Mr. Speaker, it is unfortunate that we have to rise in the House today to address this bill. It is a bill that in reality should not have come before this House. It is an issue we should not have had to talk to. The Prime Minister, the Deputy Prime Minister, the finance minister and scores of cabinet and caucus members all made election pledges to eliminate, not to harmonize the GST. The issue that should be before us is the elimination and not the harmonization of this tax.
As members know full well, the heritage minister was forced to resign and seek re-election at a cost of over $500,000 to Canadian taxpayers because she was unable to fulfil a commitment that was made during the election campaign. The finance minister publicly begged for forgiveness. "We have made a mistake", he said for his complicity in misleading Canadians on this Liberal GST policy.
The member for York South-Weston was banished from the Liberal caucus by the Prime Minister for insisting that the government keep its word on the GST. The member for Broadview-Greenwood went into a self-imposed exile in a rare show of solidarity with the member for York South-Weston.
What is the issue here? The issue is a matter of keeping one's word. Let us think of it in personal terms. If any member in this House or any person in my circle of acquaintances made a specific commitment to me that they intended to do something and then reneged on that deal, somehow tried to back away from it by saying
that they did not really mean what they said, my toleration for that individual would be surely tested.
It goes without saying that individuals who continually make promises they cannot keep really are not held in high regard by the people who have to deal with them. If they are in business, in short order they will be out of business. If it is a matter of friendship, friends are gone and friends are lost.
The question which comes to mind is, if this is the way we respond on a personal level to people who do not keep their word, what should be the reaction of Canadians to a government, members of which made a commitment in the heat of an election campaign and then are unable to maintain the commitment? The patience of the voters with the government would be sorely tested because of its inability to keep its word.
We have in this harmonization a situation where the Atlantic provinces were bribed into signing the deal with a billion dollars of borrowed taxpayers' money. All Canadians are aware that these kinds of expenditures are only possible because of the ability of the government to borrow money. It is not because there is a pocketful of money which could be doled out to try to get people on side. The fact is that the government is short well over $100 billion in its term of office and to finance this little escapade it will have to borrow even more.
There are three provinces, Alberta, Ontario and British Columbia that are not even willing to discuss the federal proposal. Support for the harmonization proposal is weak in Saskatchewan, Manitoba and P.E.I. It just goes to show that this is going to be piecemeal legislation.
It will be restricted to one area of the country where in some respects the governments were unable to turn down the federal government because they just did not have the fiscal strength to do so. On the other hand, it is a part of the country which will suffer the most because it entered into this agreement. In essence, if we are going to help the governments in the maritime provinces, in Newfoundland, we should be looking at trying to determine ways to reduce the tax rate to make that area of the country more attractive to industry rather than simply showing them how to hide taxes which they certainly do not need.
Another issue is the impact this bill will have on business. As has been stated in the House today, and which I think is worth repeating, three major retailers in Atlantic Canada have stated that their net annual retail deficit will total $27 million once harmonization is implemented. Now $27 million may not be much money to the heritage minister because she certainly knows how to throw around the tens of millions of dollars to back up policies which have little real effect, but for business it is a big wad of money.
One private retailer in the Atlantic region was contemplating opening two stores in 1997 and now has decided against it. That is the danger of this high taxation. That is the danger which is posed to the economy in the rest of the country if we allow the government to lead us into a harmonization program that will only result in higher taxes and which will hide a tax that Canadians are so against.
A study by the accounting firm of Ernst and Young estimated that a midsized national chain with 50 stores in the Atlantic provinces would pay up to $3 million in one-time costs and up to $1.1 million a year to comply with a regional tax in price sales system. That is a lot of money: $1.1 million for 50 stores. It is a huge overload on any one store in that chain. It is only reasonable to assume, given taxation levels of that magnitude, that the chain will be closing stores.
The Halifax Chamber of Commerce predicts that the harmonized sales tax will push up new house prices by 5.5 per cent and will force municipalities to raise property taxes. An increase of 5.5 per cent in housing costs is an unquestionably bad move. Canadians are hard pressed to pay housing costs. Any increase will be felt by the people who can least afford it: the low income earners and first time home buyers.
In essence this tax is making it even more difficult for our children to start the process of putting their own roofs over their heads. We are making it difficult for them to get out of the rental market. There will also be a great impact on the rental market. It is anticipated that rental costs will increase due to the imposition of this tax.
Consumers will pay through the nose. They will pay more for funeral services, children's clothing, books, auto repairs, electricity, gasoline, home heating fuel and haircuts among other things.
As I mentioned, the Investment Property Owners Association tabled a report in the Nova Scotia legislature. It says that renters can expect to shoulder some of the higher operating costs that will hit landlords with the harmonized GST. Because renters have less income than homeowners, the tax increases due to the blended GST will hurt those who can least afford it.
The federal government's proposal will hurt low income Canadians the most. Therefore I move:
That all the words after the word "That" be deleted and the following substituted therefor:
this House declines to give second reading to Bill C-70, an act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related acts, since the principle of the bill does not seek to abolish the goods and services tax.