Debates of Dec. 5th, 1996

Tobacco Act

[The Acting Speaker (Mrs. Ringuette-Maltais)]

The Chair will now go to the question.

(The House divided on the motion, which was agreed to on the following division:)

[The Deputy Speaker]

I declare the motion carried.

The next question is on the main motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the yeas have it.

And more than five members having risen:

[Antoine Dubé, Bloc, Lévis, QC]

Should the bells not be sounded for half an hour, Mr. Speaker?

[The Deputy Speaker]

I do not think so. It seems pretty clear cut in Standing Order 45. Paragraph 45(8) states, and I quote:

45.(8) If, pursuant to any Standing or Special Order of the House, two or more recorded divisions are to be held successively without intervening debate, the division bells shall be sounded to call the members only once.

(The House divided on the motion, which was agreed to on the following division:)

[The Deputy Speaker]

I declare the motion carried. Consequently, the bill is deemed referred to the Standing Committee on Health.

(Motion agreed to, bill read the second time and referred to a committee.)

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, it is a pleasure to see you again. Now that you are back in the Chair, I am convinced our debates will be conducted with objectivity and serenity.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, I rise on a point of order. I would submit to the House that the hon. member for Laurier-Sainte-Marie does not have a point of order. I do not think it is becoming of any parliamentarian to demonstrate any favouritism or otherwise toward any occupant of the Chair. All occupants of the Chair enjoy the same privileges, the same authority, the same courtesies and the same respect from all parliamentarians.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, I did not accuse anyone, I congratulated you.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

I take this opportunity to congratulate you, to congratulate the Speaker, Mr. Parent, and all the members of his team.

[The Deputy Speaker]

It goes without saying that I agree with the opinion that all those who sit in the Chair are equal.

The House resumed from December 4 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

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure to speak on this bill today. It includes changes to the Excise Tax Act which would remove the notional input tax credit of the GST from the used good sector.

Prior to April 1993 registered dealers in used goods were eligible to apply for and receive the notional input tax credit. However, the government is choosing to remove that tax credit. That will kill jobs because it will embed the GST into used good services. It hurts those who are most under privileged in our society because it affects used goods and used goods more often than not are purchased by those in the middle class and the lowest socioeconomic classes.

Let us take a broader look at this picture because it has implications in terms of job losses and costs to the consumer. It is really just another tax charged by this government which has claimed repeatedly that it has not raised any new taxes.

We are concerned because this is going to affect between 4 to 6 per cent of our gross domestic product. It is going to affect tens of thousands of individuals who sell used goods. There are 20,000 used car dealers in this country. By removing this notional input tax credit, the NITC, the people who are selling these used goods are having to embed the cost or pass it on to the consumer. That means either the seller is going to swallow it or more likely the consumer is going to pay. Many used car dealerships function on a very low profit margin.

In effect, the government is increasing taxes. It will cause job losses and push up the cost of living for people, particularly those who are most disadvantaged in our society.

The removal of the NITC is something called tax cascading, something that the government repeatedly said it would not do. Yet once again the government is embedding the GST, that tax that it said it was going to remove, and enshrining it into these goods that affect 6 per cent of our GDP, which is not a small number.

It is illogical for the government to do this in view of its repeated assertions that it would not raise taxes to the consumer.

The number of jobs that will be lost is unknown right now. We imagine that the number will be somewhere in the order of 6 to 8 per cent in the groups which are dealing with used goods. It also encourages the underground economy. Any time taxes are increased the underground economy goes up. In fact, members of the government, including the Minister of Finance, said that the GST is going to increase the underground economy by increasing the cost to the consumer.

All we have to do is go back to our ridings to see that the underground economy is alive and thriving, in large part because the consumer and the producer feel that they are being taxed to the hilt. People are not imagining that they are being taxed to the hilt. The reality is that our taxes are some of the highest in the industrialized world.

As I said before, it is a tax grab. As it is going to affect the used goods market it is going to affect those people who rely on that market. Generally those people are in the lowest socioeconomic classes. We did a few studies in the maritimes. We found that in one business alone the removal of the NITC will cost them nearly $90,000 which is going to translate into job losses.

This whole concept belies a much more insidious problem and that is the GST. The government came to power on the promise that the GST would be abolished. It staked its reputation on it. The Deputy Prime Minister had to resign over the issue and many other members said that they were going to scrap the GST.

The Minister of Finance said that the goods and services tax is a stupid, inept and incompetent tax. The Prime Minister said that public and private libraries will have to reduce their purchases of books, periodicals and newspapers by about 10 per cent annually because of the GST. The Minister of Labour said the following: "We created a monster. Now we have an underground economy so big that no one can even account for it. It affects people, human beings". While government members were in opposition they

emphatically stated they were going to remove this tax. Have they? No.

It really grates when the government repeatedly says that it has not increased taxes at all. The facts are that it has increased taxes 22 times since it came to power by embedding taxes such as the removal of the NITC, and by harmonization which I will get to in a moment.

It has also increased gasoline taxes, yet it says to the public: "We have not increased taxes". All one has to do is go to the pumps to find that taxes have increased. The way the government is doing this will hurt those on fixed incomes and those in the lowest socioeconomic groups. When taxes are embedding into goods that are consumed by everybody, everyone is not hurt equally. Those who hurt the most are on fixed incomes with the least flexibility.

Another thing the government did to increase the taxes was the harmonization of taxes in the maritimes. This was a $1 billion deal subsidized by taxpayers outside of the maritimes. Even within the maritimes there was great rancour over this. It is going to increase the cost to the consumer. This blended sales tax will do the following to business.

The three major retailers in Atlantic Canada do not find this acceptable at all. In fact, they figure that their net annual retail deficit will total $27 million when harmonization is implemented. That means jobs are lost.

The Retail Council of Canada said that by forcing stores to bury the new tax prices, the harmonized taxes regime will cost retailers at least $100 million per year. That is absolutely staggering. That is not a benign figure. One hundred million dollars translates into job loss.

Reform came to the House not to merely criticize the government but to put forward good solutions. My colleague for Medicine Hat has done a superb job on finance and has made a number of good suggestions, as has my colleague from Capilano-Howe Sound.

Reform proposes that the GST be lowered and ultimately scrapped after the debt is under control. Reform has put forward a plan to get that debt under control in two years. We are also going to provide tax relief to Canadians. Why? Because money in people's pockets will enable them to take care of themselves. People do not have the money in their pockets today to even provide for their basic needs. That is why we see children going to school hungry. There are people who cannot buy the basic necessities for their families. Given the current tax burden on our society is why companies are unable to hire people.

In 1992 when the Conservative government decreased taxes, income and revenue to the federal coffers actually increased. What did the government do? The Conservative government of the day went on an orgy of taxation, introduced the GST and then government revenues fell off. That is a real life example that shows that making a tax cut will actually stimulate the economy and will increase moneys in the public coffers. I think that is an important thing to realize.

We have a responsibility to Canadians to provide them with a fair taxation system. My colleagues in the Reform Party have made proposals for a flat tax system that provides for equal taxation to all people, and most importantly it greatly diminishes the taxation on the lowest socioeconomic groups. Those who are poorest in our society will be better off under Reform's financial proposal than they currently are with the government. I encourage the government, in fact implore it, to look at Reform's policies on finance because they are going to save our social programs. It is going to provide more money for the poor and the underprivileged. It is going to stimulate the economy, create jobs and provide a stronger and healthier Canada today and in the future for all Canadians.

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

Mr. Speaker, I also want to speak on this motion. It is important for Canadians to know what this motion is about. This motion is essentially a-

[Barry Campbell, Liberal, St. Paul's, ON]

Mr. Speaker, I rise on a point of order. I apologize to my hon. colleague. I understood that on resuming debate we were into normal debate followed by questions and comments. Is that what we are doing?

[The Deputy Speaker]

That is a reasonable question that the parliamentary secretary is putting. The five hours have expired so we are now down to 10-minute speeches and no questions or comments.

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

Mr. Speaker, it is important for all Canadians to understand the motion. We refer to it has a hoist motion, meaning that the member who put this motion forward would like Bill C-70, an act to amend the Excise Tax Act, to be now read a second time this day six months hence. Essentially it would delay the whole issue.

Taxation and excise taxes are things which are very well known in my riding of Haldimand-Norfolk. There are a number of farmers and other people in my riding who contribute to the tax system. Specifically, there are a number of tobacco farmers in my riding. Taxes like the GST and the Excise Tax Act the Minister of Finance has now put on tobacco products affect the people in my riding. I want to talk a little bit about how this happens.

A study was done in my area, called the "Economic Contribution of the Tobacco Industry in the Tobacco Growing Region of Ontario" by Deloitte & Touche. Essentially it was found that in terms of taxation the tobacco industry in the area studied provides $453 million in income and 70 per cent of that money stays within

the area and of the 9,423 full time equivalent jobs, 76 per cent of those stay within the study area.

The study comprised an area in my riding in southwestern Ontario. It dealt with the economic contributions of the tobacco industry in that area. It also dealt with the taxation question we are dealing with today. This is an important study. I want to ensure that all Canadians know the importance of this industry in a small concentrated area in rural southwestern Ontario.

My area is also home to the largest native reserve in the country. The whole question of how natives are taxed is always on the lips of Canadians. It is important to know the impact of taxation on the smuggling industry and how smuggling has been cut back as a result of the fact that our government lowered the excise tax on tobacco products some two years ago.

It was interesting to hear some of the comments in the earlier debate. Some comments of Reform Party members cut off debate on that very important issue. I know we are not talking about that debate now, but it is important to note that the Reform Party did cut off debate on that issue.

The issue we are dealing with now is the six month hoist on Bill C-70 which is a GST matter. Those three letters concern a number of Canadians, as does the whole question of excise taxes and taxes specifically in my area on tobacco products. One hundred and fifty-seven million dollars in tax revenues, including GST, come into-

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

Mr. Speaker, I rise on a point of order.

For those people out in TV land, I would like to clarify what the hon. member is saying. We had a process which unfortunately came a bit unravelled a while ago on Bill C-71, the tobacco bill. In fact it was not the Reform Party that shut down debate. We put forward a motion to allow the question to be put and the Speaker was the one who shut down debate, not the Reform Party. I would like that clarification on the record.

[The Deputy Speaker]

That will not come out of the hon. member's time.