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.