Mr. Speaker, I thank the hon. member for his questions. Other than confusing my interest in a system of tax which he later supported, he asked good questions. Let me begin at the end of his comments.
In order to understand the impact of a retail sales tax such as the provincial retail sales tax on the consumer, one must understand why the Atlantic premiers claim there is no sales tax. What happens with the existing retail sales tax is that not only is it applied to the price of the goods that are purchased, but it is embedded in the cost of every item produced and every service generated by a business in a province with that kind of tax.
Take the classic case of the barber shop which everyone likes to talk about. People say there is no tax on haircuts. Who do they think pays the tax that the barber paid when he bought his barber chairs? Who pays the tax that the barber paid when he bought all his hairdressing equipment? Who pays the tax that the barber paid when he bought all of the other services that are necessary for him to render his hair cutting service? It is embedded in the price of the haircut.
If we take the case of another business that is producing a good, then again the provincial sales tax systems as they exist in Canadian provinces cause a cascading of the tax. Every time in every stage of production tax is paid by the business on inputs, it is embedded in the price of the good that the business sells. Tax is applied to that, which includes tax on the tax previously paid, and so on down the chain.
Under the harmonized sales tax, all of that is eliminated. When a business sells a good to a consumer, the only sales tax is the sales tax that is applied at the retail level. There is no sales tax embedded in the original price of the good. That is why the Atlantic premiers can say with pride that there is no sales tax, because they have managed a system that is clean when the good is finally sold to the consumer. The consumer knows that the sales tax component he pays on that good is 15 per cent. It is demonstrated on the bill. There is no hidden sales tax. There is no hidden tax on a good in the Atlantic provinces.
Once again the member suggests, and the Reform Party has tried to make something out of this for several months, that somehow the red book did not represent this party's election promises in 1993. That of course is something the Reform Party did not try to proclaim at the time. Reformers were given the red book as were other opposition parties. Our promises were plainly made and they have been fulfilled.
If the hon. member wonders why we opposed the GST in 1989 and 1990, then I commend to him the report that we wrote. Circumstances have to be dealt with as they are found at the time. We recommended against implementing this tax for some of the same reasons that we are trying to fix it now.
As I spoke of earlier, with two sales taxes at the retail level, it is the only jurisdiction in the western world that has tried to do that. It was not a good idea. It was confusing. It was predictable that we would have the tax chaos which resulted. But there was no turning back the clock and saying we wished it had never happened and let us go back to the old sales tax and begin with that. Time had moved on.
When the Liberals campaigned in 1993 we made it very clear what we would do. Given the reality that the government of the day had already imposed the GST and that the introduction of the tax had been absorbed in the economy, we said that we would have the finance committee study it in the first year of government and prepare a report on how we might move forward to produce a better tax that would be harmonized with provincial sales taxes.
It is disingenuous of the hon. member to suggest that he can take things out of a 1990 debate in the House of Commons before the law was enacted, before the tax was imposed, before the retail community had to make the adjustments in order to apply the tax, before the manufacturers sales tax had been withdrawn and use them in debate in 1996 when we are trying to make the mess we found liveable for retailers and consumers. It might be good political rhetoric but it is not precisely what the hon. member
would like to be identified with in putting real and substantial choices before the Canadian public as we move on from here.