Mr. Speaker, I welcome this opportunity to begin the debate at second reading of Bill C-40. This bill contains a number of amendments to update the operation of our tax system, some of which have been previously made public either by news release or by way of a notice of ways and means motion.
Before I outline the measures contained in the bill, I would first point out that the consultative process that led up to the introduction of the bill is an excellent example of successful cooperation between government and the tax and business communities toward achieving our common aim of improving our tax system. Adjustments have been made to the legislation as it was originally proposed in response to representations from both tax and business communities.
On behalf of Canada's new government, I take this opportunity to thank those interested parties who brought forward their views on the many issues addressed in the legislation. Bill C-40 reaffirms this government's commitment to making our tax system simpler and fairer not only for individual Canadians but for Canadian businesses as well.
I would like to take a moment to comment more broadly on how the legislation proposed in Bill C-40 links to this government's goal to ensure that Canada has a fair and competitive tax system.
Canada has long been recognized internationally as a country that treats its citizens fairly, which is one of the reasons that many people from all over the world come here to fulfill a dream of a better life for themselves and their families. Canada's new government believes in helping those dreams come true by creating new opportunities for Canadians wherever they live. That is why in our first budget we took action to help families and individuals as well as businesses by lowering taxes, rewarding effort and making Canada a better place in which to live and work.
One of our core priorities was to reduce taxes. We did that first by reducing the GST. We also provided other significant personal and corporate tax relief on the investments that will create jobs and boost Canada's economy by improving incentives to work, save and invest, and we are doing more.
The Minister of Finance recently announced a tax fairness plan for all Canadians. This plan will help restore balance and fairness in Canada's tax system to ensure our economy continues to grow and prosper and to bring Canada in line with our trading partners.
Families and businesses still pay too much tax in this country and our government will continue to reduce taxes for all Canadians. This new government firmly believes that a fair, efficient and competitive tax system plays a key role in creating a stronger, more productive economy. The measures contained in this bill reflect that belief. I will outline the initiatives contained in the legislation and in doing so illustrate how they support this government's goal of ensuring that we have a fair tax system.
The bill is divided into three parts. Part one mainly implements proposed measures relating to the goods and services tax and the harmonized sales tax. These measures are aimed at improving the operation of the GST-HST in the affected areas and ensuring that the legislation accords with the policy intent. Part two contains measures relating to the taxation of wine, spirits and tobacco. Part three of the bill is related to the air travel security charge.
Starting with part one, the GST-HST measures, a number of these initiatives have been previously announced by way of press release or by notice of ways and means motions. The proposed GST-HST measures in the bill fall into a number of main areas. The first is health.
An important priority for Canadians and Canada's new government is our health care system. The Government of Canada is committed to providing support to provinces and territories to help ensure that all Canadians have access to timely, quality health care. To make sure that happens, transfers from the federal government to the provinces and territories in support of health are at their highest levels ever, approximately $21.3 billion for the Canada health transfer and wait times reduction transfer.
This will ensure stable, predictable and increasing support for Canada's health care system. In addition to transfers, the Government of Canada provides some $6 billion annually in its own areas of responsibility, including first nations and veterans health, health protection, disease prevention, health related research, and medical and caregiver tax credits. The legislation contained in the bill complements these investments by helping to ensure that Canadians receive the health services they need.
For example, Bill C-40 proposes to continue indefinitely the GST-HST exemption for speech language pathology services. It also exempts health related services rendered in the practise of the profession of social work. These amendments are consistent with the government's policy criteria for inclusion of a particular health care service on the list for those that are GST-HST exempt. That is to say, if a service is rendered in the practise of a profession that is regulated as a health care profession by the governments of at least five provinces, the service is exempt in all provinces.
In addition, the bill proposes a tax free status to the sales and importations of blood substitutes known as plasma expander.
Under the current GST-HST legislation, the supply of blood and blood derivatives is tax free, whereas synthetic blood products, such as plasma expander, are not tax free as they are not of organic origin. To maintain consistency in our tax system, the proposed amendments will also ensure that blood products, such as plasma expander, receive the same GST-HST treatment as that of blood derivatives.
The bill would also restore the tax free status of a group of drugs that are commonly used to treat a variety of conditions such as seizure control, anxiety and alcohol withdrawal.
Once again, the proposed amendment in Bill C-40 would ensure consistency with the government's policy criteria of ensuring that no sales tax applies throughout the production-distribution chain in a case of federally regulated drugs that can only be sold to a consumer under a prescription.
Another GST-HST area dealt with in the bill is agriculture. The Government of Canada recognizes the vital role that farmers play in our economy. To help those hard-working Canadians, the government has established a number of tax measures and other programs that support our farmers. For example, farmers do not need to pay the GST on a list of selected major items used exclusively by farmers. This includes pesticides, feed, all fertilizer and certain farm machinery and equipment. This so-called zero related list is intended to relieve farmers of possible cash flow problems that might arise between the terms of payment of tax on high price items and the receipt of an input tax credit.
The amendments in Bill C-40 would help ensure consistency between the GST-HST treatment of different farm products that can be purchased, imported and sold by farmers on a tax free basis.
Bill C-40 also deals with GST-HST as it relates to business arrangements. Canada's new government recognizes the important role played by small businesses in our economy. After all, they are the main job creators in Canada. Accordingly, we are committed to ensuring a favourable environment that allows these businesses to prosper and expand.
I mentioned at the outset that measures in the bill result from consultations with the tax and business community.
Time does not permit me to go into all the details but suffice it to say that Bill C-40 contains a number of provisions mostly intended to simplify or clarify the GST-HST administrative requirements for businesses in Canada.
Ensuring the efficient operation of our sales tax system is important to the government. To that end, Bill C-40 contains miscellaneous housekeeping changes to sales tax legislation that update provisions, correct ambiguities or ensure consistency. As well, the bill contains GST-HST administrative amendments concerning the discretionary power under the act for the Minister of National Revenue.
Finally, three Atlantic provinces have harmonized their sales tax system with that of the federal system. Bill C-40 contains rules related to the operation of the harmonized sales tax. One such example proposes to modify the existing new housing rebate for the provincial portion of the HST in the province of Nova Scotia. As announced by the Government of Nova Scotia, this rebate will be targeted to first time homebuyers and capped at a maximum of $1,500.
As I mentioned at the outset, Bill C-40 is comprised of three parts. I will now outline the details of the second part. This section contains measures relating to the taxation of wines, spirits and tobacco.
By way of first providing some background, a comprehensive review of the federal framework for the taxation of alcohol and tobacco products culminated in new excise tax legislation. This new framework modernizes the legislative provisions governing the taxation of spirits, wine and tobacco products and introduced an updated administrative and enforcement framework that reflects current industry practices.
The proposals contained in Bill C-40 implement a number of technical amendments to the excise framework. The amendments constitute refinements that would improve operation of the legislation and more accurately reflect industry and administrative practices.
The excise legislation has also been amended to implement a minor change to bring it into compliance with the specifications of the Framework Convention on Tobacco Control, an international treaty on tobacco control sponsored by the World Health Organization.
This brings me to part three of Bill C-40 which deals with proposed amendments to the air travellers security charge.
While time does not permit me to outline all of the proposed amendments, it is important to point out that the majority of these amendments come as a result of the consultation process with interested parties. I would, however, like to describe in more detail one of the proposed amendments. This is the one that deals with an exception for the air travellers security charge for charitable flights.
Immediately after the security charge was introduced, it was brought to the attention of the previous government that certain charities arrange free air transportation services for persons who otherwise cannot afford the cost of flights for medical care, as well as “flights of a lifetime” for physically, mentally or socially challenged children.
Canada's new government has responded to these concerns with this proposed legislation. Specifically, Bill C-40 proposes that the air travellers security charge will not be payable for air travel that is donated by an air carrier at no cost to a registered charity as long as the charity donates the air travel to an individual, also at no cost, in pursuit of the charitable purpose. This measure would help charities, like the Children's Wish Foundation of Canada which is dedicated to fulfilling a favourite wish for children afflicted with a high risk, life-threatening illness.
The measures contained in Bill C-40 that I have outlined today propose to refine, streamline and clarify the application of our sales tax system. At the same time, the bill reflects this new government's commitment to ensure that our tax system is efficient and, above all, fair.
I, therefore, urge hon. members to support the bill.
