Mr. Speaker, I thank the member for his question.
In its 1997 budget, the Quebec government announced measures to help ensure that the tips of workers in the restaurant and hotel industry are reported and subject to tax. It announced that this would be accomplished in part through new measures to be introduced in legislation which would oblige the workers to remit their tips to their employers.
The Quebec budget also announced that tips would be eligible income in the calculation of various social benefits, notably employment insurance.
Prior to the Quebec budget announcement, Quebec officials had explained to federal officials that employees would be required to remit tips daily to employers who, in turn, would record them, withhold the appropriate deductions and return the remainder to the employees. On that basis, Quebec was advised that tips would be insurable for employment insurance purposes because they would be employer controlled.
Under the current employment insurance legislation, tips can only be regarded as insurable if they are employer controlled as a result of being remitted by the employee to the employer on an ongoing basis.
We are aware of the underlying objective of the Quebec government to curb the underground economy and address the under reporting of income, more specifically tips in restaurant and hotel industries.
The federal government also understands that following the publication of the Quebec proposals, major concerns were expressed by employers as to their added administrative burden. As a result, Quebec considered a number of options for alleviating this burden and has asked the federal government to advise whether these changes would be acceptable for EI coverage purposes.
These are being actively reviewed. I will assure the House that the federal government is aware of the importance of the issue and the tight time frame of the Government of Quebec to implement its program by January 1.
The government is treating Quebec's request as top priority. Quebec will soon be advised of the federal government's position on the matter.