House of Commons Hansard #93 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was quebec.


Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

Some hon. members


Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

The Deputy Speaker

All those in favour of the motion will please say yea.

Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

Some hon. members


Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

The Deputy Speaker

All those opposed will please say nay.

Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

Some hon. members


Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

The Deputy Speaker

In my opinion the nays have it.

And more than five members having risen:

Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

The Deputy Speaker

Call in the members.

And the bells having rung:

Canadian Tourism Commission ActGovernment Orders

11:10 a.m.

The Deputy Speaker

At the request of the chief government whip, the vote will be deferred until tomorrow, Wednesday, May 10 at the conclusion of the time provided for Government Orders.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

11:10 a.m.

Vancouver Centre B.C.


Hedy Fry Liberalfor the Minister of Finance

moved that Bill C-24, an act to amend the Excise Tax Act, a related act, the Bankruptcy and Insolvency Act, the Budget Implementation Act, 1997, the Budget Implementation Act, 1998, the Budget Implementation Act, 1999, the Canada Pension Plan, the Companies' Creditors Arrangement Act, the Cultural Property Export and Import Act, the Customs Act, the Customs Tariff, the Employment Insurance Act, the Excise Act, the Income Tax Act, the Tax Court of Canada Act and the Unemployment Insurance Act, be read the second time and referred to a committee.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

11:10 a.m.

Etobicoke North Ontario


Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I welcome this opportunity to speak at second reading of Bill C-24.

I think most hon. members would agree that few issues are more timely and few areas of action more compelling than taxation. The operation of our federal tax system affects virtually every Canadian and every family, each company and organization. It impacts our standard of living as individuals and our ability to compete and grow as a nation.

That is the reason why, having put the country's financial house in order and eliminated the deficit, our government adopted concrete measures to start reducing the personal tax burden of Canadians.

Broad based income tax reduction is not and cannot be the only arena for action. From the start of our first mandate, this government has been active in ensuring that we provide a tax system which is fair, a system which eliminates unnecessary loopholes and confusion, and a system which provides targeted assistance to sectors and groups, such as charities and persons with disabilities, that deserve our assistance.

These are the goals and opportunities underlying the legislation before us to make our tax system more simple and fair not only for individual Canadians but for Canadian businesses as well. Another goal we have consistently pursued is to sustain and enhance our federal tax system in a manner which promotes federal-provincial co-operation and harmonization. This bill does just that.

Hon. members will recall that when the harmonized sales tax, the HST, was implemented in 1997 with three Atlantic provinces, Nova Scotia, New Brunswick, and Newfoundland and Labrador, it was a successful example of federal-provincial co-operation. It also presented creative solutions to some of the challenges that we as Canadians will face together as we head into a new century. This bill builds on the spirit of that initiative.

Even if this bill is specifically designed to improve the GST, the goods and services tax, and the HST, it also contains important proposals concerning the tax on certain products.

In this regard Bill C-24 contains measures with respect to the taxation of tobacco products.

I trust that hon. members are aware of the government's commitment to reduce smoking rates, particularly among younger Canadians. One of the concrete planks in this commitment has been the national action plan to combat smuggling which we launched in 1994. This plan has had a significant impact on contraband such that we have been able to increase taxes on tobacco products in 1995, 1996 and 1998 in co-operation with the participating provinces of Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island.

Today's legislation puts in place another increase of 60 cents in federal excise taxes per carton of 200 cigarettes for sale in Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island, the five provinces that are action plan partners. These provinces are also increasing their taxes on cigarettes by comparable amounts.

Excise taxes on tobacco sticks will also be increased in Ontario, Quebec, New Brunswick and Prince Edward Island, re-establishing a uniform national tax rate on tobacco sticks for sale in all provinces and the territories. Furthermore, the bill proposes to make permanent the current 40% surtax on the profits of tobacco manufacturers.

In a related matter, as it was mentioned in the federal budget of February 1999, Bill C-24 contains measures intended to implement a reduction of the tobacco export tax exemption.

The intent of this measure is to reduce the supply of Canadian made tobacco products intended for export but which are potentially available to smugglers.

The proposals contained in the bill relating to the taxation of tobacco products reaffirm the government's commitment to reduce tobacco consumption in Canada while maintaining vigilance in combatting the level of contraband.

An important component of Bill C-24 is that it reflects the government's responsiveness to the health and social needs of Canadians. For example, the government recognizes that many Canadians are providing care for family members, very often an elderly parent or disabled child.

Bill C-24 proposes an exemption from sales tax for these respite care services. This would mean that services—care and supervision—for persons who have limited capacity for self-supervision and self-care due to disability would be exempted

This proposal will enhance federal support for those Canadians who are striving to meet the growing demands of caring for family members with an infirmity or disability.

With respect to individuals with disabilities, I trust that hon. members would agree that these Canadians face many challenges. In past budgets the government has introduced numerous measures to assist these individuals. The bill builds on such actions and the significant level of tax assistance that is already available.

The proposals contained in Bill C-24 extend sales tax relief to the purchase of specially equipped motor vehicles for transporting individuals with disabilities. The proposed sales tax rebate will ensure that all individuals and organizations get tax relief on the additional cost of purchasing vehicles that meet their special needs.

Other measures in the area of health care that are contained in the bill include the continuation of the goods and services tax and the harmonized sales tax exemption for speech therapy services. Under the GST and HST, harmonized sales tax, the list of exempt health care providers is limited to those regulated as a health care profession in at least five provinces. The proposals contained in the bill will allow the speech therapy profession more time to meet the eligibility requirements for the provision of tax exempt services.

The bill also ensures that providers of osteopathic services are exempt from sales tax. In addition, Bill C-24 corrects an inequity with respect to providers of psychological services by ensuring that the sales tax does not discriminate against duly qualified psychologists.

As I indicated in my introduction, the government is committed to making the taxation system more equitable for Canadians. Bill C-24 shows that commitment in a number of different areas.

In recognizing the important role played by charitable organizations in assisting Canadians and enriching our communities, the bill addresses the special circumstances faced by designated charities whose main purpose include the provision of care, employment, employment training or employment placement services for individuals with disabilities. Specifically the bill provides these charities the capacity to compete on an equal footing when selling goods or services to GST registered businesses.

Bill C-24 also refines the rules for the streamlined accounting method for charities. In addition, it implements the decision by the Government of Newfoundland and Labrador to extend the 50% rebate of the provincial portion of the harmonized sales tax, which is already available to charities in that province and to certain public service bodies such as hospitals that are also charities. The extended rebate would be available to those entities in relation to the activities undertaken in their capacity as charities.

Thus, a hospital board in Newfoundland, operating as a charitable institution, might also manage a care home. The proposed amendment would enable them to apply for a 50% rebate of the HST paid on expenditures relating to the care home.

A number of the amendments proposed in Bill C-24 are aimed at clarifying and enhancing application of our sales tax systems.

For example, the bill contains amendments aimed at clarifying the sales tax treatment of transactions between natural resource producers and exploration companies. Amendments such as these will ensure consistency and fairness in the application of the goods and services tax and harmonized sales tax in a number of key areas.

I should like to take a moment to point out that the amendments in the proposed legislation were developed in response to representations from tax professionals, business communities and Canadians. As I mentioned earlier, this reflects the government's ongoing commitment to making the tax system fairer, more efficient and easier for businesses to comply with.

As a result of the collaborative process between the federal government and businesses in the energy sector, the bill proposes a number of changes which streamline the operation of the goods and services tax and the harmonized sales tax in that sector.

For example, the measures proposed facilitate export transactions which involve exchanges of gas and oil between Canadian and foreign suppliers.

These changes will help to ensure that Canadian businesses remain competitive in the international marketplace. With respect to other international commercial transactions, the bill also proposes to make air navigation services provided to carriers tax-free in relation to international flights and refine the rules for exports of goods by common carriers.

I would like to take this opportunity to state that the federal government acknowledges the importance of the travel and tourism industry to the Canadian economy.

The government has contributed to promoting Canada as a tourist destination and to supporting the tourist industry as a source of employment.

Hon. members are no doubt aware that the federal government provides rebates of the goods and services tax and harmonized sales tax to non-residents on eligible goods exported from Canada, short term accommodation and certain goods and services used in the conduct of a foreign convention.

In consultation with the tourism industry the visitors rebate program was reviewed. These consultations highlighted the fact that the program is generally seen as an important tool in promoting tourism, in particular the accommodation and convention measures.

As a result of the review the 1998 budget contained several proposals to improve the visitors rebate program. Bill C-24 proposes further enhancements to the design and delivery of the visitors rebate program to better promote Canada as a destination for tourists and a site for conventions, for example by reducing the the GST and HST costs associated with providing conventions to non-residents.

On the subject of tourism the bill also proposes changes aimed at providing consistent tax treatment between tax-free international transportation services and various separate charges that relate to such transportation.

Another change will eliminate the requirement that payment for air travel from the United States to Canada be tendered outside Canada for the transportation service to be tax free.

I emphasize that the federal government will continue to consult with the business community to improve the operation of our sales tax system.

In that regard Bill C-24 contains a number of proposals to improve the rules relating to certain business arrangements and ensure that the legislation is consistent with the policy intent. As well as clarifying certain sales tax issues in the area of financial services, Bill C-24 provides a more level playing field in the retail debt sector by repealing bad debt relief for closely related financing companies.

In response to industry concerns, the bill also proposes an important measure that will correct an inequity with respect to multi-employer pension plans. The bill proposes that a rebate be provided to trusts governed by such pension plans, which will place them on a comparable footing with single employer pension plans in relation to the sales tax they bear.

Our government is continuing as well to improve the administration and application of our sales tax system. Bill C-24 amends a number of provisions in these areas to ensure their conformity with existing administrative practices.

In addition, the bill proposes greater harmonization between certain administrative and application provisions in the various laws on taxes and charges.

It also contains proposals to improve the efficiency and effectiveness of the assessment, appeals and corrections provisions overall.

I mentioned earlier that Bill C-24 contains measures relating to other specific levies on certain products. In accordance with the 1997 decision of the World Trade Organization, the bill contains the amendment that repeals the provisions relating to the excise tax on split-run editions of periodicals.

With respect to customs tariffs the bill implements proposals to increase certain duty and tax exemptions for persons returning to Canada after a minimum period abroad. These proposals will make it more convenient for travellers to clear Canadian customs. This is just another example of the steps we have taken to improve service for visitors and for Canadians returning to Canada.

The government remains committed to enhancing aboriginal self-government and has often reiterated its willingness to put into effect taxation arrangements with first nations interested in exercising tax powers. In this context through the budget implementation acts of 1997, 1998 and 1999 the government introduced legislation enabling certain first nations to impose GST-like taxes on specific products such as alcoholic beverages, fuel and tobacco.

This bill proposes that technical amendments be made to the laws I have just mentioned to increase the harmonization of the sales tax of first nations with the GST and to ensure the definitions in these laws are consistent with the definitions used in other federal laws.

In closing, the measures contained in Bill C-24 I have outlined today propose to refine, streamline and clarify the application of our tax system.

This bill also tackles social issues that are important to Canadians.

I therefore urge hon. members to consider the bill and give it their full support.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

11:25 a.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, I am honoured to stand to give my point of view with respect to Bill C-24. It is important for everyone who is listening, both in and outside the House or perhaps someone who may be reading Hansard some time in the future, to know what is going on here.

Bill C-24 is actually a budget implementation act. I begin my speech by saying that a very strange thing happens in Canada when it comes to the implementation of budget measures. There is the day when the Minister of Finance stands and there is a bunch of hoopla. All the media come and set up their big tractor trailer units with their dishes. The cables that run into this place are twice as thick as usual. It is called budget day. On that day, the minister announces all the determinations that are going to appear in the new budget rules which, for all intents and purposes, means this is how we are going collect money from Canadians and this is how we are going to spend it for them. That is the big picture of the budget. Of course, everyone pays close attention to it and wonders how it will impact on them.

What I find difficult to understand and accept is that the budget is announced prior to any real input from Canadian people or from parliamentarians. I know that all the Liberals in the House would protest that if they were so inclined. They would say that we have had prebudget consultations, we have listened to the people and we are implementing the things that the people of Canada want. I think most of the members in the House presently would probably be silent.

I would however point out that this really is a very one-sided affair. The Minister of Finance in conjunction with the top people in the finance department actually write that budget speech and determine the budget provisions well in advance of the budget being made. When it is announced in the House of Commons instantly becomes de facto law. We can call that a democratic process if we want to but I seriously question that because of two things.

First, the one I have already mentioned, is that there is no meaningful input or debate in the House prior to the budget. We go through some machinations of doing that but we very seldom see the actual minister or his departmental officials. How it is transmitted to them I do not think is much beyond some political considerations. These decisions are made behind closed doors and then it becomes de facto law.

The second part, which shows that this is very one-sided and dictatorial, is that there is to my knowledge no record of a parliament ever reversing anything that the Minister of Finance has said on budget day. In other words, what he says is then law. When we come to vote on the budget, the government members are all whipped into voting for these measures. Whether they agree with them or not and whether they understand them or not, they just do it. We have new rules imposed on Canadians without any real input.

Traditionally the members on the opposition side will speak and vote against those parts of the budget that they find objectionable, and in our party, we will speak in favour of the things that we support. We are then asked to vote, usually on its entirety.

One of the dilemmas we face with the bill before us today is that with one vote we will have to either vote for some of the things we agree with, thereby giving our assent to those that we profoundly disagree with or, on the contrary, we will vote against Bill C-24 because of the objectionable parts of it. The political spin from our opposition on the other side will be that we voted against giving a tax break to people who have extra expenses because they are handicapped.

I have a great dilemma. I in fact would like to say yes. I am in favour of those provisions in the bill that provide for reduced taxation for those who have special costs because they are physically or mentally handicapped or whatever their needs. However, it is as if I had gone to a restaurant where the waiter brings me a beautiful steak and instead of having it surrounded with potatoes and vegetables, it is surrounded by gravel.

I now have a beautiful steak with gravel around it and I have to ask myself “Am I going to take it or not?” As good as the steak may appear and as hungry as I may be, I can look at the plate and say “That steak is so appealing. Yes, I would love to eat it but the gravel, the sand and the other garbage around it makes it unpalatable. I have to send it back to the kitchen and maybe the cook can try again”. That is probably what will happen with Bill C-24.

As I have said, there are some admirable and commendable things in this bill. I would like to be on record as being in favour of it but I do not think that will be an option because of the objectionable things.

About 1994, if I remember correctly, the third party, as we were called at that time, brought forward a motion on the budget. During that parliament, as in this one, the Liberals had a majority and could do pretty well what they wanted to do. The Reform Party at that time moved some amendments to the budget which were truly not substantive but very symbolic.

One of the motions we moved would have reduced the expenditures of several departments by a small amount. As I recall, our motion called for the expenditures to be reduced by $20,000. I hesitate to say that is a small amount because people in my riding and elsewhere in Canada are being taxed to death by the government and to them $20,000 is by no means a small amount. However, in comparison to the billions that the government taxes out of Canadians and spends, sometimes very foolishly, $20,000 is a very small proportion of the total budget.

We therefore moved a motion that one or two departments have their total expenditures reduced by $20,000 as a symbolic statement simply to demonstrate that parliament did have control over the budget. We thought that was an important first step. If that could have been established, we would have proceeded to the next step and taken some real control as parliamentarians over the budget process. We would have been able to tell the bureaucrats how much money they could spend instead of them telling us how much they were going to take from Canadian taxpayers and spend in government departments.

I believe that every Liberal member at that time voted against our motion. We gave the Liberals an opportunity to demonstrate that parliament had control over the budgetary process but they chose to vote against it. They said that they would not reduce departmental budgets even by $20,000 because they wanted to continue the dictatorship that comes from the Minister of Finance.

There is another reason that it is very difficult to hold the government accountable. I will illustrate this by taking one of the cases in the particular act that we are studying today. We have an issue in Bill C-24 where the government proposes to exempt from taxation part of the accommodation costs made by people who come into Canada as visitors. This simply exempts and adds to the exemption people who are coming in as tourists and who are using the campgrounds as accommodations. Up until now campgrounds were not included in this.

I want to read this clause in the bill because it illustrates to Canadian taxpayers, and to people who happen to be listening to this debate or who will be reading it later on, how difficult it is for us to keep the government's feet to the fire so to speak because of the convoluted language that is used even in such a simple matter. I refer to section 252 of the act which is being amended by clause 68 of Bill C-24. It states that section 252 of the act is replaced by the following:

“camping accommodation” means a campsite at a recreational trailer park or campground (other than a campsite included in the definition “short-term accommodation” in subsection 123(1) or included in that part of a tour package that is not the taxable portion of the tour package, as defined in subsection 163(3))—

That is how it starts. I will go back and read the first part again but I will miss the brackets this time. It reads:

“camping accommodation” means a campsite at a recreational trailer park or campground—

And then we have this parenthetical phrase:

—that is supplied by way of lease, licence or similar arrangement for the purpose of its occupancy by an individual as a place of residence or lodging, if the period throughout which the individual is given continuous occupancy of the campsite is less than one month. It includes water, electricity and waste disposal services, or the right to their use, if they are accessed by means of an outlet or hook-up at the campsite and are supplied with the campsite.

“tour package” has the meaning assigned by subsection 163(3), but does not include a tour package that includes a convention facility or related convention supplies.

That is how this thing starts but then it becomes convoluted. Perhaps I should not read all this but it now begins to define “non-resident”. I previously said that this is the part in Bill C-24 that proposes to exempt from taxation the taxes on camp fees that are charged to non-residents. It states:

a non-resident person is the recipient of a supply made by a registrant of short-term accommodation, camping accommodation or a tour package that includes short-term accommodation or camping accommodation,—

It further states:

a particular non-resident who is not registered under Subdivision d of Division V is the recipient of a supply of short-term accommodation, camping accommodation or a tour package that includes short-term accommodation or camping accommodation.

Mr. Speaker, do you know what I said? Do you understand what I just read? I hate to admit this publicly but I am not sure I know what this means. However, I will vote on it and so will all the Liberal members afterwards. Of course it is easy for them because they will just stand when their string is pulled. However, as a member of the opposition I have to somehow try to make sense of this and figure out whether this is a good thing or not.

I would like to urge people out there in the real world to get on the Internet and call up Bill C-24. They just have to go to the parliamentary site,, look for government business, look at the bills, pull up Bill C-24 and try to read it. I defy them to read it.

I know there are not many Liberals listening to me right now but maybe there is an accountant listening. Maybe that accountant could phone me back and say “I read that and I understood it perfectly”. I would like to meet that person. That is only one example. It goes on and on. I hesitate to punish our interpreters, whom I value so highly, by reading more of this. These are really strange things. It goes on and on for four or five pages.

There is another strange thing that happens. Different parts of the bill come into effect on different dates. Subparagraph 252.1(13) states that subsection (1) is deemed to have come into force on February 24, 1998, which is a little over two years ago. There are other parts of the bill which I scanned through while I was sitting here that have implementation dates all the way back to 1990. Even though this is a bill that primarily implements the provisions of the budget in the last year or two, or three, there are some sections which go back further than that. For example, the top of page 98 states:

(5) Subsection (2) is deemed to have come into force on November 26, 1997”.

(6) Subsection (3) is deemed to have come into force on April 1, 1997.

(7) Subsection (4) is deemed to have come into force on December 17, 1990.

That is over 10 years ago. We are implementing a budget provision that, when the bill is passed, will retroactively be deemed to have come into force on December 17, 1990. Most of us cannot even remember where we were on that day.

I do this to illustrate how convoluted the Income Tax Act is. The whole bill is full of this.

If there is anything that has urgent need, it is the simplification of the Income Tax Act. I despair of a government which has as its goal to fleece Canadians of as much money as it can and then selectively, through all of these different provisions of the Income Tax Act, make provisions from which one person or another is exempt.

I resent the tax exemption on camping facilities. I resent the fact that non-residents can come into Canada and rent the same space that I and my fellow Canadians can rent and pay a lower price for the same space. If the space is worth it, we should all pay the same amount. Non-residents are exempt because it helps to make us competitive in the travel industry. It is ironic that the bill discussed prior to this was the tourism bill. Tourism is very important to Canadians. It is a large part of our economy and it must be competitive.

In Bill C-24 we have a move to make it more competitive, but what about Canadians who choose to travel in their country, to enjoy their parks? They are priced right out of it. After they have finished paying their income tax, property tax, sales tax and their daily expenses, Canadians scarcely have enough money left to even consider going on a vacation. If they do go on a vacation they pay taxes on everything that happens when they go to different places, including parks. They pay huge fees now to the Government of Canada to enter a national park and then they pay the GST on top of that fee.

Speaking of the GST, I distinctly recall that the Liberals, when campaigning for the 1993 election, made some statements about not liking the GST. In fact, there were some members of the Liberal team who campaigned on trying to get rid of it.

I do not know if you were one of those, Mr. Speaker. I know that you ran under the Liberal banner and, of course, due to the neutrality of your position I am not able to draw you into these partisan debates. However, I think of all those other Liberals. Should I call them the green foreheaded Liberals over there? At least I see a lot of green, so that must reflect their foreheads.

Many of them ran under the campaign which said “We will kill the GST. We will eliminate it. It will be gone”. In fact, the hon. member who is now the Minister of Canadian Heritage, who in the last parliament was the Deputy Prime Minister, was actually forced to resign because day after day the press and the opposition kept reminding her of how she had said she would resign if the GST did not disappear. Finally, one day she had that critical moment when she went to her banking machine and it gave her a tinge of conscience. It said to her “You had better resign because you said you would if the GST was not gone, and it is not gone”. The Canadian taxpayers in her riding got to fork out another approximately $100,000 to run a byelection. They paid for the fact that she and all of her colleagues broke that election promise. They paid again. They paid for the election campaign.

Of course, it was well reported at that time that prior to her making this decision which showed that she had such a deep conscience there was some polling done, paid for by the taxpayers, which determined in advance that if, having resigned, she were to run again that she would be re-elected. Then she was able to fulfil her tinge of conscience and resign.

I sometimes wonder what would have happened if that poll had said that if she had resigned over this GST issue she would not have been re-elected. I wonder if she still would have followed through on that deep pang of conscience. I wonder if maybe she would have just invented more excuses in order to hang on to power.

The point I making is this. There was a commitment to kill the GST, to eliminate it. It would be gone, the people were told, if they voted Liberal. I sometimes wonder how many Canadians voted Liberal in the 1993 election based on that promise alone. I think there were many of them.

The Conservatives brought in the much hated GST in 1990. I have never before in my life—and I have lived quite a long time—seen a tax which has gained such enduring hatred of Canadians.

Every week there are advertisements in the papers in Alberta where one store or another has a big sale and the biggest banner on the sale announcement is that there is no GST, but in smaller letters it says that the store will have to pay the GST because it is a legal requirement.

Instead of saying there will be a 7% reduction in prices, which would bring in only a few people, they put up a big banner that says “No GST” and the people flock there to avoid the GST. The stores find that they get more people coming to storewide sales when they have a no GST event than if they were simply to say they would reduce the prices by 7%.

The GST is a very much hated tax. I sometimes think that the Liberal government sits in the position of power in Ottawa based on, dare I say it—and it is not attributed to any individual—based on a fraud.

The people on the government side in the election campaign said they would eliminate the GST if elected. That is why Canadians voted for them. The government turned around and not only kept the GST, but harmonized it in those provinces participating. It is now a 15% tax instead of a 7% tax. We all know it is a harmonized tax and some of the revenue goes to the province, but I think it is also fair to say that instead of eliminating the GST in the participating provinces the government effectively doubled it.

That is the Liberal record on the GST. Bill C-24, which we are debating today, has included in it a number of GST provisions. I said at the beginning of my speech that I am not opposed to some of those provisions. There is an increase in tax on cigarettes, which is another topic. Bill C-24 reduces or removes the GST on a number of health care related services.

I would like to share this with hon. members. We recently had a funeral in our family. My beloved sister passed away about a month ago and we had the funeral. We did not pay much attention to this issue that I am now going to mention at the time of my sister's funeral, but I had a grieving constituent phone me because his wife had just passed away and he said “In the middle of my sorrow, I go to buy a casket for my wife, and the casket is $3,000 and the government wants another $210 in taxes, in GST, on the casket.” He was very upset. I was not able to comfort him in his loss, nor was I able to promise him that there would be no GST on caskets tomorrow, because there is, the government has arranged it.

I noticed in Bill C-24 that there is a change concerning burial plots and the GST as well, but I do not quite remember what it is. It is one of those convoluted things that I tried to read, but could not really figure out from the bill whether the GST will be increased on burial plots or whether it applies to non-residents, or what it was. However, there are some revisions.

The GST is everywhere. It is there when you are born, it is there when you live, and it is there when you die. The government has no intention of reducing or removing it. It loves the revenue. There is nothing that the government does not like to tax.

Here is an interesting one. I want to say a bit about the tax on cigarettes. It was about three, four or five years ago that cigarette smuggling was a huge issue, so the government decided to reduce the taxes on cigarettes to make the price differential between smuggled cigarettes and those purchased at the store less so there would be less demand for the black market, thereby reducing smuggling. The government tells us that this has had some effect.

Bill C-24 will once again increase cigarette taxes. It also provides for a rebate system to retailers in the cigarette marketing industry, but I will not go into that detail. However, I have to ask the question: If high taxes were part of the reason for developing the smuggling industry in the first place, would it not be possible that by increasing these taxes, as Bill C-24 will do, the problem will return? I think that is something the government should think about.

I want to talk a little about some of the other provisions in Bill C-24. One that comes to mind has to do with non-residents, cross-border transactions and the work of conventions. This bill talks about provisions for collecting taxes on gas and other utility transmission and generation. The bill also provides for a tax rebate for charities. Charities can get a tax rebate on the money they raise in bottle drives and things like that.

The real thing happening is that we are meddling. We are once again increasing the complexity of the Income Tax Act. There is no real change here. Nothing here will substantially change the tax level of Canadians. That is what is regrettable.

I would like to see the Liberals actually implement their election promise. Perhaps we should have a motion again in the House calling for the elimination of the GST. As a matter of fact, Mr. Speaker, I think that if you were to ask for it right now, perhaps we could get unanimous consent that the GST be eliminated. I would ask for that. Sure, why not?

Sales Tax And Excise Tax Amendments Act, 1999Government Orders


The Acting Speaker (Mr. McClelland)

The hon. member for Elk Island has requested unanimous consent to move a motion. Does the hon. member for Elk Island have the unanimous consent of the House to move the motion?

Sales Tax And Excise Tax Amendments Act, 1999Government Orders


Some hon. members


Sales Tax And Excise Tax Amendments Act, 1999Government Orders


Some hon. members


Sales Tax And Excise Tax Amendments Act, 1999Government Orders



Ken Epp Reform Elk Island, AB

Mr. Speaker, I am surprised. When I tried to fulfill their election promise, Liberal members came out of the bushes and said they did not want to do it. I am really surprised. They ran on that election promise. I thought they would be quite willing to accept the motion that the GST be eliminated because that is what they ran on. It would have been done and they could have gone home and said, “Look, we have fulfilled our promise”, just by staying in the bushes behind the curtains when a member of the official opposition moved that motion.

I also have a general statement about Bill C-24. It is illustrative of the things the government does. The budget is much more of a PR exercise than most people are aware. The announcements made in the budget every year by the Minister of Finance are numbers which are really designed to make people feel good.

There were announcements in last year's budget for example restoring $13.5 billion to health care. Canadians felt so good about that. Wowee, after all the money that has been taken out of health care. We all know how our health care system is suffering and now the government is putting back $13.5 billion. That is the messaging the Liberals do. What people do not know, and I guess it is the job of the opposition to point this out to Canadians and we need to repeat it over and over again, is that is a cumulative total over five years.

In my humble opinion it is bordering on dishonest in a one year budget to use numbers like that. It implies that $13.5 billion per year is being restored to health care when that is not true. It is $2.5 billion in the budget year, $2.5 billion the next year, $2.5 billion the year following, and then a couple of other payments in the next two years. Over five years the government will manage to put $13.5 billion into health care.

It makes us wonder why the government did not say $20 billion spread over 10 years or $40 billion spread over 20 years. Why did it not do that? The government could have got a bigger kick out of saying $40 billion instead of $20 billion or $13.5 billion.

Bill C-24 very much illustrates this because over and over it talks about implementing measures that were introduced in the 1999, 1998 and 1997 budgets. By voting in favour of this bill, if anybody does, they are simply saying to the Liberal government that it is okay for it to lie to the Canadian people and to totally misrepresent the budgetary facts by putting these things into place and talking about them.

Way back in 1997 there was the announcement of the millennium scholarship fund. The government got three years of kick out of it but did not put any money into it. The students' lives were not made any easier; their tuitions and costs did not go down. Meanwhile the government had this $3 billion millennium scholarship fund and all of the young people said, “The Liberals must truly be wonderful because they are giving us $3 billion”. But they did not. Over the objections of the auditor general, they billed it to that year's expenditures but they are simply taking it, hoarding it and putting it aside somewhere to spend in the future.

The same thing is true with many of the other issues the Liberals come forward with. What about the tax cuts? In this year's budget the Minister of Finance said that there would be $58 billion of tax cuts. Even Canadians like me feel like jumping up and kicking our heels because $58 billion of tax cuts is pretty exciting. Those are the words they used.

Let us look at our pay stubs. Is there any effect there? No. Our total taxes have actually gone up because the CPP premiums went up. The reductions are way down the road, five years from now. It is very presumptuous of the finance minister to do things like that. How does he know if he will even be in power five years down the road? The Liberals' mandate ends in the next year or two. It is very presumptuous of him to make promises of accumulated tax cuts. However, he gets the PR kick out of it and people feel good.

Unfortunately, feeling good does not affect our economy. It is only when we physically leave more money in the pockets of the taxpayers that our economy gets the real kick. Only then can Canadians buy the things they need for their families thereby promoting the economic well-being of businesses in their communities and the economy takes off. That only happens when they actually get the tax cut.

Meanwhile the Liberals are so interested in all of this spinning that we end up on May 9, 2000 implementing parts of the 1997 budget speech. Finally we are implementing the things that they promised three years ago.

The conclusion is simply that Bill C-24 is not good enough. It is a bill that has one or two good provisions as I said. I would love to vote in favour of them, but I cannot because of the other things.

The overriding issue of course is that in many areas we are revisiting and revising the implementation of the GST provision when in fact the government promised that it would eliminate, kill and destroy the GST. It has not happened. The Liberals who stand up and vote in favour of Bill C-24 will once again be standing in front of Canadians and saying “You cannot trust us. You cannot really believe what we say because we are implementing exactly the opposite of what we promised in the election campaign”.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

12:10 p.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I am going to pick up on the conclusion of the Canadian Alliance member. We too are unable to support Bill C-24, which implements the 1997, 1998, and 1999 budgets, or certain important measures contained in them, for reasons similar to those of the Canadian Alliance member.

I would like to go over the key features of the three budgets mentioned in Bill C-24. First, we characterized the Minister of Finance's 1997 budget as lazy and blatantly election-minded. We do not normally resort to this sort of vocabulary over nothing.

With respect to the 1997 budget, we said that the Minister of Finance could have done much more than he actually did to combat the unemployment and poverty at the time, particularly when he rose in the House, placed his hand over his heart and said that he was full of compassion for the thousands of Canadian children living in poverty and that he was prepared to do all sorts of things for them.

In the 1997 budget, with forecasts already pointing to large surpluses, we expected the Minister of Finance to immediately take stock of the increasing poverty, especially of Canada's children, and use these surpluses to help these children and particularly their parents.

We kept telling the Prime Minister that in 1997 the federal government would not be facing a deficit as large as he was saying, but rather a surplus. I remind the House of what the Minister of Finance was saying at that time. He said he was anticipating a $14 billion deficit for 1997. Guess what he got at the end of the fiscal year. We were telling him that the surplus could be close to $4 billion, and that is in fact what happened. At the end of the 1997 fiscal year, the surplus was $3.5 billion.

By hiding the truth behind the figures, by hiding the surplus, the Minister of Finance could say “Listen, we still do not have the means this year to relieve poverty and to improve conditions for the unemployed, to substantially lower employment insurance premiums and also to increase benefits. We will wait till next year”.

In reality, and this is why we had called the 1997 budget a blatantly election-minded budget, all the good news announced in the 1997 budget were for the 1998-99 fiscal year. A few weeks after the Minister of Finance brought down the 1997 budget, the Prime Minister and member for Saint-Maurice called an election. This demonstrated that the criticism we voiced on budget day was right. The Bloc Quebecois' contention that this was a blatantly election-minded budget was confirmed, as we were entering an election campaign.

The Liberals fought their election campaign on promises to reduce taxes, to improve the employment insurance plan and to reduce EI premiums. They said that they had to be re-elected.

The 1997 budget gave us a preview of what this government intended to do in the following years with the huge surpluses generated by making cuts at the expense of the provinces, particularly in the Canada social transfer, which is designed to allow the provinces and the Government of Quebec to fund social assistance, higher education and health, and also with the money that the government had been collecting year after year in the employment insurance fund, to which it contributed nothing. The EI surpluses were generated by the contributions of employers and workers.

We began to see how the Minister of Finance would behave once he had all these surpluses.

The 1997 budget was also a lazy budget, as the minister had promised a tax reform. He had told us in this House “Wait. I am setting up a committee that will make recommendations and I will start a review process of all the Canadian tax provisions, which have not been reviewed since 1967”.

We expected the Minister of Finance to come up with something in the 1997 budget. But no.

True to his proverbial laziness, the Minister of Finance preferred to stay put, to miss an opportunity and do nothing to eliminate the existing inequities in the tax system, particularly for low and middle income earners. Incidentally, these inequities still exist, even though the minister announced in the last budget that full indexation of tax tables would be restored.

We are being asked to support Bill C-24, to support measures that will implement large parts of the 1997 budget. Members will understand that we cannot support this bill, since we soundly rejected the 1997 budget, which was a smoke and mirrors budget, a blatantly election-minded budget, and also a lazy budget.

Let us now turn to the 1998 budget. We cannot support the measures this budget implements either. I remind the House of what the Bloc Quebecois said about this budget “Once a Liberal, always a Liberal.” Why did we say that?

In 1998, budget surpluses began to grow a bit, even if the Finance Minister did not yet acknowledge the existence of staggering surpluses and was bold enough to make a real farce of this budget by referring to a balanced budget, or zero surplus for the following three years.

The government was beginning to have quite interesting surpluses, which could have been used to restore the Canada social transfer payments to provinces in order to finance social assistance, post-secondary education and health, which had been drastically cut by the Minister of Finance two years before in a plan, in effect until 2002, which provides for annual cuts of several billion dollars in social transfer payments to the provinces.

Instead of giving back the money which it had stolen from the provinces, the Minister of Finance, who had also robbed the poorest, the sick and students, preferred to start implementing policies which were then seen and still are seen as unacceptable encroachments on provincial jurisdictions.

In other words, they rob provinces of their money and they use it to duplicate, overlap and encroach on provincial jurisdiction. There was a gross example of such an intrusion in the 1998 federal liberal budget, and that was the famous Canada millennium scholarship fund, worth $2.5 billion.

Never before had a federal government dared to encroach so blatantly and on such a way on an area, namely education, which is clearly a provincial jurisdiction.

The Liberal government decided to encroach in a heavy-handed way on an area which was clearly Quebec's jurisdiction, a jurisdiction recognised in the constitution. They seem to have acted in this manner to flatter the Prime Minister's ego.

Everybody has an ego; some have a big one, some have a smaller one, but generally we all have one. The Prime Minister's ego is gigantic. He wanted to leave his mark with the millennium scholarships and chose to interfere in an area under provincial jurisdiction, thereby creating endless quarrels. I think this is typical of this Prime Minister, whose career is based on quarrels between the Quebec government and the federal government, constitutional and jurisdictional quarrels, quarrels about the federal government's interference in areas under provincial jurisdiction.

With the millennium scholarships, which were introduced in the 1998 budget, the Prime Minister showed that he was on an ego trip. He wanted to leave his mark. I suppose he is hoping that his face will appear on a bank note one day.

Negotiations with the Quebec government lasted several months. The quarrelling lasted several months. At the end of the day, the students are the ones who had to wait and who had to pay because of this interference by the federal government and because of the Prime Minister's ego trip.

No distinction has been made between the situation of students in Quebec and of students in Canada. There has not even been any recognition of the existence of a loans and scholarships system, which was consolidated at the 1964 constitutional conference between Mr. Pearson and Mr. Lesage.

The benefits of this thematic system of loans and grants in Quebec were not even recognized. The Prime Minister claimed that the federal government had a say in the education sector.

That budget also reinforced the federal government claims on surpluses accumulated in the employment insurance fund. That year, surpluses were over $6.4 billion. And the federal government, and particularly its Minister of Finance, who wants to be the leader of the Liberal Party of Canada, shamelessly took this money and put it in their pockets, as though it belonged to them. The government did something else instead of compensating the unemployed, which would normally be the ultimate objective of this fund.

I remind the House that we started getting quite disturbing statistics that year about the employment insurance coverage, with fewer and fewer unemployed people being entitled to employment insurance benefits. More and more people were marginalized from the labour market and were driven to poverty, although they had been employed before being laid off, because they were not entitled to any benefits.

The following year, statistics were appalling: 43% of the unemployed were entitled to employment insurance benefits. I repeat it, and the Bloc has also said so numerous times and has fought an extraordinary battle in that regard, when a system does not serve the majority of the clients it is supposed to serve, we must toss it out and start all over again, go back to the drawing board and take our responsibilities. This important system is supposed to help workers temporarily affected by the economic conditions who need help and support. It is not intended to push them aside, marginalize them or threat them as abusers.

Let us not forget that it is not only because the EI qualifying criteria have been tightened that 43% of the unemployed now qualify and, more importantly, that there is a $6 billion dollar surplus. It is mainly because, since 1997 and particularly 1998, the unemployed have been considered as potential abusers. They have been hunted down. Some even received calls as early as 5:45 in the morning, checking if they would be available for an interview that same day, to see if they were ready to re-enter the job market. They have been hunted down like criminals.

This is what the 1998 budget was all about. And now the government is asking us to support the measures that give effect to this budget. We will never do that. It would be a shame and we would lose sleep over it. If the Minister of Finance can still look at himself in the mirror after the drastic cuts that he has made in the social programs and after the role that he has played in exacerbating the problem of rising poverty in Canada, good for him. But on this side of the House, we have too much social conscience and sense of duty to be able to do so. We will never support this budget, nor others of the same ilk, nor any Liberal party measure that is not in the public interest.

Let us move on to the 1999 budget, for Bill C-24 contains some measures which concretize part of the 1999 budget. It goes from bad to worse. I will repeat the main thrust of our analysis from that time. When the Minister of Finance introduced his budget, we described it as being evidence of one thing: the federal Liberals were not ones to keep their word. Why such a severe judgment once again? As I have already said, we in the Bloc Quebecois do not make such statements lightly. This is a documented fact. This time there was no shortage of documentation.

As we said back in 1999, the Liberals do not keep their word. Why? Because, with no warning, the Minister of Finance decided to change the formula for determining the distribution of funds under the Canada Social Transfer to the provinces and the Government of Quebec. He did so unilaterally, without any warning, without any advance notice.

So, contrary to what had been the practice in the past, when provincial need was the main criterion, when for instance a poorer province was entitled to more funding for welfare and the criterion of provincial need was self-evident, the decision was made to change this, with the stroke of a pen, in favour of solely population size.

It is ridiculous, shameful—if somebody could die of shame, the Minister of Finance would be long dead; of course, I do not wish anyone dead, this is just a figure of speech—to have changed from this method to a strictly population-based approach, which will mean that, in the next few years, Canada's most heavily populated province.

Ontario, which is also richest province, will receive approximately 47% of the new transfers allocated by the Minister of Finance in the 1999 budget and the 2000 budget. Of the additional $11.2 billion dollars allocated in 1999, 47% will go to Ontario, while Quebec will get 8.3%, because the formula takes into account adjustments in cuts already planned, as well as various criteria that will evolve between now and 2002.

So, under the new formula, which takes into account the relative population of the provinces instead of other criteria, which balanced population with the needs of the provinces, Ontario will end up with 47% of this new funding and Quebec 8.3%.

With this unilateral change in the method of allocating funding, we have the following situation. Quebec will absorb about 50% of the unilateral cuts planned by the federal government between 1995 and 2001, 2002. In addition to not getting any new funding from the federal government and having a proportion corresponding to one-third of its demographic weight, Quebec will absorb about 50% of the cuts announced by the Minister of Finance and the Liberal government.

This decision reinforces our opinion that the Liberals are not true to their word, that they honour neither their word nor their signature, and that we are witness to a real attack against the Government of Quebec. I remember very well that the President of the Treasury Board, sometime in 1997 or 1998, said, as reported in Le Soleil that what the federal government most do is hurt the Government of Quebec.

The President of the Treasury Board said, speaking for his government, that “when Bouchard has cut in health care, social transfers and education, the federal government will come along as the protector and show itself to be the great social democrat in this country, full of compassion and having a better fate for the most disadvantaged at heart”.

This is what lies behind the three budgets of the Minister of Finance. All of this was behind that, nothing more, nothing less.

The 1999 budget is also the budget of shame, because in 1999, the Minister of Finance had the means to immediately initiate a reform of the tax system so that the people and families who should be in the middle income bracket did not find themselves below the poverty line, once federal income tax was paid. He could have corrected this injustice. He could have had the tax thresholds raised. Let me explain.

He would have had the means in 1999 to ensure that a single income family of two adults and one child, paying federal tax on an income above $13,700 only, would pay income tax when it had an acceptable income. In Quebec, a family pays taxes only on an income of over $30,000. At the federal level, it is $13,700.

The Minister of Finance could have corrected that situation in 1999. He could also have corrected it in the last budget, the year 2000 budget. He did not do so. Why? Why do we have a situation where federal taxes in this supposedly wonderful country are so high that they turn what should be a middle income into a low income, an income below the poverty level? This does not make any sense.

In the 1999 budget, the budget of shame, the minister told us “A tax reform is underway. I can already tell you that there will be tax cuts”. Yes, but what exactly are these tax cuts? This is what we have to look at.

The Minister of Finance is a millionaire and a shipowner who passes laws that benefit him, or at least we suspect so. He proposes tax cuts that benefit his buddies, that benefit the millionaires of this country. He told us he would eliminate the 5% surtax on personal income. He was very proud to announce that measure, because it was going to provide relief to taxpayers, who would have a little more leeway.

But those who have more leeway are not the taxpayers who are experiencing real problems. Rather, it is those who earn $250,000 or more annually. In 1999, these people enjoyed a $3,800 tax cut. They are the lucky ones.

By comparison, that same year, those who earned $30,000 or less got a $90 tax cut. There is talk of fair taxation, there is great pride in announcing tax cuts to benefit the most disadvantaged, when in fact the target group is the millionaires. Is this normal?

Is this a budget whose implementation could be acceptable, when it is totally unacceptable as far as its main principles are concerned, condemnable and fit for the trash can?

Very few people here recall the latest statistics on the increase in poverty in Canada, which came out in 1999. At that time we learned that there were no longer in excess of one million poor children in Canada, as there had been in 1993. The number had increased to 1.4 million, that is 400,000 additional cases because of this government, because of the harsh measures taken by a harsh and heartless minister, the Minister of Finance, and his shameless government.

There have been three shameful budgets: 1997, 1998 and 1999. Any others could have been described in the same way. It was clear that there was only one way the Minister of Finance could find to put this country's finances back on an even footing: the provinces were asked to contribute 60% of the effort via deep slashes to the transfer payments used to fund health, higher education and social assistance.

The taxpayers of Canada were asked to contribute 30%. As hon. members are aware, in four years, 1994, 1995, 1996 and 1997, by not reforming the tax system, the Minister of Finance ended up with close to $25 billion extra in taxes in his coffers, among other things by not indexing the tax tables. That is how the country's finances were put back on an even footing.

It was not his talent or intelligence. A puppet could have done the same thing. It is easy to sit down and watch the train go by, to do nothing to correct the injustices in the tax system and to see that these injustices translate into billions of dollars in revenue going into the federal coffers.

It is easy to sit on one's fanny, watch the train go by, pinch, steal, money from the employers and the employees in the employment insurance fund, to stuff that in one's pockets and to create a good impression. It is easy to sit and keep the expected adjustment of the government machinery, the talk was of 19% in reduction of the machinery, to 8%.

That is the supreme intelligence of the federal Liberals in the management of public finances.

No one is to be congratulated on these three budgets. We certainly do not have to support them. If I did, I could never sleep, I could not look at myself in the mirror, because I would always be ashamed. I wonder how they manage.

I would now like to give a little dry and somewhat technical demonstration, which is worth the trouble. It represents $2 billion for Quebec.

In Bill C-24, there is also a clause that implements the agreement reached April 23, 1996 between the federal government, the Minister of Finance in this case, and three maritime provinces—New Brunswick, Nova Scotia and Newfoundland.

On April 23, 1996, the Minister of Finance signed a memorandum of understanding with these three maritime provinces so they would harmonize their provincial sales tax with the federal GST. In this process of harmonization, it was clear that some would have to adjust their tax system, because in some provinces the sales tax was 12% or 14%. They had to bring this provincial tax down to 8%.

In direct terms, looking at the tax revenue from provincial sales tax, these three provinces came up short. The Minister of Finance therefore decided that they should be compensated. Admittedly, this is a political decision. Nevertheless, it is a decision which, based on the formula used, is unfair to Quebec, and I will explain.

In 1991, the Government of Quebec, which did not wait for Canada's other provinces to make the move, decided to harmonize the GST with the TVQ for reasons of operation and cost to businesses in Quebec. Ultimately, it was about making Quebec's businesses competitive.

In fact, the then Progressive Conservative government had appealed to the provinces to harmonize their PST with the GST so that all Canadian businesses could face the music, be competitive and efficient, as well as enjoy the benefits of a harmonized regime, which is less difficult to manage. In short, there were all sorts of good reasons.

The Government of Quebec did not wait, and immediately began the process of harmonization. But when it did so, it had to adjust its tax structure. How did the Government of Quebec do that? By increasing certain taxes payable by businesses in Quebec. Let me give an example.

Following the harmonization of the GST and the QST in 1991, the tax on profits generated by small and medium size businesses rose from 3.45% to 5.75%, a rather drastic increase of 66%, because of the shortfall suffered by the Quebec government as a result of that harmonization. Taxes on the profits of these businesses had to be adjusted. That was a necessary measure to maintain a stable tax base.

Taxes on profits in general were also increased, from 6.3% before harmonizing the GST and the QST in Quebec, to 8.9%. Taxes on gasoline and cigarettes also had to be adjusted. If that new tax had been added to the existing excise tax on cigarettes and gasoline, the rate would have been so high for gasoline that it would have been too big a shock for the Quebec economy.

So, because of the adjustments that had to made to the Quebec government tax structure, some costs were absorbed partly by Quebec and partly by the companies, through the tax increases to which I referred.

These adjustments are estimated at about $725 million a year for the Quebec government and businesses. That was achieved by using the same bases for calculation that the Minister of Finance used with the maritime provinces, but by looking at all the adjustments that had to be made to the whole tax structure, and not only the adjustment at the provincial sales taxes level.

This is where the fundamental difference lies. When the Minister of Finance signed the MOU, he looked at the shortfall directly related to the reduction of provincial sales taxes in the three maritime provinces and determined a compensation on that basis.

As far as compensation is concerned, they were saying that any shortfall in excess of 5% between provincial sales tax receipts as they existed in the maritime provinces before harmonization and afterward was compensated for by the federal government, but only when it exceeded 5%. When the calculations were done for the maritime provinces, the figure reached was $964 million for the next four years.

When we do the same calculation, taking into consideration that the federal government would have to compensate for 100% of the shortfall in excess of 5% the first two years, followed by 50% for the third year, and 25% for the fourth, the figure we get for the first year is a loss of $725 million, taking into account the whole adjustment to the taxation system. The second year, taking into consideration the payment that should come from the federal government, which is again 100% reimbursable by the federal government after the first 5% of the harmonized tax as compared to the original tax, the figure would be an additional $725 million. The third year it would be $363 million and the fourth, corresponding to 25% of the shortfall, would be $181 million, for a grand total of $1.9 billion, or very nearly $2 billion.

These calculations were presented to specialists outside of the federal and Quebec governments, and they agreed with us. As well, in 1997, the provincial premiers supported the Government of Quebec in its crusade to obtain justice in this matter. The federal government turned a deaf ear. At the 1996 summit in Quebec, there was unanimity. Along with talk of the battle against the deficit, there was also talk of the $2 billion the federal government was obstinately refusing to pay the Government of Quebec.

This led to another problem. The fact that we were not entitled to compensation to which we were legitimately entitled—and our calculations are above reproach—had another result. When harmonization of the GST with the Quebec sales tax was carried out, the harmonization was not complete. This would have cost the Government of Quebec and the businesses of Quebec too dearly, given the shortfall, and given the lack of federal government contribution to this harmonization.

Even though the Government of Quebec manages the collection of its harmonized provincial taxes and the GST for the federal government, and Quebec businesses have only one form to complete, they have, however, different calculations to do when the time comes to claim the input tax credit at the federal level or in the harmonized provincial sales tax system.

The list of input credits for some industries is not the same as the list of items that permit a return for federal government input tax credit. So that Quebec businesses cannot fully benefit from the harmonization of the GST and the provincial sales tax.

If the federal government would stop being obtuse, if it paid attention to our analyses, our demonstrations, if it acknowledged we were right—because we were right and it was wrong—we could conclude this harmonization. Quebec businesses would be a lot more competitive in an environment where the talk is of liberalization and globalization. This is an important factor when we are talking about taxation and red tape and especially when we are talking about returns for input tax credits that Quebec business is entitled to.

We are therefore not pleased to support a measure that treats Quebec and, more importantly, Quebec business, unfairly and unjustly in connection with the harmonization of the GST and the QST, with the provincial sales tax of these three maritime provinces.

We support the principle of harmonization since Quebec was the first, oddly enough, without asking for anything, to harmonize or at least to try to harmonize its provincial sales tax totally with the federal GST. Afterwards, when the time came to claim some support for this adjustment, like it did with the three maritime provinces, it sent Quebec packing. How are we supposed to support Bill C-24, which implements this memorandum of understanding of April 1996? We cannot.

It cannot be said that businesses from the maritime provinces increased their competitiveness compared to their Quebec counterparts, in spite of the help of federal funds to which we did not have access, even though we had a right to such funds. We have no choice but to oppose this provision of Bill C-24, just like we were opposed to the Liberal mismanagement displayed in the 1997, 1998 and 1999 budgets, for the reasons that I mentioned earlier.

I want to say a word on the year 2000 budget. That budget did not solve any of the problems that I mentioned. The federal government turned a deaf ear, in spite of the fact that opposition parties in the House were unanimous in asking for employment insurance reforms, for leaving the employment insurance surpluses in the EI fund for the unemployed, for respecting contributors by not stealing their contributions, particularly since the government contributes nothing. The federal government also turned a deaf ear in spite of the unanimity among opposition parties regarding the level to which social transfers should be restored.

In the year 2000 budget, the government announced the elimination of certain cuts. However, by the year 2002, the cuts that were originally expected to total $40 billion will be around $33 billion. And we should thank this government for cutting social transfers, transfers for education and health, when it continues to make cuts and when it is making election-minded announcements about bogus increases in transfers.

The government did not solve any taxation problems in Budget 2000, any more than it did in the 1997, 1998 and 1999 budgets. Since our arrival here in 1994, since the first budget, we have been calling for this taxation reform. We have good reasons for doing so. Federal taxation is antiquated, unfair to low and middle income earners and too generous to certain big corporations, which take advantage of loopholes. These corporations have the resources to hire the best tax experts, who know the ins and outs of taxation and who put them to work for their clients.

If we look just at the clause having to do with taxes deferred by these large corporations, and at another clause concerning the accelerated depreciation of technological inputs, we find ourselves with a situation where businesses will never pay any taxes. These businesses are proud of the fact.

However, the money that they do not contribute in taxes is squeezed out of individual taxpayers, the families I mentioned earlier, with two adults, one child and a single income, who start paying federal taxes at $13,000. This is the family that is making up for what big corporations like Bell Canada or Bell Canada Enterprises, Mr. Monty's business, are not paying. I keep thinking about Mr. Monty and I do not know why. Probably for a number of reasons, but for that one in particular.

I was looking at the latest statistics available on Bell Canada Enterprises compiled by the CTC, which show that BCE has deferred taxes owing and unpaid. Normally, over the years, it should have paid these taxes, but it owes around $2 billion or $2.5 billion. BCE owes $2.5 billion in back taxes, which it will likely never pay, because of the clause to which I have referred: accelerated capital cost deduction and tax deferral.

That $2 billion is precisely what it took to acquire CTV. Hon. members will recall that Mr. Monty made a $2.3 billion offer to acquire CTV. This prompts me to comment that, if Bell Canada Enterprises were to acquire CTV, it would belong to everyone. It would belong to the families made up of two parents and one child who pay federal tax starting at $13,000. They would own a piece of it because they are the ones paying to compensate the big guys, BCE and the like.

This is unfair. The minimum taxation levels are unfair. The Government of Quebec did an excellent job in this area. In the last three years in particular, we have brought the minimum tax level down to a reasonable level. A family of two adults, one of them the wage earner, with one child will start paying taxes at the $30,000 annual income level. The federal cutoff is $13,700.

Our millionaire financier, and manager of the state, he whose pockets are overflowing, finds himself in the situation of being too lazy to initiate a true tax reform in order to bring about fair taxation.

For all these reasons, we are going to continue to speak out against this Liberal government management and we will most certainly vote against Bill C-24.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

12:50 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, it is with pleasure that I rise today to speak to Bill C-24, an act to amend the Excise Tax Act, the Budget Implementation Act, 1997, the Budget Implementation Act, 1998, the Budget Implementation Act, 1999 and the Income Tax Act.

Here we are in May 2000 debating amendments to the budget implementation act dating back to the 1997 budget. It should be noted that in reviving parliamentary democracy the Liberal plan for the House of Commons and electoral reform from the 1993 Liberal platform stated:

In addition, the credibility stretching tradition of not passing actual tax measures until many months after a budget, often even after the measures have come into effect, must, within the context of a suitable system of consultation, be ended.

What we have here is another example of a broken Liberal promise. In this case it is one of parliamentary reform to provide a more reasonable time period within which budgets would be implemented, as opposed to talking about these changes three years after an actual budget is presented by the Minister of Finance.

Another area of the specific legislation which magnifies some of the broken Liberal promises is the fact that we are discussing some measures relative to the changes to the GST. Everyone in the House remembers, particularly the Liberal members opposite who ran in the 1993 election, campaigning on a Liberal commitment to get rid of the GST.

The current government promised at various points during the 1993 campaign to eliminate, to scrap, to abolish the GST. The finance minister in 1989 once said in the House of Commons that the GST was a stupid, inept and incompetent tax. As a candidate for the Liberal leadership he was quoted as saying that he was committed to scrapping the GST and replacing it with an alternative. Since then the Prime Minister during foreign travels has not just embraced the GST but has actually told foreign dignitaries that it was his idea in the first place and that it is a great tax.

For the Liberals today to embrace the GST after campaigning vociferously against it qualifies them for the award of the patron saint of hypocrisy in the Canadian parliamentary system. For Liberals to have fought against the GST and now take credit for it and benefit as a government from the proceeds of the GST is one of the reasons Canadians are so skeptical and cynical about politics in general.

The Economist magazine 1998 year preview stated quite clearly that credit for the deficit reduction in Canada belonged largely to structural reforms made by the previous government. The Economist magazine went on to list them. They included free trade, the GST, deregulation of financial services, transportation and energy. If I remember correctly, the Liberals campaigned vociferously against all those policies in previous elections. The current government has utilized those policies to eliminate the deficit.

I am not suggesting that I would have been happier had the government reversed those policies. In fact I am quite pleased that it maintained them. The only thing worse than the Liberals blatantly stealing Conservative policies and taking credit for the results would be if they were to implement Liberal policies which would probably be far more deleterious for the Canadian economy. Instead of trying to creatively develop Liberal policies we are pleased that they had the good sense to embrace and support the sound policies of the previous government.

I could go further and say that this is a government of sound and original ideas. Unfortunately its original ideas are seldom sound and its sound ideas are never original.

Although the GST was an appropriate tax measure and appropriate tax reform at the time, we have not seen any meaningful level of tax reform under the current government. We could look at other countries with which we are competing and the degree to which they are using tax reform and tax reduction as vehicles to create greater levels of economic growth. I suggest that we look at what Izzy Asper, former leader of the Liberal Party in Manitoba, the CEO of CanWest Global Communications Corporation and head of the Global Television Network, said when he spoke recently at the BCNI meetings in Toronto.

He said that the Canadian tax system we were living under was last reformed 32 years ago, that it was obsolete and that the world it was designed to deal with no longer existed. He went on to say that the system was a nightmare of complexity and a sea of uncertainty, and that the tax system was anti-business, anti-private sector and anti-entrepreneurial.

He asked a question of the Minister of Industry who spent some time speaking to corporate leaders. The Minister of Industry responded by saying that there could be no significant level of tax reform in Canada and that tax reform would require a complete consensus.

Obviously we will never have complete consensus on tax reform or on any other major public policy reform or issue. The industry minister and the whole government are so focused on poll driven incrementalism and focus group economics that they cannot really embrace the courageous visionary changes and steps toward the more competitive economy which is necessary now because it would involve political risk.

We have an industry minister who is credited by some as being one of the most commonsensical in terms of his recognition that the private sector plays a role in the economy. He actually believes there cannot be any tax reform unless there is 100% complete consensus on tax reform issues. I think that is a sad state of affairs.

Canada needs a significant level of tax reform. Such reform should be used as a vehicle for tax reduction. It is not just personal taxes. We need a significant level of corporate tax reduction.

The most recent budget reduced corporate taxes somewhat over a period of years. However, prior to this budget we had the second highest corporate taxes in the OECD. After the full implementation of budget measures over a five year period we will still have the fourth highest corporate taxes of 31 OECD countries.

It is not really a very significant step in the right direction, particularly given that 27 of the 31 OECD countries have stated plans to further reduce their corporate taxes. While we are taking baby steps in the right direction on some of these issues, other countries with which we are competing are taking gigantic leaps.

On the hypercompetitive global information highway upon which individual Canadian companies are trying to compete and succeed, we run the risk of becoming road kill unless the government actually embraces some of the realities of the future as opposed to always dealing with reforms around an economy that no longer exists. That is part of the difficulty in discussing and making these types of changes so long after a budget is introduced.

Right now the rate of economic change has never been greater. Now is probably the worst time in Canadian history to have a caretaker, cruise control kind of government that is more focused on next week's polls than on the challenges and opportunities for the next 20 or 30 years. My fear is that Canadians will continue to be held back by this weak leadership that is not focused on the real issues facing the private sector and all Canadians.

We should be moving more significantly toward reducing and ultimately eliminating capital taxes in Canada. The taxation of capital in itself is of dubious benefit. It creates significant disadvantages to accumulating capital in Canada and some significant competitive disadvantages for our Canadian financial services sector and banks. Some 7.5 million Canadians are shareholders of those banks directly or indirectly.

The capital gains tax issue needs to be addressed. The government's recent budget would reduce capital gains inclusion rates from 75% to 66.6%. That is a step in the right direction but it still leaves Canadian entrepreneurs with a 13% disadvantage in terms of effective capital gains tax rates over the U.S. A 13% disadvantage is certainly not something to crow about.

The capital gains tax issue particularly in the new economy is important because of the degree to which stock options are used as compensatory assets. There is no reason to suspect this will not continue to be the case even with the recent volatility. The new economy is going to continue to depend on stock options as a very important compensatory vehicle.

As such, when we maintain a 13% disadvantage over the U.S. in terms of the way we tax capital gains, the resultant gain from exercising a stock option, we are driving entrepreneurial talent from Canada. We are sending the risk takers and the great minds who are capable of building better companies and better opportunities and thus a better country, somewhere else. That better country may not be Canada. It may be the United States of America or somewhere else because of the wrong-headedness of the government and its inability to get with it in terms of embracing the realities of the new economy.

There are several revenue neutral changes in Bill C-24 which relate to the goods and services tax, the GST, and the harmonized sales tax, the HST. These measures were announced on March 20, 1997. Most of them relate directly to Atlantic Canada and Nova Scotia in particular. It is notable that these were introduced on March 20, 1997, just a few short months before the Liberals were turfed from Nova Scotia. I am not suggesting that the unanimous decision in ridings across Nova Scotia to remove the Liberal representatives from their seats was a reflection of this issue specifically, but I think it did play a certain role.

By and large the measures are revenue neutral changes. Some of them are positive. Assistance to charities that employ individuals with disabilities and charities that are involved in bottle recycling, enhancements to visitor rebate programs and changes benefiting small businesses that sell products to direct sellers are positive measures and we in the Progressive Conservative Party can support them.

The general tax direction not just of this legislation but of any Liberal government legislation in recent years has been so flawed by a fundamental lack of vision and initiative that it is very difficult to support almost any tax package brought forward.

There have been some changes on the tobacco tax regime and also the tax regime on split run magazines.

I would like to speak to some of the things that are not addressed in this legislation and which I would like to see more of in Liberal fiscal and economic policies.

It is time to significantly raise the basic personal exemption in Canada. It is absolutely atrocious how much people are being taxed. The most recent budget would have raised the basic personal exemption to $8,200, the amount at which the government feels it is appropriate to start taxing Canadians. In the U.S. the basic personal exemption is not hit until someone earns approximately $11,000 Canadian. Here we are in Canada which supposedly is a less harsh country and we actually tax people at $8,200 per year. That seems fundamentally unfair and needs to be addressed, but the government clearly has not set that as a priority.

Canada needs to redefine its middle class. Currently the top marginal tax rate is hit at $60,000. The most recent budget would increase that to $70,000. The fact is in the U.S. an American does not hit the top marginal tax rate until he or she is making $420,000 Canadian. As a result, we are taxing at $60,000 and the government with the full implementation of the most recent budget would increase that to $70,000.

Using $70,000 as the amount, at $70,000 the government feels it is appropriate to tax Canadian families as if they are rich. That creates immense pressure for those people earning $70,000 to $100,000 to be drawn south of the border to greater opportunities and lower taxes.

For example a software designer or a knowledge based worker in Vancouver making $70,000 per year will pay 52% of his income in combined federal and provincial income taxes. Less than an hour and a half away in Seattle, a software worker or a knowledge based industry worker making the same amount of money, about $70,000 Canadian, will pay 26% of his income in combined state and federal taxes. An hour and a half away in the United States, the same individual in the same industry will pay half the level of taxes that he would pay in Canada.

The argument that is used quite frequently, and to a certain extent there is some validity to it, is that of medicare. That argument has been reduced significantly in recent years as the government particularly since 1993 has cut, slashed and decimated the Canadian health care system which for a long time defined Canadians. The health care system played a large role not just in protecting the health of Canadians but also in defining to a large extent the Canadian psyche.

The government through its draconian cuts since 1993 has created immense havoc in every province in the country. Every province has had to deal with the significant level of cuts for health care funding that the government has perpetrated. As a result of the cuts, the percentage of federal commitment to health care has declined steadily to a point that some estimates are that the federal government is paying around 13% of every dollar spent on health care in Canada. Clearly that is unacceptable and that is part of the problem.

On the tax side, the Canadian advantage with medicare really does not exist any longer. What we have seen develop in Canada is a fairly mediocre system for everybody. While it is egalitarian, it is a poor system. As a result, those who can afford it are increasingly being drawn toward making the choice of seeking health care elsewhere or to actually live elsewhere. Many of the professionals who have been drawn away by the brain drain work for companies that provide health care insurance so it is less of an issue.

We have to consider this from a competitiveness perspective. We have to ensure that we are not allowing economic symbolism to define us. Economic performance is more important than economic symbolism.

We have to get our fundamentals right. We need a sound tax structure which is more reflective of the current realities. We also need a more effective health care system which recognizes the current realities.

The fact is that Canada already has a two tier health care system. Around 30% of our health care costs are in the form of costs covering pharmaceuticals, much of which is already paid for privately.

The changes in health care which have occurred and to a large extent the rising costs of pharmaceuticals, the increased level of sophistication in biotechnology and the pharmaceutical industry have already led to rising costs and an increased level of participation by the private sector. Add to that the fact that many Canadians are drawn to the U.S. for health care treatments in private sector facilities.

We need significant levels of economic reform on the fiscal front. We need sound and firm debt reduction targets. We need lower taxes, better tax reform and a better health care system. That is only going to be accomplished with a more visionary, courageous government. Unfortunately, I have lost faith in the members opposite to provide that type of leadership.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:10 p.m.


Ghislain Lebel Bloc Chambly, QC

Mr. Speaker, I listened with great interest to the comments of the Progressive Conservative Party member. Like him, I am worried.

I cannot understand this talk about inventing tax reform. Mr. Charest, a former Progressive Conservative who has come to Quebec, seemed to want to get away from the equation whereby government revenues, whether from individuals or corporations, are spent on services and generally the revenues pretty much balance out the services provided to the public.

There is another phenomenon where work must not contribute to poverty, so that the more you work, the poorer you get. This is another given. Reducing corporate taxes because it is the combination of the two, the corporate and the individual taxes. Of course, there are by-products of taxation such as sales tax, duties and taxes and so forth, but the fact remains that the government weighs the necessary balance between revenues on the one hand, and expenditures on the other. Expenditures are services.

The last tax reform was in 1971. That was the last, as far as I recall. Of course, there was the GST, which was introduced in 1984, I believe.

But the fact remains that this is the sort of thing governments must face. In the tax reforms to date, whether the government digs into the right pocket or the left, it is still the same pair of pants.

Despite all my efforts, I cannot see what these new sources of revenue would be. If we are speaking of individuals, it would be a disincentive to work. If we are speaking of businesses, it would discourage investment, entrepreneurship and so forth.

So perhaps the government has to decide to take an approach other than tax reform. I do not know what. We might be faced with worse choices, including in the health care sector and other sectors that are important to us, such as education. It must not come to that. I ask the member to tell me what the magic formula is.

Perhaps he has already had a chance to speak with the current leader of the opposition in Quebec City, Mr. Charest, who was in his party at one point. I wish he would enlighten me. I am honestly confused. I cannot imagine anything other than what we have now.

I am not a tax expert and I humbly ask him to enlighten me. I am open to his comments.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:15 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I thank the hon. member for his excellent points and questions. He has raised a couple of very important issues.

First, the last significant overriding tax reform was around the time of the Carter commission back in 1971. The changes were introduced by the Carter commission which reported in the late sixties, approximately 30 years ago. Since then we have seen amazing changes in the Canadian economy. It is clear that we do need some level of reform.

The GST was a significant change as well. The Minister of Industry said in a speech at the BCNI that tax reform was a non-starter for the government because it could not get consensus on tax reform. There was a consensus on the GST. Unfortunately it went against the governing party and resulted in not just significant tax changes but significant political changes in 1993.

The question the hon. member had was relative to how we balance tax reduction and the other needs. Ideally, there should be tax reform and it should be based, in my opinion, on growth and not greed. We should be looking at tax reform from the perspective of what taxes can we reduce to create the greatest level of economic growth and opportunities here in Canada.

I can point to a few examples. In Ireland much of the tax reduction that has occurred has been in corporate taxes. By reducing corporate tax rates, Ireland has actually increased corporate tax revenue by attracting companies from around the world.

There are examples closer to home. I would argue that Quebec has been very successful under Bernard Landry with many of his tax policies, particularly those focused on the new economy. One of the most innovative aspects of the Quebec tax policy has been on the provincial income tax not being paid by research scientists, the Ph.D.s coming from other places to Quebec to participate in research. The new economy, whether it is in e-commerce or biotechnology, needs those Ph.D.s and researchers. As a result of the policy by the Quebec government, it has effectively been able to reduce the personal tax rates for these minds that Quebec and Canada need to U.S. levels, which has been very innovative.

I would argue that we can reduce some types of taxes without reducing revenue overall. Another example of that is capital gains taxes. When we reduce capital gains taxes there is often a resultant unlocking of capital which actually leads to a greater level of capital flow and a greater level of taxes being paid.

Unfortunately tax reform is usually based on political criteria as opposed to economic criteria. We often build tax reform around what is politically palatable or what is popular and do not think of what will lead to the greatest levels of economic growth. It is not always the same thing, but in many ways the Quebec government has pursued some policies that have been quite innovative in terms of attracting the type of industries that are necessary.

I would like to see the national government be a little more amenable to that kind of thing. Some of these successes have resulted of course in the recent move of NASDAQ to Montreal.

While I disagree with the policies of the Parti Quebecois in terms of its position on federalism, I have to express some level of admiration for some of what the Parti Quebecois has done on economic policy.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:20 p.m.

Etobicoke North Ontario


Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I listened to the comments by the member for Kings—Hants and I heard a different interpretation and variation of history.

One interpretation I found particularly intriguing, although I forget his exact wording, was when he said that the former Progressive Conservative government built the architecture for the fiscal results of this government. In reflecting upon that, I looked at the growth in the deficits. In fact, when we came into office in 1993 the deficit was at $42 billion. There had been no action on the deficit whatsoever. The public debt had increased significantly. Taxes had been increased, the EI premiums to name one, and other taxes.

I wonder if the member could actually describe the architecture that was built by the former Progressive Conservative government that lead to the very good fiscal results of this government since 1993.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I thank the hon. member for his question. I look forward to being on that side of the House and having him lob similar softball questions across to us once we are back in government. That was indeed a softball question.

The Mulroney Progressive Conservative government was successful in reducing the deficit as a percent of GDP from 9% when it took office to 5% by the time it left office. It was kind of like that old country and western song, Give Me 40 Acres and I'll Turn This Rig Around . That previous government inherited an 18-wheeler that was going down the road at 200 miles per hour in the wrong direction. Somebody had to slow it down and somebody had to implement the types of structural economic changes that were necessary to enable this visionless government to effectively cruise through the last several years and, through no fault of its own, to have fairly decent economic results.

Those were not my words crediting the Progressive Conservative for the reduction and elimination of the deficit. Those were the words of the greatest news journal in the world, in my opinion, the Economist magazine out of the U.K., which said very clearly that credit for the deficit reduction in Canada belongs largely to structural reforms made to the Canadian economy by the previous government. I would not be so audacious as to say that myself. I was just quoting a wonderful news publication that brings a very objective view to the situation here in Canada.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:20 p.m.


Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, thank you for the opportunity to get back into the order and the flow of things. I missed my opportunity at the end of the Bloc Quebecois speech to add our contribution to this debate. I appreciate the latitude shown to let me speak to this now.

It should come as no surprise to anybody here that the NDP caucus is in opposition to Bill C-24. Members look shocked that we do not fully concur with the Liberal Party tax policy. I want to use my time to point out just how strongly we oppose Bill C-24 and other recent developments from the most recent budget that dealt with tax relief and tax reform, if one can call it that. We have been calling for true tax reform since we have been in the House but we have yet to see it. Frankly, we have seen more in the same direction and a continuation of the same economic policy and philosophy which we think does not serve ordinary Canadians and does not serve working Canadians well.

By way of beginning my remarks, it is useful to look at a direct quote from the majority report of the finance committee. It is just a few short lines so I will read it. The majority report of the finance committee states:

The Committee has chosen to use tax reform/relief as the primary vehicle for promoting increased productivity not because we know that there are very specific and definitive links between productivity and taxation, but primarily because of what we don't know.

The Liberals are almost jumping into this avenue of economic policy by virtue of what they do not know will be the predictable results and consequences. That should not give Canadians any comfort. It should worry Canadians very much if that is the sort of research that has been done.

I will read this again because a lot of Canadians will probably not understand how significant and indicative this is. It says:

The Committee has chosen to use tax reform/tax relief as the primary vehicle for promoting increased productivity not because we know that there are very specific and definitive links between productivity and taxation, but primarily because of what we don't know.

That sounds like nonsense. It is also very worrisome for ordinary Canadians who may pick that up and read it.

One thing I can say is that there is no empirical evidence anywhere in the country that proves tax relief creates jobs. That is a myth that has been perpetrated. It is something that we might like to believe, because it would give us some sense of surety that we are confident about the direction in which we are going, but there is no empirical evidence anywhere. There has been no academic study. There has been no proof that tax relief, as such, creates jobs.

There is also no proof anywhere, as the committee admits, that tax relief per se increases productivity. We do not know if the two are related, and the committee readily admits that in its paper.

These words of the majority report of the finance committee delivers its empty rationale for recommending $46 billion in tax cuts for high income earners as a priority for upcoming budgets. It can only be called blind faith in the virtue of tax cuts for the wealthy. We believe it is typical of the Liberal government's position in the debate about what to do with the predicted federal surpluses. It is the worst form of trickle-down economics, blind faith in an obsolete ideology.

Frankly, ordinary working Canadians are used to being trickled on. We have been trickled on a lot in recent history and it is not water that is trickling down from above and it certainly is not revenues and pennies from heaven. We are being trickled on in the most mean-spirited ways often and frequently. These trickle-down economics are a continuation of the same line of thinking.

When it comes to tax cuts, the debate we should be having should be about setting goals for improving the quality of life for all Canadians not just tax cuts for the wealthy. We should be taking steps that move us forward. A lot of us believe that society does not move forward unless we all move forward together. It is one of the basic tenets of the NDP philosophy that society does not move forward unless we all move forward together. We are against anything that further builds that gap, the great divide, between the rich and the poor.

Having set and met financial targets on eliminating the deficit, one would think that the prospect of large surpluses would now allow Canadians and the government to meet such emergencies as the crisis facing the homeless, for instance. That would be a laudable pursuit. We would have liked to have heard more in the budget about the crisis facing the homeless in the country. That would be worthwhile and we would stand up and applaud budget initiatives in that regard. Another crisis would the family farm crisis in the province I come from. Those are the types of missed opportunities that we believe the government is taking part in with its policy on how to deal with the generous surpluses it is looking forward to.

Another idea I have is that we could try to meet the target we set for ourselves 10 years ago to eliminate child poverty. That would be a laudable concept. Giving tax breaks to the wealthy does not do anything to eliminate child poverty in the country. I defy the government to show me the connection, unless it is relying strictly on that famous old trickle-down theory of an economic system with lots of millionaires and surely some of that money will spill over from their coffers and fall onto ordinary Canadians. It is a cruel myth and a lot of people are tired of being the brunt of that myth.

What about taking steps to ensure that all our children are given the best possible start in life? In the newspaper today there was a very interesting article about how youth crime and youth violence can be so directly connected to the problem of fetal alcohol syndrome, FAE/FAS children. This is an emergency in our schools. It is an emergency in our criminal justice system. It is an emergency in the inner city of our big cities, in small communities and on reserves right across the country. We have seen nothing to address that issue specifically in this budget or in any policy that we have debated in the House of Commons. This is a worthwhile emergency on which we could in fact be spending some of our surplus instead of on tax relief for the wealthy.

There is a growing movement and concern in Canada that we are losing our cherished not for profit public health care system. We are losing it to the spectacle of a two-tiered American style health care system which we know does not work. Instead of using this flourishing, blossoming surplus on protecting and strengthening our universal public health care system, again we are seeing the idea of tax cuts for the wealthy. I guess if the wealthy had more of their disposable income left in their pockets they could afford to buy the health care they need when they need it. That is fundamentally contradictory to the NDP philosophy and I am glad to be able to express that today.

There is another worthwhile initiative that we are completely ignoring and that is to provide Canadians access to world class post-secondary education. One would think in this high tech age, or the age of e-commerce, et cetera, that we would value more and make access to post-secondary education a number one priority for Canadians instead of burdening students with debt that is paramount to carrying a small mortgage when they finally graduate from university. That is not a priority. We have not heard it expressed here. Instead, again, we are talking about the implementation of bills that give tax cuts to the wealthy.

There are all kinds of other worthwhile spending initiatives, whether it is our infrastructure, our roads or our transit systems. We need these things to assure the continued growth of our economy and we are not hearing about it. To offer, in balance of these priorities, needed tax relief, we would not mind having that debate.

Let us list these priorities and address ways to deal with them and talk about tax relief. Frankly, there is nothing contradictory to the NDP talking about tax fairness. We have been talking about tax fairness since day one because we believe that working people pay too much tax. We believe that working people pay too much tax because others are not paying their fair share of taxes and it is an inequitable situation. One tax relief initiative that we would welcome, endorse and support is the gradual reduction toward the elimination of the GST.

We believe that if the government were serious about universal tax relief which would benefit all Canadians, that to reduce the GST by 1% this year would be a good first step in at least making some effort to keep the promise made in 1993 to eliminate the GST. We would certainly welcome that, but we are not hearing that today in the debate on Bill C-24, we did not hear it in the budget speech and we did not hear it in the majority report of the finance committee.

The finance committee preferred the message of the Business Council on National Issues, the BCNI, that the real urgency was to give more and bigger tax breaks to those who need them the least. It was completely 180 degrees backward to any conventional thinking on true equality, or to flattening the gap between the rich and the poor, or to addressing many of the urgent social issues I have outlined.

There is a quote from the report of the Business Council on National Issues to the Standing Committee on Finance which states that the greatest economic gains will be achieved when marginal tax rates, especially the highest ones, are reduced. In other words, we are allowing the BCNI to set social and economic policy for the country. It is an unelected body. I am surprised, frankly, that my colleagues from the Canadian Alliance are not up in arms about this. We are taking specific direction from unelected representatives of corporate Canada over the opinions and the economic outlines of elected officials like those of us in this Chamber.

People call Thomas d'Aquino the unofficial prime minister. Those of us who are cynical are certainly starting to think that, given the access that the BCNI has to power and the fact that the Liberal government is charting policy based on the needs of Bay Street and certainly not based on the needs of Main Street.

The NDP caucus rejects the committee's unbalanced approach. We recommend that a key priority be to make the investments necessary to help reverse the erosion of Canadian living standards, the growing divisions in Canadian society and the growing gap between the rich and the poor. That would be a laudable pursuit for the government, but that is not a key objective. It is taking steps today, even with Bill C-24, that will expand the gap between the rich and the poor. It will make that rift even wider. It is completely contrary to NDP policy and philosophy. We believe that society moves forward genuinely when we all move forward together.

We include in Canadian living standards investment in our children, investment in our communities, investment in our health care and education systems and investment in the environment. Has there ever been a more ample opportunity to finally do something about cleaning up the environment in Canada? We have a surplus budget situation. The Minister of Finance is in the enviable position of having money to spend on important priorities for Canadians. What could be more important than to act now to clean up the toxic waste sites in this country and to deal with small communities that still need basic sewage and water treatments centres?

For instance, my colleagues from Sydney—Victoria and Bras d'Or—Cape Breton live near what is arguably the worst toxic waste site in the world, the Sydney tar ponds. Is there money budgeted and allocated to clean up, finally, the Sydney tar ponds? Have they started to scrape the toxic effluent off Frederick Street so that people can live there again? Or, are we satisfied to have a Cape Breton version of the Love Canal? Is that one of the legacies the Liberal government wants to leave in Atlantic Canada, that even though it had the money to prevent it, it allowed this toxic site to poison more Nova Scotians? I do not think so. I think the Liberals will pay a political price for being that negligent to the real needs of Canadians.

It is useful to look at where the government's budget surplus actually came from. There is a lot of debate going on about how the budget surplus should be spent, but people are forgetting where this fantastic pile of money came from. One of the most significant sources, I would like to remind Canadians, is the EI surplus.

The employment insurance system is broken. It is completely defunct. The wheels have fallen off. It does not work any more. It is only a cash cow for the government. Working people have to pay into it, and yet working people have a less than 40% chance of actually receiving any income maintenance should they become unfortunate enough to find themselves unemployed. What kind of an insurance fund is that? Who in their right mind would design an insurance fund like that?

Mr. Speaker, what if it was mandatory that you had to pay insurance on your house. You had to pay it every month. Yet if your house burned down you would have a less than 40% chance of collecting any dividend. You would think you had been cheated. You would think you had been robbed. You would be outraged. Mr. Speaker, you would be standing in your place and screaming bloody murder that you had been cheated. That is exactly the situation in which working people find themselves.

In fact, the figures are worse than that. The average worker has a less than 40% chance of collecting any EI benefit. The average woman has a less than 25% chance of collecting any EI benefit. The changes to EI disproportionately affect working women because there are more part time working women. Youths under 25 have a less than 15% chance of collecting any EI benefits at all. Yet faithfully every paycheque those people have to pay the premium, and faithfully every paycheque their employers have to pay 1.4 times the amount that the employees pay.

No wonder there is a surplus. If the government takes and takes and never pays anything out, of course it will have a surplus. That surplus is $600 million per month; not per year, per month. There is $7 billion per year in EI premiums alone that the government takes in and fails to pay out in benefits. To use that money for anything other than income maintenance for unemployed workers, I suggest, at the very least, is being dishonest. At the very worst it is fraudulent. To take something from a person's paycheque for a specific purpose and to use it for something else is a breach of trust.

To take it one step further, to take money away from those most vulnerable in society, unemployed workers who paid into the fund, and hand it over as tax cuts to the wealthy is nothing short of a perverse version of Robin Hood. To rob from the poor to give to the rich is absolutely unconscionable and somehow the government is getting away with it without a huge hue and cry.

Tonight there will be a vote on this issue. The member for Acadie—Bathurst has a private member's bill on EI reform which will be voted on tonight. Liberal members of parliament will have to stand to say whether they agree with this absolute cash cow that is the EI fund, and they will be counted. The public will notice them and they will pay a political price for voting against EI reform. We know where the money came from that gave this budget its surplus. It came out of the pockets of working people. It came out of the benefits that should have been paid to unemployed people in this country.

The whole issue of tax reform is a necessary debate. As I said, it is nothing against NDP policy to talk about true tax reform. It is frustrating to some of us that some would deny the fact that the NDP is concerned about tax fairness. We are very concerned about it. We believe that the tax system is one of the great economic instruments we have to redistribute wealth.

I can give an example of what a difference fair taxation can make. I can give the House the state of the nation in terms of the way we use taxation in the country to try to make a more equitable society.

If we look at the distribution of market income in 1997, the ratio of the top fifth income earners to the bottom fifth is 24:1. That is grotesquely unfair. The ratio is 24:1 of the top fifth income earners to the bottom fifth income earners. After taxes and transfers, that ratio falls to 8:1. It is still obscene by anybody's standards, but a huge improvement.

If we factor in the value of public services, which we equally enjoy and do not have to dig into our pockets to purchase, the ratio of income in equity falls to less than 4:1. Starting out at 24:1, we now have it down to 4:1. Some would still say that is fundamentally wrong, that we should be a lot more equitable than that. We believe that changes should be made in that direction.

It points out how the tax system can be used as an instrument for economic fairness, justice and equality. Yet we have chosen to go in the opposite direction. The changes in the current budget take us further in the opposite direction; not toward tax fairness, but growing the inequality between rich and poor. We have been sold a bill of goods that has told us it is necessary to let the wealthy keep more of their money and ignore the situation of the lowest fifth of the economic scale.

It is a very cynical point of view, and the same is true in American politics, but there is no point in targeting a political message or an economic policy to people in the bottom fifth of the economic social scale because they do not vote. They are so marginalized and disenfranchised that they do not vote at election time. Why would government waste its largesse on 20% of the population which, frankly, would not vote for it anyway? They have given up on the electoral system as a vehicle or a means by which to improve themselves.

That might sound cynical, but I accuse the government of having gone through that thought process, in the same way the Americans have in their political system, that there is no sense in wasting messaging on people who really need it because they are so disenfranchised and marginalized they do not vote.

I want to voice our strong opposition to Bill C-24. It takes us further away from the idea of tax fairness. It will accentuate and augment the inequalities in our tax system and further institutionalize those inequalities for another couple of years until we can do something to convince the government to take steps otherwise.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:40 p.m.

Etobicoke North Ontario


Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I would like to comment on two matters raised by the member for Winnipeg Centre.

First, is the member aware that in 1985 the auditor general told the government of the day, when the EI had a deficit of about $5 billion, that it would distort the public accounts if the deficit was not included in the consolidated accounts of the government? The auditor general said that the deficit must be included in the consolidated accounts and the government of the day did that. The EI surplus of today, if he wants to call it that, is really incorporated within the consolidated revenues of the government.

Does the member also know that the EI notional account has been in a deficit for 11 years of the last 17 years? Does he understand that the Canadian taxpayers supported that deficit for 11 years? Therefore, when the account has a surplus, why should the Canadian taxpayers, generally, not be able to use that notional fund for the benefit of all Canadians?

The member talks about tax relief for rich or wealthy Canadians. Is he confusing this with the tax policy proposals of the Alliance, which talk about a flat tax, which would clearly move the tax burden from the high income earners to middle and low income earners? The government in its last three or four budgets has delivered tax relief to low income and middle income Canadians.

From where did the member pick up the notion that the government was providing massive tax relief to high income, wealthy, rich Canadians? The facts do not support that. Is he mixing it up with the flat tax proposal of the Alliance Party?

Could the member opposite clarify his understanding that the EI notional surplus has been in deficit 11 out of 17 years? How can he justify not using that surplus today to benefit middle income and low income Canadians?

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:45 p.m.


Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, I am happy to be able to answer a very good question that has its basis in actual fact. The EI fund was in deficit. The Canadian taxpayer propped it up over that period of time by a total accumulated backfill of $13 billion. The total accumulated surplus will exceed $39 billion at the end of this year. In other words, we paid back the original debt of $13 billion and another $26 billion is being hived off, again going into consolidated revenue.

The member is absolutely right again. There is no separate EI fund. All the money goes into general revenues. Our point is that any surplus above and beyond what we owe the consolidated revenue fund should be used toward income maintenance for unemployed workers, as it was intended.

If an amount is deducted from a person's paycheque for a specific purpose and then used for something completely different, at the very least it is a breach of trust. In the worst case scenario it is out and out fraudulence. We believe there has been a structured and deliberate abuse of the EI program that went far beyond paying back the $13 billion and now is being used as a cash cow.

The hon. member asked if I understood the nature of the tax cuts being proposed by the government. I do. I understand the finance committee recommended four major components: reducing the capital gains tax, dropping the middle income tax rate, eliminating the 5% upper income surtax and raising the threshold for the top two tax rates. I wonder if the hon. member realizes that these four measures would make a difference in various income brackets.

Those making $475,000 a year would get $11,650 in tax breaks with these measures. Those making $42,000 a year would get $1,140 in tax breaks with these measures. Those making $20,000 a year would get a $3 tax break. Who is this benefiting the most? Obviously the high income earner.

The hon. member from Surrey spoke to me before I gave my speech. He pointed out that his daughter made $8,000 last year. At the end of the year she received a bill for $200 for taxes owing. The kid made eight grand and still owed $200, even after paying taxes on her paycheques.

My mother makes $21,000 a year from all her sources of income such as old age pension, her husband's CPP and widow's pension. She pays $600 per quarter in taxes every year. At the end of the year she owes $1,500. Something is fundamentally wrong, I would put to the Parliamentary Secretary to the Minister of Finance.

Sales Tax And Excise Tax Amendments Act, 1999Government Orders

1:45 p.m.


Roy H. Bailey Reform Souris—Moose Mountain, SK

Mr. Speaker, it is very clear to many Canadians, particularly young summer employees and so on, that this is not an insurance. It is a tax and it goes into the federal coffers.

I should like to inform the NDP member who just spoke that a terrible thing is happening with EI payments. There is a large oil well operation in my constituency. It is a cyclical industry. When it is up, it is hiring, and then it goes down. If a young person from the city of Weyburn or Estevan hires on in the oil industry and then gets laid off, he can draw EI insurance. However, if someone is laid off and returns to the family farm to live with his parents, he collects zippo. I am quite used to seeing farmers being abused, but when the government taxes them and they have to pay the taxes it is wrong that they cannot qualify. It should be corrected. I brought it to the government's attention but it made no difference. I would like the hon. member to comment on that.