Pierre Brien

[New Brunswick Premier, November 6th, 1995]

Mr. Speaker, Premier McKenna is on a mission in western Canada. He wants to explain to his colleagues that the distinct society clause to which the Prime Minister of Canada and he himself are referring is indeed the meaningless concept set out in the Charlottetown accord, even though this accord was rejected by a majority of Quebecers and Canadians.

To support his arguments, he can also remind those unfamiliar with constitutional wrangling of the key role he played in killing the Meech Lake accord. Despite Mr. McKenna's assurances on the purely symbolic value of the distinct society clause, the premiers of Ontario and western Canada are incapable of recognizing, even half-heartedly, the existence of the people of Quebec.

Since we know that two out of three Canadians do not want to reopen the constitution, Quebecers will quickly realize that the vague promises of change and the McKenna-style machinations in favour of distinct society are nothing but a ruse, and that real change can only be achieved through Quebec sovereignty.

[Goods And Services Tax, October 31st, 1995]

Mr. Speaker, that effectiveness is always slow to come. I have a supplementary for the Minister of Finance.

Does he still intend, as do his Liberal colleagues on the finance committee, to go ahead with a suggestion to hide the GST in the sale price and to impose that tax on food items and on drugs? Is that the type of change proposed by the Minister of Finance to his provincial counterparts?

[Goods And Services Tax, October 31st, 1995]

Mr. Speaker, allow me to remind the Prime Minister that, before making petty comments on the official opposition, he should remember that, yesterday, a majority of his constituents voted yes in the referendum.

My question is for the Minister of Finance. During the last federal election campaign, the Liberals, and particularly the Prime Minister, promised to eliminate the GST by January 1996. On March 2, 1994, the Prime Minister again said: "We hate that tax and we will abolish it".

Can the Minister of Finance tell us why, after more than two years in office, he still has not made good on his promise to abolish the GST, and whether or not he intends to fulfill that commitment before January?

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, Bill C-90 is now at the third reading stage. We have already had an opportunity, as the official opposition, to state our position on this bill at the second reading stage and in committee, the Standing Committee on Finance.

Although some of these measures may be positive, there is one that bothers us particularly, so much so that we would vote against this bill. I am referring to the proposal to increase the excise tax on gas by 1.5 cents per litre.

I will be brief. I want to make a connection between this debate and the one we had when we were discussing the excise tax on cigarettes.

In fact, this bill contains measures that would bring about a gradual upward adjustment of the tax on tobacco products. Of course we all realized at the time that the purpose of the drastic reduction in taxes on tobacco products was to destabilize smuggling networks. However, everyone agrees that now the price is so affordable it could have a disastrous impact on the demand for these products in the long term. The lower the price, the better a product sells.

No one objects to an adjustment. However, we should be careful not to do this too quickly and in the process give these networks a chance to regroup and take control again.

That being said, the government still has a duty to monitor the situation, because there are other ways besides taxation to ensure that people engaged in smuggling various products are arrested. This still goes on. It is still the case for various kinds of products. Enforcement is not as strict at that level. Much remains to be done to improve the way we deal with various smuggling networks.

As far as the excise tax on gas is concerned, everybody knows it can be very irritating, and it is so easy for the government, when it needs money quickly, to use the excise tax on gas, because this is instant revenue. We are talking about $500 million which the finance minister quickly took out of taxpayers' pockets.

It is hard for the consumer to see this happening, because when the price of gas goes up at the pump, the consumer is not sure whether the price of oil has gone up or the retailer, the manufactur-

er or someone else has raised his profit margin or whether the government has just increased the excise tax.

Unlike other types of products, when we buy gas, it does not say what proportion of the price we pay for a litre of gas is actually taxes. It is just as well, because taxpayers would be even more furious with the various governments. They would be constantly reminded of all the taxes levied on gasoline products.

In this case as in the case of tobacco products, when the government goes to the other extreme and tax levels rise beyond the acceptance threshold, taxpayers feel they have every right to buy contraband goods. We may deplore it, but the taxpayers' feeling is that this is a legitimate action they are taking.

We must not do anything to bolster this trend, because we know all the problems there are with the underground economy, the black market economy. At some point, the tax on gasoline reached the limit people would bear. We feel that any increase will only contribute to pushing consumers toward an underground economy which is extremely counterproductive for everyone. Counterproductive not only for the taxpayers who make use of it, since those using the black market economy are penalizing themselves without knowing it, but also for everyone in the long run. At some point we have to learn our lesson.

It does not seem that we have learned any lesson from what happened with tobacco products. Certain products in a number of different areas are still being heavily taxed.

However, it is not abnormal for there to be higher taxes on gasoline than on other products, because of the environmental effects everyone is aware of. Steps must be taken to ensure that when what the economists call externalities result from the consumption of a product, there are provisions to make the users bear the cost of those externalities. At some point, however, there is some uncertainty as to whether we have gone too far in this.

Essentially, we strongly disagree with this measure and feel that raising the tax again by 1.5 cents a litre in his last budget was not the route the Minister of Finance ought to have taken. We do not feel this is a measure that will contribute to any great extent to economic recovery. Everyone knows that there is a lot of work to be done on the expenditure side. If the Minister of Finance has no ideas of his own, we might suggest that he hasten before the finance committee to discuss it, something he has refused to do because of his fear of presenting his financial statements before the referendum. That is understandable.

If he wants to discuss it in more detail, we invite him to do so. This will provide us with the opportunity to debate the matter with him and to point out that there may be other avenues he ought to explore when he needs to balance his books, instead of constantly digging into the taxpayers' pockets for more revenue.

So, essentially, it is our intention to oppose adoption of Bill C-90 on third reading and, as I have said, essentially because of this measure. There are others on which I have not spoken but which we were able to bring up during second reading or in committee on which we do agree. But we have a major disagreement with this one.

[Canada-United States Tax Convention Act, 1984, October 17th, 1995]

Mr. Speaker, I found the Liberal member's grandstanding amusing. His closing reasoning was obviously somewhat illogical. He was more critical of the opposition parties than of the government. I would gently remind him that, if he does not agree, he need only settle his differences with his own colleagues. This bill comes from the government, which is made up of people from his own party. So they will have to talk among themselves and try to reach an agreement. It was even a bit sad to see them in such disagreement this morning. However, I agree with my colleague on some points, on others, I do not, but I will get to that.

Obviously, we share his concern for society's disadvantaged. We agree on this, and I hope, when the time comes to adopt the unemployment insurance reform and other such things, he will again rise, as he did today. It seems to me that only one member was opposed last time. I am not sure I heard him. I am not sure he was present. Next time, we will watch to see where he stands in the upcoming debate on cuts to the transfer payments, in particular, and on social programs. We will see where he stands and whether his concern is real or whether he is just giving a political performance here, once in awhile, to please his constituents and ensure his re-election.

I want to point out that we have have to consider both the substance and the form of this bill. We agree with what the auditor general said about tax conventions, which is that there is going to have to be a code of conduct for signing such conventions with other countries. There can be major differences in taxation levels between Canada and the other country signing the convention. In such cases, there is clearly a problem, and we must ensure that we are not threatening economic transactions and running the risk of losing revenues here in signing such agreements.

Before us we have a tax convention with the United States. Obviously, a person can oppose it if they like, but they have to say so directly. They cannot, in our view anyway, oppose something that aims to maximize economic exchange between Canada and the United States.

For a long time it was believed that our markets in Canada were east-west and now increasingly we see that they are north-south. There is a great deal of potential for development there. I can understand that there are still some pockets of resistance among those who are opposed to free trade and everything that goes with it, but we must think of where we are headed in the next century. And this is where we are headed. Consistency and logic is required. When one agrees to get involved in something like free trade, one has to live with what that implies. One has to live with reciprocity as well. Now, I want to get on to the content of these amendments, which strike me as suffering either from bad drafting, technically speaking, or from a fundamental problem.

Of course, there is the first amendment. I have heard what the Liberal member has had to say, waxing so eloquent in his attack on the tax rate cut from 10 per cent down to 5 per cent. Yet his amendment is aimed at ensuring that this will not apply after the year 2000. Why before that date? Why not after that date? Why 2000? Why not 2001? Why not 2002? It is very hard to grasp the reasoning behind his first amendment and I have not found anyone able to explain the real meaning and scope of his first amendment to me.

Obviously, one cannot agree with something that is poorly written. You have to be for something or against it. You cannot be against something for a few years and then in favour of it after that. There comes a time for logic.

The second amendment reminds me of those who are in favour of free trade but only one way free trade, with others opening up their borders to us, but our borders being closed to them. But this is in the area of taxation. We are told that we must not allow this retroactive refund, as one might call it, not allow it if there has been income taxable in Canada during that period. There is another side to that coin also. What reasoning applies to the reverse situation, American residents whose assets were in Canada or Quebec?

But the amendment does not address the opposite situation. Accepting the second amendment means asking the Americans to follow suit and to reopen the tax convention. This is, I suppose, what they had in mind, because consistency is required with what is proposed. I shall be surprised if they do so, because these are the same people who tell us sovereignists in the speeches they make here: "It will be just dreadful if you vote yes. Perhaps NAFTA would have to be reopened". Yet they want to reopen tax conventions. And they spoke of their desire to reopen NAFTA during the election campaign.

I sense a strong desire on their part to reopen the whole discussion about relations between Canada and the United States. Of course, that is their right, but I do not think this desire is shared by the majority of the House or by the majority of the public.

Of course we are concerned about the most vulnerable in our society. And as far as the future of our social programs is concerned, I think we can all agree that some serious debate is in order regarding the approach suggested by this government.

However, we must not exaggerate, and the figures quoted by the hon. member to indicate the economic impact of these amendments or these motions are clearly exaggerated. There was a reference to hundreds of millions of dollars. I read what happened in committee, I followed the proceedings, and no one could extrapolate the same figures as the hon. member and say that hundreds of millions of dollars were involved in this particular case.

It is easy to quote figures out of the blue, but you have to support those figures, justify them and provide documentation. We cannot afford to keep throwing figures at the public and say: Yes, that is the way it is, without further ado. We have to be more serious, more credible than that.

And that is why we cannot support these amendments, and this applies both to Motion No. 1 and Motion No. 2. Motion No. 1 is poorly drafted, complicated and not consistent with what the hon. member said, in my opinion. The second amendment makes no provision for compensation or reciprocity. After all, this is a two-way street. When we sign tax treaties, there must be reciprocity. We cannot get away from that. However, there is nothing in the second motion that refers to this.

If they want to renegotiate the whole tax treaty, that is their problem. What we would prefer and what we always suggested is to go along with what was said by the auditor general. We now have a certain number of tax treaties that cause problems because of the differences in tax rates. In such cases we will need certain guidelines for adopting tax treaties, because this is going to escalate in the next few years, considering current economic trends.

So we will have to get much stricter guidelines when we send people to sign this kind of tax treaty, to avoid being faced with a situation that will be difficult to change subsequently.

In concluding, and I do not intend to speak at greater length on this matter, we agree with the tax convention. I must admit, however, that the retroactive aspect bothers us too. It bothers us that compensation is given retroactively.

That being said, these two amendments will not correct that, neither the first nor the second motion-they will not correct that because, as I said earlier, the amendments make no provision for compensation or reciprocity. When the time comes to vote on the tax convention on third reading, we will have to evaluate Bill S-9 as such. On the whole, we think it is important to pursue this approach.

I repeat, the retroactive aspect bothers us. But in any case, what the hon. member suggested does nothing to correct this particular aspect. We will vote against both amendments and we will vote in favour of Bill S-9 on third reading. I am sure the hon. member will listen to his colleague, the parliamentary secretary, who will explain what amounts are involved with this bill and tell him they are nowhere near what he suggested.

I find it amusing to hear him attack the Bloc Quebecois in this debate. He should be more concerned about ensuring that his party, the government party, has certain guidelines for adopting tax conventions. He should get that message across to his supporters and eventually to the government, and then we will get somewhere. We cannot backtrack and change things that have been signed and that arise from the whole North American free trade context. Any action that is taken should be logical and consistent, and that is why the Bloc Quebecois will support this bill and will reject, as the government and also the Reform Party have done on many occasions, the two motions proposed by the hon. member.

[The Underground Economy, September 27th, 1995]

Mr. Speaker, I am pleased to speak on the motion put forward by the hon. member for Mississauga South regarding the underground economy. I would like to begin by addressing the thrust of his proposal and comment on its three elements, because this proposal is really threefold.

Let me say right away that we agree with the thrust of the proposal, because I think everyone agrees that action must be taken to tackle the problem of underground economy. There are all kinds of numbers being put forward and debates taking place, some excessive, some not, but the fact remains that a lot of money is slipping through the government's fingers.

Naturally, taxpayers are not the only ones at fault here. It is because the tax system is becoming more and more complex and less and less acceptable to taxpayers, to the point that they feel justified in turning to the underground economy.

Let us look at the three components of the member's motion. First, he proposes an enhanced information campaign to educate the public. I think everyone will agree with that suggestion. However, we must be careful not to end up with some complex bureaucratic structure merely to explain the harmful consequences of an underground economy.

I think the public is quite well aware of the issue. However, such a measure would certainly be useful, and it would also be consistent with the concept of the people's responsibility as citizens. As elected representatives, we all have an obligation to promote individual responsibility, and we must also serve as an example. It might be necessary to make some members and ministers aware of the impact of the measures which they take and which lead people to reject our tax system.

The second proposed initiative is a limited amnesty on interest and penalties otherwise payable when a taxpayer voluntarily declares previously undeclared income.

Our system already provides for an amnesty on penalties for voluntary disclosures. As for the interest payable, we have to be cautious. Such a measure should be of a temporary nature, should have a time limit set. Otherwise, some people might be tempted to not declare income in a given year, since they would not have to pay any interest, even if they got caught. Such a scheme would enable these people to use the money for a year or two, before the department tracked them down.

If we are to have an amnesty, it should be defined and limited in time. It would be a way to go back to square one and do things properly from then on.

The third part of the motion is an interesting approach that should be explored. When we talk about the underground economy, what comes to mind most of the time is the construction industry. The underground economy flourishes there because regulations are so complicated. There are other consequences, but that industry is very much affected by underground activity, and sooner or later we will have to regain control over that industry because we are losing a lot of revenue. Entrepreneurs who want to operate within the law have a hard time fending off fierce competition. Just about everywhere, things are done under the table.

A tax credit for taxpayers seems like a good approach, but we should determine how far we are willing to go, how much the credit should be compared to the savings to be made by turning to the underground economy, because that is what the population will try to figure out, and how much it will cost the government compared to the revenues the tax credit will generate. If the credit is not high enough, it will not work. It will cost us more than before, and only some people will use it. But this is a good start, an approach to consider.

However, it must be done in close co-operation with the provinces, especially where Quebec is concerned. Each province may have its own set of rules for the construction industry, and the approach used must be consistent with the way tax revenues are generated in this sector.

The hon. member for Mississauga South has moved a motion which makes a lot of sense and which we will support. I would like however to address other concerns I have about the underground economy.

There was a lot of discussion in this House, in Canada and in Quebec when the GST was introduced. Many people link the increasing popularity of the underground economy with the implementation of the GST. I would like to remind everyone that the GST was not a new tax. It replaced another tax which the population did not see, because it was hidden, but the GST did replace another tax. What is new is that the GST applies to services.

When we talk about the underground economy and the taxation of services, we have a problem, because nothing is easier to avoid than a service tax. When a carpenter, a plumber or an electrician comes to your house and does not charge for his labour by the hour, it is very hard to find out whether he did or did not work or how long he worked. Ever since the government decided to get into taxing services, there is one element that is almost impossible to control because it all depends on the good faith of the public, a public that felt governments were taxing them enough already. This new tax has increased public dissatisfaction.

Oddly enough, I saw a poll when we were considering the GST-which has yet to be amended, but I will get to that-and it seems people work harder to avoid the GST than they do to avoid paying income tax. This despite the fact that income tax rates are often 30, 35, 40 or 45 per cent, which means 30, 35, 40 or 45 cents on a dollar earned, while in Quebec, the combined QST and GST is 14 per cent. Nevertheless, people will work harder to avoid the GST because they are upset by this tax and find it very hard to accept it.

Much of this can be blamed on the Liberal Party opposite. When the GST was adopted, they were up in arms and even made a major commitment during the last election campaign to abolish the tax. After that they said very discreetly that they wanted to replace it with something else. Once in power, they said they could not afford to forgo 15, 16 or 17 billion dollars worth of revenue, depending on the year. Something else had to be found. But how, meanwhile trying to convince people that they got rid of the tax? Voters are not easily fooled and talk about it to their members, I am sure, because these are subjects that often come up in caucus meetings, apparently. Their commitment was not met because they were forced to collect this revenue, contrary to their campaign promises.

The Prime Minister has repeated this in the House. I quote him from memory but correctly I think: "We hate that tax and we are going to abolish it". That was two years ago. In my opinion discussing a tax, replacing it or abolishing it, can take a certain amount of time from the point the decision is taken. In reality, application can take a minimum of six months, generally at least a year, due to the time needed to explain it, to have people understand it, to try to gain its acceptance.

So two years of the mandate are down now, and after three years, for it will take at least a year, there will still have been no change, because agreement with the provinces on taxation reform is not possible.

There is a problem when the government creates expectations, when it wants to make this type of changes and does not make them. That does not do anything to increase people's confidence in the taxation system, much less in those who design it and those who have to administer it. The government will have to act at some point. It is nice to have these motions, I have nothing against the member who is moving it, but he will have to exert some pressure on his colleagues at Revenue and at Finance, and on the cabinet, so that they live up to their commitment and come forward with proposals, because we have not seen anything yet.

While they are talking about taxation, I would also like to talk about something else. In Quebec, at one point there were different views of the economy, and the government of Canada was perhaps more active on the economic front in the post-war era. During the war, it had taken over a lot of taxation power from the provinces, particularly Quebec. It never gave it back.

As a result, in Quebec, we have two income tax collection systems. Revenue Quebec and Revenue Canada both collect taxes, they each have their own income tax return; every year, we must fill out two income tax returns, because taxation can be a powerful economic development tool. Through taxation, each government imposes its own vision of things, and taxpayers have a hard time sorting things out. Very few of them are able to fill out their income tax returns on their own, not because they are lacking in skills or ability, but because the returns are just too complicated. I am convinced that there are not many members in this House who fill out their returns on their own. And yet, we are the lawmakers and the ones who pass legislation and establish policies.

So there is indeed a serious problem which, over the years, has led to confrontation between Quebec and Canada because Quebec would have liked to have full control over its tax system and use it as an economic development tool. But this is not the case. I would also like to remind people who are watching us today that, not only do we have two systems, not only do we pay taxes to both Quebec and Ottawa, but there are transfer payment mechanisms to transfer money from one government to another. We send our tax money to the federal government, which gives it back to the province through transfer payments, not always in the proportions that we would like. This system is cumbersome and complicated, and requires a lot of manpower.

To conclude my remarks, since I only have thirty seconds left, I want to say that the hon. member's motion makes a lot of sense, but I would like him to remind his colleagues that they have made a major commitment and that they will have to put forward concrete proposals, hopefully before Quebecers make a decision on October 30, on what they intend to do with regard to our tax system, particularly with regard to the GST.

[Canada-Quebec Monetary Union, September 27th, 1995]

Mr. Speaker, does the Minister of Finance acknowledge that the worst thing that could happen to the Canadian dollar would be for Quebecers, who have ownership of it, who have earned it with the sweat of their brows, to decide to collectively unload the one quarter of the money supply that is in their hands, some 100 billion dollars, whereas mutual interest and common sense militate strongly in favour of a monetary union?

[Canada-Quebec Monetary Union, September 27th, 1995]

Mr. Speaker, my question is for the Minister of Finance. He appears to reject the idea of a monetary union between a sovereign Quebec and Canada. In addition, the leaders of the No side are questioning the ability of a sovereign Quebec to continue to use the Canadian dollar.

Does the Minister of Finance confirm that it is in Canada's very best interest to not only acknowledge that a sovereign Quebec may continue to use the Canadian dollar, but also to wish for this, specifically for the purpose of maintaining its value?

[Unemployment Insurance, September 25th, 1995]

Mr. Speaker, if his reform is so good, he should table it now, so we can look at it and make up our minds beforehand.

My supplementary is directed to the Minister of Finance. Would the minister confirm that the target he has set for his colleague at human resources development with respect to next year's cuts in the unemployment insurance program is still at least $1.5 billion?

[Unemployment Insurance, September 25th, 1995]

Mr. Speaker, my question is directed to the Minister of Human Resources Development.

The unemployed will be severely affected by cuts of at least $1.5 billion in the unemployment insurance plan as of next year. Quebec alone stands to absorb more than $600 million worth of cuts. These will be felt particularly in regions with a high proportion of seasonal workers, whose benefits will be reduced, since from now on they will be treated as second class unemployed workers.

Does the minister realize that by making Quebec alone absorb $600 million in cuts in unemployment insurance, he is practically putting whole regions like the Saguenay-Lac-Saint-Jean, Abitibi-Témiscamingue, the North Shore, the Gaspé and the Saint-Maurice area on welfare?