Mr. Speaker, I am pleased to begin second reading of the provincial choice tax framework act. I will keep my comments short and as succinct as possible because we have heard time and time again how important this is to the provinces that they be allowed to make their choice as to how they collect their taxes. They are asking us to facilitate this as quickly as possible.
As I have said in the House before, the provincial choice tax framework act is a very straightforward piece of legislation that simply confirms a fundamentally basic principle: provincial taxation is a provincial responsibility. As such, each province must have the independence to decide whatever form of taxation they deem best for their own jurisdiction's economy. The provincial choice tax framework act enshrines federal Parliament's belief that provincial taxation is indeed a matter of provincial autonomy. It facilitates maximum provincial choice on matters of provincial taxation, including the decision of a province to transition to harmonized value-added tax.
As a point of overview, I remind members that in the past provinces in Canada have been allowed the autonomy to adopt the model of provincial taxation they so desire. That has meant that various provinces in Canada have been permitted without restriction to adopt varied models including in relation to their sales tax. At present five have sales tax, four provinces have a value-added tax or a variation of a value-added tax and one province has neither. The key point to emphasize here is that each province has had complete autonomy in this decision, free of federal restriction, to implement the model they consider most appropriate for their economy: a sales tax, a value-added tax, or neither.
As I have mentioned previously in this chamber, our government fully supports provincial autonomy in matters of provincial taxation. What is more, we strongly believe provinces should all be treated in the same way with respect to making such a choice. Put another way, each province should have the same rights as other provinces when making choices regarding provincial taxation, including the ability to freely adopt a harmonized value-added tax.
A little over a decade ago, under the administration of the then Liberal government, I remind this chamber that we saw this concept in action. Nova Scotia, New Brunswick, Newfoundland and Labrador each made the decision to transform their model of provincial taxation. Accordingly, the then federal Liberal government facilitated those provincial decisions to harmonize their new value-added taxes with the federal value-added tax.
I note the newly elected NDP government in Nova Scotia has not publicly denounced or sought to repeal the province's harmonized value-added tax since forming government. We believe and have stated so consistently, since forming government in 2006, that the exact same treatment should be equally afforded to all provinces. Indeed, the provincial choice tax framework act will ensure that going forward all provinces will have that ability and have the freedom to make decisions on matters of provincial taxation with greater certainty.
As we are all well aware, two provinces have recently declared their intention to alter their model of provincial taxation. First, on March 26, 2009, the province of Ontario, through its minister of finance, Dwight Duncan, announced the following and I will quote at length to provide the full context of this provincial decision for the benefit of our colleagues in this House:
Ontarians have a great track record of success when we work together to build a better future for our children. Our goal is a better future powered by a stronger economy. The next step we must take to get there is tax reform.
Specifically, today we propose three significant tax changes. First, a single value-added sales tax for Ontario. Second, permanent personal tax relief and three direct payments to Ontarians as we transition to a single sales tax. Third, comprehensive corporate tax reforms to permanently and significantly reduce business taxes for large and small enterprises across the province.
More than 130 countries have adopted a value-added tax. Every other country in the Organisation for Economic Co-operation and Development (OECD), save the United States, has a value-added tax — as do four other Canadian provinces. It is the way modern, globally competitive jurisdictions do business.
The Ontario Chamber of Commerce, many experts, research groups and sector associations have called on us to reform our tax system and create a single provincial–federal sales tax.
Over the next 15 months, we are planning to implement a single provincial–federal sales tax of 13 per cent. The single sales tax would begin July 1, 2010.
That is a long quote, but it is all attributed to Dwight Duncan, the finance minister of Ontario.
Second, on July 23, the province of British Columbia announced the following, and I quote at length again from a news release of that day, to preserve the province's complete rationale for its decision:
British Columbia intends to harmonize its provincial sales tax with the federal Goods and Services Tax effective July 1, 2010, to boost new business investment, improve productivity, enhance economic growth, and create jobs.
And I quote here Premier Gordon Campbell:
This is the single biggest thing we can do to improve B.C.'s economy.
To continue on with the quote from the news release:
This is an essential step to make our businesses more competitive, encourage billions of dollars in new investment, lower costs on productivity and reduce administrative costs to B.C. taxpayers and businesses. Most importantly, this will create jobs and generate long-term economic growth that will in turn generate more revenue to sustain and improve crucial public services. The PST is an outdated, inefficient and costly tax, some of which is hidden in the price of goods and services and passed on to and paid by consumers.
That was a quote from the finance minister, Colin Hansen, specifically. It continues:
Evidence from the Atlantic provinces showed that the hidden tax is removed very quickly, with the majority of the savings passed through to consumers in the first year.
More than 130 countries, including 29 of the 30 OECD countries, along with four Canadian provinces, have adopted taxes similar to the HST, called value-added taxes...Implementation of a single sales tax in B.C. would immediately reduce costs and enhance the competitiveness of B.C. manufacturers and exporters both nationally and internationally and bring B.C. into line with what is viewed as the most efficient form of sales taxation in the world.
Once fully implemented, the single sales tax will make B.C. one of the most competitive jurisdictions in the industrialized world for new investments.
Once again that was a long quote.
Let me underscore, as both those lengthy statements from each province in question have clearly set out, these were very deliberate decisions; decisions both provincial governments deemed necessary for their very specific economic reasons.
What all members of this chamber need to acknowledge and appreciate, and what serves as the main objective behind the provincial choice tax framework act, is that provincial governments must be able to make the decisions they believe necessary regarding provincial taxation, and they should be able to do so without federal interference.
We are in the unique position in this Parliament of having former premiers of both British Columbia and Ontario as sitting members; albeit, on opposition benches. It is instructive to consider what they, as former premiers, have publicly declared on this matter.
Listen to the former premier of British Columbia and current Liberal member for Vancouver South. He said, “Ultimately it is the decision of the provincial government whether or not to do HST”.
Here is another quote from the former premier of Ontario and current Liberal member for Toronto Centre , who said, “It's up to provinces to decide whether they want to proceed with a harmonized tax. It's a decision for them, not for us”. I will quote and highlight again that last portion: “It's a decision for them, not for us”.
In that spirit, let me quote, for the benefit of the chamber, statements made by the premiers and finance ministers of both British Columbia and Ontario on the question of the right of provincial governments to make decisions about provincial taxation.
In the words of B.C. Premier Gordon Campbell:
This is a matter of provincial autonomy. It is simply saying that British Columbia and Ontario will get the same kind of opportunities they have had for Nova Scotia, New Brunswick, and Newfoundland and Labrador.
Listen to his finance minister, Colin Hansen:
The question MPs have to ask themselves is not whether they like or don't like the HST, it's whether or not they will honour a request from the provinces of B.C. and Ontario.
Here is a quote from Premier Dalton McGuinty:
--I am very confident that the government of Canada will honour the wishes of the people of Ontario, as expressed by their duly elected Parliament, their Legislature and their government....I expect that the result will be respected by the people of Canada, as expressed through the government of Canada....I think members of Parliament in the House of Commons understand that Ontario in particular has suffered greatly. Our families and communities have suffered greatly as a result of this global economic downturn. They know that we need to take strong action. They know that we need to be rather dramatic in terms of the reforms that we put in place. They know that we've given long and hard thought to what needs to be done, so I'm confident that we'll have their support, as I say, to create those 600,000 jobs for the people of Ontario.
As Ontario's finance minister, Dwight Duncan, succinctly remarked:
I fully expect and hope the Parliament of Canada will honour the wishes of the duly elected governments of Ontario and British Columbia.
Essentially, what British Columbia and Ontario are asking for is not complicated. It is simply respect, that we respect provincial taxation and modifications to it that provincial governments may deem necessary, which are ultimately their responsibility, equally and without restriction.
Through the provincial choice tax framework act, we respect that principle and confirm the autonomy in this matter, specifically the move to a fully harmonized value-added tax. The provincial choice tax framework act will ensure that, through amendments to the Excise Tax Act, the transition to a harmonized value-added tax for provinces that choose such a course of action is done in an equal and consistent manner.
This technical tax legislation will enshrine a provincial choice tax framework that will be equally available to all provinces. The provincial choice tax framework act specifically includes: first, the imposition of the provincial component of the harmonized value-added tax in respect of that province; second, the application of any element of provincial tax policy flexibilities, including rate flexibility for the provincial component of the harmonized value-added tax; and finally, the proper administration and enforcement of and compliance with the act.
This technical tax legislation requires timely parliamentary approval to provide certainty to businesses and individuals. I note that both the governments of and the businesses and consumers in British Columbia and Ontario have already committed significant resources toward and planned for this key economic reorganization.
For instance, BCE has already publicly announced its intention to accelerate its investment in Ontario for 2010, based on the Ontario government's implementation of a harmonized value-added tax.
To quote George Cope, President and CEO of BCE:
As has been the experience in other provinces in which Bell operates, savings from a single sales tax structure will accelerate our investment in Ontario. Fewer dollars going toward taxes in 2010 mean more dollars that Bell will reinvest in our networks and service in the province next year.
We cannot delay and allow uncertainty to creep in, as it would be hugely unfair to business, unfair to provincial governments and their employees, unacceptable to consumers and unhelpful to Canada's international competitiveness.
To repeat, this is not a difficult decision. Either Parliament supports the right of provincial autonomy regarding provincial taxation and provincial freedom to move to a harmonized value added tax, such as occurred in Nova Scotia, New Brunswick and Newfoundland and Labrador before; or it advocates unequal treatment and federal interference in provincial jurisdiction.
The provincial choice tax framework act would allow Parliament to make that decision. A timely decision would avoid major uncertainty for businesses, consumers and provincial economies.
I strongly urge this chamber to ensure that all provinces have the autonomy to choose the model of taxation they deem necessary and do so on an equal basis going forward under the framework laid out in this bill.
This is not complicated. I urge the House to decide in a timely manner.