Debates of April 23rd, 2001

Sales Tax And Excise Tax Amendments Act, 2001

[Claudette Bradshaw, Liberal, for the Minister of Finance]

moved that the bill be read the third time and passed.

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, I welcome the opportunity to speak today at third reading of Bill C-13, the Sales Tax and Excise Tax Amendments Act, 2001.

The bill would reaffirm the government's commitment to making our tax system simpler and fairer for individuals and for Canadian business. The principal purpose of the bill is to implement measures relating to the goods and services tax and harmonized sales tax that were announced in the 2000 budget, as well as the additional sales tax measures proposed in the notice of ways and means motion tabled in parliament on October 4, 2000.

The measures were aimed at improving the operation of the GST-HST in the affected areas and ensuring that the legislation accords with the policy intent. The bill would also implement two amendments to the Excise Tax Act relating to excise taxes on specific products.

I would like to begin by outlining the measures contained in the bill that were proposed in budget 2000.

First, the GST-HST is designed to ensure that Canadian businesses and products are competitive in the export markets. A number of measures in Bill C-13 are aimed at achieving that specific objective. Specifically, these measures relate to the GST-HST treatment of export distribution activities.

The bill would implement an initiative referred to as the export distribution centre program. It is an initiative that addresses a cashflow issue faced by limited value added export oriented businesses. It would also help ensure that the GST-HST does not present an impediment to the establishment of North American distribution centres in Canada.

I will speak to the opportunities provided by the establishment of EDCs in a moment.

Bill C-13 contains a measure that would ensure that the GST-HST does not make Canadian suppliers of warranty repair or replacement services less competitive relative to foreign suppliers when in fact these services are provided to non-residents. It also expands on an existing program known as the exporters of processing services program. Refinements to the program would ensure that the GST-HST does not impose prohibitive cashflow costs for businesses that provide storage or distribution services for non-residents in respect of goods that are for export.

Another proposal in the bill relates to the cross-border transactions, in particular the sale of railway rolling stock to non-resident businesses. Bill C-13 proposes an amendment to ensure that the use of railway rolling stock to ship goods out of the country in the course of the exportation of the rolling stock itself would not disqualify it from tax-free treatment.

Bill C-13 introduces the new residential rental property rebate, another important sales tax initiative. The measure stems from the 2000 budget and would be of significant benefit to builders and purchasers of new residential rental accommodation. It would reduce the effective GST rate on newly constructed rental property by 2.5% which is the same federal tax rate reduction that applies to purchasers of new, owner occupied homes under the existing new housing rebate program.

Bill C-13 builds on the government's commitment to continue to work on improving health care and education in Canada. In the area of health care, the bill proposes an amendment to continue in force an existing GST-HST exemption for speech therapy services that are billed by individual practitioners but are not covered by applicable provincial health care plans.

With respect to education, Bill C-13 contains a measure which would ensure that vocational training provided in different provinces receives the same GST-HST treatment regardless of the regulatory regime that exists in each province with respect to vocational schools.

The government recognizes, as do all members of the House, the important role that charities play in helping Canadians and in enriching our communities. The bill proposes amendments to ensure that the GST-HST legislation properly reflects the government's intended policy of generally exempting from sales tax the rental of real property and related goods by charities.

The legislation proposes a number of clarifying amendments to ensure that there could be no doubt as to the application of these provisions for both future and past transactions, for example the issue of excise tax on automobile air conditioners.

Bill C-13 reflects a number of improvements to the administration of the tax system, which is in keeping with the spirit of the government online initiative recently announced by the Prime Minister. There is a movement within government and in the public to ensure that it meets its target of getting on line in the very near future.

I would like to spend a few moments on a part of the bill which has not received the attention it should have received to date. I would like to raise the awareness of the creation of export distribution centres by explaining what they mean and their potential.

The creation of export distribution centres enhances Canada's ability to conduct export distribution activity. The program does not create any artificial advantages for any Canadian community. Instead, it unleashes their inherent geographic advantage. If the 49th parallel did not exist, in other words if the entire continent was Canada, our communities would be host to a significantly greater number of distribution centres for goods produced abroad because of our geographic advantage. That this is not the case today is due to legislative and regulatory barriers.

When we look at the U.S. foreign trade zone program, we find that an overwhelming number of such zones are located in the northern tier along the Canadian border. That is because the northern part of our continent provides the natural entry point gateways to the NAFTA economy.

The EDC program which would be created as a result of Bill C-13 would allow communities in every part of Canada to participate in the fast growing distribution and logistics industry. It is also important to note that the program is not zone specific; it would be market driven. Unlike the United States, which geographically decides where a trade zone is to locate, the Canadian export distribution centres would be market driven.

It is a program that is universal. Any location in Canada and any business could seek to participate. Unlike programs in the U.S. and elsewhere, it does not create any unique privileges for specific locations. I am already aware, as are many close to this issue, of groups in Hamilton, Montreal, Vancouver, Gander and Regina that are pursuing the EDC opportunity. It is truly a coast to coast opportunity.

Many members of these groups have told us that the opportunity to engage in this kind of activity has been there for some time but it has been hindered by existing regulations. Bill C-13 removes this impediment for local community development.

In my riding of Stoney Creek the legislation would allow us to make full use of the John C. Munro Hamilton International Airport as an economic development engine. The airport is well placed and well prepared to attract logistics and distribution companies.

Tony Battaglia, president of TradePort International, the firm entrusted with managing the Hamilton airport, commented that the airport would be able to compete with similar facilities in the United States. The proposed changes in Bill C-13 would provide the necessary tools for Canadian facilities that move goods by air, road, water and rail. These tools would allow such Canadian firms to compete and attract global commerce.

What does that mean in terms of job creation? Professor Michael Tretheway of the University of British Columbia's transportation and logistics program has estimated that within 10 years Canada will be able to create up to 50,000 jobs in the distribution sector. Job creation can only be enabled if we can offer distribution firms in Canada the same advantages that locations in the United States offer to their distributors.

For example, existing programs in Canada allow the storage and re-export of goods in a duty and tax free environment. However they do not allow the addition of Canadian value to the goods being re-exported. The situation is paradoxical. On the one hand, the current program encourages distribution centre locations in Canada but, on the other hand, it discourages the adding of value and the job growth that results from it.

The legislation seeks to redress the imbalance by providing a program that allows the creation of distribution centres in Canada in a duty and tax free environment where value could be added when goods are intended for distribution into the broader NAFTA marketplace.

During the consultation period a concern was brought forward by a number of individuals that the legislation would enable growth in the distribution sector at the expense of Canada's domestic manufacturers. The program has strict limits so that it cannot be used for full manufacturing. Furthermore, 90% of the goods must be re-exported. The program is intended to attract distribution centres for goods already being manufactured overseas and exported to the U.S. and broader NAFTA markets. There is no displacement of domestic manufacturers.

The proposed legislation is strongly supported by Canada's airports. The Canadian Airports Council has been a very strong supporter of the EDC program. It sees an opportunity to develop its airport lands for the benefit of its communities.

The EDC program would allow the airports council to lever its air service and ground transportation networks and build the flow of goods and jobs between Asia and Europe on the one hand and the U.S. and NAFTA economies on the other. Companies in Europe and Asia that wanted access to NAFTA markets were not looking to Canada for foreign trade zone possibilities. However, because of Bill C-13, they now can.

The measures in Bill C-13 that I have outlined today propose to refine, streamline and clarify the application of our tax system. The bill would provide an opportunity for economic development specifically through the creation of export distribution centres. At the same time, Bill C-13 reflects the government's commitment to ensure our tax system is fair. I urge all hon. members to pass the measures quickly.

[Gurmant Grewal, Canadian Alliance, Surrey Central, BC]

Mr. Speaker, on behalf of the constituents of Surrey Central, I am pleased to participate in the debate today on Bill C-13, the sales tax and excise tax amendments.

Mr. Speaker, I point out that I will be sharing my time with the hon. member for Richmond.

The bill we are debating today has been before committee and is now going through its final debate in the House. The purpose of the bill is to simplify the tax code, but probably not to the extent Canadians would like. The measures are aimed principally at improving the operation and fairness of the GST or HST in affected areas and ensuring the legislation accords with the policy intent.

Bill C-13 implements two amendments to the Excise Tax Act. The first clarifies the deferral of tax on various automobiles and car products to the time of sale or importation to a manufacturer. The amendment is made to clarify the deferral of existing excise taxes on air conditioners, for example, installed in automobiles and on new heavy automobiles at the time of importation by a licensed manufacturer or sale to a licensed manufacturer.

The second amendment provides the Minister of National Revenue with he discretionary power to waive or cancel interest and/or penalties. The second amendment provides discretionary power to the minister, as I have said, to cancel penalties calculated in the same manner as interest under the excise tax system, which is consistent with the discretion already provided to the minister in relation to the sales tax and income tax systems.

The primary goal of the bill is therefore to correct some administrative oversights in the February 2000 budget concerning the application of the GST and HST. The bill is technical amending legislation. The official opposition therefore supports the bill, but we believe the government could have done more to address other pertinent issues relating to taxes.

There are a number of GST and HST measures in the bill. I will briefly describe them. The export distribution centre and export trading house programs amendment would implement new rules that ensure the GST and HST do not impede North American distribution centres in Canada. Businesses would be able to purchase or import inventory and customer goods on a tax-free basis rather than having to pay the tax and later claim a refund. This might help combat fraud, which is unfortunately part of the system.

The non-residents and cross-border transactions amendment ensures that no tax is payable on goods imported solely as replacements under warranty. It also ensures there is no tax on the service of storing goods for a non-resident business.

Another point is that the real property amendment implements the new residential rental property rebate, which is a partial rebate of GST on newly constructed or substantially renovated long term residential rental accommodation. I see many such accommodations in my constituency of Surrey Central. The builders or the people involved in that kind of construction will feel some relief in that area.

That is important because it permits a credit for work done on a new home used primarily as a place of residence or as short term public accommodation, for example a bed and breakfast establishment. Such establishments will get some sort of relief. That is particularly important because the previous rules disallowed homeowners the credit if they ran small businesses out of their homes.

There are other amendments. The health amendment continues to be in force. There are GST and HST exemptions for speech therapy services that are billed by individual practitioners and not covered by the applicable provincial health care plan. The bill will provide some relief for people who use such therapies.

The education amendment ensures that similar vocational training across the country is provided the same exempt treatment, regardless of how vocational schools are regulated in each province.

The electronic filing amendment removes the requirement to apply to the Minister of National Revenue for permission to file GST or HST returns electronically over the telephone or Internet. Canadians are busy preparing their tax returns. If the bill is put into place it will probably give relief to people who must seek such permission. It allows anyone to file taxes that way, provided they meet the criteria set out by the minister.

Finally, there are miscellaneous amendments which correct ambiguities in existing provisions consistent with current industry practice, administrative interpretation and the underlying policy intent. These are some of the areas the bill focuses on.

For those who are watching I will quote from the Canadian Alliance policy, which is the grassroots members' policy.

We will restore public confidence in the fairness of the Canadian tax system by reducing its complexity. We will restore indexation and move towards a simpler tax system, built around a single rate of taxation to ensure lower taxes for all Canadians. We believe that all Canadians above a minimum income level should share in the cost of the services provided by government, which benefit us all.

There are other areas of concern. I was talking with my constituents during the two week break. They are concerned about gas prices because there are taxes on taxes on taxes. I regret that the sharp spike in the price of home heating oil and gasoline, which has hit us all so hard, is not addressed in the bill.

Canadians suffered this winter in the cold climate. The Liberals did not foresee or prevent the 70% hike in natural gas prices, which they should have if they had prudent practices in place. They did nothing about it except send out cheques for a couple of hundred dollars. The government completely missed the target. Instead of sending cheques to those most in need of assistance it sent them to people who probably do not pay heating bills such as students, prisoners and even deceased Canadians.

The Liberal finance minister has no sympathy for our seniors or for persons on fixed incomes. These people have so little money that they must choose between filling prescriptions, buying food or paying for heat. It is the Liberal government's fault because the government keeps our taxes high and our dollar weak. We are being hurt twice.

It is the tax on gas which has driven the price upward. The price we pay at the gas pumps includes a tremendous amount of tax. The price of crude gas is something like 29 cents, but these days we are paying 74 cents or so at the pumps.

That is why when the price of gas or oil on the world market is hiked we feel it more. Not only is the price hiked but the taxes go up accordingly. That exacerbates the increase in the wholesale price.

First, we have the federal excise and sales tax on gas. On top of that we have a provincial excise tax. On top of that we have a provincial sales tax. On top of all that we have the 7% GST. In other words, we are paying GST on the taxes as well which is wrong. We have a tax on a tax on tax on a tax. That is the kind of system we have in gas pricing and that is very unfair.

My province of British Columbia gets less than 5% of the amount of federal taxes paid on gas for transportation and infrastructure development. The federal Liberals rake in about $700 million a year in fuel taxes from British Columbia alone, and this is the only province that does not have any four lane highways. We cannot even buy enough street lamps with the 5% the federal Liberals are returning to us for transportation and infrastructure development. That is the kind of situation we are facing with respect to that particular area.

However, we support this bill but we again urge the government to lower taxes for Canadian families, consumers and small businesses. Those lower taxes will help boost our economy. We want lower taxes and a simplified tax code. Our tax code is very complicated, probably one of the most complicated of any country which I have visited or heard about.

The clarifications in Bill C-13 should only be a temporary measure on the road to tax reform. The steps are in the right direction but they are baby steps.

The provisions of Bill C-13 enact corrections to last year's budget and the fall mini budget. The government should be moving toward simplifying and broadening the base of the tax code. If the tax code was simplified, endless exemptions and further clarifications would not be necessary. There may not be any need to do what we are doing today.

From this point, lowering the taxes of all Canadians will have a far more positive impact for everyone. With the exception of the new residential rental property debate, the amendments will have little impact on the government's revenue. Expected costs for the new residential rental property rebate are estimated at $15 million for 2000-01, $40 million for 2001-02 and $45 million for subsequent years.

In conclusion, we will support the bill but we remind the government that it should lower taxes for Canadians and simplify the tax code. I believe Canada can be a competitive leader in the global economy of the future and I believe Canadians can enjoy a higher standard of living and a better quality of life.

However to get there we must blaze a trail of tax relief and debt reduction. We need to lower taxes such as payroll taxes. We need to cut the tax on investing. We should not be penalizing those investors who invest in Canada, who boost our economy and who help create jobs.

We should cut the taxes on high tech businesses. It is time these businesses be promoted. That is where our future lies. That is where more jobs will be created. However the government does not realize that we have to cut taxes for high tech businesses as well as small businesses. Ninety-six per cent of jobs are created by small businesses.

These are some of the points I wanted to add to this debate.

[Joe Peschisolido, Canadian Alliance, Richmond, BC]

Mr. Speaker, I would like to take this opportunity to reiterate the point which my colleague from the Alliance Party made that as the opposition party the Alliance supports Bill C-13. Our concern though is that this will be viewed as a final step and not as a temporary, necessary technical change in our tax system on the long road to full taxation reform.

I will not get into the details that were discussed by my colleague on the Alliance policy on tax reform. However I do want to speak about a luncheon I attended last Friday for the Vancouver Board of Trade. It was very illuminating for me. The guest speaker was the Governor of the Bank of Canada, Mr. Dodge. He spoke about the variety of variables that go into having a sound economy. It was like a lesson on 101 central banking. The unfortunate thing though was that he did not once mention the taxation system.

We all know in the House that there is a great link between monetary policy and fiscal policy. As my colleague just discussed, taxes are high and the Canadian dollar is low. What the Alliance puts forth, and I say, is that taxes are high therefore our Canadian dollar is low. More important, it does not allow the Governor of the Bank of Canada to do what is right with monetary policy, which would be to have lower interest rates at this time.

Mr. Greenspan, the chair of the federal reserve in the United States, dramatically and successfully used the proper monetary tools at his disposal and reduced interest rates a full half a per cent. Obviously, he believed there were further tough economic times. The Bank of Canada put forth a very anemic quarter per cent interest decrease.

It is not because the Governor of the Bank of Canada does not understand that we need a softening of monetary policy to deal with these tough times. It is simply that he cannot. His hands are tied because of the lax fiscal planning of the Liberal government.

I and the Alliance Party believe that the chair of the federal reserve of the United States will follow up with a further half per cent decrease. However our Governor of the Bank of Canada, legitimately so, is so concerned about the level of the Canadian dollar that his hands are tied. Why are his hands tied? They are tied because there is a direct correlation between economic performance wich includes all of the variables and the level of the Canadian dollar.

The level of the Canadian dollar, outside of the fluctuations on a day to day basis, is simply a reflection of the economic health of the country. Tax policy is a key in that economic health. If Canada were a patient, it would not be doing very well right now because our economic policy is correctly reflected by our low Canadian dollar.

What should the Canadian government do? Bill C-13 is a positive step. Why? It deals with certain technical problems that the government itself created in the past seven to eight years. That is good.

My concern with Bill C-13 is not what is in the bill but what is not in the bill. As my colleague said so eloquently, the economic problems we face in Canada should be dealt with quickly.

Let me give one example. There is a severe housing shortage right across this country. Even in an area such as my constituency of Richmond, British Columbia, which is viewed as a middle class rather affluent part of Canada, we have a problem as well. It is the problem of not enough housing.

We all know about the tragic, and I use that word carefully, situation in Vancouver East which the member of parliament for that area eloquently spoke about. I do not agree with many of her proposals on how to fix the problem, but I do agree with the point that there is a problem and the Liberal government is ignoring it. Sure it throws $25 million here and $25 million there. I would argue that that is exacerbating a problem rather than fixing it.

Why not utilize the tax system to urge the creation of rental stock through the private sector? Yes, there is 5%, 10% or maybe 15% of the population who are marginalized and have other problems that have to be dealt with, such as alcoholism, drug abuse and coming from broken homes. The government has to play a role there. However on the creation of a housing stock, that is where the tax code can be utilized and it is not.

Why is it that apartment owners and builders are not treated as a business when it comes to capital gains, rollovers and loss allocations? It is a simple step. Rather than taking moneys and providing housing in a grandiose national plan, perhaps it would be a better approach to allow the private sector to build affordable housing with the provision that there is a segment of marginalized Canadians who have to be helped in a different way.

I commend the Liberal government for the variety of technical bills it has put forth in this session to deal with the inadequacies that it created. However it is a first step. I hope that in the next step of dealing with the economic morass that we are in, it will put forth more substantive tax reductions to deal with an economy that is declining. I do not say that with partisan vigour. Sure there is the parry and thrust of debate. Sure there is a partisan element of the electoral process. However I think we all agree that we do not want a more complicated tax system. I believe we all agree that the reduction of capital gains tax is a way to spur economic growth.

I hope that in the next few months we will have from the other side of the House real substantive tax reform and not simply necessary and technical amendments to problems that were created by this government.

[The Deputy Speaker]

The hon. member for Yorkton—Melville.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, I had the honour to represent Yorkton—Melville in the House for 25 years. I understand why you said Yorkton—Melville. I want to say a few words on the changes to the GST, which the bill before the House implement.

I remember the great debate in the House of Commons when the GST went through. I believe it was in 1991. There was a great debate about changing our taxation system. We used to have what was called a manufacturers' sales tax. The government of the day, the Mulroney Conservative government, decided to replace that tax with the goods and services tax.

We had a great debate in the finance committee. I was a member of the finance committee at the time as the NDP finance critic. We studied the issue ad nauseam. We had hearings on it. I remember spending several days writing a report on it with members of the finance committee. We made recommendations. There were all kinds of changes made at the time to the initial proposal of the government. The GST came in and the old manufacturers' sales tax disappeared. At the time we voiced a lot of concerns about the GST itself.

First, the problem with the GST is that it is a tax that the government likes. It takes in a lot of money, I believe $23 million to $24 million. Every point in the GST brings in roughly $3.5 million of revenue.

Another problem with the GST is that it is all encompassing and taxes things like funerals. It taxes reading materials, books and a whole series of things that are necessities of life at the same level it taxes things that are not necessities or things that might be purchased for entertainment, luxury goods and things of that sort.

Another thing is that the GST is a very regressive tax. It does not matter what our income is, we still pay the same GST. We pay 7% for a haircut. Whether we are rich or poor, we still pay that same 7%. When we buy clothes we pay 7%. It is a very regressive tax in terms of having a fair and balanced tax system.

I have always believed that in a democratic society that looks after the common good we should pay taxes based on the ability to pay. If we make more money we should pay more in tax. The tax rate for those making $100,000 should be higher than it should be for someone making $30,000, $40,000, $20,000 or $25,000 a year. For those making a million dollars a year the tax rate should be higher still. There has to be a progressive taxation system in the country. The problem with the GST is that it is not progressive. It hits everybody in the same way in terms of paying the same rate of tax on the same goods and commodities.

If we look around we see many necessities on which people pay GST. I mentioned haircuts, all kinds of clothing and a lot of the necessities of life on which we pay GST.

[An hon. member]

Home heating fuel.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Home heating fuel is a very good example as well. With the price of energy going up, particularly the price of natural gas, a lot of ordinary folks who are on a very tight budget or on a fixed income have real difficulty paying the 7% on a home heating bill that may have been $75 or $80 a few years ago and is today maybe $150 or $250, depending on where one lives. The GST adds an awful lot in costs for the ordinary consumer who is paying the heating bill.

I think a measure of a society is to have a taxation system based on the ability to pay. That is the most important part of this. It should be based on ability to pay. Our party, the NDP, realizes, of course, that there should be a very important role in our society for government. In the last few years the role of government has diminished too much in terms of deregulation, privatization and cutbacks to social programs. Health funding is the best example of that. We have a health funding crisis in the country. The federal government cut back by billions of dollars transfers to the provinces for health care. The member for Winnipeg North Centre, who is our critic, knows the cost of that to ordinary people across the country.

We do need taxation revenue coming in, but the principle is to find the money on the basis of the ability to pay. The taxation system in the country should become more progressive, not less progressive. To do that I think we eventually have to phase out the GST, to roll it back from 7% to 6% to 5% and to 4%. Eventually, when we have a fair taxation system and the economy grows and becomes stronger, we have to eliminate it altogether. Our party said that in 1991-92. That is what we said in the last campaign. That is what we say now. The goal is to eliminate the GST in the country in order to have a fairer taxation system.

[An hon. member]

The Liberals used to say that, it seems to me.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

As the member from Winnipeg says, I remember the debates in the House of Commons in 1993 when members of the Liberal Party got up and said “elect us and we will get rid of the GST”. I remember the Prime Minister saying that if he was elected Prime Minister he would get rid of the GST. That is on tape and can be seen by looking up the old speeches from question period in 1992-93. I ask the Liberals across the way what happened to that fundamental promise they made to the Canadian people. What happened? The Liberal member across the way is clearing his throat in embarrassment. What happened to that campaign promise the Liberals made to the Canadian people in 1993?

No wonder people are cynical about the electoral process, politicians and political parties when a political party can make a very serious promise to the country and then break that promise. In hindsight, the only member across the way who did not break the promise was the minister of heritage, the member for Hamilton East. She was deputy prime minister. She resigned her seat in the House of Commons, probably in 1996, and went back to Hamilton East for a byelection. She said she had made a commitment on the GST, the government had changed its mind and she sought a new mandate for herself as the member of parliament for Hamilton East.

What about the rest of those members? They made the promise, they broke the promise and they are still in government. That is one reason why more and more people in the country give up on the political process and rank politicians so low in terms of credibility. The goal has to be to gradually eliminate the GST in order to make it a more progressive taxation system.

People are in the final process of filing their income tax, with the deadline being April 30, which is only a few days away. When Canadians file their income taxes they are reminded that too much of the taxation burden in Canada is still on low income and modest income people in Canada. These are people who have families and are struggling to make ends meet. I hear stories day in and day out about low income people having trouble with the taxes they have to pay.

Yet there are so many loopholes in our taxation system. We have the family trusts for the Bronfmans and the wealthy, and they can really get away from paying taxes, from paying their fair share. These very wealthy people, the billionaires, do not pay their fair share and we have the Liberals across the way who will not do anything about this.

[An hon. member]

Operation loophole.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Yes, there is the whole case of operation loophole, the court case that was launched in Manitoba by someone in the city of Winnipeg going after the Bronfman family and the wealthy people for the taxes they evade by moving their wealth offshore. That is not fair. When a person does that the ordinary person has to pick up the can and put more money into the taxation system.

What we have to do is have a more progressive taxation system. Many years ago we had seven or eight tax brackets in Canada. The Mulroney government reduced that to three. In the last budget we had a fourth tax bracket added, which is a very minor step in the right direction. Also, the tax rate for middle income people in the country is gradually going down from 26% to 23% so we will have a taxation system that is a bit more graduated, except that the highest tax bracket still remains at 29%, I think. In the United States the highest tax bracket goes up to 45% or 50% for extremely wealthy people.

Even in the United States there is a more progressive taxation system than we have in this country, and the United States is the world's bastion of so-called capitalism, where they talk about making life as easy as possible for investors and people with a lot of money and a lot of wealth. Even in the United States there is a more progressive taxation system on the individual income tax side. We have to get back to that in Canada.

I see the Alliance across the way. The people of Canada should be aware that the Alliance Party is pushing a single flat tax system in the country. It is a single rate, a flat tax. That is the most regressive tax of all that we could have. Even the Republicans in the United States have dropped the idea of a flat tax. George Bush and the Republicans think it is too regressive for the Republicans in the United States.

[Pat Martin, NDP, Winnipeg Centre, MB]

But not for the Alliance.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

But not for the Alliance, not for the reformers. They are advocating a flat tax whereby a wealthy person would pay the same tax rate as somebody who is teaching in an elementary school in Halifax or working on the assembly line in Oshawa or in a grocery store in Moose Jaw, Saskatchewan.

I ask you, Mr. Speaker, if that is fair, if that is just. That is what the Alliance Party in Canada is advocating, even flattening it more, giving the wealthier a bigger break, giving the rich a bigger break and putting a heavier load on the ordinary people. Basically and fundamentally it wants to cut back on the role of government, just cut back and cut back on the role of government. The Alliance says it wants to reduce the role of government in our society to the lowest common denominator. I do not think that is the way to go.

We need a more progressive individual tax system and a gradual elimination of the GST, which is regressive because in a way it is a flat tax. On the other side, we have to fill some of the loopholes in the current taxation system that are there for some of the wealthy and some of the big corporations in Canada. Finally, we have to readjust our corporate tax rate in Canada so that the large corporations pay more of their fair share. A number of years ago the large corporations paid a lot more in taxes than they do today. Today individuals are paying more and corporations are paying less. It used to be the other way in the days of Lester Pearson and Pierre Trudeau and even in the first part of the Mulroney years when all this started to change.

The sad thing about it is that when the Liberal Party took over, instead of making a more progressive taxation system in terms of our society, it got spooked into a more reactionary and conservative taxation system because the Liberals feared the Reform Party. The Liberals feared the agenda of the Reform Party, now the Alliance. This Liberal Party made a sharp turn to the right. It is the most right wing, conservative Liberal Party we have seen in the history of our country and that is why we have to make a change.

With a fair taxation system we can give people the freedom to have more equality of condition. With a fair taxation system we can still raise a lot of government revenues for social programs, for education, health, research and development, social housing and the farm crisis. If we had a fair taxation system we could accomplish all these things for the common good.

One way to start is to make sure we gradually eliminate the GST. We could take the first steps in that direction by taking the GST off reading materials and some of the other basic necessities. That would help ordinary citizens of the country.

I will close with that and say that I hope to see Liberal colleagues getting up and telling me they are embarrassed that their party broke its promise in 1993, when the candidate from Peterborough, for example, was out there for the party that promised to get rid of the GST. I would like to see him get up in the House of Commons now and explain why his party broke that promise and why he hangs his head in the House of Commons whenever this issue comes up. His party has broken a basic and fundamental promise to the people of the country.

It is like medicare. I am told that way back in 1919 the Liberal Party promised health care for Canada. It promised medicare in 1919. That did not happen until about 1966 and it only happened at that time because of the leadership of the CCF of Saskatchewan, where the first health care system in Canada became such a popular idea that in 1966 the Pearson government brought it in. That took an awful long time. It took 47 years to keep that promise. How long will it be before the Liberal Party keeps its promise on the GST?

I end with that question and I hope some of those members have the courage to get up and tell us why they have broken faith and why they have broken this engagement with the people of Canada.

[The Deputy Speaker]

In closing, my apologies to the member for Regina—Qu'Appelle. I was in a time warp when going back to Yorkton—Melville, I suppose.

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to, bill read the third time and passed)

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I rise on a point of order. I am looking for some guidance. I was to speak on behalf of our party. I was out of the Chamber, retrieving some of my notes. I am wondering where we are in this debate now. Have we passed on to further debate? We in our party do have a point of view we would like to put forward.

[The Deputy Speaker]

To the hon. member for New Brunswick Southwest, the debate on Bill C-13 in fact did collapse. The Chair did on a few occasions ask if there were any other members seeking the floor for debate.

I am aware the hon. member had given some indication that in fact he had an interest in speaking to the previous bill, which has since been passed.

The Chair can only make a suggestion. The hon. member for New Brunswick Southwest could seek unanimous consent of the House to allow him to speak to the bill which has been passed.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I would seek unanimous consent to continue the debate, though I am certain that government members will not want to hear what I have to say.

[The Deputy Speaker]

The hon. member for New Brunswick Southwest would also help the Chair if he could indicate how much time he would require to add his comments to the record. Could he please specify the amount of time that he would seek? He is indicating 10 minutes. Does the House give its consent for the member to put forward his comments?

[Some hon. members]

Agreed.

[Some hon. members]

No.

The House resumed from April 6 consideration of the motion that Bill C-4, an act to establish a foundation to fund sustainable development technology, be read the third time and passed.