Mr. Speaker, I am pleased to rise in the House to speak to the bill proposed by the member for Langley—Aldergrove.
Bill C-342 proposes to amend the Excise Tax Act to provide that any tax on carbon pollution that is imposed by a province be excluded from the total purchase price, and consequently that it excluded from the calculation of the goods and services tax or the harmonized sales tax, the GST/HST.
Although the hon. member has good intentions, the bill presented would unnecessarily complicate our tax system without providing any significant benefits for taxpayers.
The Government of Canada wants our tax system to be as fair and as effective 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 for the middle class, which is central to our economy.
Before taking time to explain the steps and measures that the government has taken in this regard, I would like to explore the consequences of Bill C-342 as proposed by the member.
The GST and HST have always been intended as a tax on consumption. 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 effective, which is undeniably of benefit to Canadian businesses and consumers.
This is how the GST and HST work: they are calculated on the final sale price of numerous goods and services that Canadians consume or use every day. I am sure that as consumers we are all subject to the tax. That final amount, to which the GST is applied, includes the other taxes, expenses and levies that may have been incorporated into the final price, such as customs duties, the tobacco tax, and other gasoline taxes.
The main advantage of this long-standing general approach is that it is simple and predictable, and that is good for Canadian consumers. It also means that it is easy to calculate for companies that do business in Canada and that it is easy for them to comply with it.
This bill would eliminate those advantages, but without offering any clear benefits in exchange.
The government believes that changes to tax laws are ideally considered to be part of the budget process, to ensure that they are consistent with the financial framework and the general uniformity of the tax system.
Making the tax system fairer and more effective is certainly an important objective of the current government. That is why, last year, we launched a broad review of tax expenditures. The objective of that review is to eliminate tax measures that are poorly targeted or ineffective. The review will also enable the government to identify cases where it would be possible to eliminate measures that unfairly benefit the wealthiest Canadians.
Budget 2017 brings in the first measures intended to implement the changes that came out of the review of tax expenditures conducted by the government. That review identified opportunities for making existing tax measures more effective, fairer, and more accessible to Canadians.
In this regard, budget 2017 provided for measures to improve the tax relief offered to family caregivers, students, and persons with disabilities. Tax fairness is a complex objective that calls for ongoing engagement on several fronts. As the government’s work in this area progresses, it will continue to aim for a fair tax system that benefits the middle class and those who are working hard to join it.
As our Minister of Environment and Climate Change has stated clearly before, pollution is not free. A successful climate change strategy puts a price on pollution, enabling Canadians to make choices about their consumption habits to ensure these choices do not come at the expense of our environment. Separating the carbon tax from the total purchase price would instantly make tax compliance more complicated.
A central component of the government's pan-Canadian framework on clean growth and climate change is the increase of nearly $2,300 in tax-free child benefits this year. We have also taken steps outside the area of taxation to help Canadians keep more of their hard-earned money and plan for the future.
A year ago, the government acted to help people retire with dignity by strengthening the Canada pension plan, reaching a historic agreement with the provinces that will increase the maximum benefit by about 50% over time.
These are real, significant actions that decisively and definitely impact the lives of Canadians.
Add to that the government's historic investment through our previous two budgets and last year's fall economic statement. These investments will help communities become cleaner and less reliant on sources of energy that pollute the air, harm the environment, and compromise our health and the future of our children.
We continue to work toward executing a single, cohesive, and comprehensive plan to improve the lives of middle-class Canadians, a plan that will achieve more than an ad hoc approach like the one proposed in this bill. Commitment to pricing carbon pollution across the country by 2018, which is in line with the federal benchmark, is based on a very basic principle of fairness: people or their proxy must pay for what they use.
When it comes to implementation, provinces that have not already done so have two broad choices. The first is an explicit price-based system. It might be a carbon tax like the one in British Columbia or a hybrid approach composed of a carbon levy and an output-based pricing system, such as the one that is in place in Alberta today. The other possibility is a cap and trade system such as the one here in Ontario and in Quebec.
The final reason the bill falls short of its intent simply comes down to dollars and cents. When we take a closer look at the savings this proposed legislation might achieve, we find that the impact of removing GST/HST on carbon taxes or levies would be relatively negligible for most fuels and would have little impact on purchasers.
For example, removing the 5% GST on the current 6.67¢ per litre carbon tax on gasoline sold in British Columbia would reduce the price per litre of gasoline by about three-tenths of a cent. On a 50-litre fill-up, the amount of relief would be only 15¢. In Alberta, removing the 5% GST on the estimated cost of $205 for the carbon levy on natural gas in 2018 for a couple with two children would result in savings of about 85¢ per month, or $10.25 in that year.
Let us contrast that with the meaningful tax cut that the government introduced shortly after taking office in 2015. Through the middle-class tax cut, nearly nine million Canadians saw a drop in their personal income taxes. Single individuals who benefit are saving an average of $330 each year, and couples who benefit are saving an average of $540 each year.
With the introduction of the Canada child benefit plan, which has been in effect since July 2016, nine out of 10 Canadian families with children will receive an average tax cut that is extremely significant.
The bill before us today proposes a tax treatment that is inefficient and fails to support our environmental objectives and priorities. We are proposing to move forward in a clear and cohesive way in co-operation with provinces and municipalities while making sure the middle class and those trying hard to join it are properly protected through a fair and equitable tax system.
For these reasons, the government opposes this legislation.