1989-10-12

ROUTINE PROCEEDINGS


Mr. Albert Cooper (Parliamentary Secretary to Government House Leader):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table in both official languages the government's response to a petition.
[Editor's Note: See today's Votes and Proceedings.]



STRIKING COMMITTEE


Mr. Jim Hawkes (Calgary West):: Mr. Speaker, I have the honour to present the sixteenth report of the Striking Committee.
[Editor's Note: See today's Votes and Proceedings.]



BROADCASTING ACT


Hon. Doug Lewis (for the Minister of Communications) moved: for leave to introduce Bill C-40, an Act respecting broadcasting and to amend certain Acts in relation thereto and in relation to radiocommunication.


The Acting Speaker (Mrs. Champagne):: Shall the Hon. Minister have leave to introduce the Bill?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
The Acting Speaker (Mrs. Champagne):: When shall the Bill be read the second time? At the next sitting of the House?


Some Hon. Members:: Agreed.


PETITIONS
Mr. Mac Harb (Ottawa Centre):: Madam Speaker, pursuant to Standing Order 36, I have the pleasure to present here in the House of Commons a petition from Canadians who oppose the tax proposed by the Conservative Government, the 9 per cent GST.


Mr. Stan Keyes (Hamilton West):: Madam Speaker, I have the honour and duty, pursuant to Standing Order 36, to present to this House 103 petitions containing over 4,000 signatures from the residents of my riding of Hamilton West, including the Hamilton-Wentworth region, who call upon the government to scrap this proposed goods and services tax.
These petitions are in addition to the ones I have already presented in this House and are only a portion of the remaining petitions of mine which are in the hands of the clerk. Some of these petitions were collected as result of a town hall meeting held in my riding at which 350 people attended and not one person was in favour of this government's proposed tax. They say, "enough is enough".


Hon. Ralph Ferguson (Lambton-Middlesex):: Madam Speaker, I rise today pursuant to Standing Order 36 to present these petitions in the House of Commons, reflecting the ancient and undoubted right of the citizens of this country to present a grievance with the certain assurance that this honourable House will therefore provide a remedy.

Routine Proceedings
The undersigned petitioners humbly pray and call upon this Parliament to reject the proposed goods and services tax.


Mr. Simon de Jong (Regina -Qu'Appelle):: Madam Speaker, it is a great pleasure for me to introduce and present a petition to you signed by many of my constituents from Ituna, Hubbard, Regina, as well as members of my constituency of Regina-Qu'Appelle.
The petitioners are requesting Parliament to maintain our VIA Rail service. They point out that with the pronounced cuts by the minister, Regina will no longer receive rail passenger service. The petitioners are asking the government to maintain this essential service in order to maintain our national unity.


Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Madam Speaker, I rise this morning on behalf of a number of Canadians who are petitioning this Parliament and the Conservative government to do away with its 9 per cent goods and services tax and go back to the drawing board. They claim that this new tax, which will be hidden from all Canadians, will be applied to virtually everything they buy. They petition the government to cancel this outrageous tax.


Mr. Ian Waddell (Port Moody-Coquitlam):: Madam Speaker, I rise, as did my friend before me, the member for Regina-Qu'Appelle, with a petition on preserving VIA Rail. These petitioners from Saskatchewan are echoed in their sentiments by my constituents in British Columbia. The petitioners state that the railway passenger service as carried on by VIA Rail is an essential means of transportation for many Canadians and has been part of basic Canadian infrastructure for over 100 years.
They also mention the fact that this is an environmentally sensitive means of transportation. There are a number of signatures on the petition, which calls on Parliament to maintain VIA Rail, Canada's present national network, to upgrade VIA Rail with new equipment, and to give VIA Rail a sufficient budget to
maintain its national mandate for passenger service. That is what the government should be doing.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Madam Speaker, it is my duty to present a petition signed by some of my constituents who claim that the goods and services tax will be bad for Canadians.

These petitioners support their claim by saying that the Tory government has increased the present manufacturers' sales tax from 9 per cent to 13.5 per cent in less than five years. The Conservative government wants to impose on these Canadian consumers a goods and services tax which will be hidden. We would be the only country in the world having a two sales tax system, with each tax administered by a different level of government. The imposition of the tax will create an onerous burden on small businesses. The petitioners pray and call upon Parliament to reject the proposed goods and services tax.


Mr. Bob Speller (Haldimand-Norfolk):: Madam Speaker, I also rise under Standing Order 36, to present a petition from a number of constituents in southwestern Ontario, duly certified by the clerk of petitions, which calls upon Parliament to reject the goods and services tax.
This is among a number of petitions that I have received at fall fairs throughout my riding which, unfortunately, are locked in the clerk of petitions' office now and which I will be presenting at a later date.


Mr. Ross Harvey (Edmonton East):: Madam Speaker, I rise as I have before and no doubt will again under Standing Order 36 to present a petition signed by numerous Canadians, calling on the government to maintain VIA Rail Canada, to upgrade VIA Rail and to give VIA Rail a sufficient budget to maintain its national mandate.
This petition today is particularly appropriate, given the expressions by American rail companies of interest in operating a passenger rail service in Canada. Basically, these petitioners simply call on the government to reject the tender overtures of "Massah" to the south and rebuild a Canadian rail passenger network.
October 12, 1989


Mr. Rex Crawford (Kent):: Madam Speaker, I am honoured today to rise in the House and present a petition from London East, pursuant to Standing Order 36, which has been certified correct as to form and content. The petitioners pray and call upon Parliament to reject the goods and services tax.


Mrs. Shirley Maheu (Saint-Laurent-Cartierville):: Madam Speaker, pursuant to Standing Order 36, I have the honour and privilege to present a petition on behalf of the Golden Age Association of Bethora requesting that Parliament reject the proposed goods and services tax because of the serious and unfair hardship to low and middle-income Canadians.


Shirley Maheu: Madam Speaker, I also have a petition, pursuant to Standing Order 36, presented by the Golden Age Club of Saint-Laurent, which also asks us to reject this goods and services tax. I have several other petitions as well that are waiting at the Clerk's office.


Mr. Joe Fontana (London East):: Madam Speaker, pursuant to Standing Order 36, it is an honour for me to present petitions on behalf of people from London East, London West, and London-Middlesex, as I have in the past, do so now, and will in the future, requesting that this government rescind and reverse this callous tax that it wishes to impose on every man, woman, and child across this country.


Mr. Tom Wappel (Scarborough West):: Madam Speaker, I rise, pursuant to Standing Order 36 to present to the House four petitions containing a total of 121 signatures dealing with the proposed goods and services tax.
The people who have signed these four petitions are all in the riding of Scarborough West, and call upon the House to categorically and unequivocally reject any legislation which is brought forward for the purpose of implementing the said goods and services tax.
Routine Proceedings
I am bringing these petitions forward, as I have done each day that I am in the House, and as I will continue to do each day that I am in the House, as I have many hundreds of petitions from members of my riding.


Mr. Fred J. Mifflin (Bonavista-TVinity-Conception):: Madam Speaker, I rise, pursuant to Standing Order 36, to present a petition duly certified by the clerk of petitions.
Canadians are fed up with the 31 tax increases that this government has imposed since 1984, more are in the offing, and they now see the goods and services tax as a sales tax, and on top of that as another tax grab.
I have 30 signatures here of Canadians who call on Parliament to firmly reject this proposed goods and services tax.


Mr. Nelson A. Riis (Kamloops):: Madam Speaker, it is my pleasure to present a petition, pursuant to Standing Order 36 that has been certified correct by the clerk of petitions. The petitioners point out how disappointed and distressed a number of British Columbians are at the decision of the government to curtail VIA Rail service.
The petitioners point out that they would prefer that the government modernize VIA Rail and provide it with the necessary financing to turn it into a first-class, high speed passenger rail service for Canada, to build an appropriate infrastructure for the future, both in terms of transportation and also for the tourist industry.


Mr. Robert D. Nault (Kenora-Rainy River):: Madam Speaker, pursuant to Standing Order 36, it is my honour and pleasure to present a petition on behalf of concerned Canadians who are adamantly opposed to the goods and services tax.
They humbly request that the government look at what is being done to this country as it relates to taxes, and the fact that young people, in particular, are getting to the point in their lives where they wonder if it is even worth going to work in the morning when they know that the money that they are making is just going to the government to throw away on extravagant affairs, new limousines, and lots of ministers of the Crown.

October 12, 1989
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I ask the government to look at this with seriousness and hopefully come to its senses before it is too late.


Mr. Rod Murphy (Churchill):: Madam Speaker, I also have the honour to present a petition signed by people from a number of communities in Manitoba, including Gillam, Winnipeg, Sundance, York Landing, Pikwitonei, and other communities in Manitoba, expressing their concem with the government's intent to cut VIA Rail.
The petitioners believe that it will cost jobs, it is going to hurt the communities that are affected, and that it is part of a plan by the federal government to destroy the Canadian national railway system.


Mr. Peter Milliken (Kingston and the Islands):: Madam Speaker, I have the honour to present a petition, pursuant to Standing Order 36, from certain residents of the city of London. These petitioners have realized the old maxim that "Tory times are hard times", and have signed this petition opposing the goods and services tax to indicate their desire to avoid the worst excesses of this government in taxing them to the hilt.
The petitioners oppose the goods and services tax and call on Parliament to reject this particular legislation.


Mr. Iain Angus (Thunder Bay-Atikokan):: Madam Speaker, I have the honour and privilege to table a petition signed by a number of residents from the provinces of Ontario and Quebec, from Cambridge and La Salle, Quebec, from Toronto, Sarnia, Kitchener, London, Wyoming and Guelph, Ontario.
The petitioners humbly pray and call upon Parliament to maintain, improve, and modernize VIA Rail service in those areas of the country where it can provide a more rapid, economical, safe, convenient, environmentally sound, and energy efficient alternative to other means of transportation.


Mr. John Harvard (Winnipeg-St. James):: Madam Speaker, I too have the pleasure and the honour of presenting a petition. It relates to the goods and services tax and has been certified correct as to content and form by the clerk of petitions. There are approximately 40
signatures on this petition. The signatories point out in the petition that the GST will be an unfair burden on ordinary Canadians, and that the 9 per cent tax is unfair. They humbly pray and call upon Parliament to reject the so-called GST.


QUESTIONS ON THE ORDER PAPER
Albert Glen Cooper: Madam Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mrs. Champagne):: Shall all questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


Mr. Lome Nystrom (Yorkton-Melville) moved:: That this House advise the government to scrap the proposed goods and services tax and implement a tax system which is based on the ability to pay and which includes:
1)	a minimum corporate tax on profitable corporations;
2)	taxation of capital gains income, with the exception of farmland sold for agricultural purposes, small businesses and principal residences;
3)	the restoration of an inheritance tax on wealthy estates;
4)	effectively progressive income tax; and
5)	tax provisions which encourage environmentally sound practices.
He said: Madam Speaker, I rise today to ask the House to reject this proposal in the technical paper on the goods and services tax. We speak directly to the people of Canada, asking them to band together to organize to fight against the Conservative Party in an effort to stop the tax.
I have been across the country recently and I have seen an interesting coalition of people ranging from the trade union movement in this country, many farm organizations, chambers of commerce, John Bulloch and many ordinary Canadians and small business people who are all saying loudly and clearly that enough is enough, the tax should be stopped, and the Conservatives should withdraw their proposition from the House.
October 12, 1989



Madam Speaker, with the GST, there will be a 9 per cent tax on everything in this country: hairdressing, movies, pizzas and funerals. Canadians will have to pay a 9 per cent tax on just about anything.
Madam Speaker, it is high time we said: enough is enough. We have to stop this tax! "Mr. Prime Minister, you lied to us!"

We can do this if the people of this country stand together as one and say no. If we do not watch out in this country, we are soon going to have the taxes of Sweden and the services of Margaret Thatcher's Britain. That is what this debate is all about.
Who is going to pay? It is going to be the poor people, the ordinary workers, and middle income Canadians, particularly those with a number of children, who will pay. It will be the women who will be the hardest hit in the country. It will be the seniors, along with the women, who will be the hardest hit as well.
About four years ago in Canada there was a great debate over deindexing old age pensions. The seniors of this country got together, they rallied Canadian after Canadian, and they forced a majority government to come to its senses within a few short weeks. I can remember very well in the lobby of the House of Commons one day back in July of 1985, when a woman, Madam Denis said to the Prime Minister: "Monsieur le premier ministre, vous nous avez mentiV' "You have lied to us!" That magical moment went across this country on the television screens in French and English. Within a few short days the government across the way came to its senses and withdrew the bill to de-index old age pensions. If we could do it back in 1985 we are going to do it again in 1990 or 1989 in terms of withdrawing the goods and services tax.
Now we go across the country and talk to trade unionists, chambers of commerce, and all kinds of small business organizations. We have seen people holding rallies. My colleague for Edmonton East was at a rally in Edmonton a few days ago of 1,500 to 1,600 people with all political stripes represented and there people were
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saying: "Scrap the tax. We are not going to pay a tax like this. It is unfair." In Red Deer, Alberta, just two days ago, 3,000 people in the heartland of Tory Canada came out and said "no" to the Prime Minister and "no" to the Minister of Finance.
This tax is part of the Tory agenda to change our country forever. First, we had free trade, then deregulation, then privatization, and now with this tax move we have phase two, in my opinion, of free trade. We have a tax system now that will make up for the loss in tariff revenues, and we have a tax system now that is going to reduce the burden on big corporations so they are more competitive with the corporations in the United States. It is part of the Tory agenda and the people of this country should make no mistake about it.
Since 1984 we have seen a tremendous shift in the tax burden away from big business in this country to the ordinary people. In fact, corporate taxes have dropped by about 21 per cent, while taxes on individuals have skyrocketed since the first Tory budgets back in 1984 and 1985. This move before the country today, which is rallying people of all political stripes in opposition to it, represents the single biggest tax grab in the history of Canada.
Even the Department of Finance is estimating $24 billion, and that estimate is very conservative. It is going to be more like $27 billion, $28 billion, or $29 billion by the time the bureaucrats of the Minister of Finance get finished with it. It is a big tax grab.
Secondly, it is regressive. It is going to hit the poor very hard. We have all kinds of statistics about the poor. Across the way the government is not even going to index the tax credits fully to the cost of inflation. In fact, they only get the increase in the cost of living over 3 per cent. So every year the poor in this country will fall further and further behind. The thresholds are too low. For an individual person in poverty, that individual person if he or she makes $15,000 a year will pay more under the GST than under the present system in spite of the tax credit that is in this legislation. I think that is a shameful disgrace in modem day Canada, a country that is abundant with wealth and technology and people to make it happen and make it work.

October 12, 1989
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It is a tax grab. It is regressive. It is a tremendous transfer in principle of billions of dollars of taxation revenue from big business, from the big corporations in this country to the ordinary people. Because under this legislation, under the technical paper for the GST, business can write off all expenses. It is called a churning process. When they buy machinery and equipment they can write off all the expenses through what is called a tax credit or an input tax credit. They write it off at the manufacturing level, at the wholesale level, at the retail level. They keep writing it off, and writing it off until the ordinary citizen arrives to buy a refrigerator or a stove and the ordinary citizen is then going to have to pay the entire tax bill.
That is a tremendous shift away from progressive taxation in this country, a shift from the large corporations and from the wealthy in Canada to loading the tax on the ordinary citizen. That is why thousands of people are turning out at rallies, and that is why people are sending petitions to the House of Commons.
We will be the only country in the world with a two-tier tax system, with the federal state having one tax and the provinces or the member states having another tax. The provinces have said no.
I had the opportunity last week to talk with Dick Johnston, the Treasurer of Alberta, who is the treasurer most committed to stopping the tax.
We get laughs across the way from one of the ministers. I say to the minister across the way that he has not been at our committee. He has not seen the Retail Council of Canada, whose president is the president of Loblaws, come before our committee and say that a two-tier tax system and the complexities we have will add an extra $2 billion per year in administrative costs for retailers alone. That too will be passed on to the ordinary citizens of this country.
John Bulloch who is no flaming socialist or Marxist, on behalf of the Canadian Federation of Independent Business in this country, is saying that this tax must be stopped. He is saying it is a nightmare, it is complex, it is full of red tape, and it will be expensive to the small business people of this country.
I remember a hairdresser in Regina coming to our committee. Her name is Evelyn Armstrong. She said to us that if this tax comes through businesses that are very price sensitive like the hairdressing business in this
country will suffer. Many will go bankrupt. People will have fewer haircuts. They will have less expensive haircuts because of the 9 per cent tax. Much of the business will be driven underground as people open up part-time beauty salons and part-time hairdressing shops in their basements or in spare rooms.
This tax is a tax grab. It is regressive. It is a change from big business to the consumer. It is a two-tier system which will cost a lot of money. It is complicated.
We have had witness after witness come to our committee and ask questions that cannot be answered by the Department of Finance. For example, why is a birth control pill not taxable and yet a condom is taxed at 9 per cent?
If you go into a donut shop and eat six donuts with a cup of coffee and read your paper on a Saturday morning, those six donuts are taxable because a donut shop is called a restaurant and you are eating them in the shop. But if one of these big, fat, wealthy Tories across the way who picks up his donuts and eats them at home, they are not taxed because it is called a basic grocery.
Why do we have this complexity in a law that will create all kinds of red tape and bureaucracy for the ordinary citizen and for the small business person?
The tax, despite promises by the minister across the way, will not be visible. It will not be visible to the ordinary person so that he can see what he will pay. These are promises that have been made by the Conservative Party and the Conservative government time and time and time again.
Instead of having a goods and services tax on absolutely everything except basic groceries and prescription goods in this country, our party is arguing that we need alternatives to this system of a consumption tax. We are saying that there are alternatives where the rich people in this country should pay their fair share and where the big corporations in this country should pay their fair share so that we can maintain the services that the ordinary folk of Canada need in order to live a decent standard of living in a wealthy country called Canada.
We can only get that if people band together and say no to the tax, stop this tax, and look seriously at some of the alternatives. I can say to you that it concerns me when I see people like Link Nifield and others in Alberta and different parts of this country organizing a campaign not only to stop the tax but to cut back on spending and services by the Government of Canada.
October 12, 1989

Sure, there is a lot of waste in the Government of Canada. There is a lot of stupid spending like $800,000 on a government ad to promote a tax that has not even passed. I know that there is a lot of crazy spending going on. We must not get carried away by cutting back on the federal budget by billions and billions of dollars. When ordinary people who depend on their pensions for their livelihood will be the ones who will be affected.
We cannot give credence to the movement that it has already started to end universality on social programs through a clawback of family allowances and a clawback of old age pensions. We cannot give credence to the movement in which there is now a cut-back in Established Programs Financing of 1 per cent for medical care and post-secondary education. That is not the way to go when we have a campaign to stop this tax.
What we must do is stop the tax. We must rally the people of Canada and say no to the GST. We must say no to this tax that will hurt the ordinary people, the women, the children and the seniors of Canada and at the same time use our resources to make sure we have better social programs and jobs for every single Canadian and opportunities in the future for the people of Canada.
We should consider a series of alternatives by which we can get some money to create more wealth in this country, and we suggested that in our motion today.
One of our recommendations is a minimum corporate tax, something so radical that even Ronald Reagan introduced it into the United States a few years ago. A minimum corporate tax would raise at least $1 billion per year in this country which could be spent on creating jobs, on research and development, and on better pensions for the seniors of Canada.
We should also have a capital gains tax to raise a lot more money than we are raising, with the exemption of course for the family farm, the small business and the individual residence that a person has. But outside that, why should capital gains not be taxed in the same way as another dollar or another buck is taxed in Canada? If we did that we would have hundreds of millions of dollars per year more to spend on programs to reduce the discriminatory sales taxes that we already have, which
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penalize ordinary people from one part of Canada to the other.
Another way of reforming our tax system is to reduce the tax expenditures now which go out to the wealthy and the big corporations in Canada. We have had study after study and economist after economist who have said that there is negligible benefit, if any benefit at all, from many of these tax expenditures that we are now seeing.
Fourth, we must once again increase the marginal tax rates on the rich in Canada. It does not make any sense that under the last phase of tax reform that the tax rate for the wealthiest Canadians was reduced from 34 per cent to 29 per cent. Someone making $100,000 will be paying a maximum tax to the federal government of 29 per cent, but someone making $1 million is still going to be paying 29 per cent to the federal government.
That is not a tax system based on the ability to pay. That is not a tax system that is progressive. That is a tax system that is regressive. The ordinary citizen who is struggling out there at a minimum wage or a single parent family with a couple of kids should know that under the Conservative party they are going to be paying more and more and more for movies, pizza, McDonald burgers which they are picking up at McDonald's, while rich Canadians are going to be paying less and less because the Conservative party has lowered their taxes through lowering the marginal tax rate.
I suggest we go back to what we had in this country before, more tax rates and much higher marginal tax rates for the wealthy. Instead of 29 per cent let us go back to at least 34 per cent, and my personal preference would be much higher than that for the extremely wealthy in this country.
Why do we not look at a wealth tax? In Canada today the top 20 per cent of our people own 69 per cent of the wealth and the bottom 40 per cent of Canada has only 2 per cent of the wealth. We are one of only a couple of countries in the OECD that does not have a wealth tax at all. It is the ordinary worker and the farmer who is doing the work and creating the wealth in this country, and it is the rich who are getting richer and it is the rich who are not paying.

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In Canada the Bronfman family alone controls or owns some 459 corporations in our country; the Irving family, 138 corporations; and the Weston family, 117 corporations. Poor old Peter Pocklington is one of the poorest big guys in Canada and yet when he gets into trouble every government, particularly Don Getty and Lougheed, will bail him out. He is a big welfare case. Yet, we do not have a wealth tax. We do not have a wealth tax, but we spend all kinds of money from the federal government year after year subsidizing the Pocklingtons and the Westons and the Irvings and corporation after corporation. They make their millions and there is no wealth tax.
What will be the consequences of this tax deal? Madam Speaker, if you had come to our committee about two weeks ago you would have noticed that the Conference Board said to us that in the first three or four years under the GST corporate profits in Canada will be increasing by $10 billion and disposable income going down by $17 billion.
Yet, the Minister of Fiance and his bureaucrats in their ivory towers in Ottawa say: "Well, there is only going to be an increase in inflation of 2-1/4 per cent, and it will only be 2-1/2 per cent because the workers in this country will restrain themselves. They will not ask for any increase". Where are they living? The workers of this country are going to have to have a major wage increase to keep up with the increased in the cost of living.
You can look at the Conference Board, Wood Gundy, Informetrica and economist after economist to see that the increase in the cost of in inflation is not going to be 2 per cent. The increase in inflation will be more like 4 per cent or 5 per cent because of the GST. Add that to the regular projection of about 5 per cent or 6 per cent and the increase in inflation will be 10 per cent or 11 per cent in 1991.
How does the Minister of Finance expect the worker to take the brunt of this tremendous government induced inflationary push in 1991? Then, the minister and his naive officials say that the existing manufacturers' sales tax, which will be $18 billion by 1991, will be passed on in its entirety to the people of Canada. Imagine that. The naivety of the Minister of Finance and his officials to say that every single dollar of the $18 billion existing
federal sales tax and manufactured sales tax would be passed on.
Have you ever seen a case, Madam Speaker, where there has been a major tax decrease and the money ends up in the pockets of the consumer? If you have, please get up and tell me about it because I have not seen that. The ordinary people of this country have not seen that. When the price of crude oil drops or is dropped by the OPEC countries, we do not see the entire drop at the gas pump in Kamsack, Saskatchewan or Chicoutimi, Quebec.

No, Madam Speaker, the GST is not a progressive tax for Canadians, definitely not. The GST is a very regressive tax. The GST is a tax that will collect a lot of money from Canadians across Canada, about 24, 26, 27 or 28 billion dollars worth. It is now time for Canadians to say "No"in this Chamber, to this Prime Minister, this Minister of Finance and this Government.

If we get together as Canadians, if we listen to the people of Canada, we can say to the government that enough is enough, scrap the tax, bring in a new system that is progressive, where the rich will pay, where the corporations will pay, where the friends of the Tories will pay. Madam Speaker, they are not listening to the ordinary people of Canada. If they cease to listen, then in the next election campaign they will never again sit on the government side of the House.


Fred J. Mifflin: Madam Speaker, I listened with great interest to the hon. member's presentation, advocations and admonitions on the goods and services tax. I must say I agreed with a lot of what he had to say. There were certain elements that I would certainly like to hear a little more about.
I was struck by some of the alternatives that he suggested in his point program. One particular point I would like the hon. member to amplify on is his concern about the level of taxation on big business and corporations. I wonder if he could just amplify his view on the gap between the corporate tax rate in Canada and the United States and what effect that has on where business is going to be, particularly with respect to the goods and services tax and the ambience that has created. Also, will he give us his views but particularly recommendations that he may have on taxing big business?


Lorne Edmund Nystrom: Madam Speaker, I think if he looks back at the changes in tax in this country, my friend, who is a fairly new member of the House of Commons, will realize that it was a previous Liberal government that started this change of reducing the tax load on corporations in Canada, reducing the tax load on wealthy people in this country.
I remember finance ministers like Mr. Benson and Mr. MacEachen, and a certain gentleman named Jean Chretien whom I am sure you have forgotten, and another fellow who is now Leader of the Opposition. I can remember all these people bringing in tax measures that gradually let the tax load of the corporations go down, down, down. That is one reason why the Liberal Party in this country almost disappeared in 1984. They became known as the party of the rich, the party of the wealthy, and the party of big business in Canada.
I know that even my friends like the Liberal Whip were so embarrassed in those days that he was even more red in the face than he is today, seeing how right wing his party has become. I know he has done a little bit to try to remedy that, but I remind him that a Liberal in opposition is much more progressive than a Liberal in government. They are like a leopard, they tend to change their spots.
What we need in this country is a truly progressive tax system based on the ability to pay. What we need in this country is to make sure that the rich pay their fair share and that the corporations pay their fair share.
What we need, instead of a massive consumer tax on ordinary Canadians, is a progressive tax. I have mentioned a wealth tax as a possibility. Another possibility is a merger tax when you have corporate mergers in Canada. Another possibility is increasing the corporate tax rate in Canada. Another thing that I have mentioned, which Reagan did in the United States, which is surely not a radical proposition, is the minimum corporate tax on profitable corporations. Another possibility is ending some of the write-offs for excess interest that corporations can claim and some of the dividend tax credits that wealthy people in this country can claim. There are many, many things we can look at in terms of reforming the tax system.
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I hear a voice across the way from the Winnipeg Chamber of Commerce. The voice across the way must know that the national Chamber of Commerce of Canada, at its convention in St. John's three weeks ago, said no to the GST.


Mrs. Dobbie:: No they didn't.


Lorne Edmund Nystrom: Said no to this proposition by the Minister of Finance and they were responding to their grassroot Chamber of Commerce across Canada.
They responded because the ordinary small business person is saying that this proposition is too complicated and that this proposition will hurt small business. It will help the big company. It will help the manufacturer. It will put the small person out of business.
They were also saying to the Chamber of Commerce leadership at that convention that they do not want to be the tax collectors on behalf of the Government of Canada. I suspect also that they too, like a lot of us, do not look forward to about 6,000 or 7,000 more bureaucrats being hired as tax collectors. So I say to the voice of the Chamber of Commerce in Winnipeg that now sits in disguise as a Tory MP in the back benches that she should listen to her former organization and perhaps she would be a bit educated about the damage that GST is going to cause Canada as it turns us into a major recession.


Mr. Walker:: Madam Speaker, I was interested in listening to the member. It is always interesting how the NDP can take a reasonable proposition such as tax reform and turn it into a rant and rave and turn every Canadian against the very possibility of having any reform.
Since the hon. member has turned into a political historian, perhaps the whole House should engage in a little bit of a history lesson. Those of us who are from the west are very familiar with the history of the NDP governments in Manitoba, Saskatchewan and British Columbia. Each, in turn, marked the bankruptcy of a provincial government. They come to the national House hoping that nobody reads a paper in Saskatchewan, nobody reads a paper in Winnipeg, nobody reads a paper in Vancouver and Victoria, and that Canadians do not realize that these are the very people who tried to bankrupt them.
They talk in great terms about the working people. What did they do with the working people in Winnipeg, the working people in Regina, the working people in British Columbia? They increased their taxes year after year after year.

October 12, 1989
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They talk about Mr. Benson. Well let us talk about the governments of Barrett. Let us talk about the governments of Shchreyer. Look what happened to Howard Pawley. Some of the great defeats in Canadian political history have been the defeats of provincial NDP governments on this very tax issue. This is the same party. I would like the hon. member to respond. He has the gift of the gab in the national House, but he refuses to accept the responsibility for what his provincial counterparts have been doing for the last three decades.


Lorne Edmund Nystrom: Madam Speaker, let us continue the history lesson on western Canada and social democracy. In Saskatchewan, the CCF, under the leadership of Tommy Douglas, took over office in 1944 and stayed there until 1964. During 20 years of government in Saskatchewan there was not a single budgetary deficit in the history of that political party with that Premier. That continued with Woodrow Lloyd as Premier during three of those last years.
I know the man from Winnipeg North Centre does not know anything about history. He is not a student of history. In 1971 Allan Blakeney was the elected Premier of Saskatchewan and he stayed there for 11 years. Every one of those 11 years saw either a budgetary surplus or a balanced budget in the province of Saskatchewan. That is not bad for a social democratic party that led the way. It was a social laboratory in this country in terms of social programs and later on, in the Blakeney years, economic programs through the mixed economy, the potash corporation, and the co-operative movement.
On my left sits a former Minister of Finance from British Columbia. When the present member for Esqui-malt-Juan de Fuca was Premier of British Columbia he brought in three or four budgets and every single one of those budgets was not only a balanced budget but a budgetary surplus.
I do not want to embarrass the member for Winnipeg North Centre by going closer to home, but I remember Ed Schreyer very well. I think in the Schreyer years four out of four were balanced budgets in Manitoba. Were they not four out of four in the Schreyer years?


An hon. Member:: Yes.


Lorne Edmund Nystrom: I understand my friend from Winnipeg North Centre knows nothing about history. He is not an historian. He has never done much reading in terms of the background of western Canadian politics, but he did not know that. I think the record of New Democratic Party governments in the west speaks for itself. They are fiscally very responsible, they have done very well. They have brought in new social programs.
Quite to the contrary, what has happened to the Liberal Party? Every single progressive measure in Canada brought in by the Liberal Party was brought in because they were being pushed and pulled by the CCF, by Woodsworth, Knowles, Douglas, and Lewis, and my friend from Ottawa-Vanier knows that. He knows that. That is why his face now is as red as his Liberal tie.


Mr. John Manley (Ottawa South):: Madam Speaker, I welcome the opportunity to speak this morning on the subject of tax reform, in connection with the motion moved by the New Democratic Party.

If there is a good and useful consequence of the proposal to introduce a goods and services tax in Canada, I believe that it may be that it will raise in Canada the realization that the time is now overdue for real tax reform on a broad and general basis in this country.
It is more than 25 years now since the appointment of the last Royal Commission on Taxation, headed by Kenneth Carter. It is many years since the results of that Carter Commission report were enacted into the 1971 tax reforms, and things have changed monumentally since those days. The needs of governments, the involvement of governments at all levels in our economy and in our affairs as a people have changed. The complexity of the modem world has increased significantly. The complexity of our underlying tax system has increased apace.
As somebody who has spent a lot of time before coming into this place working with the tax laws, I have been concerned about that for a while. I drew out this morning my most recent edition of the Income Tkx Act. I can still lift it. It is about 1,500 pages long. You cannot travel with it on an aircraft in Canada because it will not fit under the seat in front of you. If we have ever reached the point when it was time for us to stand back and take a look at the tax system that exists to see where we are going as a nation, now is the time.

fit under the seat in front of you. If we have ever reached the point when it was time for us to stand back and take a look at the tax system that exists to see where we are going as a nation, now is the time.
What we need to do in Canada is to recognize that after all of the rhetoric, after all of the changes, after all of the shifts from income tax to consumption tax, from corporate tax to personal tax, to goods and services taxes, from manufacturing taxes, after all that there is one taxpayer in Canada. It is the same taxpayer who pays his municipal taxes, who pays his municipal water rates. That is the one who pays provincial taxes and that is the one who pays federal taxes.
Unless we can get together as a country and look at the compounding problems of federal, provincial, municipal taxes, we will never sort ourselves out of this mess. The power to tax is the power to destroy. I believe that the latest measures brought forward by the government opposite have a great deal of potential for destruction of our economic well-being.
Last week in Vancouver the mayor came to speak to the finance committee studying the GST. He brought this point forward. There is one taxpayer. The municipal taxpayer in Vancouver is the same individual who is being called upon to pay the goods and services tax.
In Alberta, the treasurer spoke to us at length about the need for provincial tax points that were being eroded by the goods and services tax. The need for reform, surely, is obvious to all of us, not just in terms of the complexity that arises out of the volume that we need to go through in order to understand the current income tax system, but in terms of the normal objectives of a tax system: equity, fairness, economic efficiency, and, in Canada, some special concerns.
There are the stresses on nationhood, the stresses that arise from the need for the regions to be able to realize their objectives within the context of this country. Stresses are felt in the west, stresses are felt in Atlantic Canada, and especially in the north. We look at what is happening with what the government opposite calls tax reform and we see that those stresses are going to become more acute in the years to follow.
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Then we have the environmental imperative. There is a need in whatever measure we undertake in this country to understand the direct and indirect consequences for environmental well-being that is the overriding preoccupation of all of our people.
What we have had over the last five years is not tax reform, even though the proposals have been packaged in a document that said all over the outside of it "Tkx Reform" la reforme fiscale. What we have had is ongoing ad hockeiy. We have had a willingness to look for each and every way possible to increase government revenues, to grab money out of the pockets of the Canadian taxpayers.
That is not tax reform, that is a tax grab. What has happened to overall government revenues over the last four or five years? They have increased by more than $40 billion and yet the deficit remains at the level of $30 billion. This is in spite of the fact that for the last seven years, beginning in 1982, the western world has had an unprecedented period of economic growth and prosperity that the government should have been benefiting from. Instead, it has doubled the national debt. Instead, it has reached into the Canadian taxpayers' pockets and tom out more than $40 billion more than it ever took before. Instead, it has shifted the burden of government service downstream more and more onto the provinces and the municipalities of this country. It has allowed the Canadian infrastructures that are so important to our existence as a nation to erode and deteriorate.
The latest example is VIA Rail.
Meanwhile, the Trans-Canada Highway is in a state of disrepair and the rivers are polluted, and it is called it tax reform. What about the consultative process? We had a consultation is what they will say. We had the Standing Committee on Finance study tax reform, Phase I and now it is studying Phase II under the amiable chairmanship of the member for Mississauga South, that great promoter of grade five education.
What did they study under Phase I? They studied a package called reforms which consisted of lowering the rates, broadening the base, removing some exemptions and simplifying the structure by reducing the number of tax brackets. Simplification? Well, we talked about that before the election but really it is not as important as overall reform, they said.

October 12, 1989
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The act is much wider, much broader and much heavier than it was before 1984 as we come out of the first phase of Tory tax reform. It is much more complicated. In fact the last enactment that simplified income tax at all was brought in by Finance Minister Lalonde when he simplified the rules for small business taxation. There is no overall consultative process, no study of alternative policies. There is no look at where we are going as a country or at the overlap between federal and provincial tax burdens. No, we reduced the number of brackets from ten to three.
I guess that simplified it for some opposite. Frankly, most Canadians never found it all that difficult to go to the back of their guide and work out their rate. Have they made it more fair? What we have discovered in looking at the effects of net tax increases over the years since 1984, according to the Canadian Council on Social Development, is that there has been a significant shift in the burden of taxation in this country and that burden is now being borne by families. Since 1984 the Canadian family with a poverty line income has experienced an increase in taxes of 61 per cent. That is where the burden is being borne. For the average income family, it is 29 per cent and for the upper income family, 7 per cent.
When you look at what has happened to the Canadian tax system overall since 1984, you discover that in spite of all the pro-family rhetoric we sometimes hear across the way, the real way in which it could be helping families in Canada is ignored by the Conservative government. It does not care about families.
Then there is the essential dishonesty of its approach to tax reform. What kind of system is it, what kind of government is it that comes forward before an election and says that it is lowering taxes, that you will get bigger refunds on July 1, 1988, just in time for the November election? A few months later, after the election is safely out of the way, it increased taxes.
They talk about two phases of tax reform. Phase I will lower taxes and Phase II, which is revenue neutral, will fix up the manufacturers' sales tax, that old chestnut that needs to be repaired. What happens? After the election is over and after they are safely in office, we find that the reform of the manufacturers' sales tax is a poorly disguised tax grab.
Then we have the elimination of universality, those social programs that were a sacred trust. The government said it would never touch them. People who bought and paid for old age securities in the years before 1971 were assured by the House of Commons in debate when tax reform went through in 1971 that they would continue to be entitled to universal old age security. It is gone with a stroke of the pen. Who cares about them? They are old anyway.
I want to talk a little about the goods and services tax. This tax is the single most significant change to the Canadian tax system since the introduction of the income tax in 1917. This is not a temporary measure. This is a measure that will bring with it an incredible federal bureaucracy, thousands and thousands of tax police across Canada hired to enforce it, a paper burden on small business. In short, it is a burden that will be borne by all Canadians for the rest of their lives. There will be no way out of this tax once it is implemented.
What is it? What does it represent? We know first of all that it is a tax grab. We know that the minister's promises before the election of revenue neutrality were nothing more than words. They were nothing more than pre-election rhetoric. They were simply false. According to the Department of Finance, we may raise $24 billion and some out of this tax, $24 billion compared to the $18 billion that is being raised by the manufacturers' sales tax after this government increased it by 50 per cent from 9 per cent to 13.5 per cent in its five years in office.
The $24 billion is a low estimate. Some of the estimates are as high as $30 billion. If the experience of New Zealand which the government likes to recommend to us is any indication, $30 billion might be a low estimate.
This new tax is a shift in the tax burden. It is a shift from big business to small business, it is a shift from central Canada to the regions, it is a shift from corporations to consumers, it is a shift from manufacturers to services. The government will deny this. It says:"the manufacturers' sales tax, you do not think that just because we collect it from the corporations that they end up paying it, do you? No, no, corporations pass that on, after all its the people who buy their products who pay the tax". That is nice in economic theory, but it makes one wonder why the Conference Board of Canada went through its projections on what would happen when the implementation of the GST was completed to corporate income.
October 12, 1989

The gross domestic product in Canada is actually declining in the first year, 1991, and very marginally increasing in subsequent years according to the Conference Board of Canada. Corporate profits increase in 1991 by $.6 billion, in 1992 by $4.9 billion, and in 1993 by $3.9 billion. I ask you, how does that happen? That is by how much the corporate profits are going to increase after the implementation of this tax.
There is only one of two explanations. Since we have seen from the same projections that the economy is not particularly growing, certainly not growing at that rate, where is the additional corporate profit coming from? What it means is that the manufacturers' sales tax was either not being passed on but was being eaten by the manufacturers to some extent, in other words being borne by the shareholders-and we might wonder what the nationality of those shareholders is-or the other explanation is that the corporations will simply not pass on the 13.5 per cent savings when they realize them at the elimination of the MST. That would not be inconsistent with what happened in 1978 when the Minister of Finance, Jean Chretien, reduced the manufacturer's sales tax from 12 to 9 per cent.
What else is the GST? It is a deluge of complexity. John Bulloch of the Canadian Federation of Independent Business told us that it is going to be a nightmare on Main Street. We will be the only country in the world with a fully integrated, consumer level, two-tiered sales tax with different exemptions, different rates and different complexities. Every mother and father store owner across Canada, every retailer, every restaurateur and every service, unless they are generating revenues of less than $30,000 a year, is going to have to figure out how to collect it, how to pay it, how to differentiate it from the retail sales tax. It is a mess.
Anyone who brings in New Zealand as an example of how the thing might work is just out of their minds. New Zealand is a unitary state with no provincial or state governments. There is no complexity there. It is a state in which internal transportation costs are of no consequence. There is no basis of comparison there.
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The Retail Council of Canada called this new tax an unspeakable act of self-mutilation. These are the Tories' friends. Imagine having friends like that, Madam Speaker. Then there is the regressive nature of the tax. It is regressive. They say regressivity can be addressed with the refundable tax credit mechanism. That is the solution for all of it. All you have to do is file an income tax return and you will get four quarterly payments a year, making the tax progressive. We will find all those poor people, the illiterate people, the people who are out of sight and who are not on anybody's computer, and we will say: "Here is your T-l, please complete it and file it, and the government will send you a cheque." Thank you for progressivity, Mr. Wilson.
What about food? We have heard before the committee again and again, and we have heard statements by the chairman and the vice chairman of the finance committee, that it would be a good idea to broaden the base by taxing basic groceries. That would make things so much simpler, they say, and then we can lower the rate.
The food retailers told us that they were not worried about the complexity of having basic groceries exempt, that they are used to doing that under the retail sales tax systems in nine provinces, that it is no big problem. But the effect of taxing food on regressivity is very significant because it is clear that low-income people spend a much higher proportion of their incomes on food, on basic groceries, than do other Canadians, especially upper and middle-income Canadians.
Although the government seems incapable of finding a solution to the fact that there is no luxury tax, it is saying there are anomalies here, for instance, caviar will be exempt, and cartons of milk from McDonald's will not be. Surely those can be addressed with a little bit of ingenuity. There must be a good rationale for this magnificent tax, there must be one somewhere.
The government says the exporters need it. Well, those raving socialists at the Fraser Institute told us last week that the exporters do not need it. They are already getting government support and subsidies of 1 per cent, which is equal to the component of the manufacturers' sales tax contained in their exports. So it is a complete opposite.

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The government says that the manufacturers need it for domestic consumption. Surely the best minds in Canada can find some way to solve any problems that are arising from domestic consumption with respect to the manufacturers' sales tax. The real problem that our manufacturers and exporters face is the consequences of the government's monetary policy, the high interest rates, 4 per cent above the U.S. rate.
What I am suggesting today is that what we need in Canada is a full review of the tax system. I agree with the essence of the New Democratic Party motion that the goods and services tax should not be proceeded with, but I do not agree with its suggestion that we can patch up the tax system with a series of minor amendments. Therefore, I would like to move, seconded by the hon. member for Ottawa-Vanier, the following amendment to the motion which is before you today, Madam Speaker, that will propose an over-all review of our tax systems in Canada.
I move:
That all of the words in the motion following "goods and services
tax" be deleted and the following substituted therefor:
and after full and thorough consultation with Canadians and in full co-operation with the provinces to bring about the reform of taxation in Canada, including personal and corporate income taxes and other taxes based upon the following principles:
(1)	fairness;
(2)	simplicity;
(3)	the ability to pay; and
(4)	consistency with the environmental imperative of sustainable
development.


SPEAKER'S RULING
The Acting Speaker (Mrs. Champagne):: The Hon. Member for Ottawa South was kind enough to send a copy of his amendment to the Chair prior to taking the floor in debate, so I have had a chance to examine the procedural acceptability of the motion.

I first want to thank the Hon. Member for his co-operation, which I greatly appreciate.

However, I have doubts about the acceptability of this amendment. I will refer the hon. member and everyone in the House to citation 482 of Beauchesne's which reads as follows:
On an allotted day, during consideration of the business of Supply, an amendment must not provide the basis for an entirely different debate than that proposed in the original motion.
In my opinion, the amendment proposed by the hon. member for Ottawa South does this. It takes away what is on the table today and brings a new suggestion.
I could also refer the hon. member to a ruling by Speaker Lamoureux in his Decisions page 322. We are faced with a situation similar to this. Speaker Lamoureux said:
The proposed amendment does more than qualify or amend the main motion; it seeks to provide a basis for an entirely different debate. Furthermore, when the opposition parties agree on the choice of subject for an allotted dqy, "the spirit of fair play would require that the day not be taken away by means of an amendment". The Standing Order requiring notice would be pointless if, after notice had been given, the motion were amended to make possible the consideration of an entirely new facet of the question.
Thus, with respect, I must rule the amendment out of order and not permissible at this time.


ALLOTTED DAY, S. O. 81-PROPOSED GOODS AND SERVICES TAX
The Acting Speaker (Mrs. Champagne):: Questions or comments.


Nelson Andrew Riis: Madam Speaker, I listened with interest to my hon. colleague's presentation and I found again, as usual, that he raises some very appropriate points in terms of opposition to the general sales tax.
I have one question for him. He will recall that in our motion we suggested that one source of revenue would be an inheritance tax, recognizing of course that of the western industrialized nations all but two have such a tax. We in Canada had such a tax until in the early 1970s the Liberal government decided to do away with it so that if you inherited an incredibly wealthy estate there would be no tax on it. We are one of the two countries in the western world not to have an inheritance tax.
October 12, 1989

I wonder if the hon. member could explain why the Liberal Party thought that was an appropriate amendment to the tax act, to remove an inheritance tax from our system.


John Paul Manley: Madam Speaker, first of all, it is time, as I said in my speech, for us to review all taxation in Canada. I think that in order to do that reasonably a full consultative process across the system would include a review of wealth or inheritance taxes as part of the possible solution to the increasing demands that there are for government revenue. I do not think that can be discarded.
In specific answer to the question raised, what happened with tax reform in 1971 was two things. First, there was the introduction of the capital gains tax to the system which was intended to and which, until the Tories began tinkering with it a few years ago, did result to some extent in a realization of taxation on wealth at the time that a person died through the deemed realization on death of assets.
The other thing that happened in 1971 when the federal government abandoned the estate tax was that it was really given over to the provinces, many of which continued to have estate or succession duties for quite a few years after 1971. Ontario continued until 1979 to have a succession duty which is a wealth tax on death.
There are many problems with the capital gains tax. The first thing this government did in that memorable budget that the Minister of Finance presented in May 1985, in which it also attempted to deindex old age pensions, was to introduce a $500,000 capital gains exemption. The government said it was in order to stimulate economic activity, to reward risk taking.
With respect, the investment of money in real estate in Florida, which was equally exempt when there are gains realized, does not stimulate economic activity in Canada. Its total inability to be able to target a capital gains exemption so that it achieved the economic goals that it claimed it should have was demonstrated by that budgetary measure.
The government has not fully backed away from that measure yet. The move to 75 per cent inclusion is a good one in that direction, but overall it has failed in analysing the needs of the revenue with respect to the capital gains tax. The government has never gone back to the princi-
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pies established by Carter and asked itself how it could make the system work better and more fairly.
I certainly think that wealth taxes and inheritance taxes need to go back under consideration by all of us. But really what underlies the needs of the Canadian tax system is a system of consultation and overall reform so that everybody feels that we have come out of this with a better and fairer tax system.


Ms. Greene:: Madam Speaker, it is my understanding that the member's party, as well as the New Democratic Party, endorsed the findings of an all-party parliamentary committee which recommended that we remove the manufacturers' sales tax and that a value added tax on the broadest base possible be established.
I am just wondering how the member can be so inconsistent with the previous recommendations of his party, and how he can now at this point in time-years after tax reform has been well established and gone through a proper process, and the manufacturers' sales tax has been examined-basically urge Parliament to start all over again.


John Paul Manley: Madam Speaker, I might say that I am delighted at the question. The inconsistency in this is not on this side of the House at all. The inconsistency is over there. It was over there that there was proposed to be a replacement of the manufacturers' sales tax by a one-tiered tax across Canada, by a visible tax across Canada, by a tax that was going to be revenue neutral, by a tax that was going to be fair to low-income Canadians, by a tax that was going to benefit middle-income Canadians. None of those promises have been met, none of them.
The point about New Zealand is the key one, and this is the point that was raised again and again by the Tories' friends when they came to the finance committee. The chambers of commerce said withdraw this tax, it cannot work in a two-tiered system. The Canadian Federation of Independent Business said it is a nightmare on Main Street, withdraw it. Even the Fraser Institute said it is not visible, withdraw it. And the government thinks that we are inconsistent.


John Harvard: Madam Speaker, I want to thank my colleague from Ottawa South for an excellent presentation. I agree that we need tax reform and tax review in this country. What we do not need, for example, is that silly history lesson that we got from the hon. member for Yorkton-Melville a few minutes ago. I would have to give it a failing grade immediately.

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I have seen the enemy and the enemy is over there, it is among that crowd. The enemy is not Walter Gordon, God bless his soul. The enemy is not Edgar Benson, and the enemy is not Jean Chretien or John Turner. The enemy is over there, and the enemy is very apparent. We can see him.
We are in a mess in this country. In the past five years the Tories have increased taxes 31 times. What have we got for it? The loss of VIA Rail, some result. Spending is up $42 billion, and what do we get for it? A decimation of UIC, some result. We have borrowed more in this country than ever before, and what have we got? Closure of post offices from one coast to another. We have got free trade which was supposed to do wonders for the economy, and what have we got? A loss of jobs and plant closures. We get tax reform, and what do we get out of that? Just a whopping tax grab called the GST.
I see a pattern here. I see a program that was started five years ago. It all comes together. We are spending more, the government is taking more, and we, 26 million Canadians, are getting less. Do you see a pattern?


John Paul Manley: Madam Speaker, I thank the member for the question. There is a distinct pattern. My friend opposite talked about it as being fiscal responsibility. I beg to differ. What has happened over the last four years is the greatest example of fiscal incompetence that we have had in the history of Canada. We have seen the total tax revenue of the Government of Canada go from some $70 billion or $71 billion in 1984-85 to, in the current fiscal year, $112.4 billion. We expect, based on the projections of the recent budget, that by 1991-92 that is going to be up to $138 billion.
What has really happened here is that the government has, by pursuit of high interest policies, by failure to curb its own wastes and excess in so many ways-the most recent good example being the incredible waste on advertising about a tax that has not been approved by the Parliament of Canada-carried out the greatest tax grab in the history of Canada while at the same time permitting the federal debt to double in four years, half of the national debt of Canada in one term of one government.
What else can they do except to look for newer and better ways to gouge Canadians? The result, of course, is that we are bearing a heavier burden of tax, both at the personal income level and at the sales and excise level, whereas we have seen the continual decrease in the level of taxes borne by corporations. As I pointed out earlier that means that it is the shareholders, whatever nationality they may be, who are benefiting, the consumers and taxpayers of Canada who are paying the bills.


Hon. John McDermid (Minister of State (Privatization and Regulatory Affairs)):: Madam Speaker, I welcome the opportunity to speak to the motion today. It will give the government an opportunity to discuss, as we want to have the broadest debate possible on the taxation system in this country.
Before I begin my formal remarks though, I cannot help but make comment on the two speeches that we have heard so far today, which were full of criticism, full of "scrap this and scrap that", so on and so forth, but with very little alternative. I am going to discuss some of the alternatives that the New Democratic Party has in its motion and I am going to pay particular attention to the Liberal solution to the tax situation in this country of having another royal commission, another study. They did that in 1971, as I remember. We saw what transpired from there and there has been some criticism of what has happened from that tax reform today in the House.
I might say to the hon. member that in all fairness- and I am sure he was not misleading the House with his figures-income has in fact increased to the Government of Canada by some $40 billion. I think that is what he said. One of the things he did not point out, and I think in all fairness he should have, was that only 20 per cent of that increase came from tax increases. The other 80 per cent came from the growth of the economy-a million and a half new taxpayers in this country, new jobs that have been created and people paying taxes-and the betterment of our corporations and of small businesses in this country which are paying their taxes as well. He failed to mention that. I think that he should, in his presentation to be fair, have pointed out that a very small portion, one-fifth of that additional income that the government has realized, has come from income tax.
October 12, 1989

Let us talk about the reforming of Canada's tax system. During the last five years, our government has taken much-needed action to modernize and to improve the fairness of Canada's tax system. It is not done yet, and it is not perfect. I am the first one to admit that. At least this government has taken very positive action. Canada needs a modem tax system in order to meet the challenge of an increasingly competitive global economy.
Today the New Democratic Party said that we should go back to the old ways, that we should leave the manufacturer's sales tax and go back to the old tax reform where we had 10 different levels of taxation. "Let us tax the rich." I remember them campaigning on that once. "Tax the rich." That was the whole theme of their campaign. We know what happened to that.
The NDP think that we in Canada live on this little island and that we do not need to compete in the world, that we do not need to compete with companies in other countries around the world which have tax systems as well. If we tax our corporations out of existence, then they will not be able to compete. We export 35 per cent of what we produce in this country. We have to be able to compete. We cannot tax our corporations out of existence. The NDP would be the first ones to complain about the lay-offs from these plants that had to close down because they could not compete around the world.
We must understand that we are dealing in a global economy. Equally important, Canadians want a tax system that is as equitable as possible. That is what we are attempting to do.


Nelson Andrew Riis: Get serious.


John Horton McDermid: I think both parties will admit that I sat very quietly during both presentations.


Nelson Andrew Riis: For the first time in history.


John Harvard: Are you not feeling well?


John Horton McDermid: Now the government is giving its presentation and I would like the same courtesy.


Nelson Andrew Riis: It's so boring.
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John Horton McDermid: If the hon. member for Kamloops wants to sit and heckle all day he can. This is their motion, and he is the only one in the House. He is the only NDP in the House.


Nelson Andrew Riis: Madam Speaker, I rise on a point of order. The hon. member is an experienced member of the House. I could say that out of all of the Conservative caucus there is virtually no one here, but that would not be appropriate.
He ought to be aware that referring to the absence or presence of members in the House is unacceptable. I know that he has a memory lapse from time to time but I would encourage him to recall what the traditions and the rules of the House are and abide by them.


The Acting Speaker (Mrs. Champagne):: The hon. minister has the floor.


John Horton McDermid: Madam Speaker, I always enjoy the interruptions of the hon. member for Kamloops. He is so well informed. I will not mention that nobody is here but him from the NDP any more. I promise.
The measures that we have taken to reform Canada's tax system are part of a comprehensive long-term economic strategy which was laid out before this House in November of 1984. The strategy has been designed to produce a more competitive economy, sustained economic growth and the creation of productive Canadian jobs. It would be much, much easier for our government to let the subject of tax reform drift as past governments have done. For a government that takes its responsibilities seriously that kind of cop-out was just not acceptable.
Our objective is to have the fairest and most efficient tax system that can be designed. I believe that we have made considerable progress toward achieving that goal. In reforming the personal and corporate income tax system, stage one of tax reform was lowered tax rates. We broadened the tax base to increase efficiency and restore fairness to the system.
Our reform package ensures that higher income individuals and corporations pay their fair share of taxes. It ensures that investment decisions are based on economic merit rather than tax considerations and how to beat the tax man. It ensures that individuals in similar economic circumstances are taxed more equitably. It ensures that lower income Canadians bear a proportionately smaller share of the tax burden than higher income Canadians.

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Replacing the current federal sales tax with the goods and services tax is another building block in our over-all plan for sustaining economic growth and prosperity. In this regard, it is essential to recognize how important a country's tax system is in determining the competitiveness of its economy. We need a tax system which will contribute to, not detract from, Canada's natural advantages, one that will encourage competitiveness and job creation.
In terms of the existing sales tax I noticed very carefully today that not one of the opposition members mentioned the existing sales tax, not one of them. Not one of them suggested that it be removed. Not one of them suggested that we need a new sales tax system in this country. All they said was, "Scrap it". They never talked about the existing sales tax, with the exception of my hon. friend from Ottawa South who bragged about Jean Chretien who reduced the federal sales tax rate from 12 per cent to 9 per cent just before an election period back some years ago. That is probably the best thing that he did as finance minister, I might say. I do not want to get into a leadership debate today.
When we look at this existing sales tax we see a tax that has not been fair to either Canadian manufacturers or consumers. It has not been conditioned to economic competitiveness and growth. Let us be clear, this tax is not just a source of academic embarrassment to public finance theorists. This tax hurts Canadians. The present tax is hidden. It handicaps the economy. It is very complex to administer. It is a very unreliable generator of revenue. Incredibly, the current hidden federal sales tax puts Canadian manufacturers at a disadvantage to foreign manufacturers, not only on exports but on imports as well. It is narrowly based. It is inequitable. It leads to all sorts of distortions in the market-place.
Seventy-five thousand firms pay this tax, submit it to government. There are 22,000 special arrangements and administrative interpretations-22,000. So it is not fair even to those 75,000 who are submitting the tax today.
In view of the sorry state of this hidden federal sales tax, there is really no choice but to replace it. Yet the system is a major pillar of our tax structure. It contributes more than 17 per cent of the federal government's revenues annually.
Removing the tax and building a replacement is a challenge of major proportions. Nobody is questioning that. I do not think any of the witnesses who have come before the Standing Committee on Finance have minimized the job of replacing this manufacturer's sales tax. One thing that they all say is, "Get rid of it". I do not think that is part of the debate in this country. I think that is a given. Even the opposition parties in a motion presented to this House unanimously from a standing committee said we had to get rid of it.
There are many approaches to the problem, in theory at least. For example, as an alternative to bringing in new sales tax systems some have argued, and the NDP argue this, that the current tax should simply be abolished and the foregone revenues replaced by a corresponding increase in income tax rates. Supporters of this approach argue that this would allow for a fairer tax system overall. There are, however, some powerful economic reasons for avoiding such an increased reliance on income taxation.
Our current tax structure relies on three pillars: sales tax, income tax and corporate tax. The current federal sales tax next year will contribute about $17 billion in tax revenues. To put this in perspective, if we eliminated the federal sales tax that we have now, which we want to do, and put it on to income tax, Canadians would be paying a 30 per cent increase in personal income tax-a 30 per cent increase in personal income tax. An increase of this magnitude would lead to substantial disincentives to work and invest. There is no question about that.
Alternatively, relying on the corporate tax system for these revenues would require corporate tax revenues to more than double. We would have to double the taxation on all our small businesses, on all our corporations in this country to realize the same amount of money.
Therefore, the real issue is not whether Canada needs a sales tax, but to try to develop a sales tax that is fair and supports growth. Replacing the existing tax with the tax that the government is proposing through its goods and services tax will achieve three important goals. First, it will continue to contribute to the government's ongoing plan to reduce the deficit. It will be a vital element in our plan to make the changes necessary to ensure that Canada can compete effectively in the world and at home. It will improve the overall fairness of the tax
October 12, 1989

system. Lower and modest income Canadians will be better off when the GST is in place.
During the few moments I have left I want to address specifically the points in the motion before the House. The motion suggests that we should introduce a minimum corporate tax on profitable corporations. In the two decades before our government took office governments of the day permitted the corporate tax system to become riddled with special exemptions and deductions. I agree with my hon. friend for Ottawa South when he says the tax act is so thick he cannot get it under the seat of a plane. I never carry the tax thing around, to be quite honest with you. But I guess some people like the hon. member for Ottawa South takes it with him and cannot get it under his airplane seat. I understand that. But he must remember that the Income Tax Act just did not develop in the last four years. That, over the last 20 years, has allowed these special exemptions and these deductions. What it did was encourage wasteful activity and it eroded the nation's tax base.
Let us talk about a minimum corporate tax. That is what some people are suggesting we should introduce. However, this government believed that rather than patching up the tax, which that does-it allows the same exemptions and all the other stuff but you just put a minimum tax on-the best solution was to go to the root of the problem and curtail these special exemptions. The result has been a progressive reform of the corporate tax system over the past six years. This has included measures to generally reduce fast write-offs on capital expenditures, to increase the rate of capital gains taxation, to eliminate the general investment tax credit rates, to sharply reduce special investment tax credit rates, to block the use of various complicated financial schemes, to transfer losses and other tax advantages from nonprofitable corporations to profitable ones.
In addition, in the April budget the government introduced the large corporations tax which ensures that all corporations pay federal tax.
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The overall impact of these measures is that we will be able to increase annual revenues from the corporate sector by over $2 billion. Furthermore, because the corporate tax base is much broader now, the year to year variations in tax revenue will be more stable in the future than they have been in the past. This will enable the government to plan its programs on the basis of more certain corporate tax revenues. In summary, the federal government has chosen to repair the fundamental weaknesses of the corporate tax system, rather than leave them in place.
The motion suggests that we should tax income from capital gains at 100 per cent, with the exemption of capital gains from farm lands sold for agricultural purposes, small businesses, and principal residences. Under the existing tax, farmers and small businesses enjoy a $500,000 capital gains exemption and the existing tax also does not apply to the sale of principal residences.
However, the government remains committed to the $100,000 lifetime capital gains exemption for all other taxpayers as an incentive to encourage risk taking and increased equity participation in the Canadian economy. We believe that over time this measure will improve the balance sheets and the financial health of Canadian companies, thus contributing to job creation and higher incomes.
A further incentive to invest is provided by the inclusion rate for capital gains which the hon. member talked about today. The inclusion rate has been increased from 50 per cent to 66 2/3 per cent and is legislated to rise to 75 per cent for 1990 and subsequent years.
I would point out that it is desirable that the burden of Canada's capital gains tax not be significantly above that of other industrial nations. Canada will not be able to attract equity investment that is needed for future growth and job creation if we place an excessive tax burden on capital gains while our neighbours do not. For these and other reasons we believe that the present tax treatment of capital gains in Canada is appropriate.
The motion suggests that we should restore an inheritance tax on wealthy estates. Past experience with estate and gift taxes has shown that these taxes, first, were inequitable and, second, they were inefficient. The hon. member wanted some reasons why it was removed. Third, these taxes were complex to administer. Realizing this, the previous Liberal government abolished estate and gift taxes in 1971. Those taxes were found to be inequitable because of the many avenues of legal tax avoidance open to taxpayers with access to sophisticated tax planning advice and the resources to pursue these opportunities. Such taxes were also inefficient because

October 12, 1989
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they encouraged taxpayers to invest their wealth to an excessive extent in those investments that for administrative purposes are tax lightly. Thus they tended to encourage increased investment in farm land and life insurance policies.
A decision by the government to reintroduce estate and gift taxes would likely encourage wealthy Canadians to take up foreign residency-this is what we saw happen before and is one of the reasons why it was changed- and redirect their investment in entrepreneurial activities elsewhere. Do you remember the famous trips to the Bahamas by so many of our wealthy in this country just because of that, because of tax planning purposes? This would deprive Canada, of course, of savings and entrepreneurial talent. We agree with that decision that was taken back in 1971. We disagree with the New Democratic Party.
I guess the most important thing, something which never bothers the socialists, is that it was administratively complex because to be successful revenue raisers, they must be accompanied by complex anti-avoidance measures. Even then, the experience of other countries shows that such measures are largely ineffective. The taxpayers and their advisers appear to be always one step ahead of the tax department. I think the hon. member knows that.
On balance, such a tax as that proposed in the motion would yield small revenues, require complex legislation, be subject to widespread legal avoidance, and perhaps even illegal evasion.
The motion suggests the introduction of a more effective, progressive income tax. I said earlier that the goods and services tax is the second element in the government's comprehensive tax reform package, The first stage that took effect in 1988 involved changes to both personal and corporate income taxes. The personal income tax proposals were designed to produce a fairer, more understandable tax system. These changes also promoted greater initiative and improved competitiveness, thus contributing to economic growth and job creation. The record speaks for itself-1.5 million jobs over the last five years. The key to achieving these goals was to lower tax rates and broaden the tax base.
Lower tax rates improved incentives for Canadians to work, to invest, and to raise their standards of living. More than 85 per cent of all households had their income tax reduced as a result of tax reform. Some 850,000 lower income Canadians had their income tax eliminated. At the same time, income taxes were increased for about one million high income households. I experienced that myself.
These taxpayers included those who had claimed large, special tax preferences or credits. A progressive tax system is one in which every one pays their share, based on their ability to pay.
In 1986, the government introduced the alternative minimum tax to respond to the growing concern at the numbers of high income Canadians who were paying little or no personal income tax. Statistics show that in 1987 there were 39,550 taxpayers subject to the minimum tax yielding revenues of close to $150 million, which resulted in the reduction of a number of high income individuals who were not paying their share of tax. Now only about one-half of 1 per cent of high income individuals are paying little or no personal income tax. They cannot get away with that for much longer than two years when it catches up with them again.
Our commitment to a fairer tax system is apparent in the proposal of sales tax reform as well. A broad tax base, a low rate and targeted assistance to lower and modest income families will ensure that the proposal will be fair.
Are you telling me my time is up, Madam Speaker? I am just getting warmed up, for heaven's sake.
Let me just say on the GST, if I might just have a paragraph, that they keep telling me that it is not fair to low income people. The GST credit will be increased to $225 per adult and $100 per child. The household income level up to which maximum benefits will be paid will be increased to $24,000, so that many more Canadian families will benefit from the credit. It will be delivered four times a year in advance. More than nine million Canadians will receive the GST credit cheques. Families earning less than $30,000 will be better off once the GST is in place.
October 12, 1989

In addition to the enriched GST credit, the middle income tax rate will be reduced from 26 per cent to 25 per cent. This will provide assistance to middle income families and make the income tax system more progressive.
I realize my time is up, Madam Speaker. I just want to say that I welcome the opportunity to debate this matter today. I thank the New Democratic Party for bringing this motion forward because it gives the government an opportunity to present-and we will have other speakers later today who will go into the goods and services tax in more detail and to explain how it will work-in more detail how it will benefit Canada for many, many years.


John Paul Manley: Madam Speaker, I appreciate the opportunity to ask the minister a couple of questions about aspects of the goods and services tax that particularly trouble me.
First of all, I think he has taken a bit of the line of his leader in saying, "These people are not allowed to criticize unless they provide a detailed alternative". I would ask him to go back and review the comments that I made. That statement is a form of intellectual dishonesty because we do have an existing tax system in Canada and an alternative has been proposed. If public debate is going to be meaningful on this issue, what we need to do is focus on the proposed alternative and debate that so that Canadians understand exactly what it is that is being proposed. In criticizing that approach he has essentially tried to adopt the strategy, which I am sure he would like, of making the defence and offence.
I would like to ask him about something which truly troubles me about this tax, or two aspects of it. The first is the effect on lower income Canadians. The minister was just referring to the refundable tax credits which are meant to alleviate the amount that this tax is regressive.
If the government is really concerned about ensuring that the tax is not regressive on low income Canadians, why on earth are those tax credits not fully indexed? They are going to erode at 3 per cent a year. These are the poorest, lowest income people in Canada.
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The other aspect of this that troubles me is the effect that it will have on our diverse regions. The manufacturers' sales tax is applied at the manufacturing level. The goods are then transported by and large from central Canada to the extremes, especially the north. The new tax will be applied at the retail level. Therefore, in addition to existing excise taxes, it will result in a 9 per cent tax on the transportation costs incurred in getting goods to the regions, the north in particular, a very significant increase.
When the finance committee was in Whitehorse a couple of weeks ago we heard about how the 25 per cent additional cost-of-living burden is experienced in Whitehorse as compared to Edmonton and Vancouver. This is only going to be made worse when the tax is applied on the transportation included price of the goods. I would like the minister's comments on those two points.


John Horton McDermid: Madam Speaker, I appreciate those two questions. First of all, on the indexing, as you know the government in its policy back in 1985-86 indexed programs of the government after 3 per cent, with the exception of the senior citizens' pensions which at the time we attempted to do as well. In this particular instance this will follow the policy of the government as stated.
That is not to say that the base level cannot be adjusted from time to time, and is, as the hon. member knows. Even in indexed pension programs and so on and so forth, the base is adjusted from time to time. There is nothing to prevent a government from increasing that base from time to time as is necessary. There is no reason why this will not happen in the future.
For people projecting into 1995 and the year 2000 what this rebate will do based on today's figures is really a little unfair and very hypothetical. As the hon. member knows, governments adjust these bases from time to time, and will continue to do so.
With respect to the second question, everything in the north costs more. It always has. Those people are now paying a 13.5 per cent sales tax which is multiplied upon-they do not know it. It is based on transportation
because-


Mr. MacDonald (Dartmouth):: No, it is not.

October 12, 1989


John Horton McDermid: Excuse me, when an individual buys a product that is manufactured they pay a 13.5 per cent tax on it. They will not do that in the future. As the 9 per cent moves through, the business that pays the 9 per cent on transportation can subtract that from the tax they collect. Therefore, the transportation costs are business input costs and thus can be subtracted. I am the first one to admit that things are more expensive in the north, but a succession of governments has recognized this and has given certain tax concessions to people living north of a certain line that is drawn by the government.


John Paul Manley: So will you do it?


John Horton McDermid: It is there, it is in place now. In fact, because of the resource base which is in the north, the resource industries are going to benefit far more from this sales tax than any others. The overall impact in the north is in fact going to be relatively neutral. I think the Minister of Finance said the other day that it was a 1 per cent difference or something because of the overall impact of the GST.
You cannot look at it on a very narrow basis. You have to look at the overall economy of the region. That is what they did not do when they were making their presentations. I looked at those presentations very carefully, but they did not talk about the overall improvement in the resource industry and the competitiveness of the resource industry, the increase of jobs being created and so on. They did not talk about that.
One cannot look at the GST as did the funeral directors appearing before the committee last night, on a narrow basis. When you are discussing the tax you have to look at the overall economic performance and how it is going to affect the economy of this country. In fact, every economist in this country has said that the goods and services tax is an improvement for the output of this country.


Ronald MacDonald: Absolutely not.


John Horton McDermid: Check it. We have got figures that show it is costing us $9 billion in production today and that when it is brought in it will increase productivity and increase jobs in this country. That is what this is all about. It is to bring in a fairer, much broader based tax system that in the long run, and even in the short run, is
going to be much fairer to the Canadian taxpayers, and it is going to be much better for our economy. When our economy is working, people are working. When people are working, they are paying taxes. When they are paying taxes, then it is not necessary to increase taxes. You do not have to put heavy burdens on one section of the economy or the other. All they want is fairness. That is what this is all about.


Robert Daniel Nault: Madam Speaker, I will place my question as quickly as I can to the minister.
Before I do that, I would like to let him know-and he should know this since he is a minister of the Crown- that the manufacturers' sales tax is not part of the resource base industries as he has indicated. The produce and equipment are exempt as it relates to that. You should know that and maybe you should look it up if you get a chance.
Also, if the manufacturers' sales tax is so bad, something which you allude to in your speech, why is it that it went from 9 per cent to 13.5 per cent? Why did it not stay there where it belonged because it is supposedly so bad for Canadians? Please tell us before we retire for lunch why that is so.


John Horton McDermid: I thank you for that. That is the exact reason why. It is an unfair tax but, at the time, we still needed revenue. The government still needed to operate. We had to pay for health care, post-secondary education, social services the costs of which increase every year. Our grants to provinces are going up every year. They had to be paid for. That is why it went up, but it is not fair. The Minister of Finance was the first one to recognize it. That is why he is trying to bring in a fair goods and services tax that will be fair to all Canadians. Thank you for bringing that point up.


The Acting Speaker (Mrs. Champagne):: It being one o'clock, I do now leave the Chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
October 12, 1989

[Stage Direction]
Mr. Francis G. LeBlanc (Cape Breton Highlands -
Canso): Mr. Speaker, I want to bring to the attention of this House a letter which illustrates the outrage my constituents feel at the elimination of VIA Rail service from Halifax to Sydney. The letter is from Mr. Angus O'Neill of Mulgrave, Nova Scotia. Mr. O'Neill states:
I am writing to let you know we support you in your effort to save VIA Rail, the people's railway.
This government has forgotten the people, the majority of whom did not vote for them and is serving the millionaire minority who, in large measure, paid for their election. This government also hit our region hardest with the VIA Rail cuts as it has with all of their regressive, repressive measures. Honest governments try to keep election promises but the Mulroney government is trying to break all its election promises.
It was more ideology than economics or social awareness that motivated Mr. Bouchard's butchery of our passenger rail service. His reasons were dishonest; his facts fiction.
And Mr. O'Neill ends with a story:
About 15 years ago I left on the Railiner from Halifax at 6.45 p.m. on Christmas Eve. Planes were grounded, buses stopped and cars abandoned. No one worried aboard the train as it pushed on like a snowplow. We got into Havre Boucher station at 3 a.m. Christmas day. The train kept on to Sydney but I and others could not get away from Havre Boucher station until the highway plows cleared the roads at noon.
This government is robbing Cape Breton and eastern Nova Scotia of passenger rail service. It is time the Minister of Transport-
Mr. Speaker:: I am afraid the hon. member's time has expired.


ROYAL CANADIAN MOUNTED POLICE DRESS CODE
Barbara Greene: Mr. Speaker, I am pleased to see that the Commissioner of the RCMP, Mr. Inkster, has officially recognized the importance of reasonable accommodation of human differences. He has recommended to the Solicitor General that members of the Sikh religion who qualify to be RCMP officers should be allowed to wear their turbans, ceremonial daggers and beards.
I also appreciate the justice the RCMP has shown in permitting modifications of the traditional uniform to accommodate female officers.
It is encouraging to see that the RCMP is following the example of the Metro Toronto Police in removing barriers which have prevented equal opportunity for all Canadians to join the RCMP.
I urge the Solicitor General to uphold this progressive and sensible recommendation.


THE ENVIRONMENT
Mr. Lyle Dean MacWilliam (Okanagan-Shuswap):: Mr. Speaker, the countdown to possible disaster will begin if the U.S. National Aeronautics and Space Administration goes ahead with the launch of a space probe containing lethal plutonium.
From the moment the shuttle is launched to when the probe, called Galileo, makes two high-speed lowl-level flights over earth, this planet will be in danger of radioactive contamination.
The probe is fueled by 49.25 pounds of plutonium, one pound of which has the capacity to kill every person on earth.
The chance for shuttle accidents is now upgraded from one chance in 100,000 to one in 78. Another launch disaster similar to the Challenger holocaust could release lethal doses of plutonium to be spread by winds throughout this planet.
Because Canada has already been the victim of radioactive debris from a Soviet nuclear satellite, and because one of the purposes of the American space probe is for military reasons, Canada must send a letter of protest to NASA for putting the people of this planet at such unnecessary risk.


PUBLISHING
Mr. Larry Schneider (Regina-Wascana):: Mr. Speaker, the National Library of Canada has recently undertaken a program of mass deacidification of Canadian books. This is necessary because almost all books printed in this century have used acidic paper. However, there are new processes available which allow for the production of alkaline books.

October 12, 1989
S. ft 31
The federal government is a huge user of paper and publisher of documents and therefore it would make sense for the federal government to take the initiative and convert to the use of alkaline paper for publishing documents. Not only would this extend the shelf life of these publications, thus saving money for the National Library, but the reduction in the use of acidic chemicals in paper production would benefit our environment.
This is an opportunity for the government to lead by example and because of the size of its printing operation I believe it would have a major impact.


CHILD CARE
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, I rise today to bring to the attention of members the issue of Canada's child care crisis, and that is exactly what it is, Mr. Speaker, a crisis.
At the present time, we have parents who cannot afford child care; parents who cannot find child care for their children; parents who must put their children's names on waiting lists just to get into a child care facility; and we have child care staff who, under the current system, earn less than workers who look after some animals. This is a shameful situation.
Back on August 11, 1988, the Prime Minister said:
We want the best of care for our future generation.
The Prime Minister also said:
This government is committed to social justice for all Canadians.
Child care is the centrepiece of that commitment.
I ask, Canadians ask: Where is that commitment?
At this time, we do not need more studies, reports, and task forces. Canadian families need a national child care plan, one of quality, affordability, availability, accessibility, and they need it now. Children are the only group in our democratic society whose political rights are entrusted to another group. This government is not worthy of that trust. If children were given the right to vote-


Mr. Speaker:: I am sorry, but the hon. member's time has expired.


TRANSPORTATION
Mrs. Louise Feltham (Wild Rose):: Mr. Speaker, in view of the recently announced cuts to VIA Rail, and in view of the anticipated increase in the volume of traffic to an already over-taxed highway, will the Minister of Public Works reaffirm his commitment to the constituents of Wild Rose and to the travelling public that he will undertake as an immediate priority, the allocation of sufficient funds in the budget for the 1990-91 fiscal year to continue with the twinning of the Trans-Canada Highway in Banff National Park?
It is imperative that we do everything we can to prevent further unnecessary traffic accidents and fatalities on a hazardous highway which will become more so, as alternatives to it are eliminated.


AIR FARES
Mr. Steve Butland (Salt Ste. Marie):: Mr. Speaker, I rise today to discuss flying the friendly skies of deregulation with general reference to northern Canada.
Our jet service was, or will be, replaced with some smaller aircraft which will provide us with more frequent flights, although some aircraft will have no toilet, no food service, no physical space, no host or hostess, but we can still anticipate less expensive fares because of increased competition. Mr. Speaker, would you believe it is more expensive for anyone to fly Ottawa-Sault Ste. Marie return than it is to fly to Florida, Puerto Plata, Frankfurt, Amersterdam, Paris, Copenhagen, Brussels, and yes, even Casablanca.
The return flight to Sault Ste. Marie is $509. So much for cheaper fares. And let us not forget the unacceptable 9 per cent sales tax. The skies are less than friendly for the people of northern Canada.


MUNICIPALITIES
Mr. Guy St-Julien (Abitibi):: Mr. Speaker, the Hon. Member for Ottawa Centre (Mr. Harb) said not long ago in LeDroit: "In 1984, the Mulroney Government stopped paying municipalities the subsidies that until then helped them absorb part of the costs of infrastructure maintenance."
October 12, 1989

Mr. Speaker, the Hon. Member for Ottawa Centre should have done his homework before making that statement, because the Liberal Government terminated the subsidy program for local community services in 1982.
We should remember it was the federal Liberals who lost Canada billions of dollars, for no good reason, with their scientific research tax credit in 1983-84.
Mr. Speaker, that is the program the Hon. Member for Ottawa Centre should have mentioned in Le Droit, a program that was cancelled by the Tories shortly after they came to power, a program to which reporter Paul Morisset referred in L'Actualite of February 1987, in the title of his article: The Robbery Of The Century.


ABORTION
Thomas (Tom) William Wappel: Mr. Speaker, as members of the House will know, two weeks ago I arranged for the film, Eclipse of Reason, to be broadcast through Oasis on Channel 98. This film discusses second and third-trimester abortion from the medical point of view and depicts the procedure which is endured by the unborn child. I took this action so that members and senators of all parties would be better informed on the medical facts before entering into debate on this issue.
Although I am well aware of just how busy members are during a session, I hope that all took the brief 27 minutes out of their schedules to watch this short but informative documentary. If, however, members were unable to view the film on one of the three days that it was shown, please feel free to contact me and I will arrange a private screening.
I am certain that with this additional perspective members and senators will be better informed about the emotional subject of abortion.


S. O. 31 DRUGS
Mr. Gus Mitges (Bruce-Grey):: Mr. Speaker, the problem of drug abuse and trafficking, and together with the vast chain of associative problems, must become a paramount concern of government and citizens alike. Decisive action must begin in earnest to curb this rising tide which overwhelms large segments of our population and costs such exorbitant sums in policing services and health care.
It has been suggested by the Owen Sound Ontario Board of Police Commissioners, and which I agreed to as well, that all profits of assets seized under the Narcotics Control Act and subject to Bill C-61 be returned to the municipality in which the seizures were made. These funds would be directed into drug education and prevention or treatment programs at the local level, a move in the right direction if we are ever to be successful in cooperating to remove this tremendous loss of potential energy and leadership among our population and to lead us toward a drug-free society.


Mrs. Gabrielle Bertrand (Brome-Missisquoi):: Mr. Speaker, yesterday the Premier of Quebec introduced his new Cabinet. Today, I will not comment on individual appointments. I will let history be the judge!
Nevertheless, I think Mr. Bourassa is to be commended for having asked a large number of women to shoulder some very important responsibilities. At Cultural Affairs, Regional Development, Finance, Communications and Status of Women, they will have their work cut out for them.
Mr. Speaker, the women of this country have taken their place in political life, but above all, they have shown that with their skills, judgment, intelligence and sensitivity, they are able to play a major role in public affairs today. It would of course have been better to hear a man say this. I admit that I appropriated this role with all due humility and, Mr. Speaker, I hope the opposite sex will not hold it against me.

October 12, 1989


VIOLENCE AGAINST WOMEN
Ms. Mary Clancy (Halifax):: Mr. Speaker, on this the day of the Person's Award, a report has been released in Montreal which gives a startling reminder of the pervasiveness of violence against women in Canada. Women in this country live in fear, fear that they will be raped, abused or assaulted on the street, in their homes, by strangers, by friends, or by husbands. Sadly, their fear is justified. One million Canadian women will be abused by their husbands or partners in the next 12 months. One in four Canadian women can expect to be assaulted in their lifetimes, and half of those women will be assaulted before the age of 17.
Fifty-six per cent of urban Canadian women are afraid to walk alone in their own neighbourhoods after dark. Women who have been abused still face a society which considers them to blame, a society that tells them over and over that they do not have the credibility, the money or the power to fight back.
The women in Canada face a government that has yet to take a leading role in stopping the violence that is directed toward them. The government's allocation of $40 million last spring was a paltry attempt at a shortterm fix to a life-long problem.
I urge this government to take a real stand against violence toward women.


ROYAL CANADIAN MOUNTED POLICE
Mr.   Brian@: Mr. Speaker, one of the most important communities in the riding of Elk Island is Fort Saskatchewan. This city of over 12,000 people was named after one of the first Northwest Mounted Police forts in Canada. Since 1874, the fort on the North Saskatchewan River has served as a symbol of law and order in Canada.
As part of the foundation of the present day Royal Canadian Mounted Police, this community offers much to the history of Canada. Respect for the RCMP with its rich heritage and long-standing traditions is great not only in Fort Saskatchewan, but also in other parts of the Elk Island constituency.
On behalf of all of the people of Elk Island, I salute our police fort community and celebrate the valuable contribution of Fort Saskatchewan to the history of the RCMP in Canada.


THE ENVIRONMENT
Rodney Edward Murphy: Mr. Speaker, the Government of Saskatchewan is attempting to construct a replacement dam in Island Falls in northeastern Saskatchewan without being subjected to a federal environmental assessment and review process.
As was the case with the Rafferty-Alameda project, Premier Devine is saying that he is going to do what he wants regardless of how it affects the province of Manitoba.
Again, Manitoba's Gary Filmon is silent. When the original Island Falls dam was built in the Churchill River in 1927, no environmental review took place. For over 50 years this project has flooded Manitoba Crown lands and Indian reserves. Despite what Saskatchewan is saying, plans for the new dam are very different from the original dam. The dam will change water levels, damage fisheries, wildlife and waterfowl habitats. Navigation and water supply will be negatively affected. The lives of the Mathias Colomb and the Barren Lands band members will be changed forever.
The Minister of the Environment has a duty and he must ensure that a full environmental assessment review process takes place.


THE LATE JOHN WESLEY BEAVER
Mrs. Christine Stewart (Northumberland):: Mr. Speaker, on Tuesday, John Wesley Beaver, fondly known as Jack, died in Cobourg after a lengthy illness.
He was a great Canadian, a leader throughout his life, whether as a young man excelling in athletics, winning a middleweight boxing title, or serving his country during World War II as a spitfire pilot in the Battle of Britain and invasion of Europe, or in his professional life as an electrical engineer rising through the ranks of Ontario Hydro to become President and Chief Executive Officer of Churchill Falls Inc. Labrador. Mr. Beaver, a longtime friend, was an Ojibway Indian from the Alnwick reserve in my riding. He was a descendant of generations
October 12, 1989

of chiefs. He himself was chief for four years in the early 1950s. He contributed greatly to his native community, working with it to achieve self-government and to build an economic base through small business on reserves.
His views and counsel will be greatly missed both within his native community and in the corporate world. Our deepest sympathies are extended to his wife Marjory and their children and other members of the Beaver family as we all mourn the passing of this great native Canadian.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, will the real Minister of Finance please stand up?


Some Hon. Members:: Oh! Oh!


John Napier Turner: I do have a question for the Minister of Finance. For five years this minister has refused to provide any money for the treatment of raw sewage by Canadian cities and towns. In that time, during the custody he has had over our nation's finances, more than six billion pounds of raw sewage have been dumped by Canadian municipalities into Canadian lakes and rivers. Let me put this into context for the House.
Last year alone the equivalent of 150,000 drinking glasses full of chloroform, 84,000 glasses full of arsenic and 2.5 million glasses full of lead were dumped by Canadian municipalities into the Great Lakes.
Does the Minister of Finance, after five years reflection, still not think that this dumping of raw sewage into the Canadian environment and into the Great Lakes system is not a responsibility of the Government of Canada? When is he finally going to put in some money to respond to this crisis?


Hon. Frank Oberle (Minister of State (Forestry)):: Mr. Speaker, perhaps you would allow me to answer on behalf of the Minister of the Environment.
Oral Questions
What the right hon. gentleman is reciting here is quite an indictment of the municipalities and the provinces which have the principal responsibility for the treatment of effluent from city sewer systems.


Jean-Robert Gauthier: Pass the buck, is it?
Mr. Oberle Mr. Speaker, it is not true, as the right hon. gentleman asserts, that there has been no action by the federal government.


Jean-Robert Gauthier: What do you mean, it is not true?


Frank Oberle: We have contributed to research and information. We have assisted municipalities and provinces in tightening up their regulatory process. The fact remains in the end that the responsibility for the management and treatment of effluent remains with the municipalities and the provinces.


John Napier Turner: Mr. Speaker, the hon. minister can talk about constitutional jurisdiction. Why do we have a federal Minister of the Environment, why do we have a federal Minister of Health if we are not going to exercise some responsibility at the national level, in conjunction with our municipalities and our provinces, to clean up this mess? He should respond in a more-


Some Hon. Members:: Hear, hear!
To get back to my question, Mr. Speaker, although it seems the Minister of Finance once again is either unwilling or unable to answer, every year this Tory Government spends four times as much on advertising as it intends to spend on cleaning up the Great Lakes.
Since we all know that companies will now have to commit billions of dollars to clean up our environment, could the Minister of Finance explain why his 9 per cent tax will apply to pollution control equipment?


Frank Oberle: Mr. Speaker, we are not surprised at the simplistic solutions that the opposition would propose for the clean up of the environment and the clean up of the Great Lakes. It is the same solution they have used in the past and that is to spread money at the troubled waters. That in itself is not the solution.

Oral Questions


Mr. Peterson:: It is not a national priority you are telling us.


Frank Oberle: Mr. Speaker, if that were a solution the problem would not be as severe as it is today. The fact is that the authors of the report published yesterday admit that much research needs to be done. We do not know what the effects are on health. The fact is that action has been taken. Action committees are under way, studying and working to clean up the hot spots. We have mounted two trusts. One in the area of remedial action and a more important one perhaps in the area of preventive measures that need to be taken in close collaboration with industry, municipalities, states, provinces and government.
Mr. Turner (Vancouver Quadra) Mr. Speaker, the minister is doing a brave job-I say this to the Deputy Prime Minister-in responding to a question the Minister of Finance ought to have answered. He is talking about research. We do not need to research pollution. We need some action in this country. I say to the Minister that he cannot see the forest for the trees on this particular problem.
Mr. Speaker, since the Minister of Finance is not responding, I want to put a question to the Minister of Transport. The final recommendation of the report released yesterday jointly by the Institute for Research on Public Policy in Canada and the Conservation Foundation of the United States reads this way and I quote:
We require sweeping changes in lifestyle from societies
increasingly dependent on the motor car for transportation.
How can the Minister of Transport release at the same time his own absurd, ludicrous, ridiculous and even phoney impact study on the cutting of VIA Rail and say that 2.5 million more Canadians travelling by car every year as a result of the cuts will not be increasing the pollution problem in the country? Where has he been living for the last few years?


An Hon. Member:: On the moon.


Hon. Benoit Bouchard (Minister of Transport):: Mr. Speaker, I have already tried to explain to the right hon. gentleman the way in which the process has to be worked. I will try again.
First, the law requires the minister responsible to make a preliminary study to see if it is necessary to go forward and go further in terms of environment. The figures here are based on facts. They are there, and the Leader of the Opposition could question all the facts. We have considered the facts which have been proposed by Transport Canada. I should be more specific. They have been totally endorsed by the officers of Environment Canada.


Some Hon. Members:: Oh, oh!


Benoît Bouchard: The Leader of the Opposition says that it is a phoney document. I am sorry, but I have all confidence in the officers of Environment Canada. I can guarantee that those figures are good. There is no reason, based upon those figures, to go further in terms of the environmental study, and we won't, Mr. Speaker.


Hon. Herb Gray (Windsor West):: Mr. Speaker, if the study to which the Minister of Transport referred is so reliable, where are the figures on nitric oxide and carbon dioxide? Where are the facts, on acid rain and the greenhouse effect, following the cutbacks at VIA Rail? Why wasn't this kind of study done by experts at the Department of the Environment instead of by the Minister's officials?


Benoît Bouchard: Mr. Speaker, everyone except the Liberal Party understands that as far as the VIA Rail network is concerned, it all depends on the number of passengers we take out of the network and put on other modes of transport. We said that theoretically, because some people may take the train, 2,400,000 people would travel by car.
Mr. Speaker, I am happy to say that since the 70's, 96 per cent of hydrocarbon, carbon monoxide and nitric oxide emissions have been reduced, and that by the year 2000, these emissions will be down to 5 per cent. This started under the previous government. Canada has some of the strictest regulations in the world on emissions of polluting substances, and that is the perspective in which the study was carried out. It is in the same perspective that I say to the Hon. Member for Windsor West that this study is a valid one. It shows it is unnecessary to go any further, because once again, its conclusions are entirely endorsed by the Department of the Environment, by officials of the Department of the Environment, and the study states that it is useless to go any further because the consequences are absolutely negligible.


Herbert Eser (Herb) Gray: Mr. Speaker, we have had nothing from the Department of the Environment other than the Minister's silence and absence.


TRANSPORTATION
Herbert Eser (Herb) Gray: Mr. Speaker, it was reported today that a group of American railroaders want to operate three passenger rail routes in Canada in place of VIA Rail's service which the government wants to eliminate. In fact, their spokesman said: "The public has proven that despite the intentions of the federal government it wants passenger rail service and will partronize it when available".
Why doesn't the government allow VIA Rail to continue to operate these services? Why does the minister and the government show less confidence in Canadian passenger rail service than a group of American entrepreneurs?


Benoît Bouchard: Mr. Speaker, because Canadians will have to pay for the deficit that you created. Canadians know increasingly that you never cared about the deficit, but we do care about the deficit.


Some Hon. Members:: Hear, hear.


THE ENVIRONMENT
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is for the Minister of Transport. Canadians have seen in the last 24 hours, whether it comes to the Great Lakes or VIA Rail, in terms of the impact the government is all talk and no action whatsoever.
I want to ask the minister about his so-called environmental impact study. I have three previous studies that have been done. The Fraser-Thompson Corridor, a 100 page document on environmental impact; the Alaska Highway Pipeline, Environmental Impact Study of 100 pages and a third one, done interestingly enough on CN Rail Twin-tracking Program in British Columbia alone-one part of the whole railway system-a 100 page document. In contrast I have here a seven-page mimeographed handout that the minister prepared over the
Oral Questions
weekend. Will the minister now be honest with the people of Canada and admit that his so-called study was a complete fraud when it comes to the environment?


Benoît Bouchard: Mr. Speaker, it is obvious again that the Leader of the NDP does not understand. The situation is much more complex than what he raised. I repeat what I said. We took the passengers on the current network who want to be served and we moved those passengers to other modes of transportation.
I will give you, Mr. Speaker, just a little figure which will explain what I am talking about. If you move all those cars on highways, where at the present time we have 142,000 cars moving at the same hour and what if we put on the Canadian highways 142,000 more. I would like for you to understand once again that the figures are good. They are the figures accepted by Transport Canada and Environment Canada.


John Edward Broadbent: Mr. Speaker, neither the figures nor the minister are any good when it comes to the environment.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


John Edward Broadbent: The minister cannot name a single environmentalist in the country who will support what he has done in the last 24 hours.
With reference to the need for a serious job in terms of studying the environmental impact on the VIA proposal, the Great Lakes study itself that came down yesterday made very specific reference.
I ask the minister to check it out; do not take my word for it. On page 25, they said that if we are going to deal with the Great Lakes we have to deal with the whole ecosystem, particularly air pollution. They cite the need to reduce auto remissions. They cite the need, therefore, for further studies about the impact of alternative modes of transportations on the environment.
If the minister were serious, on the part of the government that claims to be serious about the Great Lakes would he not now admit that in terms of his responsibility on VIA Rail they ought to have done a comprehensive alternative use of transportation study to help reduce air emissions in the Great Lakes region?

Oral Questions


Benoît Bouchard: Mr. Speaker, I have two points to make. The first one is that I do not understand when the leader of the NDP asks for a more comprehensive study.
He was laughing at me when I proposed a royal commission to look at the future of transportation. Of course it will consider the environmental side of the new transportation system.
When something is serious it is not for the leader of the NDP. Dealing with the quality of the leader, I will have the elegance not to comment on that.


John Edward Broadbent: Mr. Speaker, I am glad the minister reminded me about his royal commission after the fact. That is precisely the point: the government is making a decision now about VIA but is doing its study afterward. The government is supposed to do the environmental study ahead of the project to head off the effect.


John Edward Broadbent: Mr. Speaker, the Government refused to conduct a serious environmental impact study on the VIA Rail cuts. The same Government has not taken a serious stand on the Great Lakes.
Would the Minister admit that the only aspect of the environment that matters for the Government is propaganda?


Benoît Bouchard: Mr. Speaker, once again I am surprised at the reaction of the New Democrats' Leader, because he claims that the study which was done, and I always said that it was a preliminary study, as required by law to determine the need for a supplementary study- The preliminary study does not require us to conduct a further study. What surprises me, Mr. Speaker, is that this study was endorsed by Environment Department officials, and any comprehensive study called for by the New Democratic Leader would be done by the same Environment officials.
So why are they wrong now and why would they be right if we had a comprehensive environmental study?
Mr. Speaker, a little consistency from that side of the House, please!


Rex Crawford: Mr. Speaker, in the absence of the Minister of the Environment my question is for the Deputy Prime Minister and is with regard to the Great Lakes water quality.
Canadians are scared and concerned about the massive toxic soup of the Great Lakes. The minister will be aware that many of the remedial action plans announced in 1985 are actually remedial delay plans. Not a drop of water or a grain of poisoned sediment has been cleaned. Canadians want action.
The Prime Minister announced last year $75 million for clean up. Now the minister is saying that it is only $55 million plus $20 million for a health study. If the government is so committed to action, why the delays and why the drop in clean-up funds? It takes billions, not millions.


Frank Oberle: Mr. Speaker, my hon. friend is quite right. The task at hand is costly and will require some time and serious commitment by all the stakeholders and all the players. It includes the jurisdiction of the United States, the provinces, the municipalities, the science communities and of course the federal government.
Indeed it can be said that it is quite beyond the capacity or the means of any one jurisdiction to address the problem properly. The fact is that the federal government, since 1984, has taken very decisive action. It is not true that nothing has happened.
Everybody here is as well informed as I am about the work that has gone on in the Windermere Basin in the Hamilton Harbour. It is one of the sites that has been identified as one of the hot spots. We now have solid agreements with the jurisdiction in the United States. We have agreements with the provinces. The municipalities are involved. The science community is involved in various ways in the universities that study and do research. Things are in hand. What else would the hon. member have us do?


Rex Crawford: Mr. Speaker, I have a supplementary question. The Great Lakes Water Quality Agreement has no real mechanisms for putting people's feet to the fire. Nothing is legally binding on the U.S. or Canadian government to follow its plan.

Will this government commit to negotiating a formal Great Lakes treaty, with the Americans, to force both sides to follow the rules and regulations and not leave our citizens' health and well-being to the whims of political promises?


Frank Oberle: Mr. Speaker, as the hon. member knows we have renegotiated the Great Lakes treaty with the United States. There are teeth in the agreement. Action has taken place on both sides of the lakes. In fact the comprehensive monitoring process that has been launched by these treaty negotiations points out that progress is being made. The problem is not as severe as it was 10 years ago.
That does not give us any great comfort, but the fact is that we are making progress and there is a strong commitment, certainly by this government, to complete the task.


CANADIAN BROADCASTING CORPORATION
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, television is the key medium of influence for most Canadians. The new broadcasting bill purports to ensure a Canadian broadcasting policy.
In the light of the country's rapidly changing political dynamics, the new broadcasting bill fails to Canadianize and reinforce Canadian unity.
My question is for the Deputy Prime Minister. Why will this government no longer ensure that the CBC is required in its mandate to contribute to national unity through its programming? Why is this government removing, bite by bite, anything that helps to reinforce Canada?


Mr. Jim Edwards (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, the hon. member is referring to Bill C-40 which was tabled in the House earlier today.
I think on careful examination that the hon. member will find that the CBC's role in national cultural identity is strengthened through the insertion of a new subclause to which I would be happy to draw her attention. I believe it is subclause 3(l)(l)(iii). I am sure that she would be very pleased to read that.
Oral Questions
In addition, the new mandate of the CBC is to foster Canadian consciousness. I am sure that we will hear further from the hon. member as the bill proceeds.


Sheila Finestone: Mr. Speaker, I thank the hon. member for his answer. I think Canadian unity and Canadian identity need more than a little subclause.

Why didn't the Government's new legislation make it incumbent on the CBC to promote national unity? Why did the Government forget its responsibility for reinforcing Canadian unity?


James (Jim) Stewart Edwards: Mr. Speaker, the answer is the same in French as it was in English, in other words, the proposed legislation makes it incumbent on the CBC to foster Canadian consciousness.


THE ENVIRONMENT
Iain Francis Angus: Mr. Speaker, my question is for the Minister of Transport. A few moments ago he said that the whole matter of environmental assessment is much more complex than my leader would believe.
I want to ask the Minister, if it is much more complex would he not admit that a proper environmental assessment would include the following: relative fuel consumption of various modes of transportation; relative emissions of hydrocarbons, carbon monoxide, nitrogen oxide by various modes and their contribution to the greenhouse effect and ground level ozone; the impact of increased traffic in high density areas; the impact of expanding infrastructures and a route by route environmental analysis of all significant factors?
Would he also admit that his study did not examine any one of those items.


Benoît Bouchard: Mr. Speaker, I repeat what I said twice. I said that it is a preliminary study which has to determine what will be the environmental effect on other modes of transportation if we move passengers from the trains. That is the bottom line.

October 12, 1989
Oral Questions
The answer is: it will be negligible at the time. It means that we do not have to go further to determine if the new passengers will create more environmental problem. The answer is no. This answer has been confirmed by environmental specialists.


Iain Francis Angus: Mr. Speaker, only the Minister of Transport could tell the country that 1.7 million more automobiles on the roads will not add to the environment.


Some Hon. Members:: Oh, oh!


Iain Francis Angus: I believe the Minister needs some assistance. I have in my hand a document put forward by the Federal Environmental Assessment Review Office called Federal Environmental Assessment and Review Process, Initial Assessment Guide. It is basically a "how to" to conduct an environmental assessment.


An Hon. Member:: Good idea.


Iain Francis Angus: It is available from the Library of Parliament. Perhaps the minister would like to have his staff get it, take a look at it and then decide, finally, that what should be done is a full environmental assessment before any of these cuts are proceeded with. Will he do that?
Mr. Bouchard (Roberval) Mr. Speaker, we know that the New Democratic Party would like to have a full environmental assessment by those people, FARO, those specialists in the environment who already decided that we do not need this environmental study. I am trying to understand but do not try to understand the NDP, Mr. Speaker.


PRESENCE IN GALLERY
Mr. Speaker:: I wish to draw to the attention of members the presence in the gallery of Mr. Cyprien Mbonimpa, Minister of External Relations and Co-operation of Burundi.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: I also wish to draw to the attention of members the presence in the gallery of a delegation from Austria, led by Mr. Erich Fidesser, Member of Parliament for the Province of Lower Austria.


Some Hon. Members:: Hear, hear!


AGRICULTURE
Mr. Andre Plourde (Kamouraska-Riviere-du-Loup):: Mr. Speaker, my question is directed to the Minister of State (Agriculture). Last Friday evening, a major fire caused serious damage in the sheep section of Agriculture Canada's experimental farm in La Pocatiere, in the riding of Kamouraska-Riviere-du-Loup which I have the honour and the privilege to represent in this House. Mr. Speaker, flames devastated the new facilities, finished in 1988 at a cost of $1.4 million. About 700 sheep were lost, all ewes belonging to ten different breeds, which were being used in a major genetics and breeding program aimed at increasing the number of births in sheep. Mr. Speaker, since this experimental centre was the second largest in Canada, my question is as follows: Can you confirm, for my benefit and for the benefit of the entire population of Eastern Quebec, what Agriculture Canada intends to do regarding future use of this research centre? Second, does your Department intend to proceed with the construction-


Mr. Speaker:: Order. Perhaps the Minister could respond.


Hon. Pierre Blais (Solicitor General of Canada and Minister of State (Agriculture)):: Mr. Speaker, this is a very important matter. At the facility, which was a considerable asset to sheep raising in Eastern Canada, we luckily managed to preserve all genetic records. We already have many breeders who will be able to take advantage of our findings. I think that is good news.
As far as rebuilding is concerned, our people are now working on this aspect, and I think we can say the Government intends to rebuild the facilities, Mr. Speaker.


INDIAN AFFAIRS
Robert (Bob) Speller: Mr. Speaker, I have an urgent question for the Minister of Indian and Northern Affairs concerning the appalling and unacceptable conditions that exist in a number of the Six Nations Reserve schools, of which he is aware, which I have seen first hand, and which are being boycotted by some 1,200 elementary school children.
October 12, 1989

In 1985 the fire marshals indicated that there were dozens of infractions to fire and safety regulations which needed immediate attention. It took the minister four years to take action.
Will the minister make a commitment in the House today that funds will be made available over and above what he has committed to date to bring the schools up to the proper safety levels? Will he commit to remove instead of just hide the asbestos which has been found in these schools?


Hon. Pierre H. Cadieux (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I would just like to remind my hon. colleague that I have only been Minister of Indian Affairs for about eight or nine months. Therefore I did not have the benefit of those four years he is referring to.
It is an important question, Mr. Speaker, and I hope I will have the courtesy of being able to answer. It is an important situation. It is a grave situation that has been looked into.
The health and safety issues that were raised have been resolved. The inspectors of both Labour Canada and Health and Welfare have been on site and have confirmed that the schools are safe. That is not to suggest that there is not more that has to be done. As a matter of fact I have asked Commissioner Harry La-forme of Ontario to look into the matter with the community, because there seems to be a disagreement right now that we are trying to solve.


Robert (Bob) Speller: Mr. Speaker, the disagreement is broken promises. Mr. Laforme is a fine gentleman, but the fact remains that this government, maybe not the minister, made a commitment to build three new schools on the Six Nations Reserve.
The fact was that one of these schools was to be open by this September. No sod has yet been turned. No other Canadian community would tolerate these conditions for their children and this community will no longer tolerate them.
Will the minister finally live up to his promises, start construction of these schools, meet with the chief which he refuses to do, or is he prepared to continue to put at risk the health and safety of the children of the Six Nations?
Oral Questions


Pierre H. Cadieux: First of all, Mr. Speaker, I have not refused to meet with Chief Motour.
There was an appointment that had been scheduled for next Monday which I understand has been cancelled by the chief and not by your humble servant here, Mr. Speaker.
With respect to the construction of the schools, they are planned. They request the participation of the community itself because they will be building the schools themselves. We will be proceeding with construction of new schools as was planned.


FISHERIES
Mr. Lawrence MacAulay (Cardigan):: Mr. Speaker, my question is for the Minister of Fisheries and Oceans. Tuna fishermen in eastern RE.I. have been led down the garden path by this minister's department. They were guaranteed by DFO officials before the season opened that they would be allowed to fish tuna in Atlantic off Canso, and that any tuna they caught there would count against their home zone quota. Once P.E.I. fishermen arrived in the Canso area and started to catch tuna, the DFO officials changed their tune and told them to pack up and go home.
Could the minister explain to this House why fishermen in my riding were misled by his officials?
Hon. Thomas Siddon (Minister of Fisheries and
Oceans): Mr. Speaker, I am advised that regional officials in earlier consultations with the fishermen of the gulf region did indicate that quotas taken outside the region might be deducted from or be considered as part of their quota within the gulf.
We have had such a successful tuna fishery this year in all of Atlantic Canada, including the areas of Northumberland Strait and Fishermans Bank on which the RE.I. fishermen fish, including the North Lake fishery out of eastern RE.I., landed $500,000 of tuna last weekend, that equity has certainly been ensured. All fishermen are being generously treated in the way this fishery is managed this year.


Lawrence MacAulay: Mr. Speaker, my supplementary question is for the same minister. RE.I. fishermen were given a verbal assurance by DFO officials that they would be able to fish off Canso this year. In fact their rights were written on the licences they received from DFO.

October 12, 1989
Oral Questions
I ask the Minister the following questions: Why have the rights of P.E.I. fishermen been taken away? Will the minister immediately restore these traditional rights to the P.E.I. tuna fishermen?


Mr. Siddon:: Mr. Speaker, there are no rights that are written on licences. In the final analysis we manage the fishery to ensure a fair distribution of opportunity.
I am told that in the Canso area traditionally a small number of P.E.I. based boats fish there, but this year because of the bonanza nature of the tuna fishery a much larger number of P.E.I. based fishermen wanted to fish off the Canso area in a different region.
I repeat, P.E.I. and gulf fishermen have done veiy handsomely this year in the tuna fishery, and last weekend alone $.5 million worth of tuna was landed in eastern P.E.I., because that fishery has been very abundant.


THE ENVIRONMENT
Mr. Howard McCurdy (Windsor-St. Clair):: Mr. Speaker, my question is for whoever is acting for the Minister of the Environment today.
Tony Hodge, one of the authors of the Great Lakes great legacy study said on Midday today that his greatest concern is that federal politicians are just reacting to polls, that they do not understand the depth of the problem.
The public does understand. If, for example, it is going to take $40 million in Windsor and between $60 million and $70 million in Thunder Bay for sewage treatment, would the public not understand that $55 million is not going to go very far? Would they not conclude that this government is engaged in cynical propaganda or that this government consists of a bunch of ecological nincompoops?


Some Hon. Members:: Both.


Frank Oberle: Mr. Speaker, the hon. member's criticism and that of the author whom he quotes would perhaps be justified if we had behaved as the opposition does, namely, respond to critical questions like that every time there is an article in The Globe and Mail or The Star.
The fact is that since 1984 and leading up to 1987 significant action was taken. Just two days ago we announced a $125 million program with three tasks attached to it: remedial and preventive, as well as a health study.
Let me quote another author of the report, Mr. David Reynolds, who said: "We, frankly, do not know what all this means to human health". He said: "Little research has been done on the long-term effects of chemicals on the 35 million Americans and Canadians who live in the basin".
There needs to be some advance work done to find out just what the problem is. I have already told them that in the case of sewage being discharged into the Great Lakes it is the principal responsibility of the municipalities which will just simply have to readjust their priorities in terms of the management of their affairs.


Howard Douglas McCurdy: Mr. Speaker, I guess the hon. minister does not understand that $40 million and $60 million just does not add up when only $125 million is the total budgeted.
Now, referring to The Globe and Mail, how about the upper Great Lakes Connecting Channel Study that said there should be great emphasis placed on such connecting channels as the Detroit River.
Having read that, as I am sure the minister has, how could he explain the fact that Darrell Pekartz from Environment Canada, meeting with the Binational Advisory Council preparing the remedial action plan for the Detroit River, told them that the Detroit River is unlikely to get funding from this program over its duration. How does he explain that? That is not in The Globe and Mail.


Frank Oberle: Mr. Speaker, I cannot confirm or deny what one or another official of a Canadian government agency may have said to another agency.
All I am telling the hon. member is that if he examines the record he will find that significant action is taken. A commitment is made by the Canadian government and has been in place. Action is taken in all areas of the Great Lakes and in particular in those areas which fall under Canadian jurisdiction.
October 12, 1989

The fact is, as I said earlier, that the solution to the global problem is far beyond any one jurisdiction either in its regulatory capacity or in its capacity to mount the necessary resources, so we continue to mobilize the combined efforts of all those who have a stake in cleaning up the Great Lakes.


AGRICULTURE
Larry Schneider: Mr. Speaker, I have question for the Minister of Agriculture and his new-found assistant over there. It is a rather urgent question that I have for the Minister of Agriculture.
I have received many phone calls from farmers both in and outside my constituency who are counting on funds to be made available by the Prairie Grain Advance Payments Act. Not one farmer criticized paying the interest that will be required by Bill C-36. Saskatchewan farmers are willing to pay their share toward reducing our deficit. They want to know when our government will be in a position to provide farmers access to these funds that they so desperately need.


Hon. Don Mazankowski (Deputy Prime Minister, President of the Privy Council and Minister of Agriculture):: Mr. Speaker, the hon. member can advise his farmers that the opposition's tactic of filibustering Bill C-36 is really, in effect, denying access to advance payments for crops and prairie grain.


Some Hon. Members:: Hear, hear!


Donald Frank Mazankowski: I would take this opportunity to call on them-and I ask the hon. member to contact his farmers and maybe they can call on opposition members-to stop their silly tactics and get on with the job of passing Bill C-36 so the mechanism can be available for farmers to take advantage of and to help them in the orderly flow of grain and other crops after harvest.


AIR TRANSPORTATION
Ms. Albina Guarnieri (Mississauga East):: Mr. Speaker, my question is for the Minister of Transport.
The two new runways proposed for Pearson International Airport will increase noise exposure projections in residential areas in the region of Peel. The minister's
Oral Questions
own department produced the NEP forecast upon which the city of Mississauga based its land use policies.
What assurances, if any, is the minister providing to my constituents that they will not be subjected to even more intolerable noise levels as a result of these additional runways?


Benoît Bouchard: Mr. Speaker, I think that is a good question.
This summer I was in Toronto to make the announcement about the new runways. I think the member will remember that also this summer, at the same time, I said that a full environmental assessment would be made in terms of the involvement or implications of those new runways.
The final decision will be made in light of recommendations which will be given to me by the Department of Environment, having in mind that all consideration will be given to ensure that the quality of life will be the best for people of Mississauga, Etobicoke, and Brampton.


Albina Guarnieri: Mr. Speaker, I wish I could return the compliment, but it is evident that this government plans to tax us into submission and then drown out our cries of protest with aircraft noise.
I have a supplementary question. When the minister announced plans to expand Pearson, he called for, and I quote: "an accelerated environmental assessment". The minister cannot disguise the fact that he is going to rush through an important environmental study just so he can get on with building his new runways.
Will the minister pledge to this House and the residents of my riding today that no runways will be built if the environmental assessment is negative?


Benoît Bouchard: Mr. Speaker, I can first give the guarantee that all necessary measures will be taken to ensure that the environmental assessment will be the best.
The Minister of the Environment already said in a press release issued in Toronto this summer that it will be conditional on the acceptance by the Department of the Environment that the quality of life will be considered and that it will not represent any more damage for the people of Mississauga.

October 12, 1989
Privilege


INDIAN AFFAIRS
Mr. Robert E. Skelly (Comox-Alberni):: Mr. Speaker, my question is to the Minister of Indian Affairs. Canadian Armed Forces Camp Ipperwash on Lake Huron was seized from the Stoney Point Chippewas in 1942 under the War Measures Act. The government promised to return the land when it was no longer required for military purposes. Today the camp is used for cadets and militia; military personnel use it to store their recreational vehicles and as a summer recreation spot for their families.
My question to the minister of municipal affairs is when will the government return the land to the Chippewas and locate military and cadet training camps on sites that were not seized from their rightful owners?


Hon. Mary Collins (Associate Minister of National Defence):: Mr. Speaker, I would like to advise the hon. member that Camp Ipperwash is being used for very important activities of the Department of National Defence, including for cadets and the reserve. We have no plans to make any changes in the present use of Camp Ipperwash.


PROPOSED GOODS AND SERVICES TAX
Mr.   Brian@: Mr. Speaker, my question is to the Minister of Finance. Mr. Minister, you have asked the people of Elk Island and other parts of Alberta to change the manufacturers' sales tax. We want to know what is wrong with the old tax. Can we not just fix it up? What is so bad about a tax on production anyway? Why change it now? Why can we not just keep the old manufacturers' sales tax?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, the hon. member is quite right. We have a manufacturers' sales tax and we are proposing to change that. The true reason why we are proposing to change this tax is that it is broken. It is not working. It is a drag on our economy. It is a hidden tax on exports, exports that come from right across the country including the hon. member's own riding of Elk Island. It is also a tax on imports that is one third less than on Canadian domestic production. For all of these reasons it is very important to change the tax.
In the last Parliament there were some proposals put forward to have an adjustment of the existing manufacturers' sales tax. The finance committee of the House of Commons was quite critical of this patch on the old tax. It is for that reason we believe it is important to move to a complete revision of the sales tax system.


PRIVILEGE
Robert (Bob) Speller: Mr. Speaker, the Minister of Indian and Northern Affairs may have inadvertently misled the House when he indicated that the Chief of the Six Nations Reserve, Chief Montour, refused to meet him. In fact, when I checked with the chief's office, it was indicated that the minister had refused to meet with the chief until the children went back to school. I also checked with the minister's office and they gave me the same indication, that the minister had refused to meet with the chief until the children went back to school.
I want to give the minister a chance to correct the record and if, in fact, he wants to meet with the chief I will gladly act as an intermediary in this matter.


Pierre H. Cadieux: Mr. Speaker, first of all, I have already asked someone to act as a mediator in this particular issue. It is Mr. Laforme of Ontario. If I do need additional help, I will count on my hon. colleague to help me.
With respect to the meeting, I had a meeting scheduled with Chief Montour. Obviously, there had been prior discussions for the children to return to school because both the inspectors of Labour Canada and Health and Welfare have declared the schools to be safe. Obviously the meeting was on the understanding that the children would be back in school and we would be addressing the situation of the new schools in a normal manner. The chief refused that condition, refused the meeting and it was cancelled.


Mr. Speaker:: The Hon. Member for Haldimand-Norfolk has raised a matter. There seems to be some disagreement. The Minister is responding. It is not a question of privilege, but I hope the exchange has helped to clarify things.


BUSINESS OF THE HOUSE
Herbert Eser (Herb) Gray: Mr. Speaker, this being Thursday, I want to ask the government House leader if he will give us the customary statement setting out the business the government intends to call and present to the House over the coming week.


Hon. Doug Lewis (Minister of Justice and Attorney General of Canada):: Mr. Speaker, there have been discussions among the parties. With respect to tomorrow's business, you will find that there is agreement that when Bills C-20 and C-18 are called, there is an understanding that there will be no dilatory motions put during the proceedings tomorrow in order that both those bills can be discussed.
Bill C-20 is at the report stage and I believe we are at the last of a grouping of motions for discussion. Bill C-18, the bill to create the multiculturalism and citizenship department, is veiy near completion. We expect that we will be able to complete second reading on that.
On Monday, October 16, we will devote the entire day to report stage of Bill C-21, the Unemployment Insurance Act amendments.
On Tuesday, October 17, and Wednesday, October 18, we will continue debate on second reading of Bill C-28, the income tax bill. In the event that the debate on Bill C-28 is finished on time on Wednesday, we propose to call second reading of Bill C-40, the new broadcast act which was just introduced today.
Thursday, October 19, is an allotted day for the consideration of any opposition motion and for passage, at all stages, of the 1989-90 supply bill.


Mr. Speaker:: The hon. minister on a point of order.


POINT OF ORDER
Benoît Bouchard: Mr. Speaker, in an answer I gave this afternoon to the Leader of the Opposition, I gave two figures, and I want to be sure the record is corrected in this respect. I said, in English I believe, that there would be 150 more cars per hour on Canadian highways after the changeover, while we now had 42,000 during any given hour between midnight and six o'clock. I may have said 142,000, in
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English, but I meant 42,000 cars running at any given hour between six o'clock in the morning and midnight. Not 142,000 but 42,000.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Nystrom:
That this House advise the government to scrap the proposed goods
and services tax and implement a tax system which is based on the
ability to pay and which includes:
1)	a minimum corporate tax on profitable corporations;
2)	taxation of capital gains income, with the exception of farmland sold for agricultural purposes, small businesses and principal residences;
3)	the restoration of an inheritance tax on wealthy estates;
4)	effectively progressive income tax; and
5)	tax provisions which encourage environmentally sound practices.
Nelson Andrew Riis: Madam Speaker, now that we have had the first round of speakers on this supply day, there have been some discussions between the parties regarding the concept of rather than having 20 minute speeches and the 10 minute question and comment periods, we will have 10 minute speeches and five minutes of questions and comments and continue with the usual rotation.
Madam Speaker, I would ask that you seek unanimous consent to proceed in that fashion for the rest of the day.


The Acting Speaker (Mrs. Champagne):: Do I understand that all three parties agree on 10 minute speeches followed by a five minute question and comment period?


Some Hon. Members:: Agreed.


Mr. Jack Whittaker (Okanagan-Similkameen-Merritt):: Madam Speaker, although Parliament Hill is often well insulated against the sounds of the outside world, I think that if we listened closely we could hear the major rumblings of discontent from the rest of Canada. These rumblings, I would suggest are the sounds of the avalanche of discontent caused by this goods and services tax technical paper and proposed legislation that the government is trying to saddle Canadians with.

October 12, 1989
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The force of those rumblings and the voices of Canadians from across Canada will shake the very foundations of this government, a government that has shown contempt for the people of Canada in the past and in this bill once again thumbs its nose at average Canadians. Canadians have had enough and they will not stand for it. I have received letters from a small smattering of those people from my riding. I am sure all members of Parliament on both sides of the House have had many, many letters. Let me give you a sampling from my riding. A letter from Grand Forks in the province of British Columbia states:
This letter is to protest the implementation of the Goods and Services Tax. This is not the solution to reduce the deficit. I think the Government should control their spending, especially their special-interest spending, and determine their priorities. This could generate a lot more revenue without hurting everyone and creating such havoc.
I, for one, have supported the Progressive Conservative party in the past, but will not continue to do so if you insist on this stupid course.
Another letter from Summerland, British Columbia states:
-the complexity of the proposal boggles the mind. Surely a minister with your resources could come up with a less complicated, and more equitable means of raising taxes. I know that were I in your situation, the first thing I would do would be to reduce spending. Surely that is not beyond your capabilities!
Another letter from Penticton, British Columbia states:
I have talked to many young and old, not one of these persons are in favour of this "tax grab". By adding 9 per cent, I for one will keep a real close guard on my pocket-book, and will buy nothing except the most needed.
Please tell the government, that the majority of Canadians do not make the kind of moneys the MPs do.
Another letter from Penticton states:
Mr. Wilson, you missed the boat on this one. Once again the government has underestimated the durability and tolerance of Canadians-
In the United States I would be considered one of the silent majority. I go to work, pay my taxes, and try to save some money for my retirement without complaining. No more! I am going to do everything I can to stop this horrific tax. I will be joining every organization that is against this tax and use every legal means I have to stop this travesty!
Another letter from Grand Forks states:
We have reached the point of saturation of taxes, whether it be federal, provincial, or municipal - .
Between the high interest rates and our "fair" tax system we will surely join other Third World countries in "the rich get richer and poor get poorer and the middle class foots the bill".
From Oliver, British Columbia, this letter states:
-it is hereby requested that your government take a more common-sense attitude in your efforts to decrease the federal deficit. A most worthy step would be to realize we, the taxpayers and citizens, keep the government operating and it does not bode well when we are asked to take less, while we become painfully aware of your government's excessive spending habits.
A letter from Okanagan Falls states:
-I do think that it could be something for someone to give very serious thought to and maybe sometime, somehow, something MIGHT develop to free the "little guy tax slave" from his oppressors and their idea of getting all that they possibly can for themselves and "friends" all the while in doing so the low income people of this country are pushed deeper, and deeper, down into the muck of poverty. Is equitable treatment for ALL too much to ask, or expect? Whatever did happen to the concept that no one should be expected to pay other than what they were able to pay?
Also I have a letter with respect to the goods and services tax and how it will affect a business person from Penticton who states:
As a former member for 30 years of the Federal Progressive Conservative Party, I must now speak out against the government which I, as a small business person, feel has totally lost touch with the people of Canada.
Those are simply a smattering from the mounds of mail that I have received from my riding and throughout Canada as small business critic on what people in Canada think of this particular technical paper and the proposal of a 9 per cent goods and services tax.
The government has promised simplicity. What did they do? They have snowed under the small business community of Canada. That is emphasized by the Canadian Federation of Independent Business which has insisted that the government go back to the drawing board, scrap the present tax, and get down to some serious thought as far as tax reform goes.
October 12, 1989

The small business community cannot take another kick while they are down. I am from the riding of Okanagan-Similkameen-Merritt where, to be parochial, we have been hit hard by the GATT. We have been hit hard by the free trade agreement in our industries with respect to agriculture. Added to the top of that, our tourism industry, which is one of our largest growth industries in the province of British Columbia and certainly in my riding, has predicted the loss of 400 jobs. Across Canada we are told by the tourist associations that there will be a loss by 1994 of $1.3 billion from the revenues of tourism. That is a loss predicted of 30,000 jobs Canada-wide.
We in the Okanagan-Similkameen-Merritt and boundary areas are dependent on the small business sector. We are dependent on tourism. We cannot afford another kick while we are down. We cannot afford this goods and services tax in that area.
As we travelled across Canada on the finance committee, we heard from restaurant associations that stated they will lose 40,000 jobs with massive amounts of money. We have heard hotel associations representing major hotels state that there will be business losses and business failures in the major centres. We heard hotel associations from smaller communities tell us that they are very price sensitive, that the small communities, the small mom and pop operations are the operations that will go down as failures in today's economic climate created by the goods and services tax.
These people are barely eking out a living now. To kick them while they are down when they are finally rising up from the problems in 1981 is not only unfair, but it is despicable. It is terrible that we have to put up with that in the Okanagan-Similkameen-Merritt and boundary country. In that area we do not need the goods and services tax.
I would suggest to you that not only do we not need it in my riding, but the story is the same if you go to the Yukon territories where they depend on tourism. It is the same in Prince Edward Island where there is an agriculture and tourism base. It is the same in Newfoundland. It is the same on Vancouver Island. It is the same throughout the prairies and central Canada.
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We cannot stand to have any further kicks while we are down. We cannot stand it in the tourism industry or in the small business sector. The seniors sector, once again, is an area that will be hard hit. One Voice has told us that they cannot see the goods and services tax going through as it is slated. They are diametrically opposed to the very concept of this because it is regressive. That again hits my riding.
Before I complete, let me just read a small section from a statement by the Economic Development Corporation of Osoyoos and area. Osoyoos is a small border town. The Economic Development Corporation is trying hard to assist that community in the business sector. They state that it is the organizations' hypothesis that the goods and services tax will significantly encourage residents to shop in the United States, therefore, significantly hurting local retail businesses and economy.
I think that for much of the 100 mile corridor across Canada that borders on the United States we have seen the evidence of that over the past three weeks before the Finance Committee. There will be a flood of our economy down into the United States and we in Canada cannot stand for that. We have alternatives, and hopefully I will be asked for some of them during the period for questions and comments.
Canada cannot and will not go along with this goods and services tax the government is proposing.


Mac Harb: Madam Speaker, I congratulate the hon. member on his presentation.
This morning we had a press conference where we were calling on all of those people who are opposed to the goods and services tax all across the country to join us in a pre-Hallowe'en rally in front of Parliament Hill at noon on Monday to tell this government about their feelings vis-a-vis this regressive, hidden and inflationary value added tax.
Over the weekend I was looking at an article in the Financial Post dated October 24,1988. In this article were some examples of what happened in certain parts of Europe. In Belgium, the equivalent to the goods and services tax is approximately 25.5 per cent; in France, it goes up as high as 33 per cent; in Greece, it goes as high as 36 per cent; in Italy, 38 per cent, in Portugal, 30 per cent, and in Spain, 33 per cent.

October 12, 1989
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Does the honourable member think that this government is going to be a lot better than those in Europe and will not be tempted to increase this goods and services tax over the years to reach 20 per cent?


John R. (Jack) Whittaker: From the studies that I have seen, it is clear that in all the countries that have brought in the goods and services tax, within months of bringing in that tax the rate was increased. The latest example from New Zealand is that it went from 10 per cent to 12.5 per cent.
I think in every case not only have they raised the tax that they brought in originally, but they increased their spending to meet the cash cow effect, so what we have is a situation where the governments spend more as they get it in, and look less at what their expenditures are.
It is undoubtedly a fact that if this is brought in, as is often proposed by some of the government's friends in the manufacturing sector, and we broaden the base, bring in foods, do away with exemptions, and if we lower the rate, it is simply a matter of time before the rate is raised up. I think all of the people who have appeared before us in committee have agreed to this.
The inflationary factor that is involved in any level of goods and services tax, particularly the one at 9 per cent, will probably be double what the government has originally told us. The spiral effect of inflation which the government has not taken into consideration due to increased prices and increases in wage demands will have detrimental effects on all of the economy of Canada with a probable increase in the value of the dollar and an increase in the level of interest rates. We will have total chaos and perhaps a major recession as a result of this.


Mr. Lee Richardson (Calgary Southeast):: Madam Speaker, when this government came to office in 1984, it was faced with a corporate tax system that was riddled with special deductions, exemptions, and credits. The result was a fast-eroding, federal tax base on the one hand, and a corporate sector that was being given all the wrong economic signals on the other hand. A large part of corporate resources and ingenuity was going into minimizing taxes through a plethora of government incentives. The Canadian corporation had lost its way and in fact had been lured into the woods and up the creek by the former government.
Corporate resources would have been better applied to resolving real corporate problems, such as developing more and better products for existing domestic and foreign markets. Instead, they were induced by the former government to scurry after crumbs in the form of incentives, incentives paid for by the average Canadian. The damage done by this policy to the economy was obvious. Large numbers of ventures failed once the incentives either ran out or became insufficient to support uneconomic businesses and large amounts of public funds wasted on schemes such as the scientific research tax credit-quick flips.
Even more distressing was the fact that these special incentives were so attractive that they mounted year after year, much faster than they could possibly be used. This created a tremendous incentive for taxpayers to create intricate mechanisms and schemes to sell unused tax credits and losses to profitable taxpayers.
The credibility of the tax system was in grave danger as a result of this progressive degeneration. The former government not only encouraged this behaviour, they made it impossible for even the best business people to avoid seeking such devices. The danger was not only that corporations would continue to play an increasingly smaller role in providing their share of support to funding public programs, but that individual taxpayers would react to basically an unfair situation by going to great length to minimize their taxes as well.
It does not end there. Socialist members have often raised the fact that the corporate sector's share of government revenues has fallen over the years. This is only partly true, and to the extent that it is, it has not been due to any shrinking of public responsibility by Canadian businesses as other parties suggest. In fact, as a proportion of corporate profits, corporate taxes have not changed significantly over the last quarter century. What did fall was corporate income as a percentage of total income. The reason corporate income declined in importance is that this sector was led down an unproductive path by the former government.
Our government was, therefore, faced with a fundamental choice in 1984. Leave the basic system in place with all of its structural faults and fast eroding base and offset it with a minimum tax, or go to the very heart of the problem by repairing damage inflicted by the former government and restoring stability to the tax system. We chose the latter and embarked upon a program of
October 12, 1989

corporate tax reform which began with a moratorium in 1984 on that great waste of your tax money, the scientific research tax credit-quick flips. This process continues to this day with the introduction of the large corporation tax in the April 27, 1989 budget.
In between, the more important measures have included the termination of the scientific research tax credit, that fitting example of what the opposition stands for; measures to prevent a variety of schemes to transfer tax losses from non-profitable corporations to profitable corporations, schemes encouraged by the policies of the former government, the reduction of accelerated capital consumption allowance rates across a broad range of capital goods and industries; the elimination of the general investment tax credits which proved to be such a failure in producing real wealth; the reduction of a variety of special purpose investment tax credits; an increase in the rate of taxation of capital gains; the introduction of a corporate surtax; the introduction of put-in-use rules to limit the use of deductions where taxable income is not forthcoming; removal of the inventory allowance; curtailment of the use of the leasing to transfer benefits for accelerated capital consumption allowances from non-taxable entities to profitable firms; and a creditable tax on large deposit-taking institutions.
The benefits of this approach to tax reform have been significant. We now have a broader and more stable corporate tax base which ensures that corporations, and especially large corporations, pay their fair share. In total, these measures will provide well over $2 billion in new tax revenues and will help provide the government with the funds it needs to deliver essential services to Canadians. Just as important, the changes to the tax system have turned the corporate sector's attention back to basic economic fundamentals and away from devising complicated ways to avoid tax. This is critical if our firms are to be able to compete in increasingly tough world markets.
What would the opposition have done? What do they propose? A minimum tax, a tax that would leave the old, inefficient and unfair system in place, and try to cover it up with a mechanism which would be very difficult and complicated to administer. Canadian corporations would continue to pursue complicated schemes to avoid tax and
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then pay a minimum tax as an afterthought. Even worse, this minimum tax would have been an unbearable burden to small and medium businesses just barely scraping by as it is. Inefficiencies and unfairness would have persisted and all Canadians would have suffered.
The right approach is to fix the system, not compensate for it. The right approach is to provide a fair and efficient system of taxation. That is what this government did.


David Walker: Madam Speaker, I was very interested in the comments of this Conservative member as he tried to wind his way through both a defence of a fair tax system and a defence of his own tax system, which I think is basically a contradiction.
There are two things I would like him to address. Given that this is supposed to be a new and fairer tax system, I am a little curious as to why the government now feels that children and students should be heavily taxed. As we know, everything that a child now buys, under the GST will be taxed. As well, students for the first time in our history will be taxed. Their books will be taxed, their food at the universities will be taxed, and their lessons will be taxed.
One of the interesting contradictions in this system is that when somebody goes to a stockbroker, they do not pay tax when buying stocks, but if they decide their child needs to see a psychologist, they have to pay tax on that. I just do not quite understand why a child psychologist is less important than a stockbroker. Perhaps the member has a better insight as to the fairness in that particular system.
I think that nowadays students, particularly part-time students, cannot raise enough funds and they continue to go to school for five or six years to gain their 15 credits. A lot of them are women who choose to return to the work force, and others are single parents to whom this is an additional expense. Because women usually end up at the low end of the labour market, they earn between $4 and $5 an hour. If they are now going to pay 9 per cent more on everything as students, how many hours do they have to put in just to pay the government? It takes a lot of time, and I do not think the Conservative members have given any thought to the absolute unfairness of taxing children and taxing students. Perhaps the member can show us some insight in the next minute as to exactly what is so fair about this.

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Lee Richardson: Madam Speaker, I think one of the things this government has given a lot of thought to is the $350 billion debt created by the former Liberal government. We have to get a hold on this. The country cannot continue to go on living beyond its means.
The hon. member mentioned the cost to students going to university. Canadians are very fortunate in this country to be able to go to university and pay a small amount of the actual cost of their education that they do. We can only continue to support students going to university and support the wonderful social programs we have in this country if we get our financial situation under control.
One of the fair ways of doing it is the way that 48 countries in this world have done it, including five out of seven countries of the G-7, the largest industrialized countries of the world. The only two countries of the G-7 yet to bring in a goods and services tax are Canada and the United States. The United States is looking at it now. We would like to be a leader in North America, as we have been, in tax reform. To be internationally competitive in the world, to continue to be able to pay for social programs that our government has brought in, to continue to provide these services and balance the budget in this country, we obviously have to increase the revenues to be able to pay for them. The experience in other countries has been that this is a fair system. It is not a regressive system. We have introduced an addition to the program in this country where we will provide tax credits to lower income Canadians, to the extent that those in families with incomes of less than $30,000 will actually be ahead of the game in terms of taxation under this GST system. It is a fair progressive tax and one that will help us reduce the national debt in this country and get this country back on its fiscal feet.


The Acting Speaker (Mrs. Champagne):: A point of order, the hon. member for Winnipeg North Centre.


David Walker: Madam Speaker, I would like the member to clarify the record. I think he mistakenly said that there is $350 billion worth of debt created by the opposition. Perhaps he would like to explain exactly what was meant by that.


The Acting Speaker (Mrs. Champagne):: The hon. member rose on a point of order. I think the point that he made is a question for debate which certainly could be debated with the hon. gentleman. It is not a point of order.
There is still one minute to go in the period reserved for questions or comments. I will allow the hon. member to conclude.


Lee Richardson: Madam Speaker, I think this is another myth that may be masqueraded along with this circus that the hon. member from Ottawa is going to conduct here later in October.
The Liberal answer to dealing with the economic problems of the world is: "Let's have another circus. Let's have a masquerade before Hallowe'en".
Let me answer the member's question about who created the deficit in this country. Over the past 15 years, during the Trudeau government, I can recall going out to the opening of senior citizens' homes and saying, "Isn't this wonderful that the federal government is providing financing at 2 per cent mortgage financing for these seniors' homes, for these seniors who have done such a wonderful job of creating this country for us". Well that sounded great at the time, except that they did not pay it off at the time. We have got 25 and 30 year mortgages created by the Liberal government on seniors' homes all across this country at effective 2 per cent mortgages that taxpayers today are paying for and will continue to pay for for 25 years.


The Acting Speaker (Mrs. Champagne):: I must interrupt the hon. member. His time has expired. Resuming debate.


Ronald MacDonald: Madam Speaker, I rise to join in the debate on the motion by the member for Yorkton-Melville. It is an important motion and I am glad it is on the floor for debate today.
Over the last number of weeks and months the nation's attention and anger has turned to the government policy called the GST, the goods and services tax.
Today, we are debating a motion by the hon. member which calls upon the government to scrap this tax. Earlier in the day, the members of this House were treated to one of the finest speeches I have heard since I have been elected in this House and, I am sure, one of the finest speeches in the last number of years, from my colleague for Ottawa South. He spoke eloquently about the concerns that Canadians have with this very flawed proposal, this veiled attempt at tax reform.
October 12, 1989

This latest Tory tax grab, which has been called the GST, proposes to bilk $26 billion from Canadians' back pockets. The government, before it introduced this particular goods and services tax proposal, and the Minister of Finance said that there would be a few principles underlining the new proposal that would be coming in. He said that the first principle is that it had to be a single-tier system. It cannot be a multi-tier system. He struck out on that count.
What we have now, in the words of John Bulloch from the Federation of Independent Business, is a nightmare on Main Street. This government is prepared to put a piece of legislation before this House that, if adopted, is going to cost the small businessman and woman across Canada up to $7,000, according to one of the estimates, in compliance costs with a system that is going to duplicate an already cluttered sales tax system across this country.
He also said, time and time again, that this new sales tax would be visible. But then he had to stand here in the House and look sheepishly at his feet when he told the House that there was no way that he could make this tax a visible tax. He struck out on that count as well.
He also said that the tax was going to be revenue neutral. He talked about the unfair manufacturers' sales tax that was taking in $18 billion in revenue. He called it a killer of jobs. Well, earlier today, one of the members on this side of the House, in response to a speech from a government minister, let that minister know that it was this very government that took that 9 per cent manufacturers' sales tax and hiked it to 13.5 per cent.
He has also said that any of the additional moneys raised will be given back in rebates, but that has been shot full of holes time and time again as presenter after presenter appears before the finance committee in its travels. He struck out on that count.
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He also said that the over-riding principle of realistic tax reform is that it must be fair. Well, I am going to show him in the next few minutes that he struck out on that count as well.
Before I do that, I want to talk a little about the crippling effect some of the other budgetary measures of this government has had on the regions, particularly Atlantic Canada.
Over the last number of months we have seen this government show a complete disregard for the principles of wealth redistribution and equalization. We have seen this government hell bent on pursuing a course of dividing this country between those who have and those who have not. One of the documents produced by the government's own agency, the Atlantic Canada Opportunities Agency, put it quite clearly in a leaked document that the government did not want to go public. Some Atlantic Canadian working in that office had the good sense to see that this report had to go public and leaked it. This is before the GST proposal came forward. It stated that, "the measures introduced in the budget of the Minister of Finance in the spring of this year will cost an additional $200 million in tax bites against corporations, large and small, and individuals in Nova Scotia alone."
We have also seen this government bring in programs to reduce the amount of money the Prime Minister had promised for regional development in Atlantic Canada. We have seen the Atlantic Canada Opportunities Agency have its mandate almost gutted, neutered, so that now any business venture over $200,000 no longer qualifies for direct grant assistance. We have seen the government cut back in established program funding to the government of the province of Nova Scotia to the tune of $70 million less than will be going into the coffers over the coming years. That money was earmarked for hospitals and for post-secondary education institutions.
We have also seen the government come in with uncaring, cold and vicious cuts to the unemployment insurance system. In a region that has perpetually suffered from the highest unemployment in Canada, the people of Atlantic Canada are going to suffer the most from those cuts. So much for compassion from the members opposite.

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We look specifically at the GST and the effect on industries in the Atlantic. It shows that the policies that this government has adopted which are destroying the nation's fabric piece by piece, province by province, and region by region, are continuing.
The fisheries in Atlantic Canada has been brought to its knees by this government's policies that have allowed over-fishing, have shown no enforcement, and have left our fishermen and our fish plant workers, without work and without any prospects for a future.
One thing this government has done is to tax the fishermen's bait, the dead fish used by the few fishermen remaining who can eke out a living in the Atlantic fisheries. Those fishermen are now going to have to pay 9 per cent more on the cost of their bait. How cold, callous, cruel and misguided can this government's policies be?
Another industry that employs some 100,000 Atlantic Canadians is the forest industry. I checked before I came here today because I wanted to find out exactly what effect the GST would have on the independent man or woman who works in the forest industry, the self-employed woodsmen who go to cut pulp on private wood lots. What effect will it have? I called the information hot line. I was told that unless that individual has registered himself as a business, which I take to mean incorporate at a great deal of cost, he or she will have to pay an extra 9 per cent on the cost of his or her chainsaw, on the cost of gasoline that goes into it, on the oil for the machine. They will have to pay an extra 9 per cent on work boots, work gloves and work clothes. This is what the Minister of Finance calls fair.
The effect of this tax will be devastating on the tourism industry. The tourism industry in Atlantic Canada is one of those real creators of new wealth and new jobs.
In Nova Scotia alone over $760 million per year is left in our economy by tourists from outside Nova Scotia. Fully 76 per cent of the tourists who visit Nova Scotia and spend those dollars and create those jobs are Canadians, not Americans. Twenty-four per cent are foreigners, including Americans.
In response to a question in the House, the Minister of State for Tourism, I believe, got up and had the audacity to say he was concerned about the tourism industry all over Canada, including Atlantic Canada, so the government was going to have a generous rebate system for foreign travellers. How daft can he get?
If 76 per cent of the travellers are from Canada, that means 76 per cent of the money that is left in the province of Nova Scotia is left by Canadians. They are the same Canadians who are going to be driving down to Maine, to Massachusetts, and to Cape Cod by this government's regressive tax policy. Canadians now looking for a seaside holiday are going to be driven stateside, and that is where they are going to spend their money. There will be thousands and thousands of jobs lost in the tourism industry in Atlantic Canada.
Perhaps this is one of the little side deals he has done with the President of the United States to try to increase the tourism in Kennebunkport.
In conclusion, this government has betrayed and misled Canadians. It has taxed us from the cradle to the grave and I am sure if it could find a way to tax us in the hereafter we would be debating that as well. It has taxed haircuts, bingo cards, kids' chips, lollipops, swimming lessons and recreation. Seventy-eight per cent of Canadians say they have enough of this Tory tax grab. Ninety per cent of Canadian business has said the same thing and I join with my colleagues and the millions of Canadians in saying that this tax must be scrapped.


Lee Richardson: I thought it might be nice for the hon. member to be able to join with millions of Canadians in something. It is nice that these fellows can be in a majority once in a while, as rare as it is.
I want to comment on the hon. member's speech. This sort of thing is not helpful to the whole basic issue. We hear this across the country. I have been travelling with the finance committee and I find that Canadians, once they have had an opportunity to read the proposal, as I am sure the hon. member would feel if he ever has an opportunity to read the proposal, understand that this is a very progressive broadly-based tax in the interest of all Canadians.
On no specific point did the hon. member really prove his point in terms of where these difficulties would arise. It is simply a question of him continuing to go on to raise these myths about the difficulty of the tax. When he raised questions about added input costs of 9 per cent for fishermen or whatever, at no point did he speak of the tax base available. Any business, small or large in the country, with regard to the GST, simply pay the tax on things they buy and get a rebate of 9 per cent from the government.
October 12, 1989

When the hon. member raises this issue I wonder where he fits in the income tax credits and input credits into his equation, in terms of receiving money back for all of those small businesses in the Atlantic provinces who now pay an average of 13.5 per cent, probably up to 19 per cent in terms of some of the equipment they buy, certainly vehicles. Nineteen per cent manufacturers' sales tax is the cost they absorb in their families and businesses now.
With the GST, there will be an input tax credit. They will pay the 9 per cent when they buy it and they will get a rebate of 9 per cent from the federal government. Essentially they will be further ahead, particularly as it relates to the western provinces and the Atlantic provinces which are resource based provinces. These provinces, because of the export potential, will come out ahead of the game.
The hon. member would be best serving his constituents to support this tax because it is in the best interest of Atlantic Canadians.


Ronald MacDonald: Madam Speaker, I have listened to the illogical answer of the hon. member for Calgary Southeast.
I have listened to what you have said. Initially, what you told us in this House is that you travelled with the committee and that you have listened as well. I cannot believe the nerve of the members of the government who believe that 78 per cent of the Canadian public, obviously, are wrong. You guys must have a monopoly on all that is right and righteous. Seventy-eight per cent of Canadians have said that this is a tax that they do not want, about 90 per cent of Canadian business.
You could not even get one provincial premier, not even one of the few Tory premiers who are left, to agree to go in on this tax with you. We have heard officials from various governments who have said that this tax will destroy some of the resource based industries in their areas. When you talk about the fishery, you should go back, since you are defending your government's policies, and read it.
The fish bait that is used by fishermen is not eligible for a rebate and it is not eligible for an exemption. If you want to sit out back a little later, I will show it to you in
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the book. Maybe you can give it to your colleagues. I can also remember one of your colleagues who I think is the Parliamentary Secretary to the Minister of Finance, at a meeting in Halifax just a few weeks ago when he spoke to the Canadian Japanese Automobile Retailers Association, indicating in a series of four answers to four questions that there would not be a sales tax on the full price of a used vehicle.
Subsequent to that, I happened to call up the toll free number. I was told by a senior tax official that that was simply not the case. When you are telling me that I should listen, I tell you that you and your people should listen to small businessmen across this country and you should read your own documents before you get up and start pointing fingers at anybody in this House.


The Acting Speaker (Mrs. Champagne):: Before we resume debate, I would like to point out to the Hon. Member for Dartmouth that the Chair has been quite patient. I know the hon. member has not been here for that long. He should not be addressing a member directly, but through the Chair. It would make things a lot easier.
[Translation}


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Madam Speaker, I welcome this opportunity to speak to a motion by the Opposition, especially after listening to the Hon. Member for Dartmouth (Mr. MacDonald). I am surprised, Madam Speaker, because when I went to Halifax two weeks ago to attend a conference of members of CAJAD, he was there, and I thought that at the time he understood the point I was trying to make, which was that the federal sales tax was not a good thing and needed to be changed. I am surprised, because everyone there was in favour of the change, and to answer his comment about used cars, what I said at the time is still valid today, namely that the tax on goods and services does not apply to the price of used cars sold by a dealer but to the difference between the price paid by the dealer for the used car and the dealer's selling price, because when he sells the car, the dealer provides goods and services, and that is what we want to tax. So the Hon. Member should go back to his books and listen carefully to what he hears at conferences.

October 12, 1989
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Madam Speaker, I would like to provide some background. I know many people in my own riding regularly listen to the proceedings at this time of the day, and I would like to give some background information on the Opposition motion-


Some Hon. Members:: Oh, oh!


Pierre H. Vincent: If Hon. Members opposite would care to listen with the same courtesy I showed them, it would be better for all concerned, Madam Speaker.
The motion reads as follows:
That this House advise the Government to scrap a proposed goods and services tax and implement a tax system which is based on the ability to pay and which includes:
This is where it gets interesting, Madam Speaker.
(1)	a minimum corporate tax on profitable corporations;
And we all know that the Budget includes a tax on capital.
(2)	taxation of capital gains income, with the exception of farmland sold for agricultural purposes, small businesses and principal residences;
Madam Speaker, there is already a capital gains tax in Canada.
(3)	the restoration of an inheritance tax on wealthy estates;
What is a wealthy estate and when is it not wealthy, Madam Speaker? That remains to be seen!
However, the Opposition forgot to mention the federal Government's previous experience in taxing estates or, since you are from Quebec, that province's experience in taxing estates. That experience led to a single conclusion, namely that the cost of organizing and administering estate taxes was about equivalent to the amount of money collected.
So on the one hand, they say they want to clean up government finances and cut red tape, and on the other hand the Opposition wants us to hire people to produce more red tape. That is their position!
(4)	effectively progressive income tax;
In 1988, Madam Speaker, Part I of the tax reform provided for three tax brackets instead of ten. In fact, it did even better. It changed everything that was called an exemption. Under the old Liberal regime, two individuals, one earning $10,000 and the other $100,000, both had the same exemption, say $3,000, at the end of the year. For the one earning $10,000, it meant $300 or $400 less tax to pay, whereas it was a saving of $1,500 for the one earning $100,000. At that income level, the tax rate makes a $3,000 exemption worth much more. We took all that out. Now we say: Whether you earn $10,000, $25,000
or $100,000, you will have a $1,000 tax credit. We replaced all two pages of exemptions under the old Liberal regime with tax credits. That makes the income tax system not regressive and benefits low-income families and individuals compared to high-income earners.
You see, Madam Speaker, that is the fourth point; it has already been done.
5) tax provisions which encourage environmentally sound practices.
We see the Opposition's hand in that, Madam Speaker. When you don't know what to do with an issue, you give incentives like the scientific research tax credit. It cost Canadians three or four $billion. Instead of taking money, giving it to company x, which will have to report by deadline y on the amount of money z given for scientific research, they created tax credits, which cost billions.
It is the same thing for the environment, Madam Speaker. It is a measure which gives you no way of knowing in advance who will benefit, to what extent, how and when. That is just like asking the Government to throw money out the window. That is what item 5 of the motion does.
In the last five years, Madam Speaker, this Government has done much more for the environment than the former Government was able to do. The Minister of the Environment continues his excellent work. We will not solve environmental problems with tax measures.
Madam Speaker, when we look at this motion, we see one thing. We see that the Opposition is not only after the goods and services tax. No. It wants to undo the fiscal policy of the last five years. This fiscal policy has done two things. First, it strengthened the Canadian tax system and especially tax fairness, and second, it helped the Canadian economy make substantial progress over the past five years. That is what the fiscal policy of these last five years has done.
What did we do to improve the tax system? I said that we cut tax shelters, we cut the scientific research tax credit, we introduced a refundable federal sales tax credit for low-income families in 1986. That was innovative. Since 1986, the amount a family or individual receives annually has doubled and it will quadruple in 1991 with the implementation of the new goods and services tax. That is innovative and breaks with the old-style taxation of the present federal sales tax. That tax is 65 years old, Madam Speaker. Sixty-five is time for retirement. We want to retire that federal sales tax.
October 12, 1989

All the organizations that appeared before the Standing Committee on Finance said the same thing: The present sales tax is bad!


Jean-Robert Gauthier: Yours is worse!


Pierre H. Vincent: It is bad!


Jean-Robert Gauthier: Yours is worse-they all said that!


Pierre H. Vincent: People might want to see some changes made to our proposal. That is normal. But it is definitely accepted and more acceptable than the federal sales tax. My colleague from Ottawa-Vanier will definitely admit that, not here, because he is not in a position to do so, but I well know that outside the House, he will admit that the new tax is better than the old one, because he is an intelligent, sensible man. And especially, Madam Speaker, since the honourable profession which he practised before entering this House is not affected by the GST!
I heard the NDP Members talk about taxing companies, taxing individuals, tax, tax, tax. That is fine, Madam Speaker, but remember one thing: Canada is in a competitive international market. Therefore, the Canadian personal and corporate tax system must be competitive with rates in the United States, Europe and Japan. That is important-


An Hon. Member:: With the United States!


Pierre H. Vincent: Yes, with the United States! Yes! It is funny how proud we are as a government and as a country to sell to the United States. Maybe the Liberal party is not proud of it, but it creates jobs here. You over there do not care about jobs. That is another problem. We care about employment. Come to Trois-Rivieres; people there care about jobs! That is why it is important to sell to the United States and Europe.
Madam Speaker, I see that my time is up and I will respect your decision with great pleasure. In closing, I think that we must defeat this motion, which, as I explained, in no way fits the future that we want for Canada in the year 2000.
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Mac Harb: Madam Speaker, I have a question for the Hon. Member about the surtax that was introduced in 1985. At the time it was 3 per cent. A little later, it rose to 5 per cent. On June 18, 1987, the Minister of Finance said in the House that as soon as the new sales tax was introduced, personal and corporate income surtaxes would be eliminated. However, in 1989, the Minister of Finance said in English:

"At this point I do not want to hold this one out". [Translation]
In 1987, the Minister of Finance said, "It shows.", replying that he would eliminate the surtax, but in 1989, when questioned by the Finance Committee, he said he could not eliminate the surtax- My question to the Hon. Member is as follows: If the Government really wants to go ahead with the GST as drafted, without discussions with the provinces and the various parties involved, will the Hon. Member continue to support his government's proposals in their present form?


Pierre H. Vincent: Madam Speaker, I have the benefit of four years' experience with the Department of Finance, and I can inform the hon. member for Ottawa Centre that the Conservative Government negotiated with the provinces for two years, but for various reasons no agreement was reached on a national sales tax, which would have been the ideal situation, everyone agrees. Now there is no agreement, but as I pointed out earlier, the present federal sales tax must be changed, and there is agreement on that. At least there is that.
Third, Madam Speaker, the hon. member forgot a very important aspect of the proposed GST. I can't blame him because I forgot to mention it myself. I am referring to the fact that after bringing the number of tax brackets down to three, we are now setting the second bracket at 25 per cent instead of 26 per cent, to improve the situation of low- and middle-income families. Madam Speaker, I think this amply compensates for the surtax that remains in place for high-income Canadians.

October 12, 1989
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Jean-Robert Gauthier: What about the temporary surtax?


Pierre H. Vincent: I just answered that question.


Steve Butland: Madam Speaker, I have a question for the member for Trois Rivieres on free trade and the goods and services tax. In the province of Ontario tourism has gone down 8 to 25 per cent, including tourism in Niagara Falls. The bridge from Sault Ste. Marie, Ontario, to Sault Ste Marie, Michigan, is tilted- Canadians are flocking to the United States every day.
Two hundred and fifty thousand dollars per week is spent on groceries on the Michigan side; $2 million already has been spent in the first 10 months by Canadians shopping in the United States. The flow of money is going from Canada to the United States. Tourism here is way down. I say the playing field is not level and this goods and services tax will only exacerbate the problem. The circumstance at border cities is chaotic. It is a disaster.
Would the government, and hon. member personally, want to help out border cities? Would he perhaps exclude them from the goods and services tax? What sort of comment might he have to assist border cities?


Pierre H. Vincent: Madam Speaker, I think the comments by the Member for the New Democratic Party are very interesting, but I don't think it is up to the Government to do so. I think it is up to all Members of this House to pass the message on to Canadians that they should buy Canadian and support Canadian business. Madam Speaker, this is not a partisan issue. It is a matter that has an impact on all Members of this House. To save money, many Canadians prefer to shop in the United States, when they live near the border and generally speaking, this is bad for Canada. I think my colleague should be the first to stress this point and sell this philosophy to Canadians.


The Acting Speaker (Mrs. Champagne):: Resuming debate. The Hon. Member for Ottawa-Vanier.


Jean-Robert Gauthier: Madam Speaker, it is high time we had this kind of debate in the House, and I think the New Democratic Party is to be commended for tabling a motion in the House that gives us an opportunity to spend a few minutes discussing tax reform, a discussion I believe is necessary on a subject that concerns all Canadians. Madam Speaker, we would
of course have preferred to see our amendment accepted by the Chair, so that we could broaden the scope of the debate and get at the core of the problem.
Today, Canadians want to know first of all whether our tax system is equitable, fair and visible, and whether it is truly adapted to the needs of Canadians. In other words, whether it is modem enough to meet the demands of the 90's. We all agree that the system needs restructuring, that tax reform is necessary. That is why we made a suggestion this morning for thorough consultations with Canadians and the provinces, with a view to bringing about fundamental tax reforms in this country. We feel this reform, study or consultation should focus on personal and corporate income tax and on any other tax measures that may be used to pay our debts and enable Canadians to continue to enjoy the services and programs that were developed and introduced many years ago. We would like to see a system that is fair to everyone, that is simple, that is based on the ability to pay-in other words, progressive -, that meets the environmental demands of the day and helps provide for sustainable development. The four themes I just mentioned: fairness, simplicity, ability to pay and environmental demands are themes I think should be discussed across this country, because this is truly a problem that demands our attention.
I admit that the motion before us is concerned mainly with attacking the goods and services tax. In that regard, I will just say that I quite agree it is high time for Canadians to get the message across clearly to this Government: the goods and services tax proposed by the Conservatives is unacceptable in its present form because, we must admit, it meets none of the requirements, none of the criteria set by the Finance Minister himself. I will read those criteria to you! Not only the Finance Minister but also the Prime Minister in the 1988 election campaign said the tax had to be revenue-neutral, that it could not bring in more than the present tax, about $17 or $18 billion. It had to be visible, but it will not be; it will be as hidden as the present tax is. It will have to be set in cooperation with the provinces. It will not be! We know that; the Parliamentary Secretary admitted it himself. It failed, it missed the mark. The provinces left the negotiating table and said: No, your proposed formula is not acceptable. The new goods and services tax meets none of the criteria set by the Prime Minister and the Minister of Finance.
October 12, 1989

I remind you of some statements made by the Finance Minister. He promised a revenue-neutral tax in the election campaign, and I quote him:

"The bottom line is that the GST (the goods and services tax) will not be used to raise the revenues of the Government of Canada." He said that on June 19, 1987, on CTV News. The same minister said, "So again what we are trying to do is be, using your words, "revenue neutral", in the second stage as well".

Madam Speaker, they did not keep their promise. The Minister's own technical paper now being considered in committee shows that he intends to collect 5 or 6 billion dollars more than under the present tax, which is about 24 or 25 billion dollars. These figures are on the conservative side, because if we are to believe certain witnesses-I have here a letter that says the Federation of Independent Businesses maintains that the Mulroney Government will collect 15 billion more from Canadians. Fifteen billion is fifteen thousand million!
About visibility: we wanted a visible tax so that people will know they are payingy taxes on product*. There will be no visibility, because the government has said: legally, we cannot insist that the tax be visible on the bill.
However, the Minister of Finance (Mr. Wilson) promised the House a visible tax. On June 18, 1987, he said: "Sales tax reform will eliminate the hidden tax in the prices consumers pay". It says so at page 7634 in Hansard, but it wasn't true!
Two years later, on June 22, 1989, the Minister of Finance told the House: "Our legal advice is that we do not have the legal right to require a retailer to impose the tax extra to pricing, or to include it in the pricing".
Madam Speaker, businesses are not obliged to indicate the amount of GST on the bill, and so it will not be visible.
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They told us: "Well, we will give them an incentive". Another broken promise!
They told us there would be federal-provincial co-operation. We will be the only federal system, the only Western country, the only Western developed country with a double retail sales tax: a provincial tax in most provinces except Alberta, plus a federal tax. This has an even more complex and damaging aspect, because the provinces will apply their sales tax on top of the tax imposed by the federal Government. It will be the sale price plus 9 per cent plus, in my own province of Ontario, 8 per cent. This will be a very heavy burden on low- and middle-income families, because they are the ones that will have to pay. I don't think it is fair to put this kind of burden on their shoulders.
After five years under the reign of this government- and in this context the word "reign" has a pejorative connotation-Canada's national debt has doubled since Confederation. On August 8, 1984 the Minister of Finance told the House: "We will reduce expenditures and refrain from increasing taxes, which are too high as it is".
And during the 1984 election campaign this same government kept repeating, and I quote: "Our immediate aim is to bring down the deficit by reducing expenditures, not by raising taxes".
Yet over the past five years the Conservative government has saddled the Canadian population with 31 tax increases. Interest rates have been fluctuating at an alarming rate. Low income Canadians are poorer than ever, the rich are richer than ever!
During the past five years under the Mulroney government, the taxes of a family with two children and an annual income of $23,600 have gone up by 60 per cent. The taxes of a similar family earning an average annual income of $45,000 have increased by 30 per cent, while those of the wealthy earning $100,000 a year are up by 8 per cent. A family earning $23,600, up 60 per cent; $45,000, up 30 per cent; and if you earn $100,000 your increase amounts to 8 per cent. Madam Speaker, I repeat that it is unfair.
I want to conclude my remarks by stating that we do need a reform, but first we must consult Canadians, we must get the provinces on side. We have to find a fair, equitable, open and simple solution. But the GST of this Conservative government will do nothing to help us meet the basic requirements of a system which runs well and is fair to everybody.

October 12, 1989
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Mr. Hovdebo:: Madam Speaker, I appreciate the succinct way the member defined what he considers a fair, progressive tax structure. I notice in passing though that he did not express his support for the five suggestions made in the motion before us.
Among everybody to whom I have spoken, and I guess generally across the country, there is a great suspicion that the price of everything will go up. The price of labour, goods and services will go up besides the tax being added on. There is also a suspicion that the manufacturing tax which is supposed to come off is unlikely to be passed on to the consumer.
This whole approach would add, as it has in Great Britain and in New Zealand, a considerable amount to the cost of living. Does the member agree that this is one of the real dangers of this kind of tax, that it will add so much to the cost of living and that it will be much more inflationary than is suggested by the government?


Jean-Robert Gauthier: Madam Speaker, I appreciate the question.
I did not address the points in the main motion basically because I really believe that the approach of the New Democratic Party in this debate was a patchwork type of approach. I do not agree that we should be doing any patchwork.
Canadians are fed up with patchwork. This is what the GST does. It is just a patchwork approach to a very difficult problem that we will need to resolve together. I object to people wanting to impose upon us a patchwork approach which I took the motion that we have before us today to be, unless it was amended by my friend from Ottawa South who had a very good way of putting it into a more comprehensive, global context. I apologize if I did not address, in the 10 minutes that I had, all the issues of the main motion, but I did want to address the points that I believe are important.
To tiy to answer the question that was put to me, it is true that we have no guarantees from this government that it will ensure that the saving of the 13.5 per cent manufacturer's tax will be passed on to the consumers. That is true. The government will not legislate, I know,
that manufacturers who are making the 13.5 per cent savings on their goods as of January 1, 1990-God forbid if it ever comes into force-must pass that savings on to their consumers. And that is one of the big problems because they won't. They didn't when Jean Chretien reduced the tax from 12 to 9 per cent. The experience of this country is, beware, they do not pass these savings on, they just jack up the price and say that it is part of doing business.
I have to tell people also to beware of the shell game here. The 9 per cent will cost a lot more than the 13.5 per cent even though some of my Tory friends say that they are reducing it from 13.5 to 9 per cent. That is a lie. That is not true. On a piece of furniture-a rocking chair for instance-that is manufactured for say $200 on which we pay 13.5 per cent today-which is $27 tax-when that same rocking chair gets through the transportation network, through the marketing and the store sells it and adds on its profits, it will sell for $400. Well, 9 per cent of $400 is $36, so it will cost Canadians more, not less.
That is why I think it is time for this government to drop the idea of the GST and to come to grips with the real issues. It should ask Canadians what they want in terms of fiscal reform.


Peter Andrew Stewart Milliken: Madam Speaker, I rise on a point of order. Today we are discussing the business of supply which is one of the essential functions of this House, and for which the government is accountable to the House of Commons. There is not a single minister of the Crown in the House, and I object to that.


The Acting Speaker (Mrs. Champagne):: The hon. member knows very well that this is the type of remark that he should not make in the House, yet he keeps doing it.


Mr. A. H. Harry Brightwell (Perth-Wellington-Waterloo):: Madam Speaker, I am delighted to take part in this debate today. The goods and services tax is fundamentally important to every single Canadian, to the future of every Canadian.
We in this Parliament have a responsibility to pass on to our next generation a sound economy, a fair tax, and a country that can hold its own with its competitors in the world. I want to say that we should pass on a debt-free country.

I was going to say that we should pass on a debt-free country. Frankly, while the goods and services tax is going to help in this regard, we are saddled with that huge debt we inherited in 1984. The member said we have doubled the debt. Perhaps it has doubled but it is the service cost of that debt that has generated all of the present debt. That government set a pattern that we are having difficulty breaking away from and we are saddled with that huge debt.
In the short time that I have today I would like to talk about why we must replace the existing sales tax. We know that the existing sales tax distorts business, it is hidden from consumers. The hon. member from Vanier was talking about the hidden tax. I would dispute that this new tax will be hidden because, indeed, every single business that will buy must have it separated. This tax will be visible.
The problem with the old tax is that it is hidden. It penalizes Canadian producers. What a terrible thing to have to continue, and the opposition is not suggesting any other way around it. It is very complex. It is unreliable because people can make business decisions to get around the tax.
In 1984 we set down an agenda for economic renewal. The agenda for renewal spelled out in plain terms our government's priorities and principles, and described a clear policy framework directed toward job creation. And what a record we have. One and a half million more Canadians are working now than there were in 1984. The agenda described economic growth, sound fiscal management, economic efficiency and improved international competitiveness.
The plan focused on a strong private sector as an economic leader, on a compassionate social policy to help Canadians in need and on government being a creator of solutions and not one of the problems.
The goods and services tax is the result of extensive consultation and careful study that began way back with the White Paper on tax reform in June of 1987. Tax reform was to be implemented in two stages. In 1988 the government reformed its personal and corporate tax systems. The goods and services tax is the next step in this overall plan.
We are living today with a federal sales tax that was put in place in 1924, 65 years ago. How many changes have occurred in the industrial world since then? Then it was
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simple; manufacturers made the article and wholesalers sold the article. Now everything has changed except our tax. The world economy has also changed around us and Canadians have to change in order to meet the competition.
Today's business world is different. This difference has been recognized by nations around the world. Other nations have changed their tax systems. In fact, 48 nations in the world presently use a tax similar to the goods and services tax that this government is proposing. This is hardly a new invention, hardly something different that we are proposing here today.
The opposition would lead us to believe that Canadians are not able to handle the degree of complexity in the tax, but other nations in the world can. I do not believe that for a moment. I know that Canadians can indeed understand the tax if they are given a chance to understand it and they will, in fact, be able to work competitively in the world.
It has been clear to me for some time that many people, including the opposition, do not understand what is in this tax. In fact, from what I have heard today I know that is true. If opposition members meet constituents who do not understand it as well they do not care. They are quite happy to allow the misconceptions to continue in the constituent's mind. They are not trying to tell them the facts about the tax. They have not studied it.
The member from Dartmouth said "Study the tax". He said there is a 9 per cent tax on bait that can never be recovered. Every business in Canada can be taken to a tax free position through the application of the goods and services tax, even fishermen who pay a tax on their bait.
We have heard from the member from Vanier about the new goods and services tax being a tax on tax, that the Ontario tax will be a tax on the goods and services tax. Indeed, it might. I would like to make two comments. First, the leaders in the provincial world thought they would force the Government of Canada out of this particular field and not let it have a consumer tax simply by not co-operating. I am sure that the citizens of Ontario particularly-I will not speak for the other people across Canada-would want the two taxes. Indeed, the province and the Government of Canada will come to an agreement so that we will indeed have a joint tax down the road.

October 12, 1989
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The member for Vanier also talked about the impact on the lower-income family. He did not bother mentioning the tax rebates that will go to these people and, indeed, give them more money when they are done than what they have at the present time.
Getting back to my topic, which is basically the federal sales tax, items that we buy every day are taxed right now. They include cosmetics, garbage bags, children's toys and kitchen utensils. Even food carries an impact of the federal sales tax. Other things in business such as office furniture and tools carry tax, even though many of those are supposed to be tax exempt. But there is an impact of federal sales tax that carries through in the cost of every single item that is made. It is there as a hidden aspect, but there as well as an added item at the end after manufacturing.
We should talk a little about who pays the present tax. It is suggested by many-perhaps not today for I have not heard anybody say it-that all the tax will come from the consumer. Consumers have forever paid the tax that is built in as a business expense. Indeed, if they pay the tax now, they will pay the tax later.
We have heard them say that the new tax will be 9 per cent on everything, like a tax increase. The truth is it will be very difficult for members opposite to show me any single item that will have a net increase of 9 per cent because there will be cost reductions. There will be competition in industries all over. There are businessmen on this side of the House-perhaps there are not too many over there-who know that competition does keep a lid on prices and will force the passing on of any savings.
The $17 billion in taxes that we collect right now are buried so deeply in production processes that they are virtually invisible to the majority of Canadians. Under the present tax we are taxing the business inputs of our companies which compete with companies around the world. This puts our companies at a distinct disadvantage, both here with respect to the price of products that we sell at home against imported products, and also against selling in other parts of the world. This unfairness in the tax is costing us jobs.
Let us be realistic. What country in the world would let a tax continue that shoots itself in the foot, that hurts itself in jobs and production? I do not think you can find
many others, or any others, certainly not nations of equal industrial growth and ability like ourselves. We are committed to a better future for our children. Any member of Parliament representing constituents in the House should be supportive of such a move to preserve our current good life.
There is another negative aspect of this tax. Manufacturers can organize themselves to evade the tax. They can set up a manufacturing base and move all of their costs and future costs into another company to reduce the amount of tax that is applied to the manufacturing cost. So the present tax is not reliable.
This tax is supposed to cover some 75,000 firms, but indeed it is made very complex because there are 22,000 special arrangements with administrative interpretations. There is an increasingly larger number of court cases which are trying to define the tax as it stands now and show it will not produce the revenue that it does in the future because of this type of organization.
The goods and services tax will apply uniformly across a broad base of goods and services. The present tax applies only to 30 per cent of the products that are sold. This is a very narrow base on which to have a tax which is really, in its own right, a consumption tax.
It is certainly a great understatement to say that the present sales tax is inadequate. It is outdated. It is damaging our ability to compete in the world.
I see that I have come to the end of what I might say. Perhaps I diverge a little too much on the things that the opposition members have said.
Our government has faced and will continue to face economic challenges so that we can ensure Canada's prosperity in a competitive, ever changing world. We have a plan for meeting the challenge ahead. The plan is working. The goods and services tax is an essential part of that plan.


Stanley J. Hovdebo: Madam Speaker, I know that the member recognizes that a good portion of our production in Canada is exported to the United States and is used there to produce products which sometimes come in to compete with our products. Under this particular tax, any export to the United States will not be taxed. Thus, a manufacturing firm which uses Canadian products in the States will not have to pay this 9 per cent tax. However, a manufacturing firm in Canada which uses the same materials will have to pay the tax.
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I know the member is going to tell me that it is going to be rebated, but many small firms and many productions, such as farm productions, have a cash flow problem to start with. That cash flow problem is going to be increased by 9 per cent. Would it not make much more sense not to have this tax in place and to be more competitive right from the start?


A.H. Harry Brightwell: Madam Speaker, perhaps the hon. member does not realize that every manufacturing institution in Canada and the United States will indeed be tax free. There will not be any tax carried on.
He speaks about cash flow. He and I have a kindred interest in farming. That is one area in which I agree there will be forever a claiming back of rebates. Beyond that, in businesses where all products are taxed there will be a positive cash flow because each business will forever have money owing to government in its bank account and will indeed have more money and more interest generated from it.
Products entering from the United States will be as cheap as they are now. Because we compete on the market there, our products will be cheaper. In any case, a 9 per cent tax will be paid on both sides of this issue, imported and on Canadian-made products. It will be applied fairly, which I am sure is what the hon. member must want.


Robert (Bob) Speller: Madam Speaker, I must say I was somewhat shocked that a member of this House responsible for agriculture-in fact the chairman of the agriculture committee-got up in the House today and said nothing about the effects of the GST on agriculture.
I want to bring to his attention something that is in the finance minister's technical paper. It says: "Sales of farmland will generally be subject to the normal GST rules. Sales or leases of farmland will be taxable". In other words, a farmer who sells one quarter of a section of land to another farmer or, in fact, leases it to his son, will have to pay tax. What this does is it raises the input costs of farmers. What this tax does is give more paperwork to farmers. It also brings up a system of "the cheque is in the mail" syndrome. This is something that farmers will have to deal with.
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I had the opportunity to see a number of farmers at our local fair. Farmer after farmer after farmer came up to sign petitions against this GST because they recognize that it is not good for agriculture. So I leave it to the member to get up and say something about agriculture and the effects of the GST on agricultural communities.


A.H. Harry Brightwell: Madam Speaker, the hon. member should know that I know there are other things in life apart from agriculture, although I do spend a good part of my time in that particular area.
I have already acknowledged the fact that farmers will forever be claiming input costs. I have also said that they, like every other business, will be tax free. So this in and out aspect of the tax does not mean increased costs to the farmer who is renting the land.
I want to ask the hon. member if he spent any time explaining the tax to the people who came to his booth. I would like to suggest that this member fed on the misconceptions held by the people coming to the booth and allowed them to grow. He is not really trying to explain this tax to the people of Canada.


Ms. Audrey McLaughlin (Yukon):: Madam Speaker, I rise in support of this motion today. It is a far-seeing motion that is part of real tax reform and which provides the alternatives that the Prime Minister has been calling for. Here are part of the alternatives to real tax reform.
I support this motion not just in support of my riding but in support of the people of Canada-the rights of the people of Canada to be free from a regressive tax grab and to see what real tax reform could look like.
First, I would like to make some comments on the manufacturers' sales tax which, as the previous speaker said, is an unfair tax. I would ask why this Tory Government raised an unfair tax from 9 per cent to 10 per cent to 11 per cent to 12 per cent to 13.5 per cent. In other words it raised this unfair tax since 1984. We can only take from that that in order to deal with an unfair tax this government has decided that it will make an unfair tax more unfair for every Canadian, whether it is to buy their children's clothes, a postage stamp or to bury someone. This is a tax that goes beyond the grave as well.

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We have heard a lot today about the effects of this tax on various ridings. I would like to make a few comments today on the effects on those Canadians who live in our northern regions.
First, it is known that it is vety expensive to live in the northern regions of our country. One of the issues I would like to address about this tax is the potential effect on inflation, which the government itself acknowledges. There will be an inflationary aspect to this tax, some 2.5 per cent according to the government, but to other analysts it will be beyond 3 per cent. There is no tax rebate, no tax credit to compensate northerners, farmers and those who are living in poverty for the inflationary effect of this proposed tax.
I would like a northern resident to say that the cost of living in the north ranges from 25 per cent to 50 per cent higher than southern regions, and in some remote areas in the Northwest Territories it is as much as 75 per cent to 100 per cent higher. We are going to see a situation where residents of northern areas suffer not only from the inflationary effect but also from the tax itself.
As you know, Madam Speaker, many of our goods- virtually all of our goods-from food to processed goods are trucked in or flown in. Northerners are going to be hurt particularly by the added transportation costs when the tax comes on to transportation as it is proposed. This will affect not only those of us in northern Canada, the Yukon and the Northwest Territories, but all northern parts of the provinces and indeed all rural areas which are reliant on these forms of transport. Of course, cutting VIA Rail will be another severe blow to those areas that have relied on the rail system for delivery of those goods.
The 9 per cent means that we will be suffering greater tax hardship than our counterparts in the south. I want to give some specific examples of that. For example, based on Statistics Canada data it is estimated that the average family in Whitehorse, in my riding of the Yukon, will pay $500 more per year than a southern family with the tax increases. Whereas the average Canadian family may anticipate a tax increase-and it is a total tax increase of $2,000 a year-a northern resident can anticipate an increase of approximately $2,500.
Another increased cost to northerners will be the taxes mentioned on transportation. Northerners travel more. They have to, not just to visit family and friends but for medical reasons and to do business. For example, the average Yukon family spent $662 on air travel in 1986 compared with the Canadian average of $211. That is almost three times as much. I want to remind the House that that amount is for essential services which include medical care, business reasons and so on.
What the GST means is that this family will pay an average of $40 more as compared with a southern family on increased air fare alone.
As everyone knows-and even the Hon. Minister of Finance knows-it is much colder in the north. It is much darker in the north beginning this time of year. Therefore, we use more oil, electricity and natural gas, as do other Canadians, but we use more of it than do other Canadians. In Whitehorse the average resident spends $638 on home heating fuels alone. That is compared with some $400 for the rest of Canada. Nine per cent of $638 obviously is more than 9 per cent of $425.
This tax will cost northerners more. This tax is a penalty for people living in our northern regions.
Let me make it clear that I do not in any way support this tax or this form of regressive taxation. That is why I support the New Democratic Party motion which proposes real alternatives and real tax reforms.
I was interested to hear during the hearings of the committee in Whitehorse one of the government members of the committee propose that there would be an adjustment made to the northern benefits allowance to compensate for the increased burden of taxation which may fall as a result of this proposed goods and services tax. I would certainly be interested in hearing more details on that as we have found with the northern benefits tax, which I know is under review at the moment, there are still many loopholes. There are many problems with people in claiming the benefits that they are entitled to under that format.
Northerners know that this tax is unfair, not just to them but to all Canadians. The biggest problem, as I said, is that this is a regressive tax. It is tied to the amount of money people spend and not to their wealth or incomes.
October 12, 1989

Clearly the poor are going to be hit harder by this increased consumption tax. It violates the principle of taxation according to ability to pay. It continues to shift the burden from the large corporations to the consumer.
There are alternatives, and we mention some in our motion. I would like to add a few.
There must be a comprehensive restructuring, as I have said and as we indicate in our motion, of the tax system. For example, there should be an annual net wealth tax. People should not be taxed strictly on their income but on what they own. Net wealth is the best measure of an individual's ability to pay. There are estimates that this could bring at least $1 billion in revenue to the government.
The former speaker talked about the deficit. As we know, a decrease in interest rates of 1 per cent would immediately add $1.6 billion in revenue for the government. Clearly, the calls for a decrease in interest rates-a call by all Parties on the finance committee- could be a measure which could result in an increase in tax revenues as well.
We can limit as well corporate interest deductibility. As I said earlier, with the goods and services tax there will be a tax on stamps and on children's clothing, but there are to be no taxes on the interest on the money that large corporations borrow for mergers and takeovers or, indeed, on any merger or takeover. Stockbrokers are free from having to pay the tax. I think it would be of small consolation to a single parent trying to raise a family and trying to pay for housing to know that stockbrokers' transactions will not be part of this taxable system.
We can raise income tax for the highest earners. The latest statistics already indicate that the luckiest Canadians are those who make over $125,000 a year because they are still those best favoured by our tax system.
We can also eliminate the $100,000 tax free capital gains exemption, except for farms, family businesses and private residences, which would bring in some $600 million in government revenue.
Protection of the environment is the number one issue today. I have seen nothing that indicates that the government has done an environmental assessment of
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this proposed goods and services tax. What will this mean for the purchases of environmentally-friendly products?
An environmental tax on the other hand would work toward solving two problems-protecting our environment and creating tax revenues. We need a genuine minimum corporate tax.
These are just a few of the suggestions for tax reform. What this government must realize is it cannot continue to shift the burden on to the poor and middle-income earners. It cannot continue to have support from the Canadian people. It cannot continue to call this tax reform.
Madam Speaker, today we are proposing some elements of real tax reform. I urge all members of this House to support this motion.


Mr. Murray W. Dorin (Edmonton Northwest):: Madam Speaker, I appreciate having an opportunity to speak on this motion, especially as someone who has spent the last three weeks hearing representations from people both here in Ottawa and in other parts of the country.
I notice that this motion essentially calls upon the government to abandon its efforts to reform the federal sales tax and to do other things. I would say that unfortunately it appears that the members who are proposing this motion have not been listening to the groups which have been coming and speaking before the finance committee.
Quite frankly, what I can tell you and other members of the House who may not have been free from their other duties to come and observe all of our committee meetings is that, for the most part, about nine out of ten groups that have come before the committee have endorsed the concept of a value added tax, or a goods and services tax.
In almost every case they have had particular measures that they want changed or done differently. We can look at small business, for example. Mr. Bulloch spoke on behalf of small business. He said there was no other solution to the problem but a type of goods and services tax. He was unequivocal about that. He wanted the provinces to be part of the system so that there would be one system in Canada rather than two, but he had no doubts about a value added tax.

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We had a representative from the National Council on Welfare, Mr. Ken Battle, who came and told us that the proposal put forward by the government is superior to the system that is in place today, a system, I might add, that has been there since 1924. He had some concerns with regard to the credits and the indexing of the credits, but comparing the proposal to the existing system was a positive step. I would have thought that the New Democratic Party might have been interested in hearing from the National Council on Welfare.
We had, in addition, Mrs. Shirley Carr, who came before the committee on Tuesday morning representing the Canadian Labour Congress. When I asked her directly how she felt about a value added tax which is in place in 48 other countries in the world, she said she had no difficulty in supporting the concept of a value added tax. Again, she had some concerns about this particular proposal and wanted some changes. Effectively, she wanted us to go back and have a royal commission to see what we could do in that regard.
Maybe I should speak on that for a moment because I think some people have the impression that what we are doing is somehow new or just thought up in the last few months or a year. In fact, the existing federal manufacturers' sales tax has been around since 1924. Today it accounts for about 20 per cent of the revenue of the federal government-around $18 billion. It is a large number we are talking about, but a system that has been in place for many years.
However, almost since the time it was brought in, its flaws have been known. There have been a variety of commissions, studies and examinations saying we have do something about this. In 1940, 50 years ago, there was the Rowell-Sirois commission which examined this issue and came to the conclusion that something should be done. In the 1960s there were various studies. In 1966 the Carter commission, which has been referred to by other members, examined taxation in Canada and put forward some suggestions. On the income tax side, those suggestions were adopted in 1971 by the then Minister of Finance, Edgar Benson. However, the government did not proceed with the other part of the equation, that is sales tax reform.
In 1975, we had the Minister of Finance of the day, who is now the current Leader of the Opposition, Mr. Turner, put forward a paper on the subject, seeking to reform the federal sales tax system. Of course nothing happened. Any time that previous government over the last 20 years before this government took office ran into some difficulty or some criticism it abandoned the effort. So that was abandoned. Mr. Turner abandoned it.
Mr. MacEachen tried to resurrect it when he was Finance Minister in 1981. Mr. Lalonde did the same thing by putting forward a proposal to reform the federal sales tax system. He then appointed a commission called the Goodman Commission which studied that particular proposal. It came to the conclusion that that was not particularly very good, and that it should look to something more along the lines of what we are doing now. Mr. Bulloch spoke about that series of commissions because he was a member of that commission. That is why he was able to state unequivocally that really the only answer is some form of value-added tax.
With all that support and with all those studies for 50 years it seems to me that now is the time to act-no longer talk about it, no longer study it, no longer have any more commissions and studies. Act. Put a proposal on the table. That is what the government has done.
I am not entirely satisfied with the proposal of the government. I will be the first to say that. I favour fewer exemptions, a broader base and a lower rate. I will still say that the proposal on the table by the government is superior to the existing system. While I will seek some changes along the way, especially in my role as a member of the finance committee, I know that one thing we cannot change is not doing something at all. We must proceed in some fashion.
For this motion to suggest that we do not proceed on the subject is I think, frankly, totally misguided. It does not recognize what 50 years of history has taught us. It does not recognize what individuals have been telling us.
The issue of farming was raised here a few moments ago. I should mention that last week we heard from the Canadian Barley Growers, the Canadian Wheat Growers and the Canadian Cattlemen, among other farm groups. We also heard from Unifarm. Every one of those groups endorsed a value-added tax. They said that, first, they would like a lower rate but that in order to get the lower rate they would like to be part of the system which would make food taxable.
October 12, 1989

Not only did they endorse a value-added tax, or a goods and services tax, they said that they should be brought into the system as well.
I recognize that people who have been reading newspapers or seeing clips on television may have got somewhat of a different impression. Those clips focus on the negative aspects that a particular group wants to raise when it comes before the committee. It is up to us to hear a group to try to do what we can while maintaining the integrity, over all, of the proposal.
The alternative suggestion that the New Democrats are putting forward deserves some examination here. Their first point is that there should be a minimum corporate tax on profitable corporations. That is fair enough. I think one of the problems we have is that they suggest and continue to quote numbers about there being 89,000 profitable corporations.


Ross Harvey: Sixty thousand.


Murray Dorin: A new number we have had recently is 89,000. Somebody has put that number forward. In any event, there are not that many corporations to begin with. If we were to take a definition of "corporation" commonly accepted under the Corporations and Labour Returns Act there are about 2,000 corporations that could be classified as large, profitable and unprofitable.
When we had a study examining those corporations that do not pay tax even though they make a profit-the study is available in case people have not had an opportunity to see it-we found that the largest group that falls into that category includes farmers and small business people .The reason they fall into that category is that they have very cyclical incomes. A farmer may have a large crop one year and no crop the next and then another crop. In any given year he may appear as a person who had a reasonably sizable income. He paid no income tax because for the previous two or three years he had losses. Farmers are allowed essentially an averaging mechanism. The same is true for small businesses. That is why when you talk about a minimum tax and and you talk about profitable corporations that pay no tax the largest number by far is that of farmers and small businesses.
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As long as we recognize that and if we want to increase the tax on that group then that is fine. The New Democrats should say that and be up front about it.
We talk about some other things in here, for example, taxation of capital gains and the restoration of inheritance tax. I am not going to go into detail on those, but I would suggest that if we were to take all the suggestions put forward here by the New Democratic Party in its motion today, we would have perhaps $2 billion, $3 billion or $4 billion available in taxes. That should not be disregarded. That is an important number. But it is nowhere near the $18 billion being brought in today by the federal sales tax. Therefore, this is not an alternative at all and should not be regarded as such.
Their fourth point about tax provisions which encourage environmentally sound practices is interesting. I must say that if there is anything at all redeeming about this particular motion it is this one clause which mentions that. I have said on occasion that we should consider possibly looking at how we might put into the taxation system some elements of a tax, if you like, on polluters or pollution, where we could try to address the issue of the environment in an economic way. If they had more suggestions in this area that might be a motion which I and some members of the House might be able to support.
However, given what they have said here it is not possible. It would not solve the problem. It leaves the entire question unaddressed, even after 50 years of studies, and proposes really no alternative that would in any way try to address the problem that we are trying to address. For that reason I and other members of the government will have to vote against this motion.


Stanley J. Hovdebo: Mr. Speaker, the hon. member started out by suggesting that there was a lot of support for a value added tax and that all it needed was some changes to the act. It is my understanding and the understanding of most people here that the act has already gone to the printer, that the finance committee hearings are a sham, and that there is no chance of any of these representations being any value in the changing of the act. Would the member like to comment?

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Murray Dorin: I would be glad to comment. No, I do not believe that the act has gone to the printer. What may have gone to the printer is the draft legislation.
I think on this part I could be a little bit critical of the Department of Finance because when it brought forward proposals in the White Paper in August it was our understanding that we would also receive the draft legislation to support that White Paper. Then we could have a more informed discussion of the issue when we held our hearings from tax professionals and other people who wanted to see the exact detail, as opposed to the concept which is put forward in the technical paper. We are actually anxiously awaiting that draft legislation because it will allow us to address some additional issues. We are hopeful that we can get it in time to use it and incorporate it into what we suggest in our report.
I would just like perhaps to make one further comment to the member of the New Democratic Party. I know that seated close to him is another member, the member for Nanaimo-Cowichan. I want to refer to a comment he made on May 11 of this year during the budget debate.
This is what that member of the New Democratic Party had to say: "As much as I will fight it and talk about it, between now and the time it is implemented I still want to urge the government to restrain itself in its temptation to give exemptions. Exemptions will not make it more fair. Exemptions will make the tax more difficult to administer. Exemptions will be of greater benefit to those who have more money than to those who have less money. I associate myself with the consumers' organization when they say not to exempt food."
We should ask the members of the New Democratic Party who have put forward this motion today to speak to their colleague from British Columbia who, as we know, was at one time the provincial treasurer in that province when Mr. Barrett was the Premier and when the NDP was the government there. That man knows something about taxes.
He knows something about running a government's budget, because of course he was the treasurer in that province. I think he would have something useful to say and his colleagues should heed his advice. Perhaps they might want to have a discussion with him and see whether or not he could shed some light on the situation
for them so that they would not be bringing forward motions like this one today.


Mac Harb: My question is with reference to a statement that was made by the finance minister on a number of occasions prior to the last election and during the election, that is that value added taxes will be revenue neutral.
Lately, over and over again we have been hearing about the impact the goods and services tax would have on the deficit, implying that it would reduce the deficit.
Could the hon. member tell the House how a revenue neutral tax could have an impact on reducing the deficit when it is revenue neutral? If in fact it is not revenue neutral, would the hon. member persuade his colleagues on the government side to come clean with Canadians and say that it will be the cow that we are going to milk over the years in order to reduce the deficit.


Murray Dorin: I would be pleased to respond to that question. The reason why a person can talk about a tax as being revenue neutral and talk about the deficit at the same time is that the existing federal sales tax is essentially withering away.
One of the problems with that tax is that it is applied in quite an unfair and arbitrary manner, which has spawned a great many court cases. Right now there are approximately 130 cases within the system which are basically unravelling the existing federal tax system.
If, for example, we were to stop proceeding with this and say that we were going to stay with the existing tax system, we anticipate a loss in the order of about $2 billion in revenue immediately, from just what is in the system right now in terms of people challenging the system or reorganizing their businesses basically to shift away and avoid the tax. We would have a $2 billion loss immediately and further losses over time as business continued to move away from the system.
Another thing I could remind the member of is that the manufacturing sector or the goods sector of the economy is becoming a considerably smaller part of the economy than what it used to be. In 1961 it was 63 per cent of the economy. It is now about 53 per cent. So as that sector continues to shrink and the tax base continues to shrink, the rate must be raised on what is left to get the same revenue.
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In order to maintain the revenue that we are currently getting today, or the same level of revenue, we have to make these changes to preserve the integrity of the system. That is why we can say that it is an important element in terms of maintaining our control over deficit reduction, as well as say at the same time that it is budget neutral.


Fred J. Mifflin: I am speaking on the NDP motion that would ask the government to scrap the goods and services tax. In order to put it in perspective I would like to go back for a few moments, for my own benefit and for the benefit of some of my colleagues, to make a thumbnail sketch of precisely how we arrived at this position with respect to the goods and services tax and to give you some indication in my opinion as to why the government has had to resort to this measure.
We have to go back and examine why we have taxes. The classical definition of taxes is: compulsory payment by individuals and corporations to government, levied to finance the government services, to redistribute income, and to influence the behaviour of consumers and investors.
It goes back to the Constitution Act, 1867 which gave Parliament unlimited taxing powers and limited those of the provinces to direct taxation. The federal government, under this act, was responsible for national defence and economic development which was extensive back then. The provinces were responsible for education, health and local matters, which then involved only modest expenditures. For more than 50 years customs and excise duties provided the bulk of federal revenues. By 1913 they constituted over 90 per cent of the total.
To finance World War I, in 1917 Parliament introduced personal income tax, corporate tax and in 1920 the manufacturers' sales tax and other sales taxes.
The Canadian tax structure changed profoundly during World War II. In 1941 direct taxes accounted for more than 56 per cent of the federal revenue, and the provinces received grants and the yields from gasoline and sales tax that increased substantially over the years.
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From 1947 to 1962 the provinces with mounting reluctance accepted federal grants as a substitute for levying their own direct taxes. In 1962 this changed again and the federal government reduced its own personal and corporate income tax rates to make room available to the provinces. Between 1962 and 1977 the provincial share of income tax revenues increased significantly.
A tax system, I believe, is judged on a number of factors. We could spend the rest of the day discussing these factors, but I think it is safe to say that the major criteria are equity, efficiency, economic growth, stabilization, and ease of administration and compliance.
What it boils down to is that individuals should be taxed on their ability to pay or, as it was put by Mr. Kenneth Carter in the royal commission report on taxation, appointed in 1962-and his report was in 1966-fairness should be the foremost objective of the taxation system. The poor should not pay more than their fair share, and the rich should not be allowed to avoid taxes through various loopholes.
In 1986 the Conservative government, stampeded by the extensive tax reforms under way in the United States, announced plans to proceed with a comprehensive reform of the Canadian federal tax system in order to keep our tax system competitive with that of the United States. Their intentions, as stated, were to broaden the income tax base to enable a reduction in personal and corporate taxes, and the sales tax would be replaced by what was referred to then as the business transfer tax that was to be a broadly based, value added tax system in which the value added to a product would be taxed at each stage in the production process.
The big objective was to lower tax rates and in particular to reduce reliance on the personal income tax by improving the revenue balance between personal income and other taxes. A simplified tax system was expected to be the offshoot of all these plans, and this would all combine to stimulate economic growth. It sounds good on paper.
What had really happened, I would suggest, was that in the first few years after the Tories were elected they began to worry. Taxable corporate income had been eroded by a sea of losses, investment credits, capital cost allowances, and other tax breaks. The manufacturers' sales tax eventually applied to only one-third of the goods and services sold in Canada because many had won exemptions through legislation and tax decision.

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In other words, a tax base was developing that had become dangerously narrow. Increasingly, the personal income tax was left to carry the weight and rates were being pushed progressively higher and higher. I think we all know in this House that Canadian tax revenues come mostly from three places: corporate income tax, personal income tax, and sales tax. When too much dependence is placed on one of these three the tax system goes berserk and it starts to collapse.
There is no magic mix, but let us look at the record. In 1965 corporate income tax accounted for 20 per cent of federal revenues; personal income tax, 30 per cent; and sales and excise tax, close to 40 per cent. In 1987, 22 years later, corporate tax had gone from 20 per cent to 11 per cent; personal income tax had gone from 30 per cent to 47 per cent; and sales and excise tax was 20 per cent.
As I suggested earlier there is general agreement that there is no magic formula. What you do is you take action, you monitor, you adjust, you watch international competitive trends, and you ensure that there is minimum damage to the economy.
The finance minister's advisers seem to have a sense of mission in which the only prescription seems to be to raise more taxes while the government continues to grind to a certain extent on the expenditure side. We look at the 72 per cent increase since 1984 on personal income tax and, if we do not get some Tory back-benchers to vote against Bill C-28, we are going to have about 90 per cent by 1991.
The Tories don't seem to want to offend big business, so whose left? It is the little guy. To make matter worse, they are also concerned that the gap in corporate tax rates between Canada and the United States is causing a revenue drain. Multinational companies can shift taxable profits to the United States while maintaining deductible expenses in Canada.
The estimates are that for every percentage point of the goods and services tax Ottawa will reap between $2.5 and $5 billion. We do not know exactly. This means that the tax will raise between $22.5 billion, at the very least, or it could raise as high as $27 billion. I think all of us in this House have heard figures greater than that. We have a windfall of between $4.5 billion and $9 billion per year.
That could be reduced for a number of reasons or it could be increased for a number of reasons.
This tax is a dream of this government because it will be less visible than income tax and it will be difficult to evade. It is also a revenue money machine that can easily be adjusted to maximize political benefits.
For example, if the goods and services tax were set at the 24.5 per cent, as it is now in Sweden, the Tories could abolish their federal income tax for individuals and still collect about the same revenue. If it were set at Britain's rate of 15 per cent, they could half all the income taxes.
If we look at the $9 billion that may be a windfall, the income tax could be reduced next year or the year after the introduction of GST by 15 per cent. Guess who is going to look like the good guys? Guess who is planning to look like the good guys? I am suggesting that the Tories are hoping to avoid this measure as their death-knell and they are hoping to turn it into trump card.
Let us have no illusions. Every tax has a natural history. It begins with a wide base and a low rate, but as demands for special treatment grow louder the rates inevitably rise and the base narrows. I am just waiting for the Prime Minister say: "Watch me".
I opened my presentation with a serious definition of taxes. I would like to close with another. Ihxes have been defined by some as a method used by the government in power to artificially induce the rainy day everybody has been saving for. Is this really what the government is doing? I am not prepared to watch this, neither are my colleagues on this side of the House and I would suggest over there. I hope that there are some of my colleagues from across the House who are going to say the same thing. The Canadian people will not accept this, and we are going to fight and fight to make sure that we do not see it pass.


Mac Harb: Madam Speaker, first I would like to congratulate the hon. member on a excellent presentation. It is one of the best speeches that I have heard for a long, long time. The hon. member has certainly done his homework. He mentioned something about the government really supporting business and listening to business concerns. I would like to make a correction here that on the goods and services tax issue.
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I have a leading businessman in my riding by the name of Mel Hartman who is a very capable individual. He has been involved in seeking the opinion of the business community concerning the issue of the goods and services tax.
We sent out a survey to the business community and I would like to report to my colleague that we heard from people who are against the goods and services tax who are bankers, hotel executives, pilots, tour operators, travel agents, legal assistants, retail store owners and managers, self-employed people, stock brokers, electrical contractors, architects, social workers, homeless, and unemployed. These are people from my region from all walks of life. The majority of those people who replied to this particular survey were in fact business people. This government, with this particular initiative on the goods and services tax, I can assure you, my colleagues, has cheesed off pretty well everyone.


Fred J. Mifflin: I thank my colleague for Ottawa Centre for his confirmation of my concerns. I have to explain that in my riding the average income is somewhere in the vicinity of $24,000. At the last count it was $24,500, but I think that is a little bit lower than the poverty level in Canada. I would have to inform my hon. friend that I do not have many big businesses in my riding. I am always ready to be instructed on how big business feels about these kinds of things.
In a way, I am delighted to hear that big business is as concerned about this as he indicates. Certainly it is somewhat comforting to me as a member of the Liberal party fighting these measures, the goods and services tax, unemployment insurance, Bill C-21 cuts, the problems with the fisheries, the lack of concern for the Atlantic region, and all these things that are driving nails into the coffins of Atlantic Canadians that are of concern to them as well. I am interested in learning that big business at this time in our history is also on the side of the people who are fighting for the little guy.
I can assure you, Madam Speaker, and all my colleagues in this House that as we go forward with this very unpopular tax measure, a measure that has been described by people who have been in politics a lot longer than I have been, as the most despicable and unpopular measure that has been taken by any government in their memory.
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We are going to count on big business and, I hope, chambers of commerce, business councils of national interest and all the people who perhaps were looking a little askance at our intonations and our revelations on the goods and services tax and the free trade concerns that we had the last time around.
I am delighted to hear this and I am looking forward to getting their support as I go around and talk in this country and to support my colleagues in having the government reject this very unpopular measure that is going to hit the little guy. I have a lot of little guys in my constituency and I would suggest that a lot of my colleagues do as well.


Mr. Crosby:: Madam Speaker, with your permission I would like to make a comment or two and then to put a question to the hon. member for Bonavista-Trinity-Conception.
The hon. member reviewed taxation history in Canada. I hope he realizes from his historical review that taxation is a changing concept. We have to build our taxation system to meet the needs of the very day. He mentioned the income tax. The income tax started out as a means to support the war effort. That does not suggest that all the income tax revenue should be used to fuel a defence machine or instruments of defence for Canada. No, it has changed. The proceeds of income taxes have been used for other purposes. We are always changing, but not the opposition. They do not change. They just want to stay right where we are and never move. Keep the deficits going, keep pumping through the services, don't pay for them.
The whole point of the exercise is to change the tax system to meet the needs. What has been done in the taxation system, in the goods and services tax, is to balance the taxation system, to collect money and to reimburse those in need.
I want to ask the member who described himself as the representative of the little people of Newfoundland, those low wage earners, does he object to those people getting millions of dollars? Nine million Canadians are going to receive rebates under the goods and services tax. Is he objecting to that? Does he not want them to receive those funds? Does he want to wipe out those rebates, lower the tax level, lower the tax, let the rich get richer and the poor people get even poorer than they are today? Is that what he wants?

October 12, 1989
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The Acting Speaker (Mrs. Champagne):: There is very little time, but I will allow the hon. member a short rebuttal.


Fred J. Mifflin: Madam Speaker, I thank you very much for your indulgence. I knew that you would want me to respond to my hon. friend for Halifax West. He and I have traded comments on the floor before and I always look forward to his constructive comments on those things that I have to say.
Of course I am not against rebates. He talked about taxation being an evolving thing. I agree, it is evolving. But one of the things that we on this side of the House would not want to do is to evolve something that gets rid of universality. Yes, I want to get myself involved in tax rebates, but you know as well as I, and the hon. member knows as well as I, that when you consider deindexation and all the other things, it will not make up for the difference in the money coming out of the pocket of these little guys.
I am not going to go on about universality, but if we are talking about how tax evolves, we should not evolve taxes by penalizing senior citizens, which is what this government is doing with universality. I have a lot of senior citizens in my riding who watch these comments and who are going to remember it in the next election.


The Acting Speaker (Mrs. Champagne):: I will have to cut short the hon. member's intervention.


Mr.   J.W. Bud Bird@Fredericton: Madam Speaker, I rise with pleasure to speak again on the subject of the goods and services tax. Since the subject seems to be getting a little diy with the air in this place this afternoon, I thought I might introduce a little bit of levity. As I was preparing notes for taxation, I happened to come across two sayings that pertained to taxation. I hope that these will not be considered sexist comments in any way. They are not intended to, they are intended to be well-balanced.
Joan Rivers was quoted as saying to the women of the world that: "They should love their husbands, adore their husbands, but get everything possible in their own name".
Oscar Wilde replied to that with a famous quote in which he said: "Bachelors should be taxed more than other people, because it is not fair that one segment of society should have more fun than the others".
I hope that will just introduce a little bit of lightness this late in the afternoon. Some of the members of the opposition are getting so burdened with the prospect of the goods and services tax and dealing so much with the. negatives of it that they cannot see the positive nature.


The Acting Speaker (Mrs. Champagne):: Should the Chair considers the start of this statement as entertainment today from the House of Commons?


Mr. Bird:: Madam Speaker, that is what it was intended to accomplish.
I think it is only natural that Canadians, probably every one of us, will dislike a new tax program of any kind. I do not see us out to sell Canadians on a goods and services tax or any other kind of a tax program, but rather I believe that most Canadians are honest, intelligent, responsible people and they can be persuaded to accept or even to support a new tax program if it makes sense and if it is necessary to achieve our objectives as a nation. That is what I am convinced to be the situation in this case.
I would like to go to the background for the GST and to address it briefly. I know that the opposition in particular tire of hearing about deficits and debt. The current financial strategy of the government is intended to direct our nation toward the elimination of deficit in due course and ultimately to the beginning of the repayment of our national debt.
Over the past five years, through the programs of the hon. Minister of Finance, we have been working our way slowly toward a reduction in the deficit and with the budget program and the strategy that was placed before us earlier this year, we are pointing in the direction of a balanced budget in the years of the early 1990s, and perhaps before the year 2000, to even a surplus where we can commence to pay down that debt and to start to reduce the burden on future generations.
There is only one way to stop that debt from growing larger. That is to reduce the deficit and work toward a balanced budget and eventually to achieve a surplus. I think we must give credit where it is due. The financial strategy that Michael Wilson introduced in 1984 has produced some positive results. Since September 1984
October 12, 1989

the total number of new jobs in Canada amounted to
I,	535,000. The unemployment rate has dropped from
II.	2 per cent in 1984 to 7.3 per cent in September, 1989. That is a dramatic accomplishment, a drop of close to 40 per cent in that period.
Canada's competitive position has gone from eleventh place in the world economic forum in 1983 to fourth in 1988. I think that the strategy that we have embarked upon does hold promise for Canada, a promise that will make us financially strong and responsible by the turn of the century, 10 years from now.
Unless we as citizens do accept the importance of our national responsibility, unless we are either willing to pay for the excellent standards of living we enjoy or to bear the restraint in reductions in the present levels of services, or a combination of both, then I am deeply convinced that the consequences of undisciplined continuity of deficits and debt will eventually lead us to the economic tragedy of hyperinflation, of currency devaluation, and a severe erosion in the future quality of life for coming generations in this country. The signs of that can be seen in countries like Bolivia, Argentina, Mexico and post-war Germany.
I believe it is paramount to understand that the goods and services tax is a critical and major component of the government's financial strategy for the 1990s. It is considered to be a most reliable and fair source of government revenue, essential to supplement the income tax program which itself was beneficially reformed in the past two years.
The goods and services tax is a value-added tax on consumption which will grow with the economic activity of our country. It has well become the most favoured consumption tax in the world and is now being used in some 48 countries, including 19 of the 24 members of the OECD, generally all among the world's most successful economies.
The motion today does not indicate whether it would terminate the existing federal sales tax, but we must recognize that this new tax replaces an existing federal sales tax that is hidden, that is regressive, that impacts on our competitive effectiveness for international export. It
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is really a failed tax, the elimination of which is long overdue. Because it occurs on many capital costs and operating expenses which are not possible to isolate in our export pricing it, makes us less competitive in international markets and it indirectly favours imports to the disadvantage of our domestic producers.
By comparison, the new goods and services tax will be applicable broadly at the consumption level to all Canadians and on a very wide range of commodities, with relatively few important exceptions. Instead of different rates which are currently applicable to the FST, ranging from 9 per cent to 13.5 per cent, the new tax will have a standard rate of 9 per cent.
Based on the economic assumptions in the April budget, and in terms of comparable values in 1991 dollars, the existing federal sales tax collects tax revenues of $18.5 billion. The new goods and services tax will collect revenues of $24 billion. The difference at the beginning of $5.5 billion will be applied directly to fund special provisions of the GST program. This is the significant aspect of the GST program. It is an integrated tax reform system. It touches on increases in the income tax credit program, and of the $5.5 billion in new revenues, $2.4 billion will go to 9.3 million Canadian families who will benefit from increased tax credits at the lower income levels.
Another $700 million will provide for income tax reductions of 1 per cent in the middle tax range. Lastly, about $2 billion of that $5.5 billion will be required to cover the index benefits of indexation which the 2.5 per cent or 2.25 per cent inflationary impact of GST will bring about for those at the lower level of the income tax range for family allowance benefits and for old age pensions.
Finally, of the total of $24 billion, $200 million, or less than 1 per cent, will be required for administration of the new program. I believe that this tax program does shift the burden from those least able to pay to those most able to pay. The discretionary income of Canadians as is reflected in consumer purchases will support the tax, and the food exemption ensures that low income families will not be paying a disproportionate ratio of their income which is directed to basic groceries in the form of the new tax.

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That alone is another measure that shifts the burden from those least able to pay to those most able to pay. The income tax credit does the same thing. The reduction by 1 per cent achieves a similar purpose. I should add that the unemployment insurance changes as embodied in Bill C-21 with the shift of premiums to employers and employed in high growth areas of Canada with the benefits payable to those who are unemployed in the lower growth areas of Canada also have the effect of shifting the tax burden to those best able to pay. This is a principle that this motion by the opposition calls for. I believe that that is already being accomplished.
I would like to wind up by saying that I believe the new goods and services tax program is not only a critical element in our nation's long-term financial strategy but a distinct improvement over the regressive federal sales tax which it is eliminating. Perhaps most important of all, because the GST does integrate effectively with the income tax program through the provisions of refundable tax credits and because it tends to balance the fairness of the total tax program more effectively away from those least able to pay, it is an instrument of financial fairness as well as of financial responsibility.
I believe that this motion is redundant and that its purposes are very significantly addressed in the government's current program.


Mr. Ronald J. Duhamel (Saint-Boniface):: I would like to ask the following question of the member opposite. If one looks at the increases in taxes during the last five years on income, excise taxes, on the manufacturers' sales tax, and if one looks at the unemployment insurance changes that will place a greater taxation burden on Canadians and small companies, as well as at the impact of the goods and services tax, could he tell me how these measures and the budgetary measures such as the claw-back will be fair to seniors, most of whom are women, and to youth who want to upgrade but will have to pay more for an education now?
Will it be fair to families with children who we know will be penalized unduly, to small businesses including farmers, to the unemployed and I think, perhaps in particular to people such as VIA Rail employees, over 2,700 of whom will no longer have employment? Will it be fair to the poor in this country?
There are between 3.5 million to 5 million poor. There are almost 800,000 families who are poor. There are
almost one million children, and over one million unattached adults who are within this category. How will it be fair as well to the poorer regions, like the Atlantic provinces and the north?
I would like to understand how these people will benefit from this ensemble of tax measures that have been proposed by the government. I really cannot understand the logic of anyone trying to argue for it.


John Williston (Bud) Bird: Madam Speaker, the hon. member must simply ignore in his question the reality of the tax credit program which is part of the goods and services tax system that will bring net expense relief to 9.3 million families in this country.
I do not understand how he can talk about 800,000 poor and ask that question without acknowledging, just in fairness, that 9.3 million Canadians under the GST program will have less net family expenditures as a result of the goods and services tax program and the goods and services tax credit.
I would ask him to explain why he ignores the shift in unemployment insurance premiums to those who are employed in the boom areas of this country in favour of the unemployment insurance benefits being paid to those who are unemployed in the less active areas of the country. I fail to understand how political representatives can stand and ask such questions and make such statements without at least acknowledging the facts as they are set out in the papers and in the estimates.


Ross Harvey: Madam Speaker, since the government of which the hon. member is a member came to power in 1984, sales and excise taxes combined rose from 19 per cent of total government revenues, about $12 billion to about 25 per cent of all federal revenues for 1988-89, about $20 billion. That is a rise of 66 per cent. And the effect of these changes is that an average family with two wage earners and two children and an income of about $40,000 a year will pay about $1,140 more in sales and excise taxes and about $1,081 more in income taxes in 1989 than would have been the case under the 1984 tax system. And this he calls fair? Where is the fairness in this?


The Acting Speaker (Mrs. Champagne):: A short answer from the hon. member.
October 12, 1989


John Williston (Bud) Bird: Madam Speaker, I think that if the hon. gentleman checks his statistics, and I do not have them at hand, he will find that the combination of economic growth and inflationary growth, as modest as it has been, exceeds the rate of growth of those taxation revenues. I do not believe that any Canadian resents paying his fair share of increased income taxes or increased sales taxes so long as he is paying them out of proportionately increased earnings.
The hon. member should be pleased that the economy is growing at such a rate that it generates those kinds of revenues out of increasing incomes.


David Walker: Madam Speaker, I have listened with great interest today, as I am sure other members have, to the defence of the government against this resolution. In defence of the party which sponsored this motion, I say that at least it has the right objective. That is to say, they wish to talk about tax reform.
The response from the government was one mindless defence after another of the GST. The GST is only a minor component and I think it is the last resort for this government, a government which has found itself in great taxation difficulty. So, we must ask: "How did we get ourselves into the jackpot in the last five years? Why are we at this intellectual bottom of the pit, in terms of trying to deal with a very important problem"?
Canadians are not involved in a tax revolt because they do not want to pay taxes. Canadians are very happy to pay taxes if they feel that there is service at stake and that they are getting something back for their money. The great anger within Canadians right now is that they are not getting anything back.
In region after region across the country, whether we are talking about armed forces bases, whether we are talking about VIA Rail, whether we are talking about services for pensioners, whether we are talking about services and ERDA agreements for the different regions, we are seeing cut-backs, one after another. Once people feel that their government has abandoned them, then they ask: "Why should we pay taxes?". We have not heard the government answer that question. When the finance committee travels across the country what is it that it sees in one city after another? It sees that government's position is being rejected and that the government has lost any moral authority in this country to govern because the tax issue is over-burdening all other issues. After the next election a new government will be formed, hopefully not the same government, and the primary question it will have to face is what to do with $350 billion worth of debt. That is just a staggering
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figure, and as it begins to sink in on Canadians, it is going to traumatize all of our politics.


The Acting Speaker (Mrs. Champagne):: With deep regret, I must interrupt the Hon. Member.
It being 5.45 p.m., it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the business of supply, pursuant to Standing Order 81 (14).
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


An Hon. Member:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour of the motion will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion the nays have it.
And more than five members having risen:


The Acting Speaker (Mrs. Champagne):: Call in the members.


Mr. Speaker:: I declare the motion lost.
Members
The hon. minister on a point of order.
Anderson
Atkinson
Bernier
Bird
Blais
Bosley
Bourgault
Browes
Campbell (Vancouver Centre) Champagne (Champlain)
Clark (Yellowhead)
Clifford
Collins
Cooper
Corbett
Couture
Darling
de Cotret
Desjardins
Dobbie
Duplessis
Fee
Ferland
Friesen
Gray (Bonaventure-Iles-de-la-
Guilbault
Halliday
Hogue
Hudon
James
Johnson
Koury
Langlois
Layton
Lewis
Lopez
Malone
Martin (Lincoln)
Mayer
McCreath
McDougall (St. Paul's)
Merrithew
Monteith
Nicholson
Oberle
Paproski
Andre
Belsher
Bertrand
Blackburn (Jonquiere)
Blenkarn
Bouchard (Roberval)
Brightwell
Cadieux
Champagne (Saint-Hyacint he-Bagot) Chartrand
Clark (Brandon-Souris)
Cole
Cook
Corbeil
Cote
Crosby (Halifax West)
DeBlois Della Noce Dick Dorin Edwards Feltham Fontaine Gibeau Madeleine) Greene
Gustafson
Hawkes
Horning
Jacques
Jelinek
Kempling
Landry
Larrivee
Leblanc (Longueuil)
Loiselle
MacDougall (Timiskaming)
Marin
Masse
Mazankowski
McDermid
McLean
Mitges
Moore
Nowlan
O'Kurley
Plourde


Mrs. McDougall:: Mr. Speaker, I rise on a point of order. Immediately following these proceedings six Canadian women will be honoured in the other place for their outstanding contribution to women's equality in Canada. The occasion is the presentation of the Persons Awards celebrating Alberta's famous five. This is the sixtieth anniversary of the Persons case and therefore a very special occasion indeed.
I would like to invite all members to attend the reception immediately following that ceremony in Room 200, West Block, shortly after 7 p.m. I can promise them that status of women throw the best parties.


Mary Catherine Clancy: Mr. Speaker, I would just like to join with the minister responsible for the status of women in commending her invitation to all members of the House and hoping that, as persons themselves, they will join in the celebration.


Some Hon. Members:: Hear, hear!


Ms. Langan:: Mr. Speaker, we too join in celebrating 60 years of personhood for women. We would urge that all members join us in that celebration later this afternoon.


Mr. Speaker:: It being 6.14 p.m., this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.14 p.m.
[Stage Direction]
Friday, October 13,1989