. Well-focused tax policies, such as those reflected in the bill, are a sign of a government with vision, which is what the government is all about.

We are looking ahead and planning the steps we need to take to build a stronger economy and a more confident Canada. In doing so, together we can make Canada a world leader with a long term, focused economic plan not just for today but for tomorrow.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, it is an honour to speak once again in this great House of debate and innovative thought.

Our party is supporting Bill C-40. This bill is the natural evolution of a fiscal policy, the goods and services tax harmonized in certain parts of the country. It is a natural evolution as we gain experience with it. We find that it does not always cover every little contingency the way we would think is best.

I commend the government on coming forth with a number of amendments which harmonize and streamline, and deal with exigencies which could never have been envisaged from the very start. We must continue to always adopt this type of attitude to changes in the tax law because we can always learn from our experience as we move along, so that the tax code becomes a living organism, a living body of law.

There are some areas where I believe that the government could have gone farther in making changes to our goods and services tax. One is with respect to the exemption for housing. The original exemption was $250,000, but we have seen how prices have skyrocketed in some cities across the country such as Vancouver, Edmonton, Calgary and Toronto.

The idea was that we would help new homebuyers overcome the difficulties of purchasing a home by exempting them on GST up to a certain level, and that level has never been changed. We should be adjusting it, not according to the ordinary inflation rules, which are around 2% a year or slightly higher, but according to the inflation rates for actual housing in particular markets across the country. I am sure the government will want to consider this type of change in the days and months ahead.

The hon. parliamentary secretary talked about a number of other tax measures. I have no hesitation in moving from Bill C-40 to the general fiscal policy of this government.

Let me just mention a few particular issues. The first is the government's treatment of the GST in general. The government has reduced the GST from 7% to 6%, costing about $5 billion. That money could have been used to pay down the debt, to invest in new productivity measures in Canada, or to help those most in need in our country. What is worse, the government did so by increasing personal income tax by .5%.

There is not one economist in the country, let alone the world, who would say that the tax cuts given on the GST sales tax consumption level are preferable to overall tax cuts to the personal and corporate income tax rates, cuts which would make us more globally competitive.

We are in a global competition for capital. Capital knows no borders. It flows seamlessly around the world. We have to be able to be competitive unless we are prepared to introduce capital controls and barriers. No sane economist would advocate that as well. Therefore, in order to remain competitive, why did the government give up this great chance to lower personal income taxes as well as reducing our corporate income tax rates so that we could attract that capital?

Under the previousfinance minister and previous Prime Minister Jean Chrétien, the Liberal government took a very important step. Even when we were dealing with the whole issue of the deficit, we were looking at what we had to do to attract new capital investment and the best jobs to this country. One of those was to reduce the corporate income tax, and we did it.

We were headed on a course down to 30% combined with the provinces. That would have compared with 35% in New York State, 41% in Michigan and 41% in California.

That was a responsible way to attract jobs to this country. We have seen how under our leadership the unemployment rate in this country fell to a 35 year low. This is great because we all remember back in 1990-91 when unemployment hit 11.4%. The toughest thing as an MP was to meet with constituents who had lost their job, who had used up all of their savings, had used up all their RRSPs, had lost their home, their car, their self-respect, and often their families.

We must never be content with a system which allows that level of high unemployment and this is why we must on an annual basis check our global competitiveness. The cut to the GST did not do that. It was stupid. It was obviously done for short term political gain, but Canadians are not stupid. They know when they are being had. The Canadian electorate is very smart and they recognize that the best politics is always the best policy.

Let me go on to a second area where I am very dismayed with the government in terms of its fiscal policy, income trusts. It is not just the broken promise where the Prime Minister said he would never touch income trusts, it is the fact that the measures taken were totally without tax foundation. They were totally without study. Did the government know it was going to cause a $30 billion meltdown in capital of investors who had put their money in savings, a lot of them seniors, a lot of them retired, as a result of the measures that it took?

If the Conservatives knew that, then they have to be condemned. If they did not do the studies as to what the impact on the capital markets was going to be, then they must be condemned. Why can they not admit a mistake? We had numerous witnesses before the finance committee who showed that the tax leakage figures suggested by the government were totally exaggerated, totally out of sight. They did not have to go from a zero tax to a 31.5% tax on income trusts in order to kill them.

We listened to those witnesses. Some of them said the government was even making more money by having in place income trusts where the distributions were taxed usually at high personal rates rather than the same amount of money coming out of a corporation being taxed at about 6.2%. As members know, personal rates go up as high as about 45% in Canada and that is why the tax leakage was not there. It might have been there with respect to some non-residents, but if we take a 6.2% tax equivalent at the trust corporation and compare that with the withholding tax on dividends going to foreigners, often we would find there was no loss.

Then take the money going into the tax exempt such as the pension funds here in Canada. Granted that dividend going into the pension fund was not taxed at that time, or the trust distribution, but those pension funds were very quickly distributed to individuals in this country because retirement depended on them and were again taxed at the full corporate rate.

Our Liberal government looked at this after having talked to the experts and we were convinced there was a better way. We said leave the cap on no new income trusts being created for the moment. Put a 10% distribution tax on funds going to non-residents and it will more than make up for any tax leakage that there might have been, if there was any in fact.

Meanwhile, the issue should be studied. Do we really want to blow away investment instruments such as income trusts, which were providing a decent rate of return to our retired citizens? If they are investing in bank instruments or government bonds, what rate do we think they are getting, 4%? That is only 2% above inflation. How can retired people live on that and how can they live on it when the government caused a meltdown of some $30 billion to the value of their savings?

Do the right thing. We are prepared to study it further. Why is the government afraid to study it further? My God, is it a sin to be wrong? We all make mistakes. The sin is in failing to admit that one is wrong and doing something about it. Everybody knows the government is wrong on this thing. Everybody knows that the emperor is wearing no clothes. Why does it not just admit what everybody knows and be prepared to look at this thing and give it a second thought?

Another area where I have great concern with what the government is doing in terms of fiscal policy is this issue of interest deductibility. It has said that if a Canadian investor or company borrows money to buy a company abroad in order to expand its global operations, in order to be globally competitive, it cannot deduct the interest on the money it borrows to acquire the shares in that foreign entity.

This last budget was not the first time that we in Canada have seen that particular measure. It was a measure brought in following the Carter commission many years ago, brought in by a Liberal government, where we said if the dividends coming back into Canada are not taxable, why should there be a deduction for the interest to acquire those tax free dividends? We established that measure and found out how stupid it was. We very quickly reversed that measure.

Why is it stupid to do this so-called type of non-interest deductibility? It is stupid because our foreign competitors can deduct the interest they pay on money borrowed to buy up our companies and foreign entitles, to grow, to become powerful, to become Canadian and global champions in terms of the competition that we face. This measure was not thought out in terms of the practical realities of this world.

Again, why would the government want to handicap Canadian companies? Why would it want to handicap our competitiveness? Why would it want to divert jobs out of Canada? I can say from experience what will happen. This is what a government in Canada tried before and the result was that Canadian multinational corporations were not going to continue to exist. They would simply move their global operations and headquarters out of Canada.

This is what we need in order to have the high level, high paying, good jobs here in this country. We want Canadian head offices here. We want the global champions to be based in Canada because that is where the best jobs are.

If anyone needs an example of what has happened, let us take Hong Kong. In the early nineties it was going downhill because of the fear of what would happen when it would revert back to China. The cover of Fortune magazine said, “Hong Kong is dead”. At that time Hong Kong had an 80% manufacturing economy. Anything that anyone picked up had “Made in Hong Kong” on it.

Today Hong Kong is no longer manufacturing. It is an economy that is about 90% service, with all of its manufacturing operations in foreign affiliates in the Pearl River Delta in China. Hong Kong, by being the headquarters for the multinational corporations, is producing the great jobs and the great wealth. It is booming.

We cannot be afraid to change. We have to be open to change in this global economy or we are going to lose the best jobs here.

This is another blatant mistake in fiscal policy by the government. Again I say, my God, we are all human and we all make mistakes, but the government must admit it and do something about it. We will work with the government to do something about it. We will make it possible to for us to have a strong, competitive economy here in Canada, producing the best jobs, with Canadian champions that are reaching out around the world.

Are we not proud of our Canadian banks and insurance companies that have offices in almost every other country in the world? They are showing the Canadian flag and the Canadian name. They are helping Canadians invest there, acquire things there and do business there.

We want more of these Canadian champions. The measures that the government has brought in are simply going to drive those Canadian champions out of this country.

I saw that back in the days of Carter, when we wanted to tax all dividends from foreign affiliates. For foreign entities, a buck earned in a low tax jurisdiction such as Singapore would be taxed at the same rate as a buck earned in an affiliate in a high tax jurisdiction such as France, the United States or even Canada. That may be great economics if one is an economist, but if one is a business person, one has to compete with other entities where they say that the rate of tax one pays globally is the rate set by the country in which one earns the income.

It is the host country where the activities are carried on that sets the tax rate. If a big corporation from the United States could do business in Hong Kong, for example, and pay a 12% tax rate, and a Canadian company had to pay a 50% tax rate, who was going to win? Who was going to get the jobs? It was going to be the American competitor of the Canadian company.

Therefore, that tax policy brought in by a government many years ago had to be reversed. It meant that we stemmed the flow of Canadian-based multinationals leaving this country. I beg of the government, which knows it is wrong, to just admit it. We will work with the government to fix this.

In closing, let me say that the tax fairness bill brought in by the government was not a tax fairness bill. It was a wealth-stealing bill. I am very pleased that our finance critic, the member for Markham—Unionville, has taken such a vigorous stand in taking the tax fairness bill to task right across this country. We will continue to do so until we get justice for all those people who lost their savings because of the idiocy of the government.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, in his speech, my hon. Liberal colleague spoke a great deal about taxation and international rules. I would like to know his opinion on something that should be very familiar to the Liberals, that is, tax havens, and especially those in Barbados.

When his party was in power, the government established a series of measures intended to restrict the use of tax havens. However, they created a wide-open loophole for one country in particular, Barbados. Naturally, this offended many people in my riding, many people in Quebec and indeed many Canadians, I am sure.

While these people work hard to make a living and pay their taxes—and most citizens are willing to do so, because they know they must contribute to society—they are also disenchanted, and rightly so. The Liberal government of the day and its finance minister voted in favour of tax shelters for businesses, so that businesses could transfer home, tax free, the profits generated in tax havens.

Can my hon. colleague explain why his party never acted to put an end to this tax exemption, this gaping tax loophole?

Would the Liberals be willing today—now that they have had some time to reflect on this from the opposition standpoint—to put an end, once and for all, to all existing tax havens, tax agreements and tax treaties, especially Barbados, thereby truly respecting the people we are supposed to be representing?

When the Liberals signed this tax treaty with Barbados and retroactively changed the legislation, they were not doing their job as representatives of the people. It is about time for them to make amends, admit that they failed in their duties for 13 years and henceforth support the complete elimination of all tax havens.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I have a question for the hon. member. He seems to know a lot about the tax haven situation.

Let us take the example of a Canadian corporation that has direct operations in Europe, and the tax for the corporation is roughly 25%. If this income came directly to Canada, would it be taxed here, in Canada, or at the rate of 25%? If the European corporation had a corporation in Barbados and then the income came to Canada—from Europe, through Barbados on to Canada—would the tax rate be 25%, or the rate in effect in Canada?

If the hon. member can answer that question I will continue to discuss this with him.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I listened with great interest to my learned colleague's dissertation. One thing he mentioned was the GST cut. He described how it is a foolish reduction in taxes. I have long said that it is both dumb and mean. It does nothing to improve the productivity of the nation, whereas we could have invested that money in post-secondary education and in making sure that children from lower income families, disabled Canadians or aboriginal Canadians had a chance at education.

Instead, the government took $5.5 billion, or whatever the number was, and did it so that supposedly it benefits all Canadians. One of the fallacies that we often heard from the government was that it was a tax cut that would help all Canadians, including those with the lowest incomes who do not pay income tax.

However, there are all kinds of ways to help low income Canadians. The child tax benefit is an example. Even providing child care spaces that they otherwise would not get is a way to help. There is a whole host of ways to invest that money so that we could better help Canadians who actually need the help.

Saving a penny and a half or two cents on a double-double just does not make a big difference. I ask my colleague about the unfairness of that 1% cut, which took approximately $5.5 billion out of the economy that could have been used to better help Canadians who could use the help. Would he agree with me on that?

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I think the hon. member has put it in a way that every Canadian can understand. I could not agree with him more. What is worse is that the government has pledged to another percentage point reduction in the GST. How the hell is it going to pay for that? It is going to be coming out of the pockets of those who need it most.

Could I just add to the eloquent words of my colleague? Looking around the world, we see that we have one of the lowest consumption tax rates of any nation in this world, and the government is bent on lowering it further. We have seen how other countries that are competing with us in the global marketplace have enhanced and raised their sales taxes, their consumption taxes, with some of them approaching 20%. This means they can lower their income taxes and be more globally competitive.

How do we protect the weak if we raise our sales taxes or consumption taxes? We do it through a tax credit. We already have that in place. We have a means, if sales taxes are raised, of compensating those least able to cope with increases at the consumption level.

In our global economy, this is the type of fiscal policy that is responsible. It is the one that allows us to deliver the services that are so critical for the least well off in our country.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I have been in the House for just one year and this is the first time during a period of questions and comments that I have had to answer a question from a colleague who was supposed to answer my question. This is a funny situation.

Nevertheless, what is not so funny is that I did not get an answer to my question on tax havens. I do not see what the systems for taxing interest paid abroad have to do with the fact that, when they were in power, the Liberal Party and their Minister of Finance signed a tax treaty with Barbados. This was a tailor- made agreement to allow companies that were doing business in Barbados and generating profits there, to transfer their profits, exempt from taxation, to Canada.

This situation was denounced five times by the Office of the Auditor General. This was this case on February 22, 1994, and again in 1996. The Auditor General returned to the charge again in 1998, a fourth time in 2001, and finally a fifth time in 2002. Frankly, and I am not the only one to say so, I think we can trust the Auditor General.

Now that they are in the opposition, are the Liberals prepared to come their senses and support the end of tax treaties with Barbados?

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I will answer the question because the hon. member obviously does not know the answer.

In the event that a Canadian company has operations or does business in Europe and that the tax rate in Europe is 25%, then the applicable tax rate in Canada for any income returned directly to Canada is nil. Zero. The income tax paid is still 25%. If the same income goes to a subsidiary in Barbados, the tax rate in Canada is zero. The rate paid remains 25%. It is exactly the same. What is the problem with that?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, when I heard my colleague start his remarks by saying, “I will answer the question”, I was pleased, thinking that he was actually going to answer my question. Instead, he answered his own. That is pretty strange in terms of transparency.

I would now like to speak briefly about the bill before us, namely Bill C-40. This is a very technical bill. I have already had the opportunity to go into the details at a previous reading of this bill. I will sum up our reasons for supporting it.

We believe that Bill C-40 addresses various shortcomings associated with the GST and the excise tax. Bill C-40 removes taxes from certain medical services, which will facilitate access to these services. Bill C-40 reduces the burden of taxation on charities, something we are very happy about. Bill C-40 provides for measures that will help small wine producers, which is worthwhile. It also contains legislative provisions surrounding the sale and production of tobacco, to counter smuggling. Finally, Bill C-40 adjusts the air travellers security charge to reflect the Quebec situation. For all these reasons, we will be supporting this bill.

Naturally, this bill deals with only one part of taxation in Canada. Recently, in the budget, there were a certain number of measures that changed the tax rules and I imagine we will soon see them before us. Some of them are already being examined through a ways and means motion. They will come before us again. They are not contained in Bill C-40, of course. However, the Bloc Québécois has been fighting for some of these measures for a long time. For example, there is the matter of refunding the GST to school boards. For quite some time, the Bloc Québécois has found that it was curious, to say the least, for a level of government to impose a consumption tax on another level of administration—school boards—that provide such an essential service in our society as education.

Education represents the future of our entire society. We found it hard to understand why school boards should pay the GST. We have always believed that this tax should be reimbursed and that the federal government should not tax school board funds, which already come from taxes.

School board revenues consist of the monies received directly from the provinces for education as well as school taxes. Paying a tax with a tax was quite a unique situation. For some time, the Bloc Québécois fought to change this. Naturally, we were pleased to see that the Minister of Finance had made this correction in his last budget. In the past, there was a series of events where the Liberal government refused to follow court orders and amended the legislation. We are now in a situation where this is being sorted out. We are pleased and it motivates us, in the Bloc Québécois, to continue our work and to submit constructive proposals to the government, and often to apply the necessary political pressure because, unfortunately, things do not just happen if we do not exert constant pressure on the government. When we see such results, it shows the relevance and usefulness of our work even though sometimes, over a period of a few months, there are no immediate results. However, we see that, over time, this fundamental work produces results.

There is another area where we would have liked the government to take action. It did not, though, and we will continue to exert pressure on it to do so. I am talking about the GST on books.

In Quebec, books are exempt from provincial tax. Culture is one of the foundations of our society. Books should be considered our main source of knowledge, culture and imagination. Our societies are based largely on books, at least from a cultural standpoint. The production and sale of books should be encouraged. Quebec, which does not tax retail book sales, is a model in this regard. The Bloc Québécois will continue to call on the federal government to exempt books from the GST.

There is a connection with my previous remarks about education. Most books are consumed—this may not be the most appropriate word to use in referring to culture—or used for educational purposes. They include textbooks and other educational materials, and many students use these books for research in literature and other fields. We will continue to press the government, in the hope of convincing it that this is a good thing and that it should act quickly.

Abolishing the GST visitor rebate program is another blunder by the government. Last year, the government suddenly announced that it was doing away with the GST rebate for visitors to Canada. Previously, on leaving the country, visitors could obtain a refund of a portion of the tax they had paid. The Bloc Québécois immediately said that this made no sense, because it would hurt our tourism industry.

It makes no sense to tax tourism, which is an export industry. Although tourist activities take place in Canada, we are exporting products: Quebec, Canada, the Rockies, our culture, our knowledge, our cuisine, Gaspé and the Magdalen Islands. We are exporting all that to the rest of the world to show them the beauty our country has to offer. No country taxes consumption of its exports, including tourism.

It was absolutely necessary to backtrack because this measure was wrong and unjustified. The figures presented by the government meant nothing. At the time, we were told that only 3% of travellers asked for GST refunds when leaving Canada. This figure is biased. It does not take into account the fact that most people travel in groups, or family units. This can be two, three or four people. Let us take the example of a family of four returning to the United States. We can assume that mom, dad, junior and his sister will not make individual claims. One person from the family unit will make the claim. So clearly not everyone makes a claim, and that partly explains the figure of 3% of travellers.

Moreover, this figure was calculated based on all trips, including those shorter than 24 hours. It makes sense that many people did not make a claim for a one-day trip, simply because there was nothing to claim. The fact that a person who comes to a business meeting, eats and returns to the United States the same day does not use this service does not prove that the program is worthless. It only shows that this does not apply to that person.

Once again, the calculations were biased because they did not take into account the fact that the target clientele, the real tourists, are not business people who spend one day here or Americans who cross the border to have dinner with their in-laws.

That is not tourism. That was not the goal envisioned when this rebate program was created. The program targeted real travellers. For a clearer indication of this program's effectiveness, they should have compared the amount of money claimed to the amount of money that all travellers could have claimed. Before becoming a member of Parliament, I spent some time working on this kind of thing—measuring productivity and effectiveness—and I think this is a better way to evaluate the program's effectiveness. I was hardly surprised when I was told in the Standing Committee on Finance that this comparison was never made and that these numbers were unknown. This decision was made arbitrarily, with no thought of the consequences.

The government did not evaluate the impact of this measure on marketing, either. Offering tax reductions or rebates can encourage travellers to make Canada their tourism destination of choice even if they never claim rebates at the end of their trip. Companies that provide mail-in coupons and rebates for their products know this. Electronics companies do this all the time. Consumers are told that if they buy fantastic printer X, they will get $20 or $50 back in the mail.

Many of the people who buy such products do so because they are entitled to the mail-in rebate, but they never claim it because they forget, they lose their paperwork, or they lose their receipt. This is a good deal for retailers, because the promotion means they get another sale. If consumers do not claim what they are entitled to, the retailers win in all respects. This kind of psychology also applies to tourism in Canada.

We, the Bloc Québécois, have worked very hard and I know that other opposition parties have also worked to urge the government to reconsider its decision. We now have a partial solution. For organized groups, the rebates will be maintained. However, the program will not be reinstated for individual travellers or for families who are travelling alone. Frankly, we find this unfortunate and we feel it is a mistake, especially since the tourism industry and the industry that deals with those rebate applications were willing to do so at their own expense, meaning at no cost to the government. We will continue to work on this.

Continuing in the same vein, the GST and fiscal policy, I would like to talk about the fiscal imbalance issue. When the Séguin commission completed its report on the fiscal imbalance, one of its recommendations was, in fact, to transfer the GST, currently collected by the federal government, to the governments of Quebec and the other provinces. It should come as no surprise that the fiscal imbalance must be corrected by a fiscal measure, something which is often forgotten here in the House. Before oral question period today, during members' statements, a Conservative colleague tried to cheerfully and naively insist that the fiscal imbalance has been corrected, while no party in the National Assembly would agree that the fiscal imbalance issue is completely resolved.

[An hon. member]

Not even their leader.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

There you have it. We must face the fact that even the Conservatives who claim to understand the fiscal imbalance, in reality, obviously do not.

When the Séguin commission introduced this concept of fiscal imbalance, it did not randomly pull these two words out of a hat. It did not open a dictionary and with eyes shut point at two words at random. It chose the words to mean something. It said there was an imbalance.

Obviously something is not right between all the money that is in Ottawa and its constitutional responsibilities, and all the money in Quebec City and the constitutional responsibilities there. There is an imbalance and it is a fiscal imbalance. It is a fiscal matter. Ottawa, the federal government, charges too much tax with respect to its responsibilities. The tax base is not unlimited—there is a limit to what they can take out of taxpayers' pockets—and the Government of Quebec is not able to raise enough tax money to meet all its obligations, especially since the cost of its obligations increases much faster than the cost of the federal government's obligations. We need only look at health and education, which involve the bulk of the expenses. These two sectors represent the biggest portion of the budget of the governments of Quebec and the provinces. Everyone knows that these budgetary items are increasing much faster than the cost of living, faster than inflation and so require revenue to increase much faster. That is why Quebec is calling for a transfer of tax fields, hence the name, fiscal imbalance.

Some progress was made in the recent budget on the monetary aspect. Monetary transfers exist; they are there. However, these transfers are not permanent. There is nothing stopping a future government from backtracking. I am not the only one saying so. The Conservatives say so in their advertisements. Who knows how much money they spent to remind Quebeckers that there was absolutely no guarantee that the money they gave could be available in the future? The Conservatives paid for advertisements to tell Quebeckers that if the Liberals returned to power, they could take away this money. If we read between the lines, even the Conservatives, in the next budget or in a possible majority government, could take away this money.

I posed that question to the Department of Finance officials just yesterday in the standing Committee on Finance. They confirmed what I already knew, what all experts already know, that there is nothing to stop this money from not being included in the next or future budgets. In short, the current solution, the monetary solution, keeps Quebec financially dependent. We continue to remain subject to the wishes and whims of the federal government. That is what we find unacceptable. That is what Quebeckers wish to leave behind. They want to have real revenues that their state, their government will control completely and that it can invest as it chooses, based on its priorities.

The second problem with a monetary transfer is that its value decreases over time because it is eroded by inflation. However, the value of tax revenues increases over time because, with the collection of GST or transfer of tax points, the value of these tax revenues increases as economic activity increases.

Remember what I said earlier. Because of its constitutional responsibilities, Quebec needs an increasing amount of money. A simple monetary transfer is only a very short-term solution to part of the problem; in the medium to long term, we find ourselves in the same pattern, the same situation. That is in the best-case scenario, if future governments do not backpedal and go at it again as the Liberals did in 1995 with the draconian and deep cuts to transfers for social programs and education.

Clearly, the Bloc Québécois must continue its efforts to explain to the Liberals, who have yet to acknowledge the fiscal imbalance, and to the Conservatives, who acknowledge it but still do not understand it, what we are talking about. We must continue our efforts to find a true solution to the fiscal imbalance through a tax transfer.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, first of all I would like to congratulate my colleague from Jeanne-Le Ber for his excellent speech. He covered a number of very interesting points, and I would like to comment on two of them in particular.

He talked about tourism. It stands to reason that I am interested in the subject, since I represent the Gaspé and the Îles-de-la-Madeleine region, which is a top tourist destination. There need to be incentives, points, something to improve the situation. The current government has not been listening. It is doing the same thing the previous Liberal government did with respect to aid for different issues. In particular, there is the issue of transportation in the Îles-de-la-Madeleine. During a certain part of the year, the islands find themselves in a baffling situation. For 10 months, there is a maritime transportation service. However, for the other two months of the year, there are some problems and they are faced with inadequate service.

Nevertheless, I thought my colleague's presentation was very interesting in terms of tourism. There is a way of assisting tourist regions. And although the bill before us today is in some ways quite interesting, there are some things missing. Some parts need to be improved.

So it is important to remember the rigorous and responsible work that the members of the Bloc Québécois are doing as members of the opposition. These opposition members are people who, in a way, represent democracy. And the member for Jeanne-Le Ber covered a key point: rigour and responsibility generate positive and constructive elements to improve bills, such as the one we are debating today.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, this is indeed the work that we do. It is always a great satisfaction when, in committee, through our representations and the pressure that we put on the government, we succeed in getting results that serve the interests of Quebeckers and of our constituents. That is very satisfying.

It is all the more interesting for the Bloc Québécois, because its loyalty lies strictly with Quebeckers. Our hands are not bound by a Canada-wide caucus, or by a government which all too often, unfortunately, uses its Quebec members to target Quebeckers, to carry out its deeds and to get its message across. This is deplorable.

Our daily efforts are yielding results. Personally, I had evidence of that last week, in my riding. I have been working since the beginning of my mandate to have the land of the Canada Post's mail sorting facility located on Ottawa street, in Montreal's southwest end, transferred to the Canada Lands Company which, in turn, is prepared to cooperate with stakeholders to develop projects on this land. This is beautiful land along the Lachine canal. It has a high value, but it must be developed with the citizens' best interests in mind. I have been fighting for this. We sent letters to the minister, who told us that this matter was the responsibility of Canada Post, that it was not his business, and that he did not want to get involved.

I put questions to the minister in this House, and I got the same answer. We continued the fight in the media. I also introduced a bill in the House to force Canada Post to sell the land to the Canada Lands Company. At last, my representations, along with those of all the members of our community, are producing results.

Last Friday, the Minister of Transport, Infrastructure and Communities finally decided to listen to reason and announced that these lands would be transferred to the Canada Lands Company, even though he had said in this House that he had no business getting involved in this. That is what can be achieved by a member of the Bloc Québécois who works hard to put pressure on the government without having to bow to the will of a national caucus or of a government caucus.

Of course the fight is not over yet because these lands always belonged to the government and they are heavily contaminated. They will have to be decontaminated, and stakeholders are asking that it be done by the government—the polluter for many years. If the Canada Lands Company was forced to decontaminate these lands itself and include this in its development costs, the project that the community is proposing would be neither economically viable nor feasible. They want to use this site to build affordable housing, family housing, private housing, businesses, light industries, tourist attractions, parks and green spaces. It is a fantastic project.

The next step is to ask the government to pay for the decontamination of this site. It polluted the site, therefore it is its responsibility to clean it up. However, following last Friday's announcement, I am very happy about what we gained through my work and that of the community that supports me. It motivates us to go further, to continue our work and to put pressure on the government for the decontamination of these lands.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I would like to point out another small aspect and ask the hon. member if he agrees with me. Regarding the fiscal imbalance, there are some recognized, known factors concerning the revenues of Quebec and the provinces, but there is another factor concerning a specific imbalance, which is ever increasing. Let me illustrate it this way.

The fisheries sector is going through a crisis that remains unresolved. I am referring specifically to the crisis in the shrimp industry. The federal government—the Department of Fisheries and Oceans—could manage this crisis, but it refuses to act. Its recent decision in this file involves only consultations.

However, there are things that could be done. For instance, the cost of licences could be reduced considerably. Currently, they cost between $24,000 and $26,000 per business and per boat. Given the very particular situation facing the shrimp industry, there are things that could be done. The government has constitutional responsibilities and it refuses to act. Instead, another level of government—the Quebec government—has been forced to take action, for a second consecutive year, to help the shrimp industry and sort out the problem. The Government of Quebec just announced $8.5 million in assistance.

This demonstrates once again that the fiscal imbalance does, in fact, have to do with revenues. I could give other examples from what is happening at the moment.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, the situation raised by my colleague does speak for itself. It demonstrates two things.

First, it demonstrates that the federal government is spending a great deal of money in areas of responsibility that are not federal. It interferes in areas under the purview of the governments of Quebec and the provinces. But when it comes to taking care of its own responsibilities, it is often nowhere to be found, as we have seen in fisheries and international issues. When asked to take action to protect the manufacturing industry, it is nowhere to be found. On aboriginal issues, it is nowhere to be found. It is somewhat odd to have a government meddle in the business of Quebec and the provinces, but not look after its own.

Second, it demonstrates how impotent this government and the members of its caucus are, particularly those from Quebec. This is a government that does not take action; it does nothing and is only spurred into action when it is up against the wall, after every pressure possible has been brought to bear. Any results delivered by this government—as we have seen in the last budget with the cash transfers to Quebec and the provinces—are due to the fact that a minority government has to cooperate.

This goes to show the important role played by the Bloc Québécois. If it were not for the Bloc pressuring the government, nothing would get done.

[The Acting Speaker, Andrew Scheer]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saint-Bruno—Saint-Hubert, St-Hubert Airport; the hon. member for Don Valley East, The Environment; the hon. member for Thunder Bay—Rainy River, Foreign Affairs.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I first want to thank my hon. colleague from Willowdale, who took the floor about an hour ago, because I was delayed. He spoke very well, and I thank him for his remarks. I was with visiting students from a school located in my riding.

It is a pleasure for me to rise a little later than originally planned to speak to Bill C-40. This is largely a housecleaning bill on which I do not think there will be any significant disagreement among members of the House.

The bill deals with measures relating to the GST in the first part. The second part has amendments to the Excise Tax Act. Finally, the bill has measures affecting the air travellers security charge.

I was thinking I would use my time, since there is not a great deal of controversy, to talk a bit about the GST, in particular the differences in fundamental economic policies between our party and the government. One of those differences involves the GST.

However, before I get into that, I will deal with one element of the bill, which is worth raising. It has to do with the GST rebate applying to motor vehicles that have been used subsequent to being specially equipped for use by individuals with disabilities. There is a GST rebate for large vehicles for individuals with disabilities.

My party certainly supports this measure. However, it reminds me of something else that was in the recent budget, and this is an item which consequences the government has maybe not thought about. I am talking about the green levy on gas-guzzling vehicles.

In general, this may not be a bad policy, but I wonder if the government has thought about the unintended consequences of this new tax, in particular the fact that many disabled families need to buy vehicles that are appropriate for their use and have no choice but to buy larger vehicles, which might be the gas-guzzling vehicles attracting this additional charge.

On the one hand, the government is giving a GST rebate. On the other hand, it is taking more than all of it back by imposing this gas-guzzling tax on vehicles that need to be large for the use of people with disabilities.

While the Jeep Patriot may be a fine vehicle, it is not big enough to move around the sort of equipment that these families need to help transport their disabled children. As a result, these people now have to pay a few thousand dollars more out of their own pockets to cover the increased costs of these larger vehicles. I do not see how it is fair that these families should be forced to pay a large tax levy on their vehicle simply because, in their circumstances, a larger vehicle is an essential need.

Could the government not have included something in the budget to acknowledge this set of circumstances?

Obviously the finance minister put some thought into the vehicle emission tax. He studied it enough to give the car manufacturing plant next to his own riding a break on the E85 ethanol vehicles it produces. He was willing to do this even though there is not a single gas station available to the Canadian public where they can buy the 15% ethanol content gasoline.

I hope, as the budget moves through the House, the point about large vehicles for people with disabilities will be given serious attention.

Let me now turn to perhaps the broader issue I want to address, which relates to the GST. It also reflects the fundamental difference in overall economic approach between the two sides of the House.

On our side of the House, we start with the premise that the world does not owe Canada a living, that Canada has to be competitive in this modern world. We have to compete not only against the emerging giants like China and India, but established giants like Europe, the United States and Japan. In this context of competitiveness and fairness, the last thing any country like Canada needs to do is raise income tax in order to pay for a reduction in GST.

I do not think there is an economist on the planet who would advocate such a policy. On the one hand, we have an aging population that needs to save for their retirement and the government is cutting the GST which encourages people to buy more and save less. At the same time, the government is raising income tax, partly to pay for the GST cut, and by raising the income tax, it is discouraging saving, investment and productivity.

While other countries with which we compete, such as Australia, have been cutting their income tax and company tax in broad based fashion, we, alone in the world, are cutting the GST and raising income tax. That is the opposite of what our party would do in government. This is an extraordinarily foolish policy, which I do not think commands the support of a single economist.

The other thing one has to understand is that to compete in the modern world, we will not compete with India and with China on the basis of our low wages. We would not want to do that. We really have only our people with whom to compete and we have to provide those people with ideas, education and research funding.

Fundamental to successful, internationally competitive economic policy is support for research, education and commercialization. This is the second area in which we part company. The government has actually slashed funding to research and has not given a penny to students in the most recent budget. Our plan would be to significantly increase research funding, including support for taking ideas from the lab to the market, commercialization, as well as putting substantial sums into the pockets of students.

The third difference, and the final difference that I will mention today, is that we are internationalist in our outlook. We believe Canada has to take on the world. We have to expand our investment and trade opportunities around the world, whereas the government is incredibly domestically inward looking. What is the evidence of that? If we take the world's biggest emerging economy, China, the government insults China. If we take the second biggest, and in some ways equally important, India, the government ignores India. A few weeks ago I could have said it had not sent a single minister there in more than a year in office. I think a week or two ago, the first minister went there. However, the government has insulted China and has ignored India. It is also closing consular positions in Europe, in Milan, in Japan and around the world.

This is not a sign of a government that wants to expand international trade, expand investment, take on the world. This is the policy of an inward looking government that seeks only to get votes to win the next election.

Our economic policies are fundamentally different. We see Canada as taking on the world. We would have lower income tax, not lower the GST. We would fund research, commercialization and students, not slash funding for these things. We would seriously take on trade and investment opportunities with the emerging and established world, contrary to the opposite direction in which the government is heading.

Let me now move on to a second theme, which is another extraordinarily foolish thing that the government has done, and it relates to the subject of income trusts.

We all know the government broke a solemn, serious election promise, an unconditional election promise, made to all Canadians. The Conservative government promised it would not increase the tax on income trusts. What did Canadians do? They put more and more money into income trusts, secure in the knowledge that their Prime Minister had promised to them that he would not tax them.

Canadians knew there were market risks in income trusts, but they thought the political risk had been removed because their newly elected Prime Minister had promised several times, and unequivocally, never to tax those income trusts. Therefore, the market grew because Canadians took the Prime Minister at his word.

Then what happened? On Halloween, the finance minister cut those Canadians off at the knees, broke that promise and imposed a draconian 31.5% tax on income trusts. What happened? The market collapsed the next day.

In a single day, Canadians who had taken the Prime Minister at his word lost $25 billion of hard-earned savings. It went up in smoke. As if that were not bad enough, the manner in which the government executed this broken promise was extraordinarily further damaging to the Canadian economy, because the draconian 31.5% tax essentially destroys the income trust sector.

Income trusts are very valuable savings vehicles, particularly for seniors who need the proceeds from their savings to pay the bills. Seniors had been heavily invested in income trusts and now that vehicle has been taken away from them by the government's policy to destroy the income trust sector.

Not only that, Alberta in particular--but also elsewhere--had a thriving energy trust sector that, in the words of the Governor of the Bank of Canada, was contributing to productivity, to the repatriation of foreign capital and to financing other branches of the energy sector. That was before Halloween.

After Halloween, the sector has been decimated. It is sitting there at bargain basement prices. Instead of repatriating foreign capital, it is being gobbled up by foreign capital.

This policy has destroyed $25 billion of Canadians' hard-earned savings. It has deprived all Canadians, especially seniors, of the valuable savings vehicle in the form of income trusts. It is decimating an industry that was thriving before this highly inappropriate action by the government.

All of this is neither fair nor contributing to government revenue. This is why it is so particularly foolish. It is called the tax fairness plan, but it should be called the tax unfairness plan. It is supposed to tax corporations more so that individuals pay less tax. It does the opposite. Let me explain those two points.

On fairness, what does the government's so-called tax fairness plan do? It deprives ordinary Canadians of access to income trusts. They can no longer get the benefits of these income streams if they are ordinary Canadian investors, but what if it is a deep-pocketed Canadian pension plan or a deep-pocketed private equity foreign venture? Then it can still derive the benefits of an income trust because it can buy the underlying assets directly and receive that flow of money.

The income trust vehicle is still open to the deep-pocketed pension plans and the foreign private equity companies, but the government has disallowed that vehicle to ordinary Canadians. That is not tax fairness. That is tax unfairness.

To further compound that, instead of getting more tax revenue out of this policy, the government is getting less tax revenue, because the previous owners of the income trusts pay a lot of tax. It is personal tax, but it is still tax. What about the new owners? The pension plans pay no tax, except by the pensioners when the money is ultimately distributed, and the private equity companies pay little or no tax because they have ways of leveraging themselves so that they will end up paying no tax.

We have the irony here of the tax fairness plan being the tax unfairness plan, depriving ordinary Canadians of investing in income trusts and welcoming with open arms the investments in income trusts by the fat cats. In so doing, the government is in fact depriving itself of revenue because those fat cats, the Canadian pension plans and the private equity companies, pay little or no tax compared to the previous income trust holders.

It is a disastrous policy. It is an ill thought out policy. It is a policy to drop a nuclear bomb on a problem when what was needed was a more surgical approach. Indeed, the Liberal Party's approach is just that: the more surgical, sensible approach. We would immediately repeal this illogical, irrational, draconian 31.5% tax and replace it with a 10% tax which would be refundable to Canadian residents.

That would be enough to deal with the tax leakage. At the same time, according to experts, two-thirds of the value lost, the $25 billion, would be returned to savers who had lost their money, the income trust savings vehicle would still be available, and the energy trust sector would be able to return to its thriving former self. This policy cannot entirely put the toothpaste back in the tube, but it would eliminate the worst features of the government's illogical and unfortunate income trust policy.

I will deal with one last issue, because it is the third foolishness of the government. The first is the whole economic thrust, particularly the GST cut and the income tax hike. The second is the income trust fiasco.

The third is the stupendously foolish proposal on which, thankfully, the minister is now flip-flopping, and which involves interest deductibility. He said this measure would give $40 million a year in revenue. The experts say between $1 billion and $2 billion per year. That is only out by a factor of some 3,000%. That does not show great competence to begin with.

However, the real problem here is that we are forcing our own homegrown Canadian companies to compete with foreign companies with one hand tied behind their backs. If a company from Europe, the United States or Japan buys a foreign asset, it can tax deduct the interest that it has to pay on debt. Canadian companies, under the government's proposal, will not.

Let us take an example. It has been in the news. I do not know if it will happen, but it has been in the news. It is the idea that Magna might buy Chrysler. Let us say that Magna is in competition with a U.S. or European company to buy Chrysler. Purely as a consequence of the government's interest deductibility measure, those foreign companies would be able to pay 37% more for Chrysler than Magna would be able to pay. That is purely because of the government's measure. Obviously Magna or any other Canadian company bidding against a foreign company would be at a huge disadvantage in buying any foreign company. That particular number is based on a fifty-fifty debt equity ratio in the financing.

Why does that matter? That matters because companies grow beyond the Canadian borders. If companies are to continue to grow, they must grow beyond Canada. This foolish measure of the government is tying the hands of Canadian companies behind their backs and sending them out in the big wide world to compete against foreign companies at a huge disadvantage.

As a study by KPMG has said, this will result in weaker Canadian companies, a weaker ability to acquire assets and more foreign takeovers of Canadian companies.

The whole financial world, anyone who knows anything about these things, is up in arms. We have had an expert say that this is the worst tax policy in 35 years. The Conservatives are out on their revenue estimates by 3,000%. There was a Deloitte Touche conference of about 1,000 experts yesterday who were surveyed and 90% of them said it was a bad idea. It is a disaster.

Our party and our leader announced nine days ago that we would not do this. We would scrap this idea because it is so disastrous for Canadian competitiveness, Canadian jobs and Canadian prosperity.

Fortunately, the minister came to his senses. Perhaps he heard our leader speak nine days ago and understood the wisdom of our approach. The minister said yesterday that he is flip-flopping. He will not go ahead with this. He will go ahead in a much more minor, small way and he has admitted that he did not do his homework, he did not think it through, and now he is adopting the Liberal policy--

[The Acting Speaker, Andrew Scheer]

Questions and comments, the hon. Parliamentary Secretary to the Minister of Human Resources and Social Development.

[Lynne Yelich, Conservative, Parliamentary Secretary to the Minister of Human Resources and Social Development]

Mr. Speaker, I want to remind the member that he says the Liberals would reverse it. There are some high-ranking Liberals who used to be in the party who have the same views as ours, and I am sure there are many who if they ever became government would as well.

Sheila Copps is one of them. She said that reversing the income trusts decision “would...run afoul of espoused Liberal principles, by promoting a tax loophole for a select few, financed by the rest of us”.

John Manley said, “It was the right thing to do...Any day that good public policy triumphs is a good day”.

I also want to ask the member, who is the Liberal finance critic, if he really did read the budget. This concerns his comments on the green levy for vans equipped for wheelchair access. If he did read the budget and the implementation bill, at page 46, in paragraphs 68.02(1) (a) and (b), he would know that this provides a refund of the green levy for vans equipped for wheelchair access.

I also want to comment for member who used to be the revenue minister that if he thinks reducing the GST is inconsequential, then he should think back to when he was the revenue minister. He will remember the underground economy that was going on because of the GST. It was in the billions of dollars, I believe, but maybe he can correct me.

Maybe it was billions that they found in the scams in, I believe, Atlantic Canada at the time; there was a car scam. Maybe I am incorrect, but I do believe there was quite a scam and it uncovered about $1.9 billion. It was done just between car dealerships in Atlantic Canada with the United States.

I would like to know if he realizes that people perhaps welcomed the percentage point reduction in the GST.

[John McCallum, Liberal, Markham—Unionville, ON]

Certainly, Mr. Speaker, fighting GST fraud is a significant activity of government. I did some of that when I was revenue minister. Those things can be done whether the GST is 6%, 5% or 7%.

The more fundamental point is that this is not trivial at all. We are talking about $5 billion or $6 billion per year of revenue for every GST point cut. We can do huge amounts of income tax cuts and huge amounts of social programming with that amount of money.

It is a gross waste of the fiscal capacity of a government to spend it on a GST cut for a penny or two on a cup of coffee when we consider that for two points of the GST we could have $10 billion, $11 billion or $12 billion per year, which would buy us a massive tax cut or a massive improvement in social programs.

I am not sure if the hon. member was listening to me, but the point is that the income trust policy results in less revenue for the government, not more revenue for the government. That is why I said it was a tax unfairness plan, not a tax fairness plan.

What I said earlier, and I will just repeat it very quickly, is that when these income trusts are bought out by pension plans and by private equity ventures, those pension plans and private equity ventures pay no tax or very little tax, whereas the previous owners of the income trusts paid a lot of tax.

Therefore, far from the government's policy adding to government revenues, as she said, it subtracts from government revenue to the tune of, with the last seven or eight acquisitions among income trusts, I think, those alone costing the government some $130 million a year.

I am afraid that the hon. member has her direction wrong. It will result in less revenue for the government, not more, and that is one of the virtues of the Liberal plan.

[Lynne Yelich, Conservative, Blackstrap, SK]

Mr. Speaker, would the member agree with Liberal John Manley that “it was the right thing to do” and that “any day that good public policy triumphs is a good day”? What about the policy part of income trusts? What about Sheila Copps' comment that reversing the income trusts decision “would...run afoul of espoused Liberal principles”?

Would the member agree or disagree that this goes against Liberal principles by promoting a tax loophole? In Sheila Copps' view, that is what it was, financed by the rest of us. I would like his answer on what he thought of those comments.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I will repeat my comment a third time. Sheila Copps is wrong. It perhaps was not as evident at the time before all these private equity acquisitions occurred.

I am now telling the member for the third time that this policy results in less revenue for the government, not more revenue for the government. That might not have been apparent to Sheila Copps when she made the comment but it is eminently apparent right now to the experts in the field.

I am not saying that there is absolute unanimity on our policy but I am saying that the recent commentary of Jack Mintz, for example, who was previously in support of the government, has now turned against the government. I am not sure if Mr. Manley, if he observed the recent fiasco in terms of the new set of acquisitions, would hold to that comment or not. The circumstances have deteriorated since those two individuals made their comments.

I certainly stand by the fact that this is a disastrous policy and our Liberal plan would have been far superior.

[Lynne Yelich, Conservative, Blackstrap, SK]

Mr. Speaker, what about the refund on the green levy for vans equipped for wheelchair access? Did the member read that part of the budget? I read out the pages. It was in the implementation bill on page 46. If the member had read it, he would know that it provides a refund of the green levy for vans equipped for wheelchair access.

I just want to know if the member would like to correct the record as the finance critic so he will not be misunderstood?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I was correct on other points but I may be wrong on that one. It was my impression that such vehicles were, on the one hand, given the benefit of a GST rebate but, on the other hand, were subject to the gas guzzling levy.

I suggested that second point could be corrected. If the member is telling me that second point has been corrected, then I am pleased to hear that.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, with respect to the three policies of interest deductibility, income trusts and the decision to waive withholding tax, would the member comment on the impact of those three policies when taken together as they relate to our economic sovereignty?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, there is a certain combined effect or a mutually reinforcing effect of these things. All of them tend to make it easier for foreign companies to acquire Canadian companies and harder for Canadian companies to acquire foreign companies.

I am not an NDPer. I am not objecting to foreign ownership or Canadians buying foreign companies or foreigners buying Canadian companies. I do not want to build a huge wall around Canada like in Albania in the 1960s, which sometimes one suspects the NDP wants to do. All I want is that we not tilt the playing field in favour of foreign companies at the expense of Canadians and that is what these policies, which my hon. colleague has described, tend to do.

I want, if anything, to create a Canadian advantage, which is the government's stated policy, but by its actions it has created a Canadian disadvantage, favouring foreign companies at the expense of homegrown Canadian companies. That is bad policy but that is the consequence, whether intended or unintended, of the government's misguided economic policies.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I must say that I have already had an opportunity to speak to Bill C-40 at second reading. I find it to be a useful bill but, at the same time, it is so technical that we are sometimes not too motivated to participate in the debate. This bill amends the the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act and other Acts. In the tales of Asterix, Obelix used to say that it did not matter whether menhirs were large or small--they were still menhirs. Similarly this bill, technical or not, must be debated and I am pleased to speak about the Bloc Québécois position on behalf of our party.

This fairly technical bill takes a very logical approach to dealing with a certain number of issues and that is why we will support this bill. First it addresses various shortcomings associated with the GST and excise tax. It removes taxes from certain medical services, which will facilitate access to these services. I will come back to that. It reduces the burden of taxation on charities, and I believe no will take issue with this point. It also provides for measures to help small wine producers. That is a positive measure for the wine producers in the Lanaudière region. It tightens legislative provisions with regard to the production and sale of tobacco in order to counter smuggling. Who would oppose that? It adjusts the air travellers security charge.

When in Ottawa, the Bloc Québécois, as a group, often feels somewhat like it is in the fictional Gaulish village to which I referred earlier, when talking about Asterix and Obelix. We must resist the federalist invaders and the invasions by the federal government. However, this time, I must say that this bill respects federal and provincial jurisdictions. As I said, the Bloc Québécois will support Bill C-40.

Bill C-40 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 turns then 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.

Naturally, I will start with the first part of Bill C-40, which has to do with GST-HST-related measures. In Quebec's case, this means the Quebec sales tax.

As I said, 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 seems, to me, a matter of common sense. A child, loved one or family member might need this type of service. In my opinion, it is somewhat immoral to tax something that is completely essential and necessary to a person's well-being. 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 to learn to speak again, thereby enabling them to continue living in dignity.

Then, in the area of health care again, the government will exempt services provided in the practice of the profession of social work. There are times when we need to seek the assistance of a social worker. This measure will make it easier to access such services. Nowadays, the professional duties of many social workers include acting as substitute psychologists, something which I am convinced the college of psychologists is not too thrilled about. In areas where the needs are huge, we often see shortages of specialists such as psychologists. Purchasing the services of a social worker may be a perfectly appropriate alternative. It seems totally normal to me that the government exempt from tax the services of social workers.

The government will also zero-rate the sales and importation of a product that can be used to some extent as a blood substitute. Again, it seems to me that everyone will understand that there was something sick about taxing a product making possible crucial treatments for seriously injured patients.

Back to my analogy with the village of ancient Gauls and Getafix. Members will recall that Getafix is the druid who mixed the magic potion than gave that village the strength to resist the invading Roman army. In Bill C-40, the government removes the tax on a group of drugs like Valium, Ativan and others. These are drugs needed to treat anxiety, and drug and alcohol withdrawal or as a component in preanesthetic preparations. Again, there was something predatory about government taxing drugs that do not fall under the category of consumer purchases, but are simply something that members of our society who are often dealing with enormous difficulties buy because they need it for their well-being.

Finally, as I was saying, there is an aspect of the bill that is not directly related to health, but to the welfare of people with disabilities. I am talking about the GST rebate for motor vehicles that have been used subsequent to being specially equipped for use by individuals with disabilities.

As you can see, there are measures in this bill that are relatively modest, but they cannot be criticized because, quite frankly, they are just common sense.

As far as charities are concerned, again in the first part on the GST and HST, we see changes ensuring that the exemption of supplies by charities of real property under short-term leases and licences will extend to any goods supplied together with such real property. For example, someone leases a facility with a photocopier. The leased photocopier was then taxed. In the context, this measure is minimal, especially after the cuts the Conservative government made to certain agencies. I am thinking of women's groups and literacy groups. It probably would have been better not only to have this measure, which will very slightly alleviate financial pressure, but also to re-establish all the budgets of these community groups that were cut last September.

Nonetheless, there is something there that we cannot oppose. In other words, we will also support this measure.

There are other business arrangements that affect, in particular, foreign banks that restructure their Canadian subsidiary into a Canadian branch. This a measure that affects consumer rights. We know that in Canada there is a very significant bank concentration problem. The five largest banks control most of the market, by far. Parliament, the House of Commons and the Standing Committee on Finance—I have taken part in this—have tried a number of times to find ways to improve competition on that market. I remember Bill C-8, which addressed this more or less successfully.

Having a measure that would facilitate the restructuring of a foreign bank's Canadian subsidiary into a Canadian branch seems conducive to improving competition in a very concentrated market, as I was saying. That is the first point. We also find in this bill some changes to simplify tax collection by small stores that deal with beverage container deposits that are refundable to the consumer. This simplifies life for small merchants and it seems to me that there a number of things here as well that just make sense.

There is one last measure in this first part that concerns governments. The bill will exempt a supply of a right to file or retrieve a document or information stored in an electronic official registry. This will mean, for example, that municipalities can provide information requested by taxpayers at a lower cost.

As hon. members can see, these are not sweeping measures. There is nothing to get upset about; these are small measures that make good sense.

The same is true of the second part, which pertains to excise tax. As I mentioned earlier, the measures in this part 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 amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.

I want to summarize the tobacco-related measures in Bill C-40. To better defend against the smuggling of tobacco products and facilitate collection of the tax on tobacco, the bill extends the requirement to identify the origin of tobacco products to all products, including those for sale at duty-free shops.

In this case, there will be a small problem, because the government has decided to put an end to the GST visitor rebate, except in the case of conferences and tours. Although the government's intentions are good, this will have much less impact, because of what was announced in the budget regarding the GST visitor rebate.

However, the bill does extend the requirement to identify the origin of tobacco products to duty-free shops or products sold for export, consistent with international treaties including the Framework Convention on Tobacco Control.

The bill also 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. These are relatively minor amendments, but they make a lot of sense.

As far as alcohol is concerned, Bill C-40 authorizes provincial liquor boards and vintners to possess a still or similar equipment and produce spirits for the purpose of analysing substances containing alcohol without holding a spirits licence. This measure will relieve provincial liquor boards and vintners of the entire administrative burden and cost involved in acquiring a licence for such equipment, stills or similar equipment.

Furthermore, in order to promote growth in Canada's wine industry, the government will allow the deferral of payment of duty by small vintners selling wine on consignment in retail stores operated by an association of vintners until the wine is sold. Something did not seem right, particularly asking small vintners to pay tax in advance before the product is even sold. These are often small-scale businesses that do not have enough liquid assets to assume this type of responsibility without putting the very survival of the business at risk. This is a welcome measure. The federal government has finally understood that this sector plays an important role in economic development, especially in the regions.

I remember the battle the Bloc Québécois had to wage for the reduction of excise tax on microbreweries. We finally won that battle, not in the last budget, but in the previous year's budget. This is another measure that will simplify life for small producers. When they supply their products to retail stores operated by their association of vintners, they will only have to pay GST once the product is sold—as I already mentioned. This new measure will help market local products. There are now specialty markets scattered throughout Quebec where these wine products are available.

By the way, I just want to say that the industry in Quebec is doing quite well. Wine producers have banded together in the Association des vignerons du Québec. This would not necessarily please Obelix, who does not drink alcohol since he fell into a cauldron of magic potion when he was young. In some of the books, we see that this had a rather disastrous effect on his behaviour. However, Gérard Depardieu, who played the role of Obelix in the Asterix and Obelix films, is a great fan of wine. He would be extremely interested in what I am saying.

In 2006, the Quebec vintners association had 42 members in many of the province's regions. I already mentioned Lanaudière and Île Ronde, where there are tens of thousands of vines, as well as the Eastern Townships, Montérégie and the Lower Laurentians.

Over 100 hectares of vines are cultivated annually, producing 300,000 bottles every year, primarily white wine, ice wine and fortified wine. I would invite all of my colleagues to enjoy Quebec's homegrown wines—in moderation, of course.

In both the second part and the previous part, the new legislation will authorize the Minister of National Revenue to exchange information on excise tax 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.

Like the measures in the first part, these minor measures are neither very revolutionary nor very impressive, but they are very sensible. We think that these minor measures deserve to be supported, even though—as in the example I gave about charities—they do not eliminate the negative and damaging effects of the Conservative government's cuts to literacy organizations, women's groups and the aboriginal tobacco control strategy.

With respect to the air travellers security charge, I have to say that ever since the previous government brought this tax in, we have tried to find out what good it was doing, but we never really got an answer. I got the impression from various witnesses—especially when I was a member of the Standing Committee on Finance—that the money from this tax was used for a lot of things other than passenger security.

In our opinion, the costs of air travellers security should be borne by all taxpayers, and not just by those who are often required to travel by air. I remember that, at the beginning, a tax was imposed on people flying out of regional airports. I am thinking of the member for Gaspésie—Îles-de-la-Madeleine who, unfortunately, cannot always take his car to get here. Because of time constraints, he must fly. This means that he was forced to pay that tax, which was totally unacceptable. There have been reductions over time, and we are told that another one is coming. However, as regards this bill, we are not given any explanation as to why this tax is imposed, its purpose and its link with air safety. The government remains vague on this issue.

Still, a tax relief is included. First, the bill relieves, in particular circumstances, the applicable charge in respect of air travel sold by resellers or donated by air carriers. As we can see, this affects relatively few people. The bill also provides authority for the governor in council to add, delete or vary by regulation the schedule of listed airports.

The bill will change the status of three airports in Quebec, to ensure that the standards meet market demand. So, the bill removes La Grande-3 and La Grande-4 from the list of airports subjected to the surtax under the Air Travellers Security Charge Act. I can say that 95%, if not 99% of those who fly in to La Grande-3 and La Grande-4 are workers involved in the construction or maintenance of the facilities there. They definitely do not go there for a vacation. Some may, but it is not the majority.

Finally, this measure simply makes sense. I will conclude by saying that this series of small measures, of small menhirs, as I said at the beginning, deserve the Bloc Québécois' attention and support and, indeed, we do support them.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I noticed the member talked about how the measures seemed small. In a way, he showed a great deal of responsibility when he said that even if the measures seem insignificant or small, they are important.

We were talking about what happened with microbreweries. I could say the same thing about the Îles-de-la-Madeleine. There is a beer made by a microbrewery in the Îles-de-la-Madeleine called À l'abri de la tempête. This is one of the ways to help small businesses. Together, these measures ensure that economies can keep going and be helped. These seemingly small measures produce big results. This company in the Îles-de-la-Madeleine has been in business for a few years. In addition, it creates a sense of belonging within a certain culture. At the same time, it also shows that, economically, it is possible to do great things in a region like ours. This beer, which is quite good, is exported to other areas.

The same goes for wine producers with respect to Bill C-40. It is an interesting analogy, and I might like to hear more about it, since he is quite familiar with this issue in his own area. Maybe this could bring us back to the fact that Obelix obviously fell into the magic potion, but others, who did not have the same luck as Obelix, still had the chance to get a good taste. I think it is worth looking at what our parliamentary leader said about microbreweries and small wine producers.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I appreciate the hon. member's question because it gives me the opportunity to mention something that I feel is important to bear in mind. We too, in the Lanaudière region, have several microbreweries. In Joliette, we have L'Alchimiste, of which we are very proud. This measure announced in the previous budget, as I mentioned, has greatly benefited that company.

I want to point out, because it is quite remarkable, that the microbreweries are the ones that fought for an excise tax reduction on the first 700,000 hectolitres produced. The major breweries opposed such a reduction for many years, and their lobby was unfortunately tied in large part to the Liberal government at the time.

It is fascinating to see how the Conservative government has gone about getting this passed. By granting the same reduction to both microbreweries and major breweries, it has bought the silence of the major breweries in order to help the microbreweries. This is really twisting things. Obviously, the competition for microbreweries comes first and foremost from imported beers, cottage brewery beers from abroad. In a rather unsubtle way, the meaning of the measure the Bloc Québécois had been calling for in recent years got twisted. I think that it will nonetheless help our microbreweries grow and further define part of our heritage identity.

[The Acting Speaker, Royal Galipeau]

I regret to have to interrupt the hon. member. The next time Bill C-40 is before the House, he will have six minutes remaining in the time allotted for questions and comments.

The House resumed from April 25 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.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-40 at third reading. The bill contains a number of amendments to Canada's sales tax system. It also reflects the goal of our government to improve fairness in our tax system and ensure that it functions smoothly for individuals and businesses alike

However, before getting into the specifics of Bill C-40, I would like to remind hon. members of the key elements of advantage Canada, a plan put into action in budget 2007. The plan has five key advantages.

The first advantage is a tax advantage. We wanted to create new opportunities and choices for people and when we lower taxes we help do that. It helps keep our best and brightest here at home and it attracts the best and brightest from across the world. We always say that Canadians pay too much tax relative to competition so we did something about it.

Since budget 2006, we have reduced taxes. We have decreased the GST. We have increased the basic personal amount of exemption. We have reduced the lowest personal rate of tax. We implemented Canada's employment credit of $1,000 for every employee in the country who pays taxes. We also have other targeted tax relief measures.

Our tax fairness plan went even further for Canada's seniors. We implemented a $1,000 increase in the age credit amount and, most important, we finally, after successive governments, introduced pension splitting for seniors.

Those were significant steps but we needed to go further, and we did in budget 2007.

In budget 2007, Canadians again come out ahead through real tax relief that benefits working families.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I rise on a point of order. The bill is quite specific with regard to the legislation before us with regard to sales taxes. Although I appreciate that the member can speak for a long time about the budget, about seniors and about every other issue, I think it would be important to ask the member to please address the bill itself since, by putting this kind of information on the floor during debate, it really makes it relevant for every other member who follows and that means that every issue he has mentioned could be included in the debate of every other member. I do not think we want to go there.

[The Acting Speaker, Royal Galipeau]

The hon. member for Mississauga South is thanked for his point of order. The hon. member for St. Catharines was recognized for 20 minutes and I am sure that he will come to the subject at hand soon.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, the member can rest assured that the next part of my speech dives right into that topic.

I would like to remind the member that the next time he stands to speak to any issue that he heed the words and advice that he just gave me because I think they would be outstanding for him to follow as well.

Bill C-40 would also improve our tax advantage. It would improve fairness and efficiency in the sales tax system and would ease compliance in administration for businesses and for government.

The bill consists of three parts. The first pertains to the GST and the harmonized sales tax. The second relates to the taxation of wine, spirits and tobacco. The third concerns the air travellers security charge.

I will begin with the GST. This bill is principally aimed at improving the operations and the fairness of the GST-HST in specific sectors of the economy. The principle behind the measure encompasses important areas for Canadians.

First and foremost is health care. Canadians know that our health system is one of the best and it needs to stay that way. Bill C-40 contains a number of measures to help improve it. It would cement the GST and the HST exemption for speech language pathology services and it would add the services of social workers to the list of services exempt from the GST or the HST. This is consistent with the policy criteria for the inclusion of a particular service on the list of the GST-HST exemption in all provinces.

The criteria is as follows. If a service is covered by the health care plan in a given province, it is exempt in that province. If a service, however, is covered by the health care plan of two or more provinces, it is exempt in every province. If a profession is regulated as a health profession by at least five other provinces, the services of that profession are exempt in all provinces.

The government is also very aware of the challenges faced by individuals with disabilities. Budget 2006 went above and beyond the recommendations of the Technical Advisory Committee on Tax Measures for Persons with Disabilities. In that spirit, Bill C-40 broadens the specially equipped vehicle GST-HST rebate for individuals with disabilities. It also exempts the sale and importation of a blood substitute known as plasma expander. It also restores the tax-free status of a group of drugs commonly used to treat a variety of conditions, such as seizure control, anxiety and alcohol withdrawal.

Those measures illustrate the government's commitment to ensuring that Canadians continue to have access to timely and quality health care.

Canada's new government is committed to reducing taxes for individual Canadians as well as for Canadian businesses.

Budget 2007 reduces the paper burden on small business by 20% by no later than November 2008. It also decreases the frequency of business tax remittance and filing requirements.

These measures are technical in nature so I will not get into the details but I will say that, broadly, they will ease compliance by removing technical impediments and simplifying compliance with the GST-HST legislation.

The second part of Bill C-40 dealing with excise measures relates to tobacco and alcohol products. The bill would amend the Excise Tax Act, 2001 to implement minor refinements that would improve the operation of the act and more accurately reflect current industry and administrative practices.

The bill would 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 Tax Act, 2001 are as follows. The first is tobacco. Bill C-40 would extend the requirement to identify the origin of tobacco products to all products, including those for sale at duty-free shops or for export. This is consistent with the framework convention on tobacco control, an international treaty on tobacco control. It also clarifies which tobacco products may be supplied to the export market or the domestic duty-free market. For example, cigarettes, tobacco sticks, fine cut tobacco or cigars may be supplied but it does not include packaged raw leaf tobacco.

I will move on to the spirits licence, which is required to produce alcohol products using a still. There are still some cases where private laboratories, provincial liquor boards and vintners use stills to produce spirits, to analyze substances containing ethyl alcohol.

Bill C-40 would authorize these entities to possess a still without holding a spirits licence. However, to limit possession of non-duty paid spirits, the bill would also require these parties to immediately dispose of those spirits once the analysis is complete. This would also defer payment of duty by certain small vintners selling wine on consignment in retail stores until the wine was actually sold.

As I said, a number of administrative measures are in the bill. One has to do with the exchange of information between Canada and its foreign governments. The bill would permit 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. The bill would also add a discretionary power for the chief statistician of Canada to provide statistical information concerning business activities to all the provinces. It is similar to an existing provision that is already in the Income Tax Act.

Third and finally are air travel security charge measures. The bill would relieve the charge in respect of air travel donated by an air carrier to a registered charity that arranges free flights for individuals as part of its charitable purposes. It means that certain charities that arrange free air transportation services for people who cannot otherwise afford the cost of flights for medical care will not have to pay the air travel security charge.

This is a good time to introduce a couple of examples. It includes the flights of a lifetime, such as those provided by the Children's Wish Foundation of Canada and other similar charitable organizations that organize dream trips for physically, mentally and socially challenged children. It is not something new. It is one of which all of us across the country are certainly aware. Now we have eliminated any additional costs that may be incurred by these individuals.

Tax legislation must be applied consistently. Proposed ATSC relief for charitable flights reflects that objective by being consistent with relief from other federal levies provided to registered charities. It is also consistent with other ATSC relief measures such as that provided in respect of air ambulance services.

Summing up, Canada's new government understands that good government and good tax policy go hand in hand. Well focused tax policies are a sign of a government with some vision, and this government is all about that. We are looking ahead and planning for the steps we need to take to build a stronger economy and a more confident Canada. In doing so, together we can make Canada a world leader with a long term focused economic plan not just for today, not just for tomorrow, but for years to come.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, thank the member on the other side for St. Catharines for keeping his speech to the point, and I am going do it as well.

I am pleased to rise today 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. Before I do that, I commend the hon. member for Markham—Unionville for his good work on this file.

As the title suggests, the bill is largely housekeeping. Much of the bill has to do with bringing previous legislation in line with the original policy intent of the government. The rest of the bill involves implementing previously proposed legislation that simply required further study before being drafted.

This is generally done in consultation with affected individuals and industries, which, as I understand, was the procedure followed in this instance. The bill has so far moved through second reading and report stage with the support of all parties. I expect it will continue to do so today.

Bill C-40 has three main components, as the hon. member on the other side mentioned. 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. Finally, the bill contains measures that affect the air travellers security charge.

Let me begin with the first part that deals with the goods and services tax.

A good portion of the bill deals with how health-related services are treated by the GST. We on this side of the House know how important our public health care system is to the lives of everyday Canadians. I am proud to be a member of the party that devised our current 10 year program to strengthen health care. We delivered $42 billion to the provinces to improve services, reduce wait times and ensure that Canadians would get the care they needed. Not only should they get the care they need, but every Canadian, irrespective of where they live, should have the same quality of health care.

While Bill C-40 is not the landmark piece of legislation that our health accord was, it does contain a number of health-related provisions, which will be important to Canadians. For instance, 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 rehab centres. I am glad to see the draft GST exemption of these services proposed by the previous government would be implemented through this bill.

The bill also confirms that the sale and importation of blood substitutes, known as plasma expanders, will be zero-rated for GST purposes. A plasma expander is a blood substitute product which is used primarily to maintain circulatory blood volume during surgical procedures or trauma care.

Bill C-40 would also broaden the specially equipped vehicle GST-HST rebate so the rebate would apply to motor vehicles that were used subsequent to being specially equipped for use by the individual with disabilities.

The bill would also affect the harmonized sales tax in Nova Scotia, where the government has called for the provincial tax portion of the homebuyer's rebate to be limited to $1,500. This has been done at the request of the government of Nova Scotia, and there is no reason why any of us should oppose it here.

Some of the other GST related measures in the bill include accommodating special import arrangements between businesses in certain situations where goods are supplied outside Canada to a Canadian customer and simplifying GST compliance burdens by excluding beverage container deposits that are refundable from the GST.

It will ensure that when a charity provides a property to a person or a business under a short term lease, the GST is exempt on any goods supplied with that property.

The second section of the bill deals primarily with excise tax measures surrounding the sale and production of tobacco and alcohol.

The 2005 Liberal budget announced new funding over five years to enhance federal tax compliance and enforcement in the tobacco industry. At that time, we set aside new money for enhanced markings of tobacco. I am glad to see the bill would extend the requirement to identify the origin of tobacco products to all products, including those for sale at the duty-free shop or for export.

Tobacco contraband does not only hurt the government's bottom line, it also hurts communities and can be a source of funds for organized crime. That is why the Liberals allocated $8 million to fight tobacco contraband two years ago.

As a side note, I was very disappointed to see that the government's new budget had absolutely no money to help tobacco farmers transition toward other crops, but that debate is for another time.

Moving on, the bill contains measures that would authorize laboratories to produce alcohol and spirits for the purpose of studying ethanol alcohol without them having to hold a spirits licence.

The third and final part of the bill focuses on the air travellers security charge. It will ensure that air travel seats donated to charities through air carriers are not subject to the air travellers security charge.

I will take a brief moment to revisit the reason that we have the air travellers security charge in Canada.

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 their daily lives as possible. As a result, we 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 to help 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. The Liberals, however, did believe that Canadians would be willing to pay a little more to ensure that the air travel in Canada was as safe as possible. As a result, I am proud to say they are in fact safer.

Furthermore, as airports across Canada purchased and installed new technology and as new security procedures were implemented, the start up costs began to go down. Accordingly the Liberals used their last three budgets to lower the air travellers security charge three times so Canadians would only need to pay what was necessary to ensure their safety on board flights.

As for this particular measure of Bill C-40, reducing barriers and disincentives to charitable giving, such as the travellers security charge on donated seats, is an excellent way to ensure that businesses such as airlines can help charities carry out their good work. I am happy to support this initiative.

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. While I am proud that Canadians give so much of their time and money to charities to make this country and the world a better place, I was dismayed when the current government chose to eliminate the charities advisory committee this past fall.

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 that cause.

More importantly, it was the responsibility of the committee to propose legislative changes to the Department of Finance and Canada Revenue Agency, changes that would make life easier for Canadian charities. The irony here is that it was this committee's job to come up with new ideas such as eliminating the air travellers security charge on airline seats donated to charities, a measure we are now debating in this bill.

What did the government save by eliminating this volunteer-led committee? Essentially, it saved only the cost of travel and hotel accommodation for when the committee members met three or four times a year. It may have been $100,000. I certainly believe the committee's advice was worth that much. I certainly hope that the government will consider reinstating the charities advisory committee.

As I said at the beginning of my remarks, this is a very large and very complex bill. Its contents are largely non-controversial and in some instances are the result of years of consultations. Accordingly, I am happy to support this bill.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I thank my colleague for his comments with respect to the fairness of the tax policy. He is a recently arrived member, so I know that he will not recall some of the debates we have had in this House previously, but I am wondering if he could comment on seeking tax fairness in combination with the northern living allowance.

This is something that happens in some of the rural sectors of our country, but in a seemingly selective way. This bill seems to seek to redress some of the imbalances of the tax system, yet how taxes are applied in some of the more remote or far-flung regions of our country seems to be hit and miss, and it seems to be more politically motivated than it is structurally motivated in regard to changing it to a fairer and more balanced system.

My question is very specific. If the member agrees with the measures in this bill, does he also agree with the concept of taking a basket of goods, let us say, and using that as a measurement for how we allow the northern tax allowance or the rural living allowance to be decided in this country?

A number of my constituents, particularly in the Queen Charlotte Islands, Haida Gwaii and some of the more remote communities, get frustrated and confused about why their cost of living is so much higher for transportation to services, hospitals and the like, as well as for just the basic living commodities such as home heating and food. However, a basket of goods is a way to measure where tax allowances should be made in this country rather than having some meandering political line across our country as it is right now.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I would like to thank my hon. colleague, the member for Skeena—Bulkley Valley, for putting this question to me, because when we talk about fairness when it comes to taxes, they should be equitable. When we look at the more remote areas, like the north and the rural areas, we have to pay attention.

In fact, I am sure that hon. members will recall that I spoke about the new employees who want to settle in areas like those the hon. member for Skeena—Bulkley Valley mentioned. They should be given incentives so they can settle there and be productive members of society. The proper growth would go on.

As I said earlier on health care, irrespective of where Canadians live, they should have the same quality of health care. In the same fashion, irrespective of where Canadians live, they should have equitable taxation fairness so they can make ends meet, as they have different challenges to face in those remote areas. I certainly support that.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, while it is not directly relevant to this bill, I think it would be appropriate to know what the member thinks of the program that was abolished by the Conservative government, the GST rebate for tourists. This has a major impact.

Corrective measures were taken already for outfitters and conventions. Would it not have been appropriate for similar measures to be adopted for duty-free shops, to avoid the problem being experienced now, which creates a major disadvantage for those shops, even if it might have meant adopting a private system as other countries have done?

Would it not be appropriate for the government to act quickly? Why has it not done so in the case of Bill C-40?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I could not agree more with the hon. member from the Bloc, because my riding is also a border riding adjoining the U.S. I am from British Columbia. The 2010 Olympic Games are coming to B.C.

Tourism is a key industry in British Columbia. I am sure it is also key in Quebec and from coast to coast to coast as well. As a British Columbia MP, I strongly support this member's concept and would ask the government to reinstate the GST rebate for tourism so the tourism industry can survive.

In fact, under the previous Liberal government, we moved the tourism office to British Columbia to promote tourism. We have to be prepared for the 2010 Olympics.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, it gives me pleasure to rise today to speak to Bill C-40 on behalf of the Bloc Québécois. With our research staff and those responsible for this issue, we conducted a review of this bill and, all in all, we have found very little to criticize. A lot of people, in Quebec among other places, will be pleased with many of the measures being introduced. I would like to address the first one, which is to make some medical services exempt from tax, thereby facilitating access to such services.

I remember that physiotherapists came to me a few years ago. They told me that it was important to allow these types of services to be exempt from tax. Out of need or because of their insurance, many people who could not afford to wait for public health care wanted to go see a physiotherapist after a car accident or an occupational accident. Systematically, these people had to pay tax on those services.

Then, under a ways and means motion, the previous government considered the possibility of looking at which types of medical services could be made exempt from tax from year to year.

This assessment had to be done every year. So, every year, the government determined whether it had properly identified those services that should be taxed and those that should be exempt from tax. It would ask itself, for example, if it was appropriate not to tax physiotherapy. The following year, around budget time, the word would often go around that physiotherapy would be taxed.

Physiotherapists visited MPs at their offices. I remember fighting with them for their services not to be taxed. Eventually, the government of the day decided not to tax them. It will be much better, however, to have legislation on that. This will avoid having this annual debate about what to tax, what to exempt from tax and what should be kept on the list of health products that should be exempt from tax.

This will take us closer to a standard of services that all recipients can find relatively interesting. It is not an easy thing to do when your health or physical well-being is affected to go see a health professional in an emergency or because you are required to under your insurance plan. In such cases, one has to pay not only the fee for services, but also the GST on that fee. It think it is completely worthwhile to have a list.

This is something we see quite often with speech-language pathology. Bill C-40 refers specifically to speech-language pathology. I would point out that problems with hearing and pronunciation are becoming increasingly common in our society.

I know parents whose children have speech problems, for example. They are having a very hard time accepting the fact that they have to wait two years to consult someone in the public sector. They often have insurance that allows them to turn to private clinics. When these parents go to consult a speech-language pathologist, it is much the same as with physiotherapy, which I mentioned earlier. These people have to pay for the professional services and then pay tax on top of that.

Since speech problems are on the increase, it is important, when people have no choice but to consult the private sector, that they not pay an additional tax.

It is somewhat similar to access to surgery. The taxes can be deducted. There are situations in which waiting is not an option. It should be recognized that waiting may not be an option in the case of physiotherapy and speech-language pathology services, and people should not have to pay taxes on top of the cost of professional services.

Social services are another part of medical services.

Many people these days want to consult social workers to help resolve children's behavioural problems or attention deficit problems.

As the father of a daughter myself, if she had required such services at age six or seven, I would not have wanted her to have to wait two years before meeting with a specialist in the field of social work, while she was having integration problems or any other such problems at school. Thus, I feel it is important to recognize parents' financial efforts and not make them pay additional taxes. I think that would be the right approach.

Furthermore, there is also a tax burden for charities. As a former unionist, I worked closely with charitable organizations. People in these organizations were close to the union movement. We defended a shared cause, that is, a more social approach within our society, a more equitable and fair approach. These people work year round for excellent causes. These causes might involve church groups or any type of organization that is a registered charity. In my view, the bill's new provision will be advantageous for them.

For example, a business owner who rents a shop in downtown Saint-Jean or elsewhere in Canada can deduct both the tax and the rent from his income taxes. If an owner gives space worth $10,000 in one of his buildings to a charity group, he can forego the rent and deduct it from his taxes. I think that really helps people who are supporting an important social cause.

I mentioned churches, but that might not exactly apply because they often own the premises they need to carry out their activities. This would apply more to the many registered charitable organizations that should have the opportunity to use premises for a minimal cost, that is, rent-free with no obligation to pay the rent at the end of the year. Often, the cost of rent can force an organization to cut services.

For example, if charitable organizations are allowed to use space for free, they can provide services to the public. These services are very important; nowadays, many people cannot get by without them.

We also really like the measure that supports small vintners. In fact, this affects me personally. As the member for Saint-Jean, I have to say that in Quebec, wine producers have been having a lot of problems lately. There have been some issues with the Société des alcools du Québec. It made no sense that liquor stores in Quebec were stocked with wines from all over the world, but not wines from Quebec. When I shop at the LCBO, Ontario wines are on every shelf, as are British Columbia wines. In Quebec, there were problems with that. People had to get their wine directly from the producers. Then they were hit with an excise tax, which made them less competitive. Wine production is becoming more and more competitive. Now, even the French acknowledge that they are in a very competitive environment. Wines come from all over. Stores now carry wines from South Africa, all over Europe and around the world.

Since this is a very competitive market, we should give a helping hand to the vintners. We should tell them that they no longer have to pay the excise tax. This would give them the latitude to probably offer more affordable prices. I do not think that the producers would put the entire savings from the excise tax in their pockets. I think they would pass on the savings to consumers, thus making these wines more competitive.

We like some other provisions, such as the ones on tobacco.

There are some clarifications on the provisions of the excise tax to better fight against contraband tobacco products. It is about time. We are not the first to think of this, since even the Romans thought to tax luxury goods. In today's society, we consider taxing unhealthy products, such as cigarettes. This is nothing new. Rome thought of it before us. Given all the harmful effects of tobacco, I think it is important to maintain the level of taxation. Smuggling must also be avoided, and I think that the current provisions will ensure that the origin of the tobacco product must be known.

We will have to deal with the fact that on aboriginal reserves, there are many of these little smoke shacks that sell tobacco products without tax, products whose origins are unclear as well. I regularly drive through part of the reserve at the exit of the Mercier bridge. It goes from one side of the border to the other. Some measures in Bill C-40 will make it possible to better control cigarette smuggling. It is not acceptable that some people can get away with this, while the corner store in downtown Saint-Jean must pay the total price. Conditions are not tough enough; all the corner stores must sell cigarettes with prices and taxes indicated, while elsewhere, such as on the reserve, for example, things are different.

Thus, I believe that this measure will not only get a handle on the problem, but will also allow the government to generate some revenue. This is what I mentioned this morning about Bill C-33. When an illegal trade develops and is almost entirely untaxed, it is the government that loses revenues, because some people will buy their tobacco products there instead of at the corner store.

Therefore, we encourage this measure, because it will try to finally put an end to cigarette smuggling and, if we really succeed, it will put more revenues in the coffers of the government, which will be able to spend some on all kinds of services and will be able to improve health or education services, as I mentioned this morning.

The same goes for alcohol. In the bill, some overtures have been made about the objectives. First, it allows provincial liquor boards and vintners to possess a still . This was previous illegal. Personally, I know someone—I will not tell his name—who would give me a bottle of grappa once in a while. He did not sell it to me; this was totally legal, I tell you right now. However, to produce grappa, you must have a still and a licence.

Before, one had to go through many people and many steps, and there were costs associated with these steps. The bill will save the provincial boards all these steps and costs inherent in the purchase of this equipment used to produce and sell alcohol. This legislation will allow people, whether they be wine producers or not, who wish to make grappa or any other type of wine, to do so legally. They will be able to buy these stills.

Moreover, another type of illegal trade will be eliminated. I was personally happy to be given a bottle of wine by this person, but maybe other producers were illegally selling their production and the government was losing out on these revenues. This will allow such companies to operate legally, to obey the law and to provide the government with some revenue.

I would also like to talk about the security surcharge at some airports.

After the events of 9/11, I remember sitting on the legislative committee where senators and MPs discussed a considerable surcharge—based on the number of passengers—to provide all airports with the necessary equipment to fight terrorism.

Now we learn that this charge will be eliminated at certain airports. In my opinion, this will allow airports to avoid being crushed by the weight of this surtax. We note that the La Grande 3 and La Grande 4 airports will no longer be subject to the charge

However, this is offset by the fact that certain airports that were not on the list—the Mont-Tremblant airport in particular—will now be added. There has been a significant increase in passengers at this airport because this part of Quebec is experiencing tremendous growth. Thus, they will be taxed and the charge will be added.

In other words, applying a charge to an airport that is already very popular and that is already making a bit of money, is preferable to applying a charge to all airports. Small airports would have trouble because each time a plane lands, a surtax is charged. Thus, this is significant for the budgets of small airports and we truly approve of this measure.

There are a number of provisions in this bill that we truly like.

Given that I have the time, I would like to go back a bit. Earlier I spoke of speech language pathology, but only with regard to young children who have hearing or speaking impairments. However, this measure will also help individuals who are slightly older.

I believe that many seniors may be receiving treatment for speech-language pathology. For instance, I am thinking of my father who suffered a series of strokes. Rehabilitation is a difficult and often lengthy process because of the long wait times for health care.

People with insurance could afford treatment for speech-language pathology. If they can afford it and decide to pay for it themselves, then why tax them? The situation is a little like that of the young children I was talking about earlier, who have problems speaking or hearing. The same is true of seniors who have the same sort of problem. And these clients are not wealthy. We know the statistics about seniors. Any measures that could help them further would be welcome.

We are still waiting for the federal government to look at seniors' tax returns and pay them the guaranteed income supplement immediately if they qualify. We are still calling for that. However, if they need a speech-language pathologist, we agree that this service should be tax exempt, as the bill provides.

The bill contains only good measures. There may be some things we would like to see taken further, but we believe this is a very good start. There are some measures in the bill that we have wanted to see for a long time, such as the duty on wine. Vintners would talk to me about this regularly. They will be very happy to learn that the Bloc Québécois is supporting this bill.

As I mentioned earlier, on the whole, this bill contains attractive measures not only for airports and vintners, but also for people who need health care services.

We can please all these people, and these measures are along the lines of what we want to see happen. That is why the Bloc Québécois will be very happy to support this bill.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I tend to agree with a number of the points that the member has raised. The bill is about 120-odd pages long and there are numerous provisions enacting a number of changes to improve the operations and fairness of the GST and HST. The member discussed a number of those in his speech.

There is one area where I am not exactly sure whether I fully understand the full impact of the changes, but it has to do with the GST or HST on health. The member talked about the speech language pathology services, but the bill also deals with exempting health related services rendered in the practice of the profession of social work.

I do not know if the member noticed that, but social work is a very broad concept. With regard to the operations in the fairness of the tax, I would be interested to know how far this concept of social work should go and whether or not the bill opens up a new horizon of tax fairness opportunities or maybe assistance particularly in those professions which are probably directed at helping those in most need in our society.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I wish to thank my colleague for his very pertinent remarks.

How far will we open extend the notion of social work? For my part, I considered that it was limited to social workers. Earlier, in my speech, I gave the example of a youth who had problems integrating into his school environment, and whose parents have to wait a long time before being able to meet a social worker. In my opinion, this bill is quite specific in this regard.

Could that be extended to a consultation with a psychologist? I think that more study must be done on this subject. If a child has a problem, if there is no psychologist in his school and if his parents must wait years before getting advice, I would not object to a psychologist seeing this child. However, he is partly right. How far should we extend it? For the time being, I know that speech language pathology is included, as well as social work.

For our part, we had limited that to social workers. It is not negligible. A social worker may not be a psychologist, but a good social worker surely understands the issues of the school environment, among others, and can make a valuable contribution when someone asks for help. We will stay vigilant and we will evaluate the situation as it evolves in order that the extension does not go too far.

I gave the example of the psychologist, and I said I would not be against that. As far as social workers are concerned, that is clearly in the law presently. We shall see if it needs to extend to other professions. For the time being, this is how I interpret the bill.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I found the speech by the hon. member particularly interesting. Of course, the Bloc will support the bill. However, I would like to draw the member's attention to an addition he certainly noticed.

I refer to the problem the government created when it abolished the GST rebate for tourists. We succeeded in getting some changes to the program to protect, for example, outfitters and big meetings and conventions. However, the duty free shop owners and operators are still making representations.

Since the member is an active member of the border caucus, he must undoubtedly be concerned by the issue, all the more so because there is a big duty free shop in his riding, close to the American border.

I would like to know if he thinks that the government should change the unfair situation in its future bills. If it could be done through bill C-40 it must be possible to do it in the future.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I thank my colleague for giving me an opportunity to speak to this matter.

Indeed, this is a problem we have heard a good deal about, particularly with the border caucus we have created like our American friends. I am co-chair of this caucus with three colleagues from the three other political parties. We have heard about this problem and also shop owners met with us. The government will not be refunding tourists about $70 million in GST. This is somewhat difficult to accept because most of them were getting the refund in the duty-free shops. Instead of going home with all the money they had left, they were spending it in duty-free shops.

The government had some return on this money. I do not see this saving of $70 million on a budget of close to $250 billion as a good move. I wonder if it is too late to amend the bill. Since this is third reading, it may be a bit late.

The government is encouraged to make further adjustments in a future parliament. I believe this does not need to be done through a bill. The government could make a regulation to ensure that this measure is not implemented. The government is urged to come to its senses and not prevent the benefits linked to the GST rebates for tourists.

People are saying the refund benefited the tourists. But such is not the case. Tourists were being refunded and they would often spend the money immediately. Now, the money goes to the government. I think this is a bad move from the government and it should correct the situation as soon as possible.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, the intent of Bill C-40, which we are studying today at third reading, is to correct various weaknesses with the GST and the excise tax. First, I would like to talk about some aspects of the excise tax, more precisely the measures on tobacco and alcohol, and some other enforcement aspects.

The measures to make some provisions on tobacco in the Excise Tax Act more precise should help the fight against tobacco smuggling while simplifying the collection of the tobacco tax. The bill will extend 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 international Framework Convention on Tobacco Control.

We can see that the whole tobacco smuggling issue is something that comes up on a regular basis. It seems that smugglers, from one generation to the next, are more and more original and innovative in their smuggling methods. We have heard a great deal from those concerned, from grocers among others. A kind of secondary, parallel market has sprouted up across Quebec and Canada.

Now the solution lies in part in the measure contained in this bill. We will probably need to ask for other measures to add to the punishment aspect. In any event, we will have to make sure that we really know where the tobacco comes from and that we also know, when a pack of cigarettes is sold outside a reserve for example, where it comes from and where it was produced. There would be no more ambiguity then and the customer would automatically know where it comes from and could not pretend that he or she did not know anything about the situation. This has a major economic impact on the regular network, the legal sales network, including groceries and all the other businesses that sell cigarettes.

Of course we will keep on with the campaigns to reduce tobacco use and hope that tobacco use will diminish. As far as the legal aspect is concerned, we have to make sure that the current law is properly enforced. There is at least one measure that seems to go in the right direction and this is one of the reasons why we will support this bill.

As far as alcohol is concerned, part of the bill deals with some level of modernization. Provincial liquor boards and vintners would be allowed to possess a still, or similar equipment, to produce spirits for the purpose of analyzing substances containing ethyl alcohol without holding a spirits licence.

As we know, our legislation still includes old provisions dating back to the days when some very strict restrictions were in effect regarding alcohol consumption. Some of these principles are still found in various acts, and even in the basic structure of the Quebec liquor corporation act. We are finding out that, in everyday life, with the changes occurring in consumption habits, it is important to provide local producers with as many tools as possible to allow them to develop good products, because this will often help them secure new markets. Indeed, sometimes they are not able to do so at the international level, because those products that are imported in large volumes are often sold at a much lower cost. This is why it is important to move forward with such measures.

A lot of changes are occurring. In my riding, a few years ago, a wine producer created the Vignoble du Faubourg. This producer was awarded the Grand prix du tourisme in Quebec, and it has achieved promising results. Authorizing the use of this type of tools will definitely allow us to move forward in this area.

There are other things in this bill, including measures pertaining to the air travellers security charge, and some tax relief. Other measures that deal with various areas include: a tax exemption for certain medical services; a lower tax burden for charities; helping small vintners—as I mentioned earlier—and measures relating to tobacco.

So, for all of these reasons, the Bloc Québécois will support this bill. This is a piece of legislation that includes many small provisions. A large number of measures are proposed, such as those in the health sector.

For example, the government is amending the act so that, in the future, speech-language pathology services will be tax exempt. This amendment to the act will confirm the tax exempt status of those services.

The change will facilitate access to services for seniors who suffer strokes. There are many interesting measures. There is one that 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. That will allow charities to fulfill their social mission with fewer financial pressures.

There are also measures concerning business arrangements. The Goods and Services Tax Act will be amended to provide transitional relief on the initial asset transfer by a foreign bank that restructures its Canadian subsidiary into a Canadian branch.

This last measure will give a foreign bank which owns a Canadian subsidiary the tools it needs to restructure it to the benefit of the Canadian economy. That will help foreign banks doing business in Canada to transform their subsidiaries into Canadian branches and will stimulate an increase in competition in the Canadian banking industry. We know that that industry will see more change in the future.

The debate on bank mergers is not over yet. Right now, measures are being introduced to allow Canadian banks access to foreign markets but when foreign banks have subsidiaries here we want to facilitate matters for them, depending on the context and according to the law.

The bill removes technical impediments that hinder the use of existing group relief provisions under the GST. This amendment simply clarifies the rules of application of the legislation already in effect. It is very technical in nature. In addition, the bill simplifies compliance by excluding beverage container deposits that are refundable to the consumer from the GST 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 measure also clarifies the treatment of the right to use certain types of amusement or entertainment devices, such as gaming devices, when 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.

This obviously is an omnibus bill that addresses a wide range of specific issues.

During speeches by my colleagues in this House I have often raised the issue of GST for tourists. I wanted to see in this bill or in any decision made by the government, assurances that all the negative effects of the measure announced in the budget would be eliminated.

The government probably realized in good faith that the GST rebate program was costing too much. It decided to eliminate the program, when it could have tried to find another way to manage it. Some countries that have this type of program simply outsource the management of the program. Thus, it is businesses—for example, duty free shops or other types of businesses—that ensure the administration of the tax and simply reimburse the government what it is owed. This eliminates a very costly bureaucratic process.

We should look into these avenues in order to find a way to maintain this program, which provides a significant competitive edge for the tourism industry in Canada and Quebec. Similar programs exist in other countries and some original ideas have been proposed.

What is more, a number of months ago, the Conservative government made systematic cuts in several areas. It was like these cuts were made blindly, without any consideration to their impact. We now have a concrete example that applies to the purpose of this bill before us and that calls for us to move forward to correct the situation.

I think that it is fair to say that this bill, which was introduced quite a while ago, puts forward measures worth recognizing. I would like to come back on those in relation to health, an area where speech therapy is under consideration for becoming zero rated. I do believe this is a very positive step, which would confirm the zero-rated status of speech therapy services and facilitate access to these services for youth with language disorders.

Also, this amendment will facilitate access for seniors who suffered a stroke. This is why I think it is important that these measures be implemented as soon as possible.

The sales and importations of a blood substitute known as plasma expander could also be zero rated. It is a little complicated to explain, but basically a blood substitute can be used in the treatment of people who have suffered massive blood loss, severe burns or an open fracture.

The intention was to ensure that these products would be zero rated. People's health is important, and these kinds of measures have to be put in place.

The government will restore the zero-rated status of a group of drugs collectively known as Benzodiazepines. These include medications such as Valium, Ativan and other similar products used primarily to treat anxiety, for alcohol withdrawal or as a preanesthetic medication. These help and improve people's health.

With respect to charities, the bill will allow the exemption of supplies by charities of real property. I think that is a worthwhile measure.

As a whole, this bill deserves to be passed by this House. It is currently at third reading. It has been considered and amended where necessary. It also announces work that will have to continue in these areas.

Concerning the GST and the excise tax, a thorough examination and technical improvements are often needed. Some have been suggested during this debate. It is now time to pass this bill and to ensure that it will really fulfil its role, that it will make some situations more human and that the very concrete work done to allow small wine businesses, for example, to make a name for themselves and to develop, will be made more effective.

This bill is non partisan in nature and does not require an extensive debate. Legislators have to intervene in very contentious areas, but, at times, they must support bills that are the result of in-depth discussions among participants and of recommendations coming from different areas.

Time spent on drafting a bill often impedes a lot with action. It is important to act quickly. In this case, we have already waited too long to implement some of these measures. That is why I want this bill to pass as quickly as possible.

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

Mr. Speaker, I congratulate my colleague for his speech on the bill.

Among other things, he mentioned the measures that have been announced concerning the GST collection. The member explicitly mentioned the five categories affected, one of which was charities. Charities will be exempted from all taxes on goods related to real property. These goods are supplied with real property leases and particularly short-time leases. Fundamentally, that will alleviate the burden on these organizations, which will be in a position to concentrate on their real mission as soon as the bill is enacted.

How can these measures allow charities which are in our ridings to concentrate on their mission and how will it alleviate their burden? How can we make sure that the people who receive services from these organizations can effectively receive them?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I thank the hon. member for his question and for the details that he provided.

When we pass laws, it is particularly satisfying when such measures can be implemented. Charities are often organizations that provide services to specific clienteles, that have specific needs in terms of equipment, and that may also have specific building needs to be able to do their work.

What we hope to do with this measure is to streamline as much as possible the administrative rules governing charities, so that they will spend as little money as possible on administrative procedures.

This provision 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.

For example, a building may be bought in my riding by a charity, through a foundation. At some point, the charity may find out that it needs this equipment. They have their day to day operations, and this measure will help reduce costs, particularly the administrative costs that often results from such operations.

When it comes to the GST, things can quickly get complicated. Additional administrative staff is required. It is very important that charities can fulfill their social mandate under less financial pressure. One of our responsibilities as elected people is to ensure that this is done, so as to promote the spreading of wealth. At times, this can be achieved in a spectacular fashion at specific events, but it can also be done in a concrete way, through measures such as those included in this bill.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, on a more general basis, the purpose of the bill is to make amendments to the Excise Tax Act, the Excise Act, 2001, and the Air Travellers Security Charge Act, and to make amendments to certain other acts.

The bill is some 126 pages long and it includes obscure references to amendments that are not understandable on their own. We would need to look at the existing legislation to understand where they fit and how they tie in with other things.

It would seem to me that the House has taken up a great deal of its time and the committee's time to deal with these matters because they are amendments to legislation rather than through regulation.

It would seem to me that where fine-tuning, operational efficiency and fairness issues can be the objective of the bill, there may be an opportunity here, as an example, to suggest to the Department of Finance that in crafting legislation on matters, such as we are talking about today, that these kinds of issues, rather than being incorporated into the legislation itself and therefore requiring other legislation to change it, that the more judicious use of regulations to the legislation might be a way to get swifter action on some of the important matters that the member raises in his speech about helping charities, vintners, social workers and others.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, my hon. colleague raises a very good point. He is an experienced parliamentarian and has dedicated a great deal of time to parliamentary work.

Indeed, we are talking about enacting legislation flowing from other legislation that has existed for years. I think a good parliamentary exercise with one piece of legislation would be to entrust it to the organizations responsible for reviewing the regulations so that a comprehensive study can be done and a recommendation made.

The observation that always has to be carefully considered is the following. When governments resort to regulations, the legislators are excluded from a part of the process. I have already seen this in other bills. It was a means of avoiding debate in the House to some extent, avoiding debate between legislators by saying that it would be included in the regulations. As they say, the devil is in the details. That is said in negotiations, for instance. Thus, I feel it is important that clear choices can be made between what can be addressed by legislation and what must be addressed by regulations.

This is a discussion that can take place when the Standing Orders of the House are reviewed and in the course of our various activities here. Perhaps we could also find a specific field in which to conduct such a study on a bill that will allow us to see if, indeed, there is not a specific field in which a consensus could be reached and in which studies of this nature could be conducted, and thereby avoid a partisan debate on the matter. It would have to be in a subject matter that is the result of a consensus among the parties of this House.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I believe there is not much time left for what I want to say right now.

I wish my colleague could at least give me his opinion on the comment I am about to make and answer a question I will ask.

My comment concerns the hard work done by the Bloc Quebecois and that all parties should do. I believe we could serve as an example of the way members of Parliament should work. It can be seen that we are treating this issue seriously because it is very important for certain communities. This brings me to a question concerning wines.

The excise tax on wines can affect small businesses. And when we talk about small businesses we are talking about communities. I represent the riding of Gaspésie—Îles-de-la-Madeleine. Last year, the budget contained a measure on microbreweries. The same thing could happen with wine. Such measures help small businesses with one, two or three employees, to consolidate and eventually expand. This could even be made part of the appeal for tourists in certain parts of the beautiful and great future country of Quebec. This is the comment I wanted to make on the hard work being done by the Bloc Québécois.

My question is as follows. Does my colleague believe that wines will get the same treatment as microbreweries?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I thank my colleague for his question. It gives me an opportunity to add something I did not mention before.

This bill will defer 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. For very small businesses, any additional cost can really eat into profits, which are often quite slim.

This measure came about because members went to see small vintners and listened to what they had to say. This measure is good for these companies' bottom line. On the one hand, we have a measure that lets them have a still to develop new products, and on the other, we have a measure like this one that relates directly to the GST.

Let us hope that all these measures will help this sector develop better in the coming months and years.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I want to congratulate a number of the members who took the time to review some of the provisions of Bill C-40 as they relate to their regions or matters which are of particular interest to them or their constituents.

In the question I asked of the previous speaker, I was not being facetious. I looked at the bill and took the opportunity to review its various provisions. Being the co-chair of the scrutiny of regulations committee, it made me wonder why so many of these provisions which appear to be clarifying or directed at operational efficiency are not necessarily changing the legislation with respect to the exigency of a tax.

One member described this as an omnibus bill. That is exactly what it is. It touches a number of acts. It does not read as a story from beginning to end where everything builds on everything else. In fact, one has to have in hand the related legislation and the specific sections to which those changes may relate and then they must be looked at in context. I suspect that if we were to take all of the related documents that tie into this to help us understand what it really meant, it would probably take days and days simply to peruse everything.

Having said that, it certainly makes a good case for those who craft the legislation to consider the use of regulations more fully in terms of providing the tools to those responsible for accountability of the legislation to be able to make the kinds of changes where fairness or operational efficiency, et cetera, may be the object. Any regulations appended to a piece of legislation must be authorized by the legislation itself. We cannot make law through regulations, but we can certainly provide the detail.

As a chartered accountant I have spent many years playing around with provisions within the income tax system. That document is very unwieldy and cumbersome, but in some respects it takes into account some of the other tools that are available to modify legislation or at least the application of legislation by the use of regulations. There is a variety of other documents, whether they be interpretation bulletins or information circulars, which also help Canadians.

I wanted to raise that point simply because it happens a lot in this place. It is very difficult for members of the finance committee who have the opportunity after second reading to have witnesses from the department come forward to provide explanations. Everyone is not a tax expert. What is needed is the lay language, what we lay out for other parliamentarians.

The way this place operates, very often parliamentarians have seconded the responsibility to do the due diligence on legislation to their colleagues at committee. They accept that the work has been done in a proper fashion and that the key elements of concern have been raised with officials and other witnesses, who may be stakeholders and have come before the committee to deal with it. It makes it very awkward to ask what the relevance is of the third reading debate if we cannot really get into some of the detail.

There is a lot of detail here. I am not sure whether or not there will be many answers forthcoming from the House. It would be a very interesting process to try to explain some of these measures. For instance, there is a page and a half which deals with the definition of what a returnable container is and a returnable container charge. The amendment in one aspect takes about a half a page to insert the words “the returnable container in a province”. That is the change. I am not sure whether or not there is anything more to that, other than there has to have been a dispute at some point in time where someone challenged the legislation on a clarity issue and this was simply a matter of trying to resolve that and put that issue to bed.

A number of members talked very well with regard to the changes as they affect charitable groups and organizations. I certainly concur with the direction of the changes that have taken place, particularly since most members of Parliament have been extensively involved with charitable groups. Those groups have had very good representation on the Hill. A number of the points they have raised, whether it be directly with members or through related committees, have been very helpful.

Scanning down the list of issues, some who may be watching will probably wonder why we are talking about the GST and HST. That came up in the 35th Parliament when there was legislation to provide for the replacement of the GST with a revenue equivalent, which was taken up by certain provinces. The HST, which stands for harmonized sales tax, rather than goods and services tax, combines both the federal and the provincial taxes into a one line item.

In this bill the principal measures that were taken with regard to the goods and services tax, or where applicable the harmonized sales tax in certain provinces, have to do with a couple of key areas, certainly in the area of health. With regard to health, Bill C-40 confirms the GST-HST exemption for speech language pathology services. It also exempts health related services rendered in the practise of professional social work, zero rates sales and the importation of a blood substitute known as plasma expander. It restores the zero rated status of a group of drugs collectively known as benzodiazepines. It broadens the specially equipped vehicle GST- HST rebate so that the rebate applies to motor vehicles that have been used subsequent to being specially equipped for use by individuals with disabilities.

I looked at those specifically. I cannot say that I have looked at much more in the bill simply because there was not sufficient time to do it properly. The one area where I thought the bill opened up some interesting horizons has to do with the exempt status of health related services rendered in the practise of the profession of social work.

If we look at the related legislation and look at the practise of social work, I have a feeling that the discussion of this and maybe the change that has been made here may open up a broader range of requests for the same exempt status with regard to social work as defined. I am not sure that is a bad thing either, but it does point out that the tax system is never static.

When certain changes are made, others in the same or similar activity want to examine the rationalization for a change in the Excise Tax Act or the Income Tax Act. They want to more fully understand whether or not we are talking about providing benefits to certain groups that may have a stronger lobby or that may have come up with certain other challenges or interpretations to the application of existing rules, to changes in regulations or to changes in the laws in other jurisdictions. We often want to look at those to ensure we are keeping up with the trends with an international filter on what we do.

I thought that was interesting and I certainly support it conceptually. I do not know what might come up, but every time we touch something, others see a relation to their work somehow.

On Friday I had an opportunity to work in my constituency office. I had a visit from a gentleman who has a business which provides home care for seniors. It is an expansive home care service, and includes such things as bathing, medication, shopping, almost whatever service the senior might need. The gentleman asked whether there was any way he could get some breaks. It is an important job and he has to pay people, which is his biggest expense. He would like some sort of subsidy or assistance because, like most social work, it is generally some of the lowest paid work on a per hour basis of most professions. There are a lot of people who are paid very, very poorly in the provision of social related work.

I am not sure how we get from here to there, but this is part of that whole argument about the prosperity gap, about the difference between the rich and the poor. That gap is widening. There are only certain amounts of money. For people who require social assistance, as related to the social work definition, there is only so much that can be afforded and only so much that can be taken out of the customer to provide the services. I flag that issue. This may open up some interesting horizons for a number of businesses that qualify under the current definition of the profession of social work.

There is the discussion also related to charities. As I said, I certainly agree with the exemption of supplies by charities of real property under short term leases and licences.

There is a section on business arrangements. I do not think I can add any more to the debate on that.

There was some discussion about tobacco and alcohol. I thought it was interesting. This morning my private member's bill related to alcohol warning labels was before the House. I looked very carefully at the provisions in Bill C-40 to see if there was a tie-in. I suppose the only tie-in is that they both relate to alcohol, but not with regard to the tax.

In any event, with regard to tobacco, this bill 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, which is an international treaty on tobacco control. It also clarifies that cigarettes, tobacco sticks, fine cut tobacco and cigars, but not packaged raw leaf tobacco, may be supplied to the export market or the domestic duty free market. These changes were made, I am sure, from the interventions of the duty free industry and certainly those who are involved in the export market. We have had a number of discussions over the years about how we operate vis-à-vis other countries with which we have trade relations.

With regard to alcohol, the bill authorizes private laboratories, provincial liquor boards and vintners to possess a still or similar equipment to produce spirits for the purpose of analyzing substances containing ethyl alcohol, which is beverage alcohol. Ethanol is another word that is used to describe it. It is a poison, but I will not go there because that is a whole other area of interest, certainly with regard to me, but in any event, with regard to analyzing substances containing ethyl alcohol, it authorizes laboratories, boards and vintners to possess a still or similar equipment without holding a spirits licence.

That is interesting because it seems to me that in our legislation having a licence to do something, to possess things and so on, is a precursor to doing certain activities. In this particular case, I am sure that probably a number of petitioners made argument before the tax authorities that in the case of private laboratories or provincial liquor boards and vintners, where the analyzing of substances takes place, the need for a licence was not necessary. I suspect that we are talking about some other regulatory implications, but in this particular case I suspect that the licensing process may be a problem for some of them.

The other area I simply want to comment on is the GST rebate program for tourists. As we know, this has been a very contentious issue for a number of members of Parliament, particularly with regard to those members who are in border areas.

Tourism is an extraordinarily important part of the Canadian economy. I had the opportunity to chair the outdoor caucus of our caucus in the last Parliament and I got to know quite a bit about the tourism industry. Particularly after SARS, which was I think what spawned that caucus, that group of parliamentarians interested in the tourism impacts, it was amazing to find out how sensitive the industry was to disruptions that in fact really did not affect tourist areas but were more in the urban centres. Yet we found that in a broad range of goods and services, whether it was lodging, rental of boats or fishing equipment or other purchases of equipment, all of those things took a dramatic decline.

There is another aspect. I think those members who are from the Maritimes, and in particular P.E.I., will tell you that tourism is down very substantially now. They believe, whether because of SARS or because of the GST rebate program for tourists, that those who had come here in the past suddenly found that this was enough to make them look for substitutes. They started to look for other options. In fact, many found that the substitutes, which were a better economic deal for them, had the same or similar benefits or enjoyment they had when coming to Canada.

Therefore, I am very pleased to see that this also has been resolved. I think it is important that Canada's tourist industry continue to be well supported. It is unfortunate that some damage has been done. In an economic downturn, and in particular where the dollar has been quite strong, we have to be vigilant about the unintended consequences of certain moves.

I think it behooves all of us to continue to urge those responsible for the accountability of our financial policy to think it through very carefully and to do the consultations that are necessary to ensure that our tax system remains not only operational but fair.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Mr. Speaker, the member for Mississauga South talked about the tourism industry. The tourism industry is the industry I happen to have grown up in. Over the years I have seen government actions in a positive way and even in a negative way.

The member talked about the GST visitor rebate program. Now, of course, the government has introduced the tour operator and convention incentive program. There were many representations made to the government.

I have had a lot of experience with that GST visitor rebate program. The member talked about accountability. The new program, from my knowledge and understanding, is far more accountable. No American tour groups or conventions have had to pay GST that did not have to pay it before. In fact, no group has had to pay GST that did not have to do so before.

In light of the fact that the new program is much more accountable, is it something the member would be happy to support?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member is quite right. There was a significant threat to the convention industry and the member's riding would certainly have been affected by it.

As legislators, we go through this process: we do our due diligence, we determine where the problems are, and we correct them. Whenever we make changes, it is to help us, as we say in our prayer each and every day in this House, “make good laws and wise decisions”. In this regard, I believe it is good legislation and a wise decision.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I would like to ask my friend a question to return the favour he did for me. I missed part of his speech.

Nevertheless, earlier he asked me whether it was possible to broaden the concept of social worker. I went so far as to say that I felt the same thing could apply to a psychologist. I think my friend was afraid we would take the concept of social worker too far. The bill refers to social workers, though.

Would he be in favour of broadening the concept of social work services to include other professions such as psychology or similar professions?

I would like his opinion on this. I am simply returning the favour he did for me earlier, when he asked me about my own speech. I would like his opinion on broadening the concept of social work to include other types of jobs.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I would hesitate to give a definitive answer without having considered it carefully. However, I listened carefully to the member's comments earlier. He spoke about specific cases. He spoke about speech pathologists. He spoke about psychologists. We know that in this complicated, fast-paced world we live in, children often are the victims here.

As a value or as a principle of approach to considering it, I would say that children are important to Canada's future and that investing in their health and well-being is something that is certainly worth considering very seriously.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, the last Liberal and Conservative speakers both have alluded to the damage done to the tourism industry by the cuts last year. Surplus money that was taken from the Canadian Tourism Commission could have been used for marketing the museum assistance program, MAP. Museums are very important in tourism.

Both members talked about the GST rebate, which has been partially reinstated. I do not want the members to be under the illusion that this is fixed. The tour operators and the convention people will get the rebate, which is great, but individual tourists are very important to my riding and they will not.

On Friday night in my speech at the Association of Yukon Communities, I assured the people that we would work to reinstate that rebate. Individual tourists who drive from the United States into Canada, for instance, and we have a lot of them, do not get the rebate any more. I am asking if the member would commit to help me fight to get this reinstated to help our tourism industry.

Finally, I have a constituent named Tony Fekete, who often comes to see me at the airport and suggests that in Canada we should not be ruling by regulation. Canada is unlike Europe, where governments are not allowed to do that. He thinks we rule by regulation far too much and government is not accountable. I wonder if the member would like to comment on that for my constituent.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am glad the member raised the issue of the rebate as it applies to individuals. He is quite right. It has not come back to what it was in the past, which is unfortunate.

Many communities around the country may not have the facilities for tour operators or to host conventions. However, when people go to the local lodges or the small motels and services for the wilderness, the outdoors and the non-urban or even semi-urban, these are the areas where the vitality of that local economy depends on those people.

We often do not appreciate the sensitivity of a few dollars here or there. Even the symbolism of a tax to be paid, which people cannot get back when they go back home, knowing that others can get it, is not helpful.

The answer to the member's first question is that it is very much something that should be reinstated. I know the people in our border communities would like to see that as well.

Finally, with regard to the regulation side, things cannot be done by regulation that are not authorized by the legislation itself. A tax cannot be created in a regulation. The tax must be authorized within the legislation itself.

My comment earlier about looking toward regulations is that when there is some fine-tuning, which clearly is not changing the enabling provision of the legislation but rather clarifying the items or the language so that it clarifies the concerns that taxpayers may have raised in certain other cases, that to do it by regulations certainly is a more efficient way to do it simply because it does not need to come before the House of Commons. It can be done by order in council, basically by cabinet on the recommendation of the related minister.

[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)