Debates of Dec. 5th, 1996

Business Of The House

[Herb Gray, Liberal, Leader of the Government in the House of Commons and Solicitor General of Canada]

Mr. Speaker, today, tomorrow and Monday, if necessary, we will continue the second reading debate of Bill C-70, the sales tax harmonization bill. When this is concluded we will call Bill C-60, the food inspection legislation, followed by Bill C-23, the nuclear safety bill.

On Tuesday we plan to have the first day of the prebudget debate during normal sitting hours of the House. But discussions are taking place to permit a special debate in the evening on the United Nations Declaration of Human Rights on what I believe is its 50th anniversary.

The remainder of the week will be taken up by the second day of the prebudget debate and the legislation I have already mentioned. If there is an opportunity to consider other matters, we will discuss the agenda on the other side of the House. This concludes my weekly statement of government business.

Ways And Means

[Jane Stewart, Liberal, Minister of National Revenue]

Mr. Speaker, pursuant to Standing Order 83(1), I wish to table a notice of ways and means motion to amend the Income Tax Act, the Income Tax Application Rules and another act related to the Income Tax Act. I am also tabling explanatory notes.

I ask that an order of the day be designated for consideration of the motion.

The House resumed consideration of the motion that 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, be read the second time and referred to a committee; and of the amendment.

Excise Tax Act

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I am pleased to have the opportunity to speak to Bill C-70 which deals with the GST harmonization in Atlantic Canada. The word harmonization reminds me of the song "I said it but I didn't really mean it", a very famous song.

It also gives me an opportunity to remind the Liberals in the House and, most important, their constituents, the Canadian taxpayers, of what was said on the campaign trail about the GST by the very Liberals who are sitting as the government today.

This is a little game called recall. First, let us recall the words of the Prime Minister when he was a candidate for the Liberal Party. He said: "We hate it and we will kill it". He did not say: "We hate it and we will harmonize it".

The Minister of Finance when he was campaigning as a Liberal candidate said: "I would abolish the GST". Pay careful attention to the word abolish. That means to get rid of, to lose sight of, to bury. That does not sound anything like: "I would harmonize the GST".

Our very own minister of defence said when he was a candidate: "The GST is a regressive tax. It has to be scrapped and, by golly, if we are elected to government, we will scrap it".

All across this country as the campaign went on Liberal candidate after Liberal candidate knocked on doors, spoke at public meetings and said in unison: "We will kill the GST. The Liberal Party will kill the GST if we become government in the next election". That is what they said. Everyone heard it. I was on radio shows with Liberal candidates and they could not wait to say "we will kill the GST".

It is sort of fun to go back in time and reminisce about what happened in the 1993 election. But there is a very serious part to all this. The bottom line is that the Liberal candidates in the 1993 election, prior to it, deliberately misled the Canadian people about what they were going to do with the GST. They deliberately misled the Canadian people.

[The Speaker]

I am sorry, I was otherwise disposed. Did the hon. member actually say "deliberately misled"? Did I misunderstand that?

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I was referring to the Liberal candidates prior to the 1993 election when they went campaigning and they were saying they would kill the GST, they would scrap or abolish it. That is a deliberate misrepresentation.

[The Speaker]

I wanted to make sure that I heard what I hoped I had not heard, but I would ask the hon. member to withdraw the words "deliberately misled", because that is just not parliamentary. Would the hon. member do that?

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Certainly, Mr. Speaker. I have a great deal of respect for the Chair.

During the 1993 election the Liberal candidates went coast to coast and they mis-

[Harold Culbert, Liberal, Carleton—Charlotte, NB]

Mr. Speaker, on a point of order. I listened to the recent comments made by the member from the Reform Party. I can tell you that he is not accurate and not factual with his statement and by so doing-

[The Speaker]

Let us get back to debate now. The hon. member for Prince George-Bulkley Valley.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, in venue after venue in the 1993 election the Liberal candidates across the country told the Canadian voters that they would scrap, kill, abolish the GST. That is the fact.

Taxpayers across this country are going to remember because we are going to keep reminding them that they are going to pay for this Liberal promise, this yet another Liberal broken promise. They are going to pay for this harmonization scam of the Liberals that will hurt every Canadian taxpayer because to get the Atlantic Canada provinces, the ones that agreed to harmonization, the Liberals will give the Atlantic Canada provinces a cash payment to induce them to come on to this scheme.

This payment to Atlantic Canada provinces, the ones that have joined on, that have been duped into it by the Liberal Party, is going to amount to about $1 billion a year just to satisfy the whims of this Liberal government to make it look not quite so bad. They can once again try to fool the Canadian people but they will not get away with it.

Taxpayers in every other region of Canada will be offering tax relief to Canadians in just a few provinces, the provinces that have been coerced into joining this GST harmonization plan.

Canadians in certain regions of the country I do not think should be asked to subsidize a tax cut for maritime provinces that came in on this plan because of this Liberal harmonization scam. But the Liberals are using $1 billion from taxpayers to buy a buried GST in Atlantic Canada so that they can say they kept their election promise. That simply is not going to sell to the Canadian people. This is truly despicable and Canadians will not be hoodwinked by this Liberal trickery, this Liberal sleight of hand.

Atlantic Canadians will also suffer because while they may pay a lower tax rate in this harmonization scam, they will pay taxes on a larger range of goods and services. You do not get something for nothing, particularly when a Liberal government is running the country. If people think they are actually getting something from this government, they should keep their hands on their wallets and watch their back pockets. The government will not give you what it has not first taken away from you.

The harmonized tax will apply to children clothing-wonderful-books, hair cuts, funeral services, heating oil, home renovations, gasoline and new homes. New home prices will rise by about 5.5 per cent and municipalities will be forced to raise their property taxes.

It will cause an increase in gas taxes that will cost Atlantic Canadians as much as $100 million a year. It will cost them more to heat their homes and funerals will cost more. The Liberals have even managed to make dying more expensive. When will the Liberals begin taxing births? That way they could get you coming and going. We should talk to the Minister of Finance and the revenue minister about this.

In all, this harmonization package is a bad deal for Atlantic Canadians and the maritime provinces generally. It is a bad deal for Canadians. Let us see what some of the other provinces said about this Liberal harmonization package which the Liberals are peddling as this huge great deal.

Ontario said that the plan would cost its consumers between $2 billion and $3 billion extra a year if the harmonized tax were implemented in Ontario. Ontario's premier said that giving the subsidization package to the maritimes represented nothing more than a bribe. That was his word, not mine.

Alberta's premier, who also runs a good fiscally responsible province, said that the compensation component was a bribe put forward to get the Liberal premiers in Atlantic Canada to sign on to the deal.

It will surprise the Liberals that Saskatchewan's minister of finance said that the plan would mean a massive tax shift on to the province's consumers. Who said NDP finance ministers do not know what is going on? Congratulations to Saskatchewan's finance minister.

Manitoba also said that the cost to consumers would be too high and that it would not sign on to it.

This deal will not only hurt consumers, it will hurt business in Atlantic Canada. Three major retailers have said that their net annual retail deficit will total $27 million once this plan is implemented. The Retail Council of Canada knows what it is talking about. It stated that the harmonized tax will cost retailers $100 million a year.

We are talking about a massive extra consumer tax. We are talking about deception. I urge Liberal members who have integrity to stand up in this House, stand behind their campaign promises and say no to this deception.

[The Speaker]

The member is quite agile on that tightrope. Please do not push your Speaker too far.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, I will start where the previous speaker left off, with election promises. I remember very well what I said to my constituents during the election campaign.

First, one cannot get rid of $16 billion of revenue without adding $16 billion to your annual deficit, and taking $16 billion away from what needs to be spent on other things that are important to Canadians.

I made it clear to my constituents during the election that replacing the GST meant replacing the revenue in some other way. That is quite consistent with the promise the Liberal Party made that it would replace the GST with a system of taxation that generated equivalent revenues, that was fairer to consumers and small business, that minimized disruption to small business and that promotes federal and provincial co-operation and harmonization.

There is no way that any of us on this side of the House will pretend that what we have in front of us today with the harmonized sales tax is a complete fulfilment of that. We know it is not. However, it is a first step to a national harmonized sales tax which would be significantly more efficient, fairer to consumers and a cost saving to businesses and taxpayers. It would significantly reduce costs of administration.

I answered a lot of questions about the GST during the election campaign. First, was it not supposed to help bring down the debt and the deficit? No, it was intended to be revenue neutral but in fact it lost $3 billion a year in its first year of operation. In effect, it added $3 billion to the deficit in its first year and it has continued to be a grossly inefficient tax to administer and to collect both for government and for the businesses who do the collection.

I explained to people during the last election campaign that the GST had replaced the manufacturers' sales tax which was collecting $20 billion and netting $18 billion. It was replaced by the GST which was collecting over $33 billion and netting only $15 billion, a net loss of $3 billion in revenue but a 50 per cent increase in the amount we were actually collecting from consumers. There are clearly inefficiencies in the GST.

The very first commitment made by the government as soon as Parliament resumed was to task the Standing Committee on Finance with reviewing all possible means of replacing the GST. The committee did that. It held months of hearings, it heard from close to 100 witnesses and received many more briefs from right across the country. It heard the views of Canadians. I believe it looked at over 24 options on how to generate similar revenue and try to meet the other criteria of being more fair, more efficient and promoting federal-provincial co-operation.

Both the finance committee in an all-party report and the Reform Party endorsed the idea of a national harmonized sales tax as the best answer to the problems of the GST and that is what the bill

before us today does. It starts the process of implementing that for three of the provinces.

The government did commit to try to bring in a tax that minimized disruption to small business. I want to take a few minutes to talk about some of the concerns that businesses in Atlantic Canada have about the implementation of the harmonized tax and how they have been addressed. I believe this is a pattern that if adopted across the country would help business, would help consumers and would reduce the costs of government.

Let me remind people that we are talking about one tax administration instead of two, one set of books for businesses to keep instead of two, one point of paying the sales tax instead of, as they now have in the provinces, at many points throughout the production process.

Let me focus on how it is being implemented at the cash register because Canadians, including businesses, have told us again and again that they want to know the price before they get to the cash register.

How many of us have talked to small business people in our ridings who have said: "My consumers come to the cash register, they see the total price and they leave the goods there and walk away". Under the new system people will know the price of the good when they see it on the shelf. It will be the same price they will pay at the cash register.

Potentially that could cause problems for businesses which may receive pre-priced goods or which may already have pre-priced goods in their shops. The legislation allows them to simply indicate on the shelf what the tax inclusive price will be. Their customers will know, but those stores will not have to absorb the cost of re-ticketing and re-costing every item on the shelf.

The government is doing all it can to minimize the disruptive effects of these measures. Businesses will have to adapt their operations, but we have prepared rules that will minimize problems for businesses and meet the needs of consumers.

Let me highlight some of the initiatives with respect to tax included pricing.

Business will be able to include two prices on pre-priced goods, one showing the HST inclusive price in harmonized provinces and the other indicating the price elsewhere, which may have been put on by the manufacturer when the goods were shipped. They will be able to re-ticket items to show tax inclusive prices in harmonized provinces. Magazines are a good example of how rules are being developed to minimize business disruption. Magazines are different than other pre-priced goods due to their time sensitive nature, high volume and rapid turnover.

The new pricing requirements are consistent with the pricing practices that businesses need to continue to operate with minimum disruption and efficiency.

The provincial governments have obtained a point of sale rebate for the provincial component of the HST on books. The price of books, used or new, will not rise as a result of the HST.

Administrators will work closely with business to ensure that tax inclusive pricing is implemented smoothly, with minimal disruption to normal operation. We believe that businesses will conform to the flexible rules so consumers can know the full price of their purchase in advance. Where businesses are trying to conform, they can certainly expect full co-operation and assistance.

Receipts and invoices will disclose either the amount of tax paid or the rate at which the tax has been charged. We will continue, as this is implemented, to work with retailers and businesses to ensure the new tax inclusive pricing system works effectively and efficiently.

I have listened to the speeches of other members of the House. I would ask the members of the Reform Party to go back and review their comments at the time the finance committee recommended the harmonized tax. They endorsed it fully at that time. I would never question the motives of other members of this House, but one has to wonder whether their position now that reality is in front of them does not have more to do with politics than good taxation policy.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, it funny the way things change over time. Today, the Liberals are being quite touchy. Reform members are telling them that during the 1993 election campaign, they openly condemned the GST. Liberals are now raising questions of privilege and using every tactic in the book, suggesting it is unparliamentary to remind them that they condemned the GST during the election campaign.

But we have seen a minister in this House, the Deputy Prime Minister at that, who was forced to resign or felt she had to resign because she had stated that if the GST was not abolished, she would resign.

She did resign, and she was re-elected. It is as if I, a sovereignist member, said: "If Quebec does not secede some day, I will get re-elected as a Liberal member". God forbid. It would be unthinkable. If I did that, you would say I was dishonest. I do not mean to apply this word to my colleagues. I simply want to remind you that the Deputy Prime Minister said during the election campaign: "If this tax is not abolished, I will resign".

During the 1993 election campaign, the Prime Minister said: "We will scrap the GST". Then, on May 2, 1994, he said: "We hate this tax, and we will get rid of it".

The bill before us today is even more underhanded than the scheming of those who claimed they would abolish it. Not only are they keeping it and pushing it in the western provinces, they are redeeming themselves for the next election by harmonizing it in the maritimes.

The hon. member for Beauséjour is puffing up his chest, but he was not so proud, not so long ago, when the people in his riding were angry. I even saw on television someone roll up his sleeves and invite him to step outside the assembly hall. He was not puffing up his chest then as he is doing now. He let that guy speak, I am telling you, I saw it on television.

But if we dig a little deeper, we see that this government is trying to buy back the maritimes after closing some military bases there. That decision was not very well received. Now, they are giving them a present valued at $920 million for a start. That is to buy the coming election, to try to buy relative peace, because the people there nonetheless understand to a large extent that the government is trying to pull the wool over their eyes. This gift is a sort of Trojan horse, but for many people, it is something that seems, for the moment, acceptable.

I listened to the parliamentary secretary who just spoke. She presented the GST as something completely harmless; she said it was simply replacing the old manufacturers' sales tax. Yet they did call it the goods and services tax, since it not only replaced the old 9 per cent federal manufacturers' tax but extended it to other economic sectors that had not been affected until then. The new tax now applied to legal services, for example, or to any other kind of service for that matter.

That is probably why, acting in good faith that proved short-lived, the Prime Minister, then leader of the official opposition, rose up against this tax. He expressed outrage in public, as he did in his red book and during the 1993 election campaign.

This famous tax shows that the government in place, just like its predecessors-and it is a Liberal government that was responsible for the first deficit in our history-claims that cutting the heart vein just before the blood gets to the heart is good for the taxpayer and for all aspects of our economy and allow the patient to live longer. In so doing, the government is revealing its inability to find other ways of collecting taxes and generating government revenue, which is disastrous. It is tragic.

[Fernand Robichaud, Liberal, Beauséjour, NB]

Oh, oh!

[Ghislain Lebel, Bloc, Chambly, QC]

I would invite the member for Beauséjour to breathe through the nose. I do not know who will take over his riding after the next election, but he may have to let it go given the performance of his party over the past three years.

The member for Beauséjour should stop shouting at the official opposition, his peers who still live on Canadian soil after all, and are looking for ways to improve the taxation system, increase public revenues without choking people to death. I could very well make some suggestions.

I will offer one suggestion, if he is considerate enough to listen to me; the idea just came to me.

Take the example of a worker. First, 57 or 58 per cent of his paycheque is deducted at source. On his paycheque stub he can see the word "net". What it means is that his paycheque is trimmed down to the minimum, because there is not much left. He then goes home with the 42 or 43 per cent that is left, but he is not out of the woods yet. The government thinks, dreams, racks its brains and says: "How could we grab most of the 43 cents on every dollar earned that actually he brings home?" It thinks about all kinds of things and talks about harmonization, but it never thought that, because of the economic multiplier, the less money people have, the less they will contribute to making the economy work, the less they will invest in our society and the more this economic multiplier will tend to move toward zero, towards nil.

Then, the government ponders and finds that it is not getting enough revenues. It must trap people again, somewhere else. That is the Liberal philosophy.

I will give an example. If it were willing, one day, to see things differently. We are all taxpayers and, at some point, we have to paint the interior of our house. What do we do? On a nice Saturday, we go out and buy gallons of paint, two rollers and one pole. With our wife and children, we do the painting ourselves. It takes one weekend. This has cost us $300 or $400 in paint and we have saved money on a job that would have cost $800 in total.

If the government had examined that sort of thing and had allowed the taxpayer, instead of wearing himself out on the roller one weekend, to officially give the contract to someone else, thus thwarting the underground economy, the taxpayer could say: "Instead of wearing myself out on the roller, I will give the work to my neighbour who does not have a job. He has a social insurance number and will declare his income. In reality, this will cost me $800, but I will get a tax refund of about $200 and the paint will have cost me $400. Fine. It is worth my while to spend a whole weekend painting my house to save $200? Perhaps I would have given the contract to someone else." To save $800, it is worth it, to save $400 also, but not to save $200. This is the kind of thinking they are incapable of doing.

This might mean at the outset some kind of tax break, which is unthinkable for those on the other side. They prefer to raid the piggy bank greedily, a bit more every day, and they will go almost as far as the highwaymen of the last century, who would lay in ambush for travellers and rob them. Whether the hon. member for Beauséjour likes it or not, this is the situation we are facing today. These people show no sign of compassion for taxpayers nor any willingness to provide some relief and get the economy rolling. We could get rid of the underground economy; it could yiled interesting results, but they refuse to do so.

Even if I suggested such a thing, I would be afraid that they would turn around and tax capital gains from the sale of a residence. That shows are crooked they are.

Personally, I expect nothing from this government but I hope it will be able to tell the truth to the people and tell them it paid out $920 million to the maritimes to buy the support of voters there and make them forget the terrible things it did there. But we cannot be sure of that, because we have just seen one province change governments unexpectedly.

Their bill contains nothing which allows them to pat themselves on the back. We see how well they are holding promises made in 1993. We should expect nothing from these people, not even the honesty to admit that they broke their promises and that their word is not worth more than the ink of the red book.

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, I would like to follow up on my colleague's comments and start out by asking what is a promise. A promise is an assurance that one will or will not undertake a certain action. A promise is a statement of integrity, a statement made with integrity. It is a commitment that is not to be broken. When we talk about keeping promises we talk about building trust.

On the campaign trail the Prime Minister said: "There is not one promise that I have made that I will not keep". That has now become a joke. This government has broken more promises in the past three years than it has kept.

Regarding the GST, the Liberals promised to scrap, abolish, kill, eliminate, get rid of GST. This is a promise they took from door to door. This was a major cornerstone of the Liberals election campaign.

On October 29, 1990 the current Prime Minister said: "I am opposed to the GST. I have always been opposed to it and I will always be opposed to it". The current Minister of Finance stood in the House of Commons on November 28, 1989 and said: "The goods and services tax is a stupid, inept and incompetent tax". On April 4, 1990 he said: "I would abolish the GST". On November 6, 1991 the current Deputy Prime Minister asked the Tory government why it was pursuing a GST policy that "kills Canadian jobs and puts a heavy burden on our tourist industry". On March 24, 1994 the current revenue minister stated: "As Liberals we were elected to change the tax, abolish the tax, scrap it".

The Deputy Prime Minister campaigned that she would resign if the GST were not abolished under a Liberal government. Rather than resign, she stepped down and ran a second election in her riding which cost Canadian taxpayers $.5 million.

Last March Reform put forward a motion to abolish the GST. One hundred and thirty Liberals, including the Prime Minister and Deputy Prime Minister, all voted to keep the GST. Their vote against the motion proves that they have absolutely no intention of keeping their election promise.

Clearly, killing the GST promise is just another broken promise in a long string of broken promises. The Liberals claim to have fulfilled 75 per cent of their 1993 campaign promises. We checked. We found that they have fulfilled only 22 per cent of their promises. Some record. That is a record of shame.

The red book says there is little room to raise taxes and that long term goals should be tax relief. The Liberals also claim they have not raised taxes. In fact, the Liberals have increased taxes 30 times in the past three budgets as well as instituting higher sales taxes for Atlantic Canadians.

The government made many campaign promises to scrap the GST. During the campaign Canadians did not hear anything about harmonizing the tax with the provinces. Rather than scrap the GST, the Liberal government is in the process of harmonizing the GST with the provinces to create a new sales tax, a harmonized sales tax, HST. Instead of removing the GST, the Liberals are now trying to hide the GST by including new harmonized taxes in the price of goods.

I cannot wait until the next election when Canadians will show the Liberals what they think of this broken promise, the same as the Canadians did with the Conservatives regarding the GST. Three Atlantic provinces have signed on to this deal, this harmonization deal. GST harmonization in Atlantic Canada merges provincial sales tax with the 7 per cent GST to create a single tax of 15 per cent to be implemented on April 1. It is odd that it should be coming on April Fool's Day.

The provinces that have signed on are Newfoundland, Nova Scotia and New Brunswick. The harmonized tax, the HST, is nothing more than a super tax grab on consumer spending. It is simply another tax grab.

From the last 13 years of Liberal and Tory rule, on average Canadian taxpayers now pay an extra $1,126 a year simply in

increased sales and excise taxes. The HST if applied right across the country will raise these taxes even higher.

In addition, the harmonized sales tax will apply to more goods than are currently taxed on retail sales. Consumers in the Atlantic provinces that signed on to the deal will pay higher taxes on children's clothing, gasoline, books, funerals, new homes, heating oil, haircuts, used goods and even postage stamps. This simply means higher taxes for Atlantic Canadians.

For example the HST will push the price of a new house up by 5.5 per cent. Some deal. Higher operating costs for landlords will mean that renters will pay higher rents.

There are also concerns that the tax included pricing will cause chaos not only in the Atlantic provinces but in the rest of Canada. According to the Retail Council of Canada, national retailers will be forced to change computerized inventory systems and separately price goods bound for the Atlantic region. This alone will cost $100 million.

With harmonization, Canadians will have one tax included price in Atlantic Canada while the rest of the country will function with prices that do not include GST or sales tax on the label. There will be two separate systems.

The harmonized sales tax is not only unfair to Atlantic Canadians who will pay higher taxes on many items, it is also unfair to the rest of Canada which will be paying $1 billion in compensation to the Atlantic provinces for lost tax revenue. Once again the west is financing the east with a $1 billion transfer of wealth to Atlantic Canada.

The combined sales taxes in Nova Scotia and New Brunswick are currently 18 per cent. In Newfoundland the combined rate is 20 per cent. A 15 per cent combined rate is a deal for Atlantic Canada. The rate will be reduced. That is the reason for the $1 billion transfer.

There are no advantages to provinces that pay a combined sales tax which is less. For example, Alberta has no provincial sales tax and only has the 7 per cent GST. Why would it want to enter into harmonization and go from the 7 per cent GST and no provincial tax to a 15 per cent tax? Try to sell that in Alberta. Tax systems across the country should be equitable, yet this deal is hardly equitable for Canadians outside the Atlantic provinces.

Furthermore there are concerns that revenue shortfalls as a result of lowering the tax rates may be made up by changes in equalization formulas. Canadians could see an increased redistribution of wealth from western Canadian taxpayers to the maritime provinces for nothing more than what are purely political reasons. Because the GST promise was not fulfilled, the government is now going to the HST. The result is that a transfer of wealth is going right across the country to fix the deal. It is strictly political and it is absolutely wrong.

Harmonization will not work in central and western Canada because as I stated earlier, at present the combined rates are less than 15 per cent.

Furthermore it does not make any sense for Ottawa to adopt a policy that calls on all Canadians to pay the same taxation rates regardless of where they live. Provincial taxation rates are based on provincial needs. There is no reason for a national tax rate right across the country.

All provinces simply will not come onside with this agreement. Some provinces have no sales tax, such as Alberta. Other provinces have a provincial rate that is less than 8 per cent, so the combined rate of 15 per cent simply does not make any economic sense for those provinces to buy on. Alberta, Ontario and B.C. are simply not willing to discuss the federal proposal. Support is very weak in Saskatchewan, Manitoba and P.E.I. The HST simply does not work and it will not work.

It is my understanding that in the beginning the government was going to call this the blended sales tax. Perhaps it should have done that. Now it is the harmonized sales tax, the HST. Of course a blended sales tax would be a BST. Many Canadians are seeing that a BST is very much what this bill is creating.

When will the government understand that tax increases mean job losses? If the Liberals are serious about getting our economy back on track and creating jobs, then they must start by giving business incentives to create employment. That means lowering taxes, not raising them, as they are doing with the HST.

[Nic Leblanc, Bloc, Longueuil, QC]

Mr. Speaker, I am pleased to rise today to speak on this GST bill, especially since I was a member of the ruling party at the time of the federal tax reform. I can clearly remember the whole process, and it is really funny today to see how the Liberals are going about it.

Let us not forget that, in 1988-89, we had a federal tax that, from a consumer's point of view, was a hidden tax. It was known as the manufacturers sales tax and it was charged by manufacturers to retailers. When manufacturers shipped their products to retailers, 13 per cent of the products' sale price went to the government to cover the federal tax.

At the time, there were reportedly some 22,000 exemptions. Many products were neither taxed not taxable. It had been decided that food, drugs and educational material and health products should not be taxed. Many products became tax exempt; there were reportedly 22,000 exemptions.

A large number of manufacturers also argued before the courts that the federal tax should not apply to their products. They felt it was unfair for their products to be taxed when an equivalent product was not. Every manufacturer claimed that his product was similar to a product that was not taxed.

This prompted the federal government, a member of which I was at the time, to reform the federal sales tax, not to create a new tax in addition to the old one, but to reform the old tax, because it was no longer manageable. There were so many court cases, it was just a nightmare. That tax was really not manageable any more.

The federal tax has been in existence for a long time. It used to be a tax on products only, which the manufacturer himself would charge to retailers and then pay to the federal government. Because it was no longer manageable, the federal government, of which I was a member, decided to reform that tax, which generated about $18 billion in revenues.

Today, it is said to bring in about the same amount, perhaps a little more. So, the idea was not to increase federal revenues, but to reform the tax to make it easier to manage and fairer to everyone.

The federal tax was also difficult to administer in the case of exports. Now that it is directly charged to consumers, it is easier to manage in the case of exports, since these products are shipped before the tax applies. Indeed, most export products are not taxed, which promotes exports and creates jobs at home. This was quite a reform, as you will remember.

However, the official opposition of the time led Canadians to believe that it was a new tax, and that the government wanted to tax them more. I remember that this issue generated heated debates in the House. The Liberals convinced Canadians that it was a new tax when in fact it was a tax reform. But they did convince people that it was indeed a new tax.

They worked very hard. The issue was debated for months. They kept us in the ropes until Mr. Wilson, who was finance minister at the time, finally agreed to make several exceptions.

Some products are exempt from the federal tax. Today, we are still stuck with a tax that does not apply to many exceptions. For example, if you buy an item at a convenience store you pay tax on it; however if you buy a six-pack of yogurt, it is tax free. Similarly, if you buy a cupcake you pay tax on it, but if you buy the same cupcake in a box of 12, there is no tax.

All this is to say that, when the Liberals formed the official opposition, all they succeeded in doing was to further complicate this federal tax, when all we had wanted to do was simplify it.

I sat on the committee responsible for the GST and I was in agreement up until the last minute. I remember very clearly that we met with the Minister of Finance almost every two weeks to discuss the issue and hear how things were progressing. I always supported it, because there was a GST refund for those earning less than $30,000. There was a refund for the neediest, the most disadvantaged, to offset the effects of this tax on goods and services. I always felt, and I still feel, that everything should have been taxed, without exception. All goods and services should have been taxed, whether they came under health, education or whatever, because we had simultaneously introduced a means of compensating poorer Canadians through a GST refund.

You know that thousands of people receive GST refund cheques. So there was a system in place to compensate the poorest members of society. Why then was there a need for exemptions in this case? No, exemptions were not necessary, everything should have been taxed, without exception, because we had seen that the preceding federal tax with its 22,000 exemptions was no longer manageable. In the not too distant future, in a few years probably, we are going to find ourselves facing the same problems as those we had with the other tax.

The difference is that the previous federal tax was 13 per cent on goods, and now we have a federal tax of 7 per cent, or 6.5 per cent, on goods and services, that is services received and goods sold. Before, it was just on goods. It was 13 per cent on goods, now it is 6.5 per cent, but on both goods and services. You can see, then, it comes out just about the same.

During the elections, we saw the Liberals attacking the Conservatives in a deceitful way, if you will, cheating a bit with the whole thing. They had already been very successful as the official opposition in convincing people that the Conservatives had created a new tax. It was, however, not a new tax, but a tax reform, which was completely legitimate and fair. However, when you are in politics and want to get into power, you can say just about anything; you lie to the public. I have always thought, since I started in politics, that the winners in an election campaign are the ones who are the biggest liars. Afterwards, they do exactly what they feel like, and this is obvious to everyone.

I will give you a couple of examples of this. The Prime Minister said "I will scrap this GST", I will do away with the federal tax. This would have been no mean feat. In 1993, during the campaign, the Prime Minister said "I will do away with the federal tax". He tried to convince people once again that this was a new tax, not a reform of the tax created by the Conservatives, no, but a new tax in the mind of the Prime Minister, who said "I will scrap it". And did he? No, on the contrary, he is maintaining it and intends to dump others on us as well.

"We hate this tax. We will get rid of it". Those are the Prime Minister's words. The Deputy Prime Minister said: "I will resign if the tax is not eliminated", and she did.

All of this to tell you that it is somewhat sad for democracy when all manner of things are said during a campaign, and then exactly the opposite is done afterwards.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I am pleased participate in the debate today and to register my opposition to this bill to harmonize the GST in Atlantic Canada.

I am surprised that we have to register our opposition to this bill because while the bill has been introduced by the government, it had all kinds of opposition to this type of legislation back when it was on this side of the House. I refer to the Commons Debates, page 4554, November 5, 1991, when the member for Willowdale who is now the chairman of the finance committee said: "How can Canadians have faith in this government's ability to lead us into prosperity when the GST, according to all these studies, is working against small business?"

This is from the current chairman of the finance committee who has done a complete and absolute about turn on the legislation currently before us. He opposed it when he was on this side of the House and now be has bought into the entire Liberal agenda and is endorsing and supporting the Minister of Finance in the introduction of this divisive tax which is going to kill jobs.

He was not the only one who did not like the GST. How about on May 10, 1993 Commons Debates page 19170, where the member for Winnipeg North stated: ``The Liberal party, in contrast, is committed to changing and abolishing the GST within 12 months''.

The Liberals won the election in October 1993 and 12 months from that date was October 1994 and by that time we knew that the government had reneged on any promise it had made regarding the GST. Here we are today debating its enhancement rather than its elimination. The member for Winnipeg North said that within 12 months be assured that this Liberal government will get rid of that hated tax which all Canadians would dearly love to see gone.

Even the member for Edmonton Southeast-and it is not often that I go into quotes in Hansard from the member for Edmonton Southeast-on June 7, 1993, page 20483 said: ``It is one of the reasons why we are proud to say we will repeal that tax and ask Canadians how we can best replace the missing revenue''.

We are not talking her about missing revenue. We are talking about adding to the revenue, and that is the ultimate insult.

On it goes. How about the Prime Minister, June 13, 1991, page 1632: "With the GST this government has created an unfair and unacceptable tax". He said that and he endorses the initiative of the Minister of Finance to introduce legislation to bring us the harmonized tax.

The Prime Minister again, page 6046, December 10: "On the GST we have a very clear position. We say that we want to kill the GST". That is from the current Prime Minister, not the prime minister of that day. I quote his words from the Commons Debates .

The member for Halifax, page 6406, Commons Debates , February 4, 1992: ``What I refer to is a general suffering from our goods and services tax''. And what did it do? The government harmonized, increased and took more money.

One final quote from the member for Greenwood: "My leader three weeks ago said that this GST will be scrapped. Make no mistake about it, the GST will be scrapped if we are given the trust to run the Government of Canada". This was said in Hansard on March 12, 1993 page 16902.

Make no mistake about it, they were given the trust to run the Government of Canada and what did they do? They abused the trust. They let Canadians down. They have destroyed the confidence that the people gave to them in October 1993. That is why we have no faith in this country for politicians with those kinds of speeches when in opposition. They said "give us the trust, put us in power, we will deliver". What do we have? A harmonized sales tax for Atlantic Canada and a GST remaining for the rest of Canada.

The GST by the way has been increased for the rest of Canada because it now applies to used goods as well as new goods. Every time a car trades hands the government collects GST on that automobile even though there was a serious commitment by the government that goods would be taxed only once when they were brand new. This Liberal government has expanded the tax to cover everything every time it changes hands.

The Minister of Finance tells us he is not increasing taxes. Hypocrisy from this government that it would say such things.

There are quotes upon quotes. In the Toronto Star dated October 29, 1990, the Liberal government said it will scrap the goods and services tax if it wins the next election. The current Prime Minister said: ``I am opposed to the GST. I have always been opposed to it and I will always be opposed to it''. I could go on forever slamming this government but let us talk about something positive for a change.

We heard the hon. member for Medicine Hat today in question period when he was talking about the Certified General Accountants Association which came out yesterday calling for a tax reduction, which I wholeheartedly endorse and let it be noted for

the record. I happen to be a certified general accountant and therefore I fully endorse the report it issued yesterday.

It said if we drop the UI premiums by 20 per cent that would create about 60,000 jobs. As the member for Medicine Hat said, Reform wants to drop it by 28 per cent which will create even more jobs. That is the commitment by the Reform Party. I assure members that after the next election when Reform trades places with the Liberals we will honour that commitment. Have no fear, we are not mincing our words, we are not saying beautiful things to win elections. We are talking about Reform policies where we say we will deliver.

We have talked about reducing taxes to families. People today on small incomes are struggling to raise their families and before they get that small pay cheque that is made even smaller by this government they have to get by. And yet we find that this government would rather try to tell us about programs that pick up the pieces of broken families rather than focusing on keeping families together.

I have an interesting story. I was going through the airport while heading back to my riding one day. One of the security personnel spotted my badge as a member of the House of Commons. He stopped me to tell me that he does not make a large salary as part of the security personnel at the airport. He has a wife and three children. Yet his family is so important to him that he makes sure that his wife stays home even though they have to do without many things. Yet on his small single salary he makes ends meet even though it is quite difficult.

The current taxation policies by the Liberal government deny him a deduction because he wants to raise his own children by himself and have his wife at home. The parents are denied tax relief because they want to raise their own children. He could send the children next door and have the next door kids come to his house and have his wife look after them and they would each get a tax deduction. But this government's policy is to deny a tax deduction for anyone who wants to raise their own children. What is fair about that?

That is no more fair than the way Canadians have been misled by this government when they were told that the GST will be axed, scrapped and abolished; not harmonized, not increased, not expanded, not to collect more money. That is the deception this government has imposed on the people of Canada.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, we absolutely must take advantage of the government's motion to point out how both the parliamentary process and Liberal promises have made a laughingstock of democracy. The official opposition received a 300-page bill, with 24 hours to look at the text and no explanatory notes.

This is hardly a democratic or a parliamentary way of doing things and shows little respect for the role and the duties of the official opposition and the third party. Their role is to ensure that the government discharges its duties in accordance with its program, the commitments it has made and its legal obligations.

We can hardly say that receiving a 300-page bill on which we are expected to make recommendations the next day is conducive to a serious process, a process that will reassure Canadians. That is the real issue. This government behaves as though it were the only party in this country. No wonder it has stopped showing any concern for human rights in its international relations.

I also want to point out, and we cannot help but repeat this now that an election is in the offing, that the Liberal Party was elected last time thanks to at least two false representations: jobs, jobs, jobs, emplois, emplois, emplois, while the results, despite all the Prime Minister's bragging, are nowhere near meeting existing needs and nowhere near the level reached in 1990.

Two thirds of the drop in the unemployment rate, which is still close to 10 per cent, or as the Prime Minister would say, is no longer 12 per cent, is due to the fact that unemployed workers have left the labour market and have given up looking for jobs.

So the unemployment rate has gone down, but the number of unemployed workers has not. It is worse than that. According to a recent Statistics Canada publication, what happened between December 1994 and December 1995, a period the government likes to brag about in terms of its performance? The bulk of the jobs were created by independent workers, in other words, people who had to start their own business, and of course, we do not know how long that will last, and meanwhile, these people are cut off from all social insurance programs.

"Jobs, jobs, jobs" came with a promise by the government to get rid of the unpopular GST. What do we see? Not only does the government not get rid of the GST, but it busts its britches because the Deputy Prime Minister, who agreed to resign, was re-elected, and the government is now absolved. Well, that is far from the case. We remind the government, the Liberal Party, that it was elected on promises it knew it could not keep.

The example came from way back in the history of the Liberal Party. Mr. Speaker, I do not know how old you are, but you must remember that Prime Minister Trudeau, in his time, ridiculed the Conservative government, which, in a period of high inflation, talked of imposing wage and price controls. Poor JoeClark suffered the slings and arrows of the opposition of the day.

What did Prime Minister Trudeau do a few months later? He imposed wage and price controls. There is a lesson there. It should be repeated in the coming months. The Liberal Party gets elected on promises it does not keep and I dare to suggest that it knows it cannot keep them.

A couple of words to say that this promise will cost Canadians and Quebecers dearly, because in order to appear to keep it more or less, the government reached an agreement with the Atlantic provinces to have them integrate the GST, make it disappear, something it has always opposed. But they will receive, in compensation, $961 million coming out of the pockets of the other provinces. Not only were the promises made deceptive, but it is costing a pretty penny to hide the fact that the government is unable to deliver the goods.

I take some solace, however, in the thought that, in the upcoming election campaign, the Liberal government will probably promise to resolve the Canada-Quebec issue. That is what the government will say, but everyone will know that it will, in fact, be paving the road to Quebec sovereignty. It will promise what it cannot deliver and knows it cannot deliver, but will run on that platform anyway.

We, on the other hand, will be able to remind voters of this fact over and over again and to count on the Liberal government helping us win the next referendum. We want to reassure you however that what we want is to negotiate a partnership with Canada. Our offer remains on the table because we count on your co-operation in the next election.

The Liberal Party is giving a really poor example of democracy, a poor example of the parliamentary system at work.

If I have a moment, I would like to add that the measure adopted by this government that has promised to eliminate the GST on books is in fact mere window dressing so the government can say it eliminated the GST. The truth of the matter is that this government is not going as far as Quebec by extending the tax exemption to all books, not only those bought by organizations involved in literacy programs but also those bought by consumers, but it is once again trying to pull the wool over people's eyes.

[Jay Hill, Reform, Prince George—Peace River, BC]

Mr. Speaker, it is a pleasure for me to address the House this afternoon on Bill C-70.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, I rise on a point of order. Inasmuch as we members are outnumbered by the pages, I would suggest we probably do not have a quorum.

[The Acting Speaker (Mr. Milliken)]

Call in the members.

And the bells having rung:

[The Acting Speaker (Mr. Milliken)]

I see a quorum. Resuming debate, the hon. member for Prince George-Peace River.

[Jay Hill, Reform, Prince George—Peace River, BC]

Mr. Speaker, it is good to have an audience at last. I am always torn between having absolutely no Liberals in the House and having so many Liberals in the House making so much noise that I cannot hear myself think. We are always betwixt and between whether we want to have one or two government members to hear our remarks or whether we would rather have a whole bunch and be unable to be heard.

Before I begin my remarks on Bill C-70, the harmonized sales tax legislation, I have a few brief remarks on what transpired in this place this morning. There seems to be a misconception on the part of some government members as to exactly what happened. It is important for the viewing audience out there in TV land to understand the process and the procedure which took place this morning and why that got out of kilter. It is necessary to correct the record.

This morning during debate on Bill C-71, the tobacco bill, my colleague from Macleod put forward a motion that the question be now put. What happened was that I believe there was a misunderstanding on the part of the Speaker who was in the Chair at the time. She elected to call the question immediately, but that was not the point at all.