Yvan Loubier

[Family Trusts, May 28th, 1996]

Mr. Speaker, my question is for the Minister of National Revenue.

It is now official, we have learned this morning that the ruling made by Revenue Canada in 1991, which allowed one of the wealthiest families in Canada to transfer $2 billion in assets to the United States without paying a cent in taxes, may actually have created a precedent. This morning, the deputy minister of revenue stated that hundreds of millions, if not billions, of dollars may well have evaded and still be evading taxes.

Is the minister of revenue prepared to admit today that, contrary to what she said two weeks ago, the situation does require urgent attention and that the time to act is not sometime next fall, but right now?

[Income Tax Budget Amendment Act, May 27th, 1996]

Mr. Speaker, I shall resume my demonstration where I left off when I was interrupted by question period. I was trying to make taxpayers in Quebec and Canada understand why we oppose Bill C-36 which is implementing certain measures announced not in the finance minister's latest budget but rather in the 1995 budget.

We were noting earlier that many of the measures contained in this bill and in the 1995 budget were merely ad hoc measures relating to some small and often insignificant aspects of corporate taxation. Let me give you an example.

Last year, the Minister of Finance told us: "I am pleased because my 1995 budget will ensure that corporations, and large corporations in particular, the big companies, pay more taxes. The relative amounts paid by taxpayers versus businesses-small, medium and big in particular-will be readjusted".

One of the measures announced with great pomp to restore equity and efficiency to the corporate taxation system was a special tax whereby $160 million would be collected from Canadian banks.

Before going any further, I would have two remarks to make on this subject. First, this special tax of $160 million is ridiculous, given that last year major Canadian banks made record profits of close to $5 billion. Second, it is also ridiculous that, in Canada, major banks, financial institutions and corporations, as well as very rich families, can take advantage of the tax system's flaws, flexibility and loopholes, as shown by two recent scandals.

There always has to be a scandal somewhere. In the first part of my speech, I referred to two major scandals that were uncovered: one by the Auditor General of Canada, the other by the prestigious Toronto Star .

The auditor general was very clear. Through family trusts, a system which the Bloc Quebecois, the official opposition, has been condemning since it arrived in this House, two family trusts were able to transfer $2 billion to the United States, without paying one penny in taxes on capital gains, $2 billion.

The second scandal, which involves, indirectly if not directly, major Canadian banks, was exposed on May 9 by the Toronto Star . The newspaper got hold of a Revenue Canada study which had been released shortly before to a select group and which stated that, in 1991, tax evasion amounted to no less than $60 billion. In other words, no less than $60 billion left Canada, possibly to be invested in countries deemed to be tax havens.

Since then, there has been no major change in the way capital gains are taxed, even though we have been asking the Minister of Finance for almost three years now to take action and to overhaul the tax system. We are not talking peanuts here. When you think that $60 billion in assets in 1991 alone were moved out of the country tax free, as if by magic, and there was nothing that could be done because of weaknesses in Canadian tax law, and also because of weaknesses with respect to relations between Canada and the so-called tax havens. You know what that means. That means that taxes not collected on this wealth must be found somewhere else.

Since his first budget in 1994, and even more so since his 1995 and 1996 budgets, the finance minister has been trying to get this money from the taxpayer, through various means, first, by cutting transfers to the provinces for welfare, postsecondary education and health. It is always the same taxpayer getting hit. But because the minister has not taken a firm approach to tax reform, he must make up the shortfall through other cuts.

While these wealthy Canadian families and big businesses are taking advantage of tax loopholes, the Minister of Finance will be

making up the shortfall by dipping into the unemployment insurance fund, in complicity with the Minister of Human Resources Development, who certainly showed us how little he cared today. He will use the contributions of workers and employers to make up for what others are not paying. That is Canada's so-called fair tax system.

The Toronto Star focussed on certain interesting points concerning this $60 billion tax evasion, one of which was that the bulk of these transactions were linked to the major Canadian banks.

We in the official opposition are not surprised by this. We have nothing against the big banks, but they must behave like good corporate citizens as far as taxes are concerned. For the past two and a half years or so now, we have been criticizing the fact that Canadian banks have about 46 branches in the Caribbean alone, this area being considered the ideal tax haven. Why do they have these 43 or 46 Caribbean branches, twice as many as they have anywhere else outside of Canada? This is not right.

And now we see why. With branches in these countries which are considered tax havens, it is easy to take advantage of the weakness of the tax agreements signed with those countries and to ensure that profits are not taxed at the fair rate they ought to be.

As I recall, when the Minister of Finance tabled his budget in 1995, the one that has given rise to this Bill C-36, he said: "We have taken drastic measures against the major Canadian banks. We will be imposing a special tax of $160 million on them". Do not make me laugh. The Minister of Finance should stop trying to be funny.

This concerns us, because it took two scandals, one involving $2 billion and another involving $60 in tax evasions, flights of capital abroad, for the Minister of Finance to decide finally to give the finance committee openly, not behind closed doors, the task of reviewing corporate taxation and particularly taxation of capital gains.

We on the other hand will continue to monitor very closely the Minister of Finance's accession to the demand we in the Bloc Quebecois have been making since our arrival here. The experts who will be working with the finance committee, with the elected members on the committee, were appointed by the minister at the time of the latest budget. Some of them at least may be clearly in a conflict of interest.

Some of them work for firms advising major Canadian families, Canada's wealthy families, along with large companies on ways to take advantage of tax loopholes, on how to make transfers like the one we saw involving family trusts, where $2 billion was moved to the United States without being taxed, or the $60 billion in tax evasions reported by the Toronto Star . My feeling is that the official opposition, and all members of this Parliament, will have to be extremely vigilant.

As far as we are concerned, we are not prepared to take any chances with the review process; it is far too important to us. The well-being of taxpayers in Quebec and Canada is far too important to us to allow the continued protection of tax loopholes that benefit large corporations and wealthy Canadian families at the expense of Canadian taxpayers.

What we intend to do is to scrutinize the taxation system in order to be able to oppose arguments of our own-on behalf of the official opposition and on behalf of the people of Quebec and Canada-to the arguments put forward by these eight experts, a number of whom are in conflict of interest.

However, there are two positive measures contained in this bill. See how seriously we do our job in the opposition. The first one deals with business numbers and allows Revenue Canada to exchange business name and address information with other federal government departments and the provinces. As part of the effort to have corporations actually pay their fair share of taxes, I think that this measure may prove positive.

The second measure deals with interest rates applicable to unpaid taxes. It is a good idea to increase the rate of interest on taxes payable to encourage speedier payment, but we were hoping the government would take our advice. Ever since we were elected to the House of Commons, in 1994, we in the official opposition have been suggesting that resource levels should be increased at Revenue Canada to really go after those whose taxes are unpaid.

Since 1994, we have been told over and over again by the Minister of Finance that additional resources would be provided because, year after year, approximately $6 billion in taxes payable to the Canadian government remain unpaid. That is a lot of money. For all the conviction shown by the Minister of Finance and the many promises made by the various revenue ministers, out of $6.4 billion in unpaid taxes, $200 million has been recovered on average every year for the past two years. That makes no sense.

Government must be streamlined. We in the official opposition were the first to say that downsizing is required across government. But the idea is not to blindly make cuts across the board, downsizing to the same extent everywhere. Some departments, including Revenue Canada, might benefit from additional resources to recover more revenue, to recover more than $200 million out of $6.4 billion in unpaid taxes. This does not make any sense. The money is not in dispute. Taxpayers-most of them rich people, since the average amount of taxes owed has increased considerably over the last eight years-do not dispute these amounts. They know they owe the money to Revenue Canada, but the federal government does not invest in the necessary resources to go and recover it.

It might not be a bad idea to do like the Government of Quebec did and to get the additional resources necessary to recover these

unpaid taxes. These initiatives are about the only two positive measures in the 1995 budget that I see in Bill C-36.

I can tell you, as we did in 1995 when the Minister of Finance brought down his budget, that we will oppose Bill C-36. First, it does not go far enough in terms of a true reform of corporate and capital gain taxes. Instead, this government condones, through its laxness, the loopholes, the tax evasion schemes, and the fact that very rich taxpayers or corporations do not pay their fair share to Revenue Canada.

We will also oppose the bill because, in spite of the two minor initiatives to which I referred, most of the measures, particularly those that concern family trusts, are just a joke.

The government tells very rich Canadian taxpayers: "You have four years to invest your assets in other financial vehicles that will allow you to save taxes". This is a rather cavalier way of dealing with the issue of family trusts, particularly since we learned, from the auditor general, that at least two trusts transferred $2 billion to the United States without paying any taxes.

It shows an obvious lack of determination on the government's part to take action to make very rich Canadian families and major corporations pay their due to Revenue Canada, as do small businesses and individual taxpayers. This situation is totally unacceptable. For all these reasons, and for those mentioned before question period, I will ask members of the official opposition to vote against Bill C-36.

[Petitions, May 27th, 1996]

Mr. Speaker, I am pleased to table in this House a petition signed by 2,000 residents of Saint-Pie-de-Bagot and Saint-Damase, or half the households of these two municipalities.

The people of Saint-Pie and Saint-Damase are asking Bell Canada to modernize its network, which is totally obsolete in terms of security and competitiveness. The petitioners are asking the Canadian Parliament to intercede on their behalf with the CRTC to urge Bell Canada to modernize the Saint-Pie and Saint-Damase telephone networks so that citizens can enjoy adequate service.

I therefore table this petition and thank the mayors of the municipalities and parishes concerned as well as the economic development corporation for their support in this large scale operation.

[Goods And Services Tax, May 27th, 1996]

Mr. Speaker, it is not right for the federal government to pay almost $1 billion to the maritime provinces, with taxpayers' money, without providing details on anticipated revenues, harmonizing costs and the impact of expanding the tax base to include services. It does not make sense. This is the information that the Quebec government has been asking since the very beginning.

I think the Minister of Finance made a mistake. He may have a chance to correct it. Why does he not delay any decision on the GST until the next finance ministers' meeting, on June 18? He will then be able to make, in concert with the provinces, a good, transparent and fair decision on the harmonization of the GST, at no cost for Canadians.

[Goods And Services Tax, May 27th, 1996]

Mr. Speaker, since the federal government announced the $1 billion agreement reached with the three maritime provinces concerning the GST, protest has been growing stronger, particularly in Quebec, Ontario and Alberta. While federal-provincial relations are deteriorating over this issue, and many others, the Minister of Finance stubbornly refuses to make the details of the agreement public.

My question is for the Minister of Finance. Will he lift the veil of secrecy surrounding the details of the agreement with the maritime provinces, so that, at last, we can all know how and at what price he managed to reach this partisan agreement regarding the GST?

[Income Tax Budget Amendment Act, May 27th, 1996]

Mr. Speaker, I am happy to participate in the debate at second reading of Bill C-36, an act to implement certain provisions of the budget-not the last one tabled by the Minister of Finance, but the 1995 budget.

First of all, regarding the government's behaviour, it is quite remarkable that, more than one year after tabling a budget, the government reintroduces provisions that had been announced at that time while focusing on beneficial measures from the 1995 budget, which may appear small but which are in fact magnified a thousand times. This amounts to doing the same thing twice so as to heap praise on the government and the Minister of Finance. I think the secretary of state has become an expert on this.

In the next few minutes, I will go over four of the measures in this bill which are especially important. I will talk about two positive measures on which the official opposition agrees with the government, and about two measures which, in our opinion, are highly detrimental.

I will first approach Bill C-36 in a general way. When one compares the measures in this bill with the responses given by the Minister of Finance since the 1995 budget, it is like water and fire, like night and day.

Since the 1995 budget and again recently, the Minister of Finance has often told us: "Since the 1995 budget, and even since the 1994 budget, I have put in place tax reform measures to make the Canadian tax system more effective, to correct the inequity, the imbalance between businesses that pay no taxes and those that pay taxes every year. Since my 1995 budget in particular, I have taken steps to correct inequities between individuals who pay too much tax and some businesses that do not pay any".

We in the official opposition say again to the Minister of Finance that he has done nothing to make the Canadian tax system more equitable. He has done nothing to make global or specific improvements to the Canadian tax system since taking office, since his first budget in 1994 even. He has done nothing to close tax loopholes, and this lack of action, this laissez-faire attitude is apparent in Bill C-36.

Since this bill contains measures relating to tax deferral and corporate income tax, why did the minister not take the opportunity, in preparing to table his budget, to truly reform our tax system, as we have been requesting ever since we were elected to this place?

If those are the measures on the basis of which he boasts day in day out to have "plugged the tax loopholes", it is clear-plain as day, as we would say back home-that it makes no sense whatsoever. Referring to tax deferral measures, he claimed to have fixed the problem, rectified the inequity in situations where a corporation could defer tax, perhaps indefinitely, in combination with accelerated depreciation for instance, so that it never paid a cent in taxes. He claims to have resolved the problem. He keeps referring to the 1995 budget.

What does the 1995 budget provide for on the particular matter of tax deferral? According to this budget, any corporation that is not a business corporation must end its financial year on December 31 instead of carrying income forward 18 or 24 months.

That is not it. If that is the finance minister's basis for stating: "Indeed, we have managed to ensure that all corporations pay the tax they owe", it is skimpy. Very skimpy in fact, as it does not even meet one tenth of the target the Minister of Finance claims to have met.

This is so remote from the actual objective that recently, when the issue of the capital gains tax was raised, the Toronto Star showed the weaknesses of the Canadian tax system, including loopholes that were in no way eliminated by the finance minister, whether through Bill C-36 or even the February 1994 budget. The Toronto Star wrote that a Revenue Canada report''-not a Bloc Quebecois report, a Revenue Canada report-released last month indicated that, in 1991, assets worth some $60 billion-that is a lot of money, a lot of wealth-left Canada without the department being able to identify the origin and destination of this money''.

The Toronto Star suspected that these $60 billion worth of Canadian assets had been secretly transferred to tax havens, thanks to the permissiveness and flexibility of the Canadian tax system. Mr. Speaker, we are talking about $60 billion worth of assets.

If this was the case in 1991, if no corrective measures were taken, if the Minister of Finance only kept telling us that we were wrong, that the Canadian tax system was good, that it was airtight and that we could rely on it to prevent capital flight and outright tax

evasion schemes such as the ones mentioned in the Toronto Star , then we have a problem.

A number of parties, including the major Canadian banks, were identified as having taken part in this massive tax evasion scheme.

We keep repeating to the Minister of Finance, the Prime Minister and the former and current revenue ministers that it is not normal that major Canadian banks have some 46 branches in Caribbean countries alone, which are considered to be tax havens. It is not normal that these banks have twice as many branches in the Caribbean as in the rest of the world.

Now, we learn that, as regards the tax evasion scheme whereby $60 billion worth of assets left Canada, a finger could be pointed at the major Canadian banks.

Everyone in Quebec and in Canada knows that the official opposition energetically accused the government of being too soft and decried the tax loopholes, by pointing out the opportunities for the businesses and the banks, as well as some of the richer families in Canada, to avoid paying their share to Revenue Canada. Even if the Minister of Finance said: "You are exaggerating. It all amounts to a few dozens of millions of dollars", we now know that billions of dollars, as stated in a Revenue Canada report, could leave the country and dodge income tax, that is evade the Canadian tax system.

We now have the evidence. The Minister of Finance was proud of his 1995 budget as reflected in Bill C-36. He even told us that there were no problems.

The government has made quite a few blunders, Mr. Speaker. An unkept promise about the GST; what amounts even to the most federalist of Canadians to a $1 billion partisan agreement to buy the maritime provinces; the many more blunders on constitutional issues. Now, with flights of capital of such magnitude, we realize that the Minister of Finance did not improve the tax system. This all adds up to a lot of bad points for the government.

So much for the overall approach. Let us now examine the more specific measures.

Bill C-36 deals in part with family trusts. The Minister of Finance is not a fast worker, since it took him more than a year to implement last year's budget. In 1995, the Bloc Quebecois called the Minister of Finance a "stand-up comic" and said that the minister was putting up smoke screens.

The Minister of Finance pretended to address an issue that is close to the hearts of the official opposition members, because it is quite a scandal, and said: "We have taken some measures concerning family trusts". You can take any measure on any possible issue and still not do your work, and that is exactly what the Minister of Finance did in 1995.

He said he was going to amend the rule allowing taxes on assets held in family trusts to be deferred, a rule that had been amended by the previous government and that allowed a taxpayer to defer taxes up to 80 years. Under the provisions of this rule, it was possible to defer tax on capital gains until the death of the last exempted beneficiary.

The Minister of Finance told us this would be corrected and we would go back to the old rules. We were happy, because under the old rules you had 21 years, which, while not perfect, was better than 80. At least after 21 years, taxes were paid on billions of dollars worth of assets that were accumulating in family trusts.

But the Minister of Finance immediately followed this up with the announcement that the 21 year rule would not take effect until 1999. If you were a trustee, if you had billions, tens of millions, even hundreds of thousands of dollars in a trust, what would you do? I ask the question and I will give the answer. I think you would investigate all the fiscal options open to you with a view to minimizing the tax you had to pay to Revenue Canada.

The Minister of Finance has given very rich Canadian families and large businesses, which also use trusts, an opportunity to analyse all the financial and fiscal vehicles available, and he has given them four years to transfer their money from family trusts to other vehicles, or worse yet, outside Canada.

When we voiced our objections, the Minister of Finance said: "Well, what do you expect, the official opposition is just a bunch of separatists". The usual attack, and the usual rhetoric we have come to expect from this government. There always has to be a scandal somewhere, something has to happen. Even though we have been saying and shouting for two and a half years that the government is losing hundreds of millions if not billions of dollars in taxes, it always takes a bombshell for the government to finally see the light.

This bombshell came three weeks ago when the auditor general said that two family trusts had transferred $2 billion worth of assets to the United States without paying any taxes on these assets. The finance minister said that family trusts were not a problem, that he would deal with that but we had to give him four years to do it. That meant we had to give Canada's richest families, like the ones that transferred $2 billion worth of assets to the United States, four years to find ways not to lose money.

But the ordinary Canadian taxpayers will pay. They are the ones who will pay for those $2 billion that were transferred to the United

States tax free because of this government's laxness. Taxpayers will pay, consumers will pay, unemployed people who are the victims of this government's cuts in the unemployment insurance fund will pay. It is outrageous.

Considering the sacrifices that ordinary Quebecers and Canadians are being asked to make, that the real taxpayers who are supposed to be represented by the members of this government are being forced to make, we will continue to ask not only that the issue of the 21 year rule be dealt with, but also that the appropriateness of maintaining an instrument such as family trusts at the expense of Quebec's and Canada's real taxpayers be looked at.

A second aspect of Bill C-36 which has something indecent about it. The Secretary of State was saying this morning "As a government, we have met our responsibilities. We have taxed the major chartered banks. We have levied a special renewable $160 million tax".

There is a special tax of $160 million on the chartered banks, banks which have amassed some $5 billion in profits. Yet those banks, if we can believe a Toronto Star article which reports on the contents of a Revenue Canada report on tax evasion and refers to the $60 billion in assets siphoned off to the U.S. and just about everywhere else, are not paying the federal government, Revenue Canada, its just dues. They are taking advantage of tax loopholes to transfer part of their untaxed funds into branch operations, particularly in the Caribbean. As I have said, there are 46 of these. It is easy for them to plan their affairs so as to pay the minimum in taxes.

Mr. Speaker, since you are indicating that I have two minutes left, I will end with this measure and continue after question period. The banks are being hit with $160 millions in taxes-a temporary measure-when, at the other end, there is $60 billion in tax evasion and $2 billion that went to the United States untaxed through family trusts.

We should compare the $160 in special tax on the banks to the billions it is costing Quebecers and Canadians with the restrictions in unemployment insurance, for example, and with the cuts to social assistance, post-secondary education and health. I think Quebec and Canadian taxpayers will realize that this government is working, but not necessarily in their best interest. It is working more for big business; for the powerful families, like those that succeeded in transferring $2 billion through family trusts without paying tax; and for certain financial institutions, including the banks. I will return to this in my analysis of Bill C-36.

[Budget Implementation Act, 1996, May 27th, 1996]

Mr. Speaker, my colleague caught me a bit by surprise. He usually takes a lot more time to explain things. With all the nonsense he said in the last part of his speech on Bill C-31, about us, separatists, acting in bad faith, I was hoping his speech was going to take much longer. However, I have to admit that he caught me by surprise.

I am pleased to take part in the third reading stage debate on Bill C-31, a piece of legislation the official opposition considers very important, especially-and here is what I want to focus on-the part dealing with the compensation paid to three maritime provinces within the partisan initiative launched by the Minister of Finance to harmonize the GST in that region of Canada.

Before tackling head on this compensation issue, I want to go over some historical facts about the GST, although this part of our history is recent, well, maybe not so recent, since it only dates back to the time the Liberals were in the opposition, but that is still a part of our history which is, in my view, full of contradictions and cover-ups about the commitments made by the Liberals concerning the GST. When addressing such an issue, I think it is always important to remind the people of Quebec and of Canada of the many commitments made by the current government.

First of all, let me remind the House that, when the Liberal Party of Canada was in the opposition, when its representatives were sitting on this side of the House, they energetically decried the new goods and services tax introduced by the Conservative government. At the time, how many Liberal members made a big fuss and even raised quite an uproar just to condemn this Conservative policy? Even during the election campaign, at the end of which 54 members of the Bloc Quebecois were elected and now sit in the official opposition, the current Prime Minister made some pretty clear commitments concerning the GST. He said that it was out of the question for him to keep the GST if he ever was elected head of government.

I remember that, four or five months after he was elected, the Prime Minister even said, I think it was on May 2, 1994: "We hate it and we will kill it". There are people in Quebec as well as in Canada who voted for the Liberal Party because they hated this tax, because they believed in the commitments of Liberal members, because they believed that the Liberals, then in the opposition, were going to fight this tax with all their might and eventually, as the Prime Minister and many officials had promised-including the Deputy Prime Minister who was forced to resign lately because of this promise-because they believed that the Liberals were going to abolish the GST as promised. Instead, the government is resorting to the usual smoke screens and introducing the first phase of an in depth reform of the GST signed by the three maritime provinces, that is, New Brunswick, Nova Scotia and Newfoundland.

Not only is this in complete violation of the Liberal election promise but this agreement, this vague attempt at a reform of the commodity tax will be extremely costly for all Quebecers and all Canadians. Why? Because the agreement announced approximately one month ago but the technical details of which have not been released yet provides for the payment to the three maritime

provinces of a $961 million compensation over the next four years, that is, almost $1 billion.

This is $1 billion that all Quebecers and all Canadians outside the three maritime provinces will have to pay to compensate for a loss of revenue due to the harmonization of the GST, to this vague attempt at a reform, to this mockery of an attempt at keeping their words by the Liberal Party of Canada, when they had in fact promised to kill the GST.

The government is spending $1 billion to make us believe that it is doing something about the GST. One billion dollars to make the GST disappear, not disappear in the true meaning of the word, but to hypocritically bury it in the price of products in the three maritime provinces. Frankly, it is unacceptable.

That is not what Quebecers and Canadians had understood during the election campaign. In fact, two government members resigned recently precisely to show that the Liberal government did not fulfil its promise, its campaign commitment to abolish the GST. These two Liberal members had the courage of their convictions and decided to inform the public that they could not live with the fact that their party did not fulfil its promise when it signed that agreement with the three maritime provinces.

What precisely are the terms of this agreement? Just like the Government of Quebec, the Government of Alberta and the Government of Ontario, we tried to know the exact terms of the agreement the federal government concluded with New Brunswick, Nova Scotia and Newfoundland. We tried to get the details, but all our efforts have been fruitless. Why is the Minister of Finance hiding the exact terms of this agreement from the people of Canada?

We know, in general terms, that the compensation principle applied by the federal government is as follows: the federal government decided, unilaterally, that the provincial sales tax and the federal GST together could not be more than 15 per cent. It has also decided unilaterally, without any consultation, that it would compensate the maritime provinces if the provincial sales tax and the GST combined exceeded 15 per cent. If you look at the three maritime provinces, you will see that the PST and GST combined are just over 19 per cent.

So the federal government has decided unilaterally that the new harmonized sales tax would not exceed 15 per cent and that it would compensate the provinces for the difference between 15 per cent and 19 per cent. The federal government has decided to compensate the governments of the three maritime provinces for this loss of four percentage points in sales tax, even though it represents tax relief for consumers in these provinces.

How did the government estimate this loss? We do not know. We do not know where it got the figures with regard to tax revenues and to the cost of this harmonization exercise, but the finance minister is asking us to trust him, to give him a free hand, just like he does every time he makes deals behind closed doors and then imposes these things upon us, begging us not to ask too many questions. He is telling us to trust him.

The government is giving close to $1 billion to three maritime provinces for a partisan policy, a policy whose sole purpose is to show that the government is doing something about the GST. Do you not think it is a bit expensive? Do you not think it is expensive for Canadian taxpayers outside these three maritime provinces and also for Quebec taxpayers? Between $200 and $250 million of that sum will come from Quebecers. And the remaining $700 million will come from taxpayers from the rest of Canada.

If, in the opinion of several government representatives according to a member of the Liberal Party, we have to pay such a price every time we need to harmonize policies, every time we need to improve the economic and commercial operation of the federation, I wonder what is the value of the federalism these people have been defending desperately since we have come to this place. I wonder what it is worth if a part of the population of Quebec and Canada have to pay such a price every time people on the other side of the House want to improve the tax system.

I will quote someone I do not quote often because our ideas rarely coincide, particularly on constitutional matters. However, I want to quote the chief editorial writer of La Presse , Mr. Dubuc, who, of course, supported our point of view last week-end when he wrote: ``The federal government and its Minister of Finance made a huge blunder when, in order to convince them to harmonize their sales tax with the federal GST, they promised the Atlantic provinces to give them $960 million''. That was written by Alain Dubuc.

He added: "The Chrétien government had to buy them to convince them to adopt the GST system because he absolutely needed their support to be able to claim that he replaced the GST with an harmonized tax of 15 per cent. In other words-and I am still quoting Alain Dubuc from La Presse -$1 billion in public funds were spent in a partisan way for the sole purpose of allowing the Liberal government to claim that it was fulfilling its promise''.

Seeing the official opposition in agreement with Alain Dubuc is like, in Quebec, seeing Gérald Larose in agreement with Ghislain Dufour. Suffice it to say that opposition to the Liberal government's ridiculous GST policy is pretty much unanimous.

More and more Canadians are saying no to this sort of short sighted policy, this one step at a time strategy of claiming successes at various levels. I would say the Liberal Party is a past master at this game.

Quebec harmonized its provincial sales tax with the GST in 1991 and has had one system since then. The two systems of taxation were combined, with one administrative body, the Government of Quebec, administering its own sales tax in addition to the goods and services tax for the federal government. It did not cost the federal government one red cent, except, of course, what it understandably pays for relying on the services of the Government of Quebec to administer the federal goods and services tax.

There was never any question of the sort of compensation that is part of the agreement between the three maritime provinces and the federal government. Why was that? Because in Quebec, everyone recognized-business and the public alike-that some degree of harmonization was necessary in order to facilitate commercial transactions and the operation of the economy. We understood that and we did not need a $1 billion nudge from the federal government. We understood that and we did not need to be bribed to improve the Government of Quebec's system of collecting and administering taxes.

Why must there now be compensation of close to $1 billion for three provinces that are very cosy with the federal government? Why must Canadians in other provinces and Quebecers be made to pay for this local agreement between the federal government and the three maritime provinces? There is something not right about this policy.

Quebecers and Canadians need to understand what the federal government might do for these three provinces further down the road. Not only is there compensation of close to $1 billion paid for nothing-partisan compensation from federalists who normally support this government-but, furthermore, four years from now when the federal compensation comes to an end, it is not impossible, and it is even probable, that equalization payments will take over where the federal government's subsidy leaves off.

Why is this likely to happen? Why must Quebecers and Canadians alike see hundreds of millions of dollars more added on to this bad and partisan contract between the federal government and the three maritime provinces in the next few years? For a number of reasons.

I shall not go into the complex details of the equalization formula, but allow me to give an overview of how it works.

There is an equalization system in Canada, which affects certain provinces, including Quebec, in order to ensure that the poorest provinces, the ones which cannot raise sufficient tax revenues to ensure equivalent levels of services from east to west in Canada, can provide those services. When a complex formula is applied to calculate the taxation base for each province, the ability to collect taxes, this is where equalization payments come in for the poorest provinces.

One of the criteria for applying equalization payments is the tax base. In other words, if a province or provinces-in this case the three maritime provinces-have their tax base reduced by a federal policy related to the changes in the GST, equalization kicks in automatically to replace this reduction in the tax base.

In other words-returning to what was said at the beginning-at this time, when you take the average of the sales taxes in the three maritime provinces and add the GST, you get a taxation rate of over 19 per cent. The Minister of Finance decided it would be 15 per cent in future, so he is lowering the three maritime provinces' tax base by more than 4 points, more than 4 per cent. By doing so, however, by voluntarily reducing consumption taxes by 4 or 5 points, under a partisan agreement that hits all taxpayers in the pocket book, the equalization formula will necessarily kick in because the tax base has been lowered.

Once the $961 million are paid to New Brunswick, Newfoundland and Nova Scotia, there is a mechanism which will force all Canadians and Quebecers, with the exception of the Atlantic provinces, to continue to pay this average compensation, hundreds of millions of dollars through equalization payments, because the Finance Minister has decided, in the name of the government, to show off. By doing this he wanted to prove that his government is going ahead with the tax reform, that it has begun to hold its promises on the GST. In fact, the government is doing no such thing since it had actually promised to abolish the GST once in power.

This agreement is getting costly. First of all, it settles nothing, in terms of sales tax harmonisation. There is still going to be a sales tax and there is no single system for the consumption tax in Canada. Second, equalization will come into play in the coming years to add to the first billion dollars paid by the federal government. Third, there is this whole mess created by the finance minister and the government through this agreement.

As if the constitutional muddle he created was not enough, the Prime Minister added to it, through the finance minister, by signing secretly, behind closed doors, this agreement on the GST with three Atlantic provinces, knowing full well that Quebec had harmonized its tax in 1991, at no cost. They did not boast about it. When Quebec costs nothing and Quebec is the most efficient and even one of the most effective partners in the Canadian federation in

trade and economic terms, they try to keep it under wraps, because the nasty separatists do not make good trading partners in this federation.

We are trying to find out more about this agreement. We are trying to find out more about the subject of our remarks this morning, that is, the part of Bill C-31 on the $961 million in compensation paid to the maritime provinces. What is distressing, however, is that we have had no response from the government. We asked for the detailed agreement between the federal government and the three maritime provinces. And we, the Bloc Quebecois, the official opposition, are not the only ones to ask for it. The Government of Quebec asked for it, as did the governments of Ontario and Alberta. Instead of responding, making things clear and revealing the details of the agreement, the Minister of Finance hid behind terms that needed tidying up, saying it would have to wait until next year, perhaps.

This is unacceptable. The Minister of Finance signs an agreement with some members of the Canadian federation that costs us $1 billion, and he refuses to tell us how he reached the figure of $1 billion. This is not normal. He will say: "You know the details. Sales taxes are at approximately 19 per cent in the maritimes at the moment. I have decided unilaterally that the combined tax, the new GST, will be no higher than 15 per cent, and I have decided to make up the difference".

There are a number of other questions the Minister of Finance is refusing to answer. The first one that comes to mind, which I mentioned earlier, concerns the real cost of the agreement. We are not talking simply about $961 million. There are other implications in terms of equalization payments.

The second question is: "How were the calculations made?" Any figure can be arrived at, it is only a matter of working from solid assumptions. But on what basis, on what assumptions was this deal with the maritimes reached, and how was the famous figure of $961 million arrived at?

For example, what is the anticipated revenue from the new goods and services tax in the three maritime provinces for the coming years? Do we at least have projected revenue for 1997-98, 1998-99, 1999-2000 and the following years? It is essential to know this. It is essential because, in addition to reducing the rate in the maritimes from 19 per cent to 15 per cent on average, the tax base has been extended, the new tax has been extended and will from now on apply to services in New Brunswick, in Nova Scotia and in Newfoundland. What more will this bring in, in terms of revenue? Is the extension to services of a 15 per cent tax-which was not applicable to services before-going to generate so much revenue that it will compensate for the reduction of the present tax on goods from 19 per cent to 15 per cent?

It is important to know this. If this extension generates extra revenue, could it be, this is the third question, that the compensation of nearly $1 billion-$250 million and $700 million of which are paid respectively by Quebecers and people in other Canadian provinces-is not necessary? The Minister of Finance said that it was necessary. This is not the way to govern a country. This is not the way to inform the public about the activities of a government, about justified actions of a government.

People need to be given explanations, they need to know this kind of detail to be able to judge the appropriateness of this deal. For the moment, the impression we have-not only us but people like Alain Dubuc, who are not necessarily and even rarely on the side of the official opposition or the Bloc Quebecois-is that it looks suspicious. Not only does it seem partisan, we have indications that it really is, according to the consensus reached outside the maritimes, in particular in Quebec, Ontario and Alberta.

Another question deserves an answer from the Minister of Finance, namely: "What were the alternatives?" Considering what happened in Quebec, where both taxes were harmonized without it costing the rest of the country a single cent, where Quebec succeeded in balancing its tax base and found different ways of managing its taxation system effectively, how is it that no alternative was considered to the agreement reached between the Minister of Finance and the three maritime provinces?

Could it be that, if the Minister of Finance had done his homework, if it had not been only a partisan matter for the federal government, there could have been other ways of compensating for lost revenues in the three maritime provinces within their own taxation systems?

If the finance minister had acted properly, and had wisely and competently analyzed the evolution of the tax burden as well as the present tax burden of taxpayers in Nova Scotia, New Brunswick, and Newfoundland, he would have easily realized-it does not take a rocket scientist for that-that, by lowering the consumption tax from 19 per cent to 15 per cent with his new policy, he was doing them a favour.

However certain adjustments to the provincial income tax in these three provinces might have been necessary. Without increasing the total tax burden of people in these three maritime provinces, personal and corporate income taxes could have been slightly increased in these three provinces in order to offset the loss in revenue from the consumption tax. It would have been legitimate, efficient and normal since taxpayers in these three provinces will see their consumption tax reduced by four to five points over the next few years and, unless it is decided otherwise, forever.

Would it not have been more logical to find a local solution to a local problem of tax harmonization and efficiency? I think so, and I believe it does not take much figuring out to reach this conclusion. I believe that if the finance minister had really wanted to contribute to improved taxation and to the harmonization of a new tax across Canada, he would have gone about it differently. It would not have been difficult.

I am extremely disappointed by the government's handling of this issue. As I said before, until now we have not succeeded, just as the Quebec government and other provincial governments have not succeeded in obtaining details of this agreement.

Today, in this House, I would like to present the government with a formal request. Would it be possible to shortly obtain all the documents, not only the press releases and the media documentation, but also the technical data at the basis of the $961 million figure, the technical data which would support some sound projections on tax revenues in the maritimes and a cost projection for the harmonization?

When we spend $1 billion, it seems only reasonable that people know what they are paying for. Until now the finance minister's attitude has been outrageous. This scandalous decision comes after others like the $2 billion invested in family trusts which crossed over to the United States without a penny being paid in taxes on capital gains.

For two and a half years now, we have been asking the government to act on that issue. For two and a half years, we have been saying it is inadmissible, but the government does nothing; they sit there and say family trusts are unimportant. That is why $2 billion from two family trusts were transferred south of the border tax free. Today, the government realizes the problem and says maybe we should review the taxation system. For two and a half years, we have been saying that the taxation system makes no sense. Now the government is asking the finance committee to find a solution. It was high time.

To avoid repeating the mistakes due to its incompetence, why is the government not listening to the official opposition, the Government of Quebec, the governments of Ontario and Alberta, Canadians and Quebecers who are asking that it suspend the process leading to the payment of a billion dollars in compensation to three maritime provinces, and that the whole question of harmonization of the GST be submitted to the next meeting of finance ministers which is to be held around June 18?

It seems to me that the process would be somewhat more open if the government were to table all the relevant data relating to the GST and make them available to all representatives of the Canadian provinces and Quebec, so they could talk about it and find ways to improve the federal tax system and the provincial tax systems.

It seems to me that, for once, it would be nice to have the Minister of Finance follow his own logic. We are talking about harmony, not just harmonization, between the federal government and the provinces, but when the time comes to make concrete decisions, goodbye harmony. As my colleague from Rimouski-Témiscouata would say: poof! harmony.

It seems to me it is high time that, for such important questions regarding taxation of consumer goods and services, the Minister of Finance be more open, that he table the technical documents we request and, moreover, that he discuss this question of harmonization of the GST and provincial sales taxes with his provincial counterparts at the next conference. In the meantime, he should stop implementing processes like this one which involves payment of $1 billion in compensation.

I think that most Quebecers and Canadians would be better off if the Minister of Finance were to listen to us, for once, and stopped acting that way. For all these reasons, on top of asking for suspension of the payment of $961 million, I urge all my colleagues in the official opposition, in the Bloc Quebecois, to vote against this bill.

[Civil Air Navigation Services Commercialization Act, May 17th, 1996]

Mr. Speaker, I am very pleased this morning to have the opportunity to take part in debate at second reading stage of Bill C-20, an important piece of legislation to privatize Canadian airports.

As my colleague from Laval Centre mentioned earlier, the Bloc Quebecois is not against any privatization initiative that could improve the efficiency of airport management throughout the country. However, there is privatization and privatization. When privatization leads to security problems, as we saw recently in the United States when a ValuJet airplane crashed, then the Bloc Quebecois cannot give its assent. Also, when basic principles such as fairness and transparency are set aside, then again the Bloc cannot give its assent.

In the bill before us, two basic principles are violated. First, the local communities are not treated fairly. As for respect for the local communities, nothing in this bill leads us to believe that regional and local communities will have their say in the privatization process and the management of the airports in Canada, or will receive the information they need and be treated fairly and respectfully for what they are.

It is not surprising that this bill shows no concern for local communities. The former Minister of Transportation, now Minister of Human Resources Development, reacted the same way when the issue of unemployment insurance reform was addressed recently. He showed that he did not care about some local communities who depend on seasonal work, by overlooking the many concerns expressed by people from his own riding, people who live in these communities, who know them well, who are able to assess the bad decisions made by the government and the real negative impact they have on the local economies.

It does not surprise me that Bill C-20 reflects a lack of concern for local communities and that the government has turned a deaf ear to our numerous requests in this regard.

Such a bill should not only aim to ensure, directly in the mandate of this new organization created by the federal government-Nav Canada-air transportation in remote areas, for example, but also to advise local communities, which are the first concerned and the main clients of the air carriers, of any change in services-rates, frequency, schedules, etc.-and in air transportation equipment or infrastructure.

The bill is rather deficient as far as information to be provided to local people is concerned, since, according to the government, one notice only in a national newspaper like the Globe and Mail or Le Devoir , for example, should do. Thus, this group of motions, that is, motions Nos 4 to 12, aims essentially at ensuring one thing: information.

It is not normal that people living close to the airport in Mont-Joli, for example, should be informed in the Globe and Mail of changes that concern them. The normal and respectable thing to do would be to publish these notices of changes in the Mont-Joli local newspapers. Le Devoir would not be the normal vehicle for such a notice on the North Shore, since this newspaper is not that easy to find in that area.

Local communities should have a guarantee that they will receive notice directly, through their local media, of changes in the frequency of service, in the schedules, etc., or of more substantive chaanges such as the reduction of some services or even the closure of some airports. The same holds true for Native bands. It is not always easy to reach them, even through the local media. The band councils must be informed of the changes regarding local airports.

Today, information is not only a privilege, it is also a basic right, all the more so since the communities that will be the first affected by the changes made by Nav Canada are the local ones. It will not be the communities in major centres, where there is a larger density and frequency of services. This then becomes a necessity.

In this respect, let me praise the member for Kamouraska-Rivière-du-Loup for being sensitive to these issues, that is to say for insisting on service, respect and fairness for local communities. As you may know, our colleague, the member for Kamouraska-Rivière-du-Loup, is also the official Bloc Quebecois spokesman for a major organization in Quebec called Solidarité rurale, and I think it is much to his credit to have succeeded in making our party, our

caucus and our members more aware of the needs of local communities and of the respect we owe them.

It is more and more obvious that this government wants to carry out all its reforms by betraying the very principles it says it wants to protect. In the red book or the speech from the throne, much is made of respect for people, for rural communities and the people's decisions. But this government's actions give a completely different picture.

I was listening to the Minister of National Revenue who displayed such compassion for Canada's richest families. She said that there should more of them. In other words, she supported her department's decision, which allowed the transfer of $2 billion worth of assets in the United States absolutely tax free, without one cent of tax being paid on capital gains. She displayed a lot compassion for those families.

If her government displayed the same compassion for local communities and the needy, we would be one hundred per cent behind the government, but the fact is that there is an almost insurmountable chasm between what the government says and what it does.

Out of respect for local communities, for the human beings who live in these regions and who are the victims of the government's carelessness or of the cruel and inhuman decisions of the Minister of Human Resources Development concerning unemployment insurance, maybe we should, for once, be taking measures which favour them; in other words, we should give them an inalienable right to information when it comes to an important project such as the privatization of airports.

So this is the meaning of the motions moved by the Bloc Quebecois, and it can seem strange for people who live in Ottawa, Toronto, Montréal, Québec, Winnipeg, Calgary, etc., to call for these notices to be given in the local media, but for the people concerned, it makes all the difference between the pride of being who they are and the respect due them by government.

[Supply, May 16th, 1996]

Newfoundland voted twice.

[Supply, May 16th, 1996]

Against Quebec.