Mr. Speaker, I am pleased to announce that the Government of Canada has reached detailed agreements with the Governments of Nova Scotia, New Brunswick, Newfoundland and Labrador to implement a new harmonized sales tax system as of April 1, 1997. The detailed agreements are based on the principles outlined in the memorandum of understanding that was signed earlier this year.
Any successful negotiation requires goodwill and good faith by the parties involved. I would like to take this opportunity to thank the governments of the three provinces concerned and especially my counterparts in Nova Scotia, New Brunswick, Newfoundland and Labrador for the manner in which they and their officials handled the issues involved in these negotiations.
What helped all of us to conclude these negotiations successfully was that we shared a common objective: to give consumers and businesses a sales tax system that is simpler, more efficient and more equitable. It is a practical example of how the federal and provincial governments can collaborate to make our federal system work better.
For consumers, the new harmonized system will offer several important benefits. First, thanks to tax inclusive pricing, consumers will know the full price of their purchases before they get to the cash register. This is something Canadians have consistently insisted on in consultations about GST reform. At the same time, consumers will continue to know how much tax they are paying because receipts and invoices will show either the amount of tax paid or the rate at which tax has been charged.
Consumers will also benefit because sales tax rates will be substantially lower than at present in each of the participating provinces. In Newfoundland, sales tax rates will be almost five percentage points lower. In Nova Scotia and New Brunswick they will be almost four percentage points lower.
The harmonized sales tax will be good for businesses as well. They will have to deal with only one tax, not two. They will have to complete only one set of forms, not two. And, they will have to deal with only one tax administration, not two. The new system will be straightforward and simple. For example, there will be no separate requirement for businesses to register for the harmonized sales tax. Businesses that are registered for the GST will automatically be registered for the HST. Furthermore, registered businesses will continue to use the current GST return to calculate net tax remittances. When reporting tax collected and remitted, as well as claiming input tax credits, there will be no need for registered businesses to identify separately the federal and provincial components of the HST.
During our negotiations with the three Atlantic provinces, concerns were expressed about the taxation of books and its impact on literacy. We took those concerns seriously. They came from the Atlantic ministers themselves, but they were also expressed most articulately and most forcefully by a number of members of the federal Liberal caucus.
Members may recall that in our economic and fiscal update of October 9 we said that one of the key roles of government was to
help give Canadians the tools they need to take advantage of the new economy. In that context the question that we have to answer today is at a time of limited resources how can we best support efforts to promote literacy.
Our answer is to target assistance to educational institutions and organizations which play a direct role in the area of such concern to us. That is why I am tabling today a notice of ways and means motion that provides a 100 per cent rebate on all books purchased by public libraries, schools, universities, colleges, municipalities, certain charities and non-profit organizations and other frontline literacy groups.
This rebate is not an isolated gesture. We introduced several measures designed to support learning and education in our 1996 budget, an increase in the education tax credit and increases to the limits on the transfer of tuition and education credits and contributions to registered education savings plans.
The 100 per cent rebate that I am announcing today means that there will be no GST on all books purchased by educational institutions and learning organizations across Canada. It means no GST on all books distributed freely in primary schools, in secondary schools and other educational settings. It means tax relief on books not only for structured learning in our schools and colleges but for lifelong learning through public libraries and front line literacy groups. These measures are effective immediately and on a national basis.
We have also agreed to administer a point of sale rebate in the three harmonizing provinces which will eliminate the provincial component of the tax on books. In short, there will be absolutely no increase in the taxation of books as a result of harmonization. Indeed in many cases there will be a decrease.
In closing, we do not claim that today's measure answers all the challenges we face with respect to literacy in this country. However, by targeting assistance in this way we can get greater impact for every dollar we spend at a time of limited resources.
Obviously more needs to be done. My colleague, the minister responsible for literacy, is working hard to get groups right across the country to identify and to develop the best means for working on this problem. We will continue to work closely with her to ensure that progress is made.
More often than not, real and lasting progress in government occurs in measured steps. Today's announcement on a harmonized sales tax and the rebate on books is a real, constructive and a concrete step forward in the administration of sales taxes in the promotion of literacy in our country.