Debates of June 22nd, 1994

Committees Of The House

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I think you will find consent to adopt the motion for concurrence in the 28th report of the Standing Committee on Procedure and House Affairs which is standing in my name on the order paper, without debate at this time.

The report deals with the allocation of space to various committees and would take effect after today so it would be in effect in the autumn when committees resume their work.

[The Acting Speaker (Mr. Kilger)]

Does the hon. parliamentary secretary have unanimous consent to move the motion?

[Some hon. members]

No.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I move that the ninth report of the Standing Committee on Finance presented to the House on Monday, June 20, 1994 be concurred in.

[David Walker, Liberal, Winnipeg North Centre, MB]

Mr. Speaker, on a point of order. Could the Chair please clarify what the intent of this motion is.

[The Acting Speaker (Mr. Kilger)]

It is that the ninth report of the Standing Committee on Finance presented to the House on June 20, 1994 be concurred in.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, with respect to the ninth report of the Standing Committee on Finance regarding replacing the GST and options for Canada, there are two issues I would like to address and I will also present the Reform Party's plan for tax reform.

The two issues I would like to address on this motion are the Liberal red book promise and the Liberal campaign election promise. There is a distinct difference between the two and this government is now attempting to confuse the Canadian public by putting the two together.

First, with respect to the red book campaign promise, the Liberals promised in that book, and it is there for everybody to read, to replace the GST with a simplified tax, more fair to small business and harmonized with the provinces.

The government is going to call this the new national value added tax but it is nothing more than a Christmas wish list. The government has made no hard proposals, only various options for provinces to consider, for Canadians to consider. It shirks its responsibilities by coming out one way or another on anything that is within the proposal. All decisions are left for the provincial governments to make. It is trying to sell the perfect tax world. If the provinces do not go along they will be the ones blamed and the federal government will claim that it has done the proper thing based on a report from a committee.

I have two colleagues who will address this issue as well and I will leave it to them to point out our concerns with this new national value added tax. I predict in short order, probably before Christmas, it will be referred to as the very awful tax and Canadians will be encouraging the government not to implement it.

My two colleagues will also point out the basic fundamental flaws that value added taxes are unable to resolve.

I would like to go on to the second aspect of-

[The Acting Speaker (Mr. Kilger)]

Order. On a point of order, the hon. member for Mississauga South.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I understood that the motion was to adopt a report that had been previously tabled in the House. It appears to me that we have debate on the substance of the discussion within the committee and not the recommendations or the-

[The Acting Speaker (Mr. Kilger)]

I do not believe that is a point of order. Respectfully, I say the member is engaging in debate.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, the second issue that I wish to address relates to the report that has been filed.

This report is an attempt to fulfil an election promise. It is very apropos that we talk about the Liberal Party's election promises and its behaviour between now when it is the government and when its members were in opposition. The things they said to the Canadian public to get here, to get themselves elected, especially in the province of Ontario where they stole every seat except one-

[Some hon. members]

Oh, oh.

[Jim Silye, Reform, Calgary Centre, AB]

I do not mean stole. I will take that comment back. -where they were elected in every seat but one, duly elected democratically.

Let me quote the current finance minister: "I would abolish the tax", August 1990; the Minister of International Trade: "I would tax prescription drugs and food", 1989. During the campaign the Prime Minister said that he would scrap the tax. As recently as February of this year and May 4, 1994, in answer to one of my questions about this proposed tax, he indicated that he hated the GST and that he would kill it.

With comments like that, now they have proposed a replacement for the GST which is virtually the same as the current GST. It is nothing more than the son of GST, a clone of the GST with a new name. They now expect the Canadian public to accept the fact that they have fulfilled an election promise, that they have not only replaced the tax but they got rid of the awful GST.

What we will have if they proceed with this particular proposal is a very awful tax which is the same as the GST. The Canadian public will feel betrayed.

Here is an interesting situation I put to the government and to the Canadian public that are listening. The Deputy Prime Minister said that if the Liberal Party did not abolish the GST she would resign. She said this at a CBC town hall. That is a very firm commitment. I know she always keeps her word. The question is, how do we determine if this new national value added tax abolishes the GST? If it is determined by the Canadian public that it does not abolish the GST, then I would recommend that the Deputy Prime Minister fulfil her promise and duly resign.

It should be acknowledged and recognized that not only the Deputy Prime Minister but the Prime Minister, the Minister of Finance and the Minister of International Trade basically made an election promise they cannot keep. Rather than coming clean in the House and telling the Canadian public that "we can't keep

clean," they are continually trying to proceed with this double talk in the hope that the Canadian public will not hold them accountable.

I beg to differ, Mr. Speaker. The honeymoon is over and I believe that the government over the summer and in the fall will be held accountable. I just wonder how they will vote on this concurrence motion that brings it closer to government policy.

As we know from the media, both the finance minister and the Prime Minister are trying to distance themselves from this report by the committee. They choose to ignore the recommendations of the committee because they know it is a political hot potato.

The leader of the Liberal Party made promises. He is a populist leader and the popular thing to do when you have made a mistake and are wrong is to admit it rather than continue the farce of this double talk and trying to fool the Canadian public.

I take a little bit of offence at the finance minister's answers to my question in question period today about how we are guilty of double talk and if he ever saw double talk it is the Reform minority report on the replacement of the GST which has been filed with the ninth report of the Standing Committee on Finance.

I will highlight some of the aspects that are in this minority report and I will leave it for the Canadian public to decide if this is double talk.

A majority finance committee report on the replacement of the GST cannot be fully endorsed by the Reform Party. While the replacement goes part way in responding to concerns presented to the committee, many of the concerns will only be addressed by future negotiations with the provinces. If the provinces do not agree to integration, if the provinces do not agree to harmonization, this proposal has been a waste of time and all those witnesses that came before the committee, all their constructive words of wisdom, will have been a waste of time.

The majority report recommendation merely tinkers with the current GST and does not live up to the Liberal promise to scrap it. We are of the view that value added taxes are incapable of responding to a significant portion of the concerns raised during the hearings.

The Reform Party recommends that spending cuts be the government's first priority. As well, the entire current system of personal, corporate and value added taxes should be replaced by a simple visible and proportional system of taxation that is similar to the single tax that one of their more intelligent members has recommended, that incorporates the principles of fairness and the lowest rate possible. In the interim, the party will support reforms to the current regime that move in this direction.

The Reform Party strategy for tax reform is as follows: We believe strongly that tax reform must include a number of components. First, a review of spending in order to balance the budget in as short a term as possible with the least negative impact on the economy, and we see that as three years. We came here with that philosophy, we recommended that philosophy, but the finance minister said it is too draconian, that a 6 per cent cut in spending is too draconian. Now I read in the paper as of three or four weeks ago that he is now looking for 12 per cent cuts in next year's budget.

Second, we believe a simple visible system of taxation that incorporates the principles of fairness, simplicity and the lowest rate possible. The Reform Party opposes tax inclusive pricing, which is just hiding the tax. It is like the gasoline tax you pay at the pumps. None of us know what we pay but we know that governments have raised it and pretty soon the Canadian public once again falls out of touch with what taxes we are paying. This is the Liberal way of eventually raising taxes in years to come and that is why the British call this the very awful tax because that is what happened in that country.

This practice of hiding the tax violates the principle of open taxation which is essential to efficient functioning of open democracies. Disclosures of taxes paid on cash register receipts preserves an element of openness in taxation, but as the experience in Europe has shown, it eventually results in strongly diminished public awareness of the tax.

Third, the Reform Party believes that tax reform must also mean tax relief. We believe that Canadians are concerned as much or more with the level of taxation as with the method of taxation. If we are asking the Canadian public to sacrifice, there must be a reward at the end of the day. That reward would be to eliminate and abolish the GST and we would do that once we get the budget balanced.

We agree with those who say that the introduction of the GST was the trigger that set off the underground economy, a general distrust of politicians and a belief that governments had lost control of their finances. The current government believes that this distaste can be dispelled through a change in the mechanism. It believes that if it scraps the GST or changes the name that the antagonism toward a new value added tax will go away.

That is my point today. If this is what the government believes will happen it will be sorely surprised and like that commercial on TV they slap their face while saying, "I needed that", that is what it is going to get.

Canadians will be wary of accepting changes to how they are taxed when the bottom line is that they must pay between 30 and 60 per cent of their income to carry a government that cannot control its spending. Not only will the government not control it, it will not even enter into serious dialogue to cut spending. They bring us into their offices, we show them $9 billion to $12 billion worth of cuts and they say: "We can't do that because it is philosophical". Anytime we make a point to criticize their philosophy they change the subject.

Only when Canadians see meaningful expenditure reform and deficit reduction, only when Canadians believe that they will get value for their tax dollar, will they acquiesce on the tax burden required to provide these services.

The Reform Party's plan for tax reform recognizes that the current structure of taxation is not suited to carry us into the 21st century. Our plan recognizes the need not only for changes to the mechanism but the necessary changes to the level of taxation. Our plan recognizes that deficit reduction is an integral part of tax reform.

Our party's plan for tax reform would embark on a comprehensive plan for expenditure reform with a plan to eliminate the deficit in three years. Concurrently the Reform Party would work toward the implementation, as I said earlier, of a simple visible, proportional tax. Third, once it is clear that the deficit reduction strategy is leading to a balanced budget, the Reform Party would eliminate in stages the national value added tax, the GST tax, the son of GST, whatever, the great Liberal flip-flop, GST, VAT, NVAT, whatever, and implement a personal and corporate tax based on the principles of the proportional tax.

The Reform Party acknowledges that tax reform is a difficult process. We were somewhat apprehensive that the limited time frame given this committee would not allow adequate investigation of the type of sweeping reforms that are necessary to address all of the concerns with the GST. Our apprehension is verified in that many of the problems with the GST are not dealt with in this report-my colleagues will touch on that-being either put off to future negotiations or implicitly ignored.

The Reform Party sees the GST, now the national value added tax or equivalent, as a temporary tax which belongs in the provincial domain. As much as the tax will exist for a temporary period of time, the Reform Party supports the constructive changes that would streamline the operation and remove as many of the significant problems that exist until such a time as we can implement such wider tax reforms that provide both tax relief and tax simplification. This would include the elimination of a federal value added tax.

My final point in the few minutes left to me is the following. I am a rookie politician. I came here because I am fiscally responsible. I want to see government live within its means. Two and a half months ago I was named a member of the finance committee and the first job I had was to help evaluate a replacement for the GST on behalf of the government.

All members of the committee worked hard and constructively. They all listened to the witnesses and tried to see where the group could stay together for the longest possible time to achieve a unanimous report in the best interests of all Canadians and all provinces. I can assure you, Mr. Speaker, all of us tried to do that.

I went back to the previous report that was filed when the Conservatives first brought in the GST. Many members opposite were on that committee; the Minister of Industry, the party whip and others sitting on the other side.

Their recommendation was not to bring in a GST, no consumption tax. Two and a half years ago many members of that party gave that opinion. They gave it in committee. Some Liberals came to our committee. No GST-truly abolish the GST; replace it with a better system of taxation, replace it with nothing, replace it combined with some spending cuts and this party has ignored those recommendations. For two and a half years it has done nothing to work toward its goal of a simplified system of taxation, more equitable, more efficient.

As a rookie MP, I am very disappointed. If you stand up today and say something and you get your chance to do it two and a half years later and you do not do it, is power that corrupting?

[The Acting Speaker (Mr. Kilger)]

Before proceeding to questions and comments, because there have been many requests from members on both sides of the House regarding petitions, I would like to remind members that if they so choose to table those petitions with the clerk, the net result of course is that they are not printed in Hansard but in fact do appear under the publication of Votes and Proceedings .

I leave that for your own judgment.

[David Walker, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I thank the self-proclaimed rookie from Calgary Centre for this opportunity to discuss the GST report and to show by his motion support for what the majority of Liberals are trying to get toward.

What we are trying to do in this report is set the stage for some fundamental changes in the Canadian tax system and I would like to publicly thank my colleagues both on the government side and on the opposition side for their diligence.

There are only two members of the House of Commons committee on finance who have ever sat before on a House of Commons committee, the chairman and I, and it is a great tribute to the new members who brought such strength and wisdom and such diligence not only in Ottawa but across the country in the consideration of this very difficult piece of legislation.

It is old ground that this government inherited a very difficult tax. This tax is a very difficult one for Canadians. In the last few years it was a focal point for tax unrest and government unrest and there would indeed be many members of this House who are here today because of that general public unrest with the previous government.

We have taken this issue. It is one of the first things that we did when the House sat. I can remember presenting on behalf of the government the motion to the House of Commons committee in the first week of business in which we stated quite clearly in the speech from the throne and in the committee on the first day that we were going to fulfil the commitment from the red book.

I would like to take this opportunity to express my thanks to those in the former opposition caucus of the Liberal Party and in the office of the Leader of the Official Opposition for their work in preparing the red book.

I used to be very involved with the policy process of the Liberal Party of Canada and it took us years to get people to agree that the best way to succeed in politics was to present a clear mandate, a clear choice to Canadians as to what we intended to do in the government.

This red book is the first serious effort of a major party to present a document of substance and I think the fact that we have used it as a benchmark in our actions is a tribute to the Prime Minister and to his cabinet.

Our inquiry was in response to the red book commitment of the government to have the finance committee "report on all options for alternatives to the current GST", and "replace the GST with a system that generates equivalent revenues, is fairer to consumers and to small business, and minimizes disruption to small business, and promotes federal-provincial fiscal co-operation and harmonization".

That motion was passed unanimously by that committee on the first day of its business and all three parties voted to begin its work.

It was with a great deal of spirit of co-operation that witnesses were called, were questioned, and I think that the committee soon began to recognize the complexity of the GST issue as part of the consumption tax strategy of the national government.

It is not well known but the federal government entered the income tax field in 1917 in response to its fiscal prices during the first world war and the began to enter the consumption tax deal by various means in 1923.

Therefore the government has been involved with one form of consumption tax or another for the last 70 years. As one begins to reform these taxes, to restructure them and to build a new tax that is completely different than the previous GST which has, I must admit, been a great frustration for almost every Canadian I met, this committee showed a great deal of maturity to go through each of these issues.

Many Canadians, as I speak today, have not had an opportunity to read the report, as it was just tabled 48 hours ago and is in the beginnings of being distributed. The committee broke its work up into five areas. It looked at the history of the tax and why it was such a difficult tax. It looked at the fact that the GST became an opportunity lost.

I, as a member of the opposition-

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, on a point of order, I want to know under comments and questions if the member is leading to a question or whether he is making a comment.

[The Acting Speaker (Mr. Kilger)]

Let me see if I can help the member. I asked for questions and comments at the conclusion of the intervention by the hon. member for Calgary Centre. Not seeing anyone seeking the floor, I then called for the resuming of debate and we are in the process of engaging in debate.

[David Walker, Liberal, Winnipeg North Centre, MB]

Mr. Speaker, it was the hon. member who first introduced the sports image of a rookie. I think you are just a rookie camp and looked down at the ball when some guy was coming toward you. Pay attention to the debate and all the subtleties from the Speaker.

[The Acting Speaker (Mr. Kilger)]

I would like to have a bit of the member's time, if I may. I would like to remind all members that although we are leading to possibly a conclusion here some time this week, still direct all of your comments and interventions through the Chair.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, on a point of order, I feel the member should withdraw those comments. If he wants to play on a football field I will meet him any time. If he wants to have a war of words-

[The Acting Speaker (Mr. Kilger)]

That is not a point of order. It will be a debate for another day and another place.

[David Walker, Liberal, Winnipeg North Centre, MB]

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.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, I have a two-part question for the parliamentary secretary.

I heard him say that the committee's Liberal majority report draws no conclusions and makes no recommendations on whether the tax base should be broadened to include food, pharmaceutical products and the like. However, the same report says that a simplified system will be adopted for small businesses so that they will only have to report once a year, simply by subtracting purchases from total sales.

Clearly, if the system is to be simplified and if the tax is going to be called a business transfer tax, then everything will have to be taxed. That is the hypothesis behind this model. Can the parliamentary secretary tell me if the recommendation pertaining to small businesses would still allow them both to preserve their current accounting methods and to report as proposed in the Liberal committee report or will they once again have to adopt a different accounting method, one which would take into consideration taxable and tax-free purchases as well as taxable and tax-free sales? That is the first question I would like him to answer. If there continues to be exceptions, then the system will not work. Therefore, to say that the report draws no conclusions and makes no recommendations on whether to broaden the tax base to food is to lack courage. The hypotheses underlying the proposed simplification of the business transfer tax would clearly indicate quite another matter.

The second part of my question has to do with the parliamentary secretary's comment that low and middle-income earners would be compensated, regardless of the new system implemented. How does he explain the fact that families with two young children will receive the same credit, regardless of whether their children are 12 and 14 years old, or 14 and 7 years old years, or whether in one case, a child is sick and needs medication? How can he guarantee that both families will have the same consumption patterns? How can he be certain of the amount these two families pay in taxes? How can he say this credit system is effective? These are questions which I would like the parliamentary secretary to answer.

[David Walker, Liberal, Winnipeg North Centre, MB]

Mr. Speaker, I was happy to hear the question from the hon. member. A series of hypothetical questions is just that. The report was very careful not to get into hypothetical situations. Dealing with the tax field, my own experience is that as soon as people begin to speculate on hypothetical situations they get themselves into greater and greater difficulty.

The majority on the committee has stated its position and I have reiterated the government's position that no taxes will be introduced that increase the burden on low income families. I state categorically that the intention of the government is and will continue to be to re-establish fairness in the tax system for low income families and individuals. No steps will be taken that in any way, shape or form breaches the commitment we are making.

On the question of making sure that small businesses find it easier to report the tax, the committee's report has been very thorough in its examinations of options. It will make sure that small businesses feel more comfortable with the tax. The small business community has expressed through its leadership a real determination to work with us and to simplify it. In fact it is happy with the recommendations. We look forward to the actual design assistance to make it easier for small businesses.

[John Solomon, NDP, Regina—Lumsden, SK]

Mr. Speaker, everybody in Canada knows that the GST was purely the transfer of a tax burden from corporations to ordinary Canadians. As New Democrats we oppose that sort of transfer of burden from one sector to another.

I would like to ask the member a question pertaining to whether or not the committee reviewed any other alternatives besides just a new name for the GST. For example, there are a number of family trusts outstanding. The total value is about $70 billion that goes untaxed. This is a tax free situation provided to very wealthy families. It was a tax free situation afforded to those people by the former Liberal government for 20 years, extended for 20 more years by the Conservative government, and this government has not done anything with it.

I am wondering whether the committee has reviewed that matter and in particular is looking at some of the transfer of profits from corporations operating in Canada to other countries. The example I use is Imperial Oil. Last year it declared a dividend of $580 million. Of course 70 per cent of its shareholders is the Exxon corporation of the U.S.A and $405 million left Canada through this nice little tricky tax free situation to go into the United States.

We lost a portion of what we believe should rightfully stay here either to work in our economy or contribute to our taxation system. I would like to know whether the government is looking at the situation or whether it considered looking at the approximate 63,000 profitable corporations in Canada with substantial profits that were not taxed a dime on their profits.

I am wondering if the committee considered some of these very important tax sources as opposed to once again going to low income people, middle income people and others who have very difficult financial circumstances to deal with right now with their families and getting along in Canada.