Mr. Speaker, I will be sharing my time with the hon. member for St. Boniface.
Bill C-70 is really about re-engineering the Canadian economy. We live in very changing times economically. Surely as if we had lived back in the 1800s when the horse was replaced by the iron horse, today our society is changing dramatically before our very eyes.
When we talk about Atlantic Canada, for instance in the province of Nova Scotia more people today are engaged in education than in the fishery and forestry combined. It tells us that the nature of our society is changing. We have to change our internal and external trade mechanisms because this is becoming a very competitive world.
The harmonization of the GST is just part and parcel of a general program to make our economy much more efficient by stopping the duplication of various taxes and the overlap it causes and make our economies efficient and competitive as we move toward the 21st century.
We have talked about the WTO. It was the Atlantic provinces when they first came into Confederation back in 1867 that were the engines of growth at that time, the creators of wealth and the builders of ships. It is to their credit that those provinces have realized the importance of a harmonized GST system and of doing away with duplication and overlap to create more efficient economies for their people which will create jobs in the future.
We need a more homogeneous Canadian market, a Canadian trading system. This is just part of the parcel to do that.
Let me first address the whole concept of provincial sales taxes. Each one of our provinces at various times has implemented provincial sales taxes. They have come along and changed them, applied them to some things in one province and others in another province.
When I served on the finance committee I travelled to Atlantic Canada. I talked to the people about the kinds of administrations that existed in the provincial sales tax system. We get the same thing in my province of Ontario. It likes to protect children's clothing so it is exempted from the PST. Prince Edward Island is very concerned about home heating fuel so it is exempted. In other words, there is a patchwork of provincial sales taxes and rates which go from 12 per cent to 7 per cent and to 0 per cent in Alberta.
There is a hodge-podge of provincial sales taxes across the country. In and of itself what has that created? I am surprised that members of the Reform Party who talk about making this a better economy cannot see the importance of changing this outmoded system of individual provincial sales tax regimes.
When I was in the province of Newfoundland I was surprised and shocked to find that businesses were complaining about mail order businesses which operated out of Ontario and shipped products to Newfoundland because the retail sales tax in Ontario was less than that in Newfoundland. In other words, somebody would not buy something in their own neighbourhood because they could buy it cheaper through a mail order business in Ontario because of the difference in the provincial sales taxes.
These are some of the very basic problems a harmonized system is attempting to address. It is long overdue. It is not a matter of change for the sake of change. I hear some people say that the Liberals just want to change the GST and harmonize the sales tax so that they can meet their election commitments. Nothing could be further from the truth. This concept of integrating the two taxes is very important for our future as a country and for our economic well-being.
It is very important to have a similar system across the country from coast to coast to coast. That is my ideal. Some members of the Reform Party will say that we did it in only three provinces. Those three provinces are three more than we had a year ago. At this rate we will have harmonization across the country in a few years.
I would like to talk about the difference between a multistage tax and a single stage tax which basically is what the provincial sales tax is. The value added tax is a more efficient tax, if the people listening believe that there is such a thing as an efficient tax. It is an efficient tax in that it taxes at all stages of consumption. The provincial sales tax is not efficient for a number of reasons. One very real reason is that the provincial sales taxes invariably become embedded in manufactured goods. What do I mean by that?
I mentioned initially the importance of re-engineering our economy, creating a more robust economy in Canada. Another aspect is our export sector which has been the engine of growth and the engine of employment. Many people come to the industry committee week after week and say that to start a small or medium size business in Canada they have to start with the assumption that 70 per cent of their sales will go outside the country. What does that have to do with taxes?
The bottom line is that with the provincial sales tax system, we incorporate and compound the taxes on our export sales because there is no mechanism to relieve our exports of the provincial sales tax. The whole concept of the GST or a value added tax is that when we export something, we do not include those taxes in the export selling price. In other words, it makes our products much more competitive in the world environment. I will give an example.
In my riding even though we do not have a General Motors plant, General Motors is a big player in the economy. General Motors currently would pay provincial sales tax in its operations. Everyone knows there is no such thing as a business tax per se. We hear the province of Ontario argue back and forth that it does not want to shift the taxes from businesses to individuals. I would like to suggest that there is no such thing as business taxes. The only taxes are on individuals. We are all paying the tax on a personal basis whether it is in that car or the products that we buy daily, our telephones, refrigerators and so on. We are all paying the tax. Sometimes we see it, sometimes we do not. That is the essence of the problem of provincial sales tax.
It is amazing that members of the Bloc have not noticed that their own system is a very efficient one. It is completely harmonized with the existing GST system. The automotive sector is one of the growing engines of our economy. It is one of the things that has kept people employed and has allowed our economy to go forward in the last few years. A car produced in Oshawa when sold in the United States has PST, provincial sales tax, embedded in the selling price but a similar car produced in Ste-Thérèse, Quebec does not. All things being equal, the car produced in Ste-Thérèse, Quebec and shipped into the American market is cheaper than the one produced in Ontario.
Everyone can understand why I believe that Ontario and most other provinces will eventually harmonize. It is just good business, just good sense and just good for the economy.
The interesting aspect about this is that moving toward a truly harmonized system means that we have a common base, a common rate and a single administration. One of the most important things is a single administration so that we end the duplication and overlap which exists in the system.
I would like to mention a person I contacted just this morning, Fred Shaw from St. Anthony, Newfoundland. Fred is an accountant. In his own practice, because of the harmonization process he is actually going to end up charging more on his invoices but he said that his customers are going to be a lot better off under a harmonized system. The province of Newfoundland is going to be better off by millions of dollars by harmonizing its administration system.
Mr. Shaw talked about buying a load of gravel. Before, he would have had to pay the PST and the GST on a load of gravel but if the same truck had spread it over his front lawn he would not have had
to pay the PST. This is the sort of ridiculous argument we are all doing away with under this system.
In conclusion the object of a harmonized system is to create a more robust engine within Canada and to create a more dynamic economy as Canada competes in the 21st century against many other competitors that are doing the same thing.