Speech to Opposition Day Motion on Tax Hikes in Budget 2013
April 15th, 2013 - 11:12pm
That this House condemn the tax hikes introduced by the government in Budget 2013 on hospital parking, bicycles, baby strollers, coffee makers, iPods and other goods and services, which break the promise the government made to Canadians during the last election.
Mr. Speaker, today I rise to speak on a motion that calls on this House to condemn the tax hikes introduced by the Conservative government in budget 2013. It raised taxes on hospital parking, bicycles, baby strollers, coffee makers, iPods and other goods and services, which, in our judgment, breaks the promise the government made to Canadians during the last election.
In that election, Conservatives ran on a pledge that there would be no new taxes. The Prime Minister said, “I give you my word: As long as I will be Prime Minister...there will be no new taxes”.
In the lead-up to the budget, the Minister of Finance reaffirmed that pledge and again promised Canadians that there would be no tax increases in this budget. In his 2013 budget speech, the minister said, “We will not raise taxes...”.
However, as noted, the budget is filled with hundreds of tax hikes on everything from hospital parking, credit unions and workers' funds, to bicycles, baby strollers, safety deposit boxes and the like. Apparently they both forgot this promise. The reality is that there are tax hikes, and they will cost Canadians nearly $8 billion over the next five years.
I should note at the outset that I will be sharing my time with the member for Rimouski-Neigette—Témiscouata—Les Basques.
The Conservatives are raising taxes on over 1,200 types of goods, which will hit Canadians in their pocketbooks. These tax hikes will also hurt Canadian businesses, which will now find it harder to compete with their U.S. competitors as the cross-border price differential widens. The government should be supporting Canadian retailers, not forcing cash-strapped shoppers to head south of the border, which is a phenomenon many of us living in southern Canada see growing every year.
Not content to simply raise prices on hundreds of goods, the Conservatives are trying to help their big corporate friends by attacking institutions that support working families, such as credit unions and workers' funds, with hundreds of millions of dollars in new taxes. The Conservatives are unwilling to let anything escape taxation, and even increase taxes on those with safety deposit boxes to the tune of $150 million.
I predict that we will be told by the Conservatives and their apologists that the new tariffs are not really taxes at all, and that therefore their promises have not been broken. However, hard-working taxpayers know the bottom line: they will have less in their pockets next year, if their incomes remain constant, than they will this year. That is the bottom line that Canadians will understand.
In anticipation of this argument, I decided to look at some material that defines taxes. I went to the very reputable Canadian Tax Foundation's book, called Tax Policy in Canada, which was given to us at the finance committee not long ago. It defines tax as follows:
Taxes are compulsory payments made by individuals and businesses to government treasuries to finance public services.
It goes on to say:
Taxes are not the only source of government revenue.
Indeed, in the Canadian Tax Foundation's Tax Policy in Canada, under “Principal Elements of the Canadian Tax System”, the first item is tariffs. It spends a lot of time talking about the historical importance of tariffs as important sources of revenue for the government.
Something I rarely do, and I suspect my colleagues on this side of the House rarely do as well, is quote the Fraser Institute. However, when the Fraser Institute referred to the Canadian Consumer Tax Index last year, it said the following:
The Canadian Consumer Tax Index calculates the total tax bill paid by a Canadian family with average income by adding up the various taxes that the family pays to federal, provincial, and local governments. These include taxes such as income taxes, sales taxes, Employment Insurance and Canada Pension Plan contributions, as well as “hidden” taxes such as import duties, excise taxes on tobacco and alcohol, amusement taxes, and gas taxes.
The most drastic tax hikes in this budget are entitled “Modernizing Canada's General Preferential Tariff (GPT) Regime for Developing Countries”. This measure raises tariffs. We say it is a form of tax, agreeing with the Fraser Institute, on imports of 1,290 types of goods from 72 countries. These tariff hikes will raise the price on goods across the board, hurting consumers and retailers. The government is raising tariffs on over 80% of all imported types of goods from over 70 countries, and it is inevitable that Canadian consumers will feel the effect in their pocketbooks.
Canadian retailers are going to have to raise their prices as well. The tariff hikes are going to widen the Canada-U.S. tax gap.
The government is trying to frame the general preferential tariff as a foreign aid program, but Canadians will not be fooled. Changes to the general preferential tariff are simply more tax hikes. According to industry sources, this will raise the price of affected imports by some 3%.
The Conservatives have trumpeted their $76 million in tax relief for sporting goods and baby clothes, but this is vastly outweighed by the tax hikes in the general preferential tariff. In their marketing of the budget, the Conservatives have made a virtue out of lowering tariffs on sporting goods and baby clothes in an effort to deflect attention from the massive increase in tariffs on 1,290 types of goods from 72 countries. That is what is going on. The GPT tax hike is going to generate $330 million a year, and by 2017-18 over $1 billion in total.
What about the famous iPod tax? The Conservatives have told us that there is no such thing. I am indebted to Professor Moffatt of the Richard Ivey School of Business at the University of Western Ontario, whose analysis can be found in The Globe and Mail and elsewhere. In his judgment, after admittedly tortuous analysis of a very complicated system of exemptions and tariffs, he concludes that there is such a thing as an iPod tax. Also buried in the long list of tariff hikes imposed by budget 2013 is a new 5% tax on MP3 players and iPods entering Canada. It is tariff category 85119.81.29.
This is a new Conservative iPod tax. They have claimed that music devices and iPods would not be subject to a tariff increase. Why? It is because it is a special exemption dating from 1987 for devices that are plugged into a computer. However, Professor Moffatt's analysis demonstrates that actually qualifying for that exemption is so onerous that it is unlikely any importer or retailer will be able to use it to avoid the new Conservative iPod tax. The Conservatives are just blowing smoke.
Sony of Canada has warned that consumers should expect an increase of 5% to 6% in the cost of its MP3 players and iPods because attaining the exemption is so complicated.
The new 5% tax on iPods and MP3 players shows Conservative hypocrisy on tax hikes. Despite the photo op with the Minister of Industry and the Minister of Canadian Heritage at the end of 2010, there is a real iPod tax.
The Conservatives have always tried to claim that they are the defenders of Canadian taxpayers. They have repeatedly run on platforms focused on tax cuts and promises not to raise taxes; they have broken their promises.
New Democrats believe in doing politics differently. We believe politicians should be accountable for what they say and do. The Conservatives promised Canadians they would neither raise taxes nor create any new taxes. They have violated this pledge to Canadians. My hope is that all members of the House will consider the motion carefully and vote to condemn these harmful tax increases.