Mr. Speaker, I am pleased to introduce Bill C-40 at third reading. This bill contains a number of amendments to Canada's sales tax system.
Although largely technical in nature, the bill reflects the goal of Canada's new government to improve fairness in our tax system and ensure it functions smoothly for individuals and businesses alike.
With that goal in mind, last November, along with the economic and fiscal update, we announced advantage Canada, an economic plan to give Canada and Canadians the key advantages needed to compete today and succeed for years to come.
Before getting to the specifics of Bill C-40, I think it prudent to remind the hon. members of the key elements of our plan, a plan put into action in budget 2007. The plan focuses on creating five key advantages, one of them being a tax advantage.
The government wants to create new opportunities and choices for people. Lowering taxes, creating a tax advantage for Canadians, will help do that. It will also help to keep our best and brightest here at home, while attracting the people our country will need to build a strong economy in the 21st century. It all starts with a lower tax burden.
Before coming to office, and practically every day since, we have said that Canadians simply pay too much tax compared to other countries we compete with for talent, skilled workers and foreign investment and so we did something about it.
In our first budget last May and the months that have followed, Canada's new government began to reduce taxes. We reduced the GST rate. We increased the amount Canadians can earn without paying federal income tax by permanently reducing the bottom rate. We introduced the Canada employment credit and brought in a host of targeted tax relief measures.
The tax fairness plan we announced on October 31 went even further for Canada's seniors. We increased the age credit amount by $1,000 and introduced pension income splitting for pensions to increase the rewards from retirement saving.
Budget 2006 and our tax fairness plan took significant steps to get this country back on track and to begin to create a tax advantage for Canada.
We need to go further, and we did that in budget 2007. To create a greater tax advantage for Canada and Canadians over the coming years, we reduced taxes even further. In budget 2007, Canadians come out ahead through real tax relief that benefits working families.
Bill C-40 would help create a Canadian tax advantage. It would improve fairness and efficiency in the sales tax system and ease compliance and administration for businesses and government.
The bill consists of three parts, the first of which pertains to the goods and services tax and the harmonized sales tax. The second part of the bill relates to the application of taxation of wine, spirits and tobacco. Part three concerns the application of the air travellers security charge.
First, the GST-HST measures. These measures are principally aimed at improving the operation and fairness of the GST-HST in specific sectors of the economy.
It is important to point out that in some cases adjustments have been made over the course of time to the legislation as originally proposed in response to representations from tax and business communities. We listened.
The principal GST-HST measures encompass important areas for Canadians. One such area is health care. Canadians know that our health system is one of the best in the world but we need to work to keep it so it continues to meet the needs of Canadians.
Bill C-40 contains a number of measures that would improve our health system. For example, the bill would cement in place the continued GST-HST exemption for speech-language pathology services. The bill also proposes to add the services of social workers to the list of health care services that are exempt from the GST-HST.
These amendments are consistent with the government's policy criteria for inclusion of a particular health care service on the list of those that are GST-HST exempt in all provinces.
The criteria is as follows. First, if a service is covered by the health care plan in a given province, it is exempt in that province. Second, if a service is covered by the health care plan of two or more provinces, it is exempt in all provinces. Finally, if a profession is regulated as a health profession by at least five provinces, the services of that profession are exempt in all provinces.
Canada's new government is also very aware of the challenges faced by individuals with disabilities. Budget 2006 fully implemented and went beyond the policy recommendations put forward by the technical advisory committee on tax measures for persons with disabilities.
In the spirit of that action, Bill C-40 broadens the specially equipped vehicle GST-HST rebate for individuals with disabilities. This measure will help those individuals to participate as fully as possible in Canadian society. Moreover, this measure reflects the government's continuing commitment to ensure that all Canadians are treated in a fair and equitable manner.
Also, on the health front, the bill proposes to make the sale and importation of a blood substitute, known as plasma expander, free from sales tax. It would also restore the tax free status of a group of drugs commonly used to treat a variety of conditions, such as seizure control, anxiety and alcohol withdrawal.
The measures in the bill illustrate the government's commitment to ensuring that Canadians continue to have access to timely and quality health care.
As I said at the outset, we have made it abundantly clear that Canada's new government is committed to reducing taxes for individual Canadians as well as for Canadian businesses.
High taxes not only discourage investment in Canada, they also impede businesses from prospering. However, there is more to it than that. Businesses do not need more government meddling. They need government to get out of the way and to free them to do what they do best: invest, expand and create jobs.
Budget 2007 proposes to reduce the federal paper burden on small businesses by 20% by November 2008. The budget also proposes to reduce the tax compliance burden on small business by decreasing the frequency of their tax remittance and filing requirements.
The measures in Bill C-40 reflect the intent of this action. These measures are technical in nature. I will not go into detail now but I will say that the measures contained in the bill would ease compliance for a wide range of businesses and other organizations by removing technical impediments and simplifying compliance with the GST-HST legislation. The bill also clarifies and confirms the government's policy intent.
The second part of Bill C-40 concerns excise measures; that is to say, measures related to tobacco and alcohol products. The measures in this part of the bill would amend the Excise Act, 2001 to implement minor refinements that would improve the operation of the act and more accurately reflect current industry and administrative practices.
The bill would also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.
The principal measures included in this bill, those related to the Excise Act, 2001 are as follows: First, with respect to tobacco, Bill C-40 would extend the requirement to identify the origin of tobacco products to all products, including those for sale at duty free shops or for export. This amendment is consistent with the Framework Convention on Tobacco Control, an international treaty on tobacco control.
The bill would also clarify which tobacco products may be supplied to the export market or the domestic duty free market. For example, cigarettes, tobacco sticks, fine cut tobacco or cigars may be supplied to those markets but not packaged raw leaf tobacco.
As the House may know, a spirits licence is required to produce alcoholic products using a still. There are some cases, however, where private laboratories, provincial liquor boards and vintners use a still to produce spirits for the purpose of analysing substances containing ethyl alcohol. Bill C-40 would authorize these entities to possess a still or similar equipment for testing purposes without holding a spirits licence.
To limit the possession of non-duty paid spirits, the bill would also require these parties to immediately destroy or dispose of those spirits once the analysis is complete.
Another proposed amendment to the act would defer payment of duty by certain small vintners selling wine on consignment in retail stores until the wine is sold.
The bill also contains a number of administration measures. One such measure has to do with the exchange of information between Canada and foreign governments. Specifically, the bill would permit the Minister of National Revenue to exchange excise duty information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters.
One other measure relating to the exchange of information adds a discretionary power under the act for the chief statistician of Canada to provide statistical information concerning business activities to the provinces. This is similar to an existing provision in the Income Tax Act.
The third and final part of Bill C-40 relates to the air traveller security charge, or ATSC. One of the principal ATSC measures included in the motion relieves the charge in respect of air travel donated by an air carrier to a registered charity that arranges free flights for individuals as part of its charitable purposes. This means that certain charities that arrange free air transportation services for persons who otherwise cannot afford the cost of flights for medical care would not have to pay the air traveller security charge. This includes “flights of a lifetime”, such as those provided by the Children's Wish Foundation of Canada and other similar charitable organizations that organize dream trips for physically, mentally and socially challenged children.
I said at the outset that tax legislation must be applied consistently. This proposed ATSC relief for charitable flights reflects that objective by being consistent with relief from other federal levies provided to registered charities. These measures are also consistent with other ATSC relief measures, such as that provided in respect of air ambulance services.
Summing up, Canada's new government understands that good government and good tax policy go hand in hand. Well-focused tax policies, such as those reflected in the bill, are a sign of a government with vision, which is what the government is all about.
We are looking ahead and planning the steps we need to take to build a stronger economy and a more confident Canada. In doing so, together we can make Canada a world leader with a long term, focused economic plan not just for today but for tomorrow.