Mr. Speaker, this gives me a chance to answer the member's question, because I think all members of Parliament have received communications from their constituents on the harmonized sales tax question, which has a number of elements to it.
The member who just spoke is quite right. What the Conservative government is doing now is putting closure on the whole process of dealing with this bill. That is reflected in Motion No. 8, the matter that was first raised here, for which the member has now tabled her amendment.
I do not have the amendment. However, if one of the pages could get me a copy of the amendment that was tabled, it would be helpful.
My constituents have been trying to understand what exactly is the role of the federal government here and I have been trying to provide them with some detail. However, I thought it would be helpful for others if there were at least some recognition of what is happening here in the chamber and what is going to happen as we move forward with this bill.
The government has in fact tabled Bill C-62 in the House, the bill that would amend the Excise Tax Act and make all of the necessary changes to permit Ontario and B.C. to pursue harmonization of their sales taxes.
That bill is not before us yet. It has been tabled and printed and is here and members can look at it. They had better have a copy of the Excise Tax Act, because it will be very difficult for members to understand what this means without putting it in the context of the Excise Tax Act itself.
There has also now been an amendment made to change the process. However, the process before the House is such that we will only have one day to debate Bill C-62, when it is finally called. That will be before the end of second reading stage, and 15 minutes before expiry of the time provided for government orders on the day on which this bill is going to be called, we will have votes. We will vote on this bill at second reading, which is basically to provide approval in principle.
Normally, what we would do is to refer it to committee for committee hearings. However, Motion No. 8 goes on to say that the committee is only going to have four hours. This is where the previous speaker decided to move an amendment. What it says in paragraph 2 is that:
not more than four hours following the adoption of the second reading motion, any proceedings before the Committee to which the bill stands referred shall be interrupted....
Hence, it basically says that the committee is going to have four hours.
I can tell members that there are a number of constituencies that are impacted by the potential imposition of an HST, but the discussion in committee will be four hours. It says that the committee has to report the bill back to the House by 11 o'clock that night.
The next part of Motion No. 8 has to do with report stage motions. I raised this earlier as question for a member who spoke. As a matter of fact, it was a question to the finance minister this morning, saying that members of Parliament who were not on the finance committee could attend and listen to a committee meeting, but without the unanimous consent of the members of the committee, they would not get a chance to ask any questions or speak.
Therefore, what is going to happen is that they are going to do their work and at the end of four hours, they are going to have to vote and send it back to the House. The next morning, what is going to happen is that any member who wants to make a report stage motion, i.e., to propose a change to that legislation, he or she will have to submit it by 3 a.m. There are some rules surrounding report stage motions, one of which is that if a matter has been disposed of or considered and negated in committee, it cannot be raised at report stage.
The question I raised with the minister was that it did not seem that members were going to have much of an opportunity to determine whether or not any other amendments would be admissible, simply from the standpoint that they would have to be advised first of exactly what was dealt with in committee. Theoretically, I guess 308 members would have to attend the finance committee meeting to determine what amendments they might be able to make.
Obviously, that is ludicrous. It is not going to happen, unless the meetings are held in West Block and members are provided at least some water while they do their work.
The deadline for getting to the report stage motion is 3 a.m. The bill is then going to proceed on the next sitting day at report stage, if there are any amendments. I suspect there may not be, but if there are, no more than one sitting day is going to be allowed for both report stage and third reading. I am not sure there is going to be a report stage motion. There may be some ingenious way of getting the amendments through, but it is very unlikely we will have an opportunity to debate them in a normal fashion.
My comment to the minister was that we are basically going through a charade. I really do not appreciate it, because the committee ought to be relied upon to carry out due diligence on a bill and to report to the House that it has looked at it and there are no problems.
There are also some stakeholders who may want to appear before the committee and they are not going to have the chance. In a four-hour meeting, after the presentations by the Finance officials on the various aspects of the bill, explaining why they are there and answering questions from members, et cetera, it is very unlikely there are going to be any witnesses.
Quite frankly, we are going through a process wherein we are really not going to be able to do much to change Bill C-62 as presented to us now. The motion before us pretty well shuts down all venues that members normally have to advocate for certain changes.
If we get to a point where the bill is not read a third time and passed by this coming Friday, the House will adjourn on Friday and reconvene on Saturday and we would here then to dispose of the remaining business related to third reading.
I know that many of the members do not like the idea of closure. It is another reason to oppose the bill for those who have a profound disagreement with the introduction of the harmonized sales tax in their province, whether it be B.C. or Ontario, or maybe another province that may ultimately decide to go forward with that.
I and a number of other people met with a provincial minister of revenue on this just to try to understand it a little better. One of the things I really had to understand was the agreement the Province of Ontario entered into with the Government of Canada. It is my province. I have not read the memorandum of agreement between B.C. and the federal government, but I took the opportunity to print it and look at it. There certainly is a lot of ministry involvement.
The memorandum of agreement is referred to in the debate as the MOA. We will also hear about the Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement, referred to as the CITCA. There is also the Canada Revenue Agency and a lot of people will talk about the CRA, as well as the Canada Border Services Agency, the CBSA, which will administer the Ontario value added tax, the OVAT. If people are not confused yet, they will get confused unless they have a glossary of terms and acronyms.
For this agreement negotiated by the Conservative Government of Canada with Ontario and B.C., the necessary legislative process and the signing of appropriate agreements have to take place before March 31, 2010, except where otherwise authorized by the MOA. Canada also undertakes to seek approval of the Governor in Council to enter into the agreement.
As for the implementation date, Canadians will probably know that the proposed date for the harmonization of sales taxes in the two additional provinces to be effective is Canada Day, July 1, 2010.
The transitional provisions are important. There is a provision under the provincial tax policy flexibility that, subject to reasonable notice, the province, in this case Ontario, could increase or decrease its value added tax rate two years after the date of implementation. So there is actually a freeze on this, and there is not going to be a change before the two years are up.
It is important that people understand in regard to the implementation of a value added tax and a harmonized sales tax that when taxation systems get too many exceptions and too many details, they become very cumbersome to administer and, certainly, to apply, which causes an awful lot of difficulty. Therefore, the agreement stipulates that there will be a designated, limited number of OVAT point of sale rebates, that is, for the Ontario value added sales tax, not to exceed 5% of the aggregate. It means there will be a limit in place in the agreement on how many items can be exempted from the harmonized sales tax, and that is why there are a number of items that members have already noted do not currently attract a provincial sales tax. I think there is provincial sales tax on shoes of over $30 in value, but not those under $30. Now shoes are not even going to be exempt at all. It is not easy to say that we will now implement an 8% tax increase on shoes under $30. A lot of these kinds of examples will come up, but we have to remain focused on what this chamber has been asked to do.
There are some other provisions with regard to input tax credits. I do not believe they have agreed yet, but there is an undertaking to agree on the rebate rates and thresholds for the MUSH sector. Members may recall the discussions with regard to municipalities, universities, schools, colleges and hospitals; and charities and qualifying housing NPOs. I am sure there will be significant discussions with those sectors because, currently under the GST, they do get some extra assistance with regard to rebates or input tax credits, for which they are eligible.
This whole agreement is based on a common tax base, and I should indicate that all of this information is available on the Ontario government website. There is no questions that if one took the GST collection system and the provincial system and combined them into one, then one would have a whole administration for collecting the taxes, processing the documents, doing investigations, fixing errors, et cetera. It is a tremendous cost. As a matter of fact, there are some provisions in the agreement whereby it is mutually agreed that the provincial tax policy flexibility provisions will be collected and administered at mutually agreed upon service and compliance levels by the Canada Revenue Agency and the Canada Border Services Agency at no cost or charge to Ontario.
In addition, Canada will be solely responsible for all the revenue agency and border services agency start-up and ongoing costs, including their development and systems costs, so there is a substantial savings in terms of eliminating costs at the provincial level. These costs will in fact be billed to the province on the basis of usage in terms of the processing involved with the provincial taxation component.
The agreement says, “Canada agrees to pay Ontario its revenue entitlements on a daily basis. For greater clarity, the allocation for a tax entitlement year will be paid to Ontario in estimated daily amounts determined using the revenue allocation framework beginning July 1, 2010”.
There are some provisions with regard to the exchange of information agreement with regard to human resources. There are some other changes. During the transitional period, though, the province will be able to continue to operate the system so that a transitioning happens when things get sorted out. Whenever we have a change, there are always things that are going to come up, so they have made some transitional provisions.
I was not aware of this, but there is going to be an appointment of a panel. Both the Government of Canada and the Government of Ontario have agreed to appoint a panel or an individual within six months following the implementation to review and make recommendations on possible improvements to the administrative and policy information available; the revenue allocation framework, such as replacement by a system that would provide distribution of revenue to Ontario, and harmonized sales tax provinces, based on actual sales of goods and services in such provinces; and finally the governance and organization structures of the various committees under the Canada-Ontario agreement.
Therefore it is anticipated that there will be ongoing fine tuning with regard to the agreement.
I encourage members to consider looking at the agreement. I understand that once we get through this procedural phase, it would appear there is not going to be much chance of amending Bill C-62. It is going to be presented to the House on probably the fastest track one can ever imagine.
What members probably should consider is the fact that Ontario and B.C. have made a judgment: in their judgment, this policy of harmonizing the taxes makes sense for their economies.
Having met with the Ontario Minister of Revenue last week and having seen the presentation on how this would work, I could see clearly that the Province of Ontario is hurting badly; in fact, its projected deficit for the current year is about $24 billion. The job loss in Ontario is extraordinary.
Faced with the prospect of having this implemented now, people were saying it might make good policy sense, but the timing is not good because everything is so bad in the economy. However, both B.C. and Ontario have been arguing that it makes sense because it is going to provide an additional stimulus in their provinces to create jobs. In fact, about 591,000 jobs will be created in Ontario, according to Jack Mintz .
We might wonder where this money is coming from. Earlier I had an opportunity to pose a point to a member and ask for his comment. It had to do with the difference between this tax and what happens when GST is charged on a product.
As most Canadians know, GST is only paid once, and that is by the end user or consumer. For any GST paid by a wholesaler there is an input tax credit, so in the case of the GST only the 5% is ultimately paid.
The provincial sale tax is different. At every level of motion through the economy until it gets to the consumer, provincial sales tax is charged; then it is added to the input costs of the next buyer, and then it is charged again, and it cascades. That cascading of the provincial sales tax is really where it is coming out.
Canadians in Ontario can look forward to tax cuts on their personal income tax effective January 1, 2010, as well as a credit of up to $1,000 to help with the transitioning. I hope they will have an opportunity to be well informed about the implications of this bill on the economy of Ontario.
