Thank you, Madam Speaker. The liberal government is still reneging on its promise to abolish the GST. Let me quote a few lines from the March 11, 1996, issue of the Globe and Mail , which are very enlightening in that regard. First: ``I have already said personally and very directly that if the GST is not abolished, I will resign''. That statement was made to the CBC by the current Deputy Prime Minister on October 18, 1993, one week before the federal election.
As for the current Prime Minister, he is quoted as saying, also in 1993: "We will scrap the GST". The red book, published in 1993, states as well, and I quote: "A Liberal government will replace the GST". Again, in March 1996, the Deputy Prime Minister stated: "If we do not replace it, I will resign. I really do not have much choice. It will be replaced".
You probably remember that the GST and its abolition where big issues during the election campaign in 1993.
It was a major issue and it greatly helped the Liberals get elected. Since then, the Liberal strategy has been to downplay the importance of that issue, so as to make it easier to renege on their election promises.
During the election campaign, the Liberals made no bones about the fact that they were going to abolish the GST. Now, they talk instead of replacing it, of harmonizing it with provincial taxes. The Liberals are doing that because they are quietly paving the way for a national sales tax. Instead of abolishing the GST, they will make it even more pervasive.
The Liberal government, with its commitment to harmonize, now stands exactly where the Conservatives were. Indeed, before disappearing from the political map in 1993, the Conservatives were thinking of the same thing, harmonizing the federal and provincial sales taxes.
You have to admit that the Liberals and the Conservatives are pretty much one and the same. In addition to proposing a hybrid GST which in no way solves the management problems created by the GST, the Liberals want to impose this rigid tax to the provinces.
In view of this all-out attack against the provinces' authority, the Bloc Quebecois totally distances itself from the Liberal position and proposes instead to abolish the GST and to transfer to the provinces the tax field currently occupied by the GST. We feel this is the only way to implement a single tax system that would benefit the provinces.
As for Quebec, such a transfer would reflect its specificity and its fiscal autonomy. Quebec and other interested provinces could thus define the parameters of the new tax field, such as the goods and services that are taxable and not taxable, as well as the type of tax to be applied. This single tax would be administered and collected by each provincial government. Finally, this single tax should not take more out of taxpayers' pockets than do the current provincial sales tax, the QST in Quebec, and the GST together.
The Bloc Quebecois understands that the transfer of this tax field to Quebec could result in a significant loss of revenue for the federal government and that the latter should be compensated for that loss. Without touching transfers of tax points and special abatements-a tax field already occupied by the Government of Quebec-the federal government could reduce the transfer payments it makes under the various provincial transfer programs by an amount equivalent to the current GST revenues collected in Quebec.
This would also reduce federal interference in certain sectors of exclusively provincial jurisdiction, thus helping to cut back on duplication. In addition, as long as Quebecers pay their income taxes to the federal government, an equalization program should be maintained, without additional cuts, in order to offset the differences in the provinces' fiscal capacities.
In practical terms, our proposal would eliminate the duplication resulting from the existence of two parallel taxes and would reduce administrative costs for businesses, which would have only one tax to keep track of.
What is the context in which alternatives to the GST have been analysed?
It is a difficult context financially and economically. Middle and low income taxpayers have reached their threshold of tolerance. Unemployment rates are high and public finances are in such a
poor state that they are resulting in a risk premium on interest rates that is detrimental to investments.
The labour market is in a sorry state. Remember that with the increase in the population, we need several hundreds of thousands of jobs more in Canada, just to return to the level of employment at the beginning of the recession in the second quarter of 1990.
If we look at the tax statistics by income brackets published by Statistics Canada, we see that the increase in the tax burden of middle and lower income citizens is indeed real. Between 1972 and 1992, taxpayers saw a jump in real tax rates of 22.7 per cent. During the same period, taxpayers in lower income brackets saw their real tax rates go up by 42 per cent.
The increased tax burden has triggered the emergence of a flourishing underground economy. As the Liberal majority report states, analysts estimate the underground economy to represent somewhere between 2 and 20 per cent of the GDP. Only a total revision of the taxation system could make it possible to contain and reduce the size of the underground economy, because it is linked to the overall tax burden or, in other words, is dependent on all taxes paid by the taxpaying public.
The question of abolishing the GST and transferring it to the provinces arises in this context. All the commotion focussing on replacing the GST illustrates, more clearly than anything else could, the necessity of a total review of the federal taxation system. An examination of that system shows that high income individuals and major corporations have the financial means and the legal expertise to take advantage of a number of tax loopholes which save them considerable amounts of tax.
Think, for example, of the family trust scheme by which rich families can put off, virtually forever, having to pay capital gains tax on the assets held in trust. It is hard to estimate what the tax losses are on such tax deferments, because the Department of Finance keeps the figures hidden. According to a study commissioned by the Canadian Association of Family Enterprise in 1990, however, tax losses can be estimated at several hundred million dollars.
In 1993, when the Liberals were the opposition, they-the present Minister of Finance included-voted against reinstatement of the tax breaks associated with family trusts. Now the Liberals are refusing to abolish those same breaks, but they show no hesitancy in the least to dump on the unemployed, couples with child support agreements, and the pensioners of the future.
In fact the Liberals, just like the Conservatives in 1993, have given in to the lobby of rich influential families who want to keep their assets safe from taxes, while the tax burden on low income families continues to spiral endlessly upward.
Another example of unfairness are the tax havens. In the Auditor General's report in 1992, it was pointed out that the Income Tax Act and the tax agreements made it possible for foreign affiliates of Canadian companies to avoid paying tax in Canada and to take advantage of the lower rates of taxation available in a number of countries considered tax havens.
In fact, the auditor general estimates that more than $16 billion were invested by Canadian companies in tax havens, thus avoiding paying millions of dollars in taxes to the federal government every year. This means that, in a roundabout way, several Canadian companies are declaring abroad revenue earned in Canada.
Taking advantage of tax loopholes, many high income earners as well as big profitable firms do not pay a cent in taxes. It is to put an end to this kind of inequity that the Bloc Quebecois is demanding a comprehensive review of the Canadian tax system, not this business taxation committee comprised mostly of advisors working for firms using tax havens and contributors to the Liberal election fund.
The Bloc Quebecois is of the opinion that, in order to prevent big profitable firms from using complicated schemes to pay ridiculously low taxes, the government should impose a real minimum tax on the business profits made by large corporations instead of an easily avoidable capital tax.
The GST is not the only component of public revenue that needs to be reviewed and changed. In the minority report on the GST tabled by the Liberals in 1989 while they were in opposition, it is recommended that the Conservative government abandon its plans to introduce a goods and services tax and immediately initiate consultations with Canadians and the provincial governments on a fair and integrated reform of the tax system as a whole.
Now that they are in power, the same Liberals are content with trying to harmonize the GST and bring down three consecutive budgets that do nothing to eliminate unfairness. It is wrong to believe that all federal tax problems can be resolved by merely reforming our sales tax.
Several examples show that the Liberals are victims of their own policy of analyzing the GST separately from the other sources of federal revenue. Chapter 2 of the report of the Liberal majority on the finance committee, tabled in June 1994, states that wealth transfer tax cannot be considered as a replacement for the GST as it would not generate as much revenue.
This kind of reasoning rules out alternatives like a real minimum tax on large corporations making profits, the taxation of family trusts, the elimination of tax shelters, and so on. They rule out all partial solutions that, together, could do the job.
Finally, the Liberals are making exactly the same mistake as their predecessors by changing their minds about reviewing all sources of government revenue. By tackling only one aspect of the problem, the Liberals will never arrive at a lasting decision, because the tax system is a complex and delicate equation in which fair taxation and a balanced budget cannot be achieved by imposing a new tax in isolation.
The Bloc Quebecois' proposal would allow the Quebec government to put in place a tax that really meets Quebec's needs and avoid the mess that would inevitably be created by 11 parties trying to negotiate the base, administrative details and characteristics of the tax.
Our proposal would also make the Quebec government less vulnerable to the federal government's unilateral cuts in transfers to the provinces. At the operating level, it would eliminate the duplication resulting from two parallel taxes, improve control and reduce administration costs for businesses, which would have only one tax to manage.
Some may argue that our position would encourage consumers to take advantage of provincial rate differences. In this regard, we would like to repeat what the Liberal majority on the finance committee wrote in its report, namely that the committee recognized that the national VAT might encourage consumers to take advantage of rate differences, but no more so than today's provincial sales taxes.
It must be understood that the Bloc Quebecois' proposal derives from the basic principle guiding our policies: Quebec sovereignty. Indeed, sovereignty means, among other things, that the Quebec government would have full control over all these budgetary and economic instruments. It would then be free to use these tools based on Quebec's specific needs and Quebecers' aspirations.
The Bloc Quebecois makes this proposal from a Quebec perspective. However, it could also apply to any other province wishing to take control of the tax field currently occupied by the GST.
For these reasons, we will support the Reform motion to abolish the GST. The Minister of Finance wants to harmonize the GST with provincial sales taxes. This is a new centralizing attempt by the federal government. Why not harmonize that tax with the support of every province? As for Quebec, our proposal seeks, as I said, to abolish the GST and to transfer to the province the tax field currently occupied by that tax. Abolishing the GST does not mean merely changing its name, as the government might think.