Mr. Speaker, it is a pleasure to speak 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. Really what this has to do with is the harmonization of the GST in Atlantic Canada.
Before I speak specifically about Atlantic Canada it is important to go back and discuss the chronology of events which led us to this point.
It is accurate to say that this legislation was born of very dubious parentage. We had a promise born of a loose lipped government member and we had a father who could only be called political opportunism. How sad that this young harmonized GST had to be raised in such a dysfunctional home, or should I say house?
Since 1990 it has become very clear that the government was being very opportunistic in discussing the GST and in suggesting to Canadians that when it came to power somehow the GST would magically disappear.
Just to remind hon. members across the way what exactly their record is on this, let me refer to some quotes that came from government members over the last several years with respect to the GST to remind them how far they have gone astray from their original promise.
Let us go back to government members when they were in opposition, in the wake of the GST coming into place under the Conservative government. Let me start by quoting some members who now hold prominent positions in the cabinet of the Liberal government.
First, let us go to a quote which came from the current Liberal House leader back in the days following the GST coming into place under the Conservative government.
The current Liberal House leader said: "Not only do the Liberals oppose the GST now, that opposition will continue even if the bill is passed. We are not interested in tinkering with the GST. We do not want it at all".
Meanwhile, the current finance minister said: "I would abolish the GST". The Prime Minister said: "I want the tax dead". One of the quotes that came from the Toronto Star back then was: `The Liberals will scrap the goods and services tax if they win the next general election, the leader of the party said. He said:I am opposed to the GST. I have always been opposed to it and I will be opposed to it always'''.
We saw the climax of the quotes that came from all the various members in October 1993 on the eve of the election when the current Deputy Prime Minister, on national television-that image will be frozen forever in my mind and probably in the minds of Canadians everywhere-said: "If the GST is not abolished under a Liberal government I will resign".
We all know that Liberal MPs campaigned in many ridings on the promise to abolish the GST. I know members will say that the red book stated it would be replaced. However, I need to point out that the government did not find the courage to bring the red book out until about a month before the election. They only produced about 70,000 copies. They did not talk about their promise with respect to the GST. Instead, they allowed people to think that they were going to still do what they said they would do early on which is to get rid of the GST altogether, scrap, axe and abolish the GST. However, that is not what they did.
All of this, of course, led up to the event last spring when the government was under great pressure to fulfil the promise made by the Deputy Prime Minister on national television. First the finance minister said that perhaps they had made a mistake. However, a lot of Canadians felt that he was pressured into that position and it was not coming from his heart.
Ultimately the Deputy Prime Minister was forced to resign. She went to great lengths to make it look like she was doing the honourable thing, but we know she polled her constituents first to find out whether she still had enough credibility to win the election in Hamilton East. Then of course she announced that she had been at the bank machine and could not look anybody in the eye and felt she had to resign. Well, $500,000 later she was back in the House of Commons.
The whole incident was a black mark on the history of parliamentary promises. There have been a lot of broken promises over the years but none more blatant than that broken GST promise of this Liberal government. I do not think that the government has yet paid the full price for it.
I want to set those incidents aside for a moment and talk about some of the aspects of the bill, the harmonized GST. First I would argue that the harmonized GST is extremely divisive the way the government has brought it in.
Members will recall that the government, to get Newfoundland, New Brunswick and Nova Scotia on side, had to go to them with an offer of $1 billion if they would come on board. It had to try and save face with $1 billion because although there was always the opportunity for any province to come on board and say that they were very interested in the new harmonized GST, there were no takers. The government was under great pressure at that point. Therefore, the only thing the government could think to do to bring governments on board was to offer up a billion dollars. It went to the Atlantic premiers and said if they came on board it had a cool $1 billion in hush money for them. That is insulting and causes great divisions in the country. It encourages dependency. It encourages the provinces to be under the thumb of the federal government. That is not acceptable as we approach the 21st century.
Some provinces are becoming very responsible. They have certainly shown more responsibility in dealing with their finances than the federal government has. They have taken leadership roles in all kinds of other areas. For the government to say it is going to pay $1 billion for those provinces to come on board if they are kind of quiet about things and just go along with it is insulting.
I want to talk about how divisive that is. I and my friends in the Reform Party, and Liberals if they are honest about it, probably have had constituents come to them and ask why are they are paying more taxes so the government can come up with $1 billion to give to three Atlantic premiers? It is very divisive.
I received a fax not too long ago from Lorne Taylor, the MLA for Medicine Hat-Cyprus in Alberta. He pointed out that the Alberta treasury had produced a document that said the effect of giving $1 billion to Atlantic Canada, except for P.E.I., was to lower the GST in those provinces to 5.5 per cent for the first two years of the deal. In speaking up for his constituents, which is the right thing to do, he asked why Alberta did not get that deal.
Ontario asked why in the world did it not get the same kind of deal. If Ontario were to harmonize, it would cost about $3 billion. The finance minister in Ontario, speaking for the people of his province, said $3 billion is what Ontario would require of this so-called adjustment money if Ontario was to come on board.
If I remember correctly, Manitoba and Saskatchewan came up with figures too. They were asking for money as well. I do not blame them. They were simply asking for what the premiers in Atlantic Canada got.
What did the government do? The government said no way, they are not getting any money, it is for those three provinces alone. It is divisive when one or three provinces are treated in a special way and the others are not treated the same way.
This has always been the way of the Liberal Party. It has made a career out of creating these types of divisions. Obviously it has served them well but it has not served the interests of Canadians as a whole. That is one very important reason why Reform is speaking against Bill C-70.
Another concern I have with this legislation is that it raises taxes. I know the government will say that all it is doing is broadening the base in Atlantic Canada and it will be a wash. It just is not so. It is not true.
This is a huge bill with many different aspects to it. It addresses all kinds of different things. One of the most pernicious aspects of the bill is the removal of the notional input tax credit. That was done back in April. I remember when it was announced. A lot of people did not know what it meant. An accounting firm in Winnipeg picked up on it right away. It said that it could amount to as much as $1 billion a year tax grab for the government.
The government had removed the input credit on used goods thereby ensuring that every time a used good changed hands the tax would cascade. In other words, if that good was bought after someone else had owned it and someone before that had owned it and someone before that had owned it, pretty soon there would be tax on tax on tax paid. There is no input credit going to the person who sold it. Pretty soon the value of that item would be inflated way out of proportion because of tax on tax on tax.
The result is that the government will reap all kinds of new revenue. Of course, a lot of the higher costs would be passed on to consumers. Potentially the government reaps a billion dollars more a year in new revenue.
It is a hidden tax grab, one that was never really debated. We raised it many times in the House. We received responses from RV and car dealers who were concerned and upset about it. To this date, the government has not given an adequate answer on how it can go ahead with it. People need to be made aware of it and that is why I am raising it right now.
That is not the only way the bill raises taxes. On April 1, when the bill comes into law, as undoubtedly it will, capital taxes will go up in New Brunswick and Nova Scotia. That is one provision of the bill. It allows the provinces to implement capital taxes. That is precisely what two provinces are going to do. The provinces will be given a new lever to raise taxes.
The Nova Scotia finance minister and the Halifax Chamber of Commerce have pointed out that one of the consequences of this bill will be that property taxes in Nova Scotia are going to go up. That is another aspect of the bill that leads to higher taxes.
I want to move on to a related area. This bill will not only raise taxes it will entrench higher taxes. Something which has not been discussed enough is the fact that changes to the provincial portion of the tax are going to be quite complicated, in fact, almost impossible, if governments want to lower the tax, but much easier if they want to raise the tax.
I do not know if members realize that it will require unanimity of all the provinces, should sales taxes be harmonized across the country, to lower the provincial portion of the tax. The provinces are being asked to do what they have probably almost never done before, and that is for the 10 of them agree on one thing at one time, to lower taxes. But they only need a simple majority if they want to raise taxes.
Obviously this gives the governments of the provinces a powerful new tool to go about raising taxes if the government gets its wish and the GST is harmonized across the country.
There is an ongoing debate in the country about taxes and tax increases. However, the debate is not about how high they should be raised, it is about how low they should go. The government has put in a provision to raises taxes, not to lower them. That is ridiculous. Reform cannot support that. Canadians will be outraged when they discover that one aspect of Bill C-70, the act to implement the harmonized GST in Atlantic Canada.
It is important to point out that it is not only the Reform Party that has raised this concern. Back in 1990 when the current finance minister was running for the leadership, and a lot of people would argue that he has never quit running for it, he pointed out that he thought he would scrap the GST. Not only that, he made special reference to the fact that once a harmonized GST is in place across the country, it could not be removed. Taxes could not be lowered.
If he felt so strongly about it then, what happened between 1990 and now? When did the conversion of Paul on the road to Damascus take place? What precisely influenced him to think that
now all of a sudden the provinces are going to fall into line, all 10 at once, and agree to decrease the provincial portion of the GST? It simply will not happen. It is simply not going to happen; 10 provinces agreeing to cut the tax. The finance minister was right in 1990 when he said that it is not going to happen. I think it is right today that it simply will not happen. At a time when we are having a debate about taxes in this country we should be finding ways to lower taxes, not to increase them.
I want to say another word about entrenched taxes and about why harmonization is a bad idea. One of the great benefits of not harmonizing is that it encourages a competition between different jurisdictions to keep taxes low.
We all know about competition in the marketplace but I think competition in government is just as important. That is why for instance in my native province of Alberta, where we have no sales tax, we have low income taxes, we have the great Alberta advantage and people in our province have paid a price to have that advantage. We have had to cut back on our spending so that we could afford to keep those taxes nice and low. Now that we have got to that point, we want to benefit from that advantage. We want to attract business from all over the world. In fact, we are.
The very fact that Alberta has those low tax rates is, believe it or not, a great benefit to the rest of the country not only because the rest of the country gets spin-off benefits from what happens in Alberta and Alberta sends a lot of money into equalization payments, but because it puts a pressure on the province next to it, and the province next to it, and the province next to it to get their taxes into line.
I know many people in the business community have spoken in favour of a harmonized GST. They have made the argument that it would be simpler. The paper work would not be as onerous and all that kind of thing. But that is a minor benefit compared to the benefit of having competition between different jurisdictions to keep taxes low.
I do not understand how that was missed by so many groups when they talked about harmonizing the GST. To me it just does not make any sense.
I would encourage people to look at some of the examples not only in Canada where we have Alberta with the low tax rates but in North America and around the world. When we have low tax rates, when we have competition between jurisdictions ultimately it leads to lower taxes across the board which means that people have more money in their pockets. It means that they have more opportunity and they can create their own prosperity for themselves. They are not dependent on a government.
If there is one thing we have to get rid of in this country it is this dependency mentality that governments tend to breed. They tend to
breed it and ultimately it is to the detriment of the entire country and to all of society. We have seen it over and over again, and not just limited to Liberal governments. Tory governments have done it over and over again as well. They should be ashamed especially now that they can see the fruits of their actions of the past where we have entire economies becoming dependent on government programs.
This is a very important aspect that the legislation does not address and ignores, the fact that we need some competition between different jurisdictions.
The fifth point I want to make is that this bill will mean, at least in the short run, and I think members have to acknowledge this across the way, higher costs for business in Nova Scotia, New Brunswick and Newfoundland.
I am not going to ask members to take my word for it. I am going to ask them to listen to the words of the Retail Council of Canada. The Retail Council of Canada is in favour of harmonization. It is in favour of it but what it is against is the government's bringing harmonization into three provinces and leaving the rest of the country unharmonized. They are saying to themselves: "Why are we pushing ahead with tax in pricing in particular when the government knows full well that it is going to hurt business in Atlantic Canada and if it hurts business it is going to hurt the Atlantic Canada economy?" Of course there is no economy in the country that needs help more than Atlantic Canada.
Why out of a sort of perverse need to try to fulfil a wonky election promise is the government pushing ahead with this when it knows it is going to hurt Atlantic Canada?
I am not going to ask members to accept my word for it. I am going to quote from a letter written on November 29 by the Retail Council of Canada which was sent to the current finance minister. This letter is rather lengthy so I ask for members' indulgence because the points raised are very important: "Retail council provided you with early estimates of the cost attached to tax in pricing in July of this year. At about the same time, seven national retailers also prepared a paper which explained how tax in pricing harmed their operations and provided estimates of the costs they faced.
"Since then, retail council members have worked to get a clearer understanding of the cost impacts. Ten members accounting for roughly 30 per cent of Canadian retail sales have given us in confidence their detailed estimates of the impacts for their firms.
"As the attached chart shows, these companies alone will incur annual ongoing costs of almost $34 million. This is only slightly
offset by input tax credit and other savings of $6 million, leaving these firms with a continuing annual net cost of $28 million".
This is for firms that represent only 30 per cent of the retail sector in the three provinces which have recently agreed to harmonization. It continues:
"Other RCC members have indicated that they will provide similar information on their costs to you directly. Nor are these costs incurred only by national firms. The expert distribution, warehousing and logistics costs incurred by the suppliers to independent and small chain retailers will almost certainly be passed on given the relatively weak negotiating position of smaller firms.
"Second, many of their suppliers are located in provinces that are not harmonizing so they will not benefit from any ITCs"-input tax credits-"in respect to provincial taxes.
"Third, small firms that receive prepriced merchandise will incur the same reticketing costs as larger regional and national retailers. Retailers operating only in the harmonized provinces will face one time costs to reprogram their computer systems but will not face the same continuing system integration costs that come with operating in harmonized and non-harmonized provinces.
"As part of the harmonization agreement, the federal government facilitated the imposition of capital and payroll taxes. Nova Scotia and New Brunswick have taken this opportunity to introduce new corporate capital taxes as of April 1, 1997, further increasing the costs attached to harmonization".
The letter goes on and on but I will not read any more in the interest of time. It is fairly clear this is a group that is arguing harmonization is a good idea. It wants harmonization but it is saying that the government should not go ahead in three provinces while it leaves the rest of the country without the harmonized tax. The group points out is will cost millions of dollars.
It will not cost the businesses millions of dollars ultimately. They will pass the costs on. So who pays for it? Consumers. Consumers pay through the nose for a broken Liberal government promise.
It would be bad enough if Canadians in general paid for that promise, but it is the people of Atlantic Canada. It is the economy that can least afford to take a tax hit of any region in the entire country. But the government did not care. It was so desperate to save the Deputy Prime Minister's skin that it went ahead and pushed through this ridiculous measure and it did not care that it cost people in Atlantic Canada jobs. It meant more money out of their pockets. It did not care for a moment.
The government does not care that it is divisive to the country. At a time when we are trying to hold the country together, the government gives Canadians one more reason to be cynical about its desire to treat everybody equally.
I must ask a question that I am dying to know the answer to. Where are the members from Atlantic Canada? Why are they not standing up for their constituents? We know there is a grassroots revolt in Atlantic Canada against the harmonized GST. Recently Greenberg Stores Ltd. announced it was closing a number of stores in New Brunswick. It was closing stores in different ridings. It was closing stores in Beauséjour, Restigouche-Chaleur, Acadie-Bathurst, Fundy-Royal, Moncton and also in Saint John. When stores close as a result of government action and 79 people in Atlantic Canada are thrown out of work, the MPs from those ridings should be on their feet. Where is the defence minister? He should be standing up for his constituents. Where is the junior minister of agriculture? Why is that minister not standing up for his constituents? What about the Conservative member for Saint John? We know that they are lock, stock and tomahawk in favour of harmonization and they are not standing up for their constituents.
That lays out how important it is for us to reform this place so that MPs have the power to stand up for their constituents. My goodness, if that had happened in my province, I would like to think that my colleagues would have jumped to their feet and said: "This is unacceptable. I do not care if it is my leader who is bringing it in. My constituents say it is wrong and I am going to stand up for them and vote against it".
Where are they? Where are the Liberal members from Atlantic Canada? There are 16,000 names on a petition against this. Where are the MPs from Atlantic Canada? Where are those Liberal MPs? Why are they not standing up for their people?
Their silence speaks eloquently of the need to reform this place. It speaks eloquently of the government's insensitivity to Atlantic Canada. It speaks volumes about its approach to treating provinces differently, as opposed to treating them equally, something the Reform Party truly stands for.
I am going to conclude my remarks by saying that our party does not believe in this approach. It is wrong. The government should have fulfilled its promise. It made a promise. It said it would get rid of the GST. Its members went door to door and promised it would be gone if they were elected. They were elected in spades; 177 seats and still the GST sits there as a permanent reminder that governments cannot be trusted. People cannot be trusted to come through with their promises when they make them on the doorsteps during an election campaign. The government should have followed through and gotten rid of the GST. That was its commitment to voters. The Deputy Prime Minister said so on national television. It was said over and over again.
I do not think the government has listened closely enough and, frankly, I do not think a lot of people have listened closely enough to the argument that there has to be competition between jurisdictions. If we do not, we are entrenching higher taxes. The finance minister said it in 1990. That is a very compelling reason to vote against a harmonized GST. We have to have competition. If we do we can all enjoy lower taxes in this country. However, under the current formula, which requires unanimity to lower the provincial portion of the GST, that will never happen, as hon. members know.
Canadians want lower taxes, not different taxes. We are having a massive debate in the House about how we are going to change taxes. When I go around to doorsteps, when I have my town hall meetings in Manyberries, Alberta or in Taber, Brooks or Medicine Hat, Suffield or Empress, or wherever, people do not say: "Boy, I wish the taxes were different". They do say: "I wish the taxes were lower. I wish I could keep more money in my pocket. The government gets its share". It gets 46 per cent of the average person's income. "Then I have to go out and provide my food, shelter and clothing for me and my family. There is not much left". There is hardly anything left, which is why we have record high levels of personal debt in this country. It is why we have record bankruptcies in this country.
Instead of debating how we are going to change taxes, why not have a debate in here about how we can lower taxes? I think Canadians have had it with the government having its own agenda which simply does not reflect at all what the agenda of Canadians is. This bill does nothing to address the overriding concern of Canadians that too much of their money is being spent and wasted in many cases by the government. They want that money left in their pockets.
In conclusion, I urge hon. members not only to listen to my arguments, I ask them to listen to the arguments of people in the provinces where this tax is being harmonized. Opposition parties are raising Cain in the various provincial legislatures saying they are against it. The Retail Council of Canada, the Canadian Real Estate Association, the Halifax Chamber of Commerce and many others are pointing out that the way this tax is being introduced is going to kill jobs in Atlantic Canada. I cannot believe a government that ran on the promise of jobs, jobs, jobs is going to push through with this even though it is going to kill jobs in Atlantic Canada. This is contrary to common sense.
If Liberal MPs in Atlantic Canada will not listen, I ask all members to listen to this. Why will they not listen to the people who have made it clear that they do not want this tax? There were 16,000 names on one petition alone. There may be other petitions out there but I am only aware of one. There are 16,000 people who are opposed to the harmonized GST in Atlantic Canada.
If the Liberals will not listen to me and my colleagues in the Reform Party, then I urge them, especially the Atlantic Canadian MPs, to at least listen to their own constituents and vote against this bill and to forever forget the idea of introducing a harmonized GST across the country.