Jim Silye

[Points Of Order, February 14th, 1997]

Mr. Speaker, it is on the same point of order but it would be for clarification purposes.

In question period he made a comment which he now feels needs to be clarified. He has clarified it and I understand his clarification. However, why can we not have further clarification of what he has now said and submitted to the House because there is a difference.

In one case he knows it was murder. In the other case he is unsure, but yet he has invoked closure on the hearings. Why has he invoked closure on the hearings when he does not have all the answers?

[Points Of Order, February 14th, 1997]

Mr. Speaker, a point of order.

[Excise Tax Act, February 11th, 1997]

Mr. Speaker, I welcome the question from the hon. member. I agree that a goods and services tax, that a consumption tax along the lines of the GST does eliminate tax cascading and does allow us to produce and manufacture products, and export goods at a lower cost.

That still does not justify what the government is doing with this partial harmonization in three provinces. That is a tax theory, a tax question, and I agree with the member's point of view on it.

How long will it take the savings from this Oshawa plant to recover a billion dollars of taxpayers' money to help three provinces to recover the $100 million minimum that some of these businesses have said it will cost them to conform to this new bill? Yes, it is good for business. Yes, products can be sold cheaper. However, in the end the very philosophy of a GST is that the consumer pays the tax. The hon. member knows that.

What we have done here is make it more fair for business. There is no question about that. However, we have now increased taxes. Harmonization helps. Instead of having two taxes, federal and provincial we have one. All those arguments make sense.

When the consumers find out how much more it will cost them, I predict there will be a lot more complaints and a lot more people crying about it than there is now. Everybody will be affected. At first they support the theory and the concept. Then, as they find out more about it, it becomes like the tax inclusive pricing which is causing a nightmare. That is what is really creating a cost for businesses.

The government would have them on side if it just dumped it. I do not know why the geniuses in cabinet do not go for it. They are stubborn. They will force it. The MPs will have to explain it. That is fine. Handle it. That is their job. They brought this in.

In the end, wait until the consumers get a hold of it. Wait until they see how it affects them. That is when it will be really of concern to members of Parliament, especially the Atlantic provinces. They will hear about it in their constituency offices. I predict that.

[Excise Tax Act, February 11th, 1997]

Mr. Speaker, I appreciate the question. I will try to answer it in the following way.

There is no question that if businesses are allowed to get credit for their input costs amounting to $700 million, as the hon. member put it himself, this savings is available for businesses to pass along to consumers. It is available but that does not mean they will pass it along. Let us assume that they do. There is $700 million that will then be passed along to the consumers. That is revenue neutral. There is no increase in costs, there is no decrease and everybody is happy.

What about this close to $1 billion payment to the three Atlantic provinces? Why was it made? It was made because theoretically-and this is all theoretical; we are in the realm of theory here-these three provinces would receive that much less in revenue by moving

over to a lower combined rate from their 18 to 20 per cent down to 15 per cent to make up for that loss in revenue which they would have received from their provincial sales tax. Because of this input system through the GST, because it is a different form of a tax, they have to be compensated.

To compensate three provinces at the expense of all Canadian taxpayers is something I certainly object to when it is not necessary to do so. Then there is the fact that it is a 15 per cent combined rate. This tax goes on goods and services that the GST did not go on before. This will have a dramatic effect and impact on the consumers of Atlantic Canada. It has an impact on those businesses which deal with Atlantic Canada that are located outside of Atlantic Canada because they have to sustain dual packaging, dual pricing. It adds a lot of complications and a lot of cost.

There is this argument that this is just like a GST. Instead of getting rid of or replacing the GST, I still argue and maintain that the government has entrenched the GST and has, in effect, introduced in those three provinces a 15 per cent GST. Remember when the Conservatives first introduced this tax and the Liberals on this side said they would have to get this rate and that rate down and make all these exemptions, which they did? However, the biggest argument against this was that once the bill was passed the government would be able to raise it and raise it.

I humbly submit that this could very well be the first step by a government, maybe inadvertently, actually increasing the GST from 7 per cent, which was originally supposed to be 9 per cent, to 15 per cent.

I understand and agree with the merits of the GST system and its advantages to business and how the tax does not cascade. It does make sense. However, when we look at the impact on the range of goods and services that Atlantic Canadians will now have to pay 15 per cent on rather than the previous 9 per cent, their costs will go up. Their out of pocket, disposable income will go down. They will find that they have less money for goods and services.

That is my argument in terms of the counter balance and the higher cost to consumers which offsets this $700 million in input costs, which does makes sense, which should help businesses and it should be passed along. There is also the fact that the provincial governments make less revenue and need to be compensated.

What happens at the end of four years? This billion dollar payment to the three provinces is supposed to be just for the three or four years. What if those three provincial governments still have not balanced their books and are still running deficits? What if they need more money for whatever they want to provide their citizens? What are they going to do? They are going to have to raise the tax. Now they have a convenient one tax they can raise, which is our other argument against this tax.

I am only trying to be fair in pointing out the criticisms of this tax. I think our party has been very good, even in the standing committee, of offering solutions. The members of the standing committee know that we tried very hard to work with the government to come up with a system to replace the GST. We looked at a lot of things but this piecemeal, partial harmonization will do more harm and create more confusion at a higher cost than if the government would have taken its time and done it right with all the provinces complying and co-operating rather than just trying to save the Deputy Prime Minister's political career.

[Excise Tax Act, February 11th, 1997]

I already covered the topic of what the Reform Party said and what it did in its minority report in context, not out of context as the Liberals are trying to do again.

Ottawa is proceeding with this because this is its idea of keeping its election promise. This is it folks, Canadian taxpayers. This is how the Liberal Party has kept its promise. Liberal members went door to door and said that they would get rid of, abolish and kill this tax. They said that they hated it. This is what they did. They got rid of it by blending it with the provincial sales taxes in three provinces. They feel they have now kept their promise. What they have really done is they have entrenched the GST forever.

When the Minister of Finance was on this side of the House he said that if you ever harmonize a GST with a PST, you entrench the GST forever, and he has done it. The member from Toronto also stated that the committee looked at a lot of options for the GST and the final solution was that there was no better tax than the GST. The Liberals have entrenched it. This is their way of keeping their promise of getting rid of the GST.

Look at their promise in the red book that they would replace the GST with a system of taxation that was simple and more fair. All the evidence I have given today is to the contrary. It is unfair. It favours one region over another. It subsidizes one over another at the expense of the other. Businesses are yelling out saying that they could go broke. Is that fair?

It is so complicated that there are definitions for tax in and tax out pricing. There will be four items on the shelves in the stores which people are pointing out. Is that simpler or is that more confusing? The definitions of all these rules and the white book required to implement all these rules will add about another 300 pages to the Income Tax Act. That is not simplifying it. A harmonized tax can make sense, and I will get to that soon.

The Reform Party sees the GST as an unnecessary and temporary tax that does not belong in the federal domain. Inasmuch as the tax

will exist temporarily, the Reform Party encourages the government to streamline taxation, remove as many of the significant problems that exist until such time as we can implement much wider tax reforms that provide both tax relief and tax simplification.

If the government presented a national solution to this problem, a national solution to fulfil its promise to get rid of the GST or to replace the GST with something that was revenue neutral, then we could support it. We have given the government some suggestions but it has chosen not to listen. The government said that it listened to over 20 proposals but the one proposal the government did not listen to is the proposal in our fresh start.

It is a proposal to simplify the tax system and generate the replacement revenues required so we can eliminate the GST. It would operate on the basis of a simplified tax system. We could get rid of this convoluted, complex, confusing income tax system we have now and replace it with a more effective, fair, simplified, harmonized system, harmonized with the Canadian taxpayers. Get in tune with the people who pay the final price. It is the person at the cash register, not the person who produces the goods, not the person who sells them. It is the person who buys them.

Why not have a system where we increase our personal exemptions, as we say in our fresh start? We could increase spousal exemptions, remove the federal and provincial surtaxes, reduce the UI premiums not by five cents per hundred as this finance minister would do, but reduce them every year by 10 cents until we get to 28 cents or 30 cents, or 60 per cent as some people are asking for.

We need to do something for the Canadian taxpayers, for the people who have to foot the bill to run government. Why do we have to spend $108 billion? Why not just spend $90 billion to run a government as we suggest in our fresh start platform? We could pass along those spending savings to the taxpayer in terms of tax breaks and tax cuts.

The difference between the Reform Party that would only spend $90 billion and the Liberal Party that spends $108 billion is that we would give the people the money to look after themselves right at the source before they send it here to Ottawa where Ottawa takes 30 per cent to 40 per cent off and sends it back to them in terms of child care and child tax credits et cetera. Why not leave the money in parents' hands in the first place to take care of their children? They will have more money for clothes and food right when they earn their money. Create the incentive for people to work and earn more so they pay less in taxes, not more in taxes. Why punish incentive? Why not create incentive and help these people look after their families?

It is ridiculous that we tax people who make $12,000. It is absolutely shameful. Yet this government is planning to reduce child poverty by increasing payments. This is admirable and it is one way of doing it, but a better way of doing it, a less expensive way of doing it is to leave the money in their hands in the first place.

In conclusion, the Liberals' are attempting to keep their promise to replace, to harmonize, and it is not even harmonized. It is not even harmonized in the Atlantic provinces. They could not convince Prince Edward Island to come on board. There is no unification there. It has not worked. It is not going to work. It is going to be a big embarrassment to this government.

[Excise Tax Act, February 11th, 1997]

Out of respect to you and the Chair, Mr. Speaker, I will withdraw the word bribe.

With respect to harmonization, businesses located outside the harmonized provinces will also be required to collect both the federal and provincial portions of the blended sales tax on purchases made by residents of the harmonized provinces. That means businesses in seven other provinces will have to act as tax collection agents for the provinces of New Brunswick, Nova Scotia

and Newfoundland and they will have to carry the associated costs. That is another reason the bill is not well thought out and should not be proceeded with.

The Reform Party opposes tax inclusive pricing. This practice violates the principle of open taxation which is essential to the efficient functioning of open democracies. Disclosures of taxes paid on cash register receipts preserves an element of openness in taxation but as the experience in Europe has shown, it eventually results in strongly diminished public awareness of the tax. Eventually governments simply increase the rate when they need more money.

We are heading toward a $700 billion debt. We are going to crack $600 billion sometime this year. Our interest costs are rising notwithstanding the lower interest rate. The economy always goes in cycles. Economists tell us that. The government continues to add to the debt. It is doing so less than the previous government, but it is still adding to it. It added $17 billion or $18 billion last year. That is a lot of money. It is a deficit. It is adding to the problem. As those interest costs go up, the government will have no other choice but to raise taxes. It will raise the HST/BST from 15 per cent to 20 per cent to 25 per cent. It will raise personal taxes and corporate taxes. It will be forced to raise taxes in order to make the payments on the debt.

The standing committee listened to a lot of complaints from a lot of people who came to the hearings and it claims to have solved them. I am not sure that it has. Some of the issues were highlighted in a story by John Geddes of the Financial Post . He used Carlton Card's representation which was made by Shannon Hallett, who expressed her firm's frustration with the Liberal members of the Commons finance committee. She warned that a policy the government plans to impose will force Carlton to close 19 of its 37 shops in the economically fragile Atlantic provinces. Is that not of concern to a party which ran on jobs, jobs, jobs?

At issue is the proposal to force retailers to bury the new 15 per cent harmonized sales tax in prices rather than adding on the HST at the cash register. To retain that support, why not just drop the tax inclusive pricing?

Tax in pricing would cost Carlton $84,000 in one-time expenses such as programming computer inventory systems. It would add $63,000 a year in continuing costs such as putting new prices on cars bound for the east coast. Furthermore, tax in pricing would cost stores in the three provinces about $90 million. Winsbys Shoes told the committee how hard it would be to sell a $99 pair of pumps if it had to put a $115 tax in price tag on them.

Shoppers Drug Mart vented annoyance at the prospect of having to comply by putting up tax in price conversion charts beside racks of magazines which come printed with the tax out price. Re-ticketing thousands of items in a store and trying to cram the tax in price

and tax out price along with the bar code on small labels will be a problem.

These are all problems that the bill has not solved, even though the Standing Committee on Finance said it would look after all of them.

Why is Ottawa so determined to keep this contentious tax included pricing rule when the rest of the harmonization of two taxes into one could be sold much better and could be accepted by Canadians all across Canada?

[Excise Tax Act, February 11th, 1997]

Mr. Speaker, the definition I have is a xerox copy of page 147 from the Concise Oxford Dictionary 1973. Is that the same one you have?

[Excise Tax Act, February 11th, 1997]

Mr. Speaker, I do like to be amicable and I like open debate. In no way when I used the word bribe did I mean that it was illegal. Nor do I mean that the government is being dishonest, even though that definition is hinted at in your definition .

My definition basically says "money offered to procure action in favour of the giver". A further definition below that is "pervert by gifts or other inducements the action or judgment of" whomever. It is a matter of interpretation. I do not mean that what is being done here is illegal, but it is something being done that the Canadian taxpayer should be aware of. Three provinces will have their costs lowered because of this particular payment than the other provinces at the cost of all taxpayers. I would just like to proceed with the debate.

[Excise Tax Act, February 11th, 1997]

Mr. Speaker, I will not withdraw that word and I will tell you why. You gave me an opening and said if I find a dictionary where the definition of my use of the word bribe is acceptable then I can use it.

I will give a definition of the word bribe: "Money offered to procure action in favour of the giver". This is money given to three provinces, that favours the federal government, for them to comply with the harmonized sales tax.

I would like to proceed. There have been already three or four minutes taken out of my speech. May I continue?

[Excise Tax Act, February 11th, 1997]

People can ask for what they want. The Canadian taxpayer knows what is going on here. We know what is happening. Everybody knows what is happening. Whether or not we withdraw a word is not the issue.

The issue is we have now made a large payment prior to the enactment of the bill itself to three provinces. The government calls it a transition cost. There has been nothing in transition yet, but that money has been paid. I call that an inducement. I call that an encouragement. I call that a lot of things. It may come close to the word that I am not supposed to use, and so I will not use that word if they find it offensive. But the Canadian public knows if it smells like a-, it is a-.