Madam Speaker, thank goodness there is no question attached to that statement. My colleague from the NDP would be on his feet until at least supper hour.
This is an interesting debate today. We are talking about Bill C-13 which proposes technical adjustments to the GST. As my colleague from the NDP mentioned, it is probably a debate that under normal circumstances we would not be having. Witness red book one.
I am not sure whether or not red book one brought you to this place, Madam Speaker, but it certainly brought a number of Liberal MPs to the House of Commons. The election of 1993, among other things, was based on the promise to eliminate the hated GST.
The government received dividends from the GST in more ways than one. It obviously received political dividends, because it brought a lot of its members to the House under what in the real world are called false pretences. It is probably unparliamentary to say that, but I am being more generous than I should be. Obviously it worked.
The government has been in power now for over seven years and we are still saddled with the hated GST. Just by way of comment, I should mention that we supporting the technical changes to the GST. We will not hold them up. At least one person is applauding over there. I did not hear the parliamentary secretary applauding yet but I am sure he will before the day is out.
Talk about fooling the Canadian public. During the 1993 election I fought the issue as a government member, as a Conservative. It was the last year of the manufacturers' sales tax. Before the 7% GST we paid a hidden 13.5% federal sales tax on automobiles and other goods. It was hidden in the cost of automobiles and every other commodity.
We paid a price for our intellectual honesty. We said that we would eliminate the hidden tax and that from then on Canadians would see it at the point of purchase. In other words, if they bought a $10,000 car, 7% of it would be GST. Seven hundred dollars would be seen upfront. Someone buying a $20,000 car in 1991 would pay $1,400 in tax upfront. They would see it.
Many Canadians were surprised. They did not believe we had a hidden federal sales tax, which we did, but the old sales tax restricted our capacity as an exporting country. It was all part of the parcel.
We also brought in the free trade agreement, but that alone was not enough. We wanted to restructure how we did business in the country. We revised the tax rules. We brought the number of tax divisions down from a high of nine to around five in one fell swoop.
We then brought in the GST which levelled the playing field for exporters. It made us competitive in the international world, which we were not under the old system. The last year we had the manufacturers' sales tax was 1989-90. In that year that tax brought in $17.8 billion, which is quite a bit of money.
This year the GST will bring in $55 billion compared to the old system that brought in $17.8 billion. It is interesting that we will take $32 billion of that and pay it out in GST rebates to Canadians outside the higher income levels that the NDP sometimes mentions in terms of unfairness. It is a fair tax policy because a lot of the money is distributed to Canadians who need it via the GST rebate.
That is an astounding figure. When we do our research we find that the government talks about a $22.8 billion revenue from the GST. It excludes the gross. It only talks about the net. The gross income for the government under the GST is $55 billion and $32 billion of it is distributed to Canadians who need it. That is a lot of money.
Another point is that taxation must be fair. It must be perceived as being fair. My NDP colleague talks about it being unfair because the 7% applies to everyone. It is true that a millionaire or someone at the poverty line pays the 7% GST, but lower income Canadians get the benefit of the GST rebate which makes up for the lack of fairness. That was not present under the old system when the tax was actually hidden. That is a major improvement.
Another point is that we can never lose sight of fairness in taxation and what has to be taxed to make the system fair for everyone. A fair system must tax consumption. It must tax capital and incomes. We cannot simply take a tax and cover one base. Some people would argue that we should do away with the GST and just tax incomes, which would be completely unfair and unacceptable and would not work. It has never worked in any jurisdiction that has tried it and it certainly would not work in Canada.
We must spread out the way in which we collect taxes because if the government is smart and considerate in how it spends the taxes it takes in, at the end of the day it will benefit all Canadians.
When we are talking about tax bills as we are today we should point out that the government should consider bringing in a budget. It is March 2 and we do not have a budget. We are still working with a mini-budget from last fall, which was very convenient because it was brought in on the eve of an election.
I suggest the Prime Minister was smart enough to call the election knowing full well that some of the danger signals were out there, that we may be heading into a recession come early winter, late winter or possibly early spring. That was one of the things that motivated the Prime Minister to call an early election. Much to his credit he won it. We were right in terms of what might be happening in the economy. Some of the danger signals are out there.
On that point I will read into the record a comment from Don Drummond, the former assistant deputy minister to the Minister of Finance. He now works as an economist for TD Bank. Just last week in his article entitled Using the Federal Budget Surplus: Is there any left? he wrote:
Confused about the fiscal prospects of the federal government? If so, you are not alone. The October 2000 Economic Statement and Budget Update provided fiscal projections to 2005-06. However, those projections do not reflect the tax cuts promised in the Statement, nor the spending commitments made subsequently in the Red Book III and the January 30, 2001 Speech from the Throne. In addition, the economic assumptions underpinning the October Update now seem decidedly optimistic for the short term. To date, no attempt has been made by either public or private bodies to cut through the confusion.
Things have changed dramatically in the last 90 days. It was only 90 days ago that we stopped knocking on doors in an attempt to get elected. A lot has changed. We see some of the biggest and best corporations in Canada and in North America laying people off.
I see you signalling me, Madam Speaker. If I am getting the government in trouble in terms of time, I am sure you will rise and I will sit down. We want the legislation to pass. We do not want to delay it.
The government should bring in a budget to reflect today's reality because we are in the midst of layoffs. As we speak, the new president of the United States, George W. Bush, is proposing huge tax cuts which will put pressure on Canada to do the same.
We must attract business to Canada. We must do what it takes to keep the economy moving. It appears the U.S. wants to do that, but we are in a period of suspended animation: the world is good, why worry? It is not so. There are troubling signs on the horizon and we must move to do something about it.
In closing, I hope the government will at least take that into consideration in the next few days. We must do something. We cannot stand still. We must move to reflect times as they now are. Times have changed dramatically in the last 90 days since the last election.