1987-05-28

Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, yesterday before the House adjourned, we were unable to rise to indicate officially to the House that today would be an allotted day for the New Democratic Party. This arrangement was agreed to at the House Leaders' meeting which took place yesterday afternoon and the New Democratic Party has filed an appropriate motion for debate. Therefore, when Orders of the Day are called, I think you will find that there is unanimous consent to consider the motion on the Notice Paper standing in the name of the Hon. Member for Ottawa Centre (Mr. Cassidy) as the motion for the allotted day.


Mr. Speaker:: Is there such agreement?


Some Hon. Members:: Agreed.



ROUTINE PROCEEDINGS


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, on Monday, my colleague, the Minister of National Health and Welfare (Mr. Epp), announced the National Drug Strategy which sets a uniquely Canadian course in dealing with the problems posed by drug abuse and illicit trafficking. It recognizes the excellent work done by the RCMP, by Customs and Excise and by other law enforcement agencies in preventing the importation and trafficking of drugs.
In general, the programs of the strategy are directed at solving domestic problems in Canada. However, illicit trafficking is an international industry and it is clear that
Canada cannot solve our drug abuse and trafficking problems in isolation.
Many of the drugs consumed in Canada such as cocaine and heroin are brought into our country illegally by well organized trafficking networks based overseas. In 1985, the RCMP and Customs seized 62 kilograms of heroin, 109 kilograms of cocaine and 19,000 kilograms of hashish. These are the last statistics available for 1985 and they probably understate the dimensions of the problem today.
Furthermore, Canadian territory often serves as a transit point for narcotics being sent by these trafficking networks to other countries. In addition to that, illicit psychoactive substances are produced in Canada to feed the terrible addictions of citizens of other countries. Clearly we must act to stem this traffic, not only because Canadians are its victims but also because we have a role to play as responsible citizens of the world.

Drug abuse is not a new phenomenon, but its extent is indeed. As early as in 1909 Canada participated actively in drafting an international convention on the control of opium trafficking. And today still we continue to play a major role within such United Nations bodies as the Commission on Narcotic Drugs. Yesterday, as a matter of fact, Canada was re-elected to this important commission which in past years had concentrated its efforts specially on the problem of supply reduction.
Along with other countries Canada played a part in the introduction of a new element in the approach taken by the Commission, namely the reduction of demand. We are also trying to take into account certain other elements such as the new complexity of international networks of traffickers.

Their tentacles now stretching around the world, these networks have refined their procedures for moving their product. Some utilize couriers who, travelling by air, carry the drugs strapped to their bodies. Other shipments are disguised as cargoes of innocuous commodities. The profits earned by this illicit enterprise are protected by a variety of methods, the use of shell companies and other means. The money earned from drug trafficking is sent to offshore havens.
These problems can only be faced effectively through international co-operation so the UN Commission is preparing a new international convention on illicit trafficking. The origin

May 28, 1987
Statements by Ministers
of this convention is a resolution of the UN General Assembly co-sponsored by Canada and adopted in December, 1984. My colleague, the Hon. Member for Calgary West (Mr. Hawkes), served as a member of the Canadian delegation to the UN and announced Canada's co-sponsorship of that important international initiative. This new convention can become a powerful tool for law enforcement agencies around the world to use against traffickers. Canada places a high priority on successful completion of the new convention.
The Government is working internationally on three other fronts. The UN Fund for Drug Abuse Control sponsors projects which assist producer countries to develop and finance programs that will help farmers move away from drug production, help improve local standards of living, and help train local police to deal with the extremely well-organized drug traffickers. Canada has made substantial contributions to this body's general fund as well as giving two grants of $1 million apiece to UNFDAC projects in Thailand and Pakistan to develop alternative crops for farmers. That is a new policy direction for C1DA established in 1986. As well, we will continue to consider on a case-by-case basis requests from narcotics-producing countries for development assistance.
Second, our contribution to UNFDAC will be raised to $500,000 this year and $1 million by 1991 to demonstrate our commitment to international co-operation.
Third, we are expanding the consular awareness program of the Department of External Affairs to make Canadian travellers more aware of the dangers of drug purchase, drug possession, drug trafficking, and drug use abroad. Sir, more Canadians are in prison overseas for drug offences than for any other crime.
A UN sponsored international conference on drug abuse and illicit trafficking will take place in Vienna from June 17 to June 26. Our delegates to this conference will be led by my colleague, the Minister of National Health and Welfare (Mr. Epp). In order to reflect truly the international approach of this Government to the issue of drug abuse the delegation will also include representatives from the provinces and the voluntary sector.

Canada played a significant role in drafting the 1971 convention on psychotropic substances. When in Vienna the Minister of National Health and Welfare (Mr. Epp) will be tabling the accession instruments which will make it possible to enforce this convention here in Canada.
The Government acknowledges that wide-ranging efforts will be made in Canada to fight drug abuse and traffic. We also believe that if we choose to ignore the international aspects we will be doing so at our own risk. The part of our national drug strategy which relates to the international aspects attests to our intention to co-operate with other countries to reduce drug production, traffic and abuse both in Canada and abroad.


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, I think today's announcement is another example of the Government's position on the drug question, much ado about nothing. I refer specifically to the Minister's announcement that we will be increasing the amount of money we give to the UN Fund for Drug Abuse Control. In the past it was the Minister of National Health and Welfare (Mr. Epp) who was responsible for funding our contribution to UNFDAC, which is indeed doing very important work as outlined by the Minister. At the beginning of this year that Department refused to continue paying that funding because they said it was a problem for the Department of External Affairs. The Department of External Affairs said it would not pay for our contribution, which at that point was just under $400,000, because it was a health and welfare problem. We played financial ping-pong on this issue for several months until finally, this week, we get word from the Government that, yes, its contribution to UNFDAC will continue and will indeed be increased. It is now, presumably, covered by the Department of External Affairs.
We were trying to get information as late as last week about whether the Government had taken up its responsibility to contribute to UNFDAC, but we could not get an answer from the Minister. We could not get an answer from External Affairs. We could not get an answer from Health and Welfare. As is typical of this Government, they were passing the buck. Health and Welfare said it was an international problem which should be funded through External Affairs. We now finally see that the Government is going to move in this area and for that we are grateful, but there is one area of the UN convention where the Government has unfortunately chosen not to act.
We heard the Minister talk today about the difficulty in stemming the increase in the flow of illicit drugs into Canada. Indeed, over the course of the last several months the Standing Committee on National Health and Welfare heard from the RCMP and those involved in the interdiction of international trafficking, that indeed stemming the inflow of drugs into any country is practically impossible. We have to attack it from the demand as well as the supply end. However, there is one area where the Government could have acted and it would have followed up on the UN convention which is being developed. It could even have followed the example of the U.S., which it is prone to do, concerning what happens to drug profits. What happens to the money laundered through legitimate sources, including some Canadian banks, whether it be here in Canada or offshore?
We have heard questions in the House over the last number of months about why the Canadian Government did not introduce legislation to permit the seizure of assets gained through illegal methods. In order to stop the drug trade you have to make it less profitable. It is fine for the Minister to stand in the House and talk about illegal drugs coming into the country. We know that. We know that if we stem the tide of drugs coming in to Nova Scotia from offshore it may indeed
May 28, 1987

spring up in another area of the country. However, if the Government had the political courage to introduce legislation to force Canadian banks to give up money received through illegal drug trafficking, if it had the political courage to say to Canadian banks that they could not receive laundered money, then we would start getting to the root of the problem.
Unfortunately, the Government has not had the courage to do that. In fact, notwithstanding the UN convention which is being developed, Canada again has blinkers on. Canada is going to be the last to get on board, just as it was the last to get on board this year with the UNFDAC contribution.

Nevertheless, I am glad to see that the Government is going to do something about the matter of psychotropic drugs. I think Canada was a leader in 1971, when the UN International Convention was drafted, but when it was signed in 1976, Canada was not a signatory. I think that we, that the previous Liberal Government should have signed the Convention to try and control the question of psychotropic drugs.
However, I want to warn the Minister that psychotropic drugs are not just the drugs that come to Canada.
We should log the Government's action in the area of psychotropic drugs. I wish that the previous Liberal Government had signed the convention which we were instrumental in beginning to develop in 1971, but it did not, and the Government is rectifying that.
I would like the Minister to be aware that the question of psychotropic substances is not only dealt with in the illegal drugs which are coming into the country, but also in drugs that are being made in Canada. I refer to recent press reports which show that in Montreal legal drugs are being garnered through the Canadian health system and sold as quaaludes, illegal drugs, in the United States. It is a very serious problem.
We also need to have answers on the question of designer drugs. I hope that when the Government introduces specific legislation following the UN Convention on Psychotropic Substances it will include the area of designer drugs.

The most important thing is, Mr. Speaker, that if the Government-if the Minister of National Health and Welfare (Mr. Epp) or the Secretary of State for External Affairs (Mr. Clark)-is truly prepared to act, to fight against drugs, it will have to introduce, through the Minister of Justice (Mr. Hnatyshyn), certain amendments that will enable the federal Government to seize funds now in Canadian banks, whether here in Canada or abroad, and I am referring to profits made from drug trafficking.
Statements by Ministers

If we are unprepared to seize assets garnered by illegal drug trade which are currently on deposit in Canadian banks, then all the money we are giving to UNFDAC, all of the work we are doing here, and the measures which have been announced by the Minister will be for naught. As long as there is a profit to be made from the drug trade and as long as there are Canadians who continue to use legal and illegal drugs, there will continue to be a problem. We must attack it from the demand side. In terms of the supply side we must definitely introduce legislation to permit us to seize assets from Canadian banks. Without that legislation all this talk is only puffery.


Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, before specifically addressing the announcement made by the Secretary of State for External Affairs (Mr. Clark) I would like to weigh the attack on drug abuse in terms of attacks on the supply versus the demand side. In examining the new drug strategy within the context of the demand side we must call attention to the fact that although a great deal of emphasis continues to be placed upon illicit drugs, street drugs, and over-the-counter prescription drugs, the same factors operate in impelling the use of the most dangerous and widely used drug, namely alcohol.
In addressing the issue of demand it is clear that essentially the same factors operate in the overuse of alcohol as in the overuse of over-the-counter drugs, marijuana, and other street drugs which are frequently abused. Having said that, it is certainly clear that immense tragedy is caused through the use of drugs which are exchanged internationally, whether drugs derived from opium, such as cocaine, or some of the new synthetic drugs which are subject to abuse.
The program announced by the Government is impressive on first sight. We are told that $210 million will be spent over the next five years. However, we must put that and the entire program in perspective. In the first year only $20 million is to be spent. When you really think about it, $210 million is not an awful lot of money considering the immensity of the problem that we are attempting to attack.
Furthermore, we have a concern about the distribution of that money and its focus with respect to the essentials of the problem. I rose in this House the other day to express concern about the fact that this program was announced without reference to the Standing Committee on National Health and Welfare which is engaged in an examination of the issue of alcohol and drug abuse. I was pleased to hear from the Minister of National Health and Welfare (Mr. Epp) that the recommendations of that committee will be taken into account as the National Drug Strategy develops its specifics. I hope that that promise will be met. I hope we will have an opportunity to scrutinize this program with a fine tooth comb to ensure its effectiveness.
In terms of the record of the past Liberal Government and what has happened heretofore, we welcome the program announced this morning by the Secretary of State for External

May 28, 1987
Tabling of Documents
Affairs. In many respects it is long past due. The accession to the international Convention on Psychotropic Substances which was approved in 1971 pleases us immensely. Canada's contribution heretofore to the UN Fund for Drug Abuse Control amounted to $300,000. This will be raised to $500,000, and we of course welcome that. We welcome the somewhat more tenuous promise that this will be raised to $ 1 million by 1991. However, we must put this in perspective as well. Italy, for example, is contributing something in the order of $300 million for the same purpose.
We know that these funds are designed to help bring about economic changes which will take farmers in the Third World away from drug production and divert them to the cultivation of more useful crops. This entails economic changes which will enable those Third World countries to adapt to new circumstances. When we analyse that situation we see that the Third World is once again being exploited to its disadvantage. Considerably more effort must be exerted to make it possible for Third World countries and ordinary farmers there to prosper without being involved in the cultivation of drugs which do harm in those countries as well as in Canada.
I am under the impression that this program will not divert funds from CIDA which are allocated for essentially the same purpose. I would be very disturbed if funds were diverted from CIDA to accomplish the same purpose.
Expanding consular awareness of the dangers of being involved in drug usage in foreign countries when travelling is laudable, although I am not so sure of how significant it is. One would have to measure that against the failure to address the issue of AIDS with alacrity. I think that is a far more serious problem. Although I recognize that while travellers will not become addicts through a 10 day or two-week exploration of these agents in foreign countries, it is true that they may find themselves in serious difficulty.
We must address the issue of laundered money and the attempt to control it. We understand that there will be legislation introduced in the House tomorrow to address the problem of money being diverted through financial institutions into legitimate concerns which hides the existence of moneys earned through the illicit drug trade. However, I cannot possibly understand how a Government which wants to be taken seriously on the issue of laundering money earned through the illicit drug trade would fail to address the need for the reporting of funds deposited or internationally exchanged. This is done very effectively in the United States and ensures that they will have the means of detecting the fact that this money is gained from the illicit drug trade and the use of that money for other purposes, which subsequently makes it impossible to track down. If the Government is serious, then it will immediately introduce legislation comparable to that in the United States which has been so potent in dealing with the problem of laundered money derived from the sale of illicit drugs.
[ Translation]


PETITIONS
Philip Derek Lewis: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the government's response to the following 154 Petitions: Nos. 332-2017 to 332-2035 inclusive, 332-2039, 332-2042 to 332-2051 inclusive, 332-2054 to 3322076 inclusive, 332-2082 to 332-2102 inclusive, 332-2107 to 332-2109 inclusive, 332-2111 to 332-2116 inclusive, 332-2118 to 332-2141 inclusive, 332-2147, 332-2151 to 332-2187 inclusive and 332-2189 to 332-2197 inclusive.


EXTERNAL AFFAIRS AND INTERNATIONAL TRADE
Mr. William C. Winegard (Guelph):: Mr. Speaker, I have the honour of tabling the First Report of the Standing Committee on External Affairs and International Trade.
In this report, the committee has tried to set forth the objectives and directions of our official development assistance program for the next several years. We suggest a change of focus to human development and human resource development. We urge a greater emphasis on human rights. We urge, in the strongest possible terms, a major decentralization to the field. In fact, "out of Ottawa to the field" is a thought that runs throughout the whole report.
We make new proposals about tied aid. We support an increased role for the non-governmental organizations, institutions and business. We think that, on the whole, we have responded to the concerns expressed to us by Canadians and people in other countries.


PETITIONS
Mr. David Kilgour (Edmonton-Strathcona):: Mr. Speaker, this petition is signed by 27 residents of various parts of Canada and concerns the problems encountered by Mr. Fred
May 28, 1987

Turner and Turnair Limited. They are asking that compensation be paid to Mr. Turner for the damages that were caused to him when the CTC cancelled his permit.


Mr. Joe Reid (St. Catharines):: Mr. Speaker, I have the duty to present a petition, duly certified, signed by some 50 St. Catharines residents, calling upon this Parliament to support Motion M-37, amending the Charter of Rights so as to include the human foetus as having the right to life.


BUSINESS OF THE HOUSE
Philip Derek Lewis: Mr. Speaker, there have been discussions among the Parties with respect to Bill C-56. I think you will find support for the placing of the following motion and unanimous consent thereto. I move:
That the order for second reading and reference to a Legislative Committee of
Bill C-56, an Act to amend certain Acts relating to financial institutions,
standing on the Order Paper, be changed to read "second reading and
reference to the Standing Committee on Finance and Economic Affairs".


Mr. Deputy Speaker:: Does the Hon. Parliamentary Secretary have unanimous consent to move his motion?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Philip Derek Lewis: Mr. Speaker, I ask that all questions be allowed to stand.


Mr. Deputy Speaker:: Is it agreed?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: I wish to inform the House that because of the ministerial statement, Government Orders will be extended by 24 minutes, beginning at one o'clock.
______________________________________6471
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GOVERNMENT ORDERS


Mr. Mike Cassidy (Ottawa Centre) moved:: That this House oppose any imposition of a federal tax on food and urge the Government to reject any such tax as part of its tax reform package.
He said: Mr. Speaker, I am sorry that this debate is necessary today. It would not have been necessary had the Government been more clear about its intentions when the Minister of Finance (Mr. Wilson) made his statement on tax reform on May 6.
As it is, the Government is continuing to play games with the Canadian consumers and families with average incomes across the country about whether it will carry through with its intention to put a 6 per cent or 8 per cent sales tax on the family grocery bill for every Canadian family. That is the issue and the reason that I and my Party are asking members of all Parties to join with the New Democrats in making it very clear that the House should oppose any imposition of a federal tax on food and urge the Government to reject any such tax as part of its tax reform package.
The reason for scheduling the debate now is simple. When the Minister of Finance outlined his plans and gave the House a preview of what he would be exposing on June 18, I warned him that he would be facing a tax revolt from New Democrats and Canadians from coast to coast if the Government carried out its intention to impose a business transfer tax that included food. We want there to be no mistake about this issue and that is why today's debate is so important.
Let me outline exactly what is at stake. For the past two years the Minister of Finance and the Government have been inching toward a comprehensive package of tax reform. The Finance Minister indicates that he wants to bring personal and corporate tax rates down in Canada to around the levels that are now being levied in the United States after its recent tax reform.
There are two ways in which he wants to gain the revenues to accomplish that. As we understand it, he intends to broaden the tax base by eliminating tax loopholes and unproductive tax deductions and exemptions. The Americans succeeded in lowering their tax rates in that way, broadening the base at the same time.
The Canadian tax system has a heavier burden to bear than in the United States, mainly because we have a more comprehensive and adequate structure of social services, particularly medicare. Canadians would not want it any different.
However, as the Finance Minister comes to grips with this particular problem it appears that he is now intending to take a major amount of new revenues from the sale tax system.

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He has indicated for some time that he wishes to reform Canada's antiquated sales tax system, the federal manufacturers' sales tax. The NDP agrees that that tax is long overdue for reform. In its present form, it tends to give a tax break to importers bringing goods into Canadian markets and, at the same time, tends to discriminate against Canadian exporters who lose an edge when competing against other countries which more effectively rebate sales taxes from their exports.
The motivation which has led the Minister to embrace the concept of sales tax reform is the prospect of major increases in federal revenues which would then allow him to cut the personal and corporate tax rates. In this way he hopes to emerge as the hero who saved the fortunes of the Conservative Party and enabled it to return as a minority Government rather than simply becoming a one-term Government and a brief blip in the political history of this country, despite their enormous victory in 1984.
The Minister of Finance, and I have said this before, has been playing a shell game with Canadian taxpayers. He is trying to come up a hero by saying: "Look at what I have done", in terms of reducing the personal tax rates when he makes his announcements on the evening of June 18. At the same time he is not prepared to have Canadians look at what they will be paying in additional taxes or what the inflationary impact will be of the broadening and increasing of the sales tax system as is apparently being contemplated by the Government.
The present manufacturers' sales tax covers only about 32 per cent of Canada's economy, that is, that two-thirds of the goods and services which are sold every year, or the value-added in the economy, are exempt from this tax. This means that the tax discriminates against manufactured goods in favour of services and that it is unduly high because there are so many areas not covered. In other words, the present revenue of about $16 billion from the sales tax could be achieved with a rate of only 6 per cent or so, if all goods and services were taxed rather than only some.
A 1 per cent rate in the proposed business transfer tax would give the Government a revenue of about $2.6 billion. What is happening is that I think the Minister of Finance has allowed himself to be seduced. He has been seduced not in the sense that might embarrass him politically, as has happened recently in the United States, but he has been seduced in the sense that it could be very adverse politically. He has been seduced by the technocrats in the Department of Finance who themselves are convinced that, for technical reasons, what Canada should have is a business transfer tax, which applies as much to people's weekly grocery bill at Safeway, Loblaws, the IGA or at their independent food store, as to the purchase of a car or a lawyer's service. They want to apply it to such things as people's payments for day care. I am not sure if they want to
apply it to dentists' bills. We have not seen what the exemptions might be. However, clearly, the fewer the exemptions the happier the advisers to the Minister are going to be.
The Government has carefully worded a statement on this particular subject which was designed to be uninformative. I accuse the Minister of Finance of being the Gypsy Rose Lee of tax reform. I am reminded of those fan dancers who used to flourish back in the 1920s and 1930s. Every time they were about to expose all by throwing a fan into the air, they would tactfully put another fan just in front of the naughty bits. That is what the Minister of Finance has been doing with respect to his proposals for the sales tax.
The Minister of Finance is talking about the creation of a "broad-based, multi-stage sales tax". Who on earth could be opposed to that? Who in fact could understand exactly what that means. When we asked more detailed questions, we were put off. We were told: "No, the Government is not backing off from its intentions to reform the sales tax. It is only laying out three optional ways by which the sales tax can be collected". Lo and behold, when we look at it more carefully, the plans of the tax experts in the Department of Finance to tax food, are still there front and centre. It is still to be repudiated by the Government.
As the Minister of Finance put it, his first option remains the business transfer tax. He calls it a "federal tax only without invoices". He calls it a "goods and services tax". He says: "It is relatively simple both to administer and to comply with but only if it is applied uniformly on all goods and services". There is no mistaking what that means. It means that sales tax would be applied on food as well as on every other article of service which businesses and consumers purchase.
This also means that this tax is misnamed if it is being called a "business transfer tax". It is a consumer tax. It is a tax which will be paid by consumers. It is not a business tax. It is not a substitute for adequate increases in corporation or profit taxes. People will save a few dollars on their personal income tax, but will end up paying hundreds of dollars more in sales tax and will be worse off rather than better.
I grant that other options are being considered. A federal-provincial sales tax is one suggestion. The Government has also been talking about a value-added tax along the European model which would permit more discrimination between different types of goods being taxed. However, there are a lot of hurdles in the way of these two particular proposals. Not all the provinces have jumped for joy at the prospect of a joint tax. One of the reasons for that, of course, is that they feel it is important that they be able to carry out some measure of provincial fiscal policy by means of the exemptions in the areas in which they tax in the sales tax field.
In Quebec I believe it is still the case that soft goods, furniture, for example, are not taxed by a sales tax system because of the fact that those goods are important to Quebecers and it is a way in which the Quebec Government benefits
May 28, 1987

an important local industry and its consumers in the process. That would probably not be permitted under a joint federal-provincial sales tax.
1 think it could be very embarrassing as well if the federal-provincial sales tax were to range between a rate of, say, 6 per cent or 7 per cent in Alberta, if Alberta continued not to have any provincial sales tax, and as much as 14 per cent or 15 per cent in Newfoundland. I think a combined invisible tax like that could easily lead to a great deal of illegal but still threatening tax evasion.
The other prospect is the value-added tax. That, of course, has been resisted very strongly by small businesses which fear the paper work and which also fear the prospect of being made into a million strong army of tax collectors for the Minister of Finance and the Conservative Government. In other words, from what we can see, the Government is still intent on this food tax despite the reaction from coast to coast that this is not a tax which Canadians are prepared to support.
What is the impact of the Government's proposal? We estimated, based on a very conservative average of $5,000 in expenditures on food for an average family in a year, that the proposed tax would cost about $300 per family. This was assuming a 6 per cent tax rate. In the last three weeks I have had a chance to look at some of the work of the experts in the accounting industry and elsewhere. They are now talking about an 8 per cent tax rate for the business transfer tax. Right away the levy is up to about $400 in additional tax which will be paid on food by the average family.
The experts indicate more and more that the Government is going to be looking not for a tax-neutral prospect but for increased revenues from the sales tax, which revenues currently total about $16 billion. That might mean that the rate could easily come in as high as 9 per cent or 10 per cent rather than 8 per cent. From the food industry, that is, farmers, producers, retailers and ultimately consumers, it is estimated that the tax proposed by the Government, or this particular option available to the Government, would result in a $4 billion tax levy on one of the absolute essentials of life for Canadians.
It is hard to avoid paying for rent or housing costs. Nevertheless, one could at least argue that many Canadians do have some options if they find they have difficulty meeting housing costs. If they happen to have a home of their own, they could take in a lodger. They may not like it. It is not the Canadian way these days, but that is one way. They could also move into a smaller apartment. That is not desirable, but it is a possibility.


Mr. Orlikow:: If they can find one.


Michael Morris Cassidy: If they can find one, as the Hon. Member for Winnipeg North (Mr. Orlikow) points out. If a family is hit by the rising cost of living and find they cannot afford new clothing, perhaps they can get by with a little less clothing in a particular year. For families living in poverty that is barely possible. It is possible, although not desirable, with respect to
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families with working incomes. However, we cannot take $100 a week grocery bill, and that is low for a lot of Canadian families, and suddenly cut that down to $50 or $25. We cannot go without food. We cannot ask a family to do that. We cannot say to a family: "Your kids are going to have to live on macaroni and cheese for now and for the next year because of a sales tax which is being imposed by the Minister of Finance".
So what can the Government do? So the Government can give the capital gains tax exemption to high-rollers and people who tend to work on Conservative campaigns. I do not know if that is what will be dealt with in tax reform, but it is the type of choice we are likely to face.
There is a very real prospect of the Government imposing this tax unless we in Parliament and Canadians can get the message through to the Government that this is not an acceptable tax.


Mr. Gustafson:: You're dreaming!


Michael Morris Cassidy: The Hon. Members suggests that I am dreaming. If I am, then I ask him why the Minister of Finance has, in response to many questions here in the House of Commons, not indicated absolutely clearly that this is no longer an option being considered by the Government. If the Government wanted to be free from charges that it was intending or considering this particular tax, then the way out was very easy and clear. Members of the Government could simply say to me: "Mike, stop getting worried. Tell your Party to stop getting worried. We are not going to do it". I hope that perhaps the Minister of State for Finance (Mr. Hockin), who I believe will speak in this debate, or perhaps the Minister of Finance, will get up in the House today to reassure us that that will be the case. If that were the result of this particular debate, then I would feel that the time of the House had been well spent on this Opposition Day motion in opposing the food tax and getting the Government to make it clear that it is no longer considering this particular measure.
The Government has suggested that the way around the problem created by taxing food is to provide a sales tax credit in order to take the burden off those families which would be most affected. We will of course have to wait until June 18 to see what the Government has in mind. But the performance up until now leaves my Party, myself and many Canadians very uneasy.
The Government says: "Look what we did. We innovated. We brought in a refundable sales tax credit of $50 per adult and $25 per child. That is directed at families earning under $15,000 per year. Are we not wonderful?" That measure does not compensate poor families for the regressive impact of the sales tax that is currently being applied. It does not compensate them for more than a portion of the increases in sales tax that have been levied by the Progressive Conservatives since coming to power just under three years ago.

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In addition, the refundable sales tax credit does nothing to compensate the average Canadian family for the fact that the Conservatives have increased their tax burden by something in the order of $1,500 per year since they came to power in 1984. When the Conservatives came to power they said: "There is waste and inefficiency in Government. We will root it out". What they did instead was to bring in enormous tax increases which have been levied almost entirely on personal taxpayers and on people paying sales tax, not on corporations. In fact, we estimate that between 1984 and 1990 the increase in sales taxes on the average Canadian family alone will amount to some $20 billion on a cumulative basis.
What is significant is that the sales tax credit that is applied now does not apply to people earning over $20,000 per year. It does not apply to a family whose principal earner works at GM in Oshawa or Chrysler. It does not apply to a farmer struggling to get by and still having some income from a farm in western Canada. It does not apply to a clerk or a secretary raising a couple of kids and living in Vancouver where there are very heavy housing prices. It does not apply to a fisherman and his family on the coast of Nova Scotia or Newfoundland if their income is over $20,000 per year. It only applies to people earning less than $15,000 per year.
The poverty line in a major Canadian city is about $20,000 for a family of four. So many families in poverty are not benefiting at all from the sales tax credit. But government spokespeople have inadvertently, perhaps, let it out on many occasions that they only see this tax credit, which might amount to $300 per year, going to people earning less than $15,000 per year. Therefore all those families having trouble meeting mortgage payments of $600 a month, and all those families having trouble meeting rent for a home of $700 per month, as well as meeting the costs of transportation, food and maybe getting skates for the kids so that they can go to figure skating or play hockey, will be meeting a burden of $400 per year or more in increased sales tax with no compensation through the tax credit at all.


An Hon. Member:: Wait and see.


Michael Morris Cassidy: I have been waiting for assurance but we have seen nothing. What I have seen from the Conservatives is that they have raised the burden of sales tax and the tax burden on the average Canadian family by $1,500 per year. They have already begun to extend the sales tax to food. They have taxed candy. They have taxed potato chips. They have levied a tax on kids. They have taxed snacks. They have taxed soft drinks at a time when we are trying to encourage people to get away from drinking by taking alternatives. They have raised the excise taxes on gasoline, alcohol and tobacco.
My time is very close to being up. I would point out that the Government is wrong when its experts say that it is more progressive to give this tax credit than it is to exempt food from tax. Their own figures, which were given to me by the Department of Finance, indicate that a family earning $15,000 per year spends 20 per cent of its income on food. I think that
it is probably more. A family living on $60,000 per year spends less than 9 per cent of its income on food. Therefore a tax on food will hit the low income family much harder than it will hit the family earning much more money.
I point out that in Japan there is a taxpayers' revolt despite the fact that the proposed valued-added tax in Japan will not hit food, I point out that the value-added, or business transfer, tax may begin small but that the Government will be tempted to raise it the way it has been raised in Britain, France and other countries where it is now up to levels of 15 per cent or 16 per cent. If 8 per cent on food is intolerable, 15 per cent would be absolutely unconscionable. The Government has done little to maintain or gain public confidence, which is why New Democrats-

This is why the New Democratic Party-my Party-agrees with Canadian men and women who openly tell the Government: Time has come for you to assure us that no tax will be levied against food, that the business transfer tax will never apply to food, that each week the average Canadian family will not be forced to pay this tax which would cost $400 a year.


Mr. Hockin:: I have a brief question for the Hon. Member, Mr. Speaker. 1 listened carefully to what he had to say. I was searching for his proposal for sales tax reform. It is easy to criticize whatever models are put in front of one with respect to sales tax reform, especially to take one of the models and speak against it for an extended period of time. But what is the Hon. Member's proposal for sales tax reform?
With respect to the food tax I want to ask the Hon. Member how adamant he is about what he said. If he does not believe in taxing food, then I would like to pin him down very categorically on that. Does he believe that we should continue our two-price approach to wheat? That is my first question.
My second question is the following. What if it were proven to him-and I am not too sure it could be proven-that it was progressive, that is, a heavier tax proportionately on the wealthy, if certain foods were taxed? Would the Hon. Member then favour a food tax in that situation?
He has given us his figures which indicate that any type of food tax would be regressive. What if there were figures and certain food products were taxed in such a way that it was progressive, that is, if we taxed the wealthy much more than the poor, then what would the Hon. Member have to say? This does not mean that the Government is contemplating a food tax. But I would like to know where the Hon. Member stands.
Would he be in favour of such a tax if it were progressive as opposed to regressive? What is his stand on the two-price wheat policy, which is tied to food? What is his proposal for tax reform?
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Michael Morris Cassidy: Mr. Speaker, 1 am impressed by the fact that the Minister should have jumped on the first opportunity to ask questions to the New Democratic Party. Yet I am deeply disappointed that at the same time the Minister did not make a statement on the Government intentions.
Since the Minister will have to leave the House during the debate, I would begin by asking him whether or not the Government intends to tax the increases. The Minister's question is as follows: Would we be supportive if it could be proven that this tax is progressive?
Well, Mr. Speaker, my answer is simply that, according to the figures given the Standing Committee on Finance and Economic Affairs by the Department of Finance officials whom I have just quoted, the 1982 report on family expenditures reveals that a family with an annual income of $60,000 spends about $5,000 a year on food. This is probably a conservative estimate, but the figures were provided by his Department. It accounts for about 9 per cent of the income of a family earning $60,000 a year. In the case of a family with an annual income ranging from $15,000 to $20,000, the corresponding figure is $3,000, or $60 a week. This represents 20 per cent of the annual earnings of a family with an income of $15,000.
In other words, a family averaging $15,000 a year spends proportionately twice as much on food as does a family with an annual income of $60,000.
Indeed, Mr. Speaker, in light of the remarks of the Department of Finance officials, it goes to show to what extent a tax on food can be regressive: it hits a family earning $15,000 twice as hard as another one with an income of $60,000, and this despite the fact that it is much easier for the latter to bear taxes for federal Government services.
I would suggest that if the Government wants to levy progressive taxes against high income families, then let us get them through an income tax system because, as I see it, the Minister's proposal is unlikely to produce a progressive sales tax system.
The two-price system for wheat, Mr. Speaker, does of course influence somewhat the price of bread and other wheat-derived products in Canada. That I admit. However, Mr. Speaker, it also represents a direct benefit for a major sector of our economy, namely, the farmers across this country.
That is why we support the system. The Minister asks whether the New Democratic Party is opposed to any taxes being levied either directly or indirectly on food. That, of course, would be unrealistic. For instance, farmers buy gas for their tractors. There are other items they buy for their production process, on which they pay some kind of sales tax or excise tax. Fine. And these taxes are part of the price we ultimately pay for the end product.
The fact is, Mr. Speaker, that the tax burden on food today is perhaps 1.5 per cent or 2 per cent, certainly not more than
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that. And now the Minister and his Government want to increase that burden to as much as 8 per cent, 9 per cent or 10 per cent. We don't know exactly how much. There is a big difference, Mr. Speaker, between a minor tax that indirectly enters into the price of a product and a tax deliberately levied by the Government.
So what is the NDP saying?
We are saying that we should not rely more on indirect taxes. We are saying you should not tax food. We are saying, yes, you should reform the manufacturers' sales tax. We accept the need to broaden the base, Mr. Speaker. We are suggesting that with all of the brain power in the Department of Finance the Department should have been able to do better than what it has done so far. Is the Minister in favour of taxing food? Yes or no? What is the position of the Government?


Mr. Darling:: Wait and see.


Mr. Deputy Speaker:: We will have two more questions. First, the Hon. Member for Hamilton East (Ms. Copps) and then the Member for Nanaimo-Alberni (Mr. Schellenberg).


Sheila Maureen Copps: I am glad to see the New Democratic Party join the Fiberals in opposing the food tax. However, I would like to ask the Hon. member for Ottawa Centre (Mr. Cassidy) whether he agrees with the action taken last year by the socialist Government-I know that he and his leader are very much attuned to international socialism-whether he agrees with the action taken by the Government of New Zealand, a so-called socialist government, which last year imposed a 10 per cent tax on food.


Michael Morris Cassidy: Mr. Speaker, that is a good question. The answer is obvious, and it is clear form the speech I just made, that I am opposed to these taxes in our particular situation here in Canada. So I am opposed to this tax, even if certain socialist governments have imposed a tax on food. I don't know exactly what kind of tax was imposed by the socialists or rather the Fabour government in New Zealand. I would have to look into that. But it did impose this tax, and I am against it. The question we have to deal with now is: Is the Government in favour of this tax, yes or no? Why these delaying tactics and refusal to assure Canadian consumers that food will not be taxed?


Mr. Schellenberg:: Mr. Speaker, I listened with interest to the comments and the statements of the Hon. Member for Ottawa Centre (Mr. Cassidy). 1 think we are a bit pre-emptive with this discussion today. We might as well be discussing what the weather is going to be like on the weekend. We should wait until June 18 before we get into actual details and discussion on tax reform in this House.

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Be that as it may, I seem to interpret from the Member's comments that he is in support of tax reform but not in support of the food tax. If that is the case, I was surprised that he did not mention the New Democrats' travelling road show across the country some months ago, of which I believe he was a part. I trust New Democrats did not talk just to the interest groups but to average Canadians. Did the average Canadians to whom they spoke support the over-all concept of tax reform?
There being a hidden tax in this country, that being the deficit with which we are all faced, how would he as Finance Minister in a New Democratic Party Government of Canada deal with that hidden tax which costs Canadian families thousands of dollars a year? Would he bring in tax reform or would he change the manufacturers' sales tax? Would he cut the cost of government? How would he deal, as we have to deal, with that hidden tax of the Canadian deficit?


Michael Morris Cassidy: Mr. Speaker, I appreciate the questions from the Hon. Member. I would point out that when we went across the country with Tax Probe 86-and I am glad the Member has taken note of that because I think we did do a good job in talking to a broad range of Canadians-what people said most of all was, "Yes, as taxpayers we are prepared to pay our share of federal taxes." We did not find a widespread tax revolt with people saying, "No, the tax burden is so awful, let us cut it by half'. It was not a Proposition 13 type of mentality such as that found in the State of California. What we found instead though was people saying, "When we pay our taxes, we want to know that the tax system is really being just and fair".
One of the things which the Hon. Member's Government has done, which I think has done more than any other single measure to undermine people's confidence in the justice and fairness of the tax system, was to give a half a million dollar exemption on capital gains. We know that 90 per cent of that benefit will go to people in the top 1 per cent or 2 per cent of the income range, to high-flyers speculating in art, land, and whatever else. That is where most of the benefit of that measure has gone. That is why that kind of measure has to be taken away.
An NDP Government would be committed to tax reform along the kinds of principles that I have outlined in a number of speeches both in the House of Commons and elsewhere. We do want to maintain a substantial reliance on direct taxation. We believe that the corporate share of the tax burden in Canada has been allowed to go down too far, both by Liberal and Conservative Governments.
We deplore the degree to which this Government, now in office since 1984, has loaded billions of dollars of additional tax burden on to average Canadians while putting peanut-sized tax demands on the corporate sector. Those are some of the guidelines and principles that we would follow. We believe that if we can get the economy of Canada going, that in itself would reduce government expenditures, increase revenues and
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make a major contribution to bringing down the deficit, which I think most people feel is, in the long term, unduly high.


Thomas Hockin: Mr. Speaker, before beginning my remarks, I should like to tell the Hon. Member that the whole question of sales tax on food and other matters will be properly discussed on June 18. The Minister of Finance (Mr. Wilson) has made that clear, and I ask the Hon. Member to wait until then. He can certainly warn the Government, if that is what he wants to do, and prod the Government not to do things; that is an historic role of the Opposition. However, it is also an historic role of the Opposition-and I want to make this point very clear before I begin my remarks-to present credible alternatives.
In my view the role of the Opposition is to check the Government, to prod the Government, and to be a responsible alternative. What we are hearing this morning is a little of the first and the second and none of the third.
In order for the country to be properly informed in a debate about tax reform, it seems to me that we should have contesting alternatives in the Chamber, not simply negative criticisms of attempts to be constructive in reforming our tax system.
I welcome the opportunity to speak in the debate today and to deal with some of the broad questions on tax reform. The Hon. Member said that he was concerned that the Minister of Finance has not been as informative as he would like. Let me summarize where the Government is, up until now, and set the stage for June 18.
In responding to the Hon. Member for Ottawa Centre (Mr. Cassidy), I should note at the start that the timing of his motion is a little strange. In just three weeks from today the Minister of Finance will be presenting to the House and to the country the Government's proposals for tax reform. That is really the time to have this debate, but for some peculiar reason we are having it today. I could have understood why we are having it today if, as I mentioned at the beginning of my remarks, the Hon. Member for Ottawa Centre had a whole set of alternative proposals to bring to us from his task force and wanted to put them before the House to allow us to criticize and examine them. However, that is not the case. Instead, we hear nothing about that; we just hear warnings about particular fears he has about what might be announced on June 18.
It is bizarre that we are having the debate today but, now that we are having it, let me proceed. The Minister of Finance has already made it clear that important and broad-reaching changes to our tax system will be proposed. He has indicated the general nature of some of the approaches of tax reform. It is clear from this that the White Paper will contain major reforms.
The Hon. Member opposite is clearly impatient. I have already heard his impatience this morning. He is not prepared to wait until June 18 to see exactly what will be proposed, but he will have to wait. Moreover, he has presented a motion with
May 28, 1987

a strangely narrow focus. It ignores the whole broad range of tax issues which have a bearing on the fairness and balance of our tax system.
It is often said that it is good politics to concentrate on one issue and criticize it. I am not too sure that that is what the Canadian public is expecting-just criticism on one aspect of tax reform. I think it is looking for comprehensive reform and it is looking to all Parties not to have a strangely narrow focus but to have a comprehensive focus.
Perhaps it is not so surprising that the motion is couched narrowly, in view of the fact that the Minister of Finance has made the broad directions of tax reform quite clear. It is apparent from what he has said already that a fairer tax system is emerging.
The tax burden will be redistributed, to be shared more equitably among taxpayers in similar circumstances. The Minister has stated that the Government's revenue sources will be better balanced with less reliance on personal income taxes and higher take-home pay for the great majority of Canadians.
I have heard the Hon. Member for Laval-des-Rapides (Mr. Garneau) speak on tax reform in the House. His principle seems to be close to but not nearly as specific as that of the Government. However, these principles are supported by Canadians-that we should redistribute the burden, share it more equitably, make the system simpler, and have less reliance on personal income taxes than we have had in the past.
[ Translation]
The Minister has stated that the income tax system for individuals will be improved as a result of reduced tax rates, fewer income tax brackets, fewer special privileges which mainly benefit high income taxpayers and an increased use of tax credits as opposed to tax exemptions, a change that will help very substantially those in the lowest income bracket.
In addition, the switch to a tax credit system may be seen as a progressive social change, because doing so, we can use the personal income tax system to continue to improve the situation of low-income Canadians.

The Minister of Finance has left no doubt about his intentions in this regard. They are changes that will be widely welcomed by Canadians, so it should not be surprising that an opposition motion attacking the Government is silent on all these very positive measures. It is silent, too, on the Minister's stated intention to change the corporate tax system. The corporate tax base will be broadened by eliminating many special preferences and reducing others.
The Hon. Member spoke briefly about corporate tax, but he did not say very much about it. The corporate tax base will be broadened by eliminating many special preferences and reducing others. Many more profitable corporations will pay tax. The resulting increase in revenues will permit a reduction in corporate tax rates, so that they remain competitive with
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those of our major trading partners. Nothing could be more clear about where we are heading with tax reform, which is to lower the rates and broaden the base.
We have not heard much about what Hon. Members opposite would do to bring about improvements which are so badly needed in our sales tax system. The flaws in the sales tax system have been known for many years and documented in a whole series of studies. As a matter of fact, the Hon. Member presented our case when he said that two-thirds of the goods and services in Canada are not taxed, and that we must have a reform of the federal sales tax. I listened closely, and I could not get what his reform of federal sales tax would be. In fact, I asked him direct questions on this and I still could not get the answer.
We have a sales tax which discriminates against our own producers in favour of foreign competitors. This is unbelievable. Any foreigner who looks at our federal sales tax system finds it hard to believe that we would have such a system.
Due to a different tax base, the effective rate of taxes on average is one-third higher on Canadian products. What would Hon. Members opposite do about that? Not only that, but the tax discriminates against similar products made by competing manufacturers within a particular industry. It even discriminates within an industry, as well as discriminating against our exporters.
About one-half of the total sales tax collected is derived from tax on business inputs. The result is an indirect charge on exported goods estimated at about 1 per cent of the sales value of exports, burdening Canadian producers with a competitive disadvantage in world markets. Moreover, the federal sales tax is too narrowly based, as I have said. With such a narrow base, tax rates have been forced to rise for fiscal purposes. The result has been to distort efficient operations in our economy.


Michael Morris Cassidy: What about food? Is food in or out?


Thomas Hockin: You will find out on June 18.


Michael Morris Cassidy: Why not now?


Thomas Hockin: Hon. Members opposite are well aware of the sorry state of our sales tax structure. What would they do about it? The Hon. Member wants to know only about one thing-the taxation of food. He knows that the answer to that, and the alternatives Canadian people are invited to look at with regard to that will come on June 18.
What we are not told by the motion-and I do not expect we will hear any suggested answers from them in this debate-is what they would do about federal sales tax reform.
The Minister of Finance has indicated the Government's approach. His White Paper in three weeks will set out proposals to replace the flawed and inadequate federal sales tax. Its replacement will be a broadly based, multi-stage sales tax in which the wide coverage will permit a lower sales tax rate.

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Michael Morris Cassidy: Including food, eh?


Thomas Hockin: The question of what is to be included in the sales tax base is one of the important issues to be addressed in the process of sales tax reform.


Michael Morris Cassidy: Make up your mind. Are you in or out?


Thomas Hockin: You will know. We want to hear the considered views of interested groups and individual Canadians before taking a decision.
We have heard some of the Hon. Member's views. We ask for some more details, but we do not get them. The composition of the tax base will also be a major item in our discussions with provincial Governments as we explore the alternative mechanisms which could be used in implementing a national multi-stage sales tax.
There is one important element in our tax system that has particular bearing on this whole question and I refer to the refundable sales tax credit which was introduced by the Government in the February 1986 Budget. The credit is $50 for adults and $25 for dependent children and will be refundable in full for families with net incomes of up to $15,000. All Parties have acknowledged the progressive nature of this credit. Obviously the credit will have an important bearing in our discussions on the sales tax base.


Michael Morris Cassidy: No, all Parties have had real problems with it.


Thomas Hockin: You don't agree with refundable sales tax credit? That has not been the position of the Hon. Member's Party. It has praised the concept and we have made it a reality.


Michael Morris Cassidy: That's right, we have praised the concept but not the implementation by your Party.


Thomas Hockin: This Government made it a reality, and whatever changes will be made to the sales tax must be considered and judged in the over-all context of the tax reform package that will be tabled on June 18.
As I have already mentioned, the Minister of Finance has made it clear that important changes to personal income tax will have a major effect on providing fair tax treatment for lower-income Canadians. Of all the fears I have heard from the Hon. Member opposite, he has totally neglected to mention how the Minister of Finance has made it clear that lower-income Canadians will find their taxes much lower. That was not part of his speech in any way. I can only urge Hon. Members and Canadians generally to judge what we do on its over-all effect on creating a better and fairer federal tax system for Canada.
I would also like to remind the House that the goal of a better and fairer tax system is not a newly adopted policy of the Government. It has been a major priority ever since the Government took office in 1984. In his agenda paper of the fall
of 1984, the Minister of Finance identified the tax system itself as an obstacle to the country's economic growth. I do not know if Canadians realize how important that statement is. There are many obstacles to growth in Canada, but who would have dreamed that the tax system itself was one of those obstacles? It is, and the Minister recognized reform of the tax system as an important aspect of economic renewal.
Since then, in a deliberate and measured way, the Government has introduced a number of important improvements to the tax system. With his first Budget, the Minister of Finance tabled a discussion paper outlining directions for reforming the corporate income tax system and the first phase of those reforms was carried forward in the February, 1986, Budget. We are already in the process of reform and of broadening the tax base to permit a reduction in corporate tax rates. The second phase of corporate tax reform will be launched in the June 18 White Paper.
What has happened already in the area of personal income tax? The tax base has been broadened by the Government by eliminating a number of tax-avoidance and deferral techniques. Not once do we hear anything about that from the Opposition. There are a number of major steps that have already been taken to reduce tax preferences in the corporate sector and in the personal income sector. We have eliminated a number of tax-avoidance and deferral techniques-


Michael Morris Cassidy: And created new ones.


Thomas Hockin: I would be very happy to go through examples of those during Question Period. What we have created that is new is a minimum tax to ensure that high-income earners cannot avoid paying any tax. We never hear about that either. As well, the first steps were taken toward finding a replacement for the inadequate federal sales tax. A review was undertaken of selected social and tax transfer programs.
There is much to be said about how far the Government has already gone on tax reform before the statement of June 18. It soon became apparent, however, that if we were to achieve our goals of tax reform, we would have to undertake a major restructuring of personal income tax as well. That led to the announcement last July of the Government's intention to proceed with comprehensive tax reform. The goals and guidelines of tax reform were set out by the Minister of Finance in the Blue Book he tabled in the House on October 23.
Fairness is the key measure of tax reform. The tax system must ensure a fair sharing of the tax burden. People in similar circumstances are not now treated equally. They will be treated equally after tax reform. High-income earners and profitable corporations should pay their fair share of taxes and similar products should bear the same rate of sales tax. The previous Government felt that it could not act on any of these but we will act on them.
The tax system should also be simpler so Canadians may understand it and comply with it. I recall that two or three
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months ago, I met with the Chinese Minister of Trade who asked me what the books were that were sitting in the corner of the Department of Finance boardroom. I said that they were interpretation bulletins and the Statutes of the Canadian Income Tax Act, comprising about 3,000 pages. I asked how big the Chinese income tax document was, and he said that it was six pages. I do not think we will ever be able to get that much simplicity, but Canadians want a simpler system, a system that will allow them to understand and to do their income tax returns themselves. That is a major motive behind the reforms we will be bringing in on June 18.
Another important objective has been to achieve a better balance of federal revenue sources with less reliance on personal income tax. We also seek greater stability and certainty in federal revenues. There are other important concerns which help shape tax reform, including the need to encourage economic growth and to remove distortions in business decision-making created by tax incentives, the need to reinforce international competitiveness and the need to reflect Canada's social and economic priorities.
We have been concerned that any tax changes should be implemented with appropriate provisions for transition to the new tax system. I think it is important that we signal that now. Throughout we have consulted broadly with Canadians in developing the proposals we have submitted to the House. Consultation is important. The last time there was a major effort at tax reform in the MacEachen Budget, there was not appropriate consultation. The Government was caught unawares time and time again and in a humiliating way had to change at least 49 major parts of that Budget.
We have been consulting. In fact, in order to minimize surprises, we have also brought forward papers for debate and discussion. The Hon. Member could not have introduced this motion and debated it in the way he has if the subject had not been raised by the Government. He wants to talk only about food, but all the other aspects that he does not discuss have been in the public domain. Canadians understand them and that will help in the understanding of tax reform when we table our major document on June 18.
I am confident that the White Paper will be judged a success in meeting those guidelines. I think the consultations we have already undertaken will have been very helpful. I was told that in New Zealand, there was a government information office on the sales tax system and it was able to be closed before the tax was even brought in because the people of New Zealand were so well informed about what the Government was doing.
I think consultation has helped set the stage for the Canadian people to sympathize with and understand what we intend to do. In particular, I am sure that impartial judges will conclude that tax reform meets its central objective, which is to reduce tax rates. This is the best possible incentive for growth, investment and job creation. Lower income tax rates will mean larger take-home pay for the great majority of Canadians. Tax avoidance is minimized through lower rates.
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Incentives are put in place through lower rates. Lower rates are key to all of these reforms.
By way of conclusion, let me say that these lower tax rates will be brought about by reducing or eliminating a wide range of tax preferences which have been of benefit primarily to corporations and upper-income earners. That is how we will find the revenue to lower rates and what will emerge will be a tax system that will levy less total tax on the large majority of individual taxpayers and achieve this through a greater measure of fairness in the system as a whole.


Sheila Maureen Copps: Mr. Speaker, given that the Minister cites the example of the imposition by the Labour Government of the 10 per cent tax in New Zealand, can he tell us what effect that had on working families and particularly on the Consumer Price Index in New Zealand?


Thomas Hockin: My only reference to New Zealand was the effort made there to inform citizens of what the reforms were so that confusion would be minimized. I am not a close student of those reforms and I could not give the Hon. Member the answer she seeks.


Sheila Maureen Copps: Mr. Speaker, obviously the Minister has looked at the New Zealand system or he would not know about the information system. If he went beyond that he might be aware that in the three months following the imposition of a 10 per cent across the board tax, including on food, imposed by the Labour Government the inflation rate increased by 8.9 per cent. Can he explain how an increase in inflation of 8.9 per cent over three months would be of benefit to low and middle-income Canadians?


Thomas Hockin: Mr. Speaker, I have to reiterate that I cannot vouch for figures. However, let me tell her that the kind of tax reform we are proposing will broaden the base and lower the rate. For example, say you are a taxi driver and you buy an automobile. What is the tax, 12 per cent? If, through tax reform, that rate is lowered to 6 per cent or 7 per cent this Government has lowered the cost of that automobile for the owner. By broadening the base and lowering the rate you will have less inflation in many cases, not more.


Michael Morris Cassidy: Mr. Speaker, because the sales tax is levied at the wholesale level, it does not hit taxpayers quite as hard as perhaps some people think. The figures we have indicate that the average rate at the consumer level comes out to about 7.2 per cent. He should beware suggesting there will be a huge drop in taxes if the tax is reduced to 6 per cent or 7 per cent in the form of a business transfer tax.
He also asks where the NDP stands. In July, 1986, we said in our tax probe report that our analysis has led us to conclude that the current federal sales tax is so unfair, unaccountable, and administratively complex that it should be abolished. That is pretty clear. We then talked about alternatives.

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The Minister suggested that we should talk about the whole range of tax reform in this debate. We will discuss that after June 18. My Party was focusing on the very specific issue, which he danced around, that food is such an essential necessity of life we believe it should not be taxed. Does he believe food should be taxed, yes or no? I would like him to give the answer on behalf of the Government.


Thomas Hockin: Mr. Speaker, I guess it depends on what kind of food, what level of income, and so on. That question is to be canvassed further on June 18. The Hon. Member says he is not in favour of taxing food but he believes in the two-price policy for wheat, for example. I am sure he believes in marketing boards as well. Those things mean that agricultural products are somewhat more expensive than they would otherwise be. He has never suggested a solution to that problem.
Because of the cost of food, this Government brought in a refundable sales tax credit. We have a child tax credit. We have put these credits in place in order to compensate for the regressive nature of some of the things that have to be done. Yet we never get a proposal that goes even that far from Members opposite in order to help low-income Canadians.


Mr. Redway:: Mr. Speaker, the Minister indicated he felt we should be addressing the tax reform question in a broader context. He also made reference to the fact that there are hidden taxes on food resulting from the supply management system and the two price wheat system. I understand that the U.S. Department of Agriculture has done a comparative study and claims to have found that Canadian consumers, as a result of the factors I mentioned, pay a tax in effect of 25 per cent to 50 per cent for milk, 10 per cent to 24 per cent for butter and cheese, and less than 10 per cent but still something in excess of 1 per cent obviously-


Michael Morris Cassidy: Why don't you eliminate medicare and cut taxes that way, too?


Alan Redway: -for a host of other foods such as sugar, poultry, beef, pork and several other grains.


Michael Morris Cassidy: Turn this into a Ronald Reagan paradise, that is what you are trying to say.


Alan Redway: I wonder if the Hon. Member for Ottawa Centre (Mr. Cassidy) could just calm down and let other people speak calmly. The whole point of the House of Commons, as I understand it, is to have a rational, calm debate. I am disappointed and disturbed that the Hon. Member feels we should have a shouting match, screaming and shouting from his seat.
In light of this report, in light of the things the Hon. Minister has been saying this morning, will he tell me, the House and the Canadian people if the White Paper on tax reform is going to address these problems in a broader way than just the question of tax credits?


Michael Morris Cassidy: Do you want to eliminate unions as well as marketing boards?


Alan Redway: Here we go again. We are hearing the NDP Member for Ottawa Centre trying to shout down anyone else who wants to say something in this House. It is disappointing to me and, I am sure, the Canadian people.
Could the Hon. Minister tell us-


Michael Morris Cassidy: Retrograde Conservatives.


Alan Redway: There he goes again. The NDP does not want anyone else in this country to say anything.
Can the Hon. Minister tell this House if the Government's tax reform package will address these problems? If so, will it do it in a way that goes beyond the tax credit approach he has been talking about? To date at least those tax credits have been fairly modest in relationship to the taxes paid by the Canadian public on food.


Thomas Hockin: Mr. Speaker, I thank my hon. colleague for raising that question. It is rather awkward because he is asking me to reveal what is going to be in the June 18 document. I think he will understand that I cannot answer that directly, but I could make a couple of comments.
To deal with the imbalance in our tax system, to make it fair, is to come to terms with some of these hidden expenses for low-income Canadians about which he expresses justifiable concern. The child tax credit is designed to help a poor family purchase food for their children. It is quite generous. The refundable sales tax credit is an important innovation of this Government. To remove hundreds of thousands of Canadians from the tax rolls also a major objective of tax reform, and that will help produce more income so these people can buy the products about which the Hon. Member expresses concern.
I have to make a broader point. If you can create 778,000 jobs, that is an enormous contribution to the solution of the problem of which he speaks. It produces income for people who had very little.
The Hon. Member raises an important point about the subsidy system in Canada. The Government has brought in credits and created jobs. It will create a fair system. That is our answer to the very good question he raises. Perhaps there will be more specifics on June 18. Liberal and NDP Members opposite, especially the Hon. Member for Ottawa Centre are silent on the kind of questions the Hon. Member for York East (Mr. Redway) raises.


David Orlikow: Mr. Speaker, the Conservative Government has talked about a fairer tax system since the election campaign of 1984. It is now 1987 and we have seen taxes for the average family increase by $1,500 a year. There has been an increase in indirect taxes through increases in the sales tax rate and charges for government services. A $500,000 exemption on capital gains has been implemented which benefits the
May 28, 1987

wealthy. We know that over 200 Canadians who had incomes of over $200,000 paid no income tax at all. We know that the biggest corporations have been able to avoid paying any corporation tax at all. As an example, when Gulf Canada was purchased, there was a $500 million tax avoidance through the Little Egypt Bump.
Therefore, we are pretty skeptical about the promises for a fairer tax system. We will watch him very carefully because so far we have seen very little evidence of a move toward a fairer tax system. We have seen higher taxes for ordinary Canadians.


Thomas Hockin: Mr. Speaker, I know it is the duty of the Opposition to express skepticism. However, to express skepticism in the midst of concrete actions in the opposite direction is less understandable. Let us look at the tax fairness measures which we have implemented to date. The proof is in what we have done since 1984.
We ended the scientific research tax credit abuse which was terribly expensive. We eliminated tax shelters based on investment in yachts, recreational vehicles and similar properties. We eliminated the Registered Home Ownership Savings Program. We brought about the elimination of income splitting among family members by using interest-free loans in order to minimize tax. We imposed a minimum tax on high income individuals, which is something the Hon. Member called for.
From July to December, 1985, actions were taken to stop the so-called carve-out transactions in the oil and gas sector and to prevent the use of trusts through market securities issued in such a way that income and capital returns to investors were distributed tax free. We ended the use of partnership and corporate takeovers to increase tax deductions through the so-called partnership step-up rules. The list goes on. All of these measures are evidence that reform is under way.
In addition, the Government is committed to replacing exemptions with credits. This is a very, very progressive move. In the 1987 Budget the Government indicated that it would do this. In addition, through the federal sales tax credit and the child tax credit we have already given concrete evidence that we are moving in this direction.
Exemptions favour those in the higher tax brackets, and I do not know why Hon. Members do not mention this. Each $1,000 of exemption is worth $60 in federal sales tax saving to a lower income individual in the 6 per cent tax bracket, while it is worth $340 to a person in the top 34 per cent tax bracket. Credits provide the same amount of tax reduction to taxpayers at all income levels. That is why it is so important to move to a credit system. Finally, moving to credits will mean more benefits for lower income taxpayers and less for those at higher income levels.
I do not ask the Opposition to cease being skeptical. That is the job of the Opposition. However, I do ask Members to look at these concrete, progressive moves which show that we are
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moving massively in the direction of fairness, more so than any previous Government in my memory.


Sheila Maureen Copps: Mr. Speaker, I cannot believe my ears. I cannot believe that the Minister of State for Finance (Mr. Hockin) said in his speech that the tax credit which is currently given to families is used to buy food. That tax credit was originally instituted by previous Liberal Governments to help those poor families that could not afford to buy clothing, furniture, or some of the big ticket items. It was certainly never intended to pay for food.
That mentality of the Minister is an indication of what we can expect on June 18. We already hear the Minister saying "sales tax credit to pay for food". Shame on the Government, and the Minister of Finance (Mr. Wilson) and the Minister of State for Finance who claim that they will bring in tax reform. They will bring in tax reform all right. Just ask low-income Canadians including senior citizens living below the poverty line on pensions what kind of tax they are now paying as a result of the Government's so-called reforms instituted in the November Economic Statement in a cumulative way.
Does the Minister really think the Canadian people are that stupid? Does he really think they cannot read the taxes they are now paying in the low and middle-income brackets as a result of the changes made by the Government which favour the rich? We heard the Minister expound on how fair tax credits were as compared with exemptions. He did not mention the $.5 million capital gains exemption which he and his friends on Bay Street have offered to the top 2 per cent of the population which can afford to earn such capital gains.
In the last two and a half years the Government has wreaked a tax expense havoc on the poor and middle-income families which has been unprecedented in Canadian history. We now see the ultimate blow in the form of a tax on food. We heard the Minister of State for Finance talk about what happened when the wonderful socialist Government in New Zealand imposed a 10 per cent tax on food. Yes, in the shortterm they saw their take-home pay increase because their income tax had been reduced. However, they also saw prices increase dramatically.
In the first three months following the imposition of a 10 per cent tax on food the Consumer Price Index increased by 8.9 per cent. The Minister said that he could not foresee an increase in the CPI. That is because he has not studied the issue. He has not looked at what has happened in other jurisdictions. It is quite clear that there will be an increase in inflation. It is quite clear that a tax on bread and milk will hit those who can least afford to pay.
We could not pin the Minister down today on exactly what the Government intends to do on June 18, but we heard a bit of the line, the Dalton Camp line, which is probably being crafted now in the Office of the Prime Minister. God forbid that the Government should get itself in the same kind of a mess with the food tax as it got itself in on its attempt to cut back on senior citizens' pensions. I am sure the Government

May 28, 1987
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will have a finely honed, finely crafted line, part of which we heard today from the Minister of State for Finance.
He said that the Government will broaden the base. A food tax will certainly broaden the base. Instead of taxing luxury items and other specific items as is currently the case under federal sales tax legislation, we will be taxing milk, bread, and other food when we already know from looking at the figures for the last 20 years that Canadians are already paying more to eat and survive than for lodging.
A recent article in Maclean's magazine gives a fairly good picture of how hard Canadians are already being hit for the cost of food. Between 1961 and 1986 Canadians have increased the amount of money they pay for food up to 25 per cent. The amount they pay for shelter has increased by 19 per cent and the amount they pay for taxes has increased by over 33.5 per cent on average. We can see that the amount spent for food has increased tremendously, and yet the Government is going to add a double-whammy if it introduces a tax on food on June 18. Will the Government that was elected with the largest majority in our history receive the support of Canadians to tax food? No. Nearly two out of every three Canadians oppose the Government's proposal to extend federal sales tax to cover food and services.
Food is not the only item. Food is a very basic item, but will we see the Government introduce a tax on day care? Will we see it introduce a tax on other essential services at the same time that it claims it will introduce these other beneficial measures for working families?
The Government claims that it will broaden the tax base and introduce a fairer system. Yet it is really introducing a tax grab for the federal Treasury. The Government likely receives its advice from Deloitte, Haskins and Sells, who suggested just last week that it will be cheaper for the federal Government to tax food and provide a tax credit than not to tax food at all. Deloitte, Haskins and Sells are making preliminary calculations which suggest that it will be cheaper for the Government to tax food. The federal Government will be in a position to collect $20 billion if it comes forward with the business transfer tax of 8 per cent. Its tax credits, which it will potentially give only to families earning below $15,000-far below the poverty line in most communities in Canada-would only amount to $3 billion. Therefore, the net gain to the federal Treasury is $17 billion.
While the Government talks about tax fairness, it will literally be taking food out of the mouths of babes if it introduces this food tax that is being suggested in the June 18 financial statement by the Minister.


Alan Redway: Nonsense.


Sheila Maureen Copps: The Member says nonsense. He may recall one of his Conservative cohorts in the Ontario Legislature, Frank Miller. He was an erstwhile gentleman who certainly had a
very quick tenure as Premier of Ontario. One reason why Mr. Miller went down to defeat, apart from the fact that we had an extremely able Premier to take his place, was that as Treasurer in Ontario he introduced a tax on candy, ice cream and chocolate bars for children, as well as a tax on tampons. I received hundreds of letters from irate consumers, including parents and children, who asked why this man, whom they did not know before this infamous tax, was imposing a tax on candy and tampons. He told me in the Ontario Legislature that tampons were a non-essential item and that is why they should be taxed. We know that the Treasurer ultimately had to eat his words.
When he went to the electorate in the election, people told him what they thought about his tax on candy and tampons. The federal Government should learn from that message that was sent in very strong terms to the then Premier of the Province of Ontario.
There are certain elements in Canadian life that are absolutely essential, one of which is food. If the Minister of Finance really believes he can sell Canadians the notion that while imposing a tax across the board on food consumers will receive a somewhat bigger cheque at the end of the year, it is obvious that the Minister of Finance is not the one doing the shopping in his household. He will not be able to convince the senior citizens who, for the first time, are paying taxes as a result of the regressive tax policies of the Government. It is also obvious that the Minister of State for Finance does not balance the budget in his household.
Canadians pay for their food on a weekly basis and must pay for it with cash. I doubt that Canadians will be able to go to any of the major grocery stores and say that they will pay the balance of their food bill when they receive their sales tax credit from the Minister in 1989. The Member from Newfoundland is smiling. He knows that his constituents will not be happy with a Government that introduces a tax on food while suggesting they will get a bigger cheque at the end of the year.
The figures from Deloitte, Haskins and Sells are selfexplanatory and indicate that the imposition of a food tax, including the tax credit that may be given, may still result in a net benefit to the federal Treasury of a billion dollars more than what it would be without the food tax. It represents $1 billion to the federal Government out of the food bill of ordinary Canadians. When I look at the figures, I am practically speechless.


Mr. Jelinek:: That would be a first.


Sheila Maureen Copps: We make reasonably good salaries as Members of Parliament and I dare say there is not a Member of Parliament who is struggling to pay the food bill. However, we know according to the latest national figures, that there are hundreds of thousands of Canadians, including almost a million Canadian children, living in poverty. Most of those children come from one-parent homes led by mothers. These families cannot afford to pay a tax on food, nor can middle-
May 28, 1987

income families afford a tax on food as a result of the cumulative tax policy since 1984, as part of the so-called tax reform package introduced by that great reformer. Leonard Shifrin, a social policy analyst, called the Minister the "great deceiver", which 1 believe is a perfect name.
A family of four with both parents working, earning $35,000 a year, which represents a fairly average family in certain areas of the country, will be paying over the life of the tax reform package an extra $3,452 through increases in income taxes as well as losses through the cut-back in family allowances.
These average families are gouged by almost 10 per cent of their gross income in a tax period of three to four years. The Minister will then return to the House on June 18 and say that he will offer them a tax break and broaden the base. That was the catch phrase used by the Minister of State this morning which, in simple English, means taxing everything that Canadians use. It may even include such areas of service as daycare and medicare. The enormity of the tax grab on middle and lower-income Canadians as a result of the Government's potential initiatives on June 18 is so devastating that I cannot even begin to describe it.

Mr. Speaker, we know that the Minister of State himself revealed the kind of attitude he has towards poorer people when he said, among other things: We, the Government, pay the sales tax, we pay the sales tax credit to poorer families so they will be able to eat. But when the tax credits were introduced by former Liberal Government a few years ago, it was not for food, it was to give families an opportunity to buy various things such as clothes and big ticket items. This is why we came up with the tax credit, not to pay for food. Indeed we can already guess that the Minister of State for Finance (Mr. Hockin) with his colleague the Minister of Finance (Mr. Wilson) and the Prime Minister (Mr. Mulroney) have begun to toy with the idea of taxing food.
We can only recall the situation in New Zealand where a socialist Government imposed a 10 per cent tax. Even the New Democratic Party . . . Here in Canada we have precious little opportunity to examine the Government performance because it does not perform all that much. However, we have the example of New Zealand, and I was rather surprised to hear the Hon. Member for Ottawa Centre (Mr. Cassidy), who strongly criticized the Conservative Government, reply to my question about what he thought of the action taken by the Socialist Government in New Zealand: "That is not the same. Canada is different".
The Socialist Government in New Zealand imposed a 10 per cent tax on food products, which caused an 8.9 per cent, or nearly 9 per cent increase in the cost of living over the next three-month period. And who is affected by a higher cost of living index? The poor, the old, the underprivileged. Someone with a $100,000 income will not lose any sleep if the cost of
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living index goes up by 7 per cent or 8 per cent. However, someone who spends the larger part of his income on food and housing does.
During the last 20 years, the percentage of average income paid by Canadians on food alone has increased to 25 per cent. Food has become even more expensive than housing in Canada. We already spend 25 per cent of our average income to eat. The so-called tax reform of the Minister, which will supposedly be clarified on June 18, will involve additional taxes, and a tax on food products is even being considered.
A former Ontario Premier tried it before. He imposed a tax on candy, or a kiddy tax, such as the Minister of Finance (Mr. Wilson) has himself imposed this year. The Premier even put a tax on tampons, thus suggesting to Ontario women that such things are not essential. This caused so much protest that he was defeated during the 1985 election.
Mr. Speaker, the Prime Minister (Mr. Mulroney) and the Minister of Finance should look at what happened in Ontario and realize that Canadians are opposed to any tax on food products. It is all very well for the Minister of State to claim that this will extend the tax base. Naturally it will. At this time, the federal tax covers what could be termed luxury products, items which are not essential to daily life.
However, the tax on food products and the possible tax on day-care, in view of the need for such services, represent taxes on the necessities of life. There are no two ways about it. People have to eat. There are Canadians who have to rely on a steady diet of macaroni, and sometimes even cat food. There occasionally are articles in newspapers describing the plight of the poor. Their life is already very hard. If we look at the so-called tax reforms brought in after the 1984 Budget, we find, for instance, that a family with a $15,000 annual income, which is certainly not astronomical, has already lost a total of $1,844 in the three years this Government has been in power. This represents both benefits that have been cut back and additional taxes that now have to be paid. Such a family has lost $1,844. It is fair for a family of four with an income of $15,000 to have to pay additional taxes and lose benefits for a total of $1,844? I do not think so.
Mr. Speaker, I do not think that Canadians are stupid enough to swallow the arguments of the Minister of State for Finance who says that this will be fair and equitable because everyone will pay. This is truly a Reaganite tax reform, which is not surprising as the Prime Minister is always hopping into bed with the President of the United States. This is the same type of reform we saw in the United States and which cost the poor very dearly while fattening the bank accounts of the wealthy.
Mr. Speaker, this is why we are against this tax, and I think that the Government should listen to us and refrain from introducing it on June 18.

May 28, 1987
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Alan Redway: Mr. Speaker, the Hon. Member indicated that she was practically speechless as a result of some of the comments made by the Minister. I have to admit that I was struck dumb by some of the comments made by the Hon. Member. The Hon. Member had the nerve and the gall to indicate that between 1961 and 1986 the cost of food increased by some 25 per cent. You and I are well aware, Mr. Speaker, who formed the Government for virtually all of that time. You and I, Sir, are also well aware of the double-digit inflation that ravaged this country while the former Government, of which the Hon. Member is a supporter, was in office. I do not see how the Hon. Member has the nerve and the gall to stand in this House and tell us that she is ashamed of the fact that the price of food rose by 25 per cent when it was her Government that in fact was responsible.
The Hon. Member went on to talk about what is in the White Paper on tax reform. It not only surprised but shocked me that she apparently has inside information as to what is in the White Paper on tax reform. She implied there were all sorts of things such as taxing food and daycare and everything else under the sun. That was very interesting. As you and I know, Mr. Speaker, that is just fear-mongering. She is deliberately trying to spread fear and concern among the low-income earners and senior citizens when she does not have a shred of evidence on which to base her allegations. She indicated as well that DeLoitte Haskins and Sells were writing the White Paper on tax reform. There is not one shred of evidence to indicate that fact. All of the statements she made indicating what was in the White Paper on tax reform cannot be backed up by one shred of evidence. What she has been doing here today is fear-mongering.
The Hon. Member did say one thing which really interested me and I would like to get her response on the record. It has to do with the scorn she heaped on the half million dollar capital gains exemption brought in by this Government as part of a package of economic recovery. It has in fact lowered the rate of unemployment from what it was when the former Liberal Government was in power. It has brought about an unemployment rate in my own community of close to what is traditionally called by economists "full employment". It admittedly has not done the job across the country the Government would have liked but things are certainly moving much closer to that position than when the Liberal Government was in power.
Can the Hon. Member tell us if it is the official policy of her Party, if and when it ever forms a government, to immediately repeal the capital gains tax exemption which is now in effect?


Sheila Maureen Copps: Mr. Speaker, I am not sure where the Hon. Member has been for the last two and a half years. If he had been here in the House where he was supposed to be, he would know that my Leader has already called upon the Government to repeal that half million dollar capital gains write-off with the exception of the farmers. That has been on the record as
clear as the nose on my face since the Government introduced that measure. Of course, we will repeal it. The Government should repeal it because it is a discriminatory exemption which permits the top two per cent of the population to get a tax grab at the expense of low and middle income earners.
It has been suggested that the Hon. Member has a social conscience. Even his name suggests he might be a red Tory. But I cannot believe the Hon. Member would actually defend the position of the Government that the half million dollar capital gains write-off for the top two per cent of the population should be supported. If we were to look at the figures we would see that a single parent with two children who is earning less than $20,000 per year, who is living below the poverty line as a result of this Government's tax grabs alone, not counting the cut-back in family allowances, will be paying an extra $438 in taxes after the February, 1987, Budget. That is a cumulative increase of $487.
Does the Hon. Member really believe that we should be giving a $500,000 capital gains tax write-off to the top 2 per cent of people who are earning $100,000 and $200,000 while at the same time we are increasing the taxes of those who are living below the poverty line? If he does believe that, then I wish he would answer my mail.
I received a letter recently from a constituent in my riding who is a senior citizen living below the poverty line. He receives the old age pension and a very small income, which puts him below the poverty line. He could not understand why he was asked to pay taxes. He thought that it was a mistake. It is not a mistake. The Government over the last two and a half years in its so-called tax reform package has managed to tax heaviest those who can least afford to pay.
I do not know where the Hon. Member was when I spoke about Deloitte Haskins and Sells. If he had been here he would know that I was referring to an article in the "Report on Business" in The Globe and Mail which is usually where the Minister of State for Finance gets all of his ideas. The "Report on Business" in The Globe and Mail last week gave the Government an analysis of what would happen if it were to introduce a food tax. It was that particular article to which I was referring. It was that particular article which pointed out quite clearly that the Government's move to impose potentially a tax on food is not for the benefit of the consumers. According to the figures of Deloitte Haskins and Sells, if the Government imposes a tax on food and then bumps back a tax credit to those living on $15,000 per year or less, it will still end up with a net benefit of an extra $1 billion for the federal Treasury. The Government is doing this so that it can have a tax grab, probably in pursuit of that Holy Grail of deficit reduction.
The interesting thing is that this same Government which is pursuing this Reagan-like policy of deficit reduction has only to look south of the border to find that the selfsame President of the United States who campaigned on a policy of tax reform
May 28, 1987

coupled with deficit reduction has now managed to augur the largest deficit in the history of the United States. If we are following that example, then God forbid the situation which will be created when we do have a chance after the next election to get rid of that $500,000 capital gains tax exemption.


David Orlikow: Mr. Speaker, I want to ask the Hon. Member a question. She has criticized the tax measures brought in by the Conservative Government. However, the Liberals formed the Government for 50 of the last 60 years. We know that they drafted the tax legislation. We know that in the last year in which they were in power, 200 people who had incomes over $250,000 per year paid no income tax at all. We know that many corporations, at least the most profitable ones, paid no corporation tax. We know that the new purchasers of Gulf were able to obtain a tax avoidance of $500 million on that one transaction alone.
I ask the Hon. Member what assurances we have, if we ever have another Liberal Government, that it will not continue the type of policies it had before which were so beneficial to wealthy individuals and wealthy corporations.


Sheila Maureen Copps: Mr. Speaker, I am not surprised that the Hon. Member is running on the platform of previous Liberal Governments. He uses the corporate welfare bum slogan. We remember that very well from the 1960s. I think the socialist Party ran with that slogan, and it did so reasonably well. What the Hon. Member fails to recognize is that what we are dealing with right now, something which I pointed out in my speech, is that as a result of specific tax grabs by the Conservative Government since September of 1984 we have seen a cumulative tax grab on families anywhere from $400 in the case of those living at $19,000 per year to literally thousands of dollars on ordinary, average Canadian families.
The socialist Government of New Zealand, a Government with which the Hon. Member likes to associate himself, as does his Leader and the Hon. Member for Ottawa Centre (Mr. Cassidy), introduced a 10 per cent tax on food in its own tax grab. Obviously, we cannot compare the record of previous NDP Governments in Canada because there have been so few of them. The NDP Government of New Zealand has taxed that sacrosanct area which the NDP in Canada claims is untouchable. When I asked the Hon. Member for Ottawa Centre about it, he did not completely dissociate himself from it. He did not say that the tax in New Zealand is wrong. He said that we have a different situation in Canada.
It is easy for this particular Hon. Member and his Party to hearken back to past political campaigns. Let us face it, we took our lumps in 1984. We paid the price by losing dozens of good Members from across the country because people wanted a change. They voted to put the present Government in place because its members claimed they were going to bring in all these great changes. Almost three years have elapsed. Frankly, we in the Liberal Party are just a little bit sick and tired of the Government trotting out past Liberal excesses which cost us.
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We have paid for them. There are about 70-odd Conservative back-benchers from Quebec and a bunch from my area sitting around saying nothing to pay for our excesses. What the Canadian people want to know now is what the Government is going to do specifically as it relates to tax reform.
In terms of the NDP, I only ask its members to look over to their socialist friends ip New Zealand. Why did the Hon. Member for Ottawa Centre not have the guts to stand in his place and blast the Government of New Zealand for its 10 per cent tax on food in the same way as he is blasting the federal Government for potentially introducing a similar tax here in Canada?


Thomas Hockin: Mr. Speaker, the Hon. Member says that members of her Party have paid the price for Liberal excesses by sitting in Opposition for three years. The Canadian people are paying a terrible price for the accumulated deficit that was built up. They left us with a debt of over $200 billion. The Canadian people are still paying the price. The present generation and the next generation will be paying the price because of the huge accumulation of debt that was built up by the previous Government. It is the Canadian people who are paying the price, not the Liberal Party by having to sit out of office for a few years.
The way the Liberal Party should pay the price is to think of alternatives. What would its members do to decrease the deficit? What would they do to reform the tax system? That is how they should pay the price. They cannot pay the price by nit-picking and coming up with some hypothetical criticisms. The price must be paid by doing some hard thinking about what are the alternatives. The Hon. Member is an intelligent Member. She can give leadership in this area. I ask her to tell the House what her alternatives are.
With respect to the federal sales tax, I have in my hand two articles which deal with firms in Canada which have been put out of business because of the federal sales tax. Central Tobacco Manufacturing says that the controversial tax is forcing it to stop production locally and to import products instead from its plant in Plattsburg, New York. This is from an article dated December 17, 1986. The Bic pen people laid off 12 of 73 people. They claim that it is because of our federal sales taxes which the previous Government put in place and which we are trying to dismantle.
What is the Hon. Member's proposal with respect to a federal sales tax system? If we do not reform the federal sales tax system we will have more of this. It is a silent killer of jobs, to quote one of the presidents of these companies.
When the Hon. Member talks about lower income Canadians can she disagree with me when I say that 778,000 people are paying tax today who did not pay tax before because they now have jobs? The creation of jobs has been a monumental contribution by the Government in the last two and a half years. That is a major answer to what lower income Canadians are worried about. Will the Hon. Member acknowledge that that has happened?

May 28, 1987
I want the Hon. Member's proposals with respect to federal sales tax reform, the ones that she would put forward. I would also like to know broadly what the Hon. Member's specific alternatives are. The Hon. Member is intelligent enough to share that with the House if the Party has done that thinking.


Sheila Maureen Copps: Very briefly, Mr. Speaker, I cannot believe that the Hon. Member would be satisfied with the current level of unemployment among Canadians. We are almost four years out of the recession and we now see that the unemployment rate, according to this Conservative Government, is still hovering around 9 per cent. If that is progress for Conservatives, I think it is a shame that this Government, having elected the largest majority in the history of Canada, cannot set a goal for itself to do a heck of a lot better. Nine per cent is not suitable.
The Minister of State for Finance has just given a bit of a peek into what we can expect to see on June 18. He suggests that current sales tax measures are a silent killer of jobs and small businesses. If the Minister introduces a VAT or if he introduces a business transfer tax which includes food, then obviously the paper work will not be there but it will be a killer of income for all Canadians. If he introduces exemptions, then most small businesses will find themselves faced with more paper work than what they have under the current system.


Thomas Hockin: What are you going to do?


Sheila Maureen Copps: I dare say that the Minister would not only see the kinds of losses of jobs at Bic, but if he includes a tax on food, all of those small grocery stores and small business people currently involved in the sale of food-agriculture and the production of food accounts for about 20 per cent; I think one in five jobs in Canada is related to the food industry-will also have to become federal tax collectors and they will be echoing the kinds of sentiments just expressed by the Minister of State for Finance.


Thomas Hockin: You would leave the system the way it is.


Mr. Deputy Speaker:: If the House agrees, we will call it one o'clock. The Hon. Member for Winnipeg North (Mr. Orlikow) will start his speech after Question Period.
It being one o'clock, I do now leave the Chair until 2 p.m. this day.
At 1.22 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, on the occasion of the sixty-ninth anniversary of the establishment of the Republic of Armenia, I should like to quote the Acting Chairman of the Armenian National Council, who stated on August 1, 1918;
Yes, our Republic is small and its bounds are narrow. It is deprived of its best lands, and there is not enough room for all the people. It seems as if conditions are lacking for its independent existence. But I feel that the boundaries of a state cannot remain inflexible forever. I believe that our borders will spread with the iron force of life, with defence of our just and indisputable rights concerning the occupied lands, and with a new treaty of friendship with Turkey and its allied governments. . . We have chosen the path of mutual agreement and peace, and we would like to believe that we are not mistaken in this.
This statement, made 69 years ago by the Speaker of the Legislature of the Independent Republic of Armenia, still reflects the aspirations of the Armenian people.
Every Member of the House is invited to meet with representatives of them tonight at five o'clock.



ABORTION


Mr. Walter Van  De Walle@Pembina: Mr. Speaker, abortion has been the subject of debate in the House for several months as Hon. Members state their positions on Motion M-37, the Private Member's Motion of the Hon. Member for Grey-Simcoe (Mr. Mitges).
A great many of my constituents have written to me on the matter and have voiced their support for the motion. Residents of my riding are concerned about the number of abortions performed in our province. According to Statistics Canada, 6,544 unborn children were killed in Alberta in 1985.
Furthermore, the Alberta Medical Association has stated that 14 per cent of women having abortions in Alberta, or over 900 women, are in fact having a second or third abortion.
I agree with the concerns of my constituents. I have never hesitated to state that abortion is the killing of an innocent human being. I hope all Hon. Members will give the concerns of their constituents in this matter the serious consideration they deserve.
May 28, 1987



WILDLIFE


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, since the arrival of the white man, the grizzly bear has been driven from over half of its natural habitat in North America. Highly sensitive to human activity, the grizzly now only exists in significant numbers in areas of British Columbia, Alberta, Yukon, Northwest Territories, and Alaska. Despite this alarming decline, Canada does not have a single sanctuary dedicated primarily to the protection of the grizzly.
The best candidate for such a sanctuary is the Khut-zeymateen Valley north of Prince Rupert on the B.C. coast. Khutzeymateen is one of the last undisturbed valleys on the West Coast. The Khutzeymateen has been recognized by the United Nations as a globally unique and significant site. Most important, the Khutzeymateen has one of the highest concentrations of grizzly bears left in Canada. The Khutzeymateen would be an excellent choice as Canada's first grizzly bear sanctuary.
Unfortunately, the Khutzeymateen, like so many other ecologically important areas in B.C., is threatened by logging. This would be a terrible mistake that would only further reduce the grizzly's already shrinking habitat and population.
I call upon the Government to take the initiative and begin immediate negotiations with the Government of British Columbia to establish a grizzly bear sanctuary in the Khutzeymateen Valley.



CANADA-UNITED STATES NEGOTIATIONS-SUPPORT FROM ORGANIZATIONS AND ASSOCIATIONS

Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, "we believe that a free trade agreement will help better our economy and our workforce and create new opportunity and choices for all Canadians". This is the unqualified conclusion of The Canadian Alliance for Trade and Job Opportunities, comprised of the Canadian Federation of Independent Business, Consumers' Association of Canada, Business Council on National Issues, Canadian Manufacturers' Association, Canadian Chamber of Commerce, and the Canadian Exporters' Association.
Canadians from all walks of life and all regions of the country are speaking out in support of the Government's free trade initiative.
The Canadian Alliance for Trade and Job Opportunities is to be complimented on its campaign to promote free trade and thereby a better life for all Canadians.



VISIBLE MINORITIES


Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, hopes that the Government would achieve an honourable redress for Japanese-Canadian dispossession during World War II seem very near being blasted entirely. One Minister's promise of negotiations two and a half years ago did not survive the second meeting with the National Association of Japanese Canadians. A second Minister's promise of a fair, equitable and honourable resolution was never given any practical expression. A third Minister's promise to obtain approval for a process of negotiation has ended in a take-it-or-forget-it ultimatum from his Chief of Staff.
Forty-five years ago a Liberal Government yielded to racial prejudice in British Columbia and disrupted a peaceable community. Today a Conservative Government refuses to find the financial resources required to do the honourable thing by redressing individuals.
The Government has never really negotiated with the NAJC. The hopes of June, 1984, lie in ruins. One more promise has been broken. Clearly it will require a different Government to clear the national honour of this genocidal blot.



ENVIRONMENTAL AFFAIRS


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, the proposed takeover of Dome Petroleum by Amoco Canada has environmental as well as sovereignty implications. Amoco is the company responsible for the world's largest oil spill, the sinking of the Amoco Cadiz. Here at home, Amoco Canada was responsible for the Lodgepole sour gas blowout in Alberta which, I am told, could have been a disaster of Bhopal proportions but for the fact that the surrounding area is so sparsely populated.
To say the least, Amoco has not been a leader in environmental responsibility. By contrast, Dome Petroleum has developed quite a sensitivity toward environmental and socioeconomic concerns, particularly in the north where human and natural environments are particularly fragile. Amoco's track record causes concern that Amoco Canada will not apply the same environmental standards.
I call on Investment Canada to include the environment in the review of proposals and to scrutinize closely the Amoco-Dome deal from an environmental viewpoint. In doing so, it would protect Canada's economic interests and the economic interests of generations to come.

May 28, 1987
[ Translation]



ESTABLISHMENT OF FIRST EXPORT CLUB IN LAC-SAINT-JEAN- GOVERNMENT'S PARTICIPATION

Mr. Clement M. Cote (Lac-Saint-Jean):: Mr. Speaker, I am particularly proud to tell the House and the Canadian people that my riding witnessed the birth of the first export club of the region last Monday.
This association was set up through the co-operative efforts of the Department of Regional Industrial Expansion and the Economic Council of Alma and will monitor companies interested in exporting their products to both extra-regional and international markets.
Mr. Speaker, I want to emphasize our Government's participation in this project and the spirit of co-operation inherent in this endeavour which will make it possible for certain companies to benefit from the experience others may have gained. Hopefully more such initiatives will be taken throughout the country.



FIGHT AGAINST ABUSIVE CONSUMPTION OF ALCOHOL AND DRUGS

Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, faithful to its commitment made in last October's Speech from the Throne, the federal Government unveiled this week a five-year $200-million wide-ranging campaign to fight against the abusive consumption of drug and alcohol.
Mr. Speaker, knowing as we do that 16 million Canadians drink alcoholic beverages and that close to 1.5 million are addicted to cannabis or cocaine, we simply had to come to grips with this serious national problem.
Mr. Speaker, alcohol and drug ravages are even more obvious in rural regions. Oftentimes they are the major source of family and social problems which may eventually lead to suicide.
Mr. Speaker, a responsible Government could not stand still before this scourge which is particularly prevalent among young people. The Member for Temiscamingue intends to take active participation in this campaign and denounce the harmful effects of drugs as well as criminals who benefit from illicit drug trafficking at the expense of younger people who are powerless because they are badly informed.



CULTURE


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, we learned this morning that the assets of Unimedia, which owns, among other things, the French language dailies Le Droit of Ottawa, Le Soleil of Quebec City and Le Quotidien of Chicoutimi, have been acquired by a new company, Media-Quebec, owned by Toronto financier Conrad Black.
It seems that, according to the former owner, Mr. Fran-coeur, the takeover by Mr. Black was necessary to ensure the survival of these newspapers. For us, Franco-Ontarians, the newspaper Le Droit is of vital importance. Since its foundation in 1912, its purpose has been to promote and defend the French fact in Ontario and Canada.
I sincerely hope that this transaction will stabilize the financial position of Le Droit and the other dailies involved as their services are essential to our community. I also hope that the reporters of Le Droit will be able to remain independent and continue to promote and defend the French fact.
Le Droit is the voice of Franco-Ontarians in the National Capital Region. I am therefore speaking on behalf of all readers of Le Droit and wish them good luck.



HUMAN RIGHTS


Joseph Lloyd Reid: Mr. Speaker, the whole House rejoiced with the Secretary of State for External Affairs (Mr. Clark) when, by persistent effort, he obtained the release of Josyp Terelya, Danylo Shumuk, and others. The Soviet Union has gained much favourable publicity through the release of these political prisoners. Dissident sources, such as the Ukrainian Human Rights Commission, say, however, that the number said to be released is extremely exaggerated.
Few religious activists are among those released, and few were advocates of national or human rights. Very few were released from the notorious Camp 36-1 where a number of deaths have been reported as a result of administrative misdemeanours and mistreatment.
Given the successes of recent months and the great number of political prisoners still in detention I urge the Minister to continue to press for the release of persons exiled or imprisoned for no more than reciting a Christian prayer. The job has really just begun.
May 28, 1987



HISTORIC EVENTS


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, May 28 is Armenian Independence Day. Between 1918 and 1920 the short-lived independent Republic of Armenia had an impressive record of social democracy. During the first elections in June, 1919, all adults of both sexes, including Muslim and Russian minorities, were granted the right to vote in universal, secret and proportional balloting. Six political Parties participated and 80 members were elected, among whom were women and representatives of the minorities.
Despite the extended pressures building against the Republic and the internal problems of hunger, disease and poverty, this tiny nation founded a university, provided schools for Muslim minorities, and authorized formation of labour unions. Courts were established and the jury system was introduced for the first time in that area of the world.
Certainly it was the commitment of the Armenian people to democracy and social welfare, in addition to their past sufferings, that led the Government of Canada, on April 1, 1920, to place itself formally on record as absolutely opposed to the return of any Armenian provinces of Turkey to Turkish rule.



COPYRIGHT


Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, I was delighted with the copyright Bill tabled yesterday. These amendments are just the first step in a comprehensive revision of the Act. A second Bill dealing with other copyright issues will be tabled in the House as soon as possible, probably in the fall.
The abolition of the compulsory licensing of sound recordings is most welcome. By abolishing this provision, a grave restriction on musical copyright will be removed. The composer of a song or the copyright owner will be freely able to negotiate fees and conditions through the market-place.
This new Bill encourages the creation of new types of collectives in all areas of copyright. It also expands creator's moral rights.
The Bill introduces a new right, that of exhibition. Artists will now have a right over the public exhibition of their work.
I trust that the second set of revisions to be tabled will address the issue of classroom use of copyright material, an issue I brought up in the House late last fall. The Bill tabled yesterday is very encouraging for all Canadians directly or indirectly involved in matters relating to copyright. I look forward to step two.



UNEMPLOYMENT INSURANCE


Mr. Jean-Claude Malepart (Montreal-Sainte Marie):: Mr. Speaker, this morning, the Official Opposition made a firm proposal to the Conservative Government to ensure that the 35,000 early retirees whose unemployment insurance benefits were unfairly cut off will be reimbursed by the first week of July.
Mr. Speaker, the firm proposal made to this Government includes, first, the holding next week of the second reading debate on Bill C-50; the referral of this Bill to committee to allow the Opposition and various witnesses to suggest improvements; the holding of the third reading debate and passage of an amended Bill before June 10 so that the 35,000 early retirees involved in Canada, in both Eastern and Western Canada, as well as in Quebec and Ontario, may be finally reimbursed as they should.



THE DISABLED AND THE HANDICAPPED


Mr. Terry Clifford (London-Middlesex):: Mr. Speaker, I am pleased to inform Members of the House today that the Speaker has opened the doors of opportunity for the mentally disadvantaged youth of Ottawa by providing, with the outstanding assistance and commitment of employees of the House of Commons, a unique on-the-job work experience training program to allow mentally handicapped students to learn on-the-job skills in the House of Commons.
The success of the Exceptional Students Pilot Project has given these youngsters the chance to develop their personal potential while enriching the lives of all of us. Let us allow this experience to serve as a model of how all Canadians can further the development of the mentally handicapped and provide the young people with the opportunity to achieve their goals.
This weekend the Speaker will share this Hill experience with his colleagues from the Legislatures of Canada. He will spread the word and encourage others to lead by initiating similar programs so that a beacon of hope will shine across the country.

May 28, 1987
Oral Questions PARTICIPACTION



CHALLENGE 87 WON BY HAMILTONIANS

Sheila Maureen Copps: Mr. Speaker, once again Hamilton is number one, and number one by a very wide margin. The results of Participaction Challenge 87 which required 15 minutes of continuous exercise, show that 210,000 Hamiltonians participated. The runner-up, London, had a pathetic 97,800 participants.
We have our own ski hill in Hamilton. We have our own hockey arena. We can skate, we can ski, we can even jump on tables. The Hamilton community has shown an example to all of Canada by getting off our butts, getting out there and participating. 1 challenge other communities with pathetic participation levels, such as Ottawa which had only 97,000 participants.
Once again Hamilton is number one. All I ask is that Harold Ballard please allow us to have an NHL team so that we will win not only the Grey Cup but the Stanley Cup.


Some Hon. Members:: Hear, hear!



RAILWAYS


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, in Moncton, CN violated certain articles of the collective agreement when it laid off workers at its workshops. That was the ruling handed down by arbitrator J.F.W. Weatherill. The ruling means that CN employees with eight years of service or more are entitled to employment security, and CN had no right to lay them off. I hope CN will act on this ruling as soon as possible, to correct the grave injustice that was done to Moncton workers.
Mr. Speaker, I also invite the Minister of Transport (Mr. Crosbie) to get involved and ensure that justice is done. And I think the Minister should apologize to the workers for wrongly blaming them for the closing of the CN shops.



PRESENCE IN GALLERY OF MEMBERS OF WORLD WAR I FLYERS ASSOCIATION

Mr. Speaker:: 1 would like to draw the attention of Members to a very special group of Canadians here today in the Gallery. They are members of the World War I Flyers Association who are holding their reunion in Ottawa this week.


Some Hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is directed to the Right Hon. Prime Minister. On May 5 the Prime Minister sent a communication to President Reagan, asking him to assure that a solution is found for the detrimental decision of the U.S. Federal Energy Regulatory Commission which will cost exporters of natural gas in this country between $140 million and $400 million a year.
Yesterday that same American commission turned down a petition from Canadian natural gas exporters to have this dreadful decision reheard.
It is obvious that the White House did not even pay attention to the Prime Minister's petition and request to the President of the United States to intervene in this. Why does the Canadian Government keep giving the Americans everything they want while, at the same time, we have to sell off our natural resources and our major Canadian corporations?


Hon. Marcel Masse (Minister of Energy, Mines and Resources):: Mr. Speaker, perhaps I may remind the Hon. Member that the Canadian Government has made representations through diplomatic channels and has had various meetings with people in the U.S. Administration. In fact, the U.S. Administration, at the highest level, the Secretary of Energy and all others with administrative responsibilities, have always shown the greatest sympathy and support for the Canadian position.
There is also the fact that an American agency, a quasijudicial body, has made a decision that to a certain extent was largely contrary to the Administration's expressed intentions. On behalf of the Canadian Government, I have deplored, in the strongest diplomatic terms, this decision by the U.S. judicial body.
Finally, we would have preferred a decision other than the one that was announced. We would rather have seen the postponement requested by the Secretary of Energy so they could continue the in-depth study of the natural gas rates system, initiated by the U.S. Government, and await the conclusions of the study. However, the judicial body decided otherwise, Mr. Speaker.
May 28, 1987

Oral Questions


GOVERNMENT POSITION
Russell Gregoire MacLellan: Mr. Speaker, we do not want the sympathy of the United States, we want them to have some respect for Canada.


Some Hon. Members:: Hear, hear!


Russell Gregoire MacLellan: The Prime Minister himself has said that this decision of the Federal Energy Regulatory Commission in the United States extends U.S. regulations into Canada. Why is the Government not only giving away our resources, but now allowing the Americans to make our laws?


Marcel Masse: Mr. Speaker, for the time being this is not a problem with a government but with a judicial body, and subsequent actions will have to be taken at that level.


PROPOSED PURCHASE OF DOME PETROLEUM BY AMOCO CANADA
Russell Gregoire MacLellan: Mr. Speaker, it seems that anything the Americans want, the Americans get, including the take-over of Dome Petroleum by Amoco.
Why have Investment Canada and the Competitions Branch been told by the Government to keep their hands off this transaction? Is it because Simon Reisman has told the Government that any interference by the Canadian Government in this will jeopardize the success of U.S. free trade talks?


Marcel Masse: Mr. Speaker, I have never seen such a display of ignorance in this House.
The judicial power in the United States has the same independence that our Canadian institutions provide for our judicial power. And why should it be otherwise? When a Canadian judicial body makes a decision contrary to the will of U.S. citizens, that is the responsibility of the body in question, and the Government of Canada is not asked to reverse a judicial decision. That is what we call division of powers.
To infer that we can, at will, blur those divisions between the judicial, legislative and executive powers is erroneous in the extreme, Mr. Speaker.
As for the question of Investment Canada, the Hon. Member knows perfectly well, and if he didn't, he does now, because I can inform him no such requests were made.


GOVERNMENT ACTIONS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is directed to the Prime Minister. His colleague, the Minister of Energy, Mines and Resources, has just stated that the Government knew that this was a quasijudicial process and that there was no power of intervention. If that is the case, why did the Prime Minister, with full knowledge of that, then undertake to write the letter to President Reagan holding out the hope to the western Canadian oil and gas industry that he was personally going to do something about it? Why were that expectation and hope raised when the Government already knew it was bound to fail? Why is the Government creating those kinds of tricks on Canadians and holding out those kinds of false hopes?


Charles Joseph Clark: Mr. Speaker, I think the Hon. Member knows the process and is not willfully trying to play a trick on the House of Commons. What we had sought-and Secretary of State Shultz had already acted on the question as a result of our representations-was a delay in the decision so there could be more evidence brought forward. That request by this Government and by the U.S. administration was not heeded, was not acceded to, by the quasi-judicial body concerned. We very much regret that, as my colleague has made clear. However, the matter is now a matter to be handled by the private companies. They have already indicated their intention to launch an appeal.


GOVERNMENT INTENTIONS
Lloyd Axworthy: Mr. Speaker, I will then direct my question to the Secretary of State for External Affairs. The Government has now said that the letter which was sent by the Prime Minister was sent in the knowledge that there was not going to be any effective stoppage, but simply to try to get a delay, which has now been rejected. Is the Government now simply laying off the whole issue? Is it not going to make any further response even though the Minister of Energy, Mines and Resources himself has said that this is an extraterritorial application of U.S. law into Canada?
Surely there must be steps the Government could take to challenge this in the U.S. system and the international system? We would really like to know if the Government intends to take further steps to combat this very unfortunate and damaging decision taken by the Americans?


Charles Joseph Clark: Mr. Speaker, I would, as usual, prefer the words I just uttered in the House of Commons to be taken as our position rather than the interpretation placed upon them by the Hon. Member for Winnipeg-Fort Garry.

May 28, 1987
Oral Questions
We had sought, through the intermediation of the United States administration, a delay in the proceedings. The United States administration sought that delay in the proceedings. It was not granted. We regret that. We are now looking at every option which is available to the Government of Canada to support Canadian interests which must now pursue the matter through the courts. We have indicated to the companies which are involved in the appeal that they enter into that appeal with our support.


UNITED STATES REGULATIONS AFFECTING PRICE OF CANADIAN NATURAL GAS
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is directed to the Prime Minister. This decision by a United States agency could cost the people of Alberta some $400 million. In the case of softwoods, the United States tried to impose its law-and got away with it with the Conservative Government-on our provinces and the price for which they should sell their wood products. So too in this decision it is now insisting U.S. regulations affecting gas pricing ought to apply on our side of the border.
Given the serious impingement on Canadian sovereignty which is involved in this course of action, will the Prime Minister immediately contact President Reagan on a Head of Government to Head of Government basis, and let him know this is completely unacceptable to the people of Canada?


Charles Joseph Clark: Mr. Speaker, no one knows better than I, with all respect to the Hon. Member for Oshawa, the importance and impact of this decision upon the people and the producers of Alberta. That is why we used every instrument available to us to try to seek a delay in the proceedings. That effort, although it was supported by the United States administration, did not succeed.
We have now indicated we are prepared to be of as much help, as is feasible for this Government, to the private sector as it pursues the only course open to it. I take it what the Leader of the New Democratic Party is asking us to do is to go down and, I presume, shout at the President of the United States.


John Edward Broadbent: Oh!


Charles Joseph Clark: Well, if he has some other course of action which is open in law, open in diplomacy, to the Government of Canada, we would be interested in knowing what that is.


REQUEST THAT PRIME MINISTER COMMUNICATE WITH UNITED STATES PRESIDENT
John Edward Broadbent: Mr. Speaker, I would be happy to suggest what that should be to the Secretary of State for External Affairs, but I want to suggest it to the Prime Minister.
The Prime Minister said when he was in Lethbridge, and I quote him: "President Reagan has an obligation to act".
With respect, I would suggest that the people of Alberta think that the Prime Minister of Canada has an obligation to act.
Given the seriousness of this, not only for the people of Alberta, but because the matter goes to the heart of the notion of the sovereignty of a nation, making its own laws, pertinent to its own people, will the Prime Minister in a straightforward fashion get in touch with President Reagan and make it clear that in this decision, as well as in any other related trade embargo decision, Canadian law, and Canadian law only, ought to affect the people of Canada?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, the Leader of the NDP may have noticed a statement on an unrelated but also important matter yesterday by the President of the United States in which he is, I think, signalling a very strong response to the contention of this Government in regard to sovereignty in the Arctic, which is most encouraging. I think it is an indication of the strong results that come from the policy adopted by our Government in asserting the sovereignty of Canada at all times.
In regard to this case that has been raised, we think that the FERC ruling marks a serious set-back in our joint efforts which we have developed since the Quebec meetings toward a market-oriented pricing arrangement concerning energy products. We believe that this kind of inhibition runs counter to the best interests of both countries. It is one that we vigorously and strongly protest. The Secretary of State for External Affairs has quite properly pointed it out in an appropriate context. We shall do so again and we will pursue it with all of the vigour and all of the leverage which this national Government has, to make sure that producers in western Canada, particularly Alberta, get justice to which they are entitled.


EFFECT OF DECISION ON ECONOMY OF ALBERTA
John Edward Broadbent: with Canadian sovereignty, the decision that has now been taken by the United States is totally unacceptable to the people of Canada?


Martin Brian Mulroney: Mr. Speaker, I think my hon. friend is in substantial error in regard to the interpretation he places on the statement yesterday.
With regard to the second point which the Hon. Member makes, whether Canadian law applies, well, of course, it does. Concerning the third point as to whether we will be in touch, we already have. It is my hope to be meeting with President Reagan for a discussion of this and other important matters relating to our ongoing bilateral agenda.


John R. Rodriguez: When?


AGRICULTURE
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is for the Minister of Agriculture. The Prime Minister told the House this week that we should not be recommending that the Government provide a deficiency payment to help grain farmers survive the trade wars that are going on between the United States and the European Economic Community.
Today the Canadian Federation of Agriculture, on behalf of tens of thousands of grain and corn farmers across the country, are demanding a commitment by the Government that it provide a deficiency payment as they meet with members of caucuses on all sides of the House.
When will the Minister of Agriculture stop stonewalling the farmers and the Canadian Federation of Agriculture and make a commitment to a deficiency payment for the 1987-88 crop year?


Martin Brian Mulroney: Mr. Speaker, I must respond to that because the Hon. Member says that I recommended that the Government not be making a deficiency payment to western farmers. That statement is a complete fabrication and falsehood.


Lloyd Axworthy: Withdraw.


Martin Brian Mulroney: That is at total variance with what I said in the House of Commons.


Mr. Guilbault (Saint-Jacques):: Withdraw.


Martin Brian Mulroney: It is at total variance with what I said in the House of Commons. It is at total variance with the record of this Government which has given more aid to western farmers, which has been here to assist western farmers-


An Hon. Member:: What about the problems?
Oral Questions


Martin Brian Mulroney: Here is a Liberal yelling. When the Liberals refused and said to western farmers, "Why should we sell your wheat?", this Government said we should sell your wheat because we have an obligation to help farmers. That is why.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The Hon. Member for Algoma.


PRIME MINISTER'S SCHEDULED MEETING WITH FARM ORGANIZATIONS
Maurice Brydon Foster: Mr. Speaker, we will let Hansard speak for itself. I think we will find exactly what I said is exactly what the Prime Minister said earlier this week.
If the Prime Minister wants to come clean with the Canadian Federation of Agriculture, the pools, the corn growers and the farmers-and he will be meeting with them tomorrow morning-why does he not make a simple commitment that he will provide a deficiency payment for the 1987-88 crop year so that our Canadian farmers will know that they are going to survive, the same as farmers in the United States, not a gold-plated deficiency system, but just to survive?


Martin Brian Mulroney: Mr. Speaker, I invite my hon. friend to take a look at Hansard very closely and to reflect upon what was said. I know he will want to withdraw the inadvertent distortions in what he said in the prefatory remarks to his questions.
Indeed, he is right. As opposed to any Liberal Prime Minister that he can care to name, I, tomorrow, will be meeting with farmers again. It is probably the sixth or seventh formal meeting with farmers that I have had in the last few years.


Some Hon. Members:: Hear, hear!


Jacques Guilbault: They will boo you too.


Martin Brian Mulroney: There is the Liberal point of view. The Liberals give the farmers the finger, and we give them the time of day and a hell of a lot of help. That is the difference.


CANADA POST CORPORATION
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the Prime Minister. Last November the Prime Minister insisted that Crown corporations be required to have affirmative action plans and work toward meeting the equity legislation passed by the House of Commons.
Considering that 85 per cent of Canada's letter carriers are men and that the Crown corporation is insisting that all new employees have 25 per cent less in salary, does the Prime

May 28, 1987
Oral Questions
Minister not recognize that the Government's action in this case is going to mean that women workers always earn less than men?
Hon. Harvie Andre (Minister of Consumer and Corporate
Affairs): Mr. Speaker, I am sorry, I did not catch the earlier part of the Hon. Member's question-


An Hon. Member:: You never do.


Mr. Andre:: -because it was not directed at me initially.
In terms of salaries for employees, this is a matter that is being negotiated now between the unions and the Post Office. I do not think it is particularly useful to bring those negotiations or the elements of them to the floor of the House of Commons.


SALARIES OF NEW WOMEN EMPLOYEES
Rodney Edward Murphy: Mr. Speaker, my supplementary question is for the Prime Minister. It is a matter of government procedure and government policy. Is he going to allow a Crown corporation to insist that all new employees, who will basically be women, receive salaries which are 25 per cent less than those of the men who are working there now?


Harvie Andre: Mr. Speaker, I do not understand why the Hon. Member would feel he would be contributing to labour peace by bringing in here the question of starting salaries or any other element of the contracts that are now being discussed at the table between management and labour.
As to the assertion of starting employees of one gender or another, that does not mesh with the facts as I know them. As far as I know, there are both men and women working in the Post Office, although I cannot give the Hon. Member the exact percentages at this point in time.


UNEMPLOYMENT INSURANCE
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is for the Minister of Employment and Immigration. In January, 1986, the Government unfairly and savagely cut the unemployment insurance benefits of thousands of pre-retired Canadians. After a year of protests the Government recognized its error and introduced Bill C-50 on April 1. However, after eight weeks, the Government has not called that Bill for debate.
While we do not accept all parts of the Bill, today we made a proposal to the Government to limit debate on the Bill to two
days, with short committee hearings, so that it would be completely passed by June 19. Won't the Minister give attention to this proposal and accept it immediately so that we can reimburse these thousands of Canadian pensioners?
Hon. Benoit Bouchard (Minister of Employment and Immigration):: We have done much better, Mr. Speaker. Yesterday, the House Leader suggested to the Liberal Party having a full day debate on the issue. I am making the same proposal today. We are not suggesting a two-day debate. If you had not blocked so many Bills in the House, this measure would have been passed a long time ago.


REQUEST FOR TWO-DAY DEBATE
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my supplementary question is directed to the Government House Leader. Bill C-50 is a complex, controversial Bill which affects thousands of Canadians. The Government is asking us to deal with it in all stages in one day, when it delayed the issue for more than a year.
Two days are reasonable and necessary. Won't the Government House Leader give the Minister permission to accept this reasonable proposal?
Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, it would be nice if the Liberal Party got its act together. We have the critic negotiating here on this particular issue-


Mr. Allmand:: It is the same position.


Jacques Guilbault: Clean up your own mess. It is your mess.


Donald Frank Mazankowski: When they are through, Mr. Speaker, I will give the answer.
We discussed this matter at a House Leaders' meeting yesterday. It is a matter which is still before us for consideration.
There was a proposal made. My understanding is that both House Leaders were to go back to their respective caucuses and/or critics and to come back with another proposal. We are prepared to move on it very quickly.


William Warren Allmand: There it is.


Donald Frank Mazankowski: The Hon. Member is a well seasoned Member. He knows very well that these kinds of negotiations normally take place at House Leaders' meetings, not on the floor of the House of Commons. What he is really trying to do is bail them out of a sink-hole into which he and his colleagues have got themselves.
May 28, 1987


DECISION OF U S. FEDERAL ENERGY REGULATORY COMMISSION-EFFECT ON ALBERTA
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Prime Minister. I think, as he is well aware, that the U.S. FERC ruling will cost the people of Alberta and their economy $400 million.
Since the letter to the President of the United States has failed; since, as we have learned from the Secretary of State for External Affairs, diplomatic efforts to this point have failed; and since they are both looking for positive suggestions, would the Prime Minister be prepared to accept a motion before the House to allow the House to express unanimously its views on the matter so that the President of the United States, the U.S. Congress, and their regulatory agencies can hear Canadian voices united loud and clear on this important Alberta issue?


Charles Joseph Clark: Mr. Speaker, there is no doubt in the minds of the United States about the strength of the feeling of Canadians on this question. That has been made clear.
What we must do is see if there are means open to us by which that decision can be reversed. One way in which that can occur is through the courts.
I am touched as an Albertan by the interest pretended by the New Democratic Party in the oil and gas industry in my province. Its policy calls for a halt to all exports of oil and gas from Alberta to the United States.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


James Ross Fulton: I was born in Alberta. I know a little about Alberta. I do not know what kind of Canadian unity is supposed to be expressed in here with that kind of petty comment from the Secretary of State for External Affairs.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: The Hon. Member will put his question, please.


PASSAGE OF UNANIMOUS MOTION REQUESTED
James Ross Fulton: Mr. Speaker, my supplementary question is directed to the Prime Minister, because the Secretary of State for External Affairs is just flatly wrong.
My question to the Prime Minister is a serious one in that neighbourly countries like the United States listen when legislatures pass unanimous resolutions. I ask in utmost seriousness will the Prime Minister accept a motion before the House so that all Parties and all Members can express their concern to Albertans and their concern to the Americans about this FERC ruling which would cost $400 million per year?
Oral Questions


Charles Joseph Clark: Mr. Speaker, the question is not about unity in the country. The question is about unity in the New Democratic Party.
Let me quote their policy: "We therefore recommend the phasing out of such exports". Once it becomes known in the Province of Alberta that what the New Democratic Party wants to do with the oil and gas industry is cut off the exports and cut off the jobs which are involved in those exports, then, seriously though we regard the FERC decision in the United States and seriously though we regard that problem to Alberta, it is clear that the four letter word "FERC" is less dangerous to Alberta than the three letter word "NDP".


Some Hon. Members:: Hear, hear!


UNEMPLOYMENT INSURANCE
Jean-Claude Malépart: Mr. Speaker, my question is for the Prime Minister and again concerns older workers in Canada. We know that his performance in this matter has been dismal.


Sheila Maureen Copps: He does not care about it either.


Jean-Claude Malépart: The Official Opposition made a specific offer to ensure that the 35,000 older workers involved will receive their cheques before the first week of July. Would the Prime Minister ask his Deputy Prime Minister, first to call the second reading debate of the Bill next week, second, to allow referral to committee so that witnesses can be heard, and third, to see to it that the Bill passes the third reading stage with amendments the first week of June to ensure that these older workers receive what is owed to them?


Benoît Bouchard: Mr. Speaker, for several months, the Hon. Member for Montreal-Sainte-Marie has been travelling throughout Quebec promising people who are waiting for their pensions that they will be paid. Now is the time to deliver. We are ready to pay after a one-day debate. We are waiting for you.


INQUIRY WHY GOVERNMENT APPARENTLY REFUSES TO HEAR CERTAIN PERSONS
Jean-Claude Malépart: The
Minister of Employment and Immigration has already made a shocking statement about the purity of the Lac-Saint-Jean area. He has already made the shocking statement that francophones do not know how to add, and he has just

May 28, 1987
Oral Questions
committed a shocking injustice as far as older workers are concerned.
Can the Prime Minister explain why his Government is denying our military, our veterans and our senior citizens the right to express their views? Why discriminate against these people? Why have the hypocrisy to applaud?


Benoît Bouchard: Mr. Speaker-


Jean-Claude Malépart: Mrs. Solange Denis and Charlie Brown.


Mr. Speaker:: Order, please! The Hon. Minister has the floor.


Benoît Bouchard: Mr. Speaker, I only want to say to the Hon. Member for Montreal-Sainte-Marie that the retirees want a one-day debate only, not the type of shouting we have just heard. They want to get paid, sir, if you please.


Jean-Claude Malépart: Two days of debate.


HARBOURFRONT
Alan Redway: Mr. Speaker, once the Liberals calm down, I will direct my question to the Minister of Public Works. It concerns the Harbourfront property in Toronto.
Will the Minister advise the House why, in the name of heaven, just three weeks after imposing a freeze at Harbourfront, he approved a new lease for development at that site? Is there a freeze at Harbourfront or isn't there a freeze?


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, the freeze continues. The lease which was recently signed with Wang and Danetsky was a formalization of an agreement entered into some years ago. The Government was legally committed. The freeze continues, and there are many other approvals which this developer must obtain specifically from the Toronto planning authorities before anything further happens.


NATIONAL DRUG STRATEGY
Howard Douglas McCurdy: Mr. Speaker, my question is directed to the Right Hon. Prime Minister. As he knows, a significant and effective component
of U.S. legislation against the laundering of illicit drug generated income is its Bank Secrecy Act. It looks as though Canada is not to follow suit.
Would the Prime Minister confirm or deny that the legislation against money laundering will not include a requirement for reporting on the part of financial institutions and banks in Canada?


Thomas Hockin: Mr. Speaker, this particular question is relevant to financial institutions. I have to tell the Hon. Member that I cannot speculate, and I know he would understand that, on the contents of legislation which has not yet been introduced in the House. I suggest that he wait until the legislation is introduced by my colleague, the Hon. Minister of Justice.


EFFECT OF PROPOSED LEGISLATION
Howard Douglas McCurdy: Mr. Speaker, would the Government not agree that the failure to have a reporting component to this legislation would be like loading up a gun with blanks, especially when four Canadian banks are already under investigation for the laundering of money in the Bahamas?


Thomas Hockin: Mr. Speaker, as I said, the way that issue will be handled will become evident in the legislation.


REPORTING OF LARGE BANK DEPOSITS
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is on the same subject, the Government's so-called war on drug abuse. It appears clear now that the legislation to be introduced tomorrow will not include a provision that would require Canadian banks and financial institutions to report large sums of money that have been deposited in their institutions.
Can the Prime Minister give the House his undertaking that the legislation that will be introduced tomorrow will include a provision requiring the banks to report? If not, why will that provision not be in the legislation?


Hon. John C. Crosbie (Minister of Transport):: Mr. Speaker, one has to wonder why hon. gentlemen are asking these questions. They pooh-poohed the fact that there was any problem with drug abuse in Canada a few months ago when the Prime Minister introduced the subject. Now they are trying to show an interest in it.
The legislation in question that will deal with the proceeds of crime was under study and review last year. It will be introduced this week. If there are any improvements to it that Hon. Members would suggest, they may suggest them in committee. I would suggest that we wait until it is introduced before we have a vigorous debate on the provisions of legislation that is not yet known.
May 28, 1987


SEIZURE OF PROFITS OF CRIME
John V. Nunziata: Mr. Speaker, if the Government is serious about its war on drug abuse, it should not go into the battle with pop-guns. A former Deputy Solicitor General has stated:
Canadian legislation that would permit the freezing, seizure, and forfeiture of the profits from enterprise crime would have little effect unless there were mechanisms in place whereby these profits could be traced.
Will the Minister not admit that that provision will not be in the legislation because the Government caved in to the Canadian banks?


John Carnell Crosbie: Mr. Speaker, one of course despairs of ever reaching the hon. gentleman, but the fact is that his own Party was in power nearly every year since 1945 and did exactly nothing about the proceeds of crime or the disposition of the proceeds of crime. Why is there this late interest in the subject when nothing was done by his Party for 40 years?


CORPORATE AFFAIRS
David Orlikow: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. He will know that Safeway has purchased 23 of the food stores formerly owned by Woodward's. This means that in the City of Edmonton, Safeway will have more than 60 per cent of the market. In the City of Calgary, it will have over 50 per cent of the market.
There has been a great deal of concern over this expressed by the Consumers' Association of Canada. What steps does the Minister intend to take to protect the consumers in Calgary, Edmonton and a number of other cities in Alberta and British Columbia who will be so adversely affected?


Harvie Andre: Mr. Speaker, as the Hon. Member knows, the examination of this merger takeover is part of the responsibility of the Director of Investigation Research of the Combines Branch. The Hon. Member will also know that it is against the law for the Minister to interfere and participate in that activity. His request of me that I break the law by interfering is one I will have to turn down.
The decision has been announced by the Director of Investigation, and part of the agreement was that Safeway would divest itself of a number of stores in areas where there was significant detrimental impact on competition as a result of the Woodward's takeover.
Oral Questions


REQUIREMENT TO SELL CERTAIN STORES-REPORTED REQUEST FOR EXEMPTION
David Orlikow: Mr. Speaker, does the Minister not know that the way Safeway got around the requirement to account for what it is doing to the Director of Investigation was to promise to sell 12 to 15 stores but it has now said that it wants to be exempt from the necessity of doing that? Is it not time the Government and the Director took some action to protect people who will really get hurt by Safeway's monopoly?


Harvie Andre: Mr. Speaker, I think one should in fact examine what was said and not what headline writers wrote. In the event, any change of that sort could only occur with the concurrence of the competition tribunal, the semi-judicial and indeed judicial body that would examine this. If that eventuality should come to pass, the Hon. Member and any other interested Canadian would have the opportunity to make representations before the competition tribunal to ensure that the decision is in the interests of the consumers of Canada.


LAPRADE FUND
Mr. Gilles Grondin (Saint-Maurice):: Mr. Speaker, my question is directed to the President of the Treasury Board. Further to a recent news item in the daily Le Nouvelliste, announcing that two million dollars from the Laprade Fund would be distributed to eight ridings, could the President of the Treasury Board inform the House whether these monies can be used to set up a special investment fund, similar to the one in the Lac-Saint-Jean area, or will they have to be used for a specific purpose, for projects that are to be submitted either to the office of the President of the Treasury Board or of the Minister of Regional Industrial Expansion?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, first of all, the Hon. Member referred to an article that appeared last week and which, I imagine, was based on leaked information and contained a number of inaccuracies. The Laprade Fund will be used, as I have said many times, to create permanent jobs, to promote industrial, recreational and technological development in the region and also as a complement, especially to existing programs. What we want to do, further to what happened at Laprade, is to provide a development fund for the central region of Quebec, which will give us our 'place in the sun' and promote economic development.

May 28, 1987
Oral Questions


DETERMINATION OF PRIORITIES
Gilles Grondin: Mr. Speaker, my supplementary is also directed to the President of the Treasury Board. Will the projects that are submitted, or the projects or studies that are on the table now, be used to determine the priorities in each riding, and will this be done from the office of the President of the Treasury Board or of the Minister of Regional Industrial Expansion, or can those projects or priorities in the ridings be determined by management boards that could be set up to manage the Laprade Fund?


Robert René de Cotret: Mr. Speaker, the Hon. Member is speculating on how the Laprade Fund will be spent. We as a Government would prefer to see the people in the various regions across this country contribute to a very large extent to our economic development, and the Laprade Fund will be used along those lines. We will try to get the people in the region actively involved, by having people from each riding help determine priorities according to the general criteria for awarding monies from this Fund.
*
* *


VIA RAIL
Terrence (Terry) Clifford: Mr. Speaker, my question is directed to the Minister of Transport. The Wind-sor-London-Toronto corridor is one of the most highly travelled corridors in the VIA Rail system. In light of recent service cut-backs made without any consultation, together with a new commitment to improve this national service, will the Minister relate to the House how residents of southwestern Ontario, particularly London-Middlesex, can gain assurance that changes in service policy are not implemented without their input, and will he assure those patrons that they will in fact be granted an opportunity to be heard?


THE CONSTITUTION
Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, my question is directed to the Right Hon. the Prime Minister who received last week an invitation from the leaders of aboriginal organizations to meet with them here in Ottawa during this week's conference to discuss the implications of the Meech Lake accord over which they entertain serious and legitimate concerns.
Is the Prime Minister prepared to meet with the leaders of the main aboriginal organizations at the earliest opportunity to set up a negotiation program to complete the Canadian Confederation by including the aboriginal peoples' right to self-government?


Martin Brian Mulroney: Mr. Speaker, I thank my colleague for this question. Indeed, on four occasions, through constitutional conferences on aboriginal issues, we attempted to reintegrate, to give native peoples the full benefit of Canada's constitutional provisions.
Again recently, despite our best efforts, we as a nation failed in this latest attempt. I pointed out at the time, and again here in the House, that in spite of that failure-my friend would know that the provinces must co-operate if we are to succeed- at the appropriate time I would of course be prepared to reopen the case and make a new attempt to propose a fair integration process to the native peoples with respect to the Canadian Constitution.
I remain available and interested in seeing this process through to its successful completion.


REQUEST FOR SCHEDULING OF NEGOTIATIONS
John Edmund Parry: Mr. Speaker, I am sure all Canadians appreciate the Prime Minister's commitment. What concrete measures will he take to ensure that a schedule is set up for negotiations to include aboriginal selfgovernment rights in the Constitution, and will he raise this matter with the Premiers at the next meeting?


John Carnell Crosbie: Mr. Speaker, with the additional funds we are now providing for VIA Rail we hope passenger comfort and equipment reliability will improve. I agree with the Hon. Member that there needs to be greater consultation between VIA Rail and those it serves. I believe in his area a consultative committee is going to be set up by VIA. That will be in addition to the North Main line consultative committee on which London is represented. A community consultative committee is going to be set up in London itself to discuss not only scheduling but all other VIA related issues. That is a course I hope VIA will continue to pursue in response to the vigorous representations of the Hon. Member.


Martin Brian Mulroney: Mr. Speaker-


Sheila Maureen Copps: Wake up!


Martin Brian Mulroney: It is nice to see her grace from Hamilton East back in her seat. When we are trying to discuss something of value to the aboriginal peoples all we get is heckling from the Liberal Party.
In regard to the very important question raised by my hon. friend, I think he will agree that the most important aspect in this kind of process is to ensure a reasonable chance of success. We have had four constitutional conferences on this question so far without success. As I have already indicated, it is
May 28, 1987

important that we try to create a climate so that the next time we meet a degree of success is attainable. I expressed that view in regard to the timing and manner in which I proposed to have this Government prepare for the constitutional negotiations with the Province of Quebec at Meech Lake. I believe that was an important part of the process.
I also believe that much more important than a schedule at this point in time are discussions with the First Ministers to try to create a climate wherein it is generally recognized and accepted that a sense of justice and equity is required for the aboriginal peoples of Canada so that there can be a constitutional accord on this vital issue.


Mr. Speaker:: I have to advise Hon. Members that this will be the last question.


REFUGEES
Mr. Alex Kindy (Calgary East):: Mr. Speaker, my question is directed to the Minister of State for Immigration and concerns Francesco Piperno, a known terrorist, who organized a conference at the University of Quebec in November, 1985. He has used taxpayers' money to bring all sorts of terrorists to Canada. I am asking the Minister why he does not apply Section 39 of the Immigration Act of 1976, Chapter 52, which permits him to have this individual deported for the safety and security of Canada?


Hon. Gerry Weiner (Minister of State (Immigration)):: Mr. Speaker, as I answered clearly in the House yesterday, this matter is now before the Immigration Appeal Board. It is inappropriate for me to comment while the case is before a quasi-judicial body.


Mr. Pennock:: Supplementary.


Mr. Speaker:: The Hon. Member for Etobicoke North.


SECURITY RISK INQUIRY
Robert Pennock: Mr. Speaker, we are talking about a matter of security. This person has been convicted in absentia in Rome for terrorism and he is teaching students in Canada. In the absence of the Solicitor General my question is directed to the Deputy Prime Minister. Can he assure this House that the necessary steps have been taken to ensure that this person is not a security risk to young Canadians here in Canada?


Benoît Bouchard: Mr. Speaker, I should want to reassure my colleague concerning the case to which he is referring. The case is now before the Immigration Appeal Board, and the
Point of Order-Mr. Gray (Windsor West)
Minister cannot intervene directly to stop a process which is already under way. We will wait for the ruling which should be made soon. The government takes security matters into account, and that will be our approach in this case as well.


Mr. Gray (Windsor West):: Mr. Speaker, I have two points. One is the usual business question and the other is a point of order arising out of today's Question Period. I ask your guidance as to which you would like me to raise first.


Mr. Speaker:: I suppose the choice is yours.


POINT OF ORDER
Herbert Eser (Herb) Gray: Mr. Speaker, I want to raise a point of order arising out of today's Question Period. In answer to a question raised by the Hon. Member for Algoma (Mr. Foster), the Prime Minister, in referring to the words used by the Hon. Member, used the word "fabrication". 1 want to refer to Beauchesne's Citation 320(2) which indicates that since 1958, it has been ruled unparliamentary to use the following expressions. Then on page 106 we find the word "fabrication". There appears to have been a ruling by a Speaker reported in the House of Commons Debates of January 27, 1959, at page 385.
Unlike the word "falsehood", the use of which was discussed in a point of order a few days ago, and which was found in some cases to be parliamentary and in other cases unparliamentary, the only precedent before you is that of a Speaker who ruled that the word "fabrication" was unparliamentary. Therefore, I respectfully call upon you to ask the Prime Minister to follow the accepted practice of this House and withdraw the word "fabrication" unconditionally.


Martin Brian Mulroney: Mr. Speaker, I refer my hon. friend to the prefatory remarks of the Hon. Member today in which he made a statement-


Jacques Guilbault: We are talking about your remarks.


Martin Brian Mulroney: Yes, indeed. He talked about remarks 1 made on May 26 at page 6401 of Hansard. He will see there is absolutely nothing in those remarks that would give rise at all to the-


Mr. Marchi:: Today's remark.


Martin Brian Mulroney: Mr. Speaker-


Jacques Guilbault: It is irrelevant. Either withdraw or not.


Donald Frank Mazankowski: Why don't you keep quiet?

May 28, 1987
Business of the House


Mr. Speaker:: I think Hon. Members are aware that the Chair has been very careful on points of order and questions of privilege to hear all those who are involved in the dispute or the complaint, and to hear as well other Hon. Members who wish to intervene. In the present case the Right Hon. Prime Minister (Mr. Mulroney) is responding to the Hon. Member for Windsor West (Mr. Gray). The Prime Minister has the floor as he is entitled to have.


Martin Brian Mulroney: It is a very, very simple point, Mr. Speaker. My hon. friend said that I had said no to western farmers. I said no such thing. My hon. friend is the one who, as reported at page 6401 of Hansard, said "It is a no, a firm no." In other words, his interpretation gave rise to his own suggestion that I had said no to western farmers when I had said exactly the opposite.
If the objection is to the word "fabrication", if that is unparliamentary, I would happily withdraw it in favour of the word "invention" because I made no such comment at all. I would be happy to follow your directive, Mr. Speaker, in this regard.


Mr. Rossi:: Did he say "fabrication" or not?


Donald Frank Mazankowski: He withdrew it.


Mr. Speaker:: The Hon. Member for Windsor West has risen on a point of order and quite properly pointed out to the House that the word "fabrication" has in the past been found to be unparliamentary. The Hon. Member for Windsor West, who is a scholar on procedural matters, would also point out that these words must be looked at in the context in which they were spoken. The Chair has not had the opportunity in the last few minutes to check Hansard for that particular citation.
However, the Right Hon. Prime Minister got up and said "I withdraw the word 'fabrication'", and I think that that ends it.
* * #


BUSINESS OF THE HOUSE
Herbert Eser (Herb) Gray: Mr. Speaker, I would like permission to ask the usual question of the Government House Leader as to the business he intends to call during the coming week.


Donald Frank Mazankowski: Mr. Speaker, in order to accommodate the Opposition we will be calling Bills C-42 and C-56 tomorrow. Monday will be an allotted day. Presuming that we conclude the second reading stage of Bill C-42, we will call Bill C-56 on Tuesday. Perhaps we will get into Bill C-56 tomorrow. However, that will be the order of business.


POINT OF ORDER
Mr. Speaker:: The Hon. Parliamentary Secretary to the Deputy Prime Minister and President of the Privy Council (Mr. Lewis) has been patiently awaiting, for quite some time, the Chair's comments on a matter which he raised on March 23 last. The Hon. Parliamentary Secretary, on a point of order, questioned the current practice with respect to the presentation of petitions. In particular, he pointed out a number of instances where petitions were certified by the Clerk of Petitions and then presented to the House some weeks or months later. He claimed that a lengthy lapse of time between the certification of a petition and its presentation in the House denied those Canadians who were petitioning the opportunity for speedy redress of their grievances. It also, he claimed, denied the Government the right to reply promptly.
So that all Hon. Members and the public will understand, under the rules of this place when a petition is presented either by an Hon. Member rising to his or her feet to present it, or by filing it at the Table, the Government is now required under the rules to reply to that petition in so many days. It is important that all Hon. Members and the public which is watching this understand that because that is a key ingredient of these remarks.
The Hon. Parliamentary Secretary is raising an extremely legitimate complaint here. Any Canadian who signs a petition would not expect that several months would elapse from the date the petition is first signed until a response is forthcoming. While a delay of several weeks is potentially required in order to allow for the collection of signatures, the transmittal to Ottawa, the certification by the Clerk of Petitions, the presentation in the House, and the response by the Government, most Canadians would agree that delays of some seven or eight months, as pointed out by the Hon. Parliamentary Secretary, are difficult to justify.
The second point raised by the Parliamentary Secretary dealt with the presentation of petitions by Members other than the Member who had the petition certified. As Hon. Members will know, before a petition can be presented it must be certified at the Table. He claimed that this practice would be misleading because when Members from across the country were presenting petitions the implication could be drawn that a particular issue was of more widespread concern to Canadians than possibly was the case.

By way of response to these two points let me first quote Standing Order 106(1) which states:
Prior to presentation, the Clerk of Petitions shall examine all petitions, and in
order to be presented, they must be certified correct as to form and content by
the said Clerk.
There is no specific mention in this Standing Order of any requirement to present a petition within a specific time frame, only the point that "prior to presentation" it must be certified.
May 28, 1987

The Chair consulted the McGrath Committee report of June 1985 which recommended this particular Standing Order to see whether any indication was given there of a possible restriction on the period of time between certification and presentation but could find no guidance.

To take the matter further, in Beauchesne's Fifth Edition Citation 691 states:
A Member cannot be compelled to present a petition. In a subsequent action, it was held that there is no right in a person desirous of petitioning the House to compel any Member to present his petition and that no action will lie against a Member for refusing to do so.
If there is no requirement that a Member present a petition, can there be a requirement that a petition should be presented within a specified period of time following certification? On March 23, 1987, the Hon. Member for Ottawa-Vanier (Mr. Gauthier) ably pointed out that various reasons might prevent a Member from presenting a certified petition expeditiously. I would suggest to Members that several months need not elapse between certification and presentation in most circumstances. However, I agree with the Hon. Member for Churchill (Mr. Murphy) that the present Standing Order does not impose any specific restriction.

To address the second point raised by the Hon. Parliamentary Secretary let me quote Standing Order 106(4) which states:
Any Member desiring to present a petition in his or her place in the House may do so on "Presenting Petitions-"
There is no specific mention here that the Member presenting the petition must be the Member who had it certified, or indeed that it must be the Member in whose riding the petitioners reside. There is no restriction stated in the Standing Order. It merely states "any member".
On a careful reading of the Standing Orders and a strict interpretation of those Standing Orders, I can find no requirement that the Member who has the petition certified must be the Member who presents it. In fact, as the Hon. Member for Ottawa-Vanier pointed out, Beauchesne's Citations 689 and 690 specifically relate to Members presenting petitions for other Members.
However, because the current Standing Orders relating to petitions are provisional and have only been in force for a short time, and because the Standing Committee on Elections, Privileges and Procedure is in the process of considering the Standing Orders at the present time, it might be timely to suggest to members of this committee that they may wish to pay particular attention to the Standing Orders relating to the presentation of petitions, if as the Hon. Parliamentary Secretary has contended, these particular Standing Orders are causing concern.
Supply
As these provisional Standing Orders are now written, I am unable to order that the Member who has a petition certified be the same Member who presents it to the House, nor can I define any time restriction for the period between the certification and the presentation of a petition.
I do, however, feel that the issues raised by the Hon. Parliamentary Secretary, are legitimate ones dealing with the fundamental right of every citizen to petition the House of Commons and to expect speedy redress. I would suggest to all Members that they give this issue their close attention. I thank Hon. Members for their representations.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cassidy:
That this House oppose any imposition of a federal tax on food and urge the Government to reject any such tax as part of its tax reform package.
David Orlikow: Mr. Speaker, today we are debating a motion by the New Democratic Party which expresses the view of hundreds of thousands of Canadians who do not want the sales tax extended, and certainly do not want it applied to food.
This country has been governed by Liberal Governments for 50 of the last 60 years. During those years the tax system became increasingly unfair. In the last year for which we have figures, over 200 Canadians with incomes of $250,000 or more paid no income tax. Many of the most profitable corporations in this country have paid no corporation taxes for years. Indeed, there is the recent example of the Gulf Canada purchase in which the purchasers were able to avoid payment of $500 million in corporation taxes which they should have paid.
We realize today that we mistakenly believed the Prime Minister (Mr. Mulroney) during the last election campaign to be sincere when he said he believed in a more fair and equitable tax system. Unfortunately, the record proves the exact opposite. Since the Government has been in office it has loaded increased taxes on ordinary citizens and has made it easier for those in the high income brackets and those wealthy corporations to pay even less than they did in the past.
On May 6, the Minister of Finance (Mr. Wilson) condemned the current sales tax regime as being flawed and inadequate. We agree with that. However, he went on to say that he wanted to replace the sales tax system with "a broad-based, multi-stage sales tax". This concept can mean virtually anything. It could mean that there will be a tax on almost all goods and services at all stages of production and development

May 28, 1987
Supply
of consumption items. It could mean that there will be a tax on everyday transactions such as a tenant paying rent, a parent taking a child to day care, or someone visiting a dentist. The Government has been very careful not to make public the details of what it proposes.
We have estimated that the average Canadian family spends about $5,000 a year on food. Under a new Conservative sales tax regime, the average Canadian family might pay a minimum of $300 in new taxes if food is not exempted from this new tax. We intend to fight such a proposal if and when the Government attempts to bring it forward. The Government has argued that it will minimize the difficulties which will be created for low and middle-income people by this new sales tax through the use of an enhanced refundable sales tax credit which, at the present time, gives adults $50 in refunds and children $25 in refunds. However, the National Council of Welfare has calculated that while this form of tax relief does reduce the sales tax burden considerably, it does not fully offset the cost of recent Conservative sales and excise tax increases. Furthermore, the tax credit is only available to families with incomes between $10,000 and $15,000.
We have made some calculations on what tax increases have meant to ordinary Canadian families since the Conservative Government took office. As a result of the November, 1985 economic statement of the Minister of Finance, there were increases in oil and gas price, unemployment insurance premiums, and an increase in sales tax. That cost the ordinary family $425.
The May, 1985 Budget eliminated the federal tax reduction, modified indexing of income tax, cut the family allowance payments, broadened the sales tax base, increased cigarettes and alcohol tax, and increased the gas tax. That cost the ordinary family $512 in the course of a year.
There were further increases in the Budget of February 26, 1986. There was a 3 per cent surtax on income tax, a sales tax increase, and an increase in taxes for cigarettes and alcohol. That cost the family $340 in a year.
In February of this year there were further increases in the gas tax. The sales tax base was broadened and cigarette and air ticket taxes were increased. That cost the family about $80.
The cost to the ordinary family of increases in taxes by the Conservative Government has been $1,384 in the course of a year.
The New Democratic Party and the National Council on Welfare are not the only ones to criticize the imposition of a business transfer tax. Mr. Bulloch's Canadian Federation of Independent Business, whose membership includes tens of thousands of small-business people, have opposed such a tax.
The Minister of Finance has said that one of the chief objectives of tax reform is to give the majority of Canadians more take home pay by way of a personal tax cut. We are concerned that what the Conservatives give with one hand they
will just as likely take with the other through increases, hidden sales taxes.
This is not only true of sales taxes. We have seen a steady increase in the use of consumption taxes. We oppose the increased use of consumption taxes because we believe that it is regressive and shifts corporate tax burdens directly on to consumers. We believe that not only do corporations not pay their fair share, they pass their share of taxes on to consumers.
The increased use of sales taxes is a blow to the fair and progressive tax system in Canada that was almost destroyed by former Liberal Governments. Yet this is exactly the direction in which the Conservative tax changes have taken us since 1984.

As a consequence of the last three Budgets, and one economic statement, Canadians are now paying over $20 billion in new sales and excise taxes, or will be by 1990. That amounts to an additional $910 for an average Canadian family over and above what we were paying in sales taxes prior to the time the Conservatives took office. It is also one of the largest single tax increases in Canadian history.
What this has meant in terms of how the Government gets its revenue can be explained very simply. The revenue that personal income taxes have brought to the Government has increased by 43 per cent. The revenue which came to the Government as a result of the increases it instituted through indirect taxes has increased by 56 per cent. The revenue of the Government from changes in the corporate income tax has increased by just three-tenths of 1 per cent. So it is pretty obvious to us who the Conservative Government represents.
We believe in a fair and progressive tax system, a system where individual incomes above a basic level are taxed on a progressive and graduated basis in order to redistribute the income from the wealthy to average and lower income Canadians and to achieve a more equal society. The past and future addiction of the Conservatives to sales tax increases will mean a serious erosion of progressivity in the tax system as consumption taxes take up an increasingly higher proportion of over-all revenues.
In 1986 alone, sales tax increases managed to move the percentage of revenues represented by these taxes from 22.3 per cent to much more. Tax reform proposals which the Minister will bring in in a few weeks will undoubtedly propel this percentage higher. It is the equivalent of imposing a flat tax on all incomes regardless of whether the person is rich or poor.
Let us deal with what a tax on food will do. It is important to note that the Conservatives have already put in motion their methods of collecting sales tax on food. In February of this year they extended the federal sales tax to snack foods effective July 1. A month from now we are going to see the kids paying more for their potato chips and chocolate bars.
May 28, 1987

This tax will primarily hit children and raise $120 million in revenue. It will cost the average family about $15 a year.
Why would a Government which cares about the Canadian people impose that kind of tax when it lets the purchasers of Gulf Canada avoid paying $500 million in taxes? If the Government had collected that tax which the purchasers should have paid, and were obligated to pay by law, except for the very strange ruling by Revenue Canada, the Government would not have to do most of the things it is doing.
We have estimated that the average Canadian family will pay $300 in new taxes as a result of taxing food. That is if the new tax is what is called "revenue neutral", in other words, if it is set at 6 per cent. However, what is to prevent the present Conservative Government, which is so concerned about the deficit, from setting the rate not at 6 per cent but at 7 per cent or 8 per cent or higher, as it is in many European countries? This would mean an increased cost of about $350 or $400 a year to the average family.
We say that tax increases on such fundamental living items will generate a tax revolt among Canadians. The people of Canada took the Prime Minister seriously when he talked before the election about a fairer, simpler, less complex tax system. He said that Canadians who were wealthy and corporations which were profitable would pay their fair share of taxes. We are still waiting for that. We are certain that the imposition of a tax on food is precisely the wrong way in which the people of Canada want this Government, or any government, to go. Therefore, we give notice now that we will fight such a proposal if it is in the White Paper the Minister will be bringing down shortly. We will fight it with everything we have, both in Parliament and outside of this place among the ordinary people of this country.


Ted William Schellenberg: Mr. Speaker, clearly the New Democratic Party opposes any kind of tax on food, but surely it will acknowledge that there are already hidden taxes involved in the processing of food, whether it is the hidden price subsidies or the cost of packaging or the cost of transportation. These are all taxes on the production of food. Is the NDP saying that it would attempt as a Government, should it ever become a Government, to remove those taxes on food? Is the NDP in opposition to those taxes on food? And if it thinks it can remove them, how would that be done?


David Orlikow: Mr. Speaker, what I said today and what we have always said is that we believe that the services the people of Canada want and need have to be paid for in one way or another, but we also believe that the tax system should be as fair as possible. That is why we are opposed to increases in hidden taxes. That is why we are opposed to increases in sales taxes, the business-transfer tax or value-added tax, whatever name or label one wants to give to that kind of tax. We are opposed to any increases. We believe that the loopholes in the income tax should be plugged so that everyone will have to pay a fair share. Why should a teller in a bank pay more in income tax than the bank he works for pays in corporation taxes? Why
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should a clerk at the Hudson Bay store pay more in income tax than the Hudson Bay Company pays in corporation taxes?
We say we want to plug the holes in the Income Tax Act, most of which were created when the Liberals formed the Government. We want fairness. We want the large corporations to pay taxes at least at the same rate and with the same consistency as the small businessman. There is more than $30 billion in deferred corporation taxes owing, and 90 per cent of that or more is owed by a very small number of the largest corporations.
Are we proposing that all the sales taxes which are already there should be removed? Of course, we cannot do that because we cannot do everything at one time. What we are saying is we do not want any increase or broadening of the sales tax base, and we want those individuals who are wealthy and those corporations which are profitable to pay their fair share of taxes.


Mr. White:: Mr. Speaker, I listened with interest to the Hon. Member for Winnipeg North (Mr. Orlikow) who is, as I am, a Manitoban. We have in Manitoba a NDP Government, one of two in Canada. I think we can use them as an example of NDP tax policy in action.
On March 16 a Budget was introduced in Manitoba. It increased taxes for four out of every five Manitobans. The retail sales tax was increased. In spite of the Hon. Member's comment that the NDP is opposed to a consumptive tax, the NDP in Manitoba raised the sales tax from 6 per cent to 7 per cent. The Government extended the provincial sales tax to include take-out meals. The payroll tax was increased by 60 per cent. Every small business in Manitoba pays a tax on gross payroll, and that figure was increased by 50 per cent. A 2 per cent tax was imposed on net income for every Manitoban. This basically means a 21 per cent tax increase for a single mother earning $27,000 per year. However, if a taxpayer is part of a childless couple making over $200,000 per year then that couple will pay less than half the increase that a single mother will pay. If there is going to be a tax revolt it will be in Manitoba where we pay the highest rate of provincial tax in the country.
In light of what the Hon. Member has said I am wondering if he and his federal colleagues have passed on their feelings and their displeasure with the Manitoba budget to their cohorts in Manitoba.


David Orlikow: Mr. Speaker, the Hon. Member for Dauphin-Swan River (Mr. White) has given the facts with respect to the increases levied by the Government of Manitoba in its last Budget. However, I ask him to think about the reasons for these increases. The fact is that Manitoba is one of the have-not provinces, whether we have an NDP Government, a Conservative Government or a Liberal Government as we had years ago. Manitoba depends to a large extent on transfer payments from the federal Government, as do the Atlantic

May 28, 1987
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provinces. What has happened since the Conservatives won the last election is that the funds going to the Province of Manitoba from the federal Government have been sharply reduced.


Mr. Minaker:: They have not.


David Orlikow: The Hon. Member says that they have not. The fact is that the Government has limited the transfer payments under the EPF and a whole host of other programs. The other thing is that Manitoba, like nine of the provinces in the country, has its income taxes collected by the federal Government. Those exemptions and those loopholes in the income tax structure which I talked about, put into place by members of the Liberal Party when they formed the Government, and which have been extended by the Conservative Government, such as the $500,000 exemption on capital gains, are built into the system by the federal Government. The Government of Manitoba, like every other provincial Government in Canada, except Quebec which collects its own income taxes, has to build its tax program on the federal tax system. So of course the Government of Manitoba had to do a number of things which it did not like to do. But it had to do them because of the way the federal Government has treated the Province of Manitoba. The alternative to that was not to increase taxes and to impose Draconian cuts in services which we see have been implemented by the Conservative Government of Saskatchewan.
I make the following challenge to the Hon. Member for Dauphin-Swan River. I will come up to his constituency and the two of us can talk about the Budget presented by the NDP Government of Manitoba and what it has meant and the Budget presented by the Conservative Government of Saskatchewan with its major cut-backs in services and the lay-off of 2,000 civil servants. I will take my chances that there will be much more sympathy for the Manitoba Government than there will be for the Government of Saskatchewan.


Alan Redway: Mr. Speaker, here we go again. Once more all we hear from the Hon. Member this afternoon are more words of fear. He is here to sow fear on behalf of his Party. He is here to sow fear in the minds of average and ordinary Canadians. His Party was created on fear and it continues to exist on fear. I refer not to the fear of realities but to the fear of myths, the fear of suspicions which the Hon. Member and members of his Party try to sow in the minds of other Canadians.
One thing that is a reality and about which we know is the fact that before the last Budget there was a federal sales tax on certain, what we might describe as, junk foods. The Hon. Member spoke about the extension of the federal sales tax to other junk foods during his remarks.
I have in my riding a company by the name of Wrigley which produces chewing gum. It complained to me and to the Minister of Finance (Mr. Wilson) about the fact that the federal sales tax prior to the last Budget applied to it but not to its direct competitors which produced potato chips and things of that sort. That was a disadvantage to Wrigley that was
driving it out of business. That was threatening to put its 300 employees, some of whom I suspect were supporters of the Hon. Member's Party, out of work and onto the street. In fact, the last Budget imposed a sales tax which applied fairly to competing products in this area.
Based on what the Hon. Member says I have the impression that he thinks we should do away with sales tax on this type of food. Can he tell us whether or not he would remove the federal sales tax, not only on things such as potato chips, a measure which was included in the last Budget, but also on Wrigley's chewing gum? If that is his position and the position of his Party then will he tell us whether or not the following resolution passed at the 1977 NDP federal convention is still the policy of his Party?
Be it further resolved that a surtax shall be placed on junk foods to make them
very expensive.


David Orlikow: Mr. Speaker, let me begin by saying that if the polls showed that the NDP was still at 18 per cent we would not have Conservative Members of Parliament digging out resolutions passed at NDP conventions 10 or more years ago. I thought I made it clear in my reply to the last question I was asked that we do not believe that we can get rid of all sales taxes which are now in place. What we are saying is that we will not have a more fair system by broadening sales tax and by including more items.
I want to tell the Hon. Member for York East (Mr. Redway) that when the former Conservative cabinet Minister from Ontario, Mr. Norton, came to see me this morning to plead that we not put sales tax on potato chips I wished I had known what he felt. Had I known that, I would have told Mr. Norton that he was wasting his time, he should go to see the Hon. Member for York East.
I wish to say something about spreading fear. This morning in the course of asking a question the Hon. Member made it very clear that he is opposed to marketing boards and supply management for agriculture. In talking about fear, if that is the policy of the Conservative Government, then Conservative Members of Parliament from rural areas, and I see the Hon. Member for Assiniboia (Mr. Gustafson) in the House, should really be frightened. I say that because if there is one thing that the farmers of the country know it is that the only way they can survive in almost every commodity which they produce is by having marketing boards and supply management. If we are talking about fear, then that is really something to fear.


Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Trois-Rivieres (Mr. Vincent).


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I welcome the opportunity to take part in this debate, after the comments by the Hon. Member for Winnipeg North (Mr. Orlikow), and I hope I will
May 28, 1987

be able to rouse the Hon. Member for Ottawa Centre (Mr. Cassidy), on whom our colleague's comments seemed to have a soporific effect. I think it is important to clarify the Government's intentions with respect to tax reform. Mr. Speaker, you will recall, and I do not want to go back to early 1984, but you will recall that when we were elected, we promised that, as a Government, we would bring in a complete program for economic renewal, and this program included improving the tax system. Mr. Speaker, when we talk about tax reform, we are not talking about your usual budget with a few amendments to the Income Tax Act, as it affects personal income tax and corporate taxes, and some changes in the federal sales tax. We are really talking about the kind of tax reform that will be as important as the last one, which dates back to 1971. Last July, Mr. Speaker, the Minister of Finance (Mr. Wilson) announced his intention of proceeding with a study of the options the Government had for a thorough reform of the Canadian tax system. In October, he identified the specific guidelines for this reform. Mr. Speaker, I shall, if I may, repeat them here.
First, fairness; second, simplification; third, ease of compliance; fourth, balance; fifth, revenue stability; sixth, international competitiveness; seventh, economic growth; eighth, Canadian priorities; ninth, measured transition; and finally, Mr. Speaker, consultation.
The Minister of Finance is following these 10 guidelines to prepare the tax reform and the White Paper which will be announced on June 18. But why exactly? What do those guidelines mean, Mr. Speaker?
First, I believe that is is essentiel to ensure a fairer distribution of the tax burden so that Canadian taxpayers in comparable circumstances will pay the same amount of taxes. We must also ensure that corporations pay their fair share of taxes. Mr. Speaker, I shall not list the aberrations introduced in our tax system by the former Liberal Government. 1 shall only mention in passing the scientific research tax credit which lost billions of dollars in revenue for the Canadian Government and in assistance those who really needed it.
Mr. Speaker, I shall wait for the questions of the Hon. Member for Ottawa Centre before replying.
There is another point which should be emphasized. I recall that, when I was Parliamentary Secretary to the Minister of National Revenue, the Hon. Perrin Beatty, we said that selfassessment should be maintained and that Canadian taxpayers should work in co-operation with their Government in this regard. However, this does not mean that there is no need to simplify our tax system.
At the same time, we must bring back some balance to the sources of public revenue. In so doing, Mr. Speaker, we must take action to ensure that the tax system will become less dependent on personal income tax and that Canadian taxpayers have more money at their disposal. This is the purpose of our tax reform. Canadians whose taxes were too high will have more money in their pockets. Businesses which took advantage of the unfair benefits granted by the former Government will
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pay a fair and reasonable amount of taxes. At the same time, the Government will have enough money to pursue its economic development initiatives and maintain useful programs. However, in this context, while we speak about our regions, our provinces and our country, we must also remember that Canada must compete with the United States, Japan, France, New Zealand, Australia and Great Britain, many of which are also reforming their own tax system.
Mr. Speaker, our tax system must be just and fair and deal strictly with tax matters; it should not be an income tax legislation dealing with regional development or economic development. Our tax system should help the Canadian economy, but the purpose of our tax legislation should not be regional development. At the same time, Mr. Speaker, that tax reform should help create a positive climate so that the people of Canada, with a little more money in their pockets, should be able to invest at the regional level in your riding, Mr. Speaker, in the Trois-Rivieres constituency, in the constituency of my Hon. colleague, to invest in the Canadian economy and trust that Canadian economy and of course their tax system. Now, Mr. Speaker, those principles are the underlying principles of the tax reform which will be tabled by the Hon. Minister of Finance on June 18.
Opposition Members are against that tax reform. I can tell you, Mr. Speaker, and I shall quote-


An Hon. Member:: Against the tax reform? But you-


Pierre H. Vincent: They are against the tax reform. That is what you said, that you were against it. . . I could quote, Mr. Speaker, from some of the suggestions and recommendations of a tax reform committee: "The Canadian tax system should be as close as possible to, but not necessarily a blueprint of, the U.S. tax system, it should increase the corporate tax rate instead of paying specific attention to profit transfers by foreign-based companies, instead of dealing with the appropriateness of a minimum tax calculation for companies, it should be used to establish tighter administrative controls for companies and to tax every source of income whatsoever, it should deal with the $25,000 life insurance tax exemption". I could go on, Mr. Speaker, as there are several more pages of similar suggestions. Mr. Speaker, I have just quoted part of a report submitted to me by a group of businessmen in my riding of Trois-Rivieres: Pierre Bettez, a chartered accountant; Pierre Dessureault, a chartered accountant with the Dessureault, Leblanc, et Lefebvre firm; Paul Lavoie, a consulting economist; Jean Morand, a lawyer with a Master's degree in tax administration, with the Jolicoeur, Lacasse et Simard law firm; Gilles Morin, a chartered accountant; Gabriel Pellerin, a chartered accountant; Luc Therrien, a lawyer with a Master's degree in tax administration with the Baumier & Associes law office, and Laurent Verreault, the Chairman of the Laperriere & Verreault group. Mr. Speaker, there was a meeting of those people in Trois-Rivieres and 1 told them: We are working on a tax reform, and I would like to know what you, as professionals involved daily with such matters, would expect from that reform. And I have just quoted part of their report.

May 28, 1987
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I believe that most Canadians, if presented with those suggestions, would agree with them. Our tax burden is unfairly distributed at the present time, Mr. Speaker. The increase that we have seen in the income tax of ordinary taxpayers is counter-progressive, it acts as a barrier to the economic growth of our regions, our provinces and our country.
If you look at the tax incentive that were granted over the years by the former Government, particularly to businesses, companies, Mr. Speaker, it is amazing to see how a number of those businesses, not many of them, but too many nevertheless, took unfair advantage of tax shelters, those tax shelters which the former Government considered normal, which were provided since 1971, since the last tax reform, over the years, and I remember, Mr. Speaker, seing budgets where we had to deal with heaps of documents, technical papers and so on. With respect to the ordinary taxpayers, the situation was pretty much the same. However, tax shelters were mostly available for high income earners than for Canadians with a lower income. The last point, Mr. Speaker, leaving aside partisan biases, is the federal sales tax-
I remember that in 1978, Mr. Speaker, when I was a student at Sherbrooke University, taking a Master's degree in taxation, our professor used to tell us about the federal sales tax that the Federal Government should change shortly, because it was nonsense. That was in 1978 and the federal sales tax law has not been amended. We are aware of it and we have said it. That tax presently harms our businesses. It kills jobs and that is why this reform is so important. That is why this reform must aim to reduce tax rates of individual taxpayers who have paid too much tax and of corporations which paid their fair share, while increasing the tax rate of corporations which have not paid their share. At the same time, in that comprehensive reform, we should amend the federal sales tax. We have said that we would reduce tax rates and also that we would reduce the number of tax brackets in order to streamline the system. And we said that we would change exemptions which taxpayers enjoy in tax credits.
Mr. Speaker, as you know, a tax credit, whatever its kind and level, is much more profitable than an exemption for a taxpayer. To understand that, you do not have to go to university for it is mathematical. At the same time, it brings about a huge benefit. It makes the tax system more equitable because as you know, Mr. Speaker, if I am entitled to a tax credit of $1,000, somebody whose yearly income is $100,000 will happen to pay more tax than with an exemption for the same amount. As for low income people, of course, they will benefit more from a tax credit than an exemption.
Therefore, all Canadians will eventually pay less tax, thanks to the tax reform. That is the important thing to remember. The White Paper on tax reform will be tabled in that perspective.
Obviously, within that context, high income people who might have avoided to pay their fair share of tax in the past will have to pay more. That is the substance of my basic criteria when I referred to fairness, when I said that all Canadians must pay their fair share of income tax at all levels.
You will remember, Mr. Speaker, that in terms of tax law, we have innovated in this country with the introduction a federal sales tax credit. It was the first time in this country that a Government, after increasing the rate of the federal sales tax, had the decency to grant a refundable credit to low income people. This is a new kind of law, Mr. Speaker. And I can tell you, having had the opportunity to go to different places in Quebec as well as outside that province, that people are grateful for that. Nobody likes tax increases, but people recognize that, while there has been an increase, this Government has taken steps to help low-income families.


Michael Morris Cassidy: With capital gain tax exemptions.


Pierre H. Vincent: There is nothing to indicate that this new benefit will not resurface in the White Paper.
As far as corporations are concerned, we must put together a package for our corporations which really create jobs in this country, even if the socialist party refuses to believe it. We must see to it that they carry their fair share of the tax burden. We must be careful not to overtax them, however, because they create most jobs in this country, but we must collect the income tax they owe. I suggest that the previous Government's performance in this regard had left a lot to be desired. The White Paper will be there to correct all past mistakes.
As I was saying a while ago, Mr. Speaker, our federal sales tax scheme is much too narrow. As it is currently applied, it favours imported goods at the expense of Canadian goods. This is something which is not right and should be changed, Mr. Speaker.
As a country, Canada needs a federal sales tax scheme with a wider base and reduced rates to be levied more evenly and equitably on a wide variety of goods and services.
There can be different types of federal sales tax. There could be a multi-stage sales tax, with or without invoices, levied only by the federal Government, or a federal provincial sales tax with invoices, but what we should be seeking in a non-partisan way is the common good of Canadians. If the federal government can agree with the 10 provinces, and so far I think that things are going well at this level, to set up a national sales tax scheme, 1 think it would be a great step for Canada, for each and every province and, therefore, for all Canadian taxpayers.
The make-up of the sales tax base will be a key element of our indirect tax system reform and I think that what we should be looking at is the tax reform as a whole. We should take into account personal income taxes, corporate taxes and indirect taxes which is the federal sales tax. I think that if we tried to look at them separately and individually, as the Hon. Member for Ottawa Centre is doing, we would be wrong. This is a major and comprehensive reform. It must not be divided.
May 28, 1987

You are signalling that I am running out of time, Mr. Speaker. In conclusion, I feel that the motion moved today must be defeated and that my friend the Hon. Member for Ottawa Centre should wait until we introduce our White Paper on June 18 before making comments which might not reflect reality and, as my other colleague was saying, serve only to frighten Canadians. This is a responsible Government which is seeking a tax reform for the common good of Canadians and, in this context, 1 urge him to wait until June 18.


Jean-Claude Malépart: Mr. Speaker, I was wondering at first why in opinion polls in Quebec, the Tories are third, the NDP people are second and Liberals first. However, after the speech which 1 have just heard, I understand why in Trois-Rivieres, even the Rhinoceros Party leads the Conservative Party. I shall put my question to the Hon. Member. He boasts about the merits of his Government, about the capital gains exemption. His comments are timely. Mr. Alain Dubuc of the newspaper La Presse, who is neither a Liberal nor a Conservative, was not born yesterday, is not on welfare, and is better informed than the Hon. Member for Trois-Rivieres (Mr. Vincent) says: "The capital gains exemption is an indecent gift". If an Oscar were given for the most stupid tax measure, the capital gains exemption would win that award outright."
Now the Hon. Member is boasting about the eminent members of his committee who had all obtained contracts and were not ordinary citizens. Does the Hon. Member for Trois-Riviere approve or disapprove the comments of Alain Dubuc who is a reputable and unbiased economist? Has he some comments to make about Alain Dubuc? Is Alain Dubuc right or wrong?


Pierre H. Vincent: Mr. Speaker, I recognize the Hon. Member for Montreal-Saint-Marie (Mr. Malepart) by his more than partisan comments. I find it sad that he would attack my constituents of Trois-Rivieres who worked hard to submit theirs views on tax reform and who unfortunately-and my colleague will be sorry to hear that-did not get any contract but have worked in good faith. They are accountants and businessmen who have voluntarily given their time to help their province and country. I suggest, Mr. Speaker, that it is unfortunate to hear in the House of Commons comments such as those made by the Hon. Member for Montreal-Sainte-Marie. I trust that when he is given the opportunity to rise, he will surely apologize to those people in Trois-Rivieres.
Mr. Speaker, with respect to the question put by my colleague from Montreal-Sainte-Marie, I did not read the above-mentioned report. However, I can say that the capital gains exemption introduced by our Government has definitely helped to create permanent jobs in Quebec and everywhere in Canada. And if it is a gift, it was a profitable one for all Canadians. I find it rather less absurd than the tax credit for scientific research implemented under the former Liberal government, under which some billions of dollars were wasted
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and given away to Canadian and international corporations already making millions in profits. That seems to me to be much more aberrant.


Michael Morris Cassidy: Mr. Speaker, having listened carefully to the speech by the Hon. Member for Trois-Rivieres (Mr. Vincent), 1 should have thought that he would make no statement on the motion before the House today.
Finally, he indicates that he is not even willing to attempt to influence his Government to ensure that taxation of food will not be included in the tax reform proposals that the Minister of Finance will submit on June 18.
The Hon. Member is mistaken when he states that the Opposition is against fiscal reform. If he is referring to the New Democratic Party, I submit that our party has been pushing for fiscal reform. I was among the Members of our Party who travelled all across Canada to discuss tax reform with Canadians and to gather information as part of the 1986 Tax Probe project. 1 have recently given speeches on this topic in various communities in Ontario and Quebec. The Hon. Member is therefore mistaken to think that the New Democratic Party is not pushing for tax reform.
But then again, there is such a thing as the wrong kind of fiscal reform. I fear, Mr. Speaker, that the Hon. Member does not grasp the necessity of voicing a considered opinion on the specific initiative which the Government is proposing, that is to impose a 7 per cent, 8 per cent or 9 per cent tax on all purchases of food and grocery items in Canada.
I would perhaps want to put my question once again to the Hon. Member. He says we should look at the overall picture. However, I have given all kinds of reasons why the overall approach does not apply in the case of a tax on food products, which represent the most basic of basic necessities.
I would ask the Hon. Member, then, to say whether or not he is in favour of a sales tax on food.


Pierre H. Vincent: Mr. Speaker, I find it unfortunate that my colleague the Hon. Member for Ottawa Centre is attempting to scare people. This is not the way Parliament was meant to work.
He has presented a motion and my response is as follows, Mr. Speaker. He should wait until June 18 before getting scared. You're afraid of being scared, of being afraid. Wait until June 18-


Jean-Claude Malépart: Senior citizens have a long memory.


Pierre H. Vincent: Let him wait until June 18, Mr. Speaker, and then he can bring in 25 motions if he disagrees with the White Paper. At that time, I shall be ready to support him if there are things on which I disagree. However, Mr. Speaker, his timing is wrong and he should wait.


Alan Redway: Mr. Speaker, the Hon. Parliamentary Secretary will be aware, I know, that on average Canadian manufacturers pay one-third more tax than competing imports

May 28, 1987
Adjournment Motion
and that, in fact, imported goods often end up costing less than goods manufactured here because of the federal sales tax as it now impacts on Canadian manufacturers and their products. He will be aware as well that the Bic company in Toronto, for instance, has laid off workers as a result of that sort of situation and that the sales tax in fact hurts our exports, encourages imports and hurts job creation. I wonder if the Hon. Parliamentary Secretary could advise the House if the White Paper on tax reform that we will be seeing very shortly will address this problem and correct it so Canadian companies and manufacturers can at least compete on an equal basis with foreign producers.


Pierre H. Vincent: Mr. Speaker, I must say without any partisanship that this surely is the best question that 1 have been asked so far this afternoon. And I am happy to provide my collegue with an answer.
Indeed, Mr. Speaker, and 1 have mentioned it earlier briefly, 1 would say that the federal sales tax legislation in its present form is a real "hassle", as we say back home. My colleague is absolutely right. The White Paper will deal precisely with that aspect among other aspects of the fiscal reform. And again, my answer could also be directed to the Member for Ottawa Centre, Mr. Speaker, in the sense that we must expect a package deal, that the reform will reduce the personal income tax, will deal with corporations which do not pay any tax and will also help companies which are having difficulties with the federal sales tax legislation as it is now, that is legislation that very often benefits importers as opposed to exporters.


Michael Morris Cassidy: It is not necessary to tax food to achieve a much needed reform of existing sales tax. The Hon. Member knows it very well. This Government, Mr. Speaker, is arrogant. It should tell us: "Don't ask for our opinions now, wait until we are willing and ready to accept comments." Mr. Speaker, Canadians already know what it means. Take for example those in Quebec who took early retirement. The Government reduced or cut their access to unemployment insurance by changing the policy and, when told, said: "If only we had known that you had problems . .. But now the decision has been made". Finally, a Bill might change the situation for some of them, only some, after more than a year and a half of continuing struggle. That is how this Government works. After only two and a half years in power, that is the way this new Government operates.
The Government backed down on the question of deindexing Old Age Security pensions, but the partial deindexing of the fiscal system was successfully achieved, because there was no way of convincing the Government to change its mind. It is my duty as an opposition Member to inform the Government- yes, it is partisan; being in opposition I have to be partisanthat Canadians do not, and will not, accept a tax on food; they are very concerned by what the Government said and they are asking to be listened to now, rather than having to wait, in fear, for what the Government will come out with. I am asking the Hon. Member: Is he willing to listen to the people, the poor, those who live below the poverty line, as well as workers who are just beyond the poverty line but do not want, and cannot afford, a tax on the necessities of life like bread and milk?


Pierre H. Vincent: Mr. Speaker, if ever a federal Government has consulted the Canadian people on financial matters it is ours. I can say in all sincerity and objectivity, and I think that my colleague for Montreal-Sainte-Marie will agree with me, that there have been consultations before and after each budget; consultation is an ongoing process and it will not stop on June 18. I think that at that level-


Michael Morris Cassidy: You did consult the early retirees!


Pierre H. Vincent: I have been polite and did not interrupt. Please show me the same consideration.
At the level of the Department of Finance, Mr. Speaker, I can say quite frankly that there is consultation.
In answer to my colleague for Ottawa Centre who mentioned early retirees, I can tell him that they will be happy with the fiscal reform. I ask him to be patient. June 18 is in three weeks. He will then learn about our proposals. And if he does not agree they will be pleased to listen to him and even discuss the matter with him. But please let him stop sowing fear in the minds of people way ahead of time. No one in the Conservative government said that food would be taxed. It is pure invention. I do not know how it happened but this is how fear spreads among people, Mr. Speaker, that is the only thing I ask of him.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 66, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The Hon. Member for Calgary East (Mr. Kindy)-Canadian Security Intelligence Service-Refusal of information concerning former Ambassador to Egypt; the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie)-Nuclear Energy-Lepreau II reactor project in New Brunswick-Government position; the Hon. Member for Davenport (Mr. Caccia)-Environmental Affairs-Acid rain-Position of head of United States environment protection agency-Policy announced by President Reagan.
May 28, 1987



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cassidy:
That this House oppose any imposition of a federal tax on food and urge the
Government to reject any such tax as part of its tax reform package.
Jean-Claude Malépart: Mr. Speaker, I welcome this opportunity to speak, especially after the Hon. Member for Trois-Rivieres (Mr. Vincent). Frankly, the contradictions in his speech were incredible. All of a sudden, the Hon. Member made the discovery that tax exemptions were regressive and tax credits were better, and this after three Budgets, after exploiting workers and their families, after increasing the exemption on contributions to Registered Retirement Savings Plans. No wonder he wants to leave the House to hide his shame.


Pierre H. Vincent: Mr. Speaker, on a point of order.


Mr. Deputy Speaker:: The Hon. Member for Trois-Rivieres (Mr. Vincent), on a point of order.


Pierre H. Vincent: Mr. Speaker, I was under the impression that there is a Member in this House, the Member for Montreal- Sainte-Marie (Mr. Malepart), of quite some years' standing- granted, he was silent for much of that time-who ought to know the Standing Orders. I would ask him to please withdraw what he just said.


Jean-Claude Malépart: Mr. Speaker, I refuse to get involved in the Hon. Member's little games. Considering the kind of speech he made, no wonder he is ashamed and wants to make a quick exit.
Mr. Speaker, I fully realize the disastrous situation facing the Conservatives today, and I realize why the Hon. Member would prefer to disappear without a trace, because that is exactly what is going to happen to him in the next election. I understand that, and I support the motion and what was said in the debate today by the New Democratic Party.
Mr. Speaker, Canadians, including the senior citizens, mothers and workers who are watching us today, remember clearly the solemn commitment made by the Prime Minister (Mr. Mulroney), with one hand on his heart and the other on the Bible, when he promised full indexation of Old Age Security pensions. People remember the so-called consultation. It is true that this Government consults, but then it turns around and does the exact opposite. It misleads people. I have here the January 1985 Consultation Paper signed by the Minister of National Health and "Social Injustice" in Canada, who told senior citizens: Nothing will be changed. Don't worry. Remember the Mulroney Budget! What happened? Old Age Security pensions were de-indexed. He told families: Don't worry, the changes that are going to be made in support programs for families with children, including family allowance, the child tax credit and the child tax exemption, will not
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be used to reduce the deficit but to help people in need. Again, Canadians and this House were deceived by the Government. Six months later, the Minister of Finance (Mr. Wilson) was forced to admit that he had cut, in fact had stolen money from Canadian families to reduce his deficit and at the same time, given the rich a capital gains tax exemption of $500,000. What Alain Dubuc, in yesterday's La Presse, referred to as "Capital gains: an obscene giveaway", is indeed an obscene giveaway, useless except for making the rich richer. It does not create a single job for anyone, and today, the Hon. Member for Trois-Rivieres and his fellow Members of the Conservative Party are saying: How come, you are making people scared? But the Conservative Members misled Canadians. You misled them on four occasions, yet now you expect them to believe you. They will never believe you from now on. When it comes to the tax reform Canadians insist that Conservative Members who have enough courage and this Prime Minister who misled them four times tell them that food, which is essential to survive, will not be taxed.
Still the Conservative Members are asking themselves: How come people have lost faith in us? How come people do not listen to us? Why is it that people no longer trust us? Simple: This same Government came out with a Budget to remove indexation on Old Age Security pensions and family allowances, and then decided to slap a 10 per cent tax on prescription drugs, taxing the health of people yet. Never before in the history of Canada did a Government, no matter its political stripe, stoop to the point of taxing health, taxing sick people to erase its deficit.
It was only after people rallied, particularly the elderly, and forced this Government to back down and restore the full indexation of old age security pensions.
Sadly enough, we were unable to get this shameless Government to change its policy concerning family allowances, but at least we did manage to force . . . Think only about the syringes which people who suffer from diabetes have to use every day, this Conservative Government, this Minister of Finance-we should say the Minister of High Finance-this Minister deliberately chose to tax these people, Mr. Speaker. Except for the Official Opposition along with spokesmen for these groups, people who buy drugs for cardiovascular conditions or equipment to relieve respiratory ailments, not a single Conservative Member of this same Government rose to say: Enough is enough, Mr. Prime Minister, stop this attack against poor people. No, Sir, not one! At the same time those people . . . Referring to the capital gains tax exemption, Alain Dubuc said: If there were an Oscar Award, the capital gains tax exemption would get it.
And we remember that at the same time, on the same occasion-and Canadians in all provinces and all ridings remember that and have lost faith in this Government with respect to the tax reform-we all remember that when the Government raised personal income taxes at the same time it

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introduced legislation to repay the wealthy depositors of the two banks which went under, people who had $60,000 or more in their accounts. This Government has given billions of dollars to the rich, for instance the Reisman brothers in the case of the Gulf deal which resulted in the closing of the Gulf refinery in East Montreal. There have been so many scandals. Yet now, the Conservatives would like the people of New Brunswick, of Halifax in Nova Scotia, of Quebec, Ontario, Manitoba, Alberta and Vancouver in British Columbia to believe them after all the scandals, the bribes, the manipulations, the unfairness to the public. They would like them to believe the Prime Minister and the Minister of Finance when they say that there will be a comprehensive tax reform and that even though food might be taxed, there will be a small credit for the poorest, those with a $15,000 income. Come on! Will the grocer give credit without interest to each poor family and say: You are paying the food tax, but you will give me the difference at the end of the year because Mr. Mulroney will send you a little cheque as you are under the $15,000 level. However, if you have the misfortune to make $500 more in overtime during that year, with an income of $15,500, you will not receive any cheque. This is ridiculous and unacceptable.
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We in the Official Opposition say that we need a tax reform. However, we need both a tax reform and a reform of our social programs. We need a tax reform to ensure that there is some justice and that every high income Canadian will pay his rightful share of taxes since he will benefit from the programs and services provided by the Canadian people and the federal Government. The tax reform must be fair instead of allowing the rich to use all the tax shelters available to avoid paying one cent of taxes while middle income taxpayers bear most of the burden. These people are fed up with paying always more taxes.
If we follow the path on which the Government is leading us with its tax reform, who will foot the bill? It will be the middle income taxpayers, fathers, mothers, young couples, working Canadians who contribute to the economy, and in return, the Conservative Government will take away nearly half of their paycheque with its hidden taxes. If you call a plumber tomorrow you will pay a 10 per cent tax to have him fix your tap; if you go to the butcher's tomorrow you will pay a 10 per cent tax on the meat you buy; if you go to the bakery you will pay 10 per cent; consult a lawyer, a notary, another 10 per cent; your accountant fills in your tax return, again 10 per cent. Is that equity and justice? The tax reform of this Government is sheer financial hypocrisy.
Mr. Speaker, the Official Opposition, the Liberal Party fought to protect elderly Canadians from the deindexation of Old Age Security pensions; we fought in the case of taxes on drugs; we fought in the case of family allowances; and again recently we have been keeping up the fight against the injustice done to older workers by the Government which saw fit to deprive them of their unemployment insurance benefits.
After a year and a half these people are forced to go from one office to the next and call upon their Members of Parliament to force this Government to pass legislation, whereas the big wheels of financial circles simply called the Prime Minister's Office, and PMO officials crawled on their knees to rush legislation through without our ever finding out just who would be getting these billions of dollars.
The Official Opposition did not roll over and play dead when faced with your budgetary onslaught. My friends, I suggest you get ready, you have not seen anything yet. There are thousands of Canadian women like Mrs. Denis who will confront your leader, Charlie Brown. There are men and women who have had it up to here. You have seen this in each of your ridings, no? The Conservative Party ranks third and would fall to fourth place if there were a fourth party.
But the question you must ask yourselves has to do with all the mistakes and blunders you made, authorized and allowed to go on.
You are the accomplices of the Minister of Finance. By remaining silent, you are condoning what he has done. If we look at the exemption for contributions to a Registered Retirement Savings plan, we have to realize that by the year 2000, over 12 per cent of the population will be 65. People are opting for early retirement. What did the Government do? It refused to index private pension plans but agreed to spend billions of dollars to let someone with an income of $150,000 contribute $15,000 tax-free to an RRSP. People with an annual income of $10,000, $20,000 or $25,000 are being ignored by this Government. Three million women in Canada are not eligible to contribute to a public plan, either the Quebec or the Canada Pension Plan. Three million women, through the fault of this Conservative Government, realize that by the time they are 65, they will be living in poverty and will have to apply for the Guaranteed Income Supplement. This Government, this Minister, this Prime Minister and all these Conservative Members know what they are doing and are doing so deliberately.
We have the Hon. Member for Trois-Rivieres (Mr. Vincent) boasting that he had a committee in his riding to advise him on tax reform. Did you notice who was on the committee? A tax lawyer, a chartered accountant, a notary, another lawyer, another accountant, and a bank manager. What about the average person, the taxpayers, the people who pay to support his advisers? He didn't see them. He didn't care what they thought. He just wanted to know what his friends thought about tax reform.
So the guy says: I have a small office as a tax lawyer. Get me all the exemptions you can. And then the expert who works for an insurance company says: Get me a bigger exemption because I sell insurance. But he does not care, and he does not even know, what the people in Trois-Rivieres, what the taxpayers and the unemployed textile workers think. He does not know and he does not care, with all his boasting.
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Multiply this example by 210 or 211, if you include the one who crossed the floor to the NDP. They are all the same. It is a disgrace. It is worse than anything else this Government and this Party has done, worse than all the other scandals, flagrant and not so flagrant. Of course we need tax reform. We have to get rid of the tax shelters. We have to share the exemptions.
He wanted suggestions about the Registered Retirement Savings plans. For instance, instead of giving a tax exemption to someone who has a higher income and costs the Canadian taxpayer more in tax shelters, we might say that anyone who puts $1,000 into an RRSP will be entitled to a $100 tax credit. Whether this person earns $10,000 or $100,000 a year, the tax credit will be $100. This would be fair. However, I am now convinced that the Government after improving the RRSP system, will not touch it in its tax reform in view of its hypocrisy: nor will it alter the tax breaks given to the rich, such as the capital gains tax exemption and the tax exemption for RRSPs which benefits the rich.
The only things the Government wants to touch are the tax exemptions for senior citizens, dependent children and spouses and the personal tax exemption. The Government will change these exemptions and implement the purchasing tax credit. If, instead of an income of $15,000, you have an income of $17,000, the Government will take 10 per cent of this money and say that it will be given to low-income Canadians. The balance will be used to compensate the loss of revenue from the capital gains tax exemption and the RRSP exemption which benefits the rich. Who will be penalized? Who will have to pay the 10 per cent, 11 per cent or 12 per cent tax when he needs the plumber, the electrician, the accountant, the lawyer or the notary to make out a will, the baker, the grocer and the milkman? Middle income earners. They are not the pals of the Conservatives.
The Hon. Member for Trois-Rivieres has already explained in which tax bracket the pals of the Conservatives are. They are the ones who will benefit from exemptions because they have already had all kinds of goodies. But this will not be allowed. It will not be allowed, not only by the Official Opposition which knows this Government and knows how it misleads the public and how to make it back down, but it will not be accepted by the public either. The public will protest vigorously, perhaps with the same results as for the reform of unemployment insurance.
Mr. Speaker, this Government which has once again deceived the Canadian public is committed to amending the Unemployment Insurance Program. All political Parties and the Canadian population generally agree that it should be amended. Following four reports, including those submitted by the Macdonald Commission which was prepared at a cost of millions of dollars, the Forget Commission which cost $6 million, those of an internal committee of officials and the House of Commons Committee, four reports, on which the Government wasted almost $8 million of our taxpayers' money, the learned Minister of Employment and Immigration
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(Mr. Bouchard) rose on a Friday morning on the orders of the Prime Minister and stated solemnly that on the basis of all these reports and after spending all that money, that he felt he had different opinions from various groups. He was satisfied with sitting on his bum and doing nothing.
Such are the political will and guts of this Government.
But who pays for all of that? Who pays for all this foolishness on top of the $7 million or $8 million of the taxpayers' money which was wasted? It is the men and women working part-time who will continue to be penalized by not being paid full unemployment insurance benefits, those who are on maternity leave or on sick leave. Should a labour conflict arise, either through a strike or a lock-out, these people will be penalized and will lose their benefits because they will be deemed striking employees, even though the House Committee, including its Tory Members, unanimously agreed that there had to be changes.
Mr. Speaker, I do hope today, and I conclude on this, that there will be at least one Progressive Conservative Member who will open his eyes and read the article published in La Presse under the signature of Alain Dubuc, a guy highly regarded for his honesty and expertise and who clearly describes the implications of capital gains tax exemption, who foresees what is going to happen in the so-called tax reform, but the people here, no matter their political stripe, should stand up and tell the Prime Minister, as the population as a whole did: Do not touch our senior citizens and do not levy a food tax.
In closing, Mr. Speaker, it is essential that the voters in every constituency go to their Member of Parliament, whatever his Party, and have him sign a paper promising to vote against any measure which would impose a tax on food products as this is a basic necessity.
Mr. Speaker, I warn the Prime Minister that there will be a national campaign with leaders in every riding and that every Member of this House will be contacted. The public will remember those who refuse to sign and to promise that they will object to a tax on food products and who agree with such a tax. The public will remember them at election time.


Alan Redway: Mr. Speaker, when one comes from a Party that does not have a policy, like the Hon. Member's Party, or when one comes from a Party which has a number of policies that conflict with one another, like the Hon. Member's Party, what does one do?
The Hon. Member, as have many of his colleagues, has chosen to spread fear and confusion in the minds of the average Canadian about the issue of tax reform and the question of a tax on food. The Hon. Member is obviously spreading fear and confusion on the basis of not one single, solitary shred of evidence.

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It seems to me that the Hon. Member has a lot of nerve. He was a member of a government that gave us and the Canadian people the Scientific Research Tax Credit that ripped off Canadian taxpayers and poor people of this country to the tune of over $1 billion. It was his former Liberal Government that gave us tax shelters for investment on such things as yachts and recreational vehicles. He has a lot of nerve.
It was his Government that gave us income splitting, that allowed the use of interest-free loans in order to minimize taxes. His Government did not impose a minimum tax on high income individuals in this country, as the present Government has done.
It was his Government that gave us the carve-out transactions which allowed other people to save taxes and rip off the Canadian public. His Government allowed for the use of trusts to market security issues in such a way that income and capital were distributed tax free. It was his Government that allowed the use in tax law of partnerships in corporate take-overs to increase tax deductions and rip off the Canadian taxpayer.
It was also his Government that gave provisions in the Income Tax Act that allowed for salary tax deferral arrangements to rip off the Canadian taxpayer. His Government set up the general Investment Tax Credit which is being phased out by the present Government. It was his Government that set up the inventory deduction that is being phased out by the current Government.
All of these are examples of what the Hon. Member and his Government put in place to rip off Canadian taxpayers. Now he is telling us that we should have some competence and faith in him. How, in heaven's name, can he expect Canadians to have any faith, confidence or trust in anything that he or his Party has to say?


Jean-Claude Malépart: Mr. Speaker, maybe the Hon. Member is from Mars, but he does not read the polls or live in the real world. He wonders whether the public is confident. If he looks at the polls, he will find that 70 per cent or 77 per cent of the public no longer trusts the Prime Minister. Wake up, my dear sir. Get back on earth. You are in Canada, in Ottawa, in the House of Commons. Read and you will see what I mean. Thousands of Canadians are saying that they no longer trust the Government. Why? Because the Hon. Member who has just spoken and his Prime Minister tried to rob the elderly by deindexing old age security pensions when the Hon. Member himself and his Prime Minister had promised that they would not. The Hon. Member who has just spoken was with me when the committee considered the estimates. The Hon. Member was an accomplice when he let the family allowance deindexation go through, pure and simple theft of the indexation money, the 3 per cent reduction in the deindexation of family allowances which was to be used to reduce the deficit. People no longer have confidence in this Member because he was on the committee which voted with the Government and which
made a written commitment-as the Hon. Member will recall-that the money saved would not be used to lower the deficit, yet the Minister did the contrary. Why have people lost confidence? Because this Government did not keep its promise and, contrary to what it had said, went ahead and put a tax on drugs. The same Government which chose to tax candies, snack foods for kids, soft drinks. After all this Government has done, leading an attack against all Canadians with the complicity and support of this Member, he stands up in the House and brags about being proud to have voted in favour of reimbursing depositors who had $60,000 or more in the bank. The same Member takes the floor because he has friends and pals who benefit from that capital gains tax exemption. And he wonders how come people no longer trust them. The Hon. Member seems to think that all is well and could not be better. And of course he is right, provided he only considers what his Conservative colleagues are saying and what they are saying on Bay Street. All is well for those people. All is right with the world. And making money like it was going out of style. But the people in the Hon. Member's riding are not that sure all is well. The people in his riding think the Hon. Member did the exact opposite of what he told them. And people who are found lacking in intellectual honesty do not last very long in politics.
If the Liberals made some poor decisions in the past, well, we were beaten in the last election. And that is what is going to happen to you if you keep this up. We want to pick up the pieces and do better, and that is why we are number one in the polls.
Mr. Speaker, 1 think I have answered the Hon. Member's question satisfactorily, and if he doesn't remember, I happen to have the January, 1985, Blue paper right here. Jake Epp, that is your Minister of National Health and Welfare, but to me, he is Canada's Minister of Social Injustice. It says here in print that the funds, and I am not making this up, this is the truth. Now that is the difference between a Liberal and a Conservative. We can document what we say. We don't make it up as we go along. It says here that the money saved will not be used to reduce the deficit. It will be transferred to help those most in need. But that is not what happened. One billion six hundred million dollars were stolen out of the pockets of every family with children here in Canada. One billion six hundred million dollars were stolen by that Government with the complicity mostly of that Member, for he sat on that committee. The only thing you did which deserves my appreciation was in respect of missing children, when you applied a little common sense to prevent your Government from acting with disgrace in the case of those people too. But on the matter of family allowances, you frankly, honestly, earnestly helped to deceive the people of Canada, and if you need further evidence, I will give you the Blue paper in case you have lost it. It states black on white that your Government deceived the people of Canada.
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Ted William Schellenberg: Mr. Speaker, as the Hon. Member began his speech, he mentioned that the people who were going to be affected most adversely by tax reform, in his words, were those watching this broadcast, the seniors, the middle-income earner, the school children. I was moved almost to tears. I was very upset thinking about that. Then I remembered that those are the same people who are actually going to benefit from much of this tax reform.
Then, of course, it came to me that this same Hon. Member was a Member of the previous Liberal Government and, if my history serves me right, I recall that in 1968 when the Right Hon. Pierre Trudeau, who has just come out of hibernation, became the Prime Minister we had a $600 million surplus in this country. Over a period of years we started to get into a deficit under the now Leader of the Liberal Party, the Hon. Member for Vancouver Quadra (Mr. Turner), who was then Minister of Finance. We got into a position where our deficit became $12 billion, $20 billion, $32 billion. When we came into office it was at $37 billion. It is now going down.
When the Hon. Member sat as a member of the previous Government, did he speak up as passionately as he does now in favour of those seniors, school children and middle-income earners? Or is he part of the Liberal legacy with which we are living in this country?


Jean-Claude Malépart: Mr. Speaker, I do not know if the Hon. Member sat in this House before 1979. I do not know if he read the newspapers or if he was just busy like others making money. However, I would like to tell him that when the Liberal Government ran into deficits, it did so to help people. Whereas under the Conservative philosophy, you want to have deficits in order to help the rich, I remember that in those difficult times, we were in favour of the programs under Section 38. The Hon. Member has probably never heard of Section 38, because it is not meant to help the rich, but to help regular middle income workers. I am convinced that he does not know what it is. When a business was experiencing difficulties, rather than laying off young workers, it was agreed, based on the program under Section 38, that those workers would work under a time-sharing formula. They would work three days, spend two days on unemployment insurance, so that they would not all have to be layed off.
I know that the Hon. Member is not aware of that program, because it is meant to help ordinary people. But we did not have the capital gains exemption to help the rich. I know that he is aware of the profits involved. If you sell your gold ingots, you have saved your money and you can buy a condominium in Florida. That is his problem.
Yet, Mr. Speaker, I would also like to tell the Hon. Member what action I took with respect to other programs. With respect to elderly people, we should be thankful to Mrs. Begin, we should be thankful to the Hon. Member for the NDP who
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sits here in the House of Commons, for what they did when we were in power.
Senior citizens living alone received increases of $50, $35, to make sure they would no longer live below the poverty line. Liberals introduced the child tax credit, all the current social programs, free health insurance-I know you are against that, because it is humiliating for the rich to be next to a social welfare recipient when he or she goes to hospital. Who is responsible for all these programs? Even if helping people in need resulted in a deficit, the Liberal Party did something good, something honorable, and we can walk tall. But a Conservative will never be able to take pride in having reduced the deficit on the back of poor families.


Mr. Simon de Jong (Regina East):: Mr. Speaker, 1 too wish to enter into debate on the motion presented by my Party. The motion calls upon the Government not to impose a federal tax on food. This motion is presented at a time when we are about ready to enter into a regime of tax reform. Certainly, the Minister of Finance (Mr. Wilson) has given every indication that there will be some form of federal sales tax, whether it will be called a business-transfer tax or a value-added tax, the type of tax which most European countries now have, or whether it will be a federal sales tax, and that is a tax in conjunction with the provinces. Regardless of the form this sales tax will take, there is very good reason to believe that food will be taxed by the federal Government.
My colleagues and I in the New Democratic Party basically oppose this measure. Let me say that there is no doubt that we need reform of our tax system. We also need reform of our federal sales and excise tax system. The system as it exists today is in many ways confusing and arbitrary. While the Government has set rates, we also know that the Department of Revenue enters into numerous contracts with various firms and establishes other rates. I think it is just a question of time before some of those agreements are taken to court because some industries have these agreements and other industries have other agreements. Certainly some people claim that these agreements are arbitrary.
I have received correspondence from business people who feel the federal sales tax which was imposed on their product was unfair. In fact, I am dealing with a particular case right now where federal sales tax was imposed and then two or three years later the Government admitted it had made a mistake and refunded all the money which had been collected by this particular manufacturer. It did not do the manufacturer much good because over a period of years he had to charge the sales tax and he succeeded in pricing his goods out of the market because his competitors did not have to pay that sales tax. This individual lost a fair amount of business. In fact, the particular business he was involved in has since gone bankrupt.
I do not have to be convinced that the sales tax regime which now exists is in need of reform. It is, as I mentioned, very arbitrary and confusing. I remember meeting a while ago

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with manufacturers of sailboats in Victoria. They told me that various items on their boats were taxed at different levels and different rates. It was very confusing for them. Certainly, our present sales tax regime imposes taxes on our exporters and gives some benefit to importers. Canada is one of the few countries in the world that actually gives benefit to those who import. We tax those who export. This is because of our particular system, which just does not make sense.
It has been known for quite some time that our sales tax system is a total mess. In the many years that the Liberals were in power they really did not do very much to clean it up. In fact, if anything, they added to it.
I understand that if we are to have a sales tax of some sort, it is desirable that it be as simple as possible. Some European countries have value-added taxes that really impose a high level of bureaucracy upon the businesses that have to collect it.
I think it is in the interests of everyone that if we must have a sales tax in Canada, it be as simple as possible.
I certainly do not disagree with the attempt of the Government to reform our tax system, in particular the sales tax system, to end up with a simple system, one that is easy to administer and understand. There is no doubt that if we are to have a simple system then tax must be placed on everything. The moment one starts to introduce exemptions then one starts to create more paperwork. I understand that.
I understand the notion that if one is to have simplicity, then quite often it has to be at the expense of equity. If one is to have equity then one has to introduce some form of complexity into the tax system. This is true whether we are talking about sales tax or income tax. There is a trade-off that Governments have to make between simplicity and fairness. Of course, a wise government attempts to have as simple a system as possible while having a primarily fair system.
Thus I come to the following point. I have admitted that we need reform of our tax system, in particular the sales tax system. I have admitted that the more exemptions one introduces into a federal sales tax system the more complexity there is created. However, I have to rise here in my place today to oppose the imposition of a federal sales tax on food. I rise today to denounce any attempt to tax food. I do this for the following reasons.
All those who advocate a federal sales tax recognize that it is regressive. The Minister of Finance has stated both in the House and in committee, as well as in other public fora, that, yes, a sales tax is a regressive measure. It is regressive because everyone pays the same per centage of tax on an item regardless of one's ability to pay. Thus a person who buys a steak, a pound of hamburger, or a can of sardines pays the same tax, whatever the rate might be. Of course, a poor person who has to dispose of most of his income on the basic necessities of life, that is, food, shelter and clothing, ends up paying a proportionately higher per centage of his income as a tax than a person
with more income. Therefore it is regressive. I think that with this basic principle there is surely no disagreement.
Everyone will recognize that a federal sales tax, or a provincial sales tax, is a regressive form of taxation. It is not tied to one's ability to pay. However, the Minister of Finance stated that he would correct this. He said, "We are going to introduce a federal sales tax credit". He pointed to the fact that the 1985 Budget created a federal sales tax credit so that those people who are at the low end of the income scale will receive a credit back. In other words, the money they have spent on the essentials for goods and services which they need and upon which they have paid federal sales tax will be partially reimbursed through this sales tax credit.
The credit amounts to some $50 for a person and then $25 for every dependant under the age of 18. The maximum income that a family of four could earn in order to qualify is around $15,000 per year. As soon as that family earns more than $15,000 per year then the tax credit will be reduced accordingly. If the family earns up to $18,000 per year then they will not get anything back. They will not get any credit at all.
It has to be recognized that the sales tax credit the Minister of Finance and the Government have given does not compensate what a family of four at the low end of the income scale would be paying the Government in federal sales tax and excise tax. First, the $50 does not cover it. Okay, I will accept the fact that that is sort of a first step. I would have greater difficulty rising in my place today to oppose a sales tax on food had the Minister of Finance in his Budget of February of this year indicated that the Government would maintain the sales tax credit at some equal level. I would have more difficulty if he had said that as the amount individuals pay and as the sales tax goes up he would increase the credit for poorer families. He failed to do that. He failed to index the level at which people would become eligible for the sales tax credit; and he did not index the sales tax credit itself. In fact, he increased the sales tax in his Budget. He increased the amount that he was taking in from Canadian consumers. He increased the tax on gasoline. He added more items to the list of those which will be taxed by the federal sales tax. Therefore, he is taking more money out of the pockets of Canadian consumers. However, he did not compensate or increase the compensation to the poor by increasing the sales tax credit.
In my books the Minister committed three sins. First, he did not index the level at which people would become eligible for the sales tax credit. Second, he did not index the sales tax credit. Third, he did not increase the sales tax credit when he increased the sales tax.
If the Government is to introduce a wide sales tax on all goods and services, and if it wants to convince the Canadian public that the very poor will be compensated for this increase in taxation, then the Minister should have sent out a signal to the people that whatever benefits they will get back will not be eroded. He did not do that. The whole matter comes down to a
May 28, 1987

question of trust. I for one do not have trust in the Government, nor does the Canadian public, particularly the poor, have any trust or confidence in it. We are concerned that the Minister of Finance will impose a sales tax, especially on the basic needs; food, clothing and shelter. Will he at the same time redress the imbalance, the unfairness and the inequity of the federal sales tax by giving a tax credit to the poor? We cannot believe that a tax credit would be fully indexed, so it would in time just erode, erode and erode. Certainly the Minister of Finance can introduce a Budget, impose a federal sales tax and then compensate the very poor with a tax credit. But then a year later with inflation and an increase in the federal sales tax, what will happen? The people who would be eligible to receive the sales tax credit would become fewer in number. In a few years time the benefit would hardly be meaningful.
If Canadians are to accept that the inequity of a federal sales tax will be redressed by a federal tax credit, then Canadians will have to be able to trust the Government that the tax credit will remain constant with the cost of living. Canadians will have to trust the Government that there will be full indexing. We do not have the confidence in this Government to do that.
We have seen this Government more often than not break its sacred trust. We saw that with the attempt to deindex the benefits to pensioners. Were it not for the opposition of senior citizens across the country and the Opposition in this House, the Government would have succeeded in deindexing benefits to our old people. The Government did succeed in deindexing the benefits that parents receive. The Government succeeded in deindexing income tax. The Government succeeded in deindexing the family allowance and the family child tax credit so that fewer and fewer people are now qualified to receive those benefits. It is an eroding base.
I hear an Hon. Member say, "We will give it all away". That makes me afraid of a Tory Government and any sales tax credits the Conservatives might introduce, because the thinking is that somehow or other these poor people do not deserve them, that they are getting enough anyway. Therefore, we will cut short indexing provisions.
It is a question of trust, Mr. Speaker. We cannot trust this Government. We cannot trust that any sales tax credit to compensate the very poor will remain an effective tax credit, because the Government will allow it to erode away through inflation.
There is need for tax reform. In 1983 over $13 billion in profits did not produce one cent tax. When the Hon. Member says, "We will give it all away", that has been happening both under Liberal and Tory Governments. We have been giving it away, but we have not been giving it to the poor. We have been taxing, taxing and taxing the poor. Today a person who earns $10 in taxable income pays tax. Yet, $13 billion in profits can
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be made without producing one cent of tax. Isn't that shameful, Mr. Speaker? Is that fair? Is that equal? We say no. That is why I rise today and denounce any attempts to increase the tax load on middle and poor people. What the Government has done to middle and low income Canadians is outrageous. We will resist with every bit of our strength the imposition of a sales tax on the basic necessity of life-food.


Clement George Minaker: Mr. Speaker, I have a few questions and comments. The first is with regard to the question of trust. Both the Hon. Member for Regina East (Mr. de Jong) and the Hon. Member for Winnipeg North Centre (Mr. Keeper) mentioned the question of trust and fairness. Hypothetically should his Party ever form the federal Government of Canada-Heaven forbid-could we trust an NDP Government? Let me give you an idea of what the Manitoba New Democratic Government did and how much the people of Manitoba trust that Government.
Concerning the taxing of food, a question which the Hon. Member raised, the Manitoba NDP Government's Budget this year raised taxes through provincial sales tax on take-out orders. The Manitoba New Democratic Government has taxed food. The NDP Government in Manitoba has gone further. It now taxes water. The headlines in the paper read, "What next? A tax on the air that we breath?" Now in Manitoba the provincial NDP Government taxes municipalities for the use of water from the rivers, the rivers that were formed from rain that drains off the land which the people own. This is what we can expect from an NDP Government.
The Hon. Member talks about the fairness of sales tax. In Manitoba, the New Democratic Party Government raised the sales tax by 1 per cent and took away the sales tax credit that the federal Government gave the seniors through the federal sales tax exemption credit. The Manitoba NDP Government took that away.
Who do we trust, Mr. Speaker? Do we trust the Hon. Member for Regina East? The Member talks about not indexing certain things. In Manitoba you pay 2 per cent tax on your net income. Do you know what that means, Mr. Speaker? Does the Hon. Member from Regina East know what that means to senior citizens and to families? When you tax net income, you do not take into account basic personal deductions, family size, age or charitable donations. But that NDP Government does not even take into account the disability or the pension deduction. This is what the NDP Manitoba Government did. Who can we trust when you get something like that happening?
Can we trust the Hon. Member for Winnipeg North Centre when he said, "Don't cut spending, tax higher". That is exactly what the NDP Government did in Manitoba. This year that Government will raise 8.2 per cent more in taxes but it is going to spend 9.7 per cent more than last year. That is the policy of the NDP Government. Raise the taxes and spend more.
Is the Hon. Member for Regina East talking out of both sides of his mouth? Does he support what has been done in

May 28, 1987
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Manitoba? Or is the Hon. Member not telling the truth in this House, because that is exactly what the New Democrats would do if the NDP formed the federal Government?


Simon Leendert de Jong: Mr. Speaker, I think the Hon. Member raises some good points. One also has to add that the taxes which the NDP Government has raised in Manitoba are very similar to taxes that Conservative Governments have raised in other provinces. When the Member talks about the 2 per cent tax on income before deductions, it was the Conservative Government of Saskatchewan which introduced that innovation. I think it is also true that provincial Governments have less tax manoeuvrability than does the federal Government. The federal Government's ability to raise taxes is certainly much better than provincial Governments. Provincial Governments have been in a tight squeeze all across the board, partly because of the actions of the federal Government.


Michael Morris Cassidy: Manitoba doesn't tax bread and milk.


Simon Leendert de Jong: With the cut-backs occurring at the federal level, very often the provinces have to pick up the pieces. The over-all economic performance of Manitoba has been quite good in terms of job creation. When the Hon. Member criticizes that Government for having increased expenditures by 9 per cent, he should realize that much of it goes toward creating jobs and job opportunities in Manitoba.
Philosophically I find that sales tax is regressive and wish that perhaps some day we could do without a sales tax per se. However, I know there is also a need for revenues at the provincial and federal levels. Therefore, I cannot advocate that we do away with sales taxes.
One must draw a line. The Manitoba Government, as my colleague just mentioned, is not taxing bread and milk. Yes, it is taxing restaurant meals, which is what the Tories and Liberals in Ontario also did. However, the basics of life which everyone picks up at the grocery store or the essentials which everyone needs are not being taxed. Our motion is asking the Government not to tax the basic foods which every human being needs.


Clement George Minaker: Mr. Speaker, we have a unique tax in Manitoba called the payroll tax. It was increased by 50 per cent, from 1.5 per cent to 2.25 per cent. If one decides to open a business and create 30 jobs in Manitoba, one must pay 2.25 per cent of employees' salaries in taxes to the provincial Government. Does the Hon. Member for Regina East support that principle?
We want to broaden the base in our tax reform so that lower individual income taxes will be paid by both persons and corporations. We are hoping for and encouraging investment
in our country to create jobs, which is the reverse effect of the direction taken by the Manitoba Government that has increased by 50 per cent the amount of tax people who are opening businesses will have to pay from their employees' incomes.
Does the Hon. Member support that type of taxation? Would he institute it if his Party were the Government of Canada?


Simon Leendert de Jong: Mr. Speaker, in some ways we already have an employment tax. Certainly CPP and UI contributions are in one form or another a payroll tax per se. Governments must raise revenues. It does not matter what Party forms the Government, whether it be NDP, Conservative, or Liberal. The question is one of fairness-what is fair and what produces the best economic results. Certainly we could say that a certain measure is an undesirable tax and that it would be better if we did not have it. Certainly the cost of doing business in Canada would be much less if there was no necessity for CPP and unemployment insurance contributions.
If Manitoba did not have its payroll tax, the money would have to be raised from other sources of revenue. However, it is within the ability of the federal Government to set up a tax regime. Surely that is where the action must lie. If the federal Government shows leadership in introducing a fair tax regime, many provinces would also see their tax revenues increase.
I should like to pose a question to the Hon. Member. Does he think it is fair that, for example, in 1983 the Royal Bank of Canada, with over $360 million in profits, did not pay one cent of tax? In fact, the Royal Bank of Canada received a tax credit of some $25 million. Is that fair? No, it is not. No wonder we are running into deficits. No wonder there is a squeeze on many provincial Governments to make up the difference through regressive tax measures.
If the taxation system in the country were fair, provincial revenues would likely increase as well and the need for regressive taxes would become less. Had we had a fair tax regime in the country, there would not have been the need for the Government to increase sales taxes, as it has in the last number of years. We would have come close to balanced budgets, had those with the ability to pay actually been paying their fair share of tax. When the largest corporations in Canada can make over $13 billion in profits in one year and not pay one cent of tax, something is very wrong, very sick, very unfair.
We will support the Government in its attempt to correct that measure, but adding a tax on food will not do it. It is not the type of tax reform we will support. In the area of genuine tax reform, by golly, we are right behind the Government and applaud it, but we cannot support regressive tax reform.
May 28, 1987


MESSAGE FROM THE SENATE
Mr. Deputy Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed, without amendment, Bill C-37, an Act respecting the imposition of a charge on the export of certain softwood lumber products, and Bill C-57, an Act to amend the Export and Import Permits Act.



THE ROYAL ASSENT

Mr. Deputy Speaker:: I have the honour to inform the House that a communication has been received as follows:
Government House Ottawa
28 May 1987 Sir,
I have the honour to inform you that the Honourable Antonio Lamer, Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy Governor General, will proceed to the Senate Chamber today, the 28th day of May, 1987, at 5.45, for the purpose of giving Royal Assent to certain Bills.
Yours sincerely,
Anthony P. Smyth
Deputy Secretary, Policy and Program



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cassidy:
That this House oppose any imposition of a federal tax on food and urge the
Government to reject any such tax as part of its tax reform package.
Ted William Schellenberg: Mr. Speaker, I am very pleased to take part in the debate on tax reform this afternoon. I am not a tax lawyer. I am not exactly a financial wizard. My wife will tell you, Mr. Speaker, that I even have trouble balancing our own family cheque-book. However, I am an individual who has been paying income tax in Canada for a couple of decades at least, and it is to my fellow taxpayers that I wish to direct my remarks this afternoon.
First, let us look at the motion. It asks the House to oppose any attempt by the Government in its White Paper on tax reform to impose a federal tax on food.
I hate to disagree with one of my own colleagues, but the Deputy Government House Leader this morning said when the motion was brought forward that it was "an appropriate motion for debate". I do not think it is. It is an interesting
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point that the Opposition has made, but it is not an appropriate motion for debate and it should not take up House time.
As I pointed out earlier in questioning of the Hon. Member for Ottawa Centre (Mr. Cassidy), we might as well debate what the weather will be like this weekend, because the Minister of Finance (Mr. Wilson), the Prime Minister (Mr. Mulroney), and the Government of Canada have not said that there will be a tax on food. The NDP and the Liberals set up these strawmen and then knock them down. They spent a whole day of House time knocking down strawmen, and I think it is an absolute waste of time. However, as I say, it is a valid-


Stan Darling: Where are the NDP?


Ted William Schellenberg: That is a good question.


An Hon. Member:: They are not interested in this issue, 1 guess.


Leonard J. Gustafson: It is not an issue, that is why.


Ted William Schellenberg: I should like to thank my colleagues for their comments, but I will resume debate.
Following June 18 when the White Paper is presented, we will have more meat to chew on, so to speak, and we should be able to have ample opportunity to debate the question. However, a White Paper is just that; it is a discussion paper, an opportunity for the Government to put forward its ideas. At that time we can certainly deal with the question of taxes on whatever items.
As I rose to join in the debate today, my eye caught the sculpture on the west wall of the House of Commons which reads: "Impot-Tax", and below it is depicted a Canadian family. There is a father, a mother, and a child on the lap. I am sure that when this Chamber was built, that was put there for good reason. Those are the commoners of Canada, the people who make what we do possible through their taxation dollars. Indeed, the figure appears on one of the major arches of the House of Commons, quite appropriately. If it was not there, the ceiling would fall down. Those people are important to Canada. They are the ones who make what we do possible and it is to them that I wish to address my remarks today.
Let me begin by making an obvious but important assumption. Where the tax system is concerned, fairness is uppermost in the minds of most Canadians. Fairness is the basic standard by which Canadians assess the tax system and how it affects them and others around them.
Over the past decade, the perception has grown that the tax system falls short of the level of fairness Canadians have a right to expect. This growing perception is expressed in questions any Canadian might ask: why is the tax burden so high, why do some people in the same circumstances pay less

May 28, 1987
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tax, how is it that some profitable corporations pay little or no tax?
The latter question was raised in debate by my hon. colleague from Regina East. He asked if it was right that the Royal Bank of Canada with all its profits pay no tax. It is not right and that is the purpose of tax reform. Tax reform will ensure that corporations like that pay their fair share. I cannot understand why members of the NDP and the Liberal Party would oppose tax reform.
The Government shares the concerns of most Canadians about the tax system. We intend, in the weeks and months to come, to make the Canadian taxation system fairer. We believe that the tax system should not only be fair but that it should generally be perceived to be fair. We believe it is a primary responsibility to ensure that the elderly and those in greatest need receive fair treatment. We believe that high-income earners and profitable corporations should pay their fair share of tax. We believe that individuals with similar abilities to pay taxes should pay similar amounts of tax. Finally, we believe that fair sharing of the tax burden should apply broadly across sectors of the economy and across goods and services.
Ironically, one of my constituents came up with what he thought was the perfect solution to all of our tax dilemmas. He suggested, in all due respect, that we should consider taxing sex. He said that indeed, if a tax was paid whenever the act was performed, eventually Canadians would brag about how much they were paying in taxes and indeed we would solve all of our deficit problems. It would be a little hard to administer, but like most of my constituents' suggestions, one worth considering.
For the third time in 20 years Canadians will soon attempt a major overhaul of the tax system. It is generally agreed that the first two attempts by other Governments ended in failure. In each case, the blueprint for tax reform designed by economists and tax specialists was shredded by the arguments and opposition of special-interest groups who sought to maintain the tax preferences that benefited them most.
The greatest challenge facing proponents of comprehensive tax reform today, proponents like members of the Government, is the same as it was in the past. It is to reform the tax system to make it internationally competitive, fair and efficient in a way that avoids the swamp of special-interest pleading. Avoiding the swamp will require not only a sound blueprint for reform, which we will soon release, but also a Government that is prepared to consult on ways to improve that reform and will provide the leadership necessary to see that the national interest is put ahead of special interests. The Government we have in Canada today is that kind of Government.
Last summer, the U.S. Congress made history when it passed its comprehensive tax reform Bill. So many things in Canada are dependent upon what happens south of the 49th. That is the world in which we live. By eliminating hundreds of deductions and incentives, the Americans were able to
substantially reduce personal and corporate income tax rates for the first time in decades. The Canadian Government has now served notice that it too is planning an overhaul of its entire tax system.
We in Canada have lived with taxation for over 300 years. The first recorded tax in Canada was levied in 1650. It was an export tax on beaver and moose pelts. The annual revenue yield is estimated to have been no more than $200. If the Liberals had been in power then, they might have received $200 and spent $300, but that is another matter.
In 1867, the British North America Act institutionalized taxation by granting the federal Government wide powers to raise revenues while restricting the provinces to direct taxation within their own jurisdictional boundaries. Direct taxation includes such taxes as personal and corporate income tax, property tax, sales tax, succession duties, et cetera. Customs and excise taxes are the best examples of indirect taxation.
In 1916, the business profits war tax Act was passed to help finance the Canadian war effort followed by the income war tax Act in 1917. That was, of course, the first national personal income tax and it was, we were told then, a temporary measure. For the next 20 years, the bulk of government revenues continued to be derived from customs and excise taxes on products such as tobacco and alcohol. By the time World War II started, however, the burden of taxation had shifted to personal and corporate income taxes.
Governments have continually tinkered with the Income Tax Act for the past 40 years. Changes have been made under the guise of stimulating economic growth, creating employment and increasing international competitiveness as well as more equitably redistributing income. Forty years of changes during which the Conservatives have only been in power for five or six years means that the Liberals must take credit for 35 of those 40 years. Those changes have made the Act one of the most unwieldy, complex pieces of legislation today.
The Canadian Income Tax Act is about as thick as three volumes of Hansard and some say it makes just about as much sense. There is also a generally accepted feeling that the current system no longer meets the stated objectives. The question of fairness figures prominently in people's perception of our current tax system. Public opinion indicates that there is a growing attitudinal gap between those in the upper and lower ends of the socio-economic scale. Those on the lower end have the sense that while the economy may be steadily improving, they are not benefiting from it. Much of that feeling can be traced back to concerns about the tax system and the belief that corporations are not paying their fair share due to the numerous deductions and exemptions available.
These exemptions and deductions for corporations, of course, do serve a valuable purpose. Corporations do hire people. William Watson of McGill University, in the March 26 edition of the Financial Post, said:
The corporation is nothing more than a convenient legal fiction. Corporations
don't pay taxes. People pay corporate taxes. The taxes are paid either by the
corporation's customers (in higher prices), by its workers (in lower wages), by
May 28, 1987

its suppliers (in lower materials prices), or by its shareholders (in reduced earnings).
Unfortunately, 50 years of economic analysis hasn't made clear in just what proportion these four groups pay ... more and more corporations are now owned by pension plans, so that, increasingly, even when "capital" pays, labor pays. If the NDP wants to raise a tax that may well be paid in large part by the "working class," that's fine by me, though someone should tell the working class what its friends are up to.
Indeed, when we talk about the value of corporations and small business to the Canadian economy, we should remember where our recent economic growth has come from. The Canadian Federation of Independent Business points out the following:
Solid growth has been achieved with an 11 per cent increase in business formations over 1984, a net gain of 65,000 new businesses. The marked improvement in national job generation has resulted in a significant lowering of unemployment.
That is something for which my colleagues and I will take some credit. The federation continues:
Over 70 per cent of the jobs created during this Government's mandate, in excess of 394,000, are the result of small business entrepreneurial activity.
Of course, that is also the result of good Government. The federation goes on to say:
Canadians in all regions are benefiting from the hard work of the nation's risk takers who have been encouraged by measures in the last two budgets.
Those measures will be improved by the measures contained in the White Paper on tax reform which is to be released on June 18.
With all that in mind, we cannot deny that by treating different sources of investment and savings in different ways, financial decisions by corporations and individuals are often made purely on the basis of tax treatment.
A good example of tax abuse, as we have heard several times in the Chamber today, is the scientific research tax credit introduced in 1983 to encourage research. It ended up costing the federal Treasury $3 billion or $4 billion without a proportionate amount of scientific research being done. The result is that the Government and taxpayers have been subsidizing companies without enjoying the full benefits of job creation, regional development or indeed scientific breakthroughs.
The Minister of Finance first addressed the issue of tax reform in his economic statement of 1984. This is culminating in the White Paper of June 18. Indeed, a background paper prepared for the Standing Committee on Finance and Economic Affairs by the C. D. Howe Institute issued a warning to which my opposition colleagues should pay heed. The institute said:
Much of the debate undoubtedly will be couched in terms of the reform's fairness. In this regard, we believe that it is essential to focus on the impact of the over-all package rather than on individual elements. Failure to judge the reform in this way may mean that special interests will dominate, to the detriment of the national interest.
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We must have a release of that White Paper, and deal with the measures it contains then, not 20 days in advance, as we are doing today.
How will our Government make Canada's taxation system fair? Let us look first at lower rates. Lower marginal rates coupled with the elimination of preferences, and strengthened provisions to counter tax avoidance, would reverse our growing dependence on personal income taxes. Canadians would get to keep more of each additional dollar they earn to spend, save or invest as they choose. They would also be assured that others are bearing their fair share of the burden. I repeat, fair taxation will make tax reform work.
What has our Government done so far to improve our taxation system? As has been mentioned several times today, we put an end to the SRTC which was considerably abused. We restricted tax losses and credits for investors and limited partnerships. We put a stop to the so-called carve-out transactions in the oil and gas sector. We introduced rules to prevent trading in tax losses and credits among corporations. We also brought in the minimum income tax, the sales tax credit, and increases in the child tax credit.
A major part of our continuing tax reform will be to build in several specific measures to ensure that low-income Canadians, including pensioners, are treated equitably. I trust the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart) is listening because many pensioners will go off the tax rolls because of the tax reform we are bringing in.
As part of our tax reform we are going to convert personal exemptions and some deductions to tax credits. Exemptions favour those in higher income brackets. Indeed, the identical exemption confers considerably more benefit on the high-income earner as it is now, than on the lower income earner. On the other hand, a tax credit provides the same dollar benefit to taxpayers regardless of their income level. With a system of tax credits, lower income taxpayers will receive greater benefit than they do now, while those at the higher income levels would receive less.
A system of tax credits would make the system more progressive. In other words, for every $1,000 of tax exemption the individual at the 34 per cent rate is allowed a $340 tax exemption. The lower income earner at the bottom of the scale, 6 per cent, only makes $60 on that exemption. That is what we are changing through the tax credit system. With the change from exemptions to credits, many low-income people, including pensioners, will be dropped from the rolls. These people will no longer be required to pay income tax.
Let there be no doubt at all about the Government's revenue intentions for tax reform. We have said all along that in pursuing a fairer balance our intention is to ensure a sounder, more predictable revenue base, not greater total revenue. Tax reform will not be a tax grab. That is worth repeating. Tax reform under a Progressive Conservative Government will not be a tax grab.

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To sum up, the Government's plan for comprehensive tax reform is to bring greater equity to the federal taxation system. We want Canadians to feel that their tax system treats ail members of the Canadian community fairly. When you analyse all the features of the tax reform, all the improvements we want to make are designed to ultimately improve the fairness of the system. We realize that a fair tax system, fair in the fullest sense of the word, is one that helps the economy to operate to its full potential at maximum efficiency, so that it generates the growth and produces the jobs which will benefit all Canadians. A tax system that does that is a system of which all Canadians can be proud. This is our goal in tax reform and we intend to accomplish it.
The public debate on tax reform is just beginning to build momentum. The search for an equitable tax system acceptable to all Canadians, including the provinces, the business community and social groups, will be one of the most difficult tasks this Government will face. However, failure to do so will only perpetuate a problem which has simply become too expensive to ignore. We will act. We will reform the tax system. Canadian taxpayers expect it, want it, and they are going to get tax reform under a Progressive Conservative Government.


Mr. Deputy Speaker:: Questions and comments.


Michael Morris Cassidy: Mr. Speaker, this has been an interesting and perhaps a bit disturbing kind of debate, given the submissions made by government Members. 1 say disturbing because through the entire day those Members talked about tax reform in general terms. They suggested we should have a debate on tax reform in general. They have avoided the specific question put before the House, which is that the House declare itself in opposition to the imposition of a federal tax on food and urges the Government to reject such a tax as part of its tax reform package.
The Hon. Member for Nanaimo-Alberni (Mr. Schelien-berg) has joined the chorus of those who say how wonderful tax reform is while avoiding the question of whether or not it is appropriate to levy a tax on people's grocery bills. This is particularly important to those working Canadians who are somewhere not too far above what we see now as the poverty line in major cities and are still struggling to make end's meet. They may occasionally take their kids to McDonald's or do something special for them rather than just grimly hanging on. They will be really hit by a $400 or $500 a year tax on their grocery bill. That is what the business-transfer tax proposal would amount to. If the precedent established with respect to the sales tax were followed they would get no remission of that tax at all.
Perhaps I can ask the Hon. Member to answer the question directly. Does he favour a tax on food or is he prepared to join with us and express his reservations over imposing a tax on the most basic essential of life.


Ted William Schellenberg: Mr. Speaker, I presume the Hon. Member for Ottawa Centre enjoys dealing with hypothetical situations. I do not. He was not here at the beginning of my speech when I said I have yet to see-


Alan Redway: He was not here except for the last few seconds.


Ted William Schellenberg: He was not here for the majority of my speech. In any event, neither the Minister of Finance, the Prime Minister, nor anyone else in the Government of Canada has said we are bringing in a tax on food. If he wants to tilt at hypothetical windmills or erect strawmen and knock them down he is more than entitled to do it as a Member of Parliament. However, this Government does not deal with hypothetical situations. If the Hon. Member would be kind enough to call me on the afternoon of June 18 I will inform him just what this Government will be doing with tax reform.


Michael Morris Cassidy: Mr. Speaker, that sums up the problem. The Minister of Finance (Mr. Wilson) and others have on many occasions averred to a major new tax area which I believe most Canadians would find objectionable. It is clear that such a tax would be extremely regressive even if a modest amount of tax credit were given to low-income Canadians.
A month ago I was briefed by the Department of Finance at length on the business-transfer tax which, as I understand it, is still the most likely option to be implemented. It was referred to by the Minister of Finance in his statement in this House on May 6. I will just refer to a departmental analysis in order to inform the Hon. Member and explain why I am expressing my Party's concerns now rather than waiting tamely and passively until the afternoon of June 18. Even then we will still be in the dark because the proposals are being put forward at eight p.m. in the evening.
This is from an analysis the Department of Finance made just a month ago. They said ad hoc changes would be complex and limited in scope. A shift to the wholesale level would be rejected by business. A shift to the retail level is not feasible in the presence of provincial retail sales taxes. The business-transfer tax is feasible "only if applied at a single rate and on all goods and services". That is what the Government is considering. The BTT is a comprehensive tax with few exemptions. It is not viable with exemptions at multiple rates. Exemptions lead to double taxation and complicate compliance and administration, and the impact on lower income families is best redressed through a tax credit.
We have a proposal for a tax on food with no exemption and a credit for low-income families. The Government has defined low-income families as those earning less than $15,000 a year. There is a gap of about $5,000 a year below the urban poverty line for a family of four in which people would be paying the tax on food. This is not hypothetical. This is a very real proposal which is currently being considered by the Ministry
May 28, 1987

and is being actively lobbied for by the tax experts and officials in the Department of Finance.
Is the Member prepared to stand with me and other Members of Parliament in telling the Government that that is not an acceptable form of tax and that it should rule that out and look for other options for reform of the sales tax? Is the Hon. Member prepared to say that or not?


Ted William Schellenberg: Here we go again, Mr. Speaker. The Hon. Member for Ottawa-Centre has gone to a briefing where items were thrown out which may or may not be acted upon. He is taking up a day's time on a situation which I continue to call a strawman, a hypothetical windmill at which he wants to tilt. 1 have discussed a number of the measures which may or may not come forward in tax reform. Knowing the Minister of Finance as I do, I am sure he will take the wisdom and the excellent advice of the Member for Nanaimo-Alberni to heart and we will all see that on June 18.


Alan Redway: Mr. Speaker, the Hon. Member has quite rightly been trying to enlighten the House, notwithstanding the fact that many Members of the House have indicated that they will probably still be in the dark after the White Paper has been issued. I know the Hon. Member is concerned about the complexity and the arbitrary nature of the current federal sales tax provisions. I know that he is as concerned as I am about the fact, for example, that fluoridated toothpaste may qualify as a tax-exempt health product because it claims to be fighting cavities, or it may be taxable as a cosmetic. That is an example of the problems which the current federal sales tax imposes on our system.
In his statement the Minister of Finance indicated that there are a number of options for dealing with this particular issue. He indicated that one of the options which would be put forward is a business transfer tax. He also indicated that we could still have a federal sales tax. In addition, he talked about the possibility of a combined federal and provincial sales tax which appears to be a good option.
Would the Hon. Member comment on the three options, and particularly on what the chances are that we may have a combined provincial and federal sales tax, bearing in mind that the Province of Alberta currently has no provincial sales tax? I have been told by some people in the eastern part of British Columbia, the Hon. Member's home province, that at one time there was a movement afoot to secede to Alberta because there is no sales tax paid there while there is in the Hon. Member's province.


Ted William Schellenberg: I would like to thank my hon. colleague for his question. It seems that very often westerners are talking about seceding from one body or another. That often happens when they get disgruntled. That is the way we are.
The Hon. Member is correct when he talks about how the federal sales tax kills jobs. We are told that Canada's federal sales tax is the only commodity tax in the world which favours imports over domestic goods. I understand that on average
Royal Assent
Canadian manufacturers pay one-third more tax than competing importers. In fact, some pay as much as 60 or 70 per cent more under the federal sales tax system which now exists than do their important competitors. This happens because the tax is levied on a domestic manufacturers' final price which usually includes expenses for advertising, warehousing, warranty programs and other marketing operations.
My colleague spoke about the different options being considered, such as the business-transfer tax, the federal sales tax, and perhaps a joint federal-provincial sales tax. That shows the kind of consultation which has taken place and the work the Finance Minister, his Department, and my colleagues have done to study all the avenues open. They have consulted and received as much input as possible to ensure that when the announcement is made on June 18 at eight o'clock Ottawa time, 5 p.m. in B.C., it will be the best possible document that we can provide.


Alan Redway: Mr. Speaker, in the statement of the Hon. Minister of Finance (Mr. Wilson) regarding the tax reform package, he indicated that it was very likely that there would be much more reliance on tax credits than there has been in the past. He indicated as well that the tax credit was a fairer process than deductions, that deductions might very well save high-income persons more taxes than the same deductions would save a low-income person. He indicated that the tax credit system would be more beneficial. Perhaps the Hon. Member can tell us whether he favours a system with tax credits as opposed to deductions.


Ted William Schellenberg: Mr. Speaker, I will be brief. The Hon. Member is correct when he talks about the unfairness of the exemption versus tax credit system. In reality the present tax exemption system is Robin Hood in reverse, it is taxing the poor and giving to the rich. An individual in the 34 per cent bracket who is claiming a tax deduction of $1,000 is getting $340. The individual in the 6 per cent bracket is only getting $60. The Government proposes to remove the tax exemptions and replace them with tax credits in many areas. I think that is a worthy goal.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by the Gentleman Usher of the Black Rod as follows:
Mr. Speaker, the Honourable Deputy to the Governor General desires the immediate attendance of this honourable House in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker, with the House went up to the Senate chamber.
And being returned:
[Stage Direction]
May 28, 1987
Supply
Mr. Deputy Speaker:: I have the honour to inform the House that when the House went up to the Senate Chamber, the Deputy Governor General was pleased to give, in Her Majesty's name, the Royal Assent to the following Bills:
Bill C-37, an Act respecting the imposition of a charge on the export of certain softwood lumber products-Chapter No. 15, 1987.
Bill C-57, an Act to amend the Export and Import Permits Act-Chapter No. 16, 1987.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cassidy:
That this Flouse oppose any imposition of a federal tax on food and urge the Government to reject any such tax as part of its tax reform package.
Mr. Deputy Speaker:: With the conclusion of the debate, proceedings on the motion before the House have expired, pursuant to Section 12 of Standing Order 82.