Mr. Speaker, I am pleased to rise in the House today to speak to the bill introduced by the hon. member for Langley—Aldergrove.
Bill C-342 seeks to amend the Excise Tax Act to provide that any tax paid to a province in respect of carbon is excluded from the total purchase price for the purpose of calculating the goods and services tax. Even though I have no doubt that the hon. member has the best intentions in the world, this bill will not only not have an impact on Canadians' taxes, but it will also unnecessarily complicate our tax system.
Experience tells us that passing tax-related private members' bills can undermine the budgetary process and impede the Government of Canada's ability to prioritize public policy issues and urgent expenses when drafting a balanced series of budgetary measures.
Ideally, any changes to tax laws should be made as part of the larger budget process to ensure that they are consistent with the fiscal framework and the tax system. Before I provide a more detailed explanation of the steps and measures that the government has taken in this regard, I would like to talk about the implications of Bill C-342.
A key component of the government's pan-Canadian framework on clean growth and climate change is the commitment to put a federally regulated price on carbon pollution across the country in 2018. This commitment is based on the very basic principle of fairness under which every person or their representative must pay for what they use.
The provinces will be able to choose between two great options for implementing this initiative. The first is an explicit price-based system, for example, the carbon tax that is in place in British Columbia, or a hybrid system made up of a carbon levy and production-based pricing like in Alberta. The second option is a cap-and-trade system like those used in Quebec and Ontario.
The bill before the House would complicate things. Separating carbon taxes and levies from the total purchase price would make tax compliance more complicated and make the total purchase price less transparent.
Above all, this bill weakens our commitment to protect the environment more responsibly and fight climate change. The Government of Canada wants the tax system to be as fair and efficient as possible. If we want strong and sustainable economic growth that benefits Canadians as a whole, we must have in place a tax system that is fair for everyone, especially the middle class.
The GST/HST was always meant to be a consumption tax. Applying that tax to a broad range of goods and services not only makes it equitable, but also gives it the additional advantage of being simpler to manage and more efficient, which is undeniably of benefit to Canadian businesses and consumers.
Here is how the GST/HST works: it is calculated on the final sale price of many goods and services that Canadians consume and use every day. The final amount to which the GST applies generally includes other amounts charged, such as duties, the tobacco tax, and other gas and fuel taxes.
The main advantage of this general approach is that it is simple and predictable, which is better for Canadian consumers and makes it easy for Canadian businesses to calculate and collect the tax.
The final reason this bill does not achieve its goal is a financial one. When we look at the savings this bill would generate, we can see that not charging GST/HST on carbon taxes would have a negligible impact in the case of most fuels and little impact on buyers.
For example, eliminating the GST on the existing carbon tax, which is 6.67¢ per litre of gas sold in British Columbia, would bring the price of a litre of gas down by about 0.37¢, which is about 0.03% if the retail price is $1 per litre.
In Alberta, not charging the GST on the natural gas carbon tax, which will be an estimated $205 in 2018 for a couple with two children, would save about 85¢ per month, which adds up to $10.25 for that year.
Let us compare that to the major tax cuts we have introduced since December 2015. Nearly nine million Canadians are benefiting from the government's middle-class tax cut, and the new Canada child benefit means that about 300,000 fewer children are living in poverty now than in 2013.
That works out to a roughly 40% drop in Canada's child poverty rate. We also took non-tax measures to help Canadians retain more of their hard-earned money and plan for their future.
A year ago, the government took action to help people retire with dignity by strengthening the Canada pension plan. Thanks to a historic agreement between the federal government and the provinces, the maximum benefit will increase by about 50% over time. This real and meaningful action has a major impact on the lives of Canadians. This is in addition to our government's unprecedented investments announced in the last two budgets to help clean up communities and reduce their dependence on energy sources that cause air pollution, have harmful effects on the environment, and jeopardize our health.
We are continuing to work to develop a single, consistent, and comprehensive plan to improve the lives of the middle class and all Canadians, a plan that will yield better results than an ad hoc approach like the one proposed in this bill.
The tax treatment provided for in the bill we are discussing today is neither fair nor efficient. Furthermore, this plan is not consistent with the objectives and priorities we have set with respect to environmental protection. For these reasons, the government opposes this legislation.