Madam Speaker, on November 4 I asked the finance minister if he was aware of the fact that thousands of jobs in the Atlantic provinces are in jeopardy because of his harmonized sales tax.
The minister responded by saying that retailers will be able to take advantage of the input tax credit. Their costs would be lower and they would be in a position to pass their savings on to consumers.
Contrary to what the minister has stated, retailers will not pass along any savings to consumers because there are no savings to be had. Jobs are already being lost.
Today in my local paper in Saint John, New Brunswick, the MMG Management Group which operates Greenberg and MetMart stores announced the closure of 12 stores and the loss of 150 jobs as a direct result of the HST in New Brunswick. Seventy-nine people have been told that they will be laid off and the stores closed by the end of 1996, that is at the end of next month.
MMG's New Brunswick stores face over $1 million in annual costs to accommodate the harmonization. The input tax credit the minister spoke of amounts to $495,000 but this still leaves the company with a shortfall of $563,000.
The HST is nothing more than a blatant attempt by our present government to fulfil an election promise. I have to say that the only reason it went through was because of the three Liberal premiers in Nova Scotia, New Brunswick and Newfoundland. None of the other provinces have agreed to this.
It is not good for Atlantic Canada and puts the three Atlantic provinces out of sync with the rest of Canada. It is being forced on us to pad the Liberal version of a red book promise kept.
Under the agreement New Brunswick, Nova Scotia and Newfoundland must include or hide the 15 per cent HST in the ticket price of the item, known as in-pricing. However in the rest of Canada the provincial sales tax and the GST must still be added at the cash register.
The incentive for New Brunswick was a $364 million pay-off which the province has already received from the federal government despite an April 1 deadline for harmonization. This money already is being used by the provincial government and this was their incentive to sign this agreement.
The main problem is the patchwork approach to harmonization. The retail sector came here to see me. The Retail Council of Canada representing Sears, Eaton's, Canadian Tire, Shoppers Drug Mart and Hudson's Bay has stated these stores can operate with a single rate sales tax system either tax inclusive or tax extra across Canada. The retailers cannot manage a tax inclusive in a partially harmonized system.
A report prepared by Ernst and Young for the Retail Council of Canada makes reference to the Department of Finance announcement of April 23. The announcement promised that partial harmonization would bring about a simpler tax system for both consumers and business, lower costs and less paper work. Further it promised harmonization will also help lower prices through a reduction in the cost of doing business.
The retailers state the exact opposite will happen. The system will not be simple and the costs will increase. The software used by many companies will have to be altered to accommodate the regionalized pricing system and in the six major retailers this means changing over 132 software systems.
All of those retailers rely on catalogues and their catalogue business will now be forced to print an English and French catalogue for New Brunswick, Nova Scotia and Newfoundland and then an English and French catalogue for central Canada and the western provinces. National TV and radio advertising will also cost more. The Ernst and Young report states that the annual cost to retailers in the harmonized provinces is expected to be in excess of $100 million. I have to ask what all this means to the consumer. It means that we will pay more. Why? In order to remain profitable, businesses and retailers must recover their conversion expenses.
The pride of this government is going to cost Atlantic Canadians dearly. It will hit us in our wallets and it will-