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 . 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 , 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.
Mr. Speaker, I can be relatively brief and concise today because I think we have gone through these matters a number of times and the situation is really very simple, that is to say, it is a matter of provincial jurisdiction. I could just sit down at this point because it is that simple, but I will speak for a little bit longer.
The bill creates the framework for Ontario and B.C. to harmonize their provincial sales taxes with the GST. Beyond that it will create a framework for any other provinces that wish to harmonize their taxes to do so as well.
There is a simple principle contained in the bill, the idea that provinces have the right to choose how they tax their citizens. Specifically, the bill creates a framework for Ontario and B.C. to harmonize their provincial sales taxes with the GST, as they have chosen to do. I do not understand why this simple point is so difficult for the NDP to understand.
This is within provincial jurisdiction. It is up to the provinces to decide how they will tax. This is not about whether or not we like the tax; it is a matter of provincial jurisdictions.
It will also create a framework for any other provinces that choose to harmonize their sales tax to do so. As we know, several Canadian provinces have already harmonized their sales tax with that of the federal government, and none of these provinces that have harmonized have ever chosen to reverse their course and de-harmonize the tax.
Nova Scotia chose to harmonize its sales tax, and the federal government allowed it to do so. At the time, the provincial NDP Party vowed that if it were ever elected to government, it would scrap the HST. Believe it or not today the NDP is the governing party in Nova Scotia, and I have not heard NDP Premier Darrell Dexter indicate in any way that his government will de-harmonize its HST. In fact, the Nova Scotia NDP wants to retain Nova Scotia's harmonized sales tax. That is the choice of the Nova Scotia NDP government and we, as federal politicians, should respect the provincial NDP's choice in this area.
This year, as we know, Ontario and British Columbia have indicated their intention to harmonize their respective sales taxes, just as other provincial governments had done during the 1990s.
Today it falls to us, as federal legislators, to decide if we will allow Ontario and British Columbia to harmonize their taxes, the same way that past Parliaments have allowed other provinces to do so. I am talking about provinces like New Brunswick where a Liberal government currently maintains an HST, like Newfoundland and Labrador where a Conservative government maintains an HST, and like Nova Scotia where an NDP government maintains an HST.
The 35th Parliament allowed these provinces to harmonize when they asked to do so. Should we, today, change course and tell other provinces that might wish to follow their lead that it is too late? Should we tell them that they cannot have an HST if they want one?
I would say the obvious answer to that question is no. We must allow them to make their own decisions, and that is why I will be supporting this legislation that allows these provinces, and other provinces in the future, to make a choice regarding what is fundamentally a matter that is inside their own jurisdiction.
Let me give a very brief description of what this bill does. The bill will add B.C. and Ontario, the two provinces that are seeking to harmonize taxes, to schedule VIII of the Excise Tax Act and will set B.C.'s portion of the HST at a rate of 7% and Ontario's at 8%. It is important to note that this is a fundamental shift from the 1990s vision of a single rate across the country, which assumed that all provinces would share an identical rate.
One important shortcoming of this legislation is that first nations in Ontario will be denied the tax exemption they currently enjoy. I have written to the on this topic, and I have asked him to negotiate a fairer arrangement with the Government of Ontario on this matter.
It is also important to note that some input tax credits will initially be denied under this bill. This denial will apply to large businesses with over $100 million in sales. The input tax credit denials will be phased out over the next five years as the HST becomes a full value-added tax.
To those Canadians who are on the opposition's side of the HST, it should be abundantly obvious that the federal Conservatives have their fingerprints all over this legislation. It was the and his who encouraged Ontario and British Columbia to harmonize their sales tax.
It was the federal Conservatives who noticed that the two provinces were both facing deficits due to this Canada-wide Conservative recession and who offered them billions of dollars to make the tax change. If they had not done so, perhaps Ontario and B.C. would not have decided to harmonize.
That possibility is of course strictly hypothetical, because the hard reality is that both Ontario and B.C. have in fact decided to harmonize their sales taxes and regardless of their reasons have struck and signed deals with the federal government. That is why, as I said earlier, this legislation is about whether Ottawa feels that provinces have the right to determine how they tax within their own areas of jurisdiction.
I appreciate that some in this House may not like the HST, but I would suggest that if they want to begin prohibiting provinces from working in areas of their own jurisdiction, they should resign from this House and they should run for their provincial legislatures. Otherwise, they should support this bill and its very simple principle that should not be beyond the NDP's capacity to understand, that principle being that provinces have a right to decide whether or not to have a harmonized sales tax.
Mr. Speaker, I would like to begin by stating that Bloc Québécois members support Bill , which is before us today. Yesterday, some people were wondering whether we opposed the time allocation motion for this bill, given that we did not even see the bill until after the motion was moved. That was completely unacceptable. But now that the motion has been adopted, we agree with the House's decision.
We support this bill, but not for the same reasons as other members, be they Conservative or Liberal. We respect Ontario and British Columbia's decision to harmonize their provincial sales taxes with the GST, because that is what Quebec has been doing for many years now.
We would like to reiterate the request made by Quebec's National Assembly last spring in a unanimous resolution: Quebec must receive fair compensation for having harmonized its sales tax with the federal tax beginning in 1992.
The Bloc Québécois is calling for fair and equal treatment for Quebec in all matters. The federal government changed the rules of the harmonization game. When it compensated the maritime provinces—New Brunswick, Newfoundland and Labrador, and Nova Scotia—it said that Ontario, British Columbia and Quebec would not be eligible for compensation because they stood to lose less than 5% of their tax revenue.
As we have seen, the federal government changed the rules for Ontario and British Columbia. Its latest budget included funds for compensating those two provinces. The Government of Quebec, naturally, passed a unanimous resolution telling the federal government that it makes no sense to change the rules and that it must take into account what Quebec has done in previous years. I will come back to that.
We intend to continue putting pressure on the federal government to resolve this contentious issue that has been around for many years. This is a matter of equality.
I want to put this into context. We know that the Government of Quebec harmonized its sales tax with the federal tax in the early 1990s. At that time, the federal government agreed to allow Quebec to manage the GST within its own jurisdiction.
In 1997, the federal government offered compensation to three provinces—New Brunswick, Newfoundland and Labrador, and Nova Scotia—to harmonize their sales taxes with the federal tax.
Unlike the situation in Quebec, the federal government would manage the federal part as well as the provincial part of the new harmonized tax. As compensation for the loss of revenue caused by harmonization, the federal government paid nearly $1 billion to those three provinces.
Since then, the Government of Quebec has been asking Ottawa for compensation for harmonizing its sales taxes, which it had done five years earlier. However, even though it recognized the Government of Quebec's full harmonization of sales taxes, the federal government refused to compensate Quebec, claiming that the Quebec government's loss of revenue caused by the harmonization was not enough to justify such compensation.
At that time, in order to receive compensation, the loss of revenue caused by the harmonization of the provincial portion of the sales tax had to exceed 5% of the total amount of the provincial tax. At the same time, the federal government said that Ontario and British Columbia were not entitled to this compensation.
But the government is now going back on its word on this lost revenue rule and it has reached an agreement with Ontario and British Columbia. This agreement included significant compensation, to the tune of $4.3 billion for Ontario and $1.6 billion for British Columbia. One might say that, by rejecting the 5% criterion, the federal government has now opened the door for Quebec to qualify for compensation. The rules of the game have been changed for two provinces, so why not change them for Quebec as well and ensure that it, too, is eligible for compensation.
Instead of naturally and fairly compensating Quebec for having harmonized its tax five years earlier, in other words in 1992—or 17 years ago now—the Conservatives, using their legendary bad faith, have started coming up with new excuses not to give Quebec the $2.6 billion it is owed.
In response to their claim, which surprised Quebec's finance minister, Ms. Jérôme-Forget, that the Government of Quebec had not in fact completely harmonized its sales tax with the federal government, Quebec committed to doing one thing right away. There were certain inputs for big companies that were still not exempt from QST. The finance minister announced that the Government of Quebec would proceed with those adjustments. Then, and we heard it here in this House, the Conservatives found new reasons not to compensate Quebec. They said that Quebec should stop charging tax on tax. Through its finance minister, the Government of Quebec promised to so do.
What did the federal government do? It came up with another excuse. From now on, only provinces whose federal and provincial sales taxes are collected by the federal government will be compensated. An agreement was made in 1992 whereby the Government of Quebec would collect the tax on behalf of the federal government. This is just another fine example of the predatory federalism practised by the Conservative government.
As I said earlier, when the two sales taxes were harmonized in 1991, the Government of Quebec entered into an agreement with the federal government whereby the Government of Quebec would collect the tax on behalf of both governments and then pay Ottawa its share. For Quebec, it was and still is a question of autonomy. In exchange, the federal government would pay Quebec $130 million annually. This was not compensation, but payment for services rendered.
The Bloc Québécois respects the decision by Ontario and British Columbia to have the federal government collect their sales taxes. That is their choice and their business. But the Bloc Québécois will support the Government of Quebec in its fight against the federal government, which is trying to take away Quebec's power to collect the GST in Quebec on Ottawa's behalf.
Those are the main reasons why, although we are in favour of the bill, we are still certain that until this dispute between Quebec City and Ottawa is resolved, there will still be an injustice. We are going to work hard to put an end to this injustice and ensure that the federal government provides Quebec with compensation pro-rated to its population and the amount of sales tax collected in Quebec, as it is planning to do for Ontario and British Columbia. Quebec must be compensated fairly for what it has been doing for many years under the sales tax harmonization agreement.
In closing, I would like to say that we will certainly not let this dispute continue. We are not going to let the current government keep on acting unfairly and denying what the Government of Quebec has already done to harmonize its sales tax and even make adjustments. When adjustments have been needed, they have been made quickly.
We are certain that, because of this bill, the provinces will be somewhat more able to create or enter into agreements with the federal government more easily. That is the upside of this bill and that is why we will vote for it.
Mr. Speaker, I am delighted to speak again in opposition to what is essentially an 8% ripoff for Ontarians and the people in British Columbia.
If the and the McGuinty Liberals have their way, a haircut next summer would cost 8% more. Burying a loved one would cost 8% more. Vitamins, a pair of sneakers, postage stamps, vet fees for a dog and an oil change for a car would all cost 8% more. Even the price of gas would go up. That would hurt a lot of families, seniors, young people and small businesses.
From the outset, the NDP said that the HST was the wrong tax at the wrong time. The recession is still being felt, unemployment is still rising and this regressive tax will take $2.5 billion out of the pockets of those who are least able to afford it. To add insult to injury, the will give Premier Dalton McGuinty $4.3 billion in exchange for his agreements to tax Ontarians more. B.C., which will also get the HST, is being paid too. Therefore, I can understand why Quebec, which has already harmonized its sales taxes, will want compensation.
These payouts are all money that drives Canada further into debt, and for which the government has not budgeted.
At the same time, big companies will win the jackpot yet again with another $1.5 billion in corporate tax cuts and, as McGuinty and the boast, the HST will cut business input costs even further. In other words, the HST will drive up taxes for families and lower them for big business.
The and McGuinty say that we need to look at the bigger picture. Okay, let us do that. Here is what we see. This recession was caused, not by high wages or a lack of initiative on the part of working Canadians. It was caused by a carnival of greed among bankers, financiers and others who took reckless risks and triggered a worldwide financial crisis.
Yet seniors and hard-working families are the ones taking it in the neck. Pension funds are in difficulties. Retirement savings tucked away in RRSPs have lost much of their value. From next summer onward, big business would pay less and ordinary Canadians would pay more for everything from Internet services to gasoline. That is hardly fair. That is why we are currently locked into battle in the House of Commons to block the legislation that will allow the federal government to foist the HST on Ontarians.
Under the leadership of the member for , the Liberal Party has sided with the , who has launched an underhanded gambit to ram through the House before the holiday break. It is his way of saying, “Merry Christmas”.
There will be no consultations on the HST law, no committee hearings, no opportunity for Canadians to have their say. The does not want to hear from retiree groups, real estate associations, minor hockey organizations, provincial premiers and many others who have declared their opposition. He wants us out of the way as quickly as possible. He wants to hang this tax on Premier McGuinty. He wants us to get used to this tax grab so we will not blame him forward to the next election.
We will not let the Conservatives take the blame because we know that this is the wrong tax in the wrong hands at the wrong time, and the knows it too. Here is what he said about the HST in the House in December of 1996 when he was in opposition:
We need another way. This harmonization of the GST, this tax collusion between provincial and federal Liberal governments, is not the way to reverse the economic decline of this country.
Here is what the current said when he was in the Conservative opposition, “The proof is in the pudding. This harmonized sales tax is going to hurt Atlantic Canada”.
Liberals, who are now supporting the HST, are flip-flopping like mad because they too are on record as opposing the HST. The member for said, “It is absolutely horrendous and it is criminal on the part of the Conservative government to be pushing this policy at a time of deep, economic recession”. He should have made certain that his leader would not flip-flop on yet another policy issue before he decided to go on the record. Now it is coming back to bite him.
Despite the fact that all of these quotes prove my point that the HST does not deserve anyone's support, I am much more concerned about the quotes that I am getting in a flood of emails, letters and phone calls from my constituents on . They know they are getting a raw deal and they deserve to be heard. If the government will not listen to me, perhaps it will listen to the people whose vote it needs to woo.
The first is from Mark, “Charging my customers this cost will hurt my business for sure”. That is from a businessman.
Mrs. Longille says, “We don't need this extra tax. People don't have the money or jobs and are not over this deep recession. I am 79 years old”.
Marg says, “The well is dry. When are the powers that be going to recognize that average citizens can bear no more? Please No HST”.
Ronald writes, “I am a senior on a disability. I am barely making it every month. I live in my parent's house that was left to him and do not want to give it up. I have lived here all my life”.
Debra says, “We're just barely getting by now. This is just going to put us over the edge”.
Ed says, “This tax does not surprise me. That is the Conservative way”.
Fred says, “I am on a fixed income with no cost of living raises. I'm retired, but not by my choice. We are one of the most taxed countries in the world. Are they never going to be satisfied?”
Letty says, “It is unfair to expect low income families and seniors to pay more taxes. Can this change not be stopped somehow?“
Debra says, “We're just barely getting by now. This is just going to put us over the edge”.
Gerry writes, “I feel that “increasing” sales taxes by harmonization is a bad idea. This is a large increase for us consumers by having to pay additional taxes that are now not required on the provincial tax level. ie. heating bills, hydro, new houses, labour on auto repairs etc. Please help stop this tax grab”.
Another person writes, “I am totally against the HST and the 8% tax increase that our governments are trying to place on us. This will surely hurt my family as well as the other Canadian families in Ontario. I believe that the Leaders that we elect have a responsibility to the people of this country to improve the quality of living or life just as we the people have that same responsibility.
The Government's that we elect are not to put burdens or yokes around our necks and this TAX would be doing just that along with other POLICIES that are in the works. The Greed of our Government Officials (not all) and the lack of there integrity are surely hurting Canadians and this Country. I wish that we would go back in time and learn from history to see the problems that Russia and other Countries had and recently came out of. I truly hope that you will sound the trumpet on the issue of the HST and other POLICIES”. I am happy to do that on behalf of Patrick.
Bill writes, “I felt that I should forward this e-mail about the HST to you. Please, help us. We, the seniors of Ontario, are going under like the Titanic”.
John and Jacquie write, “As senior citizens, we have to be very careful with our money and it seems that this new government initiative...does not bode well for us. As you know, the blending of the PST and GST will result in higher end costs for virtually most goods and services. How can this possibly be justified?”
Anne Thors writes, “I think it is outrageous what the provincial and federal governments are doing to us, especially to the seniors. All the MP's and MPP's are well provided for, they are all just a bunch of sorry story tellers. They are forgetting that our vote put them in that place. Will they be surprised when we all change our minds? I am an outraged senior”.
Another person writes, “What happened to the election promise that no taxes would be increased? I guess technically McGuinty isn't raising taxes, he's just creating a new tax. In this time of economic strife, Mr. McGuinty is being completely irresponsible and totally out of touch with the needs of the “little people”. It's hard to know what they need when you are constantly rubbing elbows with the elite”.
Charles says, “In Ontario we are being taxed to death! As a senior we are not getting any increases?”
Frank writes, “After serving in the military for $1.35 a day and being on pension for 25 years and still paying I have done my share. They are trying to squeeze more out of me?”
Armand writes, “Just another tax for seniors and the people in Ontario by the Provincial and Federal government of Canada”.
Doreen writes, “This is a gouging from everyone, especially the low income people. Keep fighting for us”.
Douglas and Sylvia Chisholm of my riding write, “[The Prime Minister] and Mr. McGuinty—Are you losing touch with the people you're supposed to represent? I believe you are”.
John writes, “I'm struggling right now, taxing my utility bills could be what will sink me, and many other families, I am sure”.
“Please do what you can to block the GST.” That is from Linda and Ralph.
Jean and Ronald write, “My husband and I are seniors on a fixed income and would like to add our names to your HST petition... It is pretty scary reading all the additional services and/or items that will have this blended tax added and we would like our voice to count in objecting to this additional tax on the presently exempt services/and or items”.
John writes, “With the added of the cost to the utilities and other non-luxury items we have no extra income to keep the economy rolling. We are taxed so heavy now I don't have extra for my family. If you keep taxing our spending will eventually have to stop”.
Here is one from a businessman that members might be interested in. He writes, “As a constituent in your riding of Hamilton Mountain I am asking for your support on the federal front to block the HST legislation. At a time when most, if not all, Canadians are tightening their belts due to tough economic times, we are facing increases on the simple necessities to heat our homes and turn on our lights with this new tax grab. The claims of job creation, et cetera, fall on deaf ears. The only job creation I foresee is another level of government bureaucracy to manage it. As a small business owner, I see no advantage. Business cheques are cheap and I don't mind signing eight instead of four. What I do mind is investing more of my working capital into a never ending loop of payables and receivables, that I will never gain back these moneys 100% unless I liquidate my inventory and close up shop. As an Importer, I will have to pull the full 13% from my pocket when I customs clear my orders instead of the current 5% GST. I don't know how I'm supposed to benefit from laying out an extra 8% up front and waiting to recoup that money on receivables later. I am a very proud Canadian, but things like this shave a bit off the top of that pride every time it is forced down our throats by those who are elected by us and draw a salary from our hard work. If the opportunity arises in Parliament to defeat this legislation, I ask you to hear my voice as a resounding NO!”
Another email stated, “I think or I know it is disgusting that the Conservative Government and the Ontario Liberal Government have lied and taxed people to the hilt and expect to get blood out of a stone with the Harmonized Sales Tax”.
Ruggerd and Annie write, “Very unhappy about the tax increase. We are on a fixed seniors pension. I think [the Prime Minister] should smarten up and try to help us not destroy us”.
Renee writes, “My family is not ok with the tax hike. We cannot afford to buy food or pay our bills now. We are out of work and trying to find a job is tough enough. This new tax will kill us, we will lose our house”.
Amanda writes, “We are a family - 2 adults and 3 children, already struggling - no tax increase please!”
Audrey writes, “As a housewife with everything going up in price, I am having a hard time. At my age it is very hard to make ends meet”.
Mr. and Mrs. Cappadocia write, “Enough is Enough! My husband is laid off and we find making ends meet now very difficult. A recession is not the time to add more tax”.
Pat and Jackie write, “How distressing! This is just another big tax grab, thank you for informing us of this so-called bribery. Is anyone honest anymore?”
Mr. and Mrs. Robertson write, “My husband and I are seniors, and anymore tax increases are just going to be unbearable. If our pensions increased like the government's do maybe we could make ends meet. Thank you for your hard work on this issue”.
Lawrence writes, “Greed knows no bounds. Those who survive from pay to pay or pension or pension will indeed lose disposable income they cannot afford to”.
Ellen writes, “This tax is an added burden for the unemployed people who are already unable to cope now”.
Marianne writes, “If this is so great a deal, why the advertising blitz outlining its benefit!! It didn't work in the Atlantic provinces and it won't work in Ontario either. Its about time the government listened to the people who are paying the bill”.
Mr. and Mrs. Van Rooyen write, “If this goes through, I know who our family will be voting for in the next election”.
Ruth Morrison writes, “This is no way to get people spending. If they're paying more for the essentials how are they going to have extra money for non essentials?”
Teresa and Regina write, “We are disgusted that they should keep grabbing what little money we have left from our pensions”.
I could go on and on. Perhaps I will get another chance later on in this debate to continue relaying the outrage expressed by my constituents.
However, let me just sum up the arguments that are inherent in the hundreds of emails that I have received and those that I just read.
First, the tax is inherently regressive. It disproportionately hits those who have no choice but to spend all or a large part of their income, and it favours those with income to save. This is doubly true in a recession where less than 50% of the unemployed qualify for EI, where social assistance rates are well below the poverty line, and the cost of essentials loom all the larger.
Second, the HST extends the sales tax to essentials previously not covered by the PST, and apart from those items exempted, and those differ from province to province, those with the lowest income have no choice but to pay it and sacrifice consumption elsewhere. The HST is hitting those who can least afford it harder than anyone else. The tax, quite simply, is unfair.
Third, without significant compensating measures, like the GST tax rebate, or significant exemptions of essential goods and services for low and moderate income families, the tax remains unfair. Our experience with social support programs does not reassure us. Governments that have demonstrated a callous disregard for the plight of low and moderate income households cannot be trusted to apply the HST fairly.
Fourth, the suggestion that the HST will lead to significant increases in investment is unproven. Economist Erin Weir has pointed out that a significant proportion of business inputs in Ontario are already exempted from the PST, therefore removing the remaining tax on inputs will not have the impact that the government claims.
Fifth, if as is argued a sales tax is bad for investment compared to the tax on profits, then why is the removal of sales taxes from inputs not matched by an increase in corporate income taxes? In fact, the opposite is true. The HST is accompanied by corporate income tax cuts at both the federal and provincial levels. In other words, the HST is part of a general and indiscriminate shift in tax burden from the corporations to individuals and families without adequate compensation.
Sixth, progressive economists argue that if we want to use the tax system to encourage investment, across-the-board cuts are an inefficient way to proceed.
Seventh, with the economy operating at two-thirds capacity, increasing profits by lowering taxes through the HST is not as likely to foster new investment as it might when the economy is booming. The timing of this tax, again, is inappropriate.
Last, as for lowering prices, this assumes businesses will pass along their savings to consumers. If this happens, it will happen only in competitive industries. Studies show much less than 100% of the savings are passed on to consumers. In other words, price increases are virtually inevitable.
In conclusion, let me repeat, this is the wrong tax in the wrong hands at the wrong time. It continues the pattern under successive federal Conservative and Liberal governments of pursuing policies that boost the returns to a privileged corporate elite on the flimsy excuse that they will use those returns to benefit the rest of us. Three decades of growing income inequality in this country prove those promises false.
Mr. Speaker, how could anyone be against a bill that allows the provinces to harmonize taxes that affect everyone? We must ask ourselves this question. In Quebec, we do not understand how anyone could oppose it, since we harmonized our taxes in 1992. At that time, we thought it was only right that we should take over the management of our own affairs. It was only natural for us to govern in a different way. Business was business at that time, and accordingly, for services rendered, the Government of Canada reimbursed the Government of Quebec $130 million a year for administrative costs. It is an administrative arrangement: the federal government has what it has for $130 million. This has nothing to do with compensation.
At the time, the Government of Canada did not offer any compensation. As least that is what it said, until it offered three provinces—New Brunswick, Nova Scotia and Newfoundland—compensation equivalent to 1.5 percentage points of the tax base. That is how those three maritime provinces received nearly $1 billion, $961 million to be exact, beginning in April 1996, to be paid over four years, thereby compensating for 100% of the difference for the first two years, 50% for the third year, and 25% for the fourth year. No matter what administrative arrangements were made, there were arrangements and there was compensation.
It is up to the provinces to decide whether to let the Government of Canada collect the tax. I see this as yet another difference between Quebec and the Canadian provinces. Quebeckers would rather we control our own tax revenue ourselves. That is one of our rights, one of the rights we have claimed, one of the rights we exercise, and nobody is going to come and take that away from us.
However, since 1996, Canada's tax system has been blatantly unfair. The maritime provinces were compensated, but Quebec was not. Of course, there are those who say that since 1995, the federal government has been allowed to do whatever it wants to Quebec.
The value-added tax system is a much better system that Quebec has favoured for ages. This is another example of what a great job Quebec is doing running its own affairs. It is doing such a great job that Canada's two largest provincial economies have now accepted that this is the best way to do things and are working on harmonizing their taxes.
And now, in one fell swoop, the Government of Canada wants to be in charge of collecting these taxes for free on top of providing compensation.
Compensation for these two provinces is more than peanuts. It will be around $4.3 billion for Ontario and $1.6 billion for British Columbia, a total of $5.9 billion in current 2009 dollars. Those two provinces will cash in, but Quebec will still get nothing.
This morning, one of the speakers estimated that the $5.9 billion will actually end up costing a little over $10 billion because of the interest that the Government of Canada will have to pay on the money it borrows to pay that $5.9 billion.
I did the opposite calculation and came up with some numbers of my own. If the government has owed Quebec $2.6 billion since 1992, what would that be worth today? How much? At an interest rate of 5% over 17 years—I did this properly using a 5% interest rate, not 10%—the current value of the $2.6 billion owing to Quebec since 1992 would be $6 billion. Now, $6 billion compared to $5.9 billion, that is saying something.
In other words, what the federal government will be giving Ontario and British Columbia is equivalent, in today's dollars, to what has been owed to Quebec since 1992. It could not be more unfair.
But we have no intention of interfering in the negotiations between the federal government and the Government of Quebec regarding the compensation. They have the power to negotiate and we will let them do so. But in order to negotiate, you need at least two parties.
One has to wonder about the willingness of the federal government to negotiate with Quebec. Despite a unanimous motion from the Quebec National Assembly, we have not gotten anything. When their interests are at stake, Quebeckers generally support the minister, regardless of his or her party.
The former Quebec finance minister had a very long exchange with Canada's . Ms. Jérôme-Forget was practically waving a white flag in one of the letters that she sent to the current federal , because she said that she would give him what he wanted.
She told the minister that he was right to open the door to compensation for Ontario, and that we would do everything we could to get the same compensation. Seven years ago, the door was also opened to British Columbia, but the door is always slammed in Quebec's face. Ms. Jérôme-Forget wrote the following:
—with respect to all the pertinent clauses, the agreement will be modelled for the most part on the Canada-Ontario agreement signed last March.
The Canada-B.C. agreement is the same as the Canada-Ontario agreement.
I cannot be accused of partisanship since we are not in the same party.
The more the Minister of Finance agreed to what the federal asked for, the more he asked for. He does not seem to want to resolve the issue. It is as though, during a three-period hockey game, the federal government decided that the players would play four quarters of football and, in the fourth quarter, that the players would play nine innings of baseball and then, in the ninth inning, it claimed to have made a mistake and decided that the players would now play 18 holes of golf.
It has been 17 years. If they want to play golf, they will be resolving the issue next year.
I therefore call on the Minister of Finance of Canada to show that he can manage the public purse fairly. It is his duty to compensate Quebec pronto, because Quebec harmonized its tax 17 years ago. He should respect the people of Quebec and their National Assembly.
All Quebeckers support the current Minister of Finance, Mr. Bachand, who is the member for Outremont. I am deliberately mentioning the minister's riding. Quebeckers do not really understand why the other member for Outremont, who sits here, is going to vote against the bill. All Quebeckers support the provincial member for Outremont. Only one federal member from Quebec does not support the bill, and that is the member for . I am sure that it is because his motto is “Canada first”.
Of course, any bill can be improved, but I believe that this one respects the provinces' jurisdiction. Since that is a rare occurrence these days, we will vote in favour of the bill.
Some provisions do leave me confused, though, such as the advance notice required for changes in provincial value-added tax rates. From now on, the provinces will have to notify the federal government 120 days before making any changes. This means that a provincial finance minister will no longer be able to announce in a budget speech that effective at midnight, the tax rate will go down or up by a given percentage. I am getting into administrative details, but the fact remains that the substance of the bill is good.
The bill offers less flexibility and is sort of a Canadian compromise.
My first official speech in this House supports the unanimous motion in the National Assembly, where I sat for 15 years, including the beginning of the harmonization period. The motion read:
WHEREAS Québec was the first province to harmonize with the Federal goods and services tax (GST) in the early 1990s: [I was there]
WHEREAS since then, three Atlantic provinces have harmonized with the GST in 1997 and have received compensation for this from the Federal Government totalling close to 1 billion dollars;
WHEREAS the Government of Ontario announced that it would harmonize its sales tax with the GST beginning on 1 July 2010;
WHEREAS the Federal Government will grant a 4.3 billion dollar compensation to Ontario for this harmonization, an amount that is justified in the Canada-Ontario memorandum of understanding particularly owing to the desire to stimulate economic growth and job creation, and the Federal Government will administer this new provincial tax free of charge on behalf of Ontario;
WHEREAS the Ontario sales tax will be very similar to the Québec sales tax (QST) since certain goods, such as books [that is important to us], will not be subject to the provincial tax and that input tax refunds in Ontario may be identical to those agreed to by Québec for an 8-year period;
WHEREAS Ontario is the fourth province to receive compensation from the Federal Government as part of the harmonization of the provincial and federal sales taxes, while Québec has not received any compensation to this day even though it was the first province to harmonize its sales tax;
BE IT RESOLVED THAT the National Assembly ask the Federal Government to treat Québec justly and equitably, by granting compensation that is comparable to that offered to Ontario for the harmonization of its sales tax with the GST, which would represent an amount of 2.6 billion dollars for Québec.
The National Assembly of Québec voted on that motion on March 31, 2009. Naturally, British Columbia was not there.
This should be respected. In my opinion, this first speech also condones fiscal freedom for the provincial governments. Subtle or not, the result is that there is a certain respect for provincial jurisdictions. I am calling on the Government of Canada to continue in that vein and compensate Quebec.
This first speech also reflects the views of an independent thinker who is practical, realistic and patient and who realizes again and again that having just one fiscal policy, ours, and just one collection authority, ours, would be a much better way to run Quebec. Add to that all our own laws and signing our own agreements and what we have is the definition of sovereignty.
Madam Speaker, if someone were to tell someone else on the street that there would be an 8% increase in the cost of a number of services not currently charged any tax, and then took a survey of all of those people, asking them if that were a good idea or how they felt about it, I can only assume that most of the people would say that they really did not want to pay any more tax on something, if it is not taxed already. That, indeed, has been the basis of the argument a number of people have made.
Interestingly enough, the conversations that members have had and the discussions and debate have been about income tax issues in the provinces of Ontario and British Columbia at this time. The conversations are not with regard to Bill specifically, the bill we are presently debating. It is the nature of this place that if a person can make a link to an issue, they can talk about pretty well whatever they want, because politically it may be more advantageous for them to say some things, but not everything.
That is unfortunate, because the constituents I have heard are not exactly sure what is happening and who is in charge of what. So I thought I would try to explain this to them, because most of us have received a lot of emails from people about a harmonized sales tax, and they are not exactly sure what all of the details are, because the bills that will lay out all of the details have not even been presented yet in the Province of Ontario or the Province of B.C. There are some preliminary pieces of information on the websites of those provinces, which their residents can look at.
The Conservative Government of Canada has entered into agreements with the provinces of Ontario and British Columbia to harmonize the federal and provincial taxes into one tax called an HST. Three other provinces have already done it. The fourth province, Quebec, has done a sort of harmonization; it is not complete and, indeed, there are still discussions going on about whether or not Quebec may be entitled to further compensation for having entered into a quasi-harmonization agreement. Now two provinces want to enter into such an agreement as well.
We have to ask ourselves, why would provinces want to do that? Why would they want to harmonize their taxes, knowing that the issue of taxation is not politically popular? They do not do it because they want to somehow agitate people. There must be a reason. Having done enough research and having looked at the economic analyses and to some of the people who have been involved historically in dealing with consumer taxes like GST or PST, the consensus among the analysts I have looked to, the people who appear regularly before the finance committee and, indeed, some other committees, has been that the provincial sales tax system is a very inefficient system.
It is inefficient because provincial sales tax is charged at each stage of the life of producing a product. That means when someone gets the raw materials, for instance, cutting down a tree, that business of cutting down trees and sending trees to the lumber mill is charged provincial sales tax. The lumber mill will have some other expenses and it will process and produce the trees into two by fours and other building materials.
Those are sold to wholesalers and there is a provincial tax added to them, the same provincial tax. Now the product has been hit three times along the way. Ultimately, it goes from there to where the individual consumer can purchase the wood needed for the project, which is again charged. The provincial sales tax has been charged more than once. It is charged all the way along the line. It is tax on tax on tax.
In fact, if we were to look at the analysis of the final selling price of a product that people purchase in the province of Ontario, we would find, notwithstanding that the provincial sales tax rate is currently 8% in Ontario, that the amount of provincial sales tax in the ultimate price we pay is far greater than that, because it has been applied several times and compounds. There is an enormous amount of tax.
Could anyone imagine if that provincial sales tax were treated the same way the GST is treated? The GST is only paid by the end consumer. It is charged at the first point of production, for instance, in the example that I used, but when the product is sold to the next person down the line, maybe the lumber mill, the seller gets back the taxes paid. The seller has just passed on the 7% and it keeps building up.
However, at the end of the day, the total amount of GST charged on the same product is currently 5%. That is the total amount that people would see in the final purchase price of that product compared with something now that is far in excess of the current provincial rate, simply because there are no input tax credits.
Most of the members here are very familiar with that, particularly the member for . She is on the finance committee and we talk about a lot of these things. She and I know the mechanics of the system and know very well that if efficiencies in the tax system save businesses money, these are is not going to help the consumer very much if the businesses decide to hoard the money and keep it themselves rather than passing it on to consumers.
The only way to address that is to have a competitive economy. There has to be enough competition within the system so that if a competitor is going to pass on more or all of the savings from changes in tax policy, another competing business has no choice but to match those or else lose business to the competitor simply because of the economies of lower pricing.
Therefore, it does make some sense to make the provincial system more efficient and fairer, in fact. We are overtaxed at the provincial level.
However, why now? Many of the members have raised the issue of it being good policy but bad timing.
I do not think anybody is going to dispute the fact that the Province of Ontario is in some very serious difficulty in terms of its economic fundamentals. Its projected deficit is some $24 billion. The unemployment rate in most regions is much higher than the national rate.
The Conservative government has boasted about a stimulus plan that it has committed to but has not actually issued cheques for. It is a matter of, “Here is what we have promised to do and we have promised to do it so many times over and over again”. Eventually projects might get the money. However, before we know it, things are going to lapse and the government is going to say that the project did not get done or that it did not manage to get the money out, and it is just going to lapse.
I am sure this is going to happen. Much of the money that should have been spent and the cheques that should have gone out to approved projects are going to lapse. It will never happen and we will never get the benefit of the job creation that was supposed to happen.
Members will know that, because it also happened in the last fiscal year with the infrastructure funding. I think it was somewhere around $3 billion of approved infrastructure funding that lapsed and never got out. It was approved and ready to go and the government just did not issue the cheques. This is one of the reasons that members have to hold the government accountable on things.
It is easy to use this place and to say that the Province of Ontario has decided that it wants to enter into an agreement with the Government of Canada, which they did. There is a copy of it. It is about four pages long and includes a number of details. This was an initiative by the Province of Ontario directly related to what it can do to create jobs and investments in Ontario to deal with the economic crisis in the province.
We have a system of taxation under our Excise Tax Act that permits the harmonization of taxes. As I indicated, we do have three provinces that have formally harmonized their sales taxes, including all of the maritime provinces. Now two other provinces have decided they want to make their system more efficient and do some other things in conjunction with that, as part of their program for economic recovery in their provinces.
As members would know if they looked at Bill , it does not talk about the tax rate we are going to charge on haircuts, etc. That would be in a bill that would appear in the legislatures of Ontario and B.C. Our bill actually has amendments to the Excise Tax Act, and we would have to have the Excise Tax Act sitting beside us to know what some of these clauses mean.
I went through the clauses that were of interest to me last night, and I think I understand the bill a little bit better. However, I am pretty sure that most members have no idea what is in this bill and what it means, what it means for direct sellers for instance, or what it means in terms of non-taxable items and how the system will deal with those to make sure that things do not slip through the cracks.
The bottom line is that this bill is an enabling piece of legislation. What it does is that it makes the necessary amendments to the Excise Tax Act, so that the agreements the Government of Canada has entered into with Ontario and B.C. can be formalized and those provinces will be able to pass the necessary legislation to conform to the agreed framework in the memorandum of agreement and the Excise Tax Act, as amended by this.
I thought it was interesting that most members wanted to debate closure on Motion No. 8, another instrument that prescribed how we are going to deal with Bill . It basically said that we were not going to allow the normal process to take place; in fact we were going to deal with this whole bill in a day. Is that not outrageous?
We have a situation here where the HST memorandum of agreement—
Madam Speaker, we have a situation now where the governments of two provinces have committed to harmonizing their taxes effective July 1, 2010.
The Province of Ontario, in conjunction with the legislation it is bringing in to harmonize the sales tax, is also concurrently going to bring in income tax cuts and other credits for residents of Ontario. These cuts are going to be effective on January 1, 2010, six months before the HST in that province would take effect.
For the Ontario government to be able to make that effective January 1, its plans are to pass its legislation on the HST with the other permanent income tax cuts before Christmas. It cannot do that unless Bill makes the necessary changes to the Excise Tax Act so that Ontario's bill conforms with the laws of Canada.
I wish the would simply get up in the House and announce to everybody that the government made a deal with the Province of Ontario, which faces a great deal of difficulty in terms of its economy and wants to move forward with these tax cuts and the harmonization. On a projected basis, these tax cuts and the harmonization would create over 500,000 new jobs, create $47 billion in increased capital investment and increase annual incomes by up to 8.8% or some $29.4 billion.
The consequences of this legislation to Ontario are enormous. We have to ask whether the Parliament of Canada feels that it should not pass Bill , thus effectively stopping the Province of Ontario from carrying out its decisions to address its economic crisis and therefore being able to make a contribution towards remedying the economic crisis facing our country as a whole. That is really the big question.
The provinces have a choice about whether or not to do this. I could make a case, as others have, by indicating that a haircut would cost 8% more, but that is not exactly true because the hair salon or the barber shop also incurs provincial sales tax on all the other supplies and services related to its business and they all cascade down. Once we convert, their costs of doing business will go down in a perfect flow-through fashion in a competitive economy. In fact, their prices will go down. Even though the 8% tax will be added for the additional provincial tax component, the overall price really should not change. In fact, it theoretically should go down because of the built-in taxes in the underlying costs of doing business.
Canadians are going to hear a lot of stories, but the best thing they can do is to ask for all of the information on what a harmonized sales tax is and visit the provincial websites to see what the plans are. They will also see a copy of the agreement that outlines all of the details.
In Ontario, for instance, notwithstanding that the harmonization of the tax would affect only about 17% of the goods and services that we purchase, there is going to be a very substantial reduction in personal income taxes for all Ontarians. In the first year, families are going to get a $1,000 transitional credit. There will also be a sales tax credit increase to reflect the fact that the harmonized sales tax has both levels of government tax included in it.
These are offsets. Canadians should know that to the extent that some exemptions will no longer be there, that is pursuant to the agreement. The agreement limited the exemptions to 5% of all of the goods and services that are being offered. Therefore there had to be some streamlining of the benefits. However, to take that into account, some things may be taxed now that were not previously taxed, but there is going to be a permanent offset through income taxes as well as through tax credits and the one-time transitional credit of $1,000 for a family.
There is more for people to know about. In Ontario, for instance, I know some of the members are saying this is a tax grab and asking how we feel about it. In fact, after implementation the provincial sales tax revenues to the Province of Ontario will actually decline. It is not a tax grab. In fact the revenues are decreasing.
If we look at the implications for Ontario, there is the possibility of getting the job creation activity that it drastically needs, as well as business investment. Businesses should be able to pass on the savings to them by investing further through creating jobs. We cannot ignore the job creation issue. It is critical in the economy of Ontario.
The Government of Ontario has made this decision. I am hopeful that Canadians will take the opportunity to inform themselves instead of listening to linear arguments.
Madam Speaker, it is my turn to speak to Bill . This bill is the culmination of an operation that the Conservatives began four years ago that has brought about the largest shift in Canadian history of taxes from the corporate sector on to the backs of ordinary hard-working Canadians. That is what the Liberals are supporting. That is what this bill is about.
To understand the scam, it has often been said that for a swindle to work, it requires two dishonest people, the person who is putting the scam together and a dishonest person on the other side who thinks he or she will actually gain from it. That is what we have here. The swindle put together by the Conservatives is the ideological continuation of what they have been doing for the past four years. The dupes in the Liberal Party are supporting them of course, and the numbskull premiers of British Columbia and Ontario think that somehow they are going to be putting money in their pockets, whereas in fact they are just further damaging the economies that have already been undermined by the Conservatives' actions.
Let us look at the genesis of this problem and how it began with the arrival of the Conservatives, shall we? Their ideology is that governments should play no role in the economy, that there is a pristine marketplace that makes all of the right choices, that anyone who thinks that governments or the state has a role in this is trying to pick winners. Let us look at it for what it is.
The Conservatives have decided there is one winner in the Canadian economy and it is the oil sector in Alberta. That is what has been destabilizing an erstwhile balanced economy that was built up in this country since the second world war. Successive governments always understood that to give value to the second largest country in the world with a minor population, today just in the order of 30 million, we required vision. We required the government to play a role in ensuring that we could develop our primary sector, forestry in particular and mining, that we could have a strong manufacturing sector as well, and that we could develop as modern times have allowed us to do, a tertiary sector, the service sector.
A lot of people look at the unemployment created since the fall of 2008 when the current recession began, but what we saw was that as a direct result of the Conservatives' choices, because governing is a reflection of one's choices and one's priorities, as a result of the Conservatives' choices backed every step of the way by their henchmen in the Liberal Party, they have reduced corporate taxes by $60 billion. The effect of that has been to provide that fiscal space of $60 billion to the most profitable corporations. I say the most profitable corporations because it should be obvious, but for some people it is not, that by definition if a company had not made a profit, if it was breaking even or losing money, it did not get any of the money from those tax reductions. Who did? Mostly the very profitable oil sector. Companies like EnCana saw windfall profits of hundreds of millions of dollars, which was totally unexpected and certainly unnecessary for it in terms of its operations, as did Canada's major chartered banks.
Who suffered? The manufacturing sector and the forestry sector centred in Ontario and Quebec for the manufacturing and the forestry sector which included a lot of lost jobs in British Columbia and in New Brunswick on top of those mostly in Ontario and in Quebec. That was a choice. Before the current recession hit, we had already bled off hundreds of thousands of jobs in the manufacturing and forestry sectors in Ontario and Quebec.
One of the primary reasons for that was the high Canadian dollar which was being stoked by the petrodollars coming into Alberta that does not even internalize the environmental and social costs of the exploitation of the tar sands. There are three basic principles of sustainable development that have to apply to any exploitation of that nature. They are internalization of costs, polluter pay and user pay. Of course the Conservatives apply none of it. The Liberals are ill-placed to even discuss the subject. They signed Kyoto, and as Eddie Goldenberg, the former chief of staff for Jean Chrétien correctly pointed out, the only reason they signed it is for public relations purposes. That is why under the Liberals for 13 years Canada had the worst record in the world in terms of greenhouse gas reduction and that has simply become worse under the Conservatives.
The Liberals did nothing, the Conservatives do not want to do anything and the Bloc cannot do anything. It is a good thing that our leader, the leader of the NDP, is heading to Copenhagen. That at least offers some hope. I am told that this very morning, Bill , which scandalously the Liberals have been holding up in committee, was finally allowed to go through, so there is a ray of hope on the horizon being provided by the New Democratic Party.
The $60 billion of tax reductions was only possible by creating a similar fiscal space. How was that fiscal space created? It was created by pillaging $57 billion in the employment insurance account and turning it into general revenues of the government. Again, it was with the culpable complicity of the spineless Liberals who have no principles and no beliefs. They backed the Conservatives every step of the way.
It should be remembered, as one of my colleagues said earlier, that the Bloc Québécois also voted for the first two Conservative budgets. That is something the New Democratic Party of Canada has never done. We have always stood up against the Conservative vision for the economy. We have always resolutely voted against the Conservative budgets and we are very proud of that record.
Some people have said that they may be taking $57 billion from the EI account, but it is a notional amount. They are turning it into general revenue, so who really cares, because it does not change anything; it is all still government money. There is a huge mistake in that analysis. Every single company in Canada, whether it was making money, breaking even or losing money, had to pay into that employment insurance account for every single one of its employees.
That money was paid in by employers and employees for a dedicated purpose, to take care of the cyclical nature of our economy for a day like today in the middle of a recession when there are dramatic job losses. The fund would be there. That is what it was put in for. To add insult to injury, $19 billion is calculated to be missing from the account now, because they have frozen contributions as part of the recession.
That means that the very same companies that were losing money in forestry or manufacturing and had made their compulsory contributions for every single employee into that fund saw that fund turned into a fiscal space that was given in the form of tax reductions for the most profitable corporations in Canada, stimulating even more rapidly the Canadian economy, with regard to the oil sector, at least, and pushing the Canadian dollar higher as those petrodollars came in.
The result, in the clearest possible terms, is that companies that were already losing money in the forestry and manufacturing sectors were directly subsidizing the very petroleum sector that was causing the high dollar and making their exports even more difficult because of the very high Canadian dollar. It is similar to one being asked to pay one's executioner. That is exactly what happened here with regard to the Canadian economy.
That is the Conservatives' way of doing business. That is what they wanted to do. That is what they set out to do. They set out to destroy the manufacturing and forestry sectors at the altar of the expediency of the rapid exploitation of the tar sands. As if that were not enough, projects like Keystone, one of the many pipeline projects that the Conservatives have put in place in the west since they arrived in government, are exporting the rawest form of the production of the tar sands straight to the United States.
We are exporting jobs. Keystone alone represents 18,000 lost jobs for Canada. We are not only stupid enough to send all of this south without any added value here, but we are sending it so fast that we are not even holding on to anything. We are not even internalizing the costs to the environment today and the costs for future generations.
The internalization of costs is a principle that Canadians all understand. When we buy tires for our car, the province adds a $3 fee to take care of the recycling of the tires. That is the environmental cost of the tires being paid by the person who is buying the tires. That is only fair. If people take the metro or the bus to work, or they take their bike or walk and they do not own a car, why should they pay for that recycling out of their general tax obligations? Why should they be paying to recycle their neighbour's tires? Everybody gets that.
It should be the same thing with the tar sands. It is an important resource, but it is not immune from the application of general principles of sustainable development. What one does is internalize the cost on a barrel of petroleum produced out of the tar sands. That would be the equivalent of approximately $3 to $4 a barrel. The internalization of the cost of sequestration of the greenhouse gases or their reduction and the treatment of all the pollution that is now being held back is going to be a problem that we are shovelling forward for future generations.
It is wonderful to watch the Conservatives, those great moralizers, wagging their index fingers under our collective noses, always telling us how to be and allowing the worst pollution on the planet to take place here in Canada in the Athabasca tar sands. Right now, the dykes at the tar ponds are the longest dams in the world. They are holding back what is not seeping right into the underground water. This is the greatest source of pollution right now in Canada.
We are destroying ecosystems. We are destroying groundwater. We are causing cancers that are exceptional, that can only be traced back to the chemical products being produced in the tar sands. At the very least, we should be internalizing the cost of that, instead of sending the bill to future generations.
Contrary to their theoretical position on all these matters, what we are doing with the Conservatives is enjoying ourselves today, taking everything we can for ourselves and letting the future generations of tomorrow fend for themselves. At the very least, a fund could be put aside out of those important revenues.
Both the internalization of costs and the setting aside of that fund would reduce the pressure on the Canadian dollar. This would make it possible to go back to a more balanced economy like the one we had built up since the second world war. It would be easier to export than it is right now with the high Canadian dollar. We could at the same time put in place an infrastructure of green renewables, hydrogen, wind, hydro and others that can be developed in this great country of ours.
However, there is a singular lack of vision among the government benches on this issue. The Conservatives do not care about future generations. They love to pose with future generations. There is nothing easier than to get a Conservative to pose at a hockey rink on a Saturday with a bunch of kids. What about the day when we will no longer be able to play hockey outdoors in Canada because of global warming and because of their incompetence and their negligence? That is the issue that has to be discussed.
We in Canada are in a unique position in the world. We have extraordinary resources that we can and should be developing, but we should be doing it cleanly.
The Conservatives are so much at the beck and call of our American neighbours. They are in such a hurry to get everything through the National Energy Board. They are in such a hurry to get all their approvals for these pipelines straight south, the raw agreement, to export not only our wealth but also jobs. That is the scandal of the Conservative approach. There is $60 billion in tax decreases for the richest corporations. Some $57 billion has been pillaged from the employment insurance account. Businesses that have already subsidized the oil patch are going to be asked to re-contribute in the order of $19 billion.
Right now, the government is saying, “We have a plan. We are going to look at the premiers of Ontario and British Columbia, the provinces which were the hardest hit by our previous plan to destroy the manufacturing and forestry sectors. Now, we are going to bring them to the table. It has been part of the plan since day one”.
The current said four years ago in his first budget:
The Government invites all provinces that have not yet done so to engage in discussions on the harmonization of their provincial retail sales taxes with the federal GST.
Do not try to convince anyone who has looked at the file that this is not the responsibility of the Conservative government. It is the Conservatives' plan. This has been laid out for the past four years. Without the Liberals, it would not be possible. That is the real problem.
In Ontario and British Columbia, the pusillanimous Liberals, because they have allowed the Conservatives every step of the way to destroy their manufacturing base, to destroy their primary resources, mostly in forestry, are now saying, “We are too broke. We have to give in to their plan”.
A regressive tax is one that hits the poorest hardest. By definition, this HST is a regressive tax. People have no choice. A retired couple living on a modest fixed income in northern Ontario or B.C. who have to buy home heating oil is going to be spending 8% more for that heating oil. That is what the Conservatives are doing.
It has nothing to do with one's revenue. It is not like an income tax, which is progressive: the more one earns, the higher the percentage; that has been accepted and understood in our country for a long time. This is a direct hit on the people who can least afford it.
What is interesting is it is not just those of us who work every day with people and with communities and groups who are saying this. I have a letter that was sent to me by the Canadian Federation of Independent Business. It is really worth noting that it is as opposed as we are to this new HST. This used to be the bailiwick of the Conservatives.
The CFIB says this, and it is worth reading:
While governments did not consult with small firms in either Ontario or British Columbia, I should note that our members continue to have a mixed reaction to sales tax harmonization. Certainly, the expansion of input tax credits to the provincial portion of sales tax administration is a considerable improvement over the current tax-on-tax system we now have...[however, we have] a lack of trust that tax reforms will, in fact, lower the overall tax burden. We have heard many comments from members in Ontario and British Columbia that suggest concern that sales tax harmonization will not end up as revenue neutral or a tax reduction, but lead to an overall increase in the tax burden on Canadians.
What is interesting is it is bringing up one of the points that everyone has raised, and that is what is happening here today. The government has the temerity to use closure without ever holding any consultation or debate on this tax. It is our irresponsible who said, “It's not me, it's the Liberals in B.C. and Ontario”.
Let us look at what the Canadian Federation of Independent Business says, which is that we have to do five things that are not being done now. It has to be a win for consumers through a lower combined rate.
The CFIB explains, in an interesting manner, how it was able to back the harmonization in the Maritimes and be against this one in B.C. and Ontario. It explains that what was done in the Maritimes actually produced a lower combined rate. What we have here is a tax grab on the backs of those who can least afford it. That is what the Conservatives have concocted this time, with the culpable complicity of the Liberals in both B.C. and Ontario and, of course, their squid in the House.
The validity of the tax and associated revenue stream has to also be one of the important principles, ongoing vendor compensation and introduction of a fairness code. This was said by Dan Kelly, senior vice-president, legislative affairs of the Canadian Federation of Independent Business.
This is the result of choices. The bleeding off of hundreds of thousands of jobs in the manufacturing and forestry sectors is a direct result of what the Conservative government chose to do. We are leaving a debt to future generations in terms of the current deficit structure that we are putting in place, which will be one that we will not be able to get away from for decades. At the very least, we should be leaving something that future generations can use. We should be bequeathing them something in terms of clean renewables. We should be moving to an economy less based on carbon.
As George Monbiot pointed out last week in the Guardian newspaper in the United Kingdom, and has been pointed out in a lot of other countries since then, the once diversified economy of Canada is being destroyed actively by the Conservative government. It is the same mistake that people have already seen.
There have been lots of treatises and papers written about this around the world. What Holland went through after the second world war in a similar petroleum bubble, which killed its manufacturing sector, Canada has not had the wisdom to avoid.
We have always understood in our country that it took a balanced approach to building the economy across our huge country. The Conservatives simply do not believe in Canada. They simply do not believe in the importance of maintaining jobs in diverse sectors like manufacturing and forestry. They think by pumping in petrol dollars from the United States that somehow we will be able to maintain the economy that we have had in the past.
In the time I have left, I would like to express my surprise at the Bloc Québécois' support for Bill .
The bill is available on line for anyone who wants to double-check what I am saying. It includes a schedule that lists the participating provinces, and Quebec is not even mentioned. The whole bill is silent on the subject of reimbursing Quebec for harmonizing its tax. Quebec has been owed $2.6 billion for over 15 years now. Monique Jérôme-Forget deserves to be congratulated for having once again raised the issue in debate. Quebec's decision to harmonize its taxes was historic. The minister was twice mistaken when he referred in the House to Quebec's harmonization.
Those of us on this side are against an unfair tax that will hurt the poor. We strongly condemn the Bloc's decision to support this bill.
Madam Speaker, it is an honour to rise and talk about this issue while we can in the House of Commons.
I agree with my colleague that it is also important to mention the tar sands. My community of Windsor, Ontario is going to be significantly affected by the tar sands, because the refining of that gunk is going to be done across the border in Detroit. Windsor is downwind of the refining facilities that are being expanded, so we are getting the consequences of it on both ends. That is a real issue. Progressive environmental groups from all political parties, both on the Canadian and American sides, have been trying to work together to prevent some of this from happening. It is critical because it affects not only our economy but also our health, as we are the people who are going to breathe this in.
On this bill, I think it is important to talk a bit about the process in the House of Commons and the “harpocrisy” of the Conservative government. It is really outstanding because on this issue, the government is ramming the bill through the House really quickly, whereas on other issues where the government could actually get support from all political parties and affect the economy, it could get a lot of benefit from but does not.
I would point to the process that the government is going through with infrastructure funding. The Conservative government is not using the gas tax, for example, as a model to get some of these projects out the door.
What we are getting here is not only a procedural ramming through of legislation in this session of Parliament, abetted by the Liberals and the Bloc, but we are also missing out on the important work that takes place in this place to ensure that when legislation goes through, it is done properly. The government is behaving similarly to the American-style Republican Party, adding riders to money bills to change legislation as opposed to actually doing the good work that usually happens at committees and providing the due diligence necessary to investigate the impact of legislation on various groups.
Specifically, we would have a debate here in the House of Commons and then we would move the bill to committee if there were interest. Then at committee there would be witnesses who would be called from all corners of Canada to provide testimony on the impacts of a policy.
The impact of the HST is certainly going to be significant for Ontario and British Columbia. It does involve other provinces, as was noted in the House before. There is actually a history of Conservative governments trying to ram such legislation down the throats of residents, aided and abetted by some of their provincial support mechanisms. This time it is the Liberal Party in the provinces of Ontario and British Columbia.
However, in the past, I can think of the Grant Devine government of Saskatchewan, for example. That corrupt government was eventually thrown out of power and the HST was repealed by the Roy Romanow NDP government. That government then brought in great legislation, balanced the books, cleaned up corruption and set a significant mark for that province. Everyone remembers the corrupt Grant Devine Conservative government. That is important because it is tied to the HST.
We also see what has taken place with the Darrell Dexter NDP government in Nova Scotia. That government has rebated the home heating portion of the HST right away, as it starts to delist items from the HST.
Meanwhile, what we have here in Ontario and also in British Columbia is the new tax that is to be introduced. These provinces are not even considering removing a percentile point off the tax or delisting items that are important to consumers. We are not talking about luxury items, like jewellery or home entertainment devices or whatever; we are talking about haircuts or things that kids need to do, like going to camps or hockey practices. All of these things will now be subject to another level of tax.
Ironically, the supposed fiscal wizards on that side of the House are actually going to be borrowing money from Canadian taxpayers at a time when Canada is running a deficit, and that money will be taxed back from Canadians. Canadians are waking up to this. It is a sensitive issue and it is also an issue where they understand the economics.
Right now, the government has a large deficit and it is going to increase that deficit through some of its policies. One of its policies was large corporate tax cuts, and I will talk about the effects of those in a few minutes.
It is important to note that I had the parliamentary research bureau do some research for me. The bureau is available to every member. I submitted some information to the bureau and asked it to look at the costs of borrowing the funds from the public purse.
The bureau ran a model, and I am going to cite the results of this independent report from the economists at the Parliamentary research service. They said that the average annual interest rate on the market debt of the federal government from 1998-99 to 2007-08 was 5.3%. Should the federal government borrow $5.9 billion in order to finance the proposed transfer to British Columbia and Ontario, and should it repay that amount in exactly 10 years, and assuming an average interest rate of 5.3%, the total nominal cost to the federal government would be about $9.9 billion.
That is important. We do not know if we will, but the report assumes that we are actually going to be recovering and getting out of recession.
The minister mentioned a few minutes ago that the jobless rate was going down, but one of the reasons it is actually falling in a place like is that people are running out of benefits.
There has been high employment for years. We have been warning the government and the previous government of a lack of sectoral strategy for the manufacturing sector. The member for was quite right in talking about how the petrodollar has raised the Canadian dollar so high and so quickly that we have been shedding tens of thousands of jobs in the manufacturing sector over the last number of years.
Therefore, in communities like Windsor, we now have people who are exiting the benefit system that was available to them.
It is important to recognize what we are going to borrow and what we are going to get in terms of a return. I have seen some of the documents and read through the argument on why do this for the manufacturing sector? The HST will eliminate some taxation that is happening on multiple levels. There is no doubt about that, because it does happen, and that is a fair argument to make.
However, then we have to believe that those savings will get passed on to the consumer. I do not believe that is going to happen. Those savings would have to be passed on to the consumer and then the theory is that people can buy more and can stimulate the economy.
I mentioned in earlier exchanges in the House that it was the argument put forth when we had no conditions put on the reduction of the GST on gasoline prices. What we saw was the GST reduced on gasoline. So the coffers of the nation lost that revenue coming in, but we have not seen that passed on to consumers. I have yet to see a study that shows that those savings have been passed on to consumers.
I would suspect many Canadians justly question gasoline prices, especially because the government killed the only program capable of monitoring that, a monitoring agency, a watchdog program, that would have been fairly and independently out there. We have the industry that is policing itself, which is ludicrous.
One of the reasons I talk about the important process when the legislation passes is that we do figure out ways to ameliorate problems when we have legislation in front of us. Earlier this past week, we had the before us at committee, who admitted there had been no study done on the effects on tourism of this particular HST grab.
That is critical, because there was a study done by the Tourism Industry Association of Ontario and another done in British Columbia by Butchart Gardens, which show that tourism is going to be affected significantly by this HST grab, because hotels, restaurants, theme attractions, travel, and all of those things are going to have a big whack tax put right on top of them right now.
The tourism industry is the fourth largest sector in the Canadian economy, when all of its components are put together. It has been facing a perfect storm as well. Not only was there the introduction of the U.S. passport requirement, which is a real challenge, because only about 35% of Americans carry passports; but we have also had the petro dollar affecting the tourism industry, all the way from the Niagara region across Ontario, and even in my region, where the high dollar, especially its rapid acceleration, has resulted in a shift. It used to be an advantage for Americans to come over and take advantage of that.
Then the government whacked the tourism industry again when it cut out the GST rebate. This is the party of our good friend Brian Mulroney, who brought in the GST, and there were severe economic repercussions for the tourism industry from that.
In fact when he introduced the GST in 1991, the food service industry in Canada suffered a 10.6% decline in real sales, 7.3% of which was attributed to the GST. Once again, it was our Conservative friends who introduced that tax on Canadians.
We have a situation now where we have had a couple of hearings and some witnesses yesterday at the tourism committee. As we happened to be studying another sector of the economy in committee, we were able to get some testimony from them on the HST. They see this as a significant challenge. We had some good testimony, and that is important because they are calling for some rebates and a series of things to be delisted, but we cannot really get to that full evidence and analysis because there is no actual study at committee on this bill.
It is shameful for the Conservatives, and the Liberals in particular, not even to allow public debate to take place, not even to allow that evidence from witnesses who are important in our sectoral economies to come forward and to show what challenges would take place. There is complete ignorance on that. They prevented some really good evidence being heard on how this will affect the tourism industry.
People have to be wondering about their representation, when they are in southern Ontario and look at the Niagara region and elsewhere, where we have to compete so hard for dollars. What is interesting is that our tourism deficit has ballooned under this government, and I will get into that later. We have seen U.S. visits to Canada, which account for three-quarters of all tourist visits here, decline significantly. On top of that, we have actually seen that deficit expand quite significantly, and so we have been suffering job losses in those industries.
A number of different independent studies have been done by the Tourism Industry Association of Ontario. It looked at a number of different scenarios as examples of what the HST is going to increase and what the industry is going to face. Keep in mind that Canada is already one of the most expensive places in the world to visit. I believe we rank fourth in the world in terms of the overall expense of a visit, and now on top of that, we are going to have another level of taxation that will further add to that component. That is a real problem, especially given the fact, as I mentioned earlier, that the dollar is high and U.S. visits are down and we have a struggling economy.
Therefore, borrowing from our own taxpayers and from these businesses to throw another tax on top of them is going to affect a number of different scenarios.
One scenario is the weekend getaway, which has a base cost of $1,603. Currently we have an 8.3% tax on that, but when we actually add the HST and future taxes and incremental taxation, taxes on these visitors are going to increase by 43.6%. When we look at the incremental taxation related to activities in that type of vacation and take all the different components of that vacation and visit, we see that taxes are going up significantly.
Another scenario is a one week camping holiday. The government cannot even leave camping alone. This is one of the ironic things about this in Ontario. This is another Dalton McGuinty tax day on Canada Day; he cannot help himself, apparently. Maybe we need to have a motion in the House of Commons to have Dalton leave our Canada Day alone, because he brought in his health care tax a number of years ago after not telling the public about that, and then once again went through an election and did not tell the public about that. Now the Ontario government is introducing a new tax on camping.
My son is a Beaver and his Beaver group will be an example of the new taxation. We have to do fundraising for them as it is. We live in the inner city, where some of the kids cannot afford some of these events. In fact his troop, because there are kids in it that cannot afford the different events, was recently subsidized by the other troops for a fun day that we had in Windsor. I thank all the volunteers for that at the Cleary International Centre. It was a terrific family event day.
Now when they go camping they are going to get taxed. When they go camping now, the estimated base cost is $2,173 with current taxes of $188 at a rate of 7.9%. That will go up and there may be future taxation on the other things that are added on. So the association is estimating there will about a 33.2% tax increase overall when all of the activities of a camping trip are put together.
We could not even exempt camping in Canada. We could not even have a discussion or a debate about that; we just have to accept this is going to happen.
We also looked at a shopping weekend in Toronto where good friends of the Conservatives, the Liberals, are right now in the Toronto area. A shopping weekend of $4,856 is the average shopping weekend in Toronto according to the study and there is going to be a 14.2% increase on that when we add in the hotels and all the different things that people would have. So that is going to make it more challenging for Toronto as a destination.
We have already had a number of challenges such as SARS for example. In my riding people from the Detroit area refused to come to Windsor or Toronto explicitly because of the SARS issue and we had to debunk all that. It has taken years to recover from that issue.
There have been challenges and tourism destinations are very important for the country, not just for Toronto. Tourism is our fourth largest industry and once again we have not been able to study this issue or to have any meaningful input on it other than these outside measures others have been doing. They are from credible companies. HLT is the advisory group for this one.
A family ski holiday of $4,363 ends up with the incremental taxation resulting in a 25.3% increase. That is the estimation because things like lift tickets and a whole series of other things that did not have any tax now are subjected to this new tax grab.
In terms of the impact on the overall economy, it was good to have the Canadian Tourism Commission at our committee. It does a very good job. Madame McKenzie runs it. It has many challenges. It has a small budget, small department. Interestingly enough, the Liberals moved it toward the Olympics and that is a big event and destination that hopefully does take place. We hope that will turn some things around. The CTC said, “Canadian outbound travel spending continued to rise in light of a strong Canadian dollar to reach a record level of $26.9 billion in 2008, an increase of 15.5% over 2007. As a result Canada's international travel deficit, the difference between what Canadian residents spend abroad and what international travellers spend in Canada, rose to a record of $12.6 billion in 2008”.
That is devastating. When there is a significant deficit like that in one of our largest industries, it is critical to turn that around. We are not just talking about Americans or other destination marketers coming in that are going to have to pay the HST. When the government scrapped the GST rebate, they were very upset about that and many people said that was one of the reasons they would not come back.
With the HST imposed in Ontario and British Columbia there could be more incentives for more Canadians to spend their tourism dollars outside of Canada. Part of the CTC's mandate is to have Canadians spend money in their own communities or to travel around Canada. But now we are adding another level of cost when we are competing for tourism dollars at a time when we have the significant challenges of a crumbling economy.
This is just absolute utter nonsense that we would not get into a responsible evaluation about the impacts of this, whether we agree or disagree with the ideology of the bill, but we should be concerned about getting some empirical data to analyze and propose some solutions that would look at this and show some leadership. To simply say we are washing our hands of it is unacceptable.
It is important that Canadians realize this is the agenda. When the Conservatives brought in the GST supported by the Liberals, I remember the big scrap that was supposed to happen. It never took place and there have been successive attempts to bring in provinces. This is exactly what the said on May 2 in budget 2006:
The Government invites all provinces that have not yet done so to engage in discussions on the harmonization of their provincial retail sales taxes with the federal GST.
That is what the minister said. That is the reality. Nothing happens without this. We need to have a proper study before we tear this at Canadians.
Madam Speaker, I would like to share my time with the member for .
I believe it is essential for me to speak today, on behalf of my constituents, against this insidious new tax. I say this because when it became clear that the party in power was determined to inflict a new tax on the people of Ontario and British Columbia, I sent out a mailing to the residents of . I asked them what they thought of the HST, the new tax that Conservatives and Liberals plan to enact on July 1, their gift to Ontario and British Columbia on Canada Day.
I communicate quite regularly with my constituents and they respond in significant numbers. We have a good dialogue, and I always appreciate hearing from them.
However, the response to the HST survey was astounding. I received hundreds and hundreds of mail-backs, emails and letters. I have never had such a response. Despite nearly four years of mismanagement by the members from across the aisle, four years of cynically telling Canadians that our environment does not matter, that child care can be had for $100 a month, that housing does not have to be affordable, that first nation children do not need a school, after four years of ideological agenda from this group that basically says that there is no room for the aspirations of Canadians or the values that we cherish, my constituents have responded with renewed and greater anger, greater than I have ever seen. Because of those nearly four years of bad government, my constituents said, with absolutely clarity, that they had enough. This tax grab was the last straw and they counted on New Democrats to defend their interests.
We have heard repeatedly from the that this legislation is the will of the provinces, that this is democracy in action. The truth is we are fighting a bill, in the name of the , to amend the excise tax and enable the HST.
The party in power insists it is innocent. According to the , the bill is to accommodate the provinces. Despite his insistence that this is not a federal bill, despite his persistent attempt to wash his hands of this bill, it stands in his name. I would suggest he has much greater responsibility than he cares to admit.
I can understand his desperate need to distance himself from the HST because it is, quite simply, the wrong tax, at the worst of times. It will increase the cost of haircuts, home heating, gasoline, firewood, Internet, cell phones, snow removal, newspapers, magazines, camping fees, veterinary care, taxi fares, carpet cleaning, landscaping, utilities, commercial property rentals, postage stamps, courier fees, domestic air, rail and commercial bus tickets, funerals, all of these and more, by an additional 8%.
Imagine one earning minimum wage, trying to raise a family and, now, despite all the sacrifices, is hit with an additional 8% cost of living. Many women in Canada will face particular hardships due to this increase in the cost of living. It is well known that single women and single mothers face higher poverty levels than any other group.
According to the Canadian Centre for Policy Alternatives, most anti-poverty strategies in Canada and elsewhere have concentrated on reducing child poverty, but other groups within the population are even more disadvantaged. In 2007, for example, 9.5% of young people under age 18, the child poverty measure, had low incomes and 23.6% of Canadian women heading lone-parent families had incomes below the after-tax level. In fact, the incidents of low income for female lone-parent families was almost five times as high as that of two-parent families with children.
At the same time, 14.3% of women aged 65 and over, who are on their own, had low incomes. Seniors living on their own experienced a low income rate almost 13 times higher than seniors living in families in 2007. The depths of poverty of these groups was significant. On average, the after-tax income of senior women on their own was $2,400 below the poverty level. However, the average after-tax income of women who had lone-parent families was $7,500 below the after-tax income level.
To a large extent, these groups of women might be described as the forgotten poor. They are generally not mentioned in budgets or stimulus packages, and with one or two notable exceptions, no specific programs are developed to address their needs.
Of course it goes without saying that children are poor because their parents are poor. Many poor children live in low-income lone-parent families headed by women, but it has become more acceptable to talk about child poverty than women's poverty.
I would like to make special note that according to CCPA, while many people seem to believe women to choose to work part-time or on a temporary basis so they can more easily combine their paid employment with family responsibilities, in 2008 among women in the main childbearing age group, 25 to 44, 27% of those who were employed part-time worked part-time because they were unable to find full-time jobs. About 38% of women in this age group were working part-time because they were caring for children.
Women in Canada still have unacceptably high rates of poverty, especially if they are on their own as lone-parent heads of families or as older women living alone. While we used to talk about the feminization of poverty, addressing women's poverty no longer seems to be a high priority among policymakers.
The HST is a policy that continues to ignore the feminization of poverty in our country. The worst of it is the tax is inherently regressive. It disproportionately hits those who have no choice but to spend all or a large part of their income and it favours those with income to save. This is doubly true in a recession where less than 50% of the unemployed qualify for EI, where social assistance rates are well below the poverty line and the cost of essentials looms larger and larger.
Those with the lowest income have no choice but to pay the tax and sacrifice consumption elsewhere. The HST is hitting those who can least afford it harder than anyone else. The tax is quite simply unfair.
The Conservatives have demonstrated a callous disregard for the plight of low and moderate income households. They cannot be trusted to apply the HST fairly. It has been argued a sales tax is bad for investment compared with a tax on profits. Then why is the removal of sales tax from inputs not matched by an increase in corporate income taxes? In fact, the opposite is true.
The HST is accompanied by corporate income tax cuts, both at the federal and provincial levels. In other words, the HST is part of a general and indiscriminate tax shift, shifting the burden from corporations to individuals and families without adequate compensation.
The claim that it will lower prices assumes businesses will pass along their savings to consumers. Studies show that much less than 100% of the savings are passed on to consumers. Price increases are virtually inevitable. Remember when the GST was introduced? Prices to consumers did not decline.
One of the arguments the Conservatives put forward states that because it applies to a wider range of goods, it is more efficient as a generator of revenue and hence, under progressive governments, provides support to high-quality public services. Scandinavian countries depend on HST for much of their revenue. This, of course, does not apply to the current situation because the party in power is far from progressive and it has done nothing but undermine services to Canadians.
It should be noted that I have refused to call this a government. A government leads with integrity and places the needs of people before its own. A real government would never have done what the Conservatives have done to undermine women's rights, deprive first nations, use the resources of government to mislead and create dissension among its citizens.
Finally, last evening the members across the aisle invoked closure to stifle debate, to force through its undemocratic and unfair tax. It wants, like its , to wash its hands of responsibility for the people of Ontario and British Columbia, just as it washed its hands of its obligations to this nation and to its people.
That is a group I cannot call government because, quite simply, it is not.