Canada, House of Commons Debates, “Question Period re: Indirect Taxation of Hydroelectricity Sales”, 32nd Parl, 1st Sess (17 November 1980)
By: Canada (Parliament)
Citation: Canada, House of Commons Debates, 32nd Parl, 1st Sess, 1981 at 4736, 4738.
Other formats: Click here to view the original document (PDF).
INQUIRY RESPECTING INDIRECT TAXATION OF HYDROELECTRICITY SALES
Mr. David Kilgour (Edmonton-Strathcona): Madam Speaker, my question is directed to the Minister of Finance in view of the absence of the Minister of Justice. I shall wait while he speaks to his assistant. I shall try again, Madam Speaker. His colleague, the Minister of National Revenue, indicated clearly over the weekend that his government will give the provinces the right to levy indirect taxes on hydroelectricity. The minister remained silent while the leader of the Liberal opposition in Newfoundland said that his province could increase its revenues by $600 million each year. Can he—Madam Speaker, the Minister of Justice is now in the House. If I may be allowed, I could perhaps direct my question to him; it pertains to the topic his colleague dealt with.
Over the weekend, the Minister of National Revenue made it clear in Newfoundland that his government will give the provinces the right to levy indirect taxes on their resources, on hydroelectricity. The minister remained silent while his colleague, the Liberal leader in Newfoundland, said that his government could thus increase its revenue by $600 million each year. Can the hon. member confirm the remarks of his colleague and, if so, can he also confirm the amount and the fact that Quebeckers will have to bear the financial burden mentioned?
Hon. Jean Chrétien (Minister of Justice and Minister of State for Social Development): Madam Speaker, I have stated several times that we intend to include in the constitutional reform a provision allowing indirect taxation of natural resources. That is the proposal that was put forward at the constitutional conference last summer. Everyone is aware of that. What it would represent in government revenue, I am in no position to assess. It would depend on how provincial governments would use the new power the federal government would hand over to them.
Mr. Kilgour: Madam Speaker, I have before me a copy of the statement he made on November 7 when he explained his position. Can he tell us, Madam Speaker, whether his colleague read the proceedings of the Quebec and Newfoundland contract before speaking as he did?
Mr. Chrétien: Madam Speaker, I do not know exactly what was said by my colleague or by the Liberal leader in Newfoundland. I say that the position is quite clear. We suggested to the provinces last summer that they might levy an indirect tax on natural resources, which they were not allowed to do. Of course, if a province acquires taxing power, it is up to it to determine the amount of taxation it wants to levy. I have no comment nor speculation to make on the possible revenues any province might derive from the decentralization of powers which the federal government is ready to grant to the provinces.
* * *
NATIONAL RESOURCES INDIRECT TAXATION OF HYDROELECTRICITY SALES—GOVERNMENT POSITION
Hon. John C. Crosbie (St. John’s West): Madam Speaker, my question is for the Minister of Justice. On Friday the Minister of National Revenue flew to Newfoundland especially to hold a press conference on constitutional matters with the new leader of the Newfoundland Liberal party. He said the proposed amendment to the constitutional resolution will provide to the provinces the right to levy indirect taxation on hydro resources. He said that this will enable Newfoundland to recover the money it is losing to Quebec from the Upper Churchill. He pointed out that the amendment was proposed some weeks ago by the national New Democratic Party and that the federal government has publicly announced its intention to accept the amendment.
My question for the Minister of Justice is: did the Minister of National Revenue properly inform the people of Newfoundland? Is it the official policy of the Government of Canada to permit indirect taxation of hydro resources so that Newfoundland can tax the Upper Churchill contract, thereby gaining something in the order of $600 million a year from Quebec consumers of hydroelectricity purchased from Newfoundland and Labrador? Is that the position of the Canadian government?
Hon. Jean Chrétien (Minister of Justice and Minister of State for Social Development): Madam Speaker, we said during the summer that, if this policy were accepted by the provinces and inscribed in the constitution, natural resources could be taxed indirectly by provincial governments. This right does not exist for the provinces at this time, but may come into existence if we proceed with the constitutional amendments.
In terms of the usage of that power by the provinces, it will be up to them to decide how it will be used. The financial consequences of this devolution of power by the federal government to the provinces will also be in the hands of the provinces. I have no further comment to make.
Mr. Crosbie: Madam Speaker, the minister may have no further comment to make, but we have further questions because he and his colleague are attempting to fool the people of Newfoundland. The leader of the Liberal party of Newfoundland, who was present with the Minister of National Revenue, said that the proposal would amount to $600 million a year for Newfoundland and went on to say:
That’s the exciting part of it. If we get this amendment, we can announce to Quebec, “It was a good deal but it’s a good deal no longer. How do vou want to renegotiate”‘?
Does the Government of Canada intend to give to the government of Newfoundland the power to force Quebec to renegotiate the Upper Churchil contract with Hydro-Quebec, which would mean an increased cost to hydroelectric consumers in Quebec of $600 million a year now and untold billions in the future? Is that the position of the Government of Canada as stated by the Minister of National Revenue and the leader of the Liberal party of Newfoundland in a deceptive manner last Friday in St. John’s?
Mr. Chrétien: Madam Speaker, I just stated very clearly the position of the government, that we are willing to give the provinces the power to tax indirectly their resources.
Mr. Crosbie: You’re weaseling.
Mr. Chrétien: Of course, once the federal government gives this power to the provinces, it is theirs to use. What the situation will be in a particular province is hypothetical.
Mr. Crosbie: Not as far as your colleague is concerned.
Mr. Chrétien: I am not a member of the administration of any provincial government. I am glad to see that there are people who recognize that this amendment, which I offered to the provinces this summer and for which the NDP is asking at this moment, will be good for the provinces. However, i am waiting to sec what the Tory party will do when this amendment is put forward in committee.
* * *