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.