Debates of Feb. 11th, 1997

Excise Tax Act

[The Deputy Speaker]

Thank you very much my hon. colleague. Just give me a moment and I will check that.

I am most grateful to my hon. colleague for Calgary Centre. There was an error by the Chair and in fact the hon. member for Calgary Centre is quite correct. There is a 10 minute questions and comments period. I call on the hon. member for Calgary Centre.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I do not mean to interfere in the debate but the member will get his chance and so will we.

I would like to ask the hon. member from the Liberal Party who just gave his speech to comment on a couple of things within his speech.

First, I would like to comment that members of the Liberal government, including the Prime Minister, always say that they are number one and that by a number of different lists they are number one. Do you not think, Mr. Speaker, that anybody could be number one in any profession, in any business, if they could borrow for 30 years and just let that debt continue to grow and invest anywhere in the world and let that debt continue to grow and be number one in anything?

The government fails to recognize that the real problem is the debt which we are not making any payments toward. This government is adding to the problem a little more slowly than the previous government, but it is still adding to the problem. That is what I have to say about this number one issue.

Back to the debate on Bill C-70. The member referred to two things, one was that this bill is imperfect. I would like him to outline where he feels this bill is imperfect. It is his responsibility to tell the people of Canada where he as a member of the government side thinks this bill is imperfect.

I would also like him to comment on the justification for already spending a billion dollars on this movement. The bill does not even come into effect until April 1, 1997, yet this government with last year's revenues has already dished out, paid under the guise of transitional costs although it has not even transitionalized-if that is a word-close to a billion dollars.

I would like the member to comment on where this bill is imperfect and the transitional cost of a billion dollars.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, I welcome the question. I thank my colleague for making the intervention to the Chair and subsequently to me because it gives me an opportunity to respond to the questions that were raised.

For that member or any member, particularly a member of the Reform Party to suggest that we are number one on any number of measures because we have borrowed is virtually scandalous. We are number one because we are Canada. We are number one because we are Canadians. We are number one because our aboriginal peoples from the beginning of this country have contributed to its greatness, because the English and the French and Canadians from virtually every single country in the world have come to contribute their talents, their energy and their efforts to make this country the country that it is.

He suggested that we have become number one because of previous governments with which he is very sympathetic and if my memory serves me correctly, he wanted to run for a particular government that had the same label as the one that preceded this one which doubled the debt. To suggest for one moment that we are number one because we borrowed is scandalous. I am surprised and disappointed because I have a lot of respect for that member. Frankly as I see some of the more moderate members making some of those grossly exaggerated, insensitive inaccurate comments, I know where they are going: down, down, down.

With respect to the imperfect bill, there are a number of imperfections. There are difficulties with respect to advertising. There are difficulties. For example, a particular item might cost $9.99 and with the tax it would be beyond that. People have in their minds that they are buying a $9.99 item. There are many others. My colleague probably read-I hope he did-the various testimonies from the literally hundreds of groups that drew various points to our attention and that wanted them corrected. These are in the process of being corrected.

There is virtually no piece of legislation that does not improve after men and women of sound mind and good intentions have looked at it in a co-operative way in order to make it better for the people they represent and serve. Is that astonishing? It would be extremely astonishing if legislation of that magnitude and impact did not undergo refinement. In fact it would never happen. My

colleague knows that and he knows it full well. It is an attempt to try to embarrass the government, but it is not going to work.

We are talking about all of these dollars that have supposedly been spent. Does my colleague suggest they have been spent for naught? Does my colleague suggest that we spent that to have fun? Does my colleague suggest that we spent that irresponsibly? Where is the proof? Of course not. Changing any system is expensive and he knows that. He knows that changing any system is expensive but he will not acknowledge it. I find that most unfortunate, most most unfortunate. It is to help with the transition and he knows it.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, the hon. member refers to this billion dollar payment, or $961 million, as supposedly spent. The proof is that it is in the public accounts for last year. The money has been spent. The finance minister included it, against generally accepted accounting principles I might add, in last year's expenditures. It is there. The money has been given to those three provinces. For what? Why? The bill does not even come into effect until April 1. The finance minister is borderline on breaking conventional accounting practices and that is my proof.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, I find it shocking that my colleague would suggest the Minister of Finance is breaking rules and regulations that have been established. I do not believe that. Canadians do not believe that. The Minister of Finance is one of the finest Ministers of Finance we have ever had. He is one of the people whom I admire the most because he does toe the line. He is aware of the rules and regulations. He follows them.

For my colleague to suggest that because a bill comes into effect on a certain day and there are no expenditures before shows a lack of understanding of the political process, of the implementation process. I thought he was a business person, I would even add of business principles. That is shocking, absolutely, totally, completely shocking.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, as a business man it would be improper for anybody to load up front a billion dollars in any business venture before the whole deal takes place.

This has cost the Canadian taxpayers one billion dollars already. Now it is going to cost corporations the transitional cost for their computers, their point of sale equipment. I am glad he is getting coached by the member from the finance committee because he is going to need it.

The business aspect of this deal is that now that the taxpayers have paid up front, front end loaded a billion dollars, the retailers and the businesses will have to pay to change their computers and to change all this mixed up tax included pricing. After that is all in place, then guess who will have to pay some more after that in a year or two, starting in April. The consumers will have to pay more on goods and services that the GST never applied to. There will be three people paying a lot.

As a business person I would never have entered into this kind of arrangement. It is piecemeal, ad hoc and irresponsible.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, I wish we could continue this exchange because the more questions my colleague asks, the more he and his party are falling at this point in time.

I cannot believe my colleague would not recognize that we had an agreement signed much before April 1. He forgets that. He conveniently forgets it I suspect, because he is quite a bright fellow actually.

With respect to the way he suggests we have spent the money, front end loaded, he uses expressions. I wonder if he could define them for us. It would be very helpful to Canadians because most of them do not know what he is talking about.

He knows that that money was needed. He knows that that money was spent responsibly. He knows that we had an agreement well before April 1. He knows that the Minister of Finance and his colleagues have done a tremendous job on an extremely complex issue.

If he will recant, I hope he will give an address and do nothing but point out some of the positives of this piece of legislation. At the same time he should indicate what he might do in order to prove it as opposed to making grossly exaggerated, insensitive and wildly inaccurate statements.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, I hope I will not lose my temper like the previous speaker. I am pleased to speak to Bill C-70 concerning the GST. This bill proposes a so-called replacement of the GST by the HST, or harmonized sales tax.

This is basically the same tax, in the same amount. Nothing is changed, really. I would like to draw your attention, however, to the attitude of this government that does not fulfil its promises.

We have here a glaring example of a promise unfulfilled by this government. They had made an election commitment to eliminate, kill, abolish the GST. "We will scrap the GST", said the current Prime Minister on television when he was running in the election. "We hate this tax and we will kill it".

In a minority report dated November 1989, the Liberals, then in opposition, stated: "It is the position of the Liberal members of the finance committee that the Conservative goods and services tax

proposal is flawed and cannot be `patched up' in a way that would it fair for Canadian taxpayers".

The Prime Minister has tried to make the public believe that he had never made any promise of the sort. But the evidence is there, television was there. He was forced to recognize it, after a waitress questioned him about this toward the end of last year and after being taken to task in an editorial published in the Globe and Mail .

The Minister of Canadian Heritage was forced to resign her position as a member of Parliament over this, and this has cost the taxpayers $500,000. The hon. member for York South-Weston, who is an honest man, left the Liberal Party of Canada, accusing it, that is the government, of not having fulfilled its commitments. Indeed, it is the members opposite, government members, particularly those who hold ministerial responsibilities, including the Solicitor General, the Minister of Health and the Minister of Public Works, who fought this tax when it was introduced in Parliament by the Mulroney government.

Voters will not forget what this government did. They will not forget that it has not kept its word in this case, but also regarding other issues, including job creation. This is one of the most negative things about this government, which was elected under the slogan "jobs, jobs, jobs". There is also another issue concerning which the government did not keep its word: the funding of the CBC.

Today, with Bill C-70, the government is seeking to harmonize the GST with provincial taxes. However, it is already costing the federal government $1 billion to harmonize the GST in the Atlantic provinces. The government refuses to provide the same financial assistance to the Government of Quebec, which is in the process of spending $1.9 billion to harmonize its tax with the federal one.

Like others in the Bloc Quebecois, I would like to say and to repeat this: there can be no sales tax reform without an in depth review of personal and corporate income tax, and without the participation of the other levels of government.

It is imperative that Canada undertake a tax reform that will include all forms of taxation, at all levels of government. For three years now, the Bloc Quebecois has constantly been raising the issue of taxation. Two reports proposing excellent recommendations were tabled.

The first, which was tabled last November, examines corporate taxes. The second looks at individual taxes and was tabled in this House a few days ago.

The Bloc Quebecois firmly opposes family trusts and tax havens. We also defend the interests of Canadian and Quebec taxpayers. We proposed an overhaul of the corporate tax system. The federal government could recover up to $3 billion annually by eliminating certain outmoded, ineffective and unfair tax expenditures. This money could then be used to help businesses create jobs.

Tax expenditures allow businesses, particularly large ones, to reduce the taxes they pay to Revenue Canada by quite a bit, sometimes to eliminate them entirely. The cost of these tax expenditures is estimated at over $9 billion annually, according to the latest figures from the finance department.

These billions of dollars in uncollected taxes represent an additional tax burden for taxpayers and other businesses that do not benefit from these tax deductions.

It is useful to point out that the percentage of federal tax revenue from corporate income tax has fallen considerably over the last 30 years. It dropped from 23 per cent in 1961 to 9 per cent in 1995. Canada is one of the G-7 countries with the lowest corporate taxes. It has also ranked well below the average for OECD countries consistently since 1965.

Given the current job market difficulties, the goal of corporate taxation should be to maximize the creation of sustainable and meaningful employment, while ensuring that financing of public services is shared equitably by corporations and individuals.

The tax system must encourage businesses, particularly SMBs, to create jobs. It is important to emphasize at this point that it would still take over 800,000 more jobs in Canada to match the situation in 1989, before the recession.

Official unemployment rates are still scandalously high, 9.7 per cent in Canada and 12.2 per cent in Quebec, according to Statistics Canada figures released a few days ago. Why is Canada unable to lower its unemployment to 5.4 per cent, as the U.S. has done? It must be pointed out that, in the public sector alone, 200,000 federal and provincial public servants have lost their jobs in the past two years. This is unbelievable.

The government lacks control over intercorporate dividends, which means that some companies with branches in tax havens such as Barbados are able to minimize the tax they have to pay by doing some tax planning. They maximize their profits via means that are unproductive to both the government and society.

According to the auditor general, this tax loophole appears to have cost the taxpayers the modest sum of $240 million in 1992 alone. The Bloc Quebecois recently tabled its second report on personal income tax, a system which currently favours the most advantaged people in the country.

The federal government currently pays out $77 billion in tax expenditures to individuals annually. By introducing greater progressivity, the Bloc Quebecois has identified $2.5 billion that could be recovered by doing away with, or tightening up, tax expenditures that are deemed unfair. Obviously, it would be the low and middle income taxpayers who would benefit from this revision.

The federal government has been in power for over three years. The actions it has taken to make the taxation system fairer and more progressive are lamentable. The Minister of Finance is holding up corporate tax reform unduly. What is more, he is refusing to undertake any serious study of the personal income tax system. He does not dare attack tax advantages which run the risk of upsetting the friends of the Liberal Party.

The Bloc Quebecois is addressing the federal tax system in a concrete manner in order to make it more equitable, more progressive and more focussed on job creation.

For instance, one concrete measure would be to abolish outright a privilege that is now obsolete: the tax free salary and other remuneration paid to the Governor General by the federal government. This is an anachronism, because today, even the Queen of England has to pay income tax.

The Bloc Quebecois suggested that part of the resources in RRSPs be spent on fighting unemployment. An RRSP-employment program would allow a person who is unemployed to withdraw part of his RRSP without penalty for the purpose of starting up a business. Now that is a great suggestion by the official opposition, the Bloc Quebecois, that would create jobs. The Minister of Finance should include it in the budget he will bring down in this House on February 18.

We also suggest raising the maximum for investments in a labour sponsored fund. The Liberals reduced this maximum from $5,000 to $3,500 in the 1996 budget. However, these funds have had a positive impact on economic development and job creation. The maximum should therefore be raised to $5,000.

Last October, I attended a meeting of the finance committee which heard submissions from representatives of venture capital corporations. These included Fernand Daoust and Pierre Laflamme, for the Fonds de solidarité de la FTQ; Jim Cambly for Working Ventures Canadian Fund; Earl Storie, for Vengrowth Investment Fund; David Levi, for Working Opportunity Fund of British Columbia, and Jim Delaney for First Ontario Labour Sponsored Investment Fund.

Labour sponsored venture capital corporations administer a total of $3 billion. They exist in practically every region in Canada.

These investment funds are sponsored by the labour movement. Capitalization is provided by a vast number of shareholders, mostly workers. The federal and provincial governments give tax credits. The purpose is to protect and create jobs, stimulate regional economic development, and provide training for workers and shares in the company supported by their money. We all know that unemployment and job insecurity have become a fact of life in our economy.

The Fonds de solidarité of the FTQ is the oldest labour sponsored investment fund in Canada. It was set up in 1983 and for 14 years injected one billion dollars into small businesses in Quebec, thus helping to save or create about 45,000 jobs. These funds warded off a final shutdown at the Kenworth company in Ste. Thérèse, Quebec, and protected hundreds of jobs held by members of the CAW.

I want to take this opportunity to pay tribute to the FTQ, the labour organization where I worked for 19 years, on this its 40th anniversary. In fact, it was on February 16, 1957, in Quebec City, that delegates of the Fédération provinciale du travail du Québec and the Fédération des unions industrielles du Québec founded the FTQ. This merger brought together trade unions and industrial unions.

At the time, the labour movement was very active and fought the Duplessis government which since 1944 had been actively anti-union.

It must be pointed out that, in actual fact, the FTQ is far more than 40 years old. Its origins go back to the end of the nineteenth century. It builds on the old traditions of a combination of European and North American trade unionism, and is the heir of the rich history of the international labour movement.

Today, the FTQ represents 480,000 people working in all sectors and all regions of Quebec. In addition to doggedly defending the interests of wage-earners of all backgrounds, the FTQ also battles for the sovereignty of Quebec and for its membership's right to work and to live in French. On behalf of the House of Commons, I wish the FTQ, my labour congress, all the best on its 40th anniversary.

My colleague from Saint-Hyacinthe-Bagot was saying just now that the government is ramming this bill through and taking an undemocratic attitude by preventing discussion on this highly complex bill. It is close to 300 pages in length, and thrown together any old way.

He also referred to the pre-election fever the government is trying to turn to its advantage, particularly in Quebec. According to the latest surveys, the Bloc Quebecois has 49 per cent of public support, and the Liberal Party of Canada only 39 per cent.

I would like to touch on the meeting held in my riding of Bourassa this past Sunday. It confirmed the nomination of my long time opponent Denis Coderre as the next candidate for the Liberal Party of Canada in my riding. I defeated him in 1993, and will have no trouble doing so again in the next federal election.

The riding's provincial representative, Yvon Charbonneau, was present at this meeting. I would remind you that he used to be a trade unionist like myself, but he renounced those convictions somewhat by joining the Quebec Liberal Party, which had imprisoned him and other union leaders in 1972. Mr. Charbonneau was quoted as saying: "In this riding, we have a Bloc Quebecois member, Osvaldo Nunez, and we want to get him out of here". Such arrogance!

With all due respect to my provincial counterpart, I wish to tell him that it is neither he nor his party who will push me out of my riding. These words do not scare me, nor do the racist attacks against me by my former and current Liberal opponent in Bourassa, Mr. Coderre, and by the former federal Minister of Human Resources Development, now the Minister of National Defence.

The three provincial Liberals supporting the Liberal candidate on Sunday were called to order by Jonathan Sauvé, president of the Quebec young Liberals. He wanted to remind them that the Liberal Party of Quebec had to remain neutral in the next federal election campaign. Mr. Sauvé also said that the provincial Liberals must not team up with any federal political party.

The Quebec Liberal Party youth commission revealed its intention not to campaign for the Liberal Party of Canada. Mr. Charbonneau thus appears at odds with the calls for neutrality issued by his leader, Daniel Johnson.

Jonathan Sauvé added yesterday that they had spent much of the past year explaining to Quebecers that the QLP was not a branch office of any other political party.

Bill C-70 is not acceptable to the people of Canada, to the people of Quebec and, especially, to the people of Bourassa. It is unfair. It is a bad bill. It is a half baked bill, and I will vote against it.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I would like to ask the hon. member from the Bloc to tell the House what he thinks about the comment of the member for St. Paul's who also wants to ask a question. Earlier today and also yesterday, in defence of the harmonization or blended sales tax, BST, the member for St. Paul's used Quebec as an example and said that if it is good enough for Quebec it should be good enough for the rest of Canada.

I would like to know what is the Bloc's response to that kind of justification for the rest of Canada and all taxpayers to spend a billion dollars just in three provinces. How and in what way would he react?

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, as the hon. member has just said, Quebec harmonized its tax in 1991 and asked nothing of the federal government.

Today, we realize that harmonization cost nearly $2 billion. We say that, if the federal government is prepared to pay $1 billion to the Atlantic provinces to harmonize the federal tax with the sales tax of these three provinces, why would it not pay Quebec the amount it is asking for?

This takes nothing away from our statement as representatives of the Bloc Quebecois or the speech I made to the effect that this bill was hastily thrown together, is bad and unfair, and is one we will vote against.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I have a brief question for the hon. member of the Bloc. If the Government of Canada were to offer Quebec a billion dollars would it then agree to drop its plans to secede from the union and stay in Confederation?

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, the question is totally irrelevant. In any case, I can tell you that the sovereignty project in Quebec cannot be bought. We would not drop it, even if the government gave us $2 billion. I must add that we send $30 billion every year to Ottawa.

The sovereignist project is a political project, a social project that arises from the hearts of Quebecers in response to the deep aspirations of the people of Quebec. It will go on until Quebec becomes a sovereign country.

[Barry Campbell, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am very pleased that the hon. member for Calgary Centre actually asked a question about this bill because prior to that it was very confusing. The member for the Block appeared to be talking about the Quebec provincial election. I have to remind him that this is the Parliament of Canada and we are debating federal legislation here not the situation in his riding for the provincial election.

The hon. member talks a lot about tax rates. Does he think it is at all important to have in mind how personal and corporate tax rates in this country compare to other jurisdictions? Does that have any impact on the prosperity of this country and is that a legitimate thing? Does he know what our position is and our tax rate is versus

our major trading partner or anyone else for that matter? I would like to hear a comment from him about comparative tax rates and the importance of that.

I also wonder whether he might comment on some of his colleagues in Quebec City who said, during the last referendum, that if Quebec were to separate it would become a tax haven with extremely low tax rates to attract investment, both corporate and individual.

While the member rails against the government, I suspect he may not know much about comparative tax rates and certainly not much about what is in store from some of his colleagues in his own home province of Quebec City who talk about Quebec becoming a tax haven.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, everyone knows that it is very difficult to compare tax systems internationally. On the whole in Canada and Quebec, the tax system favours business. Corporate taxes are much higher in some countries than they are in Canada, and in Quebec naturally.

In a sovereign Quebec, I think it will be much easier to set up a much fairer tax system, one that is much fairer for individuals and corporations, one that stimulates job creation.

For example, as I mentioned earlier, the labour sponsored investment fund has contributed hugely to job creation in Canada and, particularly, in Quebec, and we will promote this fund in a sovereign Quebec. Right now, all the federal government is doing is cutting some of the credits to these funds, which runs counter to its job creation policy.

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

I congratulate the hon. member for doing such a good job of explaining the Bloc's analysis of Bill C-70 and answering our colleague's question on taxation in a sovereign Quebec.

Perhaps he should have added-it was an omission on his part, I am sure-that the federal government started by offering its own vision of taxation, of how to make it fairer and more equitable. I think the Liberal Party should take a good look at itself before talking about what the tax system should be like in a sovereign Quebec.

I have a question for the hon. member for Bourassa. How does he explain that, when Quebec harmonized its sales tax with the federal sales tax in 1991, no compensation was paid to Quebec, while it should have been entitled to $2 billion? In his opinion, what was the finance minister's motivation for giving the maritimes $1 billion just like that?

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, in a nutshell, there is no justification for paying huge amounts to three Atlantic provinces to harmonize their taxes. All taxpayers in Canada and Quebec will have to foot the bill, at a time when this government is telling us that the deficit must be tackled. It seems unreasonable to me to grant this $1 billion subsidy to the three Atlantic provinces.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I am surprised that the Liberal member for St. Boniface, who has proven to be very aware, intelligent and with it, was not on the issue that the government has already given $1 billion to three of the Atlantic provinces for harmonization. In fact, the payment was made out of last year's funds. The payment was criticized by no less than the auditor general because a final agreement had not been signed. It was only a letter of intent. The auditor general said it was a very dangerous precedent to be set by a finance minister for future years. It is on the borderline and is construed and believed by a lot of people to be against generally accepted accounting principles.

The member for St. Boniface just proved by his speech and lack of knowledge what the first speaker from our party, the member for Medicine Hat, pointed out earlier, that the Liberal members of Parliament are being duped by the government and by the finance minister on this issue.

Here we have the situation in Atlantic Canada. Canadian taxpayers have already spent $1 billion to get rid of this GST. To help the Liberals keep their promise we have now paid $1 billion to three Atlantic provinces. Retailers and businesses estimate they are going to spend upwards of $100 million. They presented these numbers to the Standing Committee on Finance. This is not a number I am making up, nor am I exaggerating, it is their number.

Third, starting April 1, 1997 the consumers of Atlantic Canada are going to see how this affects their pocketbook. I do hope the Prime Minister does call an election for June because after three months of paying at the tills and seeing how this whole fiasco affects them, there will be a groundswell against the Liberal Party. It will have overestimated its popularity in the polls. There will be a new groundswell for a party that does offer a true alternative, a true choice and a fresh start for Canadians.

With that introduction let me get into some of the main elements of Bill C-70 at third reading. In direct contradiction of Liberal Party members who have their speeches written by spin doctors that we support this harmonized sales tax, let me point out that the minority report of the Reform Party on replacing the GST clearly stated otherwise in its executive summary.

On page 113, for the record, accurately, in context it states:

The majority finance committee report on the replacement of the GST cannot be fully endorsed by the Reform Party. While the replacement goes part of the way in

responding to concerns presented to the committee, many of the concerns will only be addressed by future negotiations with the provinces.

I did not realize at the time that meant bribing them.

The majority report recommendation merely tinkers with the current GST and does not live up to the Liberal promise to "Scrap the GST".

After all, this is what it is all about.

We are of the view that value added taxes are incapable of responding to a significant portion of the concerns raised during our hearings.

The Reform Party recommends that spending cuts be the government's first priority. As well the entire current system personal, corporate and value added taxes should be replaced by a simple, visible and proportional system of taxation that incorporates the principles of fairness and the lowest rate possible. In the interim, the party will support reforms to the current regime that move in this direction.

After all, we do want what is in the best interests of all Canadians.

While harmonization does simplify the tax system it makes no sense to do it in a piecemeal, ad hoc fashion because it simply increases the confusion, the cost and the resentment across the country.

Liberal members yesterday and today said they do not understand why the costs are going to go up. The costs are going to go down because the provincial sales tax will be treated like the GST. There will be input cost recoveries by the businesses lowering the costs. Let me tell these members why the cost goes up.

It goes up because the base on which this new combined tax will be applied has become broader. It will be applied to more goods and services. Previous speakers have pointed out, from clothes to housing, where this tax will apply. Because of that broader base the new harmonized sales tax or blended sales tax, HST or BST, will cost consumers more money.

In the ninth report of the Standing Committee on Finance the government wrote:

The GST is collected at each stage of the production and distribution process. However, since each business collecting the tax also receives input tax credits for the GST it has paid out, it is the final consumer who ultimately pays the tax.

It is the final consumer who ultimately pays the tax. As Liberal members try to defend this HST in terms of cost savings, they must not forget that yes, it is a savings for businesses after they pay the initial outlay of $100 million to conform their point of sale material, but it is the consumer who will ultimately pay a higher tax.

This is why other provinces like Ontario, Saskatchewan and British Columbia which have provincial sales tax are against it. It will shift the tax burden from businesses to consumers and that is what is bad about this particular bill. In effect it is an 8 per cent increase on those particular goods and services that were strictly on the PST and not on the GST. The GST has a broader base than the PST. That is a simple fact and simple arithmetic and should be enough proof for the Liberal members as to why this will be an increase in costs to consumers.

The purpose should be to eliminate dual tax regimes, but this version retains it for national firms. Somebody operating outside those three Atlantic provinces will have to have tax included pricing there, not tax included pricing elsewhere.

Therefore when they report their taxable income, they will need two different forms. This is an increased cost for businesses which then, in turn, looking at the bottom line, eventually will pass along this cost to the consumer. Once again it hits the consumer where it hurts the most, right in the pocketbook.

This billion dollar bribe or transitional payment to the three provinces, the cost of reducing the sales taxes in the harmonized provinces, is being paid for by all the taxpayers.

The deal will increase the complexity of the tax system for all businesses in Canada with operations in the Atlantic provinces. It does not just affect those three provinces. It is not just a deal for those three provinces.

National retailers have said that tax inclusive pricing in a partially harmonized system will lead to increased cost. If done nationally it would be a much simpler solution due to separate packaging requirements for harmonized provinces.

In response to these concerns, the federal government and the participating governments announced changes on January 17, 1997-

[Barry Campbell, Liberal, St. Paul's, ON]

Mr. Speaker, I rise on a point of order. I am sorry to interrupt my friend, the hon. member for Calgary Centre, but I am sure he would want me to point out that he used a word in his speech that you have asked in this House just yesterday not be used in this debate, the word bribe. I would ask that he withdraw that word.

[The Deputy Speaker]

I do not know that the hon. member for Calgary Centre was here yesterday when that word came up. There was some discussion about it. The hon. member's colleague did agree to replace that word with a more palatable word in the House.

The Chair suggested that the word bribe in the dictionary probably has something about a payment or an inducement for an illegal purpose. If the hon. member has a dictionary that suggests otherwise or if he wishes to look at a dictionary and finds that the Chair is mistaken on that, fine. Otherwise I wonder if he would be kind enough to rephrase that term.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, in the rest of my speech there is no reference to any form of inducement. I will not be using that word any more.

[An hon. member]

No withdrawal?

[Jim Silye, Reform, Calgary Centre, AB]

People can ask for what they want. The Canadian taxpayer knows what is going on here. We know what is happening. Everybody knows what is happening. Whether or not we withdraw a word is not the issue.

The issue is we have now made a large payment prior to the enactment of the bill itself to three provinces. The government calls it a transition cost. There has been nothing in transition yet, but that money has been paid. I call that an inducement. I call that an encouragement. I call that a lot of things. It may come close to the word that I am not supposed to use, and so I will not use that word if they find it offensive. But the Canadian public knows if it smells like a-, it is a-.

[Barry Campbell, Liberal, St. Paul's, ON]

Mr. Speaker, on a point of order, the hon. member for Calgary Centre, whom I have great respect for, would notice that when he stood up and said initially that he did not intend to use that word any more, I sat down and did not rise to my feet.

He has now gone on for another two minutes suggesting that is precisely what he intended to say, ending in his last comments a moment ago. I would renew, through you Mr. Speaker, my request that he withdraw the initial use of that word. I was prepared to leave it be, but not in light of his later comments. I renew that request through you, Mr. Speaker.

[The Deputy Speaker]

The hon. member, to the Chair, did not use the word in the last two minutes, but I would ask the hon. member if he would be kind enough to withdraw the word of two minutes ago and to please avoid using that word again.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I will not withdraw that word and I will tell you why. You gave me an opening and said if I find a dictionary where the definition of my use of the word bribe is acceptable then I can use it.

I will give a definition of the word bribe: "Money offered to procure action in favour of the giver". This is money given to three provinces, that favours the federal government, for them to comply with the harmonized sales tax.

I would like to proceed. There have been already three or four minutes taken out of my speech. May I continue?