Mr. Speaker, I am surprised that the Liberal member for St. Boniface, who has proven to be very aware, intelligent and with it, was not on the issue that the government has already given $1 billion to three of the Atlantic provinces for harmonization. In fact, the payment was made out of last year's funds. The payment was criticized by no less than the auditor general because a final agreement had not been signed. It was only a letter of intent. The auditor general said it was a very dangerous precedent to be set by a finance minister for future years. It is on the borderline and is construed and believed by a lot of people to be against generally accepted accounting principles.
The member for St. Boniface just proved by his speech and lack of knowledge what the first speaker from our party, the member for Medicine Hat, pointed out earlier, that the Liberal members of Parliament are being duped by the government and by the finance minister on this issue.
Here we have the situation in Atlantic Canada. Canadian taxpayers have already spent $1 billion to get rid of this GST. To help the Liberals keep their promise we have now paid $1 billion to three Atlantic provinces. Retailers and businesses estimate they are going to spend upwards of $100 million. They presented these numbers to the Standing Committee on Finance. This is not a number I am making up, nor am I exaggerating, it is their number.
Third, starting April 1, 1997 the consumers of Atlantic Canada are going to see how this affects their pocketbook. I do hope the Prime Minister does call an election for June because after three months of paying at the tills and seeing how this whole fiasco affects them, there will be a groundswell against the Liberal Party. It will have overestimated its popularity in the polls. There will be a new groundswell for a party that does offer a true alternative, a true choice and a fresh start for Canadians.
With that introduction let me get into some of the main elements of Bill C-70 at third reading. In direct contradiction of Liberal Party members who have their speeches written by spin doctors that we support this harmonized sales tax, let me point out that the minority report of the Reform Party on replacing the GST clearly stated otherwise in its executive summary.
On page 113, for the record, accurately, in context it states:
The majority finance committee report on the replacement of the GST cannot be fully endorsed by the Reform Party. While the replacement goes part of the way in
responding to concerns presented to the committee, many of the concerns will only be addressed by future negotiations with the provinces.
I did not realize at the time that meant bribing them.
The majority report recommendation merely tinkers with the current GST and does not live up to the Liberal promise to "Scrap the GST".
After all, this is what it is all about.
We are of the view that value added taxes are incapable of responding to a significant portion of the concerns raised during our hearings.
The Reform Party recommends that spending cuts be the government's first priority. As well the entire current system personal, corporate and value added taxes should be replaced by a simple, visible and proportional system of taxation that incorporates the principles of fairness and the lowest rate possible. In the interim, the party will support reforms to the current regime that move in this direction.
After all, we do want what is in the best interests of all Canadians.
While harmonization does simplify the tax system it makes no sense to do it in a piecemeal, ad hoc fashion because it simply increases the confusion, the cost and the resentment across the country.
Liberal members yesterday and today said they do not understand why the costs are going to go up. The costs are going to go down because the provincial sales tax will be treated like the GST. There will be input cost recoveries by the businesses lowering the costs. Let me tell these members why the cost goes up.
It goes up because the base on which this new combined tax will be applied has become broader. It will be applied to more goods and services. Previous speakers have pointed out, from clothes to housing, where this tax will apply. Because of that broader base the new harmonized sales tax or blended sales tax, HST or BST, will cost consumers more money.
In the ninth report of the Standing Committee on Finance the government wrote:
The GST is collected at each stage of the production and distribution process. However, since each business collecting the tax also receives input tax credits for the GST it has paid out, it is the final consumer who ultimately pays the tax.
It is the final consumer who ultimately pays the tax. As Liberal members try to defend this HST in terms of cost savings, they must not forget that yes, it is a savings for businesses after they pay the initial outlay of $100 million to conform their point of sale material, but it is the consumer who will ultimately pay a higher tax.
This is why other provinces like Ontario, Saskatchewan and British Columbia which have provincial sales tax are against it. It will shift the tax burden from businesses to consumers and that is what is bad about this particular bill. In effect it is an 8 per cent increase on those particular goods and services that were strictly on the PST and not on the GST. The GST has a broader base than the PST. That is a simple fact and simple arithmetic and should be enough proof for the Liberal members as to why this will be an increase in costs to consumers.
The purpose should be to eliminate dual tax regimes, but this version retains it for national firms. Somebody operating outside those three Atlantic provinces will have to have tax included pricing there, not tax included pricing elsewhere.
Therefore when they report their taxable income, they will need two different forms. This is an increased cost for businesses which then, in turn, looking at the bottom line, eventually will pass along this cost to the consumer. Once again it hits the consumer where it hurts the most, right in the pocketbook.
This billion dollar bribe or transitional payment to the three provinces, the cost of reducing the sales taxes in the harmonized provinces, is being paid for by all the taxpayers.
The deal will increase the complexity of the tax system for all businesses in Canada with operations in the Atlantic provinces. It does not just affect those three provinces. It is not just a deal for those three provinces.
National retailers have said that tax inclusive pricing in a partially harmonized system will lead to increased cost. If done nationally it would be a much simpler solution due to separate packaging requirements for harmonized provinces.
In response to these concerns, the federal government and the participating governments announced changes on January 17, 1997-