Debates of Feb. 10th, 1997

Excise Tax Act

[Mary Clancy, Liberal, Halifax, NS]

Mr. Speaker, I am very pleased to take part in this debate today. I want to speak a little about some of the benefits that harmonizing the sales tax will bring, in particular to consumers in Atlantic Canada.

It is very interesting to know that in polling and in otherwise questioning consumers in the Atlantic provinces that have agreed to harmonize the sales tax with the federal government, over 79 per cent of persons polled-and I am happy to say that the major poll was taken in the city of Halifax in my riding-were in favour of tax inclusive pricing.

It is very important for people to realize, even some of the people on the other side, and really understand what is happening and what tax inclusive pricing means for consumers. It is something all of us as legislators have heard of since the first time the GST was brought in. The bottom line is that consumers want to know how much they have to pay before they get to the cash register.

Every single one of us has had the experience while shopping of seeing something that we want to buy for ourselves, a family member or whatever and thinking the price is reasonable and within the realm of what we have decided we want to pay. We go to the cash register only to discover that the tax bite has put it over the top of where we want to be. That of course is something that distresses consumers every day.

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

Are you saying that your constituents cannot figure out what 7 per cent is?

[Mary Clancy, Liberal, Halifax, NS]

Actually it is 19 per cent, to the hon. member from Kicking Horse Pass over there. I understand that he has always had a little difficulty with arithmetic, which does not surprise me.

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

Your constituents cannot figure out 19 per cent either?

[Mary Clancy, Liberal, Halifax, NS]

The hon. gentleman appears to be making an untoward amount of noise. I must say that I am a little leery of making any comments that might in any way stir the beans on the other side for fear someone might start to undress in the House of Commons, which of course I would consider to be most distressing, not to mention unsightly. But of course unsightly premises are municipal law, not federal law.

At any rate, with regard to tax inclusive pricing, the participating governments developed guidelines based on extensive consultations with businesses and business associations.

In Halifax there have been long consultations with ever more increasing consumers, retailers, the Chamber of Commerce in Halifax. My colleague, the member for Halifax West, and I had a long and most productive meeting with the Chamber of Commerce in Halifax recently. As a result the word we heard most has become a hallmark of this legislation. That is guidelines that provide flexibility to ensure that businesses can comply without undue cost. That, of course, is of paramount importance.

[Jim Silye, Reform, Calgary Centre, AB]

It is going to cost $90 million.

[Mary Clancy, Liberal, Halifax, NS]

I am really concerned about the outgoing member for Calgary whatever over there. I am afraid that there may be a problem and I wonder if we could ask the page to bring him a glass of water. What he proceeds to do with the glass of water, of course, will be his own decision. Pouring it over his head would have to be a decision he took for himself.

His incredible response to the debate earlier today when I was in the Chamber, all he could talk about was how glad he was that he

would be out of here in a couple of months. I can only say that, collegiality notwithstanding, we too on this side will be glad to hasten his departure.

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

Not as glad as they will be about yours.

[Mary Clancy, Liberal, Halifax, NS]

I am glad the hon. member for B.C. brought that up.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

You are just trying to kill time. Why not speak to the bill?

[Mary Clancy, Liberal, Halifax, NS]

I have to respond to my colleague. I am still waiting to hear if a Reformer is going to run in my riding. Apparently not.

Tax inclusive pricing will be confusing for consumers. That is a myth. There is nothing confusing about tax inclusive pricing. Tax inclusive price is what is paid at the cash register. Indeed, the research that many of us have dealt with, those of us who understand it, shows that consumers will not be confused. They support tax in pricing and they support the options available to retailers.

Some of those options are to post the tax inclusive price only, to post the tax in and the tax out prices alongside each other, to use shelf or bin pricing so they do not have to resticker prepriced goods from the manufacturer, or use conversion charts so consumers can look at the tax included price for prepriced magazines, greeting cards, et cetera.

Many retailers already use these methods, particularly bin or shelf pricing. All they have to do is apply this common practice to tax inclusive pricing.

For goods priced individually by retailers business supply companies are producing stickers with the words tax inclusive price or tax exclusive price embossed right on the sticker. This will make it clear which price includes tax and which does not.

The thing I think most consumer realize is that prices change all the time in our retail establishments in this country. In fact, the idea that confusion will result is not true. Indeed, it will make life less confusing for those shoppers and consumers.

The second myth is that it will be difficult for consumer to comparison shop given that retailers may follow different pricing practices. I think with the greatest respect again there is a theory here that the Canadian consumer is somehow less willing and able to know what this is about. Most of these things are fairly easy to handle. My personal belief, in spite of what our friends on the other side will have us believe, is that the Canadian consumer is capable of handling this. It may well be that our friends on the other side are not capable of handling it. That I certainly believe. Again, I trust none of them will start taking off their coats.

The reality on this supposed myth of difficulty is that what matters to consumers is what they pay at the cash and not how retailers display tax in prices. Consumers will know the difference between a price that includes the tax and one that does not. They will compare total prices and make their purchases accordingly. That is effectively what I was talking about when I said that consumers do not want surprises when they go to the cash register.

Harmonization is something that will benefit both retailers and consumers. Another myth is that tax inclusive pricing will be costly for businesses that will pass on the increased costs to consumers in the form of higher prices. In reality governments have developed a flexible and simple set of options to ensure that businesses can implement tax inclusive pricing at a minimum expense.

For example, the need to reticket inventory will be limited and the need to reprogram cash registers will be minimal. Many of the costs associated with implementing tax in pricing are one time costs. Other expenses will be absorbed into the ongoing cost of doing business.

Harmonization will also benefit retailers in several important ways. It will permanently reduce their costs because they will no longer have to pay sales tax on their business inputs. This will save retailers in the participating provinces $30 million.

Harmonization will mean a substantial reduction in sales tax rates, about 5 percentage points lower in Newfoundland and Labrador and 4 points lower in the provinces of Nova Scotia and New Brunswick. Both these factors will mean lower prices for consumers, between 3.5 per cent and 5 per cent lower which will translate in higher sales for retailers.

Another myth is tax inclusive pricing will result in a hidden tax. With the tax clearly shown on the receipts the sales tax cannot be hidden. Consumers believe that showing the tax on the sales receipt is sufficient to ensure that they know how much tax they are paying. Indeed, in polling done, 71 per cent agreed in a survey in the participating provinces that this was both comprehensible and an acceptable way to do it.

The harmonized sales tax is something that-

[Jim Silye, Reform, Calgary Centre, AB]

A blended sales tax.

[Mary Clancy, Liberal, Halifax, NS]

Here they go again attempting to correct my usage in the House and suggesting that I use a term that is both agricultural and faintly scatological.

[The Deputy Speaker]

I want to inform the hon. member that her time has expired.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, I understand that the Prime Minister and the Deputy Prime Minister have been busily writing a new dictionary. I do not know whether it is going to have a red cover or not but I suppose it will. It is going to be called "The Liberal Lexicon of Misinformation and Mendacity". They have come up

with some new synonyms for scrap, kill and abolish. These are hide deviously, infuriate citizens, kill jobs-not a tax but jobs.

This is supposed to be, or at least I thought it was when I came down here, a place where we sit down and reason together. Boy, did I get an education.

It is sad. The member for Calgary Centre is one of the few people in this House who has the competence to understand the ramifications of this bill and who actually looks at taxation from the point of view of the victim. When he tried to make his points he was subjected to the usual yahoo comments from the people in the Liberal nosebleed section. However, when it comes to real debate only three members from Atlantic Canada have been willing to face the wrath of their constituents by speaking on behalf of hiding the hated GST.

The members for Cumberland-Colchester, Carleton-Charlotte and Halifax should be commended for volunteering to commit political suicide. Their Atlantic colleagues are wisely keeping their heads down.

Some place in the rubble I have an editorial which I would like to share with the House. Believe it or not it is from the Saint John Telegraph Journal . The last time I looked Saint John was in the maritimes. It says: `To keep the GST hidden from Canadians is despicable,' said Robert Nault, a Liberal opposition MP to the Conservative government in 1989. The government is telling Canadians,trust us'. There is no trust in this government and there is no integrity in this government''. My, my, how things stay the same.

"Seven years after Mr. Nault's righteous tirade against hidden taxes, a principle championed by the Liberal opposition in those days, the government of the Prime Minister is demanding that its own sales tax be hidden in retail prices". Imagine.

Consider this. The harmonized sales tax legislation would make not hiding the tax a criminal offence. In spite of what one of the members opposite said a while ago, it will still-even with the amendments brought in at committee-make hiding the tax a criminal act. The only difference is that now it will be possible to get an absolute discharge if you do not remember to show the tax when you sell a chocolate bar.

I quote again from the editorial: "Any law that hides the tax from those who are paying it is draconian and any government that opposes such a law is practising deception. In the moments when we all stop giggling at the government's silly contention that it only wants to hide the HST in prices to make it easier for shoppers to know how much things cost, it's clear that the only people who will benefit from a hidden GST are the politicians who are doing the hiding".

I am really gratified that there are people in Atlantic Canada who can speak so eloquently to this subject. They bring the views of ordinary Atlantic Canadians to this House even though they have to do it through a member from Saskatchewan. Of course their own members do not have the fortitude-if I may use that semi-parliamentary word-to stand up for their constituents. They are too busy polishing the apple of the Prime Minister.

I return to this wonderful editorial: "The government, which has no proof that consumers are crying for a law to impose tax inclusive pricing, cannot deny that Canadian business is uniformly against a hidden HST". The government should be listening to people who think about these things, like the Canadian Federation of Independent Business, the Canadian Labour Congress, the Canadian Chamber of Commerce, all of whom say that the hidden tax should be withdrawn.

Is it not interesting that way back in 1990 the now minister of defence rose in this House as a Liberal finance critic, attacked the government's GST bill and said that this tax should be withdrawn. How times do change. Apparently there is a big difference between being here or over there. It is a sea change in attitudes; it is a sea change in integrity.

Integrity is what we are talking about here. We are not talking about taxation. We are talking about a government which cannot be trusted, which does not stick to its principles and which does not keep its word.

Getting back to the nitty-gritties, the Retail Council of Canada has studied this BST-HST at great length. It states that forcing stores to bury the new tax in prices will cost retailers at least $100 million a year. The Retail Council of Canada has no vested interest in telling a government how it should collect its taxes. It has a very large vested interest when the government's proposals are going to crucify its members in Atlantic Canada by forcing all this new and unnecessary bookwork on them. It is going to cost jobs. I do not know how many people have brought this up today.

The Halifax Chamber of Commerce, which I believe is also from Atlantic Canada, predicts that the harmonized sales tax will push up the prices on new housing by 5.5 per cent. It will also force municipalities to raise property taxes. The Canadian Real Estate Association says that harmonization will increase the cost of a new house by $4,000 in Nova Scotia and Newfoundland and $3,374 in New Brunswick.

To get all these wonderful benefits, we are going to send almost a billion dollars of federal tax funds, taken out of the hides of the rest of us, preferably western Canada I presume since we are the usual whipping boy, to bribe, if you will, the premiers of those Atlantic provinces to accept the fiat from Ottawa.

[Doug Peters, Liberal, Secretary of State (International Financial Institutions)]

Unfortunately, Mr. Speaker, it is not God that is here. It is just the secretary of state.

I am delighted to speak on this subject. Having listened to my colleagues, especially my colleague from Halifax who just recently spoke, about the effect of this tax on consumers, I would like to see if the opposition parties might think about the business aspect of this.

I know the Reform Party would not be interested in the fact that businesses are going to improve their efficiency with this thing, that there will be one set of rules instead of two. No, the Reform Party wants two set of rules.

[Jim Silye, Reform, Calgary Centre, AB]

Tell us about Carleton Cards.

[Doug Peters, Liberal, Scarborough East, ON]

I hear the Reform Party member telling me that he does not want two sets of rules. He wants a provincial set of sales tax rules and a federal set of sales tax rules. Instead of that, under a harmonized sales tax rule we will have a single set of rules. A single set of rules will be applied to all business.

I was in London, England where I walked into a store and bought an article. I went to pay for it and it cost five pounds. I down my five pounds and asked how much more I needed but that was all it cost.

[Jim Silye, Reform, Calgary Centre, AB]

I'll bet you liked that.

[Doug Peters, Liberal, Scarborough East, ON]

I think a pack of yahoos have infiltrated the Reform Party benches.

I asked the clerk: "What do you know about the taxes?" He said: "I don't know anything. I don't have to know anything". However, if we go into any Canadian store and ask the clerk if they know about the sales taxes, they will answer: "Yes, there is 8 per cent and 7 per cent in Ontario. There is a different one in Newfoundland, a different one in P.E.I. and a different one in Nova Scotia".

This harmonized sales tax will be of serious benefit not just to consumers, who will know when they see the price, but it will be of real benefit to business. Businesses will not have to register for the harmonized sales tax. It will be already registered. Everyone who has registered for the GST will be registered again.

How will a new business be treated? Instead of having to register for a provincial sales tax and a federal sales tax, it will have to register for one sales tax.

Reform Party members have quoted a number of people. Here is a GST quote. This is from The Atlantic Provinces Economic Council: "The potential benefits of harmonization can be easily laid out. By broadening the base of taxation, harmonization will make the system more equitable and reduce the incentive for tax based consumption or investment decisions. Harmonization should also simplify tax collection procedures, reducing the red tape required to administer the sales tax for both business and government. A common system among the three provinces with a full system of input tax credits will also result in the removal of a barrier to interprovincial trade and may reduce the amount of activity in the underground economy".

[An hon. member]

Give us a date.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Speaker, it seems that our friends over there are not interested in reducing the underground economy. They are not interested in efficiency. They are also not interested in being quiet.

The Atlantic Provinces Economic Council has given a clear indication of how favourable this harmonized sales tax would be. Another quote comes from the Deveau family which owns Acadian Seaplants in Dartmouth. It landed an order from Thailand recently during the Team Canada sales mission. It told the law amendments committee hearing on the BST that its competitors already have a full refundable tax system for business: "What the harmonized sales tax does for us is to level the playing field when we compete with the Europeans, who already have the advantages of a value added tax system. The harmonized sales tax means we have lower costs and that means we can have lower prices, win more contracts and hire more people". That is a quote from the material provided by the Nova Scotia department of finance. It is obvious that the harmonized sales tax will be a strong plus for business in the Atlantic provinces. The Reform Party does not have any members in the Atlantic provinces so it cannot be very interested in business in the Atlantic provinces.

This government is to be commended for putting the harmonized sales tax forward. It will have many advantages for business in Atlantic Canada. It will return the structure of the sales tax system to a proper order so that business in the Atlantic provinces will have a serious advantage in selling their products, not just locally and nationally, but internationally as well. The consumers will also have a serious advantage. They will know the price of the goods they are buying. It will be on the item. That will be what they will pay at the cash register.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, it is February 1997 and we are still talking about the GST. I remember when I first started taking interest in the federal political system. It was during the beginning of the GST debate. I got involved in Canada's political life about the time the GST was beginning to be debated.

I remember attending anti-GST rallies. They were held across Canada. I remember people from the various political parties speaking about the GST. There were members from the Liberal Party who spoke against the GST. I remember in particular a rally in Saskatchewan. I believe it was in Weyburn, Saskatchewan. The current Minister of Foreign Affairs was there. He was representing the Liberal Party. At that time he was an opposition member. He said "I see they have named this rally after me". It was the axe the tax rally. He came in with a bluster and a flurry and said how

terrible the tax was and how the government should not be spending so much money. Of course, as Canadians know, the Minister of Foreign Affairs is one of the biggest spenders we have ever seen.

The public sentiment against the GST began to increase. Canadians began to realize that this was not just a replacement tax for the manufacturers' sales tax but that it was a plan of the Conservative government to tax Canadians more intensely.

It was an easier dial to turn to tax the hides off Canadians. They also recognized and realized that the Conservative line that this was a tax that would be applied against the deficit to reduce the deficit was a bunch of baloney. They began to oppose the tax even more strongly.

The Conservatives got into a lot of trouble over the GST. They were having trouble in their riding associations. Their members were coming back to find that they had rebellion in their riding associations. There was talk of nominating new candidates to run in the next election. There were defections even in the Conservative caucus, members leaving to become independents or to join other parties.

It was not a very happy time for the Conservatives but power at any cost was the motto of the Progressive Conservative Party. It decided it was going to get this thing through. It rammed it through the Parliament of Canada. It rammed it through this House.

The Conservatives had a majority government, just like we have a majority Liberal government today. It gets its way. It just forces the MPs to vote in line with the Prime Minister's wishes, the PMO's wishes.

The Conservatives got that GST through the House of Commons. There was the filibustering. There was the indignation and all the routine we see in the House of Commons. The Conservatives had a pretty strong and pretty long whip. They whipped their members into shape and got that bill, eventually, through the House of Commons.

Then they sent it off to the Senate but the Conservatives had a bit of a problem in the Senate, sort of like the Liberals have had in the past two or three years where they were not always sure of getting their legislation passed through the Senate.

The bill got stalled in the Senate. Mr. Mulroney had to have power at any cost. He had to get this GST through. He had to have the source of revenue. His pride was on the line. What did the prime minister of the day do? He took a very arrogant step of expanding the Senate by eight members. This was unprecedented in Canadian history. He added eight extra seats. We call them the stacking stools. The Senate went from 104 to 112 senators.

Just the other day one of those senators from Saskatchewan was charged. I am sure members are aware of the charges that have been laid against one of those stacked senators, Senator Berntson. We do not know whether he is guilty or not. It just reminds Canadians of that old Conservative air where power had to be had and power had to be maintained at any cost. Tamper with democracy. Tamper with the parliamentary system, but we have to get this GST through. We cannot be stymied by Canadians. We cannot listen to Canadians. We have to have our way.

We know what happened to the Mulroney Conservative government. Those few Tories who are left today are still admiring his government. I do not understand why even the current leader today seems to think Mulroney was a great prime minister. I guess he liked his heavy handed ways.

Nevertheless, the Tories were defeated in 1993 because another party had come along. The official opposition said "we're going to scrap the GST, we'll kill it, we'll get rid of it for you". We have seen the video tapes. We know that is a fact. That is what happened.

Then the Liberals inherited the problem. They were not prepared to reduce the size of government. They like to spend over $100 billion on government programs. They wanted to increase revenues, not reduce revenues. They like big government. If there is big government, there is control, power and maybe Canadians can be manipulated.

The Liberals suddenly found themselves in a very awkward position, having made a promise that they were not particularly keen on keeping.

What did they do? They tried to avoid the problem. They pretended that it was not a problem. They pretended they had not said what they said. They tried to camouflage it with some wording from the red book even though Canadians knew they had campaigned and promised to scrap, abolish and kill the GST.

It finally got so bad they thought they would sacrifice one of their own to try to appease Canadians and make them forget they made this promise. The Deputy Prime Minister did some polling. She figured she could get re-elected. After they had carefully calculated everything, she tearfully resigned to keep her promise to scrap and kill the GST.

Then she went stomping back in the by-election and was re-elected and reinstated as the Deputy Prime Minister by the current government.

The problem did not go away. The government by this time is bringing in Bill C-70 that we are debating today, this blended sales tax. It does not eliminate or scrap or do anything with the GST other than try to heap its many implications on the provinces in a blended form with a provincial sales tax.

In Saskatchewan we have a provincial sales tax. It is far too high. It is the old NDP motto you have to tax them hard and often. We certainly pay in Saskatchewan with our provincial sales tax, but this sales tax is not on everything. If we blend this sale tax with our GST, suddenly our tax bill is going to go up substantially in Saskatchewan and it is not going to sell very well.

It was not going to sell very well anywhere in the country. This is becoming very embarrassing to the Liberal government, so it decided: "We have three friends in Atlantic Canada, three premiers and perhaps we can strike a deal; how much is it going to cost us?" That is the old Mulroney approach. "Let's sit down and make a deal. Is it going to be $200 million or $300 million or maybe $100 million a province to sign up for this blended sales tax". They are Atlantic premiers and they know how to wheel and deal. By the time the dealing was done it turned about to be $1 billion for three provinces to agree to a harmonized sales tax.

Where does this $1 billion come from? It happens to come from taxpayers, some of whom are from Atlantic Canada. I understand Atlantic Canadians are not very happy about this blended sales tax. They realize now when they go to the cash register it is costing them a lot of money. They also realize that federal taxes and federal revenues have increased and government is still large. The government is not only operating a blended sales tax but it is still operating the non-blended sales tax where provinces are not co-operating. The government has a mighty mess on its hands.

So what does the government do? Today here we are in the House of Commons and it has moved closure. I do not know how many times this federal government has moved closure but it is just the same way the Mulroney government operated. Power at any cost, control at any cost, to heck with Canadians, they do not matter. All they are good for is writing the cheques. As long as we can keep this big monster going, $115 billion government going every year, borrow money if we have to, but we do not care what we promise Canadians, we have to have this GST. We have to keep it because we have an insatiable appetite for money.

The Mulroney government fell flat on its face because it failed to listen to Canadians regarding the GST. I predict that the Liberal government will be even damaged more than it already has been. We know that its popularity is starting to sink like a stone in water simply because Canadians recognize it has broken its promise regarding the GST. Bill C-70 is as poor excuse for trying to keep a promise that has been broken.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.