Madam Speaker, I rise today to address Bill C-31. I will touch on some elements in the bill. I will talk about how sometimes an opposition party that becomes government looks at things and operates. Specifically, I will talk a little about the Prime Minister and his philosophy. Then I will go on to aspects of the bill and the part in question which is the harmonization with compensation.
In reading the autobiography Straight from the Heart by the Prime Minister, I found a couple of quotes, which in my opinion explain to Canadians the type of thinking our Prime Minister uses. One is: ``In politics, perception is everything''. Another is:
A successful politician must not only be able to read the mood of the public, he must have the skill to get the public on his side. The public is moved by mood more than logic, by instinct more than reason, and that is something that every politician must make use of or guard against.
Interesting, is it not? A third quote is:
I learned early that business is business and politics is politics. The proof is how few important businessmen have made good politicians. They make think they are very smart about everything because they made millions of dollars by digging a hole in the ground and finding oil, but the talent and luck needed to become rich are not the same talent and luck needed to succeed on Parliament Hill-.Most businessmen have very limited, specialized knowledge which often gives them a narrow view.
As a businessman, the kind of person he is talking about, I do not believe my view is narrow enough to mislead and distort the Canadian public. The fourth quote I would like to put into context is: "If businessmen want to make the decisions, the solution is simple: they should get themselves elected to Parliament". Well I did. I am here and I am going to try to do my best to point out the hypocrisy, duplicity and failure of this Liberal government to keep their election promise.
I refer specifically to that part of Bill C-31 which appropriates $961 million-let us round that out to $1 billion because it rhymes with bribe-from the consolidated revenue fund to pay off or bribe as most people are saying. It is not just the Reform Party, the premier of British Columbia has called it a bribe. The provincial elected officials in Ontario have called it a bribe. A lot of people are calling this a bribe to the three Atlantic provinces which have agreed to harmonize the PST with the GST but only if they are compensated for revenue shortfalls.
I would like to review, analyse and comment on the Liberal promise, not the one to kill, abolish, scrap the GST. We have gone through that and the Liberals have admitted they broke that promise. They have admitted that they failed to deliver on that promise. That is fine. But what about the promise they put in writing, the one the Prime Minister brags about, to replace it, as per page 22 of their now dead and embarrassing red book? In that red book the Liberals promised to the Canadian public that they would replace the GST with a system that generated equivalent revenues. That is not so. They are not equivalent revenues.
The harmonization in the Atlantic provinces represents a shortfall over three years of $1 billion and in order to induce, encourage and bribe those provinces to get on board, the government is going to pay for that shortfall. They are not equivalent revenues. The Liberals failed on that part of their promise in the red book. It does not generate equal revenues. Basically it is a tax cut for the three provinces at the expense of all Canadians. Wait until the consumers in those three provinces find out how much more they will be paying for the promises of their three Liberal premiers to the Liberal Prime Minister.
Page 22 says that this replacement tax will be fairer to consumers and to small business. I will agree it is fairer to small business. It does improve the situation for small businesses. They will have one tax to collect and one tax to remit. They will have a choice on how they can do it. There is no question that it does streamline it for the businesses. However, it will not be fair to the consumers. The consumers will be the ones who will be paying a greater portion of the tax in those provinces.
If we look at what goods and services the retail sales taxes are applied to or exempted from in New Brunswick, Newfoundland and Nova Scotia, we will find many that are exempt from the PST but will now be taxed with this new 15 per cent GST. Although the provincial rates go down on the PST, the combined rate will increase taxes on a lot of items that are in the service industry.
Work done by construction companies will now be taxed. Certain footwear, children's clothing, hair cuts. All these items will now be taxed. Funerals, pharmaceutical and medical supplies, mobile homes, utilities such as water and heating oil in the province of New Brunswick. Most of the lists are the same. Children's car seats, postage stamps and coins. We read about that in the paper today. The revenue minister did not even know there was a tax on stamps. Many labour charges, wood burning stoves, wood splitters, hand crafted products. These are all things on which people have not had to pay PST but will now have to pay tax. This is where it is an 8 per cent tax increase to the consumers in those three provinces who have allowed their premiers and their governments to harmonize with compensation.
The harmonization we support and we say works is one that is revenue neutral. It combines the two rates into a single rate and is applied to all things so there is the lowest possible rate. However the government did not do that. It chose to do it another way. The government chose to do it so that no revenues are lost on the GST portion. The premiers of those three provinces can promise their people a tax cut which will be subsidized by all Canadians. It is distorting the economy and creating unfair competition. That is not the kind of harmonization our party supports.
When the Prime Minister says that the Reform Party supports that kind of harmonization by quoting the minority report of the Reform Party, he is once again distorting and stretching the reality of what we said in that paper. He is taking it out of context and I take exception to that.
That is why I quoted the Prime Minister. It is not reason or logic that matters. What matters in his own words is the mood, and make sure that programs are matched to the mood of the people, and instinct. Whatever you can get away with, do it when you can. It will only be a short term hit. It will only be criticized for a while and then away we go, we are off to the races. That is why the quotes in my opening comments are very, very important.
In a speech at the University of Prince Edward Island in October 1993 the Deputy Prime Minister had the following to say about the GST: "Food is not subject to GST because it is a necessity. So are books. They are needed for young minds to grow". If she still believes what she said during the last election campaign, then why has her government not only not removed the GST from reading materials but in harmonizing the tax systems in Newfoundland, Nova Scotia and New Brunswick has effectively doubled the tax on reading materials?
Also, the current chairman of the Standing Committee on Finance, the hon. member for Willowdale, had this to say about the tax on reading materials, a tax his government has now doubled: "The government is proposing to add to its GST by taxing the printed word. It strikes a blow at learning, the transfer of information". That is what the hon. member said in the House. What does he say now about increasing the tax on reading material to 15 per cent from 7 per cent?
There is more. The Minister of Health urged the government to "axe the tax and prevent the GST from being presented on books and literature". Believe me, there is more.
I ask the Deputy Prime Minister, does she now support a tax on reading, a tax that will now double which will make it even more difficult to deal with Canada's literacy problem? This is a tax she promised to scrap, not to double, as her government is doing now. Going for mood and instinct rather than logic and reason is not the way to govern a country.
We go back to the promise on page 22 of the red book. We have analysed whether it generates equivalent revenues. Not so. Fair to consumers and small business is only 50 per cent true. It is fairer and simpler to business but unfair to consumers and wait until they find out.
I am only talking about page 22. The Liberals promised to replace, not scrap, not abolish, not kill, simply to replace. That is all. Have they met their promise as the Prime Minister claimed yesterday? That is all I am trying to establish here today. I am laying evidence and putting forward the argument that the government has failed to do so.
The third element is "promotes federal-provincial fiscal co-operation and harmonization". I submit it is not so. What kind of fiscal co-operation is it with three provinces out of 10? The province of Quebec is angry and Alberta is saying: "We share. We contribute $2 billion to the GST. Where is our share of that subsidy?" Is Ontario happy about it? No. That is not fiscal co-operation. It is fiscal disharmony, not harmony.
Who asked for this? Did those three provinces in Atlantic Canada ask for this? The answer is no. None of the provinces across Canada asked for it. I was on the standing committee when this was reviewed. I listened to the witnesses in the spring of 1994. I was a co-author of our minority report on the GST replacement. Nobody in the provinces asked for it.
From the witnesses and the discussion of the MPs around that table, we knew it would have to be a federal initiative. The government would have to go to the provinces, lay out the advantages and do the sales job. None bit until the word compensation came in and until the government lowered the rates in those three Atlantic provinces to 15 per cent combined instead of the 19 per cent they have now.
That is when this took on some life and when the son of GST, which is being nurtured in the three Atlantic provinces, comes to life. Only when the government subsidized a tax cut did these three provinces even agree to go further.
As the chief finance critic for the Bloc Quebecois has mentioned, this is a politically motivated agreement. This has nothing to do with economics. This increases the tax burden on consumers in those provinces. This is uneconomical and inefficient for consumers. It is will cost more to their pocketbooks.
In opposition the current finance minister said: "If you ever merge the federal sales tax, the GST, with provincial sales tax, the PST, it will be very difficult to get rid of the GST". Now that he is the finance minister what has he done? If it was bad in opposition three or four years ago, why is not bad now? When a person promises to get rid of something why does he go about entrenching
it? That is exactly what the finance minister has done. It will be very difficult to ever separate the two.
Those three premiers, to brag about a tax cut, have now lost their autonomy over their own rates. How in heaven's name will those three premiers argue with the federal government when they are a little short on revenue and want to raise their share of the PST or the GST? The federal government will say "no, it is the GST. We collect it, we set the rate and it is staying at 15 per cent. Tough. Do it through the income tax".
One of the three provinces is already presenting legislation in its legislature to increase personal taxes. The price that one of these provinces has to pay will be enormous. This does not create federal-provincial fiscal co-operation and harmonization. It is exactly the opposite.
The finance minister has now basically entrenched the GST in the lives of those three provinces. In an effort to sell it everywhere else, we are talking about words like mood and instinct: "this is the time to do it, we have the majority, we will force it down their throats". People did not forget Brian Mulroney after forcing the GST down their throats. People will not forget what the Liberal government is doing.
What a joke, closure on a debate as important as this. We are talking about a billion dollars and the advantages or disadvantages thereof and the government has introduced closure. It wants to limit debate on this because it wants to get going. It brought it in really fast under ways and means. A hundred changes, all the little things we could all be contributing toward making it better; but no, it wants to go ahead and do it without all that. That is not democracy.
In opposition the Liberals cried, bellyached and whined every time the Conservatives introduced closure. Now they have done it more times in two and a half years than the Conservatives did it in their whole term.
The Liberals are looking for and promoting support everywhere. They are begging for people to show the advantages of it. When the Canadian Federation of Independent Business supports it, they are talking about only a narrow sector. It is a special interest group, a small business. However, they do not talk about the consumers who buy the products of those business and how much more they will have to pay.
I would like to ask the president of the CFIB what the answer to that is, transferring the tax from businesses on to the consumers of their products. I hope they are proud of that. When they get one accounting firm out of the millions across Canada to support their proposal they get the media to put it on the front page and support it. This does not make economic sense overall.
Bits and pieces of it make good sense and are positive. There are things that can be done constructively to make things better if we
really want to do it the right way. However, I do not believe the government has the interest to do that.
The Liberals even claim the Reform Party supports harmonization. I state unequivocally right now in the House, the Reform Party is against and does not support harmonization with compensation. Do members know what will happen a week or two from now? The Liberals will take what I said today, because they go by mood and instinct rather than by logic and reason, and say "he said something, let us use it against him". They will say "that member stood in the House and said he was against harmonization, and now he is flip-flopping".
They forget I said "with compensation". A single tax instead of two only makes sense. A single tax instead of two is better in terms of efficiency and simplicity, but we never said anything about driving somebody if there is a shortfall. If the combined rate still takes the same money out of our pockets, why bother?
They have not given the transition cost alone of doing this in those three provinces. All they talk about are the lost revenues. The complications of a value added tax system that exist for a lot of people will still be there. It does not eliminate all the exemptions, the zero rated, the tax exempt and all of those complicated rules.
I put on record that the Reform Party was against the GST replacement proposal of the Standing Committee on Finance, and it said so. Reformers then complimented the Liberals on their efforts in reviewing harmonization. They spent a lot of time, as did we all, exploring that. However, in the final analysis we said we could not concur because the way to do it is to first get their fiscal house in order and establish a balanced budget. After they do that they can introduce a more simple and visible form of taxation along the lines of a proportional flat tax. That is what we recommended. They dismissed that.
There is another distortion. The finance minister stood in the House and said they had explored all of the alternatives. That is not so. The one that was not reviewed, the one that was not looked into, was the one from the hon. member for Broadview-Greenwood. He, along with a number of members from the greater Toronto area, with the support of about 20, 30 or 40 Liberals, suggested a flat tax to simplify the tax system and then get rid of the GST altogether. It would save the country $2 billion, $3 billion, $4 billion, $5 billion-up to $10 billion. Get rid of it and use a simplified tax system.
The chairman of the Standing Committee on Finance said: "Given the time constraints we have, we cannot explore this. It is too massive a change and we cannot explore this alternative". Therefore it was dismissed. It was not reviewed. It was not considered. The minister stood in front of Canadians and said they
looked at them all, 20 different proposals. This is not so. There is one they did not review, one which our party will pursue.
I move:
That all the words after the word "That" be deleted and the following substituted therefor:
this House declines to give second reading to Bill C-31, an act to implement certain provisions of the budget tabled in Parliament on March 6, 1996, since the principle of the bill does not seek to abolish the goods and services tax.
