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House of Commons Hansard #47 of the 40th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Government Response to PetitionsRoutine Proceedings

10:05 a.m.

Regina—Lumsden—Lake Centre Saskatchewan

Conservative

Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8) I have the honour to table, in both official languages, the government's response to two petitions.

Income Tax ActRoutine Proceedings

10:05 a.m.

NDP

Denise Savoie NDP Victoria, BC

moved for leave to introduce Bill C-371, An Act to amend the Income Tax Act (low-cost residential rental property).

Mr. Speaker, I am pleased to introduce a bill that would significantly boost the stock of affordable housing in Canada while also providing a much needed stimulus for our slumping economy.

I have worked closely with the Victoria Real Estate Board that has done an exquisite job documenting the range of locked in real estate assets in the greater Victoria area. These are long held properties whose owners are reluctant to sell and reinvest because they would pay a large amount of capital gains tax.

My bill would roll over or defer gains tax for these property owners if they reinvest their proceeds in affordable rental housing.

When targeted smartly, I believe that tax incentives can be an effective tool to achieve common good and this bill represents a creative use of tax incentives to address a social crisis that has endured for far too long in Canada.

(Motions deemed adopted, bill read the first time and printed)

Income TrustsPetitionsRoutine Proceedings

10:05 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, pursuant to Standing Order 36 and as certified by the Clerk of Petitions, I am pleased to present yet another income trust broken promise petition on behalf of Mr. Martin Harrison from Stouffville, Ontario, who remembers the Prime Minister boasting about his apparent commitment to accountability when he said that the greatest fraud was a promise not kept.

The petitioners remind the Prime Minister that he promised never to tax income trusts but that he broke that promise and he imposed a 31.5% punitive tax, which permanently wiped out over $25 billion of the hard-earned retirement savings of over two million Canadians, particularly seniors.

The petitioners, therefore, call upon the Conservative minority government to: first, admit that the decision to tax income trusts was based on flawed methodology and incorrect assumptions, as was demonstrated in the finance committee hearings; second, apologize to those who were unfairly harmed by this broken promise; and finally, repeal the punitive 31.5% tax on income trusts.

Fishing IndustryPetitionsRoutine Proceedings

10:05 a.m.

Liberal

Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL

Mr. Speaker, I have the duty and the pleasure to table in the House this morning a petition on behalf of constituents and people from Newfoundland and Labrador, especially the northeast coast of the province, who call on the government to bring forward a program for income support due to significant ice conditions along the northeast coast of Newfoundland, the northern tip of Newfoundland, as well the area of Labrador.

The petitioners ask the government to act quickly but, as well, to put in place a more permanent mechanism to help these families and these people who face such significant and serious economic consequences as a result of the inability to earn a livelihood from the fishing industry as a result of these serious ice conditions. It is through no fault of their own but through the natural environment that these circumstances occur.

The petitioners do note that the government has enacted other mechanisms to provide relief to other workers in other sectors and they call upon the government to do so in this particular case.

Several petitions have been received by my office but, unfortunately, some could not be certified by the Clerk of Petitions due to the fact that they did not meet the required form. However, I do have one here that does indeed meet the required form and I ask the government to act very quickly.

The government has already indicated that it would be bringing forward an ice compensation program. We ask the government to put in place the requirements within the context of this particular petition and that it do so very quickly.

Questions on the Order PaperRoutine Proceedings

April 28th, 2009 / 10:05 a.m.

Regina—Lumsden—Lake Centre Saskatchewan

Conservative

Tom Lukiwski ConservativeParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I ask that all questions be allowed to stand.

Questions on the Order PaperRoutine Proceedings

10:05 a.m.

Liberal

The Speaker Liberal Peter Milliken

Is that agreed?

Questions on the Order PaperRoutine Proceedings

10:05 a.m.

Some hon. members

Agreed.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:10 a.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

moved:

That, in the opinion of the House, the government should negotiate in good faith with the Government of Quebec to resolve the dispute dating back over ten years regarding the harmonization of the QST with the GST in the early 1990s and agree to provide $2.6 billion in compensation to Quebec for this harmonization, and that Quebec continue to administer these harmonized taxes.

Mr. Speaker, I will be sharing my time with the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.

The motion I am presenting today is supported by the entire Bloc Québécois. It fits within a context of tax equity and fairness. It is important to point out that there is a whole history behind this motion. I am presenting it today on behalf of the Bloc Québécois because, given the process we have witnessed by which Ontario was compensated, the Bloc considers that Quebec is losing across the board as far as harmonization of the QST with the GST is concerned.

It is important right at the start to clarify one extremely important element concerning the Quebec nation: as a nation, Quebec possesses the legitimacy required to collect and administer sales tax within its borders. The debate must be based on that principle and that statement of fact. In the course of this day it will be noted—and I will point it out as well—that the present Conservative government's arguments deny that reality.

To give a brief background, the GST was introduced in the early 1990s, and the Government of Quebec harmonized its sales tax with the GST in 1991 and 1992. It was the first in Canada to do so, and it received no compensation. Quebec felt that harmonization of taxes was important for the province's businesses. The Liberal federal government of the day called for the various provinces to follow the Quebec example and harmonize their sales tax.

After several interventions, the Maritimes harmonized their sales taxes in 1997. The Liberal federal government then compensated the maritime provinces which had done so with close to $1 billion, given that there were costs connected to harmonization. Then the province of Quebec asked that Liberal government why it was not offering Quebec the same thing. Since Quebec had already harmonized its sales tax with the GST, why should it not be compensated?

The Liberal government refused to consider the Quebec government's request for financial compensation. It said that it would provide compensation for the transition to a harmonized tax if the province's revenues declined by more than 5%. In Quebec, revenue losses were less than 5%. Quebec agreed to that because that was the rule, and the province went along with that way of doing things. Quebec always tries to cooperate, so it accepted the situation because it had not lost more than 5% of its sales tax revenue.

However, the Conservative government has changed the rules dramatically. This spring, when the Government of Ontario introduced its budget, it announced plans to harmonize its provincial sales tax with the GST and stated that it would receive $4.3 billion in compensation from the Conservative government. Interestingly, Ontario, like Quebec, will not be losing more than 5% of its sales tax revenue.

On the contrary, by harmonizing its sales tax, the province will collect more revenue. As I said earlier, this is about tax fairness, and that is the point. It is perfectly clear that the federal government is compensating Ontario, and that smacks of favouritism.

In response, the Government of Quebec passed a unanimous resolution calling on the federal government to pay $2.6 billion in compensation, a pro-rated amount based on Ontario's compensation.

Since then, the Minister of Finance has been scrambling to come up with excuses that have absolutely no relation to the logic underlying the Government of Quebec's request. He has been stonewalling by coming up with new reasons for his refusal almost every day.

First, he said that the tax was not really harmonized. In a letter to the Minister of Finance, Quebec's former finance minister, Ms. Jérôme-Forget, said that her government would address the few remaining differences between Ontario's and Quebec's harmonized taxes. It is clear that the Conservative government must compensate Quebec if the two taxes are harmonized and on a level playing field.

Then the government came up with another excuse, and now it is forcing a completely unacceptable situation on Quebeckers.

In 2006, Quebec was said to be a nation, yet it is not recognized as such. In addition, it is being asked to give up the power to collect taxes from its citizens and raise tax revenue from the QST and the GST, something it has been doing since the beginning of this harmonization process. That is totally unacceptable on the part of the Conservative government.

During the 2006 election campaign and the years that followed, we heard the government boast about its open federalism approach. Talk is fine, but we have seen no action since. Unfortunately, what we have here is another example of adding to the pile. Disputes are piling up and, once again, Quebec is the one being denied $2.6 billion.

Great efforts were made during the 2006 election campaign to seduce the electorate. The current Prime Minister went as far as to promise that the provinces' jurisdictions would be respected, that the fiscal imbalance would be dealt with, that the international extension of Quebec's internal jurisdictions would be recognized, that Quebec would have special autonomous status through the recognition of its institutional responsibilities, and that open federalism would put an end to the constant confrontation between Quebec City and Ottawa. That is what the current Prime Minister promised, but clearly these were only words.

Now, two elections later, the great seduction has been replaced with the great disappointment, of which there are many examples. The case at hand today is unfortunately one more example showing that, regardless of the government in office at the federal level, be it Liberal or Conservative, hardly anything has changed in how Canada operates.

There has been a short honeymoon between Quebec and the Conservatives, but I can assure this House that the honeymoon is over and that the confrontation between Quebec City and Ottawa is back on with a vengeance. Moreover, this whole situation is unacceptable to all Quebeckers. We have introduced this motion because we think and we are convinced that Quebec ought to get its fair share and that this is ultimately a matter of fairness and social justice.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:20 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I thank the member for kicking off this debate. It is an important motion because there are some principles involved. At the outset, the member talked about fairness and equity. In order for Canadians to have confidence in our system of taxation, all programs need to meet those benchmarks of being fair and equitable.

The member gave us some history, but I would like him to remind the House of the commitment of the Minister of Finance to the province of Quebec with regard to harmonization and the $2.6 billion. It is the compensation issue, something that was dealt with when the Maritimes made the transition to harmonization to deal with the cost of doing the process as well as to deal with issues of lost revenue.

It is important to put the commitment of the current Minister of Finance to the province of Quebec on the record for all to understand.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:20 a.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

Mr. Speaker, I thought I was clear on that point. What I said when I touched briefly on the historical background is important and I look forward to seeing the Liberals' position on this issue.

The Minister of Finance said he would compensate Quebec if the tax were fully harmonized. Since that time, he keeps inventing new conditions that he knows full well Quebec will never accept. Among other things, the finance minister set a requirement, and he even did it publicly. A letter published in the newspapers said that Quebec would receive compensation only if both the GST and the QST were collected by the federal government from now on. This is totally unacceptable.

There is another aspect to the commitment made by the Minister of Finance. He said that, previously, provinces were to be compensated only if they stood to lose more than 5% of their tax revenues because of harmonization. Now we know that Ontario will see its revenues increase with a harmonized tax.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:20 a.m.

Macleod Alberta

Conservative

Ted Menzies ConservativeParliamentary Secretary to the Minister of Finance

Mr. Speaker, I listened intently to my hon. colleague with whom I share the privilege of sitting on the finance committee. He has done some fine work on that committee. The member asks good questions and does his homework.

In answer to the previous question, he suggested that the finance minister of Canada has changed his position on the requirements for this proposal that is suggested in the motion today. The facts are that the finance minister has not changed his position from what has been offered to all provinces. In fact, Quebec has said that it is not willing to adopt full harmonization of the sales tax.

We have provided funding for the role it is playing in taxes, but to suggest that the Government of Quebec is willing to fully harmonize, I wish the hon. member would share with us that letter where the provincial government has said it will actually fully harmonize. I would be glad to present that to our finance minister as an olive branch, that the provincial government is willing to sit down and talk seriously.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:20 a.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

Mr. Speaker, the member is talking about a letter that the Quebec finance minister sent to the federal finance minister on April 1, 2009. The letter clearly states that the main difference between the QST and the GST has to do with input tax credits. The minister says very clearly in this letter that the Government of Quebec would accept to make the necessary adjustments to its QST to ensure a fuller harmonization.

From the moment the Quebec finance minister sends a letter in which she confirms what the Quebec government intends to do, the situation is very clear: the Quebec government is willing to go a long way in eliminating the few remaining differences, but—

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:25 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, for debate.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:25 a.m.

Bloc

Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, being the representative of a Quebec riding makes one very happy in this place on some days. Indeed, the Bloc Québécois has been elected to promote sovereignty and to defend Quebec's interests. I will read today's motion because I think it is in line with what Quebeckers want collectively:

That, in the opinion of the House, the government should negotiate in good faith with the Government of Quebec to resolve the dispute dating back over ten years regarding the harmonization of the QST with the GST in the early 1990s and agree to provide $2.6 billion in compensation to Quebec for this harmonization, and that Quebec continue to administer these harmonized taxes.

That motion illustrates clearly what it means to defend Quebec's interests because it supports a motion adopted unanimously by all parties in the National Assembly. Since Quebec regained the right to have a provincial income tax system 50 or 60 years ago, it has always tried to get as much financial autonomy as possible. In the end, total financial and legal autonomy will be necessary.

I want to read the unanimous motion of Quebec's National Assembly because I believe it sums up the position of Quebec very well:

WHEREAS Québec was the first province to harmonize with the Federal goods and services tax (GST) in the early 1990s:

This is nothing new. In the early 1990s, Quebec was the first province to do so.

WHEREAS since then, three Atlantic provinces have harmonized with the GST in 1997 and have received compensation for this from the Federal Government totalling close to 1 billion dollars;

Quebec, on the other hand, received no compensation.

WHEREAS the Government of Ontario announced that it would harmonize its sales tax with the GST beginning on 1 July 2010;

WHEREAS the Federal Government will grant a 4.3 billion dollar compensation to Ontario for this harmonization, an amount that is justified in the Canada-Ontario memorandum of understanding particularly owing to the desire to stimulate economic growth and job creation, and the Federal Government will administer this new provincial tax free of charge on behalf of Ontario;

It is the Quebec government that administers this tax in Quebec, although the federal government will do so free of charge for Ontario.

WHEREAS the Ontario sales tax will be very similar to the Québec sales tax (QST) since certain goods, such as books, will not be subject to the provincial tax and that input tax refunds in Ontario may be identical to those agreed to by Québec for an 8-year period;

So the two cases are comparable.

WHEREAS Ontario is the fourth province to receive compensation from the Federal Government as part of the harmonization of the provincial and federal sales taxes, while Québec has not received any compensation to this day even though it was the first province to harmonize its sales tax;

All parties in the Quebec National Assembly unanimously agree on this.

BE IT RESOLVED THAT the National Assembly ask the Federal Government to treat Québec justly and equitably, by granting compensation that is comparable to that offered to Ontario for the harmonization of its sales tax with the GST, which would represent an amount of 2.6 billion dollars for Québec.

So as we can see, today's Bloc Québécois motion is actually the Quebec National Assembly motion. The Government of Quebec is unanimously saying that they are the ones who have been moving forward on this, acting in good faith, reaching agreements and administering this tax for many years, without ever receiving any compensation, as we watch other provinces receive compensation year after year for various reasons.

Ottawa invents arguments to compensate the other provinces, but it does not compensate Quebec. The federal government's latest invention is very hard to swallow: it is saying that it should collect the money, even though nearly 20 years ago, the federal government said Quebec could collect it. The current government, which has said it is open to Quebec, is more regressive than previous governments in this respect. Quebec truly cannot understand or accept such an attitude.

Quebeckers have always been open-minded. For example, we took positions on free trade that we felt were important for proper trade. But the federal government has always been very jealous of the rights of the National Assembly of Quebec. I believe that there has not been one Government of Quebec in more than 75 years that has not tried to make Quebec more autonomous, and especially more financially independent. As I mentioned earlier, Maurice Duplessis was the first premier to make sure that income tax in Quebec was collected separately from federal income tax.

Later, the government of Mr. Bourassa entered into an agreement whereby Quebec would collect and administer the tax and then send the federal government its share.

So even though there was an internal debate in Quebec and even though the Parti Québécois was ahead of the Liberals on this issue, Quebec realized that this could be an important, worthwhile tax tool. When the federal government lowers its tax and Quebec takes its place, it becomes more financially independent.

It took the Liberals a year or two longer, but they included this measure in the latest budget. They are finally going to recoup the 1%. The Parti Québécois had been calling for this for many years and had suggested it in the past. It is a good measure.

Every time Quebec becomes more financially independent, Quebeckers win, because they are able to assume their responsibilities and invest all the money they need to in their own areas of jurisdiction.

We see all the cuts the federal government is making. For example, it is constantly changing the rules for equalization, forcing Quebec's finance minister to do financial gymnastics, which is unacceptable.

The more financially independent Quebec is, the less dependent it will be on such decisions, and the less it will be in a paternalistic relationship with the federal government. That is the message the Government of Quebec has sent, and it is the message the Bloc Québécois hopes to get across.

Financial independence has always been an important criterion for developing nations. Let us remember that in the United States, it was the issue of a tax on tea that, in a symbolic way, became the reason why the United States of America decided to become independent from the British Empire.

In Quebec, opinions are divided concerning independence. We have not yet achieved a solid majority but there certainly is a consensus on the fact that Quebec must have the most financial independence possible. It is that consensus that the Bloc Québécois brings before this House today, and we hope that the House will listen to it.

It is important, because the response to this motion will have a large impact on the way the people of Quebec view this Parliament. During the next year or so, there will probably be a federal election campaign. When Quebeckers are asked to decide which party will best represent them, they will certainly take a look at who has defended their interests here in this House, in particular the interests formally expressed by the Quebec National Assembly. It is the Bloc Québécois that has done so today.

Quebec has acted in good faith in this matter. In the past, federal government documents even recognized that taxes were harmonized in Quebec. Now, they have come up with this approach to collecting taxes in an effort to avoid having to compensate Quebec.

We are not here begging for money. We just want what we are entitled to. As Mr. Duplessis would have said, we want what is ours. This is money that is due to us under this system. It is not true that the rest of Canada has the right to be compensated but not Quebec.

Rest assured that on this point we represent all Quebeckers. Everyone knows that what we are talking about here is only about half the financial envelope of Canada, and that when decisions are made by the federal government in its areas of jurisdiction, such as national defence, where a great deal of money is being spent on Afghanistan, those decisions mean that money is not available for other types of spending.

Quebeckers are well aware that the more financially independent they are, the more likely it is that they will be able to develop the social model they desire. They have done that with the parental leave system, with day care centres, and they want to continue to do so. In fact, Quebec has a social model, a society, a nation that is different. Our nation has even been recognized as different by this House. Now, it is time for the Conservative federal government and the federalist parties here to make a gesture toward Quebec. a gesture of fairness, by supporting this motion put forward by the Bloc Québécois. Otherwise, Quebeckers will know what conclusions they should draw.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:35 a.m.

Bloc

Robert Vincent Bloc Shefford, QC

Mr. Speaker, my colleague made an excellent speech.

The Bloc Québécois is often said to be rebellious. There are plenty of reasons for that, but it is mainly because when the Liberals were in power, the federal government did nothing when the crisis hit the textile and footwear industries. These two industries are now closed.

With regard to the manufacturing and forestry sectors, we are talking about $170 million over two years for all of Canada.

If we look at problems experienced in other provinces, for example the crisis in the auto industry in Ontario, that industry has already received $20 billion. Money has also been given to the tar sands industry.

Now, whatever issue is debated in the House, Quebec always comes last. There is blatant evidence of that. As soon as one of the provinces gives or does something, it is compensated immediately. However, when it is an issue that has to do with Quebec, the answer is no. Quebeckers can protest all they want, but nothing happens.

Well, we will not let that continue. We have rights and every province has rights. We will defend the rights of Quebec, that is a given. We will do it every time we come into the House of Commons.

Can my distinguished colleague tell me what he thinks the problem is and why the government does not want to compensate Quebec for harmonizing the QST with the GST?

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:35 a.m.

Bloc

Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, that is an excellent question.

Why does the federal government want to take over collecting the taxes again? Because it has realized that Quebec had acquired a significant tool for financial autonomy. The example I just gave, the reduction in the GST that will be recouped by Quebec, that is gradual financial autonomy. Several years from now, we might have less and less income tax, and taxes might be increasingly collected through consumption taxes.

There is choice in this situation, there is autonomy. Perhaps the federal government has realized this, because at the same time it is losing the hold it has through systems like equalization and other systems where it can set national standards and engage in what it calls Canadian nation-building. In this situation, Quebeckers want their own model and want their nation to have as much autonomy as possible to control its development. Money is the sinews of war.

In my opinion, that is the direction the federal government is going. I would not be surprised if this new position on collection came from high up in the federal bureaucracy, from the people who outlive governments, who were here under Mr. Chrétien and even under Mr. Trudeau. Those people are determined to build the Canadian government with the Canadian framework and Canadian values, while we want to build Quebec with Quebec values.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:35 a.m.

Lotbinière—Chutes-de-la-Chaudière Québec

Conservative

Jacques Gourde ConservativeParliamentary Secretary to the Minister of Public Works and Government Services and to the Minister of National Revenue

Mr. Speaker, my colleague referred to equalization payments. On the question of equalization payments, overall, transfers to Quebec have reached historic highs and are continuing to rise. As a percentage of the province’s total revenue, equalization payments have risen from 8.6% to 13.4% since 2005-2006.

Total federal assistance to Quebec in 2009-2010 amounted to $17.7 billion, an increase of $5.3 billion or 43% since 2005-2006, including an increase in support for health care, postsecondary education and infrastructure.

In 2009-2010, Quebec will receive $8.4 billion in equalization, a jump of over 70% from what it was in 2005-2006 and nearly as much as transfers paid to all provinces in 2005-2006.

Could my colleague explain whether these transfers have given the province of Quebec greater financial autonomy? That is perhaps the justification for his decision to stand for the Parti Québécois.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:35 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup has 30 seconds left to give his answer.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:35 a.m.

Bloc

Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, my answer is in two parts.

First, on the question of equalization, the problem is the unilateral decisions by the federal government. One year ago, there was $1 billion more coming and we suddenly learned there would be $1 billion less. Imagine the impact it has on the Government of Quebec to have $1 billion less to count on in revenue, in its envelope.

Second, when Quebec is sovereign, we will no longer need equalization. We will be autonomous then and we will manage our affairs properly. The equalization system provides compensation for the results of poverty--

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:40 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

I am very sorry to have to interrupt the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup.

Resuming debate, the hon. parliamentary secretary to the Minister of Finance.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:40 a.m.

Macleod Alberta

Conservative

Ted Menzies ConservativeParliamentary Secretary to the Minister of Finance

Mr. Speaker, thank you for this opportunity to participate in today's debate as we discuss harmonization. I note with some surprise that the Bloc has chosen an economic issue for the subject of its opposition day today as it has been acknowledged by many, in fact, in its own party that the Bloc has not historically had the strongest understanding or position on economic matters.

We all recall the infamous words of Caroline St-Hilaire, the former Bloc MP for Longueuil—Pierre-Boucher, who resigned her seat in the last Parliament: “The economy is constantly a black sheep for us. We are profoundly uncomfortable when it comes to discussing the economy”.

While the Bloc may be profoundly uncomfortable discussing or protecting the economy, our Conservative government is not and we are also not uncomfortable cutting taxes. Lower taxes are part of our Conservative government's ongoing commitment to a smaller tax burden, improving the tax system, and creating an environment where Canadian businesses can flourish to create new jobs today and for tomorrow.

As the Canadian Council of Chief Executives declared:

The federal government clearly has done everything it can to reduce tax rates within the boundaries of prudent fiscal management. The next major steps in forging a more competitive corporate tax system must come at the provincial level. The single most important measure would be the replacement of remaining provincial sales taxes with value-added taxes, preferably harmonized with the Goods and Services Tax.”

While not the most exciting of topics, harmonization is a key economic issue as it has been recognized as tremendously beneficial for job and business growth. As Jonathan Kesselman of the C.D. Howe Institute has stated:

--harmonization would reduce Canada's corporate tax burden, make Canadian firms more internationally competitive and make Canada a more attractive place for foreigners to set up shop, injecting job-creating direct investment into the economy.

The recognized benefits of harmonization include supporting job creation by allowing businesses to save time and money by the move to a simpler more effective tax structure that features: first, a one tax rate, not two; second, one substantially harmonized tax base, not two; and third, one level of tax administration, not two.

Moreover, these efficiencies create cost savings for businesses that will make their way to consumers' wallets. I note that independent academic studies have certainly shown that to be the case when New Brunswick, Nova Scotia and Newfoundland and Labrador became fully harmonized provinces.

As Finn Poschmann, also of the C.D. Howe Institute, recently indicated before the Standing Committee on Finance:

What happened in 1997 when the eastern provinces harmonized...is just a terrific example. The prices of some things that hadn't been taxed before under the provincial tax went up. Other things stayed the same and some other prices went down. Overall the broad price level in the eastern provinces dropped by roughly the amount of the decline in the net tax rate. So the competitive markets delivered a very quick pass-through of the lower tax on consumer prices.

Indeed, that is why our government continues to be committed to working with the other provinces to facilitate the transition to a fully modernized, efficient and harmonized tax system in Canada. We also continue to encourage the provinces to reduce their corporate income taxes, so that Canada can reach the goal of an overall 25% federal-provincial corporate income tax rate by the year 2012.

As the Bloc should be aware, Quebec has not fully harmonized its sales tax. Even the Quebec government has admitted this fact noting in a recent press release that there was a major difference between the QST and the GST and that the province was ready to agree to make the necessary adjustments for full harmonization.

Quebec currently retains full control over the design and application of its provincial sales tax. It also administers Quebec's value added tax as well as the GST, an arrangement dating back decades.

Years ago the Quebec government sought to collect the GST for the federal government. The then government agreed and the province of Quebec has been compensated for that since. In fact, last year alone, Quebec was paid approximately $130 million to do just that. What is more, the federal government has paid Quebec about $1.8 billion to date to administer the GST in that province alone. In addition, I understand the federal government does not charge Quebec for the development of GST-specific rulings which it relies on to administer the GST.

In further respect to the situation in Quebec, the Bloc should be well aware that the province decided to introduce its own Quebec style value added tax, or VAT, something quite different from full harmonization. In contrast with New Brunswick, Nova Scotia, Newfoundland and Labrador, and now Ontario, Quebec did not have to adopt federal HST legislation. It did not have to sign a comprehensive integrated tax coordination agreement, and has kept full control over the design and administration of its value added tax. Ontario and the three existing fully harmonized provinces have joined that federal framework. Quebec has not. That is the arrangement as it exists currently, and that is the arrangement that the province of Quebec has recently suggested it might wish to alter.

We in good faith remain open to discussions with the Government of Quebec, not the Bloc by the way, about changes and any federal assistance that may be appropriate if such an agreement is met. The Government of Quebec clearly appreciates our gestures of good faith, noting that it “welcomed the openness shown by the federal government regarding fair treatment for Quebec with respect to harmonization of sales taxes”.

As I indicated earlier, we encourage all provinces to reduce their business income tax rate as we have done at the federal level so that Canada can be recognized as a lower tax jurisdiction. Reducing the tax burden on Canadians will be important in getting through this global recession and positioning our country for future prosperity.

For those in the Bloc, the Liberal Party, and the NDP who would argue for higher job-killing taxes on businesses large and small, I ask them to listen to the words of a recent OECD report that examined what tax structures best promote economic growth. The OECD concluded that corporate taxes are found to be most harmful for growth, and that high corporate taxes may reduce incentives to invest in innovative activities.

Our Conservative government has long been a champion of lower taxes. Let me list some of the tax reductions that we have brought forward since forming government in 2006.

First of all, we cut over 100 taxes, including the GST from 7% to 6% to 5%. We introduced important tax credits, such as the Canada employment credit, the working income tax benefit, and the child tax credit.

We cut taxes in every way that government collects them, personal, consumption, business, excise taxes, and more. Our government removed almost 950,000 low-income Canadians completely from the tax roll. We reduced the overall tax burden by nearly $220 billion, the lowest level in nearly 50 years. We have built on our legacy tax relief by reducing taxes on savings with our landmark tax free savings account.

What does that mean for a typical hard-working Canadian family? It means a total savings of over $3,000 a year. That is $3,000 in their pockets, where it belongs, instead of feeding big, bloated, do-nothing government bureaucracies in Ottawa.

While that might not mean something to the Bloc, it does to most Quebeckers and most Canadians. Families and individuals want to work for themselves, not government, and they appreciate our actions to lower their tax bill. How so? As a Winnipeg Free Press editorial noted:

Tax Freedom Day this year [referring to 2008] arrived four days earlier than last year and the trend over the last few years has been positive as a result of cuts in personal income taxes and reductions in the GST.

We built on our proud record of tax relief in Canada's economic action plan by leaving even more money in Canadians' pockets, especially low- and middle-income Canadians. Measures introduced in budget 2009 alone will provide $20 billion in new personal income tax relief. We have increased the basic personal amount that all Canadians can earn before paying federal personal income taxes. We have increased the top of the two lowest personal income tax brackets so Canadians can earn more income before being subject to higher tax rates.

We are effectively doubling the tax relief provided by the working income tax benefit to encourage low-income Canadians to find and retain a job. We have provided up to an additional $150 of annual tax savings for low- and middle-income seniors through our $1,000 increase to the age credit amount. We are introducing three tax measures that will provide immediate stimulus and encourage investment in Canada's housing stock. These are: a temporary home renovation tax credit of up to $1,350 per family; a new first-time home buyers' tax credit of up to $750; and an increase in the amount that can be withdrawn without penalty under the home buyers' plan, up to $25,000.

We are also reducing taxes in order to support businesses as they make difficult adjustments in these changing economic times. Tax relief measures for businesses include: a temporary two-year measure that allows businesses to fully expense their investments in computers in the year they were acquired; further assistance for Canada's manufacturing and processing sector by extending the temporary 50% straight line accelerated capital cost allowance rate to investment in manufacturing or processing machinery and equipment undertaken in 2010-11; and increasing the amount of small business income eligible for the reduced federal income tax rate of 11% to $500,000 from the former $400,000 to help small businesses reinvest and grow.

No wonder Canadians, especially in Quebec, were so enthusiastic in their praise of the federal budget. Public interest groups such as the Board of Trade of Metropolitan Montreal heralded it by stating:

The [Conservative] government is on target with measures designed to support companies, including easier access to credit, tax breaks, and tariff relief to stimulate investment....

Reducing the tax burden on individuals and implementing a tax credit for home renovations will encourage Canadians to participate in the recovery.

Listen to what well-respected Montreal Gazette columnist Jay Bryan had to say about the budget:

If you were to mark [the finance minister] on the effectiveness of his budget measures in getting the economy moving again, you'd have to give him a better than passing grade.... [It] will also give a major boost to the economy....

Budget 2009 builds on the previous measures to help the businesses that I alluded to earlier. Most important, businesses will also benefit this year from previously pledged reductions in the general corporate income tax rate to 19% in 2009 and going forward further reductions to 15% by 2012. By next year Canada will have the lowest overall tax rate on new business investment in the entire G7. That is a good thing because we are making Canada a better place to invest and a better place for job creation.

However, do not just take my word for it. Listen to what the influential Forbes publication had to say in its 2009 edition of “Best Countries For Business”:

The economic downturn that's swept the globe has crushed financial markets, exploded unemployment and shaken confidence in the banking system. The disaster isn't shared equally, though. Some countries are in a much better position than others to rebound from the current malaise by attracting entrepreneurs, investors and workers. Who are they? Our fourth annual Best Countries for Business ranking looks at business conditions in 127 economies. Topping the list for 2009: ...Canada is up four spots to No. 3.

Clearly, our Conservative government has taken decisive steps to help Canadians across this great country. This volatile environment means that we have to take the necessary steps to improve the Canadian economy and restore confidence to ensure our country's long-term prosperity. As this government has stated from the outset, lower taxes are an essential part of making that happen.

Quebec for its part chose to operate its own sales tax system and not to adopt a harmonized system. We respect that was its decision and its choice. Should Quebec choose to harmonize its sales tax, like Ontario, New Brunswick, Nova Scotia, or Newfoundland and Labrador, then we will be prepared to talk about that transition and potential transition funding. We will do that in good faith to make that happen for the province of Quebec.

That is something among many other things which the Bloc, after nearly 20 years in perpetual opposition, could never do for Quebec.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:55 a.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I would like to inform our colleague that we are now in the year 2009. We have media and newspapers, people are educated and follow politics, and right now they are looking primarily at Quebec’s economy.

The Conservatives say people in Quebec are happy with the federal budget, but the polls are down. People are actually very unhappy with this dishonest, partisan budget. The Conservatives are trying to use it to buy votes in Ontario at the expense of Quebec. The proof is that they are investing $2.7 billion in the automobile industry and only $170 million in the forest and manufacturing industries, which are suffering badly but still provide more jobs than the automobile industry.

When it comes to tax harmonization, the Conservatives say we are going to harmonize it. We harmonized our sales tax with the GST back in 1990. The fact it is allegedly still not harmonized costs us $2.6 billion. The government says here in the House that it reduced taxes and pretends everyone is happy in the best of worlds, but it is not true. The government is totally hypocritical. That is the word for it. It is showing just how hypocritical it is.

Quebec voters are going to show just how dissatisfied they are in the next election and soon this party, which is highly partisan with public funds and has no sense of justice and fairness toward the people of Canada and Quebec, will find itself joining the ranks of the opposition. As in Mr. Mulroney’s day, it is going to find itself in the corner with two or three members. That is what will happen. What the Conservatives say is simply shameful.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

10:55 a.m.

Conservative

Ted Menzies Conservative Macleod, AB

Mr. Speaker, the only shameful thing about it is that the hon. member still does not believe the former finance minister of Quebec and the present finance minister of Quebec, both of whom have admitted that they have not harmonized the tax. For the hon. member to stand in the House and suggest that they have, and he is a federal representative of Quebec, fair enough, I would suggest that the finance minister who deals on a day to day basis with that perhaps has a better understanding.

At the outset of my speech, I talked about the difficult issues in understanding the economy, but I have no doubt that both well-respected finance ministers in Quebec, the former and the present, probably have a better grasp of this. In fact, they have been communicating back and forth with our finance minister on what is required to actually harmonize. For the hon. member to stand and claim that they have in fact harmonized in Quebec, I would suggest that the hon. member go back and have a heart to heart with the finance minister, because I do not think either the present or the former finance minister would agree.

Let me make the point on something that was referred to in a speech earlier today, and that is how Canada respects all of its provinces. With respect to the transfer payments, fundamentally, that is the federal government's role, to make sure that constituents in all provinces are treated fairly when it comes to health transfers, when it comes to social transfers. We need to remind all Canadians that those continue to increase. Health transfers to every province in this country continue to increase at 6% overall. On social transfers, we treat all provinces the same. Social transfers increase 3% every year.

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

11 a.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Mr. Speaker, we are talking about the potential harmonization, or not, of taxes and the transparency of how the government collects revenues and then dispenses them back to the provinces for needed programs. I think there is a growing lack of trust with the government's ability to do that very thing. In the region that I represent, a clear and decisive promise was made by the government to transfer $100 million to the province in order to counter the devastating effects of the pine beetle on the economies of northern British Columbia and the central interior. In the first year, very little of that money flowed out, something like $17 million in total. In the second year, it got even more grey; and now, we cannot find it in the budget that he refers to.

In the interest of having some sort of sense of transparency when debating issues of harmonization of tax or in any program that the government stands up in this House and congratulates itself for, it must answer the question, does the money actually flow? Does the money actually appear in the budget document? The $100 million a year that was committed over 10 years to the communities I represent seems to have evaporated, as Conservative promises so often do when they leave this place and attempt to hit the ground.

I wonder if the parliamentary secretary could clarify today, in very simple terms, is there $100 million for the pine beetle initiative in his 2009 budget, yes or no?

Opposition Motion—Harmonization of QST with GSTBusiness of SupplyGovernment Orders

11 a.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

I am not sure if that relates to the subject of the motion but I see the parliamentary secretary is rising, so I will give him an opportunity to respond.