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.