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Postscript: Expulsion

One by-product of the GST issue was a demonstration to Canadians of what happens to MPs who dare to side with their constituents instead of the government whip in present day Ottawa.

From virtually the beginning of his period as Finance Minister, Michael Wilson struck me as the embodiment of my late father’s view, expressed in the mid-1950s, that the main goal of the national Conservative party was to improve the financial lot of wealthy Torontonians and Montréalers. His changes in personal income taxes following the 1984 election indicated that high-income earners were to be the main beneficiaries while many low and middle-income families faced successive volleys of tax increases. The National Council of Welfare estimates that by 1991 the federal taxes for families with a total income of $25,000 will have risen 60 per cent since 1984.

Reforming Ottawa’s corporate income tax meant that the share of federal tax revenues generated by our income tax on companies would fall from 18 per cent in 1980 to an estimated 10 per cent for this fiscal year. Donald Blenkarn, the minister’s usually like-thinking chairman of the Finance Committee, and Murray Dorin, the vice-chairman, both said publicly earlier in 1990 that they would like to see the federal corporation tax abolished completely.

When Wilson released his technical paper on the GST in the spring of 1989, I was troubled from a number of standpoints, most notably on the issues of fairness and simplicity. I asked the Library of Parliament and as many other sources as possible for everything they could provide and began to dig into the proposal in depth. Constituents and individuals and groups from many provinces were also sources of much good advice. Like an onion, the more layers I managed to remove the worse it smelled.

For example, many Outer Canadians believe the major motivation for the GST was to release about 75,000 manufacturers, mostly located in southern Ontario and around Montréal, from the burden carried since 1924 of collecting the MST in favour of requiring more than two million small businesses and individuals across the country to collect an even larger amount of revenue from consumers everywhere. When responsible economists estimated that the switch from the MST to the GST represented a tax break of approximately $4 billion on business inputs, mostly for larger companies, my father’s earlier view took on an even sharper focus.

Canadians in cities sensed that the new tax would be an additional obstacle for the very large number of small businessmen selling all manner of services and goods to each other. Many instinctively shared the view of the Toronto urbanologist Jane Jacobs on value-added taxes: "no neater little tax contrivance could be imagined for favouring large, relatively self-sufficient enterprises such as multinational corporations with their many subsidiaries and many internal transactions while penalizing symbiotic production. Such a tax," she concluded, "needlessly twists the knife in the very vitals of city economies."

In early October of 1989,1 sent a detailed submission to the Commons Finance Committee which reflected my conclusion that the GST would be a major policy error of National Energy Program proportions. A copy was sent to every Conservative MP and senator. It contained a range of serious objections to the proposal. For example, the seven per cent GST levy on transportation services struck me as providing an especially discriminatory blow for Outer Canadians generally, both as consumers and producers. Someone in Nanaimo, St. John’s or Yellowknife would be required, for the first time, to pay seven per cent on the cost of shipping a refrigerator --most probably from somewhere in Inner Canada -- based on the distance involved. A producer in Outer Canada would have to absorb a similar levy in order to compete in our most populous markets within Inner Canada. The present MST provides a small tax advantage to remote manufacturers of finished products -- so the MST provides one of the few competitive advantages Outer Canadians enjoy.

Except for a brief period in Denmark, my submission stressed, countries with a value-added consumption tax invariably raise the rate significantly after its introduction. Handing Ottawa a fresh means of raising vast quantities of new tax monies would inevitably reduce the current public pressure to bring the national finances and debt under control. As nations with value-added taxes all appear to have higher levels of government spending than those which don’t, the introduction of the GST would, in my view, only ratchet up overall spending by Ottawa to new and higher levels.

The submission stressed the view of the Atlantic Provinces’ Economic Council that the ability of a manufacturer or retailer to pass on the GST to consumers in Atlantic Canada would be greater than in regions of greater population concentration where market competition is more vigorous. The GST is simply a means of collecting, from residents of nine of our ten provinces, a second and differently calculated retail sales tax which would prove a nightmare for most of those required by law to collect it. I’ve since learned that if the Senate passes the tax as is, Canada will be the only nation on earth with a two-tier sales tax, most probably calculated differently, in nine provinces. A recent study by the Institute for Policy Analysis estimates that a harmonized federal-provincial goods and services tax would cost more than 200,000 jobs in the first years of implementation.

I agreed with a study which was done by the Cambridge Research Institute that where a value-added tax is designed to raise additional revenues -- as this one undoubtedly was, despite Michael Wilson’s repeated claims that it would be revenue neutral -- price increases are greater than where such taxes do not raise more taxes than what they replace. A Conservative MP from Britain had admitted to me that Margaret Thatcher’s virtual doubling of the value-added tax to 15 per cent during 1979 was one major reason why the U.K. inflation rate rose from 8 percent in 1979 to 20 percent in 1980.

The cost of the GST in reduced revenues and employment and additional administrative costs to businesses which are price sensitive would be high. Wilson’s technical paper suggested that a series of taxes and rebates on eleven transactions occurring between the iron ore and washing machine dealer stage would produce only $54 in GST revenue for Ottawa. But at what administrative cost and loss of sales to all those required to be Ottawa’s collectors along the way? A spokesman for the Boy Scout movement in Western Canada had told me they expected their revenues at the earlier nine per cent rate would drop by eighteen per cent under the tax: nine per cent in revenues and nine per cent to collect it. What would be the full costs of this measure for our large voluntary sector nationally?

The experience of the European Community nations with value-added taxes is not encouraging. In some, business felt it was simply pre-financing government because it had to file tax returns monthly, while rebates came quarterly. Evasion of the tax in Europe appeared to be considerable, especially in the service sector, either through barter arrangements without invoices or through selling services free of the tax and then either not recording the sale or invoicing for less than the full amount charged. European consumers minimize their tax payments by making as many purchases as possible abroad. In Canada, a similar measure would both encourage our nationals to buy more taxable items in the United States and discourage all visitors to Canada from buying within Canada.

In a cover letter sent with my submission to all Conservative MPs, I attempted to dissuade them from the party whip’s argument that voting against the GST bill would constitute a gross parliamentary heresy. I referred them to a study on confidence votes done by Eugene Forsey and Graham Eglington. It noted that between 1867 and 1872 there were dozens upon dozens of Commons decisions in which Conservative MPs voted against measures of the first John A. Macdonald administration without impairing the ability of his cabinet to govern effectively. In 1914, R.B. Bennett of Calgary both spoke out strongly against and voted against a proposed railway agreement of his own Prime Minister, Robert Borden, with no consequences for the dissident MP and future Conservative party national leader.

More advanced parliamentary systems permit MPs to vote against their respective political parties. In Britain, taxation bills have not been regarded as confidence votes since 1834. In our own country, the defeat of the Trudeau government in 1983 on a clause of an Income Tax Amendment was not deemed a confidence vote.

In mid-October, I received a reply from Donald Blenkarn which I felt was neither persuasive nor substantive in any respect. He wrote, for example, "Once you have covered your needs for food and shelter and clothing, then what you spend starts to have more and more of a volunteer nature to it." Only a Tory MP-lawyer-businessman-hobby farmer could make such a statement. How, I asked in a six page rejoinder, would he answer low and middle income Canadians? Moreover, how would greater savings be encouraged by a tax which would reduce the standard of living for most Canadian families? Both of us sent copies of our letters to the Conservative national caucus.

Additional letters went back and forth on the subject among Blenkarn, myself and other Conservative caucus members. None received from other caucus members contained much common sense or logic. From private conversations with Conservative MPs during the period, I concluded that few of them could make a persuasive case for the proposal. Most had simply accepted it on blind faith from the Finance Minister and were searching for ways to defend it to hostile constituents.

I sent many objections on behalf of concerned organizations and individuals to Michael Wilson. None of his replies dealt realistically with their concerns, usually because most of the responses were based on suppositions that were absurd in the real world of commerce. His officials were equally unconvincing. On one occasion, I attempted to obtain a study from them on the regional consequences of the GST. It never arrived.

I went through a period of conscience-searching while wondering if I should sit as an independent MP because of my deepening opposition to the GST and other policies of the government. After speaking with a number of friends and supporters, I resolved to soldier on within the caucus. My hope, albeit an increasingly faint one as time went by, was to dissuade colleagues, some of ten years’ standing, that the GST was socially and economically wrong and politically suicidal.

This personal goal worked reasonably well for a number of weeks until it became clear that a majority of the Alberta Conservative caucus wanted Alex Kindy, the MP for Calgary Northeast, and myself to leave each Tuesday night when discussion of their strategy to sell the GST to Alberta voters began. This struck Kindy and me as reasonable since by this point neither side was going to move on the basic issue. Both sides agreed that we would leave at this point near the end of each caucus meeting. It breaches no canon of caucus secrecy to say that since the 1984 election, the national Conservative caucus functions primarily as a forum in which provincial caucuses tell the prime minister and other colleagues what’s on their members’ minds.

Several weeks later, I arrived for the regular Tuesday night Alberta caucus meeting to find the prime minister was also attending. No sooner had we all taken our seats than someone proposed that I leave because the GST would be discussed. Assuming that Mulroney knew my position on the tax from copies of letters sent to him and from various media accounts of speeches I’d made against it, I bit my tongue and said virtually nothing before leaving. Thereafter, I did not return to either the Alberta or national caucus before the April 10 final vote in the Commons on third reading, because it was pointless. The positions of both the national and Alberta Conservative caucuses and myself on the GST were irreconcilable. Some weeks after the prime minister’s visit, Dr. Kindy and I both received a one sentence letter from the chairman of the Alberta Conservative caucus, Bobbie Sparrow, telling us that we’d been suspended from the caucus. In fairness, she telephoned first to say the letter was coming, but there was little discussion of the substance.

Shortly before the final vote, I signed individual letters to all government MPs recapitulating why I would oppose the bill. I pointed Out that numerous constituents (approximately 7,500) and others had, in one form or another, indicated their opposition to the measure; all but one member of the Edmonton Southeast Conservative Association executive had voted for a motion recommending that I vote against the measure. I reminded them that the Canadian Bankers Association and the Business Council on National Issues were prominent among the few groups supporting the measure across Canada. The letter ended by saying that I’d stand with my constituents, personal convictions and Canadians generally and vote "nay."

The government response was almost immediate after Kindy and I voted against third reading of the GST bill. To the media outside the House, I indicated that, for a decade, I’d voted only once against my party except on some Meech Lake amendments and intended to attend the national caucus the next morning to defend my right to do so on principle. It was not to be. Remarks made by the government whip, Jim Hawkes, to the media later that evening indicated Kindy and I had already been expelled from the government caucus. How, we both wondered, could this unprecedented occurrence in the Conservative national caucus have happened without any species of hearing? Why had Hawkes not even bothered to telephone either of us when he prided himself on being able to reach every government MP within minutes at any time?

Kindy and I learned later that the other members of the Alberta Conservative caucus had held an emergency meeting soon after the vote and voted to expel both of us. Hawkes then evidently approached House Speaker John Fraser and told him that the two of us were to be removed from the government side of the Commons. Fraser, for whom I have the highest respect and affection, simply had no choice under our present outdated parliamentary practices but to comply despite the absence of any species of due process. I’m certain that as Speaker he had no inkling at all as to how the two heretics had been banished.

Late the same night, Alex and I discussed the situation on the telephone and agreed that attempting to attend the next morning’s national caucus, a political lynching in the making, would be foolish. He took an early flight for Calgary to face his voters; I decided to catch a noon flight to Edmonton but beforehand to do my best during the morning to ensure that the Prime Minister’s "press line" on the matter, whatever it was, was not the only one available for the Ottawa media. By the time Mulroney came out of the national caucus in the late morning to announce that it had decided to expel Kindy and myself, copies of the new seating plan had already been distributed to journalists by the Speaker’s office. Later, when I asked one of them why no one quizzed the Prime Minister on this obvious contradiction in his story, he shrugged and replied, "Why bother?" It was, however, gratifying to learn that several MPs present in the national caucus had objected strongly to the lack of any hearing before expelling two colleagues. The national caucus chairman, Bob Layton, appointed by the Prime Minister, wrote a very short letter of dismissal the same day, "we are sorry that you have chosen to withdraw your support for and confidence in the government. Your decision requires me to advise that you will no longer be recognized as a Member of our National caucus."

Arriving in Edmonton in the late afternoon, I went directly to a press conference and announced that in the unusual circumstances, I would sit as an independent Progressive Conservative for the time being. William Stewart, president of the Edmonton Southeast Conservative Association, who confronted the journalists with me, was strongly supportive of my position. Virtually all other members of the 25-member riding executive had been encouraging as well. It was, however, a painful situation in every respect. An Edmonton reporter said the Prime Minister had denounced me as someone who had never spoken up for Alberta on the GST. "That comment would melt the Blarney Stone," I quipped. From comments Mulroney had made personally to me, I knew that he was perfectly aware of my position on the tax before the vote.

After campaigning for the party for twenty-five years in nine of the ten provinces, including thirteen constituencies in Québec during the heat of the 1984 election campaign, I did not consider myself a fair-weather party supporter as was claimed by the party leader. Instead, I felt like many in Eastern Europe who had for years supported a very different political party but now found themselves no longer able to accept it or to believe its leadership. It strongly appeared from hundreds of letters, telephone calls and comments I later received from individuals all over the country that Canadians generally disapproved of the nature of the Prime Minister’s strong personal attack against someone who disagreed in principle with a government proposal.

Only the Senate can still stop the OST. I think it is better to be right with our unreforrned Senate on the issue than to be wrong with a popularly elected House of Commons whose government members had voted together, dismissing Edmund Burke’s wise advice that an MP must never surrender his judgement to anyone.

Government MPs and like-minded editorial writers argue that the Senate is unelected. However, the argument seems rather hollow considering that members of the majority who voted for the bill didn’t reflect the views of their constituents while "dissenters" were expelled from the government ranks. The incident might, therefore, help to convince Canadians that our current parliamentary practices must be changed. In a House of Commons where one party has a majority, the prime minister dictates his instructions to the MPs of his party, completely dominating them for the period between elections.

We reformers are not advocating total independence on the part of MPs, only that the parliamentary rules clearly specify under what narrow conditions a defeat of a measure in the House will also cause a government to fall. The present situation, under which virtually any lost vote can be declared by a prime minister to have been a confidence vote, should be unacceptable to any Canadian democrat at the end of the twentieth century. Our present practice, largely abandoned among parliamentary democracies, persists only because it makes life easier for prime ministers. It attracts much public ridicule of government MPs and elected office holders at both our national and provincial levels.

Westminster, as the mother of parliaments, itself offers a way out of the present situation. There, for several decades government private members have voted regularly against their party leadership. In one period during the mid- l970s, the government averaged one defeat in the House per government bill without falling. Older and mostly docile backbenchers in Britain are being replaced by more independent, smarter and younger MPs concerned about their occupational credibility. In our own much larger and more diverse country, it strikes me that allowing MPs greater freedom to represent our constituents would also help all political parties to better discharge their national role as vehicles of reconciliation.