Debates of Feb. 11th, 1997

Excise Tax Act

[The Deputy Speaker]

The hon. member's colleague yesterday did withdraw the word. The Chair did not rule that the word bribe was an unparliamentary word. It leaves the Speaker in an awkward position if the member is going to take the view that it is a parliamentary word.

The Oxford Concise Dictionary , page 161, defines bribe'' as a verb:to act especially illegally or dishonestly in one's favour by gift of money, services, et cetera''. Bribed the guard to release the suspect is given as an example. Second, a noun: ``money or services offered in the process of bribing''.

It seems to me that, as was suggested earlier, this dictionary at least suggests there is an illegal purpose involved. It is correct that Beauchesne's does not appear to put "bribe" on its list of unparliamentary words, at least what I can see quickly.

I would invite my colleague, in view of what has been stated in the dictionary, to agree to withdraw the word in the interests of amicable, open debate.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I do like to be amicable and I like open debate. In no way when I used the word bribe did I mean that it was illegal. Nor do I mean that the government is being dishonest, even though that definition is hinted at in your definition .

My definition basically says "money offered to procure action in favour of the giver". A further definition below that is "pervert by gifts or other inducements the action or judgment of" whomever. It is a matter of interpretation. I do not mean that what is being done here is illegal, but it is something being done that the Canadian taxpayer should be aware of. Three provinces will have their costs lowered because of this particular payment than the other provinces at the cost of all taxpayers. I would just like to proceed with the debate.

[The Deputy Speaker]

The hon. member did not give a source for his definition. I hope it was not "Levinson's Unafraid Dictionary" or something like that. I wonder if he would be kind enough to give us the precise and complete definition he has and from what dictionary.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, the definition I have is a xerox copy of page 147 from the Concise Oxford Dictionary 1973. Is that the same one you have?

[The Deputy Speaker]

Actually this one is from 1995 and I think I gave the entirety of the definition. I think somebody was looking at earlier editions and we are now living in 1997.

I appreciate exactly what the member is saying and I would again invite him to withdraw that word so that we can get on with other issues other than spending all morning on this issue.

[Jim Silye, Reform, Calgary Centre, AB]

Out of respect to you and the Chair, Mr. Speaker, I will withdraw the word bribe.

With respect to harmonization, businesses located outside the harmonized provinces will also be required to collect both the federal and provincial portions of the blended sales tax on purchases made by residents of the harmonized provinces. That means businesses in seven other provinces will have to act as tax collection agents for the provinces of New Brunswick, Nova Scotia

and Newfoundland and they will have to carry the associated costs. That is another reason the bill is not well thought out and should not be proceeded with.

The Reform Party opposes tax inclusive pricing. This practice violates the principle of open taxation which is essential to the efficient functioning of open democracies. Disclosures of taxes paid on cash register receipts preserves an element of openness in taxation but as the experience in Europe has shown, it eventually results in strongly diminished public awareness of the tax. Eventually governments simply increase the rate when they need more money.

We are heading toward a $700 billion debt. We are going to crack $600 billion sometime this year. Our interest costs are rising notwithstanding the lower interest rate. The economy always goes in cycles. Economists tell us that. The government continues to add to the debt. It is doing so less than the previous government, but it is still adding to it. It added $17 billion or $18 billion last year. That is a lot of money. It is a deficit. It is adding to the problem. As those interest costs go up, the government will have no other choice but to raise taxes. It will raise the HST/BST from 15 per cent to 20 per cent to 25 per cent. It will raise personal taxes and corporate taxes. It will be forced to raise taxes in order to make the payments on the debt.

The standing committee listened to a lot of complaints from a lot of people who came to the hearings and it claims to have solved them. I am not sure that it has. Some of the issues were highlighted in a story by John Geddes of the Financial Post . He used Carlton Card's representation which was made by Shannon Hallett, who expressed her firm's frustration with the Liberal members of the Commons finance committee. She warned that a policy the government plans to impose will force Carlton to close 19 of its 37 shops in the economically fragile Atlantic provinces. Is that not of concern to a party which ran on jobs, jobs, jobs?

At issue is the proposal to force retailers to bury the new 15 per cent harmonized sales tax in prices rather than adding on the HST at the cash register. To retain that support, why not just drop the tax inclusive pricing?

Tax in pricing would cost Carlton $84,000 in one-time expenses such as programming computer inventory systems. It would add $63,000 a year in continuing costs such as putting new prices on cars bound for the east coast. Furthermore, tax in pricing would cost stores in the three provinces about $90 million. Winsbys Shoes told the committee how hard it would be to sell a $99 pair of pumps if it had to put a $115 tax in price tag on them.

Shoppers Drug Mart vented annoyance at the prospect of having to comply by putting up tax in price conversion charts beside racks of magazines which come printed with the tax out price. Re-ticketing thousands of items in a store and trying to cram the tax in price

and tax out price along with the bar code on small labels will be a problem.

These are all problems that the bill has not solved, even though the Standing Committee on Finance said it would look after all of them.

Why is Ottawa so determined to keep this contentious tax included pricing rule when the rest of the harmonization of two taxes into one could be sold much better and could be accepted by Canadians all across Canada?

[Gordon Kirkby, Liberal, Prince Albert—Churchill River, SK]

Because you told us to.

[Jim Silye, Reform, Calgary Centre, AB]

I already covered the topic of what the Reform Party said and what it did in its minority report in context, not out of context as the Liberals are trying to do again.

Ottawa is proceeding with this because this is its idea of keeping its election promise. This is it folks, Canadian taxpayers. This is how the Liberal Party has kept its promise. Liberal members went door to door and said that they would get rid of, abolish and kill this tax. They said that they hated it. This is what they did. They got rid of it by blending it with the provincial sales taxes in three provinces. They feel they have now kept their promise. What they have really done is they have entrenched the GST forever.

When the Minister of Finance was on this side of the House he said that if you ever harmonize a GST with a PST, you entrench the GST forever, and he has done it. The member from Toronto also stated that the committee looked at a lot of options for the GST and the final solution was that there was no better tax than the GST. The Liberals have entrenched it. This is their way of keeping their promise of getting rid of the GST.

Look at their promise in the red book that they would replace the GST with a system of taxation that was simple and more fair. All the evidence I have given today is to the contrary. It is unfair. It favours one region over another. It subsidizes one over another at the expense of the other. Businesses are yelling out saying that they could go broke. Is that fair?

It is so complicated that there are definitions for tax in and tax out pricing. There will be four items on the shelves in the stores which people are pointing out. Is that simpler or is that more confusing? The definitions of all these rules and the white book required to implement all these rules will add about another 300 pages to the Income Tax Act. That is not simplifying it. A harmonized tax can make sense, and I will get to that soon.

The Reform Party sees the GST as an unnecessary and temporary tax that does not belong in the federal domain. Inasmuch as the tax

will exist temporarily, the Reform Party encourages the government to streamline taxation, remove as many of the significant problems that exist until such time as we can implement much wider tax reforms that provide both tax relief and tax simplification.

If the government presented a national solution to this problem, a national solution to fulfil its promise to get rid of the GST or to replace the GST with something that was revenue neutral, then we could support it. We have given the government some suggestions but it has chosen not to listen. The government said that it listened to over 20 proposals but the one proposal the government did not listen to is the proposal in our fresh start.

It is a proposal to simplify the tax system and generate the replacement revenues required so we can eliminate the GST. It would operate on the basis of a simplified tax system. We could get rid of this convoluted, complex, confusing income tax system we have now and replace it with a more effective, fair, simplified, harmonized system, harmonized with the Canadian taxpayers. Get in tune with the people who pay the final price. It is the person at the cash register, not the person who produces the goods, not the person who sells them. It is the person who buys them.

Why not have a system where we increase our personal exemptions, as we say in our fresh start? We could increase spousal exemptions, remove the federal and provincial surtaxes, reduce the UI premiums not by five cents per hundred as this finance minister would do, but reduce them every year by 10 cents until we get to 28 cents or 30 cents, or 60 per cent as some people are asking for.

We need to do something for the Canadian taxpayers, for the people who have to foot the bill to run government. Why do we have to spend $108 billion? Why not just spend $90 billion to run a government as we suggest in our fresh start platform? We could pass along those spending savings to the taxpayer in terms of tax breaks and tax cuts.

The difference between the Reform Party that would only spend $90 billion and the Liberal Party that spends $108 billion is that we would give the people the money to look after themselves right at the source before they send it here to Ottawa where Ottawa takes 30 per cent to 40 per cent off and sends it back to them in terms of child care and child tax credits et cetera. Why not leave the money in parents' hands in the first place to take care of their children? They will have more money for clothes and food right when they earn their money. Create the incentive for people to work and earn more so they pay less in taxes, not more in taxes. Why punish incentive? Why not create incentive and help these people look after their families?

It is ridiculous that we tax people who make $12,000. It is absolutely shameful. Yet this government is planning to reduce child poverty by increasing payments. This is admirable and it is one way of doing it, but a better way of doing it, a less expensive way of doing it is to leave the money in their hands in the first place.

In conclusion, the Liberals' are attempting to keep their promise to replace, to harmonize, and it is not even harmonized. It is not even harmonized in the Atlantic provinces. They could not convince Prince Edward Island to come on board. There is no unification there. It has not worked. It is not going to work. It is going to be a big embarrassment to this government.

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

Mr. Speaker, I much prefer the discourse of the hon. member for Calgary Centre when he leaves the explosive words behind and gets back to the substance which he does very well.

I want to ask him one question on the substance of what is being done and the change that is taking place in Atlantic Canada. I wonder if he had any idea and would share with this House the amount of tax that is currently on business inputs in the Atlantic provinces.

Because I may run out of time and not have a chance to find out if he knows, I would like to share with the House the fact that businesses in Atlantic Canada spend $700 million paying retail sales tax on their business inputs. Interestingly enough, that will be returned to business, and will be available to business to pass on to consumers in lower prices and to offset any of the costs that some businesses may incur in moving to the new tax inclusive pricing system. Out of that, approximately 20 per cent or $140 million is tax on business inputs that is paid by retailers in Atlantic Canada.

I did hear the member opposite speak earlier about the cost to retailers in Atlantic Canada but I wonder if he knew about the $140 million in inputs that they are not going to have to pay and the $700 million the business sector in Atlantic Canada will be saving and passing on to consumers.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I appreciate the question. I will try to answer it in the following way.

There is no question that if businesses are allowed to get credit for their input costs amounting to $700 million, as the hon. member put it himself, this savings is available for businesses to pass along to consumers. It is available but that does not mean they will pass it along. Let us assume that they do. There is $700 million that will then be passed along to the consumers. That is revenue neutral. There is no increase in costs, there is no decrease and everybody is happy.

What about this close to $1 billion payment to the three Atlantic provinces? Why was it made? It was made because theoretically-and this is all theoretical; we are in the realm of theory here-these three provinces would receive that much less in revenue by moving

over to a lower combined rate from their 18 to 20 per cent down to 15 per cent to make up for that loss in revenue which they would have received from their provincial sales tax. Because of this input system through the GST, because it is a different form of a tax, they have to be compensated.

To compensate three provinces at the expense of all Canadian taxpayers is something I certainly object to when it is not necessary to do so. Then there is the fact that it is a 15 per cent combined rate. This tax goes on goods and services that the GST did not go on before. This will have a dramatic effect and impact on the consumers of Atlantic Canada. It has an impact on those businesses which deal with Atlantic Canada that are located outside of Atlantic Canada because they have to sustain dual packaging, dual pricing. It adds a lot of complications and a lot of cost.

There is this argument that this is just like a GST. Instead of getting rid of or replacing the GST, I still argue and maintain that the government has entrenched the GST and has, in effect, introduced in those three provinces a 15 per cent GST. Remember when the Conservatives first introduced this tax and the Liberals on this side said they would have to get this rate and that rate down and make all these exemptions, which they did? However, the biggest argument against this was that once the bill was passed the government would be able to raise it and raise it.

I humbly submit that this could very well be the first step by a government, maybe inadvertently, actually increasing the GST from 7 per cent, which was originally supposed to be 9 per cent, to 15 per cent.

I understand and agree with the merits of the GST system and its advantages to business and how the tax does not cascade. It does make sense. However, when we look at the impact on the range of goods and services that Atlantic Canadians will now have to pay 15 per cent on rather than the previous 9 per cent, their costs will go up. Their out of pocket, disposable income will go down. They will find that they have less money for goods and services.

That is my argument in terms of the counter balance and the higher cost to consumers which offsets this $700 million in input costs, which does makes sense, which should help businesses and it should be passed along. There is also the fact that the provincial governments make less revenue and need to be compensated.

What happens at the end of four years? This billion dollar payment to the three provinces is supposed to be just for the three or four years. What if those three provincial governments still have not balanced their books and are still running deficits? What if they need more money for whatever they want to provide their citizens? What are they going to do? They are going to have to raise the tax. Now they have a convenient one tax they can raise, which is our other argument against this tax.

I am only trying to be fair in pointing out the criticisms of this tax. I think our party has been very good, even in the standing committee, of offering solutions. The members of the standing committee know that we tried very hard to work with the government to come up with a system to replace the GST. We looked at a lot of things but this piecemeal, partial harmonization will do more harm and create more confusion at a higher cost than if the government would have taken its time and done it right with all the provinces complying and co-operating rather than just trying to save the Deputy Prime Minister's political career.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I listened with interest to the member for Calgary Centre. There is just one aspect of the harmonized GST that the hon. member possibly did not touch on and that is the whole concept of the ability to remove provincial sales tax from export sales.

Members will know that Canada is a major exporting country. Indeed, a big section of our job growth has been related to the export sector. Much of the financial recovery that we are going through right now is related to exports. The maritime provinces, in particular, need to rebuild their economy so that they move into the 21st century. Exporting will be a big feature of that.

For example, in my riding General Motors manufactures cars and sells them on the U.S. market. Every car that is shipped into the United States from plants in Oshawa will have a certain degree of provincial sales tax embedded in the selling price. That makes our exports less competitive with some of the other competitors that are involved, such as OECD countries and southeast Asia. One of the main aspects of the GST was its ability to remove taxes from export sales.

We have provided these three provinces in particular-and the province of Quebec already has a harmonized GST-with a tool to rebuild their economy and a tool to enter into the 21st century with a more dynamic economy zeroed in on export sales.

Why would the member and his party try to frustrate the whole concept of building a new and better economy for the people of the maritimes to create jobs in the future?

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I welcome the question from the hon. member. I agree that a goods and services tax, that a consumption tax along the lines of the GST does eliminate tax cascading and does allow us to produce and manufacture products, and export goods at a lower cost.

That still does not justify what the government is doing with this partial harmonization in three provinces. That is a tax theory, a tax question, and I agree with the member's point of view on it.

How long will it take the savings from this Oshawa plant to recover a billion dollars of taxpayers' money to help three provinces to recover the $100 million minimum that some of these businesses have said it will cost them to conform to this new bill? Yes, it is good for business. Yes, products can be sold cheaper. However, in the end the very philosophy of a GST is that the consumer pays the tax. The hon. member knows that.

What we have done here is make it more fair for business. There is no question about that. However, we have now increased taxes. Harmonization helps. Instead of having two taxes, federal and provincial we have one. All those arguments make sense.

When the consumers find out how much more it will cost them, I predict there will be a lot more complaints and a lot more people crying about it than there is now. Everybody will be affected. At first they support the theory and the concept. Then, as they find out more about it, it becomes like the tax inclusive pricing which is causing a nightmare. That is what is really creating a cost for businesses.

The government would have them on side if it just dumped it. I do not know why the geniuses in cabinet do not go for it. They are stubborn. They will force it. The MPs will have to explain it. That is fine. Handle it. That is their job. They brought this in.

In the end, wait until the consumers get a hold of it. Wait until they see how it affects them. That is when it will be really of concern to members of Parliament, especially the Atlantic provinces. They will hear about it in their constituency offices. I predict that.

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, it is a privilege for me to rise today to speak on Bill C-70, the harmonized sales tax bill.

A great deal has been said in this debate about harmonization, what it will mean for Nova Scotia, New Brunswick, Newfoundland and Labrador. For the benefit of this House I want to take a moment to review some of these benefits. I would remind hon. members that the HST and its ensuing benefits will impact positively on the three participating provinces.

Clearly there could be additional benefits for the other provinces as well. I hope people are listening carefully to this debate today, especially in my home province of Ontario. It has been repeated several times in this debate that Bill C-70 represents a significant step toward a fully harmonized sales tax system, one of the government's goals.

The end result for the three participating provinces will be a system that is fair to consumers and small businesses residing and operating there. The new system will also promote fiscal co-operation and harmonization among the federal government and those three provinces. Hon. members know why harmonization will result in a simpler, fairer and more economically efficient sales tax system.

First, consumers in those three provinces will benefit. Removing the provincial retail sales tax from the business inputs, together with a lower 15 per cent rate and reduced compliance costs for businesses will mean lower consumer prices on many goods. Consumers will also know the full price of what they are buying before they get to the cash register because of tax inclusive pricing. At the same time, the rate of sales tax payable will be visible on their receipts.

Second, under the HST, businesses will be dealing with only one set of sales tax forms and operating rules. There will be one tax administration instead of the two sets of everything they do now. Not only will they have reduced compliance costs, but the competitiveness of businesses will be promoted. That is because the HST payable on business inputs will be recoverable, especially for businesses located in the participating provinces.

There will also be lower administrative costs under the HST because overlap and duplication will be eliminated. Of course, the single lower rate of 15 per cent is significantly lower than the rates currently in place in the three participating provinces.

It is important to note that the harmonization in the participating Atlantic provinces will mean a drop in their combined sales tax rates from just under 20 per cent to 15 per cent in Newfoundland and Labrador and from just under 19 per cent to 15 per cent in both Nova Scotia and New Brunswick.

To ensure a smooth transition, the HST base will be the same as the GST base. The rules governing the new system will generally be the same as those for the GST.

Economic benefits will also flow from the removal of tax on business inputs. In addition to eliminating the tax cascading that is inherent in existing provincial retail sales tax systems, the harmonization of sales taxes will minimize distortions in investment decisions.

I refer to businesses being able to recover the tax on business inputs in the new system. Keep in mind that the current provincial retail sales taxes are applied on the price of purchase, including the GST. Since the existing provincial retail sales taxes do not have a mechanism for removing taxes paid on purchases by businesses in the course of producing the goods and services that they sell, these taxes become embedded in the prices that businesses charge for the goods and services they produce.

A key advantage of the HST will be removal of the embedded taxes. This will make the tax payable on goods and services more transparent to consumers. In addition, companies and the participating provinces will be able to price their goods more competitively. This will be particularly advantageous for exported goods which will be completely relieved of tax. Along with promoting the international competitiveness of businesses in the participating provinces by removing tax from exports, steps will be taken to ensure that they and their competitors and non-participating provinces are treated equitably.

The design of the tax will ensure that goods and services sold into a harmonized province from outside the province for consumption or use in the participating province are subject to the same level of tax as goods or services sold within the province.

Registrants across Canada will be required to collect HST on goods or services sold in a participating province or shipped to that province. At the same time they will be eligible for input tax credits for HST paid on inputs into their commercial activities. Under current provincial sales tax rules in both participating and non-participating provinces, consumers are required to pay tax on any taxable purchase consumed in their home province.

If a purchase is made from a business in another province, consumers are required to self-assess the applicable provincial sales tax. The requirement to collect tax on interprovincial sales will ensure the application of a provincial tax is continued under harmonization in an administratively efficient manner.

In order to ensure a consistent and simple approach for businesses required to collect HST on interprovincial sales, a single set of rules will be provided in the Excise Tax Act. The federal government will apply this approach on behalf of any province that adopts a similar system.

As hon. members know, the registrants will be able to recover tax payable at the HST rate of 15 per cent on goods and services to the extent that they are acquired for consumption use or supply in a commercial activity. This will eliminate the tax cascading inherent in existing retail sales taxes in participating provinces.

We know too that the removal of tax on business inputs will enhance the competitive position of businesses operating in those provinces. Similarly, special rebate mechanisms will apply where property or services are acquired in participating provinces and the property is removed, or the services are for use outside these provinces by people who are unable to claim input tax credits.

Let me emphasize that registrants regardless of where they are located will be able to claim input tax credits in respect of tax paid or payable either at the 7 per cent GST rate or 15 per cent HST rate on property and services they acquire or import into Canada as inputs into their commercial activities.

By allowing registrants located in participating or non-participating provinces to claim input tax credits for tax paid or payable regardless of whether it was charged at the 7 per cent GST rate or at the 15 per cent HST rate, the dual objectives of eliminating tax cascading and maintaining competitive equity can be achieved in a way that is both simple and effective.

Businesses engaged in commercial activities anywhere in Canada that purchase goods and services in participating provinces that are taxed at the harmonized rate will be entitled to recover tax payable at the HST rate. Another result is that when reporting tax collected or claiming input tax credits, registrants will not have to separately identify the federal and provincial components of the HST at the 15 per cent rate or tax collected or payable at the 7 per cent GST rate.

Furthermore, most registrants will continue to use the current GST return to calculate net tax remittances. This aspect of harmonization will make a difference between the participating provinces and the remaining non-harmonized provinces.

Let me reiterate that at present in all provinces except Alberta, consumers pay provincial sales tax on all taxable purchases consumed in their home province. If they buy something outside the province they are required to self-assess the provincial tax applicable. Businesses generally apply only the GST on sales to other provinces but they are still required to indicate where PST does not apply, for example by destination. The PST does not apply out side the province.

Under the HST there will be no hidden taxes because of the input tax credits that businesses can claim to recover the tax on goods bought to run their operation and make products. Equity and competitiveness for Atlantic businesses dictate that all goods and services consumed in participating provinces should be subject to the same level of sales tax. This includes goods supplied by businesses in non-participating provinces for final consumption in Atlantic Canada.

Introducing a national measure for collecting tax on interprovincial sales will establish a stable, fair and predictable set of rules for businesses selling into the harmonized provinces. As we know, businesses in the non-participating provinces will have to apply the 15 per cent HST on all sales into a harmonized province.

I should point out here that frequent changes will not be required as other provinces harmonize. This is not a new sales tax on goods and services sold in the participating provinces. Sales tax on interprovincial sales has always been applicable. Many national businesses involved in interprovincial transactions already collect

and remit provincial taxes on a province of destination basis. This new approach merely ensures that sales tax is collected and remitted more efficiently and effectively.

As long as collection of tax on interprovincial sales is based on a single set of rules, collecting the 15 per cent HST will not involve a significant change for these businesses.

Some consumers shop to purchase items free of provincial sales tax in other provinces. While consumers are required to self-assess the applicable provincial sales tax on these purchases, as I mentioned before, this is not the most effective way to ensure that the tax is paid.

With businesses now having to collect and remit the HST when they sell into a participating province, consumers will no longer be able to purchase these goods free of provincial sales tax. Consequently, the same tax savings incentive to buy out of province will no longer exist. This approach is more equitable for businesses and consumers alike. Retailers in participating provinces will no longer be at a disadvantage compared out of province vendors. Both will be required to charge the full rate of tax on their sales.

Collection of tax on interprovincial sales requires two basic elements, a common base and referencing of federal legislation. The national approach to interprovincial sales establishes an efficient and effective system for collection of tax on interprovincial sales which can benefit all provinces by facilitating the collection of the provincial sales tax on all sales into the province.

We already know the HST treatment of interprovincial sales benefiting participating provinces. For example, through additional sales tax revenues and by providing a level playing field for all businesses selling in or into participating provinces.

We know too that there will be no incentive for businesses in any province to avoid paying tax on their inputs as they can claim input tax credits for the full amount of tax paid.

As I said at the beginning, this bill puts into law the first step toward replacing the GST with a truly national sales tax system. Perhaps, when the non-participating provinces see the benefits of harmonization, they too will join in and reap the benefits. After all, the consumers and businesses in those provinces deserve the same breaks as residents in Nova Scotia, New Brunswick and Newfoundland and Labrador.

No doubt the HST will be a better sales tax system when it is a national system. But this is a start, an important, valuable start that will truly benefit the economies of the Atlantic provinces. That is why I urge all hon. members to support this bill.

[Jean-Marc Jacob, Bloc, Charlesbourg, QC]

Mr. Speaker, I am pleased to participate in this debate on Bill C-70 for various reasons. Several of my colleagues and members of the Reform Party have pointed out that, through this bill, the Liberal Party has completely reneged on an election promise.

I was listening to the hon. member for St. Boniface, who mentioned the added bonuses of the so-called harmonization of the GST. All the hon. members will remember the statements made by the Prime Minister, the Deputy Prime Minister and even the Minister of Finance to the effect that the GST was an unfair, regressive tax which hurt the economy and, in some respects, encouraged work for cash when the tax is applied to services.

We have realized that, after undertaking to abolish this unfair and intolerable tax, the government is now diverting attention by saying that it has been successfully harmonized and that the Prime Minister's promise to eliminate the tax had been misunderstood.

It will be remembered that, in the late 1970s, the Liberal Party guru, former Prime Minister Trudeau, had taken very similar action regarding the gasoline tax. At the time, when former Prime Minister Joe Clark was briefly in office, Mr. Trudeau described the gasoline tax introduced by the Conservatives as an unacceptable, intolerable and unfair tax that would be abolished as soon as the Liberals were in office.

And we all know that Mr. Trudeau became Prime Minister of Canada and that the gas tax was not abolished. Quite the contrary, it was increased. This bears a strange resemblance to the promises made by Mr. Trudeau's disciple, the current Prime Minister, who said he would abolish the GST because it was unfair, regressive and bad for the economy. Again, the promises made were not fulfilled and the government has now found a roundabout means, the so-called harmonization, which it touts as an outstanding solution.

We will never stress often enough what I would call the inconsistent, farfetched promises made over a period of decades by the Liberal Party, a party that makes all kinds of promises but never fulfils them. Such was the case with the gas tax and such is now the case with the GST.

The government talks about harmonizing the GST but, to my knowledge, the GST is still at 7 per cent, under the agreement reached with the maritime provinces. What was harmonized is the provincial tax, which was lowered in Newfoundland, New Brunswick and Nova Scotia. In other words, the provincial tax was harmonized, thus reducing the total tax, a loss the federal government will quickly compensate through equalization payments.

But the government also gave these three provinces $961 million in compensation, to help them integrate the GST and implement the so-called harmonization. Strangely enough, Quebec was a harmonization pioneer, as mentioned earlier by a Liberal member, who said that having an harmonized tax was good for trade and exports. Again, one wonders what principles of justice and fairness are used by a government that subsidizes and compensates the

three maritime provinces that agreed to "harmonize" their taxes, while Quebec did the same at its own expense.

I was in the private sector when that process took place and I remember that all the costs, such as the acquisition of software to integrate the GST with the provincial sales tax, were supported by small and medium size businesses in Quebec. As for the provincial government, it trained some of its employees and integrated its computer system so as to achieve harmonization with the GST.

Did Quebec get any compensation? Let me use the words of the Minister of Human Resources Development in reference to culture: "Not a bloody cent". We did not get any compensation from the federal government. Now Quebec is asking to be compensated for having harmonized its tax with the federal GST, but this government is turning a deaf ear so that the province might not get anything.

Meanwhile, the maritimes, where, as the government says, the tax has been harmonized, are being subsidized or compensated to the tune of $961 million.

With such compensation, New Brunswick can now be competitive and attract some Quebec and Ontario businesses, by stressing the fact that taxes will be lower in that province, given the kind of subsidy granted by the federal government, through the compensation paid to maritime provinces.

This is a rather curious system when you look at it: the federal government provides a kind of competitive tool to three provinces by harmonizing its tax, to the point that it becomes unfair, since these provinces will benefit from such a substantial subsidy or compensation. How then can we believe that the Canadian federation, with bills such as this one-

[The Speaker]

I am sorry to interrupt the hon. member. I know you are in the middle of your speech, but you will have 14 minutes left. You will have the floor again after question period.

It being almost 2 p. m., we now move to members' statements.

Chinese New Year

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, last week the Chinese community celebrated Chinese New Year. In fact, the celebration was enjoyed by all communities under the leadership of those Canadians who emigrated from the countries where Chinese New Year is observed.

In my riding of Vancouver East the Chinese Cultural Centre, the Chinatown Merchants' Association, the Chinese Benevolent Association and S.U.C.C.E.S.S. organized several events in which a large number of people participated. It was a real celebration with a very successful parade with lions and dragons, drums and fireworks in a glory of colours and folklore. All devils were scared away.

One of the groups in my community we are very proud of is the Strathcona Chinese Dance Company. It was invited to Ottawa by the National Capital Commission to inaugurate Winterlude. Thirteen young people came under the leadership of Annabel Ho, while in Vancouver the remaining 70 young dancers performed under the leadership of Mimie Ho.

I would like to congratulate the whole Chinese Canadian community for its contribution to Canada and for sharing its traditions with all other Canadians.

Kung hei fat choy. Happy New Year of the Ox.

Justice

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, Canadians expect a fair and responsive justice system. Yet for the past three years the apparent lack of justice in the Patrick Kelly case brings to light serious problems within our justice system.

Kelly, a former RCMP officer, was convicted of murder when his wife fell to her death from their 17th floor balcony. The police investigation into the Patrick Kelly case is being conducted by the same police force and the same homicide squad that has been accused of wrongdoing in the original investigation.

How can Mr. Kelly have an independent review when Ed Stewart, the primary officer in the original investigation, is staff officer with the police department reinvestigating the case? Ed Stewart apparently lost the tape recording that would verify or refute many of the allegations made by the key witness who later recanted her statements. This brings into question any impartiality in the investigation.

In the name of justice, the Minister of Justice must arrange for an independent body to conduct the Kelly investigation.

Small Business

[Gilles Bernier, Independent, Beauce, QC]

Mr. Speaker, SMBs are the biggest employers in almost all communities in Canada, accounting for over half of all this country's jobs in the private sector.

When it comes to job creation, SMBs are responsible for 80 per cent of all net new employment. In addition, SMBs generate over one quarter of all sales, one third of all profits, one fifth of all goods, and approximately 40 per cent of the GDP.

Unfortunately, SMBs are spending too much time, money and energy complying with government requirements. The smaller a business, the higher its basic costs.

With the largest concentration of SMBs in Canada, the Beauce region is in a position to comment. I urge the government to do something to reduce the paper burden so that our SMBs can spend more time doing what they were intended to do, which is to produce goods and service effectively and not to waste time on often pointless paperwork.

One Hundredth Birthday Of Sister Sainte-Hermine

[Suzanne Tremblay, Bloc, Rimouski—Témiscouata, QC]

Mr. Speaker, today the Communauté des filles de Jésus in Rimouski is celebrating the 100th birthday of Sister Marie-Anne Chenel, also known to many as Sister Sainte-Hermine. I would like to add my congratulations to those of her religious family and her relatives.

Over the years, Sister Chenel has followed her chosen path with conviction. She lovingly took up duties as the teacher of young children and, through her presence and involvement, built up lasting ties within her community.

I wish Sister Sainte-Hermine serenity on her journey. May she continue to be, for a good many of us, an example of perseverance and hope.

Organ Donations

[Stan Dromisky, Liberal, Thunder Bay—Atikokan, ON]

Mr. Speaker, I rise today to inform the House of the fantastic work being conducted at the Thunder Bay Regional Hospital's McKellar site.

A Thunder Bay medical specialist, Dr. William McCready, indicated that McKellar is the top hospital in Canada for organ donation. In 1996 nine multi-organ donors were brought to McKellar. Transplant teams have retrieved healthy hearts, kidneys, livers and lungs for use in patients throughout Canada whose diseased organs put them in a life or death situation.

The transplant process is facilitated when Canadians sign a donor card and when their relatives or next of kin have given permission for organs to be removed for transplanting. I urge all Canadians to complete donor cards. This humanitarian act has the potential to give the precious gift of life to someone in need.

Pensions

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, the domestic law and administration of Great Britain have created a serious disadvantage for 130,000 Canadian citizens of British origin now living in Canada who are entitled to vested pensions from the British government. These British-Canadians do not enjoy the same benefits as British immigrants to the United States and other countries whose British pensions are indexed against inflation.

We ask the Canadian government to continue its diplomatic efforts to persuade the Government of Great Britain to bring its treatment of British-Canadian pensioners in line with similar pensioners in the United States and other countries.

Crime Prevention

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I am encouraged as I speak to constituents in my riding that crime prevention and our commitment to a partnership with law enforcement, community groups and citizens for safe homes and safe streets is working.

In 1994 our government established the National Crime Prevention Council. Active community involvement is growing.

Last month Mr. Fred Roberts, one of my constituents, witnessed a robbery and assault of a senior by a group of teenagers. Mr. Roberts did not think twice about rushing to aid his neighbour. Later he apprehended a perpetrator and persuaded him to turn himself in to the police.

The Etobicoke Crime Prevention Association is also central in working with Youth Service Canada and the Department of Justice to create prevention programs.

All this proves that citizens, communities and governments can work together to prevent crimes and to produce safer streets.

World Championships

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, last Saturday in Nagano, Japan, Jean-Luc Brassard took the world moguls title in freestyle skiing. The silver medal went to Stéphane Rochon. A few hours later, Nicolas Fontaine won the gold in aerials.

The names of Jean-Luc Brassard, Stéphane Rochon and Nicolas Fontaine will now stand alongside those of Gaétan Boucher, Josée Chouinard, Isabelle Brasseur, Sylvie Bernier, Myriam Bédard, Sylvie Fréchette, Annie Pelletier, Gilles and Jacques Villeneuve, Bruni Surin and many others, who are eloquent testimony to the fact that Quebecers can compete with anyone in the world and win.

Bravo Jean-Luc. Bravo Stéphane. Bravo Nicolas.

Grain Transportation

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

Mr. Speaker, prairie elevators are bulging with grain. Meanwhile dozens of ships are waiting to load in Vancouver and massive demurrage charges to western farmers are accumulating.

The two major railways have chosen this inopportune time to suspend service for at least three weeks on hundreds of kilometres of lines in western Canada. Outstanding car allocations have been cancelled and producers have been hung out to dry.

As usual, the interests of western grain farmers are being ignored. However with a transport minister from Victoria and a minister of agriculture apparently from some other planet, this is hardly surprising.

Tobacco Legislation

[Svend Robinson, NDP, Burnaby—Kingsway, BC]

Mr. Speaker, the Liberal government is under tremendous pressure from tobacco manufacturers to weaken and delay Bill C-71, the tobacco legislation. New Democrats urge the government to move ahead with the bill, which already represents a compromise, with no more concessions and no more delays.

It is ironic that the tobacco industry is seeking to make deals around sponsorship such as allowing international events. At the same time other governments, including the U.S., Belgium and France, are moving to a total ban on all tobacco sponsorship of arts and sports.

The government should ensure that the funds lost to cultural and sports groups are restored and strengthened from other government revenues. The government must not be bullied by the high pressure propaganda from the tobacco companies, companies that have already a very cosy relationship with the Liberal Party.

Canadians can have both a rich and varied cultural and sporting life and protect the health of our children and our own health from the destructive impact of tobacco.

No more concessions and no more delays. Move ahead with Bill C-71.