Mr. Speaker, I will take your words of caution to heart. I apologize if I have in any way disturbed the Chair.
Continuing the discussion on the GST and the work done by the committee, the committee came to the conclusion that if we were going to be serious about reform of the GST it is important to put into the public domain some of the major options available.
Those options included different proposals brought forward from the public. Some witnesses, for example, wish to see the federal government move away from consumption taxes altogether. Other people wish to see us revamp the system and go with a BTT, a business transfer tax. Other people want to see us
amend the income tax provision in our legislation and begin to move more toward a wider review of these questions.
In the end the committee decided there were a number of changes that could be made in the GST which are absolutely fundamental to the improvement of it. The committee showed a great deal of sensitivity to the small business community.
Small business people have come to us on several occasions both in the past and in this government and indicated the high cost of collecting the tax. Some of them estimate the overhead was 16 per cent of the revenues. For the large corporations which have other systems of managing the tax collection, their cost is down around 2 per cent but particularly for very small firms 16 per cent represents a great deal of time.
The revisions made to simplify the tax collection for corporations with sales in the neighbourhood of $200,000 and some choices between $200,000 and $500,000 per year are a great step forward. I am sure other members can think of businesses in their own constituency which that takes away a tremendous antagonism that has evolved between the small business person and the government.
The other relationship we wish to deal with which has caused a great deal of antagonism, which small business people and individual consumers told us, is that seeing that tax is a real antagonism because the purchase price is deceiving. They want to see the total cost. In Manitoba that adds on another 14 per cent and in Ontario another 15 per cent. That is a tremendous burden for people to carry.
If you are a busy person and you have children with you when you are shopping and you think you need $10, you end up needing $11.50. Every time you go into a store it is another $1 or $2 or $3 more. That is a real aggravation. Most families have a great deal of difficulty making ends meet with the high tax burden on the income tax side and the high cost of bringing up children. This is another aggravation they wish to see us remove.
We have suggested ways the tax can be integrated into the price structure shown in stores. There are provincial issues involved here that we will have to return to and we will be very happy to raise that with provincial governments.
If we can have an integrated price with the value added tax and indicate on the final bill the percentage that is included as tax we think consumers will be able to plan out their expenditures and see exactly what the total of their bill is going to be. In a colloquial sense it will end the surprises at the till for consumers.
This committee also saw as a major problem integration and harmonization with the provinces. To anybody serious about tax reform in this country, the work of the committee has to be endorsed as perhaps the most fundamental step being taken in the last decade.
The committee has said to the government and to the House that if you want to have fundamental change in this country you must seek out the support of the provinces to harmonize and to integrate the sales tax system, the value added tax or the consumption tax system.
I cannot agree more that this is the most fundamental problem. We are perhaps the only industrial country that has ten systems, and if you include the absence in one case, eleven different variations of a sales tax known by a series of different names. For those who are trying to do business with us or travel here it is incomprehensible that a country with only 28 million people cannot even get its consumption taxes right.
We should thank the committee and particularly thank the majority who have seen this and say let us go to the provinces as quickly as possible and open up the debate with the provinces. There are many issues we can discuss.
Fortunately the regularly scheduled meeting between the federal Minister of Finance and the provincial ministers of finance takes place next week in Vancouver. This fresh report that has been widely quoted in the media will give the ministers an opportunity to set an agenda of co-operation. I know that our Minister of Finance is looking forward with a great deal of enthusiasm to the meeting.
I am sure provincial ministers also seek an opportunity for a more harmonized and integrated consumption tax in this country. Of course there are number of issues and a number of problems dealing with collection and dealing with distribution of the revenue.
In politics you can see situations, as does the opposition party, as problems or, as on the government side, as opportunities. We are very proud that we went into this very difficult situation in February, saw the problems and have sought now to lay out a very positive agenda.
In many ways the Official Opposition also understands that this has to be a positive solution. It is seeking out ways to improve the consumption tax system in this country. It has a particular strategy which I do not think will work because it would weaken some of the provinces far too greatly. However, that is a matter for discussion. It knows the present system is not working.
There has been a great deal of discussion in the media about extending the base. This committee was willing to review the options available to the government. One of the most controversial areas of discussion is what we include if we broaden the base. One of the problems facing a government is that when we introduce a new tax there are always barriers, whether we include this or that.
One area of confusion and controversy since the introduction of the GST has been the area of food. There is a price that is paid for it if it is excluded. By excluding fundamentals such as food and pharmaceutical products the previous government was forced to set a rate of 7 per cent which became a highly visible and aggravating tax. If we broaden it and include these items as taxable we take away a lot of the confusion over exemptions. We could possibly lower the rate and at the same time include a broader base.
I do not have to tell anyone in the House that it is a very controversial discussion. However I should like to say for the record that the committee does not lead the discussion of broadening the base with a conclusion or a recommendation. It simply says to Canadians that there is a possible solution to the high rate and that is to broaden the base. If through members of Parliament and the discussions this summer and if through the provincial governments and their representatives Canadians continue to express their opinion that food should be exempt, the committee by no means would lay down any contrary recommendation.
At page 48 it says: "The committee's aim is to flag the difficult questions that must be answered, articulate the various views we heard during hearings, and pass on to the government and to citizens the committee's assessment of how best to proceed".
At page 50 it concludes the section by saying: "Whatever course the governments involved eventually takes, comprehensive based or exemptions for necessities, we recommend that the aggregate tax burden borne by low income Canadians under the national VAT not be larger than the one they bear today under the culmination of provincial sales taxes and the GST".
At the heart of Liberal principles is the principle of fairness. No taxes will be changed that increase the burden for working families, low income families, individuals and seniors. It is fundamental to the way we approach taxes as compared to the Reform Party and as compared to the previous government. We are not about to make any changes in the system-and the committee was very clear on it-that in any way affect the well-being of working Canadians. That view is shared not only by the committee but by every member of my caucus.
Perhaps in the quickness with which the member for Calgary Centre reviewed the position it was inadvertently downplayed to the extent to which the Reform Party agrees with our approach. At page 117 it says: "We agree with the report that the current structure leaves much to be desired and that changes at this time are necessary. The majority report does deal with some of the concerns raised in the lengthy hearings that the committee undertook". People were listening. It is very important to state that. It goes on to say: "Many concerns remained unresolved until negotiations between federal and provincial governments are concluded".
Therefore the motion in front of the House is ahead of itself. How can the House concur in the report before we begin the essential negotiations with provincial governments? We should wait and we should be able to proceed when we hear what the provinces have to say. As the hon. minister responsible for housing who is listening attentively to the debate knows, the way to get good housing policy is to deal directly with the provinces. The way to get good tax policy is also to deal directly with the provinces and not to get ahead of ourselves. We thank the Reform Party for recognizing that federal-provincial negotiations are at the core of resolving the tax dilemma.
The committee's conclusion at page 122 says: "The Reform Party commends the government in attempting to meet the concerns raised during the hearings in the areas of business compliance costs, harmonization and the charity section". There we go again. In the major issue of harmonization again the opposition realizes that the majority very much had its eye on the ball and very much was concerned about reforming the tax.
In the course of tax policy and what we have seen since we formed the government, there have been great strides made in getting Canadians to talk openly about issues central to their own well-being. The GST represents not only a consumption tax in itself. It represents for many Canadians all that has been wrong with the Canadian tax system in the way it was imposed.
The government will take its time and will do the right thing. It will follow up on its red book commitments and will produce for Canadians a tax that is fundamentally different from the current tax: one that works and one that is responsive to the fiscal framework and the fiscal well-being of the national government. This means in turn the livelihood and the defence of the livelihood of hundreds of thousands of Canadians and their health, social well-being and education.
The government will not put at risk the physical health of the national government by being in a hurry. We will produce a tax which is more successful, more fruitful and more reliable than the one currently imposed, the GST. We look forward to discussions with the provinces.