Debates of Oct. 17th, 1995

Canada-United States Tax Convention Act, 1984

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

Pursuant to Standing Order 76, recorded division on the motion now before the House stands deferred.

[English]

The House will now proceed to the taking of the deferred divisions at the report stage of the bill now before the House. The first vote will be on Motion No. 1.

Call in the members.

And the bells having rung:

[The Deputy Speaker]

It has been proposed that the matter be deferred until 5 p.m. this day.

[Some hon. members]

Agreed.

The House proceeded to the consideration of Bill C-90, an act to amend the Excise Tax Act and the Excise Act, as reported (without amendment) from the committee.

Excise Tax Act

[Jon Gerrard, Liberal, for the Minister of Finance]

moved that the bill be concurred in.

[The Deputy Speaker]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Deputy Speaker]

I declare the motion agreed to on division.

(Motion agreed to.)

[The Deputy Speaker]

When shall the bill be read a third time? With the permission of the House, now?

[Some hon. members]

Agreed.

[Jon Gerrard, Liberal, for the Minister of Finance]

moved that Bill C-90 be read for the third time and passed.

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

Mr. Speaker, Bill C-90 contains legislative provisions permitting the implementation of a number of amendments to the excise tax announced earlier this year.

Most of these proposals are linked to amendments announced in the February 27, 1995 budget, including amendments to the air transportation tax, the excise tax on gasoline, the marking requirements on tobacco products for sale in Prince Edward Island and the seizure and notification provisions relating to violations of the Excise Act.

Other proposals concern amendments to rates of excise tax on tobacco products for sale in Quebec, Ontario and Prince Edward Island. These amendments were announced in February and March along with provincial tax increases on tobacco.

Let me begin by addressing the key budget measures contained in Bill C-90. First, proposed changes to the air transportation tax will enable the government to recover a greater proportion of the costs of the air transportation services and facilities that are used by air travellers.

The proposed amendments to the Excise Tax Act will increase the maximum air transportation tax on higher priced domestic and trans-border air travel and the tax on international air travel purchased in Canada from $50 to $55.

In addition, the maximum tax on trans-border air travel subject to the United States' 10 per cent air transportation tax and the tax on international air travel purchased outside Canada will increase from $25 to $27.50.

These changes to the air transportation tax, effective May 1, 1995, will generate additional revenues of $27 million in the 1995-96 fiscal year and $33 million in the 1996-97 fiscal year.

Second, Bill C-90 proposes an increase in the rates of excise tax on gasoline equal to 1.5 cents per litre effective February 28, 1995.

In a budget that focused almost entirely on reducing the spending of government and delivered expenditure cuts by a margin of seven to one over tax increases, a move that I know was applauded by members of the Reform Party, this measure is necessary to raise an additional $500 million per fiscal year to ensure that the government meets the deficit reduction targets that are integral to a strong and growing economy. The Minister of Finance has reaffirmed repeatedly the government's commitment to meet the deficit reduction targets outlined in the budget in 1995 and will undoubtedly reaffirm those in the next budget.

Third, in addition to these rate changes affecting the air transportation tax and gasoline, Bill C-90 also enacts amendments to the

marking requirements for tobacco products for sale in Prince Edward Island. These amendments will phase out the sale of black stock or unmarked tobacco products in Prince Edward Island and allow for the sale of Nova Scotia marked tobacco products in the province.

This change in the tobacco marking scheme is being undertaken at the request of the two provinces and will allow for greater efficiency in serving the Prince Edward Island market.

The final budget measure contained in Bill C-90 concerns the seizure and notification provisions in respect of offences under the Excise Act.

The proposed amendments will rectify certain enforcement difficulties by allowing officers discretion in their ability to seize vehicles while stipulating that reasonable efforts must be undertaken to provide notice of seizure to known third party interests.

The bill also implements important changes in respect of excise tax rates for tobacco products for sale in Quebec, Ontario and Prince Edward Island.

As all hon. members are aware, modest federal excise tax increases were announced earlier this year in conjunction with provincial tobacco tax increases in these three provinces.

These tax increases follow the success to date of the national action plan to combat smuggling in significantly reducing contraband tobacco activity and restoring the domestic tobacco market to legitimate Canadian wholesalers and retailers.

In Quebec and Ontario, federal excise tax rates are being increased by 60 cents per carton of 200 cigarettes, while in Prince Edward Island excise taxes are being increased by $1 per carton of 200 cigarettes and 32 cents per 200 tobacco sticks.

The excise tax increases in respect of cigarettes for sale in Quebec and Ontario are effective February 18, 1995 while the increases in respect of cigarettes and tobacco sticks for sale in Prince Edward Island are effective April 1, 1995. These changes will generate an additional $65 million in federal revenues on a fiscal year basis.

In conclusion, I would like to emphasize the importance of the provisions contained in Bill C-90, notwithstanding the flippant remarks made by the hon. member of the Reform Party while speaking earlier and saying that the legislation on the government's agenda was unimportant.

The proposed changes to the air transportation tax and the excise tax rates for gasoline are an important part of the government's commitment to increased cost recovery and deficit reduction.

Amendments to the tobacco marking scheme will allow for greater efficiency in serving the Prince Edward Island market, while amendments to the seizure and notification provisions of the Excise Act will improve the delivery of enforcement activities.

Finally, the changes to the excise tax rates for tobacco products for sale in Quebec, Ontario and Prince Edward Island represent important first steps toward the long term restoration of uniform federal excise tax rates for tobacco products across Canada.

I encourage my colleagues to pass this bill without delay.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, Bill C-90 is now at the third reading stage. We have already had an opportunity, as the official opposition, to state our position on this bill at the second reading stage and in committee, the Standing Committee on Finance.

Although some of these measures may be positive, there is one that bothers us particularly, so much so that we would vote against this bill. I am referring to the proposal to increase the excise tax on gas by 1.5 cents per litre.

I will be brief. I want to make a connection between this debate and the one we had when we were discussing the excise tax on cigarettes.

In fact, this bill contains measures that would bring about a gradual upward adjustment of the tax on tobacco products. Of course we all realized at the time that the purpose of the drastic reduction in taxes on tobacco products was to destabilize smuggling networks. However, everyone agrees that now the price is so affordable it could have a disastrous impact on the demand for these products in the long term. The lower the price, the better a product sells.

No one objects to an adjustment. However, we should be careful not to do this too quickly and in the process give these networks a chance to regroup and take control again.

That being said, the government still has a duty to monitor the situation, because there are other ways besides taxation to ensure that people engaged in smuggling various products are arrested. This still goes on. It is still the case for various kinds of products. Enforcement is not as strict at that level. Much remains to be done to improve the way we deal with various smuggling networks.

As far as the excise tax on gas is concerned, everybody knows it can be very irritating, and it is so easy for the government, when it needs money quickly, to use the excise tax on gas, because this is instant revenue. We are talking about $500 million which the finance minister quickly took out of taxpayers' pockets.

It is hard for the consumer to see this happening, because when the price of gas goes up at the pump, the consumer is not sure whether the price of oil has gone up or the retailer, the manufactur-

er or someone else has raised his profit margin or whether the government has just increased the excise tax.

Unlike other types of products, when we buy gas, it does not say what proportion of the price we pay for a litre of gas is actually taxes. It is just as well, because taxpayers would be even more furious with the various governments. They would be constantly reminded of all the taxes levied on gasoline products.

In this case as in the case of tobacco products, when the government goes to the other extreme and tax levels rise beyond the acceptance threshold, taxpayers feel they have every right to buy contraband goods. We may deplore it, but the taxpayers' feeling is that this is a legitimate action they are taking.

We must not do anything to bolster this trend, because we know all the problems there are with the underground economy, the black market economy. At some point, the tax on gasoline reached the limit people would bear. We feel that any increase will only contribute to pushing consumers toward an underground economy which is extremely counterproductive for everyone. Counterproductive not only for the taxpayers who make use of it, since those using the black market economy are penalizing themselves without knowing it, but also for everyone in the long run. At some point we have to learn our lesson.

It does not seem that we have learned any lesson from what happened with tobacco products. Certain products in a number of different areas are still being heavily taxed.

However, it is not abnormal for there to be higher taxes on gasoline than on other products, because of the environmental effects everyone is aware of. Steps must be taken to ensure that when what the economists call externalities result from the consumption of a product, there are provisions to make the users bear the cost of those externalities. At some point, however, there is some uncertainty as to whether we have gone too far in this.

Essentially, we strongly disagree with this measure and feel that raising the tax again by 1.5 cents a litre in his last budget was not the route the Minister of Finance ought to have taken. We do not feel this is a measure that will contribute to any great extent to economic recovery. Everyone knows that there is a lot of work to be done on the expenditure side. If the Minister of Finance has no ideas of his own, we might suggest that he hasten before the finance committee to discuss it, something he has refused to do because of his fear of presenting his financial statements before the referendum. That is understandable.

If he wants to discuss it in more detail, we invite him to do so. This will provide us with the opportunity to debate the matter with him and to point out that there may be other avenues he ought to explore when he needs to balance his books, instead of constantly digging into the taxpayers' pockets for more revenue.

So, essentially, it is our intention to oppose adoption of Bill C-90 on third reading and, as I have said, essentially because of this measure. There are others on which I have not spoken but which we were able to bring up during second reading or in committee on which we do agree. But we have a major disagreement with this one.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I am pleased to rise today to speak in opposition to Bill C-90. This is a Liberal taxation bill. I want to comment on how easily the words "Liberals" and "increased taxation" flow together; they seem to be a naturally united phrase.

This bill amends the Excise Tax Act and the Excise Act in order for the Liberals to bring in the increased taxes they proposed in their budget last February. Mr. Speaker, I am sure that you and probably every other working Canadian will agree that this country simply does not need any more new taxes. Canadians are probably one of the most overtaxed people in the entire world, and we have a government in power that is intent on continuing to make sure we do not lose that mantle of taxation.

Taxation ultimately drains the lifeblood out of our economy. This is something Canadians are very aware of and very concerned about, how the high taxation levels in our country have such a devastating effect on the economy. We will talk about two areas of harmful effects of taxation, which probably account for 90 per cent of how we build and keep our economy buoyant, and that is investor confidence and consumer confidence.

High taxation levels have delivered a tremendous level of uncertainty to the investors, the people who would build and expand businesses in our country, who would hire Canadians to run their factories and operations, creating jobs in the country. Because of the rising taxation levels there simply is no certainty of the future for these investors, who have no incentive to increase their investments.

The average working person in Canada probably has less disposable income than ever before. There is no certainty that disposable income will not continue to shrink. Therefore consumer spending has been drawn back, thus creating a harmful effect on our economy.

The Liberals respond not with a plan to decrease their spending, to decrease their deficit spending, not with a plan to offer some tax relief to Canadians, the two things that would probably serve in more ways than any other measures to restore some buoyancy to our economy. No. The Liberal Party does not respond with these two natural solutions. Instead, they implement more taxation in

their February budget. Now they are seeking the authorization to put that into force.

Prior to the election in 1993, the Reform Party said that if the Liberal government were elected, using their own red book predictions on the financial aspect, over the term of this 35th Parliament the Liberal government would add $100 billion to our national debt and would increase the annual interest payments on that debt by some $10 billion. That is $100,000 billion and $10 billion. The Liberal Party is right on target.

By the end of the 35th Parliament our national debt will have increased by $100 billion, our interest payments on that debt will be up somewhere in the neighbourhood of $50 billion to $52 billion, and all because the Liberal Party has not taken what could be considered a common sense solution to the financial crisis in this country, which is to reduce taxes and reduce its deficit spending. Instead the Liberals chose to increase taxes. Bill C-90 gives them authorization to implement, for example, the 1.5 cent a litre tax on gasoline, which is going to add $500 million more taxes on the middle class alone.

While the government talks about tax fairness, in its last budget it in fact raised taxes by over $1 billion. In fact if we look at tax increases in the last two government budgets, the Liberals have increased taxes by about $2.5 billion, with another $500 million in user fees or hidden taxes.

Canadians should be pleased that these increased taxes have in fact been put to good use. I would like to give some examples of Liberal good use. The U.S. Department of Energy-and this is small potatoes, but there are about 5,000 of these, I understand-received a $35,000 grant from the Canadian government. The United Steel Workers of America received $116,000 from the taxpayers of Canada via the Liberal government. Here is a good one: the Prison Art Foundation received $51,000 from the Canadian taxpayers, compliments of the Liberal Party. And the Feminist Literacy Workers Network received another $57,000 from the taxpayers of Canada, thanks to the Liberal government. This is only part of about 5,000 or 6,000 of these grants that have gone out.

This type of money does not fall down from the sky in some miraculous manner. We do not pick it off a tree, as some Liberals would like to believe. This kind of money comes from the pockets of hard-working Canadians, who are among the most highly taxed people in the world.

It is said that the average middle class Canadian worker in this country in all forms of taxes pays about 63 per cent of their gross income in taxation. In a country as rich as Canada is, with the potential and the opportunity Canada has, the fact that Canadian workers are paying this much taxation out of their gross income is absolutely obscene.

[The Speaker]

My colleague, of course you will have the floor, should you so desire it, after the question period.

It being 2 p.m., we will now proceed to statements by members. The hon. member for Dartmouth.

Governor General's Award

[Ron MacDonald, Liberal, Dartmouth, NS]

Mr. Speaker, it is a real pleasure for me to rise in this House today to acknowledge the contribution to Canadian life by Carolyn Thomas, who is an outstanding Canadian and who is a constituent of mine.

Mrs. Thomas, from the community of East Preston, yesterday was the recipient of the 1995 Governor General's award in commemoration of the persons case. This is a particular honour for me because I have known Mrs. Thomas and worked with her and her husband since I was elected to this House in 1988. In that time I found her to have dedication and determination practically unrivalled in my community, not only pertaining to the betterment of women, but for the betterment of her community of East Preston, the oldest indigenous black community in Canada, and for Canadian society as a whole.

In addition to her work in the struggle for equality for women, over her lifetime Carolyn has been a visionary in her struggle for human rights and better race relations. She was a founder of the Human Rights Commission in the province of Nova Scotia and continued her good work with them for 23 years.

I ask that my colleagues here in the House and the people of the great city of Dartmouth and-

Poverty

[André Caron, Bloc, Jonquière, QC]

Mr. Speaker, the international day for the elimination of poverty provides an opportunity for all Quebecers to take a moment to reflect on the dramatic living conditions of some of our fellow citizens.

Nearly a million and a half Quebecers live below the poverty line. We live in a province that suffers from the highest rate of poverty in Canada, by far. Despite all the efforts of the Government of Quebec, one child in five in Quebec comes from a poor family. Quebec seniors continue to be much poorer than seniors anywhere else in Canada. We are struggling with a huge problem that is tearing us apart.

Quebec must become sovereign so its government will have the means to combat poverty effectively. This is why Quebecers will vote yes.

Sports Illustrated

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, this week, for the first time ever, Canadian MBA teams took to the courts to the great delight of their fans across the country. How ironic that at the same time as we are welcoming the MBA to Canada we are closing the door on North America's largest sports magazine, Sports Illustrated .

Essentially the government has said that Sports Illustrated cannot be allowed split runs in Canada because SI is too efficient in its production and too effective in attracting readers and therefore advertisers. By all means let us not encourage that; we do not want people to go around thinking it is all right to be efficient and successful.

By shutting Sports Illustrated out of Canada the government is taking a 200-year leap back in time. While other Canadian communications technologies compete head to head with companies from around the world, the magazine publishing industry in Canada has adopted the views of communist Bulgaria.

Sadly Canadian magazines will be the big losers in this policy. If advertisers cannot reach their market in magazines they will do so in other media that do not respect laws issued by sentimental Canadian regulators who pine for the good old days before the telegraph.

Health Care

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, as NDP health critic on April 2, 1994 in third reading debate on the Canada Health Act, I welcomed the move to eliminate extra billing and user fees. But I also asked the Liberal government of the day, which was the first federal government to unilaterally cut back on federal transfers, "to sit down with the provinces and renegotiate that funding relationship so we can have a full-fledged financial partnership with respect to medicare".

The Liberal government's new Canada health and social transfer with its $7 billion cut is just another Liberal unilateral cut and a further erosion of the partnership that was medicare.

Dealing with private clinics is one thing, but it is a form of straining out gnats while swallowing camels if the federal government continues to set up medicare for destruction by starving it to death.

When it comes to medicare the Liberals are into a form of passive euthanasia that plays into the hands of those who would like to actively destroy it by what I would call right wing assisted suicide.

May Cohen

[Paddy Torsney, Liberal, Burlington, ON]

Mr. Speaker, I rise in recognition of Dr. May Cohen of Burlington, Ontario, a keen promoter of women's health issues and a powerful advocate of gender equality in the medical profession. She was a recipient yesterday of the 1995 Governor General's award in commemoration of the Persons case.

A physician, researcher, educator and activist, Dr. May Cohen has repeatedly challenged the medical profession on the way it deals with the health concerns of women patients. As a volunteer and in her capacity as Associate Dean of Health Services at McMaster University's faculty of health sciences, she has taken a lead on an impressive array of issues, including gender equality, sexual harassment, sexual abuse of patients by physicians, the role of women in the medical profession and women's health in the context of women's lives.

I ask colleagues to join with me in celebrating Dr. May Cohen's achievements and extraordinary commitment to women's health. Her family and friends are justifiably proud, and so am I.

Alice E. Tyler

[John Loney, Liberal, Edmonton North, AB]

Mr. Speaker, as we approach the anniversary of the Persons case I am honoured to pay tribute to Alice E. Tyler of Edmonton, Alberta, the province where the Persons case got its start.

Alice Tyler has made the portrayal of the famous five champions of the Persons case and the promotion of their accomplishments a major focus of her life's work. In recognition of her efforts Alice Tyler was recognized as a recipient of the 1995 Governor General's award in commemoration of the Persons case.

Alice Tyler's portraits of the famous five in the Persons case have been hung in the Alberta legislature, the Edmonton Law Courts Building and the Edmonton City Public Library. They have been displayed elsewhere in Canada and abroad.

On a personal level, she has always been an ardent believer in the abilities of women. During her 24-year career as a high school art director she consistently encouraged young women to live up to their potential, helping many to set their sights on meaningful careers.

For her unique efforts to preserve the legacy of the Persons case, Alice E. Tyler is a most deserving recipient of the 1995 Governor General's award in commemoration of the Persons case.