David Walker

[Taxation, October 3rd, 1994]

Mr. Speaker, all provinces are discussing this issue with the government and a decision will be made beforeJanuary 1.

[Small Businesses, October 3rd, 1994]

Mr. Speaker, I would like to thank the hon. member for Burlington for that question because I think it concerns every member of the House as to the future of small business.

We have undertaken several initiatives in the last nine months which will become public in the next few weeks. Everyone will see the hard work that has been done. For example, the Department of Industry and the Department of Finance have been working through a private business community group to come up with a number of suggestions for financing. The House of Commons committee on industry will have its report out in the next few weeks on the future of financing those small businesses.

The government has been working very hard to convince the banks to make their lending procedures with small businesses more transparent. We expect to see a new code of conduct become public.

[1999 Pan-American Games, September 21st, 1994]

Mr. Speaker, it is with great pleasure I announce to the House that during the summer break the city of Winnipeg won the bid to host the 1999 Pan-American Games. We view the games as an opportunity to bring the world to our doorstep, to extend friendship and to exchange cultural traditions with our close cousins in the American hemisphere.

Indeed showcasing Canada to the world by hosting international games contributes immeasurably to forging international bonds. At the same time it instils in Canadians a sense of national pride and unity and a better understanding of the diversity of linguistic and cultural identities.

It will be a great celebration in 1999. Winnipeg has a long tradition of excellence in playing host to major events. I am proud to have had the opportunity to work with the excellent co-chairs Don Mackenzie and Barbara Huck, the mayor of the city of Winnipeg, the premier and the numerous volunteers to bring the games home again.

I would like to say a special thanks to the Prime Minister for supporting the bid to its success.

[Questions On The Order Paper, September 19th, 1994]

Litigation on the interpretation of the resource allowance provision concluded only when the Supreme Court of Canada denied the government leave to appeal in July 1992. On July 23, 1992 draft regulations were released by the Department of Finance that clarified the issues dealt with in the litigation. These regulations were released in draft form in order to permit consultations with industry and with other government departments.

Once promulgated, these regulations will be effective from July 23, 1992, the date of their release. Further draft regulations

stopping abuse of the resource allowance through the use of partnerships were released on March 18, 1993. Consultations on both sets of draft regulations have been held with industry, Revenue Canada and the Department of Justice. Every effort will be made to have these draft regulations finalized and promulgated in the near future.

Question No. 20-

[Excise Tax Act, June 22nd, 1994]

Let us go back over this again in case members were not paying attention. We have first a reduction in taxes on cigarettes, the single most disastrous act of sabotage to the health of the Canadian people. This party supports the immediate payment of tax rebates owing to retailers and distributors throughout Canada. Heaven forbid if something serious should happen in this country.

There are other elements of this that I want to bring to the attention of the House. There seems to be some confusion among opposition members on the air transportation tax. I want

to point out that the purpose of the new air transportation tax regime is to reduce the cost of short haul flights.

This was brought to our attention by a witness from the province of Quebec and also raised in the House during debate yesterday by members from Quebec. I want to reiterate that in most cases those flights will see a reduction in the cost of the air transportation tax because they qualify as short haul flights.

It is very important that there be flexibility of the government to respond to the needs of businessmen and local markets. The member opposite raised this and I agree with him 100 per cent. For small businesses the cost of these flights is very important. It slows down their business in the province. It slows down the business across western Canada. We have made efforts through this to reduce the cost of the airport tax on short haul flights and to increase it on long haul flights. We feel that brings a greater degree of fairness.

Mr. Speaker, I could go on for a while about other comments made in the House but I welcome the debate, as do you, and I urge all members to support Bill C-32 as soon as possible.

[Excise Tax Act, June 22nd, 1994]

Mr. Speaker, I was looking forward to the questions and comments.

We will have a special audience outside after.

Mr. Speaker, thank you very much for the opportunity to participate in this debate. As you know, Bill C-32 represents a very important part of the budget which was first presented on February 22, 1994.

I would like to spend part of my time going over the major features of this legislation, but I would also like to take some time to respond to some comments made by members during yesterday's debate. In the haste of debate we often do not take time to seriously read each other's material and to think about the consequences of what other members might be saying.

The first issue I would like to address is on page 5626 of yesterday's Hansard . A member raises the question: Why does the present Liberal government always seem to be in a hurry to table bills without having the appropriate committee reports prepared?

I would like to leave Canadians assured that the government does not rush through important legislation. We began this debate openly, not in February but back in December, and continued it through January and February, ending up with the presentation by the Minister of Finance.

The measures in this legislation were clearly explained in the original budget documents and enable the government on a technical basis to carry out these measures which are important to the success of the budget.

We gave the opposition parties an opportunity to call witnesses, and of course our own members too, and some witnesses did appear to discuss Bill C-32. The fact is the coalition made not one but two presentations concerning the tobacco tax portions of this legislation.

It is important, therefore, that members of the opposition do not play too loosely with the activities of the government and leave Canadians with the impression that we have been in a hurry and that they have not had an opportunity to speak. I would like to assure the House that anybody who approached the House of Commons finance committee to speak on this legislation was given an opportunity and that in future cases we would give the opposition parties and our own members every opportunity to invite people to speak about legislation that was presented.

As an extension of that, members of the opposition are invited to present amendments both in committee and at report stage so that we can consider ways of improving the legislation.

This legislation deals primarily with tobacco smuggling. As members have discussed in the last few days and previously, there has been a rapid growth in tobacco smuggling in Canada. The contraband tobacco trade has had serious consequences for government, business and citizens of our country. The increasing market penetration of contraband tobacco products has caused a serious decline in government revenues. These revenues are an important part of the government's tax collection and are used to provide funding for programs and services across many areas of responsibility.

Based on these concerns, the government announced a comprehensive anti-smuggling initiative on February 8, 1994 designed to eliminate smuggling as a significant national problem. Leading this national action plan was an increase in enforcement, with greater resources assigned to both the RCMP and Canada Customs to intensify their efforts along the Canada-U.S. border and to target organized criminal networks dealing in contraband tobacco and other products.

In addition to specific excise and income tax changes, Bill C-32 also contains a number of measures that are important to the long-term success of a national action plan on smuggling. This legislation contains provisions for full inventory rebates to be provided in respect of the national $5 excise tax reduction.

All wholesalers and retailers are eligible for complete reimbursement for tax paid inventories of cigarettes, tobacco sticks and fine cut tobacco held as of midnight, February 8, 1994.

Administration of the inventory rebate program is the responsibility of Revenue Canada. This bill will provide the Minister of National Revenue with the authority to pay out inventory rebate amounts once it receives royal assent.

There have been a number of questions raised and I would like to assure the House that we have been listening very carefully to these. Dealing with the question of the reductions, the question

that we hear most often is why does the national action plan on smuggling include tobacco tax reductions?

In 1992 the government announced a wide range of enforcement measures to respond to the substantial rise in tobacco smuggling triggered by federal and provincial tobacco tax increases.

These measures included much tighter controls on the distribution and sale of tax free tobacco products, significantly higher penalties for persons caught smuggling, new proceeds of criminal provisions and the allocation of substantial new resources to customs and the RCMP to strengthen their enforcement efforts and the border and within Canada.

While these measures assisted the government in its fight against tobacco smuggling, they were not sufficient to bring the problem under control. The price differential between Canadian tax paid tobacco products and contraband products were such that the profits from smuggling far outweighed the associated risk. As a result, despite these measures, smuggling continued to grow, representing about 15 per cent in about 1991, 25 per cent in 1992 and 40 per cent in 1993 of the total Canadian market for tobacco products.

The government's national action plan on smuggling is a comprehensive plan that includes new enforcement initiatives, tobacco tax reductions, measures affecting tobacco manufacturers and measures to reduce smoking. There is also an export tax. The tax on exported tobacco products is designed to more closely control export shipments and to prevent any recurrence of the level of shipments that would effectively supply the contraband trade.

At the same time Bill C-32 makes provision for certain limited exemptions to allow tobacco manufacturers to satisfy demand for legitimate exports for bona fide consumption outside Canada. These exemptions apply in respect of the historical level of exports which was in the range of 2 to 4 per cent of total domestic production during the period before tobacco smuggling became a problem. As well exports where the manufacturer provides satisfactory evidence that the national taxes of the country of destination have been paid are also exempt on the grounds that tax paid tobacco products are not used to supply the contraband tobacco market.

The tax is only imposed on manufacturers of tobacco products because only manufacturers can export tobacco products free of domestic taxes and duties.

There is also a health promotion surtax which applies for a three-year period and this has raised the question; why not make it permanent? The health promotion surtax is one part of the government's national action plan on smuggling. It was designed to respond to the potential for increased consumption associated with tobacco tax reductions, providing the funds necessary to undertake an extensive anti-smoking campaign to help prevent any increase in smoking. The government does not expect that tobacco taxes will remain at the reduced levels indefinitely. As such it was not considered appropriate to make the surtax a permanent feature of the income tax system.

Yesterday a member from one of the opposition parties quite accurately pointed out that I raised this point in testimony before the finance committee and it is part of their record that we are very concerned, as is every member of the House, about the levels of smoking and that the actions of the government do not contribute to increased consumption.

To assist the federal enforcement agencies and provinces to control the potential for interprovincial diversion of tobacco products, Bill C-32 contains new liability and offence provisions. An additional federal excise tax will be imposed on a wholesaler or retailer in respect of any sale of marked tobacco products to a person in another province. The legislation also makes the offence subject to a fine for any person to sell or offer for sale tobacco products marked for consumption in one province to a consumer located in another province.

I can assure the House that the people in Manitoba are very concerned about this issue. This particular provision was to address the western provinces.

As I started my speech I wanted to bring to the attention of the Chair that sometimes members react perhaps too strongly to particular measures. I want to quote one member yesterday who said, and I quote from page 5649 of Hansard :

This reduction in taxes to cigarettes is the single most disastrous act of sabotage to the health of Canadian people which has ever been enacted by any government in the history of this country.

That is a pretty strong statement. A representative from the same party on page 5629 said:

This party supports the immediate payment of tax rebates owing to retailers and distributors throughout Canada.

[Committees Of The House, June 22nd, 1994]

Mr. Speaker, I congratulate the hon. member on summarizing so many misconceptions into a very short question.

To start with, as he knows there were 40 meetings. Just to reiterate, in the structure of the House of Commons committees any member of the House of Commons may join in the proceedings. Many of these issues were raised. When the member gets a chance to read through the hearings over the summer holidays I am sure he will know that members of the other three parties asked some excellent questions of people who wished us to change the tax structure more broadly.

Dealing with some of the specific misconceptions, the government has addressed the family trust issue. A paper was released earlier this month by the Department of Finance. It was presented to the House of Commons Standing Committee on Finance last week. The chair was asked to arrange with the opposition parties to set out hearings or to suggest ways of proceeding.

I am sure the critic of the Bloc Quebecois would be interested in family trusts. He will know the committee report is now available. We will seek our direction from the other members of the committee and the steering committee on how to proceed with an analysis of it.

On the question of corporate taxes and the contributions of corporations to the Canadian tax base, the member knows that in the February 22 budget presented by the Minister of Finance we made more progress in closing tax loopholes for corporations than any other government has done. We are very proud of what we have done.

Lastly, we anticipate an increase in profits from the corporate sector this year. I do not want to get ahead of statistics to be released by the government over the course of the year, but the hon. member will be happy to know that corporations will be pulling their fair share as the profits from their businesses go up in the current calendar year.

[Committees Of The House, June 22nd, 1994]

Mr. Speaker, I was happy to hear the question from the hon. member. A series of hypothetical questions is just that. The report was very careful not to get into hypothetical situations. Dealing with the tax field, my own experience is that as soon as people begin to speculate on hypothetical situations they get themselves into greater and greater difficulty.

The majority on the committee has stated its position and I have reiterated the government's position that no taxes will be introduced that increase the burden on low income families. I state categorically that the intention of the government is and will continue to be to re-establish fairness in the tax system for low income families and individuals. No steps will be taken that in any way, shape or form breaches the commitment we are making.

On the question of making sure that small businesses find it easier to report the tax, the committee's report has been very thorough in its examinations of options. It will make sure that small businesses feel more comfortable with the tax. The small business community has expressed through its leadership a real determination to work with us and to simplify it. In fact it is happy with the recommendations. We look forward to the actual design assistance to make it easier for small businesses.

[Committees Of The House, June 22nd, 1994]

Mr. Speaker, I will take your words of caution to heart. I apologize if I have in any way disturbed the Chair.

Continuing the discussion on the GST and the work done by the committee, the committee came to the conclusion that if we were going to be serious about reform of the GST it is important to put into the public domain some of the major options available.

Those options included different proposals brought forward from the public. Some witnesses, for example, wish to see the federal government move away from consumption taxes altogether. Other people wish to see us revamp the system and go with a BTT, a business transfer tax. Other people want to see us

amend the income tax provision in our legislation and begin to move more toward a wider review of these questions.

In the end the committee decided there were a number of changes that could be made in the GST which are absolutely fundamental to the improvement of it. The committee showed a great deal of sensitivity to the small business community.

Small business people have come to us on several occasions both in the past and in this government and indicated the high cost of collecting the tax. Some of them estimate the overhead was 16 per cent of the revenues. For the large corporations which have other systems of managing the tax collection, their cost is down around 2 per cent but particularly for very small firms 16 per cent represents a great deal of time.

The revisions made to simplify the tax collection for corporations with sales in the neighbourhood of $200,000 and some choices between $200,000 and $500,000 per year are a great step forward. I am sure other members can think of businesses in their own constituency which that takes away a tremendous antagonism that has evolved between the small business person and the government.

The other relationship we wish to deal with which has caused a great deal of antagonism, which small business people and individual consumers told us, is that seeing that tax is a real antagonism because the purchase price is deceiving. They want to see the total cost. In Manitoba that adds on another 14 per cent and in Ontario another 15 per cent. That is a tremendous burden for people to carry.

If you are a busy person and you have children with you when you are shopping and you think you need $10, you end up needing $11.50. Every time you go into a store it is another $1 or $2 or $3 more. That is a real aggravation. Most families have a great deal of difficulty making ends meet with the high tax burden on the income tax side and the high cost of bringing up children. This is another aggravation they wish to see us remove.

We have suggested ways the tax can be integrated into the price structure shown in stores. There are provincial issues involved here that we will have to return to and we will be very happy to raise that with provincial governments.

If we can have an integrated price with the value added tax and indicate on the final bill the percentage that is included as tax we think consumers will be able to plan out their expenditures and see exactly what the total of their bill is going to be. In a colloquial sense it will end the surprises at the till for consumers.

This committee also saw as a major problem integration and harmonization with the provinces. To anybody serious about tax reform in this country, the work of the committee has to be endorsed as perhaps the most fundamental step being taken in the last decade.

The committee has said to the government and to the House that if you want to have fundamental change in this country you must seek out the support of the provinces to harmonize and to integrate the sales tax system, the value added tax or the consumption tax system.

I cannot agree more that this is the most fundamental problem. We are perhaps the only industrial country that has ten systems, and if you include the absence in one case, eleven different variations of a sales tax known by a series of different names. For those who are trying to do business with us or travel here it is incomprehensible that a country with only 28 million people cannot even get its consumption taxes right.

We should thank the committee and particularly thank the majority who have seen this and say let us go to the provinces as quickly as possible and open up the debate with the provinces. There are many issues we can discuss.

Fortunately the regularly scheduled meeting between the federal Minister of Finance and the provincial ministers of finance takes place next week in Vancouver. This fresh report that has been widely quoted in the media will give the ministers an opportunity to set an agenda of co-operation. I know that our Minister of Finance is looking forward with a great deal of enthusiasm to the meeting.

I am sure provincial ministers also seek an opportunity for a more harmonized and integrated consumption tax in this country. Of course there are number of issues and a number of problems dealing with collection and dealing with distribution of the revenue.

In politics you can see situations, as does the opposition party, as problems or, as on the government side, as opportunities. We are very proud that we went into this very difficult situation in February, saw the problems and have sought now to lay out a very positive agenda.

In many ways the Official Opposition also understands that this has to be a positive solution. It is seeking out ways to improve the consumption tax system in this country. It has a particular strategy which I do not think will work because it would weaken some of the provinces far too greatly. However, that is a matter for discussion. It knows the present system is not working.

There has been a great deal of discussion in the media about extending the base. This committee was willing to review the options available to the government. One of the most controversial areas of discussion is what we include if we broaden the base. One of the problems facing a government is that when we introduce a new tax there are always barriers, whether we include this or that.

One area of confusion and controversy since the introduction of the GST has been the area of food. There is a price that is paid for it if it is excluded. By excluding fundamentals such as food and pharmaceutical products the previous government was forced to set a rate of 7 per cent which became a highly visible and aggravating tax. If we broaden it and include these items as taxable we take away a lot of the confusion over exemptions. We could possibly lower the rate and at the same time include a broader base.

I do not have to tell anyone in the House that it is a very controversial discussion. However I should like to say for the record that the committee does not lead the discussion of broadening the base with a conclusion or a recommendation. It simply says to Canadians that there is a possible solution to the high rate and that is to broaden the base. If through members of Parliament and the discussions this summer and if through the provincial governments and their representatives Canadians continue to express their opinion that food should be exempt, the committee by no means would lay down any contrary recommendation.

At page 48 it says: "The committee's aim is to flag the difficult questions that must be answered, articulate the various views we heard during hearings, and pass on to the government and to citizens the committee's assessment of how best to proceed".

At page 50 it concludes the section by saying: "Whatever course the governments involved eventually takes, comprehensive based or exemptions for necessities, we recommend that the aggregate tax burden borne by low income Canadians under the national VAT not be larger than the one they bear today under the culmination of provincial sales taxes and the GST".

At the heart of Liberal principles is the principle of fairness. No taxes will be changed that increase the burden for working families, low income families, individuals and seniors. It is fundamental to the way we approach taxes as compared to the Reform Party and as compared to the previous government. We are not about to make any changes in the system-and the committee was very clear on it-that in any way affect the well-being of working Canadians. That view is shared not only by the committee but by every member of my caucus.

Perhaps in the quickness with which the member for Calgary Centre reviewed the position it was inadvertently downplayed to the extent to which the Reform Party agrees with our approach. At page 117 it says: "We agree with the report that the current structure leaves much to be desired and that changes at this time are necessary. The majority report does deal with some of the concerns raised in the lengthy hearings that the committee undertook". People were listening. It is very important to state that. It goes on to say: "Many concerns remained unresolved until negotiations between federal and provincial governments are concluded".

Therefore the motion in front of the House is ahead of itself. How can the House concur in the report before we begin the essential negotiations with provincial governments? We should wait and we should be able to proceed when we hear what the provinces have to say. As the hon. minister responsible for housing who is listening attentively to the debate knows, the way to get good housing policy is to deal directly with the provinces. The way to get good tax policy is also to deal directly with the provinces and not to get ahead of ourselves. We thank the Reform Party for recognizing that federal-provincial negotiations are at the core of resolving the tax dilemma.

The committee's conclusion at page 122 says: "The Reform Party commends the government in attempting to meet the concerns raised during the hearings in the areas of business compliance costs, harmonization and the charity section". There we go again. In the major issue of harmonization again the opposition realizes that the majority very much had its eye on the ball and very much was concerned about reforming the tax.

In the course of tax policy and what we have seen since we formed the government, there have been great strides made in getting Canadians to talk openly about issues central to their own well-being. The GST represents not only a consumption tax in itself. It represents for many Canadians all that has been wrong with the Canadian tax system in the way it was imposed.

The government will take its time and will do the right thing. It will follow up on its red book commitments and will produce for Canadians a tax that is fundamentally different from the current tax: one that works and one that is responsive to the fiscal framework and the fiscal well-being of the national government. This means in turn the livelihood and the defence of the livelihood of hundreds of thousands of Canadians and their health, social well-being and education.

The government will not put at risk the physical health of the national government by being in a hurry. We will produce a tax which is more successful, more fruitful and more reliable than the one currently imposed, the GST. We look forward to discussions with the provinces.

[Committees Of The House, June 22nd, 1994]

Mr. Speaker, it was the hon. member who first introduced the sports image of a rookie. I think you are just a rookie camp and looked down at the ball when some guy was coming toward you. Pay attention to the debate and all the subtleties from the Speaker.