Legislative Assembly of Ontario

[Report continued from volume A]

1840

TOBACCO TAX AND LIQUOR CONTROL STATUTE LAW AMENDMENT ACT (RETURNING RESIDENTS), 1992 / LOI DE 1992 MODIFIANT DES LOIS EN CE QUI CONCERNE LA TAXE SUR LE TABAC ET LES ALCOOLS (RÉSIDENTS DE RETOUR)

Mr Wiseman, on behalf of Ms Wark-Martyn, moved second reading of the following bill:

Bill 85, An Act to amend the Tobacco Tax Act and the Liquor Control Act to Provide for the Payment of Tax and Mark-ups by Returning Residents of Ontario / Loi modifiant la Loi de la taxe sur le tabac et la Loi sur les alcools de façon à prévoir le paiement de la taxe et des marges bénéficiares par les résidents de retour en Ontario.

The Acting Speaker (Mr Noble Villeneuve): Would the honourable member have some opening remarks?

Mr Jim Wiseman (Durham West): The amendments to this bill give the government the authority to take the necessary action to --

Mrs Barbara Sullivan (Halton Centre): Oh, the member for dumps.

Mr Wiseman: Sorry? I'll start again.

The amendments to this bill give the government the authority to take the necessary action to discourage cross-border shopping by collecting the tax due on tobacco and liquor brought into Ontario which is beyond the allowable amount under the returning resident exemption of the Excise Tax Act of Canada.

Millions of dollars in potential tax revenue are lost every year due to cross-border shopping for liquor and tobacco products alone. This bill authorizes federal customs officers to collect tobacco taxes on cigarettes, tobacco or cigars from Ontario residents returning to the province from outside Canada. The tax that will be collected is the same amount that would be paid if the tobacco had been bought in Ontario. The bill also permits customs officers to hold tobacco until the taxes are paid, and if they are not paid within 60 days, the tobacco becomes the property of the crown.

To enforce the act, one of the amendments will allow entry to a business to examine cigarette inventories. Those found guilty of an offence under the act on conviction could be fined not less than $300 and not more than $10,000. An additional fine of not less than 30 cents for each cigarette in an unmarked, unstamped package of cigarettes will also be charged.

Under this agreement, the federal government will administer and enforce the act on our behalf, both for tobacco brought into Ontario by a returning resident and tobacco delivered to a returning resident of Ontario from outside Canada.

The other part of this bill appoints federal customs officers as agents of the Liquor Control Board of Ontario. As such, they will collect for the board the markup on liquor when it is brought into Ontario from outside Canada. The officials may detain the liquor when the markup is not paid. A portion of the funds will be used to defray costs for the government of Canada's services.

Revenues collected under this bill will be approximately $1.6 million in tobacco taxes and $3.2 million on liquor markups each year. The total annual revenues will be approximately $5 million.

The Acting Speaker (Mr Dennis Drainville): Questions and/or comments? If there are none, the honourable member for Oriole.

Mrs Elinor Caplan (Oriole): I rise as the critic for the Ministry of Revenue. Oh, I thought you said --

The Acting Speaker: If there are no questions and comments -- there are. The honourable member for St Catharines.

Mr James J. Bradley (St Catharines): I'm surprised, first of all, that there's a need for this bill. I thought the member would have addressed the fact that one of the reasons this bill is being brought in is that taxes are so high on this side of the border that people tend to go over on the other side of the border for the loss leaders.

The things that make people go to the United States in terms of making their purchases are, first, the price of gasoline, second, the price of alcoholic beverages and, third, the price of tobacco. There was one time when everybody felt these were sin taxes, and they were really taxes the public was expected to support in the long run.

As it's turned out now, they are not taxes that people are supporting; they are in fact taxes that are driving people in the border areas -- the member for Sault Ste Marie would be aware of this and those in eastern Ontario, the members for Niagara Falls, St Catharines-Brock, Lincoln, Welland-Thorold, Niagara South and so on. We all recognize that the folks who live in our area don't really want to purchase things in the United States.

They look at the prices on this side of the border and we get into discussions that aren't always very productive in terms of patriotism. We get into these discussions and people start to go to the other side of the border to make their purchases. If the taxes were moderate here, if they were held in check, I think you would find fewer people doing that, and then a tax of this kind would not be necessary.

There are people who are going to object to this tax. They are often lower-income people who are looking for a bargain somewhere else who will see the prices significantly increased. But once again, if the Treasurer were not so eager to get his hands on virtually every penny he can from the people of this province through his gasoline taxes, his tobacco taxes and his taxes on alcoholic beverages, then the member for Durham West, who should be preoccupied with the many dumps that have been proposed for his area, wouldn't have to get up and defend yet another tax being imposed by the government of a gentleman who for many years in opposition opposed every possible tax, that being the member for York South.

The Acting Speaker: Further questions and/or comments?

Mr Chris Stockwell (Etobicoke West): It is difficult at this time to examine any piece of legislation from this government that addresses taxes. Taxes are the single most crippling millstone around the neck of all businesses and people in this province. It's the number one reason why this makes the recession doubly difficult, and so very difficult to begin your recovery from when any forms of revenues or income or profits are subject to such heavy and onerous taxes as the taxes we are faced with in Ontario.

There have been studies done over the past few years to show that this specific jurisdiction is one of the highest, if not the highest, taxed jurisdiction in North America. It's not surprising that we are also the one jurisdiction that has been so incredibly hard hit by this recession and is having so much difficulty recovering.

It's not a quantum leap to make the analogy that more taxes and overburdened taxpayers don't have any capacity to support a consumer-led jump out of this recession. Any government that puts on the legislative table at this time any form of tax that either creates a new tax or increases taxes certainly must be very careful in how it applies this particular theory.

In my opinion, this is just another form of increased taxation. It's another way for the Treasurer to prop up the depleted revenues, the coffers they go to to provide their programs, and it makes me wonder about how they expect local municipalities like Metropolitan Toronto to come up with a plan that's acceptable to them on market value assessment when they start suggesting that the way they work their plan out, through the same tax process, is unacceptable.

Yet you have the capacity to go back and tax any revenue source that you see fit. All they have is local property tax. It seems like a double standard to me.

1850

The Acting Speaker: Further questions and/or comments?

Mr Allan K. McLean (Simcoe East): I want to comment briefly with regard to the tobacco tax. When I look at the revenues that the government brings in each year, some $985 million in tobacco tax, that's a large sum of revenue for the government, money that the government needs.

Now I understand the situation with regard to why there is tax on tobacco. I remember years ago when there used to be a tobacco industry in the county of Simcoe. They sold out many of their tobacco rights to Tillsonburg and Simcoe, Ontario. They have continued and now some of the farmers there are out of tobacco and they're into ginseng, as the Minister of Agriculture and Food will be quite aware.

But when we look at the aspect of the tourists who travel here to Ontario, when we look at what they have to pay for cigarettes, alcohol and gas, it's a concern that many people have raised. To have an added tax on top of that is an extra burden for the taxpayers.

I know how hard it is to quit smoking. I did that several years ago. As a matter of fact, I did it on July 31, 1987, when Peterson called the election. I thought it was an appropriate time to quit and I was pleased that I did. But I'm telling you, Mr Speaker, some people can't do that and it's difficult. I respect those people who have that habit, but when we look at the aspects of health care in this province and money saved by health care, it's worth considering. However, it's people's own right to have that privilege of what they want. I say that to add more tax with regard to tobacco is going to put more farmers out of business. It will add to the tourism problem we have, and not only that, but it will certainly make Ontario less attractive for people who want to visit.

The Acting Speaker: Further questions and/or comments?

Mr Sean G. Conway (Renfrew North): I just want to make a comment, because I will make more remarks later in the debate. My friend the member for St Catharines, who is, as usual, busily working the opposite bench, has raised a number of issues in his opening remarks on Bill 85.

I can only speak for my part of eastern Ontario, and it's very clear to people living in the Cornwall-Ottawa-Smiths Falls-Pembroke area that we now have a difficulty that I don't remember the like of in my lifetime. The amount of black market activity, in tobacco particularly, has reached epidemic proportions.

I was in Deep River the other day -- and that's two and a half hours from the American border -- and one of the vendors of tobacco products in Deep River was telling me that there has been a very sharp decline in tobacco sales in his area. He is convinced that it has much more to do with the black market than with some of the other very good initiatives that the Minister of Health is taking.

In fact, people in places like Pembroke, Chalk River and Deep River are openly indicating that they're buying their cartons of cigarettes for $30 on the street. That is obviously a concern to the local member of the Legislature. It's, I'm sure, of interest to the Ontario Provincial Police. Clearly, as the member for St Catharines has observed in his opening comments, when the price differential is as great as it has now become between American cigarettes and Canadian cigarettes, as between American liquor and Canadian liquor, there is going to be a dynamic in the marketplace that is going to stimulate this kind of underground activity.

But I just simply want to make the point that in my part of eastern Ontario the price differential -- a price differential, by the way, which is occasioned by a tax policy that I support -- is none the less causing a very active black market that we are going to have to do something about.

The Acting Speaker: The honourable member for Durham West has two minutes to respond.

Mr Wiseman: The standing committee on finance and economic affairs held hearings on cross-border shopping. One of the consistent themes we heard from the people making presentations was that they wanted to have the government do something to help them. In fact, the federal government moved on this and the provincial government also decided to participate in that.

Presently, Canada Customs collects a markup on alcohol for all the provinces which bears little relationship to the current LCBO prices. The federal government offered to update this arrangement to collect tobacco tax for the provinces on a cost-recovery basis. As this arrangement will serve to discourage cross-border shopping, the Treasurer decided to accept the offer. This is part of the package that has been requested by the merchants in the cross-border areas in order to help move away from cross-border shopping, and I think it's one of the things we're trying to do to re-establish these border communities with respect to the availability of goods for the local population.

The Acting Speaker: Further debate. The honourable member for Oriole.

Mrs Caplan: Thank you very much, Mr Speaker.

Mr W. Donald Cousens (Markham): On a point of order, Mr Speaker: What's the sequence? Is it not rotating?

The Acting Speaker: Indeed, we are rotating. We began the debate with the honourable member for Durham West, and then we had questions and answers.

Mr Cousens: All this was just on what he had to say.

The Acting Speaker: He just made his response and now we've moved to the honourable member for Oriole, a member of the official opposition. I recognize the honourable member for Oriole.

Interjections.

Mrs Caplan: Sometimes after the hour of 6 strange things happens in this House, Mr Speaker.

I'm pleased to have the opportunity this evening to speak on Bill 85, which is An Act to amend the Tobacco Tax and the Liquor Control Act to provide for the Payment of Tax and Mark-ups by Returning Residents of Ontario. This is the second reading debate, and during second reading debate, as the critic for the Ministry of Revenue what I would like to do in the time that's been allotted to me is explain as best I can to the people who are watching on television, and perhaps to some members in the House who haven't had the opportunity to review the bill in detail, what exactly this bill purports to do. Some of the rationale for the bill I think has merit, but overall I have some significant concerns about the approach within this piece of legislation.

Bill 85, this bill we're debating right now, allows the federal government to collect new provincial levies -- that means new provincial taxes -- on imported alcohol and tobacco. This was one of the initiatives the Treasurer announced in his now ill-fated budget of last year, and it was part of a package designed to have an impact on cross-border shopping.

The bill is sitting on the order paper, and we know, for a whole number of reasons, that Ontarians are very aware of the impact on our economy of cross-border shopping and that we have seen, primarily I believe because of the local initiatives that have been taken in many of those border communities, a significant decline in cross-border shopping without this piece of legislation. So anyone who is going to argue that this piece of legislation, this additional tax, is going to be needed to combat cross-border shopping is making a false argument. It's fallacious to say that this is part of that package that is needed to deal with the issue of cross-border shopping. The history of the last numbers of months, the actual results of other initiatives to alert the public to the damage of cross-border shopping, in my view has made this legislation insignificant in the battle against cross-border shopping.

This bill authorizes the Liquor Control Board of Ontario to enter into a collective agreement. A collective agreement is something this government's very comfortable with, given its bias towards labour, I might say. So they authorized the Liquor Control Board of Ontario to enter into an agreement with Revenue Canada to provide for the collection of markups on liquor imported into Ontario by returning Ontario residents. What that means is, if an Ontario resident is in the United States and he or she returns with liquor in his possession, he will have to pay the provincial sales tax after this bill is passed.

The amount of the markup will ensure that the returning resident will give the Liquor Control Board of Ontario about the same amount of revenue as if the liquor was purchased in Ontario, so that it purports to remove any incentive of crossing the border to buy less expensive liquor, less expensive booze, as some would suggest.

The government proposes to increase the border levy mainly on liquor, for what's considered casual consumption of 9.1 litres or less. We know that if anyone imports a significant quantity of any substance, really -- not only liquor but anything -- if you import any appliance, if you import anything from the United States or from any other country in the world, you are required to pay provincial sales tax. This marks up those things which traditionally have not been considered by the border guards, the border crossing people, when you come across and make your declaration of excess.

1900

I would just like to put on the record, if I could, what this might mean to the average consumer. For example, on a 750-millilitre bottle of liquor, the border levy would jump to $8.57, up from the current level of $3.98, for casual importing. There is a present levy now, and they are now increasing that levy so that there will be no differential between what you would pay on one side of the border and, when the taxes are added, what you'll pay in Ontario. Another example: Where more than 9.1 litres is imported, the charge increases to $8.57, which is really up slightly from $8.49.

What that says and what people should know is that this is not going after the major importers in any big way, because they're already paying the tax when they import. This is for the individual who goes across the border and may bring back a few bottles of liquor. That individual will see a very significant increase in the cost of that bottle of liquor because of the new tax that this bill will impose.

One of the concerns I have is that this piece of legislation is needed because of the NDP's mismanagement of our economy, which really has forced the Treasurer of Ontario, Treasurer Laughren, to search everywhere for new tax revenue. This bill, as I've argued, has almost nothing to do with cross-border shopping and everything to do with finding additional tax revenue. If he can getcha, he's gonna getcha.

We saw recently a list in the newspaper of 63 items that the government is considering for new taxation. During my remarks today I'm going to point out that this is just one example of a new tax grab, one that I think will be a significant irritant and one that I don't think will bring in significant revenue, because this kind of legislation will do something that I find particularly objectionable.

This kind of legislation, which purports to nickel-and-dime the individual, will create and has already created a negative behavioural change. What do I mean by that? As a result of this kind of initiative, both as it relates to alcohol and to tobacco, we have seen a significant increase in smuggling. Any piece of legislation which creates an environment where people break the law, any piece of legislation which creates an incentive to try and circumvent the law, in my view, is not good legislation.

In the past, I have been a proponent of the use of tax increases in the name of healthy public policy when it came to tobacco and cigarettes, and I say that quite openly. As a former Minister of Health, the studies all showed us that there was a very significant relationship in the behaviour of the individual: When the taxes were increased, the usage declined.

Mr Speaker, let me tell you what the studies are showing today. The studies today are saying that we have reached what I would call a threshold. No longer do we find just the relationship that as you increase the taxes, usage declines. Now what's happening is that as you increase the taxes, smuggling is increasing and the usage is not necessarily declining at all.

By public policy, government is not having the effect of creating an environment where people will not smoke or will quit smoking because they know smoking is bad for them. They're not bringing forward healthy public policy. What they're doing is bringing forward policy which is encouraging public disobedience, bringing forward policy which is encouraging smuggling of cigarettes and tobacco, and I would say to the government that this is a very dangerous precedent and you must be very, very aware of what the effect of your policies is on our society and on the values our society holds so dear.

Canadians, by and large, are a law-abiding society, and when you try to force your ideology, when you try to force your views through inappropriate taxation, through inappropriate public policies, the public will rebel in a number of different ways. You will get tax revolts where people simply refuse to pay their taxes. You will get smuggling in increasing numbers as people find legislation such as Bill 85 more than an annoyance: the kind of irritant that will encourage human behaviour to circumvent this kind of legislation and policy.

There are a number of results of that kind of behavioural change that I think the government should be very aware of. As smuggling increases, particularly in tobacco and cigarettes, the government is likely to lose additional revenues rather than gain from any of these revenue moves.

Let me explain very clearly what I'm saying. Once smuggling becomes an accepted activity within society, as a reaction to bad government policy, government will lose the very revenue that it had hoped to gain from this taxation measure. So the policy will fail on two counts. The policy will fail on the first count because you will not get the revenue you anticipated. The policy will fail on the second count because we know already it is not going to have an impact on cross-border shopping. That's happened without this bill, but it has changed public behaviour in a very negative way. These new border levies are certainly having an impact on smuggling.

1910

I'd like to place on the record some comments from an article in the Globe and Mail which said very clearly what I've been trying to say in this debate. The headline says, "Prohibitive Taxes Spur Billion-Dollar Black Market." It says, "One in Nine Cigarettes Bought in Canada Stolen or Contraband."

In that kind of an environment, we are seeing the door opened to the kind of revenue loss that this government and frankly I as a member of the opposition think is a very dangerous situation. The government needs to have revenues in order to pay for the programs that people want. But if the public does not respect what the government is doing in how it raises those revenues or how those programs are being delivered, then an environment is created which I think undermines the values of our society.

Let me just give you a couple of quotes from this article, which I think is very significant:

"One in nine cigarettes bought in Canada last year was either stolen or smuggled across the US border, an eight-month study commissioned by the Canadian Tobacco Manufacturers' Council found, producing an estimated loss in revenue of $1.1 billion."

I'm skipping a few paragraphs. I'm not reading it totally in context but it says:

"Moreover, 'vast quantities of smuggled products, other than tobacco products, find their way into Canada through [the tobacco] distribution networks.' Drugs, alcohol, gasoline, groceries and other merchandise are cited...at key Ontario border points."

It goes on to say that Canadian customs officials are sometimes bribed to look the other way as shipments come in, this report that was commissioned by the Canadian Tobacco Manufacturers' Council found. They also found that this trade in smuggled goods has created violence at the retail level and elsewhere. The only difference between the Prohibition liquor smuggling and the contraband industry is that tobacco products in Canada are legal, yet they're made prohibitive by excessively high taxation rates. That's from the report.

I'm not going to read too much more, because I think the report makes the case. I'm not one who is arguing that you don't need to have a high tax level to discourage tobacco use; I think you do. But I think that from a public policy point of view, we must be very aware that at some point you reach a threshold. I would argue that I believe, particularly during these difficult times in recession, that this province has now been suffering more than just over two years of incompetent government from the NDP; we have been suffering through the most difficult recession in decades in this province.

I've argued before in this House that this is not the time for new taxes. This is not the time to take money out of the hands of consumers; this is the time that you want people to be able to have those dollars, hopefully to spend on things which have been manufactured in Ontario. I would hope they wouldn't spend those dollars on cigarettes. I'll be perfectly frank: I would hope they would spend those dollars on other consumer goods and items that would be helpful to our economy and good for their health.

Mr Bradley: Automobiles.

Mrs Caplan: My colleague from Niagara, the member for St Catharines, who worries about General Motors, and rightly so -- he worries about the workers in St Catharines -- he's saying the people should be buying cars. I share his hope and his wish, but people will not be able to afford those cars if this government continues to increase taxes on everything. They increase taxes on gas, they increase taxes on cigarettes and alcohol, they increase taxes on just about every consumer good. We have seen more inappropriate tax increases during a time of recession from this government than I believe anyone would have thought to see from an NDP government.

On top of that, not only have we seen tax increases, we have a list of the non-tax but fee increases this government has imposed. I'll say to you, Mr Speaker, my constituents are fed up. My constituents are saying this government does not know how to manage. My constituents understand the need for people to be able to afford to live in this province. They know how difficult it is during a time of recession.

They know that we have seen plant closures unprecedented, over 550 jobs lost every single day since Bob Rae took power in the province of Ontario, and when they look at the government's record, what do they see? They see tax increases in the midst of a recession and they see fee increases, non-tax revenue, in areas where they know it really is a hidden tax.

I'm just going to name a few. I had a constituent come to my constituency office just in the last month to tell me about the impact of the $50 corporation filing fee that has been recently imposed and the impact that's going to have on his business. We know that's going to raise an additional $8.1 million for the government treasury, but let me tell you where it's coming from.

That is coming from businesses that are barely making it now, businesses that are having to lay off staff, particularly small businesses, the place where we know most jobs are created. We know that is coming directly from the consumer --

Mr Bradley: Right out of the consumer's pocket.

Mrs Caplan: -- right out of the consumer's pocket, and we know that every time you raise a tax, every time you increase, whether it is alcohol taxes or tobacco taxes as suggested in this Bill 85 --

Hon Elmer Buchanan (Minister of Agriculture and Food): It's cross-border shopping.

Mrs Caplan: The Minister of Agriculture and Food perhaps was not here when I began my address, but I told him that while they would like to sell Bill 85 to the people of Ontario as an anti-cross-border-shopping measure, it is not.

Mr Bradley: A tax grab.

Mrs Caplan: It is purely and simply a tax grab, and I'm going to repeat and tell him why this has nothing to do with cross-border shopping.

Cross-border shopping has significantly declined over the past year because of the outstanding efforts of small border communities in raising the consciousness in their communities about the impact. We know that if this government wanted to do something significant, what it could have done was lower gas prices at those border communities. They didn't do that, and they didn't do that even though the mayors' task force and everybody told them that was the one significant thing they could do, because people cross the border to fill up their tank of gas and while they're there they do a little bit of shopping.

1920

Bill 85 has nothing whatever to do, in my opinion, with cross-border shopping. It is purely and simply a tax grab by the NDP Bob Rae government at a time when the very last thing the people of the province of Ontario need is to have more money taken from them in the form of new taxes.

Not only is this government taking money from them for new taxes that are inappropriate; this government is also taking money in the form of non-tax revenue, hidden taxes, which are having a very serious impact on our economy because they are hidden, because they are affecting the consumer, because they are affecting small business.

Let me give you another example of the kind of thing this government has been doing quietly. The cost of probating a will under the NDP government has tripled. They have raised the fee for probating a will. That takes money directly from the consumers, right from widows and orphans. The cost of probating a will has tripled in Bob Rae's Ontario in the last two and a half years.

The cost of a divorce petition: That transaction is up 68%. It has gone up from $190 to $320. Do you know who that affects? That primarily is affecting the women of this province. I would say that they are disappointed because they had expected support and understanding from Bob Rae, who purported to have a feminist government, and those of us in opposition who watched to see what kinds of things the Premier would do in support of women have been very disappointed, because the litany is a damning indictment. Talk is cheap, but a divorce is expensive in Ontario.

As a former title searcher I was shocked to find out that the cost of a title search in the residential real estate department of the ministry has increased from $4 to $11: a direct tax on the consumer; added disbursement for the lawyers. They pass it right on to the consumer. Another hidden tax by this government.

The cost of filing a claim in civil court has gone up from $75 to $125.

It's not just in the justice system. This government purports to care about the environment. This government purports to care about our natural resources. Let me tell you that the Ministry of the Environment now charges a fee to test well water. That is new in the province of Ontario and that is a new tax levied on people who rely on wells and who regularly have to test that water to make sure it is pure and clean and safe for their families to drink.

There has been a royalty imposed on the value of fish caught by fishermen. There have been environmental certificates of approval which were formerly free of charge. Now a fee is going to generate over $900,000 this year and almost $2 million next year for an environmental certificate of approval.

This government, when it came into office in the fall of 1990, had a triple-A credit rating, a province on the verge of recession and some difficult challenges. The first thing they did was move to increase their operating expenditures by paying off their friends, increasing wage bills -- the wage bill for the civil service alone went up 14% in that first year -- and those fiscal decisions have put the rest of us taxpayers in this province in the position today of having to pay the bills for the fiscal and economic mismanagement of Bob Rae and his NDP government.

They created within the first year a deficit of almost $10 billion, and they are so desperate for revenue that they are looking at everything that walks, talks, crawls, sleeps, breathes and snores. If you move in Ontario, you're taxed.

I saw a cartoon today that I thought said it all. This was a Suntoon and it's one individual talking to another and he says: "I hear Bob Rae has an idea for a new tax. Anybody who criticizes the NDP is taxed double."

Let me tell you, that would create a lot of revenue, because I can tell you that in Oriole riding people are telling me, loud and clear, how disappointed they are. They are telling me how fed up they are. Not a day goes by that they don't say to me: "How soon till the next election? When is the next provincial election?"

When I tell them that the next provincial election will likely not be until 1995, they say: "Elinor, isn't there something that you can do to make him call the election sooner? He's ruining this province with tax increases. He's ruining this province by his policies. He's ruining this province by his bias for labour."

It's not just the constituents in Oriole who feel this way. There was an article in the Toronto Star. An individual wrote the following story about Bill 85, actually. He says, "Border Markup Outrageous Money Grab." This is written in the form of a letter to the provincial Treasurer. I'm not going to read the whole thing, but there are a couple of highlights that I know the members opposite would like to hear. It says:

"What really got our goat was your recent announcement that we will have to pay the full LCBO markup on wines that we purchase outside Ontario (for Torontonians, it's usually Buffalo and Rochester where there are wine stores worthy of the name) and transport them back across the border.

"You say you want to reduce cross-border shopping. The entire Ontario economy has been hit by cross-border shopping. But instead of trying to help all retailers and merchants stave off bankruptcy, you're looking after yourself -- protecting the government monopoly and making sure that you get your full pound of flesh.

"In fact, you could make even greater profits with this legislation because the LCBO won't have the handling costs of wines purchased 'abroad,' yet they will be charging us the 60 per cent markup as well as the usual provincial sales tax, federal excise tax and GST.

"The LCBO's lists are shrinking all the time. The board just does not offer the selection we want." The article goes on to say: "And now you are punishing us because of the LCBO's inability to provide a service that is supplied by every civilized country in the world by private enterprise.

"True, the LCBO says it will order any wine we want. But have you ever tried doing that? Do you know how many months it takes for your wine to arrive -- that is, if the producer is willing to go through the hassle of exporting a single case? And did you know that you have no recourse if the wine you privately imported turns out to be off?

"If it's revenue you're after, Mr Laughren, let people buy wine where they want." This is the advice from the wine editor of the Toronto Star. "In supermarkets, food stores, private merchant shops as well as LCBO stores. You'll get your taxes and the wine-loving community of Ontario" -- he believes -- "will be better served."

1930

It's interesting. I don't agree with everything he says, but I can tell you that the point he is making is that this tax, Bill 85, is misguided, that it does not do what the government says it wants to do, which is deal with cross-border shopping, that there are many other issues and many other reasons why people import wine into Ontario, and that perhaps the government should be looking at how the LCBO runs, makes its decisions, if it wanted to serve people better.

There's another article I thought was quite interesting. It says, "Will Tax Rise Trigger Private Enterprise?" It goes on to say: "The new levies announced by Treasurer Floyd Laughren to reduce cross-border shopping for alcohol and tobacco will raise the price of personally imported wine to the equivalent of the retail price that would be charged in the Liquor Control Board of Ontario stores. It can be argued that selection is not the issue. Ontario consumers will still be free to purchase abroad, but will simply have to pay more, but it is also true that those who choose to shop at home do face" -- are you listening, Minister? -- "an inferior selection compared with the fine wine merchants in the United States who have built their reputations and business on the depth of their selection."

What I'm saying to you, and what the author is saying to you, is that this is more than taxation policy. If you are trying to impact on the values and on the behaviour of the people of Ontario, you run the Liquor Control Board of Ontario and you can make sure that it stocks the wines people will want to buy here. You can do that and you don't need a misguided taxation policy to do that. I think that's a very important point that should not be overlooked.

One of the other concerns -- I won't be too much longer -- on Bill 85 is that there are a number of things this government should be doing instead of Bill 85, and I believe it's very important as a member of the official opposition to be offering some suggestions of the sorts of things you can do instead.

I believe, as I've said before, that this is the wrong time to increase taxes. I believe this is the wrong time to be so desperate for revenue that you are playing havoc with both the business sector as well as the consumer. There are some things you could do, even though much of the mess we're in is a result of your policy. Many of the things that you could do would be quite creative and I believe you should consider them.

For example, I think you should be examining lowering the gas tax as well as tobacco and liquor taxes, particularly in those border communities. I think it would have the absolutely opposite effect. I think your revenues would increase because you would be using the incentive rather than the disincentive.

There's a flip side to every policy, and rather than raising taxes to the point where you are encouraging smuggling and bad behaviour, I believe you have to look at what is the appropriate threshold that will give you the right behaviour, that will increase your revenues because people's behaviour is positive.

I pointed out to you a few minutes ago that when you raise taxes and people smuggle, as a result your revenues are actually lowered. Often when you reduce taxes, people will spend more or they will stay home to spend more and you will actually have an increase in your revenue.

Mr Stockwell: Stay home to spend more.

Mrs Caplan: They will, instead of --

Mr Stockwell: I'm kidding. I know.

Mrs Caplan: That's right. We were just having a debate on cross-border shopping.

Bill 85, I believe, has the wrong incentives in the bill. As I've said, I think it has the incentive which, unfortunately, is misguided, is a misguided incentive, because it will affect behaviour in a way which perhaps wasn't contemplated.

I want to speak for a minute about what the impact is on smuggling and how they purport to deal with that. The bill authorizes the Minister of Revenue, again, to collect taxes on tobacco which has been purchased outside of Ontario and outside of Canada. In the tobacco situation, the importer would pay a tax on foreign tobacco as if the product was purchased in Ontario. Under Bill 85, the tax would be 6.5 cents per cigarette and 6.5 cents per gram of cut tobacco.

The new tobacco tax collections are supposed to net the treasury about $1.5 million in additional revenue. I've already stated that my concern is that you've reached the point where increasing taxes will not have an effect of lowering use. I think you've come to the point where you've reached a threshold, and now the suggestion that you're going to collect another $1.1 million is not in fact what's going to happen.

As people engage in the black market on cigarettes, what happens is they will purchase more from the black market and your revenues will actually decline. All of your public policy determination to try and reduce smoking, I think, will be jeopardized by a tax that actually will encourage people to buy their cigarettes cheaper on the black market. As you encourage and support the black market, it will have exactly the opposite effect of what you would want from your taxation policy designed to encourage people not to smoke.

Taxation has always been used as a deterrent for people to smoke, but I believe that as you raise taxes at a time when people are rebelling against tax increases, you will create an environment where smuggling and the black market will flourish. That's where people will buy their cigarettes. You will begin to see as a result of this policy an increase in smoking in Ontario, which will turn back the clock on all the good work that the Ministry of Health and your Minister of Health have been talking about in the area of smoking-cessation policy. So I ask you to think about this very seriously, because this tax could well have an effect on your smoking-cessation program that you have not considered.

I think it is worth thinking about the negative impact of this policy before you go through with it. Now, you have a majority in this House and I suspect that over my objections, this legislation, like many other pieces of legislation, will pass. So what I'm asking, as part of this debate, as it relates to the tobacco tax, Bill 85, is that you monitor that, that you begin the monitoring as quickly as you can, because I believe you will start to see possibly that trend of more and more cigarettes being purchased through the black market in Ontario at lower prices.

I think you may find that you do not collect the revenues that you're anticipating. If that is the case, then my advice to you is to remove that additional tax that has taken you over the threshold, that has affected public behaviour in what I think is a very negative way. Because when taxpayers revolt and people start to behave in a self-destructive way, it is very hard to turn that around. I leave that with you to consider, because I believe that Bill 85 could have a very negative effect on your smoking-cessation policy here in the province of Ontario.

I want to say that the bill purports to address the question of smuggling, but it's an enforcement model, and what I have generally found is that enforcement models don't work very well. You cannot afford to have enough policemen. You cannot afford the kind of enforcement that would really make a difference. You have to convince people that obeying the law is in their best interests.

I don't think a fine of $300 to $10,000 and the confiscation of the goods for somebody who has a big black market operation, one, will act as a significant deterrent and, two, I also believe that in society generally you are not going to be able to afford to enforce that provision of this legislation.

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I've gone on at length because there were some public policy principles that I wanted to discuss in relation to Bill 85. As I said, I think that initially when it was tabled and addressed in the Treasurer's budget, there were some principles there that were worthy of debate and discussion. Initially when it was tabled, this was going to be the answer to cross-border shopping. A year later, we see cross-border shopping trips are down and this legislation has not been enacted and not one cent of the tax has been collected. So we know this is not going to have an impact on cross-border shopping. We also know this could have a negative effect on the tobacco cessation program of the province of Ontario.

Lastly, on behalf of my constituents in the riding of Oriole, I urge Bob Rae and the NDP government not to raise taxes at this time of the recession. We need the consumers to have money in their pockets so that they can buy cars and buy consumer goods and help to spur the economy. I see the Premier is here. He is nodding in agreement. I ask that he withdraw this legislation because this is really a tax at the very wrong time. This is not the time to be raising any taxes.

Further, I say to the Treasurer, and I'll be speaking more about it on other occasions, this is not the time to be raising those hidden taxes, those fees and those non-tax revenue items that affect every small business and every consumer right across the province.

My feeling, as I wind up this debate, is that the people in the riding of Oriole are extremely disappointed to see a government so bereft of ideas, a government that made so many mistakes in the fall of 1990 that have really strangled the economy of the province of Ontario. While we try to be as helpful as we can be, there are some times when pieces of legislation which just do the wrong thing must be opposed.

The Acting Speaker: Questions and/or comments?

Mr Cousens: I wish we had had a chance to hear the member for Oriole when David Peterson was Premier so that she could make a speech like that, talking against tax increases. Those were the days when the honourable member for Oriole was sitting on the other side of the House, and there she was, part of the great, strong, new Peterson team in the process of making the new Ontario. It was a newly taxed Ontario.

The only thing that this member has to be disappointed about is that she didn't think of this tax back when they were in power. They thought of every tax, every other loophole, they closed the door on every person who came along. Just like the slaphappy New Democrats who come along and vote for every bill that their Treasurer or their Minister of Economics brings in, and they vote for it blindly, so too did this honourable member for Oriole. She too was just like a trained seal back when Peterson was in power.

I'll tell you, ladies and gentlemen of the House and the people of radio land and TV land, all you have to do is put into context what the honourable member is saying tonight and what she didn't say or did say a few years ago when she had her limousine and the power trappings that went along with government.

The only disgusting thing is that when Peterson was in power they just raised taxes something furious. The economy was a little stronger then, so it could withstand it. But it was still bad what they did. None of those taxes have ever been rolled back, and then the New Democrats roll into power and they just continue to turn up the heat on the people of Ontario.

I only challenge the honourable member, former minister, to not go back and reflect on the things that you did do that have created so much of the problem here for Ontario, because part of the problem of our overtaxation today has to do with the very taxes that you and your government levied upon us.

The Acting Speaker: Further questions and/or comments?

Mr Wiseman: I would like to just clarify a couple of points that the member raised. This is really a question of fairness in terms of what we're trying to do here, as well as trying to stem some of the cross-border shopping.

When a good citizen of Ontario goes to the liquor control board and buys his bottle of wine or bottle of liquor, he pays knowing full well that he is paying the full amount. When the person goes across the border for a couple of days and comes back across the border, he is allowed to bring across the border a certain amount. What we're saying here is that it would be fair for that person, who brings more than the amount he is legally entitled to, to pay the same amount as the person who stays in Ontario to buy liquor in the liquor control board.

The member laments ad nauseam about that poor person who buys the vintage wine. I have to say that for a person to have that kind of --

Mr Stockwell: Lamenting.

Mr Wiseman: Fermenting -- lamenting, fermenting concern and to be so riveted with concern about the wine and the different products that he's buying should perhaps reflect on the fact that the LCBO has over 4,000 different products and that this variety is greater than you can find in the premier wine stores in Buffalo and Rochester. Over 1,500 of these products are prime vintage products. So they don't have to go across the border to buy a good bottle of wine. They can do it right here at home.

The Acting Speaker: Further questions and/or comments?

Mr Stockwell: The point that was raised, I think, by the member for Renfrew North and I think elaborated on by the member for Oriole is the saturation point at which time taxes become so onerous that black markets develop, and I think that's something we should all begin to look at. I think tobacco has reached that stage. I think alcohol has reached that stage as well.

It gets to the point where you can go across the border and pay significantly less for tobacco or alcohol and legally transport it back and make windfall profits, and I'm talking windfall profits. When you can buy a carton of cigarettes in this country for some $45 because of taxes -- and I don't want to place blame at federal-provincial levels, but due to taxes, it's $45 or $50 -- when you can go across the border and pay in some cases half as much for cigarettes, it's such a disparity between the two countries that you tend to create this black market.

What happens in a black market is the people become so saturated with taxes that you no longer collect the revenues on the tobacco that you instituted the taxes in the first place for.

We have seen cases where transport-trailers have been pulled over for illegally transporting cigarettes and the hauls that they're talking about are worth in the millions of dollars. So we as government -- not government, but we as stewards of the taxpayers who superintend the dollars that we collect, must be very cognizant of the fact that, by increasing taxes on both alcohol and tobacco, we in fact feed a black market for illegal profits and profiteering at the expense of our collection. It is truly a double-edged sword. The question we have to ask ourselves is if tax has reached that saturation point.

The Acting Speaker: Further questions and/or comments?

Mr Drummond White (Durham Centre): The member opposite actually brings up a very valid point. I'm surprised. The issue here is not raising taxes, as the member for Oriole says, but rather collecting taxes equitably across the board. My friend the member for Durham West brings up that point quite well.

Is it not only fair that everyone should pay the same taxes, or should we be condoning people who smuggle? Should we be condoning people who engage in black market activities? I would suggest that that's what the member is suggesting, that somehow taxing people who are smuggling, who are engaging in black market activities, is not acceptable and is an extra tax.

I think that unless we do that, what we are effectively doing is adding an extra tax on all the rest of us here in Ontario who duly, respectfully pay the taxes that we are obligated to do, whether it's at the liquor store or whether it's the corner smoke store.

I think that in order to avoid a double standard, a standard whereby the opposition would suggest that it's quite all right to bring things across the border and not declare them; it's quite all right to smuggle in tractor-trailer loads; it's quite all right to do things because it's all right to avoid taxes; somehow it's all right to not assume our responsibilities as everyone else in this community should, as our members do again and again -- I would suggest that that is not all right for us. We should all pay our fair share.

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The Acting Speaker: The honourable member for Oriole has two minutes to make a response.

Mrs Caplan: It's clear that the last speaker did not understand this legislation at all. This legislation is not going to tax the smuggler; it's going to encourage more smuggling and tax avoidance.

The point I want to make is this: This is from a column on November 26, 1992:

"Just a few years ago, the assumption was that everything was cheaper in the United States -- clothing, electronics and so forth. Not so today. Canadian retailers are responding aggressively by becoming more price-competitive, more efficient, by promoting superior-quality products and ensuring better guarantees, warranties and customer service."

Another article, November 26:

"Consumers can now choose from among a much better selection of goods and services right here in our own province. Prices are much more competitive. Ontario retailers are determined to compete even more effectively for your shopping business when it comes to price."

That's the reason cross-border shopping is down. It has nothing to do with the misguided taxation policies of the NDP government. I would say to my colleagues who commented on the remarks that I had to make: Good fiscal policy says that you do what you can afford to do. At a time when you can afford more services, you have to tax to pay for those services. At a time when your province is in recession, when people are losing their jobs, you cannot afford to increase wages; you cannot afford to add new programs.

You must look to be as efficient and as effective at what you're doing as you can possibly be. You must look at the elimination of everything which is a wasteful expenditure. The one thing you must not do is take more money out of the economy through inappropriate taxation or create an environment where smuggling and tax avoidance become the order of the day. Bill 85 creates the wrong environment in the province of Ontario at this time.

The Acting Speaker: Further debate?

Mr Norman W. Sterling (Carleton): It may be found astounding to other members of the Legislature but my caucus is going to support this bill on second reading, even though this government has brought forward legislation which it has fouled up from time to time.

We just got through a number of bills. Yesterday we had third and final reading for advocacy and consent legislation. In that process we went through more amendments than there were sections in those bills, some 405 amendments to bills which had approximately 250 sections in total, and at the very last moment we had to deal with 120 amendments to those bills which we in the opposition were only given notice of about two days.

Therefore, when they bring forward that kind of legislation, it's sort of refreshing in a way to see that this piece of legislation actually makes some sense. It makes some sense in terms of dealing with the cross-border shopping issue.

Quite frankly, when I was briefed by the Ministry of Revenue officials, I said, "In order to really stop cross-border shopping, why don't they collect for you provincial sales tax at the border on all of the goods that come across?" The Ministry of Revenue said to me, "We would like that, but they won't do that for unless we combine provincial sales tax and the dreaded GST."

My party has stood out clear and has said that we should combine the GST and the PST, particularly to stop cross-border shopping. Not only that; it would make it much easier for business to deal with. They wouldn't have to file two returns each month, keep two separate pots of money in order to pay two different governments two parts to this.

If in fact the government was really concerned about cross-border shopping it would bring in, I believe, much more extensive changes to the structure of its retail sales tax collection. Some politicians are very reticent about coming forward with a policy which would join the GST and PST. I understand that, if you can't stand up for what is probably right and logical. I just think that it's time that this government acted in the best interests of all of the people. If in fact the GST and the PST were joined, particularly for goods -- if they didn't want to do it for services, that could be understood, but they could do it for goods -- then the federal government would collect both the PST and the GST on items that are declared as they are brought across the border.

We are losing some money because of the inequities with regard to duties and taxes in bringing liquor and cigarettes across the border, which we're addressing here today, but we are missing much more than we are collecting under this bill. Therefore, I say to the member for Niagara Falls, who is here: If in fact her merchants in downtown Niagara Falls are concerned about cross-border shopping, I want her to tell them about the Progressive Conservative policy, which would in fact help their situation much more than this tiny piece of legislation which we could support.

I don't understand the reluctance of this government and, quite frankly, other provincial governments who have cross-border shopping problems to deal directly with the issue. People don't like the GST. They don't like the PST. Nobody likes taxes, but the fact of the matter is, when you add them together, they come to 15%. Why not just collect 15% instead of collecting 8% and 7%?

I want to say that every so often the government can bring forward a piece of legislation which we can support. So for people who are at home and who might be following this debate, these taxes are only on those items, being liquor or cigarettes, over and above the amount which a resident is allowed to bring back each time he or she is there for, I believe, 24 hours. I believe that's the time frame and I think each resident is allowed to bring back a litre of spirits and perhaps a carton of cigarettes. Not being a smoker, I don't bring them back very often except for gifts or something like that for somebody.

At any rate, if the person brings back more than that, these particular taxes and markups are included, and I can't argue against that. I don't like the fact that we have high taxation on wine or we have high taxation on liquor. The member for Etobicoke West talked about those. Quite frankly, being a very, very strong advocate of trying to get people to quit smoking, I do believe taxation is an important element in discouraging particularly young people from smoking and therefore, of all of the taxes that I support, the taxes on cigarettes, I think, are the most acceptable, if you want to put it that way.

2000

I want to say that what this tax does is, on an average bottle of wine that is brought across the border, under the present rules, on a bottle of wine which would cost $14 in the United States and was claimed at the border, over and above the litre they would have brought in, it presently is $2.63 which is charged at the border. This is going to increase twofold to $5.51 on that bottle of wine, quite an increase in a markup, if you want to say, with regard to the wine coming in. But the markup, as I understand it with regard to the free trade agreement, has to be reasonable with regard to the markups we put on that same bottle in our stores.

In effect we support this bill because it evens the playing field with regard to the sale of liquor and cigarettes in this province. Therefore the bill makes sense and we will be supporting it.

The Acting Speaker: Questions and/or comments, the honourable member for --

Mr Murray J. Elston (Bruce): I thought you were going to recognize someone over there.

The Acting Speaker: No, I don't think so. The member for Bruce.

Mr Elston: Thank you very much, Mr Speaker. It's always a privilege to listen to the member for Carleton as he performs in the House. He has over his very lengthy career given some very excellent speeches, and I've often heard people tell me about some of his more legendary speeches which he used to make at the cabinet table when he was dealing with the issue of freedom of information.

The freedom of information which he championed for so long ultimately resulted in the legislation which has been used to shield the government these days, but I wish only to bring to your attention those of his attributes to measure against his very insightful speech this evening on this particular legislation.

I wonder if the member when he replies to my remarks, with his very considerable experience here, might answer the question which is troubling me just a wee bit, and that is whether or not his leader, nicknamed or at least maybe self-described the taxfighter, would consider support from his critic for these measures to be at odds with their public speech.

I know there will be a speech by the member for Etobicoke West and others, because he will try and set the record straight, but I can't help but ask the question, how is the member for Carleton going to survive this assault on his leader's integrity as the taxfighter when he stands and says, "We are for these new tax measures"?

I understand that there is an issue of fairness and a whole series of other initiatives that might be used in reply, but Mr Harris, the member for Nipissing, has been so stalwart in his absolute opposition to taxation that I think there is a bit of a risk for the member for Carleton. He may not get to speak much more often.

The Acting Speaker: Further questions and/or comments?

Mr Stockwell: It's unusual, and I'm very certain that a Liberal would find it unusual, that there could be a member in a caucus such as this who could stand up and present his own ideas, and ideas that may not be in tune with the rest of caucus but are ideas that he believes in wholeheartedly.

The freedom of this caucus is the true test of democracy. This caucus proves on an ever-going-forward basis that democracy has no political boundaries or artificial lines drawn in neighbourhoods for where you can begin to think and where you can't. Unlike the government, and it seems to me unlike the Liberal Party, this caucus believes that each individual member can bring forward an opinion that is both valued and listened to.

Interjections.

Mr Stockwell: I don't know if I should take any heckling from those across the floor after today in market value assessment. I will just give you forewarning that if you're going to heckle me, I will start a long and very heated debate on market value assessment, and I'd like not to do that, because we're in such a jovial form tonight.

I would like to compliment the member for Carleton, who has had a distinguished career and has put forward many good motions, many adopted in this House, while in government and in opposition. The ideas that he brings forth are most honest, sincere and very well thought out, unlike those who stand before us from the government side at times and simply mouth government policy. As I said before, on government policy, they suggest that they all agree.

Interjections: Ten, nine, eight, seven --

Mr Stockwell: There they go. There's a real --

Interjections: -- six, five, four, three, two, one, zero.

Mr Stockwell: Mr Speaker, my time's closing, because we now have the members opposite counting down, like the brain surgeons they are.

The Acting Speaker: Further questions and/or comments?

Mr Wiseman: I'd like to thank the member for his comments. I know that he sat on the finance and economic affairs committee while the presentations were being made about the cross-border shopping. I think he understands very well the issue of cross-border shopping and how this bill is going to impact on it.

I would like to say, however, in just the last few seconds, that one of the things we aren't going to do is to harmonize the GST with the PST. The reason for that is very straightforward: The GST is an extremely regressive tax which taxes many items that the PST does not tax, such as books and children's clothing. We think that these items should be tax-exempt, and we're going to keep them tax-exempt under provincial law.

So I'd say that while I thank the member for his support, I just wanted to clarify that.

The Acting Speaker: Further questions and/or comments?

Mr Bradley: I'm intrigued by my friend the member for Carleton supporting a tax and expressing, on behalf of the Progressive Conservative Party, his support for this particular tax, which I know the member for Etobicoke West will be endorsing as well.

I look at this tax and try to remember when the member spoke, because I was listening carefully to what he said, and in fact he did not mention that this tax may be a forerunner to an increase in the tax on auto workers, because there is a tax, as you would know, Mr Speaker, that is a so-called gas guzzler tax. What it really is is a money guzzler tax that guzzles money from the pockets of the people of this province and then puts them in a circumstance where they're unable to purchase vehicles that they would like to purchase.

When I saw this tax I said, "This is what we're going to see next," because as soon as they talk about tobacco taxes and alcohol taxes, we start seeing them go to automobile taxes, whether it's a gas tax or it's the so-called tax on automobiles called the gas guzzler. I call it the tax on auto workers.

Now what this very deep recession we're in does is it puts us at a very great disadvantage, those of us who represent auto-making communities. We've lost, as you know, well over 3,000 jobs, at least that have been announced, almost 4,000 jobs at the present time. I just hope that this is a forerunner not to an increase in the tax on automobiles but to the Treasurer finally recognizing that he should withdraw that tax on vehicles and that he should suspend the provincial sales tax on automobiles for approximately six months to a year to spur those sales and get people into new vehicles.

The Acting Speaker: The honourable member for Carleton has two minutes to make a response.

2010

Mr Sterling: I think it's important to note that when we suggested in our report to the economic affairs committee that we meld the GST and the PST, we recognized that there would be about a $400-million to $500-million windfall for the government of the day when it undertook that particular tax reform.

It's true that our party is not for new taxes. There's no question about that. What we do believe in, however, is that there can be tax reform within the system, and we view this as tax reform. We believe, for instance, that if you are addressing the cross-border shopping issue by doing this, then you should take the amount of money which you would gain from this measure and use it to drop the tax, say, on -- the one we had suggested in our report, our minority dissent, to the economic affairs committee was that they decrease the gasoline tax 4.5 cents per litre and use the amount of money you gained with regard to combining the GST and the PST in order to bring that into a more competitive situation. We believe that tax policies should put us, in this province, in a competitive position with regard to other jurisdictions, and quite frankly, Bill 85 follows that general theme.

I don't believe you can go through government without having tax reform. We believe very strongly that border communities are suffering from this and this will help them in some small way, and we're proud to support it for those very reasons.

The Acting Speaker: Further debate?

Mr Tony Martin (Sault Ste Marie): Indeed I see it as my duty tonight to get up in this debate and speak for a few moments on this important issue of cross-border shopping, which really is what this tax is aimed at, and to share some thoughts on what I see is a very difficult challenge that we as a government face in these times of recession and in the context of a federal government that is hell bent on removing all borders in this country between ourselves and the United States, and by so doing, drop the quality of life and the standard of living to a level that is more in harmony with a Third World country than the kind of lifestyle we in our community, in our province and in this country have come to expect.

It's good also to follow the member for Carleton, because my thoughts will reflect to some degree some of his. I think this is an issue we should all drop our traditional boundaries or borders on and begin to work together more cooperatively. It's a challenge that faces all of us, and if we don't get a handle on it, we'll do immeasurable damage to the economies of the communities a lot of us represent.

In Sault Ste Marie, we've had an interesting process of coming together around this question. It wasn't long after I got elected that a study was done that showed that there was approximately $140 million to $145 million being spent across the river in Sault, Michigan, each year, which represents a significant number of jobs, a significant amount of profit to the business sector and indeed a significant amount of tax revenue to all levels of government. So the chamber of commerce, which paid for the study to be done, gathered all of us who had a concern and an interest, and that included myself, the federal member of Parliament from Sault Ste Marie, municipal politicians and others, to sit down and talk about this difficult issue.

The one most obvious way we all saw might be an answer to some degree to stemming the flow of dollars across the river was to make sure that those who were buying goods in Sault, Michigan, were paying the appropriate tax coming across the river so that we had a level playing field, and it was the business community itself that was supporting the idea of collecting taxes at the border.

When I came to Queen's Park and spoke to some of my colleagues and listened to the debate on the GST and came to understand why it was actually impossible for us to harmonize the PST with the GST, which is what the federal government wanted us to do if it was going to collect across the board the kinds of provincial sales taxes that we felt needed to be collected in order to create this level playing field that would give our businessmen on our side of the border a fair shake in this difficult economy --

Mr Bradley: How about businesswomen?

Mr Martin: Business people, business persons, whatever. It became obvious to me that we weren't going to be able to collect taxes on everything, but we would move as quickly and as intelligently as we could to collect taxes on those things that we, as different levels of government, could agree on. In this instance, after some long and difficult discussion and debate and negotiation, it has been agreed that we could in fact together collect taxes on liquor and cigarettes, which are two of the rather --

Interjection: Big offenders.

Mr Martin: Yes, big offenders, that's right; two of the items that a lot of people like to buy across the river and bring back.

We in Sault Ste Marie are looking at a number of other initiatives that we might take. As a matter of fact, this government has been rather generous to all the cross-border zones, as identified in the last couple of years, by way of dollars to develop initiatives to do a whole lot of things -- to help businesses with their marketing and in the area of service and do some interesting advertising, particularly around the season of Christmas -- to try and entice people to stay on our side of the border and shop here because of the impact, of course, that it would have on our local economy and the taxes it would generate for the levels of government.

But in the last few months, on the invitation of the Premier of the province, when he was up to speak to the chamber of commerce -- there was an interesting gathering of people -- the labour council, myself, the federal member of Parliament, the chamber of commerce and municipal politicians and others began to gather information around the question of gasoline taxes. We've begun to study just what might be done on the question of gasoline taxes that would keep people on our side of the river so that they might purchase that commodity and bring into the government coffers the taxes that go along with that, and perhaps have an effect as well on the ability of our local dairy to sell milk, which is also very severely impacted by this whole question of cross-border shopping.

Anyway, I'm going to wrap up my few thoughts by saying that this is seen by me and many in my community as an important initiative in front of this challenge, and I will be, on behalf of many of my constituents, supporting our government as we bring this forward.

The Acting Speaker: Questions and/or comments?

Mrs Caplan: I spoke earlier on this, but I would like to comment on my friend from Sault Ste Marie's contention that this piece of legislation is connected to cross-border shopping. I would like to draw his attention to the statistics that have been gathered about cross-border shopping. We have seen significant progress. The day trips are down, and down significantly. The cross-border shopping problem we were experiencing here in Ontario of a couple of years ago seems to be getting better. I read into the record some of the reasons why: Ontario prices have come down, Ontario retailers are competing, and I believe that Ontario consumers have had their awareness and consciousness heightened about the damage cross-border shopping does to our community.

Bill 85 is nothing more than a tax grab. It will not have a significant impact on cross-border shopping. I know that the member opposite, while well meaning, is misguided. He comes from a border community. He knows that lowering gas prices in Sault Ste Marie would be more of a deterrent to those people who cross to Sault, Michigan, to fill up their tanks than collecting, or attempting to collect, tax on the purchases they may make. That's the point. I ask the member opposite, have you read the studies which suggest that the gas prices in the border communities are one of the reasons that people are lured across the border? Why do you not acknowledge that this bill is a tax grab and nothing more?

2020

The Acting Speaker: Further comments and/or questions?

Mr Gary Carr (Oakville South): I was very interested to find out that this member thought this was an important initiative. As we head into the Christmas season, with all the problems that we are facing in this province, to be dealing with this bill -- quite frankly, this is not an important initiative.

He talked a little about advertising. All the advertising campaigns do is highlight the fact that booze, cigarettes and gasoline are cheaper in the United States. Do you really think this is going to stop people from going to the United States? All it does is highlight the fact that in all those commodities the product is cheaper in the United States. In a funny way, this helps drive more people down there. They say, "Look, the cigarettes are cheaper down there, the booze is cheaper down there, the gasoline is cheaper down there," and you have a government paying for advertising to tell the people of this province that that's what it is. Nobody is staying to shop.

He talks about the study on gasoline. You do not need to have another study to tell you that if you increase taxes, people are going to go elsewhere to buy the product. We've got a government that talks about studies, that it's going to study this and study that.

Mr Stockwell: Stakeholders.

Mr Carr: And stakeholders: "We're going to deal with these people and this group." You do not need to be a Rhodes scholar to understand that if you increase taxes, people are going to get around it: They're going to go to other jurisdictions, whether they be other provinces or the United States, to buy products.

Finally, the fact is that cross-border shopping is the biggest tax revolt, and this member stands and says we're going to have advertising campaigns to keep people in this province. They're leaving in droves to go to the United States, and they're going because the products are cheaper down there. And they aren't cheaper because the workers here charge too much or the companies can't compete; they are more expensive because the government cannot control its spending. You can't continue to tax, spend and borrow like there's no tomorrow. Otherwise, there will be nothing left in this province.

The Acting Speaker: Further questions and/or comments?

Ms Margaret H. Harrington (Niagara Falls): The last two speakers have referred to the cross-border shopping that has been with us for some time, and I would like to give you an update on that. I have been following it quite carefully over the last year and a half, but let's back up a wee bit further. I believe it started as a revolution. Cross-border shopping has been going on in a border community like Niagara Falls, which has two direct bridges from downtown to the downtown across the river, for centuries; let's put it that way. And it's a tradition both ways, back and forward. But since 1989, with free trade and then heightened with the GST two years ago, that's when the real revolution started.

A year ago, we had a campaign of advertising that was initiated by our government promoting why we should shop in Canada and the benefits of that. That campaign was certainly successful to some degree, and we're now examining it again to make it even more successful.

The outcomes of this? I think everyone in this House would agree that the merchants on this side in Ontario are becoming smarter and are advertising better. We're keeping more of our people here. You can see it in all the discount merchandise, and this is what people want. Obviously, in this recession, this is what we need.

People also realize that the taxes they pay here go to support our superior OHIP coverage, our education, our social programs and our quality of life. But what's happening now is that we are trying to bring the US customers with the lower dollar over to our side. We've got the Festival of Lights going on in the city of Niagara Falls. We are advertising, with the help of the Ontario government and the Canadian government, in many papers in the US, and we are now getting those US people coming to our side, and I think we have to build on those kinds of strengths.

The Acting Speaker (Mr Noble Villeneuve): One final participant, the honourable member for St Catharines.

Mr Bradley: I thought that perhaps the reason they were implementing this tax which will bring them in some revenue was so they'd be able to pay for the many polls that are taken by the provincial government.

As you know, when he was in opposition, Premier Rae was very much opposed to the manipulation of public opinion, to the policies that were derived from the polling which is paid for out of the taxpayer's pocket. I think if people could see that the money that will be derived from this tax would be spent on something productive, they would find it much easier to accept than the things we believe it's going to be spent on.

I remember the Premier used to say that the opposition and the media and the public had the right to know the results of polls paid for by the government -- that is, polls paid for by the taxpayer -- immediately, not simply to have them kept within cabinet confines to make their policy and then release them nine months later, when they were no longer topical or particularly useful to anybody else.

Hon Howard Hampton (Attorney General): Mr Speaker, what does this have to do with the tax?

Mr Bradley: The member for Rainy River asks what this has to do with the tax. Of course, what I'm clearly pointing out is what I think you're going to spend this tax on, and I'm wondering why the member for Sault Ste Marie did not talk about that.

Hon Mr Hampton: What does the chamber say in your town?

Mr Bradley: He asks what the chamber says. I would love to tell you what the local chamber of commerce has to say about your government, because it is extremely critical. These are the people trying to promote business in our community, promote tourism in our community. I meet with the other members from St Catharines and district and we go in to meet with the chamber of commerce, and it is almost uniformly critical of virtually everything you people are doing. I think they are going to be concerned that you're going to squander this money on self-congratulatory advertising and public opinion polls.

The Acting Speaker: The honourable member for Sault Ste Marie has two minutes in response.

Mr Martin: I appreciate the opportunity to respond and thank my colleagues for the comments that were made. I would first like to say to the member for Oriole that I would rather say that she is the one who is misled, misdirected, and is attempting to mislead and misdirect the populace out there.

Interjections.

The Acting Speaker: Order, please. Would the honourable member for Sault Ste Marie please reconsider.

Mr Martin: Yes, I reconsider; I withdraw.

However, I want to say that this issue is not a simple one. It is indeed very complex and it's going to require a number of initiatives, including the ones we've already taken on as a government and are working very hard to make sure are effective, in partnership with the chambers of commerce across the province and the labour councils and the communities which are impacted most directly by the cross-border shopping phenomenon.

Anybody would be wrong to think that the differential in gasoline prices is not a factor. In fact, we in Sault Ste Marie are looking at that very closely to see if there's something we can come up with that we could present to this government that could be accepted as an answer to that particular piece of the problem. It's a huge problem.

This legislation that we introduce here tonight will be a good stab at it. It's an initiative that I'm sure will be supported by the chambers of commerce across the province. It'll be supported by labour councils, certainly in my community. It'll be supported by anyone who is intelligent and thinking about this difficult dilemma and will contribute to a multipronged attack that this government has already initiated and will continue to initiate as we come to terms with the economy that we're in and this particular piece of that economy.

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The Acting Speaker: Further debate?

Mr Cousens: When one listens to the New Democrats talk about Bill 85, the Tobacco Tax and Liquor Control Statute Law Amendment Act, you'd think they were talking about the most important single piece of legislation to come before this House since they came to power on September 6, 1990. You'd think we had before us today the piece of legislation that's going to get Ontario back to work, going to begin to balance the budget, going to begin to make Ontario healthy and strong again.

But no, what you're getting here is just another loophole being closed by the government: "If somebody's going to be a bootlegger, bringing liquor or cigarettes across the border, then we're going to penalize them and collect the tax that's due on it." That is the great big piece of legislation, and we hear the member for Sault Ste Marie say, "This is so difficult to bring in; it's momentous," and the words he uses to describe it are words you'd use for something like a brand-new agreement between the people of Ontario and the rest of the world on how to make Ontario healthy again.

Here we are in the Legislature spending time talking about another tobacco tax and another liquor tax, and the rest of the province is sitting out there, many people unemployed, many people hurting, and wondering what it is Ontario is going to do to get Ontario strong and healthy again. This Legislature has spent more time finding ways of punishing people for surviving and to go after them to make sure that the coffers of the government would be that much fuller so it could misspend it.

If they had any confidence that the money was being well spent, they'd say, "I feel I'm part of Ontario and making it a good place to live." But instead what you've got is a government that restricts money for education, for the universities, and the schools aren't able to build the classrooms, aren't able to provide the backup they need. We're seeing the developmentally handicapped come, about 4,000 of them a couple of weeks ago, to Queen's Park to complain about the lack of funding. You've got groups all across the province saying, "Help," screaming for support, and the government, collecting another couple of million dollars through this tobacco tax, has done nothing to rebuild the confidence and the strength of this province.

What misplaced priorities this place has. We're looking at a province that was once the engine of Canada, and still can be and should be and has the makings of being that, but a province that is actually suffering today in a way that it's never suffered before. We're seeing unemployment at the level of maybe 12% here in the greater Toronto area. We're seeing people who are running out of unemployment insurance and having to go on welfare. You see more houses up for sale because people can't afford to make their payments because they don't have the revenue coming in. And what are we talking about? A tobacco and a liquor tax. Where are our priorities?

It's nothing like the Agenda for People that the New Democrats bragged about, that got them elected in September 1990. It has nothing to do with the grand agenda to make a province strong and healthy again. Here you've got the New Democrats coming in with another bill, another way of saying, "Hey, we'll cut that corner, we'll cut this corner."

They haven't begun, as a government, to deal with the problems of cross-border shopping. This becomes the mechanism the government uses: "Hey, let's fix them up on the liquor and on the tobacco that comes across the border illegally." Fine. Good. As far as I am concerned, if this bill were part of a comprehensive plan, if the government had some overall strategy to say, "We are going to do something about Ontario's economy," so that people would want to shop in Niagara Falls or Sault Ste Marie or in Canada, then I would support the bill easily. But it isn't. It's like every other piece of legislation this government's coming out with; it's piecemeal.

In February they made some announcements that they'd something about cross-border shopping, and then seven or eight months later they come in with Bill 85, which is supposed to be the answer to it. What a pile of unbelievable, unadulterated garbage. That isn't what people are concerned about. They're saying: "Make Ontario strong. Let Ontario become the place where we want to shop, we want to buy, we want to grow. Look at the overall scene."

It's been raised already in the House. It's cheaper in the States to buy gas. It's cheaper to buy just about anything. Now that the dollar is starting to change, the value of the dollar is such that people will begin to say: "It's no longer the great big saving to go south of the border. Maybe we can start to buy here in Canada."

That's what we really want to see them do: buy here, shop Canadian, buy Canadian. But support Canadian manufacturers, support Canadian business, help the Canadians who are out there making an investment in a company to grow that company and build it, rather than punish it. Set a climate for Ontario so that we can be the kind of place we once were. What you're seeing instead from this government is a series of bills over a period of time which is going to drive Ontario further and further down in its standard of living, in its gross domestic product and just about everything. Bill 40 is the classic example of a government that lost sight of the overall picture.

This government, the New Democrats, brought in labour legislation. First of all, the process was wrong because it didn't involve business, it didn't involve the whole community. It was really the labour groups influencing Mr Rae and Mr Mackenzie to develop a concept to make Ontario more unionized. It's driven a huge wedge that separates business from labour and from government. That's the kind of thrust this government's had over the last two years.

In particular this last year, it's the single worst piece of legislation the government's come out with, because it's going to push Ontario into another era, into a place where you're not going to find outside investors. Our standard of living will go down unless we do something about it. We're seeing the whole business world shudder at what's going to happen in Ontario come January 1, when Bill 40 comes in.

Quebec lost one million more person-days in strikes from 1977 to the present, when it had the whole thing brought in where they weren't allowed to bring replacement workers on the floor of a plant. This government now has done it to Ontario, along with a plethora of other changes to the labour legislation, which puts a bias in Ontario that's pro-labour and anti-business. When you have them at odds with one another, then you start having a province that isn't growing together, working together.

How does that apply to Bill 85, the tobacco tax? I'm telling you what it does. It says that here is a province that isn't really pulling together, working together to make it the strong economic engine it's capable of being. I believe in Ontario, but I also believe that we have a job to do, to work as legislators with the whole business community to develop a dream for this country again, develop a vision, the kind of thing our leader, Mike Harris, is saying.

Bring down your spending as a government. If this government had found ways of reducing its deficit from something like $10 billion down to zero -- each year this deficit begins to grow and grow. If the government were controlling its spending while it's trying to do some of these add-ons of tax, then there would be some balance, but there isn't. On the one hand, you've got government spending out of sight, and then you've got taxes growing and growing.

You're never going to feed this hungry animal known as the bureaucracy of the Ontario government, because it's always going to be hungry, always looking for more money, always more taxes. The problem is that you've got to do two things at the same time. You've got to reduce the level of taxation, so that the people in Ontario, who are already the most heavily taxed jurisdiction in the world, are somehow being protected from all the tax increases. For many of the people in this Legislature, we're much higher than the average person in Canada for our income earnings, because out of the public trough you have here in Ontario, we all get what seems to be an awful lot of money compared to so many others who are out there. I'm concerned, when you start having all the money in government, and this government keeps on feeding upon the population around it, that you have a government that's never, ever sated. So you have another tax, another way of solving the problem.

Why not solve the problem through more efficiencies in government? Why not solve the problem through generating a better climate for business to succeed and prosper? But no, here we are again in the Legislature, just before Christmas, bringing in another tax for the people in Ontario. I just find it so repulsive that we haven't got the big dream in focus, the big vision, the big sense of how we in Ontario can get Ontario back to work again, people pulling together, instead of the New Democrats coming out with their social agenda and then paying for it off the backs of the taxpayers of the province of Ontario.

I want to refer to some of the remarks of the Premier and put them in the light of Bill 85 and this tax legislation. Mr Rae, on October 14, 1992, sent a letter to a number of people, probably thousands, and I don't know the exact number. It was accompanied by a letter from the president of the Ontario New Democratic Party, soliciting funds for the New Democratic Party. At the bottom of it, it says: "Yes, I support Bob Rae and his work. I wish to contribute to the leader's fund. My contribution will be," and it puts a number of dollars they can have, or Visa or MasterCard. But in the letter that accompanied this appeal for funds, Mr Rae, who is bringing in this new tax, also said a number of things he's doing. I'd like to just contrast the two, how they fit in together.

2040

Mr Rae said in his letter: "Whether it's the Liberal right or the Tory right, their message is always the same: 'If you want jobs, forget the justice agenda,' they say. 'Forget fairness.'"

First of all, I don't know how he can start putting words into the mouths of our caucus. You can do it with the Liberals because they've said all things. You saw that with the member for Oriole tonight, who, when she's in opposition, says quite a different thing about a tax bill than she did when she was in government, because the Liberals brought in more tax bills than even the New Democrats so far; of course, they were in there longer.

But the fact is that that is not true, when the Premier says that the Conservatives and the people I'm associated with say, "Forget the social agenda." That is not true. "Forget the justice agenda." That's not true. "Forget fairness." That's not true. I believe in fairness, I believe in equity, and our party believes in fairness, our party believes in equity.

The Premier goes on to say in his lovely fund-raising letter: "The wage protection fund: Thanks to our government, Ontario is the only province where all men and women are guaranteed to get the wage they are owed if their employer goes out of business or bankrupt. There's just no reason for workers to be cheated of their due through no fault of their own."

Well, it's not totally true. Do you get the whole wage you're owed? Not all of it. There's a certain limit they're owed, and in his own letter he says you get all the money. Hey, not true: You only get a certain amount of the money. Again, it's the kind of innuendo the Premier puts into his letter that just isn't valid.

Why is it that he gets away with it? I suppose when you're in power you can say what you want, when you want, how you want, to whom you want, and they're going to believe you. Well, I'll tell you something. We're not just taking it. We are going to unravel and reveal to the public at large just want a sham this New Democratic government is.

He goes on in his letter to say: "These are the programs the right tell the citizens of Ontario they ought to forget. They'd rather see social programs slashed and government made ineffective again." I tell you: "Government made ineffective again?" I've never seen it get so ineffective. I've never seen our tax dollars so abused and misspent than they have been by this government. Our riding offices can't get off the phone trying to get the problems dealt with where people want to get a birth certificate, because the government moved the registration desk up to Thunder Bay. Hey, they know how to wreck a system.

Ms Sharon Murdock (Sudbury): Oh, come on, Don. When did that happen?

Mr Cousens: Between the two of you, I can't separate the Liberals from the New Democrats, because they may start it, you're finishing it, and neither of you know how to run a good business well. You really don't know how to do it. You're both confused. To me, the public at large still sees it as a coalition, because in 1985, when David Peterson came to power, it was a matter of Bob Rae saying to him, "We're together." I'll tell you, I can't tell the difference.

The fact that you guys will say in a letter, and your Premier will say, that we would rather see social program slashed, I'd like to know what social programs we would slash. The developmentally handicapped came to Queen's Park a few weeks ago; there were 4,000 people here on the steps of Queen's Park saying, "Do something for us." They're people who are 100% dependent on society, and there they are, asking us for a handout. How wrong. There isn't one of us in this House who should ever want to see the day again where the developmentally handicapped, people who are dependent upon society for help and support and its work, come out front of this Legislature, pleading and crying for money. What a sham, what a waste. Here is the government that came out with its Agenda for People and said it was going to do something for people, and those are the very people who have come now to protest on the front steps of Queen's Park. What a horrible, horrible scene.

That's what Bob Rae said in his letter so people would give to the New Democrats. I just hope some of those people stop and think before they send their cheque. He said that we'd rather see social programs slashed. There's one social program that Marion Boyd has slashed, and I will never, ever forget the day we saw those 4,000 people out in front of the Legislature. For her not to have reversed that position, for her and the tricommittee in the province of Ontario to reduce funding for people who are handicapped and in need -- that is a social conscience issue that has to touch every one of us in this House, and we're not doing anything about it.

Bob Rae said we'd want to cut. You're the ones who have slashed the social budget and you're the ones who will be found guilty in the spring of 1995 when you go back to the public.

On goes Bob Rae: "The message of the right is nothing but a prescription for an 18th-century economy." I can't believe Premier Rae would say that, that we want to go to an 18th-century economy. I think you guys are doing it because you're driving Ontario business out of business. No one's going to want to come and invest here now. Investment from outsiders isn't coming in, so you're driving them out. You've turned the clock back; yes, sir. The New Democrats have turned the clock back so we're into a whole new era of reverse economics. Turn the clock back to some other century's approach.

Already we've gone into an approach that's like Sweden's. You're making Ontario the socialist centre for the world, because the rest of the world is going to democracy and freedom. We've got Bob Rae and socialism coming in rampantly, along with more taxes, more government spending on things we can't afford and driving the economy into the ground.

Mr Stockwell: Underground, what's left of it.

Mr Cousens: What's left is underground, because there's more business being done on the side, through barter systems and all kinds of sordid, sad stories. It had its beginnings in your time, and back to the Liberals. Maybe the seeds were there from the beginning of time.

However, when the Premier, with his pontificated approach -- I mean, there's no one who stands on a higher pinnacle of power in Ontario than the Premier, and when he said, "The message of the right is nothing but a prescription for an 18th-century economy," I just have to say the Premier is wrong. He is absolutely, totally, unequivocally wrong. I don't know where he's getting his facts from, I don't know who he's listening to, but he sure isn't listening to the people out there who are absolutely and utterly filled with dismay at the way this government is handling the economy, the way this government is driving business into the ground, the way this government is not supporting business, the way this government is not establishing a climate for business, the way this government is doing its own thing against the best interests of all the people of Ontario. A government that wanted to build by consensus, to bring all groups together, would be listening to and working with all those groups.

I like this line, when Bobby said, "In the two years since we were elected by Ontarians, I have worked steadily to recruit new investment." Dig that: New investment? What new investment has come into Ontario in the last two years since the dippers came to power? Not very much. I see the investment in my riding: more empty buildings, more commercial properties for sale, businesses closing down, hard, tough, mean times, and this government has done nothing to help business get going again and get it rolling.

I like this line too, Mr Rae speaking from his own high pinnacle: "I've crossed and recrossed 16 time zones from New York to Stuttgart to Tokyo and back." All I can say is that he may as well have stayed here, for all the good he did. We've had his ministers trekking around the world. The Minister of Industry, Trade and Technology has headed off to Pakistan and India and many parts of the world.

Mr Stockwell: Who did?

Mr Cousens: Ed Philip. And he doesn't even come back with an announcement of what he accomplished or did. There's no statement in the House, there's no coming forward to say he's accomplished anything. But he's travelling and spending taxpayers' money. I wouldn't mind him doing a bit of travelling if he did something for us, but instead he comes back and just sits at his desk, puts on the silly face and we don't know anything about it. I don't see any change in investment coming back.

I see more happening when Mayor Hazel McCallion of Mississauga heads off and goes and talks to people in China and other places to try to get them to come and bring their business to Mississauga. I see more by Mel Lastman going out there to build a community and make it right. I see the mayors and the people around Ontario trying to do something about the province of Ontario. I don't see anything coming from this socialist government that's helping things.

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Bob Rae said in his fund-raising letter, "I've crossed and recrossed 16 time zones." He could have stayed here and dealt with the problem of our police forces. At that crisis time, when we had the police, concerned as ever about the relationship between themselves and the government, asking for a meeting with the Premier, where does the Premier go? He hops on another plane and heads across another 16 time zones. Why not stay here and have his own battles in this time zone so that here in Ontario we can deal with the issues that concern the people of Ontario?

He goes on to say in this fine letter, "Our New Democratic government is also taking direct actions to put Ontarians back to work." Tell me what. I don't know what they've done to put Ontarians back to work.

Mrs Caplan: They have done nothing.

Mr Cousens: Ontario citizens want to get back to work, and they've done nothing. I quote the member for Oriole. I haven't quoted you in my life, but the honourable member for Oriole just says that they've done nothing, and for once I agree with her. This is a new alliance between the member for Oriole and me.

What have you done to help people get back to work? They are screaming for help. They're looking for opportunity, they want to have a chance. They want to raise their kids, they want to send them to school and they want to send them out to learn a trade or a business or get an education. But what's this government done? Sweet nothing. Sweet, sweet nothing to get them back to work. Yet here it is in the Premier's letter to people who are going to give some money, "We're going to get them back to work."

What this government has done is come in today with another tax bill that says: "Yes, we are going to increase the tax on tobacco and on liquor." That's what they've done. I tell you, I compare this letter with what the government's doing --

Interjection.

Mr Cousens: You're not in your seat. You shouldn't be speaking.

The Acting Speaker: Order. Would the honourable member please address his remarks to the Chair. I hope that other members -- yes, including the one who's speaking right now, who's not in his seat. Interjections are out of order, particularly when members are not in their seat.

Mr Cousens: I compliment the Speaker. I feel that the Speaker is doing everything he can to control this motley mob. It's tragic that they don't understand the rules of the House and live within them, the way I try to. I have to admit that I have had moments of failure.

But on with the Premier's letter. He had a lot to say. It's unfortunate that I can't find out how much money he raised through this sloppy letter. None the less, probably a lot of New Democrats got it and said: "Premier Rae, you've done so much to help Ontario. We're going to send you another little bit of money."

How he could ever say it, I don't know; he probably didn't have a straight face when he wrote it, or maybe someone else wrote it for him, but he said, "Our government has helped secure a $140-million investment from General Electric to build energy-saving products with worldwide sales potential right here in our province." Well, I have been led to believe that that installation, fluorescent lighting and a few other things GE was going to do, was going to happen anyway, it was on the way. I attend many openings as a politician; I'm invited to go the ribbon-cutting and share in the very happy moment when there's a startup. Like every one of the politicians in this House, from all parties, we go to those grand openings, cut the ribbon and say: "Isn't this wonderful? Keep up the good work. Keep growing, keep developing." Well, there was one that was going to come anyway, and all Mr Rae is trying to do is take the credit for what someone was going to do anyway.

As a politician, I'm invited to all those openings, and like most of us, I go to them and want to give them encouragement. I don't get invited to the closings, and over the last two years and longer, there have been more businesses go out of business, go bankrupt, close their doors and just forget about it, because they can't make any money in Ontario. The climate isn't right. Where do you see the politicians then? We're not there. We forget about them, and they're the suffering people. They're the suffering, hardworking people who in the past have been the pioneers who built this country, but the province has made it almost impossible for them to stay in business and to stay alive.

I only have a few moments left, and I want to touch on a couple of the other little nuggets in Premier Rae's letter. "When women receive only 65 or 70 cents on the dollar of what men are paid, our economy is being denied one of its best routes to innovation and growth." I happen to agree with him on that. "We're changing that," he says. "Our first step is to expand pay equity to include 400,000 more Ontario women."

Mr Bradley: Are they not keeping that promise?

Mr Cousens: I wanted to ask that. That's a good line. "Are they not keeping that promise?" asks the member for St Catharines. I want to know. Can this government testify and say, once and for all, that it is going to keep the promise to expand pay equity for 400,000 more Ontario women? Mr Rae said that in his letter to get money. How many thousands of women is he hoping to dupe on that line, saying, "Hey, I'm going to get you some money, so you give me some money." That's what the letter's all about, Premier Rae saying, "I want your money, so I'm going to put some money in your jeans." I'll tell you, there isn't any sense in this Legislature that this government is going to institute pay equity for women.

I like this line; this is another thing Bob Rae said in his fund-raising letter: "Through employment equity and anti-racism programs, our New Democrat government will dismantle these barriers. We'll throw them on the trash pile." I don't know how you're doing that. I saw more done on reverse discrimination this last summer in what this government instituted with its summer works program, that caused others, who are not part of any one minority group, to feel left out, and I've seen this government, in its whole approach to racial issues, increase the tensions rather than decrease them.

I see the human rights situation in Ontario as abysmal. The backlog continues, and this government is not doing anything about it. They're disbanding the task force that's supposed to do something about the backlog in human rights. We still end up having people with massive issues of racial intolerance, and this government, which has pontificated in such a lofty and mighty way, says it is doing something.

Mrs Irene Mathyssen (Middlesex): Sure, Don. If you don't do anything about it, it'll just go away?

Mr Cousens: Oh, come on. I'm saying we have to do something about it, but don't say you're doing something when you're not. Then Premier Bob Rae says: "Our right-wing opponents miss no opportunity to deride our continued commitment to social justice. They think that fairness, that equal opportunity for all Ontarians, are luxuries we cannot afford." That's poppycock. He's trying to paint a picture of other political parties that may be something he has in his own mind but is not close to the reality, not close to the sense of social conscience that I know that members in our caucus have and even members in the Liberal caucus have, a sense of social conscience and social equity for all people in the province of Ontario. Yet Bob Rae comes along and says that we deride a commitment to social justice. He is wrong, and for the man that called David Peterson a liar, I wonder what I could call him now, except that the parliamentary system doesn't allow me to call him what he really is.

Mr Bradley: Go ahead.

Mr Cousens: No, I'm not going to. I don't want to get kicked out before I'm finished.

So here he is, Premier Bob Rae. He has the sense that only he is right. He's got all the answers. He comes along and says that we deride a commitment to social justice. That's not true, not true at all. Commitment to social justice is something that anyone elected to this Ontario Legislature, from every party, should share and most of us do share. In fact, I can't think of any member in this House of any party who doesn't have a strong social conscience, nor would there be anyone that I have met or talked with who would put into words or practice this comment by Premier Bob Rae, that we would deride "our continued commitment to social justice." That is totally an outright lie. It is not true. It is not possible. That is not where we're coming from, and yet that's what he says to try to raise money from his New Democratic fans.

I'm nearing the end: "Our government will bring a new, better style of economic management to Ontario. We'll work with the market, but we'll also make the market work to meet people's needs." What a sham. What a lie. What a mistake.

The problem is that the people believed Bob Rae back on September 6, 1990. They voted in a large, massive majority of New Democrats to run the government. So instead of dealing with the economic issues, we're tonight dealing with Bill 85, another bill to tax the smokers and tax the drinkers. Fine, go and tax them, but you haven't begun to deal with the big issues that make Ontario tick and make Ontario strong and make it a place to be proud of.

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The Acting Speaker: Questions and/or comments?

Ms Anne Swarbrick (Scarborough West): This is a debate on the second reading of Bill 85, An Act to amend the Tobacco Tax Act and the Liquor Control Act to provide for the Payment of Tax and Mark-ups by Returning Residents of Ontario.

I understand that the opposition in this House has been complaining that 30 minutes is not sufficient time to make a reasonable speech about a particular bill this House is dealing with, yet we've just listened to a 30-minute rambling diatribe which really dealt with a fund-raising letter used by Bob Rae within the New Democratic Party, not the government, and which was a 30-minute diatribe against this government on every kind of generality, with the exception of Bill 85, An Act to amend the Tobacco Tax Act and the Liquor Control Act to provide for the Payment of Tax and Mark-ups by Returning Residents of Ontario. I didn't hear one point with regard to that. I think this makes a sham of the opposition's complaints that 30 minutes is not sufficient time for them to reasonably debate a bill before this House, and I think it's that very kind of speech we just heard which causes the Ontario public, including me at times like these, to feel very cynical about the workings in this House.

The Acting Speaker: Further questions and/or comments?

Mr Bradley: Since we are supposed to respond to the comments that are made by the speaker, I will certainly respond to the comments he has made and indicate that someone showed me the letter that goes to people who are supposed to donate money to the New Democratic Party, and in fact it has "Office of the Premier" on the outside.

Now, there's that disclaimer that Audrey McLaughlin puts on hers, and the disclaimer that Premier Rae puts on his. Nevertheless, it says "Office of the Premier" on the outside, so people think they're getting a letter from a really important individual in this province, namely, the Premier, and they open it up, of course, and find out that it is full of material which is not always as accurate as it might be.

One way people can save money is that if they purchase their NDP card, they can get a discount of 1% from the Bank of Montreal MasterCard. I thought the New Democratic Party was a party which wanted to see everyone have the same break in the province of Ontario, but here it is steering the business towards the Bank of Montreal. I wondered why the member for Markham, when he was talking about fund-raising, did not refer to the fact that the NDP does give special privileges to certain people in this province.

All my life I believed, from the days of Bob Carlin, a good member from northern Ontario who was drummed out of the NDP for being too left-wing, for being too progressive in his viewpoint -- I would think that Bob Carlin, were he alive today, would be protesting some people having special privileges in this province by buying an NDP card.

The Acting Speaker: Further questions and/or comments?

Mr Carr: As usual, the member for Markham has hit the nail right on the head. I know the other side doesn't want to hear it and I know the member for Scarborough West talks about "pathetic." I want to tell you what is pathetic.

What is pathetic is a member like the member for Scarborough West, who has worked literally years to get into this Legislature, and before Christmas, as we try and rush through the bills, what are the big bills we're dealing with? Employment equity, pay equity, all the things she fought for all her life? No, Bill 85. No one even knows what Bill 85 is. You want to talk about pathetic, member for Scarborough West? The member for Nickel Belt, who became Treasurer, for 20 years in this House, day after day, talked about programs for people. He becomes Treasurer, and Bill 85 is what he does when he gets in power. That is what is pathetic, a party that has wrangled and spoken for years and years to get into power about what it would do, and the members on the back bench who worked for years to get into power, and Bill 85 is what we are talking about as we head down to a recess before Christmas.

The member for Markham tells it like it is. The other side is pathetic. No one knows and no one cares about this Bill 85. I don't even know why we spend the time to pay people to put these in the members' binders each night. This is a pathetic piece of legislation. For the members on the other side, for the member for Scarborough West, to come into this Legislature and talk about other members, when they have fought all their lives -- the big reform was going to happen, and what do we get from this government? Bill 85. No one knows, no one cares what it is. You're going to get about $1.6 million from it.

I want to tell you what pathetic is: Pathetic is the other side and the NDP government in the province of Ontario.

The Acting Speaker: We can accommodate one final participant.

Mr Gordon Mills (Durham East): I am absolutely --

Mr Elston: On a point of order, Mr Speaker: I would understand that the member is still wanting to carry on with MVA. Did someone tell him that this is Bill 85 instead of Bill 94?

The Acting Speaker: Order. That's not a point of order.

Mr Mills: My mind is boggled when I hear the supreme Grinch of Christmas, the member for Markham, sitting over there and criticizing this government about taxes on cigarettes. What a short memory he's got, when that party was responsible for the most diabolical tax increases in this province's life when it had the ad valorem tax on gasoline, on diesel fuel, on tobacco, on cigarettes.

They weren't satisfied with the normal process. I used to do it for these people, and I would go out and I would find that the tax had gone down, and we'd come back and they'd say: "Go out again, we can't have a decrease in taxes. We cannot. Go out again. Don't go to any discount stores, don't go to any discount gas bars," because they increased the tax on all those commodities, not once a year, not in the budget, but every three months solid.

How you had the audacity to sit there and talk about this government raising taxes is absolutely beyond me. I cannot believe you are serious. You must have lost your senses to stand here and talk about that. It's a complete disgrace to get up and talk about this government with its taxes, when they are their own mothers of tax increases when they were in power. It's a disgrace and you should be ashamed of yourself.

The Acting Speaker: This completes questions and/or comments. The honourable member for Markham has two minutes in response.

Mr Cousens: I woke them up, anyway. It'll soon be feeding time.

First of all, the member for Durham East was a tax collector himself, so he made his money as a tax collector. He was known as the NDP dipsticker back a long time ago, so he's quite aware of what taxes were and how people came to this country and how you had to have people collect it. Obviously, you did a good job and you remember something from the past.

I thank the member for Oakville South. I think you really highlighted that the speech that I tried to give was one that really said that you, as a government, have lost sight of the real challenge and opportunity that the people of Ontario gave you. What is pathetic is the fact that you had a chance to do something. You've got two years, and if you keep running it the way it is, you're going to run Ontario right into the ground.

I'd forgotten, and I thank the member for St Catharines for pointing it out, that the letter I quoted to you from Bob Rae is very much government business. Right at the top of it is "Office of the Premier," Bob Rae. So this is him bragging about his government's accomplishments, and there he is --

[Applause]

Mr Cousens: Well, there's nothing to be proud of in what he had to say in this document. All you have to do is take it piece by piece and part by part, and you'll find then, member for Scarborough West, that it is something to be thinking about. The fact that this government is spending so much time bringing in such a small, meaningless bill, compared to the overall picture that has to be dealt with -- that is your mistake. You, as a keen, intelligent, hardworking person among the New Democrats, should be forcing this government to do the kinds of things you believe in, and it's not. They have lost their social conscience, they have lost their business conscience, they have lost the future next government.

I see you stand and make the comments you did and talk about cynicism. I say to you, you should become far more cynical about the promises you made and how you're living up to them, because you've broken the promise with the people of Ontario.

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The Acting Speaker: Further debate on Bill 85?

Mr John Sola (Mississauga East): I think some of the partisan shots we just heard show what the problem is with this province. In the last 10 years, we have had all three parties in power, and all three parties have taken the same measures in their budgets, in their taxation policy, yet we try to solve the problems of today by pointing fingers at yesterday and the day before.

I would like to agree with the member for Etobicoke West, who said we have reached the limits of tax tolerance. Anybody who goes out into his constituency and talks with the people will realize it. It doesn't matter whether you talk to a businessman, a labourer, somebody on welfare, somebody in management, whatever, the first story you hear from every one of your constituents is that there's too much taxation, that they are overly taxed, whether it's by the provincial government, federal government, municipal government or the school board. Taxation has just reached the saturation point and they can't tolerate it any more.

Upon reading what Bill 85 is about, An Act to amend the Tobacco Tax Act and the Liquor Control Act to provide for the Payment of Tax and Mark-ups by Returning Residents of Ontario, you wouldn't think there would be something to oppose, but the fact that it's a tax measure, the fact that the ordinary Canadian resident reacts with aversion to any mention of the word "tax" is one of the things that creates a sense of opposition.

The other thing that's wrong with it is that it's similar to the tax the NDP put on used cars. You'd say, what is the connection? I had Mr McCallum call me and say, "It's making honest people pay for people who cheat the government." He says, "Make the penalty more severe for cheaters, instead of hitting everybody." In the case of the automobile tax, he says, "It's hitting the working man because the wealthy don't buy used cars."

It's the same situation here. The wealthy don't go cross-border shopping to save money; they go out of luxury. It's people who have been taxed to death here, who cannot make ends meet, who are forced by our high taxation, by our high prices, to cross the border and shop in the States. The solution to cross-border shopping is not higher taxation of whatever kind; it is a reduction in price. As on tobacco and alcohol the highest component of price is taxes, I suggest the solution to cross-border shopping is a reduction in taxes.

You'd say: "The government has problems balancing the budget. It's got a $10-billion deficit which it is trying hard to meet. There's a recession verging on depression, if it hasn't reached that stage. People are losing jobs by some 500 a week. Companies are going bankrupt daily. How can the government afford to lose a source of revenue?" But the problem is, not one government in this country, at any level, has tried the other approach of reducing taxation as a stimulant, to leave more money with the people to have extra money to spend. I think this is an approach that somebody should be trying.

Now, in Bill 85, there's one measure I do like, and that is the fines for smuggling. People caught smuggling tobacco will be subject to a fine of between $300 and $10,000 and the confiscation of goods. That in itself is good, but the corollary to that is that the profits on smuggling are so lucrative that these fines are insignificant. They are not a deterrent to people who are really determined to smuggle.

For instance, I have read stories that drug smugglers have switched from smuggling drugs to smuggling tobacco. Why? Because it's more profitable and there's less risk, because if you're caught smuggling drugs, the penalties are severe, and if you're caught smuggling alcohol or tobacco, the penalties are insignificant in comparison to the profit. So on the one hand, we're trying to deter smuggling by increasing the fines, but on the other hand, because of the increased costs due to taxes, because of the differential in prices, more people are inclined to smuggle.

I'd just like to draw the parallel between most of the countries of eastern Europe during the time of the Iron Curtain and when the borders were really strongly guarded: That was when smuggling was in its heyday. The black market was what made the economy run in those countries because the profits to be made were so great that they outweighed any deterrent, the severe penalties for getting caught.

You don't even have to look at the former Iron Curtain countries; you just have to look at Italy. In Italy, the black market economy is so strong that when Italy is asked to attend a conference of finance ministers, they actually have two attendees: one for the regular market, and one of the black market, because that is how strong the black market activity is in Italy. What has caused it? Again, excessive taxes.

I think we have to start learning from the experiences worldwide to avoid repeating the mistakes that have been made elsewhere. As many of our colleagues have said, I don't think anybody comes into this House, runs for office, trying to make matters worse. I think we all try to do better either for our community or for our region or for the province as a whole, depending on our broad our outlook is. But I think sometimes we get so caught up in ideology, or so caught up in the trees that we miss the forest. I think this is one of those situations, where we are trying to avoid one evil and we're creating another evil.

There has been mention in this House regarding the time allocation and the fact that we have been wandering in our speeches, while we've complained so much about the 30-minute time limit. I can just give you my own experience. I have been prepared to speak time and again on various bills in this House and prepared to speak for 30 minutes. My normal limit would be 10 to 15 minutes to make sense, but bringing a lot of material with me, I think I could drag it out to 30 minutes; there are other members in this House who can probably speak for days and still be coherent and still make sense and still come up with new ideas.

Interjection: Sean Conway.

Mr Sola: Yes, the member for Renfrew North is one of those. I came prepared quite often with a stack of material so that I would be able to make my points over a 30-minute time period, and when I arrived here, I found out that there had been an agreement among the House leaders that despite the 30-minute time limit, because of time allocation that either I would not speak, or I would cut my time in half so that another member would be able to speak, or I would start speaking and I'd receive a note that, because of the shortage of time, I would have to give up my speaking turn so that somebody else would be able to speak. So while 30 minutes sounds long, if there would not be time allocation tied in with the 30 minutes on most bills, I think we would have sufficient time for most members in this House to express their opinion.

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But there's another point I'd like to make. Recently, the government brought in a bill, or several bills, in which they had over 100 amendments. With 100 amendments, if you took just one minute to speak on each amendment, you'd be speaking for 100 minutes, which would be almost four times your allocated time limit. On 100 amendments, it wouldn't take much genius to be able to construct several sentences to take up one minute of time.

We have had several bills in which there have been hundreds of amendments brought in, and not just brought in, but brought in at the last moment, sometimes not even giving sufficient notice to the critics so they could prepare a response or see whether they're acceptable, whether they could be in agreement with the amendment or not.

Those are some of the problems with time constraints, although I must admit that in my own instance 30 minutes would be more than ample time.

On another topic, I think we have to try to act together to try to solve the problems of this province. I think the partisan bickering that is going on in this House is making us lose face, if it's possible, with our electorate, and it is making it impossible for us to solve the problems of this province, because we're trying to make political points. This goes for the government as well as the opposition parties; none of us is an angel in that regard.

With the hole the province finds itself in, with the economy being in the doldrums as deeply as it is, I think all of our constituents expect us to try to improve matters, because whichever party follows this party in power, it will be better off, the better off the province is. If we leave the province in such a shape that nobody will be able to pull it out of the hole it's dug itself into --

Hon Floyd Laughren (Treasurer and Minister of Economics): We're trying.

Mr Sola: Yes, you are really trying. I think, unfortunately, that you're succeeding, Mr Treasurer. That's one of our problems. You should try filling the hole instead of digging a deeper hole.

Hon Mr Laughren: I always spoke highly of you.

Mr Sola: Well, I speak highly of you, and that's why I can't understand how come the measures you bring before this House are not in keeping with my high opinion of you.

Hon Mr Laughren: Former higher opinion.

Mr Sola: No, I still have a high opinion. I think you're doing some of these things in spite of yourself, because you're so tied in to your ideology that you can't cut the ties that bind. If you just studied the problems that your ideology got all of eastern Europe into, even Sweden -- you know, we don't hear enough about the Swedish case on this side of the ocean. We still hold it up as a model of democratic socialism, but if you read some of the European papers and you hear the problems that Sweden is in, it's almost a carbon copy of what we are experiencing right now.

Mr Randy R. Hope (Chatham-Kent): Don't take it from the newspapers.

Mr Sola: Well, studies by experts; not just newspapers but studies you get from experts. You get introduced to the studies by reading newspaper reports on those studies and then you read the studies to fill in the blanks that the newspaper reports create in your mind.

I must say that I have been horrified to see that using Sweden as a model is a worst-case scenario for us, because we may wind up in the same state Sweden is in right now. Sweden is trying to go, believe it or not, a little bit to the free market system in order to get itself out of its doldrums, so I think we have to look at that aspect.

When I talk to constituents, the one thing they all say is to let the private sector solve the problems; let the private sector create jobs; don't tie the private sector's hands. This especially comes from small businessmen. For instance, with every measure you've taken, even the $50 registration fee, small businessmen in my riding were infuriated. Some of them had just finished registering, then they got this notice saying that if they did not re-register they would be liable to a fine of $1,500 or something like that.

What offended them was, first, that there was a decree that they had to do this even though they had already fulfilled their responsibilities, and then there's all these other little nagging things. It doesn't seem like much to us, but every piece of paper a small businessman has to process means dollars, means work lost or one additional worker laid off because the manager had to do all the work himself. It builds up to a point where our small business people, the ones who create -- I don't know, depending on which study you believe -- anywhere from 67% to 80% of the jobs, are feeling most of the effect of any measure we bring in here, whether it's registration, whether it's taxation. The big companies have enough staff to delegate to look after these problems. It's the small companies that find themselves in the hole, that find themselves in trouble the more roadblocks we place in their way.

One of the problems I have with Bill 85 is just the message: one more new tax -- actually, two more new taxes: one on liquor, one on tobacco. If anything, I think the timing is wrong, as in everything else, whether it's Bill 40 or all our other measures. If we send the wrong message to the business community at the wrong time, or the wrong message to our taxpaying public at the wrong time, we're creating a state of confusion, a state of uncertainty which will keep them from participating in the economy -- that means spending -- and thereby adding to our economic woes instead of trying to be a small cog in our economic recovery.

As I said before, the government should be examining lowering taxes on gas, tobacco, liquor and anything else as a means of trying to stimulate the economy, because when you give the other message, you're adding to the depression of the economy.

I think the member for Markham castigated the Peterson government earlier, because of some remarks that the member for Oriole had made, about the many tax increases during our reign. Well, I can tell you one thing: When you compare the economy during the years 1985 to 1990 and the economy today, there was a world of difference. There were many tax increases, but there were many problems that had to be solved.

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On the other hand, if you ask most residents in Ontario how they look on the Peterson years, I think they look back on them with nostalgia, and if they had their druthers I think they would rather have Premier Peterson in the seat on the other side of the House than Premier Rae. It was strange. After that 1990 election, for the first few months when you went around the province you couldn't find a person who had not voted for the NDP. But the strange thing is that if you go back to these same people today, they swear up and down that they never voted for the NDP, that they never would and they never could. That shows you how fleeting popularity is.

Interjection.

Mr Sola: As a matter of fact, speaking of Jim Bradley, I read a newspaper report from his home town in which they actually advocated, believe this or not, that would it not be preferable to have Mr Jim Bradley in the portfolio of Minister of the Environment than the present non-minister?

Mr Hope: I disagree with you on that.

Mr Sola: Well, this is the situation. I can tell you one thing: Mr Bradley was not exactly the favourite pin-up boy of the mayor of Mississauga. They had more than one set-to during his tenure as Minister of the Environment, but right now he seems to come out very favourably in comparison.

That's how fleeting fame is in this business, that's how fleeting popularity is. That's why we have to do our utmost to take advantage, when we are in power, to do what's best for the province, for the majority of the people. We have to forget the fact that we were advocates of certain single-interest groups when we were on this side of the House. When we sit on the other side of the House we have to represent everybody, even those who voted against us.

When you look at the way most of the province is responding to no matter what measure the NDP government brings up, there's something lacking: consultation, whether it's sufficient, whether it's sufficiently advanced, whether it's after the fact, I don't know. But right now on Bill 80, I'm receiving lots of correspondence, from unions at that; if you took off the letterhead you would think it was business groups writing on Bill 40. They're using the exact same terminology: "no consultation," "authoritarian," "divisive." You name it, and the word is there.

I'm just saying we have to be cognizant of the fact that those people who supported us at election time expect us to perform at a level that is acceptable to everybody.

As I said, I would have a difficult time coming up with something new for 30 minutes, but I would just like to conclude by saying the following: I think we have overreached ourselves with our partisan politics in this House, and that's on both sides of the House. I think it's fair game to liven things up a bit, to add some sense of joviality, but when we are dealing with the serious crisis this province is in, we have to try to coordinate our efforts to dig this province out of the hole it's in so that we create a sense of optimism, which is definitely lacking in this province, and that is probably one of the greatest hindrances to a turnaround. We have to get our act together and we have to try to solve the problems of this province and not add to them.

The Acting Speaker: Questions and/or comments?

Mr Carr: I want to comment very briefly on a couple of things the member for Mississauga East said. First of all, I agree that we should be cooperating. But I think the public out there should know that I was supposed to speak this evening on long-term care; I was going to bring up my files and, I swear, they were stacked this high. I had replies from people talking about long-term care, I had two submissions from the Halton region. I sat and listened to some of the speakers today to get a sense of that bill. I found out about 10 minutes before I was going to speak that closure was going to be invoked. I am not one who goes on long-winded, but I really, honestly, truly believe I could have gone on 30 minutes with some practical solutions, but I was restricted because of the time allocation. So I think the public should know that, when we sometimes get a little carried away in this House in a partisan manner. I had some constructive ideas I wanted to bring forward that I could not speak on tonight because the government invoked closure and brought in this Bill 85.

Also, another point about cooperating: That's why we put these two New Directions papers together. Yes, we complained, but we put out the two New Directions papers, one last year and one this year. For those people who don't know, President Clinton won the election and I wrote away for his plan, the Bill Clinton plan; I thought I was going to get this big document. Ladies and gentlemen, people watching TV, this is the Bill Clinton plan we heard so much about, that he became President of the United States on, 31 pages, Putting People First. On the back it has a return address: "Bill Clinton for President, PO Box 615." This is the Clinton plan that won him the presidency of the United States. This is the Ontario Progressive Conservatives's plan, put together by 20 people in two years. It's twice as big in terms of both length and size. So maybe we are sometimes partisan, but there are some constructive ideas. I hope I get more of a chance to bring them forward.

The Acting Speaker: Further questions and/or comments.

Ms Christel Haeck (St Catharines-Brock): I just wanted to make one or two comments about what the member for Mississauga East had to say regarding cross-border shopping. I do appreciate his perspective, but having lived virtually my entire life in the Niagara Peninsula and realizing how much cross-border shopping, or in fact cross-border working, are part of people's lives, I think some of the comments he makes are probably not quite appropriate. People have been shopping across the border since the bridges have existed. People in Kitchener ran bus tours into Rochester for a weekend because they've had the 48-hour trips and they can do their shopping and come back with $300 worth of purchases. But what's interesting is that in the St Catharines Standard of yesterday, there was an article regarding the change in cross-border shopping, that that particular influx has changed, that places like Messina, New York, are experiencing an extreme change in people's shopping direction. From the US they are coming back into Ontario, realizing that there is a price advantage as a result of the change in the dollar. Shopping analysts have looked at prices in the States and in Toronto -- not exactly always the cheapest city in Ontario or in Canada -- and have found that prices in Toronto are extremely competitive with anything that was previously offered in the United States. So really and truly, the cross-border shopping situation has changed.

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The Acting Speaker: Further questions and/or comments?

Mrs Caplan: I rise to compliment my colleague the member for Mississauga East. The member for Niagara, who acknowledged that in fact the situation has changed, also helped to make the point that this particular piece of legislation, Bill 85, is a tax grab.

I listened very carefully to my colleague from Mississauga East, and I thought he made his points very clearly and very succinctly. He's always worked very hard to represent the people of Mississauga East, both within our caucus and here in the Legislature, and I think this evening as he participated in the debate on Bill 85, he represented those interests of his constituents in a very articulate and thoughtful way.

I wanted to rise both to compliment him and to suggest to the members of this House that it would be helpful to the policy development in this place if they took some of the ideas and the suggestions that come from members on this side of the House, who do try to be helpful and thoughtful in policy development, and not to assume that because there's a suggestion coming from the opposition benches perhaps it wouldn't be in the interests of the New Democrats to consider that and to change the policies.

Mr Hope: Tell us what you used to say.

Mrs Caplan: The member for Chatham-Kent, who's not in his seat, interjects. He was not here in the House when the NDP sat in opposition, but as members of the government, we were always open to good ideas and thoughtful suggestions that came from members of the opposition. I would encourage the members of the NDP government to not assume that they know everything, to not assume that they have a market on the only new ideas, and to listen to members like Mr Sola, the member for Mississauga East, and others who want to be helpful during these difficult times.

The Acting Speaker: We can accommodate one final participant.

Mr Stockwell: I was just meaning to get up to compliment the member for Mississauga East. You know, it is true that sometimes members can stand and offer some sound advice. I think the member for Oakville South did just that, and the member for Oriole, and the member for Mississauga East did exactly the same. It seems to me that the point that was being made was fair and reasonable, thought out, that maybe this just isn't the route you should be going.

Maybe this tax is the kind of tax that continues to exacerbate a problem that has been created because of taxes, and that problem is that it's getting so expensive to buy cigarettes today that it has created this black market of smuggling. Maybe, just maybe, the route to go is to examine processes, through the Ministry of Health, to warn against the evils of smoking rather than simply taking the easy way out and grabbing at revenue to prop up the coffers --

Mr Hope: Reinstate prohibition, right?

Mr Stockwell: The member across the floor says, "Reinstate prohibition." That's not what I'm trying to point out. The argument you're making is that this is a sin tax and you need to increase the taxes to discourage people from partaking in it. The point I'm making is that you're being counterproductive. By increasing the taxes, you make it more lucrative for the smugglers to get involved and you lose revenue from all those people who would have bought it at the stores. I think the member for Mississauga East offered that kind of wisdom.

I point to the member for Oakville saying it's kind of hyperbole to suggest that we should be embarrassed by ourselves, when this government is holding us down here not for pay equity or employment equity but for Bill 85, which is nothing more than a $1.6-million tax grab.

The Acting Speaker: The honourable member for Mississauga East has two minutes in response.

Mr Sola: I'd like to thank all the members for their participation. To the member for Oakville South, I just hope that Bill Clinton's plan, all 31 pages of it, doesn't turn into another Agenda for People. That would lead to his downfall in four years' time, because it is one thing to put something on paper; it is another thing to live up to the commitments made on that paper.

That may be the biggest lesson we can learn from the Agenda for People and from the performance of this government: During elections we should not make promises we cannot afford to keep. That is one thing I have heard from every constituent I have visited and from every voter in the province I have spoken to. It doesn't matter which party it is, they've all made commitments in the heat of battle during an election which, when they were faced with the reality and the responsibility of government, they could not or would not keep. It puts an added burden on us to be more reasonable during election campaigns.

To the member for St Catharines-Brock, I'd like to point out that I think she made the case I was trying to make, that it's price, not deterrents, that determines whether people go cross-border shopping or not. When the price south of the border became either too expensive in comparison to Canadian prices or approximately equal, people stopped cross-border shopping. Therefore, if the greatest component of price on the Canadian side of the border is tax, maybe we could pre-empt any possibility of cross-border shopping again by reducing the taxes.

The Acting Speaker: Further debate on Bill 85?

Mr Carr: I'd like to add a couple of comments. My constituency office, I guess about three months ago, was broken into. I got a call at about 7:30 one morning; an officer from the Halton Regional Police called me at 7:30 in the morning, as I was getting breakfast with the children and talking with my wife. He asked: "Do you know where I am? I'm officer such and such from the Halton Regional Police. I'm standing in your office."

What had happened is that, through the night, some criminals had broken into the office next door, had tunnelled right through the wall in my constituency office and right through to the wall adjacent to me, which was attached to a variety store. Of course, being a politician, I wondered when I first got there what the heck they were doing in my office; what did they want? Most of the government brochures and pamphlets we give away free, so why would they have to come in the middle of the night?

But what they were after is that the variety store next to me had cigarettes that were on the shelf of the wall attached to my wall. The criminals broke in next door, a dental office, broke right through my wall and carved a big hole in the wall and took all the cigarettes off the shelf of the variety store. Before any criminals get any idea, I want to tell you they've replaced that now with a steel case. But what happened, very simply, is that they were stealing cigarettes.

What I said to the officer when I got down there -- being a non-smoker, I was a little amazed -- is, "This must be a first in all of Halton." He laughed a little cynically at me. Being a politician, I'd been out and had ridden and spent an evening with the undercover drug police of Halton. He said, "This happens at least once a night." Because of the high taxes, the officer said, people are stealing cigarettes. They stole about $10,000 worth, and $10,000 worth is not a great amount. It was a very small amount; they simply filled up a garbage bag. What it shows is that people go to any length to avoid taxes.

The reason is very simple, and the reason I brought up that anecdote: People will not only cross the border to shop, but you've got people who historically have bought cigarettes and paid the taxes because of the health care system who are now buying them on the black market. The police officer said they'll sell this $10,000 -- that was the retail value with the markup -- for about $5,000. People are buying them left and right, honest people -- they will actually deliver them to people -- because people want to avoid paying taxes.

We as politicians, who sometimes are so totally out of touch, think to solve the problem we'll just increase the sin taxes on cigarettes and on liquor, and people will pay it. I want to tell you, they don't. We've talked a little in this Legislature about how people will cross-border shop, and there are people that will do that en masse and in droves to get around that, and that's the essence of why this bill is put in place. But there are also people who will buy from the black market. There are people who probably never thought of stealing who will do it.

A lot of people thought that if you increase the taxes to a certain point people will stop smoking. Well, they don't. They end up stealing and cross-border shopping.

The whole issue of taxation, from the Treasurer's standpoint, is that they'll get $1.6 million, maybe $5 million, a very small amount, when about a week ago the auditor came in with his report that identified some of the controls that are lacking. Here we are debating the bills on basically a very small amount of tax revenue, but we never have any debates on how we're going to control spending. Those two are intimately tied. You're never, never going to be able to provide any tax relief if you cannot control spending.

The auditor said it; it isn't me speaking about the out-of-control spending. The auditor, a week ago, talked about the controls on social assistance. Basically, he said there are no controls on social assistance, and the figure he used is about $150 million. We in this Legislature are debating a bill that will bring in $1.6 million to maybe $5 million -- I'm not sure of the exact amount, but let's say $5 million at the outside -- at a time when we're losing $150 million because we don't put controls in place.

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If you operate a small variety store, a garden store, a big manufacturer, the Ford Motor Co, you know you have to have controls in place to control costs. The private sector knows that, the workers on the shop floor know that, but the government does not. That is why this particular bill needs to come in.

Instead of debating how we're going to control spending, we, in all our wisdom, are trying to decide how we're going to squeeze more out of people by taxing them at the border when they come across having bought products. There are all sorts of plans on how that's going to work and we're going to advertise it and people are going to say, "My goodness, I didn't realize cross-border shopping costs jobs." Of course people know that, but the people doing it aren't going out and buying Jaguars with the extra money. These are the average, hardworking people who are trying to put their kids through school, trying to provide lunch money for the kids.

It's not the rich people who are going down and doing some of the shopping; it's the hardworking, average person doing this. The rich people will pay the extra -- whatever amount it boils down to -- per package for cigarettes, cigars or tiparellos or whatever they smoke. The person being hurt by this is the average working person who says: "Enough is enough. I'm the one being taxed."

The other side talked earlier about all the health care programs we have here. I honestly, truly believe that the average person wouldn't mind paying the taxes, but the auditor came out and said we're blowing $150 million, the auditor came out and said there are no controls over the health care cards and we've got 300,000 bogus cards out there, that we don't know where they are, that we could have people coming in from the United States doing cross-border health shopping using these cards and we have no way of knowing.

The sad part is that we're trying to get $5 million worth of revenue at a time when the Health minister can't tell us whether we're spending $5 million, $10 million, $300 million or $400 million on these bogus health cards. If it were not so ridiculous that we are spending time dealing with this bill, it would actually be funny, but with the economic situation we have, it isn't funny.

When you look at other areas, non-profit housing, the auditor said the same thing. We're trying to bring in $5 million, a worthwhile goal, but we're worrying about mice in the basement while there are elephants on the roof. At the same time we're trying to bring in $5 million with this bill, we are spending on non-profit housing -- not my words, I say to the other side -- triple what it costs the private sector. At a time when the costs for land and construction were going down because we're in a depression, a recession, what was happening to the non-profit -- or government-run, as I call it -- housing in the province of Ontario? The per-unit costs were going up at the same time that they were going down in the private sector because of the recession.

This whole issue of where we're spending money and the taxes I think bothers people, not because of the $5 million we're going to catch from some poor, hardworking guy who smuggles across an extra package of cigarettes because he can't afford it and because, quite frankly, he can't stop because it's an addiction. If it were easy to stop -- I'm fortunate; being an athlete, I never started smoking. But it's not as easy as just saying, "We'll tax him so much he'll stop." Most of these people can't stop, and the amounts we're going to bring in are very small potatoes versus the very large expenditures going on.

The other side always says: "Where can we control expenditures? Dr Spend and Dr Save." Well, we haven't told you where we can save thousands of dollars, we haven't told you where we can save millions of dollars; what we've talked about is billions of dollars. It is not us saying it. At a time when we're debating Bill 85 for $5 million, the auditor has identified billions in non-profit housing, in social assistance and in the health care system with the health cards.

So as we wind down before Christmas -- and I know people are anxious to get on with some of the other bills -- it is a wee bit sad and a wee bit ironic that we're worrying about a bill that will bring in about $5 million at a time when we are blowing, through black holes and endless spending, billions and billions of dollars.

Another quick one is Ataratiri, and I know this isn't this government's fault. That was non-profit government-run housing. We will have spent $1 billion of taxpayers' money by the time Metro kicks in, and we will not have one unit of housing in Ontario. We didn't spend one minute debating that debacle, and yet we are debating for a few hours here tonight a bill that will bring in $5 million. The government of Ontario spills more than that in about a half-hour.

For the side that's opposite, at the end of this government's mandate we will spend, just to pay the interest alone -- not for the goods roads or the health care system or the environment or all the education programs -- it will cost us $15,000 a minute, and that clock keeps ticking 24 hours a day, seven days a week, 365 days of the year.

My math isn't that great off the top of my head, but $15,000 a minute, and we're talking about a bill that will bring in $5 million. We will spend more on interest payments alone on the provincial debt while we're debating this bill than this bill will bring in. That's the sad, ironic part of this bill. I know people are at home saying, "That's crazy, you're not spending that much." Take a look at the figures. They're not my figures. They're in the last fiscal report of how much we spend annually.

I had the legislative research -- not parliamentary people -- take a look and divide it by the number of days in the year, and that's what it will be at the end of this mandate. Historically, when this government took over, the deficit was about $35 billion. It will hit $62 billion. It's projected to go to $100 billion over the next five years; $100 billion is what the accumulated deficit will be. And what are we debating? A bill that will bring in about $5 million. If it wasn't so ridiculous, it would be sad.

When you look at the statistics, and see the indebtedness of everybody in this province -- provincially, we're heading to $7,500 each; federally, it's about $15,000 because of the spending that went on there for decades. When you add it up for every man, woman and child in this province, we're in debt to the tune of about $22,000 for every man, woman and child. As I said to my family the other day -- I'm married with three kids, five people in the family -- the debt that we owe provincially and federally is more than our mortgage is.

When I go to schools and we talk about the health care and the education system and I talk about some of the figures, the kids sit up very quickly. They have a politician come in, and they figure: "Typical politician. What's he going to tell us?" But when I tell them how far we are sinking them in debt, the grade 10 students at QE Park school -- who will be down tomorrow, as a matter of fact, I believe, for a tour down here -- sat up very straight when I talked about what the deficit is in this province. We don't have any debates on how we're going to control it, and that's why we put New Directions together, because we wanted to be practical about some of the solutions, and I'll touch on them in a minute.

But we will spend more time debating a bill that will bring in $5 million than we will controlling spending. That's why a year ago we put together this New Directions paper. We talked about some of the tough choices on where we can control spending, and how we can reduce taxes. When you look at the numbers, and I will do this for the benefit of some of the members on the other side, if you reduce the provincial sales tax by one percentage point, it saves about $1 billion. That's how much you'd bring into the economy by giving it back to the taxpayers in tax relief, so they could then go out and buy the cars or the fridges or the stoves.

Historically, that's what happened in the mid-1980s when the Conservatives were in power. Instead of increasing taxes to get $5 million out of people, they said, "We'll give some opportunity for tax relief." They did it on autos. I come from Oakville, with a Ford Motor Co plant there. They said, "To spur investment, to keep the jobs here in Oakville, we will reduce the sales tax on cars," so that people who were thinking of purchasing and maybe put it off because they were concerned about the cost, would all of a sudden take a look at buying that car.

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I want to tell you how consumers think. One of the car dealers told me, over one of the other taxes, I think the $75 gas guzzler tax: "I have people come in who talk to me about buying a car. They will pay $1,200 extra if I tell them to put whitewalls on the car, but when I tell them it's $75, a lousy $75, in tax going to the province of Ontario or to the federal government, they say, 'I'm not going to do it, I don't want to pay that,' and walk right out of the showroom."

They will pay $1,200 to get all the fancy instruments they maybe don't need or whitewalls or the push-button windows, but when it comes to taxes, people resent paying it. They don't resent paying it for the good roads or the health care system or the education system, but they resent it when they see how it is blown, like we saw last week in the auditor's report.

I know this government said, "We've got it under control and we're taking a look at it," and I guess the 1990 and 1991 reports, certainly the 1990 one, were a reflection of the previous government. But when you look at the waste and see the expenditures, you wonder why people get upset about a small amount like this bill, $5 million, when we are blowing billions and billions of dollars. You wouldn't mind if there were some long-term plan to control or if you had politicians who were talking about it to try and deal with it.

I want to tell you the horror. This particular Legislature in the new year will be dealing with a budget. I had to fight -- and the member for Lincoln was very helpful -- to get the standing committee on finance and economic affairs to hold pre-budget hearings in January. Historically, we have always done that to give the public a chance to look at where we're spending money. We'll have bills go out to public hearings for auto insurance and some of the other bills. I had to fight because nobody else thought about it. I'm on the finance and economic committee, and I said, "What are we doing for pre-budget?" We usually have people come in and talk about finances and economics and tax so we can hear what people have to say on bills like Bill 85. Nobody had talked about it.

Mr Kimble Sutherland (Oxford): We were going to do that.

Mr Carr: One of the members who's on there is saying they were going to do that. I hope so, because we talked about it. As you know, a big part of the budget is the MUSH sector, the municipalities, universities, school boards and hospitals, where about 40% of the transfer payments go. That's already been decided upon and they won't have a chance, that decision's been made, not because of what they said in any public hearings but because of what happened with the fiscal necessity the Treasurer was faced with. I say to the member for Oxford, who's on the finance committee with me and who I know is interested in this as well, we need to take a hard look at where we are taxing and spending because the people are fed up.

This whole issue of the market value in Toronto: We had days and days of people coming in and talking about the taxes and how they're going to leave. The government ultimately may have listened, although it was ironic to hear the House leader say he'd heard all he wanted to hear and there was no point having the hearings, then lo and behold, Tuesday of this week it gets changed. You never know, in this business.

But the problem you've got with taxpayers is that they are upset because we're the highest-taxed province in Canada, the highest-taxed jurisdiction in North America. Nobody is talking about how we're going to control spending. All we're talking about is how we're going to increase spending.

That's what this bill is as we head into the Christmas season; not how we're going to get any expenditure controls in place, how we're going to reduce taxes so we can put more money back in the pockets of the hardworking men and women of this province. That isn't the discussion here. It's how can we gouge a few more dimes, nickels and pennies out of our already beleaguered taxpayers?

What will probably be even more important than this bill, the Treasurer and the Premier have already said there'll be big tax increases next time. A year from now, we'll be dealing with a bill like 85 that won't bring in $5 million, it'll bring in $10 million. The problem is that every economist who came before the pre-budget finance hearings last year -- and the member for Oxford will remember this -- said if you increase taxes any more your bottom-line revenue is actually going to decrease, because the rich people, the hardworking people, the middle class, the poor people, are going to go across the border to shop, they're going to try to avoid the gasoline tax, the taxes on cigarettes, the taxes on booze; that we cannot afford any more tax increases.

In the last election nobody expected Bob Rae to do that. I disagreed with him on a lot of policies, I didn't agree with the Agenda for the People, but I didn't believe he was going to increase taxes to the dramatic extent he did, because I fought the last election fighting the Liberals on the tax issue.

And what did we get in this last budget? In the first budget that came in, he said, "There's no room to tax so we're not going to have any tax increases in the budget because we can't do it." That was the first budget. Last year, he came in with massive tax increases. Quite frankly, this is small potatoes compared to the 14% surtax on anyone making $53,000 a year. In Bob Rae's Ontario, the average hardworking men and women making $53,000 never thought they were going to get hit with this massive surtax of 14%.

The problem with that tax is that most people thought the federal government got that, because income tax is collected federally, even though some of it goes to the province. When they get hit with the massive tax increases and the surtax put in place for the middle class by a socialist government, they are going to be horrified.

I didn't get a chance to debate that bill because the post-budget debates were shut down, even though it affected more people in my riding than Bill 85 will. I didn't get a chance to speak on that, and during that period I didn't get a chance to articulate the position -- we didn't get to do it before, although I'm not surprised because I didn't believe the government was going to listen anyway -- of the people of my riding, in Oakville and Burlington, on this massive surtax.

I'm pleased to get a chance to do it tonight on Bill 85, but when I see the preparation out there on these bills, that the pre-budget hearings are going to take place when the Treasurer has already said, "Regardless of what people say, we're going to have increase the taxes," I don't know where it will end.

I know the members have talked about trying to stem cross-border shopping. If this legislation is your answer to stemming cross-border shopping, you're going to be a failure, because this will not do it.

Mr Elston: It's too late. You're killing jobs.

Mr Carr: It is killing jobs in the province of Ontario, but what we've got to learn is that it's the tax increases, the over-regulation, the over-legislating that's been going on in this province by all political parties of all stripes, by governments at all levels, that are killing industry in the province of Ontario.

Contrary to what the members opposite think, that we love to get up here and jump all over the government for these bills, it is really a sad state of affairs when we are debating, as we wind down this session, a bill that will draw probably less than $5 million, at a time when we are spending $53 billion in the province.

I am pleased to add a few thoughts on the bill we are dealing with tonight. I will close, because I know there are some speakers who want to get on to a more important piece of legislation dealing with some of the seniors. I know the member for Etobicoke West and some of the other members will have a little bit to say on that.

But I say to the members opposite, the opposition party has in all good faith put some ideas together. Whether it's tax decreases in the blueprint, or spending controls, whether it's our Blueprint for Learning, I believe there are some practical, commonsense solutions out there, and I encourage the other side to take a look at them, because if we do not, we will destroy this province.

In conclusion, I will say that when I look at this piece of legislation before us tonight, when there was so much hope about what those on the other side were going to do, it is rather pathetic that we're dealing with this bill so far into a recession that is destroying the economic base of this province. It is with a great deal of sadness that I look at this bill and say that this government has no idea where to find revenue, how to control expenditures. The people who are being hurt by this aren't the people in this Legislature. It's the average hardworking men and women in Etobicoke and York and Rexdale and Oakville and in Burlington that are being hurt by this disaster, this government.

I will close by saying that this government, as is usual, has not hit the mark. I wish the members would take a long, hard look at the legislation and come in with something practical that will allow some opportunity for tax relief for the beleaguered taxpayers of Ontario.

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The Acting Speaker: Questions and/or comments?

Mr Sutherland: I listened intently to the member for Oakville South. First of all, I want to refute his claims that this government isn't controlling spending. His comments undermine the efforts of the Treasurer, the Health minister and many other ministers. Let's be quite clear that we have controlled spending significantly in the last budget. I want to remind people that the reason we're running into shortfalls is not because expenditures are out of control; it's because revenues are down.

I want to make another thing quite clear: In those efforts to control spending, I am quite confident that this government is going to try to do that in a very fair and very humane manner. We're not going to leave people hanging out there in the cold. He talked about us doing this before Christmas. In our efforts to control spending, I certainly believe we are not going to do it in the same way the federal government has done. We understand that the federal government has financial difficulties, but the move last week by the federal government and the federal finance minister to say that the unemployed people are the ones who are going to have to pay the price for keeping finances under control is very cold-hearted, in my view, and shows a real lack of understanding of what unemployed people are going through; denying benefits to people who may have to quit their jobs because their spouse is transferred or something of that nature. That is a clear difference.

The member for Oakville South mentioned Frank Miller's budget from 1982 and 1983. He talked about automobiles. He should have mentioned that appliances and furniture were also available. Unfortunately, if we tried to do that today, that wouldn't create as many jobs, because most of those manufacturers have left the province as a result of federal government policies.

The Acting Speaker: Further questions and/or comments?

Mr Conway: I've had the opportunity to listen to most of this debate tonight as it winds down; I don't think there are any other speakers. I simply wanted to say in responding to the comments of the last speaker, the member from Oakville, that he raises the whole issue of the burden of taxation. Bill 85 is a very specific and limited measure that seeks to deal with the problem of cross-border shopping. I think it has to be stated again -- it's been indicated earlier -- that part of the problem we face with the smuggling issue is the level of taxation.

I don't smoke and I'm quite happy to impose a very heavy level of taxation on smoking, but it's very clear to me that people will not stop smoking just because you pile up the taxes; they are going to apparently pursue other avenues. We're going to have to take account of that and develop strategies to cope with it. As I've said in my earlier remarks, the level of black marketeering in tobacco in my part of eastern Ontario has reached historic highs at the present time.

I hear and I expect that the Ontario Provincial Police and the Royal Canadian Mounted Police are working and are having some success at apprehending a number of the culprits, but the issue remains that the price is so much higher in this country than in the United States that there is a very real encouragement, almost, for people who want to engage in that kind of illegal activity to try to pursue it.

I just make the final observation -- well, no, I won't make any final observation beyond saying that the problem is a pressing one and it's not just a matter of more enforcement. It is going to be, I'm afraid, a matter of just looking at the price and tax regimes in the Canadian provinces.

The Acting Speaker: Further questions and/or comments?

Mr Sola: I'd like to congratulate the member on his well-thought-out words and also for his suggestions, because I think it's incumbent upon all members to try to help solve the problems of this province.

But once again, to touch on the smuggling factor, when taxes get so high that the government appears to be sort of a robber baron, I think the ordinary taxpayer then starts looking at smuggling not as a crime but as a chivalrous deed almost, because the criminal is the government and anything that can be done to thwart the government is right. I think that's the point we've reached here in this province and in the country.

As I stated before and as the member has stated, every level of government has piled tax upon tax, especially on so-called sin taxes. The major portion of the price of those so-called sin products is taxes. Because the major portion of that is taxes, that means the government is directly responsible for forcing otherwise law-abiding citizens into either turning to smuggling or countenancing smuggling by purchasing the product.

This is reminiscent of many Third World countries, where the smugglers and the people who circumvent the laws for financial profit are looked upon as heroes and not as criminals, because the government is looked upon as being responsible for forcing the people to circumvent the laws, disobey the laws and break the laws. We are the authors of our own misfortune.

The Acting Speaker: We can accommodate one final participant.

Mr Elston: I just wish to say that the honourable member has raised several interesting issues, some of them dealing with overexpenditure. I wanted to remind him that while he complains about some of these expenditures and while the member for Oxford goes on about what a good job his government is doing in managing its budgetary problems, neither of the two gentlemen really took to heart the fact that the New Democrats are really trying to establish a pay-as-you-go type of program.

One of the things is that they have decided to pay all of the expenses of Raul Castro to be here. In fact, OMAF paid for that entire visit, we are told. It's no wonder that we want to tax the people who are coming back from shopping in the United States, so we can pay for projects like that so that expert information can come to Ontario from other jurisdictions.

With programs like that, the member for Oakville South would be well-advised to tell the people a little more about other worthy expenditures which have been deemed to be appropriate and in the interests of the taxpayers of Ontario. There are all kinds of worthy projects these people have decided to work on. The fact that not everybody gets to benefit from the expenditures that are made by this government is of minor concern.

A little earlier, the member for St Catharines stood and talked about the affiliation card that is given to the New Democrats to allow them special discounts with a MasterCard when they join the club. These special privileges for members of the New Democratic Party and these special payments to special projects by the New Democrats are becoming the hallmark of this former party of equity and fairness and justice for all. How just? It is just for New Democrats. It is just for the élite, and this party has created a brand-new élite.

The Acting Speaker: The honourable member for Oakville South has two minutes in response.

Mr Carr: I'm pleased to sum up a little bit. I hope I've added to the debate here this evening, because I know that some of the points I was trying to raise were in the spirit of trying to be helpful.

To the member for Oxford who says they've got their expenditures under control, well, I want to tell you, we do not rest lightly when you say that. I say to the public, don't believe me, don't believe the member for Oxford, because we both have our political agenda. Take a look at the auditor, who said that social assistance is out of control and that you have no controls on it. Take a look at the auditor, who said that government-run non-profit housing is triple the cost of the private sector. Take a look at all of that book, which has pages and pages of misspending by this government.

Finally, the member for Oxford talks about what the federal government is doing. With his friend Audrey McLaughlin being at 14% in the polls in Ontario, it's ironic that the person he is slamming, the Prime Minister, is at 20% and she's at 14%. If he honestly, truly believes that the federal government is where it's at, I'm sure Audrey McLaughlin would like to have a bright person like him run in the next election. Put your seat up, because the Progressive Conservatives of the province of Ontario are looking forward to bringing the seat of Oxford back to the Conservatives. We'll be lucky to see this member even receive the same amount of votes from his family. If he truly believes that the federal government is where all the action is and where all the problems are in unemployment insurance, I am sure Audrey McLaughlin would love to have you run and represent the federal party. Unfortunately, with his record here, I'm sure he will not even get his own family to vote for him.

The Speaker (Hon David Warner): The member for Durham West has up to two minutes to respond. No? My apologies. Further debate?

Mr Wiseman, on behalf of Ms Wark-Martyn, has moved second reading of Bill 85. Is it the pleasure of the House that the motion carry? Carried.

The bill was also given third reading.

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INCOME TAX AND ONTARIO PENSIONERS PROPERTY TAX ASSISTANCE STATUTE LAW AMENDMENT ACT, 1992 / LOI DE 1992 MODIFIANT DES LOIS EN CE QUI CONCERNE L'IMPÔT SUR LE REVENU ET L'ALLÉGEMENT DE L'IMPÔT FONCIER DES RETRAITÉS DE L'ONTARIO

Mr Wiseman, on behalf of Ms Wark-Martyn, moved second reading of the following bill:

Bill 31, An Act to amend the Income Tax Act and to provide an Income Tax Credit to Seniors and to phase out grants under the Ontario Pensioners Property Tax Assistance Act / Loi modifiant la Loi de l'impôt sur le revenu, prévoyant des crédits d'impôt sur le revenu pour les personnes âgées et visant à éliminer progressivement les subventions prévues par la Loi sur l'allégement de l'impôt foncier des retraités de l'Ontario.

The Speaker (Hon David Warner): Does the member have any opening remarks?

Mr Jim Wiseman (Durham West): The purpose of this bill is to pass changes arising from the Treasurer's budget of April 30, 1992, to provide an income tax credit to seniors and to phase out the Ontario tax grants program.

Changes to the Income Tax Act replace the grants with refundable property tax and sales tax credits for seniors. The tax grants programs will end with seniors receiving their final grants in 1992. Beginning with the 1992 taxation year, seniors may be eligible for a property and sales tax credit while filing their personal income tax returns. These new credits are designed to give higher benefits to low-income seniors, which results in increased support to over 350,000 seniors' households.

Changes to the Ontario Pensioners Property Tax Assistance Act reduce the maximum property tax grant in 1992 to $450 from $600 and eliminate the property and sales tax grants effective January 1, 1993.

This bill also puts into effect amendments to the Income Tax Act that increase the personal income tax rate and the Ontario surtax. The purpose of these changes is to increase the fairness of the income tax system. The personal income tax rate will increase to 54.5% of the basic federal tax for 1992 and to 55% for 1993 and the following years.

For 1992, the Ontario surtax will be 7% of Ontario personal income tax between $5,500 and $10,000, and 14% over $10,000. After 1992, the surtax increases to 14% of Ontario personal income tax between $5,500 and 20% over $8,000.

In his budget, the Treasurer also proposed that from 1992 on, the basic Ontario tax reduction will increase to $175 from $167. The amounts that low-income taxpayers can claim for each dependent child under 19 and each dependent child with a disability will go up to $375 from $350. These changes to the Ontario tax reduction program will be carried out through a change to regulations under the Income Tax Act.

This bill increases fairness for taxpayers by allowing them to ask for tax reassessments beyond the normal three-year time limit and greater time extensions, where necessary, for filing tax returns, objections and appeals. These changes are necessary to bring the federal and provincial income taxes in line, as required under the tax collection agreement between Ontario and the federal government.

The Speaker: Are there any questions and/or comments? If not, we invite debate.

Mrs Elinor Caplan (Oriole): I listened with interest to what the parliamentary assistant for the minister had to say about this.

Interjection.

Mrs Caplan: In fact, I have quite a lot to say and I know the Minister of Agriculture and Food will be listening quite intently, because I have a slightly different perspective, as he can well imagine, than the parliamentary assistant.

As I reviewed this piece of legislation in my responsibility as critic for the Ministry of Revenue, the conclusion I came to was that while the NDP, Bob Rae, the Premier, and his government, like to talk about "fair," this piece of legislation has nothing to do with "fair." This legislation is all about more taxes for the Treasurer and more taxes for the government treasury. That's what this piece of legislation is about, and nobody should be deceived.

I'm going to take a few minutes, if I can --

Mr W. Donald Cousens (Markham): You've never been just a few minutes, Elinor.

Mrs Caplan: It may be more than a few minutes, the member for Markham says. I think this is a significant piece of tax legislation and I would like to take some time, because I think it's important for people who are watching tonight even at this late hour, or those who may, while clicking channels in the future, reviewing the legislative channel; they want to hear about what we call Bill 31.

Bill 31 has actually three very distinct and significant components. The first, as the parliamentary assistant said, is the change to the personal income tax rate. This is a very significant part of this bill. Under this bill, the NDP government, Bob Rae's government, will increase the rate of Ontario personal income tax to 54.5% of federal personal income tax for the 1992 taxation year. That is a 1.5 percentage point increase above the current rate. That is not only more than the rate of inflation, that is the most misguided of fiscal policies in the midst of one of the worst recessions this province has ever faced, and certainly the most difficult economic times Ontario has faced in decades.

Anyone who has listened to basic economic principles of fiscal planning will tell you that the midst of a recession is not the time to take money out of the pockets of consumers, that is not the time to take money out of the economy. That is the time when you want to instil confidence and stability, and that confidence should breed the kind of environment where consumers will be willing to spend. By increasing personal income tax in the midst of a recession, by taking money away from consumers, this NDP government, in my opinion, is stalling and slowing the economic recovery we should already have been experiencing.

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The reason I used the words "should already have been" is because this was announced in the budget of last spring, and even before it is before this House for debate, it has already had a chilling effect on the economy of Ontario. That cannot be overemphasized. Bill 31, which increases personal income tax, has gone quite a distance to ensuring that the recovery from this devastating recession in the province of Ontario will be slower and more painful than it had to be. The responsibility for that economic and fiscal taxation policy sits squarely with Bob Rae, Treasurer Floyd Laughren and his cabinet.

Mr Murray J. Elston (Bruce): Bob Rae and his gang.

Mrs Caplan: As my colleague the member for Bruce says, Bob Rae and his gang, but I would suggest that Premier Bob Rae must take primary responsibility as leader of the government for having the kind of economic and fiscal policy which is slowing the economic recovery of the province of Ontario.

We see businesses leaving. Every day the rate of personal bankruptcy is increasing. The number of people losing their jobs since this government took power in the fall of 1990 has been, on average, in excess of 550 jobs per day. When this government has an opportunity in its budget, through its budgetary and fiscal policy, to make things better, it produces bills such as Bill 31 which simply make it worse.

Bill 31 increases the personal income tax rate in the 1992 taxation year, as I said, to 54.5% of the federal personal income tax rate. I said that's a 1.5% increase from the current rate. To make matters worse, in 1993 this legislation will permit the Treasurer of Ontario and Premier Bob Rae to further increase the income tax rate to 55% of the basic federal income tax rate. Overall, this revenue move, as the Treasurer likes to refer to it, will bring into the provincial coffers $580 million in new taxes, in new revenue, for 1993 and beyond; $580 million from just this one revenue move to increase personal income taxes to 55% of the basic federal income tax rate.

That's just one portion of Bill 31. It's a particularly insidious portion. It was referred to by the parliamentary assistant as fair, and I would challenge him and the Premier to say what is fair about taking money from the pockets of middle-income earners in the province of Ontario in the middle of a recession. Nothing is fair about that. Nothing is fair about taking money from middle-income earners in the midst of a recession when they are worried about whether they are going to have a job tomorrow, when they are worried about the economy and when they would very much like to have those additional dollars to stimulate the economy by being able to go out and spend.

The taxes have a double whammy. One, they upset and demoralize people in the midst of a recession and, second, they take away from the people what we need them to do the most: They take away from them the incentive and the ability to spend, to help spur the economy, to get the economy going and to help lead Ontario out of this recession.

Bill 31, by raising personal income tax, has had a very negative effect already on the economy of this province, and it will continue until the next budget, where we already hear the Treasurer and the Premier musing about further tax increases. But I believe that's a red herring; I don't believe they're going to do it. I believe they're preparing the province for the worst so they can say: "We really never intended to increase taxes. We know the province just cannot bear any more taxes during these difficult and devastating times."

Bill 31 has another section, and this one is actually quite surprising coming from a socialist government. This section, the income tax surcharge changes, sets a whole new level for who is rich in Bob Rae's Ontario. The income tax surcharge changes are as follows: The NDP government proposes to reduce the income level at which an Ontarian would start paying the provincial surtax for wealthy taxpayers.

Mr Elston: Reduce it? Shameful.

Mrs Caplan: I agree with my colleague the member for Bruce that this is shameful, and I see my colleague who's not sitting in his place, the member for Sault Ste Marie. But I know that if he were sitting in his place he would then be able to interject.

It's quite interesting because in NDP Ontario, in Bob Rae's Ontario, after the passage of Bill 31, you are considered wealthy if you earn $53,000 a year. I don't know how many people who earn $53,000 a year consider themselves wealthy. I know they may consider themselves fortunate to have a job, as businesses are closing and going bankrupt in NDP Ontario, but they certainly do not consider themselves wealthy. The changes are based upon income tax payable, and when Bill 31 passes, people earning about $53,000 will begin immediately paying the high-income surtax. By 1993 the tax rate doubles. This is quite an insidious part of Bill 31.

Mr James J. Bradley (St Catharines): That's the entire cabinet. It's going to hit all the parliamentary secretaries; that means everybody on the other side who's breathing.

Mrs Caplan: The member for St Catharines is very worried about the GM workers, who would very much like to have job security, who would very much like to have the support of this government to ensure that they might qualify one day for more taxes from the NDP government -- or maybe they wouldn't like more taxes from the NDP government; I think they would just like their jobs.

Interjection.

Mrs Caplan: Mr Speaker, I would draw to your attention that the member who is interjecting is not in his seat.

The Speaker: The member for Halton North was about to either be quiet or move to his proper seat. The member for Oriole has the floor.

Mrs Caplan: I know it's difficult for members of the government caucus to hear the truth about the impact of their proposed legislation and how people who are working in Ontario today feel about increased taxation in the midst of a recession by an NDP labour-socialist government, a government that they never believed would consider $53,000 as wealthy. They never would have believed that from an NDP socialist-labour government. They are not only disappointed; many of the constituents in the riding of Oriole who understand the tax changes that this government is bringing about are distressed and disgusted. They said: "We would never have believed this from Bob Rae. We would never have believed this kind of unfairness."

Mr Elston: It's not what Lennox Farrell said they were running for, was it?

Mrs Caplan: My colleague the member for Bruce refers to the election campaign in 1990, when my opponent, the NDP candidate, Mr Farrell, never once mentioned the fact that if you earn $53,000 in income the NDP would consider you wealthy. But then again, nothing in the Agenda for People suggested that if you were earning $53,000 a year you would be considered wealthy by the NDP. In fact, nothing Mr Farrell and the NDP promised in 1990's summer campaign bears any resemblance whatever to what Mr Rae is doing today. I didn't read this in the Agenda for People.

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Mr Bradley: I have a point of order, Mr Speaker: I'd like to call the member to task for the speech she's making now, because she hasn't explained that everybody in the province of Ontario had their income tax raised as of July 1 regardless of how much money they were making, not just the people earning $53,000 and over. I think she should correct that. That's where the surcharge comes in, but everybody had their taxes increased.

The Speaker: That's a point of intense interest, but not of order.

Mr Wiseman: Point of order, Mr Speaker: In fact, both members are incorrect in making their statements, because there are at least two groups in the province who have their taxes reduced because of this bill and not increased. Most of what the member has said is factually incorrect and not based on any accurate assessment of these numbers.

The Speaker: The member does not have a point of order. It may be of some interest to someone, but the member for Oriole has the floor.

Mrs Caplan: As I pointed out -- and I'm very grateful to my colleague from St Catharines, Mr Bradley, because it does give me the opportunity to repeat what I said a few moments ago -- there are three parts to this bill and I have been, at this point in time, discussing the second portion of the bill, which is the income tax surcharge. I've mentioned the personal income tax rate change, but I'll go back to that, because that is a very, very significant part of the bill.

At this time I really would like to focus on the income tax surcharge changes. It's interesting, because the parliamentary assistant, I think, could do well to listen to the remarks; he might understand the bill by the time it passes. I suggest that he read it carefully, because it's very distressing to have a parliamentary assistant who's so uninformed about a piece of legislation the government is passing.

In 1993, as I said, the tax rate will double. After 1992 the government expects to net approximately $360 million by lowering the surcharge threshold. The parliamentary assistant will stand in his place and say this bill is about fairness. I say, when you expect to net $360 million by lowering the surtax threshold to $53,000, that is nothing but a tax grab and has nothing, I say with respect to the parliamentary assistant to the Minister of Revenue, to do with fairness. I would also say to the parliamentary assistant that people who will now be paying the wealth surtax at the level of $53,000 taxable income don't think it's fair that that be called a surtax on wealth, because they do not believe they should be considered wealthy at that income level.

The third part of this bill, which I think has created a lot of confusion and distress, is the change to the seniors' benefit program. Bill 31 changes the existing seniors' financial assistance to a tax-based program from a tax grant. I for one have always looked at how you structure your program to ensure that in fact you are helping where it is needed the most. I personally had some concerns about the structuring of the grant program, but I object very much to the way Bob Rae and the NDP have introduced this particular change for seniors, because it again is a tax grab. It's a tax grab from the senior citizens of this province and it has been portrayed as something other than that. I would suggest to you, sir, that this is the kind of rhetoric coming from the government that makes people, particularly senior citizens, lose confidence and become very upset and distressed about what the government's going to do to them next.

Let me, if I can for a minute, just explain how this works from my perspective. Under the old system, before Bill 31, eligible seniors received a flat grant of $700, regardless of their income level. The new system would link the level of provincial benefits to a senior's income so that the higher the senior's income, the lower his or her benefit from the provincial government. This provision is one which seniors have a lot of concern about.

Mr Speaker, when you look at what the implications are for the seniors tax grant, I'd like to spend just a couple of minutes describing in some detail why the seniors of this province do not see this as fair.

Mr Elston: This is the same as Mulroney, isn't it?

Mrs Caplan: My colleague asks if this is similar to what federal Prime Minister Mulroney has done to senior citizens. I will say that while this isn't the same, there are some similarities. Prime Minister Mulroney tried to de-index pensions for seniors. What the NDP has done is what's called clawback. They've clawed back $100 million from a grants program targeted to help senior citizens remain in their homes, remain independent and keep their dignity and live in the community.

What they have done is change that grants program, taken $100 million out of the program, rework the program and, to justify this, what they have done is they've given a few dollars to the poorest of seniors. When I say "a few dollars," the poorest of seniors are getting about $20 more --

Mr Bradley: Is that all?

Mrs Caplan: That's all, $20 more, and those seniors who are at the upper end are now getting nothing.

The program now puts $100 million into the treasury, and this is fair? Absolutely not, I say to the parliamentary assistant. It is not as though they reformed this to say, "We are going to restructure and reallocate the resources on the basis of need." No, that's not what they did. What they did was they actually took $100 million out of this program, and the seniors in this province are $100 million poorer because of the New Democrats and Bob Rae and Bill 31.

I think it's important that people understand what the effects of Bill 31 will be. It is a complicated piece of legislation, and that's why I'm taking this time to be as clear as I can be in explaining what the provisions of this bill will be.

I know that my constituents in the riding of Oriole are worried about it; not only are the senior citizens worried about it, and I have a number of senior citizens, just a little higher than the provincial average of seniors. I have seniors who are really concerned about their ability to maintain their homes through this difficult recession.

I can say that the other thing they're concerned about is the many reforms. Particularly, the seniors in Oriole are now paying for drugs that until recently they didn't have to pay for. As the municipality gets dumped on and raises its property taxes, the seniors in Oriole are facing ever-higher costs. What has happened? The NDP government, in the name of reform and fairness, has taken $100 million away from senior citizens in Ontario.

People say to me, "Elinor, why are they doing this?" They say, "We don't understand." I'd like to take a couple of minutes to explain why I think this has happened.

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I believe the reason Bill 31 is a tax grab in the midst of the worst recession facing this province in decades is really a result of the economic mismanagement and the very serious mistakes this government made upon assuming office in the fall of 1990. The province today, because of those serious policy errors -- and we warned you about it. We told you. We offered you advice. You ignored everything we had to tell you. Because you ignored that advice, the province today faces higher unemployment, a higher deficit and declining revenues.

This is because of Bob Rae's inability to bring forward a credible economic renewal plan. The reason I've used the word "credible" is because confidence is so very important in the renewal of the economy. This NDP government, Bob Rae's government, has done nothing to instil confidence in the business community. They have done nothing to instil confidence in the consumers. The people of Ontario are suffering because of your inability to bring forward a credible plan.

Moving ahead with Bill 40 hurt your credibility and hurt the confidence of the province of Ontario. Many of the bills that you have brought forward in the tax area -- the budget itself, which suggested the need for future tax increases, has seriously affected the economy and the confidence of investors in Ontario. That's because of your policies.

I see the members opposite smiling and joking. This is no joking matter. Let me tell you, the people of this province are quite desperate. They are desperate for leadership and a credible recovery plan, and they are suffering because of your inability to be able to show that kind of leadership. Instead, you bring forward Bill 31, which does exactly the opposite of what needs to be done in this province at this time.

I would like to argue in this debate that because of the economic mismanagement and the lack of fiscal responsibility and the lack of fiscal planning of this NDP government, the Treasurer now is desperate for new sources of revenue. I would say to him and I would say to Bob Rae that higher taxes will not reduce the deficit. The only way to deal with deficit reduction is to get the economy moving; to create jobs so that people are paying income tax, so they are paying sales tax. The more you increase taxes, the more businesses will go bankrupt. The more you increase taxes, the more people will not have the money to purchase to pay sales tax.

Interjections.

Mrs Caplan: It distresses me that in a serious debate on economic policy, as the discussion of Bill 31, members of the government benches are not interested in listening. They're not interested in the advice or the suggestions. That's very distressing to me.

I say to the members of the government caucus, higher taxes will not lead to deficit reduction; higher taxes will only leave consumers with less to spend. In the long run, less consumer spending will mean higher unemployment and larger budget deficits.

I'm pleased that the Treasurer has been able to join us this evening, because he is the architect of the budget that has gone astray. He is the architect of the fiscal and economic policy of this government, which is seen as misguided and unfair. I was in this House between 1985 and 1990 and I heard the eloquence of the now Treasurer as he spoke during budget debates and budget times. Having listened to those debates, I am surprised and I know the people of the province are surprised that he has taken the disastrous economic route he has chosen.

The parliamentary assistant talked about fairness, but the fact is that under Bill 31, people earning above $60,000 will pay more to the Ontario government in higher provincial income taxes than they will receive in the surtax reductions from Ottawa.

We've talked a little bit about how this government really likes to look around to find somebody to blame. I think most of us would admit that all the problems that face the province of Ontario are not the fault of the Treasurer alone. We know, for example, that some of the high-dollar policies on free trade and others have contributed to the challenges faced by the Treasurer. But there is one thing this government must take absolute and complete responsibility for. When the federal government cut taxes and reduced the personal income tax, what did this provincial government do? What did Treasurer Laughren do? What did Premier Bob Rae do? He moved in and took all the revenues --

Hon Floyd Laughren (Treasurer and Minister of Economics): You're not stupid.

Mrs Caplan: -- that the federal government had cut and then some, and the Treasurer sits there and says, "We're not stupid."

Hon Mr Laughren: No, I said, "You're not stupid."

Mrs Caplan: I will tell you, Treasurer, that it is not fair for your parliamentary assistant to talk --

Mr Wiseman: Point of order, Mr Speaker.

The Speaker: Point of order? The member for Durham West believes he has a point of order.

Mr Wiseman: I know the member wouldn't want to have on record something that is factually incorrect. Her last statement, saying the Treasurer took all the funds from the federal government is factually incorrect and not accurate.

The Speaker: The member will know that he can rise to correct his own record but not anyone else's. The member for Oriole has the floor.

Mrs Caplan: I stand by the statement. I will say it again, because it is correct. Treasurer Laughren took every nickel of the federal tax cut and then some in his budget. If he told you he didn't, you had better have another chat with him, because he knows that the truth is that he took every nickel of that federal tax cut and then he added to it. That, sir, is not fair. It is not fair --

Interjections.

The Speaker: Order.

Mrs Caplan: -- parliamentary assistant to the Minister of Revenue, it is not fair for your Treasurer and your Premier to stand and talk about fairness, to stand day after day in their places, blaming the federal government for all your woes and mismanagement and then move in and take back their tax cut. That's not fair.

Bill 31 also, as I said, reduces the income threshold above which Ontarians pay the wealth or the high-income surtax. Let me tell you what exists today, just so you can see how serious this really is, and why this is seen as unfair. Under the existing legislation today, only taxpayers earning more than $84,000 pay an Ontario surtax on their income; $84,000, that's what's in place today. With Bill 31, the changes in this NDP legislation, people earning more than $53,000 will be paying the high-income surtax to the provincial treasury.

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Again, the Treasurer has said this move was necessary in order to deal with the government's deficit troubles, and I understand that he is dealing with a deficit of almost $10 billion. I will say to the Treasurer that I remember the day he told the truth in this House. He knows full well that what he inherited was a triple A credit rating, a balanced operating budget, an operating budget that had been in balance, and a balanced operating budget is something this Treasurer is now saying is wishful thinking for the future.

I would say to you that it is unbecoming of the Treasurer because he knows what he inherited. He inherited a province that was at the beginning of a recession and it was his fiscal and economic policies that have made the situation worse, and for that he must accept responsibility.

For the 1992 taxation year, the Ontario surtax will be calculated as 7% of Ontario personal income tax between $5,500 and $10,000 and 14% of Ontario personal income tax in excess of $10,000.

Mr Bradley: Now you're starting to hit Richard Johnston.

Mrs Caplan: That's what this bill is about. For 1993 and beyond, the Ontario surtax will be calculated as 14% of the Ontario personal income tax, $5,500 and $8,000, and 20% of the Ontario personal income tax in excess of $8,000. Those are very, very significant tax changes, very, very significant.

Mr Bradley: We should bring in Stanley Knowles and sit him at this table to hear this.

Hon Mr Laughren: You can hit Elinor over the head with the mace.

Mrs Caplan: the Treasurer just made a joke. I don't think these times are worthy of joke-making, Mr Treasurer, as we are debating a very serious piece of tax legislation, even though it is 11 o'clock at night. To have the Treasurer sitting here making jokes, especially jokes about violence against women, distresses me personally, since he was suggesting that I was the woman and he was the one wielding the mace. I accept that he was in good humour, attempting to be funny, and that there was no personal malice intended.

This is a very serious debate and I am --

Interjections.

Mrs Caplan: Are you going to call order, Mr Speaker?

Mr Bradley: Is that Darcy McKeough sitting across there?

Mr Elston: That's Darcy McKeough. It's actually John White. Get another sweater, John.

Mrs Caplan: Mr Speaker, I'm attempting to engage in serious debate on Bill 31.

The Speaker: I realize that the member for Oriole is attempting, quite valiantly, to address a very serious issue in a very serious way, and it would be very helpful if the members would provide the appropriate attention.

Mr Elston: On a point of order, Mr Speaker, just for a moment: There has been so much harping, there really has been so much harping, I'm wondering if the government party would like to have a recess so they could actually go out and study this bill so that they wouldn't have to harp and make so many mistakes as they try to deal with the speech being made. Perhaps I could ask for unanimous consent to allow the members of the government to go and study this legislation so they'd know what they are were harping about. Mr Speaker, could I do that?

The Speaker: The member wishes to ask for unanimous consent.

Mr Elston: I'm just asking your direction. Could I ask for unanimous consent?

The Speaker: Well, you can ask for unanimous consent for just about anything.

Mr Elston: If it keeps up, perhaps.

The Speaker: Oh, I see. Okay. A very useful suggestion from the member for Bruce, as always, but currently the member for Oriole has the floor and she may wish to resume her remarks.

Mrs Caplan: Thank you very much, Mr Speaker. I've spent considerable time studying this piece of legislation and attempting to explain it not only to my constituents, but to those people who are watching this debate, because I think that often tax policy is something which people misunderstand or once it is in effect they sort of wonder: "How did this happen? What does it mean?" I would hope in the time remaining that I will be able to explain further to the people watching this debate and to my own constituents in the riding of Oriole how important taxation policy, fiscal policy and economic policy is to both wealth creation and the state of the economic health of the province of Ontario.

I've outlined in some detail the effects of Bill 31 and I'd like to, if I could, just add a little bit of additional information because there are many people in the riding of Oriole, who do not consider themselves wealthy or high-income earners, who are earning $53,000 or slightly more.

In effect, I would say to anyone in that category that if you are a single-income earner who makes above $53,000, you will pay the high-income surtax under Bill 31. As with personal income tax changes, the government has imposed a higher rate on what it considers higher-income earners under the last half of 1992. In this case, Ontarians will start paying 14% of Ontario personal tax in excess of $5,500 starting July 1, 1992.

For the parliamentary assistant, who didn't seem to understand this, this is where you had the provincial treasury moving in to take back what the federal government had given as a tax cut, and then it went on into the next fiscal year. But in this fiscal year, as you will recall, the amount of the federal tax cut was calculated to be about $150 million in Ontario. Guess what the revenue expectations are in 1992-93 from the surtax changes? They are $150 million, identical to what the federal income tax was estimated to produce. What's even more insidious is that the amount of the new tax revenues increases to $360 million in the 1993 fiscal year and beyond.

Those are the facts. Those are the facts as they relate to Bill 31, and I see nothing in this bill so far which would suggest, as the parliamentary assistant did, that this is in any way fair. It is not fair to take $100 million away from the senior citizens of this province. It is not fair to tell people who are earning $53,000 a year that they are high-income earners. It is not fair to take back the $150-million tax cut that was promised by the federal government and then increase that to $360 million in the next fiscal year. That is not fair by any stretch of the imagination.

Mr Speaker, I'm going to give you the totals. In part I, personal income tax rate changes, we had a total of $580 million in new taxes; in part II, the surtax changes, another $360 million; and we had $100 million saved clawed back from the seniors tax program. If you total all those up, you get over $1 billion, and now we're going to talk about the tax reduction component of this piece of legislation.

Interjections.

The Speaker: Order.

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Mrs Caplan: The parliamentary assistant said that this bill contains tax reductions, and it does. I want to outline for you, in the light of this $1-billion tax grab, what the tax reductions are.

As a minor part of Bill 31, the government plans to enrich the Ontario tax reduction program for 1992 and subsequent years. Starting in 1992 the basic reduction will be increased to $175, and this will increase to $375, depending on the circumstances. These reductions total, in annual savings to Ontario taxpayers, $10 million. On the one hand, you have a billion-dollar tax grab and, on the other hand, you have a $10-million tax reduction program. They are taking a billion dollars and they're saying it's fair that they're only reducing the tax burden on those least able to pay by $10 million.

That may be fair to the parliamentary assistant, that may be fair to Bob Rae, but I don't think that's fair, the people in Oriole riding don't think that's fair and the people of the province of Ontario don't see anything about it that's fair. They understand that that kind of new math is why this province is having the problems we are having.

When the parliamentary assistant and the Minister of Revenue talk about the tax reduction component of Bill 31 and then you compare it with the tax grab of Bill 31, you see $1 billion compared to $10 million, and they have the temerity to suggest that this bill is about fairness. I would say, Mr Speaker, you understand why people are disappointed, why they don't believe and why they are in a state of shock when they see this kind of policy coming from an NDP government.

The final piece of Bill 31 brings provincial tax law into line with certain changes the federal government introduced with its February budget. This is the part that actually does make me laugh, because I remember the Minister of Revenue standing in her place saying that the one thing they were never going to do was harmonize with the federal government. They did exactly that in Bill 31, because it harmonizes their taxation with the federal government.

I'm not saying that's a bad thing. I'm not criticizing that component of the bill. What I am criticizing is that they say one thing and they do the opposite and they wonder why people have no confidence in them. The Minister of Revenue stood in her place and said: "We are not going to harmonize our taxes and our tax policy with the federal government. We will never do that." Why did she say that? Because that's what Bob Rae said. Bob Rae said, "We are not going to harmonize our taxation policy with the policies of the Mulroney government." What does Bill 31 do? It harmonizes federal tax policy and the NDP provincial tax policy.

Interjection.

Mrs Caplan: Treasurer, that's not funny. Treasurer, nobody's laughing. Treasurer, I'm glad you're not laughing, because the people of this province can't believe your government again has broken its word, has told them one thing and is doing the exact opposite.

Mr Bradley: That's a daily occurrence.

Mrs Caplan: While they are seeing this day by day, a daily occurrence, they can't get used to it. They keep believing. They keep believing that maybe there is a principle left in the NDP. But sadly, each day we see that the last of the principles and the last of principled government are upon us.

In Bill 31 the NDP government in Ontario agrees to adopt some federal rules for filing tax objections and tax appeals. I happen to think that's a good idea. I really think that makes it easier for small business. I think it makes good sense to do that. What I don't think makes good sense is to have these people, this NDP government stand up on one day and tell people, "We'll never do that," and then quietly, quietly put it in in Bill 31 and kind of hope nobody will notice it. Not one word from the parliamentary assistant about the harmonization with federal tax policy; not one word from the Minister of Revenue on the harmonization of tax policy; not one word on the fact that it makes it easier for business on their filings, both for objections and appeals; not one word about that.

It's very important that you tell people what you're doing and it's even more important that if you have changed your mind, you stand up and tell them, "We've changed our minds." But you don't do that. At 11:15 at night, when we're talking about Bill 31, you're hoping nobody will notice.

I could go on for some time, but I really believe that it is important at this late hour that we realize that Bill 31 is a significant piece of tax legislation, that many believe the NDP is adrift when it comes to tax policy. I am seeing here, and I have in my hand, headlines that say "NDP Mishmash on Tax Policy," November 1992; "Mini Budget Puts Blue Tinge on Pink Floyd"; a headline that says "Poor Folks Carry an Unfair Tax Burden" and, also in December 1992, a headline that says "Taxes to Rise, Rae Warns."

My message for this evening is, I don't believe that. I believe the tax hype warning that we are reading about in the newspapers is just a new spin so that when the Treasurer comes out with his budget that contains no taxes, they'll be able to say, "Aren't we wonderful?"

But I want to remind people on this evening in December that this government has already taken the biggest tax hit, over $1.5 billion. This NDP government, which does not like to hear the truth -- and this was reported November 1992. This year Bob Rae hit the taxpayers of Ontario with a $1.6-billion tax hit, the biggest in Confederation.

Let me tell you something: People in the province of Ontario heard you loud and clear when you said you were going to be different. The difference, after two years of government, is that they don't like what they see, they are concerned about your tax policy, they don't believe what you're doing is fair and, further, they know that you're doing it not only openly and aboveboard in legislation like Bill 31, but also insidiously by regulation as you raise fees and attempt to deal with a budget disaster of your own making.

The Treasurer is here, the hour is late, and I would say to you, Mr Speaker, that I have no confidence that Bill 31 is going to help the economy of the province of Ontario. I have no confidence that Bill 31 is going to help with the economic recovery in the province of Ontario and, on behalf of my constituents in the riding of Oriole, I want to express my dismay and my distress and offer the Treasurer and the government my assistance, if I can, to help them understand what the implications are of their misguided policies, because I entered public life to see if I could make a positive difference. I believe that no matter where you sit in this Legislature you can do that, but it is extremely difficult when the government opposite refuses that help, refuses that assistance and refuses to even listen.

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The Speaker: I thank the member for Oriole for her contribution to the debate and welcome questions and/or comments. The member for Markham.

Mr Cousens: One of the aspects that indeed the member for Oriole has been able to touch on is that this is a very major piece of legislation. I don't think there's any doubt about that. The fact that the member has touched on a number of the fundamental issues that surround this bill, I think, has done credit to the whole bill. There is so much to it that I'm surprised that the honourable member when she was speaking didn't refer to one of the sections of the bill.

I would like to ask her, in her comments, if she would comment on section 5:

"(1) Section 151, subsections 152(1), (2), (3), (3.1), (4), (4.1), (4.2), (5), (6), (7) and (8) and 153 (1), (1.1), (1.2), (1.3), (1.4), (2) and (3) and 227(8.3) and (8.4) of the federal act apply for the purposes of this act and, in the application thereof, any reference therein to section 150 or to subsection 150(1) of the federal act shall be read to include a reference to subsection 9(1) of this act."

How could you talk about this bill and not touch upon section 5? I mean this bill is filled with these kinds of paragraphs. I have to tell you, Mr Speaker, I want this member who has spoken so eloquently on all the other parts to comment on this particular part. I asked the Treasurer to give me his comment on it, and since he couldn't find his glasses, he didn't dare make any comment. He said he'd have to have a lawyer to check that one out.

That's the problem with this bill. You know something, it touches on so many aspects, but the first thing is it would take a Philadelphia lawyer or a Markham lawyer to really understand it, and there isn't a Markham lawyer around here.

Mr Chris Stockwell (Etobicoke West): They don't mention the word "gouge" once in it.

Mr Cousens: That's right, this bill doesn't mention the word "gouge" and yet it's full of gouging. All I'm trying to say is, it's a complicated act. The member has done something to uncomplicate it; maybe she could explain some of the complications.

The Speaker: The member for Durham West.

Mr Wiseman: I would like to hark back and have the Legislature reflect on what was said by the Liberal Party when this bill was first introduced by the Tories.

Mr Stuart Smith stated that "he has helped the people at the top of the income ladder at the expense of the people at the bottom of the income ladder."

Mr Peterson said: "Would the Treasurer not agree that...in the name of universality, the low-income, poor pensioner will get nothing more, or marginally more, or even less in a number of circumstances? Would he agree that what he has done in the name of getting his grant checked out twice a year is make an unnaturally large transfer to the wealthier pensioners?"

Mr Peterson said on June 13: "We in the Ontario Liberal Party have serious reservations about this bill, about its fundamental lack of equity and its unnecessary administrative costs. Only a Tory government could dream up such a plan to redistribute wealth to those who already have most of it."

They forgot about this when they were in power. Instead that party increased the basic income tax by five full percentage points from 1986 to 1990. Not only did they do that; the Liberals when in power imposed a surtax of 3% of income tax payable over $5,000. This was supposed to be a temporary tax for the 1986 taxation year only. However temporary it was, in 1988 the Liberals increased the surtax by 7% to 10% and increased the threshold over $10,000.

Not only was the member for Oriole wrong about that, she was wrong about many other things as well. All of these things were done while they were in power. They ignored it; they didn't have the guts to change the inequity in this pension system. We're doing it and we're doing it in a fair way. I hope to elaborate on that a little more later.

Mr John Sola (Mississauga East): I'd like to congratulate the member for Oriole for a comprehensive overview of Bill 31. But at the same time, I would like to respond to the catcalls and interjections from the other side about their Liberal inheritance.

I'd like to quote from the auditor's report of 1991, pages 14 and 15, and listen carefully: "Ontario has had only one surplus in the last 20 years (year ended March 31, 1990)." This is your Liberal inheritance, and once the NDP took over management of the economy, things went topsy-turvy and there was a major variance with the projections of the budget.

"The major factors contributing to this variance were" the following:

"The extent of the recession, which was obviously not foreseen at the time of the budget;

"Total revenues were down by approximately $1.1 billion due primarily to the influence of the recession on taxation revenues. Excluding special payments, total expenditures were up by approximately $1 billion, with the increase in social assistance payments the major contributing factor.

"Special payments which were not provided for in the budget" -- but decided by the NDP government when it took over. These special payments totalled $924 million, and they were spent on the Ontario teachers' pension fund and the Urban Transportation Development Corp, among other things.

So when they talk about the Liberal inheritance, they are complaining about having inherited a balanced budget and a projected surplus, and since then we have had $10-billion deficits.

The Speaker: Any other questions or comments? The member for St Catharines.

Mr Randy R. Hope (Chatham-Kent): Rotation, Mr Chair.

Mr Elston: They were slow.

Mr Bradley: Get the Tory up.

Interjections.

The Speaker: Just relax. We normally try to provide a balance, but also the first member to his or her feet. The primary speaker was on this side of the House. It would be helpful to have two people from this side. We looked to the Conservatives and there wasn't anyone interested.

Mr Stockwell: Right here. Can you miss this shirt?

The Speaker: The member for Etobicoke West has found his seat, in which case we will allow the member for Etobicoke West.

Mr Stockwell: Thank you, Mr Speaker. Trying to determine whether five years ago some ex-Premier, who was an opposition leader then, would have thought this was a good idea or not and whether some previous government had a surplus in some year or not really is a rather academic exercise at this time.

At this time we're faced with the economy literally in shambles. We've got six dumps in Durham. We've got 15 dumps across Metro. We have unemployment running rampant. We have a government that is basically bankrupt, and we have government backbenchers arguing about whether or not five years ago some Premier who was in opposition then said something about a seniors' tax credit.

I guess the point that needs to be made is, the member for Oriole spoke about the present day and about the situation we find ourselves in, and the present day that we find ourselves in, regardless of the situation, was the situation this government knew all about.

They made a significant number of promises in the Agenda for People. They can't fulfil practically any of them. They have increased taxes second to no government -- non-debatable. They have deficits that are not rivalled by any provincial government anywhere at any time. They've increased taxes on the gas guzzler union tax, on personal income tax, they talk about minimum corporate tax they couldn't deliver on, and it's rather insulting to hear this government, from a member with six dumps in his riding, come forward and start discussing about a Premier in opposition who spoke about that. If you want to talk about broken promises, sidle up to the corner office and Bob Rae's got three hours' worth.

The Speaker: The member for Oriole has up to two minutes for her response.

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Mrs Caplan: No one gives much credence to the utterances of the parliamentary assistant, so I'm not going to dignify his utterances with a reply.

I will point out that the member for Markham makes a very good point. When I was discussing the bill at some length, I said that it was very complicated. I also suggested quite strongly and forcefully that this bill harmonizes tax policy with the federal tax policies and that this NDP government was in some way trying to bring that in in a way that would be unnoticed. I want to thank the member for Markham for pointing out exactly what I was talking about, because it's that kind of gobbledegook in the legislation that is confusing, complex and irritating to anybody who looks at the bill. It also suggests, in legislative language, that this NDP government is attempting to do something it would prefer nobody really understands, which really is harmonization with federal tax policies.

Bill 31 is a significant piece of legislation. It does not do justice to this government when it stands there and says this is fair, because there is nothing fair about this taxation policy at this time in the midst of a very serious recession in Ontario.

The taxpayers are feeling burdened. The taxpayers today in Ontario feel that the last thing they need is a government that adds to their burden and their problems. We need the consumers of this province to have confidence and to start spending to help us out of the recession. We need businesses to have confidence to invest in Ontario and to know that Ontario is being well and properly managed. Bill 31 does not do that. It does not give confidence to consumers, it does not give confidence to seniors, it does not give confidence to business or investors and, frankly, Bill 31 is misguided in the extreme.

The Speaker: Further debate?

Mr Norman W. Sterling (Carleton): I want to enter the debate here tonight. There are two major tax changes included in Bill 31. One deals with income taxes, which I find very, very distasteful, particularly with regard to lower-income earners in this province.

I find it absolutely amazing that someone earning as little as $10,000 a year -- you know what happened? Don Mazankowski and Brian Mulroney gave him a niggardly decrease in taxes of $10, and you know what this Treasurer did? He took the $10 back. From $10,000 they gave him $10 off, and this Treasurer comes in and scoops $10 off somebody earning $10,000 a year.

Somebody who's earning $20,000 a year: Brian Mulroney took $45 off the tax that person owed to the federal government. You know what Floyd Laughren did? Floyd Laughren came along and took $45 off a guy or a women earning $20,000 a year.

Now, this is the party that was supposed to represent the working poor, as they are sometimes called, or the people who are not doing as well as other people in society. I can't believe these income tax increases that were put forward by the Treasurer of this province. I cannot believe that an NDP Treasurer would scrape off $45 more in taxes from somebody earning as little as $20,000 a year. It's disgraceful, and you know what? We've heard these people across the way, these people in an NDP government, talk about Brian Mulroney so many times in this Legislature, how bad Brian Mulroney is. Well, I'll tell you, Brian Mulroney is kinder to the working poor in this province than Bob Rae is, and that's proven here in Bill 31.

Interjections.

Mr Sterling: I suggest you read the bill. Read the bill. The bill is that Floyd Laughren and Bob Rae take $45 away from somebody earning as little as $20,000 a year. It's in the briefing notes from the Ministry of Revenue. It's terrible. What was the Agenda for People all about? Was it an agenda for unions? Was it an agenda for people earning $60,000, $70,000 a year? This is disgraceful. This bill is disgraceful.

I also want to talk about income tax rates in general. You know that we have to be competitive with other jurisdictions, so I asked the Ministry of Revenue to obtain for me the income tax rates for various different states which we might be competing with. In other words, our businesses here might have to compete with businesses in New York state, Michigan, Ohio, North Carolina, Massachusetts. There is a charge that we are losing businesses to those kinds of states. So I asked Ministry of Revenue officials to get for me the income tax rates in those places, and you know what? The difference in income tax between just about any state that I look at and Ontario is somewhere between 11% and 12% for somebody earning around the $50,000 mark, up to a 15% difference for somebody who is earning, let's say, over that amount.

What we would like to do is attract the very best people to our province. We would like to attract into our province people who have money, because if they have money they invest that money, usually in the community they support. If you are a person who is able to earn that kind of money either in Ontario or down in the United States and you have the choice of being either here or there, I ask you, are you going to pay 10% to 15% more in tax in order to live in this jurisdiction or live in another jurisdiction in the United States?

Mr Stockwell: And that's not fear-mongering; that's just a fact.

Mr Sterling: Those are the facts. There are the facts as supplied to me, on my request, by the Ministry of Revenue in the province of Ontario.

The other thing that is very prevalent in the United States is that if you have a mortgage on your home in the United States, you can deduct that interest from your income before you put it down.

Hon Mr Laughren: That's national, isn't it? That's federal.

Mr Sterling: That's what I said. In the United States, Floyd, you can deduct interest from your mortgage that you pay.

Mr Sean G. Conway (Renfrew North): Normie, tell us about the capital gains part of that.

Mr Sterling: Well, there are some downsides, but we're talking about income tax at this point. The member over here would like me to talk about capital gains and the downsides in the United States. When you die, that comes into your estate and you have to pay -- listen, nobody on this side thinks for a moment that in the next budget this Treasurer is not going to reintroduce succession duty taxes, which were done away with by the PC government in 1978. This Treasurer has threatened in the past to reintroduce inheritance tax, and I'm receiving letters from seniors in my riding who are not only getting ripped off by his last budget but are starting to expect that they're going to get ripped off in the future.

I guess perhaps one of the most galling parts of the Treasurer's introductions with regard to the reform of the property tax system is going back to 1984, when the federal government tried the very same kind of manoeuvre with old age pensions. I think some people in here will remember that Brian Mulroney, when he arrived on the scene, found that he could help some seniors who needed more than their old age pension by clawing back, from seniors who earn more than $40,000, some of the old age pension and giving that to the more needy old age pensioners.

I can remember Ed Broadbent and all the NDP caucus in Ottawa screaming and yelling and saying: "This is disastrous. You should have universality. It doesn't matter whether or not a senior is earning $10,000 or $20,000 or $30,000 or $50,000 a year. They should still get the old age pension. To heck with the poor ones, because everything should be universal."

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What do we have here? We have a proposal by this government -- I want to say too that in the 1984 scheme Brian Mulroney put in front of these rascals, what Brian Mulroney was doing was not adjusting the total amount of the payout; all he was going to do was pay out more to the poor seniors and take some away from our more able seniors in terms of their income.

Do you know what's happening with this property tax? Last year, we spent about $400 million -- I could be out by a little bit on that -- on property tax. Now what's happening in this little shift that we're undertaking is that not only is the Treasurer changing the rules with regard to who gets it, but he's reducing the total payout by $80 million to $100 million. That's $80 million, to $100 million, this Treasurer is ripping off the backs of our seniors with regard to property tax payments.

I can remember the hues and cries about taxes like the GST, about the federal government; it was going to collect a lot more and all this kind of stuff. At least with regard to that particular tax, when they collected it, they collected the same amount as they did with the former manufacturers sales tax, plus the amounts they paid out to less able citizens, with regard to the GST payouts to less able citizens of our country.

It's very hard for any politician to even talk about the GST with all these politicians saying, "Yeah, it was bad; it was terrible," and all the rest of it. I don't like the GST. I don't like any taxes, and particularly taxes which are up front.

We've had a big fight about market value assessment this week where the government has done a major retreat with regard to that whole tax, and the reason is that people see property taxes. They don't see income taxes. Income taxes are almost taxes that are done underneath the rug, so to speak. People don't really relate to income taxes because they never write out a cheque at the end of the year for their income tax. The majority of the people have it checked off their pay, and in fact many of them receive taxes back.

I want to say that we are very much opposed to both of these taxes, for the reasons I stated. The fact is that the Treasurer is not paying out the same amount as he was paying out under the old property tax program.

I must say that I do give some support for a shift in the kind of way the program works. Our party has said in the past that we agree that we should be helping out seniors and people in our communities who are less able to take care of themselves.

It wasn't our party that in the last election talked about universality. It has never been we in opposition who have talked about universality, about this unreal dream that government can continue to pay out millions and millions of dollars endlessly on programs and apply them universally across the whole population. I think most people in the community now accept that universality with regard to programs is a thing of the past, that we just can't afford it. We'd like to be able to do it, but you can't do it.

But it's so hypocritical of this government to come forward now with this sort of pious idea and change of reasoning, change of logic which has been put forward in this kind of legislation and put forward in this bill.

Interjections.

Mr Sterling: Mr Speaker, I'm having a great deal of difficulty keeping my mind on this because of the fact that some green-shirted colleagues of mine are carrying on conversations in the near vicinity of my seat.

As you know, Mr Speaker, I can be fairly succinct in my remarks with regard to the legislation. I think the reasons I have expressed here tonight for my opposition are clear. I want to say that groups like the United Senior Citizens of Ontario, in its report to the government of Ontario, opposed the property and sales tax grant change. I read from their brief to the government:

"We have protested the discontinuance of the $600 property tax grant and the $50 sales tax grant for senior citizens. The government has indicated that these grants will be recovered through our income tax return. Since many seniors live below the poverty line and consequently do not pay taxes, we protest any action that will bring about any reduction in the grants, not only to those not taxable, but to all seniors. We furthermore submit that the increasing tax burden to seniors on fixed incomes becomes unbearable. We strongly urge the government to eliminate all sales tax to seniors in order to alleviate this condition."

I agree in part with the submission put forward.

I guess, if I could say in summary, the government, in this tax increase, is taking provincial sales tax to 54.5% of the federal tax this year and is sneaking in another increase for next year; it is increasing it to 55% next year. With regard to the surtax, they are increasing it to 14% this year and to 20% next year.

A few years ago, when the former the Liberal government was there, the federal government started to reduce personal income taxes. They started to reduce their rate of personal income tax. Every time the federal government reduced the taxes in the late 1980s, the provincial Liberal government picked that up. In other words, they'd go down a point; Bob Nixon would increase it a point. He started at about 47%. We are now at 55% of the basic federal tax.

What we have seen through both of these governments -- the Liberal government with regard to Peterson -- is that any time the federal government gave the taxpayer a break, the provincial Liberals picked it up. Under the NDP government, every time the federal government has given the taxpayer a break, the provincial government has picked it up. I want to say that in terms of the former Liberal government, it was a little kinder to the poorer taxpayer. There was a difference in the way Mr Nixon handled how he picked those points up. He wasn't any kinder to the general taxpayer, but he was kinder to the person who was earning $10,000 and $20,000 a year. I will give Mr Nixon that.

I have said that we are now in the position in this province where our combined tax load is somewhere in the neighbourhood of about 35% to 36% of the income we earn. It seems to be getting higher every year. I just don't know how far we can go along with regard to taxation in this province before we discourage everyone who is earning a certain amount of money from leaving this country.

I want to also say with regard to income taxes that countries like Sweden, which this New Democratic Party has often referred to as a model, about three or four years ago decided that it would drop personal income taxes. The reason they dropped their personal income taxes was because they were losing their very best people to other European communities. They couldn't keep their engineers, their scientists and their entrepreneurs in their country.

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I represent a high-tech area of this province: the city of Kanata. I have some great employers in my area: Newbridge Networks Corp; Bell-Northern Research is not far out of my constituency; I have Mitel. I have a whole host of high-tech firms. Now, those engineers, those scientists, those mathematicians who work in those plants, can sell their skills anywhere.

I'm a lawyer. I'm trained in Ontario and if I want to practise law, I'm restricted in where I can go and practise that law. I have to stay in the province of Ontario. But these very high-skilled people who work in firms in the city of Kanata, in the city of Nepean and in the Ottawa-Carleton area can sell their services wherever they want. They can go to North Carolina, and in North Carolina they're going to pay 15% less in income tax, so the bleeding of the technical people, the engineers, the scientists etc, who really make the money for this country -- I want to tell you that with firms like Newbridge, Gandalf and Mitel, 85% of their product is exported outside this country. They bring money into this country. They bring fresh money into this country. They are really wealth creators, because they're not just regenerating the cash and trading it from one Canadian to the other. They're making money by selling their products to England, France, the United States, all over this world.

My concern is that as our income taxes continue to rise and come out of sync with the people we have to compete with in terms of our manufacturing sector, we are going to lose our very good people to those other jurisdictions. As I say, Sweden and Europe and all the European countries have recently dropped their income tax levels. They've sought other ways to obtain their taxes because they have realized that if you keep your income taxes up, you drive your good people out.

We not only oppose these tax increases because they are putting a heavier and heavier burden on the average taxpayer, but it doesn't make sense in terms of our competitiveness and our ability to provide a higher standard of living for our people of Ontario.

As I opened my remarks, I referred to probably the worst part of this particular tax proposal, and that is that it takes away from the very low end of our taxpayers. It takes away from people who are earning as little as $10,000. This bill taxes people who are earning $10,000 a year, and the NDP is proud of this? They're going to vote for this piece of legislation that takes away $10 from somebody earning $10,000. I can't believe it. I can't believe that any government would be so insensitive as to take away from somebody who is earning $10,000 a year.

I got a letter from a young man in the city of Nepean who wrote to me and is earning $20,000 a year. He wrote to me and he said, "Mr Sterling, I don't understand how the New Democratic Party, which claimed that it represented the small guy, the little guy, the guy who's not earning a lot of money, how is it that Mr Laughren is taking away from me $45 a year?"

I can't believe it, Floyd, that, in spite of everything else you would do with regard to this bill, you would scoop $45 from somebody who's earning as little as $20,000. I mean, $45 for somebody who's earning $20,000, that's a fair junk of dough for that person. Some $45 according to your document; $45 according to the Ministry of Revenue document. He might be saying, "This is taxable income," and all the rest of it. Okay, maybe it's somebody earning $26,000 a year and maybe it's $23 a year. I don't care whether it's $23 or $45; $25 to somebody who's earning $20,000 is a lot of money. I don't know where they can get it. They have tight budgets. You're literally taking food out of their mouths. That's really what it comes down to.

I know we're getting close to the end of the day, but I think I've expressed my disdain for this piece of legislation. We will, of course, be strenuously voting against this. I understand the government needs it before January 1. It's unfortunate. I would like to go across this province and talk to people who wrote to me, people who are earning $20,000 or less. I'd really like to hear from them, but we understand that the government has to have this in order to implement it by next year.

I only wish the Treasurer was honest with our senior citizens and didn't take $80 million away from them. Many of the people in the Ottawa-Carleton area that I represent who are seniors are going to be suffering from a market value assessment imposition in the Ottawa-Carleton area. A lot of those people are perhaps going to be forced from their homes because they won't be able to pay the property tax. That $80 million that the Treasurer is scooping out of that pot, which was paid to pensioners this year, would help a lot of the people in my constituency.

I ask the Treasurer to reconsider keeping the money constant at least, for this year, and then perhaps considering something less for future years.

The Speaker: I thank the honourable member for Carleton for his contribution to the debate and invite questions and/or comments.

Mr Wiseman: All the doom and gloom that the member has said, really, when you look at it -- 11% of the population has an income of over $50,000. This surtax represents a grand total increase of two cents out of every dollar above the net amount. Over 350,000 seniors will in fact receive more money than they did this year; in fact, it is possible for a senior this year who qualifies to achieve upwards of $1,450 in grant and tax credit for this year, in terms of a double hit.

I think it's important to recognize that the senior who will not receive this funding will have to have an income of over $50,000. If it's an invested income, then they would have to have, at an 8% interest rate, somewhere in the neighbourhood of well over $500,000 in the bank.

So it is incorrect to say that what we're doing is hurting the person on the lowest end. In fact, under the tax credit system that will be in effect in 1993, it is possible for the poorest senior to receive upwards of $1,000 in terms of a tax credit.

I have heard from my constituents, who have said on an ongoing basis, "Make sure that the money that is going to people, goes to people who have the most need." What is happening here is exactly that. This bill represents a move towards more equity and fairness in the system than was previously in existence. There are 350,000 seniors who will benefit and 89% of the population who will see no increase in their taxes.

The Speaker: The member for St Catharines.

Mr Bradley: I am surprised that the previous speaker had any time at all to be dealing with this matter, as I would have thought he would be dealing with the six dumps that have been placed in his constituency by the present Minister of the Environment and by the NDP patronage appointee, the former member for Peterborough, Walter Pitman.

Anyway, in regard to this tax, the member for Carleton, as usual, was able to characterize this tax the way it really is. He talked about the seniors' tax credit program, which penalizes those seniors who have saved their money over the years, people who didn't spend it on a lot of things that would have brought pleasure to them throughout their lifetime, put the money in the bank, put it in RSPs and saved it for their retirement. Then the Treasurer came along and cut the transfers to the municipalities, so their property taxes went up, and this year of all years they need more money, and what's happening? The Treasurer's taking the money away.

The income tax increase of this bill was slipped in, in the middle of the summer to take advantage of the federal government's relinquishing that tax. I can't believe this Treasurer was responsible. I have to believe the orders came from the Premier's office for that particular tax increase to take place.

Third, lowering the threshold for the application of the Ontario high-income surcharge to $53,000 is going to catch a lot of people such as auto workers, who worked many hours of overtime and were able to earn that kind of money, only to have this government take the money away from those auto workers who are going to the need it in the year ahead.

The Speaker: Further questions or comments?

Mr Conway: I want to just say a few things about these remarks by my friend from Manotick. I'm going to have more to say on this bill tomorrow or whenever, but I think he raises a couple of very good points.

Ms Sharon Murdock (Sudbury): The member for Manotick?

Mr Conway: The member from Manotick, yes.

Mr Elston: Manotick is a very fine community in the riding of Carleton.

Mr Conway: Just a couple of things. I certainly will not be supporting this legislation, but I will say that this will probably set me apart from some of my colleagues. I personally condemned the Davis government 12 or 14 years ago or whenever it was that it made the change from the seniors' property tax credit program to the tax grant program. I have not changed my views from those days in the early 1980s or whenever that change was made.

Hon Frances Lankin (Minister of Health): But you are voting against it.

Mr Conway: I cannot support the other elements of this policy. I'm telling you, I am a Liberal, and I find it extremely --

Hon Mr Laughren: Despite fiscal conservativeness.

Mr Conway: No, I'm being honest. I know the politics for an opposition politician are to stand up and denounce the whole policy. That part of this policy which seeks to tailor the available moneys to those seniors who need the money will get my support. I condemn absolutely the tax policy contained in this bill that hammers those in the lower income brackets.

Hon Mr Laughren: That is opposition politics.

Mr Conway: That is not opposition politics.

Hon Mr Laughren: Nothing wrong with opposition politics. Don't be so sensitive.

Mr Conway: No, I'm telling you it's a very legitimate criticism for any small-l liberal and any social democrat to make. The member from Manotick is quite right to draw it to the attention of this House tonight.

But I simply say that when this government and this Legislature face the kind of fiscal mess that we've got ourselves into, I'm going to tell you that these kinds of adjustments are as nothing compared to the kinds of miserable things we're going to have to visit on people if we don't get our economic house in order.

The Speaker: It being 12 of the clock, this House stands adjourned until --

Interjection.

The Speaker: All right. We can (inaudible) the will to do that.

It's 12 of the clock and this House stands adjourned until 1:30 of the clock tomorrow.

The House adjourned at 1200.