Madam Speaker, the reason why Quebec and other provinces entered into an agreement with Canada to harmonize sales taxes is very clear.
Instead of two taxes, there is only one; a single tax base, a single tax form and a single tax administration. For small and medium size businesses this means an end to the burden of overlap and duplication. This is the reason why Quebec entered into an agreement with Canada. Quebec acted in a very practical manner.
With today's motion, the Bloc is again shooting blanks. Its motion is based on the wrong assumption that harmonization of the Quebec sales tax and the GST was unfair to Quebec.
I would like to go over some facts which have been pointed out many times in this House over the last few years.
In a sense, what the Bloc is doing today is really business as usual, it is twisting the facts to try to discredit the federal system, a system which has no place in the separatists' future.
On several occasions, our government went over the facts with representatives of Quebec and explained to them why Quebec did not meet the objective eligibility requirements for adjustment assistance. Moreover, officials received a detailed technical brief on this subject explaining, among other things, our federal program.
In 1996, provinces were offered an adjustment assistance if they were willing to implement a value added tax which would be fully harmonized with the GST and who, as a result, would suffer significant losses in sales tax revenues. It has been clearly demonstrated that Quebec demands did not meet the factual eligibility requirements to get this kind of financial assistance.
In the preset formula, we consider that significant losses should be higher than 5% of sales tax revenues. The trigger level has been set at 5% for two reasons.
First of all, heavier losses between 7% or 8% would be too hard to factor in, and the revision of already established fiscal plans a difficult exercise. And losses of less than 5% are similar to normal revenue variations governments can adjust to when they reorganize their programs and services.
Secondly, the same percentage is used, and for the same reasons, in the federal stabilization program. With this formula, Ontario, Quebec, British Columbia and Alberta would not qualify for assistance. Sales tax revenue losses in Quebec would not have been high enough to warrant any adjustment assistance.
Actually, it has been just the opposite. Sales tax revenues in Quebec have increased significantly. Moreover, the stated goal of the Quebec sales tax initiative was not only to avoid any revenue loss, but also to generate higher revenues. Since the tax was harmonized, revenues have gone up $3.46 billion. They did not drop. Even the Quebec government public accounts confirm this.
What the Quebec government is trying to do right now is to include annual losses resulting from a reduction in the tax rate on fuel and tobacco products. That has nothing to do with the sales tax.
With these losses excluded, the amount the Quebec government is demanding would be $1 billion less. Elimination of other irregularities would bring the estimated amount to zero. The Quebec government has also underestimated by more than $300 million its harmonized sales tax revenues.
The federal government co-operated fully with Quebec officials in these discussions and this analysis.
In August 1996, we provided Quebec with the precise method used to determine adjustment assistance, the results of our calculations and the figures Quebec could use to determine its own eligibility.
The federal government had numerous discussions and exchanges of information in order to clarify its numerous figures.
Once again in the history of our great country, facts prove that Quebec, far from suffering a loss, benefited in fact from Canadian federalism by harmonizing its provincial sales tax with the GST.
In conclusion, this matter proves once again that BQ members do not know how to add, subtract and multiply; they only know how to divide. That is the only role of the Bloc Quebecois.
