Mr. Speaker, I am pleased to rise today and speak to our opposition day motion.
First, the Canadian public is getting all too used to not taking what the Conservative government says to them at face value. In 2008, the Prime Minister claimed that “As long as I will be Prime Minister...there will be no new taxes”. In the budget speech, the finance minister claimed that his budget would not raise taxes.
Yet, all too predictably, the budget that was presented to Parliament last month shows that the Conservatives are not living up to their promises. In fact, the budget detailed three separate types of tax increases: first, through changes to the general preferential tariff regime; second, by changing current tax rules relating to credit unions, safety deposit boxes and workers' funds; and finally, by adding the GST and HST to previously exempted types of parking, including at schools, at municipal parking lots and, most shockingly, at hospitals.
The tax hikes detailed in budget 2013 would cost Canadians $8 billion over the next five years. The Conservative MPs will no doubt say it is not a tariff and is not a tax, but this simply is not true. Let us stamp out that argument from the outset.
Even the Encyclopedia Britannica defines a tariff as “a tax levied upon goods as they cross national boundaries, usually by the government of the importing country”. The government can call these tariff changes whatever it wants, but that does not change what they are: a tax increase, and one that will hit the poorest Canadians the hardest.
Mike Moffat, an assistant professor at the University of Western Ontario, summarized the entirety of these tariff changes most succinctly when he said, “These tax increases are also likely to be regressive in nature”.
What products will be hit by these tax changes? It is a pretty long list, including bicycles, baby carriages, coffee makers, scissors, rubber sandals, vinegar, umbrellas, paint brushes and perfume, just to name a few.
Let us look at some of these in a little more detail.
Canada imports bicycles worth $125 million from countries covered by the general preferential tariff regime. The changes in the budget will see the tariff on imported bicycles increase from 8.5% to 13%, which will cost Canadians between $5 million and $6 million a year. Ironically, the government was all too happy to shout from the rafters about its cut in tariffs on sporting equipment, but while it gives with one hand, it takes away with the other. If the government is aiming to make it cheaper for Canadians to get active, why is it increasing the cost of bicycles, which not only help Canadians stay healthy but also offer an environmentally friendly method of transportation?
The increased tax on baby carriages is equally perplexing. Again, the government was happy to sell the reduction on tariffs on baby clothes, but I do not remember any Conservative MPs or government spokespeople talking about the $1 million annual tax increase on baby carriers. Roughly 90% of all baby carriages imported into Canada come from countries covered by the general preferential tariff regime. This means that a huge majority of baby carriages will see a 3% tariff rise.
However, probably the most surprising of these tax increases is the government's iPod tax. The hypocrisy of the Conservatives on this is shocking. Not only did they promise no new taxes, but they have specifically promised no tax on iPods. A joint statement issued by the Minister of Canadian Heritage and the then Minister of Industry in December 2010 stated, “During this fragile economic recovery, the last thing Canadian families and consumers need is a massive new tax on iPods”. Given this statement, why is the government now implementing a tariff increase on MP3 players that equates to a 5% iPod tax?
The Conservatives would have us believe that this tariff will not be applied to iPods due to a special exemption dated back to 1987 on devices that are plugged into a computer. The problem with this argument is that it has already been refuted by a government department.
An internal memo from March 2012 by the Canada Border Services Agency states that it is cracking down on this exemption as the application process, which has not been fulfilled on most MP3 players, requires a certificate for each product to be signed by the consumer. CBSA, explaining its crackdown, said:
As the vast majority of end-users of these products are consumers, it is expected that the required certification will not be available as the onus is on the importer to have the required certificate completed by the consumer, typically at the time of sale.
Further, the crackdown “will likely result in a significant amount of customs duty being reassessed, and will not be well-received by the importing community.”
In fact, the final nail in the coffin of the Conservatives' argument is that CBSA has already written to one importer of the iPod touch 8GB to tell it that the product is subject to end-user verification for each and every product sold in order to get the tariff exemption.
It makes no sense for the Conservatives to increase the taxes on all these consumer goods, especially when the government's other austerity measures, as pointed out by The Economist, mean that the Conservatives are essentially relying on consumer spending to get the Canadian economy into gear. In fact, both BMO chief economist Doug Porter and Martin Schwartz, CEO of the bike manufacturer, Dorel Industries, have pointed out that the most likely consumer response to these tariff changes would be an increase in cross-border shopping, therefore hurting Canadian businesses.
I will also talk briefly about some of the other tax increases in this budget. The elimination of both the tax credit for labour-sponsored venture capital corporations or workers' funds and the preferential tax rate for credit unions smack of ideological attacks.
The elimination of the workers' funds tax credit would particularly hurt middle-class Canadians who were eligible for a tax credit of 15% on investments of up to $5,000. This tax increase would seem to be a direct attack on the labour movement, which would hurt the venture capital sector in Canada more generally. Just last year, the Conservatives announced their desire to help Canada's venture capital industry which lags behind its U.S. counterpart. Then, they turn around and kick one of the legs away from under it. It is no surprise that Canada's Venture Capital and Private Equity Association has expressed its disappointment with this tax increase.
Similarly, the elimination of the preferential tax rate for credit unions would seem like nothing more than a cash grab on an industry which offers ethical and lower-risk financial services to Canadians. The elimination of the preferential rate would add $10 million to $75 million in tax costs to credit unions, costs which unfortunately would have to be passed on to the credit unions' customers or would lead to cuts in the great community work that credit unions do from coast to coast to coast. In fact, the only people who are happy with this proposed decision are the bankers, who would see their competition weakened.
It is quite clear that the tax increases announced in this budget would do nothing to help consumers, would hurt Canadian businesses, as more people look to shop in the U.S., and would weaken competition in the financial sector. However, they also would prove that Canadians cannot trust the promises made by the Conservatives.
It is time that the public can trust that the government will do what it says. That is why I urge my colleagues to support this motion.
