Mr. Speaker, I will be sharing my time with the hon. member for LaSalle—Émard.
The Liberals will vote for this motion. The main reason is that we think it is very important for the government to negotiate in good faith with the Government of Quebec. That is the main point of the motion. There are some differences of opinion between Quebec and the federal government. These differences do not seem too great, though, if we want to have a flexible federation in which we cooperate. We should obviously negotiate with any province, including Quebec, over matters that are good for the federation.
It is as simple as that, and for this reason we will vote in favour of the motion.
One thing I will say as a small aside is that it will be interesting to see how the NDP decides to vote on this motion. On the one hand we have NDP members who have ranted and raved against the harmonized tax. On the other hand we have the member for Outremont who said:
How are we supposed to live harmoniously in this country if harmonization gives other provinces billions of dollars while Quebec gets nothing?
So it seems that whichever way they decide to vote on this motion there will be NDPers pitted against NDPers, which will be an interesting prospect for non-NDPers to view.
In any case, to return more to the substance of the matter at hand, I think the first point to make is that on economic grounds there is a good case for the GST and a good case for harmonization. It should be noted that every OECD country except the United States has a value-added tax, which is like the GST. A value-added tax is generally thought to be an efficient tax because businesses get credit on the inputs that have already had tax paid on them, so that at the end of the day, all the goods purchased by consumers are taxed only once.
Currently, then, the move by Ontario in the direction of harmonization will result in a reduction in the marginal effect of tax rates, which will be of particular assistance to the manufacturing sector. Therefore, this move is a positive one on two grounds: first, on grounds of efficiency; and second, on grounds of competitiveness.
It is more efficient to have one tax than two taxes. Small businesses and other businesses will then only have one tax to administer rather than two.
This is reminiscent of a move that the Liberal government made, I believe in 2005, to have a single tax collector for corporate income tax in the province of Ontario. This was an agreement between the federal government and Ontario. It was very well received by businesses. It reduced their compliance costs to have only one tax rather than two taxes, and this move in Ontario and potentially in Quebec is of a similar nature.
It is also good for the competiveness of the country because by reducing the effective tax rate on business investment at a time when jobs are disappearing, particularly in Ontario in the manufacturing sector, which is very much in difficulty, this move by the Government of Ontario will be positive for the Ontario economy over the medium term.
If we turn to Quebec, I can count perhaps five areas in which there is incomplete harmonization. First of all, at the moment, Quebec has two taxes rather than one tax. Second, there are some goods on which the provincial tax applies but not the federal tax, but that is the same as will be the case in Ontario. Third, the tax credits, which are part of a GST or value-added tax, are not claimable by larger companies. In the Ontario case, large companies will transition over time to be allowed to claim those tax credits. Fourth, there is a difference in terms of who collects the tax, whether it is the Government of Quebec, as it has been since the time of Brian Mulroney, or whether, as the government wishes to be the case, it is the CRA. The fifth and final point is that, currently, the Quebec sales tax is applied on top of the federal GST.
We are the opposition, not the government. It is the government that should negotiate. I submit that those five differences are not huge. I do not know exactly what the outcome of those differences would be, but certainly they leave scope for the two governments to bargain in good faith.
We in the Liberal Party welcome the Quebec government's indication that is prepared to move to a greater degree of harmonization under certain conditions. We see absolutely no reason the federal government should not enter into negotiations with the Government of Quebec on this subject and in good faith. It is for that reason the Liberal Party will be voting in favour of this motion.