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.