Debates of April 23rd, 1996
House of Commons Hansard #31 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was armenians.
- Government Response To Petitions
- Ways And Means
- Sales Tax
- Budget Implementation Act, 1996
- Questions On The Order Paper
- National Unity
- Tswwassen Sewage Treatment Plant
- Invention And Innovation
- International Book Day
- Gasoline Prices
- Auto Leasing
- The Armenian People
- Springtime In Ottawa
- The Late Clara Smallwood
- Goods And Services Tax
- Liberal Party
- Unemployment Insurance Reform
- Coast Guard
- Somalia Inquiry
- Krever Inquiry
- Middle East
- Presence In Gallery
- Bank Act
- Department Of Human Resources Act
- Department Of Health Act
- Department Of Human Resources Development Act
Government Response To Petitions
Paul Zed Parliamentary Secretary to Leader of the Government in the House of Commons
Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table in both official languages the government's responses to nine petitions presented during the first session.
Ways And Means
April 23rd, 1996 / 10 a.m.
Paul Martin Minister of Finance
Mr. Speaker, I am tabling a notice of ways and means motion and I ask that an order of the day be designated for consideration of the motion. I believe the document has been tabled.
Paul Martin Minister of Finance
Mr. Speaker, we are putting forward today a set of measures that marks significant progress toward the replacement of the GST. We are announcing the signing of a memoranda of understanding between the federal government and the governments of Nova Scotia, New Brunswick and Newfoundland and Labrador. This is the first step toward an integrated federal-provincial sales tax.
The province of Quebec is concluding the harmonization process this year. We are committed to working with the remaining provinces to the same end and are confident that, over time, Canada will indeed develop a single sales tax system. In addition, we are tabling a notice of ways and means motion proposing over 100 measures to streamline and simplify the operation of Canada's sales tax system. These measures are an essential part of the new architecture of a much improved sales tax system.
Taken together, we believe the component of this package constitutes a major advance in responsible sales tax reform. We believe that consumers, taxpayers and business, particularly small business, will benefit. True, this is not perfection, but perfection is not possible in the real world where tax policy has to apply. It is, however, real improvement.
Let me address at the outset the question not of responsible tax policy but a broader question, that of responsible government. In the red book we wrote: "A Liberal government will replace the GST with a system that generates equivalent revenues, is fairer to consumers and to small business, minimizes disruptions to small business and promotes federal-provincial fiscal co-operation and harmonization". We believe that today's plan begins that process.
We know that many Canadians believed we would be able to do more than we are announcing today. Indeed, we had hoped we would be able to do more. However, there is something Canadians deserve above all else and that is government that is responsible in its management of the economy and honest in what it does. Let me be direct with the House and with Canadians.
During the election campaign we were right to criticize the GST. It created overlap and duplication among governments. It was costing small business time, energy and money; the price paid for having to keep two sets of books, to track two sets of transactions and to deal with two tax collectors. We were right to say that all that was wrong. It still is. However, we were mistaken to have believed that once it was anchored in place a completely different alternative would be within reach, responsibly. It has not been.
The honest truth is that for two and a half years we looked at virtually every conceivable alternative. Some were not possible or desirable because of their economic impact, others because of the nature of our federation. What we have arrived at is not the best alternative conceivable; it is the best alternative possible and it is in keeping with our red book commitment.
We could have dressed up our announcement today. We could have pretended it is more than it is. Today's announcement begins the process of replacing the GST, it does not complete it. We could have cynically claimed this announcement was the panacea, that as of today the GST was dead, buried and scrapped. We know not being able to say this today means many Canadians will be disappointed. We understand that disappointment. We share it. We
want Canadians to understand fully the efforts we have made going back more than two years in order to avoid that disappointment.
The finance committee of the House looked at this issue, beginning immediately after the election. It heard nearly 500 witnesses and received more than 700 briefs-from consumers, from experts, from business. The committee looked at 20 alternatives and it found all of them wanting.
It concluded, as have we, that the best route to replace the GST was a simplified, integrated federal-provincial value-added tax. Concurrent with the work of that committee and thereafter, the government has worked without rest on this file.
As a government we evaluated every proposal brought to our attention, every option open to us. We considered other types of taxes. We looked at different combinations of taxes. We looked at options apart from taxation. We looked at everything. Some options might have made cynical, short term political sense, but none made good policy sense.
Let me explain by beginning with some basics. An inescapable fact is the GST brings in almost $18 billion a year, 13 per cent of the federal government's revenue. In the red book we made it very clear we could not give up $18 billion in revenue, nor could we cut spending by that amount to compensate for the loss that would be entailed, for the purpose of spending cuts must first be to bring the deficit down.
Therefore from the beginning our focus was on finding alternatives to the GST, either alternative sources of revenue or building on taxes that already existed. We looked at 20 options. Among them were a payroll tax, a wealth transfer tax, a national retail sales tax and a wholesale tax. None of them worked.
Let us look at three examples: we considered the business transfer tax or BTT. The BTT has been proposed before but is has never been tried anywhere in the world. The uncertainty for business and the cost of implementing a totally new system is not a risk that can be taken lightly.
We looked at a personal expenditure tax, where tax is paid on the difference between an individual's total income and his or her total savings for the year. However, there are serious disadvantages with this option. It would be very intrusive. It would be much more complex for taxpayers-in terms of record-keeping and compliance.
We looked at what is called a turnover or a transaction tax, in which tax is charged at each and every stage in the production and distribution process through a lower levy on a firm's sales. Unlike the GST, their are no rebates. The problem is the same as with a retail sales tax. Large manufacturing companies can get around the tax by making products in house, and small companies cannot.
In the export sector Canadian business would be dealt a blow. Why? At each stage of the production and the distribution process Canadian components would be taxed and the tax would be embedded in the price of our exports. Who would benefit from that? Foreign competitors, not Canadian producers.
These are but a few of the alternatives we looked at and concluded that none was satisfactory. Either they came nowhere near raising the revenue we need or they failed to meet one or more of the tests of responsible taxation of fairness, simplicity and economic efficiency.
Finally, we looked at making up the revenue that would be lost by replacing the GST through increasing other taxes that already exist. We looked at an across the board approach. We looked at more targeted approaches. We looked at increasing corporate income taxes and excise taxes. It was clear that no matter what we did under any conceivable scenario, unduly large increases in personal income taxes would be required, and that was simply unacceptable.
That briefly summarizes what was a very lengthy search for a system and a solution completely different from the GST. The results of our search were not what we had hoped but they did make very clear the direction we should take.
While we concluded there was no alternative today to a value added tax, we also concluded there is an alternative to the GST such as it now is, and that is a much better value added tax that is harmonized.
Governments need the revenue the current tax system brings in, but Canadians do not need the headaches the current tax system causes. The goal we have arrived at is a simplified integrated federal-provincial value added tax. The process we have embarked on is to put the framework in place now so that provinces can join in when their own individual priorities make that possible; that is, when they are ready.
With today's announcement we are now on the way to having a single federal-provincial sales tax in four provinces. Other prov-
inces are waiting to see how the new system works before they join in. In the end we are confident Canada will eventually have a single sales tax system.
We will continue to work with individual provinces as their circumstances permit. In the meantime unanimity need not and should not stand in the way. Let me describe the improvements we believe will flow from the approach being put forward today.
First, an integrated federal-provincial value added tax reduces the burden on business, particularly on small business, created by the current system. It means there would be no longer separate federal or provincial sales taxes of different types operating on different bases with all the complexity and the inefficiency that entails.
Canada is the only developed economy in the world that tolerates two completely different sales taxes operating at the same cash register. No one else puts up with it and it is very clear why. Patchwork sales tax systems are second rate systems particularly in an economy that is increasingly integrated globally and domestically.
Under an integrated approach this will change. There will be one sales tax, not two. There will be one tax base, not two. There will be one tax rate in a province, not two. There will be one sales tax administration, not two. What does this mean? It means life will be simpler.
Take for example the case of a store that sells washing machines. Today the retailer has the burden of dealing with two entirely different sales tax systems. The store must first total up any sales that are made to exempt purchases. It has to keep a separate record system to prove that such sales are legitimately exempt from provincial sales tax.
Then at the end of each month that store must calculate the amount of provincial sales tax collected and remit it to the provincial government. At the end of each quarter along with the provincial sales tax calculation the retailer must also calculate the amount of federal sales tax collected, deduct the amount of tax paid on all of those purchases and remit the difference to the federal government. Not only that, but throughout the year the retailer must deal with two separate bureaucracies if he or she has any sales tax questions and faces the possibility at any time of having to deal with two separate sales tax auditors.
No wonder that small businesses in particular are demanding that governments do something to address their sales tax compliance burden. The fact is we are now doing something. All this will change under the new system. It will be better for consumers. It will mean a reduced paper burden for small business, less time and money tied up unproductively, one tax form, one process, one system.
The Canadian Institute of Chartered Accountants has estimated that a harmonized national sales tax system could save Canadian businesses as much as $700 million per year. And because there will only be one tax collector, that same analysis suggests that the provinces could save an additional $100 million annually on their administration once such a system is fully in place.
Canadians want an end to overlap and duplication between governments. On sales tax, this integrated system would end it once and for all.
Furthermore a harmonized value added tax will be economically more efficient. Not only will businesses save money and time but their products should become more competitive.
At present businesses throughout Canada pay provincial sales tax on a broad range of things they themselves buy to make products or to keep their businesses running. This increases their costs and in turn leads to higher prices for their goods. As a result Canadian goods competing with imports at home or exports abroad have provincial sales tax embedded in their price. In fact because the tax becomes embedded in the production and distribution chain, the prices of our goods are often inflated not by one but by many layers of provincial retail sales tax.
Under this proposal that competitive disadvantage would end. For instance exports are the engine of our economy. As a result of this reform Canadian business will be even more successful in markets abroad. This in turn means jobs for Canadians at home. Consumers should also see benefits under the new system.
Let me address directly the contention that a harmonized value added tax shifts the tax burden from business to consumers. Let me also address the contention that consumers will lose because a broader range of goods and particular services is taxed under this approach. These arguments are simply wrong.
The fact is that today as mentioned businesses are taxed by the provinces on all the items they must buy in order to make their products, deliver their services and keep their businesses going. Anyone who believes that business does not pass on these provincial sales taxes to the consumer is simply naive. If business pays a tax up front, it is consumers who pay for it in the end. The tax is embedded in the price. This is true for all products and services produced in Canada, whether or not they are taxed at the final point of sale.
For example, some may believe that they do not pay tax on a haircut when there is none directly charged to them by the barber or the hairdresser. That is not the case. The price does include tax: the
tax the barber or the hairdresser pays on their supplies fromtheir scissors to their salon equipment to the shampoo. Whenthey decide what price to charge, they pass these costs on totheir clients.
Under an integrated value added tax system, this changes completely. Provincial retail sales taxes will no longer be paid by businesses during the production and distribution process. Therefore, for goods and services not previously taxed, prices will go up by less than the full extent of the provincial tax because the embedded taxes will be removed. For those products and services that are presently taxed, their prices should fall. This would be the case even if the overall tax rate did not come down. Why? Again, it is because the embedded tax will disappear, lowering prices.
Furthermore, there is another advantage to broadening the base. When we do not tax services, we distort the economy. We are imposing a burden on some businesses but not on others. A broader tax base spreads the burden fairly to all sectors and to all consumers. For instance, of significance in the light of today's announcement, for the harmonizing provinces in Atlantic Canada the broader base is one of the factors that allows for a sharp decline in the overall sales tax rate.
Finally, one of the most frustrating aspects of the GST is the fact that without carrying around a calculator, consumers often do not know what things are going to cost until they get to the checkout counter. Every time a Canadian buys a candy bar or a pair of socks, GST is not on the sticker or the tag but is added as a rude awakening at the cash register.
Therefore, the agreements that will be arrived at pursuant to the memorandums of understanding we are announcing today will put an end to that practice. In the three Atlantic provinces that are harmonizing, beginning April 1, 1997 the price will include the tax. The price people see will be the price people pay. However, the new tax will also be transparent. Vendors will be able to show the tax on their bills and we will be consulting with businesses on how best to do this.
Today's announcement entails major structural change. It represents an important overhaul of the sales tax system. This government has consistently acted on the principle that people and governments need to be able to plan and adjust to structural change, and where required, we have been prepared to provide help to those who face adjustment costs up front.
For example, payments were made to provinces to address revenue losses they incurred under the major tax reform in 1972. And adjustment assistance was provided in each and every one of our budgets. For example, last year we provided resources to facilitate the adjustment flowing from elimination of subsidies under the Western Grain Transportation Act to the western provinces, as we did with the Atlantic freight subsidies to Quebec and the Atlantic provinces.
Today we are following the same precedents. An adjustment framework will be put in place to share the costs with those provinces which would experience revenue losses from harmonization in excess of 5 per cent of their current sales tax revenue.
In addition to the three provinces previously mentioned, this would include Prince Edward Island, Manitoba and Saskatchewan. On the other hand, the revenues of British Columbia, Alberta and Ontario would not be reduced sufficiently to trigger compensation under the formula, nor Quebec's for the same reason, either today or in 1990, the time it signed the MOU on harmonization with the federal government.
Under the set formula the federal government will provide 100 per cent of the balance of revenue losses in years one and two, 50 per cent in year three and 25 per cent in year four. The formula has been applied consistently to each province that has decided to harmonize and it will remain open to the other provinces for the foreseeable future.
Given the benefits that will flow from harmonization, we believe the total cost to the federal government, about $960 million for the three participating provinces spread over four years, is a responsible and reasonable investment. The federal and provincial governments will be sharing about equally in the adjustment costs over this period. The assistance will end after year four by which time the provinces will have had adequate time to adjust. I must emphasize this adjustment assistance will not jeopardize our deficit targets. They are secure.
The measures being announced today include a package of over 100 changes designed to streamline and simplify the operation of Canada's value added tax system. These improvements result from extensive consultations over the past two years with businesses, particularly small businesses, consumer associations and other groups.
Some of these are technical and sector-specific. Many will have a positive impact on those they affect.
For example, as part of our commitment to assist charities and non-profit organizations, new rules will be put in place. As a result, about 10,000 charities will no longer be required to register for and administer the GST.
The provision that remove the tax from medical devices used by persons with disabilities will be broadened, and clarified. More equipment and supplies for Canada's farmers will be made tax-free. The rules for employee benefits are being simplified-an area
of the sales tax that has been the focus of small business anger from day one.
In addition, we will be streamlining accounting, interest, penalty, administration and enforcement provisions across all federal tax laws, something that will go a long way to simplify the system for small business.
These are significant changes that will be of immediate importance to those concerned. However, there is one thing that is not being changed. The credit provided to low income Canadians and the rebates provided to municipalities, universities, schools, hospitals, qualifying charities and non-profit organizations remain intact.
The provinces joining us today clearly recognize the gains that flow from this reform. The fact is that in a region where the need to secure economic growth is as acute as anywhere, tax rationalization and simplification is probably one of the most beneficial job creation initiatives that could be undertaken.
The benefit of acting in concert so that reform in each province is reinforced by parallel change in the other maximizes the improvement for Atlantic enterprise and consumers. The benefit of a more efficient Atlantic economy means companies and workers will be able to compete more successfully in world markets.
The benefits of less overlap and duplication mean reduced administrative costs for governments and small business. For example, small business with less than $30,000 of taxable sales will no longer have to register for either federal or provincial sales tax.
There are benefits that will result from a lower sales tax rate. When this reform is fully implemented, the official tax rate will be 3 per cent lower in Nova Scotia and New Brunswick and 4 per cent lower in Newfoundland and Labrador.
Indeed, the real tax reduction will be even greater because the new system will eliminate tax on tax. The effective rate reduction will then, in fact, be almost 4 per cent in Nova Scotia and New Brunswick and almost 5 per cent in Newfoundland and Labrador.
The announcements today are not the end of the process. They are a stage. As part of moving towards an integrated federal-provincial value-added tax, discussions with the three provinces will now take place to turn the memoranda of understanding announced today into final detailed agreements to take effect on April 1 of next year.
At the same time, with Quebec's harmonization process proceeding, we are very much open to continued discussions with the remaining governements to move foward towards integration on the basis that has now been established.
In summary, while the strategy we are proposing is not the best solution in an ideal world, we believe it is the best solution in the real world. The alternative would have been to have embraced some option that would have been superficially attractive, but in the end would have been more complex for Canadians, would have reduced the capacity of government to provide needed services and would have thrown the clean-up of the nation's finances severely off track. This we were not prepared to do.
We are not pretending that our proposals are more than they are. They will have to stand on their own merits. We are not making changes for change's sake. We are making changes that make sense. That is what we were elected to do. We were elected to govern, to make responsible choices and that is what we are doing today.
Yvan Loubier Saint-Hyacinthe—Bagot, QC
Mr. Speaker, I must first of all deplore the way the Minister of Finance tabled documents this morning, an hour and a half before his presentation in the House, without our hearing from him in the past three days about his intentions regarding the GST. If this is not a way to circumvent democratic principles, I wonder what it is, especially when such an important issue is at stake.
What strikes me about the finance minister's speech is that we could have taken his old speeches from 1990, for example-the old speeches made by members of the Liberal Party of Canada-and turned them completely around to arrive at this morning's speech. A few years ago, the Minister of Finance was saying the exact opposite of what he said in his speech this morning.
All those who expected the GST to disappear, to be scrapped-as many in Canada and Quebec did and as many Liberal members had been promising for three or four years-will be sorely disappointed. The GST is staying; it is not being scrapped but replaced by another kind of GST. This is in total contradiction with the many oral and written promises made by members of the Liberal Party of Canada.
Allow me to quote just a few of them. On March 11, 1996-not so long ago-the Globe and Mail reprinted this quote by the Deputy Prime Minister:
"I have already said personally and very directly that if the GST is not abolished I will resign".
That is what the Deputy Prime Minister herself said on October 18, 1993.
My second quote, which dates back to the 1993 election campaign, comes from the Prime Minister:
"We will scrap the GST".
To scrap means to eliminate; therefore the GST was to be eliminated, not replaced by another kind of GST to give the appearance of keeping an election promise.
I could give you any number of quotes but I will make do with a last one. On May 2, 1994-not so long ago-the Prime Minister said this: "We hate this tax and we will make it disappear". The GST is staying; the only disappearance is in the price of the product.
The finance minister's new measure is hiding two important things. First of all, some of the figures in the finance minister's speech this morning are hidden; one figure is real, however: the cost of harmonization with the maritime provinces. It is the cost of buying an election promise that was not kept.
The Minister of Finance has paid off the maritimes so that they would help him keep an election promise through shameless window dressing, as we saw this morning. A total cost of $1 billion has not been denied so far. One billion dollars is what Quebecers and Canadians from the other provinces will have to pay for an election promise that was not kept by the Minister of Finance and the Prime Minister. One billion dollars is what this measure is really costing us.
But there is more. It will cost more than the $1 billion they said it will cost us in the next four years. I do not know if the Minister of Finance and his Liberal colleagues have realized this-there are many things they fail to realize-but reducing consumption taxes from 19 to 15 per cent will force all Quebecers and all Canadians from the other provinces to pay more in equalization to the maritime provinces in the future. Did he realize this? No, or if he did, he is hiding this additional cost from the people.
Are these increased equalization costs, which all taxpayers in Quebec and Canada must pay in addition to the $1 billion the Minister of Finance promised the governments of the maritime provinces in the short term, acceptable? Are they acceptable, when we compare this harmonization process, this buy-off of the maritime provinces, to Quebec's treatment in recent years?
Everyone here knows that Quebec's sales tax has been harmonized with the federal sales tax. Quebec is administering this federal tax. Quebec has been a good boy, a good corporate citizen in not demanding any compensation for this harmonization.
Why is Quebec's effort in that area not recognized now? Why is the federal government now dipping in the pockets of Quebecers and Canadians to give $1 billion in compensation to the governments of the maritime provinces, but not to the Quebec government? We were good boys and good girls in harmonizing our tax with the federal sales tax and not asking for any compensation so far. Is that what they call managing the Canadian federation? There is something wrong here.
The new GST is a sneaky tax. It is sneaky because it is hidden in the price of goods and services. I listened to the Minister of Finance who said earlier that, in 1994 and even in 1995 and after, representations had been made to the finance committee by many people who told committee members that they were irritated and upset as consumers to see the GST added to their purchases.
Others warned them against changing four quarters for a buck and hiding taxes.
Let me read what the Liberal majority wrote in 1994 in its report. They said: "It would just not be appropriate to hide from Canadians how much they pay in taxes to their government, and creating a hidden tax would affect their ability to force the government to account for how these taxes are collected and, to a lesser extent, for the use made of public funds".
That is the kind of representations that were made to the finance committee. Most witnesses told us: "First, abolish the GST, and if it absolutely has to be replaced by something else, make sure it not hidden from the public. Let it also be obvious that the federal government is unable to manage public finance properly, which explains why it has to keep dipping deeper and deeper in the pockets of taxpayers in Quebec and Canada". That is what people were telling us. "Show us the true face of public finance".
Instead, the Minister of Finance is proposing a hidden tax. Worse yet, in 1989, in its minority report on the GST, the Liberal minority, which was the official opposition then, wrote that, if the GST were hidden in the sales price, it would make it that much easier for the government to raise it later.
This is what the Liberals held as true in 1989, but now that they are in power, the tax is not supposed to go up? We will have a hidden tax and it will not go up, contrary to what the Liberals held as true in 1989. It is a disgrace to change one's mind so radically and suddenly, at the expense of Canadians.
Even back when they were in better frame of mind and did not have an election promise made by he Prime Minister to keep, Liberals were not the only ones to say that the GST should not be hidden. In 1994, a survey conducted among its members by the Canadian Chamber of Commerce showed that 70 per cent of Canadian businesses were opposed to a hidden tax. That is 70 per cent. If that is not a majority, I wonder what is.
Recently, in February 1996, the Canadian Chamber of Commerce conducted the same survey again, just to realize not only that its members' opposition was holding strong, but also that the percentage of those opposed to hiding the tax in the sales price had
risen from 70 per cent to 76 per cent. Could the message be any clearer? I do not think so. This is hypocrisy on the part of a government that is not able to call things by their rightful name and to show the Canadian reality as it is.
There is a lot of hope in that document. It refers to an agreement reached between the federal government and the three maritime provinces, which account for roughly 15 per cent of the Canadian population, and points out that the idea is to apply these precepts to all provinces. I have some news for the Minister of Finance. A vast majority of Canadians are opposed to the minister's project to establish a single 15 per cent tax to be managed by the Canada revenue commission, which would bump the provinces. This would mean that, in Ontario for example, the tax burden would increase, while in Alberta the commodity tax would go up from 7 per cent to 15 per cent. Canadians unanimously believe that the Minister of Finance is mistaken if he thinks that other provinces will go along with his project.
This unanimity exists particularly in Quebec where, for several years now, Quebecers have been working hard to harmonize the two tax bases and to manage them. Indeed, Quebec looks after the collection and the administration of the GST on behalf of the federal government. So, we worked very hard to achieve harmonization at no additional costs.
The minister was too quick to dismiss the case of Quebec by saying, in his document Towards Replacing the Goods and Services Tax , that: ``Since the harmonization process with the province of Quebec will be completed this year, the government will now work with the other provinces to extend the system to the whole country''. The minister was too quick to dismiss the case of Quebec, because it is one thing to harmonize tax bases, as Quebec is doing, with the project being about 95 per cent completed, but it is quite another to endorse the minister's project to impose a single 15 per cent tax, while the GST and the TVQ together amount to 14 per cent. This project would result in a one per cent tax increase and would push Quebec aside by giving the Canada revenue commission the mandate to administer the new 15 per cent GST. Indeed, there is a difference between the current harmonization process and the finance minister's project.
Given Quebec's history of struggles to achieve autonomy in the field of taxation, particularly since the sixties with Jean Lesage, I can assure you that it will never agree to such a taxation system.
Far from promoting tax harmonization, this project could well undermine efforts made in Quebec over a period of several years to achieve that result. Let us not forget that this harmonization project was implemented with the agreement of both parties and with a lot of goodwill. Today, the Minister of Finance is trying to fulfil an election commitment-but fails to do so because he does not abolish the GST. He comes barging in and says: "We will replace all that; we will ensure that, from now on, the federal government will be the one to manage this tax".
As a Quebecer, I would tell myself that it is not really worth co-operating with the federal government, since we are not paid to do that, nor are we compensated like the maritime provinces, who were paid off. Next time, we will say no and there will be no harmonization process. Quebec will say no. We will not get into a system whereby Quebec will lose its authority to set its own tax rate. Worse still, the federal government will raise the tax rate by one percentage point while the premier of Quebec has been doing everything he can, since he came into office, to avoid increasing Quebec's sales tax by one point, and even by half a point.
We cut where we can. We put a lot into streamlining and consultation, and we should let the federal government interfere and increase the sales tax by one percentage point? No way. Quebec will say no. We should lose the capability to fix our own rate? Quebec will say no. We should allow a federal agency to come in and make decisions on behalf of the Government of Quebec? There is no way Quebec will agree to that. You can expect tension between the federal government and Quebec to build up, when things were going so well as regards the consumption tax.
Why are they acting this way? Merely to get votes and to look as if they are fulfilling their promise, an election commitment the Prime Minister himself-and we have it on tape, as I said yesterday-is unable to keep.
With an election coming up, it is sad to see how the government is describing this election measure, because that is what it truly is, and the whole situation. The government is trying to deceive the population by saying that the GST has been eliminated-poof, as my hon. colleague from Rimouski-Témiscouata would put it-when in fact it is making a big deal out of a minor agreement reached with three maritime provinces and takes this opportunity to say: "As you can see, we can keep our promises". The fact is that they have done nothing to keep their promise. The GST is still here, there is still some friction between the federal government, Ontario and Alberta, and the expected friction with the Quebec government bodes no good.
We find this measure unfortunate. We also disapprove of the way the Minister of Finance and the Liberal government have dealt with this issue.
Monte Solberg Medicine Hat, AB
Mr. Speaker, I am completely unwilling to concede that paying $1 billion to harmonize the GST in Atlantic Canada is what was promised during the last election campaign. Even the finance minister's weak mea culpa, his tacit admission that although the Liberals were not fulfilling their promise, they were taking a step toward it, is
inadequate. What they promised was that they would scrap the GST, they would kill it, they would abolish it. That is whatthey said.
The finance minister went to some lengths to read from the red book. I am going to do some reading of my own right now. Although what he read from the red book was accurate, I point out that 80,000 copies came out one month before the election. What was said on national television, what was said for five years leading up to the election and what was said on doorsteps across the country by Liberal members was completely different.
I remind my hon. friends across the way what was said. Here is a quote from the Edmonton Journal dated March 1990: ``The Liberal Party would scrap the GST, the current human resources development minister pledged in a nationally televised debate on Monday with finance minister Michael Wilson. The goods and services tax is a regressive tax, he said. It has to be scrapped and we will scrap it''.
Listen to this statement from the Montreal Gazette in 1990: ``I would abolish the GST''. That is what the current finance minister said, as quoted in the newspaper.
Listen to this statement by the Prime Minister. He said: "I want the tax dead". That is a quote in the Montreal Gazette in 1990.
I have another one from 1990. "The Liberals will scrap the goods and services tax if they win the next general election," the current Prime Minister says. "I am opposed to the GST. I have always been opposed to it and I will be opposed to it always".
The finance minister can quote from the red book, which was hidden during the election campaign, but the fact of the matter is that he, the Prime Minister and certainly the Deputy Prime Minister made all kinds of commitments that the GST would be gone.
I have a couple more quotes from the Prime Minister and the Deputy Prime Minister. In 1991 the Prime Minister said: "I say we will replace the tax. That is a commitment you will judge me by". It is still not replaced.
I now point to the big promise of October 18, 1993: "If the GST is not abolished under a Liberal government I will resign". That was stated by the Deputy Prime Minister appearing on a CBC TV electronic town hall meeting one week before the election campaign.
The Deputy Prime Minister is still with us. Unbelievably she sits glued to her chair in question period day after day when the government is questioned about why it is that she has not fulfilled her promise to resign. She can turn around and throw darts at members like the member for York South-Weston or the member for Broadview-Greenwood who had the nerve to stand up and support their constituents. However, she sits glued to her chair hoping against hope that somehow her constituents will forget that solemn promise. I can guarantee this House that they will not.
Members across the way do not have to accept my word for this. They can accept the words of their own members. I am not talking just about the members who were thrown out of their caucus or the member who quit on the basis of his own principles. I am talking about other members as well. The member from Mississauga has talked repeatedly about how the government has failed to fulfil its commitment on the GST. The member for Ontario has also been quoted in the media about the government's failure to fulfil its commitment to scrap, abolish and kill the GST. I am not the one who making these arguments. Members across the way have made these arguments very well.
It speaks volumes when members believe so strongly that a commitment was made to scrap the GST that they are willing to put their jobs on the line. That is exactly what happened when the member for York South-Weston very courageously stood and voted against the budget. He saw that the commitment to scrap the GST which had been promised the previous summer was not in the budget. He stood up for his constituents and what happened? He was thrown out of caucus. He was mocked by the Deputy Prime Minister and by the people who used to be his friends. I cannot believe that. He stood up for his constituents. He stood up for Canadians around the country who believe that the government promised to scrap the GST. We applaud him for that. That says something about how widely that promise was made and how many members made it.
Those promises were made all across the country. I am happy to see that the member for York South-Weston stood up for his constituents even if he was ultimately punished by a meanspirited government that simply will not tolerate any semblance of democracy in this place.
Yesterday in question period the Prime Minister talked about the British parliamentary model. He said that according to British parliamentary tradition the Liberals had to throw the member out. That is ridiculous and the Prime Minister knows it. Over the past 20 years members, the British Parliament has defeated 65 money bills and other specific pieces of legislation. In the Canadian system such actions would have brought down the government.
If government members in our system vote against the government, they will be out on their ears. They will be kicked off their committees. They will be punished, which is ridiculous.
If we cannot have democracy in the House of Commons we cannot have democracy anywhere in the country. If we are not allowed to express ourselves freely here, where can we express
ourselves freely? Where is the mouthpiece of the people? Can the people not be represented in this place?
Why does the Prime Minister bring down the iron fist of discipline time after time when he has a chance to let people speak freely and express the wishes of their constituents? He is the most dictatorial Prime Minister we have seen in this country, bar none. I believe that to be a fact and I challenge hon. members across the way to stand and debate that point because it is a fact.
Canadians will not soon forget what the Prime Minister and the Deputy Prime Minister by her silence did to the members across the way. I expect other hon. members to stand and defend those members who allowed them to benefit from the promises they made during the campaign. The government was elected on the promise to scrap the GST. Now only two members are paying the price for the government's failure to fulfil that commitment. That is simply wrong. They are the scapegoats.
Let us set aside the fact that harmonization, or this very tepid step toward harmonization, was a breaking of a Liberal promise. Let us speak of the agreement itself. The provinces did not ask for harmonization. That is a fact. The federal government in an effort to save face approached the provinces. It was rejected by the provinces because it could not make harmonization work in a way that made sense to the provinces.
What did the government do? It decided to sweeten the pot. It decided it would kick in $1 billion so three provinces, possibly four, would sign on. Is that fair? What does it mean? It means that people in my riding, the farmer in Bow Island, Alberta, the fisherman in Campbell River, British Columbia, and the line worker in Windsor, Ontario will have to dig into their pockets, come up with some more tax money for the government so it can give it to people in Atlantic Canada.
What ever happened to equal treatment? I see the hon. member from Toronto talking. People in Toronto will have to come up with more money to support people in Atlantic Canada, $1 billion more. How fair is that?
One of the problems we have in this country is that this government has gone to such great lengths to treat people differently. Our party believes in equal treatment. We believe all Canadians should be treated equally. We believe all provinces should be treated equally. This government has bent over backwards to ensure it hands out privileges to certain groups, certain areas of the country and certain people. It has done it time and time again.
I talked in the House last week about the fact that the government handed over $105,000 to the Canadian Bankers Association. That is absolutely ridiculous. It is another example of how the government treats certain groups differently and specially.
Doug Peters Scarborough East, ON
That is not true.
Monte Solberg Medicine Hat, AB
The Secretary of State for Financial Institutions is pointing at me, saying that it is not true. I invite him to ask the human resources development minister because it was through his department that the bankers association, after the banks made profits of $5.1 billion dollars, received $105,000 for training. How does the hon. member respond to that? I invite him to check his facts and he will find out it is true.
What happened in the Constitution? The government said we should treat certain areas differently. It said it believes in distinct society. It is in favour of granting special status to certain people. We see over and over again how it treats people through its multiculturalism policy; again, special treatment. We simply cannot accept that.
With regard to matters of taxation the same principle must apply. People must be treated equally. We cannot have seven provinces supporting three, or six provinces supporting four, whatever it comes down to. It is absolutely ridiculous.
We have no problem with equalization payments. If provinces want to get on board and support other provinces because they got the short end of the stick over a period of time because of mismanagement by the government, let us support them through equalization.
Do we always have to come up with ever new programs for a few provinces to support the many and at the expense of some people to support other people? That is fundamentally wrong. Not to mention we already have a debt of $580 billion. The Liberals may argue they will not tax people more, they will just borrow it. We already have a debt of $580 billion, so I suggest it is not a very good option. We have to get this mess under control.
I will talk for a moment about some of the particulars of this agreement. The government is to kick over a billion dollars. However, it is not said how it will come up with the money for the other provinces if it does propose to treat all provinces equally.
The province of Ontario would require between $2 billion and $3 billion in order to get the same sort of deal as the Atlantic provinces. Where is the money to come from? Will we ask people in Atlantic Canada to come up with that money? What about the money for Saskatchewan and Manitoba? What about the money for British Columbia? I suggest that will not be an issue because all of those provinces have said it is a non-starter, it will not even happen because the federal government will not come up with the money. Besides, they do not like the overall deal.
The premier of Saskatchewan has pointed out that federal government typically invites you in with a carrot. It gives money at the beginning and then it abandons you and leaves you high and dry. If people deny that, I invite them to look at the mess our health care system is in today. The federal government started out by funding it at 50 per cent and it is now down to 22 per cent. There is a long legacy from successive Conservative and Liberal governments where they get us on board with taxpayer money and then leave us high and dry.
It was the finance minister who, when running for the leadership of the Liberal Party, said harmonization means forever. He said that once taxes were harmonized it would be very difficult to get rid of the GST again. What is he saying to people? Is he saying we should give up on the idea of having lower taxes? Should we give up on getting rid of the most hated tax in Canadian history? Is he saying we must permanently weld into place the most hated tax in Canadian history? By signing these agreements, that is exactly what has happened.
There is another way we can lower taxes. In Ontario, Manitoba and Alberta today there are debates about lower taxes.
We can have lower taxes but the only way of doing it is to balance the budget, and the government cannot get that through its thick head. It goes on and on about how we should streamline and change the administration of the GST.
I say get rid of the GST. The best way and the only way to do that is to balance the budget, eliminate it over a period of time, give Canadians the tax break they so richly deserve instead of going back to them over and over again to gouge more money from them.
The hon. member across the way looks perplexed. Gouge? What can that mean? What does he mean by gouge? Since the hon. members across the way came to power they have taken $8.8 billion from Canadians. That is unbelievable. That is $650 per taxpayer.
The hon. members across the way are wondering how could that happen. All those tax measures, all those revenue measures, all those tax increases were hidden. That is precisely what the government is proposing to do with the GST in Atlantic Canada. It is proposing to hid it so it can push through even more tax increases.
Look at all the revenue measures that have gone through the last couple of years, all hidden. All the excise tax increases, all hidden. It is simply trying to come up with creative new ways to tax people more, and if they doubt that I invite people to simply look at the record of the government. It is despicable. It is simply following along the same lines as the Conservatives.
Between 1993 and 1998 revenues for this government will go up $25 billion, the same amount as the deficit will decrease. In other words, it is exacting all of the decrease in the deficit out of the pockets of taxpayers, and that is unbelievable.
To the member across the way, check your figures. It is a fact and the hon. member knows it. He sits on the finance committee and he knows that to be a fact. We do not want different taxes, we want lower taxes, and Canadians deserve lower taxes.
The provinces have lead the way. It is possible with a bit of resolve and a bit of will. If they set their priorities they can balance the budget. Setting priorities is something this government has not done. So far it has managed to preserve spending for special interest. It has preserved spending for its friends in big business. As I pointed out to the hon. member, it does not mind giving $105,000 to the Canadian Bankers Association.
The hon. member knows we had representations from big business across the country, saying not to subsidize businesses anymore. What does the government do? It continues to subsidize businesses year after year while cutting health care by $3.2 billion, by cutting higher education by $1.2 billion. It is going after the wrong things. We could have a balanced budget if it got its priorities straight and did not bury its head in the sand and deny there is a problem. There is a very serious problem.
I am not the only one concerned about this harmonization deal, nor is it only members of my party. I want to talk about what some of the interest groups are saying, those the minister invited to come forward so he could lobby them to come on side. So far they have not come on side.
Catherine Swift, president of the Canadian Federation of Independent Business, said Ontario has to be brought on board to make harmonization worthwhile. The province, with 40 per cent of the national economy, says Ottawa's plan would cost residents $2 billion annually and has refused to co-operate in harmonization. Catherine Swift said: "If Ontario does not go and we end up with a half-hearted harmonization for the next 10 years that is pretty problematic".
The Canadian Chamber of Commerce is a big booster of harmonization, but even it has reservations. Sharon Glover, the group's senior vice-president of government relations, said she is concerned the finance minister will require the GST to be folded into the price tag on goods: "Hidden taxes are too easy to raise and they promote distrust among consumers". Frankly, I think consumers have a right to be a little distrustful of the government.
There have been reports that the GST and the new national sales tax would be included in prices but broken down separately on cash register receipts. Of course that was confirmed by the minister this
morning. The point is even the groups the hon. members from across the way say are supportive of this harmonization agreement are not, and there are the facts to prove it.
Canadians want a country in which MPs are free to come to the House of Commons to represent their constituents. That is basic. It is not being unreasonable. Canadians deserve to be represented by their members of Parliament. What the government did in throwing out the member for York South-Weston and in essentially forcing out the member for Broadview-Greenwood because he was too principled to sit among the rabble across the way was reprehensible. The government has trampled on democracy.
I cannot believe the Prime Minister invoked the name of the British Parliament the other day. Edmund Burke and John Locke would be spinning in their graves if they heard those comments coming from the Prime Minister in trying to defend his heavy handedness.
Canadians across the country want a government which keeps its promises. Canadians want a government which, when it says it will scrap the GST, will do it. They expect the Liberal members of Parliament to actually follow through and do that. They must be sorrily disappointed. They must be very cynical about what has happened across the way.
The finance minister's implied apology at the beginning of his speech today suggests they are feeling the pressure. Perhaps there is a little tweak of conscience across the way. That is good. It is nice to see that finally their conscience is catching up with them.
What Canadians want are not different taxes; they want lower taxes. Canadians from coast to coast have suffered under successive Liberal and Conservative regimes which have raised taxes and failed to deal with the debt problem. Every time they raise money, they immediately spend it. That is absolutely unacceptable. Canadians deserve a tax break. The only way that can happen is if the budget is balanced, but the government refuses to announce a date by which it will balance the budget.
The government is hiding the GST in the new deal. It will continue to tax Canadians to death by stealth, as it has done so often since coming to power. There have been 22 tax measures and revenue measures since it has come to power, taking $8.8 billion out of the economy. That represents $650 per taxpayer. That is ridiculous. No wonder we have not had an improvement in our lifestyle, our disposable income since 1980.
Canadians want to save enough for their future. Canadians want to save enough so they can send their children off to university. They want to have money they can retire on. They want to have money they can start businesses with. However, when the government talks only about changing taxes instead of lowering taxes, none of that can happen.
I urge the government to forget this bogus harmonization idea and fulfill its promise by eliminating the deficit and moving immediately to start the process of eliminating the GST.
Nelson Riis Kamloops, BC
Mr. Speaker, I rise on a point of order. I realize the official parties have been recognized in their response to the minister. I wonder, as a spokesperson for a group of independents, if I might have a few minutes to make a few comments on this important issue. I seek the unanimous consent of the House to do so.
The Deputy Speaker
Is there unanimous consent to allow the member to speak?
Some hon. members
Some hon. members
The Deputy Speaker
I will ask the question again and I ask members saying no to say it clearly and not whisper it into their benches, hoping I will not hear it.
Is there unanimous consent to allow the member to speak?
Some hon. members
Some hon. members
Nelson Riis Kamloops, BC
This may not be a point of order, Mr. Speaker, but on a daily basis unanimous consent is sought to move the agenda of the House of Commons, and without exception the New Democratic Party gives its consent to facilitate the business of the House.
I simply wanted to make that point, having been denied the right to speak.