Bill C-62 (Historical)

Provincial Choice Tax Framework Act

An Act to amend the Excise Tax Act

This enactment amends the Excise Tax Act (the “Act”) to implement, effective July 1, 2010, the new fully harmonized value-added tax framework in Ontario and British Columbia. It also facilitates the new framework to accommodate any province’s decision to have the provincial component of the harmonized value-added tax under the Act apply in that province by achieving a common understanding with Canada in respect of such a new framework, including the provision of rules and mechanisms to ensure
(a) the proper imposition of the provincial component of the harmonized value-added tax in respect of that province;
(b) the proper application of any element of provincial tax policy flexibility contemplated under the common understanding, including rate flexibility for the provincial component of the harmonized value-added tax, rebate flexibility in respect of the provincial component of the harmonized value-added tax and the temporary recapture of certain input tax credits in respect of the provincial component of the harmonized value-added tax;
(c) the proper functioning and application of the Act in all respects, including provisions flowing from the provincial tax policy flexibility contemplated under the common understanding and the addition of every province that chooses to join the new framework; and
(d) the proper administration and enforcement of, and compliance with, the Act.

Provincial Choice Tax Framework Act

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, it is tempting to just answer with a very simple yes. Frankly, I resent the implication that my constituents in the riding of Hamilton Mountain are either stupid or ill-informed.

Yes, I communicate with my constituents on a regular basis, but I am not the only source of information on this issue. The media has been covering it broadly. Goodness knows, the government is not shy about advertising its new programs. The McGuinty government in Ontario is also trying to sell this tax to somehow make it seem sweeter than it actually is.

Let me remind the member. He said there may be permanent income tax cuts to go along with this. Fair enough. My constituents need those permanent income tax cuts in their pockets now. They do not need to be given income tax cuts with one hand and then reach into that same pocket and take the money back with the 8% on things like vitamins, haircuts and home heating fuel.

I do not know whether the member for Mississauga South has ever been to my community of Hamilton, but it used to be a thriving manufacturing community. Now people are suffering as a result of an economic recession that is not of their own making.

The constituents whom I quoted are the unwitting victims of an economic crisis that was created by the greed of others. Yes, they need the government's help. Is there any doubt that they would welcome more money in their pockets? Absolutely not. But that money should not be given to them under the condition that a bit will be put in this pocket and a little more will be taken out of the other pocket. That is exactly what is happening.

When the member talks about the McGuinty cheques that are going to be trickling into people's households, does he really think he can fool people in my riding of Hamilton Mountain? They know those cheques are pre-election bribes.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Mr. Speaker, in her speech the member gave some indication of how much people dislike this new tax based on the emails, phone calls and letters that she has been receiving. That is all borne out by the Ipsos Reid Canwest poll just released yesterday, which is certainly bad news for both the Liberals and Conservatives in the House. It showed that over 74% of the people in Ontario are against this new tax.

The member for Mississauga South seems to be suggesting that somehow offsets are being offered by the government, but a lot of money is involved in this tax.

The Manitoba speech from the throne on November 30, just a few days ago, clearly stated that:

Manitoba is rejecting an invitation from the federal government to introduce a Harmonized Sales Tax. As proposed, the HST would impose more than $400 million in new sales tax costs to Manitoba families--

That is $400 million with only one million people. Let us extrapolate what one would get in Ontario which has multiple times more population.

We are talking about huge dollars here. When the member for Mississauga South talks about some income tax cuts to compensate and other compensations that Dalton McGuinty is going to give out, believe me folks, there is a lot more money here than the government is pretending. Huge dollars are involved here and that is what this is all about.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I want to thank my colleague, who is from Manitoba, for those comments because he is absolutely right. Nobody who is watching this debate and who has been following the debate as told through the media and through their members of Parliament would believe that there is not something in it for both the federal and provincial levels of government. The quote that was just read from Manitoba is absolutely spot on in that regard.

The Government of Manitoba is not the only validator of the position that we have taken here in the House. Let me read a few others. B.C. Federation of Labour president Jim Sinclair said:

We must reject in the strongest possible terms the HST. This tax is a disaster for everything we believe in. Our slogan is simple: No HST.

The Union of BC Indian Chiefs said:

This tax will further marginalize and add hardship to First Nations families and communities while increasing the coffers of industry and government.

The Canadian Association of Retired Persons said:

Eighty-five per cent of the over 5,000 CARP members polled disapproved of the proposed harmonization of GST and PST.

Pauline Aunger, president of the Ontario Real Estate Association, said:

These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market.

Harmonizing will not help homebuyers in any way.

The executive director of the Vancouver Thunderbirds Minor Hockey Association said:

We estimate that if the HST was to be introduced, it would cost the Vancouver Thunderbirds Minor Hockey Association an additional $30,000 directly related to the purchase of ice for the youth in our community registered in our hockey program.

I know I am out of time, but perhaps I will get a chance to read some of the other quotes into the record after the next question.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, my colleague's speech was very interesting. She spoke of all the issues around real people.

She mentioned some of the issues that were brought up by the first nations. It is my understanding that the Government of Ontario has actually tried to get the federal government to allow an exemption from the HST for point of sale purchases as there is now for the provincial sales tax, but the federal government has refused to do so.

Could my hon. colleague shed any illumination on why the federal government is taking a hard line against aboriginal people on reserves in Ontario and B.C.?

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, it is always difficult when colleagues ask me to get into the mind of the Conservative government. That is a challenge I am not quite prepared to take up. His point, though, is unbelievably well taken.

As you well know, Mr. Speaker, from following the debates in the House, it is not only the member for Western Arctic, but the member for Nanaimo—Cowichan who is our party's critic for aboriginal affairs, and the member for Churchill, the member for Timmins—James Bay, the member for Algoma—Manitoulin—Kapuskasing, all NDP members in the House, who have raised the point of sale issue in first nations communities over and over and over again. They are not being listened to in the House.

This is the place where we are supposed to represent the views of Canadians. Unfortunately, the process that has been adopted by the government to ram this legislation through the House and not allow for public hearings makes a mockery of this most important democratic institution in our country.

I have to say that as politicians in the House, most of us at least on the opposition side, believe that when we deal with first nations we have to do it on a government to government basis. We are doing something as fundamental as changing the tax laws in this country without any consultation with first nations. I cannot believe it is happening. I am saddened by the fact that it is happening because, as everyone knows from the speech I just gave, hundreds of people want to have input into this taxation policy and it is not being given.

[Daniel Paillé, Bloc, Hochelaga, QC]

Mr. Speaker, how could anyone be against a bill that allows the provinces to harmonize taxes that affect everyone? We must ask ourselves this question. In Quebec, we do not understand how anyone could oppose it, since we harmonized our taxes in 1992. At that time, we thought it was only right that we should take over the management of our own affairs. It was only natural for us to govern in a different way. Business was business at that time, and accordingly, for services rendered, the Government of Canada reimbursed the Government of Quebec $130 million a year for administrative costs. It is an administrative arrangement: the federal government has what it has for $130 million. This has nothing to do with compensation.

At the time, the Government of Canada did not offer any compensation. As least that is what it said, until it offered three provinces—New Brunswick, Nova Scotia and Newfoundland—compensation equivalent to 1.5 percentage points of the tax base. That is how those three maritime provinces received nearly $1 billion, $961 million to be exact, beginning in April 1996, to be paid over four years, thereby compensating for 100% of the difference for the first two years, 50% for the third year, and 25% for the fourth year. No matter what administrative arrangements were made, there were arrangements and there was compensation.

It is up to the provinces to decide whether to let the Government of Canada collect the tax. I see this as yet another difference between Quebec and the Canadian provinces. Quebeckers would rather we control our own tax revenue ourselves. That is one of our rights, one of the rights we have claimed, one of the rights we exercise, and nobody is going to come and take that away from us.

However, since 1996, Canada's tax system has been blatantly unfair. The maritime provinces were compensated, but Quebec was not. Of course, there are those who say that since 1995, the federal government has been allowed to do whatever it wants to Quebec.

The value-added tax system is a much better system that Quebec has favoured for ages. This is another example of what a great job Quebec is doing running its own affairs. It is doing such a great job that Canada's two largest provincial economies have now accepted that this is the best way to do things and are working on harmonizing their taxes.

And now, in one fell swoop, the Government of Canada wants to be in charge of collecting these taxes for free on top of providing compensation.

Compensation for these two provinces is more than peanuts. It will be around $4.3 billion for Ontario and $1.6 billion for British Columbia, a total of $5.9 billion in current 2009 dollars. Those two provinces will cash in, but Quebec will still get nothing.

This morning, one of the speakers estimated that the $5.9 billion will actually end up costing a little over $10 billion because of the interest that the Government of Canada will have to pay on the money it borrows to pay that $5.9 billion.

I did the opposite calculation and came up with some numbers of my own. If the government has owed Quebec $2.6 billion since 1992, what would that be worth today? How much? At an interest rate of 5% over 17 years—I did this properly using a 5% interest rate, not 10%—the current value of the $2.6 billion owing to Quebec since 1992 would be $6 billion. Now, $6 billion compared to $5.9 billion, that is saying something.

In other words, what the federal government will be giving Ontario and British Columbia is equivalent, in today's dollars, to what has been owed to Quebec since 1992. It could not be more unfair.

But we have no intention of interfering in the negotiations between the federal government and the Government of Quebec regarding the compensation. They have the power to negotiate and we will let them do so. But in order to negotiate, you need at least two parties.

One has to wonder about the willingness of the federal government to negotiate with Quebec. Despite a unanimous motion from the Quebec National Assembly, we have not gotten anything. When their interests are at stake, Quebeckers generally support the minister, regardless of his or her party.

The former Quebec finance minister had a very long exchange with Canada's Minister of Finance. Ms. Jérôme-Forget was practically waving a white flag in one of the letters that she sent to the current federal Minister of Finance, because she said that she would give him what he wanted.

She told the minister that he was right to open the door to compensation for Ontario, and that we would do everything we could to get the same compensation. Seven years ago, the door was also opened to British Columbia, but the door is always slammed in Quebec's face. Ms. Jérôme-Forget wrote the following:

—with respect to all the pertinent clauses, the agreement will be modelled for the most part on the Canada-Ontario agreement signed last March.

The Canada-B.C. agreement is the same as the Canada-Ontario agreement.

I cannot be accused of partisanship since we are not in the same party.

The more the Minister of Finance agreed to what the federal Minister of Finance asked for, the more he asked for. He does not seem to want to resolve the issue. It is as though, during a three-period hockey game, the federal government decided that the players would play four quarters of football and, in the fourth quarter, that the players would play nine innings of baseball and then, in the ninth inning, it claimed to have made a mistake and decided that the players would now play 18 holes of golf.

It has been 17 years. If they want to play golf, they will be resolving the issue next year.

I therefore call on the Minister of Finance of Canada to show that he can manage the public purse fairly. It is his duty to compensate Quebec pronto, because Quebec harmonized its tax 17 years ago. He should respect the people of Quebec and their National Assembly.

All Quebeckers support the current Minister of Finance, Mr. Bachand, who is the member for Outremont. I am deliberately mentioning the minister's riding. Quebeckers do not really understand why the other member for Outremont, who sits here, is going to vote against the bill. All Quebeckers support the provincial member for Outremont. Only one federal member from Quebec does not support the bill, and that is the member for Outremont. I am sure that it is because his motto is “Canada first”.

Of course, any bill can be improved, but I believe that this one respects the provinces' jurisdiction. Since that is a rare occurrence these days, we will vote in favour of the bill.

Some provisions do leave me confused, though, such as the advance notice required for changes in provincial value-added tax rates. From now on, the provinces will have to notify the federal government 120 days before making any changes. This means that a provincial finance minister will no longer be able to announce in a budget speech that effective at midnight, the tax rate will go down or up by a given percentage. I am getting into administrative details, but the fact remains that the substance of the bill is good.

The bill offers less flexibility and is sort of a Canadian compromise.

My first official speech in this House supports the unanimous motion in the National Assembly, where I sat for 15 years, including the beginning of the harmonization period. The motion read:

WHEREAS Québec was the first province to harmonize with the Federal goods and services tax (GST) in the early 1990s: [I was there]

WHEREAS since then, three Atlantic provinces have harmonized with the GST in 1997 and have received compensation for this from the Federal Government totalling close to 1 billion dollars;

WHEREAS the Government of Ontario announced that it would harmonize its sales tax with the GST beginning on 1 July 2010;

WHEREAS the Federal Government will grant a 4.3 billion dollar compensation to Ontario for this harmonization, an amount that is justified in the Canada-Ontario memorandum of understanding particularly owing to the desire to stimulate economic growth and job creation, and the Federal Government will administer this new provincial tax free of charge on behalf of Ontario;

WHEREAS the Ontario sales tax will be very similar to the Québec sales tax (QST) since certain goods, such as books [that is important to us], will not be subject to the provincial tax and that input tax refunds in Ontario may be identical to those agreed to by Québec for an 8-year period;

WHEREAS Ontario is the fourth province to receive compensation from the Federal Government as part of the harmonization of the provincial and federal sales taxes, while Québec has not received any compensation to this day even though it was the first province to harmonize its sales tax;

BE IT RESOLVED THAT the National Assembly ask the Federal Government to treat Québec justly and equitably, by granting compensation that is comparable to that offered to Ontario for the harmonization of its sales tax with the GST, which would represent an amount of 2.6 billion dollars for Québec.

The National Assembly of Québec voted on that motion on March 31, 2009. Naturally, British Columbia was not there.

This should be respected. In my opinion, this first speech also condones fiscal freedom for the provincial governments. Subtle or not, the result is that there is a certain respect for provincial jurisdictions. I am calling on the Government of Canada to continue in that vein and compensate Quebec.

This first speech also reflects the views of an independent thinker who is practical, realistic and patient and who realizes again and again that having just one fiscal policy, ours, and just one collection authority, ours, would be a much better way to run Quebec. Add to that all our own laws and signing our own agreements and what we have is the definition of sovereignty.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, I would like to congratulate the member on his maiden speech, which is important to recognize.

The member noted some of the independent research that I had requested which was done by the economists at the Library of Parliament. They reviewed the $5.9 billion that is going to be borrowed to bring in this tax in Ontario and B.C. They projected it over 10 years and applied the general borrowing rate of the Government of Canada over the last 10 years. The cost increases from $5.9 billion to $9.9 billion.

I am wondering why the Bloc is supporting this bill along with the Liberals and the Conservatives, given the history of how Quebec has been treated. It is giving up a negotiation tactic here by allowing this to go forward without that issue being addressed. I would like to know from the member what the Bloc's strategy is in terms of caving into this right now.

If the Bloc members actually were supportive of pushing this issue for fairness in Quebec, they would not give the government and the Liberals this easy out, especially over the holiday season, to close down debate this way and to limit committee hearings. If there were committee hearings, witnesses from Quebec could give testimony about what happened in the past and what should happen. They could make that argument, but the Bloc members are giving all that up.

On top of that, Quebec residents are going to have to contribute to that $9.9 billion because the money is going to come from all across Canada. They are also going to owe the $5.9 billion and the interest on that. That is going to be passed on to Quebeckers as well.

[Daniel Paillé, Bloc, Hochelaga, QC]

Madam Speaker, indeed, the Government of Canada, instead of the provinces, will have to borrow. Consequently, in terms of overall debt management, the result is the same: if one does not borrow, the other will. Quebec has been waiting for the $2.6 billion for 17 years. That should not drag on just because there is unfairness on one side.

My colleague's question reminded me of something my mother taught me when I was a child. She used to say that being treated unfairly by someone did not give me the right to treat others unfairly. That is my position today. I am saying, and with justification, that Quebec is being treated unfairly by the federal government when it comes to tax harmonization, especially with regard to sales taxes. However, that is no reason to treat everyone unfairly.

In my opinion, the bill opens the door to future compensation from the Government of Canada. Ultimately, Quebec's concern is collecting what we have been owed since 1992 and, eventually, all the rest.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I listened carefully to the member's speech. He indicated that he liked Bill C-62 because it respected provincial jurisdiction, yet another Bloc member indicated that there is nothing in Bill C-62 for Quebec. The member must be hoping by supporting this legislation that the federal government will be in a good mood when it comes to negotiating with Quebec.

The member for Windsor West just pointed out that it made more sense to him that the Bloc would be voting with us against the legislation. In fact, we moved an amendment yesterday, which the Bloc did not support, to have committee hearings and have witnesses appear before the committee. Having watched the Bloc for the last year, I thought that would be something the Bloc members would be supporting. I wonder why the member did not do that.

[Daniel Paillé, Bloc, Hochelaga, QC]

Madam Speaker, when it comes to negotiations, it is very important to respect those who are negotiating, those with the authority to negotiate. The Bloc Québécois has always respected one thing among others, and that is that the Government of Quebec negotiates on behalf of Quebeckers and the Government of Canada negotiates for the federal government.

We do not wish to meddle in these negotiations and, as far as we are concerned, we have always defended the interests of Quebeckers. After having carried out the usual and rigorous evaluation of this bill, the Bloc members unanimously decided that it could lead to a possible resolution of the Quebec problem. It is solely because of this that we are voting for this type of bill.

[Nicolas Dufour, Bloc, Repentigny, QC]

Madam Speaker, I am pleased to finally ask my colleague from Hochelaga a question.

Once again, he has given us a brilliant demonstration of why sovereignty is necessary. It was nearly 17 years ago that Quebec harmonized its sales tax. At that time, my colleague was a minister in the Quebec government. Now, 17 years later—people must be wondering how old I was 17 years ago—this issue is still important, because Quebec still has not been given the compensation it deserves.

I would like to know what my hon. colleague from Hochelaga thinks about the Conservative Party members from Quebec who are completely incapable of exerting any influence on their own government to defend a motion that was unanimously passed in the Quebec National Assembly, and who are incapable of convincing their Minister of Finance that Quebec should be compensated. This is proof that just because someone comes into power and becomes a minister with a limousine—as token Quebeckers, I would remind the House—that does not mean they are capable of defending the real interests of Quebec.

I wonder what my colleague thinks of these ministers who supposedly defend the values of Quebeckers.

[Daniel Paillé, Bloc, Hochelaga, QC]

Madam Speaker, I thank my young colleague for his comments on my first speech. In 1994, I was already older than he is now. This shows that the sovereignist movement is being revitalized and that Quebec wants to become sovereign as soon as possible. What is most important to me as a member of the Bloc Québécois is defending the interests of Quebec.

In my speech, I talked about the actions of the current member for Outremont in this House, and I wonder why on earth he is voting the way he is.

I suppose I could ask the same thing not only of the members from Quebec that are ministers in the Conservative government, but also of the other members because, although they are not many, there are Conservative Party MPs that are not ministers. I believe that day after day, these members should strongly support the unanimous wishes of the National Assembly, their National Assembly, and say that they want full compensation. The big question here is what is most important to a Quebecker. Is it the Government of Quebec or the Government of Canada?

Instinctively, Quebeckers will always respond that their government is the Government of Quebec, except those backbenchers and government members we see here.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, the member is new here and probably does not remember the days when the Bloc unilaterally facilitated the government's first two budgets, capitulating at the expense of Quebec originally. I just cannot believe that the member does not realize the strategic importance of trying to get something on the table for the government.

Perhaps the Bloc members have a secret deal, who knows, but they are certainly giving up the interests of Quebec, which is of no value at all right now.

[Daniel Paillé, Bloc, Hochelaga, QC]

Madam Speaker, this kind of question is bordering on offensive. I respect the hon. member, who has the right to ask this type of question, but I believe that the Bloc Québécois fully defends the interests of Quebec, and would never sign the kind of agreement the member has suggested. Under no circumstances would the Bloc Québécois do anything to detract from defending the interests of Quebec. That is our—

[The Acting Speaker, NDP, Denise Savoie]

Order, please. Resuming debate.

The hon. member for Mississauga South.