Debates of Feb. 11th, 1997

[The Speaker]

Before we get into the daily routine of business, I will hear a point of order from the hon. member for Kindersley-Lloydminister.

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

Mr. Speaker, it is not a point of order. It is a request for an emergency debate. Is it appropriate at this time in routine business?

[The Speaker]

I will hear him at the end of the daily routine of business.

Government Response To Petitions

[Paul Zed, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 15 petitions.

Petitions

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, I rise pursuant to Standing Order 36 to present two petitions.

The first petition is signed by 84 people from my riding. The petitioners call on Parliament to urge the federal government to join with the provincial governments to make a national highway system upgrading possible beginning in 1997.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, the second petition is signed by 332 people from the province of New Brunswick.

The petitioners feel that education and literacy are critical to the development of our country and call on the House to urge all levels of government to eliminate the sales tax, including the GST, on all reading materials.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, I have a petition to present signed by 233 people from my area and from British Columbia generally.

The petitioners are concerned about the GST, particularly on reading materials. They ask that this regressive tax on newspapers, reading materials and magazines be removed when any harmonization takes place. They request that the GST be removed from any reading material.

Questions On The Order Paper

[Paul Zed, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I ask that all questions be allowed to stand.

[The Speaker]

Is it agreed?

[Some hon. members]

Agreed.

Request For Emergency Debate

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

Mr. Speaker, in accordance with Standing Order 52, I wish to ask for the adjournment of the House for the purpose of discussing a specific and important matter requiring urgent consideration. It is imperative that the House debate the important matter of delays in grain shipments to Canada's west coast ports.

Current estimates are that it is costing the Canadian economy at least $65 million. The matter requires immediate attention. Perhaps, more important, the minister of agriculture is scheduled to meet with the parties involved. Therefore, it is incumbent on Parliament to meet to debate the issue before he meets with the parties involved with regard to the delay in shipments to the west coast.

It is on that basis and according to the standing orders that I move:

That this House now adjourn to give urgent consideration to the important matter of delays in grain shipments from Canada's west coast ports.

[The Speaker]

The hon. member for Kindersley-Lloydminster was good enough to send me notice of his application for an emergency debate earlier today.

I have had an opportunity to look over the reasons for an emergency debate and the adjournment of the House and, in my view, this does not meet the exigencies of what we have set up as criteria for an emergency debate at this time. However, I thank the hon. member for raising the matter in the House.

Excise Tax Act

[Lawrence MacAulay, Liberal, for the Minister of Finance]

moved that Bill C-70, an act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related acts, be read the third time and passed.

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

Mr. Speaker, I am pleased to open third reading debate on Bill C-70. This is landmark legislation. It will implement the harmonized sales tax in the provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador.

As of April 1, 1997 the harmonized tax will replace the GST and provincial retail sales taxes in those provinces. This legislation also proposes over 100 technical amendments to the Excise Tax Act. These technical improvements will serve the dual purpose of paving the way for harmonization while making the GST run more smoothly in those provinces that have not yet agreed to harmonization.

Why do I say that Bill C-70 is landmark legislation? That is because harmonization marks a bold and creative development in the field of federal-provincial relations. The bill is a tangible sign of the progress that can be made when different jurisdictions work together and resolve to end overlap and duplication. The significance of four governments agreeing to move forward on harmonization of retail sales taxes cannot be overstated.

Once this bill is in place, businesses in the participating provinces will no longer have to follow two sets of sales tax rules and regulations. They will no longer have to deal with two different bureaucracies nor file two sales tax returns for every appropriate and different period under both regimes, the federal and provincial. Under the harmonized system there will only be one set of rules and one tax administration, and registrants will only have to file one sales tax return.

Harmonization will make life simpler for companies of all sizes. They will spend less time doing the books and filling out forms and more time doing business.

As my hon. friends will recall, the structure of the harmonized sales tax will parallel that of the goods and services tax. The tax will apply at the harmonized rate of 15 per cent to the same goods and services that are already taxed under the federal GST. The new combined tax rate will be almost five percentage points less than is currently the case of the combined rates in Newfoundland and Labrador and 4 per cent less than it currently is in New Brunswick and Nova Scotia. This will be a major cost saving for consumers in those provinces.

The rules for registering, filing returns and claiming input tax credits will be the same as those to which registrants across Canada have already grown accustomed.

As we moved to this system we were very conscious of the need not to saddle businesses with a whole new system, a whole new set of forms, a whole new set of rules to deal with a new tax administration, but rather, to the extent possible in moving to harmonization, to use forms and procedures, rules and regulations that businesses are already accustomed to and comfortable with.

One thing was clear as we travelled the country with the finance committee. When people in the country, consumers and retailers, said end this ridiculous anomaly of duplication, of double sales taxes, of ten sales taxes across this country and harmonize, they said "please, when you do that do not saddle us with an entirely new system. We have adjusted to the ways of dealing with the existing GST. When you harmonize, to the extent possible, let us use the same forms, the same rules and regulations", and we have responded.

In the participating provinces businesses will finally be able to recover all sales taxes they pay on inventory and other expenses. By contrast, in non-harmonized systems businesses have no way of recovering provincial retail sales taxes they pay. Any of us with experience in the complicated area of retail sales tax know that it is indeed costly to pay tax on those inputs and it is indeed complex to know whether or not particular inputs are subject to exemption certificates or whether tax is payable.

In the harmonized system this added cost will not be there. In the non-harmonized provinces, tax on those business inputs will continue to be passed on to consumers, both domestic and foreign.

Unrecoverable provincial sales taxes are buried at all stages as products move through the chain from manufacturer to wholesaler

to retailer. Those hidden taxes on inputs undermine the competitive vitality of Canadian firms. Clearly this works at cross purposes with our efforts to promote trade in this country, reduce deficit and foster a more competitive environment.

The integration of overlapping sales taxes with a single, value added tax structure will bring our tax system into line with other policies that promote competitiveness.

A key element of the harmonization agreement is tax included pricing. The pricing requirements will allow a shopper to be certain of the full cost of what he or she is buying before the cashier rings up the sale. To keep the tax visible to consumers, the amount or rate of sales tax payable will be disclosed on receipts. The suggestion that tax in pricing is just a convenient way for government to sneak in tax increases is simply and absolutely untrue. The tax will be clearly displayed on sales receipts and invoices for everyone to see.

Indeed, while members of the House have spoken about this issue and their concerns about hidden taxes, not one of them has complained about the current situation which prevails at the gas pump, where the tax is indicated on the receipt. As I have pointed out to the House on earlier occasions, in much of the rest of the world we do not see legislators or individuals standing up and railing against governments for hiding a tax which is clearly visible on receipts. We could choose any country in Europe and we will see taxes clearly indicated on sales receipts. Whether it is the VAT at a certain rate or the VAT at a certain amount, it is there for the world to see.

The fact that the taxes will be indicated on receipts in the harmonizing provinces clearly puts the lie to the suggestion that taxes are being buried or hidden.

Tax inclusive pricing will address a longstanding consumer irritant. It is something which the finance committee heard a great deal about as it travelled the country studying this matter. Consumers are always on the hook for a sum of money that is different from and greater than the price that is posted or marked. It does not matter if the person is buying a restaurant meal or a refrigerator. The point is that almost every time a cash register rings in this country we can be sure that a consumer is caught short, surprised, inconvenienced or embarrassed.

I stress that Canadians overwhelmingly related stories to us, as did retailers, of awkward moments at the cash register when they were confused as to the price of items because tax had to be added. In testimony before the finance committee of this House, a retailer said this to us when commenting on the prices of goods in his shop: "I cannot sell shoes in my store for $11.49, but I can sell them for $9.99". But the reality is that a consumer cannot buy those shoes for $9.99; they really cost $11.49.

While we may have some sympathy for the marketing needs of retailers and, as I will explain later we have gone a great distance in responding to their concerns about tax inclusive pricing with flexible guidelines, we have had very much in mind the need for consumers to know what things really cost, what they will really have to pay. The marketplace place will function better because consumers have that information.

Public opinion research has shown conclusively that tax inclusive pricing is favoured by the overwhelming majority of consumers. An Ekos Research Associates survey conducted this past month found that consumers in Nova Scotia, New Brunswick, Newfoundland and Labrador strongly support tax in pricing. When respondents were given a choice between tax included and tax excluded pricing, 80 per cent of consumers preferred tax included pricing, a finding that is consistent across all three provinces.

When asked about their intensity of support or opposition to tax in pricing, 42 per cent of consumers said they supported it and 37 per cent said they strongly supported it. Over 65 per cent of respondents said that it is extremely important to know the full price before reaching the cash.

The reasons stated by consumers for preferring tax inclusive pricing are compelling. Eighty per cent agreed that taxes should be included in the price so that the total price of a good is known before getting to the cash. Seventy-six per cent of respondents said that including sales taxes in the price displayed on the product is a more honest way of showing prices to consumers. Sixty per cent of respondents did not think that adding sales taxes to the display price would make things more complicated for consumers, an assertion we have heard from certain people.

While 69 per cent of respondents said that they pretty much know the total price of an item before reaching the cash, 64 per cent of respondents said that they are often unpleasantly surprised at differences between sticker price and total price at the cash. Remember my example of the $9.99 item that the retailer says he can move at that price but also the $11.49 actual price under the new system.

Participating governments in consultation with affected businesses have developed guidelines for tax included pricing. We have made and participate along with the other participating governments a concerted effort to ensure that the pricing requirements that accommodate the wishes and needs of consumers do not do so in a way that imposes an undue compliance burden on vendors. In this spirit of a fair and practical approach, the participating governments are continuing to refine the pricing guidelines which were released some weeks ago with a particular emphasis on the issue of price advertising in the harmonizing provinces.

The guidelines issued a number of weeks ago go a long way toward addressing retailer concerns about cost and inconvenience in moving to the new tax inclusive system. I note just two options that exist for retailers pursuant to the guidelines, namely shelf pricing or bin pricing. There will not be a need to go through and reticket every individual item. There are options to shelf price, to bin price items, to dual price so that price points can be advertised as long as the full tax inclusive pricing is also available. So there is a great deal of flexibility in accommodating vendor concerns.

The government has listened and has responded but it has never forsaken the desire of consumers in this country to know once and for all the real cost of items they wish to purchase.

During the finance committee's recent study of this legislation one of the main criticisms was that it might criminalize offences under the pricing requirements. The participating governments are certainly eager to encourage compliance with the new system. Consumers would expect no less of us, but I can assure the hon. members that failure to comply with tax inclusive pricing is not a criminal offence but a regulatory one. In addition to clarifying this point I would like to make the more general comment that the government intends to take a flexible approach to monitoring compliance with the pricing requirements.

While it is true that the new system will come into place in April of this year, monitoring, education and assistance will be available and compliance will only be effectively looked at six months later. In August, as the pricing guidelines indicate, is the time by which it is expected that vendors will have made the transition, with all the help that the guidelines provide and other help which relevant departments in the participating provinces will provide; a full six months to adjust to the new scheme once it is implement. That is in addition to the time which retailers have had and have spent consulting with government which has resulted in the very effective response to the pricing guidelines.

The goal is to make sure that businesses have plenty of time to become more informed of their obligations and fully apprised to the various options available to them in fulfilling their obligations.

Tax included pricing is not the only benefit that will accrue to consumers under harmonization. They will pay lower prices on many items. For the sake of argument, let us forget for a moment about the layers of provincial retail sales taxes that are absorbed in business costs, the tax on tax, the tax cascading that consumers pay the price for, and consider only the nominal rate of tax that consumers pay directly. Even with this assumption Nova Scotia and New Brunswick consumers now pay a combined rate of 18.77 per cent on most goods that they buy. In Newfoundland and Labrador the combined rate is almost 20 per cent.

Under the harmonized sales tax consumers will pay only 15 per cent. This may mean a higher rate of tax on some services, as we move to the GST base, but in the rate debate the bottom line is what really matters. When all is said and done, I want to reiterate what we have said in this House before, the overall tax burden on consumers in the harmonizing provinces will decrease under the harmonized system. How could it be otherwise as the rate moves from 20 per cent in Newfoundland and Labrador to 15 per cent and from almost 19 per cent in Nova Scotia and New Brunswick to 15 per cent?

The bottom line is overall tax will go down and consumers will see that as they reflect back on their overall purchases over the course of any year in the new system. This is a benefit that will be felt across all sectors of the economy.

I would now like to move away from the consumer related aspects of Bill C-70 and mention that several technical motions were adopted by the finance committee earlier. These were motions that have addressed witnesses' specific concerns.

I want to pause for a moment on behalf of the government to thank the finance committee for the very fine work it did in the hearings that were held here in Ottawa where it heard from dozens and dozens of individuals, interest groups, interested parties who came to speak to Bill C-70. In addition to that I would like to thank the individual members of Parliament on all sides of this House who held consultations in their ridings, town hall meetings, and reflected comments back to the government with respect to Bill C-70.

As the chairman of the finance committee said during the hearings here in Ottawa, there is not one witness who came forward to the clerk of the committee asking to be heard who was not heard, who could not be provided for if they wished to be heard here in Ottawa. In addition, members held individual hearings and town hall meetings in their ridings and there was a tremendous amount of input. In addition to the witnesses who appeared here in Ottawa, dozens of other witnesses provided written briefs to the committee and to individual members.

As a result of that consultation held by the committee, a number of motions were brought forward by the government to bring amendments to Bill C-70 at that stage which reflected concerns that had come to the government's attention. By pausing to speak about that process, it is to say that the system works. The committee deliberations resulted in very specific responses to precise problems that certain groups brought to our attention.

For instance, one group brought to our attention certain cash flow problems that they would have as a result of the new system. We responded to that. Individuals asked for clarification with

respect to the suggestion that failure to comply might amount to a criminal breach. That is not the case. Clarifications came forward. There were other examples as well.

I spoke about the cash flow issue to give an example. Under the proposed simplification measures originally reviewed by the committee, auctioneers would have been responsible at all times for remitting the tax collected on auction sales to the government rather than passing the tax back to a registered principal.

In response to concerns raised at the committee stage, these rules are being amended further to alleviate the cash flow burden that this measure would otherwise create for wholesalers selling large lots of goods through auctioneers. This will be accomplished by giving auctioneers and certain principals the option of making an election that would allow the auctioneer to pass the tax back to the principal.

I have been speaking about the process in responding to witnesses to debunk those who stand in this House and say that to propose amendments at the committee stage, or indeed at this stage in the House, is to suggest that the government has not done its homework or that there is something wrong with the legislation. This is how the system works in this House and in this country. If a government fails to listen to witnesses who come forward with compelling reasons why legislation should be amended to respond to particular inequities or to clear up certain anomalies or confusions, then it is a sad day indeed.

I find it somewhat remarkable to have people stand in this House and criticize that process when, if we presented a bill and entertained no amendments whatsoever at committee stage or here in the House, we would be accused of some sort of dictatorship. The system works. It works effectively and it works well.

The arguments in favour of sales tax harmonization are too compelling to refute. All stakeholders stand to gain from it. The participating governments have developed a framework for harmonization that is balanced and reasonable. Bill C-70 will reduce the tax burden on individuals in the harmonizing provinces. What could be wrong with that?

We have responded favourably to Canadians' desire to know the full cost of something before paying for it at the cash register. What could be wrong with that? We have responded to consumers who were afraid of not being able to know the tax if they need to know it. It will be there on the receipt for all to see. What could be wrong with that?

Harmonization represents a fundamental restructuring of the way in which sales taxes are levied and administered. It eliminates overlap and duplication. It is simplified in administration, it is simplified for retailers in compliance. What could be wrong with that?

There will be minimal potential for disruption and confusion during the transition period because of the pricing guidelines and the delays allowed to retailers to get on side. What could be wrong with that?

The legislation shows innovation and foresight for it leaves the door open to any province that may wish to harmonize in the future. What could be wrong with that?

In this country we cannot wait to move forward with important changes, for every province to sign on. Indeed it is the structure of this federation that often opportunities are presented for provinces to go their own way for a time. But the wisdom of this harmonization now being embraced by three provinces will be understood soon by other provinces because their consumers will demand it, their retailers understand it.

With the exception of one witness, every witness who appeared before the finance committee supported harmonization across this country and urged the government not to give up on trying to effect harmonization with the rest of the provinces. I might point out at this time that the province of Quebec is currently harmonized with the federal GST. The province of Quebec understands the benefits of harmonization. What could be wrong with harmonization? If it is good enough for Quebec, why is it not good enough for the Atlantic provinces?

Before closing, I would like to focus on an aspect of harmonization which has been much discussed and some might say yelled about in this House as it was a moment ago. It is the decision by the government to provide a formula for short term adjustment assistance to qualifying participating provinces when they face significant structural costs to enter the new integrated sales tax regime.

Under this legislation, this move to a harmonized sales tax, adjustment assistance becomes available to provinces that experience a revenue shortfall in excess of 5 per cent of their current retail sales tax because of moving to the single harmonized sales tax system. I repeat the formula is that adjustment assistance becomes available to provinces that experience a revenue shortfall in excess of 5 per cent of their current retail sales tax revenue because of moving to a single harmonized system.

This is the case for Newfoundland and Labrador. This is the case for Nova Scotia. This is the case for New Brunswick. Under this formula, Quebec would not have qualified for adjustment assistance when it harmonized, nor would British Columbia or Ontario if they harmonized right now.

In fact, while my friends opposite rail against this adjustment assistance, Quebec did not experience a loss of revenue when it

harmonized because of the way in which it harmonized over a period of time, not all at once as the participating provinces are. Quebec ran two parallel systems and experienced an increase in revenue, not a decrease.

There is another aspect of this adjustment assistance debate which needs to be repeated in this House. Our history is rife with examples where such assistance has been offered to provinces or regions. I hear little from members opposite about those other examples when they benefited their provinces. However they rail against this adjustment assistance to Atlantic Canada which some of them would not qualify for.

When the Crow rate which helped the farmers of the west respond to the challenge of distant markets was abolished, over $1 billion in adjustment assistance was provided to grain farmers. I did not hear any complaints from the members of the third party such as we are hearing with respect to adjustment assistance for Atlantic Canada in moving to the harmonized system.

In 1972 when the federal government instituted income tax reform, every single province received adjustment assistance, a total of $2.7 billion over a seven-year period. I did not hear anyone say: "No, do not give our province any of that".

When subsidies were scaled back for the agricultural sector, compensation was also provided. I did not hear members of the official opposition or the third party stand up and say: "No, we are not entitled to that. Do not do that".

It is curious. Those examples, the Crow rate and agricultural subsidies benefited particular regions and provinces and not Atlantic Canada. This adjustment assistance which is justifiable, which is justified, which is appropriate because of revenue losses in those provinces, is being criticized by people who stood silent in this House when adjustment assistance went their way. I think that says it all.

What I find disappointing is that there are Canadians who have attacked the entire concept of this adjustment assistance, but that is a mindset which ignores history, misreads the present, misunderstands the past and lacks vision for the future.

The assistance we have developed applies equally to all. There is no discrimination, no favouritism and no bribery. The participating provinces are joining in the harmonized system because it will make their economies more efficient, more effective, more competitive and consumers will benefit.

Some critics may view this bill as an easy target if their ambition in life is to grab headlines and score cheap political points in the short term. However, the legacy of this government is sound management, not sound bites.

As I just said in English, Bloc members are against harmonization, which is very surprising, because Quebec already has harmonization. Is it because they want to keep the benefits of harmonization for themselves, their companies and their consumers?

Could that be the reason? Do they want to keep a comparative advantage for themselves? Atlantic Canada wants that same comparative advantage. Its governments have decided that they shall have it and indeed they will.

As an economic policy and as a model of federal-provincial co-operation, the merit of this legislation is unassailable. Therefore in closing, I urge hon. members of the House to support Bill C-70.

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

Mr. Speaker, it is a pleasure to speak on third reading of Bill C-70. This is a very important bill. It is certainly not routine. This bill will have crucial consequences for the maritimes but also for all citizens in Quebec and Canada. In my view, this bill is highly controversial, concerning as it does a measure that the members of this government fiercely opposed when they were in opposition.

Hon. members will recall, and especially my colleague from Sorel, the battle of epic proportions which the Liberal Party of Canada waged against the GST. Later on I will share with you some quotes from the Liberal opposition's report when the GST was introduced and from the debates that preceded its introduction. The position taken in this report was the exact opposite of the position taken today by the Liberal government, the opposition at the time.

Bill C-70 provides that in three Atlantic provinces, provincial sales tax will be merged with the GST, so there will be only one tax, referred to as it the "HST", the harmonized sales tax, which will be 15 per cent. Basically, this agreement compensates three maritime provinces for harmonizing their sales tax with the GST. In fact, this compensation will be paid for by the people of Quebec and other Canadian provinces outside the maritimes and is expected to amount to nearly one billion dollars.

The government has not provided any solutions. If the government wanted to achieve anything at all with respect to the GST, it certainly did not do so with this bill. We will comment on the government's commitments later on. The harmonization that was much vaunted by the other side for many months has not come through. It is only being done in a specific geographic area, in three maritime provinces. Harmonization should mean harmony, but that is certainly not the case.

During the three days of public hearings held by the Standing Committee on Finance, even representatives from the maritimes disagreed with the government's proposal and, meanwhile, the government did not have a clue how to get out of this mess.

Before getting to the crux of the matter, I would like to make two comments regarding the procedures followed for this bill and the conduct of the government's representatives. First of all, the government's representatives behaved in a manner I would call undemocratic, ever since we started examining this bill.

At the second reading stage, we received the bill 24 hours before hand. Twenty-four hours to examine a bill that is more than 300 pages long, plus explanatory notes. We were told to do our job. We must explain to the public that certain parts of the bill could cause problems and should be debated in the House.

It is unheard of to receive a bill as important as this one, with so many clauses and having so many potential consequences, only 24 hours ahead of time. It is hard to explain why, unless we realize that the Liberals want to talk about GST as little as possible. They want to give us as little ammunition as possible with which to attack the GST because their own arguments are so weak. From the very beginning, their approach has been very much ad hoc.

Quite simply, I wish to point out two things in connection with the attendance of the witnesses over three days in early January and the way the Liberals presented things.

First of all, right from the word go, right from the start of these hearings, the Liberals arrived at the finance committee with 16 amendments to their own bill. Imagine how unsure of themselves they must have been to have seen problems in the bill they had tabled themselves, to start off by giving the committee 16 amendments.

We saw those amendments at the same time everyone else did, even though our role as official opposition would require us to have access to them in advance so we could assess their scope. And that is not all.

On the third day of the hearings, because hearings on such an important matter were restricted to three days, the Liberals tabled 113 amendments on the very evening that the bill was being analyzed clause by clause. Yes, 113 amendments to a government bill introduced by representatives of the government-there is some incongruity to that.

[Ghislain Lebel, Bloc, Chambly, QC]

They were bewitched by a magic potion.

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

Exactly. So, for a bill of approximately 272 pages, there were 113 amendments. You can see that both the process and the bill itself can be described as an improvisation right from the start. Proposing 113 amendments to 272 clauses is a neat trick.

Not only did they table these amendments, which is ridiculous enough in itself coming from a government that claims to be serious, but at the same time, those amendments to the bill were provided to us two hours in advance, and involved modifications and outright deletions.

I get the feeling the government is so anxious to conceal things about the GST that it wants to prevent us from doing our job as the official opposition. And despite our asking continually during the three days of hearings in January that they be extended, because people from the maritimes wanted to take part in the finance committee hearings in order to explain that the government was making a mistake, with its perpetual improvisation, with its game of pretending to do something about the GST, whereas it had promised to scrap the GST, to abolish the GST, our request was refused. As a result, the bill is riddled with inconsistencies, even practical barriers for businesses. We shall return to that point later.

As for the improvisation I referred to, even this week when we undertook examination of Bill C-70 at the report stage, we did not even have the bill as amended by the committee available to us when we started our examination. That takes the cake. This is a solemn institution, with a government that claims to be responsible, and, when Bill C-70 is studied at report stage, we do not even get the latest amended version of it. I think Liberal members are so stricken by pre-election fever that they forget to do their work properly. Lucky for them they have an official opposition that looks after the interests of Quebecers and Canadians while this fever rages.

Not only is the government continually improvising, it is diverting taxpayers' attention in this bill. Why? Because the bill talks about harmonizing in a small part of the country: three maritime provinces at a cost of $1 billion, we must not forget. It is too awful for us to keep silent on this political compensation.

They are hiding the truth. It is not the truth to say that harmonizing is necessary in the maritimes, and this will provide an example for the future. The truth is that the government made a commitment to abolish the GST. The commitment was not made by the rank and file of the Liberal Party. The Deputy Prime Minister, who made a big production of her resignation and re-election at the cost of half a million dollars, had promised her government would abolish the GST. So did the Prime Minister. We must not let this be forgotten, because we will soon be going to the polls, and the people will remember that, when the Prime Minister makes a promise, he will not necessarily keep it, because he can say whatever he likes and do the complete opposite once he is in power.

The people will remember. They will remember that, during the election campaign, the current Prime Minister said, and I quote: "We will scrap the GST". Scrapping does not mean harmonizing and it certainly does not mean paying $1 billion in payoff to the maritime provinces in order to come out smelling like a rose in the matter of the GST.

The people of Canada and Quebec will remember as well that the Prime Minister said on May 2, 1994: "We hate this tax and we are going to eliminate it". They will remember each time the Prime Minister opens his mouth to make a solemn commitment, as we have seen regularly since that famous evening in Verdun, the first referendum evening when he made a slew of commitments he did not keep either. People will know that the Prime Minister's commitments are not worth the microphones he utters them into.

The Liberals, the government, the Liberal Party of Canada have a very selective memory on the subject of Bill C-70, and the comments I heard earlier from my colleagues prove it. First, when they were in opposition, the Liberals got themselves in a great state. My colleague from Sorel remembers that, because he was a member of the Conservative Party, which was in government and which set up the GST.

In their minority report, a report dated November 1989, when they were in opposition, the Liberal members of the Standing Committee on Finance stated, and I quote: "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". This is a quote from page 262.

What have the Liberals done with Bill C-70? A patch-up job. In the three Atlantic provinces, the existing GST and provincial sales taxes are being replaced with a single tax called HST, or harmonized sales tax. But the fact of the matter is that it is the same tax. It is the GST with a different name, with approximately $1 billion in bonus for the maritimes. They have done a patch-up job to meet their election objectives. They have made a partisan patch-up job at public expense, at the taxpayers' expense, with the taxes paid to the federal government every year.

Here is another quote from the Liberal minority report, at page 277, regarding the fact that the new harmonized sales tax would be included in the sales price. I may have failed to mention this detail. The maritimes tax harmonization scheme provides for the new 15 per cent tax to be included in sales prices.

Coming back to the minority report tabled by the Liberals in 1989, at the time when the goods and services tax was established and the Liberals were in opposition, let me quote from page 277 of the minority report, which stated: "The great danger of making the GST a hidden tax is that it would be much easier for the government to raise the rate in the future". In those days, the Liberals opposed tax inclusive pricing, arguing that the Conservatives would do everything they could to raise the tax without anyone noticing. The Liberals are doing that very thing. That is incredible.

I would like to bring to the attention of the public another quote from the report of the Liberal minority, which was in opposition at the time. They were sitting then exactly where we are sitting today. Regarding tax reform, the Liberals said, and I quote from page 300 of their report to the finance committee: "Sales tax reform cannot be undertaken independent from income tax reform, corporate tax reform, social welfare reform or independently of the other levels of government. Canada is in need of an overall tax reform that encompasses all forms of taxation and all levels of government".

Not only did the Liberals not abolish the GST, but they have not undertaken any overall income and corporate tax review.

We had to nip at the heels of this government for three and years, and we had to submit ideas and analyses ourselves to reform individual and corporate taxation, as was done in November for businesses and just recently for individuals. The official opposition had to do the government's job as regards tax reform, because the government is not doing its job. It even goes against its own vision, doing exactly the opposite of what it claimed it would do when it sat in opposition. As for the participation of other levels of government, we know what to make of it.

Officials representing the governments of Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia were literally pushed aside. Why? Because this is a bill providing $1 billion in compensation, something which is unacceptable to officials representing Canadian provinces other than the maritimes, including those from Quebec. It is unacceptable because the government takes money paid by the taxpayers from all these provinces to compensate the maritimes through a local harmonization process. This is unprecedented. It is obviously a political and partisan measure that makes no sense at all. We have now reached the point where, in order to make local tax changes in the maritimes, the federal government takes the taxpayers' money to compensate the provinces concerned. It makes no sense.

The result is a bill that is in total contradiction with what the Liberals claimed to defend before they took office. It has nothing to do with the tax reform they claimed to support at the time, particularly as regards the GST, a tax which they then claimed to hate. The Liberals said they hated the GST. At the time, they pointed their fingers at the Conservative government and relentlessly attacked its members on the GST issue. All the Liberal members who were there at the time said the GST had to be abolished, that it had to be scrapped, because nobody wanted that tax in Canada. Once they took office, there was no problem any

more. Not only did they keep the GST, but they are also tinkering with it, something to which they had been opposed at the time.

In addition, with respect to the process surrounding the debate on Bill C-70, we added our voice to that of the Government of Quebec and the governments of certain Canadian provinces and urged the federal government to make public the details of the calculations that prompted it to hand over $1 billion, or close to $1 billion, in compensation to the maritime provinces.

Each time, we came up against a blank wall. The government is refusing to make public the criteria behind this compensation, how it was calculated and the figures available for the three maritime provinces. Their refusal to release this information means that there is something to hide. Could it be that the $1 billion in compensation is not justified? Could it be that a request from the governments of these three Atlantic provinces was thrown on the table and the Minister of Finance responded with this $960 million subsidy? Could it be that this is nothing more than a partisan agreement, something to show Quebecers and Canadians that the government is working to reform the GST, that it is doing something? Because, by doing something, they are giving the impression that the Liberals are gradually starting to deliver on their promise.

It is not right that $1 billion of our money has been spent and no details are available about how this amount was arrived at.

I again ask the Minister of Finance, on behalf of the Government of Quebec and the provincial governments who have been asking for this information since the early summer, to make it public. I remind him of this request that he make public the criteria and the method used to calculate this $1 billion in compensation to the maritimes.

This is not the only bill Quebecers and Canadians will be stuck with as a result of this agreement between the federal government and three maritime governments. Three, five, ten, fifteen, twenty or one hundred years down the road, taxpayers outside the maritimes will also be hit with the ongoing costs of equalization payments.

With your permission, I am going to give a little explanation of the equalization process for the benefit of the public. A province gets an equalization payment if it is determined that its tax base, in other words its ability to collect taxes from taxpayers, is not sufficient to enable it to provide public services equivalent to those available elsewhere in Canada. There is a very complex formula. I would urge you, Mr. Speaker, since you sometimes seem to enjoy the complexity of things, to read a lengthy but very interesting document put out by the Minister of Finance explaining all the calculations in detail; the technical wizardry is something else.

So when we analyse the tax base and are faced with the fact that in the maritimes the Liberal government purposely made the suggestion, which was accepted, to reduce the sales tax base, we see that equalization will play a greater role in the future than it already does in the three maritime provinces. Let me explain.

In the three maritime provinces, sales tax plus the federal tax on goods and services, the GST, added up to around 19 per cent: provincial sales tax plus GST equalled a tax of 19 per cent on goods purchased in those provinces. In the agreement with the maritimes, this tax is reduced from 19 per cent to 15 per cent. In other words, 4 per cent of potential tax revenue was eliminated.

Eliminating this 4 per cent of potential sales tax revenue of the three maritime provinces will necessarily mean that equalization will play a more important role.

To finish my exposé, in the future, after paying one billion dollars in compensation to the government's three maritime provinces, Quebecers and Canadians will continue to pay through equalization, Quebecers perhaps to a lesser extent because they will be asked to vote in a future referendum on the sovereignty of Quebec, but other Canadians will have to pay in perpetuity for the sales tax forgone by the maritime provinces as a result of reducing total consumer taxes from 19 per cent to 15 per cent.

The Minister of Finance is not advertising the fact. When we asked him about this in the House, he was vague to say the least. He was confident about the positive impact on economic growth and said that the tax revenues connected with his fantastic harmonization agreement with the maritimes would ensure that equalization would not be a major problem.

It is totally unrealistic to say that equalization would not be a major problem and that taxpayers will not pay in perpetuity for this very costly agreement with the maritimes.

According to Bill C-70, the agreement with the three Atlantic provinces could be used as a model for implementing the new harmonized sales tax system, which is nothing more than the GST in disguise. It is just as heinous as the previous tax. They say this could serve as a model for a new consumption tax system in other provinces in Canada. If this is the model, then, as we say, things must be pretty rough.

Even in the maritimes, they are rejecting this new system. This new tax system is going to be a fiasco. In the maritimes, they fear it

will bring total chaos. If this is the model they want to implement elsewhere, it is not worth much, and the government has problems.

Since the Liberals set aside only three days for finance committee hearings, witnesses from the maritimes willing to come to Ottawa to testify on this bad piece of legislation had to be turned away. As some of them told me, the Liberals thought that, during those three days, the representatives of the three maritime provinces would praise the government, tell them what a good job they had done, and say that they were happy to have the $1 billion in compensation paid by the people of the other provinces and proud of the agreement and of being used as a model for the implementation of a new tax system elsewhere in Canada.

The Liberals, however, got a great surprise-so did we for that matter. According to the Minister of Finance, this agreement appeared to be well received in the maritimes, and we believed him. We did not take his word, as usual, but we did think there was an element of truth. He believed what he said. He had met representatives of the maritimes, and everything was fine. Even the members from the maritimes said the agreement was a wonderful thing.

During the three days of finance committee hearings, the representatives of the maritimes told us that the bill had to be done over from scratch. The bill could not be used in the maritimes, because of the minister's endless changes. I myself would not do this bill over from scratch. I would pitch it in the garbage.

Why. The answer is simple. The aim of the bill was to improve opportunities for economic growth by promoting consumer spending, which would create thousands of jobs in the maritimes. According to some representatives from the maritimes, the new harmonized sales tax would create so many jobs the affected provinces would not have enough room for them all.

In fact, this tax may threaten rather than create jobs. There are very high costs associated with setting up and managing a new sales tax system. Representatives of large businesses operating in the three Atlantic provinces as well as in other Canadian provinces cautioned us not to proceed. Not only will setting up this new system cost approximately $100 million, but businesses operating in the maritimes will have to pay between $90 and $100 million per year in recurring management costs.

There are no savings. Harmonization may well prove to be a monumental fiasco. Representatives of major organizations like the Retail Council of Canada, whose members are responsible for 65 per cent of the retail trade, told us tax inclusive pricing was a bad idea. According to them, it will confuse consumers and result in additional management costs for retail operations, regardless of their size.

Sears Canada, Woolworth Canada and Canadian Tire-not exactly small businesses-also told us not to implement this system. They asked that the implementation of the system be deferred because of the incredible difficulties inherent to its setting up and management.

Businesses like Canadian Tire, Woolworth and so on are in the habit-and I think this is normal-of seeking the highest possible rate of return, so they centralize in huge warehouses the goods that will be sold through their many stores across Canada.

Goods are shipped from these large warehouses to the retail stores operated by Canadian Tire, Woolworth and other companies. But before they are shipped, the goods are tagged or labelled. At present, there is centralized tagging for all of Canada, which means that the procedure is the same throughout the country. The tags indicating the retail price are the same in Ontario, Quebec and the maritimes.

But the new system and the inclusion of the new harmonized sales tax in the sales price for the three maritime provinces will change all that. Large chains that warehouse and tag their goods themselves will be forced to put, on one side, goods for sale in the three maritime provinces and, on the other, the goods for sale in the other Canadian provinces and Quebec.

Why? Because the price will not be the same. The retail price of goods sold in these chain stores in Quebec, Ontario, Manitoba and so on, will not include the sales tax, while the price of goods sold in the maritimes will. So, these are two different systems.

They require different accounting processes and different inventory management systems. This means not only a different inventory management system, but also a different management system for the taxes to be paid by these businesses. The stock value is based on the costs of buying goods and on resale costs. Imagine the mess. All this to help but a fraction of the Canadian population. This will result in an increase in overall costs and in a terrible mess.

And the Minister boasts about having set up an extraordinary model. Extraordinary indeed. It is a model that is costing us $1 billion, that will cost us even more in equalization payments, that will trigger implementation costs of $100 million for businesses in the maritimes, that will result in yearly recurrent expenses of 90 to 100 million dollars in additional management costs, because managing stocks, prices and the movement of goods in the Canadian provinces will be a terrible nightmare for these businesses.

This is serious. It is no wonder that, on the third evening of January, when the snow was falling and it was really nice outside, the Liberals tabled 113 amendments to their own bill. They do not know what to do. They do not want the charming Minister of Finance, who is a very credible person, to lose face. He could indeed lose face with a bill such as this one. It makes no sense. If, even with a $1 billion gift to the maritime provinces, the federal

government is still not able to sell this unenforceable bill, then there is a problem.

I personally told the chairman of the Standing Committee on Finance that it made no sense to table such a bill. I did not get a clear answer from him. I have the feeling that he too is beginning to think the days are long when dealing with Bill C-70.

It came as no surprise when, yesterday, the government displayed an undemocratic attitude that has become something of a tradition in the past three and a half years by imposing closure on this bill. The more we talk about the GST, the more it hurts the government. There is a difference between harmonizing, particularly if it is done improperly as in the maritimes, and abolishing the GST, which is what the government pledged to do.

The more we talk about this bill, the more we analyze it. After all, the government only gave us 24 hours to review this legislation, including its explanatory notes, to make sure the interests of taxpayers are protected.

The closer we look at this bill and the more people we consult, even in the maritimes, the more we are left with the conclusion that you have to be a little strange, to have a brand of logic that perhaps only they understand, to bring in a system of taxation like this one. It makes no sense.

I ask the Minister of Finance, who is listening attentively, to delay implementation of this bill, to listen to the arguments put forward by the maritimes and by the official opposition and the other opposition. It makes no sense to implement a bill like this, that is costly for everyone, just so that he will look like he is doing something about the GST. It is unbelievable, but this is what often happens, more often than not. We therefore formally ask him to postpone this bill.

We agree that politics have changed. A politician can make mistakes. And a politician who makes a mistake and admits it can be forgiven. The Minister of Finance made a mistake; the Prime Minister also made a mistake. He made a mistake with this bill. He has made many since we have known him, but this bill takes the cake.

If the Minister of Finance admits that he made a mistake with this bill, that it is costly, that it is a fiasco, we will probably forgive him, because to err is human, but he must stop feeding us this nonsense. He must stop telling us how wonderful this bill is, when he cannot even convince the people in the maritimes that he is right.

Having given my views on Bill C-70, I would like to take a moment to look at taxes on books.

The government is proudly telling anyone who will listen, and I heard a Liberal colleague crowing about it just recently, that it has lifted the tax on books. It is true that it has lifted the tax on certain books, but not all. Furthermore, when the Finance Minister tabled his bill, I congratulated him on this aspect of it, but asked him to chuck the rest. I congratulated the Finance Minister on taking a first step by removing the GST on books. But he did not go far enough. He is exempting books bought by institutions of learning. This represents only a small percentage of the books bought in Quebec and in Canada.

We are asking, as we have for years, that the GST on books be eliminated. Even before the last election, my seven colleagues who founded the Bloc Quebecois-and I acknowledge the presence of the hon. member for Sorel-battled to get the GST taken off books. They joined forces with the entire literary community of Quebec and Canada to demand that culture not be taxed, that books not be taxed, and that steps be taken to make culture more accessible.

The first seven representatives of the Bloc Quebecois-Bloc Quebecois: the first generation, they might be called-were the first to rise up in defence of Quebec literary culture, and Canadian literary culture as well. This is somewhat incongruous, but there is something rather incongruous about the Bloc Quebecois too. It does, however, fit in well with history until Quebec decides to take charge of itself and declare its sovereignty.

Yet it is somewhat peculiar for sovereignists to be defending Canadian culture, by demanding that the GST be removed from all books and fighting a minister for international trade who is prepared to put it up for grabs by the Americans or anyone else in the world. And it is somewhat peculiar for sovereignists like my colleague for Richmond-Wolfe, the culture critic, to rise in the House and demand that the CBC and the major cultural institutions be given back all the money they have been robbed of in the past three years. All this devastation is caused by the same person: the finance minister, who looks good, winks nicely and just oozes charm, but he can sure wreak havoc.

What we are doing may be peculiar, but we are doing it nonetheless. We are standing up proudly in defence of culture, and we are asking the Minister of Finance-and this is the second time the official opposition is asking him this-to abolish the GST on books, thus giving a boost to the culture he claims to be defending.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I rise to speak to Bill C-70. The first thing we need to do when speaking to this legislation is to talk about it in context. To do that, we need to go back, believe it or not, about eight years to the time when the current finance minister was seeking the leadership of the Liberal Party.

At that time if I remember right-I have a newspaper clipping somewhere from the Calgary Herald -the finance minister came out four square against harmonization. The reason he was so opposed to harmonization at that point was that he foresaw, quite correctly, that harmonization would make it extremely difficult to ever lower taxes once it was in place.

That is what he said in 1989. I truly believe that what he said is true. What has happened since then demonstrates in a way that I cannot say with words, that the government cannot be trusted on these issues, that it will say one thing and do quite another. The Liberals are more interested in staying in power than in serving the people.

Between 1989 and the election of 1993, we heard over and over members of the opposition, people who currently hold positions of responsibility in the government, people like the defence minister, the Prime Minister, the finance minister and the Deputy Prime Minister, say in one form or another that they were going to axe the GST, they were going to scrap the GST, they were going to abolish the GST.

People who are currently prominent Liberal backbenchers-if that is not an oxymoron-said over and over again that they would get rid of the GST. Many of them had it in their campaign literature. We pointed out in the House who those people are. The member for Niagara had it in his campaign literature. The member for Vancouver South had it in his campaign literature. The hon. member across the way is challenging me on this. I have given him some names and I trust that he will check this out so that he knows how he is being duped by his own party.

We all recall a few days before the last election campaign-I do not think the member across the way will deny this-that the Deputy Prime Minister appeared on national television and said that if the GST was not scrapped, axed and abolished, she would resign. She said it on national television.

In the days following the election campaign, all of a sudden the government did a complete 180 degree turn on those types of promises. Members across the way will say that on page 22 of the red book it states that the Liberals were only going to replace the GST.

The Liberals said one thing in the red book, of which approximately 70,000 copies were distributed. They were saying something completely different when they got on national television where millions of people were watching. It was probably the only information most people got on the Liberal platform because that document had so little circulation for very good reasons. On the one hand the current government was saying one thing and on the other hand it was doing another thing.

Let us fast forward a little. It was well into the government's mandate when it started to finally feel the pressure of all the promises Liberals had made and had used to lever themselves into power. They had made a ton of promises about these things. I see my friend from Broadview-Greenwood is here. He remembers this very well. Those promises were catching up to them.

Finally, after an embarrassing situation here in the House where government members had to vote against scrapping the GST, even though that was the promise many of them had made on doorsteps across the country during the election campaign, the Deputy Prime Minister, after polling her riding, saw that it was safe for her to resign because she knew she could be re-elected again, and resigned. It cost the country half a million dollars or something like that, but finally she did resign. She was subsequently re-elected. We all know that. I think that was a disappointment to Canadians who felt that if she resigned she should not run again.

While all that was happening, the government was going through all kinds of machinations to make a deal with Atlantic Canadian premiers. It offered them a backroom deal of $1 billion if they would come on board to be part of a harmonization deal.

People will remember that the provinces were not exactly lining up to come on board and sign a harmonization deal. The government did talk about a harmonization deal but all of the provinces said that there was no way they wanted to be part of it. That was until the government put $1 billion on the table. Is it not funny how $1 billion will change attitudes, especially when that $1 billion is designed for Liberal premiers in Atlantic Canada?

That was the second time in this sorry saga that the people of Canada had been let down. They had been let down initially when they were told that the GST would be scrapped and it was not. The second time was when a backroom deal was cut with Atlantic Canada premiers and people were left out in the cold. Despite the fact that in Atlantic Canada this deal was going to fundamentally affect their lives they had no say. It was $1 billion, and the people of Atlantic Canada were left out.

That is not where this tale ends. We wish it did but it goes on. The government said it was going to introduce HST legislation or as it is euphemistically called in Atlantic Canada BS tax legislation. That was done on December 2, 1996. It was only days after that when the Prime Minister appeared at a town hall meeting and he was still in denial. I guess the Prime Minister is so cocooned, so distant, so disconnected from reality he still cannot get it through his head that what he said in the days leading up to the election campaign were words that people had actually counted on him fulfilling.

He appeared at the town hall meeting. He actually chided a young woman from Montreal, Johanne Savoie, for having the nerve to try to hold him accountable for his promise. He said to her: "Tell me when you heard me say that I would scrap the GST". Much to his chagrin she did exactly that. She told him that she had seen him on television. She told him that she had heard him on the

radio. He denied it but the CBC reported seconds later on a newscast that indeed he had said those things.

The Prime Minister was caught. He was hung on his own words. Again the Prime Minister was in denial. He was trying to tell people that he had not said those things when in fact he had. I wish I could say that the Prime Minister saw the error of his ways, apologized and said that he would not do that again and it was wrong for him to do that, but he did not. The whole thing continues on. The sorry mess continues.

After that the government in its wisdom decided that not only was it not going to allow people the chance to be involved in having a discussion about the $1 billion that went to Atlantic Canadian premiers, and people were not going to be allowed to hold the government accountable on breaking a promise to get rid of the GST, the government was not going to even allow people from Atlantic Canada to come to hearings on the GST.

During hearings in January, I moved a motion that hearings be extended and moved to Atlantic Canada so that the people there could have a say on this issue. I would say that unless people have that opportunity, we have at least taxation without consultation if not taxation without representation.

I know there were some hon. members opposite, and at least one from Atlantic Canada, who said "I am sensitive to the fact that people in my region should have a say in this. I am going to advertise and we will fly them from Atlantic Canada to Ottawa". In other words, in her situation, because I guess she felt that she could only push her luck so far with her colleagues, she was trying to do what she could.

Certainly that flies in the face of all logic. The finance committee should go to Atlantic Canada to talk to people about a taxation system which will affect their lives in a fundamental way.

We had all kinds of people come forward from business. Provincial politicians came forward. We had people come forward representing groups such as chambers of commerce who said that there were flaws in the legislation. There were things that were wrong with it. They had to come to Ottawa because Ottawa was simply too arrogant to go to them.

Ottawa could not be bothered to go to Atlantic Canada, despite the fact that this legislation is going to have a profound impact on the economic future of Atlantic Canada. That is wrong. It is fundamentally against everything which every member in the House believes in, even if some cannot bring themselves to say it. Just about every member of the House knows that if we are going into a region to say "we are going to change your tax system completely", then those people should have the right to have their say before a committee which has some influence on how the legislation will be implemented. It is common courtesy. It is common sense. It is something that should happen as a matter of course in a democracy.

Unfortunately Liberal members voted it down. It is shameful. It is ridiculous. I hope that when those members return to their ridings in Atlantic Canada they will come up with an explanation to justify how they could deny their constituents what should be a basic right.

I have talked about the lack of process in inviting input, but that does not mean there were not people who were raising their voices, speaking out against many aspects of the harmonization legislation.

One of the biggest problems people have with the HST legislation is the tax in pricing component. I talked to dozens and dozens of business organizations and people who had grave concerns about the impact it would have on their businesses in Atlantic Canada and, as a consequence of the impact on those businesses, on the people of Atlantic Canada.

People came forward from Carleton Cards who said they will close 19 stores in Atlantic Canada if this legislation goes through. There was no caveat on the comment. They said they will do this.

Woolworth's has 125 stores in Atlantic Canada. Those stores fall under a number of different names. It might close as many as 25 per cent of them. Over 30 stores in Atlantic Canada will be closed because of this legislation. It said that some of the things in the legislation and the tax in pricing component will mean extra costs to business. That will mean that all the stores which are marginal, which are barely making a profit, will all of a sudden become unprofitable. Many stores will be facing new leases in the near future and given the choice between signing a new lease or closing the store, knowing that the legislation will mean they are destined to be unprofitable, those businesses will be closed. Obviously the people working in those stores will lose their jobs.

In Atlantic Canada those jobs are precious. People need those jobs in Atlantic Canada. For crying out loud, the unemployment statistics which came out on Friday told us that unemployment in Newfoundland is at 20 per cent. That is a human tragedy of unbelievable scope. However, the government entertains to let businesses close because of its legislation and a part of it is not even necessary to carry forward the great bulk of the legislation to achieve any good that could come from the legislation, according to these businesses.

I have not even mentioned the other businesses that closed down. MMG Management closed a number of stores in New Brunswick, and I believe 72 or 75 jobs were lost as a result. This is not an abstract piece of legislation that has no effect in the real world. I

can guarantee that the effect is quite profound and I would say for those people who have lost their jobs it is a great tragedy.

That is one aspect of the legislation that people were speaking out against, but again they had no voice in Atlantic Canada, first because there were no hearings in Atlantic Canada and second, I would argue, because a bare few MPs from Atlantic Canada have even bothered to speak to the legislation. I have yet to see one of them stand in question period and go after their own minister, asking why they are not listening to the people of Atlantic Canada on concerns they have with this legislation.

However, it does not end there. There are other concerns that people have. One is that the legislation will mean that a disproportionate impact of the tax changes will fall on the poor in Atlantic Canada. For years the government and Liberals have talked about how they care more. They have tried to assume the superior air. They have tried to take the moral high ground on the issue of compassion and they have tried to tell Canadians they care more. But it is indisputable that this legislation will mean that the people of Atlantic Canada who can least afford it will bear the brunt of the cost of this legislation.

Let me give an example. Children's clothing will go up in cost in Nova Scotia, heating fuel for homes will go up in cost, utilities of various kinds will go up in price, gasoline for cars will go up in price. People who can least afford it will be trapped by this new legislation because they are on a fixed income and do not have the means to make it up.

Contrarily, ironically, a fur coat will cost less; a yacht will cost less. But did we hear members from Atlantic Canada raising this in question period? No. They are absolutely mute on this point. Did the people of Atlantic Canada have a chance to raise this before the finance committee in their home towns in Atlantic Canada? Absolutely not. Again I think the government has let the poorest of the poor in Atlantic Canada down.

There are other problems with this legislation, not what is in the legislation but what is not in the legislation, which is the fulfilment of the promise the government made to end the GST on reading materials. It would be bad enough if it simply did not fulfil the promise, but when it ends up doubling the GST on reading materials, I think that simply mocks the people to whom the promise was originally made.

The don't tax reading coalition wrote to the Prime Minister in the lead-up to the 1993 election and asked him if he would remove the GST on reading materials. "Oh, my, yes", the Prime Minister said. "Yes, we will get rid of the GST on reading materials. After all, we passed that sort of policy at our policy convention". Subsequent to the Liberals' policy convention in 1993 they also passed another policy in 1995 to get rid of the GST on reading materials. But the GST remains on reading materials.

I know some will argue that they have removed it in some ways for university and libraries. I want to be fair. They have done that, but they have come nowhere near fulfilling their promise. In fact, by introducing the harmonized sales tax in Atlantic Canada they have doubled the GST on books.

Once again we have the Liberal myth versus the reality. The myth being "we are going to get rid of the GST". The myth being "we care about the poor". The myth being "we are going to listen to people". The reality was they did not get rid of the GST, they did not remove it from reading materials. The reality is they raised prices for the poorest of the poor in Atlantic Canada. The reality is people did not have a voice because there were no hearings in Atlantic Canada.

There is even more, and I must comment on these things. One of the things we have heard from the government over and over again is what the finance minister spoke to the other day. He said "we believe in tax fairness". He talked about the tax fairness measures he and his government have introduced since they have been in power.

If you are a taxpayer, when you look at these so-called tax fairness measures, you will be bound to say that this is not tax fairness but a tax grab. In so many cases the finance minister removed legitimate deductions simply so more revenue could be raised. If it were tax fairness the Liberals would have given the money back to Canadians in the form of a lower rate. That would have been fair. But they kept the revenue.

They had a chance to demonstrate that they really believed in tax fairness when members of the medical community, private ambulance services and physicians, said to the government that when the legislation came into place, many people like farmers and pharmacists were able to zero rate GST because they could not pass it on to the people who ultimately consumed the services which in their case would be the provincial governments. They asked to be treated in the same way as others who were zero rated.

There were some wonderfully warm words from the other side that this is important, we need to be fair to everyone, the tax system should treat everyone fairly. But what did the Liberals do? They said no. They said "tax fairness only means that we get more money. We close loopholes", as they call them, "so we can get more money. It does not mean that we would ever give money back to anybody. That would not be fair. We would not want to treat everybody the same, especially if it meant giving taxpayers a break".

Again the government let people down. It says on the one hand that it believes in tax fairness but on the other hand it does something quite different.

People raised some other concerns with respect to tax in pricing. One of the first people we had before us in our Ottawa hearings three weeks ago was a gentleman who raised a concern about a provision in the legislation that would allow the government to send someone to jail if they inadvertently did not put a tax inclusive price on a chocolate bar or whatever. When he raised this issue the finance committee was in an uproar and everyone said "we will fix this. We will not allow that to happen. That is ridiculous. What happened here? How did this happen? We are going to fix this".

To its credit, the government will no longer send anybody to jail if they inadvertently do not put the proper price on a chocolate bar. What bothers me is the fact that this provision was in a press release that came from the finance department betrays an attitude. It tells us that the finance department and by extension the finance minister are so disdainful of the public on these sorts of issues that they will put things in a press release that they want to be widely disseminated by the media to the public. It speaks of an arrogance in the government that in the past has been the downfall of other governments.

When people raised this, politicians on the finance committee immediately saw this was wrong. They protested against it and it was changed. But my question is how did this get in there in the first place. Why did they have that type of language in the legislation?

At every stage over the last three years we have seen the finance department become more and more aggressive with respect to people who are trying to do their own books. All of a sudden an official from finance or revenue shows up says: "We are going to squeeze every nickel out of you and if you do not give us every nickel, we are going to camp on your doorstep and make life miserable for you". Everybody knows. The government has hired more auditors and tax collectors. It has made life generally more miserable for people who are simply trying to get by and run a business out there, the people who create real jobs.

I think the government went over the line in the harmonized sales tax legislation when it publicized in a press release that a person will go to jail for 30 days if he does not put the proper price on a chocolate bar. It bespeaks an attitude, one I do not think Canadians like. It is an attitude we saw coming from the Prime Minister in the town hall meeting. It is an attitude we saw coming from the Prime Minister in an interview in the Toronto Star on the weekend. Frankly, I think Canadians are a little sick and tired of that type of arrogance and that kind of disdain for regular rank and file Canadians who are simply trying to get by.

I want to say a word about the tremendous bureaucracy the government is putting in place in introducing harmonized sales tax legislation. Tax in pricing is something that simply does not have to be in the legislation in order for the government to carry forward with the bulk of its changes but it has insisted on it being in there. The government has said it has to have it despite the protest from businesses which said it is going to cost jobs in Atlantic Canada.

Businesses said they are going to end up passing on costs of $100 million a year to Atlantic Canadian consumers and the government does not care. The government said not to worry about it, that it will set up a regulatory regime to make it a little easier for them and it will not be such a big deal.

The government has even come down with guidelines saying to those who want to have catalogues in Atlantic Canada that in their catalogues they must say in type which is one thirty-second of the page in size that the prices do not include provincial sales taxes. Are we now going to see an army of bureaucrats come out with pocket protectors, rulers and magnifying glasses? Are they going to come into Atlantic Canada and sit down and measure the type in catalogues? Are they going to be measuring signs in stores?

The government came up with 20 or 25 different ways of allowing people in Atlantic Canada to comply with the legislation before the government would come down on them for not being in compliance. The end result is we are going to have 20 or 25 different systems.

Consumers are going to be hopelessly confused. What started out as tax simplification is now going to be tax complication. It completely defeats the whole purpose of the legislation. It is ridiculous to be doing it this way but the government, never to be swayed by common sense or logic, decides to boldly go ahead and damn the torpedoes.

I have talked about the process and I have pointed out that initially the government said it was going to scrap the GST and it did not. Then it went ahead with the backroom deal and left the Canadian people out. It gave Atlantic premiers $1 billion to go ahead with the legislation. Then it refused to have hearings in Atlantic Canada.

I think it is appropriate that this has been topped off with the government now invoking closure on this legislation. Once again it is shutting the Canadian people out of the process. It is saying to the people that elected representatives cannot stand up for the people of Atlantic Canada to point out the flaws in this legislation, to try to get the government to change its mind when so many people have indicated they have grave concerns with the legislation. And here we are debating this legislation for the last time.

This government has used closure more often than any other previous government. Twenty per cent of the legislation that passes through this House is subject to closure. In other words the government says it is going to shut down debate here in the Parliament of Canada. This is the place where democracy should reign supreme, and the government routinely denies members of Parliament the right to freely express themselves. I think that is wrong.

It was wrong when hearings were not held in Atlantic Canada. It was wrong when the premiers of Atlantic Canada cut a deal with the Prime Minister for a billion dollars and left Canadians out of the process. It was also wrong when the government deceived Canadians about its intentions with respect to the GST.

This movement to introduce closure simply punctuates the sentence. It puts a period on a sentence of anti-democratic behaviour and behaviour that simply does not become mature men and women.

We have arrived back at where we began. I want to make the argument for why this whole idea of harmonization is a bad idea. At the beginning of my speech I pointed out that the current finance minister, the member for LaSalle-Émard, when he was in opposition in 1989 and running for the leadership of the Liberal Party, pointed out that harmonization would make it very hard to lower taxes in Canada. He was prescient. He was dead on. He knew exactly of what he spoke. Political convenience made him change his mind over the years.

There is no denying that harmonization will make it virtually impossible to lower taxes in this country. Let me explain why. There are two major reasons.

The first reason exists in the agreement itself. The agreement states that in order to raise the rate of the harmonized sales tax, it requires only a simple majority of provinces and the federal government to agree and then they can go ahead and raise the rate. However to lower the rate requires absolute unanimity. It requires everybody to get on board and say that they agree to lower the GST, or the harmonized sales tax, or the BST, or whatever you want to call it.

When was the last time we had complete agreement on anything in this country? For crying out loud, we have had the Charlottetown and Meech Lake accords. It is fairly obvious that in a country this big and this diverse it is going to be virtually impossible to get 10 provinces, two territories and the federal government to ever agree on anything let alone lowering taxes which almost never happens in this country.

The finance minister was right in 1989. He was right when he said that harmonization would make it impossible to lower taxes.

I want to make another point with respect to the difficulty this poses in coming up with ways to lower taxes. One of the arguments I would make for not introducing harmonization is that when we have a single rate of tax across the country we eliminate competition between jurisdictions.

One of the great advantages of my province of Alberta is that we do not have a sales tax. Frankly, I think it is because Alberta does not have a sales tax that Saskatchewan's sales tax is not higher than it already is. The same would apply to B.C. People already come across the border to shop in Alberta because we do not have a sales tax. If we go to a single rate across the country, we will not have the type of competition that puts downward pressure on taxes. We need that in this country of all countries. In the G-7 we need it.

I looked at a graph the other day and granted, it was of income taxes. In this particular case it showed the increase in income taxes in Canada compared to the G-7 average. Without a word of a lie, our income taxes between 1965 and 1994 have gone up 1,000 per cent higher than the G-7 average.

No one can tell me that we do not need every mechanism possible to keep downward pressure on taxes in this country. We have had 35 surreptitious, sneaky tax increases by this government alone. We had 71 by the Tories before it. Every year because of what is called bracket creep, the government raises taxes in effect. Any time inflation is below 3 per cent, none of that is indexed. We end up paying probably close to $2 billion more in new taxes every year.

We have some of the highest taxes in the industrialized world and we need every mechanism, every tool we can find to push taxes down. That is why our party has argued that it is time to have a debate about taxes in this country.

Some people have said: "Let us look at the deficit problem and the debt problem". We agree with that. That has been the Reform Party mantra for 10 years. We have been saying let's balance the budget. But balancing the budget is not the end. It is the means. We have to shrink government and balance budgets so we can have lower taxes which creates all kinds of wealth in this country. That creates jobs, permanent jobs, well paying jobs. That is what it is all about.

We need to have the tools in this country to lower taxes. We do not want to give any government some kind of veto power to keep taxes high. That is what the government is proposing to do not only with this legislation but with future legislation that would have to deal with the harmonized sales tax.

That is wrong. We cannot afford to have higher taxes. Do people in this Chamber realize that in 1996 we had record high taxation which led to record high personal indebtedness, which led to record bankruptcies? There were more bankruptcies in 1996 than in any previous year. For 76 months in a row, as a result of all that

taxation, we have had unemployment over 9 per cent in this country.

Can there be any question that taxes kill jobs. By now we must have learned that message. If people doubt it, I invite members to look just south of the border to the state of Michigan. Look to Michigan, a state that was part of the rust belt only a few years ago. It elected a new governor in 1990. He introduced 15 tax cuts. Michigan produced 450,000 new jobs between 1990 and 1995. That is more jobs in one state than the entire country of Canada produced in that five-year period. That is 450,000 in a state of what, six or eight million? In a country of 30 million, we could not produce that same amount of jobs.

That is unbelievable to me. It is unbelievable that we have not learned that lesson. The lesson is that taxes kill jobs. If we ever are going to deal with the problem of unemployment, we must learn this lesson. We must get our tax rates down. It is time that members in this place learned that lesson.

I must point out for a moment that our party has introduced a plan that will offer Canadians a way to get to the point where we have lower taxes. We will give people the tool that the government is denying with this GST legislation.

We have said that we will shrink the government. We will get rid of some of the wonky subsidies. We will not hand out money to Bombardier any more. That would not be done under a Reform government. We will not give money to some of the weird and wacky special interest groups who love to grace the halls of Parliament at budget time to cry for more money. They will not get money from the Reform Party. People are just a little sick and tired of giving money to those sorts of people.

We will cut spending for all those departments that more properly belong at the provincial level. We will not have those any more. We will provide Canadians with a government that does about 10 things and does them well. We want a government that focuses on getting the justice system right. Instead of doing 20 or 25 things and doing them all poorly, let us do 10 and do them right. Let us fix the justice system.

Let us fix national defence. It has become a national embarrassment the way the government cannot get a handle on fixing national defence. There is a rot at the top of national defence and we cannot fix it. If we would focus on fixing it instead of spending money on flags or whatever it is we are doing, we could actually do these things. We would be doing the country a great service.

Let us do those 10 things well. Let us get out of certain areas that we are in right now which more properly belong to the provinces. Like welfare. The provinces and lower levels of government have the solutions to things like the welfare problem. They are much more capable of dealing with it than bureaucrats 2,000 miles away. Let us let the provinces deal with those things.

If we shrink government we can balance the budget and give a dividend back to Canadians in the form of lower taxes, $2,000 by the year 2000. That is what Reformers propose to do. That is the way to help people in Atlantic Canada, in central Canada and in the western part of the country. That is how Reform is going to help people. We will not go around raising taxes or removing the mechanisms to lower taxes. That is what the government has done. That is not our plan at all.

I will summarize by saying that the finance minister was right in 1989. He foresaw that harmonization meant higher taxes. He foresaw that this legislation would simply mean that at some point in the future, when the deficit had been dealt with, it would be impossible to lower the GST to give Canadians the benefit of their hard work.

I conclude by saying that we are opposed to this legislation. I hope that hon. members, in particular those from Atlantic Canada, will see the folly of this legislation and will vote against it.

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

Mr. Speaker, initially there had been an accord that I would be sharing my time, but that has now been changed and I will not be doing so.

I am pleased to have the opportunity to address the House today in support of this bill, which makes amendments to the GST and harmonizes the HST in the Atlantic provinces. I am pleased to do so because I want to try to bring forward some of the more positive features while recognizing that there are difficulties. A model has been put forward that is applicable to other provinces, with the same advantages to other provinces.

No special deal has been set up, as some colleagues would pretend, in order to try to make politics. It is rather interesting when one talks about the Reform Party these days. There are a lot of articles about how much difficulty it is having. It is not unusual to notice why. We have just heard from one of their more moderate members who spent much of his time talking about going to jail for putting a sticker at the wrong place on a chocolate bar. Let us get serious. Would that really happen?

He talked about the arrogance of the Prime Minister. What nonsense. We have one of the most gentle, kind, down to earth prime ministers we have ever had. There is no arrogance. That is the kind of sentiment that Reform wants to put out in order to gain political points.

He talked about Bombardier, which is one of the large, prosperous and significant companies in Canada, and within a few seconds was talking about weird, wacky interest groups and somehow put them together. If you are an interest group, does that make you weird and wacky? No, I think not. I know of a lot of interest groups whose members are extremely well educated and knowledgeable who have specific and important objectives. Just because they

come to Parliament and to governments to share information and seek assistance does not mean that it is inappropriate, but there goes the Reform philosophy. It puts Bombardier and weird and wacky interest groups all together. That comes from one of their more moderate members.

Is anybody surprised that Reform is having difficulty trying to convince Canadians that it is a serious political party? It does not surprise me.

I recognize that the scrap versus replace debate is ongoing. I understand the position of both groups. I made it my job to do so. However, I think any fair-minded person would recognize, if they took the time to look at it, that this legislation is a big step toward the accomplishment of another of the government's red book promises, as imperfect as it may be.

I want to quote what was in the red book as opposed to what the opposition parties that are trying to make political hay are saying. They recognize that taxes are not popular. They recognize that when a tax is changed, that is the time to try to embarrass the government. There is no serious criticism in trying to make what is happening better, simpler, easier, more acceptable to businesses and consumers. There is none of that. There is simply an attempt to exaggerate items, but they exaggerate to the point where no one really believes them.

I will return to the quote.

A Liberal government will replace the GST with a system that generates equivalent revenues, is fair to consumers and to small business, minimizes disruption to small business, and promotes federal-provincial fiscal co-operation and harmonization.

That is what we said. I realize that in the course of the debate, there are a number of things people may have said. And unfortunately, they may have caused some people to jump to conclusions. That is really too bad.

Suppose we look at what we said officially.

The broad elements of the final agreement with the Atlantic provinces included-it is important to understand that because therein lies a model which could be applicable to other provinces-a substantial reduction from current combined rates down to 15 per cent in the three participating provinces; a single administration for both federal and provincial sales taxes; tax inclusive pricing so consumers will know in advance of their purchase the exact price they will pay. For transparency purposes, the tax or rate of tax will be shown separately on the sales slip.

A national approach to interprovincial sales will ensure a level playing field for businesses in the participating provinces. Federal rebates and the GST low income tax receipt will continue to apply under the harmonization agreement.

A key element of the new system is a single set of rules and forms, as well as a single administration. Tax relief for charities and public sector bodies will continue. Participating provinces will provide rebates for the provincial component of the HST to charities and qualifying non-profit organizations.

In each province, municipalities, hospitals, schools, public colleges and universities will receive a partial rebate of their tax.

I believe that businesses in participating provinces will become more competitive at home and abroad. Some have indicated exactly that, recognizing that some people have disagreed with them.

Furthermore, businesses will collect and remit the HST on sales in the participating provinces. This approach ensures that sales tax is collected and remitted in a more effective and efficient manner. Surely we have a commitment to be more effective and efficient. Perhaps the Reform Party does not want that.

Simply put, the harmonized sales tax means a simpler tax system for both consumers and businesses which is more efficient to govern.

I would like to address an issue about which I am pleased with the direction taken. I have always supported and continue to support the removal of the GST from all reading materials. It is a position which I took a long time ago and I have not wavered from it.

I was extremely pleased with the announcement made by the Minister of Finance on October 23, 1996. At that time the minister announced the government's intention to implement a 100 per cent GST rebate on all books purchased by public libraries, schools, universities, public colleges, municipalities, qualifying charities and non-profit organizations across Canada, effective immediately. I have not heard the opposition talk a lot about that.

This change includes all classroom books distributed freely to students by educational authorities. As a result, all books purchased by these bodies will not be subject to the federal sales tax anywhere in Canada.

This rebate affirms the federal government's commitment to support literacy. However, I must confess that I consider the measure to be a partial sucess as opposed to a total success. This special rebate recognizes the important role played by public

libraries, educational institutions and other community organizations in helping people learn how to read and improve their reading skills, something which has become increasingly critically important in today's society.

Finally, I have received numerous representations from physicians in my riding and from across Canada. The physicians have made what I consider to be an effective case concerning the application of the GST to their practices. Although physicians are treated for income tax purposes as small businesses, they are unable to claim a GST refund on the medical supplies used in the delivery of health care.

I am told that the recent agreement between the federal government and the Atlantic provinces will make matters even worse than they were. I believe that doctors deserve to be treated the same way as any other self-employed Canadian or small business.

As I said at the finance committee meetings which reviewed Bill C-70, I have concerns with respect to the GST and physicians. Officials acknowledged that such difficulties need to be addressed. It continues to be my hope that an equitable solution can be found. Surely there is a solution that is acceptable to both physicians and government. I am seeking a solution that is acceptable to the government and to the doctors. I will continue to play a role to that end if I am requested to do so.

Finally, I would like to sum up the benefits of harmonizing the GST. This is not to say there are no obstacles to overcome, no problems. Obviously, the system is changing, and when we change something, we know there will be problems. We cannot anticipate everything, but the benefits are there, and I will mention a few. It is one of the most effective measures for supporting job creation and economic growth in that region.

Some people say we should remove the GST altogether. We would love to be able to do that, and if it were at all possible, that is what we would do. However, we cannot forego the revenue. The Prime Minister and the Minister of Finance have said many times it would be impossible to abolish, to shelve this tax, without replacing it with a tax increase to keep revenues at the same level.

I also wanted to talk about tax cuts, something not often mentioned by my opposition colleagues. For consumers in the three provinces where the tax is being harmonized, this new system will mean a tax cut and eliminating the tax on the tax. That was not mentioned.

The new tax will be better for consumers, business and governments-that is what harmonization is all about-and it will be easier for the consumer, because tax will be included in the sales price. What consumers see on the price tag is what they will pay at the cash, but retailers will indicate the tax clearly on the sales slip. Those are the advantages.

Businesses in harmonizing provinces will have only one sales tax administration to deal with and not two; a single group of auditors and not two.

It is a better system for the economy, because the harmonized tax will be more effective from an economic standpoint. It is a national strategy for interprovincial sales to ensure the rules of the game are fair for businesses in participating provinces. Furthermore, federal refunds and the GST credit for low income earners will continue to apply under the harmonization agreement.

I believe that the government is taking a big step forward with this bill, as imperfect as it is. It is a complex bill. It was complex before, it is complex still today and it will continue to be. Clearly there will continue to be challenges and difficulties to surmount. Surely if we are what we pretend to be in this House, we ought to be identifying not only the problems, not only the hurdles, not only the challenges, not only the insensitivities if they exist, but also the solutions to correct it. I have not heard that.

I have heard gross exaggerations that they will remove the tax and they will do this and they will do that and then they will do this and that and this and that, knowing full well there will never be an opportunity for them to do it. It is very easy to promise everything when you know you are not going to have to do it. But where is your responsible behaviour when you look at a piece of legislation and you are unable to look at not only the difficulties but the merits; when you are able to identify not only the problems but to suggest corrective measures as opposed to empty exaggerated rhetoric that attempts to aid a drowning party and somehow lift it up? That is what is happening here.

I personally look forward to the signing of agreements of this nature across the provinces. I am hopeful my colleagues will use their resources, their knowledge, their insights in order to make this legislation even better than it is. If they were to do that, they would be helping consumers across Canada. If they were to do that, they would be helping business men and women across Canada. If they were to do that, they would be helping our country, which is already number one on a number of measures, become even better, stronger, more united, more oriented toward helping each other as opposed to being pecky and picky and attempting to destroy the very fabric that holds us together.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, I rise today to speak at third reading of Bill C-70 concerning the so-called replacement of the GST, the goods and services tax.

[Jim Silye, Reform, Calgary Centre, AB]

Point of order, Mr. Speaker.

[The Deputy Speaker]

The hon. member for Calgary Centre is going to say that the Bloc just spoke and therefore it should be him.

[Jim Silye, Reform, Calgary Centre, AB]

No, Mr. Speaker, I just wanted to ask a question. Are we not under questions and comments? When does that kick in?

[The Deputy Speaker]

It does not. At this stage of the debate there is not 10 minutes for questions or comments.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, under orders of the day it says that after three speakers, one from each party, we go to questions and comments after 20 minute interventions.