House of Commons Hansard #127 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was taxes.
Excise Tax ActGovernment Orders
The Deputy Speaker
It is my duty, pursuant to Standing Order 38, to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Burnaby-Kingsway, Canada Pension Plan.
Bill Graham Liberal Rosedale, ON
Mr. Speaker, I am very pleased to stand and debate the issue today, although it obviously is a matter which concerns our colleagues in the Atlantic provinces more than the rest of Canada directly. In fact, it concerns all of us in Canada. What we have here in this proposition is a superior model for dealing with the problem of consumption taxes throughout Canada.
We have heard the member from the Bloc, the previous speaker from the province of Quebec. We know that Quebec has harmonized its tax system for obvious reasons. I will return to that.
The fact of the matter is this government has spent the last three years struggling with the problem of how to have the intelligent application of a consumption tax in the country. Every tax expert, anybody who knows anything about the way modern taxes work in a modern society, particularly one which is subject to globalization, knows very well that there is a proper mix of income taxes and consumption taxes that must be applied.
Why did we end up where we did with the GST, which we in the House have spent so much time talking about? We as citizens and members of Parliament have been trying to deal with the unfortunate hand that was dealt us by the last government.
The reason the GST was brought in was that the former manufacturers' sales tax which applied to manufactured goods in the country was no longer sustainable once tariffs were moved down to what they were after the war when originally they were around 50 per cent and then dropped to an average tariff today of 7 per cent. The manufacturers' sales tax only applied to goods which were manufactured in Canada. The consequence of applying that in today's world would have been totally impossible. It would have inhibited manufacturing in Canada and given benefits to imports. Of course we had to move to a consumption tax which could be applied at the level which would hit imports the same as domestically manufactured products. That is why a consumption tax must be regarded as a tool of any modern economy.
When we ran for the Liberal Party in the last election, we spoke of the need to deal with the problems of the GST. We spoke of the need to harmonize it. We spoke of the need to deal with the inequities in the system. We spoke of that in the last election in spite of what the member opposite has been crying out, saying "election promises". That was the election promise of the government, to deal with the serious problems that were inherent in the tax. That is what we have sought to do since we were elected.
Bill Graham Liberal Rosedale, ON
We are not talking about video tapes here. We are talking about taxation and we have been seeking to deal with it since were were elected. The finance committee has met innumerable times and we have spent hours and hours of individual members' time from all parties of the House to come to grips with what is a very serious problem. Instead of cat calling back and forth about it, we should be trying to wrestle with it.
I believe members opposite are saying they want a rational solution to the problem. Let us try to find a rational solution to the problem rather than saying scrap it. The party opposite says scrap it and at the same time wants to see the deficit reduced. How can we deal with a deficit of $17 billion? Take it out of the taxes and put it into the income tax system? This is not realistic.
We are seeking a realistic solution to a very complicated problem. There is a realistic solution that I think we can be proud of when we look at the Atlantic provinces. What have the Atlantic provinces achieved by agreeing to harmonization? This is the way to deal with it.
In my province of Ontario we have two different systems of tax being collected differently. Some apply to services and some do not. It is an irrational system to have two different levels of consumption taxes applied, collected differently and imposed particularly on small and medium size businesses that have to bear
the extraordinary input costs of dealing with this system. It just does not make any sense.
The Atlantic provinces have been willing to grasp this nettle in a way that deals with many problems. It deals with the problem of the small business which looks at the fact that its cost to apply this tax will be less. It deals with the problems of the manufacturers in the general economy by insuring that the proper input credits will be given both in respect of PST and GST. That would eliminate one of the most serious macro economic problems about this tax, which is its inefficiencies and the way in which it interferes with rational economic planning and manufacturing.
It deals with the problem of the consumer, who in the end really does not want a system as complicated as the present one. That makes a lot of sense.
I suggest that if we in the province of Ontario would be willing to look at a similar solution, and if the rest of the provinces would be willing to look at a similar solution, it would be of extraordinary benefit to the country. In the first place, it would remove what is a very serious non-tariff barrier to trade within the country. We cannot ignore the fact that at present the tax structure of the country inhibits people from moving back and forth and offering their services in different parts of the country.
I happen to know of service providers in the province of Ontario who will not go to the maritime provinces at this time because the cost of having to calculate what their services would be and how they would pay the tax is not worth their while. As a result, the maritime provinces are losing the benefit of the input of those people and the people of Ontario are losing the opportunity to compete in those marketplaces. It is inefficient. It does not make sense. The maritime provinces have provided an opportunity for the rest of Canada to follow.
The tax will deal with the problem of proper management. It will deal with the input level issue. It will deal with the question of services which today account for 60 per cent of the economy. It is totally a modern solution to the problem. This is the only way we can go.
What I find a bit odd is that it is members from Quebec who are protesting a system that is ultimately the same as the one in their own province. They have harmonized their PST with the GST.
Why? Is it because Quebec's representatives at the provincial and federal levels have recognized that it is in the interest of Quebec taxpayers to harmonize? Having done so, they are asking the rest of the country why they are following suit. "You are nuts to harmonize your provincial sales tax with the GST," they say. I do not understand this reasoning at all.
I am surprised that Bloc Quebecois members are not saying: "At last, the rest of the country is recognizing that what we did makes sense. We congratulate the rest of the country for following our example and we urge the Province of Ontario and the other provinces to follow suit. And in the interest of Quebec taxpayers, we are going to eliminate the non-tariff barriers between Canadian provinces for the greater benefit of all Canadians, not just in Ontario, but in Quebec and the Atlantic provinces".
We in this country no longer have the privilege of living in an isolated world. We live in a world in which our goods and services compete in international marketplaces. Furthermore, our goods and services compete in international marketplaces not just when they are exported but they compete in international marketplaces within our own country, within our own jurisdictions, because we have competing goods and services coming in.
We have to face the fact that in 1998 when the NAFTA comes into effect goods and services will move across the borders of Canada, Mexico and the United States much more freely than they do today. We have to recognize that we need in place a tax system which will recognize that reality and not be an inhibition to the productivity of our citizens, our manufacturers and our sales people in this country. Otherwise we are going to be in real trouble.
The harmonization solution which will be implemented in the Atlantic provinces will go a long way in dealing with a lot of these issues.
The members of the foreign affairs committee have had the opportunity to travel and meet people, for example, in the European Union. People in the European Union have spent the last 30 years trying to harmonize their taxes.
When I was a law professor at the University of Toronto years ago, I remember meeting experts from the European Union who said: "You created a tax system with different rates in different provinces? You have a PST in some provinces, different from the GST? How could you possibly invent a system that is not harmonized? We have spent 30 years trying to harmonize our system and you have created a system that is a nightmare". That was in 1986.
The government is trying to cure the nightmare that was created by the previous administration. Instead of the members opposite screaming and yelling and saying: "This is crazy. Did you watch last night's video?" why not say: "Let's pull together. Let's look at this mess. Let's find the best solution possible". The finance committee has looked at this. We have all looked at this. The harmonization proposal for the Atlantic provinces is finally ad-
dressing in a concrete, positive way a tremendous problem that we have as Canadian citizens.
Speaking as a member of Parliament from the province of Ontario, I hope that the members of Parliament from my province and the premier of the province of Ontario will have a look at it and say: "This is the way we should go. This is for the benefit of Canada. This is for the benefit of the citizens, not only of the Atlantic provinces, but Ontario, British Columbia, Alberta, Quebec and every other province in Canada".
Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC
Mr. Speaker, the hon. member for Rosedale is most eloquent, but it would be even better if what he said made sense.
What he did say positively made my hair stand on end. When he said that the new tax system-I see you are smiling because of my hair, and I realize it is somewhat sparse-when he said that companies in the maritimes would benefit under a system that would increase their efficiency and performance and reduce their production costs, he is on another planet. We are certainly not. We had three days of hearings before the finance committee in January, and while the hon. member for Rosedale was probably on the ski slopes, we were working.
We heard testimony from representatives of large Canadian corporations, average Canadian companies and small retailers. They came to see us, and they said: "You must postpone implementation of this bill; you must postpone the implementation of this harmonized sales tax system because it will create considerable problems and the cost will be exorbitant: implementation costs, $100 million; recurrent annual administrative costs, $90 million, to be absorbed by maritime businesses".
What the government told us was nonsense. There will be no improvement. At the present time in the maritimes it is total chaos. So much so that the Liberal government no longer knows what to do with this hot potato. It thought that by sweetening the deal for the three provincial governments of the maritimes, by giving them $1 billion, a $1 billion gift, there would no longer be a problem. But that is not the case.
As far as Quebec and harmonization are concerned, if the government thinks so highly of the kind of harmonization we achieved in Quebec in 1991, it should pay us. If it works, we should be paid for it. We should get exactly the same treatment the government gave the maritimes. One billion for this agreement.
I have a question for the hon. member. Considering the message he heard God knows where and what is really happening down here, which is total chaos, and that representatives of businesses in the maritimes are putting pressure on the government to refrain from implementing the system, why is the hon. member on the government benches unaware of the utter confusion caused by our charming Minister of Finance with Bill C-70? Why does what he says not reflect real situation?
Bill Graham Liberal Rosedale, ON
Mr. Speaker, I am beginning to understand why the member has so few hairs on his head. He has split them so often in the debates in this House that he only has a few left. If he really wants to have his feet on the ground and not be out in space, I suggest that he keep the hair he has left by focussing his remarks on the real issues.
He has raised no real issues here. Look at what took place in the committee of which he is a member. The proof in committee was that we will now save $700 million in subsidies to businesses in the maritimes, $140 million of which will be in the retail sector alone.
These are all benefits to consumers, finally. This is what it means to have your feet on the ground, to be realistic and to look out for the interests of consumers in this country. I suggest to the hon. member that he look at benefits to consumers in this country instead of looking at the world through the rose coloured glasses of his party on the ski slopes of Quebec.
Jay Hill Reform Prince George—Peace River, BC
Mr. Speaker, it is a pleasure to have the opportunity to put a question to the hon. member.
He spoke long and eloquently about what makes sense and what does not make sense in our tax system. Therefore I would like to put to him a problem that has been presented to me as a member of Parliament, and I believe probably has come to all members of Parliament, and that is the problem doctors in Canada have experienced with the GST.
I would like to read in the little time I have from a submission that was made to me by Dr. Laurie Cook, a doctor in my riding in the city of Prince George. In his letter he states: "Enclosed is a copy of the Canadian Medical Association review of GST as regards physicians in private practice. My guess is that I have lost about $2,000 a year since 1991 as a result of GST paid but not recoverable".
In the submission from the CMA I note a couple of points. It states: "Doctors are not asking for special treatment. Doctors are asking to be treated like other self-employed Canadians and small businesses. If doctors or self-employed individuals are considered as small businesses for tax purposes it seems reasonable that doctors should have the same tax rules apply to them that apply to other small businesses. This is a question of fundamental fairness".
Further it states: "It is estimated that the 55,000 doctors employ up to 100,000 Canadians. Physicians play an important part in job creation. The effects of the GST and a proposed harmonized sales tax could have an effect on individuals employed by doctors".
In light of that, since the hon. member has spoken so long and eloquently about fairness in the tax system, I wonder what his feeling is about this particular issue. Will he support the doctors being zero rated for GST purposes?
Bill Graham Liberal Rosedale, ON
Mr. Speaker, the member raises a question which I understand has been discussed before the finance committee. It is a concern. There are always problems in any tax system which will create a glitch here or there. The one about the doctors is one that has to be faced.
As the hon. member well knows, doctors are paid at rates set by the provinces. The integrated tax is a tax that is being developed by both the province and the federal government together. It seems to me that where this must be addressed, and where it would be equitable for it to be addressed, would be at the provincial level. The provincial governments in question should be looking at the impact of the tax-after all they are party to this-on the medical profession and ensuring that the medical profession will be properly compensated for any inequities that are being imposed on them from the tax.
I do not see why this poses any problem. There might be some eventual time difference in terms of finding the correct solution to this, but there is no principal problem that the tax itself imposes.
There is the need for a political recognition that this is an issue and has to be addressed. It does not have to be addressed through the tax itself. It has to be addressed through the proper compensation scheme set by the province. I think that is the answer to that problem.
Philippe Paré Bloc Louis-Hébert, QC
Mr. Speaker, generally the member for Rosedale shows less partisan politics and more rigour, as well as weighing his words a little more carefully.
To hear him speak just now, one would have thought we were listening to the Prime Minister defending the fact that he had never made promises. In the debate at hand, they are trying to have people believe that the Bloc members are against harmonization. That is absolutely not what it is all about. What it is about, is that their party made commitments during the election campaign.
One of its commitments was to eliminate the GST, because this was a detestable tax. This is not fabrication on our part, the Prime Minister said so.
The Bloc Quebecois is not against harmonization. I wish to ask him the following question, however: if harmonization of the two taxes in the maritime provinces is so desirable, and so favourable to economic development, why did he have to sweeten the pot to the tune of $961 million to get harmonization?
Bill Graham Liberal Rosedale, ON
Mr. Speaker, first of all, I would like to thank my hon. colleague for his question. The first part of his question was probably more of a comment than a question. I am delighted to hear that the Bloc Quebecois is not opposed to harmonization. This means they will vote for this bill.
If I am not mistaken, they have a problem with the last election campaign. There is an election campaign coming up, let us see how it goes. But as regards the bill before us, if I understood correctly what my colleague, the hon. member for Louis-Hébert, said in his remarks, his party is not against harmonization. That is good and I am pleased to hear it.
As for the $900 million, if I got the point right, and I am the first to admit that I am not an expert in this matter, which may be a source of merriment to my hon. colleague across the way, any time a new tax or system is introduced, there are always transaction costs involved. They cannot be avoided.
In this case, the $900 million referred to are a form of payment designed to help in the implementation and integration of the new tax. Given the benefits to the local and Canadian economy, I would say that $900 million is an entirely reasonable amount, proportionate to what this tax will accomplish. That is all I can say.
The hon. member for Elk Island has the remaining three minutes.
Ken Epp Reform Elk Island, AB
Mr. Speaker, I will use those three minutes as wisely as I can.
Soon we will be seeing a spectacle in this House. A whole bunch of members of Parliament who were elected by their constituents are going to stand up one after the other, and they are going to vote the way their whip tells them to vote. They are not going to listen to what their constituents back home have to say on the GST and harmonization. Instead, they will do as they are told like a bunch of bleating sheep. I am disgusted with that.
I want to read from the speech of the member for Burin-St. George's on March 12, 1993 when he was on this side of the House: "Let me say how we in this party propose to deal with the issue. We have said we would wipe out the GST. We intend to do that". He said that right in the House. They said it in the House, they said it on the hustings, and what are they doing? Garbage.
"We have said that during the first year of our mandate we will consult Canadians, which is more than this administration has done". He was referring to the previous Conservative government. Have the Liberals consulted? Have they listened? No, they listen to their whip. They will vote so they can get re-elected, so the Prime
Minister will once again sign their nomination forms. Then they will be able to collect their MP pension plans. This is ridiculous.
"I want to tell Canadians who were not consulted last time that this time they will be consulted". That is so much garbage. I am ashamed of the members opposite who do not have the fortitude to stand up for the people but who will stand up for themselves and vote the way they are told. I challenge them, do they have any fortitude?
When that vote is called in a few minutes will they stand up and speak for the people of Canada or will they speak for themselves? Will they speak for their Liberal government which has totally flip-flopped on this issue since coming into power? Will they do that? I challenge them to do that. I do not believe they will but I am going to ask them to. I am going to ask them sincerely. I am asking them strenuously.
My challenge is there. We will be watching carefully and so will the Canadian people not only later this evening but in the next election.
Excise Tax ActGovernment Orders
The Deputy Speaker
Pursuant to order made Monday, February 10, 1997 it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the third reading stage of the bill now before the House.
Call in the members.
(The House divided on the motion, which was agreed on the following division:)
Excise Tax ActGovernment Orders
The Deputy Speaker
I declare the motion carried.
(Motion agreed to, bill read the third time and passed.)
The House resumed from Friday, February 7 consideration of the motion and amendment.
Bob Kilger Liberal Stormont—Dundas, ON
Mr. Speaker, if the House would agree I would propose that you seek unanimous consent that members who voted on the previous motion be recorded as having voted on the motion now before the House, with Liberal members voting nay.
Madeleine Dalphond-Guiral Bloc Laval Centre, QC
Mr. Speaker, members of the official opposition will vote nay.
John Solomon NDP Regina—Lumsden, SK
Mr. Speaker, the New Democratic Party members present this afternoon will vote yes on this motion.
Elsie Wayne Progressive Conservative Saint John, NB
Mr. Speaker, the member for the PC party will be voting yea.
Gilles Bernier Independent Beauce, QC
Mr. Speaker, I vote with the government.
(The House divided on the amendment, which was negatived on the following division:)
SupplyGovernment Orders
The Deputy Speaker
The amendment is defeated. The next question is on the main motion.
Bob Kilger Liberal Stormont—Dundas, ON
Mr. Speaker, you will find there is unanimous consent to have the members who voted on the previous motion be recorded as having voted on the motion now before the House, with Liberal members voting nay.
