House of Commons Hansard #145 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was consumers.


11 a.m.

The Speaker

I have notice of a question of privilege.


11 a.m.


Nic Leblanc Bloc Longueuil, QC

Mr. Speaker, I want to inform you that I have decided to resign from the caucus of the Bloc Quebecois and to sit from now on as an independent sovereignist member.

I entered politics in 1984 to promote decentralization, personal responsibility, sound public finances and national reconciliation. I was re-elected in 1988 for the same reasons and to finalize the North American Free Trade Agreement and the Meech Lake accord.

I resigned from the Progressive Conservative Party on June 26, 1990, when English Canada refused to ratify the Meech Lake accord. On the 29th of the same month, I invited other former Conservative members to my office in Longueuil to discuss our future and our contribution to sovereignty plan for Quebec.

At that meeting, we chose Lucien Bouchard as the leader of our parliamentary group. In the fall, we set up our caucus so as to be more effective in the House. On September 20, I was given the position of president of the caucus and became the group's main organizer.

When it was decided to establish the Bloc Quebecois party in early February 1991, I agreed to be interim director general and to be responsible for the party's organizing activities in the Montérégie.

In Tracy on June 15, 1991, the Bloc Quebecois became a party, and I had the honour of being the signatory vice-president. Subsequently, I was on the winning team in the 1993 election. Our party's platform was twofold: to defend the interests of Quebec and to promote sovereignty until a majority voted in favour of this concept in a referendum.

Unfortunately, after the 1993 election, decision making within the Bloc Quebecois became rigid and authoritarian. Opportunities to promote my own ideals and those of the business community, especially those of Quebec's small businesses, which is my background, were steadily dwindling.

During the recent leadership campaign, the hon. member for Laurier-Sainte-Marie, who was a candidate, confirmed that he would maintain the same rigid policies. As we all know, the hon. member was elected leader and will continue to promote his political vision, which is diametrically opposed to my own.

But that is not all. In fact, some fairly reliable rumours lead me to believe that the hon. member for Laurier-Sainte-Marie headed the group of members which brought about the departure of the former leader, the hon. member for Roberval. We have never had a satisfactory explanation of this situation.

For all of these reasons, you will understand that I can neither come to terms with nor support the leadership of the hon. member for Laurier-Sainte-Marie. After spending so much time and energy on the party and our cause, I sincerely regret that I must resign from the caucus of the Bloc Quebecois.

Several colleagues and party members very sincerely insisted that I should let bygones be bygones and continue to sit with the Bloc Quebecois, even if this meant staying home, so as to avoid tarnishing the image of the party and our cause just before a major election.

Keep silent, me? Me, a member of Parliament from Quebec for nearly 13 years, and in a party I founded? Certainly not. Never.

Others accused me more openly of putting my own insignificant self before the cause. I say to them: does the greatness or insignificance of an individual depend on the person's ability to be a sacrificial lamb or on moral and ethical integrity?

Can they not understand that the rules of morality and ethics are not so many obstacles that we can circumvent at will?

I cannot remain in the caucus of the Bloc Quebecois. This would only lead to tension and conflict that would be just as bad.

My constituents in Longueuil, who have known and supported me since 1984, know that to me, honesty and frankness are sacred.

I am sure they will realize, although they may not like it, that this decision was inevitable and is in the best interests of all concerned.

I would like to say to my colleagues who honoured me with their trust and friendship that I appreciate their co-operation and wish to express my sincere thanks.

As for the future, I will continue to work where I feel I will be most useful to defend the interests of Quebec.


11 a.m.

The Speaker

My dear colleague, this is my ruling: this is not a question of privilege but most certainly a personal statement.

Since this is a personal statement and not a question of privilege, no other members will be recognized to speak to this matter. I wish to thank you for your personal statement.


The hon. member for North Vancouver is not present to move the order under Private Members' Business as listed in today's Notice Paper. Accordingly, the motion is dropped to the bottom of the order of precedence on the Order Paper.


11 a.m.

The Speaker

The sitting will be suspended until twelve o'clock.

(The sitting of the House was suspended at 11.15 a.m.)

The House resumed at 12 p.m.

Excise Tax ActGovernment Orders

March 17th, 1997 / 11 a.m.

Cape Breton—East Richmond Nova Scotia


David Dingwall Liberalfor the Minister of Finance


That the amendment made by the Senate to 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 now read the second time and concurred in; but

That this House, while disapproving of any infraction of its privileges or rights by the other House, in this case waives its claim to insist upon such rights and privileges, but the waiver of said rights and privileges is not to be drawn into a precedent; and

That a Message be sent to the Senate to acquaint Their Honours therewith.

Excise Tax ActGovernment Orders

11 a.m.


John Williams Reform St. Albert, AB

Mr. Speaker, a point of order. I was listening to your point about the government asking us to waive certain rights and privileges. I wonder if we could get an explanation of what these rights and privileges are before we get into debate.

Excise Tax ActGovernment Orders

11 a.m.

The Deputy Speaker

That is not the wording of the Chair. That is a matter of debate.

Excise Tax ActGovernment Orders

11 a.m.

St. Paul's Ontario


Barry Campbell LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I rise once again in support of Bill C-70. My remarks today will focus on an amendment that was adopted in the other place last week.

As hon. members will recall from earlier debates in the House, the purpose of Bill C-70 is to implement the harmonized sales tax in the provinces of Nova Scotia, New Brunswick, 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 apply not only to the harmonized sales tax, but also to the GST in the rest of Canada.

A key element of the legislation that was debated by the House a few weeks ago is tax included pricing. This is the feature of Bill C-70 that the hon. senators propose to amend. Specifically, the proposal is to delay tax included pricing until such time as provinces with sales taxes that comprise at least 51 per cent of Canada's population have harmonized or otherwise adopted tax included pricing.

To repeat, the proposal is to delay tax included pricing until such time as provinces with sales taxes and that comprise at least 51 per cent of Canada's population have harmonized or have otherwise adopted tax included pricing.

I would like to make two points concerning this development.

First, in every other respect the proposed legislation that is the subject of today's debate is identical to the legislation that was passed by the House on February 11. The postponement of tax included pricing is the only change on which the hon. members will be asked to vote.

Second, the government continues to recognize the importance of tax included pricing. As I have said many times, consumers want tax included pricing. This is a policy to which the government remains committed. As more provinces harmonize in the future, we will welcome tax included pricing as the solution to the annoyance, the inconvenience and the frustration that consumers now experience at the cash checkout every day.

I would now like to explain the practical considerations that govern our approach today.

Essentially, opposition senators on the banking, trade and commerce committee gave us a choice: either postpone tax included pricing or delay passage of the bill beyond the April 1 implementation date.

Speaking for the Progressive Conservative Party, Senator Angus stated emphatically that if the pricing requirements remained in the

bill, it would not see the light of day by April. He said in no uncertain terms that his party would delay the bill regardless of the chaos and confusion that such a delay would entail for businesses and everyone else that are gearing up for harmonization to come into effect 15 days from now.

Given the potential for chaos, and given the fundamental economic benefits that harmonization will bring to the Atlantic economy, the risk of missing the April 1 deadline is a risk the government is not prepared to take.

In the course of the banking, trade and commerce committee's recent hearings on the legislation, witness after witness spoke of the real and immediate advantages of the HST. The Atlantic Provinces Economic Council argued that the harmonized sales tax will make Atlantic Canada more competitive by ridding their economy of embedded sales taxes and by bringing the relatively high sales tax rates into line with those of other provinces. They see it as a way to reduce costs for businesses and stimulate consumer spending.

The government and its provincial counterparts also see harmonization as a way to reduce administrative costs. These and many other points were eloquently endorsed by the finance ministers of the participating provinces. All three ministers took the time to appear before the Senate committee.

No matter how it is looked at, this is legislation that will work to the benefit of Newfoundlanders, Nova Scotians and New Brunswickers. That is a point these ministers came to Ottawa to make in the face of criticism from opposition parties that think they know better and that want to tell that region of the country what it should or should not do.

On balance, the gains in this legislation outweigh the postponement of tax included pricing. We accept Bill C-70 in its amended form because of the long term economic benefits it will bring to the Atlantic region.

A more immediate consideration is that April 1 is fast approaching and we must ensure the transition to a harmonized sales tax does not cause disruption and confusion for businesses and consumers.

From the time the House of Commons Standing Committee on Finance began studying options for replacing the GST three years ago, the goal of an orderly transition has been a guiding principle in developing the harmonization model that is before us today.

In its current form, Bill C-70 contains several features that will contribute to a smooth transition. The harmonized tax will have the same tax base and same basic operating rules as the GST. There will be no requirement for GST registrants to obtain new registration numbers. Most businesses already know and understand the rules for applying the GST and for claiming input tax credits. These rules will continue to apply under the harmonized sales tax.

The Atlantic business community needs certainty, a smooth and orderly transition to the harmonized system. The importance of a smooth transition is not lost on lawmakers in those provinces or on us in the House, for they have given their respective harmonization bills swift passage, something we are anxious to do as well. It is now time for hon. members to do likewise by supporting the proposed amendment to Bill C-70.

Excise Tax ActGovernment Orders

12:10 p.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, we are faced with a monumental farce. If being ridiculous were fatal, all of the members of the government would be dead. Why?

I would like to begin by reminding my listeners what our debate is about at this time. Bill C-70, which sets out the mechanisms for harmonizing the GST with the provincial sales taxes in three maritime provinces, was reviewed by the other House.

The other House proposes, contrary to what is set out in the bill, which provides for the inclusion of the new harmonized 15 per cent tax in the price in three maritime provinces, to postpone implementation of this provision, or in other words to continue the status quo. This means that a consumer's receipt, and the price label on the item, will show the price, with the new tax rate beside it. The senators are asking that tax-inclusive pricing be postponed until 51 per cent of Canadians, and therefore a certain number of provinces, accept this inclusion in the price.

How does the government respond to this proposed amendment by the Senate? As follows:

That this House, while disapproving of any infraction of its privileges or rights by the other House, in this case waives its claim to insist upon such rights and privileges, but the waiver of such rights and privileges is not be drawn into a precedent; and

That a Message be sent to the Senate to acquaint Their Honours therewith.

What this means is that the government is bowing to the other House, whose members are unelected, and part of an archaic, outmoded system that absolutely must be abolished. They accept the arguments of the other House, provided that this does not create a precedent.

It is shameful to see them bowing to an unelected House with an archaic system, and moreover to arguments which were presented by elected members throughout the entire debate on Bill C-70.

Allow me to explain. One of the major points made throughout the entire debate-three readings and the report stage as well-by the official opposition, the Bloc Quebecois, which is made up of elected members, was precisely the fact that the new harmonized tax was being included in the price.

In January, the finance committee heard witnesses representing maritime businesses and consumers tell us that including the new harmonized tax in the price made no sense, and would create chaos, total turmoil in the maritimes, particularly for companies doing business across Canada.

We in the Bloc and the Reform Party as well-both of which are made up of duly elected members-hit the nail on the head. Yet, every time, the response was: "You are wrong, the new harmonized tax must be included in the price right away, otherwise there will be total chaos in the maritimes, the system will be inefficient, and there will be chaos at the fiscal level".

Now, when the other House, which is made up of unelected, illegitimate members, proposes a similar amendment to the one we debated, the one to which the government turned a deaf ear, it gets presented and accepted, of course. We trust this will not serve as a precedent, that it will not reduce the rights and privileges of the House of Commons, of the duly elected members of the House of Commons. It makes no sense whatsoever to present things in this way.

It does not make any sense either to make us debate and work for weeks on the finance committee to try to come up with something worthwhile, to try to listen to criticism and opinions from people from the maritimes even, to end up wasting time and taxpayers' money in this exercise, when we arrived at the very same conclusion as is being proposed today by the outmoded and outdated other House. We went through the entire process: lost time, wasted energy, overspent taxpayers' money so that the government could accept today, for purely partisan and election purposes, the amendment of the other House.

Democracy has never been so badly served. The rights and privileges of the elected members of the House of Commons have never been so badly served as in this matter, which has been a disaster since the start.

If that were the only issue, but there is also the one of 104 individuals, whose appointments were totally partisan, who were appointed by the office of the Prime Minister. There is worse yet. The entire bill should be dumped.

It is still around and it should be dumped, because it is not right, after the government's capitulation before unelected officials on the point of not including the new harmonized sales tax in the cost price, that we find ourselves back at the start- in other words, with the GST not harmonized with the provincial sales taxes. What is this situation? The GST remains, the problem remains in its entirety, politically. This government lied about its intentions and it is presenting this legislation to us as the bill of the century.

Democracy is being very badly served, when, even before we passed Bill C-70, a few weeks ago, $961 million was paid out to the maritimes. Even before the bill was passed, even before democratic process was applied to this bill, the government had decided that democracy was of no importance.

They do not care about the rights and privileges of members of the House. They released the funds they are already paying out to the maritimes. Under what pretext? Under the pretext of avoiding chaos, a chaos they created in the first place with this flawed and partisan bill to buy the maritimes with nearly $1 billion in compensation. This chaos is their doing. They would not listen to us, in the official opposition, when we told them that including the new harmonized sales tax in the price made no sense. Now, the same suggestion, coming from the 104 dinosaurs in the other place, is looked upon favourably.

Sometimes, there is no logic in politics. What we have before us is a motion totally devoid of logic. Indeed, after going through the democratic process of debating a bill, where is the logic in the government going along with whatever nonsense the other place may have come up with? The government is overlooking the privileges of members of Parliament and forgetting the importance of the House of Commons. It has reached a point where the sovereignists have more respect for this institution, its rights and privileges, than the federalists, who claim to be 100 per cent behind the federal system, including its greatest manifestation: the House of Commons.

It is a sad day for democracy when funds are released before the appropriate legislation is passed. At this rate, what will be the use of the House of Commons, of elected representatives, of debates on issues as fundamental as this one? One billion dollars is taken out of the pockets of taxpayers and literally thrown out the window. The GST problem remains unresolved. Nothing has been resolved. Even innovations like tax included pricing were no use, since the other place rejected the idea. Where does that leave us?

We are back to square one. It is the provincial sales tax in three maritime provinces, three Atlantic provinces, that is being harmonized with the GST. The GST remains, but the new harmonized tax rate will drop to 15 per cent, at a cost of $1 billion to Canadian taxpayers. The initial situation was strangely similar to that prevailing in Quebec in 1993.

We in Quebec harmonized our provincial sales tax with the GST, and not the other way around as provided for in the initial plan. We did not include the tax in the price. The situation in the maritimes is exactly the same as Quebec's situation since 1991. If that is the case, it means the people across the way owe us $2 billion. That amount was calculated based on specific criteria, on readily identifiable costs incurred in harmonizing Quebec's sales tax with the GST. The federal government owes us $2 billion.

This morning, we have an opportunity to demand that the government treat Quebec fairly. If our province were the only one making that claim, if it had no ally in this great federation, one might say "Quebec is always complaining", but three Canadian premiers support Quebec's claim. The British Columbia premier even said that if, based on the calculation method and the transition costs used, the maritimes were entitled to $961 million in compensation, then Quebec also deserved a compensation, estimated at $2 billion. There is basically a Canada-wide consensus that Quebec must be compensated for its harmonization efforts.

If there is a matter in which the government is acting like a clown, in which government members, including the finance minister, are acting like clowns, it is definitely the GST. The Liberals made an issue of the GST during the last election campaign. Promises were made by the Prime Minister and the Deputy Prime Minister. These commitments were not fulfilled. Not only did the Liberals not fulfil their commitments, they also created total chaos in the maritimes.

Earlier, the hon. member talked about uncertainty. He said that business people need certainty.

Business people need certainty. Big deal. The Liberals themselves created situations filled with uncertainty. So much so in fact that, just a few weeks ago, eminent representatives of business people from the maritimes no longer knew what to expect. They were told all sorts of things, such as: "You could, perhaps, in the first three months, not include the new harmonized sales tax in the price. However, after three months, you should include that tax". People no longer knew what to do. National companies no longer knew what to do, because they were now required to have a dual labelling system. They were now required to have a dual storage system for the goods they sell in the maritimes and those they sell elsewhere.

Then the Senate came up with an amendment saying: "Until such time as 51 per cent of Canadians agree to include the new harmonized sales tax in the price, we will not force them to do so". What do business people think now? They are saying to themselves: "We set up a system that allowed us to implement the main provisions of Bill C-70. Now the government is changing its mind because of the 104 anachronisms in the other place". If that is not uncertainty, if that does leave businesses wondering where to head next, I do not know what it is.

It was such an unsatisfactory bill that, the very day it was introduced in the House, the government decided it had better table over a dozen amendments along with it, right at the outset. For a government that knows where it is headed, when you introduce a bill and a dozen amendments to it at the same time, it is pretty hard to take. And then, at the end of the line, they accept to set aside one of its a provisions.

So I continue to say that this bill makes no sense. It solves nothing. It is costing us almost $1 billion, outside the maritimes, in Quebec, Ontario, British Columbia, Manitoba, Saskatchewan and Alberta. The taxpayers in these provinces are the ones who will be footing the bill for this compensation that is still unjustified and unjustifiable when we look at the treatment received by Quebec with respect to the harmonization process.

And now, on top of that, the members opposite now say that they do not care about the rights and privileges of elected members. They are handing over part of the rights and privileges of the House of Commons to the 104 anachronisms in the other place, in a completely outdated institution which most Quebecers and Canadians would like to see abolished at the earliest opportunity.

Therefore, in light of all this, and we will have some explaining to do during the upcoming election, we can only reject this motion because it comes from an institution we condemn, an institution that is costing taxpayers $43 million annually and does nothing more than add additional layers of uncertainty that the government bows to in agreeing to waive the rights and privileges of this House.

We will also oppose this motion because overall this bill makes no sense to us. It is a bill that is costing Canadian taxpayers $1 billion, and $1 billion in compensation to the maritimes should in the normal course of events lead to $2 billion in compensation to Quebec. But the government is turning a deaf ear to that.

We are not about to congratulate this government, nor am I about to congratulate my colleague, because caving in like this in the face of a real process to reform overall taxation-something it defended when in opposition-and caving in as well before such an outmoded institution is unbelievable. We reject this motion, as we rejected Bill C-70.

Excise Tax ActGovernment Orders

12:25 p.m.


Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, once again I rise to speak to Bill C-70. It seems to pursue us like a bad dream, having returned with amendments from the other place.

I want to talk a bit about some general principles which most people would hold to be extremely important. They are ones people would normally expect the government to adhere to. Most people believe very strongly in the principles of honesty, equality and accountability. The government has ignored those principles in bringing about Bill 70 again, and in bringing it about in the first place. I want to elaborate a little on that.

During the last election campaign a great fraud was perpetrated in this country. The opposition at the time, the Liberals, criticized the government for years on end over the goods and services tax. It had gone on and on.

The rhetoric was extreme. The Liberals said over and over again that they would get rid of the GST when they came into power. I have all kinds of quotes. I will not run through them again but I have stacks of quotes from prominent members across the way who now sit in cabinet who said that the GST would be gone when they came into power.

The current defence minister was involved in this, the current finance minister, the Deputy Prime Minister, and of course the Prime Minister. There were many other backbench members as well. In their campaign literature many said they would get rid of the GST. That was the tone of the debate.

Hon. friends opposite will say that in the red book on page 22 they said they would replace the GST. Indeed that is true. I acknowledge that. However, what is important to point out is while they were saying that and distributing it in the red book, which went to about 70,000 people with about three weeks left in the campaign, they were saying something quite different on national television. They were using the mass media to communicate a very different message.

It is convenient that they could have both messages out there. They thought it would allow them to escape from a tight spot. In fact they did not escape. In the last few months we have seen this whole issue come back to bite them once again. I will touch on that in a moment.

The point I want to make is that the end can never justify the means. My hon. friend, the parliamentary secretary for finance, is arguing that there are some positive changes in this legislation that will aid business. I acknowledge that tax simplification is a good idea. To the degree that business can work together with government at all levels and with consumers to simplify things so that it is easier for everyone, we should all support that. However, the ends do not justify the means.

We have a situation here where the government set out quite deliberately in my judgment to take people down a course where they believe they were going to get rid of the GST. If we pass this amendment and legislation we are sending completely the wrong message. We are sending the message that they can dupe Canadians, that they can draw them in with what is nothing more than a huge mistruth and get them to vote for them, then turn around, do something completely different and it is okay. That is what the government is essentially saying.

I cannot go along with that. There is a greater principle at stake here than just simplifying the tax system. We have a problem in this country where we actually have the public so cynical about what governments say they will do in election campaigns that we have a lawsuit going on in British Columbia. Some people in that beautiful province have decided that they will not put up with it any more. They are actually suing their provincial government because they are tired of being mislead during election campaigns.

That is precisely what has happened to this point where we are now talking about passing legislation that would change the GST. There is a huge principle in that. There is far more at stake here. It is far more important than the one that has been talked about by the parliamentary secretary.

Simplification of the tax system is an important issue. No one really disagrees with that. However, the big issue is does one allow governments to go ahead and do things that they said they would not do simply to get elected. That is the big issue.

That is the issue that is more important to a great majority of Canadians. The government has, frankly, mislead Canadians over the last three and a half years.

I want to talk a bit more about that. Some hon. friends across the way are saying that is not the case. However, I would remind the chairman of the finance committee and other hon. friends across the way that the Prime Minister himself was caught in a trap on the GST at a town hall meeting on CBC just a few short months ago when he denied that he had said he would scrap the GST, get rid of it. When he was challenged by a young waitress from Montreal on this issue, he said "I did not say any of those things".

What happened? The CBC just happened to have all kinds of footage of the Prime Minister saying precisely those things. Again the trust of the public was undermined.

This is a far more important principle than whether we should go about simplifying the tax system. It was not just that. We had a byelection because the Deputy Prime Minister said on national television two weeks before the last election campaign that if the GST were not scrapped she would resign. She did indeed resign, and we were glad about that, but she took a poll first to find out whether it was okay to resign so she could run again.

The issue here is whether politicians should be allowed to go ahead and make those kinds of promises only to turn around and completely refute them and then expect to get re-elected and expect to have people jump up and down about legislation that they are bringing through to simply cover up what it was they were trying to hide in the first place.

I think people today are very cynical. It is interesting that this bill would come down on the eve of an election. To me this is the

poster child for the GST, for the broken promises that the government has been unable to fulfil since the last election. Of all the different promises that the government has broken, on things ranging from NAFTA, to the CBC, to day care spaces, to unemployment, this has to be one of the biggest broken promises.

I would certainly encourage Canadians who are watching to hold the government accountable to the greatest degree that they can on this issue in the upcoming election.

I also want to say a few words about equality. Equality is something most Canadians believe in very strongly. They believe that we should treat all the provinces equally. However, I would argue that by paying the Atlantic provinces, with the exception of Prince Edward Island, a billion dollars to go along with this deal, the government has done something that just flies in the face of what most Canadians believe to be fair and right, which is to treat all the provinces differently. It decided that it was going to pay a billion dollars to Atlantic Canada because that was the only way it could get it to go along with the deal.

If members remember the atmosphere leading up to the agreement with Atlantic Canada, Atlantic Canadian provinces simply were not coming forward to the government saying "boy, I wish you would offer us a harmonization deal". They did not say that. In fact, the government was caught at that time because it was facing tremendous heat from the Canadian public because it had broken its GST promise so it needed a way out. Therefore it went to the Atlantic provinces and told them it would give them a billion dollars if they would go along with the harmonization deal. Because the Atlantic provinces are of course strapped for cash they said they would take the deal. That is how it happened.

When the other provinces said they would be interested in talking about this too if there was that kind of money involved, all of a sudden there was no money left. The government could only provide for Atlantic Canada. The people of Quebec were asking for $2 billion in compensation. Ontario wanted over $3 billion. The government of course said it just could not do it. It points to how the government thinks differently about what the notion of equality is.

Most Canadians feel that equality should be equal opportunity. If it is offered to one then it should be offered to everybody. The government has a different notion. It thinks that equality means equality of outcome. It thinks that equality means that we take from some provinces and give to other provinces and that makes everyone happy. It really does not work that way. In fact, all it does is divide Canadians. That is precisely what this legislation has done. It has divided Canadians on the notion that somehow some provinces are more equal than others.

I want to say a few words on the whole issue of accountability. I have talked about honesty, I have talked about equality and I want to say just a couple of words about accountability. Accountability is a common theme through the whole sorry tale of this legislation, going back to 1993 when the Liberals raised this as an issue during the election campaign. At that point they said they were going to scrap the GST.

Unfortunately now Canadians would like to hold them accountable on that issue and they cannot, at least not until the next election campaign. In the meantime other things have happened that really raised the issue of whether or not we can properly hold our politicians accountable in this country, not just at the federal level but also at the provincial level.

We had a situation, as I mentioned a minute ago, where the Atlantic provinces took $1 billion to introduce harmonization in those three provinces. But when that happened there were no hearings between the provincial governments and their own people. We all know that was a huge mistake because the province of New Brunswick for instance had to back down from the tax inclusive pricing portion of the legislation. It saw that the public simply did not support it there. Those people would have known better if they had talked to their people beforehand when they were accepting the money from the federal government.

It does not just end there. There are all kinds of problems with the lack of accountability with respect to this legislation. It was not very long ago when other members of the finance committee and I sat here in Ottawa during the January break and we voted on an amendment that my party moved that we go to Atlantic Canada to have hearings on this issue. The Liberals voted against that. They denied the people of Atlantic Canada the chance to have a say on whether they wanted this legislation in Atlantic Canada.

In the United States people fought a war over taxation without representation. In Canada I guess we look at things a little differently. Newfoundland is going to be celebrating 500 years of history this year. We would think the government would say to the people of Newfoundland "after 500 years we think it is probably okay for you to have a little say in how your taxation system should be structured".

The Liberal government denied them that opportunity. It took the unelected, patronage filled Senate to do it. It took the Senate to show the government what it means to go and talk to people, to consult with people. To me, that is absolutely ridiculous that they would be denied the chance to do that before their elected representatives in the House of Commons, but that is precisely what happened. That is so fundamentally wrong. It is completely wrong.

The accountability issue again is notable by the fact that very few Atlantic MPs have risen to speak to this issue, even though we know it was a major issue in Atlantic Canada. It fact, 16,000 people signed a petition on the tax inclusive pricing issue alone. There were hearings before the provincial legislatures because there was such a public outcry.

Where were the Atlantic MPs? Why did they not stand up for their constituents? There were stores closing down in many of their ridings. Did they stand to protest before the finance minister, before the government to say that there are problems? They were silent because they were afraid of what would happen if the party whip was put in place. We have seen how the government has dealt with dissenters in the past.

There were a number of different occasions where the issue of accountability was raised and it was proven in this legislation that the government has no intention of being held accountable on an issue that is of vital importance to the people of Atlantic Canada.

I want to speak about some of the specifics now. During the hearings we had back in January my party raised over and over again the issue of tax in pricing.

At the time hon. members said that everybody in Atlantic Canada was on board. Now we know that was false. The government of New Brunswick said that it did not want tax in pricing after it had rethought it. Many businesses, almost entirely to the person, said that they did not want tax in pricing in one part of the country at one time, that it made no sense. We also know that consumers spoke out against it. Provincial politicians came forward to say that it would be a nightmare.

What did the government do? It did nothing. Again it took the unelected patronage filled Senate to push the issue. That is a sad commentary. It does not say much for the government. They are the ones who have to take the pulse of the public along with my party to get the government to change its mind. Nevertheless it happened and people can judge for themselves what it says about the government.

A concern with the legislation is how the government has over the years led physicians and providers of ambulance services on to believe that perhaps someday it would actually change the GST legislation to allow them to pass on the GST just like many small businesses pass it on, or at least to have it zero rated. Unfortunately the government has led these people on for a long time. It has basically slammed the door in their face over the last several months saying it was not on.

We have a situation where doctors cannot pass on GST costs. It is one of the aggravating factors that causes physicians to flee the country to other places like the United States, which leaves us with a shortage of physicians in rural areas. Again the government has misplaced priorities. It has lots of money when it comes to providing funds for its friends at Bombardier but not when it comes to providing funds to ensure health care across the country and that all people are treated equally in the taxation system. All of a sudden it cannot find the money. It should be criticized very strongly for that.

The final point I will make is with respect to the notional input tax credit. Over the last several days it has been interesting to watch the papers. There has been considerable discussion about how the government has been hiding millions of dollars of revenue. We need to point to one of the most least understood tax grabs the government has yet to bring about, one of the biggest tax grabs it is to bring about, that is the removal of the notional input tax credit on many different items.

It will mean the government will bring in hundreds of millions of dollars. Some people estimate that it will $1 billion year more in revenue for the government. The people it hits are low income people because the notional input tax credit applies primarily to used goods. People who buy used goods are paying tax on tax on tax. The beneficiary of that is the federal government. It brings in hundreds of millions of dollars more a year in tax.

For some reason the government has ignored this message and will push ahead with it anyway. The people who will pay the price are the people who can least afford it.

I will wrap up by simply saying that the government has broken some very big principles: the principles of honesty, equality and accountability. Therefore I move:

That motion be amended in the first paragraph by deleting all the words after the word "That" and substituting the following:

"this House agrees with the principle set out in the amendment made by the Senate to 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, but would propose that the following amendment be amended to read as follows: pages 334 and 335, clause 242: replace lines 40 to 45 on page 334 and lines 1 to 4 on page 335 with the following: `Subsection (1) comes into force on a day fixed by order of the governor in council, which day shall not be before the first day on which all provinces have enacted laws requiring that suppliers include the tax under part IX of the act in indications of the prices of property and services supplied"'.

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12:50 p.m.

The Deputy Speaker

The Chair will reserve judgment on the matter for the time being but will as quickly as possible indicate whether or not the amendment is acceptable.

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12:50 p.m.


Chuck Strahl Reform Fraser Valley East, BC

Mr. Speaker, the amendment proposed by the member for Medicine Hat includes provisions for all provinces and the necessity for the agreement of all provinces if we are to proceed with the sections and subsections mentioned in the amendment.

I would be interested in hearing from him what impact that would have, especially in Alberta. What will we do with Alberta? Will it continue to be the lowest taxed province? Will it continue to have the highest rate of growth? Will it continue to have the best job creation program with lower taxes? Does he believe the idea that lower taxes equal more jobs would continue with the amendment?

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12:50 p.m.


Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, I thank the hon. member for his most excellent question.

The question of what would happen with Alberta would ultimately be answered by Alberta. The whole amendment is contingent upon the province and the people of Alberta agreeing with what the federal government is proposing. It would ultimately be up to the people of Alberta to make that decision.

The people of Alberta believe that taxes are a cancer on job creation, to use a phrase the finance minister has used in the past. I would argue that high taxes are ultimately the reason for the country failing to meet its job creation targets. It is the reason the Liberal government has failed to make any real progress on the issue of jobs, jobs, jobs.

I spoke a minute ago about the Liberal promise on the GST. One of the biggest promises the government has broken for reasons that are worthy of our attention is that it would create jobs, jobs, jobs. There is such a tremendous tax burden on Canadians overall and particularly in payroll taxes that job creators, the small business people who create about 85 per cent of all jobs, simply do not have the incentive to create jobs. The federal government is proposing to increase premiums on CPP by 73 per cent, which will make it even more difficult for job creators to create jobs.

In Alberta we have very low taxes relative to the rest of the country. The people in my province have a tremendous incentive to make money. When they do that they know they will be able to keep most of it. That gives them the incentive to keep working harder and harder and harder.

In high tax jurisdictions, which I would regard Canada as a whole as being-and certainly relative to our G-7 neighbours that is true-it is difficult for people to get excited about creating jobs, knowing they will have to pay more and more in taxes the more money they make.

I hope that adequately answers my friend's question.

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12:55 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, at the end of the speech by the member for Medicine Hat he spoke about notional tax credits being eliminated not only in Atlantic Canada. We thought the harmonized sales tax was applicable to only Atlantic Canada but we found that it was applicable right across the country.

For example, every time a car changes hands, and cars get traded quite frequently, the government will take 7 per cent tax. It will be on new goods and on used goods. The government will be there with its hand out saying: "7 per cent, please".

I recall some years ago when the Liberals were on this side of the House and they adamantly forced the Tory government of the day to make an absolute guarantee that used goods would never be taxed.

Does the member for Medicine Hat feel this is another broken promise of the Liberal government? Is taxation which is usurious and ongoing beneficial to the economy, or does it kill more jobs?

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12:55 p.m.


Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, I appreciate the tough question. It is a broken promise which we could add to the long list of broken promises on taxation.

My friend mentioned the notional input credit. The removal of the notional input tax credit would mean that people would have to pay more for used books. Another broken promise is that the government was to get rid of the GST on reading material. It did not do that even though it promised to in a letter from the Prime Minister to the Don't Tax Reading Coalition and in a number of policy conventions. In many respects the government is penalizing people who read, which is flying completely in the face of what it said it would do.

My hon. friend has it right. The government has broken promises on the taxation issue and to people it thought would support it on the basis of its promise not to tax reading materials.

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12:55 p.m.


Jim Peterson Liberal Willowdale, ON

Mr. Speaker, I am very pleased to follow my friend and colleague from Medicine Hat.

Let me clear up a few misunderstandings. Are Reform Party members advocating that no used goods should be subject to the GST? Are they saying that people who sell used goods should be favoured as opposed to people who sell new goods? Is this what they are trying to prejudice?

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John Williams Reform St. Albert, AB

You are the guys who are trying to change the policies.

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Jim Peterson Liberal Willowdale, ON

Are they advocating that no used goods should be subject to the GST? Are they saying that services should not be subject to the GST? Do they want a level playing field or do they not? They cannot have it both ways.

The hon. member for Medicine Hat made great issue about compensation being paid to the three Atlantic provinces over a three-year period. He said it was a breach of equal treatment for provinces.

Let us take a look at it. Every province that wants to harmonize the GST at a lower rate and loses money will be entitled to compensation. That is what we call equality of opportunity for all provinces.

We must remember the combined sales tax rates in Newfoundland were about 20 per cent. In the other two provinces, Nova Scotia and New Brunswick, they were about 19 per cent. These are punitive rates. Why should these provinces have to pay outlandish rates of taxes just because they are the poorest provinces? We are pleased they were able to benefit consumers by getting their combined rates of tax down to about 15 per cent. I am proud of that.

If the provincial governments lose money because of it, I am not upset at all if some compensation is to be paid over a three-year period to help those provincial coffers adjust to that temporary loss of revenue.

Members will say it was not fair. Have we not in other circumstances helped other provinces?

The member talked about Alberta, which has the lowest rate of tax. There is no provincial sales tax in Alberta. Why is that?

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1 p.m.

An hon. member

We do not need it.

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Jim Peterson Liberal Willowdale, ON

Why is that? Because it has a tax other provinces do not have. It has a tax on its energy royalties. It gets a tremendous tax revenue out of its energy which no other province does.

In spite of that, what did the federal government do recently? It gave tax incentives which would allow the tarsands to develop. It amounted to millions upon million of dollars. Did they complain about that type of grant not being offered to other provinces? No. They cannot have it both ways.

I do not apologize for one minute that this government is in the position of making loans to enterprises which are employing Canadians, creating exports, building planes and putting us at the leading edge of the global economy.

This is a responsible use of federal power. Let us not shrink for one minute from the fact that in these areas we do have leading edge technology. Our companies are world leaders because we have a partnership, not through grants but through loans.

Let me return to the issue of the harmonized sales tax. We have looked as a finance committee and as a Parliament at this issue for a long period of time. Our committee had the privilege in 1993-94 of looking at alternatives to the goods and services tax. The thing that we found most compelling was that Canada is the only country in the world that had not just one retail sales tax but ten different retail sales taxes. Canada was the only country in the world that had more than one retail sales tax.

What did that mean to Canadians? It meant that we were supporting as taxpayers ten bureaucracies instead of one. It meant that businesses had to assume the incredible cost of complying with not just one sales tax regime but ten different regimes. Some European countries have a value added tax. Canadian consumers did not have the benefit of tax included pricing. The price they saw advertised on the item was not what they had to pay when they went to the cash register.

One witness appeared before us, among many, who put on the table $40,000 in cancelled receipts from irate customers who, when they got to the checkout counter and found they had to pay more than the price shown, decided not to buy the item. That is the phenomenon of sticker shock or counter shock.

We have found through extensive surveying and working with consumer groups that consumers want to know what they have to pay when they get to the cash register and take the money out of their wallets. Overwhelmingly, 86 per cent of Canadians surveyed on the issue of tax inclusive pricing for the three Atlantic provinces involved wanted tax inclusive pricing. Why should they not? Why should merchants not want to give it to them? After all, the price they see is the price they should have to pay.

Another advantage of the harmonized tax system goes to our business competitiveness and our capacity to create jobs. Today in Canada businesses are paying about $6 billion in provincial sales taxes on their business inputs. These are things which they must purchase in order to carry on business, such as a car, a computer, furniture and so on.

Why should Canadian businesses have to pay this type of tax burden when their American counterparts do not?

This is why businesses in the three provinces of Atlantic Canada were paying $580 million in provincial taxes on their business inputs. This made them non-competitive in many cases with their American counterparts. They should not have to pay provincial sales taxes on their business inputs. It is against all good tax policy.

Therefore this was one of the great advantages of this harmonized sales tax. No longer would Atlantic provinces have their businesses at this competitive disadvantage when it came to creating jobs.

Through the harmonization process they have gone through, they will have these tax savings. They will be able to pass much of those savings, if not all of them, on to consumers in Atlantic Canada. Those businesses will have a competitive advantage over businesses in Ontario and other provinces where the provinces still tax their business inputs in terms of creating jobs and being competitive.

These are some of the compelling reasons why we need harmonization and why no one in this House has spoken against harmonization. Not one witness before our finance committee spoke against the harmonized regime.

The member for Medicine Hat was quite right in suggesting that tax inclusive pricing was a bit of a problem. If a national retailer based outside Atlantic Canada had to publish another catalogue showing the real price people would have to pay, or if someone had to retag the price of goods, that would be an added cost.

Let us be very clear. There were some added costs to businesses that were going to be doing business in Atlantic Canada but were not getting the benefit of the input tax credits because they did not purchase any of their business inputs in Atlantic Canada.

If someone had a business based outside the three harmonized provinces and they were not spending money in that area, or very little money, because what they were doing was running a retail operation, bringing the goods in, selling them and not making a lot of purchases there, they were not going to get the benefits. All witnesses realize this. They would not participate in that $580 some million of tax savings per year. It is quite understandable that businesses that were going to have the added costs from tax inclusive pricing that were not offset by the tax savings on their business inputs were going to complain.

I have no problem with that. They were quite right in doing it. However, for the hon. member for Medicine Hat to say that what the Senate did was create a victory against tax inclusive pricing is wrong. We were not going to take the chance that we could not get this bill through on time.

The Senate threatened to hold it up beyond the implementation date of April 1 if we were not capable of doing something about tax inclusive pricing. Therefore, we said maybe we have to go along with that because what is really critical to Atlantic Canada is that we get the harmonized tax in place, even without tax inclusive pricing.

The Senate did not reject tax inclusive pricing as a fundamental concept of this tax. It said that as soon as provinces with 51 per cent of the Canadian population are on board, it will then insist on tax inclusive pricing for all provinces.

This is an acceptance, even by the Conservative majority in the Senate, of this concept of tax inclusive pricing. It recognize it is good for consumers. We have held all along that it is important to consumers to know exactly what they will pay.

This is supported by not only the polls of consumers but by the Consumers' Association of Canada. It has has argued very strongly in front of our committee and Parliament that we need the concept of tax inclusive pricing. Telling people in advance how much it is going to cost them out of their wallet is just fairness.

I regret that we are not able to proceed with the tax inclusive pricing. However, let me be clear. We were not dogmatic about how it went into effect. We in the finance committee, along with the government, suggested many compromises that would have softened the burden of tax inclusive pricing for most businesses. For example, we told businesses they only needed to have one catalogue, not two, if they were a national advertiser. We told them they could advertise at one price throughout the whole country but to put a little disclaimer somewhere in the catalogue stating that provincial sales taxes are not included.

We suggested to businesses that they did not have to reticket every item that was in inventory. They could go to other things such as rack pricing, bin pricing and dual ticketing on items that were there. For certain items they could even have certain types of signage which would indicate what the prices were. In other words, we suggested that there were many ways we could achieve benefits for consumers of tax inclusive pricing and reduce the cost from those which were originally contemplated and would apply under a fully harmonized, hardline, tax inclusive pricing regime.

We were working with business groups. We worked with the Canadian Federation of Independent Business. It was working with its members to come back to us in order to find ways to implement the tax in such a way that the burdens were reduced and the benefits for consumers were still there.

I am pleased that we have proceeded with the harmonization in these three provinces. I think this is just a step on the journey to achieving a fully harmonized sales tax system throughout Canada. It is inevitable that it will come. Taxpayers do not want to support the duplication and overlap of now eight different systems as opposed to ten. It is just stupid. The Canadian Federation of Independent Business castigated us and asked us when we were finally going to get our act together as politicians, federal and provincial, and do what was right for the people to help make businesses competitive and help get rid of the unnecessary costs. We are on that road and we will do it.

When we brought in the concept of the Canada Health Act there were only two provinces that initially signed on. It took some years before all the other provinces agreed to go along with it. This is what I envisage in terms of the future of it. No one is arguing against that concept and the inevitability that we should have one sales tax system throughout Canada based on the GST model, and this is what we will achieve.

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1:10 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, first I would like to point out that he was talking about the inevitability of a universal sales tax right across this country when three and a half years ago they were talking absolutely and categorically that there would be no sales tax courtesy of the federal government. So this is an absolute, complete turnaround on behalf of the member for Willowdale.

While the member talks about a universal sales tax right across the country, it seems to me he is talking in the same model that they have proposed for Atlantic Canada of 15 per cent right across the board. What does he intend to do for the province of Alberta which has no provincial sales tax at all at this point in time and the people of Alberta have no intention of having any provincial sales tax of any kind? Is it the intention of the member that the government would compensate the province of Alberta by reducing its rate, according to what kind of vision he has, so that it would only pay the federal rate so that Albertans would recognize that they are not subsidizing the rest of Canada as they have done in many other issues?

We think back to the national energy policy of 1983 where Albertans basically carried the federal government and the rest of the country on their backs. They felt that they were being hard done by as billions of dollars flowed from the province of Alberta to the rest of the country.

I would like to ask the member when he envisions this universal sales tax right across the country, whether or not Alberta is going to pay more than its share again and how inevitable is this tax when three and a half years ago the Liberals were telling us there would be no tax at all?

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1:15 p.m.


Jim Peterson Liberal Willowdale, ON

Mr. Speaker, I thank the hon. member for St. Albert for his question.

It is very simple. Canada is a difficult country to govern, as we all know, with its various jurisdictions. When the members of the finance committee recommended that the 10 different sales taxes be replaced by a single national value added tax we contemplated two things. We did a lot of work on this.

We contemplated and recommended a tax that could be brought in one province or two provinces at a time. In other words, not all provinces had to accede to the new regime at the same time. Second, although it makes a more complicated tax, provinces did not have to come in all at the same rate.

Over time I can see provinces coming in at different rates. For example, Premier Harris had promised before the last Ontario election that Ontario recognized the incredible advantages to that province of having a harmonized sales tax system. Ontario could probably harmonize at about 13 to 14 per cent instead of 15 per cent and be revenue neutral. Why would it come in at a higher rate?

The tax system in place, as the member for St. Albert well knows because he has a strong accounting background, envisages the possibility of different rates. It would be easier to administer if the rate is the same in every province and maybe over years, after all the provinces have acceded to the tax, the rates will come together. That will be a further step in the process of simplification.

When the member goes back to the perceived injustices of the national energy program of the 1980s, why does he not talk about the billions of dollars of tax grants that were given to make the tar sands available just recently? Is he ashamed of that? Why does he not talk about the millions on millions of dollars that we are giving to the farmers in western Canada, the western diversification fund, in helping them transport their goods to market or to diversify and get away from their dependence on some of the funds they have had?

What bothers me most about this debate is that we can differ as parliamentarians about the HST. But when members deliberately set out to create a balance sheet where they do not put in all the figures on what provinces are receiving from Confederation, they are trying to be divisive and set provinces against provinces, rather than recognizing that we are so fortunate to be in this country.

This country is diverse, with different economic circumstances from coast to coast. But part of being a nation is to help those regions from time to time with things like equalization and perhaps special breaks that will help them with their resources, with their transportation needs or whatever. That is the essence to me of being a country.

I do not shy away from these programs which are entered into in the spirit of helping those regions that need it most. This, to me, is what this nation is about.

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1:15 p.m.


Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Spea-ker, I just wanted to make one quick comment.

In the finance committee report on the harmonized sales tax, I had the privilege of drafting, and later getting approved by my colleagues, the idea that perhaps the tax in pricing should be suspended for the provinces. If the government had followed my recommendation, then it would have saved itself all this embarrassment.

I agree that tax in pricing at this stage is a good thing to do. Because of the fear that the Conservatives had over the ability of the government simply to raise taxes by one little percentage point on the harmonized sales tax and get away with it because people would not notice it is just not true. In western Europe we have seen that when the German government tried to do that it had a major tax revolt on its hands. The Conservative argument in the light of those experiences is not valid.

In the hearings of the finance committee the member and I heard from 1,000 witnesses the suggestion that we still have a real bad monster on our hands, a value added tax which has in it exemptions, zero rating and all kinds of complications which are an

accountants' nightmare. Witnesses suggested getting rid of this, put the same rate on everything at a much lower percentage than it is right now. If there are good causes-magazines and poor people who need subsidies-write them cheques. Give them explicit subsidies. It will be open and everyone will know about it.

I would like to ask the hon. member's position on this suggestion. Does he see any hope that a reform of this sort will be carried through in the future?

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1:20 p.m.


Jim Peterson Liberal Willowdale, ON

Mr. Speaker, I thank the hon. member for Capilano-Howe Sound for what I think is a very important question.

I agree with him that from a strict tax policy point of view the ideal tax would be the simplest. It would apply to everything, no exemptions. That would mean a lower rate. For example, if the GST were to apply to basic groceries it could probably be reduced by about 0.7 per cent. Everything in the country would have a slightly lower tax rate.

In asking this question the member has displayed the type of integrity and intellectual honesty which we in the finance committee have to come respect over the last three years. I commend him for this. The problem is from a tax policy point of view. It might be right but Canadians at this point are not yet prepared to accept that the tax should apply to things such as basic groceries, certain medicines, drugs and health devices.

I do not mind that debate being held. I commend the hon. member for bringing this forward but at this time I do not think Canadians are ready to accept that type of tax reform. We are having enough difficulty getting the harmonized tax in place. Maybe that is something that can be contemplated down the road.