Debates of Nov. 6th, 1997

Supply

[Jim Peterson, Liberal, Willowdale, ON]

It is true.

[Francine Lalonde, Bloc, Mercier, QC]

Of course it is true. We are not lying.

The federal government's formula does not recognize the type of losses incurred by Quebec. Yet, these losses are very real, because with a harmonized sales tax rate of 7%, revenues would have been $969 million less than those generated in 1990 with Quebec's retail sales tax.

This confirms that the federal government does not recognize the costs involved. Over a four-year period, the shortfall will be $1.9 billion, or $2 billion if you take into account the federal finance department's own figures. This amount of $2 billion is what the Quebec government and the opposition are claiming.

And we are not alone. All the partners at the economic summit in Quebec City supported this $2 billion claim. Moreover, the support does not only come from Quebec. When they met in St. Andrews, all the premiers supported Lucien Bouchard's claim for $2 billion. So, everyone in Quebec and all the provincial premiers support it. What are the federal government and the finance minister waiting for?

In order to give a chance to the government, we say “Let us ask experts—one appointed by the federal government, one appointed by the Quebec government, and a third one appointed by the first two—to evaluate the amount”. If the government is so confident in its calculations, why does it refuse to establish such a committee? And I would also say that, if the Government of Quebec was worried, why would it go along with the idea of a committee?

This is an extremely important issue. Take the deep cuts Quebec suffered in the central government's deficit reducing exercise, and add the fact that it was the province that lost the most in the UI cuts, and that it was very hard hit by the cuts in health, education and social assistance, and two billion dollars adds up. The cost to Quebeckers is phenomenal and it is unacceptable.

So, if the government thinks it is right, then it should at least be willing to submit its figures to a panel of experts for review. And if it is not willing, we will continue to say, with the support of Quebec's partners, with the support of Canada's premiers, that the central government treated Quebec with blatant unfairness in the matter of the harmonization carried out by that province, the first with the federal GST, a promise made by this government it will be recalled.

I hope that this motion will be passed unanimously by the House as a sign of minimal good faith towards Quebec.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Madam Speaker, it is with pleasure that I take part in this debate on the opposition motion by the Bloc Quebecois, which asks:

That this House condemn the government for blatant unfairness to Quebec in the matter of the GST, the government having denied it compensation without letting it submit its arguments to an independent arbitration panel made up of three experts, the first to be appointed by the federal government, the second by the government of Quebec, and the third jointly by the first two.

Let me outline the background for the motion moved today in the House of Commons. In 1990, Quebec and the federal government signed a memorandum of agreement on harmonization of the provincial sales tax and the goods and services tax at 7%. Compensation was calculated for the calendar year during which the federal government and the province signed the memorandum of understanding.

Quebec did what it had to and harmonized its sales tax. It did so without any financial assistance. There were of course considerable financial costs involved. These costs were absorbed by increasing the tax burden for corporations and by applying restrictions to input tax refunds.

Under the Quebec sales tax system, large corporations can apply for an input tax refund only on certain goods and services acquired to conduct their business. For these corporations, this represents additional costs totalling $500 million annually.

So those who are in fact being penalized by the federal government, which refuses any financial compensation for the Government of Quebec, are Quebec businesses. These still cannot benefit from the tax breaks that harmonization gave to competing firms in the three Atlantic provinces. This situation is especially unfair when you consider that the tax benefits given to corporations in the Atlantic provinces were in part financed by the taxes paid by individuals and businesses in Quebec.

With this compensation, the Atlantic provinces were able to harmonize their sales tax in one single operation. In Quebec, harmonization is not yet completed; it is being phased in over several years due to the fact that it is impossible to remit the input tax refund to businesses because this would entail, according to conservative estimates, a loss of around 10% in provincial sales tax revenues.

On April 23, 1996, the federal government announced the signature of memorandums of understanding with the three Atlantic provinces, whereby their respective sales taxes would be harmonized beginning April 1, 1997, at a combined rate of 15%. To compensate financial losses in these three provinces, the federal government will grant them, under a readjustment program, compensation totalling almost $1 billion, the equivalent of $423 per capita. The federal government also announced that Quebec, the only jurisdiction to have harmonized its tax, could not benefit from this new readjustment program.

Questions are being raised concerning this financial compensation program. Was it designed so that only certain groups could receive this funding? The financial assistance program that is benefiting the Atlantic provinces does so at the expense of Quebec. It only considers sales tax revenues instead of the whole tax base representing the provinces' global tax policy.

It should be noted that the share of provincial sales tax revenues compared to total tax revenues for 1994 was 8.6% for Quebec compared to 12.9% for the Atlantic provinces. These figures are real and can be verified, since they come from statistics on government revenue published by the OECD and Statistics Canada.

The federal government established that the compensation is equal to 100% of the cost of harmonisation exceeding 5% of the provincial sales tax returns before harmonisation for the first two years, 50% for the third year and 25% for the fourth year.

Quebec believes it is entitled to compensation and the Bloc Quebecois supports that claim. On Friday, December 13, 1996, Bernard Landry and Jacques Brassard held a press conference to demand that Quebec receive compensation of $2 billion for having harmonized its PST to the GST. Quebec acted alone and without any financial support. This compensation would represent an amount of $273 per person, which is clearly less than the amount of $423 paid to the Atlantic provinces.

Yet, the federal government still refuses to pay compensation to Quebec on the ground that harmonization of the PST and GST has cost it nothing. Now, one only has to look at the public accounts and budget documents to see the magnitude of the costs involved.

The annual conference of premiers of August 1996, which was held in Jasper, supported the position of the Quebec finance minister by saying that all provinces should benefit equally from the agreements on harmonization, including compensation. We have had support from various sources. Participants to the 1996 socio-economic summit, even the Leader of the Opposition in Quebec, whose political leanings are well known, supported Quebec's position. Last but not least, premiers meeting in St. Andrews in 1997 renewed their support for Quebec's position.

On the strength of such overwhelming support, the Bloc Quebecois would like the federal finance minister to admit his calculations are flawed. This is the reason why, during the last federal election campaign, the Bloc Quebecois leader asked the Liberal government to create an independent arbitration panel to put an end to the deadlock.

To this day, the minister has turned a deaf ear to this request. He insists his numbers are accurate and says that he has taken the right decision. Why then is he so afraid to face independent experts and show he is right when Quebec's deputy premier and finance minister are willing to compare their numbers with Paul Martin's so that justice may be done?

The Bloc Quebecois believes that voting against this motion means that the arguments used so far by the federal finance minister would not stand the comparison with Quebec's. We want to settle this dispute once and for all so that independent experts may come to a clear and fair decision.

I would even go so far as to amend the motion. Therefore I move:

That the motion be amended by deleting the word “blatant” and substituting the following therefor: “flagrant”.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, I listened with intent to the hon. member for Mercier and also the last intervener.

The harmonization of the GST is a positive thing economically. I will give one example. My riding is highly influenced by General Motors which pays provincial sales tax on its input costs. When it exports it does not get a relieving provision which is what the GST basically does.

It means that the costs for automobiles manufactured in Ontario and landed in the United States are greater than for those produced in St. Therese, Quebec, for instance.

The fact that Quebec harmonized the GST quickly gave it a tremendous economic advantage. If there is anyone who should receive compensation I would argue that it is the laggers such as my own province, which has refused to move into the area of harmonization. The Quebec economy has received great economic advantage for doing that early.

I wonder if that is part of the calculation, how much benefit has been realized from looking forward to export trade which Quebec has already received by harmonizing quickly.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Madam Speaker, the member is right on one thing: we had a vision. We were the first ones, in 1990, to harmonize our tax without expecting anything in return. Speaking of shortfall, we feel it is only fair to receive compensation. A loss of $500 million on inputs is a lot of money for Quebec businesses.

If they want to argue over numbers, let us talk numbers. Let us talk numbers before a committee where there will an expert designated by your government. There will be an expert from Quebec and both experts will designate a third one so we can have a non-partisan committee addressing all these issues.

[René Laurin, Bloc, Joliette, QC]

Madam Speaker, our colleagues on the other side seem to forget one thing when they say the sales tax harmonization was profitable for Quebec.

Of course we benefited from that, but we paid what was required for it before we could reap the benefits. I would compare that situation to a landlord investing $100,000 in renovations on a house in order to increase the rents afterwards.

Members opposite are saying: “Because the landlord refurbished his house, he earned a higher income from the rents, so it was profitable”. But the $100,000 the landlord spent on repairs in order to harmonize his building with standards, they refuse to take it into account, they will not give it to Quebec. However, they grant it to the Atlantic provinces because they presumably suffered some losses.

The costs of harmonization for the Atlantic provinces are reimbursed, but Quebec is denied compensation for the same costs. They will only take into account revenues and advantages obtained by Quebec because it implemented harmonization voluntarily but they will refund New Brunswick since that province was somehow forced into harmonization because the Liberal government wanted to show it had changed its GST.

When comparing things, one should do it properly. If the government is so certain it was not both judge and jury in this instance, it should submit its figures to a committee, as we are asking. Let the government submit its data and let the committee look at them impartially.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Madam Speaker, I would like to add a comment to what my colleague just told the House.

When the Government of Quebec began working on harmonization, it was wise enough to avoid penalizing people with a tax on fuel and tobacco. Had it done so, it might have jeopardized the businesses concerned. In any case, consumers would have been very unhappy.

The fact that a sales tax is calculated only on the sales tax and not on the tax base harshly penalizes the province of Quebec. We will get back to this later today. However, we demonstrated a lot of wisdom.

[The Acting Speaker (Ms. Thibeault)]

The amendment proposed by the member for Louis-Hébert is in order.

[Jim Peterson, Liberal, Secretary of State (International Financial Institutions)]

Madam Speaker, the reason why Quebec and other provinces entered into an agreement with Canada to harmonize sales taxes is very clear.

Instead of two taxes, there is only one; a single tax base, a single tax form and a single tax administration. For small and medium size businesses this means an end to the burden of overlap and duplication. This is the reason why Quebec entered into an agreement with Canada. Quebec acted in a very practical manner.

With today's motion, the Bloc is again shooting blanks. Its motion is based on the wrong assumption that harmonization of the Quebec sales tax and the GST was unfair to Quebec.

I would like to go over some facts which have been pointed out many times in this House over the last few years.

In a sense, what the Bloc is doing today is really business as usual, it is twisting the facts to try to discredit the federal system, a system which has no place in the separatists' future.

On several occasions, our government went over the facts with representatives of Quebec and explained to them why Quebec did not meet the objective eligibility requirements for adjustment assistance. Moreover, officials received a detailed technical brief on this subject explaining, among other things, our federal program.

In 1996, provinces were offered an adjustment assistance if they were willing to implement a value added tax which would be fully harmonized with the GST and who, as a result, would suffer significant losses in sales tax revenues. It has been clearly demonstrated that Quebec demands did not meet the factual eligibility requirements to get this kind of financial assistance.

In the preset formula, we consider that significant losses should be higher than 5% of sales tax revenues. The trigger level has been set at 5% for two reasons.

First of all, heavier losses between 7% or 8% would be too hard to factor in, and the revision of already established fiscal plans a difficult exercise. And losses of less than 5% are similar to normal revenue variations governments can adjust to when they reorganize their programs and services.

Secondly, the same percentage is used, and for the same reasons, in the federal stabilization program. With this formula, Ontario, Quebec, British Columbia and Alberta would not qualify for assistance. Sales tax revenue losses in Quebec would not have been high enough to warrant any adjustment assistance.

Actually, it has been just the opposite. Sales tax revenues in Quebec have increased significantly. Moreover, the stated goal of the Quebec sales tax initiative was not only to avoid any revenue loss, but also to generate higher revenues. Since the tax was harmonized, revenues have gone up $3.46 billion. They did not drop. Even the Quebec government public accounts confirm this.

What the Quebec government is trying to do right now is to include annual losses resulting from a reduction in the tax rate on fuel and tobacco products. That has nothing to do with the sales tax.

With these losses excluded, the amount the Quebec government is demanding would be $1 billion less. Elimination of other irregularities would bring the estimated amount to zero. The Quebec government has also underestimated by more than $300 million its harmonized sales tax revenues.

The federal government co-operated fully with Quebec officials in these discussions and this analysis.

In August 1996, we provided Quebec with the precise method used to determine adjustment assistance, the results of our calculations and the figures Quebec could use to determine its own eligibility.

The federal government had numerous discussions and exchanges of information in order to clarify its numerous figures.

Once again in the history of our great country, facts prove that Quebec, far from suffering a loss, benefited in fact from Canadian federalism by harmonizing its provincial sales tax with the GST.

In conclusion, this matter proves once again that BQ members do not know how to add, subtract and multiply; they only know how to divide. That is the only role of the Bloc Quebecois.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I would like to ask a question to the Liberal member. If he says that this legitimate request from Quebec is like shooting blanks, if he says that our case is weak, if he says that we have no reason to submit a bill for $2 billion to the federal government, why is the federal government refusing our offer, which is very reasonable in this case? This is to avoid constant wars with numbers.

Our offer is to appoint an independent committee of experts that would analyze our numbers and the government's numbers. If this assessment would show that we are wrong, we would humbly admit it. However, if we are right, the committee would have the power to force the federal government to pay the $2 billion. That is my first remark.

I have a second one. If this is like shooting blanks and if this is a feeble attempt by the Bloc Quebecois to sow dissension, I would like the member to explain to me how it is that all provincial premiers, who are not members of the Bloc Quebecois—Mr. Harris and Mr. Clark are not members of the Bloc Quebecois—support the Quebec government in this request for a payment of $2 billion? I would like him to explain this to me.

[Jim Peterson, Liberal, Willowdale, ON]

Madam Speaker, it is obvious. We openly and on several occasions provided the details of our program. According to its own calculations, the Quebec government did not incur any loss of sales tax revenues. Following harmonization, the province's sales tax revenue increased by more than $3 billion. The figures were openly discussed with Quebec officials.

For all those who remain objective in this debate and really want to know the facts, instead of trying to demolish the Canadian Confederation, the facts are so obvious that it is pointless to waste any time discussing them.

[Ghislain Lebel, Bloc, Chambly, QC]

Madam Speaker, I would like to tell the member who just spoke and seems refuse to admit the obvious that the Atlantic provinces had chosen. Rather than having a higher income tax rates they had chosen, as a way to collect taxes, to have a higher sales tax. Of course, in the Minister of Finance's calculations, they could lose 5% of their revenue by harmonizing. But it was a political choice they had made. Rather than having a fairer tax rate they had preferred to have a higher tax rate. The fact remains that harmonization has cost and is still costing a lot of money to the Government of Quebec.

I would like to ask a question to the minister who just spoke. If there had been a sovereignist government rather than a federalist one in Quebec City when this deal was signed in 1990 might things have been the same? In fact, I put this question to Quebecers: Do you see how a federalist government in Quebec City has served us in the harmonization process with the federal government? I would like him to answer that.

[Jim Peterson, Liberal, Willowdale, ON]

Madam Speaker, my colleagues will indicate exactly what Canada has given to the province of Quebec. That being said, the hon. member opposite is wrong because what we have done under the harmonization scheme with those three Atlantic provinces was very simple: the sales tax levels in these three provinces, among the poorest in Canada, were at 19%, almost 20%. As part of our harmonization scheme, we found that it would be necessary to bring this level down to something much more reasonable. That is why we established a 15% tax rate, reasonable under the circumstances. That is why there resulted a loss of revenue.

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, it is a pleasure to rise to this motion today. I must tell members that our party will be standing in opposition.

I do think that my hon. friends from the Liberal Party and from the Bloc both missed the most important point. I want to make my argument on three different tracks.

First of all, while we know that the Atlantic provinces did receive compensation in the harmonization deal, we should not assume for a moment that compensation was the right thing to do.

Second, if it was wrong to give that money to Atlantic Canada, then it is equally wrong to offer that kind of compensation, if you want to call it that. I think it is euphemistic to call it compensation. It is wrong to offer it to Quebec.

Finally, we should point out that Quebec entered into this deal willingly. It asserted its independence and made this deal quite willingly in 1991.

I want to expand on those points. The first thing is was the money that was paid to Atlantic Canada really compensation? We should ask ourselves how this all came to pass. We look back on this, back to 1993, to the deputy prime minister's promise on national television about scrapping the GST.

We all know about the sorry episode that followed thereafter. We ended up with the deputy prime minister's having to resign and run in a byelection. She was eventually demoted. She lost her job as the deputy prime minister. It was a sorry episode in the history of the Liberal Party.

Of course, what happened when the government was trying to find some way to make it look like it fulfilled its promise, it rushed out to Atlantic Canada and said “we will give you $1 billion in political hush money if you will go along with our harmonization deal”.

Where do my friends in the Bloc think that comes from, that billion dollars? It does not just come from the mint. We do not just print it. It comes from taxpayers, including from taxpayers in Quebec who already face the highest tax burdens in the country almost and probably in certain ways they do.

We need to remember that taxpayers had to cough up that billion dollars from all across the country. Just because Atlantic Canadians received this money in what I think was kind of an unseemly way does not mean we should also offer it to the province of Quebec. Two wrongs simply do not make a right. They never have and they never will. We absolutely disagree with the premise.

I want to touch for a moment on the last point I made which was that this money comes from Canadians. Where is this money supposed to come from in the current context? The government is talking about a fiscal dividend, however we want to define that, but certainly it will have a surplus.

Instead of that money going toward reducing the debt, which sits at $600 billion, instead of reducing the tremendous tax burden that people face in this country, personal income tax rates that, relative to our G-7 trading partners, are 52% higher than the average, which is absolutely shameful, instead of granting relief to those people, including the people of Quebec who stagger under even higher burdens than the Canadian average, according to the Bloc Quebecois plan we are going to give the money to governments to do with it what they will.

We argue that the money is much better left in the hands of taxpayers. We will make that argument forcefully over the next several months as that issue grips the nation. It is certainly a big issue today. We say let us remember where that money is coming from.

The final point I want to make is that Quebec is the one that entered into this deal willingly, presumably because it thought it would help its economy. It asserted its independence, which is always the argument of the Bloc Quebecois members, “we are an independent nation, we are a people, we will go ahead and make our own deals”. They did make their own deal. Now they are saying “we have decided that we want to change our mind; not only did we make a bad decision back then but we want compensation for making a bad decision”.

They cannot have it both ways. I point out to my friends in the Bloc that almost every program we have in this country today is a transfer program of some kind. Inevitably my friends in Quebec do extraordinarily well, which is one of the most compelling arguments we can make to keep them in Confederation. Why in the world would they step out into the great unknown when they know that they have not only very generous equalization programs but even in programs like the Canada health and social transfer they do extraordinarily well. Almost every program has become a transfer program of some kind; the harmonization deal obviously for Atlantic Canada, but two wrongs do not make a right.

Even the infrastructure program was based on a formula that included unemployment so that higher unemployment provinces like Quebec got more money. What about employment insurance? Huge amounts of money are sent into a province like Quebec because we have regionally extended benefits primarily as an inducement to keep provinces like Quebec in the fold.

We have regional development which overwhelmingly benefits provinces like Quebec. Even the cultural grants in this country disproportionately go to the province of Quebec.

I am making the point that Quebec has already done extraordinarily well by Confederation. With the greatest of respect to some of my friends in the Bloc, this is beyond the pale. They are simply asking too much.

I am going to conclude simply by saying that compensation to Quebec for the GST deal which it entered into sets a horrible precedent. Canadians simply cannot afford it. If we do it for Quebec then we need to do it for every province. We are talking about not a few billion but tens of billions of dollars. Ontario would want $3 billion and on and on it would go.

Where is this money supposed to come from? Where does it come from? It comes from the pockets of ordinary Canadians. We simply cannot afford to tax them ever more to give money to provincial governments. It is absolutely ridiculous.

That is the first point I want to make in summarizing as we enter this whole debate about the fiscal dividend. Let us not give the money away before we even get to the point where we have some money to give away.

Second, let us remember that two wrongs do not make a right. It does not make any sense that because money was paid to Atlantic Canada as sort of political hush money because of a dirty political promise that the then deputy prime minister made that it necessarily follows that we give the money to Quebec.

That is ridiculous. Two wrongs do not make a right. Every child knows that and I am surprised that some members in the House do not understand that.

I point out to my friends in the Bloc that they entered into this deal willingly. They made that decision in 1991 and rushed headlong in. They undoubtedly will enjoy the benefits of harmonization. They claim they already have. Are they to argue then that if they do better in the long run on harmonization than they projected they will turn some of the benefit back to the federal government? I doubt it. I do not think we will hear that.

Let me conclude by saying that Reformers will be voting against this motion. We think it is a foolhardy motion. We think the best solution of all is to take that fiscal dividend and turn it back to ordinary Canadians to spend in the most productive way possible.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, I was happy to hear the member for Medicine Hat admit that the harmonization system may well be a benefit. It seems to me it was that party that argued against the harmonization in this House.

I listened with intent as the member talked about the importance of reducing taxes and getting taxes back in the hands of everyday Canadians. He also asked where the money was coming from.

We have in this country a program of equalization payments. It is a very complex formula but basically the object is to bring everybody in the country to common standards in health and education. Through the mechanism of the equalization payments certain portions of this country are already sending money to the Atlantic provinces. As a nation we want to build a dynamic economy. One of the features is a harmonized sales tax in the Atlantic provinces to allow those provinces to compete internationally.

One of the big features of a harmonization package is to reduce sales taxes for Canadians in the Atlantic provinces. It did just what the member is talking about. It reduced taxes and allowed more disposable income in the hands of Atlantic Canadians. Can they not see that?

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, I am surprised that the hon. member does not recall the debate a little better. One of the reasons that the Reform Party opposed this was precisely that it raised taxes in Atlantic Canada on the most vulnerable Canadians. As members of the NDP pointed out, in those provinces we were going to see an actual reduction in the cost of a yacht but on essentials like fuel for heating their homes and children's clothing we were going to see increased prices.

How can the member stand there and say that somehow this is a benefit to the people who are most vulnerable in Atlantic Canada? It is absolutely ridiculous.

I also point out to my hon. friend that part of this deal stipulates that it takes only a majority of the provinces to raise the rate for the harmonized sales tax but an absolute unanimity of all the provinces to lower it. In having a debate today about what to do with the fiscal dividend, we would need all the provinces on board to say we are going to lower that rate in order for Canadians to enjoy tax relief from the harmonized sales tax.

Why in the world would people who want to see some tax relief today stand up and support that type of deal when it essentially guarantees they will never see tax relief on the harmonized sales tax front? It is a crazy idea.

[Joe Comuzzi, Liberal, Thunder Bay—Nipigon, ON]

Madam Speaker, I want to ask the member from Medicine Hat a couple of questions with respect to the speech he just gave. I am a bit disturbed by the tone of the debate.

[An hon. member]

Oh, oh.

[Joe Comuzzi, Liberal, Thunder Bay—Nipigon, ON]

I see my colleague opposite, in his anger, has not yet begun to pay attention to what is happening. If he would wait I am sure he would get an opportunity to speak in due course. That is a rule of the House.

The tone of the debate seems to be heading toward divisiveness and the fostering the divisiveness in the country that we are all trying to correct.

As a result of what the member for Medicine Hat just said in the House, does he agree with the following two points?

First, the House of Commons has a fundamental role when a country is as big as Canada. Some areas are more productive than others. Should we as a federal state be responsible for the distribution of the wealth in order to look after people living in certain regions who are not as fortunate to have the same natural resources as perhaps the people in his province?

Second, he talked about the surplus and a tax dividend. Should we not first be looking at improving health care, improving the educational system and improving the transportation system? Are they not the best places to put our funds?

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, the most important role of the federal government is to ensure equality of provinces, to ensure that provinces are treated equally.

That does not rule out equalization. Our party agrees with equalization. We do not happen to think that three provinces should support seven.

We should also pay attention to outcomes. We should ask ourselves whether or not it has actually worked to subsidize some provinces to the degree we have. Has it created the type of prosperity that will allow them to stand on their own two feet? I would argue that it has not. If it had worked everybody in Atlantic Canada would have six jobs. Most of them cannot find one today.

Canadians disagree with the hon. member when he says that we should pour more money into spending. Recent poles indicate that people want to see the debt paid down. They want to see tax relief. Only 13% want to see some spending. Instead of spending more money in absolute terms, we should focus some of the spending, take it out of unproductive areas of which there are many in government and focus it on areas that are important to people like health care, education, and research and development.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Madam Speaker, in Quebec we have a beautiful motto, Je me souviens . In Quebec, we remember the love demonstration of October 27, 1995, just three days before the October 95 referendum, when people from English Canada came to tell us how much they loved us.

I would like my fellow citizens from Quebec who are watching us to realize how English Canada and the Reform Party love us: on our knees, on all four. We are not able to stand up. We have here a clear demonstration of how much they love us.

Here is my question to the hon. member. In his speech, he made much of the fact that Quebec is costing a great deal to Canada, particularly in terms of unemployment insurance. So let us go then; we want to go away. Let us leave!

I would like the hon. member to tell us what he thinks about a trend that is spreading more and more in western Canada. I have been to North Vancouver to give lectures at the invitation of Reform members and people there were saying “Let them go”. Yes, let us go, we want to leave, that is exactly what we would like to do.

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, Canadians are asking us to find a way to unite the country, not let them go.

The best way to unite the country is to bring economic prosperity to all and to treat all Canadians equally. The way to ensure economic prosperity is to keep tax levels lower than they are. We have the highest tax rates in the G-7. We have to get rid of the $600 billion debt and give the people of Quebec, not the politicians, more money in their pockets so they can carve out their own lives and realize their own destinies.

We do not need big government, whether it be in Quebec City or in Ottawa, telling people how to live their lives. Let us leave money in their pockets.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Madam Speaker, I would like you to rule on some terms the hon. member used earlier in his speech. I would like you to indicate to this House if the word “stupid” is in order and can be used in our discussions here. I would like your advice on this matter.

[The Acting Speaker (Ms. Thibeault)]

We will review the blues and inform the hon. member of our decision.

In the meanwhile, we will resume debate. The hon. member for Kamloops has the floor.

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, it is a joy for many of us to have the opportunity today to talk about the most dreaded, hated tax that has ever been levied in the country. I guess we could say we are talking about two dreaded taxes, the harmonized sales tax in certain provinces and the GST which symbolizes most what Canadian taxpayers feel is the ultimate betrayal in recent political history.

I refer back to the election when the Liberals first came to power. I remember local candidate in Kamloops saying that if the Liberals were elected they would abolish the GST. In opposition they had spoken about the GST for many years. They called it a hated tax, a payroll tax, a tax that would destroy jobs, a job killer. Then when they were on the verge of becoming government they said if elected they would scrap the tax, abolish it, do away with it, because it was an evil, bad tax.

They promised that if they were elected the GST would be gone, would be history, would be scrapped, would be abandoned, would be finished, would be abolished.

Many Canadians thought that meant the tax would go away, that the government would actually do away with the dreaded tax. Obviously it was one of the most regressive taxes ever levied in the country because it did not discriminate between the rich and the poor. When a rich person buys snow tires and a winter battery, he or she will pay exactly the same tax as the poor person buying the same items. It does not make any difference. Obviously it is a very regressive tax.

It is fair to say that the citizens were betrayed, misled and lied to. I am not saying any individual lied, but a whole group of individuals lied called Liberal candidates.

After the election the government decided that rather than abolish or scrap the GST as was promised it would harmonize the GST. Harmonize is a good word. We all like to harmonize things. We like to sing in harmony or harmonize a community. The harmonized tax was to blend provincial and federal taxes.

I was shocked when the Government of Quebec acted so enthusiastically. It said that this was a great idea. It wanted to harmonize first. It wanted to be the first to harmonize the GST and the provincial sales tax.

I will let my friends in the Bloc explain why this sort of enthusiastic cheerleader approach was followed. I never understood it. All the evidence I saw at that time, all the evidence I have seen since and all the evidence I have on my desk before me today indicate that taxpayers pay more under the blended tax. The short and long of it is that taxpayers will pay more.

Some might say that might be the NDP analysis. Let us refer to someone other than the New Democratic Party of Canada. What about the dominion bond rating agencies? They thought they should do a very thorough summary, at least in the Atlantic provinces, to find out the impact of the blended sales tax in what they called the maritimes.

I will read two or three of the summary comments. They stated that there would be a net revenue loss for the provinces. That is not surprising. That is what everybody predicted. They stated that consumers would not benefit. They stated that the federal government would benefit because it would make progress toward complete harmonization and the burying of the GST. In other words, hiding the GST.

Probably one of the ultimate goals was to hide the GST so that people would not be reminded every time they bought a good or a service that they were being taxed by the federal government. The idea was to hide it from the consumer, and the blended sales tax would do that.

The analysis of the dominion bond rating agencies goes on for pages and pages. I could quote it until the time I have for my presentation runs out. They said there were two losers: provincial governments and consumers. They said the net benefit for business was negligible if at all. The availability of input tax credits was offset by the imposition of new taxes, as well as taxation on newly generated income.

Who benefits from it? The federal government sees it as a way to get off the hook, but it could not fool most Canadians so easily as presumably the Government of Quebec was fooled. I cannot to this day understand why the Government of Quebec was so enthusiastic to join with the federal government. I will leave that aside. It must have had its reasons.

What about the Atlantic provinces? Interestingly enough, there were Liberal governments in Ottawa, in Newfoundland, in New Brunswick and in Nova Scotia. I guess the prime minister said that they had to help out by joining in on the blended sales tax business to get it started. I guess he said that the Government of Quebec had been conned and they had to be onside to get this thing happening.

The Atlantic premiers thought they would lose money. The prime minister said “What about a bribe? What about a billion dollar bribe? Would that help?” The premiers could probably be bought off for a billion dollars. They could do a lot of politicking with an extra billion dollars, and so they did. The three Liberal premiers of the Atlantic Canadian provinces of Newfoundland, Nova Scotia and New Brunswick accepted a billion dollar bribe to force the blended sales tax, the harmonized sales tax, on the citizens of the three provinces.

Then the government went to Prince Edward Island, which also had a Liberal premier, but there was an election on the horizon. In other words, the Liberal Government of Prince Edward Island would have to go to the people soon. Its members said that they could never sell it, that they did not have time to brainwash the people of Prince Edward Island, that they could never con them or fool them into believing it was good for them.

The evidence was mounting by the day. The Liberal Premier of Prince Edward Island said they could not be bought, could not be bribed, and would not be part of it. Indeed it is not a part of it to this day. Now there is a Conservative Premier of Prince Edward Island. The last thing he will try to do is jam the blended sales tax down the throats of the people of Prince Edward Island. The people of Prince Edward Island know what it will do to them.

What will it do? The Standing Committee on Finance finished a tour of Atlantic Canada. We went to all the capital cities. We talked to people about the economic and fiscal situation of Canada. A number of them indicated that the fact the average family in Atlantic Canada had to pay the blended sales tax meant the average family was paying out as much as $600 more a year in taxes.

My friends across the way on the Liberal benches should be hanging their heads in shame, running out the back door and having a coffee. The president of Noranda in his speech the other day in Halifax indicated that 52% of working Canadians make less than $20,000 a year in income. Those are working Canadians. We know that unfortunately a large number of people in Atlantic Canada do not have jobs period. If the average working family is making less than $20,000, imagine the devastating inhuman impact an increase in taxes of $600 a year would mean to those families. It means necessities have to be abandoned.

One of the most troubling days of my life as an elected representative was the day I went into an elementary Christian school in my constituency. We talked about the life of an MP and what we did, that part of the job was to raise money to do good works. That was the kind of theme I was trying to develop. I asked if there were any questions. A little girl in grade four or five said “Every Saturday my mom and I go to the bookstore to buy books about Jesus. I have to pay a tax on these books. I even have to pay a tax on my Bible”.

I have 20 minutes, Madam Speaker, and I have not spoken for 20 minutes.

The little girl felt it was unjust that she was paying the GST on her religious story books for Sunday school and on the Bible. She asked me to explain why we were doing this to her. I could not explain. I did not want to say that the Liberals were cruel or that they had imposed this regressive tax because I do not think it is fair for a young child to hear that kind of message. I said that sometimes governments just do odd and silly things, inappropriate things. Many other terms were on my lips at that time but I was in a Christian school—